-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PE78X2yaREGpwkKZRERcAL4AzqdsqPYqVF4h+QGeQkYpL4DnUhYpIZNygsppto+I kUzpJREqA8LoP9wv1VDMSw== /in/edgar/work/0000909518-00-000605/0000909518-00-000605.txt : 20000930 0000909518-00-000605.hdr.sgml : 20000930 ACCESSION NUMBER: 0000909518-00-000605 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 15 CONFORMED PERIOD OF REPORT: 20000922 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20000928 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CONSECO INC CENTRAL INDEX KEY: 0000719241 STANDARD INDUSTRIAL CLASSIFICATION: [6321 ] IRS NUMBER: 351468632 STATE OF INCORPORATION: IN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 001-09250 FILM NUMBER: 730141 BUSINESS ADDRESS: STREET 1: 11825 N PENNSYLVANIA ST CITY: CARMEL STATE: IN ZIP: 46032 BUSINESS PHONE: 3178176100 MAIL ADDRESS: STREET 1: 11825 N PENNSYLVANIA ST CITY: CARMEL STATE: IN ZIP: 46032 FORMER COMPANY: FORMER CONFORMED NAME: SECURITY NATIONAL OF INDIANA CORP DATE OF NAME CHANGE: 19840207 8-K/A 1 0001.txt ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K/A (Amendment No. 1) CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DATE OF REPORT - September 22, 2000 (Date of Earliest Event Reported) CONSECO, INC. ----------------------------------------------------------- (Exact name of registrant as specified in its charter) Commission File No. 1-9250 Indiana 35-1468632 - --------------------------------- ----------------------------- (State of Incorporation) (I.R.S. Employer Identification No.) 11825 N. Pennsylvania Street, Carmel, IN 46032 - ---------------------------------------- ----------------------------- (Address of principal Zip Code executive offices) Registrant's telephone number, including area code: (317) 817-6100 ================================================================================ 39257.0001 EXPLANATORY NOTE The purpose of this amendment is to amend and restate the 8-K filed on September 27, 2000 solely for the purpose of including "Schedule A - Appendix" to Exhibits 4.1 - 4.3 and "Schedule II - Appendix" to Exhibits 4.4 - 4.6. 2 Item 5. Other Events. Restoration Plan ---------------- Conseco, Inc. ("Conseco") and its lender banks have signed amendments that will restructure the company's credit facilities as part of Conseco's "Restoration Plan". The agreement with the banks covers $2.8 billion of debt held by a 25-bank consortium led by Bank of America and Chase Manhattan Bank. The primary terms of such amendments are outlined in the press release attached as an exhibit hereto. Conseco is also filing herewith the slides from a presentation made to analysts and others. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits. (c) Exhibits. 4.1 First Amendment to the Five-Year Credit Agreement dated as of September 22, 2000. 4.2 Second Amendment to the 364-Day Credit Agreement and Amendment and Restatement of the $50,000,000 Extendible Commercial Notes dated as of September 22, 2000. 4.3 Second Amendment to the $155 Million Credit Agreement dated as of September 22, 2000. 4.4 Agreement dated as of September 22, 2000 relating to the 1997 Director and Officer Loan Credit Agreement. 4.5 Agreement dated as of September 22, 2000 relating to the 1998 Director and Officer Loan Credit Agreement. 4.6 Agreement dated as of September 22, 2000 relating to the 1999 Director and Officer Loan Credit Agreement. 4.7 Guaranty and Subordination Agreement dated as of September 22, 2000 under the Senior Secured Revolving Credit Agreement dated as of May 30, 2000. 4.8 Guaranty and Subordination Agreement dated as of September 22, 2000 under the Credit Agreement dated as of May 30, 2000. 4.9 Guaranty and Subordination Agreement dated as of September 22, 2000 under the Amended and Restated Credit Agreement dated as of August 26, 1997. 4.10 Guaranty and Subordination Agreement dated as of September 22, 2000 under the 364-Day Credit Agreement dated as of September 25, 1998. 4.11 Guaranty and Subordination Agreement dated as of September 22, 2000 under the Five-Year Credit Agreement dated as of September 25, 1998. 4.12 Guaranty and Subordination Agreement dated as of September 22, 2000 under the Credit Agreement dated as of August 28, 1998. 99.1 Press Release of Conseco, Inc. issued on September 22, 2000. 99.2 Analyst Presentation dated September 25, 2000. 3 SIGNATURES ---------- Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. CONSECO, INC. By: /s/ James S. Adams --------------------------------------- Name: James S. Adams ----------------------------- Title: Senior Vice-President, Chief Accounting Officer and Treasurer -------------------------------- Dated: September 27, 2000 4 EXHIBIT INDEX Exhibit No. Description - ----------- ------------------------------------------------- 4.1 First Amendment to the Five-Year Credit Agreement dated as of September 22, 2000. 4.2 Second Amendment to the 364-Day Credit Agreement and Amendment and Restatement of the $50,000,000 Extendible Commercial Notes dated as of September 22, 2000. 4.3 Second Amendment to the $155 Million Credit Agreement dated as of September 22, 2000. 4.4 Agreement dated as of September 22, 2000 relating to the 1997 Director and Officer Loan Credit Agreement. 4.5 Agreement dated as of September 22, 2000 relating to the 1998 Director and Officer Loan Credit Agreement. 4.6 Agreement dated as of September 22, 2000 relating to the 1999 Director and Officer Loan Credit Agreement. 4.7 Guaranty and Subordination Agreement dated as of September 22, 2000 under the Senior Secured Revolving Credit Agreement dated as of May 30, 2000. 4.8 Guaranty and Subordination Agreement dated as of September 22, 2000 under the Credit Agreement dated as of May 30, 2000. 4.9 Guaranty and Subordination Agreement dated as of September 22, 2000 under the Amended and Restated Credit Agreement dated as of August 26, 1997. 4.10 Guaranty and Subordination Agreement dated as of September 22, 2000 under the 364-Day Credit Agreement dated as of September 25, 1998. 4.11 Guaranty and Subordination Agreement dated as of September 22, 2000 under the Five-Year Credit Agreement dated as of September 25, 1998. 4.12 Guaranty and Subordination Agreement dated as of September 22, 2000 under the Credit Agreement dated as of August 28, 1998. 99.1 Press Release of Conseco, Inc. issued on September 22, 2000. 99.2 Analyst Presentation dated September 25, 2000. 5 EX-4 2 0002.txt EXHIBIT 4.1 EXHIBIT 4.1 FIRST AMENDMENT TO FIVE-YEAR CREDIT AGREEMENT THIS FIRST AMENDMENT TO FIVE-YEAR CREDIT AGREEMENT, dated as of September 22, 2000 (this "Amendment"), is made by and among Conseco, Inc., an Indiana --------- corporation (the "Company"), the various financial institutions signatory hereto ------- (the "Banks") and Bank of America, N.A. (formerly known as Bank of America ----- National Trust and Savings Association), a national banking association, individually and as agent for the Banks (the "Agent"). ----- W I T N E S S E T H: WHEREAS, the Company, the Banks and the Agent are party to that certain Five-Year Credit Agreement, dated as of September 25, 1998 (the "Credit ------ Agreement") and the Loan Documents referred to in the Credit Agreement; - --------- WHEREAS, the Company and the Banks have agreed to amend the Credit Agreement on the terms and conditions herein set forth. NOW, THEREFORE, the parties hereto hereby agree as follows: 1. Definitions. Capitalized terms used but not otherwise defined herein ----------- shall have the meanings assigned to such terms in the Credit Agreement (as amended hereby). 2. Certain Amendments to Credit Agreement. The Credit Agreement is hereby -------------------------------------- amended, effective on the date this Amendment becomes effective in accordance with Section 3 hereof, as follows: 2.1 Section 1.01 - Amended Definitions. ---------------------------------- (1) The definition of "Applicable Offshore Rate Margin" in Section 1.01 of the Credit Agreement is hereby amended by deleting such definition in its entirety and replacing it with the following: "Applicable Offshore Rate Margin" means 2.50% per annum. (2) The definition of "Termination Date" in Section 1.01 of the Credit Agreement is hereby amended by deleting such definition in its entirety and replacing it with the following: "Termination Date" means the earlier to occur of: (a) the Scheduled ---------------- Maturity Date; or (b) the date on which the Loans are accelerated in accordance with Section 8.02 of this Agreement. ------------ 2.2 Additional Definitions. The following definitions are added to ---------------------- Section 1.01 of the Credit Agreement in proper alphabetical order: "Appendix" means the Appendix attached as Schedule A to the First -------- Amendment, which is hereby incorporated by reference into the Agreement, as from time to time amended in accordance with the terms of the Agreement. "CIHC" means CIHC, Incorporated, a Delaware corporation. ---- "CIHC Guaranty" means a guaranty of CIHC in the form attached as ------------- Schedule 2 to the First Amendment. ----------- "First Amendment" means that certain First Amendment to the Agreement --------------- dated September 22, 2000. "Scheduled Maturity Date" means December 31, 2003; provided, however, ----------------------- the Scheduled Maturity Date shall mean March 31, 2005, if (1) the Company shall request such extension in a written notice to the Agent on or after December 31, 2002 but on or prior to December 5, 2003; (2) the Company shall have paid an extension fee equal to 3.5% of the then outstanding principal amount of the Loans extended; (3) the outstanding principal amount of the Loans shall have been repaid after the effective date of the First Amendment in an amount not less than $150,000,000 on or before September 30, 2002 and in an amount not less than $300,000,000 in the aggregate on or before September 30, 2003, it being acknowledged that if the Company shall prepay the Loans (whether optional, mandatory or otherwise), such payment, except for payments required (the "Required Payments") under Sections 5(c) of the Agreement, dated as of September 22, 2000, among the Company, certain financial institutions and Bank of America, N.A. as administrative agent relating to the 1997 Director & Officer Loan Credit Agreement and of the Agreement, dated as of September 22, 2000, among the Company, certain financial institutions and Bank of America, N.A. as administrative agent relating to the 1998 Director & Officer Loan Credit Agreement, shall be counted in the limitations as set forth herein; (d) the Interest Coverage Ratio as at the end of the Fiscal Quarter ending as of September 30, 2003 for the four Fiscal Quarters then ending is greater than or equal to 2.25 to 1.0 (based upon the Compliance Certificate for the Fiscal Quarter ended September 30, 2003 delivered pursuant to the terms of the Appendix); and (e) there shall be no Default or Event of Default existing at the time of the exercise of this extension option. 2.3 Additional Definitions B Appendix. The definitions set forth in --------------------------------- Section 1.01 of the Appendix are hereby incorporated by reference and added to Section 1.01 of the Credit Agreement in proper alphabetical order. To the extent Section 1.01 of the Credit Agreement contains defined terms that are also defined in Section 1.01 of the Appendix, each such definition in the Credit Agreement shall be deemed deleted and the Appendix definition substituted in lieu thereof, except that the terms "Taxes", "Required Banks", "Business Day" and "Loan Documents" as used in the Credit Agreement (but not the Appendix) shall retain the meanings set forth in Section 1.01 of the Credit Agreement. 2.4 Commitment. Notwithstanding any provisions of the Credit ---------- Agreement to the contrary, including without limitation Section 2.01 thereof, the Banks shall have no obligation to make, and shall not make, any additional Loans, including, without limitation, Swing Line Loans or Bid Loans. The aggregate Commitments shall equal the outstanding principal amount of the Loans and shall be reduced permanently by any payment of the principal of the Loans. 2.5 Interest. Sections 2.12(a) and (c) of the Credit Agreement are -------- ---------------- --- hereby amended to state in their entirety as follows: "(a) Each Committed Loan shall bear interest on the outstanding principal amount thereof from the applicable Borrowing Date at a rate per annum equal to the Offshore Rate plus the Applicable Offshore Rate Margin or the Base Rate plus 1.50%, as the case may be (and subject to the Company's right to convert to other Types of Loans under Section 2.04). ------------ (1) Notwithstanding Section 2.04 or subsection (a) of this Section ------------ -------------- ------- 2.12, upon the occurrence and during the continuance of an Event of Default ---- under Section 5.01(a) of the Appendix, the Company agrees to pay interest --------------- on such unpaid principal or other amount, from the date such amount becomes due until the date such amount is paid in full, and after as well as before any entry of judgment thereon to the extent permitted by law, payable on demand, at a fluctuating rate per annum equal to the Base Rate plus 3.00% (the "Default Rate"); provided, however, that the Company agrees to pay ------------ -------- ------- interest on the principal amount of all outstanding Obligations at the Default Rate on any date on which an Event of Default continues under Section 5.01(c) of the Appendix with respect to the Company's failure to --------------- perform or observe any term, covenant or agreement contained in Section ------- 4.13, 4.14, 4.15, 4.16, or 4.17 of the Appendix as well as under Section ---- ---- ---- ---- ---- ------- 5.01(a) of the Appendix" ------- 2.6 Fees. Section 2.13(b) (Facility Fee) and 2.13(c) (Utilization ---- -------------- ------- Fees) of the Credit Agreement are hereby deleted in their entirety. 2.7 Mandatory Prepayments. Article II of the Credit Agreement is --------------------- hereby amended by the addition of the following Section 2.18 at the end thereof: "2.18 Mandatory Prepayments. The Company agrees to perform all its --------------------- obligations under Article II of the Appendix, which is hereby incorporated by reference. The Company agrees to make the Required Payments, as defined in the definition of the "Scheduled Maturity Date"." 2.8 Affirmative Covenants. Article VI of the Credit Agreement is --------------------- hereby amended and restated in its entirety to read as set forth in Article III of the Appendix. -3- 2.9 Negative Covenants. Article VII of the Credit Agreement is ------------------ hereby amended and restated in its entirety to read as set forth in Article IV of the Appendix. 2.10 Events of Default. Section 8.01 of the Credit Agreement is ----------------- hereby amended and restated in its entirety to read as set forth in Section 5.01 of the Appendix. 2.11 Renumbering. Any amendment of the Credit Agreement herein that ----------- incorporates Articles, Sections, Schedules or Exhibits from the Appendix shall be deemed to automatically renumber any Article, Section, Schedule or Exhibit references therein to correspond to those of the Credit Agreement as amended. 3. Conditions to Effectiveness of this Amendment. This Amendment shall --------------------------------------------- become effective upon the satisfaction of the following conditions: 3.1 Executed Amendment. Receipt by the Agent of duly executed ------------------ counterparts of this Amendment from the Company and the Banks. 3.2 Restructuring. The other Relevant Facilities shall have been ------------- amended in a form reasonably satisfactory to the Required Banks and the Reserve required under the Appendix shall have been established and funded to the extent required under the Appendix. 3.3 Resolutions; Incumbency - CHIC. Receipt by the Agent of the ------------------------------ following documents: (1) copies of the resolutions of the board of directors of the Company authorizing the transactions contemplated hereby, certified as of the date hereof by the Secretary or an Assistant Secretary of the Company; and (2) a certificate of the Secretary or an Assistant Secretary of the Company, dated as of the date hereof, certifying the names and true signatures of the officers of the Company authorized to execute, deliver and perform, as applicable, this Amendment, and all other documents to be delivered by the Company hereunder. 3.7 Organizational Documents; Good Standing. Receipt by the Agent of --------------------------------------- (i) a certificate of the Secretary or an Assistant Secretary of the Company, dated as of the date hereof, certifying as to the form of the articles of incorporation and bylaws of the Company and (ii) a good standing certificate of the Company from its state of incorporation. 3.8 CIHC Guaranty. Receipt by the Agent of the duly executed CIHC ------------- Guaranty. 3.6 Resolutions; Incumbency - CIHC. Receipt by the Agent of the ------------------------------ following documents: -4- (1) copies of the resolutions of the board of directors of CIHC authorizing the CIHC Guaranty, certified as of the date hereof by the Secretary or an Assistant Secretary of CIHC; and (2) a certificate of the Secretary or an Assistant Secretary of CIHC, dated as of the date hereof, certifying the names and true signatures of the officers of CIHC authorized to execute, deliver and perform, as applicable, the CIHC Guaranty, and all other documents to be delivered by CIHC hereunder. 3.7 Organizational Documents; Good Standing. Receipt by the Agent of --------------------------------------- (i) a certificate of the Secretary or an Assistant Secretary of CIHC, dated as of the date hereof, certifying as to the form of the articles of incorporation and bylaws of CIHC and (ii) a good standing certificate as to CIHC from its state of incorporation. 3.8 Opinion of Counsel. Receipt by the Agent of an opinion of counsel ------------------ to the Company and CIHC in form reasonably satisfactory to the Agent. 3.9 Prepayments. ----------- (1) The Company shall have complied with its obligations under Section 2.01(a) of the Appendix; and (2) On or before the effective date hereof, $50,000,000 shall have been pledged as cash collateral to support the Specified D&O Facilities. 3.10 Fee. Receipt by the Agent for the benefit of the Banks of an --- amendment fee in an amount equal to 1% of the outstanding principal amount of the Loans under the Credit Agreement on the effective date hereof after giving effect to the prepayments received on the effective date hereof. 3.11 Certificate. Receipt by the Agent of a certificate signed by a ----------- Responsible Officer, dated as of the date hereof, stating that: (1) no Default or Event of Default will exist after giving effect to this Amendment; and (2) since June 30, 2000, there has been no Material Adverse Effect (except for changes in or adverse effects upon, the business, properties, condition (financial or otherwise) of the Company and its Subsidiaries as disclosed in press releases, public filings or otherwise in writing to the Agent). 3.12 CFC. The Company shall have disclosed to the Banks in writing --- any contractual restrictions on the ability of Conseco Finance Company to distribute Available Net -5- Proceeds to the Company and the Banks shall be reasonably satisfied with such restrictions, including without limitation any such restrictions under the Lehman Agreement. 3.13 Miscellaneous. Receipt by the Agent of such other documents, ------------- certificates, instruments or opinions as may reasonably be requested by the Agent or the Banks. 4. Certain Representations and Warranties by the Company. In order to ----------------------------------------------------- induce the Banks and the Agent to enter into this Amendment, the Company represents and warrants to the Banks and the Agent that: 4.1 Authority. The Company has the right, power and capacity and has --------- been duly authorized and empowered by all requisite corporate and required shareholder action, if any, to enter into, execute, deliver and perform this Amendment. 4.2 Validity. This Amendment has been duly and validly executed and -------- delivered by the Company and constitutes its legal, valid and binding obligation, enforceable against the Company in accordance with its terms, except as enforcement thereof may be subject to the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors= rights generally and general principles of equity (regardless of whether such enforcement is sought in a proceeding in equity or at law or otherwise). 4.3 No Conflicts. The Company's execution, delivery and performance ------------ of this Amendment do not and will not violate (i) its certificate or articles of incorporation or by-laws, (ii) any law, rule, regulation, order, writ, judgment, decree or award applicable to the Company or (iii) any contractual obligation to which the Company is a party or to which the Company or any of its properties are subject, except to the extent that any violations as set forth in clauses (ii) or (iii) would not result in a Material Adverse Effect. 4.4 Approvals. No authorization or approval or other action by, and --------- no notice to or filing or registration with, any Governmental Authority or regulatory body (other than those which have been obtained and are in force and effect) is required in connection with the Company's execution, delivery and performance of this Amendment. 4.5 CIHC Authority. CIHC has the right, power and capacity and has -------------- been duly authorized and empowered by all requisite corporate and required shareholder action, if any, to enter into, execute, deliver and perform the CIHC Guaranty. 4.6 CIHC Guaranty Validity. The CIHC Guaranty has been duly and ---------------------- validly executed and delivered by CIHC and constitutes its legal, valid and binding obligation, enforceable against CIHC in accordance with its terms, except as enforcement thereof may be subject to the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors' rights generally and general principles of equity (regardless of whether such enforcement is sought in a proceeding in equity or at law or otherwise). -6- 4.7 No Conflicts - CIHC. CIHC=s execution, delivery and performance ------------------- of the CIHC Guaranty do not and will not violate (i) its certificate or articles of incorporation or by-laws, (ii) any law, rule, regulation, order, writ, judgment, decree of award applicable to CIHC or (iii) any contractual obligation to which CIHC is a party or to which CIHC or any of its properties are subject, except to the extent that any violations as set forth in clauses (ii) or (iii) would not result in a Material Adverse Effect. 4.8 Approvals - CIHC. No authorization or approval or other action ---------------- by, and no notice to or filing or registration with, any Governmental Authority or regulatory body (other than those which have been obtained and are in force and effect) is required in connection with CIHC's execution, delivery and performance of the CIHC Guaranty. 4.9 Incorporated Representations and Warranties. All representations ------------------------------------------- and warranties contained in the Loan Documents are true and correct in all material respects with the same effect as though such representations and warranties had been made on and as of the date hereof and the effective date hereof, except (i) as to any representations or warranties which expressly related to an earlier date, in which event, such representations and warranties are true in all material respects as of such date and (ii) except that (A) Schedule 5.05 (Litigation), Schedule 5.13 (Investment Companies), Schedule 5.14 (Subsidiaries), Schedule 7.02(c) (Liens), and Schedule 7.02(g) (Permitted Indentures)] of the Credit Agreement are hereby amended to read in their entirety as set forth in Schedule B to this Amendment, (B) the reference in Section 5.05 to the Credit Agreement to "September 1, 1998" shall be amended to be a reference to "September 1, 2000", (C) all references in Section 5.11 of the Credit Agreement to "December 31, 1997"shall be amended to be references to "December 31, 1999", (D) Section 5.07(c) of the Credit Agreement is hereby amended by the addition of the word "not" in the first line between the words "could" and "reasonably," (E) all references in Section 5.11 of the Credit Agreement to "June 30, 1998" shall be amended to be references to "June 30, 2000", and (F) Section 5.16 of the Credit Agreement shall be amended and restated in its entirety to read as follows: "5.16 Material Adverse Effect. Since June 30, 2000, there has been ----------------------- no Material Adverse Effect (except for changes in or adverse effects upon, the business, properties, condition (financial or otherwise) of the Company and its Subsidiaries as disclosed in press releases, public filings or otherwise in writing to the Agent on or before the effective date of the First Amendment)." 4.10 No Defaults. No Default or Event of Default exists after ----------- giving effect to this Amendment. 5. Miscellaneous. The parties hereto hereby further agree as follows: ------------- 5.1 Further Assurances. Each of the parties hereto hereby agrees to ------------------ do such further acts and things and to execute, deliver and acknowledge such additional agreements, powers -7- and instruments as any other party hereto may reasonably request which are required to carry into effect the purposes of this Amendment and the Credit Agreement, as amended hereby. 5.2 Payment of Costs and Expenses. The Company agrees to pay on demand all ----------------------------- expenses of the Agent (including the fees and out-of-pocket expenses of counsel to the Agent) in connection with the negotiation, preparation, execution and delivery of this Amendment. 5.3 Governing Law. THIS AMENDMENT SHALL BE DEEMED TO BE A CONTRACT MADE ------------- UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF ILLINOIS. 5.4 Counterparts. This Amendment may be executed in one or more ------------ counterparts, each of which, when executed and delivered, shall be deemed to be an original and all of which counterparts, taken together, shall constitute but one and the same document with the same force and effect as if the signatures of all of the parties were on a single counterpart, and it shall not be necessary in making proof of this Amendment to produce more than one such counterpart. 5.5 Headings. Headings used in this Amendment are for convenience of -------- reference only and shall not affect the construction of this Amendment. 5.6 Release of CIHC Guaranty. The CIHC Guaranty shall be terminated and ------------------------ CIHC shall be released from all of its obligations thereunder on the first date after the Near-Term Facilities Termination Date on which the Company has Investment Grade Ratings Status, so long as no Default or Event of Default shall have occurred and be continuing on such date. IN WITNESS WHEREOF, this Amendment has been duly executed and delivered as of the date first above written. CONSECO, INC. By: /s/ Thomas M. Hagerty -------------------------------------- Title: Acting Chief Financial Officer ----------------------------------- BANK OF AMERICA, N.A., as Agent By: ______________________________________ Title: ___________________________________ BANK OF AMERICA, N.A., as a Bank By: ______________________________________ Title: ___________________________________ S-1 [TO FIRST AMENDMENT TO CREDIT AGREEMENT] THE CHASE MANHATTAN BANK, as a Bank By: ______________________________________ Title: ___________________________________ S-2 [TO FIRST AMENDMENT TO CREDIT AGREEMENT] FIRST UNION NATIONAL BANK, as a Bank By: ______________________________________ Title: ___________________________________ S-3 [TO FIRST AMENDMENT TO CREDIT AGREEMENT] MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as a Bank By: ______________________________________ Title: ___________________________________ S-4 [TO FIRST AMENDMENT TO CREDIT AGREEMENT] THE BANK OF NEW YORK, as a Bank By: ______________________________________ Title: ___________________________________ S-5 [TO FIRST AMENDMENT TO CREDIT AGREEMENT] BANK ONE, NA (Main Office Chicago), as a Bank By: ______________________________________ Title: ____________________________________ S-6 [TO FIRST AMENDMENT TO CREDIT AGREEMENT] SUNTRUST BANK, CENTRAL FLORIDA, N.A., as a Bank By: ______________________________________ Title: ___________________________________ S-7 [TO FIRST AMENDMENT TO CREDIT AGREEMENT] U.S. BANK NATIONAL ASSOCIATION, as a Bank By: ______________________________________ Title: ___________________________________ S-8 [TO FIRST AMENDMENT TO CREDIT AGREEMENT] THE BANK OF TOKYO-MITSUBISHI, LTD., as a Bank By: ______________________________________ Title: ___________________________________ S-9 [TO FIRST AMENDMENT TO CREDIT AGREEMENT] CREDIT SUISSE FIRST BOSTON, as a Bank By: ______________________________________ Title: ___________________________________ By: ______________________________________ Title: ___________________________________ S-10 [TO FIRST AMENDMENT TO CREDIT AGREEMENT] DEUTSCHE BANK, AG, New York and/or Cayman Islands Branches, as a Bank By: __________________________________ Title: _______________________________ By: __________________________________ Title: _______________________________ [TO FIRST AMENDMENT TO CREDIT AGREEMENT] S-11 SOCIETE GENERALE (New York Branch), as a Bank By: ____________________________________ Title: _________________________________ [TO FIRST AMENDMENT TO CREDIT AGREEMENT] S-12 NATIONAL CITY BANK OF INDIANA, as a Bank By: __________________________________ Title: _______________________________ [TO FIRST AMENDMENT TO CREDIT AGREEMENT] S-13 FIRSTAR BANK, N.A. (f/k/a Star Bank, N.A.), as a Bank By: ______________________________________ Title: ____________________________________ [TO FIRST AMENDMENT TO CREDIT AGREEMENT] S-14 UBS AG, Stamford Branch, as a Bank By: __________________________________ Title: ________________________________ [TO FIRST AMENDMENT TO CREDIT AGREEMENT] S-15 COMERICA BANK, as a Bank By: __________________________________ Title: _______________________________ [TO FIRST AMENDMENT TO CREDIT AGREEMENT] S-16 KEYBANK NATIONAL ASSOCIATION, as a Bank By: __________________________________ Title: _______________________________ [TO FIRST AMENDMENT TO CREDIT AGREEMENT] S-17 NORDDEUTSCHE LANDESBANK GIROZENTRALE, New York Branch and/or Cayman Islands Branch, as a Bank By: ___________________________________ Title: ________________________________ [TO FIRST AMENDMENT TO CREDIT AGREEMENT] S-18 SYNDICATED LOAN FUNDING TRUST By: __________________________________ Title: _______________________________ [TO FIRST AMENDMENT TO CREDIT AGREEMENT] S-19 BANK OF MONTREAL, as a Bank By: __________________________________ Title: _______________________________ [TO FIRST AMENDMENT TO CREDIT AGREEMENT] S-20 FLEET NATIONAL BANK, as a Bank By: _________________________________ Title: ______________________________ [TO FIRST AMENDMENT TO CREDIT AGREEMENT] S-21 CIBC, INC., as a Bank By: _________________________________ Title: ______________________________ [TO FIRST AMENDMENT TO CREDIT AGREEMENT] S-22 MERRILL LYNCH CAPITAL CORPORATION, as a Bank By: __________________________________ Title: _______________________________ [TO FIRST AMENDMENT TO CREDIT AGREEMENT] S-23 WELLS FARGO BANK, N.A., as a Bank By: __________________________________ Title: _______________________________ [TO FIRST AMENDMENT TO CREDIT AGREEMENT] S-24 Schedule A - Appendix ================================================================================ APPENDIX CONSECO, INC. $3,028,576,848 CREDIT FACILITIES DATED AS OF SEPTEMBER 22, 2000 BANK OF AMERICA, N.A. AND THE CHASE MANHATTAN BANK, AS JOINT LEAD ARRANGERS AND JOINT BOOK MANAGERS ================================================================================ TABLE OF CONTENTS
Page ARTICLE IDEFINITIONS....................................................................................................1 ----------- 1.01 Certain Defined Terms..............................................................................1 --------------------- 1.02 Other Interpretive Provisions.....................................................................20 ----------------------------- 1.03 Accounting Principles.............................................................................21 --------------------- ARTICLE IIMANDATORY CASH APPLICATIONS..................................................................................21 --------------------------- 2.01 General Application of Available Net Proceeds.....................................................21 --------------------------------------------- 2.02 Application of Available Net Proceeds Allocated to Facilities.....................................22 ------------------------------------------------------------- 2.03 Exempt Covenant/Waterfall Amounts.................................................................22 --------------------------------- ARTICLE IIIAFFIRMATIVE COVENANTS.......................................................................................23 --------------------- 3.01 Financial Statements..............................................................................23 -------------------- 3.02 Certificates; Other Information...................................................................24 ------------------------------- 3.03 Notices...........................................................................................24 ------- 3.04 Preservation of Corporate Existence, Etc. ........................................................26 ----------------------------------------- 3.05 Insurance.........................................................................................26 --------- 3.06 Payment of Obligations............................................................................26 ---------------------- 3.07 Compliance with Laws..............................................................................26 -------------------- 3.08 Compliance with ERISA.............................................................................26 --------------------- 3.09 Inspection of Property and Books and Records; Expense Reimbursement...............................26 ------------------------------------------------------------------- 3.10 Tritel Disposition................................................................................27 ------------------ 3.11 Conversion of FELINE PRIDES.......................................................................27 --------------------------- ARTICLE IVNEGATIVE COVENANTS...........................................................................................27 ------------------ 4.01 Limitation on Indebtedness........................................................................27 -------------------------- 4.02 Liens.............................................................................................28 ----- 4.03 Disposition of Assets.............................................................................30 --------------------- 4.04 Other Agreements..................................................................................31 ---------------- 4.05 Transactions with Affiliates......................................................................31 ---------------------------- 4.06 Change in Business................................................................................31 ------------------ 4.07 Fundamental Changes...............................................................................31 ------------------- 4.08 Restricted Payments...............................................................................32 ------------------- 4.09 Investments.......................................................................................32 ----------- 4.10 Optional Payments; Modifications of Certain Agreements; Synthetic Purchase Agreements.............33 ------------------------------------------------------------------------------------- 4.11 Negative Pledge on Tritel and Argosy Riverboat....................................................33 ---------------------------------------------- 4.12 Reserve Account...................................................................................34 --------------- 4.13 Debt to Capitalization Ratio......................................................................34 ---------------------------- 4.14 Interest Coverage Ratio...........................................................................34 ----------------------- 4.15 Conseco Adjusted Earnings.........................................................................35 ------------------------- 4.16 Conseco Finance Tangible Net Worth................................................................35 ---------------------------------- 4.17 Risk-Based Capital Ratio..........................................................................35 ------------------------ ARTICLE VEVENTS OF DEFAULT.............................................................................................36 ----------------- 5.01 Events of Default.................................................................................36 -----------------
SCHEDULES Schedule 1.01A Certain Material Insurance Subsidiaries Schedule 1.01B Specified Cash Events Schedule 1.01C Changes in Future Loss Reserves Schedule 1.01D Persons Not Subsidiaries Schedule 2.02 Exposure on Effective Date Schedule 4.01(c) Indebtedness Schedule 4.02(c) Existing Liens Schedule 4.02(g) Permitted Indentures Schedule 4.03(m) Dispositions of Investments Schedule 4.06 Business Activities Schedule 4.09(b) Proposed Investments EXHIBITS Exhibit A Form of Compliance Certificate Exhibit B Form of Reserve Account Agreement ARTICLE I DEFINITIONS I.1 Certain Defined Terms. The following terms, when used in this Appendix, have the following meanings: "Affiliate" means, as to any Person, any other Person which, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person. A Person shall be deemed to control another Person if the controlling Person possesses, directly or indirectly, the power (a) to vote 10% or more of the securities (on a fully diluted basis) having ordinary voting power for the election of directors or managing general partners, or (b) to direct or cause the direction of the management and policies of the other Person, whether through the ownership of voting securities, membership interests, by contract, or otherwise. "Agent" means any "Relevant Agent" under and as defined in the documents governing any Facility. "A.M. Best" means A.M. Best Company, together with any Person succeeding thereto by merger, consolidation or acquisition of all or substantially all of its assets, including substantially all of its business of rating insurance companies. "A.M. Best A- Status" means the circumstance that each Material Insurance Subsidiary listed on Schedule 1.01A has a claims paying rating of at least A- from A.M. Best. "Annual Statement" means the annual statutory financial statement of any Insurance Subsidiary required to be filed with the insurance commissioner (or similar authority) of its jurisdiction of incorporation, which statement shall be in the form required by such Insurance Subsidiary's jurisdiction of incorporation or, if no specific form is so required, in the form of financial statements permitted by such insurance commissioner (or such similar authority) to be used for filing annual statutory financial statements and shall contain the type of information permitted or required by such insurance commissioner (or such similar authority) to be disclosed therein, together with all exhibits or schedules filed therewith. "Appendix" means this Appendix as amended, restated, supplemented or otherwise modified from time to time. "Asset Backed Security" means a security of a Conseco Finance Entity that is collateralized by loans, leases, receivables, installment contracts or interests in or components of Interest Only Securities. "Asset Sale" means any Disposition of property or series of related Dispositions of property, excluding any such Disposition permitted by clauses (a) through (m) and clause (o) of Section 4.03 (but in any event including (whether or not permitted by any of the foregoing clauses) any direct or indirect (a) Disposition of all or any part of the Capital Stock issued by Conseco Finance, Tritel, Inc., Conseco Entertainment, Inc. or CNC Entertainment LLC, (b) Disposition of all or any part of the assets of Tritel, Inc. or CNC Entertainment LLC and (c) receipt of cash proceeds in respect of any Specified Cash Event (each, a "Disposition Transaction") that yields gross proceeds to Conseco and its Subsidiaries in excess of $10,000,000, provided that, once the aggregate gross proceeds from Disposition Transactions received during any Proceeds Test Period yielding gross proceeds between $2,000,000 and $10,000,000 exceeds $20,000,000, the first reference to $10,000,000 in this definition shall automatically be deemed to be changed to $2,000,000 for the remainder of such Proceeds Test Period. As used in this definition, "Proceeds Test Period" means (i) the period from the Effective Date through the Near-Term Facilities Termination Date and (ii) each subsequent one-year period commencing on the Near-Term Facilities Termination Date or an anniversary thereof. "Available Basket Amount" means, at any time, an amount equal to (a) ten percent (10%) of Total Shareholders' Equity at such time minus (b) the aggregate then outstanding amount of Indebtedness secured by Liens, without duplication, pursuant to Section 4.02(i)(i), (ii) (of Conseco or any "Significant Subsidiary" (as defined in the Public Debt)), (iii) or (iv). "Available Net Proceeds" means any Net Proceeds received by Conseco or any of its Subsidiaries in connection with any Prepayment Event other than Exempt Covenant/Waterfall Amounts and Exempt Waterfall Amounts applied in the manner described in clause (b) of the definition of "Exempt Waterfall Amounts". "B-Share Financings" means the financing of fees or commissions related to B-Shares. "B-Shares" means those shares of ownership representing a mutual interest in a pool of assets on which l2b-1 fees or contingent deferred sales commissions (CDSC), as defined under the Investment Company Act of 1940, are applicable. "Bank" means each "Relevant Bank" under and as defined in the documents governing any Facility. "Bankruptcy Code" means the Federal Bankruptcy Reform Act of 1978 (11 U.S.C.ss.101, et seq.). "Business Day" means any day other than a Saturday, Sunday or other day on which commercial banks in Chicago or New York City are authorized or required by law to close. "Calculation Period" means, with respect to any ratio or calculation, the period for which such ratio or calculation is being calculated. "Capital and Surplus" means, as to any Insurance Subsidiary, as of any date, the total amount shown on line 38, page 3, column I of the Annual Statement of such Insurance Subsidiary, or an amount determined in a consistent manner for any date other than one as of which an Annual Statement is prepared. "Capitalized Lease Liabilities" means, with respect to any Person, all monetary obligations of such Person under any leasing or similar arrangement which, in accordance with GAAP, would be classified as a capitalized lease, and, for purposes of this Appendix, the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP, and the stated maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be terminated by the lessee without payment of a penalty. 2 "Capital Stock" means any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person (other than a corporation) and any and all warrants, rights or options to purchase any of the foregoing. "Cash Collateral Agreement" means any cash collateral agreement provided to secure obligations of Conseco or any of its Subsidiaries pursuant to any D&O Facility. "Cash Equivalents" means (a) marketable direct obligations issued by, or unconditionally guaranteed by, the United States government or issued by any agency thereof and backed by the full faith and credit of the United States, in each case maturing within one year from the date of acquisition; (b) certificates of deposit, time deposits, eurodollar time deposits or overnight bank deposits having maturities of six months or less from the date of acquisition issued by any commercial bank organized under the laws of the United States or any state thereof having combined capital and surplus of not less than $500,000,000 and a short term deposit rating of at least A-1 by S&P and P-1 by Moody's, or carrying an equivalent rating by a nationally recognized rating agency, if both of the two named rating agencies cease publishing ratings of commercial paper issuers generally; (c) commercial paper of an issuer rated at least A-1 by S&P and P-1 by Moody's, or carrying an equivalent rating by a nationally recognized rating agency, if both of the two named rating agencies cease publishing ratings of commercial paper issuers generally, and maturing within six months from the date of acquisition; (d) repurchase obligations of any Relevant Bank or of any commercial bank satisfying the requirements of clause (b) of this definition, having a term of not more than 30 days, with respect to securities issued or fully guaranteed or insured by the United States government; (e) securities with maturities of one year or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States, by any political subdivision or taxing authority of any such state, commonwealth or territory or by any foreign government, the securities of which state, commonwealth, territory, political subdivision, taxing authority or foreign government (as the case may be) are rated at least A by S&P and A2 by Moody's; (f) securities with maturities of six months or less from the date of acquisition backed by standby letters of credit issued by any Relevant Bank or any commercial bank satisfying the requirements of clause (b) of this definition; or (g) shares of money market mutual or similar funds which invest exclusively in assets satisfying the requirements of clauses (a) through (f) of this definition. "Cash on Hand Target" has the meaning set forth in Section 2.01(b). "CBOs" means notes or other instruments (other than CMOs) secured by collateral consisting primarily of debt securities and/or other types of debt obligations, including loans. "CERCLA" means the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended. "CERCLIS" means the Comprehensive Environmental Response, Compensation and Liability Information System List. 3 "Change of Control" means (a) any acquisition by any Person, or two or more Persons acting in concert, of beneficial ownership (within the meaning of Rule l3d-3 of the Securities and Exchange Commission under the Exchange Act) of 30% or more of the outstanding shares of voting stock of Conseco (other than an acquisition by any Person or Persons who are officers or directors of Conseco on the Effective Date or any Affiliate thereof controlled by the relevant officer or director); or (b) during any period of 25 consecutive calendar months, commencing on the Effective Date, the ceasing of those individuals who were not borrowers under any of the D&O Facilities (the "Continuing Directors") who (i) were directors of Conseco on the first day of each such period or (ii) subsequently became directors of Conseco and whose actual election or initial nomination for election subsequent to that date was approved by a majority of the Continuing Directors then on the board of directors of Conseco, to constitute a majority of the board of directors of Conseco; or (c) Gary Wendt or such other Person as shall be reasonably satisfactory to the Required Banks shall cease to be the Chief Executive Officer of Conseco (other than by reason of death or disability) at any time prior to the Near-Term Facilities Termination Date. "CIHC" means CIHC, Incorporated, a Delaware corporation, and a direct Wholly-Owned Subsidiary of Conseco. "CIHC Guaranty" means any "Relevant CIHC Guaranty" under and as defined in the documents governing any Facility. "CMOs" means notes or other instruments secured by collateral consisting primarily of mortgages, mortgage-backed securities and/or other types of mortgage-related obligations. "Code" means the Internal Revenue Code of 1986, as amended, and regulations promulgated thereunder. "Collateral Agreement" means the Collateral Agreement, dated as of May 30, 2000, made by Conseco and CIHC in favor of the Collateral Agent named therein. "Compliance Certificate" means a certificate substantially in the form of Exhibit A. "Conseco" means Conseco, Inc., an Indiana corporation. "Conseco Adjusted Earnings" means, for any Calculation Period, the consolidated Net Income of Conseco for such period plus, without duplication and to the extent reflected as a charge in the statement of such Net Income for such period, the sum of (a) income tax expense, (b) interest expense, amortization or writeoff of debt discount and debt issuance costs and commissions, discounts and other fees and charges associated with Indebtedness, (c) depreciation and amortization expense, (d) amortization of intangibles (including, but not limited to, goodwill, deferred acquisition costs, the present value of future profits and changes in future loss reserves described on Schedule 1.01C) and organization costs, (e) net changes in Interest Only Securities, (f) any extraordinary, unusual or non-recurring non-cash expenses or losses (including, whether or not otherwise includable as a separate item in the statement of such Net Income for such period, non-cash losses on sales of assets outside of the ordinary course of business), (g) any other non-cash charges (provided that the after tax amounts described in clauses (f) and (g) shall not exceed in the aggregate$500,000,000 for any Calculation Period ending on or before September 30, 2001, and $50,000,000 for any Calculation Period ending thereafter), and (h) realized or unrealized losses on Investments of Insurance Subsidiaries, and minus, to the extent included in the statement of such Net Income for such period, the sum of (a) any extraordinary, unusual or non-recurring income or gains (including, whether or not otherwise includable as a separate item in the statement of such Net Income for such period, gains on the sales of assets outside of the ordinary course of business) and (b) realized or unrealized gains on Investments of Insurance Subsidiaries, all as determined on a consolidated basis. 4 "Conseco Available Cash Flow" means, for any Calculation Period, the sum, without duplication, of (a) dividends paid in cash to Conseco by any Subsidiary, plus (b) interest paid in cash to Conseco by any Subsidiary pursuant to any intercompany Indebtedness owing by such Subsidiary to Conseco, plus (c) interest or principal paid in cash to Conseco with respect to the Surplus Debentures, plus (d) amounts paid in cash to Conseco under the Tax Sharing Agreement, plus (e) management and other similar fees received by Conseco under servicing agreements or otherwise from any Subsidiary, plus (f) amounts paid in cash to Conseco pursuant to a loan made to it by any Subsidiary, plus (g) amounts paid in cash to Conseco by Conseco Finance pursuant to the redemption by Conseco Finance of preferred equity issued by Conseco Finance and owned by Conseco plus (h) Conseco's Investment Income received in cash, plus (i) in respect of any Fiscal Quarter ended on or prior to December 31, 2000, amounts paid by Conseco in closing out swaps in an amount not to exceed $15,000,000 less the value of the collateral attributable to the relevant swaps, minus (j) cash operating expenses of Conseco, minus (k) capital expenditures of Conseco, minus (l) any amounts paid by Conseco in repayment of any loan referred to in clause (f) above. Amounts received by Conseco or any of its Subsidiaries in respect of any Specified Cash Event shall be excluded from this calculation. "Conseco Finance" means Conseco Finance Corp., a Delaware corporation. "Conseco Finance Entities" means, collectively, Conseco Finance and its consolidated Subsidiaries and "Conseco Finance Entity" means any one of them individually. "Conseco Finance Tangible Net Worth" means, at any date, all amounts that would, in conformity with GAAP, be included on a consolidated balance sheet of Conseco Finance and its Subsidiaries under stockholders' equity at such date, as adjusted by the following items to the extent increasing or reducing, as the case may be, such amounts: plus (a) unrealized losses (or, if applicable, minus unrealized gains), plus (b) any non-cash charges specified in clause (f) or (g) of the definition of Conseco Adjusted Earnings (subject to the limits applicable thereto) minus (c) goodwill, minus (d) Interest Only Securities, minus (e) servicing rights plus (f) the amount of any cash dividends paid by Conseco Finance to Conseco (directly or indirectly). If all or any portion of any intercompany Indebtedness owing to Conseco or any of its Subsidiaries by Conseco Finance or any of its Subsidiaries is converted into equity, no positive impact of such conversion shall be included in determining Conseco Finance Tangible Net Worth. "Conseco Guaranty" means any "Relevant Conseco Guaranty" under and as defined in the documents governing any Facility. "Conseco Series F Preferred Stock" means $500,000,000 stated value of Conseco's Series F Common Linked Convertible Preferred Stock, without par value and any replacement thereof, except to the extent held by any Person (other than Thomas H. Lee or any Person, fund or individual affiliated therewith) that acquires such stock pursuant to a bona fide arm's length transaction. "Conseco's Cash On Hand" means, on any date of determination, the aggregate amount of cash and Cash Equivalents then held by (a) Conseco or (b) Conseco Finance or any of its Subsidiaries in connection with Investments made pursuant to Section 4.09(a)(i)(y) or (z), excluding amounts in the Reserve and amounts required on such date to be distributed pursuant to Section 2.01(b). 5 "Contingent Obligation" means, without duplication, any agreement, undertaking or arrangement by which any Person guarantees, endorses or otherwise becomes or is contingently liable upon (by direct or indirect agreement, contingent or otherwise, to provide funds for payment, to supply funds to, or otherwise to invest in, a debtor, or otherwise to assure a creditor against loss) the debt, obligation or other liability of any other Person (other than by endorsements of instruments in the course of collection), or guarantees the payment of dividends or other distributions upon the shares of any other Person; provided, that (a) the obligations of any Person under Reinsurance Agreements or in connection with Investments of Insurance Subsidiaries, (b) the obligations of Conseco in connection with its guaranty of the Trust Preferred Securities, the Unit Securities and the FELINE PRIDES and (c) the obligations of any Person in connection with its guaranty of Asset Backed Securities shall not be deemed Contingent Obligations of any such Person or Conseco, as applicable. The amount of any Person's liability with respect to any Contingent Obligation shall (subject to any limitation set forth therein) be deemed to be the outstanding principal amount (or maximum outstanding principal amount, if larger) of the debt, obligation or other liability outstanding thereunder or, if not stated or if indeterminable, the maximum reasonably anticipated liability in respect thereof at the time of determination. "Contractual Obligation" means, as to any Person, any provision of any security issued by such Person or of any agreement, undertaking, contract, indenture, mortgage, deed of trust or other instrument, document or agreement to which such Person is a party or by which it or any of its property is bound. "D&O Facilities" means the collective reference to the $144 Million D&O Facility, the $181 Million D&O Facility and the $245 Million D&O Facility. "Debt to Total Capitalization Ratio" means, as of any date of determination, without duplication, the ratio of (a) the sum of (i) the principal amount of and accrued but unpaid interest on all Indebtedness for borrowed money of Conseco (including, without limitation, (x) any Indebtedness evidenced by bonds, debentures, notes or other similar instruments and (y) any Indebtedness resulting from any conversion of preferred stock) for which Conseco is directly liable on such date and which is neither a Contingent Obligation (except that Contingent Obligations of Conseco in respect of Indebtedness of the type described in clause (a) or (b) of the definition thereof (other than in respect of the D&O Facilities) shall nevertheless be included in such calculation) nor Indebtedness arising out of a Permitted Transaction and (ii) dividends on Trust Preferred Securities that are accrued but unpaid; to (b) Total Capitalization on such date; provided, however, that solely for the purposes of calculating the Debt to Total Capitalization Ratio, the term "Indebtedness" shall exclude preferred securities issued by business trusts formed by Conseco, guaranteed by Conseco and related to guarantees and intercompany notes. "Default" means any event or circumstance which, with the giving of notice, the lapse of time, or both, would (if not cured or otherwise remedied during such time) constitute an Event of Default. "Department" means, with respect to any Insurance Subsidiary, the Governmental Authority of such Insurance Subsidiary's state of domicile with which such Insurance Subsidiary is required to file its Annual Statement. "Disposition" means the sale, assignment, leasing, transfer, contribution, conveyance, issuance or other disposal of or granting of options, warrants or other rights with respect to any of a Person's assets (including any transaction pursuant to a Reinsurance Agreement and, in the case of any Subsidiary, the issuance or sale of its Capital Stock). The terms "Dispose" and "Disposed of" shall have correlative meanings. "Disposition Transaction" has the meaning specified in the definition of "Asset Sale". 6 "Dollars", "dollars" and "$" each mean lawful money of the United States. "Effective Date" September 22, 2000. "Environmental Laws" means all federal, state or local laws, statutes, common law duties, rules, regulations, ordinances and codes, together with all administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, Governmental Authorities, in each case relating to environmental, health, safety and land use matters. "ERISA" means the Employee Retirement Income Security Act of 1974 and regulations promulgated thereunder. "ERISA Affiliate" means any trade or business (whether or not incorporated) under common control with Conseco within the meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code). "ERISA Event" means (a) a Reportable Event with respect to a Pension Plan; (b) a withdrawal by Conseco or any ERISA Affiliate from a Pension 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) or a cessation of operations which is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by Conseco or any ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to terminate, the treatment of a Plan amendment as a termination under Section 4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (e) an event or condition which could reasonably be expected to constitute grounds under Section 4042 of ERISA for the termination of or the appointment of a trustee to administer, any Pension Plan or Multiemployer Plan; or (e) the imposition of any liability under Title IV of ERISA, other than PBGC premiums due but not delinquent under Section 4007 of ERISA, upon Conseco or any ERISA Affiliate. "Event of Default" means any of the events or circumstances specified in Section 5.01. "Exchange Act" means the Securities Exchange Act of 1934 and the regulations promulgated thereunder. "Exempt Covenant/Waterfall Amounts" means up to $500,000,000 of Net Proceeds from the issuance of Specified Junior Securities received after the Near-Term Facilities Termination Date. "Exempt Waterfall Amounts" means Net Proceeds of Specified Junior Securities (not designated as "Exempt Covenant/Waterfall Amounts") which are applied either (a) (i) prior to the Near-Term Facilities Termination Date, to the Near-Term Facilities (in the manner contemplated by Section 2.02(b)) and (ii) thereafter, to the $1.5 Billion Facility and the Specified D&O Facilities (in the manner contemplated by Section 2.02(c)) or (b) to make investments in Conseco's Subsidiaries to support their operations. 7 "Exposure" means, with respect to each Bank, (a) in the case of the $155 Million Facility, the $766 Million Facility and the $1.5 Billion Facility, any outstanding "Loans" made by such Bank thereunder and (b) in the case of the D&O Facilities, any outstanding "Loans" made by such Bank thereunder minus such Bank's pro rata share of any cash collateral provided pursuant to the applicable Cash Collateral Agreement. "Facilities" means the collective reference to the Near-Term Facilities, the D&O Facilities and the $1.5 Billion Facility. "FELINE PRIDES" means the units consisting of (a) 6.75% Trust Originated Preferred Securities issued by Conseco Financing Trust IV (the "PRIDES Preferred Securities") and (b) a purchase contract to purchase shares of common stock from Conseco (the "PRIDES Purchase Contracts"). "Fiscal Quarter" means any fiscal quarter of a Fiscal Year. "Fiscal Year" means any period of twelve consecutive calendar months ending on December 31. "Fixed Interest Charges" means, for any Calculation Period, (without duplication) (a) interest paid or, without duplication, accrued but unpaid on the Exposure under any Facility (other than the D&O Facilities) with respect to such Calculation Period, plus (b) interest paid or, without duplication, accrued but unpaid on any Indebtedness of Conseco set forth in clause (a), (b) or (d) of the definition thereof during such Calculation Period, minus (c) to the extent included in clause (b) above, interest paid or, without duplication, accrued but unpaid on any Indebtedness which has been eliminated from the balance sheet liabilities of Conseco on a consolidated basis in accordance with GAAP, minus (d) to the extent included in clause (b) above, interest paid or, without duplication, accrued but unpaid on any Indebtedness of any Conseco Finance Entity or any Insurance Subsidiary. Interest paid, or accrued and unpaid, in respect of Indebtedness related to the Trust Preferred Securities or the FELINE PRIDES shall be excluded from the above calculation. "FRB" means the Board of Governors of the Federal Reserve System, and any Governmental Authority succeeding to any of its principal functions. "FY 2000 Adjustments" has the meaning specified in the definition of "Total Capitalization". "GAAP" means generally accepted accounting principles set forth from time to time in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board (or agencies with similar functions of comparable stature and authority within the U.S. accounting profession), which are applicable to the circumstances as of the date of determination. "Governmental Authority" means any nation or government, any state or other political subdivision thereof, any central bank (or similar monetary or regulatory authority) thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, and any corporation or other entity owned or controlled, through stock or capital ownership or otherwise, by any of the foregoing, including any board of insurance, insurance department or insurance commissioner. "Income Taxes" means any Taxes based upon net income. 8 "Indebtedness" means, with respect to any Person, without duplication: (a) all obligations of such Person for borrowed money or in respect of loans or advances; (b) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments; (c) all obligations in respect of letters of credit, whether or not drawn, and bankers' acceptances issued for the account or upon the application or request of such Person; (d) all Capitalized Lease Liabilities of such Person; (e) all obligations of such Person in respect of Swap Contracts; (f) all obligations of such Person to pay the deferred purchase price of property or services which are included as liabilities in accordance with GAAP (other than trade payables entered into in the ordinary course of business on ordinary terms), and all obligations secured by a Lien on property owned or being purchased by such Person (including obligations arising under conditional sales or other title retention agreements); (g) any obligations of a partnership of the kind referred to in clauses (a) through (f) above or clause (h) below in which such Person is a general partner, and (h) all Contingent Obligations of such Person in connection with indebtedness or obligations of others of the kinds referred to in clauses (a) through (g) above; provided, however, that, except for the purpose of the proviso of Section 4.01(d), the term "Indebtedness" shall exclude (i) replevin bonds, surety bonds and other similar bonds (including, without limitation, bonds issued in connection with litigation and repossession activities) issued by an Insurance Subsidiary or a Conseco Finance Entity in the ordinary course of business and (ii) the obligations of any Person under letters of credit (whether or not drawn), bankers' acceptances and swap contracts issued or entered into in connection with any Asset Backed Security. "Independent Auditor" has the meaning specified in Section 3.01(a). "Insignificant Subsidiary" means any Subsidiary of Conseco that is not a Significant Subsidiary. "Insolvency Proceeding" means, with respect to any Person, (a) any case, action or proceeding with respect to such Person before any court or other Governmental Authority relating to bankruptcy, reorganization, insolvency, liquidation, conservation, rehabilitation, receivership, dissolution, winding-up or relief of debtors, or (b) any general assignment for the benefit of creditors, composition, marshalling of assets for creditors, or other, similar arrangement in respect of its creditors generally or any substantial portion of its creditors, in any case, undertaken under U.S. Federal, state or foreign law, including the Bankruptcy Code. "Insurance Subsidiary" means any Subsidiary which is required to be licensed as an insurer or reinsurer. "Interest Coverage Ratio" means, for any Calculation Period, the ratio of (a) Conseco Available Cash Flow for such Calculation Period to (b) Fixed Interest Charges for such Calculation Period. "Interest Only Security" means any interest, including servicing fees, retained by a Conseco Finance Entity relating to the sale or securitization of loans, leases, receivables or installment contracts, which constitutes either an interest only security or a servicing right asset in accordance with GAAP. "Investment" means any advance, loan, extension of credit (by way of guaranty or otherwise) or capital contribution to, or purchase of any Capital Stock, bonds, notes, debentures or other debt securities of, or any assets constituting a business unit of, or any other investment in, any Person. 9 "Investment Grade Ratings Status" means the circumstance that Conseco has a senior unsecured non-credit enhanced long-term debt rating of at least BBB- from S&P and at least Baa3 from Moody's. "Investment Income" means the amount of earnings of Conseco on Investments, net of expenses actually incurred in connection with such Investments and taking into account realized gains and losses on such Investments. "IRS" means the Internal Revenue Service or any Governmental Authority succeeding to any of its principal functions under the Code. "Lehman" means Lehman Brothers Holdings Inc., and any successors. "Lehman Agreement" means, collectively, (a) the Amended and Restated Agreement, dated as of September 22, 2000, by and among Conseco Finance Corp., Conseco, CIHC, Green Tree Residual Finance Corp. I, Green Tree Finance Corp. - Five and Lehman, (b) Amendment to the Warehouse Debt Facility, dated as of September 22, 2000, by and among Lehman Commercial Paper Inc. and Green Tree Finance Corp. - Five and acknowledged and consented to by Conseco Finance Corp. and CIHC, (c) Amendment to the First Residual Facility (Asset Assignment Agreement), dated as of September 22, 2000, by and among Lehman ALI Inc. and Green Tree Residual Finance Corp. I and (d) Amendment to the Second Residual Facility (Master Repurchase Agreement), dated as of September 22, 2000, by and among Lehman Brothers Inc. and Green Tree Residual Finance Corp. I, in each case, as amended, supplemented or otherwise modified from time to time, and any related document or agreement (including the agreements amended or modified by the agreements specified above). "License" means any license, certificate of authority, permit or other authorization which is required to be obtained from any Governmental Authority in connection with the operation, ownership or transaction of insurance business. "Lien" means any security interest, mortgage, deed of trust, pledge, hypothecation, assignment, charge or deposit arrangement, encumbrance, lien (statutory or other) or preferential arrangement of any kind or nature whatsoever in respect of any property (including those created by, arising under or evidenced by any conditional sale or other title retention agreement, the interest of a lessor under a capital lease or any financing lease having substantially the same economic effect as any of the foregoing) and any contingent or other agreement to provide any of the foregoing, but not including the interest of a lessor under an operating lease or the contingent obligation to equally and ratably secure the Public Debt. "Litigation" means any litigation (including, without limitation, any governmental proceeding or arbitration proceeding), tax audit or investigative proceeding, claim, lawsuit, and/or investigation pending or threatened against or involving Conseco or any of its Subsidiaries or any of its or their businesses or operations. "Loan Documents" means the "Loan Documents" under and as defined in the documents governing the Relevant Facility, including, in any event, this Appendix and the Relevant CIHC Guaranty. 10 "Longer-Term Public Debt" means Conseco's 8.5% Notes due October 15, 2002, 6.4% Notes due February 10, 2003, 8-1/8% Senior Notes due February 15, 2003, 10.5% Senior Notes due December 15, 2004, 8.75% Notes due February 9, 2004, 6.8% Notes due June 15, 2005 and 9% Notes due October 15, 2006. "Material Adverse Effect" means (a) a material adverse change in, or a material adverse effect upon, the business, properties, condition (financial or otherwise) of Conseco or Conseco and its Subsidiaries taken as a whole; (b) a material impairment of the ability of Conseco to perform under any Loan Document; or (c) a material adverse effect upon the legality, validity, binding effect or enforceability against Conseco of any Loan Document. "Material Insurance Subsidiary" means an Insurance Subsidiary having Capital and Surplus of $50,000,000 or more. "Moody's" means Moody's Investors Service, Inc., together with any Person succeeding thereto by merger, consolidation or acquisition of all or substantially all of its assets, including substantially all of its business of rating securities. "Multiemployer Plan" means a "multiemployer plan", within the meaning of Section 4001(a)(3) of ERISA, to which Conseco or any ERISA Affiliate makes, is making, or is obligated to make contributions or, during the preceding three calendar years, has made, or been obligated to make, contributions. "NAIC" means the National Association of Insurance Commissioners or any successor thereto, or in absence of the National Association of Insurance Commissioners or such successor, any other association, agency or other organization performing advisory, coordination or other like functions among insurance departments, insurance commissioners and similar Governmental Authorities of the various states of the United States toward the promotion of uniformity in the practices of such Governmental Authorities. "Near-Term Facilities" means the collective reference to the $155 Million Facility and the $766 Million Facility. "Near-Term Facilities Termination Date" means the date on which all "Obligations" under and as defined in the documents governing the $155 Million Facility and the $766 Million Facility have, in both cases, been paid in full in cash. "Net Income" means, for any Person for any Calculation Period, the net income (or loss) of such Person for such period as determined in accordance with GAAP. 11 "Net Proceeds" means (a) with respect to any Disposition by any Person, the aggregate amount of cash and Cash Equivalents received by such Person in respect of such Disposition (including any such amounts received by way of deferred payment of principal pursuant to a note or installment receivable or purchase price adjustment receivable or otherwise, but only as and when received) minus the sum of (i) costs and expenses (including legal fees, notarial fees, accountants fees, investment banking fees, survey costs, title insurance premiums, amounts applied to the repayment of Indebtedness (other than under a Facility) secured by a Lien expressly permitted hereunder on any asset that is the subject of such Disposition, costs of discontinuance (including, without limitation, any reasonable severance payments), Taxes other than Income Taxes (after taking into account any available tax credits or deductions and any tax sharing arrangements) and other customary fees and expenses) incurred in connection with such Disposition and required to be paid in cash or deducted from the proceeds of such Disposition, (ii) the estimated Income Tax actually required to be paid in cash by such Person in connection with such Disposition (after taking into account any available tax credits or deductions and any tax sharing arrangements), (iii) purchase price adjustments reasonably expected to be payable in connection therewith (not to exceed 10% of the purchase price for the relevant Disposition) so long as, if any such amount ceases to be payable, it shall then become "Net Proceeds", (iv) for an Insurance Subsidiary, any amounts which the Department will not permit such Insurance Subsidiary to pay out as a result of such Disposition and (v) for a Conseco Finance Entity, any amounts which the Lehman Agreement will not permit such Conseco Finance Entity to distribute to CIHC or Conseco as a result of such Disposition, so long as, if any such amount becomes so distributable under the Lehman Agreement, it shall then become "Net Proceeds", and (b) with respect to any issuance of Capital Stock of Conseco, any incurrence of Indebtedness by Conseco or any of its Subsidiaries, the occurrence of any Specified Cash Event or the receipt of any amount pursuant to any Permitted Tritel Hedge Transaction, the proceeds thereof in the form of cash and Cash Equivalents minus the costs and expenses incurred in connection therewith (including legal fees, notarial fees, accountants fees, investment banking fees, underwriting discounts and commissions and other customary fees and expenses incurred in connection therewith) and required to be paid in cash or deducted from the proceeds of such Disposition. For purposes of this definition, the Net Proceeds received by any Person in respect of any Disposition shall include such cash or Cash Equivalents as may be received ("subsequent cash proceeds") by such Person at any time or from time to time in connection with the sale, transfer, lease or other disposition, or otherwise in respect of, any consideration other than cash or Cash Equivalents received by such Person in respect of such Disposition, less the estimated Income Tax to be paid in connection with the receipt of such subsequent cash proceeds (after taking into account any available tax credits or deductions and any tax sharing arrangements) that was not theretofore deducted in computing Net Proceeds. "Ninety-Percent Owned Subsidiary" means any Person in which (other than directors' qualifying shares required by law) at least 90% of the Capital Stock of each class having ordinary voting power (or, in the case of Persons other than corporations, membership interests or other equity interests), at the time as of which any determination is being made, is owned, beneficially and of record, directly or indirectly, by Conseco, or by one or more Wholly-Owned Subsidiaries, or both. "Non-Finance Subsidiary" means any Subsidiary which is not a Conseco Finance Entity. "Non-Insurance Subsidiary" means any Subsidiary which is not an Insurance Subsidiary. "Obligations" means all advances, debts, liabilities, obligations, covenants and duties for the payment of money arising under any Loan Document owing by Conseco to the Relevant Banks (or, if such defined term is included in the documents governing the Relevant Facility, any "Indemnified Person"), whether direct or indirect (including those acquired by assignment), absolute or contingent, due or to become due, now existing or hereafter arising. To the extent that any of the foregoing have been cash collateralized, such amounts shall nevertheless be deemed to remain outstanding for the purposes of this Appendix. "PBGC" means the Pension Benefit Guaranty Corporation, or any Governmental Authority succeeding to any of its principal functions under ERISA. 12 "Pension Plan" means a pension plan (as defined in Section 3(2) of ERISA) subject to Title IV of ERISA which Conseco or any ERISA Affiliate sponsors, maintains, or to which it makes, is making, or is obligated to make contributions, or in the case of a multiple employer plan (as described in Section 4064(a) of ERISA) has made contributions at any time during the immediately preceding five (5) plan years. "Permitted Lien" has the meaning specified in Section 4.02. "Permitted Nonrecourse Indebtedness" means (a) nonrecourse Indebtedness of Subsidiaries of Conseco resulting from the sale or securitization of (i) non-admitted assets, policy loans, B-Share Financings, CBOs and CMOs and (ii) loans, leases, receivables, installment contracts and other financial products originated, acquired, sold or securitized by a Conseco Finance Entity and (b) nonrecourse Indebtedness of a Conseco Finance Entity with respect to Interest Only Securities. "Permitted Swap Obligations" means all obligations (contingent or otherwise) of Conseco or any Subsidiary existing or arising under Swap Contracts, provided that each of the following criteria is satisfied: (a) such obligations are (or were) entered into by such Person in the ordinary course of business for the purpose of directly mitigating risks associated with liabilities, commitments or assets held by such Person, or changes in the value of securities issued by such Person in conjunction with a securities repurchase program not otherwise prohibited hereunder, and not for purposes of speculation or taking a "market view;" and (b) such Swap Contracts do not contain any provision ("walk-away" provision) exonerating the non-defaulting Party from its obligation to make payments on outstanding transactions to the defaulting party. "Permitted Transactions" means (a) mortgage-backed security transactions in which an investor sells mortgage collateral, such as securities issued by the Government National Mortgage Association and the Federal Home Loan Mortgage Corporation for delivery in the current month while simultaneously contracting to repurchase "substantially the same" (as determined by the Public Securities Association and GAAP) collateral for a later settlement, (b) transactions in which an investor lends cash to a primary dealer and the primary dealer collateralizes the borrowing of the cash with certain securities, (c) transactions in which an investor lends securities to a primary dealer and the primary dealer collateralizes the borrowing of the securities with cash collateral, (d) transactions in which an investor makes loans of securities to a broker-dealer under an agreement requiring such loans to be continuously secured by cash collateral or United States government securities, (e) transactions in which a federal home loan mortgage bank (a "FHLMB") makes loans, which are sufficiently secured by appropriate assets consisting of government agency mortgage-backed securities, in accordance with the rules, regulations and guidelines of such FHLMB for its loan programs, (f) financing transactions in which a Conseco Finance Entity sells or transfers as collateral loans, leases, receivables or installment contracts to a third party while simultaneously contracting to repurchase or reacquire substantially the same assets and (g) the issuance of any Asset Backed Securities by any Conseco Finance Entity. "Permitted Tritel Hedge Transaction" has the meaning specified in Section 4.11. "Person" means an individual, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture or Governmental Authority or other entity of whatever nature. "Plan" means an employee benefit plan (as defined in Section 3(3) of ERISA) which Conseco sponsors or maintains or to which Conseco makes, is making, or is obligated to make contributions and includes any Pension Plan. 13 "prepay" means, when used with respect to Public Debt, prepay, repurchase, redeem or otherwise optionally or voluntarily defease or segregate funds with respect thereto; and "prepaid" and "prepayment" shall have correlative meanings. "Prepayment Events" means (a) the occurrence of any Specified Cash Event or the consummation of any other Asset Sale, (b) the incurrence by Conseco or any of its Subsidiaries of any Indebtedness of the type described in clause (a) or (b) of the definition thereof, excluding Indebtedness permitted by Section 4.01 other than as set forth in Section 4.01(b) (to the extent required to be applied as a Prepayment Event as set forth in the definition of "Exempt Waterfall Amounts"), (c) the issuance of any Capital Stock by Conseco and (d) any receipt of Net Proceeds in connection with any Permitted Tritel Hedge Transaction. "PRIDES Documents" means the PRIDES Purchase Contracts, the PRIDES Preferred Securities, the Subordinated Indenture dated as of December 8, 1997 between Conseco and The First National Bank of Chicago, as amended by the First Supplemental Indenture, dated as of December 8, 1997, the 6.75% Debentures issued to the PRIDES Trust pursuant to such Indenture, the Amended and Restated Declaration of Trust of the PRIDES Trust, the Preferred Securities Guarantee dated as of December 12, 1997 executed by Conseco, the Common Securities Guarantee dated as of December 12, 1997 executed by Conseco, and the other documents, agreements, schedules, exhibits and instruments referenced in the foregoing agreements and instruments. "PRIDES Preferred Securities" has the meaning set forth in the definition of FELINE PRIDES. "PRIDES Purchase Contracts" has the meaning set forth in the definition of FELINE PRIDES. "PRIDES Trust" means Conseco Financing Trust IV, a Delaware business trust. "Public Debt" means the collective reference to the 2000 Public Debt, the 2001 Public Debt and the Longer-Term Public Debt. "Purchase Money Debt" means Indebtedness incurred by a Person in connection with the purchase of fixed or capital assets by such Person, in which such assets the seller or financier thereof has taken or retained a Lien therein, provided that any such Lien attaches to such asset concurrently with or within one hundred twenty (120) days after the purchase thereof by such Person. "Quarterly Statement" means the quarterly statutory financial statement of any Insurance Subsidiary required to be filed with the insurance commissioner (or similar authority) of its jurisdiction of incorporation or, if no specific form is so required, in the form of financial statements permitted by such insurance commissioner (or such similar authority) to be used for filing quarterly statutory financial statements and shall contain the type of financial information permitted by such insurance commissioner (or such similar authority) to be disclosed therein, together with all exhibits or schedules filed therewith. 14 "Reinsurance Agreements" means any agreement, contract, treaty, certificate or other arrangement by which any Insurance Subsidiary agrees to transfer or cede to another insurer all or part of the liability assumed or assets held by it under one or more insurance, annuity, reinsurance or retrocession policies, agreements, contracts, treaties, certificates or similar arrangements. Reinsurance Agreements shall include, but not be limited to, any agreement, contract, treaty, certificate or other arrangement which is treated as such by the applicable Department. "Relevant Agent" means the "Agent" or "Administrative Agent", as applicable, under the Relevant Facility. "Relevant Banks" means any Bank to which Obligations are owing under the Relevant Facility. "Relevant Cash Collateral Agreement" means, if the Relevant Facility is a D&O Facility, any cash collateral agreement entered into by Conseco or any of its Subsidiaries in favor of the Agent thereunder in order to cash collateralize the Conseco Guaranty relating to such Facility. "Relevant CIHC Guaranty" means the Guaranty and Subordination Agreement, dated as of the Effective Date, made by CIHC in favor of the Relevant Agent and the Relevant Banks. It is agreed that the Relevant CIHC Guaranty shall be terminated and CIHC shall be released from all of its obligations thereunder on the first date after the Near-Term Facilities Termination Date on which Conseco has Investment Grade Ratings Status, so long as no Default or Event of Default shall have occurred and be continuing on such date. "Relevant Conseco Guaranty" means, if the Relevant Facility is a D&O Facility, any guaranty issued by Conseco in favor of the Agent thereunder in order to guaranty the obligations of the individual borrowers under such Facility. "Relevant Facility" means the Facility being amended pursuant to the amendment to which this Appendix is attached. "Reportable Event" means any of the events set forth in Section 4043(c) of ERISA or the regulations thereunder, other than any such event for which the 30-day notice requirement under ERISA has been waived in regulations issued by the PBGC. "Required Banks" means the "Required Banks" under and as defined in the documents governing the Relevant Facility. "Requirement of Law" means, as to any Person, any law (statutory or common), treaty, rule or regulation or determination of an arbitrator or of a Governmental Authority, in each case applicable to or binding upon the Person or any of its property or to which the Person or any of its property is subject. "Reserve" means the collective reference to one or more restricted accounts opened by Conseco with any one or more Banks, on terms and conditions substantially as set forth on Exhibit B hereto. It is understood that any contractual right of setoff contained in the documents governing any Facility will not apply to any Reserve. "Responsible Officer" means the chief executive officer, chief operating officer, chief financial officer or treasurer of Conseco, or any other officer having substantially the same authority and responsibility including, with respect to Section 3.01, any vice-president with responsibility for or knowledge of financial matters of Conseco. "Restricted Payments" has the meaning set forth in Section 4.08. 15 "Risk-Based Capital Ratio" means, with respect to the Insurance Subsidiaries (other than Conseco Direct Life Insurance Company) taken as a whole, on any date of determination, the ratio (expressed as a percentage) of (a) the aggregate Total Adjusted Capital (as defined by the NAIC) for such Insurance Subsidiaries to (b) the aggregate Authorized Control Level Risk-Based Capital (as defined by the NAIC) for such Insurance Subsidiaries. "S&P" means Standard & Poor's Ratings Services, together with any Person succeeding thereto by merger, consolidation or acquisition of all or substantially all of its assets, including substantially all of its business of rating securities. "SAP" means, with respect to any Insurance Subsidiary, the statutory accounting practices prescribed or permitted by the insurance commissioner (or other similar authority) in the jurisdiction of domicile of such Person for the preparation of annual statements and other financial reports by insurance companies of the same type as such Person, which are applicable to the circumstances as of the date of filing of such statement or report. "SEC" means the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions. "Significant Subsidiary" means any Subsidiary of Conseco with, after the elimination of intercompany accounts, (a) assets which constituted at least 5% of Conseco's consolidated total assets, or (b) revenues which constituted at least 5% of Conseco's consolidated total revenue or (c) net earnings which constituted at least 5% of Conseco's consolidated total net earnings, but not less than $10,000,000, all as determined as of the date of Conseco's most recently prepared quarterly financial statements for the 12-month period then ended. "Single Employer Pension Plan" means a pension plan as such term is defined in Section 3(2) of ERISA, other than a multiemployer plan as defined in Section 4001(a)(3) of ERISA, to which Conseco or any other ERISA Affiliate may have liability, including any liability by reason of having been a substantial employer within the meaning of Section 4063 of ERISA at any time during the preceding five years, or by reason of being deemed to be a contributing sponsor under Section 4069 of ERISA. "Specified Cash Events" means the receipt of cash by Conseco or any of its Subsidiaries in connection with the events described on Schedule 1.01B, whether or not in connection with a Disposition. "Specified D&O Facilities" means the collective reference to the $181 Million D&O Facility and the $245 Million D&O Facility. "Specified Junior Securities" means (a) common stock of Conseco and (b) preferred stock of Conseco and subordinated Indebtedness of Conseco that, in each case, does not require cash dividend or cash interest payments prior to September 30, 2005 (other than any requirement that is limited to payments with the proceeds of available Exempt Covenant/Waterfall Amounts received and held aside or otherwise identified prior to the date such preferred stock or subordinated Indebtedness is issued or incurred) or scheduled redemption or principal payments prior to March 31, 2006 and, in the case of subordinated Indebtedness, having subordination and related terms satisfactory to each Agent. "Statutory Net Income" means, for any period, the net income of an Insurance Subsidiary determined in accordance with SAP. 16 "Subordinated Obligations" shall be the collective reference to the unpaid principal of and accrued and unpaid interest on any subordinated Indebtedness and all other subordinated obligations and liabilities of Conseco to the lenders thereof (including, without limitation, interest accruing at the then applicable rate provided in the applicable loan documents for such Indebtedness or obligations after the maturity of the subordinated loans and interest accruing at the then applicable rate provided in such loan documents after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to Conseco, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding), whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, which may arise under, out of, or in connection with, this Appendix, or such loan documents for such subordinated Indebtedness, in each case whether on account of principal, interest, reimbursement obligations, fees, indemnities, costs, expenses or otherwise (including, without limitation, all fees and disbursements of counsel to the lenders thereof that are required to be paid by Conseco pursuant to the terms of the loan documents therefor or this Appendix). "Subsidiary" of a Person means any corporation, partnership, limited liability company, limited liability partnership, joint venture, trust, association or other unincorporated organization of which or in which such Person and such Person's Subsidiaries own directly or indirectly more than 50% of (a) the combined voting power of all classes of stock having general voting power under ordinary circumstances to elect a majority of the board of directors, if it is a corporation, (b) the voting or managing interests (which shall mean the general partner in the case of a partnership), if it is a partnership, joint venture or similar entity, (c) the beneficial interest, if it is a trust, association or other unincorporated organization or (d) the membership interest, if it is a limited liability company; provided, that, with respect to any Investment made by Conseco in any Person in the ordinary course of business solely for investment purposes, such Person shall not be considered a Subsidiary of Conseco for the purposes of this Appendix if such Person is not integral to the business or operations of Conseco or any Significant Subsidiary and, by way of illustration only, Schedule 1.01D, sets forth a nonexclusive list of such Persons who are not Subsidiaries of Conseco because of the operation of this clause. "Surplus Debentures" means, as to any Insurance Subsidiary, debt securities of such Insurance Subsidiary the proceeds of which are permitted to be included, in whole or in part, as Capital and Surplus of such Insurance Subsidiary as approved and permitted by the applicable Department. "Swap Contract" means any agreement whether or not in writing, relating to any transaction that is a rate swap, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap or option, bond, note or bill option, interest rate option, forward foreign exchange transaction, cap, collar or floor transaction, currency swap, cross-currency rate swap, swaption, currency option or any other, similar transaction (including any option to enter into any of the foregoing) or any combination of the foregoing, and, unless the context otherwise clearly requires, any master agreement relating to or governing any or all of the foregoing. 17 "Swap Termination Value" means, in respect of any one or more Swap Contracts, after taking into account the effect of any legally enforceable netting agreement relating to such Swap Contracts, (a) for any date on or after the date such Swap Contracts have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in clause (a) the amount(s) determined as the mark-to-market value(s) for such Swap Contracts, as determined by Conseco based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Swap Contracts (which may include any Relevant Bank). "Synthetic Purchase Agreement" means any agreement pursuant to which Conseco or any of its Subsidiaries is or may become obligated to make (a) any payment in connection with the purchase by any third party from a Person other than Conseco or any of its Subsidiaries (other than any Subsidiary that is a Subsidiary of an Insurance Subsidiary but is not itself an Insurance Subsidiary) of any Capital Stock or Indebtedness of Conseco or any of its Subsidiaries (other than any Subsidiary that is a Subsidiary of an Insurance Subsidiary but is not itself an Insurance Subsidiary) or (b) any payment the amount of which is determined by reference to the price or value at any time of any such Capital Stock or Indebtedness; provided, that (i) no phantom stock or similar plan providing for payments only to current or former directors, officers or employees of Conseco or any of its Subsidiaries (or to their heirs or estates), (ii) no such agreement in respect of any Public Debt that is permitted to be prepaid at such time pursuant to Section 4.10 and (iii) no such agreement in respect of any Disposition of any Capital Stock of a Subsidiary of Conseco that is permitted by Section 4.03 shall be deemed to be a Synthetic Purchase Agreement. "Taxes" means any and all present or future taxes, levies, assessments, imposts, duties, deductions, fees, withholdings or similar charges, and all liabilities with respect thereto. "Tax Sharing Agreement" means the tax sharing agreement dated February 29, 1989, as amended, among Conseco and certain of its Subsidiaries. "Total Capitalization" means, without duplication, (a) the amount described in clause (a) of the definition of "Debt to Total Capitalization Ratio", plus (b) the Total Shareholders' Equity of Conseco, minus (c) the carrying value of Interest Only Securities and servicing rights. Total Capitalization shall be determined without giving effect to (a) the impact of charges or writedowns taken in the third or fourth Fiscal Quarter of the Fiscal Year ending December 31, 2000 ("FY 2000 Adjustments") so long as the aggregate after-tax amount thereof does not exceed $500,000,000 and (b) the impact of any on balance sheet treatment of the D&O Facilities. "Total Shareholders' Equity" means the sum of, without duplication, (a) total common and preferred shareholders' equity of Conseco as determined in accordance with GAAP (calculated excluding unrealized gains (losses) of securities as determined in accordance with FAS 115) and (b) the redemption value or liquidation preference (or if less, the purchase price), as applicable, of the Trust Preferred Securities, the FELINE PRIDES and the Unit Securities. "Trust Preferred Securities" mean preferred securities (a) issued by one or more Delaware business trusts formed by Conseco and (b) guaranteed by Conseco, including specifically, "MIPS," "QuIPS," "TOPrS" and "TruPS", provided that the aggregate face amount of all Trust Preferred Securities does not exceed the greater of $1,930,000,000 or 15% of Total Capitalization at any time. "2000 Public Debt" means Conseco's $150,000,000 7-7/8% Notes due December 15, 2000. "2001 Public Debt" means Conseco's 7.6% Senior Notes due June 21, 2001 and 6.4% Mandatory Par Put Remarketed Securities due June 15, 2011. 18 "Unfunded Pension Liability" means the excess of a Plan's benefit liabilities under Section 4001(a)(16) of ERISA, over the current value of that Plan's assets, determined in accordance with the assumptions used for funding the Pension Plan pursuant to Section 412 of the Code for the applicable plan year. "United States" and "U.S." each means the United States of America. "Unit Securities" means investment units comprised of (a) mandatorily redeemable preferred securities (i) issued by one or more Delaware business trusts formed by Conseco and (ii) guaranteed by Conseco, including specifically, "MIPS," QuIPS," "TOPrS" and "TruPS," and (b) equity forward contracts for the purchase of common stock of Conseco (which forward contracts shall have a settlement date that is earlier than the stated maturity of such preferred securities) collateralized by such preferred securities or government securities in lieu thereof (including, without limitation, principal and interest strips thereof). "Voting Shares" means, with respect to any Person, capital stock issued by such Person, the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or persons performing similar functions) of such Person, even though the right so to vote has been suspended by the happening of any such contingency. "Wholly-Owned Subsidiary"means any corporation in which (other than directors' qualifying shares required by law) 100% of the capital stock of each class having ordinary voting power, and 100% of the capital stock of every other class, in each case (or, in the case of Persons other than corporations, membership interests or other equity interests), at the time as of which any determination is being made, is owned, beneficially and of record, by Conseco, or by one or more of the other Wholly-Owned Subsidiaries, or both. "$50 Million Credit Agreement" means the ECN Dealer Agreement between Conseco and Merrill Lynch, Pierce, Fenner & Smith Incorporated dated September 28, 1999 and the letter dated September 28, 1999 addressed by Merrill Lynch, Pierce, Fenner & Smith Incorporated to Conseco, including the Extendible Commercial Notes Memorandum attached thereto. "$144 Million D&O Credit Agreement" means the Termination and Replacement Agreement, dated as of May 30, 2000, among the individual borrowers parties thereto, the banks parties thereto, Chase, as administrative agent and Chase Securities Inc. and Banc of America Securities LLC as co-lead arrangers and co-lead book managers. "$155 Million Credit Agreement" means the Senior Secured Revolving Credit Agreement, dated as of May 30, 2000, among Conseco, the banks parties thereto, Chase, as administrative agent and Chase Securities Inc. and Banc of America Securities LLC as co-lead arrangers and co-lead book managers. "$181 Million D&O Credit Agreement" means the Credit Agreement, dated as of August 21, 1998, among the individual borrowers parties thereto, the banks parties thereto and BofA, as administrative agent. "$245 Million D&O Credit Agreement" means the Amended and Restated Credit Agreement, dated as of August 26, 1997, among the individual borrowers parties thereto, the banks parties thereto and BofA, as administrative agent. 19 "$766 Million Credit Agreement" means the 364-Day Credit Agreement, dated as of September 25, 1998, among Conseco, the banks parties thereto, the syndication agents and documentation agent named therein and BofA, as agent, as amended on the Effective Date to incorporate the obligations of Conseco under the $50 Million Credit Agreement. "$1.5 Billion Credit Agreement" means the Five-Year Credit Agreement, dated as of September 25, 1998, among Conseco, the banks parties thereto, the syndication agents and documentation agent named therein and BofA, as agent. "$144 Million D&O Facility" means the credit facility evidenced by the $144 Million D&O Credit Agreement and the documents related thereto. "$155 Million Facility" means the credit facility evidenced by the $155 Million Credit Agreement and the documents related thereto. "$181 Million D&O Facility" means the credit facility evidenced by the $181 Million D&O Credit Agreement and the documents related thereto. "$245 Million D&O Facility" means the credit facility evidenced by the $245 Million D&O Credit Agreement and the documents related thereto. "$766 Million Facility" means the credit facility evidenced by the $766 Million Credit Agreement and the documents related thereto. "$1.5 Billion Facility" means the credit facility evidenced by the $1.5 Billion Credit Agreement and the documents related thereto. I.2 Other Interpretive Provisions. (a) The meanings of defined terms are equally applicable to the singular and plural forms of the defined terms. (b) The words "hereof", "herein", "hereunder" and similar words refer to this Appendix as a whole and not to any particular provision of this Appendix; and subsection, Section, Schedule and Exhibit references are to this Appendix unless otherwise specified. (c) (i) The term "including" is not limiting and means "including without limitation." (ii) In the computation of periods of time from a specified date to a later specified date, the word "from" means "from and including"; the words "to" and "until" each mean "to but excluding", and the word "through" means "to and including." (d) Unless otherwise expressly provided herein, (i) references to agreements (including this Appendix) and other contractual instruments shall be deemed to include all subsequent amendments and other modifications thereto, but only to the extent such amendments and other modifications are not prohibited by the terms of any Loan Document, and (ii) references to any statute or regulation are to be construed as including all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting the statute or regulation. (e) The captions and headings of this Appendix are for convenience of reference only and shall not affect the interpretation of this Appendix. 20 (f) This Appendix and other Loan Documents may use several different limitations, tests or measurements to regulate the same or similar matters. Unless otherwise expressly provided, any reference to any action of the Relevant Agent or the Relevant Banks by way of consent, approval or waiver shall be deemed modified by the phrase "in its/their sole and reasonable discretion. (g) This Appendix and the other Loan Documents are the result of negotiations among and have been reviewed by counsel to the Relevant Agent, Conseco and the other parties to the Loan Documents, and are the products of all parties. Accordingly, they shall not be construed against the Relevant Banks or the Relevant Agent merely because of the Relevant Agent's or the Relevant Banks' involvement in their preparation. I.3 Accounting Principles. (a) Unless the context otherwise clearly requires, all accounting terms not expressly defined herein shall be construed, and all financial computations required under this Appendix shall be made, in accordance with GAAP, consistently applied. (b) References hereto in particular columns, lines or sections of any Person's Annual Statement shall be deemed, where appropriate, to be references to the corresponding column, line or section of such Person's Quarterly Statement, or if no such corresponding column, line or section exists or if any report form changes, then to the corresponding item referenced thereby. In the event the column , lines or sections of the Annual Statement referenced herein are changed or renumbered from the columns, lines and sections applicable to the 1999 Annual Statement, all such references shall be deemed references to such column, line or section as so renumbered or changed. ARTICLE II MANDATORY CASH APPLICATIONS II.1 General Application of Available Net Proceeds. (a) On the Effective Date, Available Net Proceeds in the aggregate amount of $392,861,025 shall be applied to the Facilities in the manner specified in Section 2.02(a). 21 (b) On the Effective Date and thereafter, within three Business Days after Conseco or any of its Subsidiaries receives any Available Net Proceeds (other than as described in paragraph (a) above), such Available Net Proceeds shall be applied as follows: first, the first $100,000,000 (or such lesser amount as is necessary to increase the amount of Conseco's Cash on Hand to the Cash on Hand Target) shall be retained by Conseco; second, the next $700,000,000 shall be applied 1/7th per transaction to the Near-Term Facilities and 6/7ths per transaction to fund the Reserve; third, the next $200,000,000 shall be applied to fund the Reserve; fourth, all subsequent Available Net Proceeds until the occurrence of the Near-Term Facilities Termination Date shall be applied 80% per transaction to the Near-Term Facilities, with the remainder being retained by Conseco until it has Cash on Hand equal to the Cash on Hand Target at the time of such transaction, and then 100% to the Near-Term Facilities until the occurrence of the Near-Term Facilities Termination Date; and fifth, all Available Net Proceeds received after the occurrence of the Near-Term Facilities Termination Date shall be applied 50% per transaction to the $1.5 Billion Facility and the Specified D&O Facilities (in the manner contemplated by Section 2.02(c)), with the remainder being retained by Conseco. Notwithstanding the foregoing, the first $30,000,000 of Available Net Proceeds received by Conseco or any of its Subsidiaries on or after the Effective Date after giving effect to Section 2.01(a) may be retained by Conseco. Any Available Net Proceeds referred to in this paragraph as being available for retention by Conseco (i) must, if received by a Subsidiary, be distributed to Conseco for such purpose if such distribution is not prohibited by law, rule or regulation or the Lehman Agreement and (ii) may be used by Conseco for any purpose permitted by this Appendix. Notwithstanding anything to the contrary in this Section 2.01(b), in the event that, in the case of Available Net Proceeds received at any time when clause second or third is applicable, if Conseco's Cash on Hand is less than the Cash on Hand Target, such Available Net Proceeds may be applied to increase Conseco's Cash on Hand (but not above the Cash on Hand Target), provided, that in no event shall the aggregate amount applied to increase Conseco's Cash on Hand pursuant to clause first and this sentence exceed $100,000,000. As used in this paragraph, "Cash on Hand Target" means $330,000,000 minus the amount of any Investment made by Conseco pursuant to Section 4.09(a)(i)(x) (except to the extent such amount was paid back to Conseco, directly or indirectly). (c) After the Reserve has been funded in an amount sufficient to pay the remaining maturities for the 2000 Public Debt and the 2001 Public Debt, if any such Public Debt is, or has been, repurchased at a discount with amounts from the Reserve, an amount from the Reserve equal to the difference between the face amount of the relevant Public Debt and the repurchase price of the relevant Public Debt shall be applied to the Near-Term Facilities or, after the Near-Term Facilities Termination Date, to the $1.5 Billion Facility and the Specified D&O Facilities (in the manner contemplated by Section 2.02(c)). II.2 Application of Available Net Proceeds Allocated to Facilities. (a) The application of Available Net Proceeds described in Section 2.01(a) shall be allocated to the Near-Term Facilities, and to the Exposure of the Banks thereunder, such that, after giving effect thereto, the respective Exposures of the Banks thereunder shall be as set forth on Schedule 2.02 (and any inconsistent provision in the Relevant Facility shall not apply). (b) Any application of Available Net Proceeds allocated to the Near-Term Facilities pursuant to Section 2.01(b) or (c) (and any application of Net Proceeds pursuant to clause (a)(i) of the definition of "Exempt Waterfall Amounts") shall be allocated to each Bank on a pro rata basis based on the percentage of the aggregate then outstanding amount of Exposure under such Facilities held by such Bank. In the case of any Bank having Exposure under more than one Near-Term Facility, such Bank may, by notice to Conseco and the applicable Agent, allocate its reduction in Exposure to one or more such Facilities in such respective amounts as it shall select in its sole discretion (and any inconsistent provision in the Relevant Facility shall not apply). (c) Any application of Available Net Proceeds allocated to the $1.5 Billion Facility and the Specified D&O Facilities pursuant to Section 2.01(b) or (c) (and any application of Net Proceeds pursuant to clause (a)(ii) of the definition of "Exempt Waterfall Amounts") shall be allocated ratably to each such Facility based on the aggregate Exposure then outstanding under such Facilities, and ratably to the Exposure of each Bank under each such Facility. The Available Net Proceeds so allocated to each Specified D&O Facility, at the discretion of Conseco, shall be either (i) deposited in a cash collateral account pursuant to the applicable Cash Collateral Agreement or (ii) applied to repay "Loans" made to the individual borrowers pursuant to the applicable Specified D&O Facility. II.3 Exempt Covenant/Waterfall Amounts. Notwithstanding anything to the contrary in Article IV, Conseco and its Subsidiaries shall be permitted to use Exempt Covenant/Waterfall Amounts for any purpose that would otherwise be prohibited by Article IV (other than to redeem, pay dividends on or otherwise make Restricted Payments in respect of Conseco's common stock or the Conseco Series F Preferred Stock), and any such use shall not constitute a violation of any of the covenants contained in Article IV or usage of any of the basket amounts described therein. 22 ARTICLE III AFFIRMATIVE COVENANTS So long as any Exposure or other Obligation shall remain unpaid or unsatisfied under the Relevant Facility, unless the Required Banks waive compliance in writing: III.1 Financial Statements Conseco shall deliver to the Relevant Agent and each Relevant Bank: (a) as soon as available, but not later than 120 days after the end of each Fiscal Year, copies of the audited consolidated balance sheet of Conseco and its Subsidiaries and the unaudited consolidating balance sheet of Conseco and its Subsidiaries as at the end of such year and the related consolidated statements of earnings, shareholders' equity and cash flows for such year, setting forth in the case of the audited consolidated statements in comparative form the figures for the previous Fiscal Year, and accompanied by the opinion of PricewaterhouseCoopers or another nationally-recognized independent public accounting firm ("Independent Auditor"), which report shall state that such audited consolidated financial statements present fairly the financial position and result of operations of Conseco and its Subsidiaries for the periods indicated in conformity with GAAP applied on a basis consistent with prior years, except as stated therein. Such opinion shall not be qualified or limited because of a restricted or limited examination by the Independent Auditor of any material portion of Conseco's or any Subsidiary's records; (b) as soon as available, but not later than 60 days after the end of each of the first three Fiscal Quarters of each Fiscal Year, copies of the condensed unaudited consolidated and consolidating balance sheet of Conseco and its Subsidiaries as of the end of such quarter and the related condensed unaudited statements of earnings, shareholders' equity and cash flows for the period commencing on the first day and ending on the last day of such quarter, and certified by a Responsible Officer as fairly presenting, in accordance with GAAP (subject to the absence of footnotes and ordinary, good faith year-end and audit adjustments), the financial position and the results of operations of Conseco and the Subsidiaries; (c) as soon as available but not later than 75 days after the close of each Fiscal Year of each Insurance Subsidiary, copies of the unaudited Annual Statement of such Insurance Subsidiary, certified by a Responsible Officer of such Insurance Subsidiary, all such statements to be prepared in accordance with SAP consistently applied throughout the periods reflected therein and, if required by the applicable Governmental Authority, audited and certified by independent certified public accountants of recognized national standing; (d) as soon as available but not later than 60 days after the close of each of the first three (3) Fiscal Quarters of each Fiscal Year of each Insurance Subsidiary which is a Significant Subsidiary, copies of the Quarterly Statement of each of the Insurance Subsidiaries, certified by a Responsible Officer of such Insurance Subsidiary, all such statements to be prepared in accordance with SAP consistently applied through the period reflected herein; (e) within 15 days after being delivered to any Insurance Subsidiary constituting a Significant Subsidiary, any draft or final Triennial Examination Report issued by the applicable Department or the NAIC that results in material adjustments to the financial statements referred to in subsection (a), (b) or (c); and 23 (f) within 90 days after the close of each Fiscal Year of each Insurance Subsidiary, a copy of the "Statement of Actuarial Opinion" and "Management Discussion and Analysis" for each such Insurance Subsidiary which is provided to the applicable Department (or equivalent information should such Department no longer require such a statement) as to the adequacy of loss reserves of such Insurance Subsidiary, such opinion to be in the format prescribed by the insurance code of the state of domicile of such Insurance Subsidiary. III.2 Certificates; Other Information. Conseco shall furnish to the Relevant Agent, with sufficient copies for each Relevant Bank (other than in the case of clause (e)): (a) concurrently with the delivery of the financial statements referred to in Sections 3.01(a) and (b), a Compliance Certificate executed by a Responsible Officer, (b) promptly, (i) copies of all Forms 10-K and 10-Q that Conseco or any Subsidiary may file with the SEC or (ii) copies of the certificate and related financial information provided pursuant to the Lehman Agreement in connection with evidencing periodic compliance with financial covenants therein, and promptly upon the Relevant Agents' request, financial statements and reports that Conseco sends to its shareholders and copies of all other financial statements and regular, periodic or special reports (including Form 8-K) that Conseco or any Subsidiary may make to, or file with, the SEC; (c) promptly and in any event within three Business Days after learning thereof, notification of any changes after the date hereof in the rating given by S&P or Moody's in respect of Conseco's senior unsecured Indebtedness or by A.M. Best in respect of the Insurance Subsidiaries; (d) (i) concurrently with the consummation of any Disposition Transaction yielding gross proceeds in excess of $2,000,000, (x) a description of such transaction and (y) a calculation of the gross proceeds thereof and (ii) concurrently with the occurrence of any Prepayment Event or the issuance of any Specified Junior Securities, (i) a description of the relevant transaction, (ii) a calculation of the Net Proceeds (including an accounting of the items deducted from the cash or Cash Equivalents received in connection with such transaction) thereof and (iii) if applicable its intention to treat such Net Proceeds of the type described in the definition of either (i) Exempt Covenant/Waterfall Amount or (ii) Exempt Waterfall Amount as an Exempt Covenant/Waterfall Amount or an Exempt Waterfall Amount, respectively (including, if an Exempt Waterfall Amount, whether the Net Proceeds will be applied under clause (a) or (b) of such definition); and (e) promptly, such additional information regarding the business, financial or corporate affairs of Conseco or any Subsidiary as the Relevant Agent, at the request of any Relevant Bank, may from time to time reasonably request. III.3 Notices. Conseco shall promptly notify the Relevant Agent: (a) of the occurrence of any Default or Event of Default; (b) of any matter that has resulted in a Material Adverse Effect, including (i) any breach or non-performance of, or any default under, a Contractual Obligation of Conseco or any Subsidiary; (ii) any dispute, litigation, investigation, proceeding or suspension between Conseco or any Subsidiary and any Governmental Authority; or (iii) the commencement of, or any material development in, any Litigation affecting Conseco or any Subsidiary, including pursuant to any applicable Environmental Laws; 24 (c) of the commencement of, or the occurrence of any development in, any litigation or proceeding (i) which seeks to enjoin, prohibit, discontinue or otherwise impacts the validity or enforceability of this Appendix or any of the other Loan Documents or other transactions contemplated hereby or thereby, or (ii) which could be reasonably expected to have a Material Adverse Effect. (d) of the occurrence of any of the following events affecting Conseco or any ERISA Affiliate (but in no event more than 10 days after such event) and deliver to the Relevant Agent and each Relevant Bank a copy of any notice with respect to such event that is filed with a Governmental Authority and any notice delivered by a Governmental Authority to Conseco or any ERISA Affiliate with respect to such event: (i) an ERISA Event; or (ii) a material increase in the Unfunded Pension Liabilities of any Pension Plan; (iii) the adoption of or the commencement of contributions to, any Plan subject to Section 412 of the Code by Conseco or any ERISA Affiliate; or (iv) the adoption of any amendment to a Plan subject to Section 412 of the Code, if such amendment results in a material increase in contributions or Unfunded Pension Liability; provided, however, that no such notice will be required under this Section 3.03(d) with respect to the occurrence of any such event if such occurrence does not result in, and is not reasonably expected to result in, any liability to Conseco of more than $65,000,000 or any liability to any ERISA Affiliate of more than $20,000,000. (e) of any material change in accounting policies or financial reporting practices by Conseco or any of its Subsidiaries; (f) of the receipt of any notice from any Governmental Authority of the expiration without renewal, revocation, suspension or restriction of or the institution of any proceedings to revoke, suspend or restrict, any License now or hereafter held by any Insurance Subsidiary which is required to conduct insurance business in compliance with all applicable laws and regulations and the expiration, revocation or suspension of which could reasonably be expected to have a Material Adverse Effect; (g) of the receipt of any notice from any Governmental Authority of the institution of any disciplinary proceedings against or in respect of any Insurance Subsidiary, or the issuance of any order, the taking of any action or any request for an extraordinary audit for cause by any Governmental Authority which could reasonably be expected to have a Material Adverse Effect; (h) of any judicial or administrative order limiting or controlling the insurance business of any Insurance Subsidiary (and not the insurance industry generally) which has been issued or adopted and which has had, or which could reasonably be expected to have, a Material Adverse Effect, or (i) of any actual or proposed changes in any applicable insurance code which could reasonably be expected to have a Material Adverse Effect. Each notice under this Section shall be accompanied by a written statement by a Responsible Officer setting forth details of the occurrence referred to therein, and stating what action Conseco or any affected Subsidiary proposes to take with respect thereto and at what time. Each notice under Section 3.03(a) shall describe with particularity any and all clauses or provisions of this Appendix or other Loan Document that have been (or reasonably foreseeably will be) breached or violated. 25 III.4 Preservation of Corporate Existence, Etc. Conseco shall, and shall cause each Significant Subsidiary to (except as permitted by Section 4.03 or 4.07): (a) preserve and maintain in full force and effect its corporate existence and good standing under the laws of its state or jurisdiction of incorporation; (b preserve and maintain in full force and effect all governmental rights, privileges, qualifications, permits, licenses and franchises necessary in the normal conduct of its business, except where such failure to preserve and maintain could not reasonably be expected to have a Material Adverse Effect; and (c use reasonable efforts, in the ordinary course of business, to preserve its business organization and goodwill. III.5 Insurance. Conseco shall maintain, and shall cause each Significant Subsidiary to maintain, with financially sound and reputable independent insurers, insurance with respect to its properties and business against loss or damage of the kinds customarily insured against by Persons engaged in the same or similar business, of such types and in such amounts as are customarily carried under similar circumstances by such other Persons. III.6 Payment of Obligations. Conseco shall, and shall cause each Significant Subsidiary to, pay and discharge as the same shall become due and payable, all of the following: (a all material tax liabilities, assessments and governmental charges or levies upon it or its material properties or assets, unless the same are not overdue for a period of more than 60 days or are being contested in good faith by appropriate proceedings and adequate reserves in accordance with GAAP are being maintained by Conseco or such Subsidiary; and (b all material indebtedness, as and when due and payable, but subject to any subordination provisions contained in any instrument or agreement evidencing such Indebtedness. III.7 Compliance with Laws. Conseco shall comply, and shall cause each Subsidiary to comply, in all material respects with all Requirements of Law of any Governmental Authority having jurisdiction over it or its business (including the Federal Fair Labor Standards Act and all applicable Environmental Laws), the noncompliance with which could reasonably be expected to have a Material Adverse Effect, except such as may be contested in good faith or as to which a bona fide dispute may exist. III.8 Compliance with ERISA. Conseco shall, and shall cause each of its ERISA Affiliates to: (a) maintain each Plan in compliance in all material respects with the applicable provisions of ERISA, the Code and other federal or state law; (b) cause each Plan which is qualified under Section 401(a) of the Code to maintain such qualification; and (c) make all required contributions to any Plan subject to Section 412 of the Code, except where such failure to maintain as set forth in (a) or (b) or to make contributions as set forth in (c) could not be reasonably expected to have a Material Adverse Effect. 26 III.9 Inspection of Property and Books and Records; Expense Reimbursement. Conseco shall maintain and shall cause each Subsidiary to maintain proper books of record and account, in which full, true and correct entries in all material respects in conformity with GAAP or SAP, as applicable, consistently applied (except as stated therein) shall be made of all financial transactions and matters involving the assets and business of Conseco and such Subsidiary. Conseco shall permit, and shall cause each Subsidiary to permit, representatives and independent contractors of the Relevant Agent or any Relevant Bank to visit and inspect any of their respective properties, to examine their respective corporate, financial and operating records, and make copies thereof or abstracts therefrom, and to discuss their respective affairs, finances and accounts with their respective directors, officers, and independent public accountants, all at such reasonable times during normal business hours and as often as may be reasonably desired, upon reasonable advance notice to Conseco, provided, however, when an Event of Default exists the Relevant Agent or any Relevant Bank may do any of the foregoing at any time during normal business hours and without advance notice. III.10 Tritel Disposition. Conseco shall use commercially reasonable efforts to Dispose of all or substantially all of its interest in Tritel, Inc. prior to March 31, 2001. III.11 Conversion of FELINE PRIDES. Conseco shall issue shares of common stock to holders of FELINE PRIDES in accordance with the terms of the PRIDES Documents. Otherwise, and except as required by the terms of the PRIDES Documents, Conseco shall, and shall cause its Affiliates to, refrain from purchasing or redeeming any FELINE PRIDES, PRIDES Purchase Contracts or PRIDES Preferred Securities, whether in the open market or otherwise. Nothing in this provision shall have the effect of preventing Conseco or the PRIDES Trust from complying with the terms and conditions set forth in the PRIDES Documents. ARTICLE IV NEGATIVE COVENANTS So long as any Exposure or other Obligation shall remain unpaid or unsatisfied under the Relevant Facility, unless the Required Banks waive compliance in writing: IV.1 Limitation on Indebtedness. Conseco shall not, and shall not permit any of its Subsidiaries to, incur or at any time be liable with respect to, any Indebtedness, except: (a Permitted Swap Obligations and Permitted Transactions; (b Specified Junior Securities; (c Indebtedness of Conseco or any Subsidiary pursuant to (i) the items set forth on Schedule 4.01(c) and (ii) extensions, renewals or replacements thereof, provided that no such extension, renewal or replacement shall increase the principal amount thereof, except to the extent the increase would otherwise be permitted under this Section 4.01; 27 (d Contingent Obligations of: (i) CIHC in respect of (A) Conseco's obligations under any Facility, and (B) obligations of one or more Conseco Finance Entities (I) in an aggregate amount not to exceed $125,000,000 in respect of obligations to Lehman or an Affiliate thereof, (II) in an aggregate amount not to exceed $125,000,000 in respect of cash management or a swing line credit facility for the general corporate purposes of one or more of the Conseco Finance Entities and (III) in an aggregate amount not to exceed $50,000,000 incurred for general corporate purposes (so long as, in each case, the documentation governing any such Contingent Obligation (including any related subordination arrangement) is not at any time materially more favorable to the beneficiaries thereof than the Relevant CIHC Guaranty); (ii) Conseco in respect of any individual borrower's obligations under any D&O Facility; (iii) any Conseco Finance Entity relating to loans, leases, receivables, installment contracts and other financial products originated, acquired or sold by such Conseco Finance Entity or any other Conseco Finance Entity; and (iv) Conseco or any Subsidiary in the ordinary course of business not otherwise described above in an aggregate amount not to exceed at any time (A) ten percent (10%) of Total Shareholders' Equity minus (B) the aggregate amount of Conseco's Contingent Obligations under clause (ii) of this paragraph at any time, provided that (I) Contingent Obligations in respect of Indebtedness of the type described in clause (a) or (b) of the definition thereof shall not be permitted by this clause (iv) and (II) the documentation governing any Contingent Obligation of CIHC pursuant to this clause (iv) (including any related subordination arrangement) shall not at any time be materially more favorable to the beneficiaries thereof than the Relevant CIHC Guaranty; provided, that in no event shall Conseco or any of its Subsidiaries (other than a Conseco Finance Entity) have any Contingent Obligations (including obligations as an account party) pursuant to this paragraph (d) in respect of any Indebtedness incurred by or for the benefit of any Conseco Finance Entity other than as specifically permitted in clause (i)(B) above; (e Indebtedness (including Contingent Obligations) of any Conseco Finance Entity to the extent that (i) neither Conseco nor any Non-Finance Subsidiary is directly liable thereon, and (ii) neither Conseco nor any Non-Finance Subsidiary has any Contingent Obligation in respect of such Indebtedness (other than a Contingent Obligation of CIHC permitted by Section 4.01(d)(i) above); (f Permitted Nonrecourse Indebtedness; (g secured Indebtedness, including, without limitation, Capitalized Lease Liabilities and Purchase Money Debt, provided, that (i) the aggregate outstanding principal amount of Indebtedness of this type does not exceed at any time ten percent (10%) of Total Shareholders' Equity at such time and (ii) such Indebtedness shall not be secured by any Lien other than a Lien expressly permitted by Section 4.02(i); (h Indebtedness among Conseco and its Subsidiaries (other than Conseco Finance Entities); (i Indebtedness owing by any Conseco Finance Entity to the extent the related Investment is permitted under Section 4.09(a); (j Indebtedness (other than for borrowed money) subject to Liens permitted under Section 4.02(b), (d), (e) or (f); (k Indebtedness in respect of Surplus Debentures entered into by an Insurance Subsidiary; (l unsecured Indebtedness of Conseco in an aggregate principal amount not to exceed $100,000,000 at any time outstanding; and (m Indebtedness in respect of the Facilities. IV.2 Liens. Conseco shall not, and shall not permit any of its Subsidiaries to, create, assume or suffer to exist any Lien on any asset now owned or hereafter acquired by it, except for the following (collectively called "Permitted Liens"): (a Liens in connection with Permitted Transactions; (b Liens for Taxes which are not overdue for more than 60 days or for Taxes being contested in good faith and by appropriate proceedings and with respect to which adequate reserves are being maintained in accordance with GAAP; 28 (c Liens shown on Schedule 4.02(c), including extensions, renewals and replacements of such Liens; provided that (i) no such Lien is spread to cover any additional property (other than after acquired title in or on such property and proceeds of the existing collateral in accordance with the document creating such Lien) and (ii) the Indebtedness secured thereby is not increased by more than 10% (of the aggregate principal amount of such Indebtedness outstanding on the Effective Date) except as otherwise permitted under Section 4.01 (in which case the portion representing any additional increase must be permitted by another paragraph of this Section 4.02); (d Liens incurred in the ordinary course of business in connection with worker's compensation, unemployment insurance or other forms of governmental insurance or benefits or to secure performance of tenders, statutory obligations, leases and contracts (other than for borrowed money) entered into in the ordinary course of business or to secure obligations on surety or appeal bonds; (e Liens of mechanics, carriers, and materialmen and other like Liens arising in the ordinary course of business in respect of obligations which are not overdue for more than 60 days or which are being contested in good faith and by appropriate proceedings and with respect to which adequate reserves are being maintained in accordance with GAAP; (f Liens arising in the ordinary course of business for sums being contested in good faith and by appropriate proceedings and with respect to which adequate reserves are being maintained in accordance with GAAP, or for sums not due, and in either case not involving any deposits or advances for borrowed money or the deferred purchase price of property or services; (g Liens in favor of the trustee on sums required to be deposited with the trustee under the indentures described on Schedule 4.02(g); (h Liens incurred on assets of Subsidiaries that are Conseco Finance Entities securing Indebtedness which is expressly permitted by Section 4.01(e) or (f); (i Liens securing Indebtedness permitted by Section 4.01(g); provided that such Liens consist exclusively of: (i) Liens securing the Relevant Facility, (ii) Liens pursuant to any Cash Collateral Agreement (and a Lien may be incurred on the collateral under the Cash Collateral Agreement in favor of the Public Debt secured by the Collateral Agreement), (iii) Liens on "Collateral" as defined in the Collateral Agreement, (iv) Liens on Conseco's interest in Tritel, Inc. in existence of the Effective Date securing $25,000,000 of notes payable to Ericsson, Inc., and (v) Liens on other assets that (1) are not subject to a Lien incurred pursuant to clause (i), (ii), (iii) or (iv) above and (2) are not described on Schedule 1.01B securing Indebtedness in an aggregate principal amount not to exceed (x) 25% of the Available Basket Amount at any time prior to the Near-Term Facilities Termination Date or (y) 50% of the Available Basket Amount at any time thereafter; (j easements, rights-of-way, zoning restrictions, restrictions and other similar encumbrances incurred in the ordinary course of business and which do not materially interfere with the ordinary course of business of Conseco and its Subsidiaries; (k Liens on property of Conseco and its Subsidiaries in favor of landlords securing licenses, subleases or leases of property permitted hereunder; (l licenses, leases or subleases permitted hereunder granted to others not materially interfering in any material respect in the business of Conseco and its Subsidiaries; 29 (m attachment or judgment Liens not constituting an Event of Default under Section 5.01(i); (n Liens arising from precautionary Uniform Commercial Code financing statement filings with respect to operating leases or consignment arrangements entered into by Conseco and its Subsidiaries in the ordinary course of business; and (o Liens in connection with a Permitted Tritel Hedge Transaction. None of the Permitted Liens shall be permitted on the Reserve or any of the Reserve Amounts (as defined in the relevant agreement governing the Reserve). IV.3 Disposition of Assets. Conseco shall not and shall not permit any of its Subsidiaries to, sell, assign, lease, transfer or otherwise Dispose of (whether in one or a series of transactions) any property (including accounts and notes receivable with or without recourse and Capital Stock of any Subsidiary whether newly issued or otherwise) or enter into any agreement to do any of the foregoing, except: (a Dispositions of inventory or equipment (including, without limitation, repossessed and/or off lease property of Conseco Finance), all in the ordinary course of business consistent with past practices; (b the sale of equipment to the extent that such equipment is exchanged for credit against the purchase price of similar replacement equipment, or the proceeds of such sale are reasonably promptly applied to the purchase price of such replacement equipment; (c Dispositions of Investments by Insurance Subsidiaries (other than any of their respective Investments in Persons engaged in insurance lines of business) in the ordinary course of business consistent with past practices; (d Dispositions of (i) in the case of any Conseco Finance Entity, loans, leases, receivables, installment contracts and other financial products originated, acquired, sold or securitized by such Conseco Finance Entity or (ii) interests in or components of Interest Only Securities; (e intercompany Dispositions made between or among Conseco and its Subsidiaries (or Subsidiaries of Conseco with other Subsidiaries of Conseco or Conseco), in each case, in the ordinary course of business; (f (i) any Disposition pursuant to a Reinsurance Agreement so long as such Disposition is entered into in the ordinary course of business for the purpose of managing insurance risk consistent with industry practice and (ii) any other Disposition pursuant to a Reinsurance Agreement so long as (x) the proceeds therefrom are retained by an Insurance Subsidiary, (y) such proceeds are used for the general corporate purposes of the Insurance Subsidiaries (including for reinvestment within insurance lines of business similar to Conseco's insurance lines of business at the time of the relevant transaction) and (z) the aggregate statutory profit and/or gains on insurance policy sales or other portfolio transfers resulting from all Dispositions described in this clause (ii) consummated after August 25, 2000 shall not exceed $250,000,000; (g obsolete or worn out property disposed of by Conseco or any of its Subsidiaries in the ordinary course of business and consistent with past practices of Conseco and its Subsidiaries; 30 (h transfers resulting from any casualty or condemnation of property or assets; (i licenses or sublicenses of intellectual property and general intangibles and licenses, leases or subleases of other property in the ordinary course of business and consistent with the past practices of Conseco and its Subsidiaries and which do not materially interfere with the business of Conseco and its Subsidiaries; (j any consignment arrangements or similar arrangements for the sale of assets in the ordinary course of business and consistent with the past practices of Conseco and its Subsidiaries; (k the sale or discount of overdue accounts receivable arising in the ordinary course of business and consistent with the past practices of Conseco and its Subsidiaries, but only in connection with the compromise or collection thereof; (l Dispositions permitted by Section 4.07(a); (m Dispositions of Investments set forth on Schedule 4.03(m); (n Dispositions not otherwise permitted hereunder, provided that, in the case of Dispositions constituting Asset Sales, (i) 75% of the consideration received in connection therewith shall consist of cash, Cash Equivalents and/or readily marketable securities that are immediately saleable and (ii) 100% of the Net Proceeds thereof shall consist of Available Net Proceeds and shall be applied as described in Article II; and (o the exercise of the put rights set forth in the PRIDES Documents in connection with a remarketing thereunder in accordance with such documents and Section 3.11. Notwithstanding anything to the contrary in this Section 4.03, no issuance or sale of Capital Stock of any Subsidiary of Conseco (other than any Insignificant Subsidiary) shall be permitted if, after giving effect thereto, Conseco owns, directly or indirectly, 50% or less (but greater than 0%) of the voting Capital Stock of such Subsidiary. IV.4 Other Agreements. Conseco shall not, and shall not permit any of its Subsidiaries to, enter into any agreement (other than agreements with insurance regulators) containing any provision which (a) would be violated or breached by the performance of its obligations hereunder or under any instrument or document delivered or to be delivered by it hereunder or in connection herewith or (b) prohibits or restricts the ability of Conseco to amend or otherwise modify this Appendix or any other document executed in connection herewith. IV.5 Transactions with Affiliates. Conseco shall not, and shall not suffer or permit any Significant Subsidiary to, enter into any material transaction with any Affiliate of Conseco (other than Conseco or a Ninety-Percent Owned Subsidiary), except upon fair and reasonable terms no less favorable to Conseco or such Subsidiary than would be obtained in a comparable arm's-length transaction with a Person not an Affiliate of Conseco or such Subsidiary, and except for insurance transactions, intercompany pooling and other reinsurance transactions entered into in the ordinary course of business and consistent with past practice. IV.6 Change in Business. Conseco shall not, and shall not suffer or permit any Significant Subsidiary to, fundamentally change the type of business in which it is presently engaged as listed on Schedule 4.06. 31 IV.7 Fundamental Changes. Unless the Obligations shall be paid in full concurrently therewith, Conseco shall not enter into any merger, consolidation or amalgamation, or liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution), or Dispose of, all or substantially all of its property or business, other than any merger, consolidation or amalgamation (a) of any Subsidiary of Conseco into Conseco, (b) solely for the purpose of reincorporating Conseco in a different State of the United States or (c) solely for the purpose of consummating an investment permitted by Section 4.09(b)(iii) or (iv). IV.8 Restricted Payments. Conseco shall not declare or pay any dividend (other than dividends payable solely in common stock, or the same class of capital stock as to which the dividend is paid, of the Person making such dividend) on (or make any payment to a related trust for the purpose of paying a dividend), or make any payment on account of, or set apart assets for a sinking or other analogous fund for, the purchase, redemption, defeasance, retirement or other acquisition of, any Capital Stock of Conseco (or any related trust), whether now or hereafter outstanding, or make any other distribution in respect thereof, either directly or indirectly, whether in cash or property or in obligations of Conseco (collectively, "Restricted Payments"), except that (a) Conseco may declare and pay dividends on its common stock so long as, at the time of declaration of the relevant dividend, Conseco has Investment Grade Ratings Status and the Near-Term Facilities Termination Date has occurred, (b) Conseco may declare and pay regularly scheduled dividends on its preferred stock (and permit any related trust to do the same) so long as, at the time of declaration of the relevant dividend, Conseco has Investment Grade Ratings Status and the Near-Term Facilities Termination Date has occurred, (c) Conseco may declare and pay regularly scheduled payments of interest and principal on its debentures underlying the Trust Preferred Securities and the FELINE PRIDES (and the related trusts may pay regularly scheduled dividends under such Trust Preferred Securities and such FELINE PRIDES) so long as (i) Conseco's Cash on Hand on average for the 90 days prior to the date of such declaration is equal to or greater than $100,000,000, (ii) Conseco's Cash on Hand on the date of such payment, after giving effect to the payment of said dividend on such date, is equal to or greater than $100,000,000 and (iii) no Event of Default shall have occurred and be continuing at the time of such payment, (d) Conseco may make cash payments in respect of fractional shares of its preferred stock in an aggregate amount not to exceed $10,000,000 and (e) Conseco may pay dividends to Bankers National Life Insurance Company in respect of its Preferred Series E Capital Stock in an amount not to exceed $36,000,000 per year. IV.9 Investments. (a) Conseco and its Subsidiaries (other than Conseco Finance and its Subsidiaries) shall not, directly or indirectly, make any Investment in Conseco Finance or any of its Subsidiaries after the Effective Date, except (i) intercompany Investments in the ordinary course of business in an aggregate amount not to exceed $250,000,000 at any time outstanding of which (x) $50,000,000 may be made on a permanent basis, (y) $100,000,000 may be made so long as each such Investment pursuant to this clause (y) is repaid within three months of the date of Investment and within each three month period there shall be a three Business Day period during which no Investment pursuant to clause (y) of this clause (i) shall be outstanding, and (z) $100,000,000 may be made so long as each such Investment pursuant to this clause (z) is repaid within six months of the date of Investment and within each six month period there shall be a three Business Day period during which no Investment pursuant to clause (z) of this clause (i) shall be outstanding, and (ii) additional Investments made at any time after the Near-Term Facilities Termination Date in an aggregate amount not to exceed $150,000,000 at any time outstanding. 32 (b) Conseco and CIHC shall not, directly or indirectly, make any Investment in any Person (other than a Subsidiary of Conseco to support its operations in the ordinary course of business) except: (i) Investments made with common stock issued by Conseco, (ii) Investments agreed to but not made prior to the date hereof and set forth on Schedule 4.09(b), (iii) Investments not otherwise permitted hereby in an aggregate amount expended not to exceed $25,000,000 in any Fiscal Year, (iv) Investments made in connection with a sale of assets permitted by Section 4.03 to the extent of the non-cash consideration received by Conseco or a Subsidiary, (v) as permitted by Section 4.09(a) and (vi) Conseco may repurchase its 6.4% Mandatory Par Put Remarketed Securities due June 15, 2011 if required to do so pursuant to the terms and conditions thereof, which repurchase (if so required) shall be conducted in accordance with the terms and conditions of such instruments. It is understood that Investments of the type described in Section 4.09(a) may not be made pursuant to clauses (i) through (iii) of this paragraph (b). IV.10 Optional Payments; Modifications of Certain Agreements; Synthetic Purchase Agreements. (a) Conseco shall not, and shall not permit any of its Subsidiaries (other than Conseco Finance or any of its Subsidiaries) to make any optional or voluntary payment, prepayment, repurchase or redemption of or otherwise optionally or voluntarily defease or segregate funds with respect to Indebtedness (other than the Reserve), other than (i) prepayments of Indebtedness of a Subsidiary of Conseco owed to Conseco or another Subsidiary of Conseco or of Conseco owed to a Subsidiary of Conseco, in each case to the extent prepaid or repaid in the ordinary course of business, which Indebtedness is (A) not related to the Trust Preferred Securities and (B) not a prepayment of loans referred to in clause (f) of the definition of "Conseco Available Cash Flow" unless, in the case of this clause (B), at the time of, and after giving pro forma effect to, such prepayment, Conseco is in compliance with Section 4.14, (ii) prepayments of the 2000 Public Debt, (iii) prepayments of the 2001 Public Debt so long as on the date of such prepayment (or, if earlier, the date on which Conseco enters into an obligation to make such prepayment), Conseco has A.M. Best A- Status, (iv) prepayments of the Longer-Term Public Debt made after the Near-Term Facilities Termination Date so long as the scheduled maturity of the Public Debt being prepaid is earlier than the earliest scheduled maturity then in effect with respect to the remaining Facilities, (v) prepayments of Capital Lease Liabilities in connection with the Disposition of the related asset or property and (vi) prepayments not otherwise permitted by the foregoing clauses so long as the aggregate amount expended in connection therewith does not exceed $25,000,000. (b) Conseco shall not, and shall not permit any of its Subsidiaries (other than Conseco Finance or any of its Subsidiaries) to amend, modify, waive or otherwise change, or consent or agree to any amendment, modification, waiver or other change to, any of the material terms of any subordinated Indebtedness of Conseco or any of its Subsidiaries (other than Conseco Finance or any of its Subsidiaries) the aggregate principal amount of which exceeds $10,000,000 (other than any such amendment, modification, waiver or other change that (i) would extend the maturity or reduce the amount of any payment of principal thereof or reduce the rate or extend any date for payment of interest thereon and (ii) does not involve the payment of a consent fee that is not customary under the circumstances). (c) Conseco shall not, and shall not permit any of its Subsidiaries (other than Conseco Finance or any of its Subsidiaries) to amend, modify, waive or otherwise change, or consent or agree to any amendment, modification, waiver or other change to, any of the material terms of any preferred stock issued by Conseco or any of its Subsidiaries or any related trust (other than any such amendment, modification, waiver or other change that (i) would extend the scheduled redemption date or reduce the amount of any scheduled redemption payment or reduce the rate or extend any date for payment of dividends thereon and (ii) does not involve the payment of a consent fee that is not customary under the circumstances). (d) Conseco shall not, and shall not permit any of its Subsidiaries to enter into or be party to, or make any payment under, any Synthetic Purchase Agreement. 33 IV.11 Negative Pledge on Tritel and Argosy Riverboat. Conseco shall not, and shall not permit any of its Subsidiaries to, pledge or create any security interest or Lien upon (a) any of the Capital Stock of Tritel, Inc. (or any successor thereto) directly or indirectly owned by it (other than (i) any such Lien described in Section 4.02(i)(iv) and (ii) Liens securing obligations under hedging transactions relating to the value of such Capital Stock with counterparties having a senior unsecured non-credit enhanced long-term debt rating of at least A2 from Moody's and A from S&P (a "Permitted Tritel Hedge Transaction")) or (b) the Capital Stock or assets of Conseco Entertainment Inc. or CNC Entertainment LLC. IV.12 Reserve Account. Conseco shall not permit the amounts in the Reserve (a) to be invested in anything other than Cash Equivalents or (b) to be used for any purpose other than to prepay or repay the 2000 Public Debt, the 2001 Public Debt or Exposure under the Facilities, except that, with the prior written consent of each of the Agents, Conseco may use up to 20% of the amounts in the Reserve at any time (but in an aggregate amount not to exceed $160,000,000) for other general corporate purposes permitted by the Loan Documents, including this Appendix. IV.13 Debt to Capitalization Ratio. Conseco shall not permit the Debt to Total Capitalization Ratio as of the end of each Fiscal Quarter set forth below to be greater than the ratio set forth below for such date: ---------------------------------------------------------- --------------- Fiscal Quarter Ending Ratio ---------------------------------------------------------- --------------- December 31, 2000 0.450:1.0 ---------------------------------------------------------- --------------- March 31, 2001 0.435:1.0 ---------------------------------------------------------- --------------- June 30, 2001 0.425:1.0 ---------------------------------------------------------- --------------- September 30, 2001 0.425:1.0 ---------------------------------------------------------- --------------- December 31, 2001 0.400:1.0 ---------------------------------------------------------- --------------- March 31, 2002 0.400:1.0 ---------------------------------------------------------- --------------- June 30, 2002 0.400:1.0 ---------------------------------------------------------- --------------- September 30, 2002 0.375:1.0 ---------------------------------------------------------- --------------- December 31, 2002 0.375:1.0 ---------------------------------------------------------- --------------- March 31, 2003 0.350:1.0 ---------------------------------------------------------- --------------- June 30, 2003 0.350:1.0 ---------------------------------------------------------- --------------- September 30, 2003 0.350:1.0 ---------------------------------------------------------- --------------- December 31, 2003 0.350:1.0 ---------------------------------------------------------- --------------- March 31, 2004 0.300:1.0 ---------------------------------------------------------- --------------- June 30, 2004 0.300:1.0 ---------------------------------------------------------- --------------- September 30, 2004 0.300:1.0 ---------------------------------------------------------- --------------- December 31, 2004 and thereafter 0.300:1.0 ---------------------------------------------------------- --------------- For each $2,830,000 by which the aggregate amount of the FY 2000 Adjustments is less than $500,000,000, each ratio set forth above for periods ending on or prior to September 30, 2001 shall be reduced by 0.01%. IV.14 Interest Coverage Ratio. Conseco shall not permit the Interest Coverage Ratio as of the end of each Fiscal Quarter set forth below for the four Fiscal Quarters then ended (or, if less, the number of full Fiscal Quarters commencing after the Effective Date) to be less than the ratio set forth below for such date: ---------------------------------------------------------- ---------------- Fiscal Quarter Ending Ratio ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- December 31, 2000 1.00:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- March 31, 2001 1.00:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- June 30, 2001 1.10:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- September 30, 2001 1.10:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- December 31, 2001 1.20:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- March 31, 2002 1.25:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- June 30, 2002 1.30:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- September 30, 2002 1.40:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- December 31, 2002 1.40:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- March 31, 2003 1.60:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- June 30, 2003 1.75:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- September 30, 2003 1.90:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- December 31, 2003 2.00:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- March 31, 2004 2.00:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- June 30, 2004 2.00:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- September 30, 2004 2.00:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- December 31, 2004 and thereafter 2.00:1.0 ---------------------------------------------------------- ---------------- IV.15 Conseco Adjusted Earnings. Conseco shall not permit the Conseco Adjusted Earnings for any period of four Fiscal Quarters (or, in the case of the tests as at March 31, 2001, June 30, 2001 and September 30, 2001, two Fiscal Quarters, two Fiscal Quarters and three Fiscal Quarters, respectively) ended on any date set forth below to be less than the amount set forth below for such date: ---------------------------------------------------------- ------------------- Fiscal Quarter Ending Amount ---------------------------------------------------------- ------------------- March 31, 2001 $650,000,000 ---------------------------------------------------------- ------------------- June 30, 2001 $750,000,000 ---------------------------------------------------------- ------------------- 34 ---------------------------------------------------------- ------------------- September 30, 2001 $1,150,000,000 ---------------------------------------------------------- ------------------- December 31, 2001 $1,600,000,000 ---------------------------------------------------------- ------------------- March 31, 2002 $1,600,000,000 ---------------------------------------------------------- ------------------- June 30, 2002 $1,650,000,000 ---------------------------------------------------------- ------------------- September 30, 2002 $1,700,000,000 ---------------------------------------------------------- ------------------- December 31, 2002 $1,750,000,000 ---------------------------------------------------------- ------------------- March 31, 2003 $1,800,000,000 ---------------------------------------------------------- ------------------- June 30, 2003 $1,850,000,000 ---------------------------------------------------------- ------------------- September 30, 2003 $1,925,000,000 ---------------------------------------------------------- ------------------- December 31, 2003 $2,000,000,000 ---------------------------------------------------------- ------------------- March 31, 2004 $2,025,000,000 ---------------------------------------------------------- ------------------- June 30, 2004 $2,075,000,000 ---------------------------------------------------------- ------------------- September 30, 2004 $2,125,000,000 ---------------------------------------------------------- ------------------- December 31, 2004 and thereafter $2,175,000,000 ---------------------------------------------------------- ------------------- IV.16 Conseco Finance Tangible Net Worth. Conseco shall not permit Conseco Finance Tangible Net Worth as at the end of any Fiscal Quarter ending during any Fiscal Year set forth below (commencing with the Fiscal Quarter ending December 31, 2000) to be less than the relevant amount set forth below: ---------------------------------------------------------- ----------------- Fiscal Quarter Ending During Amount ---------------------------------------------------------- ----------------- Fiscal Year Ending December 31, 2000 $950,000,000 ---------------------------------------------------------- ----------------- Fiscal Year Ending December 31, 2001 $1,200,000,000 ---------------------------------------------------------- ----------------- Fiscal Year Ending December 31, 2002 $1,400,000,000 ---------------------------------------------------------- ----------------- Fiscal Year Ending December 31, 2003 $1,650,000,000 ---------------------------------------------------------- ----------------- Fiscal Year Ending December 31, 2004 and thereafter $2,000,000,000 ---------------------------------------------------------- ----------------- 35 IV.17 Risk-Based Capital Ratio. Conseco shall not permit the Risk-Based Capital Ratio as at the end of any Fiscal Quarter to be less than 200%. ARTICLE V EVENTS OF DEFAULT V.1 Events of Default. Each of the following shall constitute an "Event of Default": (a Non Payment. Conseco fails to pay, (i) when and as required to be paid herein, any amount of principal of any Loan, or (ii) within five days after the same becomes due, any interest, fee or any other amount payable hereunder or under any other Loan Document; or (b Representation or Warranty. Any representation or warranty by Conseco or any of its Subsidiaries made or deemed made herein or in any other Loan Document, or contained in any certificate, document or financial or other statement by Conseco, any Subsidiary or any Responsible Officer, furnished at any time in connection with this Appendix or in connection with any other Loan Document, is incorrect in any material respect on or as of the date made or deemed made; or (c Specific Defaults. Conseco fails to perform or observe any term, covenant or agreement contained in any of Section 3.03(a), 4.01, 4.02, 4.03, 4.04, 4.06, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.14, 4.15, 4.16 or 4.17; or (d Other Defaults. Conseco or any of its Subsidiaries fails to perform or observe any other term or covenant contained in this Appendix or any other Loan Document, and such default shall continue unremedied for a period of 30 days after the date upon which written notice thereof is given to Conseco by the Relevant Agent or any Relevant Bank; or 36 (e Cross-Default. (i) Conseco or any Significant Subsidiary (A) fails to make any payment in respect of any Indebtedness or Contingent Obligation (other than in respect of Swap Contracts) or any similar financing arrangement related to the Lehman Agreement, having an aggregate principal amount (including undrawn committed or available amounts and including amounts owing to all creditors under any combined or syndicated credit arrangement) of more than $50,000,000, when due (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise) and such failure continues after the applicable grace or notice period, if any, specified in the relevant document on the date of such failure; or (B) fails to perform or observe any other condition or covenant, or any other event shall occur or condition exist (other than an alleged breach which Conseco or such Significant Subsidiary is contesting in good faith and which does not relate to a payment default or a breach of a financial covenant), under any agreement or instrument relating to any such Indebtedness, and such failure continues after the applicable grace or notice period, if any, specified in the relevant document on the date of such failure if the effect of such failure, event or condition is to cause, or to permit the holder or holders of such Indebtedness or beneficiary or beneficiaries of such Indebtedness or any similar financing arrangement related to the Lehman Agreement (or a trustee or agent on behalf of such holder or holders or beneficiary or beneficiaries) to cause, such Indebtedness to be declared to be due and payable prior to its stated maturity, or, in the case of any such Indebtedness consisting of Contingent Obligations, to become payable or cash collateral in respect thereof to be demanded or, in the case of any similar financing arrangement related to the Lehman Agreement, otherwise permit Lehman or an Affiliate thereof to terminate its obligations or commitments thereunder; or (ii) there occurs under any Swap Contract an Early Termination Date (as defined in such Swap Contract) resulting from (1) any event of default under such Swap Contract as to which Conseco or any Subsidiary is the Defaulting Party (as defined in such Swap Contract) or (2) any Termination Event (as so defined) as to which Conseco or any Subsidiary is an Affected Party (as so defined), and, in either event, the Swap Termination Value owed by Conseco or such Subsidiary as a result thereof is greater than $50,000,000; or (f Insolvency; Voluntary Proceedings. Conseco or any Significant Subsidiary (i) ceases or fails to be solvent, or generally fails to pay, or admits in writing its inability to pay, its debts as they become due, subject to applicable grace periods, if any, whether at stated maturity or otherwise; (ii) voluntarily ceases to conduct its business in the ordinary course; (iii) commences any Insolvency Proceeding with respect to itself; or (iv) takes any action to effectuate or authorize any of the foregoing; or (g Involuntary Proceedings. (i) Any involuntary Insolvency Proceeding is commenced or filed against Conseco or any Significant Subsidiary, or any writ, judgment, warrant of attachment, execution or similar process, is issued or levied against a substantial part of Conseco's or any Significant Subsidiary's properties, and any such proceeding or petition shall not be dismissed, or such writ, judgment, warrant of attachment, execution or similar process shall not be released, vacated or fully bonded within 60 days after commencement, filing or levy; (ii) Conseco, any Significant Subsidiary or any Material Insurance Subsidiary admits the material allegations of a petition against it in any Insolvency Proceeding, or an order for relief (or similar order under non-U.S. law) is ordered in any Insolvency Proceeding; (iii) Conseco, any Significant Subsidiary or any Material Insurance Subsidiary acquiesces in the appointment of a receiver, trustee, custodian, conservator, liquidator, mortgagee in possession (or agent therefor), or other similar Person for itself or a substantial portion of its property or business; or (iv) any Material Insurance Subsidiary shall become subject to any conservation, rehabilitation or liquidation order, directive or mandate issued by any Governmental Authority; or (h Pension Plans and Welfare Plans. With respect to any Single Employer Pension Plan as to which Conseco or any other ERISA Affiliate may have any liability, there shall exist a deficiency of more than $20,000,000 as to any ERISA Affiliate (other than Conseco) or $65,000,000 as to Conseco in the Pension Plan assets available to satisfy the benefits guaranteeable under ERISA with respect to such Pension Plan, and steps are undertaken to terminate such plan or such Pension Plan is terminated or Conseco or any other ERISA Affiliate withdraws from or institutes steps to withdraw from such Pension Plan, or Conseco has knowledge that steps have been taken to terminate any Multiemployer Plan and such termination may result in liability to any ERISA Affiliate (other than Conseco) in excess of $20,000,000 or $65,000,000 as to Conseco or any Reportable Event with respect to such Pension Plan has occurred which could result in the incurrence of liability by any ERISA Affiliate (other than Conseco) in excess of $20,000,000 or $65,000,000 as to Conseco or steps are taken to terminate any Multiemployer Plan and such termination may result in any liability of any ERISA Affiliate (other than Conseco) in excess of $20,000,000 or $65,000,000 as to Conseco shall occur; or (i Material Judgments. One or more judgments or decrees shall be entered against Conseco or any of its Subsidiaries involving in the aggregate a liability (not paid or fully covered by insurance as to which the relevant insurance company has not denied coverage) of $50,000,000 or more, and all such judgments or decrees shall not have been vacated, discharged, stayed or bonded pending appeal within 30 days from the entry thereof ; or 37 (j Material Regulatory Matters. (i) If an Insurance Subsidiary shall not make a scheduled payment of interest or principal on any surplus note or similar form of subordinated indebtedness (due to actions of any Governmental Authority or otherwise), (ii) if at any time an Insurance Subsidiary's ability to pay fees to its Affiliates under existing agreements (or extensions of existing agreements) shall be restricted due to actions of any Governmental Authority or otherwise or (iii) if in any Fiscal Year, an Insurance Subsidiary's ability to pay dividends to its stockholders is restricted in any manner (due to actions of any Governmental Authority or otherwise), other than by restrictions under the insurance law of the Insurance Subsidiary's state of domicile that apply generally to other insurance companies domiciled in the state, and, in the case of clauses (i) through (iii) above, such event or condition (x) was not in effect as of the date hereof and (y) such event or condition, together with all other such events or conditions, could reasonably be expected to have a Material Adverse Effect; or (k Change of Control. There occurs any Change of Control; or (l A.M. Best A- Status. Conseco shall not have obtained A.M. Best A- Status prior to March 31, 2001; or (m CIHC Guarantee. The guarantee contained in the Relevant CIHC Guaranty shall cease, for any reason, to be in full force and effect (other than in accordance with the definition thereof or if released by the Relevant Agent at the direction of each of the Relevant Banks) or Conseco or any Subsidiary of Conseco shall so assert; or (n Subordination to CIHC Obligations. Any "Subordinated Debt" under and as defined in the Relevant CIHC Guaranty shall cease, for any reason, to be validly subordinated to the obligations of CIHC under the Relevant CIHC Guaranty as provided in the relevant provisions of the Relevant CIHC Guaranty, or Conseco or any Subsidiary of Conseco shall so assert; or (o Subordination to Obligations. Any Subordinated Obligations or the guarantees thereof shall cease, for any reason, to be validly subordinated to the Obligations or the obligations of Conseco under the Relevant Conseco Guaranty, as the case may be, as provided in the documents governing such Subordinated Obligations, or Conseco or any Subsidiary of Conseco or any trustee or material holders of such Subordinated Obligations shall so assert. 38 EX-4 3 0003.txt EXHIBIT 4.2 EXHIBIT 4.2 SECOND AMENDMENT TO 364-DAY CREDIT AGREEMENT AND AMENDMENT AND RESTATEMENT OF THE $50,000,000 EXTENDIBLE COMMERCIAL NOTES THIS SECOND AMENDMENT TO 364-DAY CREDIT AGREEMENT AND AMENDMENT AND RESTATEMENT OF THE $50,000,000 EXTENDIBLE COMMERCIAL NOTES, dated as of September 22, 2000 (this "Amendment"), is made by and among Conseco, Inc., an --------- Indiana corporation (the" Company"), the various financial institutions ------- signatory hereto (the "Banks") and Bank of America, N.A. formerly known as Bank ----- of America National Trust and Savings Association, a national banking association, individually and as agent for the Banks (the "Agent"). ----- W I T N E S S E T H: WHEREAS, the Company, the Banks and the Agent are party to that certain 364-Day Credit Agreement, dated as of September 25, 1998, as amended (as heretofore amended, the Credit Agreement) and the Loan Documents referred to ---------------- in the Credit Agreement; WHEREAS, the Company and Merrill Lynch, Pierce, Fenner & Smith Incorporated (Merrill) are party to that certain ECN Dealer Agreement dated as of September 27, 1999, pursuant to which the Company issued $50,000,000 of Extendible Commercial Notes (the Merrill Notes) dated September 28, 1999. WHEREAS, the Company and Merrill wish to restate the Merrill Notes, as hereinafter set forth; and WHEREAS, the Company and the Banks have agreed to amend the Credit Agreement on the terms and conditions herein set forth. NOW, THEREFORE, the parties hereto hereby agree as follows: 1. Definitions. Capitalized terms used but not otherwise defined herein ----------- shall have the meanings assigned to such terms in the Credit Agreement (as amended hereby). 2. Certain Amendments to Credit Agreement. The Credit Agreement is hereby -------------------------------------- amended, effective on the date this Amendment becomes effective in accordance with Section 3 hereof, as follows: 2.1 Section 1.01 - Amended Definitions. ---------------------------------- (1) The definition of "Applicable Offshore Rate Margin" in Section 1.01 of the Credit Agreement is hereby amended by deleting such definition in its entirety and replacing it with the following: "Applicable Offshore Rate Margin" means 2.50% per annum. (2) The definition of "Current Commitment Termination Date" in Section 1.01 of the Credit Agreement is hereby amended by deleting such definition in its entirety and replacing it with the following: "Current Commitment Termination Date" means the earlier to occur of: ----------------------------------- (a) December 31, 2001; or (b) the date on which the Loans are accelerated in accordance with the provisions of this Agreement. 2.2 Additional Definitions. The following definitions are added to ---------------------- Section 1.01 of the Credit Agreement in proper alphabetical order: "Appendix" means the Appendix attached as Schedule A to the Second -------- ---------- Amendment, which is hereby incorporated by reference into the Credit Agreement, as from time to time amended in accordance with the terms of this Agreement. "CIHC" means CIHC, Incorporated, a Delaware corporation. ---- "CIHC Guaranty" means a guaranty of CIHC substantially in the form ------------- attached as Schedule B to the Second Amendment hereto. ----------- "Second Amendment" means that certain Second Amendment to the ---------------- Agreement dated September 22, 2000. 2.3 Additional Definitions - Appendix. The definitions set forth in --------------------------------- Section 1.01 of the Appendix are hereby incorporated by reference and added to Section 1.01 of the Credit Agreement in proper alphabetical order. To the extent Section 1.01 of the Credit Agreement contains defined terms that are also defined in Section 1.01 of the Appendix, each such definition in the Credit Agreement shall be deemed deleted and the Appendix definition substituted in lieu thereof except that the term "Taxes", "Required Banks," "Business Day" and "Loan Documents" as used in the Credit Agreement (but not the Appendix) shall retain the meanings set forth in Section 1.01 of the Credit Agreement. 2.4 Commitment. Notwithstanding any provisions of the Credit ---------- Agreement to the contrary, including without limitation Section 2.01 thereof, the Banks shall have no obligation to make, and shall not make, any additional Loans, including, without limitation, Bid Loans. The aggregate Commitments shall equal the outstanding principal amount of the Loans and shall be reduced permanently by any payment of the principal of the Loans. 2.5 Interest. Sections 2.10(a) and (c) of the Credit Agreement are -------- ---------------- --- hereby amended to state in their entirety as follows: -2- "(a) Each Committed Loan shall bear interest on the outstanding principal amount thereof from the applicable Borrowing Date at a rate per annum equal to the Offshore Rate plus the Applicable Offshore Rate Margin ---- or the Base Rate plus 1.50%, as the case may be (and subject to the Company's right to convert to other Types of Loans under Section 2.04). ------------ (1) Notwithstanding Section 2.04 or subsection (a) of this Section ------------ -------------- ------- 2.10, upon the occurrence and during the continuance of an Event of Default ---- under Section 5.01(a) of the Appendix, the Company agrees to pay interest --------------- on such unpaid principal or other amount, from the date such amount becomes due until the date such amount is paid in full, and after as well as before any entry of judgment thereon to the extent permitted by law, payable on demand, at a fluctuating rate per annum equal to the Base Rate plus 3.00% (the "Default Rate"); provided, however, that the Company agrees to pay ------------ -------- ------- interest on the principal amount of all outstanding Obligations at the Default Rate on any date on which an Event of Default continues under Section 5.01(c) of the Appendix with respect to the Company's failure to --------------- perform or observe any term, covenant or agreement contained in Section ------- 4.13, 4.14, 4.15, 4.16 or 4.17 of the Appendix as well as under Section- ---- ---- ---- ---- ---- -------- 5.01(a) of the Appendix." ------- 2.6 Fees. Section 2.11(b) (Facility Fee) and 2.11(c) (Utilization ---- --------------- ------- Fees) of the Credit Agreement are hereby deleted in their entirety. 2.7 Mandatory Prepayments. Section 2.16 of the Credit Agreement is --------------------- ------------ hereby amended and restated in its entirety to read as follows: "2.18 Mandatory Prepayments. The Company agrees to perform all its --------------------- obligations under Article II of the Appendix, which is hereby incorporated by reference." 2.8 Affirmative Covenants. Article VI of the Credit Agreement is --------------------- hereby amended and restated in its entirety to read as set forth in Article III of the Appendix. 2.9 Negative Covenants. Article VII of the Credit Agreement is ------------------ hereby amended and restated in its entirety to read as set forth in Article IV of the Appendix. 2.10 Events of Default. Section 8.01 of the Credit Agreement is hereby amended and restated in its entirety to read as set forth in Section 5.01 ------------ of the Appendix. 2.11 Schedule 2.01. Schedule 2.01 of the Credit Agreement shall be ------------- amended to read as set forth in Schedule 2.01 hereof. ------------- 2.12 Renumbering. Any amendment of the Credit Agreement herein that ----------- incorporates Articles, Sections, Schedules or Exhibits from the Appendix shall be deemed to automatically renumber any Article, Section, Schedule or Exhibit references therein to correspond to those of the Credit Agreement as amended. -3- 3. Merrill Notes. The Merrill Notes are hereby exchanged, after giving ------------- effect to repayments on the date hereof, for Loans under the Credit Agreement, as hereby amended in an aggregate principal amount of $24,972,464. Merrill shall be deemed to be a Bank, as defined under the Credit Agreement, as hereby amended, with all rights, duties and obligations of such a Bank with a Commitment of $24,972,464. 4. Conditions to Effectiveness of this Amendment. This Amendment shall --------------------------------------------- become effective upon the satisfaction of the following conditions: 4.1 Executed Amendment. Receipt by the Agent of duly executed ------------------ counterparts of this Amendment from the Company and the Banks. 4.2 Restructuring. The other Relevant Facilities shall have been ------------- amended in a form reasonably satisfactory to the Required Banks and the Reserve required under the Appendix shall have been established and funded to the extent required under the Appendix. 4.3 Resolutions; Incumbency. Receipt by the Agent of the following ----------------------- documents: (1) copies of the resolutions of the board of directors of the Company authorizing the transactions contemplated hereby, certified as of the date hereof by the Secretary or an Assistant Secretary of the Company; and (2) a certificate of the Secretary or an Assistant Secretary of the Company, dated as of the date hereof, certifying the names and true signatures of the officers of the Company authorized to execute, deliver and perform, as applicable, this Amendment, and all other documents to be delivered by the Company hereunder. 4.4 Organizational Documents; Good Standing. Receipt by the Agent of --------------------------------------- (i) a certificate of the Secretary or an Assistant Secretary of the Company, dated as of the date hereof, certifying as to the form of the articles of incorporation and bylaws of the Company and (ii) a good standing certificate of the Company from its state of incorporation. 4.5 CIHC Guaranty. Receipt by the Agent of the duly executed CIHC ------------- Guaranty. 4.6 Resolutions; Incumbency - CIHC. Receipt by the Agent of the ------------------------------ following documents: (1) copies of the resolutions of the board of directors of CIHC authorizing the CIHC Guaranty, certified as of the date hereof by the Secretary or an Assistant Secretary of CIHC; and (2) a certificate of the Secretary or an Assistant Secretary of CIHC, dated as of the date hereof, certifying the names and true signatures of the officers of CIHC authorized -4- to execute, deliver and perform, as applicable, the CIHC Guaranty, and all other documents to be delivered by CIHC hereunder. 4.7 Organizational Documents; Good Standing. Receipt by the Agent of --------------------------------------- (i) a certificate of the Secretary or an Assistant Secretary of CIHC, dated as of the date hereof, certifying as to the form of the articles of incorporation and bylaws of CIHC and (ii) a good standing certificate as to CIHC from its state of incorporation. 4.8 Opinion of Counsel. Receipt by the Agent of an opinion of counsel ------------------ to the Company and CIHC in form reasonably satisfactory to the Agent. 4.9 Prepayments. ----------- (1) The Company shall have complied with its obligations under Section 2.01(a) of the Appendix. The outstanding Loans under the Credit Agreement to each Bank shall equal the amount of its Commitments set forth in the attached Schedule 2.01; and ------------- (2) On or before the effective date hereof, $50,000,000 shall have been pledged as cash collateral to support the Specified D&O Facilities. 4.10 Fee. Receipt by the Agent for the benefit of the Banks of an --- amendment fee in an amount equal to 1% of the outstanding principal amount of the Loans under the Credit Agreement on the effective date hereof after giving effect to the prepayments received on the effective date hereof. 4.11 Certificate. Receipt by the Agent of a certificate signed by a ----------- Responsible Officer, dated as of the date hereof, stating that: (1) no Default or Event of Default will exist after giving effect to this Amendment; and (2) since June 30, 2000, there has been no Material Adverse Effect (except for changes in or adverse effects upon, the business, properties, condition (financial or otherwise) of the Company and its Subsidiaries as disclosed in press releases, public filings or otherwise in writing to the Agent). 4.12 CFC. The Company shall have disclosed to the Banks in writing --- any contractual restrictions on the ability of Conseco Finance Company to distribute Available Net Proceeds to the Company and the Banks shall be reasonably satisfied with such restrictions including, without limitation, any such restrictions under the Lehman Agreement. 4.13 Miscellaneous. Receipt by the Agent of such other documents, ------------- certificates, instruments or opinions as may reasonably be requested by the Agent or the Banks. -5- 5. Certain Representations and Warranties by the Company. In order to ----------------------------------------------------- induce the Banks and the Agent to enter into this Amendment, the Company represents and warrants to the Banks and the Agent that: 5.1 Authority. The Company has the right, power and capacity and has --------- been duly authorized and empowered by all requisite corporate and required shareholder action, if any, to enter into, execute, deliver and perform this Amendment. 5.2 Validity. This Amendment has been duly and validly executed and -------- delivered by the Company and constitutes its legal, valid and binding obligation, enforceable against the Company in accordance with its terms, except as enforcement thereof may be subject to the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors' rights generally and general principles of equity (regardless of whether such enforcement is sought in a proceeding in equity or at law or otherwise). 5.3 No Conflicts. The Company's execution, delivery and performance ------------ of this Amendment do not and will not violate (i) its certificate or articles of incorporation or by laws, (ii) any law, rule, regulation, order, writ, judgment, decree or award applicable to the Company, or (iii) any contractual obligation to which the Company is a party or to which the Company or any of its properties are subject, except to the extent that any violations as set forth in clauses (ii) or (iii) would not result in a Material Adverse Effect. 5.4 Approvals. No authorization or approval or other action by, and --------- no notice to or filing or registration with, any Governmental Authority or regulatory body (other than those which have been obtained and are in force and effect) is required in connection with the Company's execution, delivery and performance of this Amendment. 5.5 CIHC Authority. CIHC has the right, power and capacity and has -------------- been duly authorized and empowered by all requisite corporate and required shareholder action, if any, to enter into, execute, deliver and perform the CIHC Guaranty. 5.6 CIHC Guaranty Validity. The CIHC Guaranty has been duly and ---------------------- validly executed and delivered by CIHC and constitutes its legal, valid and binding obligation, enforceable against CIHC in accordance with its terms, except as enforcement thereof may be subject to the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors' rights generally and general principles of equity (regardless of whether such enforcement is sought in a proceeding in equity or at law or otherwise). 5.7 No Conflicts - CIHC. CIHC's execution, delivery and performance ------------------- of the CIHC Guaranty do not and will not violate (i) its certificate or articles of incorporation or by-laws, (ii) any law, rule, regulation, order, writ, judgment, decree of award applicable to CIHC or (iii) any contractual obligation to which CIHC is a party or to which CIHC or any of its properties are subject, -6- except to the extent any violations as set forth in clauses (ii) or (iii) would not result in a Material Adverse Effect.. 5.8 Approvals - CIHC. No authorization or approval or other action ---------------- by, and no notice to or filing or registration with, any Governmental Authority or regulatory body (other than those which have been obtained and are in force and effect) is required in connection with CIHC's execution, delivery and performance of the CIHC Guaranty. 5.9 Incorporated Representations and Warranties. All representations ------------------------------------------- and warranties contained in the Loan Documents are true and correct in all material respects with the same effect as though such representations and warranties had been made on and as of the date hereof and the effective date hereof, except (i) as to any representations or warranties which expressly related to an earlier date, in which event, such representations and warranties are true in all material respects as of such date and (ii) except that (A) Schedule 5.05 (Litigation), Schedule 5.13 (Investment Companies), Schedule 5.14 (Subsidiaries), Schedule 7.02(c) (Liens), and Schedule 7.02(g) (Permitted Indentures) of the Credit Agreement are hereby amended to read in their entirety as set forth in Schedule C to this Amendment, (B) the reference in Section 5.05 to the Credit Agreement to "September 1, 1998" shall be amended to be a reference to "September 1, 2000", (C) all references in Section 5.11 of the Credit Agreement to "December 31, 1997"shall be amended to be references to "December 31, 1999", (D) Section 5.07(c) of the Credit Agreement is hereby amended by the addition of the word "not" in the first line between the words "could" and "reasonably", (E) all references in Section 5.11 of the Credit Agreement to "June 30, 1998" shall be amended to be references to "June 30, 2000", and (F) Section 5.16 of the Credit Agreement shall be amended and restated in its entirety to read as follows: "5.16 Material Adverse Effect. Since June 30, 2000, there has been no Material Adverse Effect (except for changes in or adverse effects upon, the business, properties, condition (financial or otherwise) of the Company and its Subsidiaries as disclosed in press releases, public filings or otherwise in writing to the Agent on or before the effective date of the Second Amendment." 5.10 No Defaults. No Default or Event of Default will exist after ----------- giving effect to this Amendment. 6. Miscellaneous. The parties hereto hereby further agree as follows: ------------- 6.1 Further Assurances. Each of the parties hereto hereby agrees to ------------------ do such further acts and things and to execute, deliver and acknowledge such additional agreements, powers and instruments as any other party hereto may reasonably request which are required to carry into effect the purposes of this Amendment and the Credit Agreement, as amended hereby. -7- 6.2 Payment of Costs and Expenses. The Company agrees to pay on demand all ----------------------------- expenses of the Agent (including the fees and out-of-pocket expenses of counsel to the Agent) in connection with the negotiation, preparation, execution and delivery of this Amendment. 6.3 Governing Law. THIS AMENDMENT SHALL BE DEEMED TO BE A CONTRACT MADE ------------- UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF ILLINOIS. 6.4 Counterparts. This Amendment may be executed in one or more ------------- counterparts, each of which, when executed and delivered, shall be deemed to be an original and all of which counterparts, taken together, shall constitute but one and the same document with the same force and effect as if the signatures of all of the parties were on a single counterpart, and it shall not be necessary in making proof of this Amendment to produce more than one such counterpart. 6.5 Headings. Headings used in this Amendment are for convenience of -------- reference only and shall not affect the construction of this Amendment. -8- IN WITNESS WHEREOF, this Amendment has been duly executed and delivered as of the date first above written. CONSECO, INC. By: /s/ Thomas M. Hagerty -------------------------------------- Title: Acting Chief Financial Officer ----------------------------------- BANK OF AMERICA, N.A., as Agent By: ______________________________________ Title: ____________________________________ BANK OF AMERICA, N.A., as a Bank By: ______________________________________ Title: ___________________________________ [TO SECOND AMENDMENT TO CREDIT AGREEMENT] S-1 THE CHASE MANHATTAN BANK, as a Bank By: ______________________________________ Title: ___________________________________ [TO SECOND AMENDMENT TO CREDIT AGREEMENT] S-2 FIRST UNION NATIONAL BANK, as a Bank By: ______________________________________ Title: ___________________________________ [TO SECOND AMENDMENT TO CREDIT AGREEMENT] S-3 MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as a Bank By: ______________________________________ Title: ___________________________________ [TO SECOND AMENDMENT TO CREDIT AGREEMENT] S-4 THE BANK OF NEW YORK, as a Bank By: ______________________________________ Title: ___________________________________ [TO SECOND AMENDMENT TO CREDIT AGREEMENT] S-5 BANK ONE, NA (Main Office Chicago), as a Bank By: ______________________________________ Title: ___________________________________ [TO SECOND AMENDMENT TO CREDIT AGREEMENT] S-6 SUNTRUST BANK, CENTRAL FLORIDA, N.A., as a Bank By: ______________________________________ Title: ___________________________________ [TO SECOND AMENDMENT TO CREDIT AGREEMENT] S-7 U.S. BANK NATIONAL ASSOCIATION, as a Bank By: ______________________________________ Title: ___________________________________ [TO SECOND AMENDMENT TO CREDIT AGREEMENT] S-8 THE BANK OF TOKYO-MITSUBISHI, LTD., as a Bank By: ______________________________________ Title: ___________________________________ [TO SECOND AMENDMENT TO CREDIT AGREEMENT] S-9 CREDIT SUISSE FIRST BOSTON, as a Bank By: ______________________________________ Title: ___________________________________ By: ______________________________________ Title: ___________________________________ [TO SECOND AMENDMENT TO CREDIT AGREEMENT] S-10 DEUTSCHE BANK, AG, New York and/or Cayman Islands Branches, as a Bank By: ______________________________________ Title: ___________________________________ By: ______________________________________ Title: ___________________________________ [TO SECOND AMENDMENT TO CREDIT AGREEMENT] S-11 SOCIETE GENERALE (New York Branch), as a Bank By: ______________________________________ Title: ___________________________________ [TO SECOND AMENDMENT TO CREDIT AGREEMENT] S-12 NATIONAL CITY BANK OF INDIANA, as a Bank By: ______________________________________ Title: ___________________________________ [TO SECOND AMENDMENT TO CREDIT AGREEMENT] S-13 FIRSTAR BANK, N.A. (f/k/a Star Bank, N.A.), as a Bank By: ______________________________________ Title: ___________________________________ [TO SECOND AMENDMENT TO CREDIT AGREEMENT] S-14 UBS AG, Stamford Branch, as a Bank By: ______________________________________ Title: ___________________________________ [TO SECOND AMENDMENT TO CREDIT AGREEMENT] S-15 COMERICA BANK, as a Bank By: ______________________________________ Title: ___________________________________ [TO SECOND AMENDMENT TO CREDIT AGREEMENT] S-16 KEYBANK NATIONAL ASSOCIATION, as a Bank By: ______________________________________ Title: ___________________________________ [TO SECOND AMENDMENT TO CREDIT AGREEMENT] S-17 NORDDEUTSCHE LANDESBANK GIROZENTRALE, New York Branch and/or Cayman Islands Branch, as a Bank By: ______________________________________ Title: ___________________________________ [TO SECOND AMENDMENT TO CREDIT AGREEMENT] S-18 SYNDICATED LOAN FUNDING TRUST By: ______________________________________ Title:____________________________________ [TO SECOND AMENDMENT TO CREDIT AGREEMENT] S-19 WELLS FARGO BANK, NA, as a Bank By: ______________________________________ Title:____________________________________ [TO SECOND AMENDMENT TO CREDIT AGREEMENT] S-20 MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED, as a Bank By: ______________________________________ Title:____________________________________ [TO SECOND AMENDMENT TO CREDIT AGREEMENT] S-21 Schedule A - Appendix ================================================================================ APPENDIX CONSECO, INC. $3,028,576,848 CREDIT FACILITIES DATED AS OF SEPTEMBER 22, 2000 BANK OF AMERICA, N.A. AND THE CHASE MANHATTAN BANK, AS JOINT LEAD ARRANGERS AND JOINT BOOK MANAGERS ================================================================================ TABLE OF CONTENTS
Page ARTICLE IDEFINITIONS....................................................................................................1 ----------- 1.01 Certain Defined Terms..............................................................................1 --------------------- 1.02 Other Interpretive Provisions.....................................................................20 ----------------------------- 1.03 Accounting Principles.............................................................................21 --------------------- ARTICLE IIMANDATORY CASH APPLICATIONS..................................................................................21 --------------------------- 2.01 General Application of Available Net Proceeds.....................................................21 --------------------------------------------- 2.02 Application of Available Net Proceeds Allocated to Facilities.....................................22 ------------------------------------------------------------- 2.03 Exempt Covenant/Waterfall Amounts.................................................................22 --------------------------------- ARTICLE IIIAFFIRMATIVE COVENANTS.......................................................................................23 --------------------- 3.01 Financial Statements..............................................................................23 -------------------- 3.02 Certificates; Other Information...................................................................24 ------------------------------- 3.03 Notices...........................................................................................24 ------- 3.04 Preservation of Corporate Existence, Etc. ........................................................26 ----------------------------------------- 3.05 Insurance.........................................................................................26 --------- 3.06 Payment of Obligations............................................................................26 ---------------------- 3.07 Compliance with Laws..............................................................................26 -------------------- 3.08 Compliance with ERISA.............................................................................26 --------------------- 3.09 Inspection of Property and Books and Records; Expense Reimbursement...............................26 ------------------------------------------------------------------- 3.10 Tritel Disposition................................................................................27 ------------------ 3.11 Conversion of FELINE PRIDES.......................................................................27 --------------------------- ARTICLE IVNEGATIVE COVENANTS...........................................................................................27 ------------------ 4.01 Limitation on Indebtedness........................................................................27 -------------------------- 4.02 Liens.............................................................................................28 ----- 4.03 Disposition of Assets.............................................................................30 --------------------- 4.04 Other Agreements..................................................................................31 ---------------- 4.05 Transactions with Affiliates......................................................................31 ---------------------------- 4.06 Change in Business................................................................................31 ------------------ 4.07 Fundamental Changes...............................................................................31 ------------------- 4.08 Restricted Payments...............................................................................32 ------------------- 4.09 Investments.......................................................................................32 ----------- 4.10 Optional Payments; Modifications of Certain Agreements; Synthetic Purchase Agreements.............33 ------------------------------------------------------------------------------------- 4.11 Negative Pledge on Tritel and Argosy Riverboat....................................................33 ---------------------------------------------- 4.12 Reserve Account...................................................................................34 --------------- 4.13 Debt to Capitalization Ratio......................................................................34 ---------------------------- 4.14 Interest Coverage Ratio...........................................................................34 ----------------------- 4.15 Conseco Adjusted Earnings.........................................................................35 ------------------------- 4.16 Conseco Finance Tangible Net Worth................................................................35 ---------------------------------- 4.17 Risk-Based Capital Ratio..........................................................................35 ------------------------ ARTICLE VEVENTS OF DEFAULT.............................................................................................36 ----------------- 5.01 Events of Default.................................................................................36 -----------------
SCHEDULES Schedule 1.01A Certain Material Insurance Subsidiaries Schedule 1.01B Specified Cash Events Schedule 1.01C Changes in Future Loss Reserves Schedule 1.01D Persons Not Subsidiaries Schedule 2.02 Exposure on Effective Date Schedule 4.01(c) Indebtedness Schedule 4.02(c) Existing Liens Schedule 4.02(g) Permitted Indentures Schedule 4.03(m) Dispositions of Investments Schedule 4.06 Business Activities Schedule 4.09(b) Proposed Investments EXHIBITS Exhibit A Form of Compliance Certificate Exhibit B Form of Reserve Account Agreement ARTICLE I DEFINITIONS I.1 Certain Defined Terms. The following terms, when used in this Appendix, have the following meanings: "Affiliate" means, as to any Person, any other Person which, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person. A Person shall be deemed to control another Person if the controlling Person possesses, directly or indirectly, the power (a) to vote 10% or more of the securities (on a fully diluted basis) having ordinary voting power for the election of directors or managing general partners, or (b) to direct or cause the direction of the management and policies of the other Person, whether through the ownership of voting securities, membership interests, by contract, or otherwise. "Agent" means any "Relevant Agent" under and as defined in the documents governing any Facility. "A.M. Best" means A.M. Best Company, together with any Person succeeding thereto by merger, consolidation or acquisition of all or substantially all of its assets, including substantially all of its business of rating insurance companies. "A.M. Best A- Status" means the circumstance that each Material Insurance Subsidiary listed on Schedule 1.01A has a claims paying rating of at least A- from A.M. Best. "Annual Statement" means the annual statutory financial statement of any Insurance Subsidiary required to be filed with the insurance commissioner (or similar authority) of its jurisdiction of incorporation, which statement shall be in the form required by such Insurance Subsidiary's jurisdiction of incorporation or, if no specific form is so required, in the form of financial statements permitted by such insurance commissioner (or such similar authority) to be used for filing annual statutory financial statements and shall contain the type of information permitted or required by such insurance commissioner (or such similar authority) to be disclosed therein, together with all exhibits or schedules filed therewith. "Appendix" means this Appendix as amended, restated, supplemented or otherwise modified from time to time. "Asset Backed Security" means a security of a Conseco Finance Entity that is collateralized by loans, leases, receivables, installment contracts or interests in or components of Interest Only Securities. "Asset Sale" means any Disposition of property or series of related Dispositions of property, excluding any such Disposition permitted by clauses (a) through (m) and clause (o) of Section 4.03 (but in any event including (whether or not permitted by any of the foregoing clauses) any direct or indirect (a) Disposition of all or any part of the Capital Stock issued by Conseco Finance, Tritel, Inc., Conseco Entertainment, Inc. or CNC Entertainment LLC, (b) Disposition of all or any part of the assets of Tritel, Inc. or CNC Entertainment LLC and (c) receipt of cash proceeds in respect of any Specified Cash Event (each, a "Disposition Transaction") that yields gross proceeds to Conseco and its Subsidiaries in excess of $10,000,000, provided that, once the aggregate gross proceeds from Disposition Transactions received during any Proceeds Test Period yielding gross proceeds between $2,000,000 and $10,000,000 exceeds $20,000,000, the first reference to $10,000,000 in this definition shall automatically be deemed to be changed to $2,000,000 for the remainder of such Proceeds Test Period. As used in this definition, "Proceeds Test Period" means (i) the period from the Effective Date through the Near-Term Facilities Termination Date and (ii) each subsequent one-year period commencing on the Near-Term Facilities Termination Date or an anniversary thereof. "Available Basket Amount" means, at any time, an amount equal to (a) ten percent (10%) of Total Shareholders' Equity at such time minus (b) the aggregate then outstanding amount of Indebtedness secured by Liens, without duplication, pursuant to Section 4.02(i)(i), (ii) (of Conseco or any "Significant Subsidiary" (as defined in the Public Debt)), (iii) or (iv). "Available Net Proceeds" means any Net Proceeds received by Conseco or any of its Subsidiaries in connection with any Prepayment Event other than Exempt Covenant/Waterfall Amounts and Exempt Waterfall Amounts applied in the manner described in clause (b) of the definition of "Exempt Waterfall Amounts". "B-Share Financings" means the financing of fees or commissions related to B-Shares. "B-Shares" means those shares of ownership representing a mutual interest in a pool of assets on which l2b-1 fees or contingent deferred sales commissions (CDSC), as defined under the Investment Company Act of 1940, are applicable. "Bank" means each "Relevant Bank" under and as defined in the documents governing any Facility. "Bankruptcy Code" means the Federal Bankruptcy Reform Act of 1978 (11 U.S.C.ss.101, et seq.). "Business Day" means any day other than a Saturday, Sunday or other day on which commercial banks in Chicago or New York City are authorized or required by law to close. "Calculation Period" means, with respect to any ratio or calculation, the period for which such ratio or calculation is being calculated. "Capital and Surplus" means, as to any Insurance Subsidiary, as of any date, the total amount shown on line 38, page 3, column I of the Annual Statement of such Insurance Subsidiary, or an amount determined in a consistent manner for any date other than one as of which an Annual Statement is prepared. "Capitalized Lease Liabilities" means, with respect to any Person, all monetary obligations of such Person under any leasing or similar arrangement which, in accordance with GAAP, would be classified as a capitalized lease, and, for purposes of this Appendix, the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP, and the stated maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be terminated by the lessee without payment of a penalty. 2 "Capital Stock" means any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person (other than a corporation) and any and all warrants, rights or options to purchase any of the foregoing. "Cash Collateral Agreement" means any cash collateral agreement provided to secure obligations of Conseco or any of its Subsidiaries pursuant to any D&O Facility. "Cash Equivalents" means (a) marketable direct obligations issued by, or unconditionally guaranteed by, the United States government or issued by any agency thereof and backed by the full faith and credit of the United States, in each case maturing within one year from the date of acquisition; (b) certificates of deposit, time deposits, eurodollar time deposits or overnight bank deposits having maturities of six months or less from the date of acquisition issued by any commercial bank organized under the laws of the United States or any state thereof having combined capital and surplus of not less than $500,000,000 and a short term deposit rating of at least A-1 by S&P and P-1 by Moody's, or carrying an equivalent rating by a nationally recognized rating agency, if both of the two named rating agencies cease publishing ratings of commercial paper issuers generally; (c) commercial paper of an issuer rated at least A-1 by S&P and P-1 by Moody's, or carrying an equivalent rating by a nationally recognized rating agency, if both of the two named rating agencies cease publishing ratings of commercial paper issuers generally, and maturing within six months from the date of acquisition; (d) repurchase obligations of any Relevant Bank or of any commercial bank satisfying the requirements of clause (b) of this definition, having a term of not more than 30 days, with respect to securities issued or fully guaranteed or insured by the United States government; (e) securities with maturities of one year or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States, by any political subdivision or taxing authority of any such state, commonwealth or territory or by any foreign government, the securities of which state, commonwealth, territory, political subdivision, taxing authority or foreign government (as the case may be) are rated at least A by S&P and A2 by Moody's; (f) securities with maturities of six months or less from the date of acquisition backed by standby letters of credit issued by any Relevant Bank or any commercial bank satisfying the requirements of clause (b) of this definition; or (g) shares of money market mutual or similar funds which invest exclusively in assets satisfying the requirements of clauses (a) through (f) of this definition. "Cash on Hand Target" has the meaning set forth in Section 2.01(b). "CBOs" means notes or other instruments (other than CMOs) secured by collateral consisting primarily of debt securities and/or other types of debt obligations, including loans. "CERCLA" means the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended. "CERCLIS" means the Comprehensive Environmental Response, Compensation and Liability Information System List. 3 "Change of Control" means (a) any acquisition by any Person, or two or more Persons acting in concert, of beneficial ownership (within the meaning of Rule l3d-3 of the Securities and Exchange Commission under the Exchange Act) of 30% or more of the outstanding shares of voting stock of Conseco (other than an acquisition by any Person or Persons who are officers or directors of Conseco on the Effective Date or any Affiliate thereof controlled by the relevant officer or director); or (b) during any period of 25 consecutive calendar months, commencing on the Effective Date, the ceasing of those individuals who were not borrowers under any of the D&O Facilities (the "Continuing Directors") who (i) were directors of Conseco on the first day of each such period or (ii) subsequently became directors of Conseco and whose actual election or initial nomination for election subsequent to that date was approved by a majority of the Continuing Directors then on the board of directors of Conseco, to constitute a majority of the board of directors of Conseco; or (c) Gary Wendt or such other Person as shall be reasonably satisfactory to the Required Banks shall cease to be the Chief Executive Officer of Conseco (other than by reason of death or disability) at any time prior to the Near-Term Facilities Termination Date. "CIHC" means CIHC, Incorporated, a Delaware corporation, and a direct Wholly-Owned Subsidiary of Conseco. "CIHC Guaranty" means any "Relevant CIHC Guaranty" under and as defined in the documents governing any Facility. "CMOs" means notes or other instruments secured by collateral consisting primarily of mortgages, mortgage-backed securities and/or other types of mortgage-related obligations. "Code" means the Internal Revenue Code of 1986, as amended, and regulations promulgated thereunder. "Collateral Agreement" means the Collateral Agreement, dated as of May 30, 2000, made by Conseco and CIHC in favor of the Collateral Agent named therein. "Compliance Certificate" means a certificate substantially in the form of Exhibit A. "Conseco" means Conseco, Inc., an Indiana corporation. "Conseco Adjusted Earnings" means, for any Calculation Period, the consolidated Net Income of Conseco for such period plus, without duplication and to the extent reflected as a charge in the statement of such Net Income for such period, the sum of (a) income tax expense, (b) interest expense, amortization or writeoff of debt discount and debt issuance costs and commissions, discounts and other fees and charges associated with Indebtedness, (c) depreciation and amortization expense, (d) amortization of intangibles (including, but not limited to, goodwill, deferred acquisition costs, the present value of future profits and changes in future loss reserves described on Schedule 1.01C) and organization costs, (e) net changes in Interest Only Securities, (f) any extraordinary, unusual or non-recurring non-cash expenses or losses (including, whether or not otherwise includable as a separate item in the statement of such Net Income for such period, non-cash losses on sales of assets outside of the ordinary course of business), (g) any other non-cash charges (provided that the after tax amounts described in clauses (f) and (g) shall not exceed in the aggregate$500,000,000 for any Calculation Period ending on or before September 30, 2001, and $50,000,000 for any Calculation Period ending thereafter), and (h) realized or unrealized losses on Investments of Insurance Subsidiaries, and minus, to the extent included in the statement of such Net Income for such period, the sum of (a) any extraordinary, unusual or non-recurring income or gains (including, whether or not otherwise includable as a separate item in the statement of such Net Income for such period, gains on the sales of assets outside of the ordinary course of business) and (b) realized or unrealized gains on Investments of Insurance Subsidiaries, all as determined on a consolidated basis. 4 "Conseco Available Cash Flow" means, for any Calculation Period, the sum, without duplication, of (a) dividends paid in cash to Conseco by any Subsidiary, plus (b) interest paid in cash to Conseco by any Subsidiary pursuant to any intercompany Indebtedness owing by such Subsidiary to Conseco, plus (c) interest or principal paid in cash to Conseco with respect to the Surplus Debentures, plus (d) amounts paid in cash to Conseco under the Tax Sharing Agreement, plus (e) management and other similar fees received by Conseco under servicing agreements or otherwise from any Subsidiary, plus (f) amounts paid in cash to Conseco pursuant to a loan made to it by any Subsidiary, plus (g) amounts paid in cash to Conseco by Conseco Finance pursuant to the redemption by Conseco Finance of preferred equity issued by Conseco Finance and owned by Conseco plus (h) Conseco's Investment Income received in cash, plus (i) in respect of any Fiscal Quarter ended on or prior to December 31, 2000, amounts paid by Conseco in closing out swaps in an amount not to exceed $15,000,000 less the value of the collateral attributable to the relevant swaps, minus (j) cash operating expenses of Conseco, minus (k) capital expenditures of Conseco, minus (l) any amounts paid by Conseco in repayment of any loan referred to in clause (f) above. Amounts received by Conseco or any of its Subsidiaries in respect of any Specified Cash Event shall be excluded from this calculation. "Conseco Finance" means Conseco Finance Corp., a Delaware corporation. "Conseco Finance Entities" means, collectively, Conseco Finance and its consolidated Subsidiaries and "Conseco Finance Entity" means any one of them individually. "Conseco Finance Tangible Net Worth" means, at any date, all amounts that would, in conformity with GAAP, be included on a consolidated balance sheet of Conseco Finance and its Subsidiaries under stockholders' equity at such date, as adjusted by the following items to the extent increasing or reducing, as the case may be, such amounts: plus (a) unrealized losses (or, if applicable, minus unrealized gains), plus (b) any non-cash charges specified in clause (f) or (g) of the definition of Conseco Adjusted Earnings (subject to the limits applicable thereto) minus (c) goodwill, minus (d) Interest Only Securities, minus (e) servicing rights plus (f) the amount of any cash dividends paid by Conseco Finance to Conseco (directly or indirectly). If all or any portion of any intercompany Indebtedness owing to Conseco or any of its Subsidiaries by Conseco Finance or any of its Subsidiaries is converted into equity, no positive impact of such conversion shall be included in determining Conseco Finance Tangible Net Worth. "Conseco Guaranty" means any "Relevant Conseco Guaranty" under and as defined in the documents governing any Facility. "Conseco Series F Preferred Stock" means $500,000,000 stated value of Conseco's Series F Common Linked Convertible Preferred Stock, without par value and any replacement thereof, except to the extent held by any Person (other than Thomas H. Lee or any Person, fund or individual affiliated therewith) that acquires such stock pursuant to a bona fide arm's length transaction. "Conseco's Cash On Hand" means, on any date of determination, the aggregate amount of cash and Cash Equivalents then held by (a) Conseco or (b) Conseco Finance or any of its Subsidiaries in connection with Investments made pursuant to Section 4.09(a)(i)(y) or (z), excluding amounts in the Reserve and amounts required on such date to be distributed pursuant to Section 2.01(b). 5 "Contingent Obligation" means, without duplication, any agreement, undertaking or arrangement by which any Person guarantees, endorses or otherwise becomes or is contingently liable upon (by direct or indirect agreement, contingent or otherwise, to provide funds for payment, to supply funds to, or otherwise to invest in, a debtor, or otherwise to assure a creditor against loss) the debt, obligation or other liability of any other Person (other than by endorsements of instruments in the course of collection), or guarantees the payment of dividends or other distributions upon the shares of any other Person; provided, that (a) the obligations of any Person under Reinsurance Agreements or in connection with Investments of Insurance Subsidiaries, (b) the obligations of Conseco in connection with its guaranty of the Trust Preferred Securities, the Unit Securities and the FELINE PRIDES and (c) the obligations of any Person in connection with its guaranty of Asset Backed Securities shall not be deemed Contingent Obligations of any such Person or Conseco, as applicable. The amount of any Person's liability with respect to any Contingent Obligation shall (subject to any limitation set forth therein) be deemed to be the outstanding principal amount (or maximum outstanding principal amount, if larger) of the debt, obligation or other liability outstanding thereunder or, if not stated or if indeterminable, the maximum reasonably anticipated liability in respect thereof at the time of determination. "Contractual Obligation" means, as to any Person, any provision of any security issued by such Person or of any agreement, undertaking, contract, indenture, mortgage, deed of trust or other instrument, document or agreement to which such Person is a party or by which it or any of its property is bound. "D&O Facilities" means the collective reference to the $144 Million D&O Facility, the $181 Million D&O Facility and the $245 Million D&O Facility. "Debt to Total Capitalization Ratio" means, as of any date of determination, without duplication, the ratio of (a) the sum of (i) the principal amount of and accrued but unpaid interest on all Indebtedness for borrowed money of Conseco (including, without limitation, (x) any Indebtedness evidenced by bonds, debentures, notes or other similar instruments and (y) any Indebtedness resulting from any conversion of preferred stock) for which Conseco is directly liable on such date and which is neither a Contingent Obligation (except that Contingent Obligations of Conseco in respect of Indebtedness of the type described in clause (a) or (b) of the definition thereof (other than in respect of the D&O Facilities) shall nevertheless be included in such calculation) nor Indebtedness arising out of a Permitted Transaction and (ii) dividends on Trust Preferred Securities that are accrued but unpaid; to (b) Total Capitalization on such date; provided, however, that solely for the purposes of calculating the Debt to Total Capitalization Ratio, the term "Indebtedness" shall exclude preferred securities issued by business trusts formed by Conseco, guaranteed by Conseco and related to guarantees and intercompany notes. "Default" means any event or circumstance which, with the giving of notice, the lapse of time, or both, would (if not cured or otherwise remedied during such time) constitute an Event of Default. "Department" means, with respect to any Insurance Subsidiary, the Governmental Authority of such Insurance Subsidiary's state of domicile with which such Insurance Subsidiary is required to file its Annual Statement. "Disposition" means the sale, assignment, leasing, transfer, contribution, conveyance, issuance or other disposal of or granting of options, warrants or other rights with respect to any of a Person's assets (including any transaction pursuant to a Reinsurance Agreement and, in the case of any Subsidiary, the issuance or sale of its Capital Stock). The terms "Dispose" and "Disposed of" shall have correlative meanings. "Disposition Transaction" has the meaning specified in the definition of "Asset Sale". 6 "Dollars", "dollars" and "$" each mean lawful money of the United States. "Effective Date" September 22, 2000. "Environmental Laws" means all federal, state or local laws, statutes, common law duties, rules, regulations, ordinances and codes, together with all administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, Governmental Authorities, in each case relating to environmental, health, safety and land use matters. "ERISA" means the Employee Retirement Income Security Act of 1974 and regulations promulgated thereunder. "ERISA Affiliate" means any trade or business (whether or not incorporated) under common control with Conseco within the meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code). "ERISA Event" means (a) a Reportable Event with respect to a Pension Plan; (b) a withdrawal by Conseco or any ERISA Affiliate from a Pension 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) or a cessation of operations which is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by Conseco or any ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to terminate, the treatment of a Plan amendment as a termination under Section 4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (e) an event or condition which could reasonably be expected to constitute grounds under Section 4042 of ERISA for the termination of or the appointment of a trustee to administer, any Pension Plan or Multiemployer Plan; or (e) the imposition of any liability under Title IV of ERISA, other than PBGC premiums due but not delinquent under Section 4007 of ERISA, upon Conseco or any ERISA Affiliate. "Event of Default" means any of the events or circumstances specified in Section 5.01. "Exchange Act" means the Securities Exchange Act of 1934 and the regulations promulgated thereunder. "Exempt Covenant/Waterfall Amounts" means up to $500,000,000 of Net Proceeds from the issuance of Specified Junior Securities received after the Near-Term Facilities Termination Date. "Exempt Waterfall Amounts" means Net Proceeds of Specified Junior Securities (not designated as "Exempt Covenant/Waterfall Amounts") which are applied either (a) (i) prior to the Near-Term Facilities Termination Date, to the Near-Term Facilities (in the manner contemplated by Section 2.02(b)) and (ii) thereafter, to the $1.5 Billion Facility and the Specified D&O Facilities (in the manner contemplated by Section 2.02(c)) or (b) to make investments in Conseco's Subsidiaries to support their operations. 7 "Exposure" means, with respect to each Bank, (a) in the case of the $155 Million Facility, the $766 Million Facility and the $1.5 Billion Facility, any outstanding "Loans" made by such Bank thereunder and (b) in the case of the D&O Facilities, any outstanding "Loans" made by such Bank thereunder minus such Bank's pro rata share of any cash collateral provided pursuant to the applicable Cash Collateral Agreement. "Facilities" means the collective reference to the Near-Term Facilities, the D&O Facilities and the $1.5 Billion Facility. "FELINE PRIDES" means the units consisting of (a) 6.75% Trust Originated Preferred Securities issued by Conseco Financing Trust IV (the "PRIDES Preferred Securities") and (b) a purchase contract to purchase shares of common stock from Conseco (the "PRIDES Purchase Contracts"). "Fiscal Quarter" means any fiscal quarter of a Fiscal Year. "Fiscal Year" means any period of twelve consecutive calendar months ending on December 31. "Fixed Interest Charges" means, for any Calculation Period, (without duplication) (a) interest paid or, without duplication, accrued but unpaid on the Exposure under any Facility (other than the D&O Facilities) with respect to such Calculation Period, plus (b) interest paid or, without duplication, accrued but unpaid on any Indebtedness of Conseco set forth in clause (a), (b) or (d) of the definition thereof during such Calculation Period, minus (c) to the extent included in clause (b) above, interest paid or, without duplication, accrued but unpaid on any Indebtedness which has been eliminated from the balance sheet liabilities of Conseco on a consolidated basis in accordance with GAAP, minus (d) to the extent included in clause (b) above, interest paid or, without duplication, accrued but unpaid on any Indebtedness of any Conseco Finance Entity or any Insurance Subsidiary. Interest paid, or accrued and unpaid, in respect of Indebtedness related to the Trust Preferred Securities or the FELINE PRIDES shall be excluded from the above calculation. "FRB" means the Board of Governors of the Federal Reserve System, and any Governmental Authority succeeding to any of its principal functions. "FY 2000 Adjustments" has the meaning specified in the definition of "Total Capitalization". "GAAP" means generally accepted accounting principles set forth from time to time in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board (or agencies with similar functions of comparable stature and authority within the U.S. accounting profession), which are applicable to the circumstances as of the date of determination. "Governmental Authority" means any nation or government, any state or other political subdivision thereof, any central bank (or similar monetary or regulatory authority) thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, and any corporation or other entity owned or controlled, through stock or capital ownership or otherwise, by any of the foregoing, including any board of insurance, insurance department or insurance commissioner. "Income Taxes" means any Taxes based upon net income. 8 "Indebtedness" means, with respect to any Person, without duplication: (a) all obligations of such Person for borrowed money or in respect of loans or advances; (b) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments; (c) all obligations in respect of letters of credit, whether or not drawn, and bankers' acceptances issued for the account or upon the application or request of such Person; (d) all Capitalized Lease Liabilities of such Person; (e) all obligations of such Person in respect of Swap Contracts; (f) all obligations of such Person to pay the deferred purchase price of property or services which are included as liabilities in accordance with GAAP (other than trade payables entered into in the ordinary course of business on ordinary terms), and all obligations secured by a Lien on property owned or being purchased by such Person (including obligations arising under conditional sales or other title retention agreements); (g) any obligations of a partnership of the kind referred to in clauses (a) through (f) above or clause (h) below in which such Person is a general partner, and (h) all Contingent Obligations of such Person in connection with indebtedness or obligations of others of the kinds referred to in clauses (a) through (g) above; provided, however, that, except for the purpose of the proviso of Section 4.01(d), the term "Indebtedness" shall exclude (i) replevin bonds, surety bonds and other similar bonds (including, without limitation, bonds issued in connection with litigation and repossession activities) issued by an Insurance Subsidiary or a Conseco Finance Entity in the ordinary course of business and (ii) the obligations of any Person under letters of credit (whether or not drawn), bankers' acceptances and swap contracts issued or entered into in connection with any Asset Backed Security. "Independent Auditor" has the meaning specified in Section 3.01(a). "Insignificant Subsidiary" means any Subsidiary of Conseco that is not a Significant Subsidiary. "Insolvency Proceeding" means, with respect to any Person, (a) any case, action or proceeding with respect to such Person before any court or other Governmental Authority relating to bankruptcy, reorganization, insolvency, liquidation, conservation, rehabilitation, receivership, dissolution, winding-up or relief of debtors, or (b) any general assignment for the benefit of creditors, composition, marshalling of assets for creditors, or other, similar arrangement in respect of its creditors generally or any substantial portion of its creditors, in any case, undertaken under U.S. Federal, state or foreign law, including the Bankruptcy Code. "Insurance Subsidiary" means any Subsidiary which is required to be licensed as an insurer or reinsurer. "Interest Coverage Ratio" means, for any Calculation Period, the ratio of (a) Conseco Available Cash Flow for such Calculation Period to (b) Fixed Interest Charges for such Calculation Period. "Interest Only Security" means any interest, including servicing fees, retained by a Conseco Finance Entity relating to the sale or securitization of loans, leases, receivables or installment contracts, which constitutes either an interest only security or a servicing right asset in accordance with GAAP. "Investment" means any advance, loan, extension of credit (by way of guaranty or otherwise) or capital contribution to, or purchase of any Capital Stock, bonds, notes, debentures or other debt securities of, or any assets constituting a business unit of, or any other investment in, any Person. 9 "Investment Grade Ratings Status" means the circumstance that Conseco has a senior unsecured non-credit enhanced long-term debt rating of at least BBB- from S&P and at least Baa3 from Moody's. "Investment Income" means the amount of earnings of Conseco on Investments, net of expenses actually incurred in connection with such Investments and taking into account realized gains and losses on such Investments. "IRS" means the Internal Revenue Service or any Governmental Authority succeeding to any of its principal functions under the Code. "Lehman" means Lehman Brothers Holdings Inc., and any successors. "Lehman Agreement" means, collectively, (a) the Amended and Restated Agreement, dated as of September 22, 2000, by and among Conseco Finance Corp., Conseco, CIHC, Green Tree Residual Finance Corp. I, Green Tree Finance Corp. - Five and Lehman, (b) Amendment to the Warehouse Debt Facility, dated as of September 22, 2000, by and among Lehman Commercial Paper Inc. and Green Tree Finance Corp. - Five and acknowledged and consented to by Conseco Finance Corp. and CIHC, (c) Amendment to the First Residual Facility (Asset Assignment Agreement), dated as of September 22, 2000, by and among Lehman ALI Inc. and Green Tree Residual Finance Corp. I and (d) Amendment to the Second Residual Facility (Master Repurchase Agreement), dated as of September 22, 2000, by and among Lehman Brothers Inc. and Green Tree Residual Finance Corp. I, in each case, as amended, supplemented or otherwise modified from time to time, and any related document or agreement (including the agreements amended or modified by the agreements specified above). "License" means any license, certificate of authority, permit or other authorization which is required to be obtained from any Governmental Authority in connection with the operation, ownership or transaction of insurance business. "Lien" means any security interest, mortgage, deed of trust, pledge, hypothecation, assignment, charge or deposit arrangement, encumbrance, lien (statutory or other) or preferential arrangement of any kind or nature whatsoever in respect of any property (including those created by, arising under or evidenced by any conditional sale or other title retention agreement, the interest of a lessor under a capital lease or any financing lease having substantially the same economic effect as any of the foregoing) and any contingent or other agreement to provide any of the foregoing, but not including the interest of a lessor under an operating lease or the contingent obligation to equally and ratably secure the Public Debt. "Litigation" means any litigation (including, without limitation, any governmental proceeding or arbitration proceeding), tax audit or investigative proceeding, claim, lawsuit, and/or investigation pending or threatened against or involving Conseco or any of its Subsidiaries or any of its or their businesses or operations. "Loan Documents" means the "Loan Documents" under and as defined in the documents governing the Relevant Facility, including, in any event, this Appendix and the Relevant CIHC Guaranty. 10 "Longer-Term Public Debt" means Conseco's 8.5% Notes due October 15, 2002, 6.4% Notes due February 10, 2003, 8-1/8% Senior Notes due February 15, 2003, 10.5% Senior Notes due December 15, 2004, 8.75% Notes due February 9, 2004, 6.8% Notes due June 15, 2005 and 9% Notes due October 15, 2006. "Material Adverse Effect" means (a) a material adverse change in, or a material adverse effect upon, the business, properties, condition (financial or otherwise) of Conseco or Conseco and its Subsidiaries taken as a whole; (b) a material impairment of the ability of Conseco to perform under any Loan Document; or (c) a material adverse effect upon the legality, validity, binding effect or enforceability against Conseco of any Loan Document. "Material Insurance Subsidiary" means an Insurance Subsidiary having Capital and Surplus of $50,000,000 or more. "Moody's" means Moody's Investors Service, Inc., together with any Person succeeding thereto by merger, consolidation or acquisition of all or substantially all of its assets, including substantially all of its business of rating securities. "Multiemployer Plan" means a "multiemployer plan", within the meaning of Section 4001(a)(3) of ERISA, to which Conseco or any ERISA Affiliate makes, is making, or is obligated to make contributions or, during the preceding three calendar years, has made, or been obligated to make, contributions. "NAIC" means the National Association of Insurance Commissioners or any successor thereto, or in absence of the National Association of Insurance Commissioners or such successor, any other association, agency or other organization performing advisory, coordination or other like functions among insurance departments, insurance commissioners and similar Governmental Authorities of the various states of the United States toward the promotion of uniformity in the practices of such Governmental Authorities. "Near-Term Facilities" means the collective reference to the $155 Million Facility and the $766 Million Facility. "Near-Term Facilities Termination Date" means the date on which all "Obligations" under and as defined in the documents governing the $155 Million Facility and the $766 Million Facility have, in both cases, been paid in full in cash. "Net Income" means, for any Person for any Calculation Period, the net income (or loss) of such Person for such period as determined in accordance with GAAP. 11 "Net Proceeds" means (a) with respect to any Disposition by any Person, the aggregate amount of cash and Cash Equivalents received by such Person in respect of such Disposition (including any such amounts received by way of deferred payment of principal pursuant to a note or installment receivable or purchase price adjustment receivable or otherwise, but only as and when received) minus the sum of (i) costs and expenses (including legal fees, notarial fees, accountants fees, investment banking fees, survey costs, title insurance premiums, amounts applied to the repayment of Indebtedness (other than under a Facility) secured by a Lien expressly permitted hereunder on any asset that is the subject of such Disposition, costs of discontinuance (including, without limitation, any reasonable severance payments), Taxes other than Income Taxes (after taking into account any available tax credits or deductions and any tax sharing arrangements) and other customary fees and expenses) incurred in connection with such Disposition and required to be paid in cash or deducted from the proceeds of such Disposition, (ii) the estimated Income Tax actually required to be paid in cash by such Person in connection with such Disposition (after taking into account any available tax credits or deductions and any tax sharing arrangements), (iii) purchase price adjustments reasonably expected to be payable in connection therewith (not to exceed 10% of the purchase price for the relevant Disposition) so long as, if any such amount ceases to be payable, it shall then become "Net Proceeds", (iv) for an Insurance Subsidiary, any amounts which the Department will not permit such Insurance Subsidiary to pay out as a result of such Disposition and (v) for a Conseco Finance Entity, any amounts which the Lehman Agreement will not permit such Conseco Finance Entity to distribute to CIHC or Conseco as a result of such Disposition, so long as, if any such amount becomes so distributable under the Lehman Agreement, it shall then become "Net Proceeds", and (b) with respect to any issuance of Capital Stock of Conseco, any incurrence of Indebtedness by Conseco or any of its Subsidiaries, the occurrence of any Specified Cash Event or the receipt of any amount pursuant to any Permitted Tritel Hedge Transaction, the proceeds thereof in the form of cash and Cash Equivalents minus the costs and expenses incurred in connection therewith (including legal fees, notarial fees, accountants fees, investment banking fees, underwriting discounts and commissions and other customary fees and expenses incurred in connection therewith) and required to be paid in cash or deducted from the proceeds of such Disposition. For purposes of this definition, the Net Proceeds received by any Person in respect of any Disposition shall include such cash or Cash Equivalents as may be received ("subsequent cash proceeds") by such Person at any time or from time to time in connection with the sale, transfer, lease or other disposition, or otherwise in respect of, any consideration other than cash or Cash Equivalents received by such Person in respect of such Disposition, less the estimated Income Tax to be paid in connection with the receipt of such subsequent cash proceeds (after taking into account any available tax credits or deductions and any tax sharing arrangements) that was not theretofore deducted in computing Net Proceeds. "Ninety-Percent Owned Subsidiary" means any Person in which (other than directors' qualifying shares required by law) at least 90% of the Capital Stock of each class having ordinary voting power (or, in the case of Persons other than corporations, membership interests or other equity interests), at the time as of which any determination is being made, is owned, beneficially and of record, directly or indirectly, by Conseco, or by one or more Wholly-Owned Subsidiaries, or both. "Non-Finance Subsidiary" means any Subsidiary which is not a Conseco Finance Entity. "Non-Insurance Subsidiary" means any Subsidiary which is not an Insurance Subsidiary. "Obligations" means all advances, debts, liabilities, obligations, covenants and duties for the payment of money arising under any Loan Document owing by Conseco to the Relevant Banks (or, if such defined term is included in the documents governing the Relevant Facility, any "Indemnified Person"), whether direct or indirect (including those acquired by assignment), absolute or contingent, due or to become due, now existing or hereafter arising. To the extent that any of the foregoing have been cash collateralized, such amounts shall nevertheless be deemed to remain outstanding for the purposes of this Appendix. "PBGC" means the Pension Benefit Guaranty Corporation, or any Governmental Authority succeeding to any of its principal functions under ERISA. 12 "Pension Plan" means a pension plan (as defined in Section 3(2) of ERISA) subject to Title IV of ERISA which Conseco or any ERISA Affiliate sponsors, maintains, or to which it makes, is making, or is obligated to make contributions, or in the case of a multiple employer plan (as described in Section 4064(a) of ERISA) has made contributions at any time during the immediately preceding five (5) plan years. "Permitted Lien" has the meaning specified in Section 4.02. "Permitted Nonrecourse Indebtedness" means (a) nonrecourse Indebtedness of Subsidiaries of Conseco resulting from the sale or securitization of (i) non-admitted assets, policy loans, B-Share Financings, CBOs and CMOs and (ii) loans, leases, receivables, installment contracts and other financial products originated, acquired, sold or securitized by a Conseco Finance Entity and (b) nonrecourse Indebtedness of a Conseco Finance Entity with respect to Interest Only Securities. "Permitted Swap Obligations" means all obligations (contingent or otherwise) of Conseco or any Subsidiary existing or arising under Swap Contracts, provided that each of the following criteria is satisfied: (a) such obligations are (or were) entered into by such Person in the ordinary course of business for the purpose of directly mitigating risks associated with liabilities, commitments or assets held by such Person, or changes in the value of securities issued by such Person in conjunction with a securities repurchase program not otherwise prohibited hereunder, and not for purposes of speculation or taking a "market view;" and (b) such Swap Contracts do not contain any provision ("walk-away" provision) exonerating the non-defaulting Party from its obligation to make payments on outstanding transactions to the defaulting party. "Permitted Transactions" means (a) mortgage-backed security transactions in which an investor sells mortgage collateral, such as securities issued by the Government National Mortgage Association and the Federal Home Loan Mortgage Corporation for delivery in the current month while simultaneously contracting to repurchase "substantially the same" (as determined by the Public Securities Association and GAAP) collateral for a later settlement, (b) transactions in which an investor lends cash to a primary dealer and the primary dealer collateralizes the borrowing of the cash with certain securities, (c) transactions in which an investor lends securities to a primary dealer and the primary dealer collateralizes the borrowing of the securities with cash collateral, (d) transactions in which an investor makes loans of securities to a broker-dealer under an agreement requiring such loans to be continuously secured by cash collateral or United States government securities, (e) transactions in which a federal home loan mortgage bank (a "FHLMB") makes loans, which are sufficiently secured by appropriate assets consisting of government agency mortgage-backed securities, in accordance with the rules, regulations and guidelines of such FHLMB for its loan programs, (f) financing transactions in which a Conseco Finance Entity sells or transfers as collateral loans, leases, receivables or installment contracts to a third party while simultaneously contracting to repurchase or reacquire substantially the same assets and (g) the issuance of any Asset Backed Securities by any Conseco Finance Entity. "Permitted Tritel Hedge Transaction" has the meaning specified in Section 4.11. "Person" means an individual, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture or Governmental Authority or other entity of whatever nature. "Plan" means an employee benefit plan (as defined in Section 3(3) of ERISA) which Conseco sponsors or maintains or to which Conseco makes, is making, or is obligated to make contributions and includes any Pension Plan. 13 "prepay" means, when used with respect to Public Debt, prepay, repurchase, redeem or otherwise optionally or voluntarily defease or segregate funds with respect thereto; and "prepaid" and "prepayment" shall have correlative meanings. "Prepayment Events" means (a) the occurrence of any Specified Cash Event or the consummation of any other Asset Sale, (b) the incurrence by Conseco or any of its Subsidiaries of any Indebtedness of the type described in clause (a) or (b) of the definition thereof, excluding Indebtedness permitted by Section 4.01 other than as set forth in Section 4.01(b) (to the extent required to be applied as a Prepayment Event as set forth in the definition of "Exempt Waterfall Amounts"), (c) the issuance of any Capital Stock by Conseco and (d) any receipt of Net Proceeds in connection with any Permitted Tritel Hedge Transaction. "PRIDES Documents" means the PRIDES Purchase Contracts, the PRIDES Preferred Securities, the Subordinated Indenture dated as of December 8, 1997 between Conseco and The First National Bank of Chicago, as amended by the First Supplemental Indenture, dated as of December 8, 1997, the 6.75% Debentures issued to the PRIDES Trust pursuant to such Indenture, the Amended and Restated Declaration of Trust of the PRIDES Trust, the Preferred Securities Guarantee dated as of December 12, 1997 executed by Conseco, the Common Securities Guarantee dated as of December 12, 1997 executed by Conseco, and the other documents, agreements, schedules, exhibits and instruments referenced in the foregoing agreements and instruments. "PRIDES Preferred Securities" has the meaning set forth in the definition of FELINE PRIDES. "PRIDES Purchase Contracts" has the meaning set forth in the definition of FELINE PRIDES. "PRIDES Trust" means Conseco Financing Trust IV, a Delaware business trust. "Public Debt" means the collective reference to the 2000 Public Debt, the 2001 Public Debt and the Longer-Term Public Debt. "Purchase Money Debt" means Indebtedness incurred by a Person in connection with the purchase of fixed or capital assets by such Person, in which such assets the seller or financier thereof has taken or retained a Lien therein, provided that any such Lien attaches to such asset concurrently with or within one hundred twenty (120) days after the purchase thereof by such Person. "Quarterly Statement" means the quarterly statutory financial statement of any Insurance Subsidiary required to be filed with the insurance commissioner (or similar authority) of its jurisdiction of incorporation or, if no specific form is so required, in the form of financial statements permitted by such insurance commissioner (or such similar authority) to be used for filing quarterly statutory financial statements and shall contain the type of financial information permitted by such insurance commissioner (or such similar authority) to be disclosed therein, together with all exhibits or schedules filed therewith. 14 "Reinsurance Agreements" means any agreement, contract, treaty, certificate or other arrangement by which any Insurance Subsidiary agrees to transfer or cede to another insurer all or part of the liability assumed or assets held by it under one or more insurance, annuity, reinsurance or retrocession policies, agreements, contracts, treaties, certificates or similar arrangements. Reinsurance Agreements shall include, but not be limited to, any agreement, contract, treaty, certificate or other arrangement which is treated as such by the applicable Department. "Relevant Agent" means the "Agent" or "Administrative Agent", as applicable, under the Relevant Facility. "Relevant Banks" means any Bank to which Obligations are owing under the Relevant Facility. "Relevant Cash Collateral Agreement" means, if the Relevant Facility is a D&O Facility, any cash collateral agreement entered into by Conseco or any of its Subsidiaries in favor of the Agent thereunder in order to cash collateralize the Conseco Guaranty relating to such Facility. "Relevant CIHC Guaranty" means the Guaranty and Subordination Agreement, dated as of the Effective Date, made by CIHC in favor of the Relevant Agent and the Relevant Banks. It is agreed that the Relevant CIHC Guaranty shall be terminated and CIHC shall be released from all of its obligations thereunder on the first date after the Near-Term Facilities Termination Date on which Conseco has Investment Grade Ratings Status, so long as no Default or Event of Default shall have occurred and be continuing on such date. "Relevant Conseco Guaranty" means, if the Relevant Facility is a D&O Facility, any guaranty issued by Conseco in favor of the Agent thereunder in order to guaranty the obligations of the individual borrowers under such Facility. "Relevant Facility" means the Facility being amended pursuant to the amendment to which this Appendix is attached. "Reportable Event" means any of the events set forth in Section 4043(c) of ERISA or the regulations thereunder, other than any such event for which the 30-day notice requirement under ERISA has been waived in regulations issued by the PBGC. "Required Banks" means the "Required Banks" under and as defined in the documents governing the Relevant Facility. "Requirement of Law" means, as to any Person, any law (statutory or common), treaty, rule or regulation or determination of an arbitrator or of a Governmental Authority, in each case applicable to or binding upon the Person or any of its property or to which the Person or any of its property is subject. "Reserve" means the collective reference to one or more restricted accounts opened by Conseco with any one or more Banks, on terms and conditions substantially as set forth on Exhibit B hereto. It is understood that any contractual right of setoff contained in the documents governing any Facility will not apply to any Reserve. "Responsible Officer" means the chief executive officer, chief operating officer, chief financial officer or treasurer of Conseco, or any other officer having substantially the same authority and responsibility including, with respect to Section 3.01, any vice-president with responsibility for or knowledge of financial matters of Conseco. "Restricted Payments" has the meaning set forth in Section 4.08. 15 "Risk-Based Capital Ratio" means, with respect to the Insurance Subsidiaries (other than Conseco Direct Life Insurance Company) taken as a whole, on any date of determination, the ratio (expressed as a percentage) of (a) the aggregate Total Adjusted Capital (as defined by the NAIC) for such Insurance Subsidiaries to (b) the aggregate Authorized Control Level Risk-Based Capital (as defined by the NAIC) for such Insurance Subsidiaries. "S&P" means Standard & Poor's Ratings Services, together with any Person succeeding thereto by merger, consolidation or acquisition of all or substantially all of its assets, including substantially all of its business of rating securities. "SAP" means, with respect to any Insurance Subsidiary, the statutory accounting practices prescribed or permitted by the insurance commissioner (or other similar authority) in the jurisdiction of domicile of such Person for the preparation of annual statements and other financial reports by insurance companies of the same type as such Person, which are applicable to the circumstances as of the date of filing of such statement or report. "SEC" means the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions. "Significant Subsidiary" means any Subsidiary of Conseco with, after the elimination of intercompany accounts, (a) assets which constituted at least 5% of Conseco's consolidated total assets, or (b) revenues which constituted at least 5% of Conseco's consolidated total revenue or (c) net earnings which constituted at least 5% of Conseco's consolidated total net earnings, but not less than $10,000,000, all as determined as of the date of Conseco's most recently prepared quarterly financial statements for the 12-month period then ended. "Single Employer Pension Plan" means a pension plan as such term is defined in Section 3(2) of ERISA, other than a multiemployer plan as defined in Section 4001(a)(3) of ERISA, to which Conseco or any other ERISA Affiliate may have liability, including any liability by reason of having been a substantial employer within the meaning of Section 4063 of ERISA at any time during the preceding five years, or by reason of being deemed to be a contributing sponsor under Section 4069 of ERISA. "Specified Cash Events" means the receipt of cash by Conseco or any of its Subsidiaries in connection with the events described on Schedule 1.01B, whether or not in connection with a Disposition. "Specified D&O Facilities" means the collective reference to the $181 Million D&O Facility and the $245 Million D&O Facility. "Specified Junior Securities" means (a) common stock of Conseco and (b) preferred stock of Conseco and subordinated Indebtedness of Conseco that, in each case, does not require cash dividend or cash interest payments prior to September 30, 2005 (other than any requirement that is limited to payments with the proceeds of available Exempt Covenant/Waterfall Amounts received and held aside or otherwise identified prior to the date such preferred stock or subordinated Indebtedness is issued or incurred) or scheduled redemption or principal payments prior to March 31, 2006 and, in the case of subordinated Indebtedness, having subordination and related terms satisfactory to each Agent. "Statutory Net Income" means, for any period, the net income of an Insurance Subsidiary determined in accordance with SAP. 16 "Subordinated Obligations" shall be the collective reference to the unpaid principal of and accrued and unpaid interest on any subordinated Indebtedness and all other subordinated obligations and liabilities of Conseco to the lenders thereof (including, without limitation, interest accruing at the then applicable rate provided in the applicable loan documents for such Indebtedness or obligations after the maturity of the subordinated loans and interest accruing at the then applicable rate provided in such loan documents after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to Conseco, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding), whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, which may arise under, out of, or in connection with, this Appendix, or such loan documents for such subordinated Indebtedness, in each case whether on account of principal, interest, reimbursement obligations, fees, indemnities, costs, expenses or otherwise (including, without limitation, all fees and disbursements of counsel to the lenders thereof that are required to be paid by Conseco pursuant to the terms of the loan documents therefor or this Appendix). "Subsidiary" of a Person means any corporation, partnership, limited liability company, limited liability partnership, joint venture, trust, association or other unincorporated organization of which or in which such Person and such Person's Subsidiaries own directly or indirectly more than 50% of (a) the combined voting power of all classes of stock having general voting power under ordinary circumstances to elect a majority of the board of directors, if it is a corporation, (b) the voting or managing interests (which shall mean the general partner in the case of a partnership), if it is a partnership, joint venture or similar entity, (c) the beneficial interest, if it is a trust, association or other unincorporated organization or (d) the membership interest, if it is a limited liability company; provided, that, with respect to any Investment made by Conseco in any Person in the ordinary course of business solely for investment purposes, such Person shall not be considered a Subsidiary of Conseco for the purposes of this Appendix if such Person is not integral to the business or operations of Conseco or any Significant Subsidiary and, by way of illustration only, Schedule 1.01D, sets forth a nonexclusive list of such Persons who are not Subsidiaries of Conseco because of the operation of this clause. "Surplus Debentures" means, as to any Insurance Subsidiary, debt securities of such Insurance Subsidiary the proceeds of which are permitted to be included, in whole or in part, as Capital and Surplus of such Insurance Subsidiary as approved and permitted by the applicable Department. "Swap Contract" means any agreement whether or not in writing, relating to any transaction that is a rate swap, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap or option, bond, note or bill option, interest rate option, forward foreign exchange transaction, cap, collar or floor transaction, currency swap, cross-currency rate swap, swaption, currency option or any other, similar transaction (including any option to enter into any of the foregoing) or any combination of the foregoing, and, unless the context otherwise clearly requires, any master agreement relating to or governing any or all of the foregoing. 17 "Swap Termination Value" means, in respect of any one or more Swap Contracts, after taking into account the effect of any legally enforceable netting agreement relating to such Swap Contracts, (a) for any date on or after the date such Swap Contracts have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in clause (a) the amount(s) determined as the mark-to-market value(s) for such Swap Contracts, as determined by Conseco based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Swap Contracts (which may include any Relevant Bank). "Synthetic Purchase Agreement" means any agreement pursuant to which Conseco or any of its Subsidiaries is or may become obligated to make (a) any payment in connection with the purchase by any third party from a Person other than Conseco or any of its Subsidiaries (other than any Subsidiary that is a Subsidiary of an Insurance Subsidiary but is not itself an Insurance Subsidiary) of any Capital Stock or Indebtedness of Conseco or any of its Subsidiaries (other than any Subsidiary that is a Subsidiary of an Insurance Subsidiary but is not itself an Insurance Subsidiary) or (b) any payment the amount of which is determined by reference to the price or value at any time of any such Capital Stock or Indebtedness; provided, that (i) no phantom stock or similar plan providing for payments only to current or former directors, officers or employees of Conseco or any of its Subsidiaries (or to their heirs or estates), (ii) no such agreement in respect of any Public Debt that is permitted to be prepaid at such time pursuant to Section 4.10 and (iii) no such agreement in respect of any Disposition of any Capital Stock of a Subsidiary of Conseco that is permitted by Section 4.03 shall be deemed to be a Synthetic Purchase Agreement. "Taxes" means any and all present or future taxes, levies, assessments, imposts, duties, deductions, fees, withholdings or similar charges, and all liabilities with respect thereto. "Tax Sharing Agreement" means the tax sharing agreement dated February 29, 1989, as amended, among Conseco and certain of its Subsidiaries. "Total Capitalization" means, without duplication, (a) the amount described in clause (a) of the definition of "Debt to Total Capitalization Ratio", plus (b) the Total Shareholders' Equity of Conseco, minus (c) the carrying value of Interest Only Securities and servicing rights. Total Capitalization shall be determined without giving effect to (a) the impact of charges or writedowns taken in the third or fourth Fiscal Quarter of the Fiscal Year ending December 31, 2000 ("FY 2000 Adjustments") so long as the aggregate after-tax amount thereof does not exceed $500,000,000 and (b) the impact of any on balance sheet treatment of the D&O Facilities. "Total Shareholders' Equity" means the sum of, without duplication, (a) total common and preferred shareholders' equity of Conseco as determined in accordance with GAAP (calculated excluding unrealized gains (losses) of securities as determined in accordance with FAS 115) and (b) the redemption value or liquidation preference (or if less, the purchase price), as applicable, of the Trust Preferred Securities, the FELINE PRIDES and the Unit Securities. "Trust Preferred Securities" mean preferred securities (a) issued by one or more Delaware business trusts formed by Conseco and (b) guaranteed by Conseco, including specifically, "MIPS," "QuIPS," "TOPrS" and "TruPS", provided that the aggregate face amount of all Trust Preferred Securities does not exceed the greater of $1,930,000,000 or 15% of Total Capitalization at any time. "2000 Public Debt" means Conseco's $150,000,000 7-7/8% Notes due December 15, 2000. "2001 Public Debt" means Conseco's 7.6% Senior Notes due June 21, 2001 and 6.4% Mandatory Par Put Remarketed Securities due June 15, 2011. 18 "Unfunded Pension Liability" means the excess of a Plan's benefit liabilities under Section 4001(a)(16) of ERISA, over the current value of that Plan's assets, determined in accordance with the assumptions used for funding the Pension Plan pursuant to Section 412 of the Code for the applicable plan year. "United States" and "U.S." each means the United States of America. "Unit Securities" means investment units comprised of (a) mandatorily redeemable preferred securities (i) issued by one or more Delaware business trusts formed by Conseco and (ii) guaranteed by Conseco, including specifically, "MIPS," QuIPS," "TOPrS" and "TruPS," and (b) equity forward contracts for the purchase of common stock of Conseco (which forward contracts shall have a settlement date that is earlier than the stated maturity of such preferred securities) collateralized by such preferred securities or government securities in lieu thereof (including, without limitation, principal and interest strips thereof). "Voting Shares" means, with respect to any Person, capital stock issued by such Person, the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or persons performing similar functions) of such Person, even though the right so to vote has been suspended by the happening of any such contingency. "Wholly-Owned Subsidiary"means any corporation in which (other than directors' qualifying shares required by law) 100% of the capital stock of each class having ordinary voting power, and 100% of the capital stock of every other class, in each case (or, in the case of Persons other than corporations, membership interests or other equity interests), at the time as of which any determination is being made, is owned, beneficially and of record, by Conseco, or by one or more of the other Wholly-Owned Subsidiaries, or both. "$50 Million Credit Agreement" means the ECN Dealer Agreement between Conseco and Merrill Lynch, Pierce, Fenner & Smith Incorporated dated September 28, 1999 and the letter dated September 28, 1999 addressed by Merrill Lynch, Pierce, Fenner & Smith Incorporated to Conseco, including the Extendible Commercial Notes Memorandum attached thereto. "$144 Million D&O Credit Agreement" means the Termination and Replacement Agreement, dated as of May 30, 2000, among the individual borrowers parties thereto, the banks parties thereto, Chase, as administrative agent and Chase Securities Inc. and Banc of America Securities LLC as co-lead arrangers and co-lead book managers. "$155 Million Credit Agreement" means the Senior Secured Revolving Credit Agreement, dated as of May 30, 2000, among Conseco, the banks parties thereto, Chase, as administrative agent and Chase Securities Inc. and Banc of America Securities LLC as co-lead arrangers and co-lead book managers. "$181 Million D&O Credit Agreement" means the Credit Agreement, dated as of August 21, 1998, among the individual borrowers parties thereto, the banks parties thereto and BofA, as administrative agent. "$245 Million D&O Credit Agreement" means the Amended and Restated Credit Agreement, dated as of August 26, 1997, among the individual borrowers parties thereto, the banks parties thereto and BofA, as administrative agent. 19 "$766 Million Credit Agreement" means the 364-Day Credit Agreement, dated as of September 25, 1998, among Conseco, the banks parties thereto, the syndication agents and documentation agent named therein and BofA, as agent, as amended on the Effective Date to incorporate the obligations of Conseco under the $50 Million Credit Agreement. "$1.5 Billion Credit Agreement" means the Five-Year Credit Agreement, dated as of September 25, 1998, among Conseco, the banks parties thereto, the syndication agents and documentation agent named therein and BofA, as agent. "$144 Million D&O Facility" means the credit facility evidenced by the $144 Million D&O Credit Agreement and the documents related thereto. "$155 Million Facility" means the credit facility evidenced by the $155 Million Credit Agreement and the documents related thereto. "$181 Million D&O Facility" means the credit facility evidenced by the $181 Million D&O Credit Agreement and the documents related thereto. "$245 Million D&O Facility" means the credit facility evidenced by the $245 Million D&O Credit Agreement and the documents related thereto. "$766 Million Facility" means the credit facility evidenced by the $766 Million Credit Agreement and the documents related thereto. "$1.5 Billion Facility" means the credit facility evidenced by the $1.5 Billion Credit Agreement and the documents related thereto. I.2 Other Interpretive Provisions. (a) The meanings of defined terms are equally applicable to the singular and plural forms of the defined terms. (b) The words "hereof", "herein", "hereunder" and similar words refer to this Appendix as a whole and not to any particular provision of this Appendix; and subsection, Section, Schedule and Exhibit references are to this Appendix unless otherwise specified. (c) (i) The term "including" is not limiting and means "including without limitation." (ii) In the computation of periods of time from a specified date to a later specified date, the word "from" means "from and including"; the words "to" and "until" each mean "to but excluding", and the word "through" means "to and including." (d) Unless otherwise expressly provided herein, (i) references to agreements (including this Appendix) and other contractual instruments shall be deemed to include all subsequent amendments and other modifications thereto, but only to the extent such amendments and other modifications are not prohibited by the terms of any Loan Document, and (ii) references to any statute or regulation are to be construed as including all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting the statute or regulation. (e) The captions and headings of this Appendix are for convenience of reference only and shall not affect the interpretation of this Appendix. 20 (f) This Appendix and other Loan Documents may use several different limitations, tests or measurements to regulate the same or similar matters. Unless otherwise expressly provided, any reference to any action of the Relevant Agent or the Relevant Banks by way of consent, approval or waiver shall be deemed modified by the phrase "in its/their sole and reasonable discretion. (g) This Appendix and the other Loan Documents are the result of negotiations among and have been reviewed by counsel to the Relevant Agent, Conseco and the other parties to the Loan Documents, and are the products of all parties. Accordingly, they shall not be construed against the Relevant Banks or the Relevant Agent merely because of the Relevant Agent's or the Relevant Banks' involvement in their preparation. I.3 Accounting Principles. (a) Unless the context otherwise clearly requires, all accounting terms not expressly defined herein shall be construed, and all financial computations required under this Appendix shall be made, in accordance with GAAP, consistently applied. (b) References hereto in particular columns, lines or sections of any Person's Annual Statement shall be deemed, where appropriate, to be references to the corresponding column, line or section of such Person's Quarterly Statement, or if no such corresponding column, line or section exists or if any report form changes, then to the corresponding item referenced thereby. In the event the column , lines or sections of the Annual Statement referenced herein are changed or renumbered from the columns, lines and sections applicable to the 1999 Annual Statement, all such references shall be deemed references to such column, line or section as so renumbered or changed. ARTICLE II MANDATORY CASH APPLICATIONS II.1 General Application of Available Net Proceeds. (a) On the Effective Date, Available Net Proceeds in the aggregate amount of $392,861,025 shall be applied to the Facilities in the manner specified in Section 2.02(a). 21 (b) On the Effective Date and thereafter, within three Business Days after Conseco or any of its Subsidiaries receives any Available Net Proceeds (other than as described in paragraph (a) above), such Available Net Proceeds shall be applied as follows: first, the first $100,000,000 (or such lesser amount as is necessary to increase the amount of Conseco's Cash on Hand to the Cash on Hand Target) shall be retained by Conseco; second, the next $700,000,000 shall be applied 1/7th per transaction to the Near-Term Facilities and 6/7ths per transaction to fund the Reserve; third, the next $200,000,000 shall be applied to fund the Reserve; fourth, all subsequent Available Net Proceeds until the occurrence of the Near-Term Facilities Termination Date shall be applied 80% per transaction to the Near-Term Facilities, with the remainder being retained by Conseco until it has Cash on Hand equal to the Cash on Hand Target at the time of such transaction, and then 100% to the Near-Term Facilities until the occurrence of the Near-Term Facilities Termination Date; and fifth, all Available Net Proceeds received after the occurrence of the Near-Term Facilities Termination Date shall be applied 50% per transaction to the $1.5 Billion Facility and the Specified D&O Facilities (in the manner contemplated by Section 2.02(c)), with the remainder being retained by Conseco. Notwithstanding the foregoing, the first $30,000,000 of Available Net Proceeds received by Conseco or any of its Subsidiaries on or after the Effective Date after giving effect to Section 2.01(a) may be retained by Conseco. Any Available Net Proceeds referred to in this paragraph as being available for retention by Conseco (i) must, if received by a Subsidiary, be distributed to Conseco for such purpose if such distribution is not prohibited by law, rule or regulation or the Lehman Agreement and (ii) may be used by Conseco for any purpose permitted by this Appendix. Notwithstanding anything to the contrary in this Section 2.01(b), in the event that, in the case of Available Net Proceeds received at any time when clause second or third is applicable, if Conseco's Cash on Hand is less than the Cash on Hand Target, such Available Net Proceeds may be applied to increase Conseco's Cash on Hand (but not above the Cash on Hand Target), provided, that in no event shall the aggregate amount applied to increase Conseco's Cash on Hand pursuant to clause first and this sentence exceed $100,000,000. As used in this paragraph, "Cash on Hand Target" means $330,000,000 minus the amount of any Investment made by Conseco pursuant to Section 4.09(a)(i)(x) (except to the extent such amount was paid back to Conseco, directly or indirectly). (c) After the Reserve has been funded in an amount sufficient to pay the remaining maturities for the 2000 Public Debt and the 2001 Public Debt, if any such Public Debt is, or has been, repurchased at a discount with amounts from the Reserve, an amount from the Reserve equal to the difference between the face amount of the relevant Public Debt and the repurchase price of the relevant Public Debt shall be applied to the Near-Term Facilities or, after the Near-Term Facilities Termination Date, to the $1.5 Billion Facility and the Specified D&O Facilities (in the manner contemplated by Section 2.02(c)). II.2 Application of Available Net Proceeds Allocated to Facilities. (a) The application of Available Net Proceeds described in Section 2.01(a) shall be allocated to the Near-Term Facilities, and to the Exposure of the Banks thereunder, such that, after giving effect thereto, the respective Exposures of the Banks thereunder shall be as set forth on Schedule 2.02 (and any inconsistent provision in the Relevant Facility shall not apply). (b) Any application of Available Net Proceeds allocated to the Near-Term Facilities pursuant to Section 2.01(b) or (c) (and any application of Net Proceeds pursuant to clause (a)(i) of the definition of "Exempt Waterfall Amounts") shall be allocated to each Bank on a pro rata basis based on the percentage of the aggregate then outstanding amount of Exposure under such Facilities held by such Bank. In the case of any Bank having Exposure under more than one Near-Term Facility, such Bank may, by notice to Conseco and the applicable Agent, allocate its reduction in Exposure to one or more such Facilities in such respective amounts as it shall select in its sole discretion (and any inconsistent provision in the Relevant Facility shall not apply). (c) Any application of Available Net Proceeds allocated to the $1.5 Billion Facility and the Specified D&O Facilities pursuant to Section 2.01(b) or (c) (and any application of Net Proceeds pursuant to clause (a)(ii) of the definition of "Exempt Waterfall Amounts") shall be allocated ratably to each such Facility based on the aggregate Exposure then outstanding under such Facilities, and ratably to the Exposure of each Bank under each such Facility. The Available Net Proceeds so allocated to each Specified D&O Facility, at the discretion of Conseco, shall be either (i) deposited in a cash collateral account pursuant to the applicable Cash Collateral Agreement or (ii) applied to repay "Loans" made to the individual borrowers pursuant to the applicable Specified D&O Facility. II.3 Exempt Covenant/Waterfall Amounts. Notwithstanding anything to the contrary in Article IV, Conseco and its Subsidiaries shall be permitted to use Exempt Covenant/Waterfall Amounts for any purpose that would otherwise be prohibited by Article IV (other than to redeem, pay dividends on or otherwise make Restricted Payments in respect of Conseco's common stock or the Conseco Series F Preferred Stock), and any such use shall not constitute a violation of any of the covenants contained in Article IV or usage of any of the basket amounts described therein. 22 ARTICLE III AFFIRMATIVE COVENANTS So long as any Exposure or other Obligation shall remain unpaid or unsatisfied under the Relevant Facility, unless the Required Banks waive compliance in writing: III.1 Financial Statements Conseco shall deliver to the Relevant Agent and each Relevant Bank: (a) as soon as available, but not later than 120 days after the end of each Fiscal Year, copies of the audited consolidated balance sheet of Conseco and its Subsidiaries and the unaudited consolidating balance sheet of Conseco and its Subsidiaries as at the end of such year and the related consolidated statements of earnings, shareholders' equity and cash flows for such year, setting forth in the case of the audited consolidated statements in comparative form the figures for the previous Fiscal Year, and accompanied by the opinion of PricewaterhouseCoopers or another nationally-recognized independent public accounting firm ("Independent Auditor"), which report shall state that such audited consolidated financial statements present fairly the financial position and result of operations of Conseco and its Subsidiaries for the periods indicated in conformity with GAAP applied on a basis consistent with prior years, except as stated therein. Such opinion shall not be qualified or limited because of a restricted or limited examination by the Independent Auditor of any material portion of Conseco's or any Subsidiary's records; (b) as soon as available, but not later than 60 days after the end of each of the first three Fiscal Quarters of each Fiscal Year, copies of the condensed unaudited consolidated and consolidating balance sheet of Conseco and its Subsidiaries as of the end of such quarter and the related condensed unaudited statements of earnings, shareholders' equity and cash flows for the period commencing on the first day and ending on the last day of such quarter, and certified by a Responsible Officer as fairly presenting, in accordance with GAAP (subject to the absence of footnotes and ordinary, good faith year-end and audit adjustments), the financial position and the results of operations of Conseco and the Subsidiaries; (c) as soon as available but not later than 75 days after the close of each Fiscal Year of each Insurance Subsidiary, copies of the unaudited Annual Statement of such Insurance Subsidiary, certified by a Responsible Officer of such Insurance Subsidiary, all such statements to be prepared in accordance with SAP consistently applied throughout the periods reflected therein and, if required by the applicable Governmental Authority, audited and certified by independent certified public accountants of recognized national standing; (d) as soon as available but not later than 60 days after the close of each of the first three (3) Fiscal Quarters of each Fiscal Year of each Insurance Subsidiary which is a Significant Subsidiary, copies of the Quarterly Statement of each of the Insurance Subsidiaries, certified by a Responsible Officer of such Insurance Subsidiary, all such statements to be prepared in accordance with SAP consistently applied through the period reflected herein; (e) within 15 days after being delivered to any Insurance Subsidiary constituting a Significant Subsidiary, any draft or final Triennial Examination Report issued by the applicable Department or the NAIC that results in material adjustments to the financial statements referred to in subsection (a), (b) or (c); and 23 (f) within 90 days after the close of each Fiscal Year of each Insurance Subsidiary, a copy of the "Statement of Actuarial Opinion" and "Management Discussion and Analysis" for each such Insurance Subsidiary which is provided to the applicable Department (or equivalent information should such Department no longer require such a statement) as to the adequacy of loss reserves of such Insurance Subsidiary, such opinion to be in the format prescribed by the insurance code of the state of domicile of such Insurance Subsidiary. III.2 Certificates; Other Information. Conseco shall furnish to the Relevant Agent, with sufficient copies for each Relevant Bank (other than in the case of clause (e)): (a) concurrently with the delivery of the financial statements referred to in Sections 3.01(a) and (b), a Compliance Certificate executed by a Responsible Officer, (b) promptly, (i) copies of all Forms 10-K and 10-Q that Conseco or any Subsidiary may file with the SEC or (ii) copies of the certificate and related financial information provided pursuant to the Lehman Agreement in connection with evidencing periodic compliance with financial covenants therein, and promptly upon the Relevant Agents' request, financial statements and reports that Conseco sends to its shareholders and copies of all other financial statements and regular, periodic or special reports (including Form 8-K) that Conseco or any Subsidiary may make to, or file with, the SEC; (c) promptly and in any event within three Business Days after learning thereof, notification of any changes after the date hereof in the rating given by S&P or Moody's in respect of Conseco's senior unsecured Indebtedness or by A.M. Best in respect of the Insurance Subsidiaries; (d) (i) concurrently with the consummation of any Disposition Transaction yielding gross proceeds in excess of $2,000,000, (x) a description of such transaction and (y) a calculation of the gross proceeds thereof and (ii) concurrently with the occurrence of any Prepayment Event or the issuance of any Specified Junior Securities, (i) a description of the relevant transaction, (ii) a calculation of the Net Proceeds (including an accounting of the items deducted from the cash or Cash Equivalents received in connection with such transaction) thereof and (iii) if applicable its intention to treat such Net Proceeds of the type described in the definition of either (i) Exempt Covenant/Waterfall Amount or (ii) Exempt Waterfall Amount as an Exempt Covenant/Waterfall Amount or an Exempt Waterfall Amount, respectively (including, if an Exempt Waterfall Amount, whether the Net Proceeds will be applied under clause (a) or (b) of such definition); and (e) promptly, such additional information regarding the business, financial or corporate affairs of Conseco or any Subsidiary as the Relevant Agent, at the request of any Relevant Bank, may from time to time reasonably request. III.3 Notices. Conseco shall promptly notify the Relevant Agent: (a) of the occurrence of any Default or Event of Default; (b) of any matter that has resulted in a Material Adverse Effect, including (i) any breach or non-performance of, or any default under, a Contractual Obligation of Conseco or any Subsidiary; (ii) any dispute, litigation, investigation, proceeding or suspension between Conseco or any Subsidiary and any Governmental Authority; or (iii) the commencement of, or any material development in, any Litigation affecting Conseco or any Subsidiary, including pursuant to any applicable Environmental Laws; 24 (c) of the commencement of, or the occurrence of any development in, any litigation or proceeding (i) which seeks to enjoin, prohibit, discontinue or otherwise impacts the validity or enforceability of this Appendix or any of the other Loan Documents or other transactions contemplated hereby or thereby, or (ii) which could be reasonably expected to have a Material Adverse Effect. (d) of the occurrence of any of the following events affecting Conseco or any ERISA Affiliate (but in no event more than 10 days after such event) and deliver to the Relevant Agent and each Relevant Bank a copy of any notice with respect to such event that is filed with a Governmental Authority and any notice delivered by a Governmental Authority to Conseco or any ERISA Affiliate with respect to such event: (i) an ERISA Event; or (ii) a material increase in the Unfunded Pension Liabilities of any Pension Plan; (iii) the adoption of or the commencement of contributions to, any Plan subject to Section 412 of the Code by Conseco or any ERISA Affiliate; or (iv) the adoption of any amendment to a Plan subject to Section 412 of the Code, if such amendment results in a material increase in contributions or Unfunded Pension Liability; provided, however, that no such notice will be required under this Section 3.03(d) with respect to the occurrence of any such event if such occurrence does not result in, and is not reasonably expected to result in, any liability to Conseco of more than $65,000,000 or any liability to any ERISA Affiliate of more than $20,000,000. (e) of any material change in accounting policies or financial reporting practices by Conseco or any of its Subsidiaries; (f) of the receipt of any notice from any Governmental Authority of the expiration without renewal, revocation, suspension or restriction of or the institution of any proceedings to revoke, suspend or restrict, any License now or hereafter held by any Insurance Subsidiary which is required to conduct insurance business in compliance with all applicable laws and regulations and the expiration, revocation or suspension of which could reasonably be expected to have a Material Adverse Effect; (g) of the receipt of any notice from any Governmental Authority of the institution of any disciplinary proceedings against or in respect of any Insurance Subsidiary, or the issuance of any order, the taking of any action or any request for an extraordinary audit for cause by any Governmental Authority which could reasonably be expected to have a Material Adverse Effect; (h) of any judicial or administrative order limiting or controlling the insurance business of any Insurance Subsidiary (and not the insurance industry generally) which has been issued or adopted and which has had, or which could reasonably be expected to have, a Material Adverse Effect, or (i) of any actual or proposed changes in any applicable insurance code which could reasonably be expected to have a Material Adverse Effect. Each notice under this Section shall be accompanied by a written statement by a Responsible Officer setting forth details of the occurrence referred to therein, and stating what action Conseco or any affected Subsidiary proposes to take with respect thereto and at what time. Each notice under Section 3.03(a) shall describe with particularity any and all clauses or provisions of this Appendix or other Loan Document that have been (or reasonably foreseeably will be) breached or violated. 25 III.4 Preservation of Corporate Existence, Etc. Conseco shall, and shall cause each Significant Subsidiary to (except as permitted by Section 4.03 or 4.07): (a) preserve and maintain in full force and effect its corporate existence and good standing under the laws of its state or jurisdiction of incorporation; (b preserve and maintain in full force and effect all governmental rights, privileges, qualifications, permits, licenses and franchises necessary in the normal conduct of its business, except where such failure to preserve and maintain could not reasonably be expected to have a Material Adverse Effect; and (c use reasonable efforts, in the ordinary course of business, to preserve its business organization and goodwill. III.5 Insurance. Conseco shall maintain, and shall cause each Significant Subsidiary to maintain, with financially sound and reputable independent insurers, insurance with respect to its properties and business against loss or damage of the kinds customarily insured against by Persons engaged in the same or similar business, of such types and in such amounts as are customarily carried under similar circumstances by such other Persons. III.6 Payment of Obligations. Conseco shall, and shall cause each Significant Subsidiary to, pay and discharge as the same shall become due and payable, all of the following: (a all material tax liabilities, assessments and governmental charges or levies upon it or its material properties or assets, unless the same are not overdue for a period of more than 60 days or are being contested in good faith by appropriate proceedings and adequate reserves in accordance with GAAP are being maintained by Conseco or such Subsidiary; and (b all material indebtedness, as and when due and payable, but subject to any subordination provisions contained in any instrument or agreement evidencing such Indebtedness. III.7 Compliance with Laws. Conseco shall comply, and shall cause each Subsidiary to comply, in all material respects with all Requirements of Law of any Governmental Authority having jurisdiction over it or its business (including the Federal Fair Labor Standards Act and all applicable Environmental Laws), the noncompliance with which could reasonably be expected to have a Material Adverse Effect, except such as may be contested in good faith or as to which a bona fide dispute may exist. III.8 Compliance with ERISA. Conseco shall, and shall cause each of its ERISA Affiliates to: (a) maintain each Plan in compliance in all material respects with the applicable provisions of ERISA, the Code and other federal or state law; (b) cause each Plan which is qualified under Section 401(a) of the Code to maintain such qualification; and (c) make all required contributions to any Plan subject to Section 412 of the Code, except where such failure to maintain as set forth in (a) or (b) or to make contributions as set forth in (c) could not be reasonably expected to have a Material Adverse Effect. 26 III.9 Inspection of Property and Books and Records; Expense Reimbursement. Conseco shall maintain and shall cause each Subsidiary to maintain proper books of record and account, in which full, true and correct entries in all material respects in conformity with GAAP or SAP, as applicable, consistently applied (except as stated therein) shall be made of all financial transactions and matters involving the assets and business of Conseco and such Subsidiary. Conseco shall permit, and shall cause each Subsidiary to permit, representatives and independent contractors of the Relevant Agent or any Relevant Bank to visit and inspect any of their respective properties, to examine their respective corporate, financial and operating records, and make copies thereof or abstracts therefrom, and to discuss their respective affairs, finances and accounts with their respective directors, officers, and independent public accountants, all at such reasonable times during normal business hours and as often as may be reasonably desired, upon reasonable advance notice to Conseco, provided, however, when an Event of Default exists the Relevant Agent or any Relevant Bank may do any of the foregoing at any time during normal business hours and without advance notice. III.10 Tritel Disposition. Conseco shall use commercially reasonable efforts to Dispose of all or substantially all of its interest in Tritel, Inc. prior to March 31, 2001. III.11 Conversion of FELINE PRIDES. Conseco shall issue shares of common stock to holders of FELINE PRIDES in accordance with the terms of the PRIDES Documents. Otherwise, and except as required by the terms of the PRIDES Documents, Conseco shall, and shall cause its Affiliates to, refrain from purchasing or redeeming any FELINE PRIDES, PRIDES Purchase Contracts or PRIDES Preferred Securities, whether in the open market or otherwise. Nothing in this provision shall have the effect of preventing Conseco or the PRIDES Trust from complying with the terms and conditions set forth in the PRIDES Documents. ARTICLE IV NEGATIVE COVENANTS So long as any Exposure or other Obligation shall remain unpaid or unsatisfied under the Relevant Facility, unless the Required Banks waive compliance in writing: IV.1 Limitation on Indebtedness. Conseco shall not, and shall not permit any of its Subsidiaries to, incur or at any time be liable with respect to, any Indebtedness, except: (a Permitted Swap Obligations and Permitted Transactions; (b Specified Junior Securities; (c Indebtedness of Conseco or any Subsidiary pursuant to (i) the items set forth on Schedule 4.01(c) and (ii) extensions, renewals or replacements thereof, provided that no such extension, renewal or replacement shall increase the principal amount thereof, except to the extent the increase would otherwise be permitted under this Section 4.01; 27 (d Contingent Obligations of: (i) CIHC in respect of (A) Conseco's obligations under any Facility, and (B) obligations of one or more Conseco Finance Entities (I) in an aggregate amount not to exceed $125,000,000 in respect of obligations to Lehman or an Affiliate thereof, (II) in an aggregate amount not to exceed $125,000,000 in respect of cash management or a swing line credit facility for the general corporate purposes of one or more of the Conseco Finance Entities and (III) in an aggregate amount not to exceed $50,000,000 incurred for general corporate purposes (so long as, in each case, the documentation governing any such Contingent Obligation (including any related subordination arrangement) is not at any time materially more favorable to the beneficiaries thereof than the Relevant CIHC Guaranty); (ii) Conseco in respect of any individual borrower's obligations under any D&O Facility; (iii) any Conseco Finance Entity relating to loans, leases, receivables, installment contracts and other financial products originated, acquired or sold by such Conseco Finance Entity or any other Conseco Finance Entity; and (iv) Conseco or any Subsidiary in the ordinary course of business not otherwise described above in an aggregate amount not to exceed at any time (A) ten percent (10%) of Total Shareholders' Equity minus (B) the aggregate amount of Conseco's Contingent Obligations under clause (ii) of this paragraph at any time, provided that (I) Contingent Obligations in respect of Indebtedness of the type described in clause (a) or (b) of the definition thereof shall not be permitted by this clause (iv) and (II) the documentation governing any Contingent Obligation of CIHC pursuant to this clause (iv) (including any related subordination arrangement) shall not at any time be materially more favorable to the beneficiaries thereof than the Relevant CIHC Guaranty; provided, that in no event shall Conseco or any of its Subsidiaries (other than a Conseco Finance Entity) have any Contingent Obligations (including obligations as an account party) pursuant to this paragraph (d) in respect of any Indebtedness incurred by or for the benefit of any Conseco Finance Entity other than as specifically permitted in clause (i)(B) above; (e Indebtedness (including Contingent Obligations) of any Conseco Finance Entity to the extent that (i) neither Conseco nor any Non-Finance Subsidiary is directly liable thereon, and (ii) neither Conseco nor any Non-Finance Subsidiary has any Contingent Obligation in respect of such Indebtedness (other than a Contingent Obligation of CIHC permitted by Section 4.01(d)(i) above); (f Permitted Nonrecourse Indebtedness; (g secured Indebtedness, including, without limitation, Capitalized Lease Liabilities and Purchase Money Debt, provided, that (i) the aggregate outstanding principal amount of Indebtedness of this type does not exceed at any time ten percent (10%) of Total Shareholders' Equity at such time and (ii) such Indebtedness shall not be secured by any Lien other than a Lien expressly permitted by Section 4.02(i); (h Indebtedness among Conseco and its Subsidiaries (other than Conseco Finance Entities); (i Indebtedness owing by any Conseco Finance Entity to the extent the related Investment is permitted under Section 4.09(a); (j Indebtedness (other than for borrowed money) subject to Liens permitted under Section 4.02(b), (d), (e) or (f); (k Indebtedness in respect of Surplus Debentures entered into by an Insurance Subsidiary; (l unsecured Indebtedness of Conseco in an aggregate principal amount not to exceed $100,000,000 at any time outstanding; and (m Indebtedness in respect of the Facilities. IV.2 Liens. Conseco shall not, and shall not permit any of its Subsidiaries to, create, assume or suffer to exist any Lien on any asset now owned or hereafter acquired by it, except for the following (collectively called "Permitted Liens"): (a Liens in connection with Permitted Transactions; (b Liens for Taxes which are not overdue for more than 60 days or for Taxes being contested in good faith and by appropriate proceedings and with respect to which adequate reserves are being maintained in accordance with GAAP; 28 (c Liens shown on Schedule 4.02(c), including extensions, renewals and replacements of such Liens; provided that (i) no such Lien is spread to cover any additional property (other than after acquired title in or on such property and proceeds of the existing collateral in accordance with the document creating such Lien) and (ii) the Indebtedness secured thereby is not increased by more than 10% (of the aggregate principal amount of such Indebtedness outstanding on the Effective Date) except as otherwise permitted under Section 4.01 (in which case the portion representing any additional increase must be permitted by another paragraph of this Section 4.02); (d Liens incurred in the ordinary course of business in connection with worker's compensation, unemployment insurance or other forms of governmental insurance or benefits or to secure performance of tenders, statutory obligations, leases and contracts (other than for borrowed money) entered into in the ordinary course of business or to secure obligations on surety or appeal bonds; (e Liens of mechanics, carriers, and materialmen and other like Liens arising in the ordinary course of business in respect of obligations which are not overdue for more than 60 days or which are being contested in good faith and by appropriate proceedings and with respect to which adequate reserves are being maintained in accordance with GAAP; (f Liens arising in the ordinary course of business for sums being contested in good faith and by appropriate proceedings and with respect to which adequate reserves are being maintained in accordance with GAAP, or for sums not due, and in either case not involving any deposits or advances for borrowed money or the deferred purchase price of property or services; (g Liens in favor of the trustee on sums required to be deposited with the trustee under the indentures described on Schedule 4.02(g); (h Liens incurred on assets of Subsidiaries that are Conseco Finance Entities securing Indebtedness which is expressly permitted by Section 4.01(e) or (f); (i Liens securing Indebtedness permitted by Section 4.01(g); provided that such Liens consist exclusively of: (i) Liens securing the Relevant Facility, (ii) Liens pursuant to any Cash Collateral Agreement (and a Lien may be incurred on the collateral under the Cash Collateral Agreement in favor of the Public Debt secured by the Collateral Agreement), (iii) Liens on "Collateral" as defined in the Collateral Agreement, (iv) Liens on Conseco's interest in Tritel, Inc. in existence of the Effective Date securing $25,000,000 of notes payable to Ericsson, Inc., and (v) Liens on other assets that (1) are not subject to a Lien incurred pursuant to clause (i), (ii), (iii) or (iv) above and (2) are not described on Schedule 1.01B securing Indebtedness in an aggregate principal amount not to exceed (x) 25% of the Available Basket Amount at any time prior to the Near-Term Facilities Termination Date or (y) 50% of the Available Basket Amount at any time thereafter; (j easements, rights-of-way, zoning restrictions, restrictions and other similar encumbrances incurred in the ordinary course of business and which do not materially interfere with the ordinary course of business of Conseco and its Subsidiaries; (k Liens on property of Conseco and its Subsidiaries in favor of landlords securing licenses, subleases or leases of property permitted hereunder; (l licenses, leases or subleases permitted hereunder granted to others not materially interfering in any material respect in the business of Conseco and its Subsidiaries; 29 (m attachment or judgment Liens not constituting an Event of Default under Section 5.01(i); (n Liens arising from precautionary Uniform Commercial Code financing statement filings with respect to operating leases or consignment arrangements entered into by Conseco and its Subsidiaries in the ordinary course of business; and (o Liens in connection with a Permitted Tritel Hedge Transaction. None of the Permitted Liens shall be permitted on the Reserve or any of the Reserve Amounts (as defined in the relevant agreement governing the Reserve). IV.3 Disposition of Assets. Conseco shall not and shall not permit any of its Subsidiaries to, sell, assign, lease, transfer or otherwise Dispose of (whether in one or a series of transactions) any property (including accounts and notes receivable with or without recourse and Capital Stock of any Subsidiary whether newly issued or otherwise) or enter into any agreement to do any of the foregoing, except: (a Dispositions of inventory or equipment (including, without limitation, repossessed and/or off lease property of Conseco Finance), all in the ordinary course of business consistent with past practices; (b the sale of equipment to the extent that such equipment is exchanged for credit against the purchase price of similar replacement equipment, or the proceeds of such sale are reasonably promptly applied to the purchase price of such replacement equipment; (c Dispositions of Investments by Insurance Subsidiaries (other than any of their respective Investments in Persons engaged in insurance lines of business) in the ordinary course of business consistent with past practices; (d Dispositions of (i) in the case of any Conseco Finance Entity, loans, leases, receivables, installment contracts and other financial products originated, acquired, sold or securitized by such Conseco Finance Entity or (ii) interests in or components of Interest Only Securities; (e intercompany Dispositions made between or among Conseco and its Subsidiaries (or Subsidiaries of Conseco with other Subsidiaries of Conseco or Conseco), in each case, in the ordinary course of business; (f (i) any Disposition pursuant to a Reinsurance Agreement so long as such Disposition is entered into in the ordinary course of business for the purpose of managing insurance risk consistent with industry practice and (ii) any other Disposition pursuant to a Reinsurance Agreement so long as (x) the proceeds therefrom are retained by an Insurance Subsidiary, (y) such proceeds are used for the general corporate purposes of the Insurance Subsidiaries (including for reinvestment within insurance lines of business similar to Conseco's insurance lines of business at the time of the relevant transaction) and (z) the aggregate statutory profit and/or gains on insurance policy sales or other portfolio transfers resulting from all Dispositions described in this clause (ii) consummated after August 25, 2000 shall not exceed $250,000,000; (g obsolete or worn out property disposed of by Conseco or any of its Subsidiaries in the ordinary course of business and consistent with past practices of Conseco and its Subsidiaries; 30 (h transfers resulting from any casualty or condemnation of property or assets; (i licenses or sublicenses of intellectual property and general intangibles and licenses, leases or subleases of other property in the ordinary course of business and consistent with the past practices of Conseco and its Subsidiaries and which do not materially interfere with the business of Conseco and its Subsidiaries; (j any consignment arrangements or similar arrangements for the sale of assets in the ordinary course of business and consistent with the past practices of Conseco and its Subsidiaries; (k the sale or discount of overdue accounts receivable arising in the ordinary course of business and consistent with the past practices of Conseco and its Subsidiaries, but only in connection with the compromise or collection thereof; (l Dispositions permitted by Section 4.07(a); (m Dispositions of Investments set forth on Schedule 4.03(m); (n Dispositions not otherwise permitted hereunder, provided that, in the case of Dispositions constituting Asset Sales, (i) 75% of the consideration received in connection therewith shall consist of cash, Cash Equivalents and/or readily marketable securities that are immediately saleable and (ii) 100% of the Net Proceeds thereof shall consist of Available Net Proceeds and shall be applied as described in Article II; and (o the exercise of the put rights set forth in the PRIDES Documents in connection with a remarketing thereunder in accordance with such documents and Section 3.11. Notwithstanding anything to the contrary in this Section 4.03, no issuance or sale of Capital Stock of any Subsidiary of Conseco (other than any Insignificant Subsidiary) shall be permitted if, after giving effect thereto, Conseco owns, directly or indirectly, 50% or less (but greater than 0%) of the voting Capital Stock of such Subsidiary. IV.4 Other Agreements. Conseco shall not, and shall not permit any of its Subsidiaries to, enter into any agreement (other than agreements with insurance regulators) containing any provision which (a) would be violated or breached by the performance of its obligations hereunder or under any instrument or document delivered or to be delivered by it hereunder or in connection herewith or (b) prohibits or restricts the ability of Conseco to amend or otherwise modify this Appendix or any other document executed in connection herewith. IV.5 Transactions with Affiliates. Conseco shall not, and shall not suffer or permit any Significant Subsidiary to, enter into any material transaction with any Affiliate of Conseco (other than Conseco or a Ninety-Percent Owned Subsidiary), except upon fair and reasonable terms no less favorable to Conseco or such Subsidiary than would be obtained in a comparable arm's-length transaction with a Person not an Affiliate of Conseco or such Subsidiary, and except for insurance transactions, intercompany pooling and other reinsurance transactions entered into in the ordinary course of business and consistent with past practice. IV.6 Change in Business. Conseco shall not, and shall not suffer or permit any Significant Subsidiary to, fundamentally change the type of business in which it is presently engaged as listed on Schedule 4.06. 31 IV.7 Fundamental Changes. Unless the Obligations shall be paid in full concurrently therewith, Conseco shall not enter into any merger, consolidation or amalgamation, or liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution), or Dispose of, all or substantially all of its property or business, other than any merger, consolidation or amalgamation (a) of any Subsidiary of Conseco into Conseco, (b) solely for the purpose of reincorporating Conseco in a different State of the United States or (c) solely for the purpose of consummating an investment permitted by Section 4.09(b)(iii) or (iv). IV.8 Restricted Payments. Conseco shall not declare or pay any dividend (other than dividends payable solely in common stock, or the same class of capital stock as to which the dividend is paid, of the Person making such dividend) on (or make any payment to a related trust for the purpose of paying a dividend), or make any payment on account of, or set apart assets for a sinking or other analogous fund for, the purchase, redemption, defeasance, retirement or other acquisition of, any Capital Stock of Conseco (or any related trust), whether now or hereafter outstanding, or make any other distribution in respect thereof, either directly or indirectly, whether in cash or property or in obligations of Conseco (collectively, "Restricted Payments"), except that (a) Conseco may declare and pay dividends on its common stock so long as, at the time of declaration of the relevant dividend, Conseco has Investment Grade Ratings Status and the Near-Term Facilities Termination Date has occurred, (b) Conseco may declare and pay regularly scheduled dividends on its preferred stock (and permit any related trust to do the same) so long as, at the time of declaration of the relevant dividend, Conseco has Investment Grade Ratings Status and the Near-Term Facilities Termination Date has occurred, (c) Conseco may declare and pay regularly scheduled payments of interest and principal on its debentures underlying the Trust Preferred Securities and the FELINE PRIDES (and the related trusts may pay regularly scheduled dividends under such Trust Preferred Securities and such FELINE PRIDES) so long as (i) Conseco's Cash on Hand on average for the 90 days prior to the date of such declaration is equal to or greater than $100,000,000, (ii) Conseco's Cash on Hand on the date of such payment, after giving effect to the payment of said dividend on such date, is equal to or greater than $100,000,000 and (iii) no Event of Default shall have occurred and be continuing at the time of such payment, (d) Conseco may make cash payments in respect of fractional shares of its preferred stock in an aggregate amount not to exceed $10,000,000 and (e) Conseco may pay dividends to Bankers National Life Insurance Company in respect of its Preferred Series E Capital Stock in an amount not to exceed $36,000,000 per year. IV.9 Investments. (a) Conseco and its Subsidiaries (other than Conseco Finance and its Subsidiaries) shall not, directly or indirectly, make any Investment in Conseco Finance or any of its Subsidiaries after the Effective Date, except (i) intercompany Investments in the ordinary course of business in an aggregate amount not to exceed $250,000,000 at any time outstanding of which (x) $50,000,000 may be made on a permanent basis, (y) $100,000,000 may be made so long as each such Investment pursuant to this clause (y) is repaid within three months of the date of Investment and within each three month period there shall be a three Business Day period during which no Investment pursuant to clause (y) of this clause (i) shall be outstanding, and (z) $100,000,000 may be made so long as each such Investment pursuant to this clause (z) is repaid within six months of the date of Investment and within each six month period there shall be a three Business Day period during which no Investment pursuant to clause (z) of this clause (i) shall be outstanding, and (ii) additional Investments made at any time after the Near-Term Facilities Termination Date in an aggregate amount not to exceed $150,000,000 at any time outstanding. 32 (b) Conseco and CIHC shall not, directly or indirectly, make any Investment in any Person (other than a Subsidiary of Conseco to support its operations in the ordinary course of business) except: (i) Investments made with common stock issued by Conseco, (ii) Investments agreed to but not made prior to the date hereof and set forth on Schedule 4.09(b), (iii) Investments not otherwise permitted hereby in an aggregate amount expended not to exceed $25,000,000 in any Fiscal Year, (iv) Investments made in connection with a sale of assets permitted by Section 4.03 to the extent of the non-cash consideration received by Conseco or a Subsidiary, (v) as permitted by Section 4.09(a) and (vi) Conseco may repurchase its 6.4% Mandatory Par Put Remarketed Securities due June 15, 2011 if required to do so pursuant to the terms and conditions thereof, which repurchase (if so required) shall be conducted in accordance with the terms and conditions of such instruments. It is understood that Investments of the type described in Section 4.09(a) may not be made pursuant to clauses (i) through (iii) of this paragraph (b). IV.10 Optional Payments; Modifications of Certain Agreements; Synthetic Purchase Agreements. (a) Conseco shall not, and shall not permit any of its Subsidiaries (other than Conseco Finance or any of its Subsidiaries) to make any optional or voluntary payment, prepayment, repurchase or redemption of or otherwise optionally or voluntarily defease or segregate funds with respect to Indebtedness (other than the Reserve), other than (i) prepayments of Indebtedness of a Subsidiary of Conseco owed to Conseco or another Subsidiary of Conseco or of Conseco owed to a Subsidiary of Conseco, in each case to the extent prepaid or repaid in the ordinary course of business, which Indebtedness is (A) not related to the Trust Preferred Securities and (B) not a prepayment of loans referred to in clause (f) of the definition of "Conseco Available Cash Flow" unless, in the case of this clause (B), at the time of, and after giving pro forma effect to, such prepayment, Conseco is in compliance with Section 4.14, (ii) prepayments of the 2000 Public Debt, (iii) prepayments of the 2001 Public Debt so long as on the date of such prepayment (or, if earlier, the date on which Conseco enters into an obligation to make such prepayment), Conseco has A.M. Best A- Status, (iv) prepayments of the Longer-Term Public Debt made after the Near-Term Facilities Termination Date so long as the scheduled maturity of the Public Debt being prepaid is earlier than the earliest scheduled maturity then in effect with respect to the remaining Facilities, (v) prepayments of Capital Lease Liabilities in connection with the Disposition of the related asset or property and (vi) prepayments not otherwise permitted by the foregoing clauses so long as the aggregate amount expended in connection therewith does not exceed $25,000,000. (b) Conseco shall not, and shall not permit any of its Subsidiaries (other than Conseco Finance or any of its Subsidiaries) to amend, modify, waive or otherwise change, or consent or agree to any amendment, modification, waiver or other change to, any of the material terms of any subordinated Indebtedness of Conseco or any of its Subsidiaries (other than Conseco Finance or any of its Subsidiaries) the aggregate principal amount of which exceeds $10,000,000 (other than any such amendment, modification, waiver or other change that (i) would extend the maturity or reduce the amount of any payment of principal thereof or reduce the rate or extend any date for payment of interest thereon and (ii) does not involve the payment of a consent fee that is not customary under the circumstances). (c) Conseco shall not, and shall not permit any of its Subsidiaries (other than Conseco Finance or any of its Subsidiaries) to amend, modify, waive or otherwise change, or consent or agree to any amendment, modification, waiver or other change to, any of the material terms of any preferred stock issued by Conseco or any of its Subsidiaries or any related trust (other than any such amendment, modification, waiver or other change that (i) would extend the scheduled redemption date or reduce the amount of any scheduled redemption payment or reduce the rate or extend any date for payment of dividends thereon and (ii) does not involve the payment of a consent fee that is not customary under the circumstances). (d) Conseco shall not, and shall not permit any of its Subsidiaries to enter into or be party to, or make any payment under, any Synthetic Purchase Agreement. 33 IV.11 Negative Pledge on Tritel and Argosy Riverboat. Conseco shall not, and shall not permit any of its Subsidiaries to, pledge or create any security interest or Lien upon (a) any of the Capital Stock of Tritel, Inc. (or any successor thereto) directly or indirectly owned by it (other than (i) any such Lien described in Section 4.02(i)(iv) and (ii) Liens securing obligations under hedging transactions relating to the value of such Capital Stock with counterparties having a senior unsecured non-credit enhanced long-term debt rating of at least A2 from Moody's and A from S&P (a "Permitted Tritel Hedge Transaction")) or (b) the Capital Stock or assets of Conseco Entertainment Inc. or CNC Entertainment LLC. IV.12 Reserve Account. Conseco shall not permit the amounts in the Reserve (a) to be invested in anything other than Cash Equivalents or (b) to be used for any purpose other than to prepay or repay the 2000 Public Debt, the 2001 Public Debt or Exposure under the Facilities, except that, with the prior written consent of each of the Agents, Conseco may use up to 20% of the amounts in the Reserve at any time (but in an aggregate amount not to exceed $160,000,000) for other general corporate purposes permitted by the Loan Documents, including this Appendix. IV.13 Debt to Capitalization Ratio. Conseco shall not permit the Debt to Total Capitalization Ratio as of the end of each Fiscal Quarter set forth below to be greater than the ratio set forth below for such date: ---------------------------------------------------------- --------------- Fiscal Quarter Ending Ratio ---------------------------------------------------------- --------------- December 31, 2000 0.450:1.0 ---------------------------------------------------------- --------------- March 31, 2001 0.435:1.0 ---------------------------------------------------------- --------------- June 30, 2001 0.425:1.0 ---------------------------------------------------------- --------------- September 30, 2001 0.425:1.0 ---------------------------------------------------------- --------------- December 31, 2001 0.400:1.0 ---------------------------------------------------------- --------------- March 31, 2002 0.400:1.0 ---------------------------------------------------------- --------------- June 30, 2002 0.400:1.0 ---------------------------------------------------------- --------------- September 30, 2002 0.375:1.0 ---------------------------------------------------------- --------------- December 31, 2002 0.375:1.0 ---------------------------------------------------------- --------------- March 31, 2003 0.350:1.0 ---------------------------------------------------------- --------------- June 30, 2003 0.350:1.0 ---------------------------------------------------------- --------------- September 30, 2003 0.350:1.0 ---------------------------------------------------------- --------------- December 31, 2003 0.350:1.0 ---------------------------------------------------------- --------------- March 31, 2004 0.300:1.0 ---------------------------------------------------------- --------------- June 30, 2004 0.300:1.0 ---------------------------------------------------------- --------------- September 30, 2004 0.300:1.0 ---------------------------------------------------------- --------------- December 31, 2004 and thereafter 0.300:1.0 ---------------------------------------------------------- --------------- For each $2,830,000 by which the aggregate amount of the FY 2000 Adjustments is less than $500,000,000, each ratio set forth above for periods ending on or prior to September 30, 2001 shall be reduced by 0.01%. IV.14 Interest Coverage Ratio. Conseco shall not permit the Interest Coverage Ratio as of the end of each Fiscal Quarter set forth below for the four Fiscal Quarters then ended (or, if less, the number of full Fiscal Quarters commencing after the Effective Date) to be less than the ratio set forth below for such date: ---------------------------------------------------------- ---------------- Fiscal Quarter Ending Ratio ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- December 31, 2000 1.00:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- March 31, 2001 1.00:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- June 30, 2001 1.10:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- September 30, 2001 1.10:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- December 31, 2001 1.20:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- March 31, 2002 1.25:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- June 30, 2002 1.30:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- September 30, 2002 1.40:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- December 31, 2002 1.40:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- March 31, 2003 1.60:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- June 30, 2003 1.75:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- September 30, 2003 1.90:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- December 31, 2003 2.00:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- March 31, 2004 2.00:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- June 30, 2004 2.00:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- September 30, 2004 2.00:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- December 31, 2004 and thereafter 2.00:1.0 ---------------------------------------------------------- ---------------- IV.15 Conseco Adjusted Earnings. Conseco shall not permit the Conseco Adjusted Earnings for any period of four Fiscal Quarters (or, in the case of the tests as at March 31, 2001, June 30, 2001 and September 30, 2001, two Fiscal Quarters, two Fiscal Quarters and three Fiscal Quarters, respectively) ended on any date set forth below to be less than the amount set forth below for such date: ---------------------------------------------------------- ------------------- Fiscal Quarter Ending Amount ---------------------------------------------------------- ------------------- March 31, 2001 $650,000,000 ---------------------------------------------------------- ------------------- June 30, 2001 $750,000,000 ---------------------------------------------------------- ------------------- 34 ---------------------------------------------------------- ------------------- September 30, 2001 $1,150,000,000 ---------------------------------------------------------- ------------------- December 31, 2001 $1,600,000,000 ---------------------------------------------------------- ------------------- March 31, 2002 $1,600,000,000 ---------------------------------------------------------- ------------------- June 30, 2002 $1,650,000,000 ---------------------------------------------------------- ------------------- September 30, 2002 $1,700,000,000 ---------------------------------------------------------- ------------------- December 31, 2002 $1,750,000,000 ---------------------------------------------------------- ------------------- March 31, 2003 $1,800,000,000 ---------------------------------------------------------- ------------------- June 30, 2003 $1,850,000,000 ---------------------------------------------------------- ------------------- September 30, 2003 $1,925,000,000 ---------------------------------------------------------- ------------------- December 31, 2003 $2,000,000,000 ---------------------------------------------------------- ------------------- March 31, 2004 $2,025,000,000 ---------------------------------------------------------- ------------------- June 30, 2004 $2,075,000,000 ---------------------------------------------------------- ------------------- September 30, 2004 $2,125,000,000 ---------------------------------------------------------- ------------------- December 31, 2004 and thereafter $2,175,000,000 ---------------------------------------------------------- ------------------- IV.16 Conseco Finance Tangible Net Worth. Conseco shall not permit Conseco Finance Tangible Net Worth as at the end of any Fiscal Quarter ending during any Fiscal Year set forth below (commencing with the Fiscal Quarter ending December 31, 2000) to be less than the relevant amount set forth below: ---------------------------------------------------------- ----------------- Fiscal Quarter Ending During Amount ---------------------------------------------------------- ----------------- Fiscal Year Ending December 31, 2000 $950,000,000 ---------------------------------------------------------- ----------------- Fiscal Year Ending December 31, 2001 $1,200,000,000 ---------------------------------------------------------- ----------------- Fiscal Year Ending December 31, 2002 $1,400,000,000 ---------------------------------------------------------- ----------------- Fiscal Year Ending December 31, 2003 $1,650,000,000 ---------------------------------------------------------- ----------------- Fiscal Year Ending December 31, 2004 and thereafter $2,000,000,000 ---------------------------------------------------------- ----------------- 35 IV.17 Risk-Based Capital Ratio. Conseco shall not permit the Risk-Based Capital Ratio as at the end of any Fiscal Quarter to be less than 200%. ARTICLE V EVENTS OF DEFAULT V.1 Events of Default. Each of the following shall constitute an "Event of Default": (a Non Payment. Conseco fails to pay, (i) when and as required to be paid herein, any amount of principal of any Loan, or (ii) within five days after the same becomes due, any interest, fee or any other amount payable hereunder or under any other Loan Document; or (b Representation or Warranty. Any representation or warranty by Conseco or any of its Subsidiaries made or deemed made herein or in any other Loan Document, or contained in any certificate, document or financial or other statement by Conseco, any Subsidiary or any Responsible Officer, furnished at any time in connection with this Appendix or in connection with any other Loan Document, is incorrect in any material respect on or as of the date made or deemed made; or (c Specific Defaults. Conseco fails to perform or observe any term, covenant or agreement contained in any of Section 3.03(a), 4.01, 4.02, 4.03, 4.04, 4.06, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.14, 4.15, 4.16 or 4.17; or (d Other Defaults. Conseco or any of its Subsidiaries fails to perform or observe any other term or covenant contained in this Appendix or any other Loan Document, and such default shall continue unremedied for a period of 30 days after the date upon which written notice thereof is given to Conseco by the Relevant Agent or any Relevant Bank; or 36 (e Cross-Default. (i) Conseco or any Significant Subsidiary (A) fails to make any payment in respect of any Indebtedness or Contingent Obligation (other than in respect of Swap Contracts) or any similar financing arrangement related to the Lehman Agreement, having an aggregate principal amount (including undrawn committed or available amounts and including amounts owing to all creditors under any combined or syndicated credit arrangement) of more than $50,000,000, when due (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise) and such failure continues after the applicable grace or notice period, if any, specified in the relevant document on the date of such failure; or (B) fails to perform or observe any other condition or covenant, or any other event shall occur or condition exist (other than an alleged breach which Conseco or such Significant Subsidiary is contesting in good faith and which does not relate to a payment default or a breach of a financial covenant), under any agreement or instrument relating to any such Indebtedness, and such failure continues after the applicable grace or notice period, if any, specified in the relevant document on the date of such failure if the effect of such failure, event or condition is to cause, or to permit the holder or holders of such Indebtedness or beneficiary or beneficiaries of such Indebtedness or any similar financing arrangement related to the Lehman Agreement (or a trustee or agent on behalf of such holder or holders or beneficiary or beneficiaries) to cause, such Indebtedness to be declared to be due and payable prior to its stated maturity, or, in the case of any such Indebtedness consisting of Contingent Obligations, to become payable or cash collateral in respect thereof to be demanded or, in the case of any similar financing arrangement related to the Lehman Agreement, otherwise permit Lehman or an Affiliate thereof to terminate its obligations or commitments thereunder; or (ii) there occurs under any Swap Contract an Early Termination Date (as defined in such Swap Contract) resulting from (1) any event of default under such Swap Contract as to which Conseco or any Subsidiary is the Defaulting Party (as defined in such Swap Contract) or (2) any Termination Event (as so defined) as to which Conseco or any Subsidiary is an Affected Party (as so defined), and, in either event, the Swap Termination Value owed by Conseco or such Subsidiary as a result thereof is greater than $50,000,000; or (f Insolvency; Voluntary Proceedings. Conseco or any Significant Subsidiary (i) ceases or fails to be solvent, or generally fails to pay, or admits in writing its inability to pay, its debts as they become due, subject to applicable grace periods, if any, whether at stated maturity or otherwise; (ii) voluntarily ceases to conduct its business in the ordinary course; (iii) commences any Insolvency Proceeding with respect to itself; or (iv) takes any action to effectuate or authorize any of the foregoing; or (g Involuntary Proceedings. (i) Any involuntary Insolvency Proceeding is commenced or filed against Conseco or any Significant Subsidiary, or any writ, judgment, warrant of attachment, execution or similar process, is issued or levied against a substantial part of Conseco's or any Significant Subsidiary's properties, and any such proceeding or petition shall not be dismissed, or such writ, judgment, warrant of attachment, execution or similar process shall not be released, vacated or fully bonded within 60 days after commencement, filing or levy; (ii) Conseco, any Significant Subsidiary or any Material Insurance Subsidiary admits the material allegations of a petition against it in any Insolvency Proceeding, or an order for relief (or similar order under non-U.S. law) is ordered in any Insolvency Proceeding; (iii) Conseco, any Significant Subsidiary or any Material Insurance Subsidiary acquiesces in the appointment of a receiver, trustee, custodian, conservator, liquidator, mortgagee in possession (or agent therefor), or other similar Person for itself or a substantial portion of its property or business; or (iv) any Material Insurance Subsidiary shall become subject to any conservation, rehabilitation or liquidation order, directive or mandate issued by any Governmental Authority; or (h Pension Plans and Welfare Plans. With respect to any Single Employer Pension Plan as to which Conseco or any other ERISA Affiliate may have any liability, there shall exist a deficiency of more than $20,000,000 as to any ERISA Affiliate (other than Conseco) or $65,000,000 as to Conseco in the Pension Plan assets available to satisfy the benefits guaranteeable under ERISA with respect to such Pension Plan, and steps are undertaken to terminate such plan or such Pension Plan is terminated or Conseco or any other ERISA Affiliate withdraws from or institutes steps to withdraw from such Pension Plan, or Conseco has knowledge that steps have been taken to terminate any Multiemployer Plan and such termination may result in liability to any ERISA Affiliate (other than Conseco) in excess of $20,000,000 or $65,000,000 as to Conseco or any Reportable Event with respect to such Pension Plan has occurred which could result in the incurrence of liability by any ERISA Affiliate (other than Conseco) in excess of $20,000,000 or $65,000,000 as to Conseco or steps are taken to terminate any Multiemployer Plan and such termination may result in any liability of any ERISA Affiliate (other than Conseco) in excess of $20,000,000 or $65,000,000 as to Conseco shall occur; or (i Material Judgments. One or more judgments or decrees shall be entered against Conseco or any of its Subsidiaries involving in the aggregate a liability (not paid or fully covered by insurance as to which the relevant insurance company has not denied coverage) of $50,000,000 or more, and all such judgments or decrees shall not have been vacated, discharged, stayed or bonded pending appeal within 30 days from the entry thereof ; or 37 (j Material Regulatory Matters. (i) If an Insurance Subsidiary shall not make a scheduled payment of interest or principal on any surplus note or similar form of subordinated indebtedness (due to actions of any Governmental Authority or otherwise), (ii) if at any time an Insurance Subsidiary's ability to pay fees to its Affiliates under existing agreements (or extensions of existing agreements) shall be restricted due to actions of any Governmental Authority or otherwise or (iii) if in any Fiscal Year, an Insurance Subsidiary's ability to pay dividends to its stockholders is restricted in any manner (due to actions of any Governmental Authority or otherwise), other than by restrictions under the insurance law of the Insurance Subsidiary's state of domicile that apply generally to other insurance companies domiciled in the state, and, in the case of clauses (i) through (iii) above, such event or condition (x) was not in effect as of the date hereof and (y) such event or condition, together with all other such events or conditions, could reasonably be expected to have a Material Adverse Effect; or (k Change of Control. There occurs any Change of Control; or (l A.M. Best A- Status. Conseco shall not have obtained A.M. Best A- Status prior to March 31, 2001; or (m CIHC Guarantee. The guarantee contained in the Relevant CIHC Guaranty shall cease, for any reason, to be in full force and effect (other than in accordance with the definition thereof or if released by the Relevant Agent at the direction of each of the Relevant Banks) or Conseco or any Subsidiary of Conseco shall so assert; or (n Subordination to CIHC Obligations. Any "Subordinated Debt" under and as defined in the Relevant CIHC Guaranty shall cease, for any reason, to be validly subordinated to the obligations of CIHC under the Relevant CIHC Guaranty as provided in the relevant provisions of the Relevant CIHC Guaranty, or Conseco or any Subsidiary of Conseco shall so assert; or (o Subordination to Obligations. Any Subordinated Obligations or the guarantees thereof shall cease, for any reason, to be validly subordinated to the Obligations or the obligations of Conseco under the Relevant Conseco Guaranty, as the case may be, as provided in the documents governing such Subordinated Obligations, or Conseco or any Subsidiary of Conseco or any trustee or material holders of such Subordinated Obligations shall so assert. 38 EX-4 4 0004.txt EXHIBIT 4.3 EXHIBIT 4.3 SECOND AMENDMENT TO $155 MILLION CREDIT AGREEMENT THIS SECOND AMENDMENT TO THE $155 MILLION CREDIT AGREEMENT, dated as of September 22, 2000 (this "Amendment"), is made by and among Conseco, Inc., an --------- Indiana corporation (the "Company"), the various financial institutions ------- signatory hereto (the "Banks") and The Chase Manhattan Bank, a New York banking ----- corporation, individually and as administrative agent for the Banks (the "Agent"). ----- W I T N E S S E T H: WHEREAS, the Company, the Banks and the Agent are party to that certain Senior Secured Revolving Credit Agreement, dated as of May 30, 2000 (the "Credit Agreement") and the Loan Documents referred to in the Credit Agreement; ---------------- WHEREAS, the Company and the Banks have agreed to amend the Credit Agreement on the terms and conditions herein set forth. NOW, THEREFORE, the parties hereto hereby agree as follows: 1. Definitions. Capitalized terms used but not otherwise defined ----------- herein shall have the meanings assigned to such terms in the Credit Agreement (as amended hereby). 2. Certain Amendments to Credit Agreement. The Credit Agreement is -------------------------------------- hereby amended, effective on the date this Amendment becomes effective in accordance with Section 3 hereof, as follows: 2.1. Section 1.01 - Amended Definitions. (a) The definition of "Maturity Date" in Section 1.01 of the Credit Agreement is hereby amended by deleting such definition in its entirety and replacing it with the following: "Maturity Date" means December 31, 2001, or such earlier ------------- date on which the Obligations become due pursuant to Section 8.02. (b) The definition of "Net Cash Proceeds" in Section 1.01 of the Credit Agreement is hereby amended by deleting such definition in its entirety. 2.2. Additional Definitions. The following definitions are added to Section 1.01 of the Credit Agreement in proper alphabetical order: "Appendix" means the Appendix attached as Schedule A to the -------- Second Amendment, which is hereby incorporated by reference into the Agreement, as from time to time amended with the consent of the Required Banks. "CIHC" means CIHC, Incorporated, a Delaware corporation. ---- 2 "CIHC Guaranty" means a guaranty of CIHC in the form attached as ------------- Schedule B to the Second Amendment. ---------- "Second Amendment" means that certain Second Amendment to the ---------------- $155 Million Credit Agreement dated September __, 2000. 2.3. Additional Definitions - Appendix. The definitions set forth --------------------------------- in Section 1.01 of the Appendix are hereby incorporated by reference and added to Section 1.01 of the Credit Agreement in proper alphabetical order. To the extent Section 1.01 of the Credit Agreement contains defined terms that are also defined in Section 1.01 of the Appendix, each such definition in the Credit Agreement shall be deemed deleted and the Appendix definition substituted in lieu thereof, except that the terms "Taxes", "Required Banks", "Business Day" and "Loan Documents" as used in the Credit Agreement (but not the Appendix) shall retain the meanings set forth in Section 1.01 of the Credit Agreement. 2.4 Commitment. (a) Notwithstanding any provisions of the Credit ---------- Agreement to the contrary, other than Sections 2.01 (b)-(f), including without limitation Section 2.01(a) thereof, the Banks shall have no obligation to make, any additional Loans. The aggregate Commitments shall equal the outstanding principal amount of the Loans and shall be reduced by any payment of the principal of the Loans; provided that the Commitments may be increased in accordance with Section 2.01(b). (b) Section 2.01(b) of the Credit Agreement is hereby amended by deleting the phrase "Section 7.01(e) of the Five Year Credit Agreement" and replacing it with the following: "Section 4.01(g) of the Appendix". (c) Section 2.01(g) of the Credit Agreement is hereby amended by deleting the phrase "Section 7.01(e) of the Five-Year Credit Agreement as in effect from time to time" and replacing it with the following: "Section 4.01(g) of the Appendix." 2.5. Mandatory Prepayments. Section 2.06(b) of the Credit Agreement --------------------- is hereby amended by deleting subsections (i) and (ii) thereof in their entirety and replacing them with the following: "The Company agrees to perform all its obligations under Article II of the Appendix, which is hereby incorporated by reference." 2.6. Termination and Repayment. Section 2.07 of the Credit Agreement ------------------------- is hereby amended by deleting such Section in its entirety and replacing it with the following: 2.07 Termination and Repayment; Extension. Unless previously ------------------------------------ terminated nor repaid, the Commitments shall terminate and the Company shall repay the Loans on the Maturity Date. 2.7. Representations and Warranties. (a) Article V of the Credit ------------------------------ Agreement is hereby amended by deleting clause (v) in its entirety and replacing it with the following: 3 (v) to a "Material Adverse Effect" or a Material Adverse Change," shall mean and be a reference to a Material Adverse Effect or Material Adverse Change, respectively, as defined herein, provided that since June 30, 2000, -------- there has been no Material Adverse Effect (except for changes in or adverse effects upon, the business, properties, condition (financial or otherwise) of the Company and its Subsidiaries as disclosed in press releases, public filings or otherwise in writing to the Administrative Agent on or before the effective date of the Second Amendment). (b) Article V of the Credit Agreement is hereby further amended by deleting the comma immediately preceding clause (xii) and inserting in lieu thereof the word "and". (c) Article V of the Credit Agreement is hereby further amended by deleting in its entirety the language starting from "(xiii) to Schedule 5.05 of the Five-Year Credit Agreement" and ending with the second reference therein to "for the purposes of this Agreement". 2.8. Affirmative Covenants. Article VI of the Credit Agreement is --------------------- hereby amended and restated in its entirety to read as set forth in Article III of the Appendix. 2.9. Negative Covenants. Article IV of the Appendix is hereby added ------------------ to the Credit Agreement as Article VII, so that Article VII of the Credit Agreement shall read in its entirety as set forth in Article IV of the Appendix. 2.10. Events of Default. Section 8.01 of the Credit Agreement is ----------------- hereby amended and restated in its entirety to read as set forth in Section 5.01 of the Appendix, except that the existing Section 8.01(f) shall be added to the end of the amended section as paragraph (p). 2.11. Remedies. Section 8.02 of the Credit Agreement is hereby amended by deleting the phrase "paragraph (e) of Section 8.01 (in the case of the last two provisions under paragraph (e) upon the expiration of the 60-day period mentioned therein)" and replacing it with the following: "paragraph (f) ------------- or (g) of Section 5.01 of the Appendix (in the case of Section 5.01(g)(i) upon --- ------------ ------------------ the expiration of the 60-day period mentioned therein)". 2.12. Schedules. Schedules 7.02(c), 7.02(g) and 7.07 are hereby --------- deleted. 2.13. Renumbering. Any amendment of the Credit Agreement herein that ----------- incorporates Articles, Sections, Schedules or Exhibits from the Appendix shall be deemed to automatically renumber any Article, Section, Schedule or Exhibit references therein to correspond to those of the Credit Agreement as amended. 3. Conditions to Effectiveness of this Amendment. This Amendment --------------------------------------------- shall become effective upon the satisfaction of the following conditions: 3.1. Executed Amendment. Receipt by the Agent of duly executed ------------------ counterparts of this Amendment from the Company and the Banks. 4 3.2. Restructuring. The other Relevant Facilities shall have been ------------- amended in a form reasonably satisfactory to the Required Banks and the Reserve required under the Appendix shall have been established and funded to the extent required under the Appendix. 3.3. Resolutions; Incumbency. Receipt by the Agent of the following ----------------------- documents: (i) copies of the resolutions of the board of directors of the Company authorizing the transactions contemplated hereby, certified as of the date hereof by the Secretary or an Assistant Secretary of the Company; and (ii) a certificate of the Secretary or an Assistant Secretary of the Company, dated as of the date hereof, certifying the names and true signatures of the officers of the Company authorized to execute, deliver and perform, as applicable, this Amendment, and all other documents to be delivered by the Company hereunder. 3.4. Organizational Documents; Good Standing. Receipt by the Agent --------------------------------------- of (i) a certificate of the Secretary or an Assistant Secretary of the Company, dated as of the date hereof, certifying as to the form of the articles of incorporation and bylaws of the Company and (ii) a good standing certificate of the Company from its state of incorporation. 3.5. CIHC Guaranty. Receipt by the Agent of the duly executed CIHC ------------- Guaranty. 3.6. Resolutions; Incumbency - CIHC. Receipt by the Agent of the ------------------------------ following documents: (i) copies of the resolutions of the board of directors of CIHC authorizing the CIHC Guaranty, certified as of the date hereof by the Secretary or an Assistant Secretary of CIHC; and (ii) a certificate of the Secretary or an Assistant Secretary of CIHC, dated as of the date hereof, certifying the names and true signatures of the officers of CIHC authorized to execute, deliver and perform, as applicable, the CIHC Guaranty, and all other documents to be delivered by CIHC hereunder. 3.7. Organizational Documents; Good Standing. Receipt by the Agent --------------------------------------- of (i) a certificate of the Secretary or an Assistant Secretary of CIHC, dated as of the date hereof, certifying as to the form of the articles of incorporation and bylaws of CIHC and (ii) a good standing certificate as to CIHC from its state of incorporation. 3.8. Opinion of Counsel. Receipt by the Agent of an opinion of ------------------ counsel to the Company and CIHC in form reasonably satisfactory to the Agent. 3.9. Prepayments. ----------- 5 (i) The Company shall have complied with its obligations under Section 2.01(a) of the Appendix and the outstanding Loans under the Credit Agreement to each Bank shall equal the amount of its Commitments set forth in the attached Schedule 2.01; and (ii) On or before the effective date hereof, $50,000,000 shall have been pledged as cash collateral to support the Specified D&O Facilities. 3.10. Fee. Receipt by the Agent for the benefit of the Banks of an --- amendment fee in an amount equal to 1% of the outstanding principal amount of the Loans under the Credit Agreement on the effective date hereof after giving effect to the prepayments received on the effective date hereof. 3.11. Certificate. Receipt by the Agent of a certificate signed by ----------- a Responsible Officer, dated as of the date hereof, stating that: (i) no Default or Event of Default will exist after giving effect to this Amendment; and (ii) since June 30, 2000, there has been no Material Adverse Effect (except for changes in or adverse effects upon, the business, properties, condition (financial or otherwise) of the Company and its Subsidiaries as disclosed in press releases, public filings or otherwise in writing to the Agent). 3.12. CFC. The Company shall have disclosed to the Banks in writing --- any contractual restrictions on the ability of Conseco Finance Corp. to distribute Available Net Proceeds to the Company and the Banks shall be reasonably satisfied with such restrictions, including, without limitation, any such restrictions under the Lehman Agreement. 3.13. Miscellaneous. Receipt by the Agent of such other documents, ------------- certificates, instruments or opinions as may reasonably be requested by the Agent or the Banks. 4. Certain Representations and Warranties by the Company. In order ----------------------------------------------------- to induce the Banks and the Agent to enter into this Amendment, the Company represents and warrants to the Banks and the Agent that: 4.1. Authority. The Company has the right, power and capacity and --------- has been duly authorized and empowered by all requisite corporate and required shareholder action, if any, to enter into, execute, deliver and perform this Amendment. 4.2. Validity. This Amendment has been duly and validly executed -------- and delivered by the Company and constitutes its legal, valid and binding obligation, enforceable against the Company in accordance with its terms, except as enforcement thereof may be subject to the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors' rights generally and general principles of equity (regardless of whether such enforcement is sought in a proceeding in equity or at law or otherwise). 6 4.3. No Conflicts. The Company's execution, delivery and ------------ performance of this Amendment do not and will not violate (i) its certificate or articles of incorporation or by-laws, (ii) any law, rule, regulation, order, writ, judgment, decree or award applicable to the Company or (iii) any contractual obligation to which the Company is a party or to which the Company or any of its properties are subject, except to the extent that any violations as set forth in clauses (ii) or (iii) would not result in a Material Adverse Effect. 4.4. Approvals. No authorization or approval or other action by, --------- and no notice to or filing or registration with, any Governmental Authority or regulatory body (other than those which have been obtained and are in force and effect) is required in connection with the Company's execution, delivery and performance of this Amendment. 4.5. CIHC Authority. CIHC has the right, power and capacity and -------------- has been duly authorized and empowered by all requisite corporate and required shareholder action, if any, to enter into, execute, deliver and perform the CIHC Guaranty. 4.6. CIHC Guaranty Validity. The CIHC Guaranty has been duly and ---------------------- validly executed and delivered by CIHC and constitutes its legal, valid and binding obligation, enforceable against CIHC in accordance with its terms, except as enforcement thereof may be subject to the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors' rights generally and general principles of equity (regardless of whether such enforcement is sought in a proceeding in equity or at law or otherwise). 4.7. No Conflicts - CIHC. CIHC's execution, delivery and ------------------- performance of the CIHC Guaranty does not and will not violate (i) its certificate or articles of incorporation or by-laws, (ii) any law, rule, regulation, order, writ, judgment, decree or award applicable to CIHC or (iii) any contractual obligation to which CIHC is a party or to which CIHC or any of its properties are subject, except to the extent that any violations as set forth in clauses (ii) or (iii) would not result in a Material Adverse Effect. 4.8. Approvals - CIHC. No authorization or approval or other ---------------- action by, and no notice to or filing or registration with, any Governmental Authority or regulatory body (other than those which have been obtained and are in force and effect) is required in connection with CIHC's execution, delivery and performance of the CIHC Guaranty. 4.9. Incorporated Representations and Warranties. All ------------------------------------------- representations and warranties contained in the Loan Documents are true and correct in all material respects with the same effect as though such representations and warranties had been made on and as of the date hereof and the effective date hereof, except as to any representations or warranties which expressly related to an earlier date, in which event, such representations and warranties are true in all material respects as of such date. 4.10. No Defaults. No Default or Event of Default exists after ----------- giving effect to this Amendment. 7 5. Miscellaneous. The parties hereto hereby further agree as follows: 5.1. Further Assurances. Each of the parties hereto hereby agrees ------------------ to do such further acts and things and to execute, deliver and acknowledge such additional agreements, powers and instruments as any other party hereto may reasonably request which are required to carry into effect the purposes of this Amendment and the Credit Agreement, as amended hereby. 5.2. Payment of Costs and Expenses. The Company agrees to pay on ----------------------------- demand all expenses of the Administrative Agent (including the fees and out-of- pocket expenses of counsel to the Administrative Agent) in connection with the negotiation, preparation, execution and delivery of this Amendment. 5.3. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND ------------- CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. 5.4. Counterparts. This Amendment may be executed in one or more ------------ counterparts (including by facsimile transmission), each of which, when executed and delivered, shall be deemed to be an original and all of which counterparts, taken together, shall constitute but one and the same document with the same force and effect as if the signatures of all of the parties were on a single counterpart, and it shall not be necessary in making proof of this Amendment to produce more than one such counterpart. 5.5. Headings. Headings used in this Amendment are for convenience -------- of reference only and shall not affect the construction of this Amendment. 5.6. Loan Documents. The defined term "Loan Documents" shall, as -------------- of the date hereof, refer to (i) the Loan Documents as defined in the Credit Agreement and (ii) this Amendment . 5.7. Release of CIHC Guaranty. The CIHC Guaranty shall be ------------------------ terminated and the Guarantor (as defined therein) shall be released from all of its obligations thereunder on the first date after the Near-Term Facilities Termination Date on which Conseco has Investment Grade Ratings Status, as long as no Default or Event of Default shall have occurred and be continuing on such date. IN WITNESS WHEREOF, this Amendment has been duly executed and delivered as of the date first above written. CONSECO, INC. By: /s/ Thomas M. Hagerty -------------------------------------- Title: Acting Chief Financial Officer ----------------------------------- THE CHASE MANHATTAN BANK, as Administrative Agent and a Bank By: _________________________________________ Title: ______________________________________ BANK OF AMERICA, N.A., as a Bank By: _________________________________________ Title: ______________________________________ Schedule A - Appendix ================================================================================ APPENDIX CONSECO, INC. $3,028,576,848 CREDIT FACILITIES DATED AS OF SEPTEMBER 22, 2000 BANK OF AMERICA, N.A. AND THE CHASE MANHATTAN BANK, AS JOINT LEAD ARRANGERS AND JOINT BOOK MANAGERS ================================================================================ TABLE OF CONTENTS
Page ARTICLE IDEFINITIONS....................................................................................................1 ----------- 1.01 Certain Defined Terms..............................................................................1 --------------------- 1.02 Other Interpretive Provisions.....................................................................20 ----------------------------- 1.03 Accounting Principles.............................................................................21 --------------------- ARTICLE IIMANDATORY CASH APPLICATIONS..................................................................................21 --------------------------- 2.01 General Application of Available Net Proceeds.....................................................21 --------------------------------------------- 2.02 Application of Available Net Proceeds Allocated to Facilities.....................................22 ------------------------------------------------------------- 2.03 Exempt Covenant/Waterfall Amounts.................................................................22 --------------------------------- ARTICLE IIIAFFIRMATIVE COVENANTS.......................................................................................23 --------------------- 3.01 Financial Statements..............................................................................23 -------------------- 3.02 Certificates; Other Information...................................................................24 ------------------------------- 3.03 Notices...........................................................................................24 ------- 3.04 Preservation of Corporate Existence, Etc. ........................................................26 ----------------------------------------- 3.05 Insurance.........................................................................................26 --------- 3.06 Payment of Obligations............................................................................26 ---------------------- 3.07 Compliance with Laws..............................................................................26 -------------------- 3.08 Compliance with ERISA.............................................................................26 --------------------- 3.09 Inspection of Property and Books and Records; Expense Reimbursement...............................26 ------------------------------------------------------------------- 3.10 Tritel Disposition................................................................................27 ------------------ 3.11 Conversion of FELINE PRIDES.......................................................................27 --------------------------- ARTICLE IVNEGATIVE COVENANTS...........................................................................................27 ------------------ 4.01 Limitation on Indebtedness........................................................................27 -------------------------- 4.02 Liens.............................................................................................28 ----- 4.03 Disposition of Assets.............................................................................30 --------------------- 4.04 Other Agreements..................................................................................31 ---------------- 4.05 Transactions with Affiliates......................................................................31 ---------------------------- 4.06 Change in Business................................................................................31 ------------------ 4.07 Fundamental Changes...............................................................................31 ------------------- 4.08 Restricted Payments...............................................................................32 ------------------- 4.09 Investments.......................................................................................32 ----------- 4.10 Optional Payments; Modifications of Certain Agreements; Synthetic Purchase Agreements.............33 ------------------------------------------------------------------------------------- 4.11 Negative Pledge on Tritel and Argosy Riverboat....................................................33 ---------------------------------------------- 4.12 Reserve Account...................................................................................34 --------------- 4.13 Debt to Capitalization Ratio......................................................................34 ---------------------------- 4.14 Interest Coverage Ratio...........................................................................34 ----------------------- 4.15 Conseco Adjusted Earnings.........................................................................35 ------------------------- 4.16 Conseco Finance Tangible Net Worth................................................................35 ---------------------------------- 4.17 Risk-Based Capital Ratio..........................................................................35 ------------------------ ARTICLE VEVENTS OF DEFAULT.............................................................................................36 ----------------- 5.01 Events of Default.................................................................................36 -----------------
SCHEDULES Schedule 1.01A Certain Material Insurance Subsidiaries Schedule 1.01B Specified Cash Events Schedule 1.01C Changes in Future Loss Reserves Schedule 1.01D Persons Not Subsidiaries Schedule 2.02 Exposure on Effective Date Schedule 4.01(c) Indebtedness Schedule 4.02(c) Existing Liens Schedule 4.02(g) Permitted Indentures Schedule 4.03(m) Dispositions of Investments Schedule 4.06 Business Activities Schedule 4.09(b) Proposed Investments EXHIBITS Exhibit A Form of Compliance Certificate Exhibit B Form of Reserve Account Agreement ARTICLE I DEFINITIONS I.1 Certain Defined Terms. The following terms, when used in this Appendix, have the following meanings: "Affiliate" means, as to any Person, any other Person which, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person. A Person shall be deemed to control another Person if the controlling Person possesses, directly or indirectly, the power (a) to vote 10% or more of the securities (on a fully diluted basis) having ordinary voting power for the election of directors or managing general partners, or (b) to direct or cause the direction of the management and policies of the other Person, whether through the ownership of voting securities, membership interests, by contract, or otherwise. "Agent" means any "Relevant Agent" under and as defined in the documents governing any Facility. "A.M. Best" means A.M. Best Company, together with any Person succeeding thereto by merger, consolidation or acquisition of all or substantially all of its assets, including substantially all of its business of rating insurance companies. "A.M. Best A- Status" means the circumstance that each Material Insurance Subsidiary listed on Schedule 1.01A has a claims paying rating of at least A- from A.M. Best. "Annual Statement" means the annual statutory financial statement of any Insurance Subsidiary required to be filed with the insurance commissioner (or similar authority) of its jurisdiction of incorporation, which statement shall be in the form required by such Insurance Subsidiary's jurisdiction of incorporation or, if no specific form is so required, in the form of financial statements permitted by such insurance commissioner (or such similar authority) to be used for filing annual statutory financial statements and shall contain the type of information permitted or required by such insurance commissioner (or such similar authority) to be disclosed therein, together with all exhibits or schedules filed therewith. "Appendix" means this Appendix as amended, restated, supplemented or otherwise modified from time to time. "Asset Backed Security" means a security of a Conseco Finance Entity that is collateralized by loans, leases, receivables, installment contracts or interests in or components of Interest Only Securities. "Asset Sale" means any Disposition of property or series of related Dispositions of property, excluding any such Disposition permitted by clauses (a) through (m) and clause (o) of Section 4.03 (but in any event including (whether or not permitted by any of the foregoing clauses) any direct or indirect (a) Disposition of all or any part of the Capital Stock issued by Conseco Finance, Tritel, Inc., Conseco Entertainment, Inc. or CNC Entertainment LLC, (b) Disposition of all or any part of the assets of Tritel, Inc. or CNC Entertainment LLC and (c) receipt of cash proceeds in respect of any Specified Cash Event (each, a "Disposition Transaction") that yields gross proceeds to Conseco and its Subsidiaries in excess of $10,000,000, provided that, once the aggregate gross proceeds from Disposition Transactions received during any Proceeds Test Period yielding gross proceeds between $2,000,000 and $10,000,000 exceeds $20,000,000, the first reference to $10,000,000 in this definition shall automatically be deemed to be changed to $2,000,000 for the remainder of such Proceeds Test Period. As used in this definition, "Proceeds Test Period" means (i) the period from the Effective Date through the Near-Term Facilities Termination Date and (ii) each subsequent one-year period commencing on the Near-Term Facilities Termination Date or an anniversary thereof. "Available Basket Amount" means, at any time, an amount equal to (a) ten percent (10%) of Total Shareholders' Equity at such time minus (b) the aggregate then outstanding amount of Indebtedness secured by Liens, without duplication, pursuant to Section 4.02(i)(i), (ii) (of Conseco or any "Significant Subsidiary" (as defined in the Public Debt)), (iii) or (iv). "Available Net Proceeds" means any Net Proceeds received by Conseco or any of its Subsidiaries in connection with any Prepayment Event other than Exempt Covenant/Waterfall Amounts and Exempt Waterfall Amounts applied in the manner described in clause (b) of the definition of "Exempt Waterfall Amounts". "B-Share Financings" means the financing of fees or commissions related to B-Shares. "B-Shares" means those shares of ownership representing a mutual interest in a pool of assets on which l2b-1 fees or contingent deferred sales commissions (CDSC), as defined under the Investment Company Act of 1940, are applicable. "Bank" means each "Relevant Bank" under and as defined in the documents governing any Facility. "Bankruptcy Code" means the Federal Bankruptcy Reform Act of 1978 (11 U.S.C.ss.101, et seq.). "Business Day" means any day other than a Saturday, Sunday or other day on which commercial banks in Chicago or New York City are authorized or required by law to close. "Calculation Period" means, with respect to any ratio or calculation, the period for which such ratio or calculation is being calculated. "Capital and Surplus" means, as to any Insurance Subsidiary, as of any date, the total amount shown on line 38, page 3, column I of the Annual Statement of such Insurance Subsidiary, or an amount determined in a consistent manner for any date other than one as of which an Annual Statement is prepared. "Capitalized Lease Liabilities" means, with respect to any Person, all monetary obligations of such Person under any leasing or similar arrangement which, in accordance with GAAP, would be classified as a capitalized lease, and, for purposes of this Appendix, the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP, and the stated maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be terminated by the lessee without payment of a penalty. 2 "Capital Stock" means any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person (other than a corporation) and any and all warrants, rights or options to purchase any of the foregoing. "Cash Collateral Agreement" means any cash collateral agreement provided to secure obligations of Conseco or any of its Subsidiaries pursuant to any D&O Facility. "Cash Equivalents" means (a) marketable direct obligations issued by, or unconditionally guaranteed by, the United States government or issued by any agency thereof and backed by the full faith and credit of the United States, in each case maturing within one year from the date of acquisition; (b) certificates of deposit, time deposits, eurodollar time deposits or overnight bank deposits having maturities of six months or less from the date of acquisition issued by any commercial bank organized under the laws of the United States or any state thereof having combined capital and surplus of not less than $500,000,000 and a short term deposit rating of at least A-1 by S&P and P-1 by Moody's, or carrying an equivalent rating by a nationally recognized rating agency, if both of the two named rating agencies cease publishing ratings of commercial paper issuers generally; (c) commercial paper of an issuer rated at least A-1 by S&P and P-1 by Moody's, or carrying an equivalent rating by a nationally recognized rating agency, if both of the two named rating agencies cease publishing ratings of commercial paper issuers generally, and maturing within six months from the date of acquisition; (d) repurchase obligations of any Relevant Bank or of any commercial bank satisfying the requirements of clause (b) of this definition, having a term of not more than 30 days, with respect to securities issued or fully guaranteed or insured by the United States government; (e) securities with maturities of one year or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States, by any political subdivision or taxing authority of any such state, commonwealth or territory or by any foreign government, the securities of which state, commonwealth, territory, political subdivision, taxing authority or foreign government (as the case may be) are rated at least A by S&P and A2 by Moody's; (f) securities with maturities of six months or less from the date of acquisition backed by standby letters of credit issued by any Relevant Bank or any commercial bank satisfying the requirements of clause (b) of this definition; or (g) shares of money market mutual or similar funds which invest exclusively in assets satisfying the requirements of clauses (a) through (f) of this definition. "Cash on Hand Target" has the meaning set forth in Section 2.01(b). "CBOs" means notes or other instruments (other than CMOs) secured by collateral consisting primarily of debt securities and/or other types of debt obligations, including loans. "CERCLA" means the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended. "CERCLIS" means the Comprehensive Environmental Response, Compensation and Liability Information System List. 3 "Change of Control" means (a) any acquisition by any Person, or two or more Persons acting in concert, of beneficial ownership (within the meaning of Rule l3d-3 of the Securities and Exchange Commission under the Exchange Act) of 30% or more of the outstanding shares of voting stock of Conseco (other than an acquisition by any Person or Persons who are officers or directors of Conseco on the Effective Date or any Affiliate thereof controlled by the relevant officer or director); or (b) during any period of 25 consecutive calendar months, commencing on the Effective Date, the ceasing of those individuals who were not borrowers under any of the D&O Facilities (the "Continuing Directors") who (i) were directors of Conseco on the first day of each such period or (ii) subsequently became directors of Conseco and whose actual election or initial nomination for election subsequent to that date was approved by a majority of the Continuing Directors then on the board of directors of Conseco, to constitute a majority of the board of directors of Conseco; or (c) Gary Wendt or such other Person as shall be reasonably satisfactory to the Required Banks shall cease to be the Chief Executive Officer of Conseco (other than by reason of death or disability) at any time prior to the Near-Term Facilities Termination Date. "CIHC" means CIHC, Incorporated, a Delaware corporation, and a direct Wholly-Owned Subsidiary of Conseco. "CIHC Guaranty" means any "Relevant CIHC Guaranty" under and as defined in the documents governing any Facility. "CMOs" means notes or other instruments secured by collateral consisting primarily of mortgages, mortgage-backed securities and/or other types of mortgage-related obligations. "Code" means the Internal Revenue Code of 1986, as amended, and regulations promulgated thereunder. "Collateral Agreement" means the Collateral Agreement, dated as of May 30, 2000, made by Conseco and CIHC in favor of the Collateral Agent named therein. "Compliance Certificate" means a certificate substantially in the form of Exhibit A. "Conseco" means Conseco, Inc., an Indiana corporation. "Conseco Adjusted Earnings" means, for any Calculation Period, the consolidated Net Income of Conseco for such period plus, without duplication and to the extent reflected as a charge in the statement of such Net Income for such period, the sum of (a) income tax expense, (b) interest expense, amortization or writeoff of debt discount and debt issuance costs and commissions, discounts and other fees and charges associated with Indebtedness, (c) depreciation and amortization expense, (d) amortization of intangibles (including, but not limited to, goodwill, deferred acquisition costs, the present value of future profits and changes in future loss reserves described on Schedule 1.01C) and organization costs, (e) net changes in Interest Only Securities, (f) any extraordinary, unusual or non-recurring non-cash expenses or losses (including, whether or not otherwise includable as a separate item in the statement of such Net Income for such period, non-cash losses on sales of assets outside of the ordinary course of business), (g) any other non-cash charges (provided that the after tax amounts described in clauses (f) and (g) shall not exceed in the aggregate$500,000,000 for any Calculation Period ending on or before September 30, 2001, and $50,000,000 for any Calculation Period ending thereafter), and (h) realized or unrealized losses on Investments of Insurance Subsidiaries, and minus, to the extent included in the statement of such Net Income for such period, the sum of (a) any extraordinary, unusual or non-recurring income or gains (including, whether or not otherwise includable as a separate item in the statement of such Net Income for such period, gains on the sales of assets outside of the ordinary course of business) and (b) realized or unrealized gains on Investments of Insurance Subsidiaries, all as determined on a consolidated basis. 4 "Conseco Available Cash Flow" means, for any Calculation Period, the sum, without duplication, of (a) dividends paid in cash to Conseco by any Subsidiary, plus (b) interest paid in cash to Conseco by any Subsidiary pursuant to any intercompany Indebtedness owing by such Subsidiary to Conseco, plus (c) interest or principal paid in cash to Conseco with respect to the Surplus Debentures, plus (d) amounts paid in cash to Conseco under the Tax Sharing Agreement, plus (e) management and other similar fees received by Conseco under servicing agreements or otherwise from any Subsidiary, plus (f) amounts paid in cash to Conseco pursuant to a loan made to it by any Subsidiary, plus (g) amounts paid in cash to Conseco by Conseco Finance pursuant to the redemption by Conseco Finance of preferred equity issued by Conseco Finance and owned by Conseco plus (h) Conseco's Investment Income received in cash, plus (i) in respect of any Fiscal Quarter ended on or prior to December 31, 2000, amounts paid by Conseco in closing out swaps in an amount not to exceed $15,000,000 less the value of the collateral attributable to the relevant swaps, minus (j) cash operating expenses of Conseco, minus (k) capital expenditures of Conseco, minus (l) any amounts paid by Conseco in repayment of any loan referred to in clause (f) above. Amounts received by Conseco or any of its Subsidiaries in respect of any Specified Cash Event shall be excluded from this calculation. "Conseco Finance" means Conseco Finance Corp., a Delaware corporation. "Conseco Finance Entities" means, collectively, Conseco Finance and its consolidated Subsidiaries and "Conseco Finance Entity" means any one of them individually. "Conseco Finance Tangible Net Worth" means, at any date, all amounts that would, in conformity with GAAP, be included on a consolidated balance sheet of Conseco Finance and its Subsidiaries under stockholders' equity at such date, as adjusted by the following items to the extent increasing or reducing, as the case may be, such amounts: plus (a) unrealized losses (or, if applicable, minus unrealized gains), plus (b) any non-cash charges specified in clause (f) or (g) of the definition of Conseco Adjusted Earnings (subject to the limits applicable thereto) minus (c) goodwill, minus (d) Interest Only Securities, minus (e) servicing rights plus (f) the amount of any cash dividends paid by Conseco Finance to Conseco (directly or indirectly). If all or any portion of any intercompany Indebtedness owing to Conseco or any of its Subsidiaries by Conseco Finance or any of its Subsidiaries is converted into equity, no positive impact of such conversion shall be included in determining Conseco Finance Tangible Net Worth. "Conseco Guaranty" means any "Relevant Conseco Guaranty" under and as defined in the documents governing any Facility. "Conseco Series F Preferred Stock" means $500,000,000 stated value of Conseco's Series F Common Linked Convertible Preferred Stock, without par value and any replacement thereof, except to the extent held by any Person (other than Thomas H. Lee or any Person, fund or individual affiliated therewith) that acquires such stock pursuant to a bona fide arm's length transaction. "Conseco's Cash On Hand" means, on any date of determination, the aggregate amount of cash and Cash Equivalents then held by (a) Conseco or (b) Conseco Finance or any of its Subsidiaries in connection with Investments made pursuant to Section 4.09(a)(i)(y) or (z), excluding amounts in the Reserve and amounts required on such date to be distributed pursuant to Section 2.01(b). 5 "Contingent Obligation" means, without duplication, any agreement, undertaking or arrangement by which any Person guarantees, endorses or otherwise becomes or is contingently liable upon (by direct or indirect agreement, contingent or otherwise, to provide funds for payment, to supply funds to, or otherwise to invest in, a debtor, or otherwise to assure a creditor against loss) the debt, obligation or other liability of any other Person (other than by endorsements of instruments in the course of collection), or guarantees the payment of dividends or other distributions upon the shares of any other Person; provided, that (a) the obligations of any Person under Reinsurance Agreements or in connection with Investments of Insurance Subsidiaries, (b) the obligations of Conseco in connection with its guaranty of the Trust Preferred Securities, the Unit Securities and the FELINE PRIDES and (c) the obligations of any Person in connection with its guaranty of Asset Backed Securities shall not be deemed Contingent Obligations of any such Person or Conseco, as applicable. The amount of any Person's liability with respect to any Contingent Obligation shall (subject to any limitation set forth therein) be deemed to be the outstanding principal amount (or maximum outstanding principal amount, if larger) of the debt, obligation or other liability outstanding thereunder or, if not stated or if indeterminable, the maximum reasonably anticipated liability in respect thereof at the time of determination. "Contractual Obligation" means, as to any Person, any provision of any security issued by such Person or of any agreement, undertaking, contract, indenture, mortgage, deed of trust or other instrument, document or agreement to which such Person is a party or by which it or any of its property is bound. "D&O Facilities" means the collective reference to the $144 Million D&O Facility, the $181 Million D&O Facility and the $245 Million D&O Facility. "Debt to Total Capitalization Ratio" means, as of any date of determination, without duplication, the ratio of (a) the sum of (i) the principal amount of and accrued but unpaid interest on all Indebtedness for borrowed money of Conseco (including, without limitation, (x) any Indebtedness evidenced by bonds, debentures, notes or other similar instruments and (y) any Indebtedness resulting from any conversion of preferred stock) for which Conseco is directly liable on such date and which is neither a Contingent Obligation (except that Contingent Obligations of Conseco in respect of Indebtedness of the type described in clause (a) or (b) of the definition thereof (other than in respect of the D&O Facilities) shall nevertheless be included in such calculation) nor Indebtedness arising out of a Permitted Transaction and (ii) dividends on Trust Preferred Securities that are accrued but unpaid; to (b) Total Capitalization on such date; provided, however, that solely for the purposes of calculating the Debt to Total Capitalization Ratio, the term "Indebtedness" shall exclude preferred securities issued by business trusts formed by Conseco, guaranteed by Conseco and related to guarantees and intercompany notes. "Default" means any event or circumstance which, with the giving of notice, the lapse of time, or both, would (if not cured or otherwise remedied during such time) constitute an Event of Default. "Department" means, with respect to any Insurance Subsidiary, the Governmental Authority of such Insurance Subsidiary's state of domicile with which such Insurance Subsidiary is required to file its Annual Statement. "Disposition" means the sale, assignment, leasing, transfer, contribution, conveyance, issuance or other disposal of or granting of options, warrants or other rights with respect to any of a Person's assets (including any transaction pursuant to a Reinsurance Agreement and, in the case of any Subsidiary, the issuance or sale of its Capital Stock). The terms "Dispose" and "Disposed of" shall have correlative meanings. "Disposition Transaction" has the meaning specified in the definition of "Asset Sale". 6 "Dollars", "dollars" and "$" each mean lawful money of the United States. "Effective Date" September 22, 2000. "Environmental Laws" means all federal, state or local laws, statutes, common law duties, rules, regulations, ordinances and codes, together with all administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, Governmental Authorities, in each case relating to environmental, health, safety and land use matters. "ERISA" means the Employee Retirement Income Security Act of 1974 and regulations promulgated thereunder. "ERISA Affiliate" means any trade or business (whether or not incorporated) under common control with Conseco within the meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code). "ERISA Event" means (a) a Reportable Event with respect to a Pension Plan; (b) a withdrawal by Conseco or any ERISA Affiliate from a Pension 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) or a cessation of operations which is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by Conseco or any ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to terminate, the treatment of a Plan amendment as a termination under Section 4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (e) an event or condition which could reasonably be expected to constitute grounds under Section 4042 of ERISA for the termination of or the appointment of a trustee to administer, any Pension Plan or Multiemployer Plan; or (e) the imposition of any liability under Title IV of ERISA, other than PBGC premiums due but not delinquent under Section 4007 of ERISA, upon Conseco or any ERISA Affiliate. "Event of Default" means any of the events or circumstances specified in Section 5.01. "Exchange Act" means the Securities Exchange Act of 1934 and the regulations promulgated thereunder. "Exempt Covenant/Waterfall Amounts" means up to $500,000,000 of Net Proceeds from the issuance of Specified Junior Securities received after the Near-Term Facilities Termination Date. "Exempt Waterfall Amounts" means Net Proceeds of Specified Junior Securities (not designated as "Exempt Covenant/Waterfall Amounts") which are applied either (a) (i) prior to the Near-Term Facilities Termination Date, to the Near-Term Facilities (in the manner contemplated by Section 2.02(b)) and (ii) thereafter, to the $1.5 Billion Facility and the Specified D&O Facilities (in the manner contemplated by Section 2.02(c)) or (b) to make investments in Conseco's Subsidiaries to support their operations. 7 "Exposure" means, with respect to each Bank, (a) in the case of the $155 Million Facility, the $766 Million Facility and the $1.5 Billion Facility, any outstanding "Loans" made by such Bank thereunder and (b) in the case of the D&O Facilities, any outstanding "Loans" made by such Bank thereunder minus such Bank's pro rata share of any cash collateral provided pursuant to the applicable Cash Collateral Agreement. "Facilities" means the collective reference to the Near-Term Facilities, the D&O Facilities and the $1.5 Billion Facility. "FELINE PRIDES" means the units consisting of (a) 6.75% Trust Originated Preferred Securities issued by Conseco Financing Trust IV (the "PRIDES Preferred Securities") and (b) a purchase contract to purchase shares of common stock from Conseco (the "PRIDES Purchase Contracts"). "Fiscal Quarter" means any fiscal quarter of a Fiscal Year. "Fiscal Year" means any period of twelve consecutive calendar months ending on December 31. "Fixed Interest Charges" means, for any Calculation Period, (without duplication) (a) interest paid or, without duplication, accrued but unpaid on the Exposure under any Facility (other than the D&O Facilities) with respect to such Calculation Period, plus (b) interest paid or, without duplication, accrued but unpaid on any Indebtedness of Conseco set forth in clause (a), (b) or (d) of the definition thereof during such Calculation Period, minus (c) to the extent included in clause (b) above, interest paid or, without duplication, accrued but unpaid on any Indebtedness which has been eliminated from the balance sheet liabilities of Conseco on a consolidated basis in accordance with GAAP, minus (d) to the extent included in clause (b) above, interest paid or, without duplication, accrued but unpaid on any Indebtedness of any Conseco Finance Entity or any Insurance Subsidiary. Interest paid, or accrued and unpaid, in respect of Indebtedness related to the Trust Preferred Securities or the FELINE PRIDES shall be excluded from the above calculation. "FRB" means the Board of Governors of the Federal Reserve System, and any Governmental Authority succeeding to any of its principal functions. "FY 2000 Adjustments" has the meaning specified in the definition of "Total Capitalization". "GAAP" means generally accepted accounting principles set forth from time to time in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board (or agencies with similar functions of comparable stature and authority within the U.S. accounting profession), which are applicable to the circumstances as of the date of determination. "Governmental Authority" means any nation or government, any state or other political subdivision thereof, any central bank (or similar monetary or regulatory authority) thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, and any corporation or other entity owned or controlled, through stock or capital ownership or otherwise, by any of the foregoing, including any board of insurance, insurance department or insurance commissioner. "Income Taxes" means any Taxes based upon net income. 8 "Indebtedness" means, with respect to any Person, without duplication: (a) all obligations of such Person for borrowed money or in respect of loans or advances; (b) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments; (c) all obligations in respect of letters of credit, whether or not drawn, and bankers' acceptances issued for the account or upon the application or request of such Person; (d) all Capitalized Lease Liabilities of such Person; (e) all obligations of such Person in respect of Swap Contracts; (f) all obligations of such Person to pay the deferred purchase price of property or services which are included as liabilities in accordance with GAAP (other than trade payables entered into in the ordinary course of business on ordinary terms), and all obligations secured by a Lien on property owned or being purchased by such Person (including obligations arising under conditional sales or other title retention agreements); (g) any obligations of a partnership of the kind referred to in clauses (a) through (f) above or clause (h) below in which such Person is a general partner, and (h) all Contingent Obligations of such Person in connection with indebtedness or obligations of others of the kinds referred to in clauses (a) through (g) above; provided, however, that, except for the purpose of the proviso of Section 4.01(d), the term "Indebtedness" shall exclude (i) replevin bonds, surety bonds and other similar bonds (including, without limitation, bonds issued in connection with litigation and repossession activities) issued by an Insurance Subsidiary or a Conseco Finance Entity in the ordinary course of business and (ii) the obligations of any Person under letters of credit (whether or not drawn), bankers' acceptances and swap contracts issued or entered into in connection with any Asset Backed Security. "Independent Auditor" has the meaning specified in Section 3.01(a). "Insignificant Subsidiary" means any Subsidiary of Conseco that is not a Significant Subsidiary. "Insolvency Proceeding" means, with respect to any Person, (a) any case, action or proceeding with respect to such Person before any court or other Governmental Authority relating to bankruptcy, reorganization, insolvency, liquidation, conservation, rehabilitation, receivership, dissolution, winding-up or relief of debtors, or (b) any general assignment for the benefit of creditors, composition, marshalling of assets for creditors, or other, similar arrangement in respect of its creditors generally or any substantial portion of its creditors, in any case, undertaken under U.S. Federal, state or foreign law, including the Bankruptcy Code. "Insurance Subsidiary" means any Subsidiary which is required to be licensed as an insurer or reinsurer. "Interest Coverage Ratio" means, for any Calculation Period, the ratio of (a) Conseco Available Cash Flow for such Calculation Period to (b) Fixed Interest Charges for such Calculation Period. "Interest Only Security" means any interest, including servicing fees, retained by a Conseco Finance Entity relating to the sale or securitization of loans, leases, receivables or installment contracts, which constitutes either an interest only security or a servicing right asset in accordance with GAAP. "Investment" means any advance, loan, extension of credit (by way of guaranty or otherwise) or capital contribution to, or purchase of any Capital Stock, bonds, notes, debentures or other debt securities of, or any assets constituting a business unit of, or any other investment in, any Person. 9 "Investment Grade Ratings Status" means the circumstance that Conseco has a senior unsecured non-credit enhanced long-term debt rating of at least BBB- from S&P and at least Baa3 from Moody's. "Investment Income" means the amount of earnings of Conseco on Investments, net of expenses actually incurred in connection with such Investments and taking into account realized gains and losses on such Investments. "IRS" means the Internal Revenue Service or any Governmental Authority succeeding to any of its principal functions under the Code. "Lehman" means Lehman Brothers Holdings Inc., and any successors. "Lehman Agreement" means, collectively, (a) the Amended and Restated Agreement, dated as of September 22, 2000, by and among Conseco Finance Corp., Conseco, CIHC, Green Tree Residual Finance Corp. I, Green Tree Finance Corp. - Five and Lehman, (b) Amendment to the Warehouse Debt Facility, dated as of September 22, 2000, by and among Lehman Commercial Paper Inc. and Green Tree Finance Corp. - Five and acknowledged and consented to by Conseco Finance Corp. and CIHC, (c) Amendment to the First Residual Facility (Asset Assignment Agreement), dated as of September 22, 2000, by and among Lehman ALI Inc. and Green Tree Residual Finance Corp. I and (d) Amendment to the Second Residual Facility (Master Repurchase Agreement), dated as of September 22, 2000, by and among Lehman Brothers Inc. and Green Tree Residual Finance Corp. I, in each case, as amended, supplemented or otherwise modified from time to time, and any related document or agreement (including the agreements amended or modified by the agreements specified above). "License" means any license, certificate of authority, permit or other authorization which is required to be obtained from any Governmental Authority in connection with the operation, ownership or transaction of insurance business. "Lien" means any security interest, mortgage, deed of trust, pledge, hypothecation, assignment, charge or deposit arrangement, encumbrance, lien (statutory or other) or preferential arrangement of any kind or nature whatsoever in respect of any property (including those created by, arising under or evidenced by any conditional sale or other title retention agreement, the interest of a lessor under a capital lease or any financing lease having substantially the same economic effect as any of the foregoing) and any contingent or other agreement to provide any of the foregoing, but not including the interest of a lessor under an operating lease or the contingent obligation to equally and ratably secure the Public Debt. "Litigation" means any litigation (including, without limitation, any governmental proceeding or arbitration proceeding), tax audit or investigative proceeding, claim, lawsuit, and/or investigation pending or threatened against or involving Conseco or any of its Subsidiaries or any of its or their businesses or operations. "Loan Documents" means the "Loan Documents" under and as defined in the documents governing the Relevant Facility, including, in any event, this Appendix and the Relevant CIHC Guaranty. 10 "Longer-Term Public Debt" means Conseco's 8.5% Notes due October 15, 2002, 6.4% Notes due February 10, 2003, 8-1/8% Senior Notes due February 15, 2003, 10.5% Senior Notes due December 15, 2004, 8.75% Notes due February 9, 2004, 6.8% Notes due June 15, 2005 and 9% Notes due October 15, 2006. "Material Adverse Effect" means (a) a material adverse change in, or a material adverse effect upon, the business, properties, condition (financial or otherwise) of Conseco or Conseco and its Subsidiaries taken as a whole; (b) a material impairment of the ability of Conseco to perform under any Loan Document; or (c) a material adverse effect upon the legality, validity, binding effect or enforceability against Conseco of any Loan Document. "Material Insurance Subsidiary" means an Insurance Subsidiary having Capital and Surplus of $50,000,000 or more. "Moody's" means Moody's Investors Service, Inc., together with any Person succeeding thereto by merger, consolidation or acquisition of all or substantially all of its assets, including substantially all of its business of rating securities. "Multiemployer Plan" means a "multiemployer plan", within the meaning of Section 4001(a)(3) of ERISA, to which Conseco or any ERISA Affiliate makes, is making, or is obligated to make contributions or, during the preceding three calendar years, has made, or been obligated to make, contributions. "NAIC" means the National Association of Insurance Commissioners or any successor thereto, or in absence of the National Association of Insurance Commissioners or such successor, any other association, agency or other organization performing advisory, coordination or other like functions among insurance departments, insurance commissioners and similar Governmental Authorities of the various states of the United States toward the promotion of uniformity in the practices of such Governmental Authorities. "Near-Term Facilities" means the collective reference to the $155 Million Facility and the $766 Million Facility. "Near-Term Facilities Termination Date" means the date on which all "Obligations" under and as defined in the documents governing the $155 Million Facility and the $766 Million Facility have, in both cases, been paid in full in cash. "Net Income" means, for any Person for any Calculation Period, the net income (or loss) of such Person for such period as determined in accordance with GAAP. 11 "Net Proceeds" means (a) with respect to any Disposition by any Person, the aggregate amount of cash and Cash Equivalents received by such Person in respect of such Disposition (including any such amounts received by way of deferred payment of principal pursuant to a note or installment receivable or purchase price adjustment receivable or otherwise, but only as and when received) minus the sum of (i) costs and expenses (including legal fees, notarial fees, accountants fees, investment banking fees, survey costs, title insurance premiums, amounts applied to the repayment of Indebtedness (other than under a Facility) secured by a Lien expressly permitted hereunder on any asset that is the subject of such Disposition, costs of discontinuance (including, without limitation, any reasonable severance payments), Taxes other than Income Taxes (after taking into account any available tax credits or deductions and any tax sharing arrangements) and other customary fees and expenses) incurred in connection with such Disposition and required to be paid in cash or deducted from the proceeds of such Disposition, (ii) the estimated Income Tax actually required to be paid in cash by such Person in connection with such Disposition (after taking into account any available tax credits or deductions and any tax sharing arrangements), (iii) purchase price adjustments reasonably expected to be payable in connection therewith (not to exceed 10% of the purchase price for the relevant Disposition) so long as, if any such amount ceases to be payable, it shall then become "Net Proceeds", (iv) for an Insurance Subsidiary, any amounts which the Department will not permit such Insurance Subsidiary to pay out as a result of such Disposition and (v) for a Conseco Finance Entity, any amounts which the Lehman Agreement will not permit such Conseco Finance Entity to distribute to CIHC or Conseco as a result of such Disposition, so long as, if any such amount becomes so distributable under the Lehman Agreement, it shall then become "Net Proceeds", and (b) with respect to any issuance of Capital Stock of Conseco, any incurrence of Indebtedness by Conseco or any of its Subsidiaries, the occurrence of any Specified Cash Event or the receipt of any amount pursuant to any Permitted Tritel Hedge Transaction, the proceeds thereof in the form of cash and Cash Equivalents minus the costs and expenses incurred in connection therewith (including legal fees, notarial fees, accountants fees, investment banking fees, underwriting discounts and commissions and other customary fees and expenses incurred in connection therewith) and required to be paid in cash or deducted from the proceeds of such Disposition. For purposes of this definition, the Net Proceeds received by any Person in respect of any Disposition shall include such cash or Cash Equivalents as may be received ("subsequent cash proceeds") by such Person at any time or from time to time in connection with the sale, transfer, lease or other disposition, or otherwise in respect of, any consideration other than cash or Cash Equivalents received by such Person in respect of such Disposition, less the estimated Income Tax to be paid in connection with the receipt of such subsequent cash proceeds (after taking into account any available tax credits or deductions and any tax sharing arrangements) that was not theretofore deducted in computing Net Proceeds. "Ninety-Percent Owned Subsidiary" means any Person in which (other than directors' qualifying shares required by law) at least 90% of the Capital Stock of each class having ordinary voting power (or, in the case of Persons other than corporations, membership interests or other equity interests), at the time as of which any determination is being made, is owned, beneficially and of record, directly or indirectly, by Conseco, or by one or more Wholly-Owned Subsidiaries, or both. "Non-Finance Subsidiary" means any Subsidiary which is not a Conseco Finance Entity. "Non-Insurance Subsidiary" means any Subsidiary which is not an Insurance Subsidiary. "Obligations" means all advances, debts, liabilities, obligations, covenants and duties for the payment of money arising under any Loan Document owing by Conseco to the Relevant Banks (or, if such defined term is included in the documents governing the Relevant Facility, any "Indemnified Person"), whether direct or indirect (including those acquired by assignment), absolute or contingent, due or to become due, now existing or hereafter arising. To the extent that any of the foregoing have been cash collateralized, such amounts shall nevertheless be deemed to remain outstanding for the purposes of this Appendix. "PBGC" means the Pension Benefit Guaranty Corporation, or any Governmental Authority succeeding to any of its principal functions under ERISA. 12 "Pension Plan" means a pension plan (as defined in Section 3(2) of ERISA) subject to Title IV of ERISA which Conseco or any ERISA Affiliate sponsors, maintains, or to which it makes, is making, or is obligated to make contributions, or in the case of a multiple employer plan (as described in Section 4064(a) of ERISA) has made contributions at any time during the immediately preceding five (5) plan years. "Permitted Lien" has the meaning specified in Section 4.02. "Permitted Nonrecourse Indebtedness" means (a) nonrecourse Indebtedness of Subsidiaries of Conseco resulting from the sale or securitization of (i) non-admitted assets, policy loans, B-Share Financings, CBOs and CMOs and (ii) loans, leases, receivables, installment contracts and other financial products originated, acquired, sold or securitized by a Conseco Finance Entity and (b) nonrecourse Indebtedness of a Conseco Finance Entity with respect to Interest Only Securities. "Permitted Swap Obligations" means all obligations (contingent or otherwise) of Conseco or any Subsidiary existing or arising under Swap Contracts, provided that each of the following criteria is satisfied: (a) such obligations are (or were) entered into by such Person in the ordinary course of business for the purpose of directly mitigating risks associated with liabilities, commitments or assets held by such Person, or changes in the value of securities issued by such Person in conjunction with a securities repurchase program not otherwise prohibited hereunder, and not for purposes of speculation or taking a "market view;" and (b) such Swap Contracts do not contain any provision ("walk-away" provision) exonerating the non-defaulting Party from its obligation to make payments on outstanding transactions to the defaulting party. "Permitted Transactions" means (a) mortgage-backed security transactions in which an investor sells mortgage collateral, such as securities issued by the Government National Mortgage Association and the Federal Home Loan Mortgage Corporation for delivery in the current month while simultaneously contracting to repurchase "substantially the same" (as determined by the Public Securities Association and GAAP) collateral for a later settlement, (b) transactions in which an investor lends cash to a primary dealer and the primary dealer collateralizes the borrowing of the cash with certain securities, (c) transactions in which an investor lends securities to a primary dealer and the primary dealer collateralizes the borrowing of the securities with cash collateral, (d) transactions in which an investor makes loans of securities to a broker-dealer under an agreement requiring such loans to be continuously secured by cash collateral or United States government securities, (e) transactions in which a federal home loan mortgage bank (a "FHLMB") makes loans, which are sufficiently secured by appropriate assets consisting of government agency mortgage-backed securities, in accordance with the rules, regulations and guidelines of such FHLMB for its loan programs, (f) financing transactions in which a Conseco Finance Entity sells or transfers as collateral loans, leases, receivables or installment contracts to a third party while simultaneously contracting to repurchase or reacquire substantially the same assets and (g) the issuance of any Asset Backed Securities by any Conseco Finance Entity. "Permitted Tritel Hedge Transaction" has the meaning specified in Section 4.11. "Person" means an individual, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture or Governmental Authority or other entity of whatever nature. "Plan" means an employee benefit plan (as defined in Section 3(3) of ERISA) which Conseco sponsors or maintains or to which Conseco makes, is making, or is obligated to make contributions and includes any Pension Plan. 13 "prepay" means, when used with respect to Public Debt, prepay, repurchase, redeem or otherwise optionally or voluntarily defease or segregate funds with respect thereto; and "prepaid" and "prepayment" shall have correlative meanings. "Prepayment Events" means (a) the occurrence of any Specified Cash Event or the consummation of any other Asset Sale, (b) the incurrence by Conseco or any of its Subsidiaries of any Indebtedness of the type described in clause (a) or (b) of the definition thereof, excluding Indebtedness permitted by Section 4.01 other than as set forth in Section 4.01(b) (to the extent required to be applied as a Prepayment Event as set forth in the definition of "Exempt Waterfall Amounts"), (c) the issuance of any Capital Stock by Conseco and (d) any receipt of Net Proceeds in connection with any Permitted Tritel Hedge Transaction. "PRIDES Documents" means the PRIDES Purchase Contracts, the PRIDES Preferred Securities, the Subordinated Indenture dated as of December 8, 1997 between Conseco and The First National Bank of Chicago, as amended by the First Supplemental Indenture, dated as of December 8, 1997, the 6.75% Debentures issued to the PRIDES Trust pursuant to such Indenture, the Amended and Restated Declaration of Trust of the PRIDES Trust, the Preferred Securities Guarantee dated as of December 12, 1997 executed by Conseco, the Common Securities Guarantee dated as of December 12, 1997 executed by Conseco, and the other documents, agreements, schedules, exhibits and instruments referenced in the foregoing agreements and instruments. "PRIDES Preferred Securities" has the meaning set forth in the definition of FELINE PRIDES. "PRIDES Purchase Contracts" has the meaning set forth in the definition of FELINE PRIDES. "PRIDES Trust" means Conseco Financing Trust IV, a Delaware business trust. "Public Debt" means the collective reference to the 2000 Public Debt, the 2001 Public Debt and the Longer-Term Public Debt. "Purchase Money Debt" means Indebtedness incurred by a Person in connection with the purchase of fixed or capital assets by such Person, in which such assets the seller or financier thereof has taken or retained a Lien therein, provided that any such Lien attaches to such asset concurrently with or within one hundred twenty (120) days after the purchase thereof by such Person. "Quarterly Statement" means the quarterly statutory financial statement of any Insurance Subsidiary required to be filed with the insurance commissioner (or similar authority) of its jurisdiction of incorporation or, if no specific form is so required, in the form of financial statements permitted by such insurance commissioner (or such similar authority) to be used for filing quarterly statutory financial statements and shall contain the type of financial information permitted by such insurance commissioner (or such similar authority) to be disclosed therein, together with all exhibits or schedules filed therewith. 14 "Reinsurance Agreements" means any agreement, contract, treaty, certificate or other arrangement by which any Insurance Subsidiary agrees to transfer or cede to another insurer all or part of the liability assumed or assets held by it under one or more insurance, annuity, reinsurance or retrocession policies, agreements, contracts, treaties, certificates or similar arrangements. Reinsurance Agreements shall include, but not be limited to, any agreement, contract, treaty, certificate or other arrangement which is treated as such by the applicable Department. "Relevant Agent" means the "Agent" or "Administrative Agent", as applicable, under the Relevant Facility. "Relevant Banks" means any Bank to which Obligations are owing under the Relevant Facility. "Relevant Cash Collateral Agreement" means, if the Relevant Facility is a D&O Facility, any cash collateral agreement entered into by Conseco or any of its Subsidiaries in favor of the Agent thereunder in order to cash collateralize the Conseco Guaranty relating to such Facility. "Relevant CIHC Guaranty" means the Guaranty and Subordination Agreement, dated as of the Effective Date, made by CIHC in favor of the Relevant Agent and the Relevant Banks. It is agreed that the Relevant CIHC Guaranty shall be terminated and CIHC shall be released from all of its obligations thereunder on the first date after the Near-Term Facilities Termination Date on which Conseco has Investment Grade Ratings Status, so long as no Default or Event of Default shall have occurred and be continuing on such date. "Relevant Conseco Guaranty" means, if the Relevant Facility is a D&O Facility, any guaranty issued by Conseco in favor of the Agent thereunder in order to guaranty the obligations of the individual borrowers under such Facility. "Relevant Facility" means the Facility being amended pursuant to the amendment to which this Appendix is attached. "Reportable Event" means any of the events set forth in Section 4043(c) of ERISA or the regulations thereunder, other than any such event for which the 30-day notice requirement under ERISA has been waived in regulations issued by the PBGC. "Required Banks" means the "Required Banks" under and as defined in the documents governing the Relevant Facility. "Requirement of Law" means, as to any Person, any law (statutory or common), treaty, rule or regulation or determination of an arbitrator or of a Governmental Authority, in each case applicable to or binding upon the Person or any of its property or to which the Person or any of its property is subject. "Reserve" means the collective reference to one or more restricted accounts opened by Conseco with any one or more Banks, on terms and conditions substantially as set forth on Exhibit B hereto. It is understood that any contractual right of setoff contained in the documents governing any Facility will not apply to any Reserve. "Responsible Officer" means the chief executive officer, chief operating officer, chief financial officer or treasurer of Conseco, or any other officer having substantially the same authority and responsibility including, with respect to Section 3.01, any vice-president with responsibility for or knowledge of financial matters of Conseco. "Restricted Payments" has the meaning set forth in Section 4.08. 15 "Risk-Based Capital Ratio" means, with respect to the Insurance Subsidiaries (other than Conseco Direct Life Insurance Company) taken as a whole, on any date of determination, the ratio (expressed as a percentage) of (a) the aggregate Total Adjusted Capital (as defined by the NAIC) for such Insurance Subsidiaries to (b) the aggregate Authorized Control Level Risk-Based Capital (as defined by the NAIC) for such Insurance Subsidiaries. "S&P" means Standard & Poor's Ratings Services, together with any Person succeeding thereto by merger, consolidation or acquisition of all or substantially all of its assets, including substantially all of its business of rating securities. "SAP" means, with respect to any Insurance Subsidiary, the statutory accounting practices prescribed or permitted by the insurance commissioner (or other similar authority) in the jurisdiction of domicile of such Person for the preparation of annual statements and other financial reports by insurance companies of the same type as such Person, which are applicable to the circumstances as of the date of filing of such statement or report. "SEC" means the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions. "Significant Subsidiary" means any Subsidiary of Conseco with, after the elimination of intercompany accounts, (a) assets which constituted at least 5% of Conseco's consolidated total assets, or (b) revenues which constituted at least 5% of Conseco's consolidated total revenue or (c) net earnings which constituted at least 5% of Conseco's consolidated total net earnings, but not less than $10,000,000, all as determined as of the date of Conseco's most recently prepared quarterly financial statements for the 12-month period then ended. "Single Employer Pension Plan" means a pension plan as such term is defined in Section 3(2) of ERISA, other than a multiemployer plan as defined in Section 4001(a)(3) of ERISA, to which Conseco or any other ERISA Affiliate may have liability, including any liability by reason of having been a substantial employer within the meaning of Section 4063 of ERISA at any time during the preceding five years, or by reason of being deemed to be a contributing sponsor under Section 4069 of ERISA. "Specified Cash Events" means the receipt of cash by Conseco or any of its Subsidiaries in connection with the events described on Schedule 1.01B, whether or not in connection with a Disposition. "Specified D&O Facilities" means the collective reference to the $181 Million D&O Facility and the $245 Million D&O Facility. "Specified Junior Securities" means (a) common stock of Conseco and (b) preferred stock of Conseco and subordinated Indebtedness of Conseco that, in each case, does not require cash dividend or cash interest payments prior to September 30, 2005 (other than any requirement that is limited to payments with the proceeds of available Exempt Covenant/Waterfall Amounts received and held aside or otherwise identified prior to the date such preferred stock or subordinated Indebtedness is issued or incurred) or scheduled redemption or principal payments prior to March 31, 2006 and, in the case of subordinated Indebtedness, having subordination and related terms satisfactory to each Agent. "Statutory Net Income" means, for any period, the net income of an Insurance Subsidiary determined in accordance with SAP. 16 "Subordinated Obligations" shall be the collective reference to the unpaid principal of and accrued and unpaid interest on any subordinated Indebtedness and all other subordinated obligations and liabilities of Conseco to the lenders thereof (including, without limitation, interest accruing at the then applicable rate provided in the applicable loan documents for such Indebtedness or obligations after the maturity of the subordinated loans and interest accruing at the then applicable rate provided in such loan documents after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to Conseco, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding), whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, which may arise under, out of, or in connection with, this Appendix, or such loan documents for such subordinated Indebtedness, in each case whether on account of principal, interest, reimbursement obligations, fees, indemnities, costs, expenses or otherwise (including, without limitation, all fees and disbursements of counsel to the lenders thereof that are required to be paid by Conseco pursuant to the terms of the loan documents therefor or this Appendix). "Subsidiary" of a Person means any corporation, partnership, limited liability company, limited liability partnership, joint venture, trust, association or other unincorporated organization of which or in which such Person and such Person's Subsidiaries own directly or indirectly more than 50% of (a) the combined voting power of all classes of stock having general voting power under ordinary circumstances to elect a majority of the board of directors, if it is a corporation, (b) the voting or managing interests (which shall mean the general partner in the case of a partnership), if it is a partnership, joint venture or similar entity, (c) the beneficial interest, if it is a trust, association or other unincorporated organization or (d) the membership interest, if it is a limited liability company; provided, that, with respect to any Investment made by Conseco in any Person in the ordinary course of business solely for investment purposes, such Person shall not be considered a Subsidiary of Conseco for the purposes of this Appendix if such Person is not integral to the business or operations of Conseco or any Significant Subsidiary and, by way of illustration only, Schedule 1.01D, sets forth a nonexclusive list of such Persons who are not Subsidiaries of Conseco because of the operation of this clause. "Surplus Debentures" means, as to any Insurance Subsidiary, debt securities of such Insurance Subsidiary the proceeds of which are permitted to be included, in whole or in part, as Capital and Surplus of such Insurance Subsidiary as approved and permitted by the applicable Department. "Swap Contract" means any agreement whether or not in writing, relating to any transaction that is a rate swap, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap or option, bond, note or bill option, interest rate option, forward foreign exchange transaction, cap, collar or floor transaction, currency swap, cross-currency rate swap, swaption, currency option or any other, similar transaction (including any option to enter into any of the foregoing) or any combination of the foregoing, and, unless the context otherwise clearly requires, any master agreement relating to or governing any or all of the foregoing. 17 "Swap Termination Value" means, in respect of any one or more Swap Contracts, after taking into account the effect of any legally enforceable netting agreement relating to such Swap Contracts, (a) for any date on or after the date such Swap Contracts have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in clause (a) the amount(s) determined as the mark-to-market value(s) for such Swap Contracts, as determined by Conseco based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Swap Contracts (which may include any Relevant Bank). "Synthetic Purchase Agreement" means any agreement pursuant to which Conseco or any of its Subsidiaries is or may become obligated to make (a) any payment in connection with the purchase by any third party from a Person other than Conseco or any of its Subsidiaries (other than any Subsidiary that is a Subsidiary of an Insurance Subsidiary but is not itself an Insurance Subsidiary) of any Capital Stock or Indebtedness of Conseco or any of its Subsidiaries (other than any Subsidiary that is a Subsidiary of an Insurance Subsidiary but is not itself an Insurance Subsidiary) or (b) any payment the amount of which is determined by reference to the price or value at any time of any such Capital Stock or Indebtedness; provided, that (i) no phantom stock or similar plan providing for payments only to current or former directors, officers or employees of Conseco or any of its Subsidiaries (or to their heirs or estates), (ii) no such agreement in respect of any Public Debt that is permitted to be prepaid at such time pursuant to Section 4.10 and (iii) no such agreement in respect of any Disposition of any Capital Stock of a Subsidiary of Conseco that is permitted by Section 4.03 shall be deemed to be a Synthetic Purchase Agreement. "Taxes" means any and all present or future taxes, levies, assessments, imposts, duties, deductions, fees, withholdings or similar charges, and all liabilities with respect thereto. "Tax Sharing Agreement" means the tax sharing agreement dated February 29, 1989, as amended, among Conseco and certain of its Subsidiaries. "Total Capitalization" means, without duplication, (a) the amount described in clause (a) of the definition of "Debt to Total Capitalization Ratio", plus (b) the Total Shareholders' Equity of Conseco, minus (c) the carrying value of Interest Only Securities and servicing rights. Total Capitalization shall be determined without giving effect to (a) the impact of charges or writedowns taken in the third or fourth Fiscal Quarter of the Fiscal Year ending December 31, 2000 ("FY 2000 Adjustments") so long as the aggregate after-tax amount thereof does not exceed $500,000,000 and (b) the impact of any on balance sheet treatment of the D&O Facilities. "Total Shareholders' Equity" means the sum of, without duplication, (a) total common and preferred shareholders' equity of Conseco as determined in accordance with GAAP (calculated excluding unrealized gains (losses) of securities as determined in accordance with FAS 115) and (b) the redemption value or liquidation preference (or if less, the purchase price), as applicable, of the Trust Preferred Securities, the FELINE PRIDES and the Unit Securities. "Trust Preferred Securities" mean preferred securities (a) issued by one or more Delaware business trusts formed by Conseco and (b) guaranteed by Conseco, including specifically, "MIPS," "QuIPS," "TOPrS" and "TruPS", provided that the aggregate face amount of all Trust Preferred Securities does not exceed the greater of $1,930,000,000 or 15% of Total Capitalization at any time. "2000 Public Debt" means Conseco's $150,000,000 7-7/8% Notes due December 15, 2000. "2001 Public Debt" means Conseco's 7.6% Senior Notes due June 21, 2001 and 6.4% Mandatory Par Put Remarketed Securities due June 15, 2011. 18 "Unfunded Pension Liability" means the excess of a Plan's benefit liabilities under Section 4001(a)(16) of ERISA, over the current value of that Plan's assets, determined in accordance with the assumptions used for funding the Pension Plan pursuant to Section 412 of the Code for the applicable plan year. "United States" and "U.S." each means the United States of America. "Unit Securities" means investment units comprised of (a) mandatorily redeemable preferred securities (i) issued by one or more Delaware business trusts formed by Conseco and (ii) guaranteed by Conseco, including specifically, "MIPS," QuIPS," "TOPrS" and "TruPS," and (b) equity forward contracts for the purchase of common stock of Conseco (which forward contracts shall have a settlement date that is earlier than the stated maturity of such preferred securities) collateralized by such preferred securities or government securities in lieu thereof (including, without limitation, principal and interest strips thereof). "Voting Shares" means, with respect to any Person, capital stock issued by such Person, the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or persons performing similar functions) of such Person, even though the right so to vote has been suspended by the happening of any such contingency. "Wholly-Owned Subsidiary"means any corporation in which (other than directors' qualifying shares required by law) 100% of the capital stock of each class having ordinary voting power, and 100% of the capital stock of every other class, in each case (or, in the case of Persons other than corporations, membership interests or other equity interests), at the time as of which any determination is being made, is owned, beneficially and of record, by Conseco, or by one or more of the other Wholly-Owned Subsidiaries, or both. "$50 Million Credit Agreement" means the ECN Dealer Agreement between Conseco and Merrill Lynch, Pierce, Fenner & Smith Incorporated dated September 28, 1999 and the letter dated September 28, 1999 addressed by Merrill Lynch, Pierce, Fenner & Smith Incorporated to Conseco, including the Extendible Commercial Notes Memorandum attached thereto. "$144 Million D&O Credit Agreement" means the Termination and Replacement Agreement, dated as of May 30, 2000, among the individual borrowers parties thereto, the banks parties thereto, Chase, as administrative agent and Chase Securities Inc. and Banc of America Securities LLC as co-lead arrangers and co-lead book managers. "$155 Million Credit Agreement" means the Senior Secured Revolving Credit Agreement, dated as of May 30, 2000, among Conseco, the banks parties thereto, Chase, as administrative agent and Chase Securities Inc. and Banc of America Securities LLC as co-lead arrangers and co-lead book managers. "$181 Million D&O Credit Agreement" means the Credit Agreement, dated as of August 21, 1998, among the individual borrowers parties thereto, the banks parties thereto and BofA, as administrative agent. "$245 Million D&O Credit Agreement" means the Amended and Restated Credit Agreement, dated as of August 26, 1997, among the individual borrowers parties thereto, the banks parties thereto and BofA, as administrative agent. 19 "$766 Million Credit Agreement" means the 364-Day Credit Agreement, dated as of September 25, 1998, among Conseco, the banks parties thereto, the syndication agents and documentation agent named therein and BofA, as agent, as amended on the Effective Date to incorporate the obligations of Conseco under the $50 Million Credit Agreement. "$1.5 Billion Credit Agreement" means the Five-Year Credit Agreement, dated as of September 25, 1998, among Conseco, the banks parties thereto, the syndication agents and documentation agent named therein and BofA, as agent. "$144 Million D&O Facility" means the credit facility evidenced by the $144 Million D&O Credit Agreement and the documents related thereto. "$155 Million Facility" means the credit facility evidenced by the $155 Million Credit Agreement and the documents related thereto. "$181 Million D&O Facility" means the credit facility evidenced by the $181 Million D&O Credit Agreement and the documents related thereto. "$245 Million D&O Facility" means the credit facility evidenced by the $245 Million D&O Credit Agreement and the documents related thereto. "$766 Million Facility" means the credit facility evidenced by the $766 Million Credit Agreement and the documents related thereto. "$1.5 Billion Facility" means the credit facility evidenced by the $1.5 Billion Credit Agreement and the documents related thereto. I.2 Other Interpretive Provisions. (a) The meanings of defined terms are equally applicable to the singular and plural forms of the defined terms. (b) The words "hereof", "herein", "hereunder" and similar words refer to this Appendix as a whole and not to any particular provision of this Appendix; and subsection, Section, Schedule and Exhibit references are to this Appendix unless otherwise specified. (c) (i) The term "including" is not limiting and means "including without limitation." (ii) In the computation of periods of time from a specified date to a later specified date, the word "from" means "from and including"; the words "to" and "until" each mean "to but excluding", and the word "through" means "to and including." (d) Unless otherwise expressly provided herein, (i) references to agreements (including this Appendix) and other contractual instruments shall be deemed to include all subsequent amendments and other modifications thereto, but only to the extent such amendments and other modifications are not prohibited by the terms of any Loan Document, and (ii) references to any statute or regulation are to be construed as including all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting the statute or regulation. (e) The captions and headings of this Appendix are for convenience of reference only and shall not affect the interpretation of this Appendix. 20 (f) This Appendix and other Loan Documents may use several different limitations, tests or measurements to regulate the same or similar matters. Unless otherwise expressly provided, any reference to any action of the Relevant Agent or the Relevant Banks by way of consent, approval or waiver shall be deemed modified by the phrase "in its/their sole and reasonable discretion. (g) This Appendix and the other Loan Documents are the result of negotiations among and have been reviewed by counsel to the Relevant Agent, Conseco and the other parties to the Loan Documents, and are the products of all parties. Accordingly, they shall not be construed against the Relevant Banks or the Relevant Agent merely because of the Relevant Agent's or the Relevant Banks' involvement in their preparation. I.3 Accounting Principles. (a) Unless the context otherwise clearly requires, all accounting terms not expressly defined herein shall be construed, and all financial computations required under this Appendix shall be made, in accordance with GAAP, consistently applied. (b) References hereto in particular columns, lines or sections of any Person's Annual Statement shall be deemed, where appropriate, to be references to the corresponding column, line or section of such Person's Quarterly Statement, or if no such corresponding column, line or section exists or if any report form changes, then to the corresponding item referenced thereby. In the event the column , lines or sections of the Annual Statement referenced herein are changed or renumbered from the columns, lines and sections applicable to the 1999 Annual Statement, all such references shall be deemed references to such column, line or section as so renumbered or changed. ARTICLE II MANDATORY CASH APPLICATIONS II.1 General Application of Available Net Proceeds. (a) On the Effective Date, Available Net Proceeds in the aggregate amount of $392,861,025 shall be applied to the Facilities in the manner specified in Section 2.02(a). 21 (b) On the Effective Date and thereafter, within three Business Days after Conseco or any of its Subsidiaries receives any Available Net Proceeds (other than as described in paragraph (a) above), such Available Net Proceeds shall be applied as follows: first, the first $100,000,000 (or such lesser amount as is necessary to increase the amount of Conseco's Cash on Hand to the Cash on Hand Target) shall be retained by Conseco; second, the next $700,000,000 shall be applied 1/7th per transaction to the Near-Term Facilities and 6/7ths per transaction to fund the Reserve; third, the next $200,000,000 shall be applied to fund the Reserve; fourth, all subsequent Available Net Proceeds until the occurrence of the Near-Term Facilities Termination Date shall be applied 80% per transaction to the Near-Term Facilities, with the remainder being retained by Conseco until it has Cash on Hand equal to the Cash on Hand Target at the time of such transaction, and then 100% to the Near-Term Facilities until the occurrence of the Near-Term Facilities Termination Date; and fifth, all Available Net Proceeds received after the occurrence of the Near-Term Facilities Termination Date shall be applied 50% per transaction to the $1.5 Billion Facility and the Specified D&O Facilities (in the manner contemplated by Section 2.02(c)), with the remainder being retained by Conseco. Notwithstanding the foregoing, the first $30,000,000 of Available Net Proceeds received by Conseco or any of its Subsidiaries on or after the Effective Date after giving effect to Section 2.01(a) may be retained by Conseco. Any Available Net Proceeds referred to in this paragraph as being available for retention by Conseco (i) must, if received by a Subsidiary, be distributed to Conseco for such purpose if such distribution is not prohibited by law, rule or regulation or the Lehman Agreement and (ii) may be used by Conseco for any purpose permitted by this Appendix. Notwithstanding anything to the contrary in this Section 2.01(b), in the event that, in the case of Available Net Proceeds received at any time when clause second or third is applicable, if Conseco's Cash on Hand is less than the Cash on Hand Target, such Available Net Proceeds may be applied to increase Conseco's Cash on Hand (but not above the Cash on Hand Target), provided, that in no event shall the aggregate amount applied to increase Conseco's Cash on Hand pursuant to clause first and this sentence exceed $100,000,000. As used in this paragraph, "Cash on Hand Target" means $330,000,000 minus the amount of any Investment made by Conseco pursuant to Section 4.09(a)(i)(x) (except to the extent such amount was paid back to Conseco, directly or indirectly). (c) After the Reserve has been funded in an amount sufficient to pay the remaining maturities for the 2000 Public Debt and the 2001 Public Debt, if any such Public Debt is, or has been, repurchased at a discount with amounts from the Reserve, an amount from the Reserve equal to the difference between the face amount of the relevant Public Debt and the repurchase price of the relevant Public Debt shall be applied to the Near-Term Facilities or, after the Near-Term Facilities Termination Date, to the $1.5 Billion Facility and the Specified D&O Facilities (in the manner contemplated by Section 2.02(c)). II.2 Application of Available Net Proceeds Allocated to Facilities. (a) The application of Available Net Proceeds described in Section 2.01(a) shall be allocated to the Near-Term Facilities, and to the Exposure of the Banks thereunder, such that, after giving effect thereto, the respective Exposures of the Banks thereunder shall be as set forth on Schedule 2.02 (and any inconsistent provision in the Relevant Facility shall not apply). (b) Any application of Available Net Proceeds allocated to the Near-Term Facilities pursuant to Section 2.01(b) or (c) (and any application of Net Proceeds pursuant to clause (a)(i) of the definition of "Exempt Waterfall Amounts") shall be allocated to each Bank on a pro rata basis based on the percentage of the aggregate then outstanding amount of Exposure under such Facilities held by such Bank. In the case of any Bank having Exposure under more than one Near-Term Facility, such Bank may, by notice to Conseco and the applicable Agent, allocate its reduction in Exposure to one or more such Facilities in such respective amounts as it shall select in its sole discretion (and any inconsistent provision in the Relevant Facility shall not apply). (c) Any application of Available Net Proceeds allocated to the $1.5 Billion Facility and the Specified D&O Facilities pursuant to Section 2.01(b) or (c) (and any application of Net Proceeds pursuant to clause (a)(ii) of the definition of "Exempt Waterfall Amounts") shall be allocated ratably to each such Facility based on the aggregate Exposure then outstanding under such Facilities, and ratably to the Exposure of each Bank under each such Facility. The Available Net Proceeds so allocated to each Specified D&O Facility, at the discretion of Conseco, shall be either (i) deposited in a cash collateral account pursuant to the applicable Cash Collateral Agreement or (ii) applied to repay "Loans" made to the individual borrowers pursuant to the applicable Specified D&O Facility. II.3 Exempt Covenant/Waterfall Amounts. Notwithstanding anything to the contrary in Article IV, Conseco and its Subsidiaries shall be permitted to use Exempt Covenant/Waterfall Amounts for any purpose that would otherwise be prohibited by Article IV (other than to redeem, pay dividends on or otherwise make Restricted Payments in respect of Conseco's common stock or the Conseco Series F Preferred Stock), and any such use shall not constitute a violation of any of the covenants contained in Article IV or usage of any of the basket amounts described therein. 22 ARTICLE III AFFIRMATIVE COVENANTS So long as any Exposure or other Obligation shall remain unpaid or unsatisfied under the Relevant Facility, unless the Required Banks waive compliance in writing: III.1 Financial Statements Conseco shall deliver to the Relevant Agent and each Relevant Bank: (a) as soon as available, but not later than 120 days after the end of each Fiscal Year, copies of the audited consolidated balance sheet of Conseco and its Subsidiaries and the unaudited consolidating balance sheet of Conseco and its Subsidiaries as at the end of such year and the related consolidated statements of earnings, shareholders' equity and cash flows for such year, setting forth in the case of the audited consolidated statements in comparative form the figures for the previous Fiscal Year, and accompanied by the opinion of PricewaterhouseCoopers or another nationally-recognized independent public accounting firm ("Independent Auditor"), which report shall state that such audited consolidated financial statements present fairly the financial position and result of operations of Conseco and its Subsidiaries for the periods indicated in conformity with GAAP applied on a basis consistent with prior years, except as stated therein. Such opinion shall not be qualified or limited because of a restricted or limited examination by the Independent Auditor of any material portion of Conseco's or any Subsidiary's records; (b) as soon as available, but not later than 60 days after the end of each of the first three Fiscal Quarters of each Fiscal Year, copies of the condensed unaudited consolidated and consolidating balance sheet of Conseco and its Subsidiaries as of the end of such quarter and the related condensed unaudited statements of earnings, shareholders' equity and cash flows for the period commencing on the first day and ending on the last day of such quarter, and certified by a Responsible Officer as fairly presenting, in accordance with GAAP (subject to the absence of footnotes and ordinary, good faith year-end and audit adjustments), the financial position and the results of operations of Conseco and the Subsidiaries; (c) as soon as available but not later than 75 days after the close of each Fiscal Year of each Insurance Subsidiary, copies of the unaudited Annual Statement of such Insurance Subsidiary, certified by a Responsible Officer of such Insurance Subsidiary, all such statements to be prepared in accordance with SAP consistently applied throughout the periods reflected therein and, if required by the applicable Governmental Authority, audited and certified by independent certified public accountants of recognized national standing; (d) as soon as available but not later than 60 days after the close of each of the first three (3) Fiscal Quarters of each Fiscal Year of each Insurance Subsidiary which is a Significant Subsidiary, copies of the Quarterly Statement of each of the Insurance Subsidiaries, certified by a Responsible Officer of such Insurance Subsidiary, all such statements to be prepared in accordance with SAP consistently applied through the period reflected herein; (e) within 15 days after being delivered to any Insurance Subsidiary constituting a Significant Subsidiary, any draft or final Triennial Examination Report issued by the applicable Department or the NAIC that results in material adjustments to the financial statements referred to in subsection (a), (b) or (c); and 23 (f) within 90 days after the close of each Fiscal Year of each Insurance Subsidiary, a copy of the "Statement of Actuarial Opinion" and "Management Discussion and Analysis" for each such Insurance Subsidiary which is provided to the applicable Department (or equivalent information should such Department no longer require such a statement) as to the adequacy of loss reserves of such Insurance Subsidiary, such opinion to be in the format prescribed by the insurance code of the state of domicile of such Insurance Subsidiary. III.2 Certificates; Other Information. Conseco shall furnish to the Relevant Agent, with sufficient copies for each Relevant Bank (other than in the case of clause (e)): (a) concurrently with the delivery of the financial statements referred to in Sections 3.01(a) and (b), a Compliance Certificate executed by a Responsible Officer, (b) promptly, (i) copies of all Forms 10-K and 10-Q that Conseco or any Subsidiary may file with the SEC or (ii) copies of the certificate and related financial information provided pursuant to the Lehman Agreement in connection with evidencing periodic compliance with financial covenants therein, and promptly upon the Relevant Agents' request, financial statements and reports that Conseco sends to its shareholders and copies of all other financial statements and regular, periodic or special reports (including Form 8-K) that Conseco or any Subsidiary may make to, or file with, the SEC; (c) promptly and in any event within three Business Days after learning thereof, notification of any changes after the date hereof in the rating given by S&P or Moody's in respect of Conseco's senior unsecured Indebtedness or by A.M. Best in respect of the Insurance Subsidiaries; (d) (i) concurrently with the consummation of any Disposition Transaction yielding gross proceeds in excess of $2,000,000, (x) a description of such transaction and (y) a calculation of the gross proceeds thereof and (ii) concurrently with the occurrence of any Prepayment Event or the issuance of any Specified Junior Securities, (i) a description of the relevant transaction, (ii) a calculation of the Net Proceeds (including an accounting of the items deducted from the cash or Cash Equivalents received in connection with such transaction) thereof and (iii) if applicable its intention to treat such Net Proceeds of the type described in the definition of either (i) Exempt Covenant/Waterfall Amount or (ii) Exempt Waterfall Amount as an Exempt Covenant/Waterfall Amount or an Exempt Waterfall Amount, respectively (including, if an Exempt Waterfall Amount, whether the Net Proceeds will be applied under clause (a) or (b) of such definition); and (e) promptly, such additional information regarding the business, financial or corporate affairs of Conseco or any Subsidiary as the Relevant Agent, at the request of any Relevant Bank, may from time to time reasonably request. III.3 Notices. Conseco shall promptly notify the Relevant Agent: (a) of the occurrence of any Default or Event of Default; (b) of any matter that has resulted in a Material Adverse Effect, including (i) any breach or non-performance of, or any default under, a Contractual Obligation of Conseco or any Subsidiary; (ii) any dispute, litigation, investigation, proceeding or suspension between Conseco or any Subsidiary and any Governmental Authority; or (iii) the commencement of, or any material development in, any Litigation affecting Conseco or any Subsidiary, including pursuant to any applicable Environmental Laws; 24 (c) of the commencement of, or the occurrence of any development in, any litigation or proceeding (i) which seeks to enjoin, prohibit, discontinue or otherwise impacts the validity or enforceability of this Appendix or any of the other Loan Documents or other transactions contemplated hereby or thereby, or (ii) which could be reasonably expected to have a Material Adverse Effect. (d) of the occurrence of any of the following events affecting Conseco or any ERISA Affiliate (but in no event more than 10 days after such event) and deliver to the Relevant Agent and each Relevant Bank a copy of any notice with respect to such event that is filed with a Governmental Authority and any notice delivered by a Governmental Authority to Conseco or any ERISA Affiliate with respect to such event: (i) an ERISA Event; or (ii) a material increase in the Unfunded Pension Liabilities of any Pension Plan; (iii) the adoption of or the commencement of contributions to, any Plan subject to Section 412 of the Code by Conseco or any ERISA Affiliate; or (iv) the adoption of any amendment to a Plan subject to Section 412 of the Code, if such amendment results in a material increase in contributions or Unfunded Pension Liability; provided, however, that no such notice will be required under this Section 3.03(d) with respect to the occurrence of any such event if such occurrence does not result in, and is not reasonably expected to result in, any liability to Conseco of more than $65,000,000 or any liability to any ERISA Affiliate of more than $20,000,000. (e) of any material change in accounting policies or financial reporting practices by Conseco or any of its Subsidiaries; (f) of the receipt of any notice from any Governmental Authority of the expiration without renewal, revocation, suspension or restriction of or the institution of any proceedings to revoke, suspend or restrict, any License now or hereafter held by any Insurance Subsidiary which is required to conduct insurance business in compliance with all applicable laws and regulations and the expiration, revocation or suspension of which could reasonably be expected to have a Material Adverse Effect; (g) of the receipt of any notice from any Governmental Authority of the institution of any disciplinary proceedings against or in respect of any Insurance Subsidiary, or the issuance of any order, the taking of any action or any request for an extraordinary audit for cause by any Governmental Authority which could reasonably be expected to have a Material Adverse Effect; (h) of any judicial or administrative order limiting or controlling the insurance business of any Insurance Subsidiary (and not the insurance industry generally) which has been issued or adopted and which has had, or which could reasonably be expected to have, a Material Adverse Effect, or (i) of any actual or proposed changes in any applicable insurance code which could reasonably be expected to have a Material Adverse Effect. Each notice under this Section shall be accompanied by a written statement by a Responsible Officer setting forth details of the occurrence referred to therein, and stating what action Conseco or any affected Subsidiary proposes to take with respect thereto and at what time. Each notice under Section 3.03(a) shall describe with particularity any and all clauses or provisions of this Appendix or other Loan Document that have been (or reasonably foreseeably will be) breached or violated. 25 III.4 Preservation of Corporate Existence, Etc. Conseco shall, and shall cause each Significant Subsidiary to (except as permitted by Section 4.03 or 4.07): (a) preserve and maintain in full force and effect its corporate existence and good standing under the laws of its state or jurisdiction of incorporation; (b preserve and maintain in full force and effect all governmental rights, privileges, qualifications, permits, licenses and franchises necessary in the normal conduct of its business, except where such failure to preserve and maintain could not reasonably be expected to have a Material Adverse Effect; and (c use reasonable efforts, in the ordinary course of business, to preserve its business organization and goodwill. III.5 Insurance. Conseco shall maintain, and shall cause each Significant Subsidiary to maintain, with financially sound and reputable independent insurers, insurance with respect to its properties and business against loss or damage of the kinds customarily insured against by Persons engaged in the same or similar business, of such types and in such amounts as are customarily carried under similar circumstances by such other Persons. III.6 Payment of Obligations. Conseco shall, and shall cause each Significant Subsidiary to, pay and discharge as the same shall become due and payable, all of the following: (a all material tax liabilities, assessments and governmental charges or levies upon it or its material properties or assets, unless the same are not overdue for a period of more than 60 days or are being contested in good faith by appropriate proceedings and adequate reserves in accordance with GAAP are being maintained by Conseco or such Subsidiary; and (b all material indebtedness, as and when due and payable, but subject to any subordination provisions contained in any instrument or agreement evidencing such Indebtedness. III.7 Compliance with Laws. Conseco shall comply, and shall cause each Subsidiary to comply, in all material respects with all Requirements of Law of any Governmental Authority having jurisdiction over it or its business (including the Federal Fair Labor Standards Act and all applicable Environmental Laws), the noncompliance with which could reasonably be expected to have a Material Adverse Effect, except such as may be contested in good faith or as to which a bona fide dispute may exist. III.8 Compliance with ERISA. Conseco shall, and shall cause each of its ERISA Affiliates to: (a) maintain each Plan in compliance in all material respects with the applicable provisions of ERISA, the Code and other federal or state law; (b) cause each Plan which is qualified under Section 401(a) of the Code to maintain such qualification; and (c) make all required contributions to any Plan subject to Section 412 of the Code, except where such failure to maintain as set forth in (a) or (b) or to make contributions as set forth in (c) could not be reasonably expected to have a Material Adverse Effect. 26 III.9 Inspection of Property and Books and Records; Expense Reimbursement. Conseco shall maintain and shall cause each Subsidiary to maintain proper books of record and account, in which full, true and correct entries in all material respects in conformity with GAAP or SAP, as applicable, consistently applied (except as stated therein) shall be made of all financial transactions and matters involving the assets and business of Conseco and such Subsidiary. Conseco shall permit, and shall cause each Subsidiary to permit, representatives and independent contractors of the Relevant Agent or any Relevant Bank to visit and inspect any of their respective properties, to examine their respective corporate, financial and operating records, and make copies thereof or abstracts therefrom, and to discuss their respective affairs, finances and accounts with their respective directors, officers, and independent public accountants, all at such reasonable times during normal business hours and as often as may be reasonably desired, upon reasonable advance notice to Conseco, provided, however, when an Event of Default exists the Relevant Agent or any Relevant Bank may do any of the foregoing at any time during normal business hours and without advance notice. III.10 Tritel Disposition. Conseco shall use commercially reasonable efforts to Dispose of all or substantially all of its interest in Tritel, Inc. prior to March 31, 2001. III.11 Conversion of FELINE PRIDES. Conseco shall issue shares of common stock to holders of FELINE PRIDES in accordance with the terms of the PRIDES Documents. Otherwise, and except as required by the terms of the PRIDES Documents, Conseco shall, and shall cause its Affiliates to, refrain from purchasing or redeeming any FELINE PRIDES, PRIDES Purchase Contracts or PRIDES Preferred Securities, whether in the open market or otherwise. Nothing in this provision shall have the effect of preventing Conseco or the PRIDES Trust from complying with the terms and conditions set forth in the PRIDES Documents. ARTICLE IV NEGATIVE COVENANTS So long as any Exposure or other Obligation shall remain unpaid or unsatisfied under the Relevant Facility, unless the Required Banks waive compliance in writing: IV.1 Limitation on Indebtedness. Conseco shall not, and shall not permit any of its Subsidiaries to, incur or at any time be liable with respect to, any Indebtedness, except: (a Permitted Swap Obligations and Permitted Transactions; (b Specified Junior Securities; (c Indebtedness of Conseco or any Subsidiary pursuant to (i) the items set forth on Schedule 4.01(c) and (ii) extensions, renewals or replacements thereof, provided that no such extension, renewal or replacement shall increase the principal amount thereof, except to the extent the increase would otherwise be permitted under this Section 4.01; 27 (d Contingent Obligations of: (i) CIHC in respect of (A) Conseco's obligations under any Facility, and (B) obligations of one or more Conseco Finance Entities (I) in an aggregate amount not to exceed $125,000,000 in respect of obligations to Lehman or an Affiliate thereof, (II) in an aggregate amount not to exceed $125,000,000 in respect of cash management or a swing line credit facility for the general corporate purposes of one or more of the Conseco Finance Entities and (III) in an aggregate amount not to exceed $50,000,000 incurred for general corporate purposes (so long as, in each case, the documentation governing any such Contingent Obligation (including any related subordination arrangement) is not at any time materially more favorable to the beneficiaries thereof than the Relevant CIHC Guaranty); (ii) Conseco in respect of any individual borrower's obligations under any D&O Facility; (iii) any Conseco Finance Entity relating to loans, leases, receivables, installment contracts and other financial products originated, acquired or sold by such Conseco Finance Entity or any other Conseco Finance Entity; and (iv) Conseco or any Subsidiary in the ordinary course of business not otherwise described above in an aggregate amount not to exceed at any time (A) ten percent (10%) of Total Shareholders' Equity minus (B) the aggregate amount of Conseco's Contingent Obligations under clause (ii) of this paragraph at any time, provided that (I) Contingent Obligations in respect of Indebtedness of the type described in clause (a) or (b) of the definition thereof shall not be permitted by this clause (iv) and (II) the documentation governing any Contingent Obligation of CIHC pursuant to this clause (iv) (including any related subordination arrangement) shall not at any time be materially more favorable to the beneficiaries thereof than the Relevant CIHC Guaranty; provided, that in no event shall Conseco or any of its Subsidiaries (other than a Conseco Finance Entity) have any Contingent Obligations (including obligations as an account party) pursuant to this paragraph (d) in respect of any Indebtedness incurred by or for the benefit of any Conseco Finance Entity other than as specifically permitted in clause (i)(B) above; (e Indebtedness (including Contingent Obligations) of any Conseco Finance Entity to the extent that (i) neither Conseco nor any Non-Finance Subsidiary is directly liable thereon, and (ii) neither Conseco nor any Non-Finance Subsidiary has any Contingent Obligation in respect of such Indebtedness (other than a Contingent Obligation of CIHC permitted by Section 4.01(d)(i) above); (f Permitted Nonrecourse Indebtedness; (g secured Indebtedness, including, without limitation, Capitalized Lease Liabilities and Purchase Money Debt, provided, that (i) the aggregate outstanding principal amount of Indebtedness of this type does not exceed at any time ten percent (10%) of Total Shareholders' Equity at such time and (ii) such Indebtedness shall not be secured by any Lien other than a Lien expressly permitted by Section 4.02(i); (h Indebtedness among Conseco and its Subsidiaries (other than Conseco Finance Entities); (i Indebtedness owing by any Conseco Finance Entity to the extent the related Investment is permitted under Section 4.09(a); (j Indebtedness (other than for borrowed money) subject to Liens permitted under Section 4.02(b), (d), (e) or (f); (k Indebtedness in respect of Surplus Debentures entered into by an Insurance Subsidiary; (l unsecured Indebtedness of Conseco in an aggregate principal amount not to exceed $100,000,000 at any time outstanding; and (m Indebtedness in respect of the Facilities. IV.2 Liens. Conseco shall not, and shall not permit any of its Subsidiaries to, create, assume or suffer to exist any Lien on any asset now owned or hereafter acquired by it, except for the following (collectively called "Permitted Liens"): (a Liens in connection with Permitted Transactions; (b Liens for Taxes which are not overdue for more than 60 days or for Taxes being contested in good faith and by appropriate proceedings and with respect to which adequate reserves are being maintained in accordance with GAAP; 28 (c Liens shown on Schedule 4.02(c), including extensions, renewals and replacements of such Liens; provided that (i) no such Lien is spread to cover any additional property (other than after acquired title in or on such property and proceeds of the existing collateral in accordance with the document creating such Lien) and (ii) the Indebtedness secured thereby is not increased by more than 10% (of the aggregate principal amount of such Indebtedness outstanding on the Effective Date) except as otherwise permitted under Section 4.01 (in which case the portion representing any additional increase must be permitted by another paragraph of this Section 4.02); (d Liens incurred in the ordinary course of business in connection with worker's compensation, unemployment insurance or other forms of governmental insurance or benefits or to secure performance of tenders, statutory obligations, leases and contracts (other than for borrowed money) entered into in the ordinary course of business or to secure obligations on surety or appeal bonds; (e Liens of mechanics, carriers, and materialmen and other like Liens arising in the ordinary course of business in respect of obligations which are not overdue for more than 60 days or which are being contested in good faith and by appropriate proceedings and with respect to which adequate reserves are being maintained in accordance with GAAP; (f Liens arising in the ordinary course of business for sums being contested in good faith and by appropriate proceedings and with respect to which adequate reserves are being maintained in accordance with GAAP, or for sums not due, and in either case not involving any deposits or advances for borrowed money or the deferred purchase price of property or services; (g Liens in favor of the trustee on sums required to be deposited with the trustee under the indentures described on Schedule 4.02(g); (h Liens incurred on assets of Subsidiaries that are Conseco Finance Entities securing Indebtedness which is expressly permitted by Section 4.01(e) or (f); (i Liens securing Indebtedness permitted by Section 4.01(g); provided that such Liens consist exclusively of: (i) Liens securing the Relevant Facility, (ii) Liens pursuant to any Cash Collateral Agreement (and a Lien may be incurred on the collateral under the Cash Collateral Agreement in favor of the Public Debt secured by the Collateral Agreement), (iii) Liens on "Collateral" as defined in the Collateral Agreement, (iv) Liens on Conseco's interest in Tritel, Inc. in existence of the Effective Date securing $25,000,000 of notes payable to Ericsson, Inc., and (v) Liens on other assets that (1) are not subject to a Lien incurred pursuant to clause (i), (ii), (iii) or (iv) above and (2) are not described on Schedule 1.01B securing Indebtedness in an aggregate principal amount not to exceed (x) 25% of the Available Basket Amount at any time prior to the Near-Term Facilities Termination Date or (y) 50% of the Available Basket Amount at any time thereafter; (j easements, rights-of-way, zoning restrictions, restrictions and other similar encumbrances incurred in the ordinary course of business and which do not materially interfere with the ordinary course of business of Conseco and its Subsidiaries; (k Liens on property of Conseco and its Subsidiaries in favor of landlords securing licenses, subleases or leases of property permitted hereunder; (l licenses, leases or subleases permitted hereunder granted to others not materially interfering in any material respect in the business of Conseco and its Subsidiaries; 29 (m attachment or judgment Liens not constituting an Event of Default under Section 5.01(i); (n Liens arising from precautionary Uniform Commercial Code financing statement filings with respect to operating leases or consignment arrangements entered into by Conseco and its Subsidiaries in the ordinary course of business; and (o Liens in connection with a Permitted Tritel Hedge Transaction. None of the Permitted Liens shall be permitted on the Reserve or any of the Reserve Amounts (as defined in the relevant agreement governing the Reserve). IV.3 Disposition of Assets. Conseco shall not and shall not permit any of its Subsidiaries to, sell, assign, lease, transfer or otherwise Dispose of (whether in one or a series of transactions) any property (including accounts and notes receivable with or without recourse and Capital Stock of any Subsidiary whether newly issued or otherwise) or enter into any agreement to do any of the foregoing, except: (a Dispositions of inventory or equipment (including, without limitation, repossessed and/or off lease property of Conseco Finance), all in the ordinary course of business consistent with past practices; (b the sale of equipment to the extent that such equipment is exchanged for credit against the purchase price of similar replacement equipment, or the proceeds of such sale are reasonably promptly applied to the purchase price of such replacement equipment; (c Dispositions of Investments by Insurance Subsidiaries (other than any of their respective Investments in Persons engaged in insurance lines of business) in the ordinary course of business consistent with past practices; (d Dispositions of (i) in the case of any Conseco Finance Entity, loans, leases, receivables, installment contracts and other financial products originated, acquired, sold or securitized by such Conseco Finance Entity or (ii) interests in or components of Interest Only Securities; (e intercompany Dispositions made between or among Conseco and its Subsidiaries (or Subsidiaries of Conseco with other Subsidiaries of Conseco or Conseco), in each case, in the ordinary course of business; (f (i) any Disposition pursuant to a Reinsurance Agreement so long as such Disposition is entered into in the ordinary course of business for the purpose of managing insurance risk consistent with industry practice and (ii) any other Disposition pursuant to a Reinsurance Agreement so long as (x) the proceeds therefrom are retained by an Insurance Subsidiary, (y) such proceeds are used for the general corporate purposes of the Insurance Subsidiaries (including for reinvestment within insurance lines of business similar to Conseco's insurance lines of business at the time of the relevant transaction) and (z) the aggregate statutory profit and/or gains on insurance policy sales or other portfolio transfers resulting from all Dispositions described in this clause (ii) consummated after August 25, 2000 shall not exceed $250,000,000; (g obsolete or worn out property disposed of by Conseco or any of its Subsidiaries in the ordinary course of business and consistent with past practices of Conseco and its Subsidiaries; 30 (h transfers resulting from any casualty or condemnation of property or assets; (i licenses or sublicenses of intellectual property and general intangibles and licenses, leases or subleases of other property in the ordinary course of business and consistent with the past practices of Conseco and its Subsidiaries and which do not materially interfere with the business of Conseco and its Subsidiaries; (j any consignment arrangements or similar arrangements for the sale of assets in the ordinary course of business and consistent with the past practices of Conseco and its Subsidiaries; (k the sale or discount of overdue accounts receivable arising in the ordinary course of business and consistent with the past practices of Conseco and its Subsidiaries, but only in connection with the compromise or collection thereof; (l Dispositions permitted by Section 4.07(a); (m Dispositions of Investments set forth on Schedule 4.03(m); (n Dispositions not otherwise permitted hereunder, provided that, in the case of Dispositions constituting Asset Sales, (i) 75% of the consideration received in connection therewith shall consist of cash, Cash Equivalents and/or readily marketable securities that are immediately saleable and (ii) 100% of the Net Proceeds thereof shall consist of Available Net Proceeds and shall be applied as described in Article II; and (o the exercise of the put rights set forth in the PRIDES Documents in connection with a remarketing thereunder in accordance with such documents and Section 3.11. Notwithstanding anything to the contrary in this Section 4.03, no issuance or sale of Capital Stock of any Subsidiary of Conseco (other than any Insignificant Subsidiary) shall be permitted if, after giving effect thereto, Conseco owns, directly or indirectly, 50% or less (but greater than 0%) of the voting Capital Stock of such Subsidiary. IV.4 Other Agreements. Conseco shall not, and shall not permit any of its Subsidiaries to, enter into any agreement (other than agreements with insurance regulators) containing any provision which (a) would be violated or breached by the performance of its obligations hereunder or under any instrument or document delivered or to be delivered by it hereunder or in connection herewith or (b) prohibits or restricts the ability of Conseco to amend or otherwise modify this Appendix or any other document executed in connection herewith. IV.5 Transactions with Affiliates. Conseco shall not, and shall not suffer or permit any Significant Subsidiary to, enter into any material transaction with any Affiliate of Conseco (other than Conseco or a Ninety-Percent Owned Subsidiary), except upon fair and reasonable terms no less favorable to Conseco or such Subsidiary than would be obtained in a comparable arm's-length transaction with a Person not an Affiliate of Conseco or such Subsidiary, and except for insurance transactions, intercompany pooling and other reinsurance transactions entered into in the ordinary course of business and consistent with past practice. IV.6 Change in Business. Conseco shall not, and shall not suffer or permit any Significant Subsidiary to, fundamentally change the type of business in which it is presently engaged as listed on Schedule 4.06. 31 IV.7 Fundamental Changes. Unless the Obligations shall be paid in full concurrently therewith, Conseco shall not enter into any merger, consolidation or amalgamation, or liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution), or Dispose of, all or substantially all of its property or business, other than any merger, consolidation or amalgamation (a) of any Subsidiary of Conseco into Conseco, (b) solely for the purpose of reincorporating Conseco in a different State of the United States or (c) solely for the purpose of consummating an investment permitted by Section 4.09(b)(iii) or (iv). IV.8 Restricted Payments. Conseco shall not declare or pay any dividend (other than dividends payable solely in common stock, or the same class of capital stock as to which the dividend is paid, of the Person making such dividend) on (or make any payment to a related trust for the purpose of paying a dividend), or make any payment on account of, or set apart assets for a sinking or other analogous fund for, the purchase, redemption, defeasance, retirement or other acquisition of, any Capital Stock of Conseco (or any related trust), whether now or hereafter outstanding, or make any other distribution in respect thereof, either directly or indirectly, whether in cash or property or in obligations of Conseco (collectively, "Restricted Payments"), except that (a) Conseco may declare and pay dividends on its common stock so long as, at the time of declaration of the relevant dividend, Conseco has Investment Grade Ratings Status and the Near-Term Facilities Termination Date has occurred, (b) Conseco may declare and pay regularly scheduled dividends on its preferred stock (and permit any related trust to do the same) so long as, at the time of declaration of the relevant dividend, Conseco has Investment Grade Ratings Status and the Near-Term Facilities Termination Date has occurred, (c) Conseco may declare and pay regularly scheduled payments of interest and principal on its debentures underlying the Trust Preferred Securities and the FELINE PRIDES (and the related trusts may pay regularly scheduled dividends under such Trust Preferred Securities and such FELINE PRIDES) so long as (i) Conseco's Cash on Hand on average for the 90 days prior to the date of such declaration is equal to or greater than $100,000,000, (ii) Conseco's Cash on Hand on the date of such payment, after giving effect to the payment of said dividend on such date, is equal to or greater than $100,000,000 and (iii) no Event of Default shall have occurred and be continuing at the time of such payment, (d) Conseco may make cash payments in respect of fractional shares of its preferred stock in an aggregate amount not to exceed $10,000,000 and (e) Conseco may pay dividends to Bankers National Life Insurance Company in respect of its Preferred Series E Capital Stock in an amount not to exceed $36,000,000 per year. IV.9 Investments. (a) Conseco and its Subsidiaries (other than Conseco Finance and its Subsidiaries) shall not, directly or indirectly, make any Investment in Conseco Finance or any of its Subsidiaries after the Effective Date, except (i) intercompany Investments in the ordinary course of business in an aggregate amount not to exceed $250,000,000 at any time outstanding of which (x) $50,000,000 may be made on a permanent basis, (y) $100,000,000 may be made so long as each such Investment pursuant to this clause (y) is repaid within three months of the date of Investment and within each three month period there shall be a three Business Day period during which no Investment pursuant to clause (y) of this clause (i) shall be outstanding, and (z) $100,000,000 may be made so long as each such Investment pursuant to this clause (z) is repaid within six months of the date of Investment and within each six month period there shall be a three Business Day period during which no Investment pursuant to clause (z) of this clause (i) shall be outstanding, and (ii) additional Investments made at any time after the Near-Term Facilities Termination Date in an aggregate amount not to exceed $150,000,000 at any time outstanding. 32 (b) Conseco and CIHC shall not, directly or indirectly, make any Investment in any Person (other than a Subsidiary of Conseco to support its operations in the ordinary course of business) except: (i) Investments made with common stock issued by Conseco, (ii) Investments agreed to but not made prior to the date hereof and set forth on Schedule 4.09(b), (iii) Investments not otherwise permitted hereby in an aggregate amount expended not to exceed $25,000,000 in any Fiscal Year, (iv) Investments made in connection with a sale of assets permitted by Section 4.03 to the extent of the non-cash consideration received by Conseco or a Subsidiary, (v) as permitted by Section 4.09(a) and (vi) Conseco may repurchase its 6.4% Mandatory Par Put Remarketed Securities due June 15, 2011 if required to do so pursuant to the terms and conditions thereof, which repurchase (if so required) shall be conducted in accordance with the terms and conditions of such instruments. It is understood that Investments of the type described in Section 4.09(a) may not be made pursuant to clauses (i) through (iii) of this paragraph (b). IV.10 Optional Payments; Modifications of Certain Agreements; Synthetic Purchase Agreements. (a) Conseco shall not, and shall not permit any of its Subsidiaries (other than Conseco Finance or any of its Subsidiaries) to make any optional or voluntary payment, prepayment, repurchase or redemption of or otherwise optionally or voluntarily defease or segregate funds with respect to Indebtedness (other than the Reserve), other than (i) prepayments of Indebtedness of a Subsidiary of Conseco owed to Conseco or another Subsidiary of Conseco or of Conseco owed to a Subsidiary of Conseco, in each case to the extent prepaid or repaid in the ordinary course of business, which Indebtedness is (A) not related to the Trust Preferred Securities and (B) not a prepayment of loans referred to in clause (f) of the definition of "Conseco Available Cash Flow" unless, in the case of this clause (B), at the time of, and after giving pro forma effect to, such prepayment, Conseco is in compliance with Section 4.14, (ii) prepayments of the 2000 Public Debt, (iii) prepayments of the 2001 Public Debt so long as on the date of such prepayment (or, if earlier, the date on which Conseco enters into an obligation to make such prepayment), Conseco has A.M. Best A- Status, (iv) prepayments of the Longer-Term Public Debt made after the Near-Term Facilities Termination Date so long as the scheduled maturity of the Public Debt being prepaid is earlier than the earliest scheduled maturity then in effect with respect to the remaining Facilities, (v) prepayments of Capital Lease Liabilities in connection with the Disposition of the related asset or property and (vi) prepayments not otherwise permitted by the foregoing clauses so long as the aggregate amount expended in connection therewith does not exceed $25,000,000. (b) Conseco shall not, and shall not permit any of its Subsidiaries (other than Conseco Finance or any of its Subsidiaries) to amend, modify, waive or otherwise change, or consent or agree to any amendment, modification, waiver or other change to, any of the material terms of any subordinated Indebtedness of Conseco or any of its Subsidiaries (other than Conseco Finance or any of its Subsidiaries) the aggregate principal amount of which exceeds $10,000,000 (other than any such amendment, modification, waiver or other change that (i) would extend the maturity or reduce the amount of any payment of principal thereof or reduce the rate or extend any date for payment of interest thereon and (ii) does not involve the payment of a consent fee that is not customary under the circumstances). (c) Conseco shall not, and shall not permit any of its Subsidiaries (other than Conseco Finance or any of its Subsidiaries) to amend, modify, waive or otherwise change, or consent or agree to any amendment, modification, waiver or other change to, any of the material terms of any preferred stock issued by Conseco or any of its Subsidiaries or any related trust (other than any such amendment, modification, waiver or other change that (i) would extend the scheduled redemption date or reduce the amount of any scheduled redemption payment or reduce the rate or extend any date for payment of dividends thereon and (ii) does not involve the payment of a consent fee that is not customary under the circumstances). (d) Conseco shall not, and shall not permit any of its Subsidiaries to enter into or be party to, or make any payment under, any Synthetic Purchase Agreement. 33 IV.11 Negative Pledge on Tritel and Argosy Riverboat. Conseco shall not, and shall not permit any of its Subsidiaries to, pledge or create any security interest or Lien upon (a) any of the Capital Stock of Tritel, Inc. (or any successor thereto) directly or indirectly owned by it (other than (i) any such Lien described in Section 4.02(i)(iv) and (ii) Liens securing obligations under hedging transactions relating to the value of such Capital Stock with counterparties having a senior unsecured non-credit enhanced long-term debt rating of at least A2 from Moody's and A from S&P (a "Permitted Tritel Hedge Transaction")) or (b) the Capital Stock or assets of Conseco Entertainment Inc. or CNC Entertainment LLC. IV.12 Reserve Account. Conseco shall not permit the amounts in the Reserve (a) to be invested in anything other than Cash Equivalents or (b) to be used for any purpose other than to prepay or repay the 2000 Public Debt, the 2001 Public Debt or Exposure under the Facilities, except that, with the prior written consent of each of the Agents, Conseco may use up to 20% of the amounts in the Reserve at any time (but in an aggregate amount not to exceed $160,000,000) for other general corporate purposes permitted by the Loan Documents, including this Appendix. IV.13 Debt to Capitalization Ratio. Conseco shall not permit the Debt to Total Capitalization Ratio as of the end of each Fiscal Quarter set forth below to be greater than the ratio set forth below for such date: ---------------------------------------------------------- --------------- Fiscal Quarter Ending Ratio ---------------------------------------------------------- --------------- December 31, 2000 0.450:1.0 ---------------------------------------------------------- --------------- March 31, 2001 0.435:1.0 ---------------------------------------------------------- --------------- June 30, 2001 0.425:1.0 ---------------------------------------------------------- --------------- September 30, 2001 0.425:1.0 ---------------------------------------------------------- --------------- December 31, 2001 0.400:1.0 ---------------------------------------------------------- --------------- March 31, 2002 0.400:1.0 ---------------------------------------------------------- --------------- June 30, 2002 0.400:1.0 ---------------------------------------------------------- --------------- September 30, 2002 0.375:1.0 ---------------------------------------------------------- --------------- December 31, 2002 0.375:1.0 ---------------------------------------------------------- --------------- March 31, 2003 0.350:1.0 ---------------------------------------------------------- --------------- June 30, 2003 0.350:1.0 ---------------------------------------------------------- --------------- September 30, 2003 0.350:1.0 ---------------------------------------------------------- --------------- December 31, 2003 0.350:1.0 ---------------------------------------------------------- --------------- March 31, 2004 0.300:1.0 ---------------------------------------------------------- --------------- June 30, 2004 0.300:1.0 ---------------------------------------------------------- --------------- September 30, 2004 0.300:1.0 ---------------------------------------------------------- --------------- December 31, 2004 and thereafter 0.300:1.0 ---------------------------------------------------------- --------------- For each $2,830,000 by which the aggregate amount of the FY 2000 Adjustments is less than $500,000,000, each ratio set forth above for periods ending on or prior to September 30, 2001 shall be reduced by 0.01%. IV.14 Interest Coverage Ratio. Conseco shall not permit the Interest Coverage Ratio as of the end of each Fiscal Quarter set forth below for the four Fiscal Quarters then ended (or, if less, the number of full Fiscal Quarters commencing after the Effective Date) to be less than the ratio set forth below for such date: ---------------------------------------------------------- ---------------- Fiscal Quarter Ending Ratio ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- December 31, 2000 1.00:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- March 31, 2001 1.00:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- June 30, 2001 1.10:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- September 30, 2001 1.10:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- December 31, 2001 1.20:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- March 31, 2002 1.25:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- June 30, 2002 1.30:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- September 30, 2002 1.40:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- December 31, 2002 1.40:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- March 31, 2003 1.60:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- June 30, 2003 1.75:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- September 30, 2003 1.90:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- December 31, 2003 2.00:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- March 31, 2004 2.00:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- June 30, 2004 2.00:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- September 30, 2004 2.00:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- December 31, 2004 and thereafter 2.00:1.0 ---------------------------------------------------------- ---------------- IV.15 Conseco Adjusted Earnings. Conseco shall not permit the Conseco Adjusted Earnings for any period of four Fiscal Quarters (or, in the case of the tests as at March 31, 2001, June 30, 2001 and September 30, 2001, two Fiscal Quarters, two Fiscal Quarters and three Fiscal Quarters, respectively) ended on any date set forth below to be less than the amount set forth below for such date: ---------------------------------------------------------- ------------------- Fiscal Quarter Ending Amount ---------------------------------------------------------- ------------------- March 31, 2001 $650,000,000 ---------------------------------------------------------- ------------------- June 30, 2001 $750,000,000 ---------------------------------------------------------- ------------------- 34 ---------------------------------------------------------- ------------------- September 30, 2001 $1,150,000,000 ---------------------------------------------------------- ------------------- December 31, 2001 $1,600,000,000 ---------------------------------------------------------- ------------------- March 31, 2002 $1,600,000,000 ---------------------------------------------------------- ------------------- June 30, 2002 $1,650,000,000 ---------------------------------------------------------- ------------------- September 30, 2002 $1,700,000,000 ---------------------------------------------------------- ------------------- December 31, 2002 $1,750,000,000 ---------------------------------------------------------- ------------------- March 31, 2003 $1,800,000,000 ---------------------------------------------------------- ------------------- June 30, 2003 $1,850,000,000 ---------------------------------------------------------- ------------------- September 30, 2003 $1,925,000,000 ---------------------------------------------------------- ------------------- December 31, 2003 $2,000,000,000 ---------------------------------------------------------- ------------------- March 31, 2004 $2,025,000,000 ---------------------------------------------------------- ------------------- June 30, 2004 $2,075,000,000 ---------------------------------------------------------- ------------------- September 30, 2004 $2,125,000,000 ---------------------------------------------------------- ------------------- December 31, 2004 and thereafter $2,175,000,000 ---------------------------------------------------------- ------------------- IV.16 Conseco Finance Tangible Net Worth. Conseco shall not permit Conseco Finance Tangible Net Worth as at the end of any Fiscal Quarter ending during any Fiscal Year set forth below (commencing with the Fiscal Quarter ending December 31, 2000) to be less than the relevant amount set forth below: ---------------------------------------------------------- ----------------- Fiscal Quarter Ending During Amount ---------------------------------------------------------- ----------------- Fiscal Year Ending December 31, 2000 $950,000,000 ---------------------------------------------------------- ----------------- Fiscal Year Ending December 31, 2001 $1,200,000,000 ---------------------------------------------------------- ----------------- Fiscal Year Ending December 31, 2002 $1,400,000,000 ---------------------------------------------------------- ----------------- Fiscal Year Ending December 31, 2003 $1,650,000,000 ---------------------------------------------------------- ----------------- Fiscal Year Ending December 31, 2004 and thereafter $2,000,000,000 ---------------------------------------------------------- ----------------- 35 IV.17 Risk-Based Capital Ratio. Conseco shall not permit the Risk-Based Capital Ratio as at the end of any Fiscal Quarter to be less than 200%. ARTICLE V EVENTS OF DEFAULT V.1 Events of Default. Each of the following shall constitute an "Event of Default": (a Non Payment. Conseco fails to pay, (i) when and as required to be paid herein, any amount of principal of any Loan, or (ii) within five days after the same becomes due, any interest, fee or any other amount payable hereunder or under any other Loan Document; or (b Representation or Warranty. Any representation or warranty by Conseco or any of its Subsidiaries made or deemed made herein or in any other Loan Document, or contained in any certificate, document or financial or other statement by Conseco, any Subsidiary or any Responsible Officer, furnished at any time in connection with this Appendix or in connection with any other Loan Document, is incorrect in any material respect on or as of the date made or deemed made; or (c Specific Defaults. Conseco fails to perform or observe any term, covenant or agreement contained in any of Section 3.03(a), 4.01, 4.02, 4.03, 4.04, 4.06, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.14, 4.15, 4.16 or 4.17; or (d Other Defaults. Conseco or any of its Subsidiaries fails to perform or observe any other term or covenant contained in this Appendix or any other Loan Document, and such default shall continue unremedied for a period of 30 days after the date upon which written notice thereof is given to Conseco by the Relevant Agent or any Relevant Bank; or 36 (e Cross-Default. (i) Conseco or any Significant Subsidiary (A) fails to make any payment in respect of any Indebtedness or Contingent Obligation (other than in respect of Swap Contracts) or any similar financing arrangement related to the Lehman Agreement, having an aggregate principal amount (including undrawn committed or available amounts and including amounts owing to all creditors under any combined or syndicated credit arrangement) of more than $50,000,000, when due (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise) and such failure continues after the applicable grace or notice period, if any, specified in the relevant document on the date of such failure; or (B) fails to perform or observe any other condition or covenant, or any other event shall occur or condition exist (other than an alleged breach which Conseco or such Significant Subsidiary is contesting in good faith and which does not relate to a payment default or a breach of a financial covenant), under any agreement or instrument relating to any such Indebtedness, and such failure continues after the applicable grace or notice period, if any, specified in the relevant document on the date of such failure if the effect of such failure, event or condition is to cause, or to permit the holder or holders of such Indebtedness or beneficiary or beneficiaries of such Indebtedness or any similar financing arrangement related to the Lehman Agreement (or a trustee or agent on behalf of such holder or holders or beneficiary or beneficiaries) to cause, such Indebtedness to be declared to be due and payable prior to its stated maturity, or, in the case of any such Indebtedness consisting of Contingent Obligations, to become payable or cash collateral in respect thereof to be demanded or, in the case of any similar financing arrangement related to the Lehman Agreement, otherwise permit Lehman or an Affiliate thereof to terminate its obligations or commitments thereunder; or (ii) there occurs under any Swap Contract an Early Termination Date (as defined in such Swap Contract) resulting from (1) any event of default under such Swap Contract as to which Conseco or any Subsidiary is the Defaulting Party (as defined in such Swap Contract) or (2) any Termination Event (as so defined) as to which Conseco or any Subsidiary is an Affected Party (as so defined), and, in either event, the Swap Termination Value owed by Conseco or such Subsidiary as a result thereof is greater than $50,000,000; or (f Insolvency; Voluntary Proceedings. Conseco or any Significant Subsidiary (i) ceases or fails to be solvent, or generally fails to pay, or admits in writing its inability to pay, its debts as they become due, subject to applicable grace periods, if any, whether at stated maturity or otherwise; (ii) voluntarily ceases to conduct its business in the ordinary course; (iii) commences any Insolvency Proceeding with respect to itself; or (iv) takes any action to effectuate or authorize any of the foregoing; or (g Involuntary Proceedings. (i) Any involuntary Insolvency Proceeding is commenced or filed against Conseco or any Significant Subsidiary, or any writ, judgment, warrant of attachment, execution or similar process, is issued or levied against a substantial part of Conseco's or any Significant Subsidiary's properties, and any such proceeding or petition shall not be dismissed, or such writ, judgment, warrant of attachment, execution or similar process shall not be released, vacated or fully bonded within 60 days after commencement, filing or levy; (ii) Conseco, any Significant Subsidiary or any Material Insurance Subsidiary admits the material allegations of a petition against it in any Insolvency Proceeding, or an order for relief (or similar order under non-U.S. law) is ordered in any Insolvency Proceeding; (iii) Conseco, any Significant Subsidiary or any Material Insurance Subsidiary acquiesces in the appointment of a receiver, trustee, custodian, conservator, liquidator, mortgagee in possession (or agent therefor), or other similar Person for itself or a substantial portion of its property or business; or (iv) any Material Insurance Subsidiary shall become subject to any conservation, rehabilitation or liquidation order, directive or mandate issued by any Governmental Authority; or (h Pension Plans and Welfare Plans. With respect to any Single Employer Pension Plan as to which Conseco or any other ERISA Affiliate may have any liability, there shall exist a deficiency of more than $20,000,000 as to any ERISA Affiliate (other than Conseco) or $65,000,000 as to Conseco in the Pension Plan assets available to satisfy the benefits guaranteeable under ERISA with respect to such Pension Plan, and steps are undertaken to terminate such plan or such Pension Plan is terminated or Conseco or any other ERISA Affiliate withdraws from or institutes steps to withdraw from such Pension Plan, or Conseco has knowledge that steps have been taken to terminate any Multiemployer Plan and such termination may result in liability to any ERISA Affiliate (other than Conseco) in excess of $20,000,000 or $65,000,000 as to Conseco or any Reportable Event with respect to such Pension Plan has occurred which could result in the incurrence of liability by any ERISA Affiliate (other than Conseco) in excess of $20,000,000 or $65,000,000 as to Conseco or steps are taken to terminate any Multiemployer Plan and such termination may result in any liability of any ERISA Affiliate (other than Conseco) in excess of $20,000,000 or $65,000,000 as to Conseco shall occur; or (i Material Judgments. One or more judgments or decrees shall be entered against Conseco or any of its Subsidiaries involving in the aggregate a liability (not paid or fully covered by insurance as to which the relevant insurance company has not denied coverage) of $50,000,000 or more, and all such judgments or decrees shall not have been vacated, discharged, stayed or bonded pending appeal within 30 days from the entry thereof ; or 37 (j Material Regulatory Matters. (i) If an Insurance Subsidiary shall not make a scheduled payment of interest or principal on any surplus note or similar form of subordinated indebtedness (due to actions of any Governmental Authority or otherwise), (ii) if at any time an Insurance Subsidiary's ability to pay fees to its Affiliates under existing agreements (or extensions of existing agreements) shall be restricted due to actions of any Governmental Authority or otherwise or (iii) if in any Fiscal Year, an Insurance Subsidiary's ability to pay dividends to its stockholders is restricted in any manner (due to actions of any Governmental Authority or otherwise), other than by restrictions under the insurance law of the Insurance Subsidiary's state of domicile that apply generally to other insurance companies domiciled in the state, and, in the case of clauses (i) through (iii) above, such event or condition (x) was not in effect as of the date hereof and (y) such event or condition, together with all other such events or conditions, could reasonably be expected to have a Material Adverse Effect; or (k Change of Control. There occurs any Change of Control; or (l A.M. Best A- Status. Conseco shall not have obtained A.M. Best A- Status prior to March 31, 2001; or (m CIHC Guarantee. The guarantee contained in the Relevant CIHC Guaranty shall cease, for any reason, to be in full force and effect (other than in accordance with the definition thereof or if released by the Relevant Agent at the direction of each of the Relevant Banks) or Conseco or any Subsidiary of Conseco shall so assert; or (n Subordination to CIHC Obligations. Any "Subordinated Debt" under and as defined in the Relevant CIHC Guaranty shall cease, for any reason, to be validly subordinated to the obligations of CIHC under the Relevant CIHC Guaranty as provided in the relevant provisions of the Relevant CIHC Guaranty, or Conseco or any Subsidiary of Conseco shall so assert; or (o Subordination to Obligations. Any Subordinated Obligations or the guarantees thereof shall cease, for any reason, to be validly subordinated to the Obligations or the obligations of Conseco under the Relevant Conseco Guaranty, as the case may be, as provided in the documents governing such Subordinated Obligations, or Conseco or any Subsidiary of Conseco or any trustee or material holders of such Subordinated Obligations shall so assert. 38 EX-4 5 0005.txt EXHIBIT 4.4 EXHIBIT 4.4 - -------------------------------------------------------------------------------- AGREEMENT, DATED AS OF SEPTEMBER 22, 2000, among CONSECO, INC., as Guarantor, THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO, as Bank Lenders and BANK OF AMERICA, N.A., as Administrative Agent, RELATING TO 1997 DIRECTOR & OFFICER LOAN CREDIT AGREEMENT - --------------------------------------------------------------------------------
Page ---- SECTION 1. DEFINITIONS..................................................................... 2 SECTION 1.1 Certain Defined Terms............................................. 2 SECTION 1.2 Additional Definitions............................................ 6 SECTION 2. Commitment for New Loans........................................................ 6 SECTION 3. No Default Acknowledgment....................................................... 8 SECTION 4. Fees............................................................................ 8 SECTION 5. Cash Collateral Deposits........................................................ 9 SECTION 6. Covenants....................................................................... 10 SECTION 7. Events of Default............................................................... 11 SECTION 8. Conditions Precedent to Effectiveness of this Agreement......................... 11 SECTION 9. Termination Events.............................................................. 12 SECTION 10. Effect of Termination........................................................... 14 SECTION 11. The Agent....................................................................... 15 SECTION 12. Representations and Warranties.................................................. 15 SECTION 13. MISCELLANEOUS................................................................... 16 SECTION 13.1 Waivers and Amendments........................................... 16 SECTION 13.2 Notices.......................................................... 16 SECTION 13.3 Indemnity........................................................ 17 SECTION 13.4 No Third Party Beneficiaries..................................... 17 SECTION 13.5 Waivers.......................................................... 17 SECTION 13.6 No Forbearance/Remedies Cumulative............................... 18 SECTION 13.7 Entire Understanding............................................. 18 SECTION 13.8 Expenses......................................................... 18 SECTION 13.9 Effect of Agreement on Existing Credit Agreement................. 18 SECTION 13.10 GOVERNING LAW................................................... 19 SECTION 13.11 Counterparts.................................................... 19
i SECTION 13.12 SUBMISSION TO JURISDICTION; WAIVER OF VENUE.................................. 20 SECTION 13.13 Successors and Assigns........................... 20 SECTION 13.14 Interpretation................................... 21 SECTION 13.15 WAIVER OF JURY TRIAL............................. 21
ii SCHEDULE I SUMMARY OF TERMS AND CONDITIONS FOR NEW LOANS SCHEDULE II APPENDIX SCHEDULE III PLAN OUTLINE EXHIBIT A FORM OF CIHC GUARANTY EXHIBIT B FORM OF D&O CASH COLLATERAL AGREEMENT EXHIBIT C FORM OF NEW CONSECO GUARANTY EXHIBIT D FORM OF NEW CIHC GUARANTY iii AGREEMENT THIS AGREEMENT (this "Agreement") is entered into as of September 22, 2000, --------- among Conseco, Inc. (the "Guarantor"), the several financial institutions party --------- to this Agreement (herein, together with any eligible assignees thereof, collectively called the "Banks" and each individually, a "Bank"), and BANK OF ----- ---- AMERICA, NATIONAL ASSOCIATION ("BofA"), as administrative agent for the Banks ---- (herein in such capacity, together with any successors thereto in such capacity, called the "Administrative Agent"). -------------------- Recitals WHEREAS, certain individuals (herein, collectively called the "Borrowers" --------- and each individually, a "Borrower"), the Banks, and the Administrative Agent -------- are parties to that certain Credit Agreement, dated as of May 13, 1996 (the "Original Credit Agreement"), which has been amended and restated pursuant to ------------------------- that certain Amended and Restated Credit Agreement, dated as of August 26, 1997 (as amended or modified through the date hereof, the "Existing Credit --------------- Agreement"), whereby the Banks made loans to the Borrowers, on the terms and - --------- subject to the conditions set forth therein; WHEREAS, as a condition to the Administrative Agent and the Banks entering into the Original Credit Agreement, Guarantor was required to and did execute and deliver its Guaranty, dated as of May 13, 1996 (the "Original Guaranty"), ----------------- and as a condition to the Administrative Agent and the Banks entering into the Existing Credit Agreement, Guarantor was required to and did execute and deliver its Amended and Restated Guaranty dated as of August 26, 1997 (the "Existing -------- Guaranty"); - -------- WHEREAS, consistent with the provisions of the Original Credit Agreement and the Existing Credit Agreement, the proceeds of such loans were used by the Borrowers solely to purchase common stock, no par value per share, and PRIDES (as such term is defined in the Existing Guaranty) of Guarantor; WHEREAS, in connection with a proposed program contemplated by the Guarantor, the Guarantor has requested that the Administrative Agent and the Banks agree to commit to extend loans to any Borrower to refinance the Loans, with such loans to have a stated maturity of December 31, 2003; WHEREAS, the Guarantor has requested that the Administrative Agent and the Banks, pending implementation of such program and making of such loans, acknowledge certain matters as to the Existing Guaranty; WHEREAS, the Administrative Agent and the Banks are willing, but only on the terms and conditions set forth herein, to agree to the aforementioned requests of the Guarantor; NOW, THEREFORE, in consideration of the mutual promises herein contained and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: SECTION 1. DEFINITIONS. SECTION 1.1 Certain Defined Terms. Capitalized terms used and not --------------------- otherwise defined in this Agreement shall have the meanings assigned thereto in the Existing Credit Agreement. The following terms shall have the following meanings: "Acknowledgment Fee" shall have the meaning set forth in Section 4(a) ------------------ hereof. "Administrative Agent" shall have the meaning set forth in the preamble -------------------- hereto. "Aggregate $25 Benchmark for Director Borrowers" shall mean the amount ---------------------------------------------- arrived at after making the following calculation: first, taking the average ----- price of the stock purchased by or on behalf of the Director Borrowers with loans under the D&O Facilities; second, subtracting from that per share average ------ the amount of $25; third, multiplying the resulting difference by the aggregate ----- number of shares purchased by or on behalf of the Director Borrowers with the loans under the Specified D&O Facilities. "Aggregate $25 Benchmark Deficiency for Director Borrowers" shall mean, the --------------------------------------------------------- amount, if a positive number, that is the difference between (a) the Aggregate $25 Benchmark for Director Borrowers and (b) the sum of (i) the amount of the Initial Cash Collateral Deposit, (ii) the aggregate amount actually paid on the principal amount of such loans by the Director Borrowers prior to December 15, 2000, and (iii) the aggregate amount of any Cash Collateral Deposits pledged indirectly with respect to such loans (including, without limitation, by the Guarantor with respect to its guaranty obligations pursuant to Article II of the Appendix (as incorporated herein pursuant to Section 5(b) hereof)). "Aggregate $25 Benchmark Surplus for Director Borrowers" shall mean on any ------------------------------------------------------ calculation date the amount, if a positive number, that the sum of (i) the amount of the Initial Cash Collateral Deposit (to the extent that it has not been withdrawn as permitted pursuant to Section 5(c) hereof), (ii) the aggregate amount actually paid on the principal amount of such loans by the Director Borrowers prior to the date of the calculation, and (iii) the aggregate amount of any other Cash Collateral Deposits pledged indirectly with respect to such loans (including, without limitation, by the Guarantor with respect to its guaranty obligations pursuant to Article II of the Appendix (as incorporated herein pursuant to Section 5(b) hereof) and the December, 2000 Cash Collateral Deposit), as of the date of the calculation, exceeds the Aggregate $25 Benchmark for Director Borrowers. "Agreement" shall have the meaning set forth in the preamble hereto. --------- 2 "Agreement Fee" shall have the meaning set forth in Section 4(a) hereof. ------------- "Appendix" means the Appendix attached as Schedule II to this Agreement, -------- which is hereby incorporated by reference, as from time to time amended with the consent of the Required Banks. "Bank" shall have the meaning set forth in the preamble hereto. ---- "BofA" shall have the meaning set forth in the preamble hereto. ---- "Borrower" shall have the meaning set forth in the first Recital. -------- "Borrower Paydowns" shall mean any payments by any Borrower in immediately ----------------- available funds in permanent reduction of the principal amount of such Borrower's loans under the Specified D&O Facilities (or any refinancing facilities provided by the relevant banks of the type described in Section 2 hereof and in Schedule I hereof). "Cash Collateral Deposits" shall have the meaning set forth in Section 5(d) ------------------------ hereof. "Cash Collateral Pledgor" shall mean one or more entities, which, from time ----------------------- to time, pledge Cash Collateral Deposits pursuant to Section 5 hereof. "CIHC" shall mean CIHC, Incorporated, a Delaware corporation, which is a ---- direct wholly-owned subsidiary of Guarantor. "CIHC Guaranty" shall have the meaning set forth in Section 1.01 of the ------------- Appendix, including, without limitation, with respect to the termination thereof, and shall be substantially in the form of Exhibit A hereto. "Commitment" shall have the meaning specified in Section 2(a) hereof. ---------- "Commitment Fee" shall have the meaning set forth in Section 4(a) hereof. -------------- "Commitment Expiration Date" shall mean as to any Borrower, October 31, -------------------------- 2000 (or such later date as to which the Administrative Agent agrees in writing but not beyond December 15, 2000). "Compliance Certificate" shall have the meaning set forth in Section 1.01 ---------------------- of the Appendix. "C-T Borrowers" shall mean the Borrowers, if any, who were employed by the ------------- Guarantor or any of its Subsidiaries on the Effective Date and have left the employment of the Guarantor or any Subsidiary as a result of termination by such employer for any reason whatsoever since the Effective Date. 3 "C-T Borrowers Cash Collateral Deposit" shall have the meaning set forth in ------------------------------------- Section 5(a) hereof. "D&O Cash Collateral Agreement" shall mean one or more cash collateral ----------------------------- agreements substantially in the form of Exhibit B hereto. "D&O Collateral Agent" shall mean BofA (or its successors) as collateral -------------------- agent under the D&O Cash Collateral Agreement. "D&O Facilities" shall have the meaning set forth in Section 1.01 of the -------------- Appendix. "December, 2000 Cash Collateral Deposit" shall mean the cash collateral -------------------------------------- deposit required to be made on or before December 15, 2000 pursuant to Section 5(a) hereof. "Director Borrower Paydown" shall mean any payments by any Director ------------------------- Borrower in immediately available funds in permanent reduction of the principal amount of such Borrower's loans under the Specified D&O Facilities (or any refinancing facilities provided by the relevant banks of the type described as "New Loans" under Section 2 hereof and in Schedule I hereof). "Director Borrowers" shall mean collectively Stephen C. Hilbert, Rollin M. ------------------ Dick, David R. Decatur, Donald F. Gongaware, James D. Massey, Dennis E. Murray, Sr., and John M. Mutz. "Effective Date" shall mean the date on or before September 22, 2000 on -------------- which the conditions to the effectiveness of this Agreement set forth in Section 8 hereof shall have been satisfied or waived in their sole and absolute discretion by the Administrative Agent and the Banks. "Existing Credit Agreement" shall have the meaning set forth in the first ------------------------- Recital. "Existing Guaranty" shall have the meaning set forth in the second Recital. ----------------- "Fees" shall have the meaning set forth in Section 4(a) hereof. ---- "Guarantor" shall have the meaning set forth in the preamble hereto. --------- "Guarantor Interest Loans" shall mean any loans made by Guarantor or any of ------------------------ its Subsidiaries to any borrower under any of the D&O Facilities for the payment of such borrower's interest obligations under any of the D&O Facilities. "Guaranty Reaffirmation" shall be a writing in form and substance ---------------------- satisfactory to the Administrative Agent to be delivered by the Guarantor pursuant to which the Guarantor will (a) confirm that it has requested the Administrative Agent and the Banks to enter into this Agreement, (b) acknowledge that the Administrative Agent and the Banks would not enter into 4 this Agreement in the absence of the Guarantor's reaffirmation of the Existing Guaranty and that the Administrative Agent and the Banks are thus relying upon such reaffirmation, and (c) reaffirm the Existing Guaranty in each and every respect, including, without limitation, the validity of any and all of its obligations under the Existing Guaranty (including, without limitation, regardless of any past, present, or future exercise or non-exercise by the Administrative Agent of any right, power and/or remedy against any Borrower (and/or his or her property), any Cash Collateral Deposits, or CIHC (and/or its property)). "Initial Cash Collateral Deposit" shall mean the $50,000,000 Cash ------------------------------- Collateral Deposit required to be made on the Effective Date pursuant to Section 5(a) hereof. "New CIHC Guaranty" shall mean the guaranty to be executed and delivered by ----------------- CIHC in connection with any New Loans, substantially in the form of Exhibit D hereto. "New Conseco Guaranty" shall mean the guaranty to be executed and delivered -------------------- by Conseco with any New Loans, substantially in the form of Exhibit C hereto. "New Loan Documents" shall mean the credit agreement, promissory notes, ------------------ instruments, guarantees (including, without limitation, the New Conseco Guaranty and the New CIHC Guaranty), borrower pledge agreements, releases, and other documents providing for loans to refinance a Borrowers' Loans upon the terms and conditions generally described in Schedule I hereto; it being understood that the Administrative Agent shall hereby be granted by each of the Banks a power of attorney to execute such documents on behalf of the Banks in its discretion. "New Loans" shall have the meaning set forth in Section 2(a) hereof. --------- "No Default Acknowledgment" shall have the meaning set forth in Section 3 ------------------------- hereof. "Non-Refinanced Loan" shall mean any Loan with respect to which the ------------------- pertinent Borrower has not executed and delivered New Loan Documents in accordance with the provisions of this Agreement (including, without limitation, the satisfaction of the conditions set forth in Section 2(c) hereof). "$1.5 Billion Facility" shall have the meaning as set forth in Section 1.01 --------------------- of the Appendix. "Original Credit Agreement" shall have the meaning set forth in the first ------------------------- Recital. "Original Guaranty" shall have the meaning set forth in the second Recital. ----------------- "Plan" means a plan to be made available to certain Borrowers, which, among ---- other things, is to be designed by Guarantor to assist such Borrowers to reduce the principal amounts of the Loans and the loans under the 1998 D&O Loan Facility to achieve the $25 Benchmark. 5 "Specified D&O Facilities" shall have the meaning assigned thereto set ------------------------ forth in Section 1.01 of the Appendix. "Subsidiaries" shall have the meaning as assigned thereto in Section 1.01 ------------ of the Appendix "Stated Termination Date" shall mean December 31, 2003. ----------------------- "Termination Event" shall have the meaning set forth in Section 9 hereof. ----------------- "1998 D&O Loan Facility" shall mean that certain Credit Agreement, dated as ---------------------- of August 21, 1998, among the individuals listed on the signature pages thereto, as borrowers, the other financial institutions party thereto, and BofA, as Administrative Agent. "$25 Benchmark" shall mean, for all of the loans of the relevant Borrower ------------- or Borrowers under the Specified D&O Facilities, an average loan balance equal to $25 per share for all of the stock purchased by or on behalf of the relevant Borrower or Borrowers, as the case may be. "$25 Benchmark Deficiency" shall mean the amount, if a positive number, ------------------------ arrived at after making the following calculation: first, taking the average ----- price of the stock purchased by or on behalf of the C-T Borrowers with loans under the Specified D&O Facilities; second, subtracting from that per share ------ average the amount of $25; third, multiplying the resulting difference by the ----- aggregate number of shares purchased by or on behalf of such Borrowers with such loans; and finally, subtracting from that total the sum of (x) the aggregate ------- amount of principal of such loans actually paid on or before the date of the calculation at issue, (y) the aggregate amount of Cash Collateral Deposits pledged indirectly with respect to such loans (including, without limitation, by the Guarantor with respect to its guaranty obligations pursuant to Article II of the Appendix (as incorporated herein pursuant to Section 5(b) hereof) and other amounts previously pledged to secure obligations relating to the C-T Borrowers) as of the date of the calculation at issue, and (z) the Aggregate $25 Benchmark Surplus for Director Borrowers, if any, then available for allocation to the Borrower's Loans for the purposes of determining whether the Guarantor is obligated to cause additional Cash Collateral Deposits to be pledged pursuant to Section 5(a) hereof. SECTION 1.2 Additional Definitions. The definitions set forth in Section ---------------------- 1.01 of the Appendix are hereby incorporated by reference and shall be applicable to the provisions incorporated by reference pursuant to Sections 5(b), 6(a) and 7 hereof. SECTION 2. Commitment for New Loans. ------------------------ (1) Commitment. Subject to the conditions set forth in Section ---------- 2(c) hereof, the Banks and the Administrative Agent hereby commit (the "Commitment") to enter into New Loan Documents with any Borrower who has ---------- accepted in writing (and otherwise satisfied the conditions of) the Plan for the making of loans to refinance such Borrower's 6 Loans (the "New Loans") consistent with the terms and conditions generally --------- described on Schedule I hereto, including providing for a stated maturity date of December 31, 2003. (2) Commitment Expiration. Should this Agreement become effective --------------------- pursuant to the provisions of Section 8 hereof, the Commitment shall expire as to any Borrower on or before the Commitment Expiration Date, without any other action being required of the Administrative Agent or any of the Banks, if any of the following shall have occurred and be continuing: (1) The Borrower shall not have accepted the terms of the Commitment on the terms and conditions set forth on Schedule I hereto and in Section 2(c) hereof and shall have failed to have executed and delivered the New Loan Documents to which he or she is a party on or before Commitment Expiration Date; (2) On or before the Commitment Expiration Date, (a) the Guarantor shall have failed to execute and deliver the New Conseco Guaranty, or (b) CIHC shall have failed to execute and deliver the New CIHC Guaranty, or (3) Any Termination Event shall have occurred and be continuing. (3) Commitment Conditions. The Commitment as to any Borrower is --------------------- conditioned upon the satisfaction of the following conditions: (1) This Agreement shall have become effective pursuant to Section 8 hereof; (2) The Borrower shall have executed and delivered to the Administrative Agent the New Loan Documents to which he or she is a party in form and substance satisfactory to the Banks on or before the applicable Commitment Expiration Date; (3) The Guarantor shall have executed and delivered the New Conseco Guaranty on or before the applicable Commitment Expiration Date; (4) The CIHC shall have executed and delivered the New CIHC Guaranty on or before the applicable Commitment Expiration Date; (5) To the extent not generally described on Schedule I hereto, the other conditions set forth in the New Loan Documents shall be similar to the conditions, including as to the satisfaction of any regulatory requirements, under the Existing Credit Agreement, and all of such conditions shall have been satisfied on or before the applicable Commitment Expiration Date; 7 (6) The absence of the occurrence and continuation of any Termination Event; and (7) The Guarantor shall have certified in writing that the applicable Borrower has accepted the Plan and has satisfied the conditions to the Plan governing such Borrower's participation in the Plan. (4) Commitment Expiration/Termination Notice. The Administrative ---------------------------------------- Agent shall undertake to provide the Guarantor with written notice of either the expiration of the Commitment with respect to any Borrower or the refusal of any of the Administrative Agent and the Banks to enter into the New Loan Documents with any Borrower for the reasons set forth in Section 2(b) or 2(c) hereof; provided, however, that the Administrative Agent's -------- ------- failure to provide such notice shall not affect in any manner the right of any of the Administrative Agent and the Banks to refuse to close under such circumstances. SECTION 3. No Default Acknowledgment. Subject to the conditions set forth ------------------------- in Sections 8 and 9 hereof, the Administrative Agent and the Banks hereby acknowledge (the "No Default Acknowledgment") that the Guarantor will not be in ------------------------- default of the Existing Guaranty (and CIHC will not be in default of the CIHC Guaranty) if the Guarantor (or CIHC, as the case may be) does not honor, on or before the Stated Termination Date, its stated obligations under such guaranty (including, without limitation, the obligation of the Guarantor to post cash collateral under Section 6.2 of the Existing Guaranty) to pay the principal portion of any Loans solely as the result of the failure on or before the Stated Termination Date of any Borrower to pay the principal amount of any Loans in full prior to such date (irrespective of whether any Borrower is obligated to pay such principal amount prior to such date as a result of the stated maturity, by required prepayment, declaration, acceleration, demand or otherwise). To the extent not deemed withdrawn as the result of the occurrence of any Termination Event prior to such date, such acknowledgment shall be deemed withdrawn (the same as if it had never been made) on the Stated Termination Date. As provided in Section 13.1 hereof, any extension or waiver of the Stated Termination Date shall require the affirmative votes of the Administrative Agent and each Bank. SECTION 4. Fees. ---- (1) The Guarantor hereby agrees that, upon the effectiveness of this Agreement pursuant to the provisions of Section 8 hereof, the Guarantor shall be obligated to pay, and shall pay, to the Administrative Agent, for the pro rata benefit of the Banks, the following fees (the "Fees"): (i) on ---- the Effective Date, an agreement fee (the "Agreement Fee") in immediately ------------- available funds equal to one percent (1%) of the principal amount of the Loans outstanding on such date, (ii) from and after the Effective Date and to the Commitment Expiration Date, a continuing per annum fee equal to 1.625% of the Loans then outstanding, payable quarterly in the amount of .40625% of the 8 average amount of the Loans outstanding during such quarter (the "Commitment Fee") and (iii) from and after the Commitment Expiration Date -------------- until the payment in full of the guaranteed obligations related to any Non- Refinanced Loans, a continuing per annum fee equal to 1.625% of the Non- Refinanced Loans then outstanding, payable quarterly in the amount of .40625% of the average amount of the Loans outstanding during such quarter, as a continuing fee for the No Default Acknowledgment (the "Acknowledgment -------------- Fee"). --- (2) The Commitment Fee and the Acknowledgment Fee shall be payable, in arrears, quarterly on the last Business Day of each calendar quarter, with payment commencing on September 30, 2000. (3) The Guarantor's obligation to pay each of the Fees shall be irrevocable, unconditional, and absolute and, consistent therewith (and with Section 10 hereof), shall not terminate in the event that this Agreement shall otherwise be terminated pursuant to its provisions. SECTION 5. Cash Collateral Deposits. ------------------------ (1) Deposits for Borrower Obligations. The Guarantor hereby agrees --------------------------------- that it shall pledge, or cause one or more of its Subsidiaries to pledge, to secure the Guarantor's obligations under its guarantees of Specified D&O Facilities, cash in an amount and on the dates set forth herein, by depositing or causing to be deposited with the D&O Collateral Agent (to be held and applied pursuant to the provisions of the D&O Cash Collateral Agreement) as follows: (i) on or before the Effective Date, the Initial Cash Collateral Deposit, (ii) on or before December 15, 2000, an amount equal to the Aggregate $25 Benchmark Deficiency for the Director Borrowers, (iii) commencing with the delivery of each Compliance Certificate pursuant to Section 3.02 (a) of the Appendix (incorporated herein pursuant to Section 6(a) hereof) relating to the year period ending December 31, 2000, an amount equal to the $25 Benchmark Deficiency for all C-T Borrowers terminated through the end of the period covered by each such Compliance Certificate (each, a "C-T Borrower Cash Collateral Deposit"); provided, ------------------------------------ -------- however, the Guarantor may elect to make that portion of the C-T Borrower ------- Cash Collateral Deposit, up to a maximum aggregate of $15,000,000, relating to C-T Borrowers terminated during the period from the Effective Date to and through October 31, 2000, as follows: (A) one-third (but in no event more than $5,000,000) on the date of the required delivery of the Compliance Certificate relating to the year ending December 31, 2000, (B) one-third (but in no event more than $5,000,000) on the date of the required delivery of the Compliance Certificate relating to the year ending December 31, 2001, and (C) one-third (but in no event more than $5,000,000) on the date of the required delivery of the Compliance Certificate relating to the year ending December 31, 2002; provided, further, however, that, -------- ------- ------- consistent with, but not in limitation of, the foregoing, on the date of the required delivery of the Compliance Certificate for the year ending December 31, 2000, the Guarantor shall deposit or cause to be deposited the sum of (x) the difference, if a positive number, 9 between: (i) that portion of the C-T Borrower Cash Collateral Deposit relating to all C-T Borrowers terminated during the period from the Effective Date to and through October 31, 2000 and (ii) $15,000,000 and (y) that portion of the C-T Cash Collateral Deposit relating to the employees terminated during the period from November 1, 2000 to and through December, 31, 2000. (2) Waterfall Deposits. The Guarantor hereby acknowledges that the ------------------ Cash Collateral Deposits obligations set forth in subsection (a) of this Section 5 are in addition to its obligations under Article II of the Appendix, which are hereby incorporated by this reference. (3) Right to Withdraw All or Portion of Initial Cash Collateral ----------------------------------------------------------- Deposit. After the Guarantor has made or caused to be made the December, ------- 2000 Cash Collateral Deposit, the Guarantor shall be entitled, within two Business Days after any Director Borrower Paydown (but only with respect to a Director Borrower Paydown and not with respect to any other Borrower Paydown), to receive a distribution from the Collateral Agent from the Cash Collateral Deposits, on a dollar-for-dollar basis and up to the aggregate amount that is equal to and not in excess of the Initial Cash Collateral Deposit, of immediately available funds in an amount not to exceed the amount of the Cash Collateral Deposits allocated to the Borrower's Loan(s) under the Specified D&O Facility against which such Director Borrower Paydown is to be applied; provided, however, that any amount permitted to -------- ------- be so withdrawn shall be paid directly to the administrative agent under the $1.5 Billion Facility for application against the Guarantor's principal obligations thereunder in the inverse order of maturity. (4) General. All Cash Collateral Deposits deposited pursuant to this ------- Section 5 (including its incorporation of Article II of the Appendix) (collectively, the "Cash Collateral Deposits") shall be deposited in ------------------------ immediately available funds with the D&O Collateral Agent (to be held and applied pursuant to the provisions of the D&O Cash Collateral Agreement). The Guarantor's obligation to make or cause to be made the Cash Collateral Deposits: (i) shall be irrevocable, unconditional, and absolute, (ii) shall create a continuing security interest in the Cash Collateral Deposits until payment in full of all of the secured obligations and shall not be subject to any right of withdrawal by the Guarantor except solely as provided in subsection (c) of this Section 5, (iii) shall apply to the Guarantor's obligations under the Specified D&O Facilities (irrespective as to whether the underlying D&O Facilities have been refinanced by new loans made by the pertinent bank group of the type described in Section 2 hereof (unless such new loans have been subsequently paid in full)), (iv) shall include, without limitation, the obligation to execute and deliver or cause to be executed and delivered each pertinent D&O Cash Collateral Agreement (and any agreements to be executed in connection therewith such as account agreements), and (v) consistent with the foregoing (and with Section 10 hereof) shall not terminate in the event that this Agreement shall otherwise be terminated pursuant to its provisions. 10 SECTION 6. Covenants. --------- (1) The affirmative and negative covenants set forth in Article III and IV, respectively, of the Appendix are hereby incorporated by this reference. (2) In addition to its other covenants hereunder, the Guarantor hereby agrees: (i) to provide the Administrative Agent a copy of the Plan once finalized and, in any event, no later than December 31, 2000, (ii) to use the Guarantor's commercially reasonable (and otherwise lawful) best efforts to sign up Borrowers to the Plan and, as part thereof, to obtain Borrower Paydowns (including, without limitation, Director Borrower Paydowns), or commitments for pay downs, on the Loans, (iii) that, at the time of the delivery of any pertinent Compliance Certificate pursuant to Section 3.02(a) of the Appendix, to provide the Administrative Agent with a report listing the names of the C-T Borrowers who have been terminated during the preceding fiscal year, listing each such Borrower's last day of employment, and setting forth the calculation of the $25 Benchmark Deficiency, if any, for all such Borrowers whose employment has been terminated to and through the end of the fiscal year covered thereby, and (iv) in each Compliance Certificate delivered after the Effective Date and through the date of payment in full of the Loans or New Loans, to provide the Administrative Agent with a summary of any changes to the Plan to date, a statement of the effective date of any such changes, and, if there has been any changes thereto since the date of the delivery of the previous Compliance Certificate, a copy of the Plan as then constituted. (3) The Guarantor further agrees that the Plan shall require that each borrower under any of the D&O Facilities shall pay the principal amount of the loans under the D&O Facilities (and any refinancing facilities provided by the relevant banks) prior to the payment of any Guarantor Interest Loans. The Guarantor further agrees that if the Guarantor or any of its Subsidiaries receives any payments from any Borrower relating to a Guarantor Interest Loan owing by such borrower at a time when such borrower owes principal under any D&O Facility, the Guarantor shall turnover and pay (or shall cause any such Subsidiary to turnover and pay) the appropriate amounts thereof to the administrative agents of the D&O Facilities (or any refinancing facilities provided by such banks of the type described in Section 2 hereof) specified by such borrower (or, in the absence of any such specification, ratably among (or between) the D&O Facilities in which such person is a borrower) within five business days of receipt thereof. The Guarantor hereby acknowledges that the modification of these aspects of the Plan would be materially adverse to the interests of the Administrative Agent and the Banks. SECTION 7. Events of Default. The Events of Default set forth in Section ----------------- 5.01 of the Appendix are hereby incorporated by this reference. 11 SECTION 8. Conditions Precedent to Effectiveness of this Agreement. This ------------------------------------------------------- Agreement shall become effective only upon the satisfaction of the following conditions on or before the Effective Date: (1) The Administrative Agent shall have received duly executed counterparts of this Agreement from the Guarantor and the Banks. (2) The Guarantor shall have paid the Agreement Fee to the Administrative Agent for the pro rata benefit of the Banks; (3) The Cash Collateral Pledgor (with respect to the Initial Cash Collateral Deposit), the D&O Collateral Agent, and the Administrative Agent for the 1998 D&O Loan Facility shall have fully executed and delivered the D&O Cash Collateral Agreement; (4) The Initial Cash Collateral Deposit shall have been deposited with the D&O Collateral Agent, and the D&O Collateral Agent shall have an exclusive, perfected, first priority security interest therein; (5) The Guarantor shall have delivered to the Administrative Agent the Guaranty Reaffirmation; (6) CIHC and Guarantor shall have delivered to the Administrative Agent the CIHC Guaranty; (7) The other Relevant Facilities (as such term is defined in the Appendix) shall have been amended in a form reasonably satisfactory to the Required Banks, and the other transactions contemplated as part of such amendments to be consummated at closing shall have been so consummated; (8) The Guarantor shall have paid all fees and expenses, including those payable pursuant to Section 13.8 hereof, required to be paid by it on such Effective Date; (9) Each of the Guarantor, CIHC and any Cash Collateral Pledgor shall have delivered to the Administrative Agent, for the benefit of itself and the Banks, such officer certificates, legal opinions, and other documents or instruments as shall be required by the Administrative Agent, including reasonable evidence of its authority to execute, deliver and perform its obligations under this Agreement, the Guaranty Reaffirmation, the CIHC Guaranty, and the D&O Cash Collateral Agreement (as the case may be) and, including opinions of the general counsel to the Guarantor, CIHC, and any Cash Collateral Pledgor and of Weil, Gotshal & Manges LLP acceptable (both in form and content and as to which counsel is delivering the particular opinion) to the Administrative Agent; and 12 (10) The Administrative Agent shall have received such other documents, certificates or instruments as may be reasonably requested by the Administrative Agent and the Banks. The Administrative Agent shall undertake to provide the Guarantor with written notice as to whether the foregoing conditions have been satisfied and this Agreement thus has become effective (or instead, whether this Agreement is null and void, all as if it had never existed); provided, however, that the -------- ------- Administrative Agent's failure to provide such notice shall not affect the determination as to whether such conditions have been satisfied and whether, concomitantly this Agreement has become effective. SECTION 9. Termination Events. Should this Agreement become effective ------------------ pursuant to the provisions of Section 8 hereof, the Administrative Agent, upon the affirmative votes of the Required Banks, may terminate any of the obligations or acknowledgments of the Administrative Agent and the Banks under this Agreement (including, without limitation, those with respect to the Commitment and the No Default Acknowledgment), if any of the following shall have occurred or otherwise shall be continuing (each, a "Termination Event)": ----------------- (1) The Guarantor shall have failed to have paid the Commitment Fee, the Acknowledgment Fee, or any amount owing by it pursuant to Section 6(c) hereof, within five days of the date it is due; (2) (i) A Cash Collateral Pledgor shall have failed timely to deposit with the D&O Cash Collateral Agent: (A) the December, 2000 Cash Collateral Deposit, (B) any C-T Borrower Cash Collateral Deposit, (C) any other amount required to be deposited pursuant to Section 5 hereof (including pursuant to its incorporation of the provisions of Article II of the Appendix), in each case within 5 days of the date it is due; or (ii) the Collateral Agent shall not have an exclusive, perfected first security interest in the Cash Collateral Deposits; (3) Any "Event of Default" under Section 5.01 of the Appendix (as incorporated herein pursuant to Section 7 hereof) shall occur and be continuing; (4) There shall have been entered any final judgment, or injunction, or other order by any court enjoining, prohibiting, discontinuing or otherwise impairing the validity or enforceability of this Agreement, the Existing Guaranty, the CIHC Guaranty, or any of the other documents contemplated by this Agreement, or any of the transactions contemplated by this Agreement; (5) The Plan, having substantially the same material terms as set forth on Schedule III hereto, shall not be in place on or before December 31, 2000, or, if in place on or before that date, subsequently shall have been modified in a manner materially 13 adverse to the interests of the Administrative Agent and the Banks or rescinded by the Guarantor (or enjoined or prohibited by a final judgement entered by any court); (6) Any Event of Default with respect to the Guarantor shall occur and shall be continuing under the Existing Credit Agreement; (7) Any event of default under the Existing Guaranty shall occur and be continuing; it being acknowledged that (i) by its terms, the Existing Guaranty automatically incorporates the covenants set forth in the Appendix and, by execution and delivery of this Agreement, the Administrative Agent and the Banks accept such covenants and (ii) moreover, for the purposes of determining whether a Termination Event has occurred as a result of any events of default under the Existing Guaranty arising from the incorporation of the covenants from any other credit agreement, the covenants set forth in the Appendix shall control; (8) Any event of default under the CIHC Guaranty shall occur and be continuing; (9) The Guarantor shall otherwise be in default of any of its obligations hereunder and such default shall be continuing for a period of thirty (30) days after written notice by the Administrative Agent to the Guarantor. Where the Administrative Agent, upon the affirmative votes of the Required Banks, shall have elected to terminate this Agreement upon the occurrence of any one or more of the foregoing events, the Administrative Agent shall undertake to provide the Guarantor with written notice of such termination; provided, -------- however, that the Administrative Agent's failure to provide such notice shall - ------- not affect in any manner the effectiveness of such termination. SECTION 10. Effect of Termination. Where the Administrative Agent, upon --------------------- the affirmative votes of the Required Banks, shall have elected to terminate this Agreement upon the occurrence of one or more of the events set forth in Section 9 hereof, all obligations of the Administrative Agent and any of the Banks hereunder shall terminate and the No Default Acknowledgment shall be deemed withdrawn (with the same effect as if it had never been extended), and this Agreement shall otherwise be terminated (except that the Guarantor shall remain liable for the payment of the Commitment Fee and the Acknowledgment Fee unless and until all outstanding Non-Refinanced Loans have been paid in full) without any liability on the part of (or any alteration of rights, powers or remedies belonging to) the Administrative Agent or any Bank, and consistent therewith, and in addition to being entitled to continue to collect such Fees from the Guarantor, each of the Administrative Agent and the Banks shall remain entitled, but not required, to exercise (in whatever manner, to whatever extent, at whatever time, and as often , seldom, or not at all as it may choose in its sole and absolute discretion) any and all (or any combination) of its rights, powers, and remedies against the Guarantor, CIHC, any other person or entity (including any Borrower), and/or any of the property of the Guarantor, CIHC, and/or 14 any other person or entity (including, without limitation, any Cash Collateral Deposit) (and/or any combination of any such person or entity or property) under any guaranty (including, without limitation, the Existing Guaranty (including as reaffirmed pursuant to the Guaranty Reaffirmation), the CIHC Guaranty, any other agreement or document (including without limitation, the D&O Cash Collateral Agreement), and/or any New Loan Documents (including any required guarantees and/or reaffirmed guarantees relating thereto) entered into prior to such termination date, and/or applicable law, all as if this Agreement had never been executed and delivered by the parties hereto (including, without limitation, as if the No Default Acknowledgment had never been extended) (but as if any and all other agreements had been so executed and delivered by the pertinent parties thereto), and all without any requirement of providing prior notice with respect thereto. Consistent with, but not in limitation of, the foregoing, any exercise or non-exercise (as the case may be) by the Administrative Agent of any such rights, powers and/or remedies, including, without limitation, the complete failure to exercise any such rights, powers, and/or remedies (whether such failure occurs prior to or subsequent to any termination of this Agreement), against (i) any or all Borrowers (or any combination thereof) or any property of any thereof, (ii) the Guarantor or any of the Guarantor's property (including any Cash Collateral Deposits made by the Guarantor), (iii) any other Cash Collateral Deposits, or (iv) CIHC and/or CIHC's property, as the case may be, shall in no manner limit the ability of the Administrative Agent to exercise any such rights, powers, and/or remedies, whether under any agreement (including any guaranty or pledge agreement) and/or applicable law against any Borrower, the Guarantor (or its property, including any property pledged pursuant to D&O Cash Collateral Agreement), the Cash Collateral Deposits, and/or CIHC (or its property). Without limiting the generality of the foregoing, the provisions of Sections 4 - 13 hereof shall survive any such termination. SECTION 11. The Agent. The Banks acknowledge that the provisions of --------- Section 11 of the Existing Credit Agreement are applicable to this Agreement in every respect. Consistent with, but not in limitation thereof, each Bank hereby agrees that the provisions of Section 11 of the Existing Credit Agreement apply to the Agent's execution, delivery, performance and other participation in this Agreement and the transactions contemplated thereby, and the Agent shall have the full benefit thereof, all as if such Section 11 of the Existing Credit Agreement were set forth and restated herein. SECTION 12. Representations and Warranties. Guarantor hereby represents ------------------------------ and warrants to each of the Administrative Agent and the Banks that: (1) Guarantor has full corporate power and authority to execute, deliver and perform this Agreement and each agreement executed in connection herewith and to consummate the transactions contemplated hereby and thereby. Guarantor has duly and validly executed and delivered this Agreement and has duly and validly executed and delivered each agreement executed in connection herewith. This Agreement, and each agreement executed in connection herewith, constitutes legal, valid and binding obligations of Guarantor, in each case, enforceable in accordance with their respective 15 terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, moratorium, reorganization or similar laws in effect which affect the enforcement of creditors' rights generally, by equitable limitations on the availability of specific remedies and by principles of equity. (2) No consent, authorization or approval of, filing or registration with, or cooperation from, any Governmental Authority or any other person or entity not a party to this Agreement is necessary in connection with the execution, delivery and performance by Guarantor of this Agreement and each agreement executed in connection herewith or the consummation by Guarantor of the transactions contemplated hereby or thereby other than immaterial consents, authorizations, approvals, filings or registrations and those already obtained. (3) The execution, delivery and performance by Guarantor of this Agreement and its related agreements and the consummation by Guarantor of the transactions contemplated hereby and thereby do not and will not (i) violate any law applicable to Guarantor; or (ii) violate or conflict with any provision of any of the certificate of incorporation, bylaws or similar organizational instruments of Guarantor or any other material agreement or contract to which Guarantor is a party. These representations and warranties shall survive closing and any termination of this Agreement. SECTION 13. MISCELLANEOUS ------------- SECTION 13.1 Waivers and Amendments. The provisions of this Agreement may ---------------------- from time to time be amended, modified or waived, if such amendment, modification, or waiver is in writing and consented to by the Guarantor and the Required Banks; provided, however, that no such amendment, modification or -------- ------- waiver: (1) which would modify any requirement hereunder that any particular action be taken by all Banks or by the Required Banks, shall be effective without the consent of each Bank; (2) which should extend the Commitment Expiration Date beyond August 26, 2001, which would otherwise substantially modify or waive the Commitment conditions in Section 2(c) hereof, which would materially and adversely modify any of the terms and conditions of the New Loans generally described on Schedule I hereto, or which would modify the No Default Acknowledgment to include within the scope of such acknowledgment the Guarantor's obligations in respect of the payment of interest, fees, expenses, or any other obligations except principal or to extend the stated Termination Date beyond December 31, 2003, shall be effective without the consent of each Bank; 16 (3) which would extend the due date for, or reduce the amount of, any of the Fees, shall be effective without the consent of each Bank; (4) which would extend the due date for, or reduce the amount of, the obligations to make the Cash Collateral Deposits set forth in Section 5 hereof, shall be effective without the consent of each Bank; or (5) which would adversely affect the interests, rights, or obligations of the Administrative Agent (in such capacity) other than removal in accordance with Section 11.6 of the Existing Credit Agreement, shall be effective without the consent of the Administrative Agent. SECTION 13.2 Notices. All notices, requests and other communications to ------- any party hereunder shall be in writing (including bank wire, telex, facsimile or similar writing) and shall be given to such party at its address, facsimile or telex number set forth on the signature or acknowledgment pages hereof or such other address, facsimile or telex number as such party may hereafter specify for the purpose by written notice to the Administrative Agent and Guarantor. Each such notice, request or other communication shall be effective (a) if given by facsimile or telex, when such facsimile or telex is transmitted to the facsimile or telex number specified in this Section and the appropriate answerback or other confirmation is received, (b) if given by mail, seventy-two (72) hours after such communication is deposited and sent via certified or registered mail, return receipt requested, with first class postage prepaid, addressed as aforesaid or (c) if given by any other means, when delivered at the address specified in this Section, provided, that notices to the Administrative -------- Agent shall not be effective until received by the Administrative Agent. SECTION 13.3 Indemnity. Without limiting in any manner whatsoever any of --------- the claims, rights, powers and remedies of the Administrative Agent and the Banks under any indemnity (including the indemnity set forth in Section 7.2 of the Existing Guaranty), Guarantor agrees to indemnify the Administrative Agent, D&O Collateral Agent, the Depositary Bank, each Bank, their affiliates and their respective directors, officers, employees, persons controlling or controlled by any of them or their respective agents, consultants, attorneys and advisors (the "Indemnified Parties") and hold each Indemnified Party harmless from and against any and all liabilities, losses, claims, damages, costs and expenses of any kind to which any of the Indemnified Parties may become subject whether directly or indirectly (including, without limitation, the reasonable fees and disbursements of counsel for any Indemnified Party), relating to or arising out of the Existing Credit Agreement, the Existing Guaranty, the other Loan Documents, any actual or proposed use of the proceeds of the Loans, any New Loans, this Agreement, any agreement executed in connection herewith (including, without limitation, the D&O Cash Collateral Agreement), the Plan, or any New Loan Documents; provided, that no Indemnified Party shall have the right to be -------- ---- indemnified hereunder for its own gross negligence or willful misconduct as determined by a court of competent jurisdiction. All obligations of the Borrowers and Guarantor provided for in this Section 13.3 shall survive the termination of the Existing Credit Agreement, the Existing 17 Guaranty, this Agreement, any agreement executed in connection herewith, and any New Loan Documents. SECTION 13.4 No Third Party Beneficiaries. This Agreement is solely for ---------------------------- the benefit of the parties hereto (except solely to the extent that (a) CIHC shall be entitled to the benefits of the No Default Acknowledgment pursuant to the provisions hereof and (b) the Indemnified Parties shall be entitled to the benefits of Section 13.13 hereof), and no provision of this Agreement shall be deemed to confer upon any other third parties (including, without limitation, any Borrower, including with respect to any property of any Borrower pledged as collateral) any remedy, claim, liability, reimbursement, cause of action or other right (including, without limitation, any right to benefit from any forbearance on the part of the Administrative Agent and/or the Banks in the exercise of any right, power, or remedy in connection with, under or otherwise relating to the Existing Credit Agreement, any other Loan Document and/or applicable law). SECTION 13.5 Waivers. The failure of a party hereto at any time or times ------- to require performance of any provision hereof shall in no manner affect its right at a later time to enforce the same. No waiver by a party of any condition or of any breach of any term, covenant, representation or warranty contained in this Agreement shall be effective unless in writing, and no waiver in any one or more instances shall be deemed to be a further or continuing waiver of any such condition or breach in other instances or a waiver of any other condition or breach of any other term, covenant, representation or warranty. SECTION 13.6 Remedies Cumulative. Consistent with, but not in limitation ------------------- of, the provisions of this Agreement, this Agreement shall be limited to its terms and narrowly construed, and neither the Administrative Agent nor any Bank agrees to otherwise limit the exercise of any of its rights, powers or remedies against any Borrower (or his or her property), the Guarantor (or its property) and/or CIHC (or its property) under its respective guaranty, any other agreement or document, applicable law, or otherwise except as expressly set forth herein. Consistent with, but not in limitation of, the foregoing, the No Default Acknowledgment is to be limited solely to the payment of principal subject to the provisions hereof and in no manner shall be deemed to restrain or adversely affect in any manner whatsoever the claims, rights, powers, and remedies of the Administrative Agent and the Banks under the Existing Guaranty, the CIHC Guaranty, and/or applicable law with respect to any guarantor's obligations in respect of the payment of interest, fees, expenses, or any obligations other than principal. The rights, powers, and/or remedies provided in this Agreement shall be cumulative and shall not preclude the assertion or exercise of any other rights or remedies available under law, in equity or otherwise except solely to the extent expressly set forth herein; it being the intent of the parties hereto that the Administrative Agent and the Banks are to have the maximum flexibility under any agreement and/or applicable law with respect to the exercise of any and/or all (or any combination of) such rights, powers, and/or remedies, including, without limitation, as to any Borrower and/or its property (including, without limitation, any property pledged as collateral to secure the obligations of any Borrower under the Existing Credit Agreement). 18 SECTION 13.7 Entire Understanding. This Agreement and each agreement -------------------- executed in connection herewith set forth the entire agreement and understanding of the parties hereto with respect to the transactions contemplated hereby and supersede any and all prior agreements, arrangements and understandings among the parties relating to the subject matter hereof. SECTION 13.8 Expenses. Without limiting in any manner any right of the -------- Administrative Agent and the Bank to receive the reimbursement of the expenses (including, without limitation, attorneys' fees and expenses) under the Existing Credit Agreement and/or the Existing Guaranty, Guarantor agrees to pay and reimburse the Administrative Agent for all of its reasonable costs and expenses incurred in connection with the preparation and delivery of this Agreement (and any agreement executed in connection herewith), including, without limitation, the reasonable fees and disbursements of counsel to the Administrative Agent. SECTION 13.9 Effect of Agreement on Existing Credit Agreement. Consistent ------------------------------------------------ with, but not in limitation of, the other provisions of this Agreement, nothing contained herein is intended as a present amendment to the Existing Credit Agreement or any other Loan Document or as agreement on the part of the Administrative Agent and the Banks to forebear in the exercise of any of its or their rights, powers, or remedies as to any Borrower (or any Borrower's property) under the Existing Credit Agreement, any other Loan Document to which any Borrower is a party (including any pledge agreement), and/or any applicable law, and the Existing Credit Agreement and any other Loan Document to which any Borrower is a party (including any pledge agreement) shall continue to be and remain in full force and effect, pending the execution and delivery of any New Loan Documents relating to such Borrower in accordance with the other provisions of this Agreement. Specifically, this Agreement shall not constitute under any circumstances an amendment, modification, or waiver of any provision of the Existing Credit Agreement or any Loan Document and shall not be construed as such under any circumstances or by any person or entity, including, without limitation, for the benefit of any of the Borrowers; it being acknowledged that the provisions relating to any Borrower herein (including those relating to the Commitment) are for the benefit of and may be enforced only by the Guarantor and not for or by any Borrower. Consistent with, but not in limitation of, the other provisions of this Agreement (including the foregoing provisions of this Section 13.9), each of the Administrative Agent and the Banks waive none of, but instead reserve all of, their respective rights, powers and remedies against any and all of the Borrowers (including against any of their respective property whether pledged as collateral or otherwise) under or in connection with the Existing Credit Agreement, any other Loan Document, and/or applicable law and, consistent with such express disclaimer of waiver and reservation of rights, shall be entitled (unless and until they enter into a binding, written agreement to the contrary), but not required, to exercise (in whatever manner, to whatever extent, at whatever time, and as often, seldom, or not at all, as it may choose in its sole and absolute discretion) any and/or all (or any combination) of such rights, powers, and/or remedies against any and/or all (or any combination) of the Borrowers and/or any of their property (including any property pledged as collateral under any pledge agreement), all as if this 19 Agreement had never been executed and delivered by the parties hereto (but as if any and all of such other agreements and instruments had been executed and delivered by the pertinent parties thereto). SECTION 13.10 GOVERNING LAW. THIS AGREEMENT SHALL BE A CONTRACT MADE UNDER ------------- AND GOVERNED BY THE LAWS OF THE STATE OF ILLINOIS, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES. ALL OBLIGATIONS OF THE GUARANTOR AND RIGHTS OF THE ADMINISTRATIVE AGENT AND THE BANKS IN RESPECT OF THE OBLIGATIONS OR LIABILITIES EXPRESSED HEREIN SHALL BE IN ADDITION TO AND NOT IN LIMITATION OF THOSE PROVIDED BY APPLICABLE LAW. SECTION 13.11 Counterparts. This Agreement may be executed in any number ------------ of counterparts and by the different parties on separate counterparts and each such counterpart shall be deemed to be an original, but all such counterparts shall together constitute but one and the same agreement. When counterparts executed by all the parties shall have been lodged with the Administrative Agent (or, in the case of any Bank as to which an executed counterpart shall not have been so lodged, the Administrative Agent shall have received telegraphic, facsimile, telex or other written confirmation from such Bank of execution of a counterpart hereof by such Bank), this Agreement shall become effective as of the Effective Date hereof, and at such time the Administrative Agent shall notify the Borrowers and each Bank. SECTION 13.12 SUBMISSION TO JURISDICTION; WAIVER OF VENUE. THE ------------------------------------------- ADMINISTRATIVE AGENT, EACH BANK AND GUARANTOR (A) HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF ANY ILLINOIS STATE OR FEDERAL COURT SITTING IN THE NORTHERN DISTRICT OF ILLINOIS OVER ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER DOCUMENTS CONTEMPLATED HEREBY, AND THE ADMINISTRATIVE AGENT, EACH BANK AND GUARANTOR HEREBY IRREVOCABLY AGREE THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH ILLINOIS STATE OR FEDERAL COURT, AND (B) AGREE NOT TO INSTITUTE ANY LEGAL ACTION OR PROCEEDING AGAINST ANOTHER PARTY OR THE DIRECTORS, OFFICERS, EMPLOYEES, AGENTS OR PROPERTY OF ANY THEREOF, ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER DOCUMENTS CONTEMPLATED HEREBY, IN ANY COURT OTHER THAN AS HEREINABOVE SPECIFIED IN THIS SECTION 13.12. THE ADMINISTRATIVE AGENT, EACH BANK AND GUARANTOR HEREBY IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION IT OR THEY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE IN ANY ACTION OR PROCEEDING (WHETHER BROUGHT BY ANY BORROWER, GUARANTOR, THE ADMINISTRATIVE AGENT, ANY BANK, OR OTHERWISE) IN ANY COURT HEREINABOVE SPECIFIED IN THIS SECTION 13.12 AS WELL AS ANY RIGHT IT OR THEY MAY NOW OR HEREAFTER HAVE TO REMOVE ANY SUCH ACTION OR 20 PROCEEDING, ONCE COMMENCED, TO ANOTHER COURT ON THE GROUNDS OF FORUM NON ----- --- CONVENIENS OR OTHERWISE. THE ADMINISTRATIVE AGENT, EACH BANK AND GUARANTOR - ---------- AGREE 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. SECTION 13.13 Successors and Assigns. This Agreement shall be binding upon ---------------------- and shall inure to the benefit of the parties hereto and their respective successors and assigns; provided, however, that Guarantor may not assign or -------- ------- transfer its rights or obligations under this Agreement or any other document contemplated hereby without the prior written consent of all Banks. Nothing contained herein shall limit the rights of the Banks to make assignments or grant participations subject to the provisions of Section 12 of the Existing Credit Agreement; provided, however, that any such assignments and -------- ------- participations insofar as such assignees' rights against or obligations to the Guarantor (including the Guarantor's rights with respect to the Extension Commitment) and CIHC shall be subject to the provisions of this Agreement SECTION 13.14 Interpretation. The headings preceding the text of Articles -------------- and Sections included in this Agreement and the headings to Schedules attached to this Agreement are for convenience only and shall not be deemed part of this Agreement or be given any effect in interpreting this Agreement. The use of the masculine, feminine or neuter gender or the singular or plural form of words herein shall not limit any provision of this Agreement. The use of the terms "including" or "include" shall in all cases herein mean "including, without limitation" or "include, without limitation," respectively. Reference to any person or entity includes such person's or entity's successors and assigns to the extent such successors and assigns are permitted by the terms of any applicable agreement, and reference to a person or entity in a particular capacity excludes such person or entity in any other capacity or individually. Reference to any agreement (including this Agreement), document or instrument means such agreement, document or instrument as amended or modified and in effect from time to time in accordance with the terms thereof and, if applicable, the terms hereof. Reference to any law means such law as amended, modified, codified, replaced or re-enacted, in whole or in part, and in effect on the date hereof, including rules, regulations, enforcement procedures and any interpretations promulgated thereunder. Underscored references to Articles, Sections, clauses, Exhibits or Schedules shall refer to those portions of this Agreement, and any underscored references to a clause shall, unless otherwise identified, refer to the appropriate clause within the same Section in which such reference occurs. The use of the terms "hereunder", "hereof", "hereto" and words of similar import shall refer to this Agreement as a whole and not to any particular Article, Section or clause of or Exhibit or Schedule to this Agreement. All terms defined in this Agreement shall have the above-defined meanings when used in any certificate, report or other document made or delivered pursuant to this Agreement, unless the context therein shall clearly otherwise require. In the computation of periods of time in this Agreement from a specified date to a later specified date, the word "from" means "from and including" and the words "to" and "until" each means "to but excluding." This Agreement and the other documents relating to this Agreement are the result of 21 negotiations among and have been reviewed by counsel to the Administrative Agent, Guarantor and the other parties, and are the products of all parties. Accordingly, they shall not be construed against the Banks or the Administrative Agent merely because of the Administrative Agent's or Banks' involvement in their preparation. SECTION 13.15 WAIVER OF JURY TRIAL. GUARANTOR, THE ADMINISTRATIVE AGENT -------------------- AND EACH BANK HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM CONCERNING ANY RIGHTS UNDER THIS AGREEMENT, ANY OTHER DOCUMENT CONTEMPLATED HEREBY OR ANY OTHER DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH, OR ARISING FROM ANY BANKING RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT, AND AGREE THAT ANY SUCH ACTION, PROCEEDING OR COUNTERCLAIM SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY; THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES ENTERING INTO THIS AGREEMENT. * * * [Signature Pages Follow] 22 Executed as of the date and year first written above. GUARANTOR: CONSECO, INC. By: /s/ Thomas M. Hagerty Name: Thomas M. Hagerty Title: Acting Chief Financial Officer Notice Address: 11825 N. Pennsylvania Street Carmel, IN 46032 Attention: David Herzog Telephone: (317) 817-5031 Facsimile: (317) 817-6327 with a copy to Weil, Gotshal & Manges LLP 100 Crescent Court, Suite 1300 Dallas, Texas 75201-6950 Attention: Angela L. Fontana, Esq. Telephone: (214) 746-7000 Facsimile: (214) 746-7700 ADMINISTRATIVE AGENT: BANK OF AMERICA, NATIONAL ASSOCIATION By: Name: Title: Notice Address: 231 South LaSalle Street Chicago, Illinois 60697 Attention: Debra Basler Telephone: (312) 828-2345 Facsimile: (312) 987-0889 with a copy to: Mayer, Brown & Platt 190 South LaSalle Street Chicago, Illinois 60603 Attention: Thomas S. Kiriakos, Esq. William C. Tompsett, Esq. Telephone: (312) 782-0600 Facsimile: (312) 701-7711 BANKS: BANK OF AMERICA, N.A. By: Name: Title: Lending Office Address: 231 S. LaSalle Street Chicago, IL 60697 Attention: Debra Basler Telephone: (312) 828-____ Facsimile: (312) ________ Notice Address: Address: 231 S. LaSalle Street Chicago, IL 60697 Attention: ______________ Telephone: (312) _________ Facsimile: (312) __________ FIRST UNION NATIONAL BANK By: Name: Title: Lending Office: Address: 301 South College Street One First Union Center, 5th FL Attention: Robert C. Mayer, Jr. Telephone: (704) 374-6628 Facsimile: (704) 383-7611 Notice Address: Address: 301 S. College Street One First Union Center, 5th FL Attention: Lisa Mowery Telephone: (704) 383-0558 Facsimile: (704) 383-7611 FLEET NATIONAL BANK By: Name: Title: Lending Office: Address: 777 Main Street, MSN 250 Hartford, CT 06115 Attention: Mildred Chavarria Jones Telephone: (860) 986-5600 Facsimile: (860) 986-1264 Notice Address: Address: Attention: Telephone: Facsimile: DEUTSCHE BANK AG By: Name: Title: Lending Office: Address: 31 W. 52nd Street New York, NY 10019 Attention: Susan Maros Telephone: (212) 474-8104 Facsimile: (212) 474-8108 Notice Address: Address: Attention: Telephone: Facsimile: SUN TRUST BANK By: Name: Title: Lending Office: Address: 200 South Orange Ave., O-1043 Orlando, FL 32802 Attention: Chris Black Telephone: (407) 237-2467 Facsimile: (407) 237-6894 Notice Address: Address: Attention: Telephone: Facsimile: GENERAL ELECTRIC CAPITAL CORPORATION By: Name: Title: Lending Office Address: Attention: Telephone: Facsimile: Notice Address: Address: Attention: Telephone: Facsimile: Schedule II - Appendix ================================================================================ APPENDIX CONSECO, INC. $3,028,576,848 CREDIT FACILITIES DATED AS OF SEPTEMBER 22, 2000 BANK OF AMERICA, N.A. AND THE CHASE MANHATTAN BANK, AS JOINT LEAD ARRANGERS AND JOINT BOOK MANAGERS ================================================================================ TABLE OF CONTENTS
Page ARTICLE IDEFINITIONS....................................................................................................1 ----------- 1.01 Certain Defined Terms..............................................................................1 --------------------- 1.02 Other Interpretive Provisions.....................................................................20 ----------------------------- 1.03 Accounting Principles.............................................................................21 --------------------- ARTICLE IIMANDATORY CASH APPLICATIONS..................................................................................21 --------------------------- 2.01 General Application of Available Net Proceeds.....................................................21 --------------------------------------------- 2.02 Application of Available Net Proceeds Allocated to Facilities.....................................22 ------------------------------------------------------------- 2.03 Exempt Covenant/Waterfall Amounts.................................................................22 --------------------------------- ARTICLE IIIAFFIRMATIVE COVENANTS.......................................................................................23 --------------------- 3.01 Financial Statements..............................................................................23 -------------------- 3.02 Certificates; Other Information...................................................................24 ------------------------------- 3.03 Notices...........................................................................................24 ------- 3.04 Preservation of Corporate Existence, Etc. ........................................................26 ----------------------------------------- 3.05 Insurance.........................................................................................26 --------- 3.06 Payment of Obligations............................................................................26 ---------------------- 3.07 Compliance with Laws..............................................................................26 -------------------- 3.08 Compliance with ERISA.............................................................................26 --------------------- 3.09 Inspection of Property and Books and Records; Expense Reimbursement...............................26 ------------------------------------------------------------------- 3.10 Tritel Disposition................................................................................27 ------------------ 3.11 Conversion of FELINE PRIDES.......................................................................27 --------------------------- ARTICLE IVNEGATIVE COVENANTS...........................................................................................27 ------------------ 4.01 Limitation on Indebtedness........................................................................27 -------------------------- 4.02 Liens.............................................................................................28 ----- 4.03 Disposition of Assets.............................................................................30 --------------------- 4.04 Other Agreements..................................................................................31 ---------------- 4.05 Transactions with Affiliates......................................................................31 ---------------------------- 4.06 Change in Business................................................................................31 ------------------ 4.07 Fundamental Changes...............................................................................31 ------------------- 4.08 Restricted Payments...............................................................................32 ------------------- 4.09 Investments.......................................................................................32 ----------- 4.10 Optional Payments; Modifications of Certain Agreements; Synthetic Purchase Agreements.............33 ------------------------------------------------------------------------------------- 4.11 Negative Pledge on Tritel and Argosy Riverboat....................................................33 ---------------------------------------------- 4.12 Reserve Account...................................................................................34 --------------- 4.13 Debt to Capitalization Ratio......................................................................34 ---------------------------- 4.14 Interest Coverage Ratio...........................................................................34 ----------------------- 4.15 Conseco Adjusted Earnings.........................................................................35 ------------------------- 4.16 Conseco Finance Tangible Net Worth................................................................35 ---------------------------------- 4.17 Risk-Based Capital Ratio..........................................................................35 ------------------------ ARTICLE VEVENTS OF DEFAULT.............................................................................................36 ----------------- 5.01 Events of Default.................................................................................36 -----------------
SCHEDULES Schedule 1.01A Certain Material Insurance Subsidiaries Schedule 1.01B Specified Cash Events Schedule 1.01C Changes in Future Loss Reserves Schedule 1.01D Persons Not Subsidiaries Schedule 2.02 Exposure on Effective Date Schedule 4.01(c) Indebtedness Schedule 4.02(c) Existing Liens Schedule 4.02(g) Permitted Indentures Schedule 4.03(m) Dispositions of Investments Schedule 4.06 Business Activities Schedule 4.09(b) Proposed Investments EXHIBITS Exhibit A Form of Compliance Certificate Exhibit B Form of Reserve Account Agreement ARTICLE I DEFINITIONS I.1 Certain Defined Terms. The following terms, when used in this Appendix, have the following meanings: "Affiliate" means, as to any Person, any other Person which, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person. A Person shall be deemed to control another Person if the controlling Person possesses, directly or indirectly, the power (a) to vote 10% or more of the securities (on a fully diluted basis) having ordinary voting power for the election of directors or managing general partners, or (b) to direct or cause the direction of the management and policies of the other Person, whether through the ownership of voting securities, membership interests, by contract, or otherwise. "Agent" means any "Relevant Agent" under and as defined in the documents governing any Facility. "A.M. Best" means A.M. Best Company, together with any Person succeeding thereto by merger, consolidation or acquisition of all or substantially all of its assets, including substantially all of its business of rating insurance companies. "A.M. Best A- Status" means the circumstance that each Material Insurance Subsidiary listed on Schedule 1.01A has a claims paying rating of at least A- from A.M. Best. "Annual Statement" means the annual statutory financial statement of any Insurance Subsidiary required to be filed with the insurance commissioner (or similar authority) of its jurisdiction of incorporation, which statement shall be in the form required by such Insurance Subsidiary's jurisdiction of incorporation or, if no specific form is so required, in the form of financial statements permitted by such insurance commissioner (or such similar authority) to be used for filing annual statutory financial statements and shall contain the type of information permitted or required by such insurance commissioner (or such similar authority) to be disclosed therein, together with all exhibits or schedules filed therewith. "Appendix" means this Appendix as amended, restated, supplemented or otherwise modified from time to time. "Asset Backed Security" means a security of a Conseco Finance Entity that is collateralized by loans, leases, receivables, installment contracts or interests in or components of Interest Only Securities. "Asset Sale" means any Disposition of property or series of related Dispositions of property, excluding any such Disposition permitted by clauses (a) through (m) and clause (o) of Section 4.03 (but in any event including (whether or not permitted by any of the foregoing clauses) any direct or indirect (a) Disposition of all or any part of the Capital Stock issued by Conseco Finance, Tritel, Inc., Conseco Entertainment, Inc. or CNC Entertainment LLC, (b) Disposition of all or any part of the assets of Tritel, Inc. or CNC Entertainment LLC and (c) receipt of cash proceeds in respect of any Specified Cash Event (each, a "Disposition Transaction") that yields gross proceeds to Conseco and its Subsidiaries in excess of $10,000,000, provided that, once the aggregate gross proceeds from Disposition Transactions received during any Proceeds Test Period yielding gross proceeds between $2,000,000 and $10,000,000 exceeds $20,000,000, the first reference to $10,000,000 in this definition shall automatically be deemed to be changed to $2,000,000 for the remainder of such Proceeds Test Period. As used in this definition, "Proceeds Test Period" means (i) the period from the Effective Date through the Near-Term Facilities Termination Date and (ii) each subsequent one-year period commencing on the Near-Term Facilities Termination Date or an anniversary thereof. "Available Basket Amount" means, at any time, an amount equal to (a) ten percent (10%) of Total Shareholders' Equity at such time minus (b) the aggregate then outstanding amount of Indebtedness secured by Liens, without duplication, pursuant to Section 4.02(i)(i), (ii) (of Conseco or any "Significant Subsidiary" (as defined in the Public Debt)), (iii) or (iv). "Available Net Proceeds" means any Net Proceeds received by Conseco or any of its Subsidiaries in connection with any Prepayment Event other than Exempt Covenant/Waterfall Amounts and Exempt Waterfall Amounts applied in the manner described in clause (b) of the definition of "Exempt Waterfall Amounts". "B-Share Financings" means the financing of fees or commissions related to B-Shares. "B-Shares" means those shares of ownership representing a mutual interest in a pool of assets on which l2b-1 fees or contingent deferred sales commissions (CDSC), as defined under the Investment Company Act of 1940, are applicable. "Bank" means each "Relevant Bank" under and as defined in the documents governing any Facility. "Bankruptcy Code" means the Federal Bankruptcy Reform Act of 1978 (11 U.S.C.ss.101, et seq.). "Business Day" means any day other than a Saturday, Sunday or other day on which commercial banks in Chicago or New York City are authorized or required by law to close. "Calculation Period" means, with respect to any ratio or calculation, the period for which such ratio or calculation is being calculated. "Capital and Surplus" means, as to any Insurance Subsidiary, as of any date, the total amount shown on line 38, page 3, column I of the Annual Statement of such Insurance Subsidiary, or an amount determined in a consistent manner for any date other than one as of which an Annual Statement is prepared. "Capitalized Lease Liabilities" means, with respect to any Person, all monetary obligations of such Person under any leasing or similar arrangement which, in accordance with GAAP, would be classified as a capitalized lease, and, for purposes of this Appendix, the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP, and the stated maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be terminated by the lessee without payment of a penalty. 2 "Capital Stock" means any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person (other than a corporation) and any and all warrants, rights or options to purchase any of the foregoing. "Cash Collateral Agreement" means any cash collateral agreement provided to secure obligations of Conseco or any of its Subsidiaries pursuant to any D&O Facility. "Cash Equivalents" means (a) marketable direct obligations issued by, or unconditionally guaranteed by, the United States government or issued by any agency thereof and backed by the full faith and credit of the United States, in each case maturing within one year from the date of acquisition; (b) certificates of deposit, time deposits, eurodollar time deposits or overnight bank deposits having maturities of six months or less from the date of acquisition issued by any commercial bank organized under the laws of the United States or any state thereof having combined capital and surplus of not less than $500,000,000 and a short term deposit rating of at least A-1 by S&P and P-1 by Moody's, or carrying an equivalent rating by a nationally recognized rating agency, if both of the two named rating agencies cease publishing ratings of commercial paper issuers generally; (c) commercial paper of an issuer rated at least A-1 by S&P and P-1 by Moody's, or carrying an equivalent rating by a nationally recognized rating agency, if both of the two named rating agencies cease publishing ratings of commercial paper issuers generally, and maturing within six months from the date of acquisition; (d) repurchase obligations of any Relevant Bank or of any commercial bank satisfying the requirements of clause (b) of this definition, having a term of not more than 30 days, with respect to securities issued or fully guaranteed or insured by the United States government; (e) securities with maturities of one year or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States, by any political subdivision or taxing authority of any such state, commonwealth or territory or by any foreign government, the securities of which state, commonwealth, territory, political subdivision, taxing authority or foreign government (as the case may be) are rated at least A by S&P and A2 by Moody's; (f) securities with maturities of six months or less from the date of acquisition backed by standby letters of credit issued by any Relevant Bank or any commercial bank satisfying the requirements of clause (b) of this definition; or (g) shares of money market mutual or similar funds which invest exclusively in assets satisfying the requirements of clauses (a) through (f) of this definition. "Cash on Hand Target" has the meaning set forth in Section 2.01(b). "CBOs" means notes or other instruments (other than CMOs) secured by collateral consisting primarily of debt securities and/or other types of debt obligations, including loans. "CERCLA" means the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended. "CERCLIS" means the Comprehensive Environmental Response, Compensation and Liability Information System List. 3 "Change of Control" means (a) any acquisition by any Person, or two or more Persons acting in concert, of beneficial ownership (within the meaning of Rule l3d-3 of the Securities and Exchange Commission under the Exchange Act) of 30% or more of the outstanding shares of voting stock of Conseco (other than an acquisition by any Person or Persons who are officers or directors of Conseco on the Effective Date or any Affiliate thereof controlled by the relevant officer or director); or (b) during any period of 25 consecutive calendar months, commencing on the Effective Date, the ceasing of those individuals who were not borrowers under any of the D&O Facilities (the "Continuing Directors") who (i) were directors of Conseco on the first day of each such period or (ii) subsequently became directors of Conseco and whose actual election or initial nomination for election subsequent to that date was approved by a majority of the Continuing Directors then on the board of directors of Conseco, to constitute a majority of the board of directors of Conseco; or (c) Gary Wendt or such other Person as shall be reasonably satisfactory to the Required Banks shall cease to be the Chief Executive Officer of Conseco (other than by reason of death or disability) at any time prior to the Near-Term Facilities Termination Date. "CIHC" means CIHC, Incorporated, a Delaware corporation, and a direct Wholly-Owned Subsidiary of Conseco. "CIHC Guaranty" means any "Relevant CIHC Guaranty" under and as defined in the documents governing any Facility. "CMOs" means notes or other instruments secured by collateral consisting primarily of mortgages, mortgage-backed securities and/or other types of mortgage-related obligations. "Code" means the Internal Revenue Code of 1986, as amended, and regulations promulgated thereunder. "Collateral Agreement" means the Collateral Agreement, dated as of May 30, 2000, made by Conseco and CIHC in favor of the Collateral Agent named therein. "Compliance Certificate" means a certificate substantially in the form of Exhibit A. "Conseco" means Conseco, Inc., an Indiana corporation. "Conseco Adjusted Earnings" means, for any Calculation Period, the consolidated Net Income of Conseco for such period plus, without duplication and to the extent reflected as a charge in the statement of such Net Income for such period, the sum of (a) income tax expense, (b) interest expense, amortization or writeoff of debt discount and debt issuance costs and commissions, discounts and other fees and charges associated with Indebtedness, (c) depreciation and amortization expense, (d) amortization of intangibles (including, but not limited to, goodwill, deferred acquisition costs, the present value of future profits and changes in future loss reserves described on Schedule 1.01C) and organization costs, (e) net changes in Interest Only Securities, (f) any extraordinary, unusual or non-recurring non-cash expenses or losses (including, whether or not otherwise includable as a separate item in the statement of such Net Income for such period, non-cash losses on sales of assets outside of the ordinary course of business), (g) any other non-cash charges (provided that the after tax amounts described in clauses (f) and (g) shall not exceed in the aggregate$500,000,000 for any Calculation Period ending on or before September 30, 2001, and $50,000,000 for any Calculation Period ending thereafter), and (h) realized or unrealized losses on Investments of Insurance Subsidiaries, and minus, to the extent included in the statement of such Net Income for such period, the sum of (a) any extraordinary, unusual or non-recurring income or gains (including, whether or not otherwise includable as a separate item in the statement of such Net Income for such period, gains on the sales of assets outside of the ordinary course of business) and (b) realized or unrealized gains on Investments of Insurance Subsidiaries, all as determined on a consolidated basis. 4 "Conseco Available Cash Flow" means, for any Calculation Period, the sum, without duplication, of (a) dividends paid in cash to Conseco by any Subsidiary, plus (b) interest paid in cash to Conseco by any Subsidiary pursuant to any intercompany Indebtedness owing by such Subsidiary to Conseco, plus (c) interest or principal paid in cash to Conseco with respect to the Surplus Debentures, plus (d) amounts paid in cash to Conseco under the Tax Sharing Agreement, plus (e) management and other similar fees received by Conseco under servicing agreements or otherwise from any Subsidiary, plus (f) amounts paid in cash to Conseco pursuant to a loan made to it by any Subsidiary, plus (g) amounts paid in cash to Conseco by Conseco Finance pursuant to the redemption by Conseco Finance of preferred equity issued by Conseco Finance and owned by Conseco plus (h) Conseco's Investment Income received in cash, plus (i) in respect of any Fiscal Quarter ended on or prior to December 31, 2000, amounts paid by Conseco in closing out swaps in an amount not to exceed $15,000,000 less the value of the collateral attributable to the relevant swaps, minus (j) cash operating expenses of Conseco, minus (k) capital expenditures of Conseco, minus (l) any amounts paid by Conseco in repayment of any loan referred to in clause (f) above. Amounts received by Conseco or any of its Subsidiaries in respect of any Specified Cash Event shall be excluded from this calculation. "Conseco Finance" means Conseco Finance Corp., a Delaware corporation. "Conseco Finance Entities" means, collectively, Conseco Finance and its consolidated Subsidiaries and "Conseco Finance Entity" means any one of them individually. "Conseco Finance Tangible Net Worth" means, at any date, all amounts that would, in conformity with GAAP, be included on a consolidated balance sheet of Conseco Finance and its Subsidiaries under stockholders' equity at such date, as adjusted by the following items to the extent increasing or reducing, as the case may be, such amounts: plus (a) unrealized losses (or, if applicable, minus unrealized gains), plus (b) any non-cash charges specified in clause (f) or (g) of the definition of Conseco Adjusted Earnings (subject to the limits applicable thereto) minus (c) goodwill, minus (d) Interest Only Securities, minus (e) servicing rights plus (f) the amount of any cash dividends paid by Conseco Finance to Conseco (directly or indirectly). If all or any portion of any intercompany Indebtedness owing to Conseco or any of its Subsidiaries by Conseco Finance or any of its Subsidiaries is converted into equity, no positive impact of such conversion shall be included in determining Conseco Finance Tangible Net Worth. "Conseco Guaranty" means any "Relevant Conseco Guaranty" under and as defined in the documents governing any Facility. "Conseco Series F Preferred Stock" means $500,000,000 stated value of Conseco's Series F Common Linked Convertible Preferred Stock, without par value and any replacement thereof, except to the extent held by any Person (other than Thomas H. Lee or any Person, fund or individual affiliated therewith) that acquires such stock pursuant to a bona fide arm's length transaction. "Conseco's Cash On Hand" means, on any date of determination, the aggregate amount of cash and Cash Equivalents then held by (a) Conseco or (b) Conseco Finance or any of its Subsidiaries in connection with Investments made pursuant to Section 4.09(a)(i)(y) or (z), excluding amounts in the Reserve and amounts required on such date to be distributed pursuant to Section 2.01(b). 5 "Contingent Obligation" means, without duplication, any agreement, undertaking or arrangement by which any Person guarantees, endorses or otherwise becomes or is contingently liable upon (by direct or indirect agreement, contingent or otherwise, to provide funds for payment, to supply funds to, or otherwise to invest in, a debtor, or otherwise to assure a creditor against loss) the debt, obligation or other liability of any other Person (other than by endorsements of instruments in the course of collection), or guarantees the payment of dividends or other distributions upon the shares of any other Person; provided, that (a) the obligations of any Person under Reinsurance Agreements or in connection with Investments of Insurance Subsidiaries, (b) the obligations of Conseco in connection with its guaranty of the Trust Preferred Securities, the Unit Securities and the FELINE PRIDES and (c) the obligations of any Person in connection with its guaranty of Asset Backed Securities shall not be deemed Contingent Obligations of any such Person or Conseco, as applicable. The amount of any Person's liability with respect to any Contingent Obligation shall (subject to any limitation set forth therein) be deemed to be the outstanding principal amount (or maximum outstanding principal amount, if larger) of the debt, obligation or other liability outstanding thereunder or, if not stated or if indeterminable, the maximum reasonably anticipated liability in respect thereof at the time of determination. "Contractual Obligation" means, as to any Person, any provision of any security issued by such Person or of any agreement, undertaking, contract, indenture, mortgage, deed of trust or other instrument, document or agreement to which such Person is a party or by which it or any of its property is bound. "D&O Facilities" means the collective reference to the $144 Million D&O Facility, the $181 Million D&O Facility and the $245 Million D&O Facility. "Debt to Total Capitalization Ratio" means, as of any date of determination, without duplication, the ratio of (a) the sum of (i) the principal amount of and accrued but unpaid interest on all Indebtedness for borrowed money of Conseco (including, without limitation, (x) any Indebtedness evidenced by bonds, debentures, notes or other similar instruments and (y) any Indebtedness resulting from any conversion of preferred stock) for which Conseco is directly liable on such date and which is neither a Contingent Obligation (except that Contingent Obligations of Conseco in respect of Indebtedness of the type described in clause (a) or (b) of the definition thereof (other than in respect of the D&O Facilities) shall nevertheless be included in such calculation) nor Indebtedness arising out of a Permitted Transaction and (ii) dividends on Trust Preferred Securities that are accrued but unpaid; to (b) Total Capitalization on such date; provided, however, that solely for the purposes of calculating the Debt to Total Capitalization Ratio, the term "Indebtedness" shall exclude preferred securities issued by business trusts formed by Conseco, guaranteed by Conseco and related to guarantees and intercompany notes. "Default" means any event or circumstance which, with the giving of notice, the lapse of time, or both, would (if not cured or otherwise remedied during such time) constitute an Event of Default. "Department" means, with respect to any Insurance Subsidiary, the Governmental Authority of such Insurance Subsidiary's state of domicile with which such Insurance Subsidiary is required to file its Annual Statement. "Disposition" means the sale, assignment, leasing, transfer, contribution, conveyance, issuance or other disposal of or granting of options, warrants or other rights with respect to any of a Person's assets (including any transaction pursuant to a Reinsurance Agreement and, in the case of any Subsidiary, the issuance or sale of its Capital Stock). The terms "Dispose" and "Disposed of" shall have correlative meanings. "Disposition Transaction" has the meaning specified in the definition of "Asset Sale". 6 "Dollars", "dollars" and "$" each mean lawful money of the United States. "Effective Date" September 22, 2000. "Environmental Laws" means all federal, state or local laws, statutes, common law duties, rules, regulations, ordinances and codes, together with all administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, Governmental Authorities, in each case relating to environmental, health, safety and land use matters. "ERISA" means the Employee Retirement Income Security Act of 1974 and regulations promulgated thereunder. "ERISA Affiliate" means any trade or business (whether or not incorporated) under common control with Conseco within the meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code). "ERISA Event" means (a) a Reportable Event with respect to a Pension Plan; (b) a withdrawal by Conseco or any ERISA Affiliate from a Pension 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) or a cessation of operations which is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by Conseco or any ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to terminate, the treatment of a Plan amendment as a termination under Section 4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (e) an event or condition which could reasonably be expected to constitute grounds under Section 4042 of ERISA for the termination of or the appointment of a trustee to administer, any Pension Plan or Multiemployer Plan; or (e) the imposition of any liability under Title IV of ERISA, other than PBGC premiums due but not delinquent under Section 4007 of ERISA, upon Conseco or any ERISA Affiliate. "Event of Default" means any of the events or circumstances specified in Section 5.01. "Exchange Act" means the Securities Exchange Act of 1934 and the regulations promulgated thereunder. "Exempt Covenant/Waterfall Amounts" means up to $500,000,000 of Net Proceeds from the issuance of Specified Junior Securities received after the Near-Term Facilities Termination Date. "Exempt Waterfall Amounts" means Net Proceeds of Specified Junior Securities (not designated as "Exempt Covenant/Waterfall Amounts") which are applied either (a) (i) prior to the Near-Term Facilities Termination Date, to the Near-Term Facilities (in the manner contemplated by Section 2.02(b)) and (ii) thereafter, to the $1.5 Billion Facility and the Specified D&O Facilities (in the manner contemplated by Section 2.02(c)) or (b) to make investments in Conseco's Subsidiaries to support their operations. 7 "Exposure" means, with respect to each Bank, (a) in the case of the $155 Million Facility, the $766 Million Facility and the $1.5 Billion Facility, any outstanding "Loans" made by such Bank thereunder and (b) in the case of the D&O Facilities, any outstanding "Loans" made by such Bank thereunder minus such Bank's pro rata share of any cash collateral provided pursuant to the applicable Cash Collateral Agreement. "Facilities" means the collective reference to the Near-Term Facilities, the D&O Facilities and the $1.5 Billion Facility. "FELINE PRIDES" means the units consisting of (a) 6.75% Trust Originated Preferred Securities issued by Conseco Financing Trust IV (the "PRIDES Preferred Securities") and (b) a purchase contract to purchase shares of common stock from Conseco (the "PRIDES Purchase Contracts"). "Fiscal Quarter" means any fiscal quarter of a Fiscal Year. "Fiscal Year" means any period of twelve consecutive calendar months ending on December 31. "Fixed Interest Charges" means, for any Calculation Period, (without duplication) (a) interest paid or, without duplication, accrued but unpaid on the Exposure under any Facility (other than the D&O Facilities) with respect to such Calculation Period, plus (b) interest paid or, without duplication, accrued but unpaid on any Indebtedness of Conseco set forth in clause (a), (b) or (d) of the definition thereof during such Calculation Period, minus (c) to the extent included in clause (b) above, interest paid or, without duplication, accrued but unpaid on any Indebtedness which has been eliminated from the balance sheet liabilities of Conseco on a consolidated basis in accordance with GAAP, minus (d) to the extent included in clause (b) above, interest paid or, without duplication, accrued but unpaid on any Indebtedness of any Conseco Finance Entity or any Insurance Subsidiary. Interest paid, or accrued and unpaid, in respect of Indebtedness related to the Trust Preferred Securities or the FELINE PRIDES shall be excluded from the above calculation. "FRB" means the Board of Governors of the Federal Reserve System, and any Governmental Authority succeeding to any of its principal functions. "FY 2000 Adjustments" has the meaning specified in the definition of "Total Capitalization". "GAAP" means generally accepted accounting principles set forth from time to time in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board (or agencies with similar functions of comparable stature and authority within the U.S. accounting profession), which are applicable to the circumstances as of the date of determination. "Governmental Authority" means any nation or government, any state or other political subdivision thereof, any central bank (or similar monetary or regulatory authority) thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, and any corporation or other entity owned or controlled, through stock or capital ownership or otherwise, by any of the foregoing, including any board of insurance, insurance department or insurance commissioner. "Income Taxes" means any Taxes based upon net income. 8 "Indebtedness" means, with respect to any Person, without duplication: (a) all obligations of such Person for borrowed money or in respect of loans or advances; (b) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments; (c) all obligations in respect of letters of credit, whether or not drawn, and bankers' acceptances issued for the account or upon the application or request of such Person; (d) all Capitalized Lease Liabilities of such Person; (e) all obligations of such Person in respect of Swap Contracts; (f) all obligations of such Person to pay the deferred purchase price of property or services which are included as liabilities in accordance with GAAP (other than trade payables entered into in the ordinary course of business on ordinary terms), and all obligations secured by a Lien on property owned or being purchased by such Person (including obligations arising under conditional sales or other title retention agreements); (g) any obligations of a partnership of the kind referred to in clauses (a) through (f) above or clause (h) below in which such Person is a general partner, and (h) all Contingent Obligations of such Person in connection with indebtedness or obligations of others of the kinds referred to in clauses (a) through (g) above; provided, however, that, except for the purpose of the proviso of Section 4.01(d), the term "Indebtedness" shall exclude (i) replevin bonds, surety bonds and other similar bonds (including, without limitation, bonds issued in connection with litigation and repossession activities) issued by an Insurance Subsidiary or a Conseco Finance Entity in the ordinary course of business and (ii) the obligations of any Person under letters of credit (whether or not drawn), bankers' acceptances and swap contracts issued or entered into in connection with any Asset Backed Security. "Independent Auditor" has the meaning specified in Section 3.01(a). "Insignificant Subsidiary" means any Subsidiary of Conseco that is not a Significant Subsidiary. "Insolvency Proceeding" means, with respect to any Person, (a) any case, action or proceeding with respect to such Person before any court or other Governmental Authority relating to bankruptcy, reorganization, insolvency, liquidation, conservation, rehabilitation, receivership, dissolution, winding-up or relief of debtors, or (b) any general assignment for the benefit of creditors, composition, marshalling of assets for creditors, or other, similar arrangement in respect of its creditors generally or any substantial portion of its creditors, in any case, undertaken under U.S. Federal, state or foreign law, including the Bankruptcy Code. "Insurance Subsidiary" means any Subsidiary which is required to be licensed as an insurer or reinsurer. "Interest Coverage Ratio" means, for any Calculation Period, the ratio of (a) Conseco Available Cash Flow for such Calculation Period to (b) Fixed Interest Charges for such Calculation Period. "Interest Only Security" means any interest, including servicing fees, retained by a Conseco Finance Entity relating to the sale or securitization of loans, leases, receivables or installment contracts, which constitutes either an interest only security or a servicing right asset in accordance with GAAP. "Investment" means any advance, loan, extension of credit (by way of guaranty or otherwise) or capital contribution to, or purchase of any Capital Stock, bonds, notes, debentures or other debt securities of, or any assets constituting a business unit of, or any other investment in, any Person. 9 "Investment Grade Ratings Status" means the circumstance that Conseco has a senior unsecured non-credit enhanced long-term debt rating of at least BBB- from S&P and at least Baa3 from Moody's. "Investment Income" means the amount of earnings of Conseco on Investments, net of expenses actually incurred in connection with such Investments and taking into account realized gains and losses on such Investments. "IRS" means the Internal Revenue Service or any Governmental Authority succeeding to any of its principal functions under the Code. "Lehman" means Lehman Brothers Holdings Inc., and any successors. "Lehman Agreement" means, collectively, (a) the Amended and Restated Agreement, dated as of September 22, 2000, by and among Conseco Finance Corp., Conseco, CIHC, Green Tree Residual Finance Corp. I, Green Tree Finance Corp. - Five and Lehman, (b) Amendment to the Warehouse Debt Facility, dated as of September 22, 2000, by and among Lehman Commercial Paper Inc. and Green Tree Finance Corp. - Five and acknowledged and consented to by Conseco Finance Corp. and CIHC, (c) Amendment to the First Residual Facility (Asset Assignment Agreement), dated as of September 22, 2000, by and among Lehman ALI Inc. and Green Tree Residual Finance Corp. I and (d) Amendment to the Second Residual Facility (Master Repurchase Agreement), dated as of September 22, 2000, by and among Lehman Brothers Inc. and Green Tree Residual Finance Corp. I, in each case, as amended, supplemented or otherwise modified from time to time, and any related document or agreement (including the agreements amended or modified by the agreements specified above). "License" means any license, certificate of authority, permit or other authorization which is required to be obtained from any Governmental Authority in connection with the operation, ownership or transaction of insurance business. "Lien" means any security interest, mortgage, deed of trust, pledge, hypothecation, assignment, charge or deposit arrangement, encumbrance, lien (statutory or other) or preferential arrangement of any kind or nature whatsoever in respect of any property (including those created by, arising under or evidenced by any conditional sale or other title retention agreement, the interest of a lessor under a capital lease or any financing lease having substantially the same economic effect as any of the foregoing) and any contingent or other agreement to provide any of the foregoing, but not including the interest of a lessor under an operating lease or the contingent obligation to equally and ratably secure the Public Debt. "Litigation" means any litigation (including, without limitation, any governmental proceeding or arbitration proceeding), tax audit or investigative proceeding, claim, lawsuit, and/or investigation pending or threatened against or involving Conseco or any of its Subsidiaries or any of its or their businesses or operations. "Loan Documents" means the "Loan Documents" under and as defined in the documents governing the Relevant Facility, including, in any event, this Appendix and the Relevant CIHC Guaranty. 10 "Longer-Term Public Debt" means Conseco's 8.5% Notes due October 15, 2002, 6.4% Notes due February 10, 2003, 8-1/8% Senior Notes due February 15, 2003, 10.5% Senior Notes due December 15, 2004, 8.75% Notes due February 9, 2004, 6.8% Notes due June 15, 2005 and 9% Notes due October 15, 2006. "Material Adverse Effect" means (a) a material adverse change in, or a material adverse effect upon, the business, properties, condition (financial or otherwise) of Conseco or Conseco and its Subsidiaries taken as a whole; (b) a material impairment of the ability of Conseco to perform under any Loan Document; or (c) a material adverse effect upon the legality, validity, binding effect or enforceability against Conseco of any Loan Document. "Material Insurance Subsidiary" means an Insurance Subsidiary having Capital and Surplus of $50,000,000 or more. "Moody's" means Moody's Investors Service, Inc., together with any Person succeeding thereto by merger, consolidation or acquisition of all or substantially all of its assets, including substantially all of its business of rating securities. "Multiemployer Plan" means a "multiemployer plan", within the meaning of Section 4001(a)(3) of ERISA, to which Conseco or any ERISA Affiliate makes, is making, or is obligated to make contributions or, during the preceding three calendar years, has made, or been obligated to make, contributions. "NAIC" means the National Association of Insurance Commissioners or any successor thereto, or in absence of the National Association of Insurance Commissioners or such successor, any other association, agency or other organization performing advisory, coordination or other like functions among insurance departments, insurance commissioners and similar Governmental Authorities of the various states of the United States toward the promotion of uniformity in the practices of such Governmental Authorities. "Near-Term Facilities" means the collective reference to the $155 Million Facility and the $766 Million Facility. "Near-Term Facilities Termination Date" means the date on which all "Obligations" under and as defined in the documents governing the $155 Million Facility and the $766 Million Facility have, in both cases, been paid in full in cash. "Net Income" means, for any Person for any Calculation Period, the net income (or loss) of such Person for such period as determined in accordance with GAAP. 11 "Net Proceeds" means (a) with respect to any Disposition by any Person, the aggregate amount of cash and Cash Equivalents received by such Person in respect of such Disposition (including any such amounts received by way of deferred payment of principal pursuant to a note or installment receivable or purchase price adjustment receivable or otherwise, but only as and when received) minus the sum of (i) costs and expenses (including legal fees, notarial fees, accountants fees, investment banking fees, survey costs, title insurance premiums, amounts applied to the repayment of Indebtedness (other than under a Facility) secured by a Lien expressly permitted hereunder on any asset that is the subject of such Disposition, costs of discontinuance (including, without limitation, any reasonable severance payments), Taxes other than Income Taxes (after taking into account any available tax credits or deductions and any tax sharing arrangements) and other customary fees and expenses) incurred in connection with such Disposition and required to be paid in cash or deducted from the proceeds of such Disposition, (ii) the estimated Income Tax actually required to be paid in cash by such Person in connection with such Disposition (after taking into account any available tax credits or deductions and any tax sharing arrangements), (iii) purchase price adjustments reasonably expected to be payable in connection therewith (not to exceed 10% of the purchase price for the relevant Disposition) so long as, if any such amount ceases to be payable, it shall then become "Net Proceeds", (iv) for an Insurance Subsidiary, any amounts which the Department will not permit such Insurance Subsidiary to pay out as a result of such Disposition and (v) for a Conseco Finance Entity, any amounts which the Lehman Agreement will not permit such Conseco Finance Entity to distribute to CIHC or Conseco as a result of such Disposition, so long as, if any such amount becomes so distributable under the Lehman Agreement, it shall then become "Net Proceeds", and (b) with respect to any issuance of Capital Stock of Conseco, any incurrence of Indebtedness by Conseco or any of its Subsidiaries, the occurrence of any Specified Cash Event or the receipt of any amount pursuant to any Permitted Tritel Hedge Transaction, the proceeds thereof in the form of cash and Cash Equivalents minus the costs and expenses incurred in connection therewith (including legal fees, notarial fees, accountants fees, investment banking fees, underwriting discounts and commissions and other customary fees and expenses incurred in connection therewith) and required to be paid in cash or deducted from the proceeds of such Disposition. For purposes of this definition, the Net Proceeds received by any Person in respect of any Disposition shall include such cash or Cash Equivalents as may be received ("subsequent cash proceeds") by such Person at any time or from time to time in connection with the sale, transfer, lease or other disposition, or otherwise in respect of, any consideration other than cash or Cash Equivalents received by such Person in respect of such Disposition, less the estimated Income Tax to be paid in connection with the receipt of such subsequent cash proceeds (after taking into account any available tax credits or deductions and any tax sharing arrangements) that was not theretofore deducted in computing Net Proceeds. "Ninety-Percent Owned Subsidiary" means any Person in which (other than directors' qualifying shares required by law) at least 90% of the Capital Stock of each class having ordinary voting power (or, in the case of Persons other than corporations, membership interests or other equity interests), at the time as of which any determination is being made, is owned, beneficially and of record, directly or indirectly, by Conseco, or by one or more Wholly-Owned Subsidiaries, or both. "Non-Finance Subsidiary" means any Subsidiary which is not a Conseco Finance Entity. "Non-Insurance Subsidiary" means any Subsidiary which is not an Insurance Subsidiary. "Obligations" means all advances, debts, liabilities, obligations, covenants and duties for the payment of money arising under any Loan Document owing by Conseco to the Relevant Banks (or, if such defined term is included in the documents governing the Relevant Facility, any "Indemnified Person"), whether direct or indirect (including those acquired by assignment), absolute or contingent, due or to become due, now existing or hereafter arising. To the extent that any of the foregoing have been cash collateralized, such amounts shall nevertheless be deemed to remain outstanding for the purposes of this Appendix. "PBGC" means the Pension Benefit Guaranty Corporation, or any Governmental Authority succeeding to any of its principal functions under ERISA. 12 "Pension Plan" means a pension plan (as defined in Section 3(2) of ERISA) subject to Title IV of ERISA which Conseco or any ERISA Affiliate sponsors, maintains, or to which it makes, is making, or is obligated to make contributions, or in the case of a multiple employer plan (as described in Section 4064(a) of ERISA) has made contributions at any time during the immediately preceding five (5) plan years. "Permitted Lien" has the meaning specified in Section 4.02. "Permitted Nonrecourse Indebtedness" means (a) nonrecourse Indebtedness of Subsidiaries of Conseco resulting from the sale or securitization of (i) non-admitted assets, policy loans, B-Share Financings, CBOs and CMOs and (ii) loans, leases, receivables, installment contracts and other financial products originated, acquired, sold or securitized by a Conseco Finance Entity and (b) nonrecourse Indebtedness of a Conseco Finance Entity with respect to Interest Only Securities. "Permitted Swap Obligations" means all obligations (contingent or otherwise) of Conseco or any Subsidiary existing or arising under Swap Contracts, provided that each of the following criteria is satisfied: (a) such obligations are (or were) entered into by such Person in the ordinary course of business for the purpose of directly mitigating risks associated with liabilities, commitments or assets held by such Person, or changes in the value of securities issued by such Person in conjunction with a securities repurchase program not otherwise prohibited hereunder, and not for purposes of speculation or taking a "market view;" and (b) such Swap Contracts do not contain any provision ("walk-away" provision) exonerating the non-defaulting Party from its obligation to make payments on outstanding transactions to the defaulting party. "Permitted Transactions" means (a) mortgage-backed security transactions in which an investor sells mortgage collateral, such as securities issued by the Government National Mortgage Association and the Federal Home Loan Mortgage Corporation for delivery in the current month while simultaneously contracting to repurchase "substantially the same" (as determined by the Public Securities Association and GAAP) collateral for a later settlement, (b) transactions in which an investor lends cash to a primary dealer and the primary dealer collateralizes the borrowing of the cash with certain securities, (c) transactions in which an investor lends securities to a primary dealer and the primary dealer collateralizes the borrowing of the securities with cash collateral, (d) transactions in which an investor makes loans of securities to a broker-dealer under an agreement requiring such loans to be continuously secured by cash collateral or United States government securities, (e) transactions in which a federal home loan mortgage bank (a "FHLMB") makes loans, which are sufficiently secured by appropriate assets consisting of government agency mortgage-backed securities, in accordance with the rules, regulations and guidelines of such FHLMB for its loan programs, (f) financing transactions in which a Conseco Finance Entity sells or transfers as collateral loans, leases, receivables or installment contracts to a third party while simultaneously contracting to repurchase or reacquire substantially the same assets and (g) the issuance of any Asset Backed Securities by any Conseco Finance Entity. "Permitted Tritel Hedge Transaction" has the meaning specified in Section 4.11. "Person" means an individual, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture or Governmental Authority or other entity of whatever nature. "Plan" means an employee benefit plan (as defined in Section 3(3) of ERISA) which Conseco sponsors or maintains or to which Conseco makes, is making, or is obligated to make contributions and includes any Pension Plan. 13 "prepay" means, when used with respect to Public Debt, prepay, repurchase, redeem or otherwise optionally or voluntarily defease or segregate funds with respect thereto; and "prepaid" and "prepayment" shall have correlative meanings. "Prepayment Events" means (a) the occurrence of any Specified Cash Event or the consummation of any other Asset Sale, (b) the incurrence by Conseco or any of its Subsidiaries of any Indebtedness of the type described in clause (a) or (b) of the definition thereof, excluding Indebtedness permitted by Section 4.01 other than as set forth in Section 4.01(b) (to the extent required to be applied as a Prepayment Event as set forth in the definition of "Exempt Waterfall Amounts"), (c) the issuance of any Capital Stock by Conseco and (d) any receipt of Net Proceeds in connection with any Permitted Tritel Hedge Transaction. "PRIDES Documents" means the PRIDES Purchase Contracts, the PRIDES Preferred Securities, the Subordinated Indenture dated as of December 8, 1997 between Conseco and The First National Bank of Chicago, as amended by the First Supplemental Indenture, dated as of December 8, 1997, the 6.75% Debentures issued to the PRIDES Trust pursuant to such Indenture, the Amended and Restated Declaration of Trust of the PRIDES Trust, the Preferred Securities Guarantee dated as of December 12, 1997 executed by Conseco, the Common Securities Guarantee dated as of December 12, 1997 executed by Conseco, and the other documents, agreements, schedules, exhibits and instruments referenced in the foregoing agreements and instruments. "PRIDES Preferred Securities" has the meaning set forth in the definition of FELINE PRIDES. "PRIDES Purchase Contracts" has the meaning set forth in the definition of FELINE PRIDES. "PRIDES Trust" means Conseco Financing Trust IV, a Delaware business trust. "Public Debt" means the collective reference to the 2000 Public Debt, the 2001 Public Debt and the Longer-Term Public Debt. "Purchase Money Debt" means Indebtedness incurred by a Person in connection with the purchase of fixed or capital assets by such Person, in which such assets the seller or financier thereof has taken or retained a Lien therein, provided that any such Lien attaches to such asset concurrently with or within one hundred twenty (120) days after the purchase thereof by such Person. "Quarterly Statement" means the quarterly statutory financial statement of any Insurance Subsidiary required to be filed with the insurance commissioner (or similar authority) of its jurisdiction of incorporation or, if no specific form is so required, in the form of financial statements permitted by such insurance commissioner (or such similar authority) to be used for filing quarterly statutory financial statements and shall contain the type of financial information permitted by such insurance commissioner (or such similar authority) to be disclosed therein, together with all exhibits or schedules filed therewith. 14 "Reinsurance Agreements" means any agreement, contract, treaty, certificate or other arrangement by which any Insurance Subsidiary agrees to transfer or cede to another insurer all or part of the liability assumed or assets held by it under one or more insurance, annuity, reinsurance or retrocession policies, agreements, contracts, treaties, certificates or similar arrangements. Reinsurance Agreements shall include, but not be limited to, any agreement, contract, treaty, certificate or other arrangement which is treated as such by the applicable Department. "Relevant Agent" means the "Agent" or "Administrative Agent", as applicable, under the Relevant Facility. "Relevant Banks" means any Bank to which Obligations are owing under the Relevant Facility. "Relevant Cash Collateral Agreement" means, if the Relevant Facility is a D&O Facility, any cash collateral agreement entered into by Conseco or any of its Subsidiaries in favor of the Agent thereunder in order to cash collateralize the Conseco Guaranty relating to such Facility. "Relevant CIHC Guaranty" means the Guaranty and Subordination Agreement, dated as of the Effective Date, made by CIHC in favor of the Relevant Agent and the Relevant Banks. It is agreed that the Relevant CIHC Guaranty shall be terminated and CIHC shall be released from all of its obligations thereunder on the first date after the Near-Term Facilities Termination Date on which Conseco has Investment Grade Ratings Status, so long as no Default or Event of Default shall have occurred and be continuing on such date. "Relevant Conseco Guaranty" means, if the Relevant Facility is a D&O Facility, any guaranty issued by Conseco in favor of the Agent thereunder in order to guaranty the obligations of the individual borrowers under such Facility. "Relevant Facility" means the Facility being amended pursuant to the amendment to which this Appendix is attached. "Reportable Event" means any of the events set forth in Section 4043(c) of ERISA or the regulations thereunder, other than any such event for which the 30-day notice requirement under ERISA has been waived in regulations issued by the PBGC. "Required Banks" means the "Required Banks" under and as defined in the documents governing the Relevant Facility. "Requirement of Law" means, as to any Person, any law (statutory or common), treaty, rule or regulation or determination of an arbitrator or of a Governmental Authority, in each case applicable to or binding upon the Person or any of its property or to which the Person or any of its property is subject. "Reserve" means the collective reference to one or more restricted accounts opened by Conseco with any one or more Banks, on terms and conditions substantially as set forth on Exhibit B hereto. It is understood that any contractual right of setoff contained in the documents governing any Facility will not apply to any Reserve. "Responsible Officer" means the chief executive officer, chief operating officer, chief financial officer or treasurer of Conseco, or any other officer having substantially the same authority and responsibility including, with respect to Section 3.01, any vice-president with responsibility for or knowledge of financial matters of Conseco. "Restricted Payments" has the meaning set forth in Section 4.08. 15 "Risk-Based Capital Ratio" means, with respect to the Insurance Subsidiaries (other than Conseco Direct Life Insurance Company) taken as a whole, on any date of determination, the ratio (expressed as a percentage) of (a) the aggregate Total Adjusted Capital (as defined by the NAIC) for such Insurance Subsidiaries to (b) the aggregate Authorized Control Level Risk-Based Capital (as defined by the NAIC) for such Insurance Subsidiaries. "S&P" means Standard & Poor's Ratings Services, together with any Person succeeding thereto by merger, consolidation or acquisition of all or substantially all of its assets, including substantially all of its business of rating securities. "SAP" means, with respect to any Insurance Subsidiary, the statutory accounting practices prescribed or permitted by the insurance commissioner (or other similar authority) in the jurisdiction of domicile of such Person for the preparation of annual statements and other financial reports by insurance companies of the same type as such Person, which are applicable to the circumstances as of the date of filing of such statement or report. "SEC" means the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions. "Significant Subsidiary" means any Subsidiary of Conseco with, after the elimination of intercompany accounts, (a) assets which constituted at least 5% of Conseco's consolidated total assets, or (b) revenues which constituted at least 5% of Conseco's consolidated total revenue or (c) net earnings which constituted at least 5% of Conseco's consolidated total net earnings, but not less than $10,000,000, all as determined as of the date of Conseco's most recently prepared quarterly financial statements for the 12-month period then ended. "Single Employer Pension Plan" means a pension plan as such term is defined in Section 3(2) of ERISA, other than a multiemployer plan as defined in Section 4001(a)(3) of ERISA, to which Conseco or any other ERISA Affiliate may have liability, including any liability by reason of having been a substantial employer within the meaning of Section 4063 of ERISA at any time during the preceding five years, or by reason of being deemed to be a contributing sponsor under Section 4069 of ERISA. "Specified Cash Events" means the receipt of cash by Conseco or any of its Subsidiaries in connection with the events described on Schedule 1.01B, whether or not in connection with a Disposition. "Specified D&O Facilities" means the collective reference to the $181 Million D&O Facility and the $245 Million D&O Facility. "Specified Junior Securities" means (a) common stock of Conseco and (b) preferred stock of Conseco and subordinated Indebtedness of Conseco that, in each case, does not require cash dividend or cash interest payments prior to September 30, 2005 (other than any requirement that is limited to payments with the proceeds of available Exempt Covenant/Waterfall Amounts received and held aside or otherwise identified prior to the date such preferred stock or subordinated Indebtedness is issued or incurred) or scheduled redemption or principal payments prior to March 31, 2006 and, in the case of subordinated Indebtedness, having subordination and related terms satisfactory to each Agent. "Statutory Net Income" means, for any period, the net income of an Insurance Subsidiary determined in accordance with SAP. 16 "Subordinated Obligations" shall be the collective reference to the unpaid principal of and accrued and unpaid interest on any subordinated Indebtedness and all other subordinated obligations and liabilities of Conseco to the lenders thereof (including, without limitation, interest accruing at the then applicable rate provided in the applicable loan documents for such Indebtedness or obligations after the maturity of the subordinated loans and interest accruing at the then applicable rate provided in such loan documents after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to Conseco, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding), whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, which may arise under, out of, or in connection with, this Appendix, or such loan documents for such subordinated Indebtedness, in each case whether on account of principal, interest, reimbursement obligations, fees, indemnities, costs, expenses or otherwise (including, without limitation, all fees and disbursements of counsel to the lenders thereof that are required to be paid by Conseco pursuant to the terms of the loan documents therefor or this Appendix). "Subsidiary" of a Person means any corporation, partnership, limited liability company, limited liability partnership, joint venture, trust, association or other unincorporated organization of which or in which such Person and such Person's Subsidiaries own directly or indirectly more than 50% of (a) the combined voting power of all classes of stock having general voting power under ordinary circumstances to elect a majority of the board of directors, if it is a corporation, (b) the voting or managing interests (which shall mean the general partner in the case of a partnership), if it is a partnership, joint venture or similar entity, (c) the beneficial interest, if it is a trust, association or other unincorporated organization or (d) the membership interest, if it is a limited liability company; provided, that, with respect to any Investment made by Conseco in any Person in the ordinary course of business solely for investment purposes, such Person shall not be considered a Subsidiary of Conseco for the purposes of this Appendix if such Person is not integral to the business or operations of Conseco or any Significant Subsidiary and, by way of illustration only, Schedule 1.01D, sets forth a nonexclusive list of such Persons who are not Subsidiaries of Conseco because of the operation of this clause. "Surplus Debentures" means, as to any Insurance Subsidiary, debt securities of such Insurance Subsidiary the proceeds of which are permitted to be included, in whole or in part, as Capital and Surplus of such Insurance Subsidiary as approved and permitted by the applicable Department. "Swap Contract" means any agreement whether or not in writing, relating to any transaction that is a rate swap, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap or option, bond, note or bill option, interest rate option, forward foreign exchange transaction, cap, collar or floor transaction, currency swap, cross-currency rate swap, swaption, currency option or any other, similar transaction (including any option to enter into any of the foregoing) or any combination of the foregoing, and, unless the context otherwise clearly requires, any master agreement relating to or governing any or all of the foregoing. 17 "Swap Termination Value" means, in respect of any one or more Swap Contracts, after taking into account the effect of any legally enforceable netting agreement relating to such Swap Contracts, (a) for any date on or after the date such Swap Contracts have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in clause (a) the amount(s) determined as the mark-to-market value(s) for such Swap Contracts, as determined by Conseco based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Swap Contracts (which may include any Relevant Bank). "Synthetic Purchase Agreement" means any agreement pursuant to which Conseco or any of its Subsidiaries is or may become obligated to make (a) any payment in connection with the purchase by any third party from a Person other than Conseco or any of its Subsidiaries (other than any Subsidiary that is a Subsidiary of an Insurance Subsidiary but is not itself an Insurance Subsidiary) of any Capital Stock or Indebtedness of Conseco or any of its Subsidiaries (other than any Subsidiary that is a Subsidiary of an Insurance Subsidiary but is not itself an Insurance Subsidiary) or (b) any payment the amount of which is determined by reference to the price or value at any time of any such Capital Stock or Indebtedness; provided, that (i) no phantom stock or similar plan providing for payments only to current or former directors, officers or employees of Conseco or any of its Subsidiaries (or to their heirs or estates), (ii) no such agreement in respect of any Public Debt that is permitted to be prepaid at such time pursuant to Section 4.10 and (iii) no such agreement in respect of any Disposition of any Capital Stock of a Subsidiary of Conseco that is permitted by Section 4.03 shall be deemed to be a Synthetic Purchase Agreement. "Taxes" means any and all present or future taxes, levies, assessments, imposts, duties, deductions, fees, withholdings or similar charges, and all liabilities with respect thereto. "Tax Sharing Agreement" means the tax sharing agreement dated February 29, 1989, as amended, among Conseco and certain of its Subsidiaries. "Total Capitalization" means, without duplication, (a) the amount described in clause (a) of the definition of "Debt to Total Capitalization Ratio", plus (b) the Total Shareholders' Equity of Conseco, minus (c) the carrying value of Interest Only Securities and servicing rights. Total Capitalization shall be determined without giving effect to (a) the impact of charges or writedowns taken in the third or fourth Fiscal Quarter of the Fiscal Year ending December 31, 2000 ("FY 2000 Adjustments") so long as the aggregate after-tax amount thereof does not exceed $500,000,000 and (b) the impact of any on balance sheet treatment of the D&O Facilities. "Total Shareholders' Equity" means the sum of, without duplication, (a) total common and preferred shareholders' equity of Conseco as determined in accordance with GAAP (calculated excluding unrealized gains (losses) of securities as determined in accordance with FAS 115) and (b) the redemption value or liquidation preference (or if less, the purchase price), as applicable, of the Trust Preferred Securities, the FELINE PRIDES and the Unit Securities. "Trust Preferred Securities" mean preferred securities (a) issued by one or more Delaware business trusts formed by Conseco and (b) guaranteed by Conseco, including specifically, "MIPS," "QuIPS," "TOPrS" and "TruPS", provided that the aggregate face amount of all Trust Preferred Securities does not exceed the greater of $1,930,000,000 or 15% of Total Capitalization at any time. "2000 Public Debt" means Conseco's $150,000,000 7-7/8% Notes due December 15, 2000. "2001 Public Debt" means Conseco's 7.6% Senior Notes due June 21, 2001 and 6.4% Mandatory Par Put Remarketed Securities due June 15, 2011. 18 "Unfunded Pension Liability" means the excess of a Plan's benefit liabilities under Section 4001(a)(16) of ERISA, over the current value of that Plan's assets, determined in accordance with the assumptions used for funding the Pension Plan pursuant to Section 412 of the Code for the applicable plan year. "United States" and "U.S." each means the United States of America. "Unit Securities" means investment units comprised of (a) mandatorily redeemable preferred securities (i) issued by one or more Delaware business trusts formed by Conseco and (ii) guaranteed by Conseco, including specifically, "MIPS," QuIPS," "TOPrS" and "TruPS," and (b) equity forward contracts for the purchase of common stock of Conseco (which forward contracts shall have a settlement date that is earlier than the stated maturity of such preferred securities) collateralized by such preferred securities or government securities in lieu thereof (including, without limitation, principal and interest strips thereof). "Voting Shares" means, with respect to any Person, capital stock issued by such Person, the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or persons performing similar functions) of such Person, even though the right so to vote has been suspended by the happening of any such contingency. "Wholly-Owned Subsidiary"means any corporation in which (other than directors' qualifying shares required by law) 100% of the capital stock of each class having ordinary voting power, and 100% of the capital stock of every other class, in each case (or, in the case of Persons other than corporations, membership interests or other equity interests), at the time as of which any determination is being made, is owned, beneficially and of record, by Conseco, or by one or more of the other Wholly-Owned Subsidiaries, or both. "$50 Million Credit Agreement" means the ECN Dealer Agreement between Conseco and Merrill Lynch, Pierce, Fenner & Smith Incorporated dated September 28, 1999 and the letter dated September 28, 1999 addressed by Merrill Lynch, Pierce, Fenner & Smith Incorporated to Conseco, including the Extendible Commercial Notes Memorandum attached thereto. "$144 Million D&O Credit Agreement" means the Termination and Replacement Agreement, dated as of May 30, 2000, among the individual borrowers parties thereto, the banks parties thereto, Chase, as administrative agent and Chase Securities Inc. and Banc of America Securities LLC as co-lead arrangers and co-lead book managers. "$155 Million Credit Agreement" means the Senior Secured Revolving Credit Agreement, dated as of May 30, 2000, among Conseco, the banks parties thereto, Chase, as administrative agent and Chase Securities Inc. and Banc of America Securities LLC as co-lead arrangers and co-lead book managers. "$181 Million D&O Credit Agreement" means the Credit Agreement, dated as of August 21, 1998, among the individual borrowers parties thereto, the banks parties thereto and BofA, as administrative agent. "$245 Million D&O Credit Agreement" means the Amended and Restated Credit Agreement, dated as of August 26, 1997, among the individual borrowers parties thereto, the banks parties thereto and BofA, as administrative agent. 19 "$766 Million Credit Agreement" means the 364-Day Credit Agreement, dated as of September 25, 1998, among Conseco, the banks parties thereto, the syndication agents and documentation agent named therein and BofA, as agent, as amended on the Effective Date to incorporate the obligations of Conseco under the $50 Million Credit Agreement. "$1.5 Billion Credit Agreement" means the Five-Year Credit Agreement, dated as of September 25, 1998, among Conseco, the banks parties thereto, the syndication agents and documentation agent named therein and BofA, as agent. "$144 Million D&O Facility" means the credit facility evidenced by the $144 Million D&O Credit Agreement and the documents related thereto. "$155 Million Facility" means the credit facility evidenced by the $155 Million Credit Agreement and the documents related thereto. "$181 Million D&O Facility" means the credit facility evidenced by the $181 Million D&O Credit Agreement and the documents related thereto. "$245 Million D&O Facility" means the credit facility evidenced by the $245 Million D&O Credit Agreement and the documents related thereto. "$766 Million Facility" means the credit facility evidenced by the $766 Million Credit Agreement and the documents related thereto. "$1.5 Billion Facility" means the credit facility evidenced by the $1.5 Billion Credit Agreement and the documents related thereto. I.2 Other Interpretive Provisions. (a) The meanings of defined terms are equally applicable to the singular and plural forms of the defined terms. (b) The words "hereof", "herein", "hereunder" and similar words refer to this Appendix as a whole and not to any particular provision of this Appendix; and subsection, Section, Schedule and Exhibit references are to this Appendix unless otherwise specified. (c) (i) The term "including" is not limiting and means "including without limitation." (ii) In the computation of periods of time from a specified date to a later specified date, the word "from" means "from and including"; the words "to" and "until" each mean "to but excluding", and the word "through" means "to and including." (d) Unless otherwise expressly provided herein, (i) references to agreements (including this Appendix) and other contractual instruments shall be deemed to include all subsequent amendments and other modifications thereto, but only to the extent such amendments and other modifications are not prohibited by the terms of any Loan Document, and (ii) references to any statute or regulation are to be construed as including all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting the statute or regulation. (e) The captions and headings of this Appendix are for convenience of reference only and shall not affect the interpretation of this Appendix. 20 (f) This Appendix and other Loan Documents may use several different limitations, tests or measurements to regulate the same or similar matters. Unless otherwise expressly provided, any reference to any action of the Relevant Agent or the Relevant Banks by way of consent, approval or waiver shall be deemed modified by the phrase "in its/their sole and reasonable discretion. (g) This Appendix and the other Loan Documents are the result of negotiations among and have been reviewed by counsel to the Relevant Agent, Conseco and the other parties to the Loan Documents, and are the products of all parties. Accordingly, they shall not be construed against the Relevant Banks or the Relevant Agent merely because of the Relevant Agent's or the Relevant Banks' involvement in their preparation. I.3 Accounting Principles. (a) Unless the context otherwise clearly requires, all accounting terms not expressly defined herein shall be construed, and all financial computations required under this Appendix shall be made, in accordance with GAAP, consistently applied. (b) References hereto in particular columns, lines or sections of any Person's Annual Statement shall be deemed, where appropriate, to be references to the corresponding column, line or section of such Person's Quarterly Statement, or if no such corresponding column, line or section exists or if any report form changes, then to the corresponding item referenced thereby. In the event the column , lines or sections of the Annual Statement referenced herein are changed or renumbered from the columns, lines and sections applicable to the 1999 Annual Statement, all such references shall be deemed references to such column, line or section as so renumbered or changed. ARTICLE II MANDATORY CASH APPLICATIONS II.1 General Application of Available Net Proceeds. (a) On the Effective Date, Available Net Proceeds in the aggregate amount of $392,861,025 shall be applied to the Facilities in the manner specified in Section 2.02(a). 21 (b) On the Effective Date and thereafter, within three Business Days after Conseco or any of its Subsidiaries receives any Available Net Proceeds (other than as described in paragraph (a) above), such Available Net Proceeds shall be applied as follows: first, the first $100,000,000 (or such lesser amount as is necessary to increase the amount of Conseco's Cash on Hand to the Cash on Hand Target) shall be retained by Conseco; second, the next $700,000,000 shall be applied 1/7th per transaction to the Near-Term Facilities and 6/7ths per transaction to fund the Reserve; third, the next $200,000,000 shall be applied to fund the Reserve; fourth, all subsequent Available Net Proceeds until the occurrence of the Near-Term Facilities Termination Date shall be applied 80% per transaction to the Near-Term Facilities, with the remainder being retained by Conseco until it has Cash on Hand equal to the Cash on Hand Target at the time of such transaction, and then 100% to the Near-Term Facilities until the occurrence of the Near-Term Facilities Termination Date; and fifth, all Available Net Proceeds received after the occurrence of the Near-Term Facilities Termination Date shall be applied 50% per transaction to the $1.5 Billion Facility and the Specified D&O Facilities (in the manner contemplated by Section 2.02(c)), with the remainder being retained by Conseco. Notwithstanding the foregoing, the first $30,000,000 of Available Net Proceeds received by Conseco or any of its Subsidiaries on or after the Effective Date after giving effect to Section 2.01(a) may be retained by Conseco. Any Available Net Proceeds referred to in this paragraph as being available for retention by Conseco (i) must, if received by a Subsidiary, be distributed to Conseco for such purpose if such distribution is not prohibited by law, rule or regulation or the Lehman Agreement and (ii) may be used by Conseco for any purpose permitted by this Appendix. Notwithstanding anything to the contrary in this Section 2.01(b), in the event that, in the case of Available Net Proceeds received at any time when clause second or third is applicable, if Conseco's Cash on Hand is less than the Cash on Hand Target, such Available Net Proceeds may be applied to increase Conseco's Cash on Hand (but not above the Cash on Hand Target), provided, that in no event shall the aggregate amount applied to increase Conseco's Cash on Hand pursuant to clause first and this sentence exceed $100,000,000. As used in this paragraph, "Cash on Hand Target" means $330,000,000 minus the amount of any Investment made by Conseco pursuant to Section 4.09(a)(i)(x) (except to the extent such amount was paid back to Conseco, directly or indirectly). (c) After the Reserve has been funded in an amount sufficient to pay the remaining maturities for the 2000 Public Debt and the 2001 Public Debt, if any such Public Debt is, or has been, repurchased at a discount with amounts from the Reserve, an amount from the Reserve equal to the difference between the face amount of the relevant Public Debt and the repurchase price of the relevant Public Debt shall be applied to the Near-Term Facilities or, after the Near-Term Facilities Termination Date, to the $1.5 Billion Facility and the Specified D&O Facilities (in the manner contemplated by Section 2.02(c)). II.2 Application of Available Net Proceeds Allocated to Facilities. (a) The application of Available Net Proceeds described in Section 2.01(a) shall be allocated to the Near-Term Facilities, and to the Exposure of the Banks thereunder, such that, after giving effect thereto, the respective Exposures of the Banks thereunder shall be as set forth on Schedule 2.02 (and any inconsistent provision in the Relevant Facility shall not apply). (b) Any application of Available Net Proceeds allocated to the Near-Term Facilities pursuant to Section 2.01(b) or (c) (and any application of Net Proceeds pursuant to clause (a)(i) of the definition of "Exempt Waterfall Amounts") shall be allocated to each Bank on a pro rata basis based on the percentage of the aggregate then outstanding amount of Exposure under such Facilities held by such Bank. In the case of any Bank having Exposure under more than one Near-Term Facility, such Bank may, by notice to Conseco and the applicable Agent, allocate its reduction in Exposure to one or more such Facilities in such respective amounts as it shall select in its sole discretion (and any inconsistent provision in the Relevant Facility shall not apply). (c) Any application of Available Net Proceeds allocated to the $1.5 Billion Facility and the Specified D&O Facilities pursuant to Section 2.01(b) or (c) (and any application of Net Proceeds pursuant to clause (a)(ii) of the definition of "Exempt Waterfall Amounts") shall be allocated ratably to each such Facility based on the aggregate Exposure then outstanding under such Facilities, and ratably to the Exposure of each Bank under each such Facility. The Available Net Proceeds so allocated to each Specified D&O Facility, at the discretion of Conseco, shall be either (i) deposited in a cash collateral account pursuant to the applicable Cash Collateral Agreement or (ii) applied to repay "Loans" made to the individual borrowers pursuant to the applicable Specified D&O Facility. II.3 Exempt Covenant/Waterfall Amounts. Notwithstanding anything to the contrary in Article IV, Conseco and its Subsidiaries shall be permitted to use Exempt Covenant/Waterfall Amounts for any purpose that would otherwise be prohibited by Article IV (other than to redeem, pay dividends on or otherwise make Restricted Payments in respect of Conseco's common stock or the Conseco Series F Preferred Stock), and any such use shall not constitute a violation of any of the covenants contained in Article IV or usage of any of the basket amounts described therein. 22 ARTICLE III AFFIRMATIVE COVENANTS So long as any Exposure or other Obligation shall remain unpaid or unsatisfied under the Relevant Facility, unless the Required Banks waive compliance in writing: III.1 Financial Statements Conseco shall deliver to the Relevant Agent and each Relevant Bank: (a) as soon as available, but not later than 120 days after the end of each Fiscal Year, copies of the audited consolidated balance sheet of Conseco and its Subsidiaries and the unaudited consolidating balance sheet of Conseco and its Subsidiaries as at the end of such year and the related consolidated statements of earnings, shareholders' equity and cash flows for such year, setting forth in the case of the audited consolidated statements in comparative form the figures for the previous Fiscal Year, and accompanied by the opinion of PricewaterhouseCoopers or another nationally-recognized independent public accounting firm ("Independent Auditor"), which report shall state that such audited consolidated financial statements present fairly the financial position and result of operations of Conseco and its Subsidiaries for the periods indicated in conformity with GAAP applied on a basis consistent with prior years, except as stated therein. Such opinion shall not be qualified or limited because of a restricted or limited examination by the Independent Auditor of any material portion of Conseco's or any Subsidiary's records; (b) as soon as available, but not later than 60 days after the end of each of the first three Fiscal Quarters of each Fiscal Year, copies of the condensed unaudited consolidated and consolidating balance sheet of Conseco and its Subsidiaries as of the end of such quarter and the related condensed unaudited statements of earnings, shareholders' equity and cash flows for the period commencing on the first day and ending on the last day of such quarter, and certified by a Responsible Officer as fairly presenting, in accordance with GAAP (subject to the absence of footnotes and ordinary, good faith year-end and audit adjustments), the financial position and the results of operations of Conseco and the Subsidiaries; (c) as soon as available but not later than 75 days after the close of each Fiscal Year of each Insurance Subsidiary, copies of the unaudited Annual Statement of such Insurance Subsidiary, certified by a Responsible Officer of such Insurance Subsidiary, all such statements to be prepared in accordance with SAP consistently applied throughout the periods reflected therein and, if required by the applicable Governmental Authority, audited and certified by independent certified public accountants of recognized national standing; (d) as soon as available but not later than 60 days after the close of each of the first three (3) Fiscal Quarters of each Fiscal Year of each Insurance Subsidiary which is a Significant Subsidiary, copies of the Quarterly Statement of each of the Insurance Subsidiaries, certified by a Responsible Officer of such Insurance Subsidiary, all such statements to be prepared in accordance with SAP consistently applied through the period reflected herein; (e) within 15 days after being delivered to any Insurance Subsidiary constituting a Significant Subsidiary, any draft or final Triennial Examination Report issued by the applicable Department or the NAIC that results in material adjustments to the financial statements referred to in subsection (a), (b) or (c); and 23 (f) within 90 days after the close of each Fiscal Year of each Insurance Subsidiary, a copy of the "Statement of Actuarial Opinion" and "Management Discussion and Analysis" for each such Insurance Subsidiary which is provided to the applicable Department (or equivalent information should such Department no longer require such a statement) as to the adequacy of loss reserves of such Insurance Subsidiary, such opinion to be in the format prescribed by the insurance code of the state of domicile of such Insurance Subsidiary. III.2 Certificates; Other Information. Conseco shall furnish to the Relevant Agent, with sufficient copies for each Relevant Bank (other than in the case of clause (e)): (a) concurrently with the delivery of the financial statements referred to in Sections 3.01(a) and (b), a Compliance Certificate executed by a Responsible Officer, (b) promptly, (i) copies of all Forms 10-K and 10-Q that Conseco or any Subsidiary may file with the SEC or (ii) copies of the certificate and related financial information provided pursuant to the Lehman Agreement in connection with evidencing periodic compliance with financial covenants therein, and promptly upon the Relevant Agents' request, financial statements and reports that Conseco sends to its shareholders and copies of all other financial statements and regular, periodic or special reports (including Form 8-K) that Conseco or any Subsidiary may make to, or file with, the SEC; (c) promptly and in any event within three Business Days after learning thereof, notification of any changes after the date hereof in the rating given by S&P or Moody's in respect of Conseco's senior unsecured Indebtedness or by A.M. Best in respect of the Insurance Subsidiaries; (d) (i) concurrently with the consummation of any Disposition Transaction yielding gross proceeds in excess of $2,000,000, (x) a description of such transaction and (y) a calculation of the gross proceeds thereof and (ii) concurrently with the occurrence of any Prepayment Event or the issuance of any Specified Junior Securities, (i) a description of the relevant transaction, (ii) a calculation of the Net Proceeds (including an accounting of the items deducted from the cash or Cash Equivalents received in connection with such transaction) thereof and (iii) if applicable its intention to treat such Net Proceeds of the type described in the definition of either (i) Exempt Covenant/Waterfall Amount or (ii) Exempt Waterfall Amount as an Exempt Covenant/Waterfall Amount or an Exempt Waterfall Amount, respectively (including, if an Exempt Waterfall Amount, whether the Net Proceeds will be applied under clause (a) or (b) of such definition); and (e) promptly, such additional information regarding the business, financial or corporate affairs of Conseco or any Subsidiary as the Relevant Agent, at the request of any Relevant Bank, may from time to time reasonably request. III.3 Notices. Conseco shall promptly notify the Relevant Agent: (a) of the occurrence of any Default or Event of Default; (b) of any matter that has resulted in a Material Adverse Effect, including (i) any breach or non-performance of, or any default under, a Contractual Obligation of Conseco or any Subsidiary; (ii) any dispute, litigation, investigation, proceeding or suspension between Conseco or any Subsidiary and any Governmental Authority; or (iii) the commencement of, or any material development in, any Litigation affecting Conseco or any Subsidiary, including pursuant to any applicable Environmental Laws; 24 (c) of the commencement of, or the occurrence of any development in, any litigation or proceeding (i) which seeks to enjoin, prohibit, discontinue or otherwise impacts the validity or enforceability of this Appendix or any of the other Loan Documents or other transactions contemplated hereby or thereby, or (ii) which could be reasonably expected to have a Material Adverse Effect. (d) of the occurrence of any of the following events affecting Conseco or any ERISA Affiliate (but in no event more than 10 days after such event) and deliver to the Relevant Agent and each Relevant Bank a copy of any notice with respect to such event that is filed with a Governmental Authority and any notice delivered by a Governmental Authority to Conseco or any ERISA Affiliate with respect to such event: (i) an ERISA Event; or (ii) a material increase in the Unfunded Pension Liabilities of any Pension Plan; (iii) the adoption of or the commencement of contributions to, any Plan subject to Section 412 of the Code by Conseco or any ERISA Affiliate; or (iv) the adoption of any amendment to a Plan subject to Section 412 of the Code, if such amendment results in a material increase in contributions or Unfunded Pension Liability; provided, however, that no such notice will be required under this Section 3.03(d) with respect to the occurrence of any such event if such occurrence does not result in, and is not reasonably expected to result in, any liability to Conseco of more than $65,000,000 or any liability to any ERISA Affiliate of more than $20,000,000. (e) of any material change in accounting policies or financial reporting practices by Conseco or any of its Subsidiaries; (f) of the receipt of any notice from any Governmental Authority of the expiration without renewal, revocation, suspension or restriction of or the institution of any proceedings to revoke, suspend or restrict, any License now or hereafter held by any Insurance Subsidiary which is required to conduct insurance business in compliance with all applicable laws and regulations and the expiration, revocation or suspension of which could reasonably be expected to have a Material Adverse Effect; (g) of the receipt of any notice from any Governmental Authority of the institution of any disciplinary proceedings against or in respect of any Insurance Subsidiary, or the issuance of any order, the taking of any action or any request for an extraordinary audit for cause by any Governmental Authority which could reasonably be expected to have a Material Adverse Effect; (h) of any judicial or administrative order limiting or controlling the insurance business of any Insurance Subsidiary (and not the insurance industry generally) which has been issued or adopted and which has had, or which could reasonably be expected to have, a Material Adverse Effect, or (i) of any actual or proposed changes in any applicable insurance code which could reasonably be expected to have a Material Adverse Effect. Each notice under this Section shall be accompanied by a written statement by a Responsible Officer setting forth details of the occurrence referred to therein, and stating what action Conseco or any affected Subsidiary proposes to take with respect thereto and at what time. Each notice under Section 3.03(a) shall describe with particularity any and all clauses or provisions of this Appendix or other Loan Document that have been (or reasonably foreseeably will be) breached or violated. 25 III.4 Preservation of Corporate Existence, Etc. Conseco shall, and shall cause each Significant Subsidiary to (except as permitted by Section 4.03 or 4.07): (a) preserve and maintain in full force and effect its corporate existence and good standing under the laws of its state or jurisdiction of incorporation; (b preserve and maintain in full force and effect all governmental rights, privileges, qualifications, permits, licenses and franchises necessary in the normal conduct of its business, except where such failure to preserve and maintain could not reasonably be expected to have a Material Adverse Effect; and (c use reasonable efforts, in the ordinary course of business, to preserve its business organization and goodwill. III.5 Insurance. Conseco shall maintain, and shall cause each Significant Subsidiary to maintain, with financially sound and reputable independent insurers, insurance with respect to its properties and business against loss or damage of the kinds customarily insured against by Persons engaged in the same or similar business, of such types and in such amounts as are customarily carried under similar circumstances by such other Persons. III.6 Payment of Obligations. Conseco shall, and shall cause each Significant Subsidiary to, pay and discharge as the same shall become due and payable, all of the following: (a all material tax liabilities, assessments and governmental charges or levies upon it or its material properties or assets, unless the same are not overdue for a period of more than 60 days or are being contested in good faith by appropriate proceedings and adequate reserves in accordance with GAAP are being maintained by Conseco or such Subsidiary; and (b all material indebtedness, as and when due and payable, but subject to any subordination provisions contained in any instrument or agreement evidencing such Indebtedness. III.7 Compliance with Laws. Conseco shall comply, and shall cause each Subsidiary to comply, in all material respects with all Requirements of Law of any Governmental Authority having jurisdiction over it or its business (including the Federal Fair Labor Standards Act and all applicable Environmental Laws), the noncompliance with which could reasonably be expected to have a Material Adverse Effect, except such as may be contested in good faith or as to which a bona fide dispute may exist. III.8 Compliance with ERISA. Conseco shall, and shall cause each of its ERISA Affiliates to: (a) maintain each Plan in compliance in all material respects with the applicable provisions of ERISA, the Code and other federal or state law; (b) cause each Plan which is qualified under Section 401(a) of the Code to maintain such qualification; and (c) make all required contributions to any Plan subject to Section 412 of the Code, except where such failure to maintain as set forth in (a) or (b) or to make contributions as set forth in (c) could not be reasonably expected to have a Material Adverse Effect. 26 III.9 Inspection of Property and Books and Records; Expense Reimbursement. Conseco shall maintain and shall cause each Subsidiary to maintain proper books of record and account, in which full, true and correct entries in all material respects in conformity with GAAP or SAP, as applicable, consistently applied (except as stated therein) shall be made of all financial transactions and matters involving the assets and business of Conseco and such Subsidiary. Conseco shall permit, and shall cause each Subsidiary to permit, representatives and independent contractors of the Relevant Agent or any Relevant Bank to visit and inspect any of their respective properties, to examine their respective corporate, financial and operating records, and make copies thereof or abstracts therefrom, and to discuss their respective affairs, finances and accounts with their respective directors, officers, and independent public accountants, all at such reasonable times during normal business hours and as often as may be reasonably desired, upon reasonable advance notice to Conseco, provided, however, when an Event of Default exists the Relevant Agent or any Relevant Bank may do any of the foregoing at any time during normal business hours and without advance notice. III.10 Tritel Disposition. Conseco shall use commercially reasonable efforts to Dispose of all or substantially all of its interest in Tritel, Inc. prior to March 31, 2001. III.11 Conversion of FELINE PRIDES. Conseco shall issue shares of common stock to holders of FELINE PRIDES in accordance with the terms of the PRIDES Documents. Otherwise, and except as required by the terms of the PRIDES Documents, Conseco shall, and shall cause its Affiliates to, refrain from purchasing or redeeming any FELINE PRIDES, PRIDES Purchase Contracts or PRIDES Preferred Securities, whether in the open market or otherwise. Nothing in this provision shall have the effect of preventing Conseco or the PRIDES Trust from complying with the terms and conditions set forth in the PRIDES Documents. ARTICLE IV NEGATIVE COVENANTS So long as any Exposure or other Obligation shall remain unpaid or unsatisfied under the Relevant Facility, unless the Required Banks waive compliance in writing: IV.1 Limitation on Indebtedness. Conseco shall not, and shall not permit any of its Subsidiaries to, incur or at any time be liable with respect to, any Indebtedness, except: (a Permitted Swap Obligations and Permitted Transactions; (b Specified Junior Securities; (c Indebtedness of Conseco or any Subsidiary pursuant to (i) the items set forth on Schedule 4.01(c) and (ii) extensions, renewals or replacements thereof, provided that no such extension, renewal or replacement shall increase the principal amount thereof, except to the extent the increase would otherwise be permitted under this Section 4.01; 27 (d Contingent Obligations of: (i) CIHC in respect of (A) Conseco's obligations under any Facility, and (B) obligations of one or more Conseco Finance Entities (I) in an aggregate amount not to exceed $125,000,000 in respect of obligations to Lehman or an Affiliate thereof, (II) in an aggregate amount not to exceed $125,000,000 in respect of cash management or a swing line credit facility for the general corporate purposes of one or more of the Conseco Finance Entities and (III) in an aggregate amount not to exceed $50,000,000 incurred for general corporate purposes (so long as, in each case, the documentation governing any such Contingent Obligation (including any related subordination arrangement) is not at any time materially more favorable to the beneficiaries thereof than the Relevant CIHC Guaranty); (ii) Conseco in respect of any individual borrower's obligations under any D&O Facility; (iii) any Conseco Finance Entity relating to loans, leases, receivables, installment contracts and other financial products originated, acquired or sold by such Conseco Finance Entity or any other Conseco Finance Entity; and (iv) Conseco or any Subsidiary in the ordinary course of business not otherwise described above in an aggregate amount not to exceed at any time (A) ten percent (10%) of Total Shareholders' Equity minus (B) the aggregate amount of Conseco's Contingent Obligations under clause (ii) of this paragraph at any time, provided that (I) Contingent Obligations in respect of Indebtedness of the type described in clause (a) or (b) of the definition thereof shall not be permitted by this clause (iv) and (II) the documentation governing any Contingent Obligation of CIHC pursuant to this clause (iv) (including any related subordination arrangement) shall not at any time be materially more favorable to the beneficiaries thereof than the Relevant CIHC Guaranty; provided, that in no event shall Conseco or any of its Subsidiaries (other than a Conseco Finance Entity) have any Contingent Obligations (including obligations as an account party) pursuant to this paragraph (d) in respect of any Indebtedness incurred by or for the benefit of any Conseco Finance Entity other than as specifically permitted in clause (i)(B) above; (e Indebtedness (including Contingent Obligations) of any Conseco Finance Entity to the extent that (i) neither Conseco nor any Non-Finance Subsidiary is directly liable thereon, and (ii) neither Conseco nor any Non-Finance Subsidiary has any Contingent Obligation in respect of such Indebtedness (other than a Contingent Obligation of CIHC permitted by Section 4.01(d)(i) above); (f Permitted Nonrecourse Indebtedness; (g secured Indebtedness, including, without limitation, Capitalized Lease Liabilities and Purchase Money Debt, provided, that (i) the aggregate outstanding principal amount of Indebtedness of this type does not exceed at any time ten percent (10%) of Total Shareholders' Equity at such time and (ii) such Indebtedness shall not be secured by any Lien other than a Lien expressly permitted by Section 4.02(i); (h Indebtedness among Conseco and its Subsidiaries (other than Conseco Finance Entities); (i Indebtedness owing by any Conseco Finance Entity to the extent the related Investment is permitted under Section 4.09(a); (j Indebtedness (other than for borrowed money) subject to Liens permitted under Section 4.02(b), (d), (e) or (f); (k Indebtedness in respect of Surplus Debentures entered into by an Insurance Subsidiary; (l unsecured Indebtedness of Conseco in an aggregate principal amount not to exceed $100,000,000 at any time outstanding; and (m Indebtedness in respect of the Facilities. IV.2 Liens. Conseco shall not, and shall not permit any of its Subsidiaries to, create, assume or suffer to exist any Lien on any asset now owned or hereafter acquired by it, except for the following (collectively called "Permitted Liens"): (a Liens in connection with Permitted Transactions; (b Liens for Taxes which are not overdue for more than 60 days or for Taxes being contested in good faith and by appropriate proceedings and with respect to which adequate reserves are being maintained in accordance with GAAP; 28 (c Liens shown on Schedule 4.02(c), including extensions, renewals and replacements of such Liens; provided that (i) no such Lien is spread to cover any additional property (other than after acquired title in or on such property and proceeds of the existing collateral in accordance with the document creating such Lien) and (ii) the Indebtedness secured thereby is not increased by more than 10% (of the aggregate principal amount of such Indebtedness outstanding on the Effective Date) except as otherwise permitted under Section 4.01 (in which case the portion representing any additional increase must be permitted by another paragraph of this Section 4.02); (d Liens incurred in the ordinary course of business in connection with worker's compensation, unemployment insurance or other forms of governmental insurance or benefits or to secure performance of tenders, statutory obligations, leases and contracts (other than for borrowed money) entered into in the ordinary course of business or to secure obligations on surety or appeal bonds; (e Liens of mechanics, carriers, and materialmen and other like Liens arising in the ordinary course of business in respect of obligations which are not overdue for more than 60 days or which are being contested in good faith and by appropriate proceedings and with respect to which adequate reserves are being maintained in accordance with GAAP; (f Liens arising in the ordinary course of business for sums being contested in good faith and by appropriate proceedings and with respect to which adequate reserves are being maintained in accordance with GAAP, or for sums not due, and in either case not involving any deposits or advances for borrowed money or the deferred purchase price of property or services; (g Liens in favor of the trustee on sums required to be deposited with the trustee under the indentures described on Schedule 4.02(g); (h Liens incurred on assets of Subsidiaries that are Conseco Finance Entities securing Indebtedness which is expressly permitted by Section 4.01(e) or (f); (i Liens securing Indebtedness permitted by Section 4.01(g); provided that such Liens consist exclusively of: (i) Liens securing the Relevant Facility, (ii) Liens pursuant to any Cash Collateral Agreement (and a Lien may be incurred on the collateral under the Cash Collateral Agreement in favor of the Public Debt secured by the Collateral Agreement), (iii) Liens on "Collateral" as defined in the Collateral Agreement, (iv) Liens on Conseco's interest in Tritel, Inc. in existence of the Effective Date securing $25,000,000 of notes payable to Ericsson, Inc., and (v) Liens on other assets that (1) are not subject to a Lien incurred pursuant to clause (i), (ii), (iii) or (iv) above and (2) are not described on Schedule 1.01B securing Indebtedness in an aggregate principal amount not to exceed (x) 25% of the Available Basket Amount at any time prior to the Near-Term Facilities Termination Date or (y) 50% of the Available Basket Amount at any time thereafter; (j easements, rights-of-way, zoning restrictions, restrictions and other similar encumbrances incurred in the ordinary course of business and which do not materially interfere with the ordinary course of business of Conseco and its Subsidiaries; (k Liens on property of Conseco and its Subsidiaries in favor of landlords securing licenses, subleases or leases of property permitted hereunder; (l licenses, leases or subleases permitted hereunder granted to others not materially interfering in any material respect in the business of Conseco and its Subsidiaries; 29 (m attachment or judgment Liens not constituting an Event of Default under Section 5.01(i); (n Liens arising from precautionary Uniform Commercial Code financing statement filings with respect to operating leases or consignment arrangements entered into by Conseco and its Subsidiaries in the ordinary course of business; and (o Liens in connection with a Permitted Tritel Hedge Transaction. None of the Permitted Liens shall be permitted on the Reserve or any of the Reserve Amounts (as defined in the relevant agreement governing the Reserve). IV.3 Disposition of Assets. Conseco shall not and shall not permit any of its Subsidiaries to, sell, assign, lease, transfer or otherwise Dispose of (whether in one or a series of transactions) any property (including accounts and notes receivable with or without recourse and Capital Stock of any Subsidiary whether newly issued or otherwise) or enter into any agreement to do any of the foregoing, except: (a Dispositions of inventory or equipment (including, without limitation, repossessed and/or off lease property of Conseco Finance), all in the ordinary course of business consistent with past practices; (b the sale of equipment to the extent that such equipment is exchanged for credit against the purchase price of similar replacement equipment, or the proceeds of such sale are reasonably promptly applied to the purchase price of such replacement equipment; (c Dispositions of Investments by Insurance Subsidiaries (other than any of their respective Investments in Persons engaged in insurance lines of business) in the ordinary course of business consistent with past practices; (d Dispositions of (i) in the case of any Conseco Finance Entity, loans, leases, receivables, installment contracts and other financial products originated, acquired, sold or securitized by such Conseco Finance Entity or (ii) interests in or components of Interest Only Securities; (e intercompany Dispositions made between or among Conseco and its Subsidiaries (or Subsidiaries of Conseco with other Subsidiaries of Conseco or Conseco), in each case, in the ordinary course of business; (f (i) any Disposition pursuant to a Reinsurance Agreement so long as such Disposition is entered into in the ordinary course of business for the purpose of managing insurance risk consistent with industry practice and (ii) any other Disposition pursuant to a Reinsurance Agreement so long as (x) the proceeds therefrom are retained by an Insurance Subsidiary, (y) such proceeds are used for the general corporate purposes of the Insurance Subsidiaries (including for reinvestment within insurance lines of business similar to Conseco's insurance lines of business at the time of the relevant transaction) and (z) the aggregate statutory profit and/or gains on insurance policy sales or other portfolio transfers resulting from all Dispositions described in this clause (ii) consummated after August 25, 2000 shall not exceed $250,000,000; (g obsolete or worn out property disposed of by Conseco or any of its Subsidiaries in the ordinary course of business and consistent with past practices of Conseco and its Subsidiaries; 30 (h transfers resulting from any casualty or condemnation of property or assets; (i licenses or sublicenses of intellectual property and general intangibles and licenses, leases or subleases of other property in the ordinary course of business and consistent with the past practices of Conseco and its Subsidiaries and which do not materially interfere with the business of Conseco and its Subsidiaries; (j any consignment arrangements or similar arrangements for the sale of assets in the ordinary course of business and consistent with the past practices of Conseco and its Subsidiaries; (k the sale or discount of overdue accounts receivable arising in the ordinary course of business and consistent with the past practices of Conseco and its Subsidiaries, but only in connection with the compromise or collection thereof; (l Dispositions permitted by Section 4.07(a); (m Dispositions of Investments set forth on Schedule 4.03(m); (n Dispositions not otherwise permitted hereunder, provided that, in the case of Dispositions constituting Asset Sales, (i) 75% of the consideration received in connection therewith shall consist of cash, Cash Equivalents and/or readily marketable securities that are immediately saleable and (ii) 100% of the Net Proceeds thereof shall consist of Available Net Proceeds and shall be applied as described in Article II; and (o the exercise of the put rights set forth in the PRIDES Documents in connection with a remarketing thereunder in accordance with such documents and Section 3.11. Notwithstanding anything to the contrary in this Section 4.03, no issuance or sale of Capital Stock of any Subsidiary of Conseco (other than any Insignificant Subsidiary) shall be permitted if, after giving effect thereto, Conseco owns, directly or indirectly, 50% or less (but greater than 0%) of the voting Capital Stock of such Subsidiary. IV.4 Other Agreements. Conseco shall not, and shall not permit any of its Subsidiaries to, enter into any agreement (other than agreements with insurance regulators) containing any provision which (a) would be violated or breached by the performance of its obligations hereunder or under any instrument or document delivered or to be delivered by it hereunder or in connection herewith or (b) prohibits or restricts the ability of Conseco to amend or otherwise modify this Appendix or any other document executed in connection herewith. IV.5 Transactions with Affiliates. Conseco shall not, and shall not suffer or permit any Significant Subsidiary to, enter into any material transaction with any Affiliate of Conseco (other than Conseco or a Ninety-Percent Owned Subsidiary), except upon fair and reasonable terms no less favorable to Conseco or such Subsidiary than would be obtained in a comparable arm's-length transaction with a Person not an Affiliate of Conseco or such Subsidiary, and except for insurance transactions, intercompany pooling and other reinsurance transactions entered into in the ordinary course of business and consistent with past practice. IV.6 Change in Business. Conseco shall not, and shall not suffer or permit any Significant Subsidiary to, fundamentally change the type of business in which it is presently engaged as listed on Schedule 4.06. 31 IV.7 Fundamental Changes. Unless the Obligations shall be paid in full concurrently therewith, Conseco shall not enter into any merger, consolidation or amalgamation, or liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution), or Dispose of, all or substantially all of its property or business, other than any merger, consolidation or amalgamation (a) of any Subsidiary of Conseco into Conseco, (b) solely for the purpose of reincorporating Conseco in a different State of the United States or (c) solely for the purpose of consummating an investment permitted by Section 4.09(b)(iii) or (iv). IV.8 Restricted Payments. Conseco shall not declare or pay any dividend (other than dividends payable solely in common stock, or the same class of capital stock as to which the dividend is paid, of the Person making such dividend) on (or make any payment to a related trust for the purpose of paying a dividend), or make any payment on account of, or set apart assets for a sinking or other analogous fund for, the purchase, redemption, defeasance, retirement or other acquisition of, any Capital Stock of Conseco (or any related trust), whether now or hereafter outstanding, or make any other distribution in respect thereof, either directly or indirectly, whether in cash or property or in obligations of Conseco (collectively, "Restricted Payments"), except that (a) Conseco may declare and pay dividends on its common stock so long as, at the time of declaration of the relevant dividend, Conseco has Investment Grade Ratings Status and the Near-Term Facilities Termination Date has occurred, (b) Conseco may declare and pay regularly scheduled dividends on its preferred stock (and permit any related trust to do the same) so long as, at the time of declaration of the relevant dividend, Conseco has Investment Grade Ratings Status and the Near-Term Facilities Termination Date has occurred, (c) Conseco may declare and pay regularly scheduled payments of interest and principal on its debentures underlying the Trust Preferred Securities and the FELINE PRIDES (and the related trusts may pay regularly scheduled dividends under such Trust Preferred Securities and such FELINE PRIDES) so long as (i) Conseco's Cash on Hand on average for the 90 days prior to the date of such declaration is equal to or greater than $100,000,000, (ii) Conseco's Cash on Hand on the date of such payment, after giving effect to the payment of said dividend on such date, is equal to or greater than $100,000,000 and (iii) no Event of Default shall have occurred and be continuing at the time of such payment, (d) Conseco may make cash payments in respect of fractional shares of its preferred stock in an aggregate amount not to exceed $10,000,000 and (e) Conseco may pay dividends to Bankers National Life Insurance Company in respect of its Preferred Series E Capital Stock in an amount not to exceed $36,000,000 per year. IV.9 Investments. (a) Conseco and its Subsidiaries (other than Conseco Finance and its Subsidiaries) shall not, directly or indirectly, make any Investment in Conseco Finance or any of its Subsidiaries after the Effective Date, except (i) intercompany Investments in the ordinary course of business in an aggregate amount not to exceed $250,000,000 at any time outstanding of which (x) $50,000,000 may be made on a permanent basis, (y) $100,000,000 may be made so long as each such Investment pursuant to this clause (y) is repaid within three months of the date of Investment and within each three month period there shall be a three Business Day period during which no Investment pursuant to clause (y) of this clause (i) shall be outstanding, and (z) $100,000,000 may be made so long as each such Investment pursuant to this clause (z) is repaid within six months of the date of Investment and within each six month period there shall be a three Business Day period during which no Investment pursuant to clause (z) of this clause (i) shall be outstanding, and (ii) additional Investments made at any time after the Near-Term Facilities Termination Date in an aggregate amount not to exceed $150,000,000 at any time outstanding. 32 (b) Conseco and CIHC shall not, directly or indirectly, make any Investment in any Person (other than a Subsidiary of Conseco to support its operations in the ordinary course of business) except: (i) Investments made with common stock issued by Conseco, (ii) Investments agreed to but not made prior to the date hereof and set forth on Schedule 4.09(b), (iii) Investments not otherwise permitted hereby in an aggregate amount expended not to exceed $25,000,000 in any Fiscal Year, (iv) Investments made in connection with a sale of assets permitted by Section 4.03 to the extent of the non-cash consideration received by Conseco or a Subsidiary, (v) as permitted by Section 4.09(a) and (vi) Conseco may repurchase its 6.4% Mandatory Par Put Remarketed Securities due June 15, 2011 if required to do so pursuant to the terms and conditions thereof, which repurchase (if so required) shall be conducted in accordance with the terms and conditions of such instruments. It is understood that Investments of the type described in Section 4.09(a) may not be made pursuant to clauses (i) through (iii) of this paragraph (b). IV.10 Optional Payments; Modifications of Certain Agreements; Synthetic Purchase Agreements. (a) Conseco shall not, and shall not permit any of its Subsidiaries (other than Conseco Finance or any of its Subsidiaries) to make any optional or voluntary payment, prepayment, repurchase or redemption of or otherwise optionally or voluntarily defease or segregate funds with respect to Indebtedness (other than the Reserve), other than (i) prepayments of Indebtedness of a Subsidiary of Conseco owed to Conseco or another Subsidiary of Conseco or of Conseco owed to a Subsidiary of Conseco, in each case to the extent prepaid or repaid in the ordinary course of business, which Indebtedness is (A) not related to the Trust Preferred Securities and (B) not a prepayment of loans referred to in clause (f) of the definition of "Conseco Available Cash Flow" unless, in the case of this clause (B), at the time of, and after giving pro forma effect to, such prepayment, Conseco is in compliance with Section 4.14, (ii) prepayments of the 2000 Public Debt, (iii) prepayments of the 2001 Public Debt so long as on the date of such prepayment (or, if earlier, the date on which Conseco enters into an obligation to make such prepayment), Conseco has A.M. Best A- Status, (iv) prepayments of the Longer-Term Public Debt made after the Near-Term Facilities Termination Date so long as the scheduled maturity of the Public Debt being prepaid is earlier than the earliest scheduled maturity then in effect with respect to the remaining Facilities, (v) prepayments of Capital Lease Liabilities in connection with the Disposition of the related asset or property and (vi) prepayments not otherwise permitted by the foregoing clauses so long as the aggregate amount expended in connection therewith does not exceed $25,000,000. (b) Conseco shall not, and shall not permit any of its Subsidiaries (other than Conseco Finance or any of its Subsidiaries) to amend, modify, waive or otherwise change, or consent or agree to any amendment, modification, waiver or other change to, any of the material terms of any subordinated Indebtedness of Conseco or any of its Subsidiaries (other than Conseco Finance or any of its Subsidiaries) the aggregate principal amount of which exceeds $10,000,000 (other than any such amendment, modification, waiver or other change that (i) would extend the maturity or reduce the amount of any payment of principal thereof or reduce the rate or extend any date for payment of interest thereon and (ii) does not involve the payment of a consent fee that is not customary under the circumstances). (c) Conseco shall not, and shall not permit any of its Subsidiaries (other than Conseco Finance or any of its Subsidiaries) to amend, modify, waive or otherwise change, or consent or agree to any amendment, modification, waiver or other change to, any of the material terms of any preferred stock issued by Conseco or any of its Subsidiaries or any related trust (other than any such amendment, modification, waiver or other change that (i) would extend the scheduled redemption date or reduce the amount of any scheduled redemption payment or reduce the rate or extend any date for payment of dividends thereon and (ii) does not involve the payment of a consent fee that is not customary under the circumstances). (d) Conseco shall not, and shall not permit any of its Subsidiaries to enter into or be party to, or make any payment under, any Synthetic Purchase Agreement. 33 IV.11 Negative Pledge on Tritel and Argosy Riverboat. Conseco shall not, and shall not permit any of its Subsidiaries to, pledge or create any security interest or Lien upon (a) any of the Capital Stock of Tritel, Inc. (or any successor thereto) directly or indirectly owned by it (other than (i) any such Lien described in Section 4.02(i)(iv) and (ii) Liens securing obligations under hedging transactions relating to the value of such Capital Stock with counterparties having a senior unsecured non-credit enhanced long-term debt rating of at least A2 from Moody's and A from S&P (a "Permitted Tritel Hedge Transaction")) or (b) the Capital Stock or assets of Conseco Entertainment Inc. or CNC Entertainment LLC. IV.12 Reserve Account. Conseco shall not permit the amounts in the Reserve (a) to be invested in anything other than Cash Equivalents or (b) to be used for any purpose other than to prepay or repay the 2000 Public Debt, the 2001 Public Debt or Exposure under the Facilities, except that, with the prior written consent of each of the Agents, Conseco may use up to 20% of the amounts in the Reserve at any time (but in an aggregate amount not to exceed $160,000,000) for other general corporate purposes permitted by the Loan Documents, including this Appendix. IV.13 Debt to Capitalization Ratio. Conseco shall not permit the Debt to Total Capitalization Ratio as of the end of each Fiscal Quarter set forth below to be greater than the ratio set forth below for such date: ---------------------------------------------------------- --------------- Fiscal Quarter Ending Ratio ---------------------------------------------------------- --------------- December 31, 2000 0.450:1.0 ---------------------------------------------------------- --------------- March 31, 2001 0.435:1.0 ---------------------------------------------------------- --------------- June 30, 2001 0.425:1.0 ---------------------------------------------------------- --------------- September 30, 2001 0.425:1.0 ---------------------------------------------------------- --------------- December 31, 2001 0.400:1.0 ---------------------------------------------------------- --------------- March 31, 2002 0.400:1.0 ---------------------------------------------------------- --------------- June 30, 2002 0.400:1.0 ---------------------------------------------------------- --------------- September 30, 2002 0.375:1.0 ---------------------------------------------------------- --------------- December 31, 2002 0.375:1.0 ---------------------------------------------------------- --------------- March 31, 2003 0.350:1.0 ---------------------------------------------------------- --------------- June 30, 2003 0.350:1.0 ---------------------------------------------------------- --------------- September 30, 2003 0.350:1.0 ---------------------------------------------------------- --------------- December 31, 2003 0.350:1.0 ---------------------------------------------------------- --------------- March 31, 2004 0.300:1.0 ---------------------------------------------------------- --------------- June 30, 2004 0.300:1.0 ---------------------------------------------------------- --------------- September 30, 2004 0.300:1.0 ---------------------------------------------------------- --------------- December 31, 2004 and thereafter 0.300:1.0 ---------------------------------------------------------- --------------- For each $2,830,000 by which the aggregate amount of the FY 2000 Adjustments is less than $500,000,000, each ratio set forth above for periods ending on or prior to September 30, 2001 shall be reduced by 0.01%. IV.14 Interest Coverage Ratio. Conseco shall not permit the Interest Coverage Ratio as of the end of each Fiscal Quarter set forth below for the four Fiscal Quarters then ended (or, if less, the number of full Fiscal Quarters commencing after the Effective Date) to be less than the ratio set forth below for such date: ---------------------------------------------------------- ---------------- Fiscal Quarter Ending Ratio ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- December 31, 2000 1.00:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- March 31, 2001 1.00:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- June 30, 2001 1.10:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- September 30, 2001 1.10:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- December 31, 2001 1.20:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- March 31, 2002 1.25:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- June 30, 2002 1.30:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- September 30, 2002 1.40:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- December 31, 2002 1.40:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- March 31, 2003 1.60:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- June 30, 2003 1.75:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- September 30, 2003 1.90:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- December 31, 2003 2.00:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- March 31, 2004 2.00:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- June 30, 2004 2.00:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- September 30, 2004 2.00:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- December 31, 2004 and thereafter 2.00:1.0 ---------------------------------------------------------- ---------------- IV.15 Conseco Adjusted Earnings. Conseco shall not permit the Conseco Adjusted Earnings for any period of four Fiscal Quarters (or, in the case of the tests as at March 31, 2001, June 30, 2001 and September 30, 2001, two Fiscal Quarters, two Fiscal Quarters and three Fiscal Quarters, respectively) ended on any date set forth below to be less than the amount set forth below for such date: ---------------------------------------------------------- ------------------- Fiscal Quarter Ending Amount ---------------------------------------------------------- ------------------- March 31, 2001 $650,000,000 ---------------------------------------------------------- ------------------- June 30, 2001 $750,000,000 ---------------------------------------------------------- ------------------- 34 ---------------------------------------------------------- ------------------- September 30, 2001 $1,150,000,000 ---------------------------------------------------------- ------------------- December 31, 2001 $1,600,000,000 ---------------------------------------------------------- ------------------- March 31, 2002 $1,600,000,000 ---------------------------------------------------------- ------------------- June 30, 2002 $1,650,000,000 ---------------------------------------------------------- ------------------- September 30, 2002 $1,700,000,000 ---------------------------------------------------------- ------------------- December 31, 2002 $1,750,000,000 ---------------------------------------------------------- ------------------- March 31, 2003 $1,800,000,000 ---------------------------------------------------------- ------------------- June 30, 2003 $1,850,000,000 ---------------------------------------------------------- ------------------- September 30, 2003 $1,925,000,000 ---------------------------------------------------------- ------------------- December 31, 2003 $2,000,000,000 ---------------------------------------------------------- ------------------- March 31, 2004 $2,025,000,000 ---------------------------------------------------------- ------------------- June 30, 2004 $2,075,000,000 ---------------------------------------------------------- ------------------- September 30, 2004 $2,125,000,000 ---------------------------------------------------------- ------------------- December 31, 2004 and thereafter $2,175,000,000 ---------------------------------------------------------- ------------------- IV.16 Conseco Finance Tangible Net Worth. Conseco shall not permit Conseco Finance Tangible Net Worth as at the end of any Fiscal Quarter ending during any Fiscal Year set forth below (commencing with the Fiscal Quarter ending December 31, 2000) to be less than the relevant amount set forth below: ---------------------------------------------------------- ----------------- Fiscal Quarter Ending During Amount ---------------------------------------------------------- ----------------- Fiscal Year Ending December 31, 2000 $950,000,000 ---------------------------------------------------------- ----------------- Fiscal Year Ending December 31, 2001 $1,200,000,000 ---------------------------------------------------------- ----------------- Fiscal Year Ending December 31, 2002 $1,400,000,000 ---------------------------------------------------------- ----------------- Fiscal Year Ending December 31, 2003 $1,650,000,000 ---------------------------------------------------------- ----------------- Fiscal Year Ending December 31, 2004 and thereafter $2,000,000,000 ---------------------------------------------------------- ----------------- 35 IV.17 Risk-Based Capital Ratio. Conseco shall not permit the Risk-Based Capital Ratio as at the end of any Fiscal Quarter to be less than 200%. ARTICLE V EVENTS OF DEFAULT V.1 Events of Default. Each of the following shall constitute an "Event of Default": (a Non Payment. Conseco fails to pay, (i) when and as required to be paid herein, any amount of principal of any Loan, or (ii) within five days after the same becomes due, any interest, fee or any other amount payable hereunder or under any other Loan Document; or (b Representation or Warranty. Any representation or warranty by Conseco or any of its Subsidiaries made or deemed made herein or in any other Loan Document, or contained in any certificate, document or financial or other statement by Conseco, any Subsidiary or any Responsible Officer, furnished at any time in connection with this Appendix or in connection with any other Loan Document, is incorrect in any material respect on or as of the date made or deemed made; or (c Specific Defaults. Conseco fails to perform or observe any term, covenant or agreement contained in any of Section 3.03(a), 4.01, 4.02, 4.03, 4.04, 4.06, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.14, 4.15, 4.16 or 4.17; or (d Other Defaults. Conseco or any of its Subsidiaries fails to perform or observe any other term or covenant contained in this Appendix or any other Loan Document, and such default shall continue unremedied for a period of 30 days after the date upon which written notice thereof is given to Conseco by the Relevant Agent or any Relevant Bank; or 36 (e Cross-Default. (i) Conseco or any Significant Subsidiary (A) fails to make any payment in respect of any Indebtedness or Contingent Obligation (other than in respect of Swap Contracts) or any similar financing arrangement related to the Lehman Agreement, having an aggregate principal amount (including undrawn committed or available amounts and including amounts owing to all creditors under any combined or syndicated credit arrangement) of more than $50,000,000, when due (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise) and such failure continues after the applicable grace or notice period, if any, specified in the relevant document on the date of such failure; or (B) fails to perform or observe any other condition or covenant, or any other event shall occur or condition exist (other than an alleged breach which Conseco or such Significant Subsidiary is contesting in good faith and which does not relate to a payment default or a breach of a financial covenant), under any agreement or instrument relating to any such Indebtedness, and such failure continues after the applicable grace or notice period, if any, specified in the relevant document on the date of such failure if the effect of such failure, event or condition is to cause, or to permit the holder or holders of such Indebtedness or beneficiary or beneficiaries of such Indebtedness or any similar financing arrangement related to the Lehman Agreement (or a trustee or agent on behalf of such holder or holders or beneficiary or beneficiaries) to cause, such Indebtedness to be declared to be due and payable prior to its stated maturity, or, in the case of any such Indebtedness consisting of Contingent Obligations, to become payable or cash collateral in respect thereof to be demanded or, in the case of any similar financing arrangement related to the Lehman Agreement, otherwise permit Lehman or an Affiliate thereof to terminate its obligations or commitments thereunder; or (ii) there occurs under any Swap Contract an Early Termination Date (as defined in such Swap Contract) resulting from (1) any event of default under such Swap Contract as to which Conseco or any Subsidiary is the Defaulting Party (as defined in such Swap Contract) or (2) any Termination Event (as so defined) as to which Conseco or any Subsidiary is an Affected Party (as so defined), and, in either event, the Swap Termination Value owed by Conseco or such Subsidiary as a result thereof is greater than $50,000,000; or (f Insolvency; Voluntary Proceedings. Conseco or any Significant Subsidiary (i) ceases or fails to be solvent, or generally fails to pay, or admits in writing its inability to pay, its debts as they become due, subject to applicable grace periods, if any, whether at stated maturity or otherwise; (ii) voluntarily ceases to conduct its business in the ordinary course; (iii) commences any Insolvency Proceeding with respect to itself; or (iv) takes any action to effectuate or authorize any of the foregoing; or (g Involuntary Proceedings. (i) Any involuntary Insolvency Proceeding is commenced or filed against Conseco or any Significant Subsidiary, or any writ, judgment, warrant of attachment, execution or similar process, is issued or levied against a substantial part of Conseco's or any Significant Subsidiary's properties, and any such proceeding or petition shall not be dismissed, or such writ, judgment, warrant of attachment, execution or similar process shall not be released, vacated or fully bonded within 60 days after commencement, filing or levy; (ii) Conseco, any Significant Subsidiary or any Material Insurance Subsidiary admits the material allegations of a petition against it in any Insolvency Proceeding, or an order for relief (or similar order under non-U.S. law) is ordered in any Insolvency Proceeding; (iii) Conseco, any Significant Subsidiary or any Material Insurance Subsidiary acquiesces in the appointment of a receiver, trustee, custodian, conservator, liquidator, mortgagee in possession (or agent therefor), or other similar Person for itself or a substantial portion of its property or business; or (iv) any Material Insurance Subsidiary shall become subject to any conservation, rehabilitation or liquidation order, directive or mandate issued by any Governmental Authority; or (h Pension Plans and Welfare Plans. With respect to any Single Employer Pension Plan as to which Conseco or any other ERISA Affiliate may have any liability, there shall exist a deficiency of more than $20,000,000 as to any ERISA Affiliate (other than Conseco) or $65,000,000 as to Conseco in the Pension Plan assets available to satisfy the benefits guaranteeable under ERISA with respect to such Pension Plan, and steps are undertaken to terminate such plan or such Pension Plan is terminated or Conseco or any other ERISA Affiliate withdraws from or institutes steps to withdraw from such Pension Plan, or Conseco has knowledge that steps have been taken to terminate any Multiemployer Plan and such termination may result in liability to any ERISA Affiliate (other than Conseco) in excess of $20,000,000 or $65,000,000 as to Conseco or any Reportable Event with respect to such Pension Plan has occurred which could result in the incurrence of liability by any ERISA Affiliate (other than Conseco) in excess of $20,000,000 or $65,000,000 as to Conseco or steps are taken to terminate any Multiemployer Plan and such termination may result in any liability of any ERISA Affiliate (other than Conseco) in excess of $20,000,000 or $65,000,000 as to Conseco shall occur; or (i Material Judgments. One or more judgments or decrees shall be entered against Conseco or any of its Subsidiaries involving in the aggregate a liability (not paid or fully covered by insurance as to which the relevant insurance company has not denied coverage) of $50,000,000 or more, and all such judgments or decrees shall not have been vacated, discharged, stayed or bonded pending appeal within 30 days from the entry thereof ; or 37 (j Material Regulatory Matters. (i) If an Insurance Subsidiary shall not make a scheduled payment of interest or principal on any surplus note or similar form of subordinated indebtedness (due to actions of any Governmental Authority or otherwise), (ii) if at any time an Insurance Subsidiary's ability to pay fees to its Affiliates under existing agreements (or extensions of existing agreements) shall be restricted due to actions of any Governmental Authority or otherwise or (iii) if in any Fiscal Year, an Insurance Subsidiary's ability to pay dividends to its stockholders is restricted in any manner (due to actions of any Governmental Authority or otherwise), other than by restrictions under the insurance law of the Insurance Subsidiary's state of domicile that apply generally to other insurance companies domiciled in the state, and, in the case of clauses (i) through (iii) above, such event or condition (x) was not in effect as of the date hereof and (y) such event or condition, together with all other such events or conditions, could reasonably be expected to have a Material Adverse Effect; or (k Change of Control. There occurs any Change of Control; or (l A.M. Best A- Status. Conseco shall not have obtained A.M. Best A- Status prior to March 31, 2001; or (m CIHC Guarantee. The guarantee contained in the Relevant CIHC Guaranty shall cease, for any reason, to be in full force and effect (other than in accordance with the definition thereof or if released by the Relevant Agent at the direction of each of the Relevant Banks) or Conseco or any Subsidiary of Conseco shall so assert; or (n Subordination to CIHC Obligations. Any "Subordinated Debt" under and as defined in the Relevant CIHC Guaranty shall cease, for any reason, to be validly subordinated to the obligations of CIHC under the Relevant CIHC Guaranty as provided in the relevant provisions of the Relevant CIHC Guaranty, or Conseco or any Subsidiary of Conseco shall so assert; or (o Subordination to Obligations. Any Subordinated Obligations or the guarantees thereof shall cease, for any reason, to be validly subordinated to the Obligations or the obligations of Conseco under the Relevant Conseco Guaranty, as the case may be, as provided in the documents governing such Subordinated Obligations, or Conseco or any Subsidiary of Conseco or any trustee or material holders of such Subordinated Obligations shall so assert. 38 EX-4 6 0006.txt EXHIBIT 4.5 EXHIBIT 4.5 ________________________________________________________________________________ AGREEMENT, DATED AS OF SEPTEMBER 22, 2000, among CONSECO, INC., as Guarantor, THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO, as Bank Lenders and BANK OF AMERICA, N.A., as Administrative Agent, RELATING TO 1998 DIRECTOR & OFFICER LOAN CREDIT AGREEMENT ________________________________________________________________________________ Table of Contents -----------------
Page ---- SECTION 1. DEFINITIONS..................................................... 2 SECTION 1.1 Certain Defined Terms............................. 2 SECTION 1.2 Additional Definitions............................ 6 SECTION 2. Commitment for New Loans........................................ 6 SECTION 3. No Default Acknowledgment....................................... 8 SECTION 4. Fees............................................................ SECTION 5. Cash Collateral Deposits........................................ 9 SECTION 6. Covenants....................................................... 11 SECTION 7. Events of Default............................................... 11 SECTION 8. Conditions Precedent to Effectiveness of this Agreement......... 12 SECTION 9. Termination Events.............................................. 13 SECTION 10. Effect of Termination........................................... 14 SECTION 11. The Agent....................................................... 15 SECTION 12. Representations and Warranties................................... 15 SECTION 13. MISCELLANEOUS.................................................... SECTION 13.1 Waivers and Amendments............................ 16 SECTION 13.2 Notices........................................... 17 SECTION 13.3 Indemnity......................................... 17 SECTION 13.4 No Third Party Beneficiaries...................... 18 SECTION 13.5 Waivers........................................... 18 SECTION 13.6 Remedies Cumulative............................... 18 SECTION 13.7 Entire Understanding.............................. 18 SECTION 13.8 Expenses.......................................... 19 SECTION 13.9 Effect of Agreement on Existing Credit Agreement.. 19 SECTION 13.10 GOVERNING LAW.................................... 20 SECTION 13.11 Counterparts..................................... 20 SECTION 13.12 SUBMISSION TO JURISDICTION; WAIVER OF............ SECTION 13.13 Successors and Assigns........................... 21 SECTION 13.14 Interpretation................................... 21 SECTION 13.15 WAIVER OF JURY TRIAL............................. 22
i SCHEDULE I SUMMARY OF TERMS AND CONDITIONS FOR NEW LOANS SCHEDULE II APPENDIX SCHEDULE III PLAN OUTLINE EXHIBIT A FORM OF CIHC GUARANTY EXHIBIT B FORM OF D&O CASH COLLATERAL AGREEMENT EXHIBIT C FORM OF NEW CONSECO GUARANTY EXHIBIT D FORM OF NEW CIHC GUARANTY ii AGREEMENT THIS AGREEMENT (this "Agreement") is entered into as of September 22, 2000, --------- among Conseco, Inc. (the "Guarantor"), the several financial institutions party --------- to this Agreement (herein, together with any eligible assignees thereof, collectively called the "Banks" and each individually, a "Bank"), and BANK OF ----- ---- AMERICA, NATIONAL ASSOCIATION ("BofA"), as administrative agent for the Banks ---- (herein in such capacity, together with any successors thereto in such capacity, called the "Administrative Agent"). -------------------- Recitals WHEREAS, certain individuals (herein, collectively called the "Borrowers" --------- and each individually, a "Borrower"), the Banks, and the Administrative Agent -------- are parties to that certain Credit Agreement, dated as of August 21, 1998 (as amended or modified through the date hereof, the "Existing Credit Agreement"), ------------------------- whereby the Banks made loans to the Borrowers, on the terms and subject to the conditions set forth therein; WHEREAS, as a condition to the Administrative Agent and the Banks entering into the Existing Credit Agreement, Guarantor was required to and did execute and deliver its Guaranty, dated as of August 21, 1998 (the "Existing Guaranty"); ----------------- WHEREAS, consistent with the provisions of the Existing Credit Agreement, the proceeds of such loans were used by the Borrowers solely to purchase common stock, no par value per share, of Guarantor; WHEREAS, in connection with a proposed program contemplated by the Guarantor, the Guarantor has requested that the Administrative Agent and the Banks agree to commit to extend loans to any Borrower to refinance the Loans, with such loans to have a stated maturity of December 31, 2003; WHEREAS, the Guarantor has requested that the Administrative Agent and the Banks, pending implementation of such program and making of such loans, acknowledge certain matters as to the Existing Guaranty; WHEREAS, the Administrative Agent and the Banks are willing, but only on the terms and conditions set forth herein, to agree to the aforementioned requests of the Guarantor; NOW, THEREFORE, in consideration of the mutual promises herein contained and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: SECTION 1. DEFINITIONS. SECTION 1.1 Certain Defined Terms. Capitalized terms used and not --------------------- otherwise defined in this Agreement shall have the meanings assigned thereto in the Existing Credit Agreement. The following terms shall have the following meanings: "Acknowledgment Fee" shall have the meaning set forth in Section 4(a) ------------------ hereof. "Administrative Agent" shall have the meaning set forth in the preamble -------------------- hereto. "Aggregate $25 Benchmark for Director Borrowers" shall mean the amount ---------------------------------------------- arrived at after making the following calculation: first, taking the average ----- price of the stock purchased by or on behalf of the Director Borrowers with loans under the D&O Facilities; second, subtracting from that per share average ------ the amount of $25; third, multiplying the resulting difference by the aggregate ----- number of shares purchased by or on behalf of the Director Borrowers with the loans under the Specified D&O Facilities. "Aggregate $25 Benchmark Deficiency for Director Borrowers" shall mean, the --------------------------------------------------------- amount, if a positive number, that is the difference between (a) the Aggregate $25 Benchmark for Director Borrowers and (b) the sum of (i) the amount of the Initial Cash Collateral Deposit, (ii) the aggregate amount actually paid on the principal amount of such loans by the Director Borrowers prior to December 15, 2000, and (iii) the aggregate amount of any Cash Collateral Deposits pledged indirectly with respect to such loans (including, without limitation, by the Guarantor with respect to its guaranty obligations pursuant to Article II of the Appendix (as incorporated herein pursuant to Section 5(b) hereof)). "Aggregate $25 Benchmark Surplus for Director Borrowers" shall mean on any ------------------------------------------------------ calculation date the amount, if a positive number, that the sum of (i) the amount of the Initial Cash Collateral Deposit (to the extent that it has not been withdrawn as permitted pursuant to Section 5(c) hereof), (ii) the aggregate amount actually paid on the principal amount of such loans by the Director Borrowers prior to the date of the calculation, and (iii) the aggregate amount of any other Cash Collateral Deposits pledged indirectly with respect to such loans (including, without limitation, by the Guarantor with respect to its guaranty obligations pursuant to Article II of the Appendix (as incorporated herein pursuant to Section 5(b) hereof) and the December, 2000 Cash Collateral Deposit), as of the date of the calculation, exceeds the Aggregate $25 Benchmark for Director Borrowers. "Agreement" shall have the meaning set forth in the preamble hereto. --------- "Agreement Fee" shall have the meaning set forth in Section 4(a) hereof. ------------- 2 "Appendix" means the Appendix attached as Schedule II to this Agreement, -------- which is hereby incorporated by reference, as from time to time amended with the consent of the Required Banks. "Bank" shall have the meaning set forth in the preamble hereto. ---- "BofA" shall have the meaning set forth in the preamble hereto. ---- "Borrower" shall have the meaning set forth in the first Recital. -------- "Borrower Paydowns" shall mean any payments by any Borrower in immediately ----------------- available funds in permanent reduction of the principal amount of such Borrower's loans under the Specified D&O Facilities (or any refinancing facilities provided by the relevant banks of the type described in Section 2 hereof and in Schedule I hereof). "Cash Collateral Deposits" shall have the meaning set forth in Section 5(d) ------------------------ hereof. "Cash Collateral Pledgor" shall mean one or more entities, which, from time ----------------------- to time, pledge Cash Collateral Deposits pursuant to Section 5 hereof. "CIHC" shall mean CIHC, Incorporated, a Delaware corporation, which is a ---- direct wholly-owned subsidiary of Guarantor. "CIHC Guaranty" shall have the meaning set forth in Section 1.01 of the ------------- Appendix, including, without limitation, with respect to the termination thereof, and shall be substantially in the form of Exhibit A hereto. "Commitment" shall have the meaning specified in Section 2(a) hereof. ---------- "Commitment Fee" shall have the meaning set forth in Section 4(a) hereof. -------------- "Commitment Expiration Date" shall mean as to any Borrower, October 31, -------------------------- 2000 (or such later date as to which the Administrative Agent agrees in writing but not beyond December 15, 2000). "Compliance Certificate" shall have the meaning set forth in Section 1.01 ---------------------- of the Appendix. "C-T Borrowers" shall mean the Borrowers, if any, who were employed by the ------------- Guarantor or any of its Subsidiaries on the Effective Date and have left the employment of the Guarantor or any Subsidiary as a result of termination by such employer for any reason whatsoever since the Effective Date. 3 "C-T Borrowers Cash Collateral Deposit" shall have the meaning set forth in ------------------------------------- Section 5(a) hereof. "D&O Cash Collateral Agreement" shall mean one or more cash collateral ----------------------------- agreements substantially in the form of Exhibit B hereto. "D&O Collateral Agent" shall mean BofA (or its successors) as collateral -------------------- agent under the D&O Cash Collateral Agreement. "D&O Facilities" shall have the meaning set forth in Section 1.01 of the -------------- Appendix. "December, 2000 Cash Collateral Deposit" shall mean the cash collateral -------------------------------------- deposit required to be made on or before December 15, 2000 pursuant to Section 5(a) hereof. "Director Borrower Paydown" shall mean any payments by any Director ------------------------- Borrower in immediately available funds in permanent reduction of the principal amount of such Borrower's loans under the Specified D&O Facilities (or any refinancing facilities provided by the relevant banks of the type described as "New Loans" under Section 2 hereof and in Schedule I hereof). "Director Borrowers" shall mean collectively Stephen C. Hilbert, Rollin M. ------------------ Dick, Lawrence M. Coss, David R. Decatur, Donald F. Gongaware, James D. Massey, Dennis E. Murray, Sr., and John M. Mutz. "Effective Date" shall mean the date on or before September 22, 2000 on -------------- which the conditions to the effectiveness of this Agreement set forth in Section 8 hereof shall have been satisfied or waived in their sole and absolute discretion by the Administrative Agent and the Banks. "Existing Credit Agreement" shall have the meaning set forth in the first ------------------------- Recital. "Existing Guaranty" shall have the meaning set forth in the second Recital. ----------------- "Fees" shall have the meaning set forth in Section 4(a) hereof. ---- "Guarantor" shall have the meaning set forth in the preamble hereto. --------- "Guarantor Interest Loans" shall mean any loans made by Guarantor or any of ------------------------ its Subsidiaries to any borrower under any of the D&O Facilities for the payment of such borrower's interest obligations under any of the D&O Facilities. "Guaranty Reaffirmation" shall be a writing in form and substance ---------------------- satisfactory to the Administrative Agent to be delivered by the Guarantor pursuant to which the Guarantor will (a) confirm that it has requested the Administrative Agent and the Banks to enter into this 4 Agreement, (b) acknowledge that the Administrative Agent and the Banks would not enter into this Agreement in the absence of the Guarantor's reaffirmation of the Existing Guaranty and that the Administrative Agent and the Banks are thus relying upon such reaffirmation, and (c) reaffirm the Existing Guaranty in each and every respect, including, without limitation, the validity of any and all of its obligations under the Existing Guaranty (including, without limitation, regardless of any past, present, or future exercise or non-exercise by the Administrative Agent of any right, power and/or remedy against any Borrower (and/or his or her property), any Cash Collateral Deposits, or CIHC (and/or its property)). "Initial Cash Collateral Deposit" shall mean the $50,000,000 Cash ------------------------------- Collateral Deposit required to be made on the Effective Date pursuant to Section 5(a) hereof. "New CIHC Guaranty" shall mean the guaranty to be executed and delivered by ----------------- CIHC in connection with any New Loans, substantially in the form of Exhibit D hereto. "New Conseco Guaranty" shall mean the guaranty to be executed and delivered -------------------- by Conseco with any New Loans, substantially in the form of Exhibit C hereto. "New Loan Documents" shall mean the credit agreement, promissory notes, ------------------ instruments, guarantees (including, without limitation, the New Conseco Guaranty and the New CIHC Guaranty), borrower pledge agreements, releases, and other documents providing for loans to refinance a Borrowers' Loans upon the terms and conditions generally described in Schedule I hereto; it being understood that the Administrative Agent shall hereby be granted by each of the Banks a power of attorney to execute such documents on behalf of the Banks in its discretion. "New Loans" shall have the meaning set forth in Section 2(a) hereof. --------- "No Default Acknowledgment" shall have the meaning set forth in Section 3 ------------------------- hereof. "Non-Refinanced Loan" shall mean any Loan with respect to which the ------------------- pertinent Borrower has not executed and delivered New Loan Documents in accordance with the provisions of this Agreement (including, without limitation, the satisfaction of the conditions set forth in Section 2(c) hereof). "$1.5 Billion Facility" shall have the meaning as set forth in Section 1.01 --------------------- of the Appendix. "Original Credit Agreement" shall have the meaning set forth in the first ------------------------- Recital. "Original Guaranty" shall have the meaning set forth in the second Recital. ----------------- "Plan" means a plan to be made available to certain Borrowers, which, among ---- other things, is to be designed by Guarantor to assist such Borrowers to reduce the principal amounts of the Loans and the loans under the 1998 D&O Loan Facility to achieve the $25 Benchmark. 5 "Specified D&O Facilities" shall have the meaning assigned thereto set ------------------------ forth in Section 1.01 of the Appendix. "Subsidiaries" shall have the meaning as assigned thereto in Section 1.01 ------------ of the Appendix "Stated Termination Date" shall mean December 31, 2003. ----------------------- "Termination Event" shall have the meaning set forth in Section 9 hereof. ----------------- "1998 D&O Loan Facility" shall mean that certain Credit Agreement, dated as ---------------------- of August 21, 1998, among the individuals listed on the signature pages thereto, as borrowers, the other financial institutions party thereto, and BofA, as Administrative Agent. "$25 Benchmark" shall mean, for all of the loans of the relevant Borrower ------------- or Borrowers under the Specified D&O Facilities, an average loan balance equal to $25 per share for all of the stock purchased by or on behalf of the relevant Borrower or Borrowers, as the case may be. "$25 Benchmark Deficiency" shall mean the amount, if a positive number, ------------------------ arrived at after making the following calculation: first, taking the average ----- price of the stock purchased by or on behalf of the C-T Borrowers with loans under the Specified D&O Facilities; second, subtracting from that per share ------ average the amount of $25; third, multiplying the resulting difference by the ----- aggregate number of shares purchased by or on behalf of such Borrowers with such loans; and finally, subtracting from that total the sum of (x) the aggregate ------- amount of principal of such loans actually paid on or before the date of the calculation at issue, (y) the aggregate amount of Cash Collateral Deposits pledged indirectly with respect to such loans (including, without limitation, by the Guarantor with respect to its guaranty obligations pursuant to Article II of the Appendix (as incorporated herein pursuant to Section 5(b) hereof) and other amounts previously pledged to secure obligations relating to the C-T Borrowers ) as of the date of the calculation at issue, and (z) the Aggregate $25 Benchmark Surplus for Director Borrowers, if any, then available for allocation to the Borrower's Loans for the purposes of determining whether the Guarantor is obligated to cause additional Cash Collateral Deposits to be pledged pursuant to Section 5(a) hereof. SECTION 1.2 Additional Definitions. The definitions set forth in ---------------------- Section 1.01 of the Appendix are hereby incorporated by reference and shall be applicable to the provisions incorporated by reference pursuant to Sections 5(b), 6(a) and 7 hereof. SECTION 2. Commitment for New Loans. ------------------------ (1) Commitment. Subject to the conditions set forth in Section 2(c) ---------- hereof, the Banks and the Administrative Agent hereby commit (the "Commitment") to enter into New Loan Documents with any Borrower who has ---------- accepted in writing (and otherwise 6 satisfied the conditions of) the Plan for the making of loans to refinance such Borrower's Loans (the "New Loans") consistent with the terms and --------- conditions generally described on Schedule I hereto, including providing for a stated maturity date of December 31, 2003. (2) Commitment Expiration. Should this Agreement become effective --------------------- pursuant to the provisions of Section 8 hereof, the Commitment shall expire as to any Borrower on or before the Commitment Expiration Date, without any other action being required of the Administrative Agent or any of the Banks, if any of the following shall have occurred and be continuing: (1) The Borrower shall not have accepted the terms of the Commitment on the terms and conditions set forth on Schedule I hereto and in Section 2(c) hereof and shall have failed to have executed and delivered the New Loan Documents to which he or she is a party on or before Commitment Expiration Date; (2) On or before the Commitment Expiration Date, (a) the Guarantor shall have failed to execute and deliver the New Conseco Guaranty, or (b) CIHC shall have failed to execute and deliver the New CIHC Guaranty, or (3) Any Termination Event shall have occurred and be continuing. (3) Commitment Conditions. The Commitment as to any Borrower is --------------------- conditioned upon the satisfaction of the following conditions: (1) This Agreement shall have become effective pursuant to Section 8 hereof; (2) The Borrower shall have executed and delivered to the Administrative Agent the New Loan Documents to which he or she is a party in form and substance satisfactory to the Banks on or before the applicable Commitment Expiration Date; (3) The Guarantor shall have executed and delivered the New Conseco Guaranty on or before the applicable Commitment Expiration Date; (4) The CIHC shall have executed and delivered the New CIHC Guaranty on or before the applicable Commitment Expiration Date; (5) To the extent not generally described on Schedule I hereto, the other conditions set forth in the New Loan Documents shall be similar to the conditions, including as to the satisfaction of any regulatory requirements, under 7 the Existing Credit Agreement, and all of such conditions shall have been satisfied on or before the applicable Commitment Expiration Date; (6) The absence of the occurrence and continuation of any Termination Event; and (7) The Guarantor shall have certified in writing that the applicable Borrower has accepted the Plan and has satisfied the conditions to the Plan governing such Borrower's participation in the Plan. (4) Commitment Expiration/Termination Notice. The Administrative ---------------------------------------- Agent shall undertake to provide the Guarantor with written notice of either the expiration of the Commitment with respect to any Borrower or the refusal of any of the Administrative Agent and the Banks to enter into the New Loan Documents with any Borrower for the reasons set forth in Section 2(b) or 2(c) hereof; provided, however, that the Administrative Agent's -------- ------- failure to provide such notice shall not affect in any manner the right of any of the Administrative Agent and the Banks to refuse to close under such circumstances. SECTION 3. No Default Acknowledgment. Subject to the conditions set forth ------------------------- in Sections 8 and 9 hereof, the Administrative Agent and the Banks hereby acknowledge (the "No Default Acknowledgment") that the Guarantor will not be in ------------------------- default of the Existing Guaranty (and CIHC will not be in default of the CIHC Guaranty) if the Guarantor (or CIHC, as the case may be) does not honor, on or before the Stated Termination Date, its stated obligations under such guaranty (including, without limitation, the obligation of the Guarantor to post cash collateral under Section 6.2 of the Existing Guaranty) to pay the principal portion of any Loans solely as the result of the failure on or before the Stated Termination Date of any Borrower to pay the principal amount of any Loans in full prior to such date (irrespective of whether any Borrower is obligated to pay such principal amount prior to such date as a result of the stated maturity, by required prepayment, declaration, acceleration, demand or otherwise). To the extent not deemed withdrawn as the result of the occurrence of any Termination Event prior to such date, such acknowledgment shall be deemed withdrawn (the same as if it had never been made) on the Stated Termination Date. As provided in Section 13.1 hereof, any extension or waiver of the Stated Termination Date shall require the affirmative votes of the Administrative Agent and each Bank. SECTION 4. Fees. ---- (1) The Guarantor hereby agrees that, upon the effectiveness of this Agreement pursuant to the provisions of Section 8 hereof, the Guarantor shall be obligated to pay, and shall pay, to the Administrative Agent, for the pro rata benefit of the Banks, the following fees (the "Fees"): (i) on ---- the Effective Date, an agreement fee (the "Agreement Fee") in immediately ------------- available funds equal to one percent (1%) of the principal amount of the Loans outstanding on such date, (ii) from and after the Effective 8 Date and to the Commitment Expiration Date, a continuing per annum fee equal to 1.625% of the Loans then outstanding, payable quarterly in the amount of .40625% of the average amount of the Loans outstanding during such quarter (the "Commitment Fee") and (iii) from and after the Commitment -------------- Expiration Date until the payment in full of the guaranteed obligations related to any Non-Refinanced Loans, a continuing per annum fee equal to 1.625% of the Non-Refinanced Loans then outstanding, payable quarterly in the amount of .40625% of the average amount of the Loans outstanding during such quarter, as a continuing fee for the No Default Acknowledgment (the "Acknowledgment Fee"). ------------------ (2) The Commitment Fee and the Acknowledgment Fee shall be payable, in arrears, quarterly on the last Business Day of each calendar quarter, with payment commencing on September 30, 2000. (3) The Guarantor's obligation to pay each of the Fees shall be irrevocable, unconditional, and absolute and, consistent therewith (and with Section 10 hereof), shall not terminate in the event that this Agreement shall otherwise be terminated pursuant to its provisions. SECTION 5. Cash Collateral Deposits. ------------------------ (1) Deposits for Borrower Obligations. The Guarantor hereby agrees --------------------------------- that it shall pledge, or cause one or more of its Subsidiaries to pledge, to secure the Guarantor's obligations under its guarantees of Specified D&O Facilities, cash in an amount and on the dates set forth herein, by depositing or causing to be deposited with the D&O Collateral Agent (to be held and applied pursuant to the provisions of the D&O Cash Collateral Agreement) as follows: (i) on or before the Effective Date, the Initial Cash Collateral Deposit, (ii) on or before December 15, 2000, an amount equal to the Aggregate $25 Benchmark Deficiency for the Director Borrowers, (iii) commencing with the delivery of each Compliance Certificate pursuant to Section 3.02 (a) of the Appendix (incorporated herein pursuant to Section 6(a) hereof) relating to the year period ending December 31, 2000, an amount equal to the $25 Benchmark Deficiency for all C-T Borrowers terminated through the end of the period covered by each such Compliance Certificate (each, a "C-T Borrower Cash Collateral Deposit"); provided, ------------------------------------ -------- however, the Guarantor may elect to make that portion of the C-T Borrower ------- Cash Collateral Deposit, up to a maximum aggregate of $15,000,000, relating to C-T Borrowers terminated during the period from the Effective Date to and through October 31, 2000, as follows: (A) one-third (but in no event more than $5,000,000) on the date of the required delivery of the Compliance Certificate relating to the year ending December 31, 2000, (B) one-third (but in no event more than $5,000,000) on the date of the required delivery of the Compliance Certificate relating to the year ending December 31, 2001, and (C) one-third (but in no event more than $5,000,000) on the date of the required delivery of the Compliance Certificate relating to the year ending December 31, 2002; provided, further, however, that, -------- ------- ------- consistent with, but not in limitation of, the foregoing, on the date of the required delivery 9 of the Compliance Certificate for the year ending December 31, 2000, the Guarantor shall deposit or cause to be deposited the sum of (x) the difference, if a positive number, between: (i) that portion of the C-T Borrower Cash Collateral Deposit relating to all C-T Borrowers terminated during the period from the Effective Date to and through October 31, 2000 and (ii) $15,000,000 and (y) that portion of the C-T Cash Collateral Deposit relating to the employees terminated during the period from November 1, 2000 to and through December, 31, 2000. (2) Waterfall Deposits. The Guarantor hereby acknowledges that the ------------------ Cash Collateral Deposits obligations set forth in subsection (a) of this Section 5 are in addition to its obligations under Article II of the Appendix, which are hereby incorporated by this reference. (3) Right to Withdraw All or Portion of Initial Cash Collateral ----------------------------------------------------------- Deposit. After the Guarantor has made or caused to be made the December, ------- 2000 Cash Collateral Deposit, the Guarantor shall be entitled, within two Business Days after any Director Borrower Paydown (but only with respect to a Director Borrower Paydown and not with respect to any other Borrower Paydown), to receive a distribution from the Collateral Agent from the Cash Collateral Deposits, on a dollar-for-dollar basis and up to the aggregate amount that is equal to and not in excess of the Initial Cash Collateral Deposit, of immediately available funds in an amount not to exceed the amount of the Cash Collateral Deposits allocated to the Borrower's Loan(s) under the Specified D&O Facility against which such Director Borrower Paydown is to be applied; provided, however, that any amount permitted to -------- ------- be so withdrawn shall be paid directly to the administrative agent under the $1.5 Billion Facility for application against the Guarantor's principal obligations thereunder in the inverse order of maturity. (4) General. All Cash Collateral Deposits deposited pursuant to this ------- Section 5 (including its incorporation of Article II of the Appendix) (collectively, the "Cash Collateral Deposits") shall be deposited in ------------------------ immediately available funds with the D&O Collateral Agent (to be held and applied pursuant to the provisions of the D&O Cash Collateral Agreement). The Guarantor's obligation to make or cause to be made the Cash Collateral Deposits: (i) shall be irrevocable, unconditional, and absolute, (ii) shall create a continuing security interest in the Cash Collateral Deposits until payment in full of all of the secured obligations and shall not be subject to any right of withdrawal by the Guarantor except solely as provided in subsection (c) of this Section 5, (iii) shall apply to the Guarantor's obligations under the Specified D&O Facilities (irrespective as to whether the underlying D&O Facilities have been refinanced by new loans made by the pertinent bank group of the type described in Section 2 hereof (unless such new loans have been subsequently paid in full)), (iv) shall include, without limitation, the obligation to execute and deliver or cause to be executed and delivered each pertinent D&O Cash Collateral Agreement (and any agreements to be executed in connection therewith such as account agreements), and (v) consistent with the foregoing (and with Section 10 hereof) shall not 10 terminate in the event that this Agreement shall otherwise be terminated pursuant to its provisions. SECTION 6. Covenants. --------- (1) The affirmative and negative covenants set forth in Article III and IV, respectively, of the Appendix are hereby incorporated by this reference. (2) In addition to its other covenants hereunder, the Guarantor hereby agrees: (i) to provide the Administrative Agent a copy of the Plan once finalized and, in any event, no later than December 31, 2000, (ii) to use the Guarantor's commercially reasonable (and otherwise lawful) best efforts to sign up Borrowers to the Plan and, as part thereof, to obtain Borrower Paydowns (including, without limitation, Director Borrower Paydowns), or commitments for pay downs, on the Loans, (iii) that, at the time of the delivery of any pertinent Compliance Certificate pursuant to Section 3.02(a) of the Appendix, to provide the Administrative Agent with a report listing the names of the C-T Borrowers who have been terminated during the preceding fiscal year, listing each such Borrower's last day of employment, and setting forth the calculation of the $25 Benchmark Deficiency, if any, for all such Borrowers whose employment has been terminated to and through the end of the fiscal year covered thereby, and (iv) in each Compliance Certificate delivered after the Effective Date and through the date of payment in full of the Loans or New Loans, to provide the Administrative Agent with a summary of any changes to the Plan to date, a statement of the effective date of any such changes, and, if there has been any changes thereto since the date of the delivery of the previous Compliance Certificate, a copy of the Plan as then constituted. (3) The Guarantor further agrees that the Plan shall require that each borrower under any of the D&O Facilities shall pay the principal amount of the loans under the D&O Facilities (and any refinancing facilities provided by the relevant banks) prior to the payment of any Guarantor Interest Loans. The Guarantor further agrees that if the Guarantor or any of its Subsidiaries receives any payments from any Borrower relating to a Guarantor Interest Loan owing by such borrower at a time when such borrower owes principal under any D&O Facility, the Guarantor shall turnover and pay (or shall cause any such Subsidiary to turnover and pay) the appropriate amounts thereof to the administrative agents of the D&O Facilities (or any refinancing facilities provided by such banks of the type described in Section 2 hereof) specified by such borrower (or, in the absence of any such specification, ratably among (or between) the D&O Facilities in which such person is a borrower) within five business days of receipt thereof. The Guarantor hereby acknowledges that the modification of these aspects of the Plan would be materially adverse to the interests of the Administrative Agent and the Banks. Section 7. Events of Default. The Events of Default set forth in Section ----------------- 5.01 of the Appendix are hereby incorporated by this reference. 11 SECTION 8. Conditions Precedent to Effectiveness of this Agreement. This ------------------------------------------------------- Agreement shall become effective only upon the satisfaction of the following conditions on or before the Effective Date: (1) The Administrative Agent shall have received duly executed counterparts of this Agreement from the Guarantor and the Banks. (2) The Guarantor shall have paid the Agreement Fee to the Administrative Agent for the pro rata benefit of the Banks; (3) The Cash Collateral Pledgor (with respect to the Initial Cash Collateral Deposit), the D&O Collateral Agent, and the Administrative Agent for the 1998 D&O Loan Facility shall have fully executed and delivered the D&O Cash Collateral Agreement; (4) The Initial Cash Collateral Deposit shall have been deposited with the D&O Collateral Agent, and the D&O Collateral Agent shall have an exclusive, perfected, first priority security interest therein; (5) The Guarantor shall have delivered to the Administrative Agent the Guaranty Reaffirmation; (6) CIHC and Guarantor shall have delivered to the Administrative Agent the CIHC Guaranty; (7) The other Relevant Facilities (as such term is defined in the Appendix) shall have been amended in a form reasonably satisfactory to the Required Banks, and the other transactions contemplated as part of such amendments to be consummated at closing shall have been so consummated; (8) The Guarantor shall have paid all fees and expenses, including those payable pursuant to Section 13.8 hereof, required to be paid by it on such Effective Date; (9) Each of the Guarantor, CIHC and any Cash Collateral Pledgor shall have delivered to the Administrative Agent, for the benefit of itself and the Banks, such officer certificates, legal opinions, and other documents or instruments as shall be required by the Administrative Agent, including reasonable evidence of its authority to execute, deliver and perform its obligations under this Agreement, the Guaranty Reaffirmation, the CIHC Guaranty, and the D&O Cash Collateral Agreement (as the case may be) and, including opinions of the general counsel to the Guarantor, CIHC, and any Cash Collateral Pledgor and of Weil, Gotshal & Manges LLP acceptable (both in form and content and as to which counsel is delivering the particular opinion) to the Administrative Agent; and 12 (10) The Administrative Agent shall have received such other documents, certificates or instruments as may be reasonably requested by the Administrative Agent and the Banks. The Administrative Agent shall undertake to provide the Guarantor with written notice as to whether the foregoing conditions have been satisfied and this Agreement thus has become effective (or instead, whether this Agreement is null and void, all as if it had never existed); provided, however, that the -------- ------- Administrative Agent=s failure to provide such notice shall not affect the determination as to whether such conditions have been satisfied and whether, concomitantly this Agreement has become effective. SECTION 9. Termination Events. Should this Agreement become effective ------------------ pursuant to the provisions of Section 8 hereof, the Administrative Agent, upon the affirmative votes of the Required Banks, may terminate any of the obligations or acknowledgments of the Administrative Agent and the Banks under this Agreement (including, without limitation, those with respect to the Commitment and the No Default Acknowledgment), if any of the following shall have occurred or otherwise shall be continuing (each, a "Termination Event)": ----------------- (1) The Guarantor shall have failed to have paid the Commitment Fee, the Acknowledgment Fee, or any amount owing by it pursuant to Section 6(c) hereof, within five days of the date it is due; (2) (i) A Cash Collateral Pledgor shall have failed timely to deposit with the D&O Cash Collateral Agent: (A) the December, 2000 Cash Collateral Deposit, (B) any C-T Borrower Cash Collateral Deposit, (C) any other amount required to be deposited pursuant to Section 5 hereof (including pursuant to its incorporation of the provisions of Article II of the Appendix), in each case within 5 days of the date it is due; or (ii) the Collateral Agent shall not have an exclusive, perfected first security interest in the Cash Collateral Deposits; (3) Any "Event of Default" under Section 5.01 of the Appendix (as incorporated herein pursuant to Section 7 hereof) shall occur and be continuing; (4) There shall have been entered any final judgment, or injunction, or other order by any court enjoining, prohibiting, discontinuing or otherwise impairing the validity or enforceability of this Agreement, the Existing Guaranty, the CIHC Guaranty, or any of the other documents contemplated by this Agreement, or any of the transactions contemplated by this Agreement; (5) The Plan, having substantially the same material terms as set forth on Schedule III hereto, shall not be in place on or before December 31, 2000, or, if in place on or before that date, subsequently shall have been modified in a manner materially 13 adverse to the interests of the Administrative Agent and the Banks or rescinded by the Guarantor (or enjoined or prohibited by a final judgement entered by any court); (6) Any Event of Default with respect to the Guarantor shall occur and shall be continuing under the Existing Credit Agreement; (7) Any event of default under the Existing Guaranty shall occur and be continuing; it being acknowledged that (i) by its terms, the Existing Guaranty automatically incorporates the covenants set forth in the Appendix and, by execution and delivery of this Agreement, the Administrative Agent and the Banks accept such covenants and (ii) moreover, for the purposes of determining whether a Termination Event has occurred as a result of any events of default under the Existing Guaranty arising from the incorporation of the covenants from any other credit agreement, the covenants set forth in the Appendix shall control; (8) Any event of default under the CIHC Guaranty shall occur and be continuing; (9) The Guarantor shall otherwise be in default of any of its obligations hereunder and such default shall be continuing for a period of thirty (30) days after written notice by the Administrative Agent to the Guarantor. Where the Administrative Agent, upon the affirmative votes of the Required Banks, shall have elected to terminate this Agreement upon the occurrence of any one or more of the foregoing events, the Administrative Agent shall undertake to provide the Guarantor with written notice of such termination; provided, -------- however, that the Administrative Agent's failure to provide such notice shall - ------- not affect in any manner the effectiveness of such termination. SECTION 10. Effect of Termination. Where the Administrative Agent, upon the --------------------- affirmative votes of the Required Banks, shall have elected to terminate this Agreement upon the occurrence of one or more of the events set forth in Section 9 hereof, all obligations of the Administrative Agent and any of the Banks hereunder shall terminate and the No Default Acknowledgment shall be deemed withdrawn (with the same effect as if it had never been extended), and this Agreement shall otherwise be terminated (except that the Guarantor shall remain liable for the payment of the Commitment Fee and the Acknowledgment Fee unless and until all outstanding Non-Refinanced Loans have been paid in full) without any liability on the part of (or any alteration of rights, powers or remedies belonging to) the Administrative Agent or any Bank, and consistent therewith, and in addition to being entitled to continue to collect such Fees from the Guarantor, each of the Administrative Agent and the Banks shall remain entitled, but not required, to exercise (in whatever manner, to whatever extent, at whatever time, and as often , seldom, or not at all as it may choose in its sole and absolute discretion) any and all (or any combination) of its rights, powers, and remedies against the Guarantor, CIHC, any other person or entity (including any Borrower), and/or any of the property of the Guarantor, CIHC, and/or 14 any other person or entity (including, without limitation, any Cash Collateral Deposit) (and/or any combination of any such person or entity or property) under any guaranty (including, without limitation, the Existing Guaranty (including as reaffirmed pursuant to the Guaranty Reaffirmation), the CIHC Guaranty, any other agreement or document (including without limitation, the D&O Cash Collateral Agreement), and/or any New Loan Documents (including any required guarantees and/or reaffirmed guarantees relating thereto) entered into prior to such termination date, and/or applicable law, all as if this Agreement had never been executed and delivered by the parties hereto (including, without limitation, as if the No Default Acknowledgment had never been extended) (but as if any and all other agreements had been so executed and delivered by the pertinent parties thereto), and all without any requirement of providing prior notice with respect thereto. Consistent with, but not in limitation of, the foregoing, any exercise or non-exercise (as the case may be) by the Administrative Agent of any such rights, powers and/or remedies, including, without limitation, the complete failure to exercise any such rights, powers, and/or remedies (whether such failure occurs prior to or subsequent to any termination of this Agreement), against (i) any or all Borrowers (or any combination thereof) or any property of any thereof, (ii) the Guarantor or any of the Guarantor's property (including any Cash Collateral Deposits made by the Guarantor), (iii) any other Cash Collateral Deposits, or (iv) CIHC and/or CIHC's property, as the case may be, shall in no manner limit the ability of the Administrative Agent to exercise any such rights, powers, and/or remedies, whether under any agreement (including any guaranty or pledge agreement) and/or applicable law against any Borrower, the Guarantor (or its property, including any property pledged pursuant to D&O Cash Collateral Agreement), the Cash Collateral Deposits, and/or CIHC (or its property). Without limiting the generality of the foregoing, the provisions of Sections 4 - 13 hereof shall survive any such termination. SECTION 11. The Agent. The Banks acknowledge that the provisions of Section --------- 11 of the Existing Credit Agreement are applicable to this Agreement in every respect. Consistent with, but not in limitation thereof, each Bank hereby agrees that the provisions of Section 11 of the Existing Credit Agreement apply to the Agent=s execution, delivery, performance and other participation in this Agreement and the transactions contemplated thereby, and the Agent shall have the full benefit thereof, all as if such Section 11 of the Existing Credit Agreement were set forth and restated herein. SECTION 12. Representations and Warranties. Guarantor hereby represents and ------------------------------ warrants to each of the Administrative Agent and the Banks that: (1) Guarantor has full corporate power and authority to execute, deliver and perform this Agreement and each agreement executed in connection herewith and to consummate the transactions contemplated hereby and thereby. Guarantor has duly and validly executed and delivered this Agreement and has duly and validly executed and delivered each agreement executed in connection herewith. This Agreement, and each agreement executed in connection herewith, constitutes legal, valid and binding obligations of Guarantor, in each case, enforceable in accordance with their respective 15 terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, moratorium, reorganization or similar laws in effect which affect the enforcement of creditors' rights generally, by equitable limitations on the availability of specific remedies and by principles of equity. (2) No consent, authorization or approval of, filing or registration with, or cooperation from, any Governmental Authority or any other person or entity not a party to this Agreement is necessary in connection with the execution, delivery and performance by Guarantor of this Agreement and each agreement executed in connection herewith or the consummation by Guarantor of the transactions contemplated hereby or thereby other than immaterial consents, authorizations, approvals, filings or registrations and those already obtained. (3) The execution, delivery and performance by Guarantor of this Agreement and its related agreements and the consummation by Guarantor of the transactions contemplated hereby and thereby do not and will not (i) violate any law applicable to Guarantor; or (ii) violate or conflict with any provision of any of the certificate of incorporation, bylaws or similar organizational instruments of Guarantor or any other material agreement or contract to which Guarantor is a party. These representations and warranties shall survive closing and any termination of this Agreement. SECTION 13. MISCELLANEOUS ------------- SECTION 13.1 Waivers and Amendments. The provisions of this Agreement may ---------------------- from time to time be amended, modified or waived, if such amendment, modification, or waiver is in writing and consented to by the Guarantor and the Required Banks; provided, however, that no such amendment, modification or -------- ------- waiver: (i) which would modify any requirement hereunder that any particular action be taken by all Banks or by the Required Banks, shall be effective without the consent of each Bank; (ii) which should extend the Commitment Expiration Date beyond August 26, 2001, which would otherwise substantially modify or waive the Commitment conditions in Section 2(c) hereof, which would materially and adversely modify any of the terms and conditions of the New Loans generally described on Schedule I hereto, or which would modify the No Default Acknowledgment to include within the scope of such acknowledgment the Guarantor=s obligations in respect of the payment of interest, fees, expenses, or any other obligations except principal or to extend the stated Termination Date beyond December 31, 2003, shall be effective without the consent of each Bank; 16 (iii) which would extend the due date for, or reduce the amount of, any of the Fees, shall be effective without the consent of each Bank; (iv) which would extend the due date for, or reduce the amount of, the obligations to make the Cash Collateral Deposits set forth in SECTION 5 hereof, shall be effective without the consent of each Bank; or (v) which would adversely affect the interests, rights, or obligations of the Administrative Agent (in such capacity) other than removal in accordance with Section 11.6 of the Existing Credit Agreement, shall be effective without the consent of the Administrative Agent. SECTION 13.2 All notices, requests and other communications to any party hereunder shall be in writing (including bank wire, telex, facsimile or similar writing) and shall be given to such party at its address, facsimile or telex number set forth on the signature or acknowledgment pages hereof or such other address, facsimile or telex number as such party may hereafter specify for the purpose by written notice to the Administrative Agent and Guarantor. Each such notice, request or other communication shall be effective (a) if given by facsimile or telex, when such facsimile or telex is transmitted to the facsimile or telex number specified in this Section and the appropriate answerback or other confirmation is received, (b) if given by mail, seventy-two (72) hours after such communication is deposited and sent via certified or registered mail, return receipt requested, with first class postage prepaid, addressed as aforesaid or (c) if given by any other means, when delivered at the address specified in this Section, provided, that notices to the Administrative Agent shall not be effective until received by the Administrative Agent. SECTION 13.3 Indemnity. Without limiting in any manner whatsoever any of the claims, rights, powers and remedies of the Administrative Agent and the Banks under any indemnity (including the indemnity set forth in Section 7.2 of the Existing Guaranty), Guarantor agrees to indemnify the Administrative Agent, D&O Collateral Agent, the Depositary Bank, each Bank, their affiliates and their respective directors, officers, employees, persons controlling or controlled by any of them or their respective agents, consultants, attorneys and advisors (the "Indemnified Parties") and hold each Indemnified Party harmless from and against any and all liabilities, losses, claims, damages, costs and expenses of any kind to which any of the Indemnified Parties may become subject whether directly or indirectly (including, without limitation, the reasonable fees and disbursements of counsel for any Indemnified Party), relating to or arising out of the Existing Credit Agreement, the Existing Guaranty, the other Loan Documents, any actual or proposed use of the proceeds of the Loans, any New Loans, this Agreement, any agreement executed in connection herewith (including, without limitation, the D&O Cash Collateral Agreement), the Plan, or any New Loan Documents; provided, that no Indemnified Party shall have the right to be indemnified hereunder for its own gross negligence or willful misconduct as determined by a court of competent jurisdiction. All obligations of the Borrowers and Guarantor provided for in this SECTION 13.3 shall survive the termination of the Existing Credit Agreement, the Existing Guaranty, this Agreement, any agreement executed in connection herewith, and any New Loan Documents. 17 SECTION 13.4 No Third Party Beneficiaries. This Agreement is solely for ---------------------------- the benefit of the parties hereto (except solely to the extent that (a) CIHC shall be entitled to the benefits of the No Default Acknowledgment pursuant to the provisions hereof and (b) the Indemnified Parties shall be entitled to the benefits of Section 13.13 hereof), and no provision of this Agreement shall be deemed to confer upon any other third parties (including, without limitation, any Borrower, including with respect to any property of any Borrower pledged as collateral) any remedy, claim, liability, reimbursement, cause of action or other right (including, without limitation, any right to benefit from any forbearance on the part of the Administrative Agent and/or the Banks in the exercise of any right, power, or remedy in connection with, under or otherwise relating to the Existing Credit Agreement, any other Loan Document and/or applicable law). SECTION 13.5 Waivers. The failure of a party hereto at any time or ------- times to require performance of any provision hereof shall in no manner affect its right at a later time to enforce the same. No waiver by a party of any condition or of any breach of any term, covenant, representation or warranty contained in this Agreement shall be effective unless in writing, and no waiver in any one or more instances shall be deemed to be a further or continuing waiver of any such condition or breach in other instances or a waiver of any other condition or breach of any other term, covenant, representation or warranty. SECTION 13.6 Remedies Cumulative. Consistent with, but not in ------------------- limitation of, the provisions of this Agreement, this Agreement shall be limited to its terms and narrowly construed, and neither the Administrative Agent nor any Bank agrees to otherwise limit the exercise of any of its rights, powers or remedies against any Borrower (or his or her property), the Guarantor (or its property) and/or CIHC (or its property) under its respective guaranty, any other agreement or document, applicable law, or otherwise except as expressly set forth herein. Consistent with, but not in limitation of, the foregoing, the No Default Acknowledgment is to be limited solely to the payment of principal subject to the provisions hereof and in no manner shall be deemed to restrain or adversely affect in any manner whatsoever the claims, rights, powers, and remedies of the Administrative Agent and the Banks under the Existing Guaranty, the CIHC Guaranty, and/or applicable law with respect to any guarantor, guarantor's obligations in respect of the payment of interest, fees, expenses, or any obligations other than principal. The rights, powers, and/or remedies provided in this Agreement shall be cumulative and shall not preclude the assertion or exercise of any other rights or remedies available under law, in equity or otherwise except solely to the extent expressly set forth herein; it being the intent of the parties hereto that the Administrative Agent and the Banks are to have the maximum flexibility under any agreement and/or applicable law with respect to the exercise of any and/or all (or any combination of) such rights, powers, and/or remedies, including, without limitation, as to any Borrower and/or its property (including, without limitation, any property pledged as collateral to secure the obligations of any Borrower under the Existing Credit Agreement). 18 SECTION 13.7 Entire Understanding. This Agreement and each agreement -------------------- executed in connection herewith set forth the entire agreement and understanding of the parties hereto with respect to the transactions contemplated hereby and supersede any and all prior agreements, arrangements and understandings among the parties relating to the subject matter hereof. SECTION 13.8 Expenses. Without limiting in any manner any right of the -------- Administrative Agent and the Bank to receive the reimbursement of the expenses (including, without limitation, attorneys' fees and expenses) under the Existing Credit Agreement and/or the Existing Guaranty, Guarantor agrees to pay and reimburse the Administrative Agent for all of its reasonable costs and expenses incurred in connection with the preparation and delivery of this Agreement (and any agreement executed in connection herewith), including, without limitation, the reasonable fees and disbursements of counsel to the Administrative Agent. SECTION 13.9 Effect of Agreement on Existing Credit Agreement. ------------------------------------------------ Consistent with, but not in limitation of, the other provisions of this Agreement, nothing contained herein is intended as a present amendment to the Existing Credit Agreement or any other Loan Document or as agreement on the part of the Administrative Agent and the Banks to forebear in the exercise of any of its or their rights, powers, or remedies as to any Borrower (or any Borrower's property) under the Existing Credit Agreement, any other Loan Document to which any Borrower is a party (including any pledge agreement), and/or any applicable law, and the Existing Credit Agreement and any other Loan Document to which any Borrower is a party (including any pledge agreement) shall continue to be and remain in full force and effect, pending the execution and delivery of any New Loan Documents relating to such Borrower in accordance with the other provisions of this Agreement. Specifically, this Agreement shall not constitute under any circumstances an amendment, modification, or waiver of any provision of the Existing Credit Agreement or any Loan Document and shall not be construed as such under any circumstances or by any person or entity, including, without limitation, for the benefit of any of the Borrowers; it being acknowledged that the provisions relating to any Borrower herein (including those relating to the Commitment) are for the benefit of and may be enforced only by the Guarantor and not for or by any Borrower. Consistent with, but not in limitation of, the other provisions of this Agreement (including the foregoing provisions of this Section 13.9), each of the Administrative Agent and the Banks waive none of, but instead reserve all of, their respective rights, powers and remedies against any and all of the Borrowers (including against any of their respective property whether pledged as collateral or otherwise) under or in connection with the Existing Credit Agreement, any other Loan Document, and/or applicable law and, consistent with such express disclaimer of waiver and reservation of rights, shall be entitled (unless and until they enter into a binding, written agreement to the contrary), but not required, to exercise (in whatever manner, to whatever extent, at whatever time, and as often, seldom, or not at all, as it may choose in its sole and absolute discretion) any and/or all (or any combination) of such rights, powers, and/or remedies against any and/or all (or any combination) of the Borrowers and/or any of their property (including any property pledged as collateral under any pledge agreement), all as if this 19 Agreement had never been executed and delivered by the parties hereto (but as if any and all of such other agreements and instruments had been executed and delivered by the pertinent parties thereto). SECTION 13.10 GOVERNING LAW. THIS AGREEMENT SHALL BE A CONTRACT MADE UNDER ------------- AND GOVERNED BY THE LAWS OF THE STATE OF ILLINOIS, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES. ALL OBLIGATIONS OF THE GUARANTOR AND RIGHTS OF THE ADMINISTRATIVE AGENT AND THE BANKS IN RESPECT OF THE OBLIGATIONS OR LIABILITIES EXPRESSED HEREIN SHALL BE IN ADDITION TO AND NOT IN LIMITATION OF THOSE PROVIDED BY APPLICABLE LAW. SECTION 13.11 Counterparts. This Agreement may be executed in any number ------------ of counterparts and by the different parties on separate counterparts and each such counterpart shall be deemed to be an original, but all such counterparts shall together constitute but one and the same agreement. When counterparts executed by all the parties shall have been lodged with the Administrative Agent (or, in the case of any Bank as to which an executed counterpart shall not have been so lodged, the Administrative Agent shall have received telegraphic, facsimile, telex or other written confirmation from such Bank of execution of a counterpart hereof by such Bank), this Agreement shall become effective as of the Effective Date hereof, and at such time the Administrative Agent shall notify the Borrowers and each Bank. SECTION 13.12 SUBMISSION TO JURISDICTION; WAIVER OF VENUE. THE ------------------------------------------- ADMINISTRATIVE AGENT, EACH BANK AND GUARANTOR (A) HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF ANY ILLINOIS STATE OR FEDERAL COURT SITTING IN THE NORTHERN DISTRICT OF ILLINOIS OVER ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER DOCUMENTS CONTEMPLATED HEREBY, AND THE ADMINISTRATIVE AGENT, EACH BANK AND GUARANTOR HEREBY IRREVOCABLY AGREE THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH ILLINOIS STATE OR FEDERAL COURT, AND (B) AGREE NOT TO INSTITUTE ANY LEGAL ACTION OR PROCEEDING AGAINST ANOTHER PARTY OR THE DIRECTORS, OFFICERS, EMPLOYEES, AGENTS OR PROPERTY OF ANY THEREOF, ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER DOCUMENTS CONTEMPLATED HEREBY, IN ANY COURT OTHER THAN AS HEREINABOVE SPECIFIED IN THIS SECTION 13.12. THE ADMINISTRATIVE AGENT, EACH BANK AND GUARANTOR HEREBY IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION IT OR THEY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE IN ANY ACTION OR PROCEEDING (WHETHER BROUGHT BY ANY BORROWER, GUARANTOR, THE ADMINISTRATIVE AGENT, ANY BANK, OR OTHERWISE) IN ANY COURT HEREINABOVE SPECIFIED IN THIS SECTION 13.12 AS WELL AS ANY RIGHT IT OR THEY MAY NOW OR HEREAFTER HAVE TO REMOVE ANY SUCH ACTION OR 20 PROCEEDING, ONCE COMMENCED, TO ANOTHER COURT ON THE GROUNDS OF FORUM NON ----- --- CONVENIENS OR OTHERWISE. THE ADMINISTRATIVE AGENT, EACH BANK AND GUARANTOR AGREE - ---------- 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. SECTION 13.13 Successors and Assigns. This Agreement shall be binding ---------------------- upon and shall inure to the benefit of the parties hereto and their respective successors and assigns; provided, however, that Guarantor may not assign or -------- ------- transfer its rights or obligations under this Agreement or any other document contemplated hereby without the prior written consent of all Banks. Nothing contained herein shall limit the rights of the Banks to make assignments or grant participations subject to the provisions of Section 12 of the Existing Credit Agreement; provided, however, that any such assignments and -------- ------- participations insofar as such assignees' rights against or obligations to the Guarantor (including the Guarantor, Guarantor's rights with respect to the Extension Commitment) and CIHC shall be subject to the provisions of this Agreement SECTION 13.14 Interpretation. The headings preceding the text of -------------- Articles and Sections included in this Agreement and the headings to Schedules attached to this Agreement are for convenience only and shall not be deemed part of this Agreement or be given any effect in interpreting this Agreement. The use of the masculine, feminine or neuter gender or the singular or plural form of words herein shall not limit any provision of this Agreement. The use of the terms "including" or "include" shall in all cases herein mean "including, without limitation" or "include, without limitation," respectively. Reference to any person or entity includes such person's or entity's successors and assigns to the extent such successors and assigns are permitted by the terms of any applicable agreement, and reference to a person or entity in a particular capacity excludes such person or entity in any other capacity or individually. Reference to any agreement (including this Agreement), document or instrument means such agreement, document or instrument as amended or modified and in effect from time to time in accordance with the terms thereof and, if applicable, the terms hereof. Reference to any law means such law as amended, modified, codified, replaced or re-enacted, in whole or in part, and in effect on the date hereof, including rules, regulations, enforcement procedures and any interpretations promulgated thereunder. Underscored references to Articles, Sections, clauses, Exhibits or Schedules shall refer to those portions of this Agreement, and any underscored references to a clause shall, unless otherwise identified, refer to the appropriate clause within the same Section in which such reference occurs. The use of the terms "hereunder", "hereof", "hereto" and words of similar import shall refer to this Agreement as a whole and not to any particular Article, Section or clause of or Exhibit or Schedule to this Agreement. All terms defined in this Agreement shall have the above-defined meanings when used in any certificate, report or other document made or delivered pursuant to this Agreement, unless the context therein shall clearly otherwise require. In the computation of periods of time in this Agreement from a specified date to a later specified date, the word "from" means "from and including" and the words "to" and "until" each means "to but excluding." This Agreement and the other documents relating to this Agreement are the result of 21 negotiations among and have been reviewed by counsel to the Administrative Agent, Guarantor and the other parties, and are the products of all parties. Accordingly, they shall not be construed against the Banks or the Administrative Agent merely because of the Administrative Agent's or Banks' involvement in their preparation. SECTION 13.15 WAIVER OF JURY TRIAL. GUARANTOR, THE ADMINISTRATIVE AGENT -------------------- AND EACH BANK HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM CONCERNING ANY RIGHTS UNDER THIS AGREEMENT, ANY OTHER DOCUMENT CONTEMPLATED HEREBY OR ANY OTHER DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH, OR ARISING FROM ANY BANKING RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT, AND AGREE THAT ANY SUCH ACTION, PROCEEDING OR COUNTERCLAIM SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY; THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES ENTERING INTO THIS AGREEMENT. * * * [Signature Pages Follow] 22 Executed as of the date and year first written above. GUARANTOR: CONSECO, INC. By: /s/ Thomas M. Hagerty Name: Thomas M. Hagerty Title: Acting Chief Financial Officer Notice Address: 11825 N. Pennsylvania Street Carmel, IN 46032 Attention: David Herzog Telephone: (317) 817-5031 Facsimile: (317) 817-6327 with a copy to Weil, Gotshal & Manges LLP 100 Crescent Court, Suite 1300 Dallas, Texas 75201-6950 Attention: Angela L. Fontana, Esq. Telephone: (214) 746-7000 Facsimile: (214) 746-7700 ADMINISTRATIVE AGENT: BANK OF AMERICA, NATIONAL ASSOCIATION By: Name: Title: Notice Address: 231 South LaSalle Street Chicago, Illinois 60697 Attention: Debra Basler Telephone: (312) 828-2345 Facsimile: (312) 987-0889 with a copy to: Mayer, Brown & Platt 190 South LaSalle Street Chicago, Illinois 60603 Attention: Thomas S. Kiriakos, Esq. William C. Tompsett, Esq. Telephone: (312) 782-0600 Facsimile: (312) 701-7711 BANKS: BANK OF AMERICA, N.A. By: Name: Title: Lending Office Address: 231 S. LaSalle Street Chicago, IL 60697 Attention: Debra Basler Telephone: (312) 828-____ Facsimile: (312) ________ Notice Address: Address: 231 S. LaSalle Street Chicago, IL 60697 Attention: ______________ Telephone: (312) _________ Facsimile: (312) __________ THE CHASE MANHATTAN BANK By: Name: Title: Lending Office: Address: 207 Park Avenue New York, New York 10017 Attention: Telephone: Facsimile: Notice Address: Address: 207 Park Avenue New York, New York 10017 Attention: Telephone: Facsimile: DEUTSCHE BANK AG By: Name: Title: Lending Office: Address: 31 W. 52nd Street New York, NY 10019 Attention: Susan Maros Telephone: (212) 474-8104 Facsimile: (212) 474-8108 Notice Address: Address: Attention: Telephone: Facsimile: BANK OF NEW YORK By: Name: Title: Lending Office: Address: One Wall Street New York, New York 10286 Attention: Telephone: Facsimile: Notice Address: Address: Attention: Telephone: Facsimile: Schedule II - Appendix ================================================================================ APPENDIX CONSECO, INC. $3,028,576,848 CREDIT FACILITIES DATED AS OF SEPTEMBER 22, 2000 BANK OF AMERICA, N.A. AND THE CHASE MANHATTAN BANK, AS JOINT LEAD ARRANGERS AND JOINT BOOK MANAGERS ================================================================================ TABLE OF CONTENTS
Page ARTICLE IDEFINITIONS....................................................................................................1 ----------- 1.01 Certain Defined Terms..............................................................................1 --------------------- 1.02 Other Interpretive Provisions.....................................................................20 ----------------------------- 1.03 Accounting Principles.............................................................................21 --------------------- ARTICLE IIMANDATORY CASH APPLICATIONS..................................................................................21 --------------------------- 2.01 General Application of Available Net Proceeds.....................................................21 --------------------------------------------- 2.02 Application of Available Net Proceeds Allocated to Facilities.....................................22 ------------------------------------------------------------- 2.03 Exempt Covenant/Waterfall Amounts.................................................................22 --------------------------------- ARTICLE IIIAFFIRMATIVE COVENANTS.......................................................................................23 --------------------- 3.01 Financial Statements..............................................................................23 -------------------- 3.02 Certificates; Other Information...................................................................24 ------------------------------- 3.03 Notices...........................................................................................24 ------- 3.04 Preservation of Corporate Existence, Etc. ........................................................26 ----------------------------------------- 3.05 Insurance.........................................................................................26 --------- 3.06 Payment of Obligations............................................................................26 ---------------------- 3.07 Compliance with Laws..............................................................................26 -------------------- 3.08 Compliance with ERISA.............................................................................26 --------------------- 3.09 Inspection of Property and Books and Records; Expense Reimbursement...............................26 ------------------------------------------------------------------- 3.10 Tritel Disposition................................................................................27 ------------------ 3.11 Conversion of FELINE PRIDES.......................................................................27 --------------------------- ARTICLE IVNEGATIVE COVENANTS...........................................................................................27 ------------------ 4.01 Limitation on Indebtedness........................................................................27 -------------------------- 4.02 Liens.............................................................................................28 ----- 4.03 Disposition of Assets.............................................................................30 --------------------- 4.04 Other Agreements..................................................................................31 ---------------- 4.05 Transactions with Affiliates......................................................................31 ---------------------------- 4.06 Change in Business................................................................................31 ------------------ 4.07 Fundamental Changes...............................................................................31 ------------------- 4.08 Restricted Payments...............................................................................32 ------------------- 4.09 Investments.......................................................................................32 ----------- 4.10 Optional Payments; Modifications of Certain Agreements; Synthetic Purchase Agreements.............33 ------------------------------------------------------------------------------------- 4.11 Negative Pledge on Tritel and Argosy Riverboat....................................................33 ---------------------------------------------- 4.12 Reserve Account...................................................................................34 --------------- 4.13 Debt to Capitalization Ratio......................................................................34 ---------------------------- 4.14 Interest Coverage Ratio...........................................................................34 ----------------------- 4.15 Conseco Adjusted Earnings.........................................................................35 ------------------------- 4.16 Conseco Finance Tangible Net Worth................................................................35 ---------------------------------- 4.17 Risk-Based Capital Ratio..........................................................................35 ------------------------ ARTICLE VEVENTS OF DEFAULT.............................................................................................36 ----------------- 5.01 Events of Default.................................................................................36 -----------------
SCHEDULES Schedule 1.01A Certain Material Insurance Subsidiaries Schedule 1.01B Specified Cash Events Schedule 1.01C Changes in Future Loss Reserves Schedule 1.01D Persons Not Subsidiaries Schedule 2.02 Exposure on Effective Date Schedule 4.01(c) Indebtedness Schedule 4.02(c) Existing Liens Schedule 4.02(g) Permitted Indentures Schedule 4.03(m) Dispositions of Investments Schedule 4.06 Business Activities Schedule 4.09(b) Proposed Investments EXHIBITS Exhibit A Form of Compliance Certificate Exhibit B Form of Reserve Account Agreement ARTICLE I DEFINITIONS I.1 Certain Defined Terms. The following terms, when used in this Appendix, have the following meanings: "Affiliate" means, as to any Person, any other Person which, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person. A Person shall be deemed to control another Person if the controlling Person possesses, directly or indirectly, the power (a) to vote 10% or more of the securities (on a fully diluted basis) having ordinary voting power for the election of directors or managing general partners, or (b) to direct or cause the direction of the management and policies of the other Person, whether through the ownership of voting securities, membership interests, by contract, or otherwise. "Agent" means any "Relevant Agent" under and as defined in the documents governing any Facility. "A.M. Best" means A.M. Best Company, together with any Person succeeding thereto by merger, consolidation or acquisition of all or substantially all of its assets, including substantially all of its business of rating insurance companies. "A.M. Best A- Status" means the circumstance that each Material Insurance Subsidiary listed on Schedule 1.01A has a claims paying rating of at least A- from A.M. Best. "Annual Statement" means the annual statutory financial statement of any Insurance Subsidiary required to be filed with the insurance commissioner (or similar authority) of its jurisdiction of incorporation, which statement shall be in the form required by such Insurance Subsidiary's jurisdiction of incorporation or, if no specific form is so required, in the form of financial statements permitted by such insurance commissioner (or such similar authority) to be used for filing annual statutory financial statements and shall contain the type of information permitted or required by such insurance commissioner (or such similar authority) to be disclosed therein, together with all exhibits or schedules filed therewith. "Appendix" means this Appendix as amended, restated, supplemented or otherwise modified from time to time. "Asset Backed Security" means a security of a Conseco Finance Entity that is collateralized by loans, leases, receivables, installment contracts or interests in or components of Interest Only Securities. "Asset Sale" means any Disposition of property or series of related Dispositions of property, excluding any such Disposition permitted by clauses (a) through (m) and clause (o) of Section 4.03 (but in any event including (whether or not permitted by any of the foregoing clauses) any direct or indirect (a) Disposition of all or any part of the Capital Stock issued by Conseco Finance, Tritel, Inc., Conseco Entertainment, Inc. or CNC Entertainment LLC, (b) Disposition of all or any part of the assets of Tritel, Inc. or CNC Entertainment LLC and (c) receipt of cash proceeds in respect of any Specified Cash Event (each, a "Disposition Transaction") that yields gross proceeds to Conseco and its Subsidiaries in excess of $10,000,000, provided that, once the aggregate gross proceeds from Disposition Transactions received during any Proceeds Test Period yielding gross proceeds between $2,000,000 and $10,000,000 exceeds $20,000,000, the first reference to $10,000,000 in this definition shall automatically be deemed to be changed to $2,000,000 for the remainder of such Proceeds Test Period. As used in this definition, "Proceeds Test Period" means (i) the period from the Effective Date through the Near-Term Facilities Termination Date and (ii) each subsequent one-year period commencing on the Near-Term Facilities Termination Date or an anniversary thereof. "Available Basket Amount" means, at any time, an amount equal to (a) ten percent (10%) of Total Shareholders' Equity at such time minus (b) the aggregate then outstanding amount of Indebtedness secured by Liens, without duplication, pursuant to Section 4.02(i)(i), (ii) (of Conseco or any "Significant Subsidiary" (as defined in the Public Debt)), (iii) or (iv). "Available Net Proceeds" means any Net Proceeds received by Conseco or any of its Subsidiaries in connection with any Prepayment Event other than Exempt Covenant/Waterfall Amounts and Exempt Waterfall Amounts applied in the manner described in clause (b) of the definition of "Exempt Waterfall Amounts". "B-Share Financings" means the financing of fees or commissions related to B-Shares. "B-Shares" means those shares of ownership representing a mutual interest in a pool of assets on which l2b-1 fees or contingent deferred sales commissions (CDSC), as defined under the Investment Company Act of 1940, are applicable. "Bank" means each "Relevant Bank" under and as defined in the documents governing any Facility. "Bankruptcy Code" means the Federal Bankruptcy Reform Act of 1978 (11 U.S.C.ss.101, et seq.). "Business Day" means any day other than a Saturday, Sunday or other day on which commercial banks in Chicago or New York City are authorized or required by law to close. "Calculation Period" means, with respect to any ratio or calculation, the period for which such ratio or calculation is being calculated. "Capital and Surplus" means, as to any Insurance Subsidiary, as of any date, the total amount shown on line 38, page 3, column I of the Annual Statement of such Insurance Subsidiary, or an amount determined in a consistent manner for any date other than one as of which an Annual Statement is prepared. "Capitalized Lease Liabilities" means, with respect to any Person, all monetary obligations of such Person under any leasing or similar arrangement which, in accordance with GAAP, would be classified as a capitalized lease, and, for purposes of this Appendix, the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP, and the stated maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be terminated by the lessee without payment of a penalty. 2 "Capital Stock" means any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person (other than a corporation) and any and all warrants, rights or options to purchase any of the foregoing. "Cash Collateral Agreement" means any cash collateral agreement provided to secure obligations of Conseco or any of its Subsidiaries pursuant to any D&O Facility. "Cash Equivalents" means (a) marketable direct obligations issued by, or unconditionally guaranteed by, the United States government or issued by any agency thereof and backed by the full faith and credit of the United States, in each case maturing within one year from the date of acquisition; (b) certificates of deposit, time deposits, eurodollar time deposits or overnight bank deposits having maturities of six months or less from the date of acquisition issued by any commercial bank organized under the laws of the United States or any state thereof having combined capital and surplus of not less than $500,000,000 and a short term deposit rating of at least A-1 by S&P and P-1 by Moody's, or carrying an equivalent rating by a nationally recognized rating agency, if both of the two named rating agencies cease publishing ratings of commercial paper issuers generally; (c) commercial paper of an issuer rated at least A-1 by S&P and P-1 by Moody's, or carrying an equivalent rating by a nationally recognized rating agency, if both of the two named rating agencies cease publishing ratings of commercial paper issuers generally, and maturing within six months from the date of acquisition; (d) repurchase obligations of any Relevant Bank or of any commercial bank satisfying the requirements of clause (b) of this definition, having a term of not more than 30 days, with respect to securities issued or fully guaranteed or insured by the United States government; (e) securities with maturities of one year or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States, by any political subdivision or taxing authority of any such state, commonwealth or territory or by any foreign government, the securities of which state, commonwealth, territory, political subdivision, taxing authority or foreign government (as the case may be) are rated at least A by S&P and A2 by Moody's; (f) securities with maturities of six months or less from the date of acquisition backed by standby letters of credit issued by any Relevant Bank or any commercial bank satisfying the requirements of clause (b) of this definition; or (g) shares of money market mutual or similar funds which invest exclusively in assets satisfying the requirements of clauses (a) through (f) of this definition. "Cash on Hand Target" has the meaning set forth in Section 2.01(b). "CBOs" means notes or other instruments (other than CMOs) secured by collateral consisting primarily of debt securities and/or other types of debt obligations, including loans. "CERCLA" means the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended. "CERCLIS" means the Comprehensive Environmental Response, Compensation and Liability Information System List. 3 "Change of Control" means (a) any acquisition by any Person, or two or more Persons acting in concert, of beneficial ownership (within the meaning of Rule l3d-3 of the Securities and Exchange Commission under the Exchange Act) of 30% or more of the outstanding shares of voting stock of Conseco (other than an acquisition by any Person or Persons who are officers or directors of Conseco on the Effective Date or any Affiliate thereof controlled by the relevant officer or director); or (b) during any period of 25 consecutive calendar months, commencing on the Effective Date, the ceasing of those individuals who were not borrowers under any of the D&O Facilities (the "Continuing Directors") who (i) were directors of Conseco on the first day of each such period or (ii) subsequently became directors of Conseco and whose actual election or initial nomination for election subsequent to that date was approved by a majority of the Continuing Directors then on the board of directors of Conseco, to constitute a majority of the board of directors of Conseco; or (c) Gary Wendt or such other Person as shall be reasonably satisfactory to the Required Banks shall cease to be the Chief Executive Officer of Conseco (other than by reason of death or disability) at any time prior to the Near-Term Facilities Termination Date. "CIHC" means CIHC, Incorporated, a Delaware corporation, and a direct Wholly-Owned Subsidiary of Conseco. "CIHC Guaranty" means any "Relevant CIHC Guaranty" under and as defined in the documents governing any Facility. "CMOs" means notes or other instruments secured by collateral consisting primarily of mortgages, mortgage-backed securities and/or other types of mortgage-related obligations. "Code" means the Internal Revenue Code of 1986, as amended, and regulations promulgated thereunder. "Collateral Agreement" means the Collateral Agreement, dated as of May 30, 2000, made by Conseco and CIHC in favor of the Collateral Agent named therein. "Compliance Certificate" means a certificate substantially in the form of Exhibit A. "Conseco" means Conseco, Inc., an Indiana corporation. "Conseco Adjusted Earnings" means, for any Calculation Period, the consolidated Net Income of Conseco for such period plus, without duplication and to the extent reflected as a charge in the statement of such Net Income for such period, the sum of (a) income tax expense, (b) interest expense, amortization or writeoff of debt discount and debt issuance costs and commissions, discounts and other fees and charges associated with Indebtedness, (c) depreciation and amortization expense, (d) amortization of intangibles (including, but not limited to, goodwill, deferred acquisition costs, the present value of future profits and changes in future loss reserves described on Schedule 1.01C) and organization costs, (e) net changes in Interest Only Securities, (f) any extraordinary, unusual or non-recurring non-cash expenses or losses (including, whether or not otherwise includable as a separate item in the statement of such Net Income for such period, non-cash losses on sales of assets outside of the ordinary course of business), (g) any other non-cash charges (provided that the after tax amounts described in clauses (f) and (g) shall not exceed in the aggregate$500,000,000 for any Calculation Period ending on or before September 30, 2001, and $50,000,000 for any Calculation Period ending thereafter), and (h) realized or unrealized losses on Investments of Insurance Subsidiaries, and minus, to the extent included in the statement of such Net Income for such period, the sum of (a) any extraordinary, unusual or non-recurring income or gains (including, whether or not otherwise includable as a separate item in the statement of such Net Income for such period, gains on the sales of assets outside of the ordinary course of business) and (b) realized or unrealized gains on Investments of Insurance Subsidiaries, all as determined on a consolidated basis. 4 "Conseco Available Cash Flow" means, for any Calculation Period, the sum, without duplication, of (a) dividends paid in cash to Conseco by any Subsidiary, plus (b) interest paid in cash to Conseco by any Subsidiary pursuant to any intercompany Indebtedness owing by such Subsidiary to Conseco, plus (c) interest or principal paid in cash to Conseco with respect to the Surplus Debentures, plus (d) amounts paid in cash to Conseco under the Tax Sharing Agreement, plus (e) management and other similar fees received by Conseco under servicing agreements or otherwise from any Subsidiary, plus (f) amounts paid in cash to Conseco pursuant to a loan made to it by any Subsidiary, plus (g) amounts paid in cash to Conseco by Conseco Finance pursuant to the redemption by Conseco Finance of preferred equity issued by Conseco Finance and owned by Conseco plus (h) Conseco's Investment Income received in cash, plus (i) in respect of any Fiscal Quarter ended on or prior to December 31, 2000, amounts paid by Conseco in closing out swaps in an amount not to exceed $15,000,000 less the value of the collateral attributable to the relevant swaps, minus (j) cash operating expenses of Conseco, minus (k) capital expenditures of Conseco, minus (l) any amounts paid by Conseco in repayment of any loan referred to in clause (f) above. Amounts received by Conseco or any of its Subsidiaries in respect of any Specified Cash Event shall be excluded from this calculation. "Conseco Finance" means Conseco Finance Corp., a Delaware corporation. "Conseco Finance Entities" means, collectively, Conseco Finance and its consolidated Subsidiaries and "Conseco Finance Entity" means any one of them individually. "Conseco Finance Tangible Net Worth" means, at any date, all amounts that would, in conformity with GAAP, be included on a consolidated balance sheet of Conseco Finance and its Subsidiaries under stockholders' equity at such date, as adjusted by the following items to the extent increasing or reducing, as the case may be, such amounts: plus (a) unrealized losses (or, if applicable, minus unrealized gains), plus (b) any non-cash charges specified in clause (f) or (g) of the definition of Conseco Adjusted Earnings (subject to the limits applicable thereto) minus (c) goodwill, minus (d) Interest Only Securities, minus (e) servicing rights plus (f) the amount of any cash dividends paid by Conseco Finance to Conseco (directly or indirectly). If all or any portion of any intercompany Indebtedness owing to Conseco or any of its Subsidiaries by Conseco Finance or any of its Subsidiaries is converted into equity, no positive impact of such conversion shall be included in determining Conseco Finance Tangible Net Worth. "Conseco Guaranty" means any "Relevant Conseco Guaranty" under and as defined in the documents governing any Facility. "Conseco Series F Preferred Stock" means $500,000,000 stated value of Conseco's Series F Common Linked Convertible Preferred Stock, without par value and any replacement thereof, except to the extent held by any Person (other than Thomas H. Lee or any Person, fund or individual affiliated therewith) that acquires such stock pursuant to a bona fide arm's length transaction. "Conseco's Cash On Hand" means, on any date of determination, the aggregate amount of cash and Cash Equivalents then held by (a) Conseco or (b) Conseco Finance or any of its Subsidiaries in connection with Investments made pursuant to Section 4.09(a)(i)(y) or (z), excluding amounts in the Reserve and amounts required on such date to be distributed pursuant to Section 2.01(b). 5 "Contingent Obligation" means, without duplication, any agreement, undertaking or arrangement by which any Person guarantees, endorses or otherwise becomes or is contingently liable upon (by direct or indirect agreement, contingent or otherwise, to provide funds for payment, to supply funds to, or otherwise to invest in, a debtor, or otherwise to assure a creditor against loss) the debt, obligation or other liability of any other Person (other than by endorsements of instruments in the course of collection), or guarantees the payment of dividends or other distributions upon the shares of any other Person; provided, that (a) the obligations of any Person under Reinsurance Agreements or in connection with Investments of Insurance Subsidiaries, (b) the obligations of Conseco in connection with its guaranty of the Trust Preferred Securities, the Unit Securities and the FELINE PRIDES and (c) the obligations of any Person in connection with its guaranty of Asset Backed Securities shall not be deemed Contingent Obligations of any such Person or Conseco, as applicable. The amount of any Person's liability with respect to any Contingent Obligation shall (subject to any limitation set forth therein) be deemed to be the outstanding principal amount (or maximum outstanding principal amount, if larger) of the debt, obligation or other liability outstanding thereunder or, if not stated or if indeterminable, the maximum reasonably anticipated liability in respect thereof at the time of determination. "Contractual Obligation" means, as to any Person, any provision of any security issued by such Person or of any agreement, undertaking, contract, indenture, mortgage, deed of trust or other instrument, document or agreement to which such Person is a party or by which it or any of its property is bound. "D&O Facilities" means the collective reference to the $144 Million D&O Facility, the $181 Million D&O Facility and the $245 Million D&O Facility. "Debt to Total Capitalization Ratio" means, as of any date of determination, without duplication, the ratio of (a) the sum of (i) the principal amount of and accrued but unpaid interest on all Indebtedness for borrowed money of Conseco (including, without limitation, (x) any Indebtedness evidenced by bonds, debentures, notes or other similar instruments and (y) any Indebtedness resulting from any conversion of preferred stock) for which Conseco is directly liable on such date and which is neither a Contingent Obligation (except that Contingent Obligations of Conseco in respect of Indebtedness of the type described in clause (a) or (b) of the definition thereof (other than in respect of the D&O Facilities) shall nevertheless be included in such calculation) nor Indebtedness arising out of a Permitted Transaction and (ii) dividends on Trust Preferred Securities that are accrued but unpaid; to (b) Total Capitalization on such date; provided, however, that solely for the purposes of calculating the Debt to Total Capitalization Ratio, the term "Indebtedness" shall exclude preferred securities issued by business trusts formed by Conseco, guaranteed by Conseco and related to guarantees and intercompany notes. "Default" means any event or circumstance which, with the giving of notice, the lapse of time, or both, would (if not cured or otherwise remedied during such time) constitute an Event of Default. "Department" means, with respect to any Insurance Subsidiary, the Governmental Authority of such Insurance Subsidiary's state of domicile with which such Insurance Subsidiary is required to file its Annual Statement. "Disposition" means the sale, assignment, leasing, transfer, contribution, conveyance, issuance or other disposal of or granting of options, warrants or other rights with respect to any of a Person's assets (including any transaction pursuant to a Reinsurance Agreement and, in the case of any Subsidiary, the issuance or sale of its Capital Stock). The terms "Dispose" and "Disposed of" shall have correlative meanings. "Disposition Transaction" has the meaning specified in the definition of "Asset Sale". 6 "Dollars", "dollars" and "$" each mean lawful money of the United States. "Effective Date" September 22, 2000. "Environmental Laws" means all federal, state or local laws, statutes, common law duties, rules, regulations, ordinances and codes, together with all administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, Governmental Authorities, in each case relating to environmental, health, safety and land use matters. "ERISA" means the Employee Retirement Income Security Act of 1974 and regulations promulgated thereunder. "ERISA Affiliate" means any trade or business (whether or not incorporated) under common control with Conseco within the meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code). "ERISA Event" means (a) a Reportable Event with respect to a Pension Plan; (b) a withdrawal by Conseco or any ERISA Affiliate from a Pension 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) or a cessation of operations which is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by Conseco or any ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to terminate, the treatment of a Plan amendment as a termination under Section 4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (e) an event or condition which could reasonably be expected to constitute grounds under Section 4042 of ERISA for the termination of or the appointment of a trustee to administer, any Pension Plan or Multiemployer Plan; or (e) the imposition of any liability under Title IV of ERISA, other than PBGC premiums due but not delinquent under Section 4007 of ERISA, upon Conseco or any ERISA Affiliate. "Event of Default" means any of the events or circumstances specified in Section 5.01. "Exchange Act" means the Securities Exchange Act of 1934 and the regulations promulgated thereunder. "Exempt Covenant/Waterfall Amounts" means up to $500,000,000 of Net Proceeds from the issuance of Specified Junior Securities received after the Near-Term Facilities Termination Date. "Exempt Waterfall Amounts" means Net Proceeds of Specified Junior Securities (not designated as "Exempt Covenant/Waterfall Amounts") which are applied either (a) (i) prior to the Near-Term Facilities Termination Date, to the Near-Term Facilities (in the manner contemplated by Section 2.02(b)) and (ii) thereafter, to the $1.5 Billion Facility and the Specified D&O Facilities (in the manner contemplated by Section 2.02(c)) or (b) to make investments in Conseco's Subsidiaries to support their operations. 7 "Exposure" means, with respect to each Bank, (a) in the case of the $155 Million Facility, the $766 Million Facility and the $1.5 Billion Facility, any outstanding "Loans" made by such Bank thereunder and (b) in the case of the D&O Facilities, any outstanding "Loans" made by such Bank thereunder minus such Bank's pro rata share of any cash collateral provided pursuant to the applicable Cash Collateral Agreement. "Facilities" means the collective reference to the Near-Term Facilities, the D&O Facilities and the $1.5 Billion Facility. "FELINE PRIDES" means the units consisting of (a) 6.75% Trust Originated Preferred Securities issued by Conseco Financing Trust IV (the "PRIDES Preferred Securities") and (b) a purchase contract to purchase shares of common stock from Conseco (the "PRIDES Purchase Contracts"). "Fiscal Quarter" means any fiscal quarter of a Fiscal Year. "Fiscal Year" means any period of twelve consecutive calendar months ending on December 31. "Fixed Interest Charges" means, for any Calculation Period, (without duplication) (a) interest paid or, without duplication, accrued but unpaid on the Exposure under any Facility (other than the D&O Facilities) with respect to such Calculation Period, plus (b) interest paid or, without duplication, accrued but unpaid on any Indebtedness of Conseco set forth in clause (a), (b) or (d) of the definition thereof during such Calculation Period, minus (c) to the extent included in clause (b) above, interest paid or, without duplication, accrued but unpaid on any Indebtedness which has been eliminated from the balance sheet liabilities of Conseco on a consolidated basis in accordance with GAAP, minus (d) to the extent included in clause (b) above, interest paid or, without duplication, accrued but unpaid on any Indebtedness of any Conseco Finance Entity or any Insurance Subsidiary. Interest paid, or accrued and unpaid, in respect of Indebtedness related to the Trust Preferred Securities or the FELINE PRIDES shall be excluded from the above calculation. "FRB" means the Board of Governors of the Federal Reserve System, and any Governmental Authority succeeding to any of its principal functions. "FY 2000 Adjustments" has the meaning specified in the definition of "Total Capitalization". "GAAP" means generally accepted accounting principles set forth from time to time in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board (or agencies with similar functions of comparable stature and authority within the U.S. accounting profession), which are applicable to the circumstances as of the date of determination. "Governmental Authority" means any nation or government, any state or other political subdivision thereof, any central bank (or similar monetary or regulatory authority) thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, and any corporation or other entity owned or controlled, through stock or capital ownership or otherwise, by any of the foregoing, including any board of insurance, insurance department or insurance commissioner. "Income Taxes" means any Taxes based upon net income. 8 "Indebtedness" means, with respect to any Person, without duplication: (a) all obligations of such Person for borrowed money or in respect of loans or advances; (b) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments; (c) all obligations in respect of letters of credit, whether or not drawn, and bankers' acceptances issued for the account or upon the application or request of such Person; (d) all Capitalized Lease Liabilities of such Person; (e) all obligations of such Person in respect of Swap Contracts; (f) all obligations of such Person to pay the deferred purchase price of property or services which are included as liabilities in accordance with GAAP (other than trade payables entered into in the ordinary course of business on ordinary terms), and all obligations secured by a Lien on property owned or being purchased by such Person (including obligations arising under conditional sales or other title retention agreements); (g) any obligations of a partnership of the kind referred to in clauses (a) through (f) above or clause (h) below in which such Person is a general partner, and (h) all Contingent Obligations of such Person in connection with indebtedness or obligations of others of the kinds referred to in clauses (a) through (g) above; provided, however, that, except for the purpose of the proviso of Section 4.01(d), the term "Indebtedness" shall exclude (i) replevin bonds, surety bonds and other similar bonds (including, without limitation, bonds issued in connection with litigation and repossession activities) issued by an Insurance Subsidiary or a Conseco Finance Entity in the ordinary course of business and (ii) the obligations of any Person under letters of credit (whether or not drawn), bankers' acceptances and swap contracts issued or entered into in connection with any Asset Backed Security. "Independent Auditor" has the meaning specified in Section 3.01(a). "Insignificant Subsidiary" means any Subsidiary of Conseco that is not a Significant Subsidiary. "Insolvency Proceeding" means, with respect to any Person, (a) any case, action or proceeding with respect to such Person before any court or other Governmental Authority relating to bankruptcy, reorganization, insolvency, liquidation, conservation, rehabilitation, receivership, dissolution, winding-up or relief of debtors, or (b) any general assignment for the benefit of creditors, composition, marshalling of assets for creditors, or other, similar arrangement in respect of its creditors generally or any substantial portion of its creditors, in any case, undertaken under U.S. Federal, state or foreign law, including the Bankruptcy Code. "Insurance Subsidiary" means any Subsidiary which is required to be licensed as an insurer or reinsurer. "Interest Coverage Ratio" means, for any Calculation Period, the ratio of (a) Conseco Available Cash Flow for such Calculation Period to (b) Fixed Interest Charges for such Calculation Period. "Interest Only Security" means any interest, including servicing fees, retained by a Conseco Finance Entity relating to the sale or securitization of loans, leases, receivables or installment contracts, which constitutes either an interest only security or a servicing right asset in accordance with GAAP. "Investment" means any advance, loan, extension of credit (by way of guaranty or otherwise) or capital contribution to, or purchase of any Capital Stock, bonds, notes, debentures or other debt securities of, or any assets constituting a business unit of, or any other investment in, any Person. 9 "Investment Grade Ratings Status" means the circumstance that Conseco has a senior unsecured non-credit enhanced long-term debt rating of at least BBB- from S&P and at least Baa3 from Moody's. "Investment Income" means the amount of earnings of Conseco on Investments, net of expenses actually incurred in connection with such Investments and taking into account realized gains and losses on such Investments. "IRS" means the Internal Revenue Service or any Governmental Authority succeeding to any of its principal functions under the Code. "Lehman" means Lehman Brothers Holdings Inc., and any successors. "Lehman Agreement" means, collectively, (a) the Amended and Restated Agreement, dated as of September 22, 2000, by and among Conseco Finance Corp., Conseco, CIHC, Green Tree Residual Finance Corp. I, Green Tree Finance Corp. - Five and Lehman, (b) Amendment to the Warehouse Debt Facility, dated as of September 22, 2000, by and among Lehman Commercial Paper Inc. and Green Tree Finance Corp. - Five and acknowledged and consented to by Conseco Finance Corp. and CIHC, (c) Amendment to the First Residual Facility (Asset Assignment Agreement), dated as of September 22, 2000, by and among Lehman ALI Inc. and Green Tree Residual Finance Corp. I and (d) Amendment to the Second Residual Facility (Master Repurchase Agreement), dated as of September 22, 2000, by and among Lehman Brothers Inc. and Green Tree Residual Finance Corp. I, in each case, as amended, supplemented or otherwise modified from time to time, and any related document or agreement (including the agreements amended or modified by the agreements specified above). "License" means any license, certificate of authority, permit or other authorization which is required to be obtained from any Governmental Authority in connection with the operation, ownership or transaction of insurance business. "Lien" means any security interest, mortgage, deed of trust, pledge, hypothecation, assignment, charge or deposit arrangement, encumbrance, lien (statutory or other) or preferential arrangement of any kind or nature whatsoever in respect of any property (including those created by, arising under or evidenced by any conditional sale or other title retention agreement, the interest of a lessor under a capital lease or any financing lease having substantially the same economic effect as any of the foregoing) and any contingent or other agreement to provide any of the foregoing, but not including the interest of a lessor under an operating lease or the contingent obligation to equally and ratably secure the Public Debt. "Litigation" means any litigation (including, without limitation, any governmental proceeding or arbitration proceeding), tax audit or investigative proceeding, claim, lawsuit, and/or investigation pending or threatened against or involving Conseco or any of its Subsidiaries or any of its or their businesses or operations. "Loan Documents" means the "Loan Documents" under and as defined in the documents governing the Relevant Facility, including, in any event, this Appendix and the Relevant CIHC Guaranty. 10 "Longer-Term Public Debt" means Conseco's 8.5% Notes due October 15, 2002, 6.4% Notes due February 10, 2003, 8-1/8% Senior Notes due February 15, 2003, 10.5% Senior Notes due December 15, 2004, 8.75% Notes due February 9, 2004, 6.8% Notes due June 15, 2005 and 9% Notes due October 15, 2006. "Material Adverse Effect" means (a) a material adverse change in, or a material adverse effect upon, the business, properties, condition (financial or otherwise) of Conseco or Conseco and its Subsidiaries taken as a whole; (b) a material impairment of the ability of Conseco to perform under any Loan Document; or (c) a material adverse effect upon the legality, validity, binding effect or enforceability against Conseco of any Loan Document. "Material Insurance Subsidiary" means an Insurance Subsidiary having Capital and Surplus of $50,000,000 or more. "Moody's" means Moody's Investors Service, Inc., together with any Person succeeding thereto by merger, consolidation or acquisition of all or substantially all of its assets, including substantially all of its business of rating securities. "Multiemployer Plan" means a "multiemployer plan", within the meaning of Section 4001(a)(3) of ERISA, to which Conseco or any ERISA Affiliate makes, is making, or is obligated to make contributions or, during the preceding three calendar years, has made, or been obligated to make, contributions. "NAIC" means the National Association of Insurance Commissioners or any successor thereto, or in absence of the National Association of Insurance Commissioners or such successor, any other association, agency or other organization performing advisory, coordination or other like functions among insurance departments, insurance commissioners and similar Governmental Authorities of the various states of the United States toward the promotion of uniformity in the practices of such Governmental Authorities. "Near-Term Facilities" means the collective reference to the $155 Million Facility and the $766 Million Facility. "Near-Term Facilities Termination Date" means the date on which all "Obligations" under and as defined in the documents governing the $155 Million Facility and the $766 Million Facility have, in both cases, been paid in full in cash. "Net Income" means, for any Person for any Calculation Period, the net income (or loss) of such Person for such period as determined in accordance with GAAP. 11 "Net Proceeds" means (a) with respect to any Disposition by any Person, the aggregate amount of cash and Cash Equivalents received by such Person in respect of such Disposition (including any such amounts received by way of deferred payment of principal pursuant to a note or installment receivable or purchase price adjustment receivable or otherwise, but only as and when received) minus the sum of (i) costs and expenses (including legal fees, notarial fees, accountants fees, investment banking fees, survey costs, title insurance premiums, amounts applied to the repayment of Indebtedness (other than under a Facility) secured by a Lien expressly permitted hereunder on any asset that is the subject of such Disposition, costs of discontinuance (including, without limitation, any reasonable severance payments), Taxes other than Income Taxes (after taking into account any available tax credits or deductions and any tax sharing arrangements) and other customary fees and expenses) incurred in connection with such Disposition and required to be paid in cash or deducted from the proceeds of such Disposition, (ii) the estimated Income Tax actually required to be paid in cash by such Person in connection with such Disposition (after taking into account any available tax credits or deductions and any tax sharing arrangements), (iii) purchase price adjustments reasonably expected to be payable in connection therewith (not to exceed 10% of the purchase price for the relevant Disposition) so long as, if any such amount ceases to be payable, it shall then become "Net Proceeds", (iv) for an Insurance Subsidiary, any amounts which the Department will not permit such Insurance Subsidiary to pay out as a result of such Disposition and (v) for a Conseco Finance Entity, any amounts which the Lehman Agreement will not permit such Conseco Finance Entity to distribute to CIHC or Conseco as a result of such Disposition, so long as, if any such amount becomes so distributable under the Lehman Agreement, it shall then become "Net Proceeds", and (b) with respect to any issuance of Capital Stock of Conseco, any incurrence of Indebtedness by Conseco or any of its Subsidiaries, the occurrence of any Specified Cash Event or the receipt of any amount pursuant to any Permitted Tritel Hedge Transaction, the proceeds thereof in the form of cash and Cash Equivalents minus the costs and expenses incurred in connection therewith (including legal fees, notarial fees, accountants fees, investment banking fees, underwriting discounts and commissions and other customary fees and expenses incurred in connection therewith) and required to be paid in cash or deducted from the proceeds of such Disposition. For purposes of this definition, the Net Proceeds received by any Person in respect of any Disposition shall include such cash or Cash Equivalents as may be received ("subsequent cash proceeds") by such Person at any time or from time to time in connection with the sale, transfer, lease or other disposition, or otherwise in respect of, any consideration other than cash or Cash Equivalents received by such Person in respect of such Disposition, less the estimated Income Tax to be paid in connection with the receipt of such subsequent cash proceeds (after taking into account any available tax credits or deductions and any tax sharing arrangements) that was not theretofore deducted in computing Net Proceeds. "Ninety-Percent Owned Subsidiary" means any Person in which (other than directors' qualifying shares required by law) at least 90% of the Capital Stock of each class having ordinary voting power (or, in the case of Persons other than corporations, membership interests or other equity interests), at the time as of which any determination is being made, is owned, beneficially and of record, directly or indirectly, by Conseco, or by one or more Wholly-Owned Subsidiaries, or both. "Non-Finance Subsidiary" means any Subsidiary which is not a Conseco Finance Entity. "Non-Insurance Subsidiary" means any Subsidiary which is not an Insurance Subsidiary. "Obligations" means all advances, debts, liabilities, obligations, covenants and duties for the payment of money arising under any Loan Document owing by Conseco to the Relevant Banks (or, if such defined term is included in the documents governing the Relevant Facility, any "Indemnified Person"), whether direct or indirect (including those acquired by assignment), absolute or contingent, due or to become due, now existing or hereafter arising. To the extent that any of the foregoing have been cash collateralized, such amounts shall nevertheless be deemed to remain outstanding for the purposes of this Appendix. "PBGC" means the Pension Benefit Guaranty Corporation, or any Governmental Authority succeeding to any of its principal functions under ERISA. 12 "Pension Plan" means a pension plan (as defined in Section 3(2) of ERISA) subject to Title IV of ERISA which Conseco or any ERISA Affiliate sponsors, maintains, or to which it makes, is making, or is obligated to make contributions, or in the case of a multiple employer plan (as described in Section 4064(a) of ERISA) has made contributions at any time during the immediately preceding five (5) plan years. "Permitted Lien" has the meaning specified in Section 4.02. "Permitted Nonrecourse Indebtedness" means (a) nonrecourse Indebtedness of Subsidiaries of Conseco resulting from the sale or securitization of (i) non-admitted assets, policy loans, B-Share Financings, CBOs and CMOs and (ii) loans, leases, receivables, installment contracts and other financial products originated, acquired, sold or securitized by a Conseco Finance Entity and (b) nonrecourse Indebtedness of a Conseco Finance Entity with respect to Interest Only Securities. "Permitted Swap Obligations" means all obligations (contingent or otherwise) of Conseco or any Subsidiary existing or arising under Swap Contracts, provided that each of the following criteria is satisfied: (a) such obligations are (or were) entered into by such Person in the ordinary course of business for the purpose of directly mitigating risks associated with liabilities, commitments or assets held by such Person, or changes in the value of securities issued by such Person in conjunction with a securities repurchase program not otherwise prohibited hereunder, and not for purposes of speculation or taking a "market view;" and (b) such Swap Contracts do not contain any provision ("walk-away" provision) exonerating the non-defaulting Party from its obligation to make payments on outstanding transactions to the defaulting party. "Permitted Transactions" means (a) mortgage-backed security transactions in which an investor sells mortgage collateral, such as securities issued by the Government National Mortgage Association and the Federal Home Loan Mortgage Corporation for delivery in the current month while simultaneously contracting to repurchase "substantially the same" (as determined by the Public Securities Association and GAAP) collateral for a later settlement, (b) transactions in which an investor lends cash to a primary dealer and the primary dealer collateralizes the borrowing of the cash with certain securities, (c) transactions in which an investor lends securities to a primary dealer and the primary dealer collateralizes the borrowing of the securities with cash collateral, (d) transactions in which an investor makes loans of securities to a broker-dealer under an agreement requiring such loans to be continuously secured by cash collateral or United States government securities, (e) transactions in which a federal home loan mortgage bank (a "FHLMB") makes loans, which are sufficiently secured by appropriate assets consisting of government agency mortgage-backed securities, in accordance with the rules, regulations and guidelines of such FHLMB for its loan programs, (f) financing transactions in which a Conseco Finance Entity sells or transfers as collateral loans, leases, receivables or installment contracts to a third party while simultaneously contracting to repurchase or reacquire substantially the same assets and (g) the issuance of any Asset Backed Securities by any Conseco Finance Entity. "Permitted Tritel Hedge Transaction" has the meaning specified in Section 4.11. "Person" means an individual, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture or Governmental Authority or other entity of whatever nature. "Plan" means an employee benefit plan (as defined in Section 3(3) of ERISA) which Conseco sponsors or maintains or to which Conseco makes, is making, or is obligated to make contributions and includes any Pension Plan. 13 "prepay" means, when used with respect to Public Debt, prepay, repurchase, redeem or otherwise optionally or voluntarily defease or segregate funds with respect thereto; and "prepaid" and "prepayment" shall have correlative meanings. "Prepayment Events" means (a) the occurrence of any Specified Cash Event or the consummation of any other Asset Sale, (b) the incurrence by Conseco or any of its Subsidiaries of any Indebtedness of the type described in clause (a) or (b) of the definition thereof, excluding Indebtedness permitted by Section 4.01 other than as set forth in Section 4.01(b) (to the extent required to be applied as a Prepayment Event as set forth in the definition of "Exempt Waterfall Amounts"), (c) the issuance of any Capital Stock by Conseco and (d) any receipt of Net Proceeds in connection with any Permitted Tritel Hedge Transaction. "PRIDES Documents" means the PRIDES Purchase Contracts, the PRIDES Preferred Securities, the Subordinated Indenture dated as of December 8, 1997 between Conseco and The First National Bank of Chicago, as amended by the First Supplemental Indenture, dated as of December 8, 1997, the 6.75% Debentures issued to the PRIDES Trust pursuant to such Indenture, the Amended and Restated Declaration of Trust of the PRIDES Trust, the Preferred Securities Guarantee dated as of December 12, 1997 executed by Conseco, the Common Securities Guarantee dated as of December 12, 1997 executed by Conseco, and the other documents, agreements, schedules, exhibits and instruments referenced in the foregoing agreements and instruments. "PRIDES Preferred Securities" has the meaning set forth in the definition of FELINE PRIDES. "PRIDES Purchase Contracts" has the meaning set forth in the definition of FELINE PRIDES. "PRIDES Trust" means Conseco Financing Trust IV, a Delaware business trust. "Public Debt" means the collective reference to the 2000 Public Debt, the 2001 Public Debt and the Longer-Term Public Debt. "Purchase Money Debt" means Indebtedness incurred by a Person in connection with the purchase of fixed or capital assets by such Person, in which such assets the seller or financier thereof has taken or retained a Lien therein, provided that any such Lien attaches to such asset concurrently with or within one hundred twenty (120) days after the purchase thereof by such Person. "Quarterly Statement" means the quarterly statutory financial statement of any Insurance Subsidiary required to be filed with the insurance commissioner (or similar authority) of its jurisdiction of incorporation or, if no specific form is so required, in the form of financial statements permitted by such insurance commissioner (or such similar authority) to be used for filing quarterly statutory financial statements and shall contain the type of financial information permitted by such insurance commissioner (or such similar authority) to be disclosed therein, together with all exhibits or schedules filed therewith. 14 "Reinsurance Agreements" means any agreement, contract, treaty, certificate or other arrangement by which any Insurance Subsidiary agrees to transfer or cede to another insurer all or part of the liability assumed or assets held by it under one or more insurance, annuity, reinsurance or retrocession policies, agreements, contracts, treaties, certificates or similar arrangements. Reinsurance Agreements shall include, but not be limited to, any agreement, contract, treaty, certificate or other arrangement which is treated as such by the applicable Department. "Relevant Agent" means the "Agent" or "Administrative Agent", as applicable, under the Relevant Facility. "Relevant Banks" means any Bank to which Obligations are owing under the Relevant Facility. "Relevant Cash Collateral Agreement" means, if the Relevant Facility is a D&O Facility, any cash collateral agreement entered into by Conseco or any of its Subsidiaries in favor of the Agent thereunder in order to cash collateralize the Conseco Guaranty relating to such Facility. "Relevant CIHC Guaranty" means the Guaranty and Subordination Agreement, dated as of the Effective Date, made by CIHC in favor of the Relevant Agent and the Relevant Banks. It is agreed that the Relevant CIHC Guaranty shall be terminated and CIHC shall be released from all of its obligations thereunder on the first date after the Near-Term Facilities Termination Date on which Conseco has Investment Grade Ratings Status, so long as no Default or Event of Default shall have occurred and be continuing on such date. "Relevant Conseco Guaranty" means, if the Relevant Facility is a D&O Facility, any guaranty issued by Conseco in favor of the Agent thereunder in order to guaranty the obligations of the individual borrowers under such Facility. "Relevant Facility" means the Facility being amended pursuant to the amendment to which this Appendix is attached. "Reportable Event" means any of the events set forth in Section 4043(c) of ERISA or the regulations thereunder, other than any such event for which the 30-day notice requirement under ERISA has been waived in regulations issued by the PBGC. "Required Banks" means the "Required Banks" under and as defined in the documents governing the Relevant Facility. "Requirement of Law" means, as to any Person, any law (statutory or common), treaty, rule or regulation or determination of an arbitrator or of a Governmental Authority, in each case applicable to or binding upon the Person or any of its property or to which the Person or any of its property is subject. "Reserve" means the collective reference to one or more restricted accounts opened by Conseco with any one or more Banks, on terms and conditions substantially as set forth on Exhibit B hereto. It is understood that any contractual right of setoff contained in the documents governing any Facility will not apply to any Reserve. "Responsible Officer" means the chief executive officer, chief operating officer, chief financial officer or treasurer of Conseco, or any other officer having substantially the same authority and responsibility including, with respect to Section 3.01, any vice-president with responsibility for or knowledge of financial matters of Conseco. "Restricted Payments" has the meaning set forth in Section 4.08. 15 "Risk-Based Capital Ratio" means, with respect to the Insurance Subsidiaries (other than Conseco Direct Life Insurance Company) taken as a whole, on any date of determination, the ratio (expressed as a percentage) of (a) the aggregate Total Adjusted Capital (as defined by the NAIC) for such Insurance Subsidiaries to (b) the aggregate Authorized Control Level Risk-Based Capital (as defined by the NAIC) for such Insurance Subsidiaries. "S&P" means Standard & Poor's Ratings Services, together with any Person succeeding thereto by merger, consolidation or acquisition of all or substantially all of its assets, including substantially all of its business of rating securities. "SAP" means, with respect to any Insurance Subsidiary, the statutory accounting practices prescribed or permitted by the insurance commissioner (or other similar authority) in the jurisdiction of domicile of such Person for the preparation of annual statements and other financial reports by insurance companies of the same type as such Person, which are applicable to the circumstances as of the date of filing of such statement or report. "SEC" means the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions. "Significant Subsidiary" means any Subsidiary of Conseco with, after the elimination of intercompany accounts, (a) assets which constituted at least 5% of Conseco's consolidated total assets, or (b) revenues which constituted at least 5% of Conseco's consolidated total revenue or (c) net earnings which constituted at least 5% of Conseco's consolidated total net earnings, but not less than $10,000,000, all as determined as of the date of Conseco's most recently prepared quarterly financial statements for the 12-month period then ended. "Single Employer Pension Plan" means a pension plan as such term is defined in Section 3(2) of ERISA, other than a multiemployer plan as defined in Section 4001(a)(3) of ERISA, to which Conseco or any other ERISA Affiliate may have liability, including any liability by reason of having been a substantial employer within the meaning of Section 4063 of ERISA at any time during the preceding five years, or by reason of being deemed to be a contributing sponsor under Section 4069 of ERISA. "Specified Cash Events" means the receipt of cash by Conseco or any of its Subsidiaries in connection with the events described on Schedule 1.01B, whether or not in connection with a Disposition. "Specified D&O Facilities" means the collective reference to the $181 Million D&O Facility and the $245 Million D&O Facility. "Specified Junior Securities" means (a) common stock of Conseco and (b) preferred stock of Conseco and subordinated Indebtedness of Conseco that, in each case, does not require cash dividend or cash interest payments prior to September 30, 2005 (other than any requirement that is limited to payments with the proceeds of available Exempt Covenant/Waterfall Amounts received and held aside or otherwise identified prior to the date such preferred stock or subordinated Indebtedness is issued or incurred) or scheduled redemption or principal payments prior to March 31, 2006 and, in the case of subordinated Indebtedness, having subordination and related terms satisfactory to each Agent. "Statutory Net Income" means, for any period, the net income of an Insurance Subsidiary determined in accordance with SAP. 16 "Subordinated Obligations" shall be the collective reference to the unpaid principal of and accrued and unpaid interest on any subordinated Indebtedness and all other subordinated obligations and liabilities of Conseco to the lenders thereof (including, without limitation, interest accruing at the then applicable rate provided in the applicable loan documents for such Indebtedness or obligations after the maturity of the subordinated loans and interest accruing at the then applicable rate provided in such loan documents after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to Conseco, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding), whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, which may arise under, out of, or in connection with, this Appendix, or such loan documents for such subordinated Indebtedness, in each case whether on account of principal, interest, reimbursement obligations, fees, indemnities, costs, expenses or otherwise (including, without limitation, all fees and disbursements of counsel to the lenders thereof that are required to be paid by Conseco pursuant to the terms of the loan documents therefor or this Appendix). "Subsidiary" of a Person means any corporation, partnership, limited liability company, limited liability partnership, joint venture, trust, association or other unincorporated organization of which or in which such Person and such Person's Subsidiaries own directly or indirectly more than 50% of (a) the combined voting power of all classes of stock having general voting power under ordinary circumstances to elect a majority of the board of directors, if it is a corporation, (b) the voting or managing interests (which shall mean the general partner in the case of a partnership), if it is a partnership, joint venture or similar entity, (c) the beneficial interest, if it is a trust, association or other unincorporated organization or (d) the membership interest, if it is a limited liability company; provided, that, with respect to any Investment made by Conseco in any Person in the ordinary course of business solely for investment purposes, such Person shall not be considered a Subsidiary of Conseco for the purposes of this Appendix if such Person is not integral to the business or operations of Conseco or any Significant Subsidiary and, by way of illustration only, Schedule 1.01D, sets forth a nonexclusive list of such Persons who are not Subsidiaries of Conseco because of the operation of this clause. "Surplus Debentures" means, as to any Insurance Subsidiary, debt securities of such Insurance Subsidiary the proceeds of which are permitted to be included, in whole or in part, as Capital and Surplus of such Insurance Subsidiary as approved and permitted by the applicable Department. "Swap Contract" means any agreement whether or not in writing, relating to any transaction that is a rate swap, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap or option, bond, note or bill option, interest rate option, forward foreign exchange transaction, cap, collar or floor transaction, currency swap, cross-currency rate swap, swaption, currency option or any other, similar transaction (including any option to enter into any of the foregoing) or any combination of the foregoing, and, unless the context otherwise clearly requires, any master agreement relating to or governing any or all of the foregoing. 17 "Swap Termination Value" means, in respect of any one or more Swap Contracts, after taking into account the effect of any legally enforceable netting agreement relating to such Swap Contracts, (a) for any date on or after the date such Swap Contracts have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in clause (a) the amount(s) determined as the mark-to-market value(s) for such Swap Contracts, as determined by Conseco based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Swap Contracts (which may include any Relevant Bank). "Synthetic Purchase Agreement" means any agreement pursuant to which Conseco or any of its Subsidiaries is or may become obligated to make (a) any payment in connection with the purchase by any third party from a Person other than Conseco or any of its Subsidiaries (other than any Subsidiary that is a Subsidiary of an Insurance Subsidiary but is not itself an Insurance Subsidiary) of any Capital Stock or Indebtedness of Conseco or any of its Subsidiaries (other than any Subsidiary that is a Subsidiary of an Insurance Subsidiary but is not itself an Insurance Subsidiary) or (b) any payment the amount of which is determined by reference to the price or value at any time of any such Capital Stock or Indebtedness; provided, that (i) no phantom stock or similar plan providing for payments only to current or former directors, officers or employees of Conseco or any of its Subsidiaries (or to their heirs or estates), (ii) no such agreement in respect of any Public Debt that is permitted to be prepaid at such time pursuant to Section 4.10 and (iii) no such agreement in respect of any Disposition of any Capital Stock of a Subsidiary of Conseco that is permitted by Section 4.03 shall be deemed to be a Synthetic Purchase Agreement. "Taxes" means any and all present or future taxes, levies, assessments, imposts, duties, deductions, fees, withholdings or similar charges, and all liabilities with respect thereto. "Tax Sharing Agreement" means the tax sharing agreement dated February 29, 1989, as amended, among Conseco and certain of its Subsidiaries. "Total Capitalization" means, without duplication, (a) the amount described in clause (a) of the definition of "Debt to Total Capitalization Ratio", plus (b) the Total Shareholders' Equity of Conseco, minus (c) the carrying value of Interest Only Securities and servicing rights. Total Capitalization shall be determined without giving effect to (a) the impact of charges or writedowns taken in the third or fourth Fiscal Quarter of the Fiscal Year ending December 31, 2000 ("FY 2000 Adjustments") so long as the aggregate after-tax amount thereof does not exceed $500,000,000 and (b) the impact of any on balance sheet treatment of the D&O Facilities. "Total Shareholders' Equity" means the sum of, without duplication, (a) total common and preferred shareholders' equity of Conseco as determined in accordance with GAAP (calculated excluding unrealized gains (losses) of securities as determined in accordance with FAS 115) and (b) the redemption value or liquidation preference (or if less, the purchase price), as applicable, of the Trust Preferred Securities, the FELINE PRIDES and the Unit Securities. "Trust Preferred Securities" mean preferred securities (a) issued by one or more Delaware business trusts formed by Conseco and (b) guaranteed by Conseco, including specifically, "MIPS," "QuIPS," "TOPrS" and "TruPS", provided that the aggregate face amount of all Trust Preferred Securities does not exceed the greater of $1,930,000,000 or 15% of Total Capitalization at any time. "2000 Public Debt" means Conseco's $150,000,000 7-7/8% Notes due December 15, 2000. "2001 Public Debt" means Conseco's 7.6% Senior Notes due June 21, 2001 and 6.4% Mandatory Par Put Remarketed Securities due June 15, 2011. 18 "Unfunded Pension Liability" means the excess of a Plan's benefit liabilities under Section 4001(a)(16) of ERISA, over the current value of that Plan's assets, determined in accordance with the assumptions used for funding the Pension Plan pursuant to Section 412 of the Code for the applicable plan year. "United States" and "U.S." each means the United States of America. "Unit Securities" means investment units comprised of (a) mandatorily redeemable preferred securities (i) issued by one or more Delaware business trusts formed by Conseco and (ii) guaranteed by Conseco, including specifically, "MIPS," QuIPS," "TOPrS" and "TruPS," and (b) equity forward contracts for the purchase of common stock of Conseco (which forward contracts shall have a settlement date that is earlier than the stated maturity of such preferred securities) collateralized by such preferred securities or government securities in lieu thereof (including, without limitation, principal and interest strips thereof). "Voting Shares" means, with respect to any Person, capital stock issued by such Person, the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or persons performing similar functions) of such Person, even though the right so to vote has been suspended by the happening of any such contingency. "Wholly-Owned Subsidiary"means any corporation in which (other than directors' qualifying shares required by law) 100% of the capital stock of each class having ordinary voting power, and 100% of the capital stock of every other class, in each case (or, in the case of Persons other than corporations, membership interests or other equity interests), at the time as of which any determination is being made, is owned, beneficially and of record, by Conseco, or by one or more of the other Wholly-Owned Subsidiaries, or both. "$50 Million Credit Agreement" means the ECN Dealer Agreement between Conseco and Merrill Lynch, Pierce, Fenner & Smith Incorporated dated September 28, 1999 and the letter dated September 28, 1999 addressed by Merrill Lynch, Pierce, Fenner & Smith Incorporated to Conseco, including the Extendible Commercial Notes Memorandum attached thereto. "$144 Million D&O Credit Agreement" means the Termination and Replacement Agreement, dated as of May 30, 2000, among the individual borrowers parties thereto, the banks parties thereto, Chase, as administrative agent and Chase Securities Inc. and Banc of America Securities LLC as co-lead arrangers and co-lead book managers. "$155 Million Credit Agreement" means the Senior Secured Revolving Credit Agreement, dated as of May 30, 2000, among Conseco, the banks parties thereto, Chase, as administrative agent and Chase Securities Inc. and Banc of America Securities LLC as co-lead arrangers and co-lead book managers. "$181 Million D&O Credit Agreement" means the Credit Agreement, dated as of August 21, 1998, among the individual borrowers parties thereto, the banks parties thereto and BofA, as administrative agent. "$245 Million D&O Credit Agreement" means the Amended and Restated Credit Agreement, dated as of August 26, 1997, among the individual borrowers parties thereto, the banks parties thereto and BofA, as administrative agent. 19 "$766 Million Credit Agreement" means the 364-Day Credit Agreement, dated as of September 25, 1998, among Conseco, the banks parties thereto, the syndication agents and documentation agent named therein and BofA, as agent, as amended on the Effective Date to incorporate the obligations of Conseco under the $50 Million Credit Agreement. "$1.5 Billion Credit Agreement" means the Five-Year Credit Agreement, dated as of September 25, 1998, among Conseco, the banks parties thereto, the syndication agents and documentation agent named therein and BofA, as agent. "$144 Million D&O Facility" means the credit facility evidenced by the $144 Million D&O Credit Agreement and the documents related thereto. "$155 Million Facility" means the credit facility evidenced by the $155 Million Credit Agreement and the documents related thereto. "$181 Million D&O Facility" means the credit facility evidenced by the $181 Million D&O Credit Agreement and the documents related thereto. "$245 Million D&O Facility" means the credit facility evidenced by the $245 Million D&O Credit Agreement and the documents related thereto. "$766 Million Facility" means the credit facility evidenced by the $766 Million Credit Agreement and the documents related thereto. "$1.5 Billion Facility" means the credit facility evidenced by the $1.5 Billion Credit Agreement and the documents related thereto. I.2 Other Interpretive Provisions. (a) The meanings of defined terms are equally applicable to the singular and plural forms of the defined terms. (b) The words "hereof", "herein", "hereunder" and similar words refer to this Appendix as a whole and not to any particular provision of this Appendix; and subsection, Section, Schedule and Exhibit references are to this Appendix unless otherwise specified. (c) (i) The term "including" is not limiting and means "including without limitation." (ii) In the computation of periods of time from a specified date to a later specified date, the word "from" means "from and including"; the words "to" and "until" each mean "to but excluding", and the word "through" means "to and including." (d) Unless otherwise expressly provided herein, (i) references to agreements (including this Appendix) and other contractual instruments shall be deemed to include all subsequent amendments and other modifications thereto, but only to the extent such amendments and other modifications are not prohibited by the terms of any Loan Document, and (ii) references to any statute or regulation are to be construed as including all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting the statute or regulation. (e) The captions and headings of this Appendix are for convenience of reference only and shall not affect the interpretation of this Appendix. 20 (f) This Appendix and other Loan Documents may use several different limitations, tests or measurements to regulate the same or similar matters. Unless otherwise expressly provided, any reference to any action of the Relevant Agent or the Relevant Banks by way of consent, approval or waiver shall be deemed modified by the phrase "in its/their sole and reasonable discretion. (g) This Appendix and the other Loan Documents are the result of negotiations among and have been reviewed by counsel to the Relevant Agent, Conseco and the other parties to the Loan Documents, and are the products of all parties. Accordingly, they shall not be construed against the Relevant Banks or the Relevant Agent merely because of the Relevant Agent's or the Relevant Banks' involvement in their preparation. I.3 Accounting Principles. (a) Unless the context otherwise clearly requires, all accounting terms not expressly defined herein shall be construed, and all financial computations required under this Appendix shall be made, in accordance with GAAP, consistently applied. (b) References hereto in particular columns, lines or sections of any Person's Annual Statement shall be deemed, where appropriate, to be references to the corresponding column, line or section of such Person's Quarterly Statement, or if no such corresponding column, line or section exists or if any report form changes, then to the corresponding item referenced thereby. In the event the column , lines or sections of the Annual Statement referenced herein are changed or renumbered from the columns, lines and sections applicable to the 1999 Annual Statement, all such references shall be deemed references to such column, line or section as so renumbered or changed. ARTICLE II MANDATORY CASH APPLICATIONS II.1 General Application of Available Net Proceeds. (a) On the Effective Date, Available Net Proceeds in the aggregate amount of $392,861,025 shall be applied to the Facilities in the manner specified in Section 2.02(a). 21 (b) On the Effective Date and thereafter, within three Business Days after Conseco or any of its Subsidiaries receives any Available Net Proceeds (other than as described in paragraph (a) above), such Available Net Proceeds shall be applied as follows: first, the first $100,000,000 (or such lesser amount as is necessary to increase the amount of Conseco's Cash on Hand to the Cash on Hand Target) shall be retained by Conseco; second, the next $700,000,000 shall be applied 1/7th per transaction to the Near-Term Facilities and 6/7ths per transaction to fund the Reserve; third, the next $200,000,000 shall be applied to fund the Reserve; fourth, all subsequent Available Net Proceeds until the occurrence of the Near-Term Facilities Termination Date shall be applied 80% per transaction to the Near-Term Facilities, with the remainder being retained by Conseco until it has Cash on Hand equal to the Cash on Hand Target at the time of such transaction, and then 100% to the Near-Term Facilities until the occurrence of the Near-Term Facilities Termination Date; and fifth, all Available Net Proceeds received after the occurrence of the Near-Term Facilities Termination Date shall be applied 50% per transaction to the $1.5 Billion Facility and the Specified D&O Facilities (in the manner contemplated by Section 2.02(c)), with the remainder being retained by Conseco. Notwithstanding the foregoing, the first $30,000,000 of Available Net Proceeds received by Conseco or any of its Subsidiaries on or after the Effective Date after giving effect to Section 2.01(a) may be retained by Conseco. Any Available Net Proceeds referred to in this paragraph as being available for retention by Conseco (i) must, if received by a Subsidiary, be distributed to Conseco for such purpose if such distribution is not prohibited by law, rule or regulation or the Lehman Agreement and (ii) may be used by Conseco for any purpose permitted by this Appendix. Notwithstanding anything to the contrary in this Section 2.01(b), in the event that, in the case of Available Net Proceeds received at any time when clause second or third is applicable, if Conseco's Cash on Hand is less than the Cash on Hand Target, such Available Net Proceeds may be applied to increase Conseco's Cash on Hand (but not above the Cash on Hand Target), provided, that in no event shall the aggregate amount applied to increase Conseco's Cash on Hand pursuant to clause first and this sentence exceed $100,000,000. As used in this paragraph, "Cash on Hand Target" means $330,000,000 minus the amount of any Investment made by Conseco pursuant to Section 4.09(a)(i)(x) (except to the extent such amount was paid back to Conseco, directly or indirectly). (c) After the Reserve has been funded in an amount sufficient to pay the remaining maturities for the 2000 Public Debt and the 2001 Public Debt, if any such Public Debt is, or has been, repurchased at a discount with amounts from the Reserve, an amount from the Reserve equal to the difference between the face amount of the relevant Public Debt and the repurchase price of the relevant Public Debt shall be applied to the Near-Term Facilities or, after the Near-Term Facilities Termination Date, to the $1.5 Billion Facility and the Specified D&O Facilities (in the manner contemplated by Section 2.02(c)). II.2 Application of Available Net Proceeds Allocated to Facilities. (a) The application of Available Net Proceeds described in Section 2.01(a) shall be allocated to the Near-Term Facilities, and to the Exposure of the Banks thereunder, such that, after giving effect thereto, the respective Exposures of the Banks thereunder shall be as set forth on Schedule 2.02 (and any inconsistent provision in the Relevant Facility shall not apply). (b) Any application of Available Net Proceeds allocated to the Near-Term Facilities pursuant to Section 2.01(b) or (c) (and any application of Net Proceeds pursuant to clause (a)(i) of the definition of "Exempt Waterfall Amounts") shall be allocated to each Bank on a pro rata basis based on the percentage of the aggregate then outstanding amount of Exposure under such Facilities held by such Bank. In the case of any Bank having Exposure under more than one Near-Term Facility, such Bank may, by notice to Conseco and the applicable Agent, allocate its reduction in Exposure to one or more such Facilities in such respective amounts as it shall select in its sole discretion (and any inconsistent provision in the Relevant Facility shall not apply). (c) Any application of Available Net Proceeds allocated to the $1.5 Billion Facility and the Specified D&O Facilities pursuant to Section 2.01(b) or (c) (and any application of Net Proceeds pursuant to clause (a)(ii) of the definition of "Exempt Waterfall Amounts") shall be allocated ratably to each such Facility based on the aggregate Exposure then outstanding under such Facilities, and ratably to the Exposure of each Bank under each such Facility. The Available Net Proceeds so allocated to each Specified D&O Facility, at the discretion of Conseco, shall be either (i) deposited in a cash collateral account pursuant to the applicable Cash Collateral Agreement or (ii) applied to repay "Loans" made to the individual borrowers pursuant to the applicable Specified D&O Facility. II.3 Exempt Covenant/Waterfall Amounts. Notwithstanding anything to the contrary in Article IV, Conseco and its Subsidiaries shall be permitted to use Exempt Covenant/Waterfall Amounts for any purpose that would otherwise be prohibited by Article IV (other than to redeem, pay dividends on or otherwise make Restricted Payments in respect of Conseco's common stock or the Conseco Series F Preferred Stock), and any such use shall not constitute a violation of any of the covenants contained in Article IV or usage of any of the basket amounts described therein. 22 ARTICLE III AFFIRMATIVE COVENANTS So long as any Exposure or other Obligation shall remain unpaid or unsatisfied under the Relevant Facility, unless the Required Banks waive compliance in writing: III.1 Financial Statements Conseco shall deliver to the Relevant Agent and each Relevant Bank: (a) as soon as available, but not later than 120 days after the end of each Fiscal Year, copies of the audited consolidated balance sheet of Conseco and its Subsidiaries and the unaudited consolidating balance sheet of Conseco and its Subsidiaries as at the end of such year and the related consolidated statements of earnings, shareholders' equity and cash flows for such year, setting forth in the case of the audited consolidated statements in comparative form the figures for the previous Fiscal Year, and accompanied by the opinion of PricewaterhouseCoopers or another nationally-recognized independent public accounting firm ("Independent Auditor"), which report shall state that such audited consolidated financial statements present fairly the financial position and result of operations of Conseco and its Subsidiaries for the periods indicated in conformity with GAAP applied on a basis consistent with prior years, except as stated therein. Such opinion shall not be qualified or limited because of a restricted or limited examination by the Independent Auditor of any material portion of Conseco's or any Subsidiary's records; (b) as soon as available, but not later than 60 days after the end of each of the first three Fiscal Quarters of each Fiscal Year, copies of the condensed unaudited consolidated and consolidating balance sheet of Conseco and its Subsidiaries as of the end of such quarter and the related condensed unaudited statements of earnings, shareholders' equity and cash flows for the period commencing on the first day and ending on the last day of such quarter, and certified by a Responsible Officer as fairly presenting, in accordance with GAAP (subject to the absence of footnotes and ordinary, good faith year-end and audit adjustments), the financial position and the results of operations of Conseco and the Subsidiaries; (c) as soon as available but not later than 75 days after the close of each Fiscal Year of each Insurance Subsidiary, copies of the unaudited Annual Statement of such Insurance Subsidiary, certified by a Responsible Officer of such Insurance Subsidiary, all such statements to be prepared in accordance with SAP consistently applied throughout the periods reflected therein and, if required by the applicable Governmental Authority, audited and certified by independent certified public accountants of recognized national standing; (d) as soon as available but not later than 60 days after the close of each of the first three (3) Fiscal Quarters of each Fiscal Year of each Insurance Subsidiary which is a Significant Subsidiary, copies of the Quarterly Statement of each of the Insurance Subsidiaries, certified by a Responsible Officer of such Insurance Subsidiary, all such statements to be prepared in accordance with SAP consistently applied through the period reflected herein; (e) within 15 days after being delivered to any Insurance Subsidiary constituting a Significant Subsidiary, any draft or final Triennial Examination Report issued by the applicable Department or the NAIC that results in material adjustments to the financial statements referred to in subsection (a), (b) or (c); and 23 (f) within 90 days after the close of each Fiscal Year of each Insurance Subsidiary, a copy of the "Statement of Actuarial Opinion" and "Management Discussion and Analysis" for each such Insurance Subsidiary which is provided to the applicable Department (or equivalent information should such Department no longer require such a statement) as to the adequacy of loss reserves of such Insurance Subsidiary, such opinion to be in the format prescribed by the insurance code of the state of domicile of such Insurance Subsidiary. III.2 Certificates; Other Information. Conseco shall furnish to the Relevant Agent, with sufficient copies for each Relevant Bank (other than in the case of clause (e)): (a) concurrently with the delivery of the financial statements referred to in Sections 3.01(a) and (b), a Compliance Certificate executed by a Responsible Officer, (b) promptly, (i) copies of all Forms 10-K and 10-Q that Conseco or any Subsidiary may file with the SEC or (ii) copies of the certificate and related financial information provided pursuant to the Lehman Agreement in connection with evidencing periodic compliance with financial covenants therein, and promptly upon the Relevant Agents' request, financial statements and reports that Conseco sends to its shareholders and copies of all other financial statements and regular, periodic or special reports (including Form 8-K) that Conseco or any Subsidiary may make to, or file with, the SEC; (c) promptly and in any event within three Business Days after learning thereof, notification of any changes after the date hereof in the rating given by S&P or Moody's in respect of Conseco's senior unsecured Indebtedness or by A.M. Best in respect of the Insurance Subsidiaries; (d) (i) concurrently with the consummation of any Disposition Transaction yielding gross proceeds in excess of $2,000,000, (x) a description of such transaction and (y) a calculation of the gross proceeds thereof and (ii) concurrently with the occurrence of any Prepayment Event or the issuance of any Specified Junior Securities, (i) a description of the relevant transaction, (ii) a calculation of the Net Proceeds (including an accounting of the items deducted from the cash or Cash Equivalents received in connection with such transaction) thereof and (iii) if applicable its intention to treat such Net Proceeds of the type described in the definition of either (i) Exempt Covenant/Waterfall Amount or (ii) Exempt Waterfall Amount as an Exempt Covenant/Waterfall Amount or an Exempt Waterfall Amount, respectively (including, if an Exempt Waterfall Amount, whether the Net Proceeds will be applied under clause (a) or (b) of such definition); and (e) promptly, such additional information regarding the business, financial or corporate affairs of Conseco or any Subsidiary as the Relevant Agent, at the request of any Relevant Bank, may from time to time reasonably request. III.3 Notices. Conseco shall promptly notify the Relevant Agent: (a) of the occurrence of any Default or Event of Default; (b) of any matter that has resulted in a Material Adverse Effect, including (i) any breach or non-performance of, or any default under, a Contractual Obligation of Conseco or any Subsidiary; (ii) any dispute, litigation, investigation, proceeding or suspension between Conseco or any Subsidiary and any Governmental Authority; or (iii) the commencement of, or any material development in, any Litigation affecting Conseco or any Subsidiary, including pursuant to any applicable Environmental Laws; 24 (c) of the commencement of, or the occurrence of any development in, any litigation or proceeding (i) which seeks to enjoin, prohibit, discontinue or otherwise impacts the validity or enforceability of this Appendix or any of the other Loan Documents or other transactions contemplated hereby or thereby, or (ii) which could be reasonably expected to have a Material Adverse Effect. (d) of the occurrence of any of the following events affecting Conseco or any ERISA Affiliate (but in no event more than 10 days after such event) and deliver to the Relevant Agent and each Relevant Bank a copy of any notice with respect to such event that is filed with a Governmental Authority and any notice delivered by a Governmental Authority to Conseco or any ERISA Affiliate with respect to such event: (i) an ERISA Event; or (ii) a material increase in the Unfunded Pension Liabilities of any Pension Plan; (iii) the adoption of or the commencement of contributions to, any Plan subject to Section 412 of the Code by Conseco or any ERISA Affiliate; or (iv) the adoption of any amendment to a Plan subject to Section 412 of the Code, if such amendment results in a material increase in contributions or Unfunded Pension Liability; provided, however, that no such notice will be required under this Section 3.03(d) with respect to the occurrence of any such event if such occurrence does not result in, and is not reasonably expected to result in, any liability to Conseco of more than $65,000,000 or any liability to any ERISA Affiliate of more than $20,000,000. (e) of any material change in accounting policies or financial reporting practices by Conseco or any of its Subsidiaries; (f) of the receipt of any notice from any Governmental Authority of the expiration without renewal, revocation, suspension or restriction of or the institution of any proceedings to revoke, suspend or restrict, any License now or hereafter held by any Insurance Subsidiary which is required to conduct insurance business in compliance with all applicable laws and regulations and the expiration, revocation or suspension of which could reasonably be expected to have a Material Adverse Effect; (g) of the receipt of any notice from any Governmental Authority of the institution of any disciplinary proceedings against or in respect of any Insurance Subsidiary, or the issuance of any order, the taking of any action or any request for an extraordinary audit for cause by any Governmental Authority which could reasonably be expected to have a Material Adverse Effect; (h) of any judicial or administrative order limiting or controlling the insurance business of any Insurance Subsidiary (and not the insurance industry generally) which has been issued or adopted and which has had, or which could reasonably be expected to have, a Material Adverse Effect, or (i) of any actual or proposed changes in any applicable insurance code which could reasonably be expected to have a Material Adverse Effect. Each notice under this Section shall be accompanied by a written statement by a Responsible Officer setting forth details of the occurrence referred to therein, and stating what action Conseco or any affected Subsidiary proposes to take with respect thereto and at what time. Each notice under Section 3.03(a) shall describe with particularity any and all clauses or provisions of this Appendix or other Loan Document that have been (or reasonably foreseeably will be) breached or violated. 25 III.4 Preservation of Corporate Existence, Etc. Conseco shall, and shall cause each Significant Subsidiary to (except as permitted by Section 4.03 or 4.07): (a) preserve and maintain in full force and effect its corporate existence and good standing under the laws of its state or jurisdiction of incorporation; (b preserve and maintain in full force and effect all governmental rights, privileges, qualifications, permits, licenses and franchises necessary in the normal conduct of its business, except where such failure to preserve and maintain could not reasonably be expected to have a Material Adverse Effect; and (c use reasonable efforts, in the ordinary course of business, to preserve its business organization and goodwill. III.5 Insurance. Conseco shall maintain, and shall cause each Significant Subsidiary to maintain, with financially sound and reputable independent insurers, insurance with respect to its properties and business against loss or damage of the kinds customarily insured against by Persons engaged in the same or similar business, of such types and in such amounts as are customarily carried under similar circumstances by such other Persons. III.6 Payment of Obligations. Conseco shall, and shall cause each Significant Subsidiary to, pay and discharge as the same shall become due and payable, all of the following: (a all material tax liabilities, assessments and governmental charges or levies upon it or its material properties or assets, unless the same are not overdue for a period of more than 60 days or are being contested in good faith by appropriate proceedings and adequate reserves in accordance with GAAP are being maintained by Conseco or such Subsidiary; and (b all material indebtedness, as and when due and payable, but subject to any subordination provisions contained in any instrument or agreement evidencing such Indebtedness. III.7 Compliance with Laws. Conseco shall comply, and shall cause each Subsidiary to comply, in all material respects with all Requirements of Law of any Governmental Authority having jurisdiction over it or its business (including the Federal Fair Labor Standards Act and all applicable Environmental Laws), the noncompliance with which could reasonably be expected to have a Material Adverse Effect, except such as may be contested in good faith or as to which a bona fide dispute may exist. III.8 Compliance with ERISA. Conseco shall, and shall cause each of its ERISA Affiliates to: (a) maintain each Plan in compliance in all material respects with the applicable provisions of ERISA, the Code and other federal or state law; (b) cause each Plan which is qualified under Section 401(a) of the Code to maintain such qualification; and (c) make all required contributions to any Plan subject to Section 412 of the Code, except where such failure to maintain as set forth in (a) or (b) or to make contributions as set forth in (c) could not be reasonably expected to have a Material Adverse Effect. 26 III.9 Inspection of Property and Books and Records; Expense Reimbursement. Conseco shall maintain and shall cause each Subsidiary to maintain proper books of record and account, in which full, true and correct entries in all material respects in conformity with GAAP or SAP, as applicable, consistently applied (except as stated therein) shall be made of all financial transactions and matters involving the assets and business of Conseco and such Subsidiary. Conseco shall permit, and shall cause each Subsidiary to permit, representatives and independent contractors of the Relevant Agent or any Relevant Bank to visit and inspect any of their respective properties, to examine their respective corporate, financial and operating records, and make copies thereof or abstracts therefrom, and to discuss their respective affairs, finances and accounts with their respective directors, officers, and independent public accountants, all at such reasonable times during normal business hours and as often as may be reasonably desired, upon reasonable advance notice to Conseco, provided, however, when an Event of Default exists the Relevant Agent or any Relevant Bank may do any of the foregoing at any time during normal business hours and without advance notice. III.10 Tritel Disposition. Conseco shall use commercially reasonable efforts to Dispose of all or substantially all of its interest in Tritel, Inc. prior to March 31, 2001. III.11 Conversion of FELINE PRIDES. Conseco shall issue shares of common stock to holders of FELINE PRIDES in accordance with the terms of the PRIDES Documents. Otherwise, and except as required by the terms of the PRIDES Documents, Conseco shall, and shall cause its Affiliates to, refrain from purchasing or redeeming any FELINE PRIDES, PRIDES Purchase Contracts or PRIDES Preferred Securities, whether in the open market or otherwise. Nothing in this provision shall have the effect of preventing Conseco or the PRIDES Trust from complying with the terms and conditions set forth in the PRIDES Documents. ARTICLE IV NEGATIVE COVENANTS So long as any Exposure or other Obligation shall remain unpaid or unsatisfied under the Relevant Facility, unless the Required Banks waive compliance in writing: IV.1 Limitation on Indebtedness. Conseco shall not, and shall not permit any of its Subsidiaries to, incur or at any time be liable with respect to, any Indebtedness, except: (a Permitted Swap Obligations and Permitted Transactions; (b Specified Junior Securities; (c Indebtedness of Conseco or any Subsidiary pursuant to (i) the items set forth on Schedule 4.01(c) and (ii) extensions, renewals or replacements thereof, provided that no such extension, renewal or replacement shall increase the principal amount thereof, except to the extent the increase would otherwise be permitted under this Section 4.01; 27 (d Contingent Obligations of: (i) CIHC in respect of (A) Conseco's obligations under any Facility, and (B) obligations of one or more Conseco Finance Entities (I) in an aggregate amount not to exceed $125,000,000 in respect of obligations to Lehman or an Affiliate thereof, (II) in an aggregate amount not to exceed $125,000,000 in respect of cash management or a swing line credit facility for the general corporate purposes of one or more of the Conseco Finance Entities and (III) in an aggregate amount not to exceed $50,000,000 incurred for general corporate purposes (so long as, in each case, the documentation governing any such Contingent Obligation (including any related subordination arrangement) is not at any time materially more favorable to the beneficiaries thereof than the Relevant CIHC Guaranty); (ii) Conseco in respect of any individual borrower's obligations under any D&O Facility; (iii) any Conseco Finance Entity relating to loans, leases, receivables, installment contracts and other financial products originated, acquired or sold by such Conseco Finance Entity or any other Conseco Finance Entity; and (iv) Conseco or any Subsidiary in the ordinary course of business not otherwise described above in an aggregate amount not to exceed at any time (A) ten percent (10%) of Total Shareholders' Equity minus (B) the aggregate amount of Conseco's Contingent Obligations under clause (ii) of this paragraph at any time, provided that (I) Contingent Obligations in respect of Indebtedness of the type described in clause (a) or (b) of the definition thereof shall not be permitted by this clause (iv) and (II) the documentation governing any Contingent Obligation of CIHC pursuant to this clause (iv) (including any related subordination arrangement) shall not at any time be materially more favorable to the beneficiaries thereof than the Relevant CIHC Guaranty; provided, that in no event shall Conseco or any of its Subsidiaries (other than a Conseco Finance Entity) have any Contingent Obligations (including obligations as an account party) pursuant to this paragraph (d) in respect of any Indebtedness incurred by or for the benefit of any Conseco Finance Entity other than as specifically permitted in clause (i)(B) above; (e Indebtedness (including Contingent Obligations) of any Conseco Finance Entity to the extent that (i) neither Conseco nor any Non-Finance Subsidiary is directly liable thereon, and (ii) neither Conseco nor any Non-Finance Subsidiary has any Contingent Obligation in respect of such Indebtedness (other than a Contingent Obligation of CIHC permitted by Section 4.01(d)(i) above); (f Permitted Nonrecourse Indebtedness; (g secured Indebtedness, including, without limitation, Capitalized Lease Liabilities and Purchase Money Debt, provided, that (i) the aggregate outstanding principal amount of Indebtedness of this type does not exceed at any time ten percent (10%) of Total Shareholders' Equity at such time and (ii) such Indebtedness shall not be secured by any Lien other than a Lien expressly permitted by Section 4.02(i); (h Indebtedness among Conseco and its Subsidiaries (other than Conseco Finance Entities); (i Indebtedness owing by any Conseco Finance Entity to the extent the related Investment is permitted under Section 4.09(a); (j Indebtedness (other than for borrowed money) subject to Liens permitted under Section 4.02(b), (d), (e) or (f); (k Indebtedness in respect of Surplus Debentures entered into by an Insurance Subsidiary; (l unsecured Indebtedness of Conseco in an aggregate principal amount not to exceed $100,000,000 at any time outstanding; and (m Indebtedness in respect of the Facilities. IV.2 Liens. Conseco shall not, and shall not permit any of its Subsidiaries to, create, assume or suffer to exist any Lien on any asset now owned or hereafter acquired by it, except for the following (collectively called "Permitted Liens"): (a Liens in connection with Permitted Transactions; (b Liens for Taxes which are not overdue for more than 60 days or for Taxes being contested in good faith and by appropriate proceedings and with respect to which adequate reserves are being maintained in accordance with GAAP; 28 (c Liens shown on Schedule 4.02(c), including extensions, renewals and replacements of such Liens; provided that (i) no such Lien is spread to cover any additional property (other than after acquired title in or on such property and proceeds of the existing collateral in accordance with the document creating such Lien) and (ii) the Indebtedness secured thereby is not increased by more than 10% (of the aggregate principal amount of such Indebtedness outstanding on the Effective Date) except as otherwise permitted under Section 4.01 (in which case the portion representing any additional increase must be permitted by another paragraph of this Section 4.02); (d Liens incurred in the ordinary course of business in connection with worker's compensation, unemployment insurance or other forms of governmental insurance or benefits or to secure performance of tenders, statutory obligations, leases and contracts (other than for borrowed money) entered into in the ordinary course of business or to secure obligations on surety or appeal bonds; (e Liens of mechanics, carriers, and materialmen and other like Liens arising in the ordinary course of business in respect of obligations which are not overdue for more than 60 days or which are being contested in good faith and by appropriate proceedings and with respect to which adequate reserves are being maintained in accordance with GAAP; (f Liens arising in the ordinary course of business for sums being contested in good faith and by appropriate proceedings and with respect to which adequate reserves are being maintained in accordance with GAAP, or for sums not due, and in either case not involving any deposits or advances for borrowed money or the deferred purchase price of property or services; (g Liens in favor of the trustee on sums required to be deposited with the trustee under the indentures described on Schedule 4.02(g); (h Liens incurred on assets of Subsidiaries that are Conseco Finance Entities securing Indebtedness which is expressly permitted by Section 4.01(e) or (f); (i Liens securing Indebtedness permitted by Section 4.01(g); provided that such Liens consist exclusively of: (i) Liens securing the Relevant Facility, (ii) Liens pursuant to any Cash Collateral Agreement (and a Lien may be incurred on the collateral under the Cash Collateral Agreement in favor of the Public Debt secured by the Collateral Agreement), (iii) Liens on "Collateral" as defined in the Collateral Agreement, (iv) Liens on Conseco's interest in Tritel, Inc. in existence of the Effective Date securing $25,000,000 of notes payable to Ericsson, Inc., and (v) Liens on other assets that (1) are not subject to a Lien incurred pursuant to clause (i), (ii), (iii) or (iv) above and (2) are not described on Schedule 1.01B securing Indebtedness in an aggregate principal amount not to exceed (x) 25% of the Available Basket Amount at any time prior to the Near-Term Facilities Termination Date or (y) 50% of the Available Basket Amount at any time thereafter; (j easements, rights-of-way, zoning restrictions, restrictions and other similar encumbrances incurred in the ordinary course of business and which do not materially interfere with the ordinary course of business of Conseco and its Subsidiaries; (k Liens on property of Conseco and its Subsidiaries in favor of landlords securing licenses, subleases or leases of property permitted hereunder; (l licenses, leases or subleases permitted hereunder granted to others not materially interfering in any material respect in the business of Conseco and its Subsidiaries; 29 (m attachment or judgment Liens not constituting an Event of Default under Section 5.01(i); (n Liens arising from precautionary Uniform Commercial Code financing statement filings with respect to operating leases or consignment arrangements entered into by Conseco and its Subsidiaries in the ordinary course of business; and (o Liens in connection with a Permitted Tritel Hedge Transaction. None of the Permitted Liens shall be permitted on the Reserve or any of the Reserve Amounts (as defined in the relevant agreement governing the Reserve). IV.3 Disposition of Assets. Conseco shall not and shall not permit any of its Subsidiaries to, sell, assign, lease, transfer or otherwise Dispose of (whether in one or a series of transactions) any property (including accounts and notes receivable with or without recourse and Capital Stock of any Subsidiary whether newly issued or otherwise) or enter into any agreement to do any of the foregoing, except: (a Dispositions of inventory or equipment (including, without limitation, repossessed and/or off lease property of Conseco Finance), all in the ordinary course of business consistent with past practices; (b the sale of equipment to the extent that such equipment is exchanged for credit against the purchase price of similar replacement equipment, or the proceeds of such sale are reasonably promptly applied to the purchase price of such replacement equipment; (c Dispositions of Investments by Insurance Subsidiaries (other than any of their respective Investments in Persons engaged in insurance lines of business) in the ordinary course of business consistent with past practices; (d Dispositions of (i) in the case of any Conseco Finance Entity, loans, leases, receivables, installment contracts and other financial products originated, acquired, sold or securitized by such Conseco Finance Entity or (ii) interests in or components of Interest Only Securities; (e intercompany Dispositions made between or among Conseco and its Subsidiaries (or Subsidiaries of Conseco with other Subsidiaries of Conseco or Conseco), in each case, in the ordinary course of business; (f (i) any Disposition pursuant to a Reinsurance Agreement so long as such Disposition is entered into in the ordinary course of business for the purpose of managing insurance risk consistent with industry practice and (ii) any other Disposition pursuant to a Reinsurance Agreement so long as (x) the proceeds therefrom are retained by an Insurance Subsidiary, (y) such proceeds are used for the general corporate purposes of the Insurance Subsidiaries (including for reinvestment within insurance lines of business similar to Conseco's insurance lines of business at the time of the relevant transaction) and (z) the aggregate statutory profit and/or gains on insurance policy sales or other portfolio transfers resulting from all Dispositions described in this clause (ii) consummated after August 25, 2000 shall not exceed $250,000,000; (g obsolete or worn out property disposed of by Conseco or any of its Subsidiaries in the ordinary course of business and consistent with past practices of Conseco and its Subsidiaries; 30 (h transfers resulting from any casualty or condemnation of property or assets; (i licenses or sublicenses of intellectual property and general intangibles and licenses, leases or subleases of other property in the ordinary course of business and consistent with the past practices of Conseco and its Subsidiaries and which do not materially interfere with the business of Conseco and its Subsidiaries; (j any consignment arrangements or similar arrangements for the sale of assets in the ordinary course of business and consistent with the past practices of Conseco and its Subsidiaries; (k the sale or discount of overdue accounts receivable arising in the ordinary course of business and consistent with the past practices of Conseco and its Subsidiaries, but only in connection with the compromise or collection thereof; (l Dispositions permitted by Section 4.07(a); (m Dispositions of Investments set forth on Schedule 4.03(m); (n Dispositions not otherwise permitted hereunder, provided that, in the case of Dispositions constituting Asset Sales, (i) 75% of the consideration received in connection therewith shall consist of cash, Cash Equivalents and/or readily marketable securities that are immediately saleable and (ii) 100% of the Net Proceeds thereof shall consist of Available Net Proceeds and shall be applied as described in Article II; and (o the exercise of the put rights set forth in the PRIDES Documents in connection with a remarketing thereunder in accordance with such documents and Section 3.11. Notwithstanding anything to the contrary in this Section 4.03, no issuance or sale of Capital Stock of any Subsidiary of Conseco (other than any Insignificant Subsidiary) shall be permitted if, after giving effect thereto, Conseco owns, directly or indirectly, 50% or less (but greater than 0%) of the voting Capital Stock of such Subsidiary. IV.4 Other Agreements. Conseco shall not, and shall not permit any of its Subsidiaries to, enter into any agreement (other than agreements with insurance regulators) containing any provision which (a) would be violated or breached by the performance of its obligations hereunder or under any instrument or document delivered or to be delivered by it hereunder or in connection herewith or (b) prohibits or restricts the ability of Conseco to amend or otherwise modify this Appendix or any other document executed in connection herewith. IV.5 Transactions with Affiliates. Conseco shall not, and shall not suffer or permit any Significant Subsidiary to, enter into any material transaction with any Affiliate of Conseco (other than Conseco or a Ninety-Percent Owned Subsidiary), except upon fair and reasonable terms no less favorable to Conseco or such Subsidiary than would be obtained in a comparable arm's-length transaction with a Person not an Affiliate of Conseco or such Subsidiary, and except for insurance transactions, intercompany pooling and other reinsurance transactions entered into in the ordinary course of business and consistent with past practice. IV.6 Change in Business. Conseco shall not, and shall not suffer or permit any Significant Subsidiary to, fundamentally change the type of business in which it is presently engaged as listed on Schedule 4.06. 31 IV.7 Fundamental Changes. Unless the Obligations shall be paid in full concurrently therewith, Conseco shall not enter into any merger, consolidation or amalgamation, or liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution), or Dispose of, all or substantially all of its property or business, other than any merger, consolidation or amalgamation (a) of any Subsidiary of Conseco into Conseco, (b) solely for the purpose of reincorporating Conseco in a different State of the United States or (c) solely for the purpose of consummating an investment permitted by Section 4.09(b)(iii) or (iv). IV.8 Restricted Payments. Conseco shall not declare or pay any dividend (other than dividends payable solely in common stock, or the same class of capital stock as to which the dividend is paid, of the Person making such dividend) on (or make any payment to a related trust for the purpose of paying a dividend), or make any payment on account of, or set apart assets for a sinking or other analogous fund for, the purchase, redemption, defeasance, retirement or other acquisition of, any Capital Stock of Conseco (or any related trust), whether now or hereafter outstanding, or make any other distribution in respect thereof, either directly or indirectly, whether in cash or property or in obligations of Conseco (collectively, "Restricted Payments"), except that (a) Conseco may declare and pay dividends on its common stock so long as, at the time of declaration of the relevant dividend, Conseco has Investment Grade Ratings Status and the Near-Term Facilities Termination Date has occurred, (b) Conseco may declare and pay regularly scheduled dividends on its preferred stock (and permit any related trust to do the same) so long as, at the time of declaration of the relevant dividend, Conseco has Investment Grade Ratings Status and the Near-Term Facilities Termination Date has occurred, (c) Conseco may declare and pay regularly scheduled payments of interest and principal on its debentures underlying the Trust Preferred Securities and the FELINE PRIDES (and the related trusts may pay regularly scheduled dividends under such Trust Preferred Securities and such FELINE PRIDES) so long as (i) Conseco's Cash on Hand on average for the 90 days prior to the date of such declaration is equal to or greater than $100,000,000, (ii) Conseco's Cash on Hand on the date of such payment, after giving effect to the payment of said dividend on such date, is equal to or greater than $100,000,000 and (iii) no Event of Default shall have occurred and be continuing at the time of such payment, (d) Conseco may make cash payments in respect of fractional shares of its preferred stock in an aggregate amount not to exceed $10,000,000 and (e) Conseco may pay dividends to Bankers National Life Insurance Company in respect of its Preferred Series E Capital Stock in an amount not to exceed $36,000,000 per year. IV.9 Investments. (a) Conseco and its Subsidiaries (other than Conseco Finance and its Subsidiaries) shall not, directly or indirectly, make any Investment in Conseco Finance or any of its Subsidiaries after the Effective Date, except (i) intercompany Investments in the ordinary course of business in an aggregate amount not to exceed $250,000,000 at any time outstanding of which (x) $50,000,000 may be made on a permanent basis, (y) $100,000,000 may be made so long as each such Investment pursuant to this clause (y) is repaid within three months of the date of Investment and within each three month period there shall be a three Business Day period during which no Investment pursuant to clause (y) of this clause (i) shall be outstanding, and (z) $100,000,000 may be made so long as each such Investment pursuant to this clause (z) is repaid within six months of the date of Investment and within each six month period there shall be a three Business Day period during which no Investment pursuant to clause (z) of this clause (i) shall be outstanding, and (ii) additional Investments made at any time after the Near-Term Facilities Termination Date in an aggregate amount not to exceed $150,000,000 at any time outstanding. 32 (b) Conseco and CIHC shall not, directly or indirectly, make any Investment in any Person (other than a Subsidiary of Conseco to support its operations in the ordinary course of business) except: (i) Investments made with common stock issued by Conseco, (ii) Investments agreed to but not made prior to the date hereof and set forth on Schedule 4.09(b), (iii) Investments not otherwise permitted hereby in an aggregate amount expended not to exceed $25,000,000 in any Fiscal Year, (iv) Investments made in connection with a sale of assets permitted by Section 4.03 to the extent of the non-cash consideration received by Conseco or a Subsidiary, (v) as permitted by Section 4.09(a) and (vi) Conseco may repurchase its 6.4% Mandatory Par Put Remarketed Securities due June 15, 2011 if required to do so pursuant to the terms and conditions thereof, which repurchase (if so required) shall be conducted in accordance with the terms and conditions of such instruments. It is understood that Investments of the type described in Section 4.09(a) may not be made pursuant to clauses (i) through (iii) of this paragraph (b). IV.10 Optional Payments; Modifications of Certain Agreements; Synthetic Purchase Agreements. (a) Conseco shall not, and shall not permit any of its Subsidiaries (other than Conseco Finance or any of its Subsidiaries) to make any optional or voluntary payment, prepayment, repurchase or redemption of or otherwise optionally or voluntarily defease or segregate funds with respect to Indebtedness (other than the Reserve), other than (i) prepayments of Indebtedness of a Subsidiary of Conseco owed to Conseco or another Subsidiary of Conseco or of Conseco owed to a Subsidiary of Conseco, in each case to the extent prepaid or repaid in the ordinary course of business, which Indebtedness is (A) not related to the Trust Preferred Securities and (B) not a prepayment of loans referred to in clause (f) of the definition of "Conseco Available Cash Flow" unless, in the case of this clause (B), at the time of, and after giving pro forma effect to, such prepayment, Conseco is in compliance with Section 4.14, (ii) prepayments of the 2000 Public Debt, (iii) prepayments of the 2001 Public Debt so long as on the date of such prepayment (or, if earlier, the date on which Conseco enters into an obligation to make such prepayment), Conseco has A.M. Best A- Status, (iv) prepayments of the Longer-Term Public Debt made after the Near-Term Facilities Termination Date so long as the scheduled maturity of the Public Debt being prepaid is earlier than the earliest scheduled maturity then in effect with respect to the remaining Facilities, (v) prepayments of Capital Lease Liabilities in connection with the Disposition of the related asset or property and (vi) prepayments not otherwise permitted by the foregoing clauses so long as the aggregate amount expended in connection therewith does not exceed $25,000,000. (b) Conseco shall not, and shall not permit any of its Subsidiaries (other than Conseco Finance or any of its Subsidiaries) to amend, modify, waive or otherwise change, or consent or agree to any amendment, modification, waiver or other change to, any of the material terms of any subordinated Indebtedness of Conseco or any of its Subsidiaries (other than Conseco Finance or any of its Subsidiaries) the aggregate principal amount of which exceeds $10,000,000 (other than any such amendment, modification, waiver or other change that (i) would extend the maturity or reduce the amount of any payment of principal thereof or reduce the rate or extend any date for payment of interest thereon and (ii) does not involve the payment of a consent fee that is not customary under the circumstances). (c) Conseco shall not, and shall not permit any of its Subsidiaries (other than Conseco Finance or any of its Subsidiaries) to amend, modify, waive or otherwise change, or consent or agree to any amendment, modification, waiver or other change to, any of the material terms of any preferred stock issued by Conseco or any of its Subsidiaries or any related trust (other than any such amendment, modification, waiver or other change that (i) would extend the scheduled redemption date or reduce the amount of any scheduled redemption payment or reduce the rate or extend any date for payment of dividends thereon and (ii) does not involve the payment of a consent fee that is not customary under the circumstances). (d) Conseco shall not, and shall not permit any of its Subsidiaries to enter into or be party to, or make any payment under, any Synthetic Purchase Agreement. 33 IV.11 Negative Pledge on Tritel and Argosy Riverboat. Conseco shall not, and shall not permit any of its Subsidiaries to, pledge or create any security interest or Lien upon (a) any of the Capital Stock of Tritel, Inc. (or any successor thereto) directly or indirectly owned by it (other than (i) any such Lien described in Section 4.02(i)(iv) and (ii) Liens securing obligations under hedging transactions relating to the value of such Capital Stock with counterparties having a senior unsecured non-credit enhanced long-term debt rating of at least A2 from Moody's and A from S&P (a "Permitted Tritel Hedge Transaction")) or (b) the Capital Stock or assets of Conseco Entertainment Inc. or CNC Entertainment LLC. IV.12 Reserve Account. Conseco shall not permit the amounts in the Reserve (a) to be invested in anything other than Cash Equivalents or (b) to be used for any purpose other than to prepay or repay the 2000 Public Debt, the 2001 Public Debt or Exposure under the Facilities, except that, with the prior written consent of each of the Agents, Conseco may use up to 20% of the amounts in the Reserve at any time (but in an aggregate amount not to exceed $160,000,000) for other general corporate purposes permitted by the Loan Documents, including this Appendix. IV.13 Debt to Capitalization Ratio. Conseco shall not permit the Debt to Total Capitalization Ratio as of the end of each Fiscal Quarter set forth below to be greater than the ratio set forth below for such date: ---------------------------------------------------------- --------------- Fiscal Quarter Ending Ratio ---------------------------------------------------------- --------------- December 31, 2000 0.450:1.0 ---------------------------------------------------------- --------------- March 31, 2001 0.435:1.0 ---------------------------------------------------------- --------------- June 30, 2001 0.425:1.0 ---------------------------------------------------------- --------------- September 30, 2001 0.425:1.0 ---------------------------------------------------------- --------------- December 31, 2001 0.400:1.0 ---------------------------------------------------------- --------------- March 31, 2002 0.400:1.0 ---------------------------------------------------------- --------------- June 30, 2002 0.400:1.0 ---------------------------------------------------------- --------------- September 30, 2002 0.375:1.0 ---------------------------------------------------------- --------------- December 31, 2002 0.375:1.0 ---------------------------------------------------------- --------------- March 31, 2003 0.350:1.0 ---------------------------------------------------------- --------------- June 30, 2003 0.350:1.0 ---------------------------------------------------------- --------------- September 30, 2003 0.350:1.0 ---------------------------------------------------------- --------------- December 31, 2003 0.350:1.0 ---------------------------------------------------------- --------------- March 31, 2004 0.300:1.0 ---------------------------------------------------------- --------------- June 30, 2004 0.300:1.0 ---------------------------------------------------------- --------------- September 30, 2004 0.300:1.0 ---------------------------------------------------------- --------------- December 31, 2004 and thereafter 0.300:1.0 ---------------------------------------------------------- --------------- For each $2,830,000 by which the aggregate amount of the FY 2000 Adjustments is less than $500,000,000, each ratio set forth above for periods ending on or prior to September 30, 2001 shall be reduced by 0.01%. IV.14 Interest Coverage Ratio. Conseco shall not permit the Interest Coverage Ratio as of the end of each Fiscal Quarter set forth below for the four Fiscal Quarters then ended (or, if less, the number of full Fiscal Quarters commencing after the Effective Date) to be less than the ratio set forth below for such date: ---------------------------------------------------------- ---------------- Fiscal Quarter Ending Ratio ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- December 31, 2000 1.00:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- March 31, 2001 1.00:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- June 30, 2001 1.10:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- September 30, 2001 1.10:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- December 31, 2001 1.20:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- March 31, 2002 1.25:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- June 30, 2002 1.30:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- September 30, 2002 1.40:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- December 31, 2002 1.40:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- March 31, 2003 1.60:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- June 30, 2003 1.75:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- September 30, 2003 1.90:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- December 31, 2003 2.00:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- March 31, 2004 2.00:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- June 30, 2004 2.00:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- September 30, 2004 2.00:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- December 31, 2004 and thereafter 2.00:1.0 ---------------------------------------------------------- ---------------- IV.15 Conseco Adjusted Earnings. Conseco shall not permit the Conseco Adjusted Earnings for any period of four Fiscal Quarters (or, in the case of the tests as at March 31, 2001, June 30, 2001 and September 30, 2001, two Fiscal Quarters, two Fiscal Quarters and three Fiscal Quarters, respectively) ended on any date set forth below to be less than the amount set forth below for such date: ---------------------------------------------------------- ------------------- Fiscal Quarter Ending Amount ---------------------------------------------------------- ------------------- March 31, 2001 $650,000,000 ---------------------------------------------------------- ------------------- June 30, 2001 $750,000,000 ---------------------------------------------------------- ------------------- 34 ---------------------------------------------------------- ------------------- September 30, 2001 $1,150,000,000 ---------------------------------------------------------- ------------------- December 31, 2001 $1,600,000,000 ---------------------------------------------------------- ------------------- March 31, 2002 $1,600,000,000 ---------------------------------------------------------- ------------------- June 30, 2002 $1,650,000,000 ---------------------------------------------------------- ------------------- September 30, 2002 $1,700,000,000 ---------------------------------------------------------- ------------------- December 31, 2002 $1,750,000,000 ---------------------------------------------------------- ------------------- March 31, 2003 $1,800,000,000 ---------------------------------------------------------- ------------------- June 30, 2003 $1,850,000,000 ---------------------------------------------------------- ------------------- September 30, 2003 $1,925,000,000 ---------------------------------------------------------- ------------------- December 31, 2003 $2,000,000,000 ---------------------------------------------------------- ------------------- March 31, 2004 $2,025,000,000 ---------------------------------------------------------- ------------------- June 30, 2004 $2,075,000,000 ---------------------------------------------------------- ------------------- September 30, 2004 $2,125,000,000 ---------------------------------------------------------- ------------------- December 31, 2004 and thereafter $2,175,000,000 ---------------------------------------------------------- ------------------- IV.16 Conseco Finance Tangible Net Worth. Conseco shall not permit Conseco Finance Tangible Net Worth as at the end of any Fiscal Quarter ending during any Fiscal Year set forth below (commencing with the Fiscal Quarter ending December 31, 2000) to be less than the relevant amount set forth below: ---------------------------------------------------------- ----------------- Fiscal Quarter Ending During Amount ---------------------------------------------------------- ----------------- Fiscal Year Ending December 31, 2000 $950,000,000 ---------------------------------------------------------- ----------------- Fiscal Year Ending December 31, 2001 $1,200,000,000 ---------------------------------------------------------- ----------------- Fiscal Year Ending December 31, 2002 $1,400,000,000 ---------------------------------------------------------- ----------------- Fiscal Year Ending December 31, 2003 $1,650,000,000 ---------------------------------------------------------- ----------------- Fiscal Year Ending December 31, 2004 and thereafter $2,000,000,000 ---------------------------------------------------------- ----------------- 35 IV.17 Risk-Based Capital Ratio. Conseco shall not permit the Risk-Based Capital Ratio as at the end of any Fiscal Quarter to be less than 200%. ARTICLE V EVENTS OF DEFAULT V.1 Events of Default. Each of the following shall constitute an "Event of Default": (a Non Payment. Conseco fails to pay, (i) when and as required to be paid herein, any amount of principal of any Loan, or (ii) within five days after the same becomes due, any interest, fee or any other amount payable hereunder or under any other Loan Document; or (b Representation or Warranty. Any representation or warranty by Conseco or any of its Subsidiaries made or deemed made herein or in any other Loan Document, or contained in any certificate, document or financial or other statement by Conseco, any Subsidiary or any Responsible Officer, furnished at any time in connection with this Appendix or in connection with any other Loan Document, is incorrect in any material respect on or as of the date made or deemed made; or (c Specific Defaults. Conseco fails to perform or observe any term, covenant or agreement contained in any of Section 3.03(a), 4.01, 4.02, 4.03, 4.04, 4.06, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.14, 4.15, 4.16 or 4.17; or (d Other Defaults. Conseco or any of its Subsidiaries fails to perform or observe any other term or covenant contained in this Appendix or any other Loan Document, and such default shall continue unremedied for a period of 30 days after the date upon which written notice thereof is given to Conseco by the Relevant Agent or any Relevant Bank; or 36 (e Cross-Default. (i) Conseco or any Significant Subsidiary (A) fails to make any payment in respect of any Indebtedness or Contingent Obligation (other than in respect of Swap Contracts) or any similar financing arrangement related to the Lehman Agreement, having an aggregate principal amount (including undrawn committed or available amounts and including amounts owing to all creditors under any combined or syndicated credit arrangement) of more than $50,000,000, when due (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise) and such failure continues after the applicable grace or notice period, if any, specified in the relevant document on the date of such failure; or (B) fails to perform or observe any other condition or covenant, or any other event shall occur or condition exist (other than an alleged breach which Conseco or such Significant Subsidiary is contesting in good faith and which does not relate to a payment default or a breach of a financial covenant), under any agreement or instrument relating to any such Indebtedness, and such failure continues after the applicable grace or notice period, if any, specified in the relevant document on the date of such failure if the effect of such failure, event or condition is to cause, or to permit the holder or holders of such Indebtedness or beneficiary or beneficiaries of such Indebtedness or any similar financing arrangement related to the Lehman Agreement (or a trustee or agent on behalf of such holder or holders or beneficiary or beneficiaries) to cause, such Indebtedness to be declared to be due and payable prior to its stated maturity, or, in the case of any such Indebtedness consisting of Contingent Obligations, to become payable or cash collateral in respect thereof to be demanded or, in the case of any similar financing arrangement related to the Lehman Agreement, otherwise permit Lehman or an Affiliate thereof to terminate its obligations or commitments thereunder; or (ii) there occurs under any Swap Contract an Early Termination Date (as defined in such Swap Contract) resulting from (1) any event of default under such Swap Contract as to which Conseco or any Subsidiary is the Defaulting Party (as defined in such Swap Contract) or (2) any Termination Event (as so defined) as to which Conseco or any Subsidiary is an Affected Party (as so defined), and, in either event, the Swap Termination Value owed by Conseco or such Subsidiary as a result thereof is greater than $50,000,000; or (f Insolvency; Voluntary Proceedings. Conseco or any Significant Subsidiary (i) ceases or fails to be solvent, or generally fails to pay, or admits in writing its inability to pay, its debts as they become due, subject to applicable grace periods, if any, whether at stated maturity or otherwise; (ii) voluntarily ceases to conduct its business in the ordinary course; (iii) commences any Insolvency Proceeding with respect to itself; or (iv) takes any action to effectuate or authorize any of the foregoing; or (g Involuntary Proceedings. (i) Any involuntary Insolvency Proceeding is commenced or filed against Conseco or any Significant Subsidiary, or any writ, judgment, warrant of attachment, execution or similar process, is issued or levied against a substantial part of Conseco's or any Significant Subsidiary's properties, and any such proceeding or petition shall not be dismissed, or such writ, judgment, warrant of attachment, execution or similar process shall not be released, vacated or fully bonded within 60 days after commencement, filing or levy; (ii) Conseco, any Significant Subsidiary or any Material Insurance Subsidiary admits the material allegations of a petition against it in any Insolvency Proceeding, or an order for relief (or similar order under non-U.S. law) is ordered in any Insolvency Proceeding; (iii) Conseco, any Significant Subsidiary or any Material Insurance Subsidiary acquiesces in the appointment of a receiver, trustee, custodian, conservator, liquidator, mortgagee in possession (or agent therefor), or other similar Person for itself or a substantial portion of its property or business; or (iv) any Material Insurance Subsidiary shall become subject to any conservation, rehabilitation or liquidation order, directive or mandate issued by any Governmental Authority; or (h Pension Plans and Welfare Plans. With respect to any Single Employer Pension Plan as to which Conseco or any other ERISA Affiliate may have any liability, there shall exist a deficiency of more than $20,000,000 as to any ERISA Affiliate (other than Conseco) or $65,000,000 as to Conseco in the Pension Plan assets available to satisfy the benefits guaranteeable under ERISA with respect to such Pension Plan, and steps are undertaken to terminate such plan or such Pension Plan is terminated or Conseco or any other ERISA Affiliate withdraws from or institutes steps to withdraw from such Pension Plan, or Conseco has knowledge that steps have been taken to terminate any Multiemployer Plan and such termination may result in liability to any ERISA Affiliate (other than Conseco) in excess of $20,000,000 or $65,000,000 as to Conseco or any Reportable Event with respect to such Pension Plan has occurred which could result in the incurrence of liability by any ERISA Affiliate (other than Conseco) in excess of $20,000,000 or $65,000,000 as to Conseco or steps are taken to terminate any Multiemployer Plan and such termination may result in any liability of any ERISA Affiliate (other than Conseco) in excess of $20,000,000 or $65,000,000 as to Conseco shall occur; or (i Material Judgments. One or more judgments or decrees shall be entered against Conseco or any of its Subsidiaries involving in the aggregate a liability (not paid or fully covered by insurance as to which the relevant insurance company has not denied coverage) of $50,000,000 or more, and all such judgments or decrees shall not have been vacated, discharged, stayed or bonded pending appeal within 30 days from the entry thereof ; or 37 (j Material Regulatory Matters. (i) If an Insurance Subsidiary shall not make a scheduled payment of interest or principal on any surplus note or similar form of subordinated indebtedness (due to actions of any Governmental Authority or otherwise), (ii) if at any time an Insurance Subsidiary's ability to pay fees to its Affiliates under existing agreements (or extensions of existing agreements) shall be restricted due to actions of any Governmental Authority or otherwise or (iii) if in any Fiscal Year, an Insurance Subsidiary's ability to pay dividends to its stockholders is restricted in any manner (due to actions of any Governmental Authority or otherwise), other than by restrictions under the insurance law of the Insurance Subsidiary's state of domicile that apply generally to other insurance companies domiciled in the state, and, in the case of clauses (i) through (iii) above, such event or condition (x) was not in effect as of the date hereof and (y) such event or condition, together with all other such events or conditions, could reasonably be expected to have a Material Adverse Effect; or (k Change of Control. There occurs any Change of Control; or (l A.M. Best A- Status. Conseco shall not have obtained A.M. Best A- Status prior to March 31, 2001; or (m CIHC Guarantee. The guarantee contained in the Relevant CIHC Guaranty shall cease, for any reason, to be in full force and effect (other than in accordance with the definition thereof or if released by the Relevant Agent at the direction of each of the Relevant Banks) or Conseco or any Subsidiary of Conseco shall so assert; or (n Subordination to CIHC Obligations. Any "Subordinated Debt" under and as defined in the Relevant CIHC Guaranty shall cease, for any reason, to be validly subordinated to the obligations of CIHC under the Relevant CIHC Guaranty as provided in the relevant provisions of the Relevant CIHC Guaranty, or Conseco or any Subsidiary of Conseco shall so assert; or (o Subordination to Obligations. Any Subordinated Obligations or the guarantees thereof shall cease, for any reason, to be validly subordinated to the Obligations or the obligations of Conseco under the Relevant Conseco Guaranty, as the case may be, as provided in the documents governing such Subordinated Obligations, or Conseco or any Subsidiary of Conseco or any trustee or material holders of such Subordinated Obligations shall so assert. 38 EX-4 7 0007.txt EXHIBIT 4.6 EXHIBIT 4.6 AGREEMENT, DATED AS OF SEPTEMBER 22, 2000, among CONSECO, INC., as Guarantor, THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO, as Bank Lenders and THE CHASE MANHATTAN BANK, as Administrative Agent, RELATING TO 1999 DIRECTOR & OFFICER LOAN CREDIT AGREEMENT Table of Contents
Page SECTION 1. DEFINITIONS.............................................. 2 SECTION 1.1 Certain Defined Terms.................................. 2 SECTION 1.2 Additional Definitions................................. 3 SECTION 2. Commitment for New Loans................................. 4 SECTION 3. Forbearance.............................................. SECTION 4. Fees..................................................... 5 SECTION 5. Covenants................................................ 5 SECTION 6. Events of Default........................................ 6 SECTION 7. Conditions Precedent to Effectiveness of this Agreement.. 6 SECTION 8. Termination Events....................................... 7 SECTION 9. Effect of Termination.................................... 8 SECTION 10. The Agent............................................... 8 SECTION 11. Representations and Warranties.......................... 8 SECTION 12. MISCELLANEOUS........................................... 9 SECTION 12.1 Waivers and Amendments................................ 9 SECTION 12.2 Notices............................................... 10 SECTION 12.3 Indemnity............................................. 10 SECTION 12.4 No Third Party Beneficiaries.......................... 10 SECTION 12.5 Waivers............................................... 11 SECTION 12.6 No Forbearance/Remedies Cumulative.................... 11 SECTION 12.7 Entire Understanding.................................. 11 SECTION 12.8 Expenses.............................................. 11 SECTION 12.9 Effect of Agreement on Existing Credit Agreement...... 12 SECTION 12.10 GOVERNING LAW........................................ 12 SECTION 12.11 Counterparts......................................... 12 SECTION 12.12 SUBMISSION TO JURISDICTION; WAIVER OF VENUE.......... 13 SECTION 12.13 Successors and Assigns............................... 13 SECTION 12.14 Interpretation....................................... 14 SECTION 12.15 WAIVER OF JURY TRIAL................................. 14
i SCHEDULE I SUMMARY OF TERMS AND CONDITIONS FOR NEW LOANS SCHEDULE II APPENDIX SCHEDULE III PLAN OUTLINE EXHIBIT A FORM OF CIHC GUARANTY EXHIBIT B FORM OF AMENDED AND RESTATED GUARANTY EXHIBIT C FORM OF NEW CONSECO GUARANTY EXHIBIT D FORM OF NEW CIHC GUARANTY ii AGREEMENT THIS AGREEMENT (this "Agreement") is entered into as of September 22, --------- 2000, among Conseco, Inc. (the "Guarantor"), the several financial institutions --------- party to this Agreement (herein, together with any eligible assignees thereof, collectively called the "Banks" and each individually, a "Bank"), and THE CHASE ----- ---- MANHATTAN BANK ("Chase"), as administrative agent for the Banks (herein in such ----- capacity, together with any successors thereto in such capacity, called the "Administrative Agent"). - --------------------- Recitals WHEREAS, certain individuals (herein, collectively called the "Borrowers" and each individually, a "Borrower"), the Banks, and the - ---------- -------- Administrative Agent are parties to that certain Credit Agreement, dated as of September 15, 1999 (the "Original Credit Agreement"), which has been terminated ------------------------- and replaced pursuant to that certain Termination and Replacement Agreement, dated as of May 30, 2000 (the new credit agreement provided for therein, as amended or modified through the date hereof, the "Existing Credit Agreement"), ------------------------- whereby the Banks made loans to the Borrowers, on the terms and subject to the conditions set forth therein; WHEREAS, as a condition to the Administrative Agent and the Banks entering into the Original Credit Agreement, Guarantor was required to and did execute and deliver its Guaranty, dated as of September 15, 1999 (the "Original -------- Guaranty"), and as a condition to the Administrative Agent and the Banks - -------- entering into the Existing Credit Agreement, Guarantor was required to and did execute and deliver its amended and restated Guaranty dated as of May 30, 2000 (the "Existing Guaranty"); ----------------- WHEREAS, consistent with the provisions of the Original Credit Agreement and the Existing Credit Agreement, the proceeds of such loans were used by the Borrowers solely to purchase common stock, no par value per share, of Guarantor; WHEREAS, in connection with a proposed program contemplated by the Guarantor, the Guarantor has requested that the Administrative Agent and the Banks agree to commit to extend loans to any Borrower to refinance the Loans, with such loans to have a stated maturity of December 31, 2003; WHEREAS, the Guarantor has requested that the Administrative Agent and the Banks, pending implementation of such program and making of such loans, acknowledge certain matters as to the Existing Guaranty, as amended and restated in connection herewith; WHEREAS, the Administrative Agent and the Banks are willing, but only on the terms and conditions set forth herein, to agree to the aforementioned requests of the Guarantor; NOW, THEREFORE, in consideration of the mutual promises herein contained and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: SECTION 1. DEFINITIONS. ----------- SECTION 1.1 Certain Defined Terms. Capitalized terms used and not ---------------------------------- otherwise defined in this Agreement shall have the meanings assigned thereto in the Existing Credit Agreement. The following terms shall have the following meanings: "Administrative Agent" shall have the meaning set forth in the -------------------- preamble hereto. "Agreement" shall have the meaning set forth in the preamble hereto. --------- "Agreement Fee" shall have the meaning set forth in Section 4 hereof. ------------- "Amended and Restated Guaranty" shall be substantially in the form of ----------------------------- Exhibit B hereto. "Appendix" means the Appendix attached as Schedule II to this -------- Agreement, which is hereby incorporated by reference, as from time to time amended with the consent of the Required Banks. "Bank" shall have the meaning set forth in the preamble hereto. ---- "Borrower" shall have the meaning set forth in the first Recital. -------- "Chase" shall have the meaning set forth in the preamble hereto. ----- "CIHC" shall mean CIHC, Incorporated, a Delaware corporation, which is ---- a direct wholly-owned subsidiary of Guarantor. "CIHC Guaranty" shall have the meaning set forth in Section 1.01 of ------------- the Appendix, including, without limitation, with respect to the termination thereof, and shall be substantially in the form of Exhibit A hereto. "Commitment" shall have the meaning specified in Section 2(a) hereof. ---------- "Commitment Expiration Date" shall mean as to any Borrower, October -------------------------- 31, 2000 (or such later date as to which the Administrative Agent agrees in writing but not beyond December 15, 2000). "Compliance Certificate" shall have the meaning set forth in Section ---------------------- 1.01 of the Appendix. "D&O Facilities" shall have the meaning set forth in Section 1.01 of -------------- the Appendix. "Effective Date" shall mean the date on or before September 22, 2000 -------------- on which the conditions to the effectiveness of this Agreement set forth in Section 7 hereof shall have been satisfied or waived in their sole and absolute discretion by the Administrative Agent and the Banks. 2 "Existing Credit Agreement" shall have the meaning set forth in the ------------------------- first Recital. "Existing Guaranty" shall have the meaning set forth in the second ----------------- Recital. "Guarantor" shall have the meaning set forth in the preamble hereto. --------- "New CIHC Guaranty" shall mean the guaranty to be executed and ----------------- delivered by CIHC in connection with any New Loans, substantially in the form of Exhibit D hereto. "New Conseco Guaranty" shall mean the guaranty to be executed and -------------------- delivered by Conseco with any New Loans, substantially in the form of Exhibit C hereto. "New Loan Documents" shall mean the credit agreement, promissory ------------------ notes, instruments, guarantees (including, without limitation, the New Conseco Guaranty and the New CIHC Guaranty), borrower pledge agreements, releases, and other documents providing for loans to refinance a Borrowers' Loans upon the terms and conditions generally described in Schedule I hereto; it being understood that the Administrative Agent shall hereby be granted by each of the Banks a power of attorney to execute such documents on behalf of the Banks in its discretion. "New Loans" shall have the meaning set forth in Section 2(a) hereof. --------- "Original Credit Agreement" shall have the meaning set forth in the ------------------------- first Recital. "Original Guaranty" shall have the meaning set forth in the second ----------------- Recital. "Plan" means a plan to be made available to certain Borrowers, which, ---- among other things, is to be designed by Guarantor to assist such Borrowers to reduce the principal amounts of the loans under the D&O Facilities to achieve the $25 Benchmark. "Subsidiaries" shall have the meaning as assigned thereto in Section ------------ 1.01 of the Appendix "Stated Termination Date" shall mean December 31, 2003. ----------------------- "Termination Event" shall have the meaning set forth in Section 8 ----------------- hereof. "$25 Benchmark" shall mean, for all of the loans of the relevant -------------- Borrower or Borrowers under the D&O Facilities, an average loan balance equal to $25 per share for all of the stock purchased by or on behalf of the relevant Borrower or Borrowers, as the case may be. SECTION 1.2 Additional Definitions. The definitions set forth in ----------------------------------- Section 1.01 of the Appendix are hereby incorporated by reference and shall be applicable to the provisions incorporated by reference pursuant to Sections 5(a) and 6 hereof. SECTION 2. Commitment for New Loans. ------------------------- (a) Commitment. Subject to the conditions set forth in Section 2(c) ---------- hereof, the Banks and the Administrative Agent hereby commit (the "Commitment") ---------- to enter into New Loan Documents with any Borrower who has accepted in writing (and otherwise satisfied the 3 conditions of) the Plan for the making of loans to refinance such Borrower's Loans (the "New Loans") consistent with the terms and conditions generally --------- described on Schedule I hereto, including providing for a stated maturity date of December 31, 2003. (b) Commitment Expiration. Should this Agreement become effective --------------------- pursuant to the provisions of Section 7 hereof, the Commitment shall expire as to any Borrower on or before the Commitment Expiration Date, without any other action being required of the Administrative Agent or any of the Banks, if any of the following shall have occurred and be continuing: (i) The Borrower shall not have accepted the terms of the Commitment on the terms and conditions set forth on Schedule I hereto and in Section 2(c) hereof and shall have failed to have executed and delivered the New Loan Documents to which he or she is a party on or before Commitment Expiration Date ; (ii) On or before the Commitment Expiration Date, (a) the Guarantor shall have failed to execute and deliver the New Conseco Guaranty, or (b) CIHC shall have failed to execute and deliver the New CIHC Guaranty; or (iii) Any Termination Event shall have occurred and be continuing. (c) Commitment Conditions. The Commitment as to any Borrower is --------------------- conditioned upon the satisfaction of the following conditions: (i) This Agreement shall have become effective pursuant to Section 7 hereof; (ii) The Borrower shall have executed and delivered to the Administrative Agent the New Loan Documents to which he or she is a party in form and substance satisfactory to the Banks on or before the applicable Commitment Expiration Date; (iii) The Guarantor shall have executed and delivered the New Conseco Guaranty on or before the applicable Commitment Expiration Date; (iv) CIHC shall have executed and delivered the New CIHC Guaranty on or before the applicable Commitment Expiration Date; (v) To the extent not generally described on Schedule I hereto, the other conditions set forth in the New Loan Documents shall be similar to the conditions, including as to the satisfaction of any regulatory requirements, under the Existing Credit Agreement, and all of such conditions shall have been satisfied on or before the applicable Commitment Expiration Date; (vi) The absence of the occurrence and continuation of any Termination Event; and (vii) The Guarantor shall have certified in writing that the applicable Borrower has accepted the Plan and has satisfied the conditions to the Plan governing such Borrower's participation in the Plan. 4 (d) Commitment Expiration/Termination Notice. The Administrative ---------------------------------------- Agent shall undertake to provide the Guarantor with written notice of either the expiration of the Commitment with respect to any Borrower or the refusal of any of the Administrative Agent and the Banks to enter into the New Loan Documents with any Borrower for the reasons set forth in Section 2(b) or 2(c) hereof; provided, however, that the Administrative Agent's failure to provide such notice shall not affect in any manner the right of any of the Administrative Agent and the Banks to refuse to close under such circumstances. SECTION 3. Forbearance. The Administrative Agent and the Banks ----------- hereby agree to forbear from the exercise of any rights and remedies any of them may have under the Existing Credit Agreement or any other Loan Document until the earlier of (i) the Commitment Expiration Date and (ii) the occurrence of a Termination Event. The forbearance of the Administrative Agent and the Banks under this Section 3 shall not constitute an amendment, waiver or modification of the Existing Credit Agreement or any other Loan Document. SECTION 4. Fees. The Guarantor hereby agrees that, upon the ---- Effective Date, the Guarantor shall be obligated to pay, and shall pay, to the Administrative Agent, for the pro rata benefit of the Banks, an agreement fee (the "Agreement Fee") in immediately available funds equal to one percent (1%) of the principal amount of the Loans outstanding on such date. SECTION 5. Covenants. --------- (a) The affirmative and negative covenants set forth in Article III and IV, respectively, of the Appendix are hereby incorporated by this reference. (b) In addition to its other covenants hereunder, the Guarantor hereby agrees: (i) to provide the Administrative Agent a copy of the Plan once finalized and, in any event, no later than December 31, 2000, (ii) to use the Guarantor's commercially reasonable (and otherwise lawful) best efforts to sign up Borrowers to the Plan and, as part thereof, to obtain from the Borrowers paydowns, or commitments for paydowns, on the loans under the D&O Facilities and (iii) in each Compliance Certificate delivered pursuant to Section 3.02(a) of the Appendix after the Effective Date and through the date of payment in full of the Loans or New Loans, to provide the Administrative Agent with a summary of any changes to the Plan to date, a statement of the effective date of any such changes, and, if there has been any changes thereto since the date of the delivery of the previous Compliance Certificate, a copy of the Plan as then constituted. SECTION 6. Events of Default. The Events of Default set forth in ----------------- Section 5.01 of the Appendix are hereby incorporated by this reference. SECTION 7. Conditions Precedent to Effectiveness of this Agreement. ------------------------------------------------------- This Agreement shall become effective only upon the satisfaction of the following conditions on or before the Effective Date : (a) The Administrative Agent shall have received duly executed counterparts of this Agreement from the Guarantor and the Banks. 5 (b) The Guarantor shall have paid the Agreement Fee to the Administrative Agent for the pro rata benefit of the Banks; (c) The Guarantor shall have delivered to the Administrative Agent the Amended and Restated Guaranty; (d) CIHC and Guarantor shall have delivered to the Administrative Agent the CIHC Guaranty; (e) The other Relevant Facilities (as such term is defined in the Appendix) shall have been amended in a form reasonably satisfactory to the Required Banks, and the other transactions contemplated as part of such amendments to be consummated at closing shall have been so consummated; (f) The Guarantor shall have paid all fees and expenses, including those payable pursuant to Section 12.8 hereof, required to be paid by it on such Effective Date; (g) Each of the Guarantor and CIHC shall have delivered to the Administrative Agent, for the benefit of itself and the Banks, such officer certificates, legal opinions, and other documents or instruments as shall be required by the Administrative Agent, including reasonable evidence of its authority to execute, deliver and perform its obligations under this Agreement, the Amended and Restated Guaranty and the CIHC Guaranty (as the case may be) and including opinions of the general counsel to the Guarantor and CIHC and of Weil, Gotshal & Manges LLP acceptable (both in form and content and as to which counsel is delivering the particular opinion) to the Administrative Agent; and (h) The Administrative Agent shall have received such other documents, certificates or instruments as may be reasonably requested by the Administrative Agent and the Banks. The Administrative Agent shall undertake to provide the Guarantor with written notice as to whether the foregoing conditions have been satisfied and this Agreement thus has become effective (or instead, whether this Agreement is null and void, all as if it had never existed); provided, however, that the Administrative Agent's failure to provide such notice shall not affect the determination as to whether such conditions have been satisfied and whether, concomitantly this Agreement has become effective. SECTION 8. Termination Events. Should this Agreement become effective ------------------ pursuant to the provisions of Section 7 hereof, the Administrative Agent, upon the affirmative votes of the Required Banks, may terminate any of the obligations or acknowledgments of the Administrative Agent and the Banks under this Agreement (including, without limitation, those with respect to the Commitment), if any of the following shall have occurred or otherwise shall be continuing (each, a "Termination Event"): ----------------- (a) Any "Event of Default" under Section 5.01 of the Appendix (as ---------------- incorporated herein pursuant to Section 6 hereof) shall occur and be continuing; 6 (b) There shall have been entered any final judgment, or injunction, or other order by any court enjoining, prohibiting, discontinuing or otherwise impairing the validity or enforceability of this Agreement, the Amended and Restated Guaranty, the CIHC Guaranty, or any of the other documents contemplated by this Agreement, or any of the transactions contemplated by this Agreement; (c) The Plan, having substantially the same material terms as set forth on Schedule III hereto, shall not be in place on or before December 31, 2000, or, if in place on or before that date, subsequently shall have been modified in a manner materially adverse to the interests of the Administrative Agent and the Banks or rescinded by the Guarantor (or enjoined or prohibited by a final judgment entered by any court); (d) Any Event of Default with respect to the Guarantor shall occur and shall be continuing under the Existing Credit Agreement; (e) Any event of default under the Amended and Restated Guaranty shall occur and be continuing; (f) Any event of default under the CIHC Guaranty shall occur and be continuing; (g) The Guarantor shall otherwise be in default of any of its obligations hereunder and such default shall be continuing for a period of thirty (30) days after written notice by the Administrative Agent to the Guarantor. Where the Administrative Agent, upon the affirmative votes of the Required Banks, shall have elected to terminate this Agreement upon the occurrence of any one or more of the foregoing events, the Administrative Agent shall undertake to provide the Guarantor with written notice of such termination; provided, however, that the Administrative Agent's failure to provide such notice shall not affect in any manner the effectiveness of such termination. SECTION 9. Effect of Termination. Where the Administrative Agent, --------------------- upon the affirmative votes of the Required Banks, shall have elected to terminate this Agreement upon the occurrence of one or more of the events set forth in Section 8 hereof, all obligations of the Administrative Agent and any of the Banks hereunder shall terminate and this Agreement shall otherwise be terminated without any liability on the part of (or any alteration of rights, powers or remedies belonging to) the Administrative Agent or any Bank, and consistent therewith, each of the Administrative Agent and the Banks shall remain entitled, but not required, to exercise (in whatever manner, to whatever extent, at whatever time, and as often, seldom, or not at all as it may choose in its sole and absolute discretion) any and all (or any combination) of its rights, powers, and remedies against the Guarantor, CIHC, any other person or entity (including any Borrower), and/or any of the property of the Guarantor, CIHC, and/or any other person or entity (and/or any combination of any such person or entity or property) under any guaranty (including, without limitation, the Amended and Restated Guaranty, the CIHC Guaranty, any other agreement or document, and/or any New Loan Documents (including any required guarantees and/or reaffirmed guarantees relating thereto) entered into prior to such termination date, and/or applicable law, all as if this Agreement had never been executed and delivered by the parties 7 hereto (but as if any and all other agreements had been so executed and delivered by the pertinent parties thereto), and all without any requirement of providing prior notice with respect thereto. Consistent with, but not in limitation of, the foregoing, any exercise or non-exercise (as the case may be) by the Administrative Agent of any such rights, powers and/or remedies, including, without limitation, the complete failure to exercise any such rights, powers, and/or remedies (whether such failure occurs prior to or subsequent to any termination of this Agreement), against (i) any or all Borrowers (or any combination thereof) or any property of any thereof, (ii) the Guarantor or any of the Guarantor's property or (iii) CIHC and/or CIHC's property, as the case may be, shall in no manner limit the ability of the Administrative Agent to exercise any such rights, powers, and/or remedies, whether under any agreement (including any guaranty or pledge agreement) and/or applicable law against any Borrower, the Guarantor (or its property, including any property pledged pursuant to this Agreement) and/or CIHC (or its property). Without limiting the generality of the foregoing, the provisions of Sections 4 -12 hereof shall survive any such termination. SECTION 10. The Agent. The Banks acknowledge that the provisions of --------- Section 11 of the Existing Credit Agreement are applicable to this Agreement in every respect. Consistent with, but not in limitation thereof, each Bank hereby agrees that the provisions of Section 11 of the Existing Credit Agreement apply to the Agent's execution, delivery, performance and other participation in this Agreement and the transactions contemplated thereby, and the Agent shall have the full benefit thereof, all as if such Section 11 of the Existing Credit Agreement were set forth and restated herein. SECTION 11. Representations and Warranties. Guarantor hereby ------------------------------ represents and warrants to each of the Administrative Agent and the Banks that: (a) Guarantor has full corporate power and authority to execute, deliver and perform this Agreement and each agreement executed in connection herewith and to consummate the transactions contemplated hereby and thereby. Guarantor has duly and validly executed and delivered this Agreement and has duly and validly executed and delivered each agreement executed in connection herewith. This Agreement, and each agreement executed in connection herewith, constitutes legal, valid and binding obligations of Guarantor, in each case, enforceable in accordance with their respective terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, moratorium, reorganization or similar laws in effect which affect the enforcement of creditors' rights generally, by equitable limitations on the availability of specific remedies and by principles of equity. (b) No consent, authorization or approval of, filing or registration with, or cooperation from, any Governmental Authority or any other person or entity not a party to this Agreement is necessary in connection with the execution, delivery and performance by Guarantor of this Agreement and each agreement executed in connection herewith or the consummation by Guarantor of the transactions contemplated hereby or thereby other than immaterial consents, authorizations, approvals, filings or registrations and those already obtained. (c) The execution, delivery and performance by Guarantor of this Agreement and its related agreements and the consummation by Guarantor of the transactions contemplated 8 hereby and thereby do not and will not (i) violate any law applicable to Guarantor; or (ii) violate or conflict with any provision of any of the certificate of incorporation, bylaws or similar organizational instruments of Guarantor or any other material agreement or contract to which Guarantor is a party. These representations and warranties shall survive closing and any termination of this Agreement. SECTION 12. MISCELLANEOUS ------------- SECTION 12.1 Waivers and Amendments. The provisions of this ------------------------------------ Agreement may from time to time be amended, modified or waived, if such amendment, modification, or waiver is in writing and consented to by the Guarantor, the Required Banks, and the Administrative Agent; provided, however, that no such amendment, modification or waiver: (i) which would modify any requirement hereunder that any particular action be taken by all Banks or by the Required Banks, shall be effective without the consent of each Bank; (ii) which should extend the Commitment Expiration Date beyond the extensions expressly provided in the definition thereto with the agreement of the Administrative Agent, which would otherwise substantially modify or waive the Commitment conditions in Section 2(c) hereof or which would materially and adversely modify any of the terms and conditions of the New Loans generally described on Schedule I hereto, shall be effective without the consent of each Bank; (iii) which would adversely affect the interests, rights, or obligations of the Administrative Agent (in such capacity) other than removal in accordance with Section 11.6 of the Existing Credit Agreement, shall be effective without the consent of the Administrative Agent. SECTION 12.2 Notices. All notices, requests and other communications --------------------- to any party hereunder shall be in writing (including bank wire, telex, facsimile or similar writing) and shall be given to such party at its address, facsimile or telex number set forth on the signature or acknowledgment pages hereof or such other address, facsimile or telex number as such party may hereafter specify for the purpose by written notice to the Administrative Agent and Guarantor. Each such notice, request or other communication shall be effective (a) if given by facsimile or telex, when such facsimile or telex is transmitted to the facsimile or telex number specified in this Section and the appropriate answerback or other confirmation is received, (b) if given by mail, seventy-two (72) hours after such communication is deposited and sent via certified or registered mail, return receipt requested, with first class postage prepaid, addressed as aforesaid or (c) if given by any other means, when delivered at the address specified in this Section, provided, that notices to the Administrative Agent shall not be effective until received by the Administrative Agent. SECTION 12.3 Indemnity. Without limiting in any manner whatsoever ----------------------- any of the claims, rights, powers and remedies of the Administrative Agent and the Banks under any indemnity (including the indemnity set forth in Section 7.2 of the Amended and Restated 9 Guaranty), Guarantor agrees to indemnify the Administrative Agent, each Bank, their affiliates and their respective directors, officers, employees, persons controlling or controlled by any of them or their respective agents, consultants, attorneys and advisors (the "Indemnified Parties") and hold each ------------------- Indemnified Party harmless from and against any and all liabilities, losses, claims, damages, costs and expenses of any kind to which any of the Indemnified Parties may become subject whether directly or indirectly (including, without limitation, the reasonable fees and disbursements of counsel for any Indemnified Party), relating to or arising out of the Existing Credit Agreement, the Amended and Restated Guaranty, the other Loan Documents, any actual or proposed use of the proceeds of the Loans, any New Loans, this Agreement, any agreement executed in connection herewith, the Plan, or any New Loan Documents; provided, that no Indemnified Party shall have the right to be indemnified hereunder for its own gross negligence or willful misconduct as determined by a court of competent jurisdiction. All obligations of the Borrowers and Guarantor provided for in this Section 12.3 shall survive the termination of the Existing Credit Agreement, the Amended and Restated Guaranty, this Agreement, any agreement executed in connection herewith, and any New Loan Documents. SECTION 12.4 No Third Party Beneficiaries. This Agreement is solely ------------------------------------------ for the benefit of the parties hereto (except solely to the extent that the Borrowers shall be entitled to the benefits of the forbearance contained in Section 3 of this Agreement), and no provision of this Agreement shall be deemed to confer upon any other third parties any remedy, claim, liability, reimbursement, cause of action or other right (including, without limitation, any right to benefit from any forbearance on the part of the Administrative Agent and/or the Banks in the exercise of any right, power, or remedy in connection with, under or otherwise relating to the Existing Credit Agreement, any other Loan Document and/or applicable law except as specifically set forth in Section 3). SECTION 12.5 Waivers. The failure of a party hereto at any time or --------------------- times to require performance of any provision hereof shall in no manner affect its right at a later time to enforce the same. No waiver by a party of any condition or of any breach of any term, covenant, representation or warranty contained in this Agreement shall be effective unless in writing, and no waiver in any one or more instances shall be deemed to be a further or continuing waiver of any such condition or breach in other instances or a waiver of any other condition or breach of any other term, covenant, representation or warranty. SECTION 12.6 Remedies Cumulative. Consistent with, but not in --------------------------------- limitation of, the provisions of this Agreement, this Agreement shall be limited to its terms and narrowly construed, and neither the Administrative Agent nor any Bank agrees to otherwise limit the exercise of any of its rights, powers or remedies against any Borrower (or his or her property), the Guarantor (or its property) and/or CIHC (or its property) under its respective guaranty, any other agreement or document, applicable law, or otherwise except as expressly set forth herein. The rights, powers, and/or remedies provided in this Agreement shall be cumulative and shall not preclude the assertion or exercise of any other rights or remedies available under law, in equity or otherwise except solely to the extent expressly set forth herein; it being the intent of the parties hereto that the Administrative Agent and the Banks are to have the maximum flexibility under any agreement and/or applicable law with respect to the exercise of any and/or all (or any combination of) such rights, powers, and/or remedies, including, without limitation, as to any 10 Borrower and/or its property (including, without limitation, any property pledged as collateral to secure the obligations of any Borrower under the Existing Credit Agreement). SECTION 12.7 Entire Understanding. This Agreement and each agreement ---------------------------------- executed in connection herewith set forth the entire agreement and understanding of the parties hereto with respect to the transactions contemplated hereby and supersede any and all prior agreements, arrangements and understandings among the parties relating to the subject matter hereof. SECTION 12.8 Expenses. Without limiting in any manner any right of ---------------------- the Administrative Agent and the Bank to receive the reimbursement of the expenses (including, without limitation, attorneys' fees and expenses) under the Existing Credit Agreement and/or the Amended and Restated Guaranty, Guarantor agrees to pay and reimburse the Administrative Agent for all of its reasonable costs and expenses incurred in connection with the preparation and delivery of this Agreement (and any agreement executed in connection herewith), including, without limitation, the reasonable fees and disbursements of counsel to the Administrative Agent. SECTION 12.9 Effect of Agreement on Existing Credit Agreement. Other -------------------------------------------------------------- than as set forth in Section 3 and, consistent with, but not in limitation of, the other provisions of this Agreement, nothing contained herein is intended as a present amendment to the Existing Credit Agreement or any other Loan Document or as agreement on the part of the Administrative Agent and the Banks to forebear in the exercise of any of its or their rights, powers or remedies as to any Borrower (or any Borrower's property) under the Existing Credit Agreement, any other Loan Document to which any Borrower is a party (including any pledge agreement), and/or any applicable law, and the Existing Credit Agreement and any other Loan Document to which any Borrower is a party (including any pledge agreement) shall continue to be and remain in full force and effect, pending the execution and delivery of any New Loan Documents relating to such Borrower in accordance with the other provisions of this Agreement. Specifically, this Agreement shall not constitute under any circumstances an amendment, modification, or waiver of any provision of the Existing Credit Agreement or any Loan Document, other than as set forth in Section 3, and shall not be construed as such under any circumstances or by any person or entity, including, without limitation, for the benefit of any of the Borrowers; it being acknowledged that the provisions relating to any Borrower herein (including those relating to the Commitment) are for the benefit of and may be enforced only by the Guarantor and not for or by any Borrower. Consistent with, but not in limitation of, the other provisions of this Agreement (including the foregoing provisions of this Section 12.9), each of the Administrative Agent and the Banks waive none of, but instead reserve all of, their respective rights, powers and remedies against any and all of the Borrowers (including against any of their respective property whether pledged as collateral or otherwise) under or in connection with the Existing Credit Agreement, any other Loan Document, and/or applicable law and, consistent with such express disclaimer of waiver and reservation of rights, shall be entitled (unless and until they enter into a binding, written agreement to the contrary), but not required, to exercise (in whatever manner, to whatever extent, at whatever time, and as often, seldom, or not at all, as it may choose in its sole and absolute discretion) any and/or all (or any combination) of such rights, powers, and/or remedies against any and/or all (or any combination) of the Borrowers and/or any of their property (including any property pledged as collateral under any pledge agreement), all as if this 11 Agreement had never been executed and delivered by the parties hereto (but as if any and all of such other agreements and instruments had been executed and delivered by the pertinent parties thereto). SECTION 12.10 GOVERNING LAW. THIS AGREEMENT SHALL BE A CONTRACT MADE ---------------------------- UNDER AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES. ALL OBLIGATIONS OF THE GUARANTOR AND RIGHTS OF THE ADMINISTRATIVE AGENT AND THE BANKS IN RESPECT OF THE OBLIGATIONS OR LIABILITIES EXPRESSED HEREIN SHALL BE IN ADDITION TO AND NOT IN LIMITATION OF THOSE PROVIDED BY APPLICABLE LAW. SECTION 12.11 Counterparts. This Agreement may be executed in any --------------------------- number of counterparts and by the different parties on separate counterparts and each such counterpart shall be deemed to be an original, but all such counterparts shall together constitute but one and the same agreement. When counterparts executed by all the parties shall have been lodged with the Administrative Agent (or, in the case of any Bank as to which an executed counterpart shall not have been so lodged, the Administrative Agent shall have received telegraphic, facsimile, telex or other written confirmation from such Bank of execution of a counterpart hereof by such Bank), this Agreement shall become effective as of the Effective Date hereof, and at such time the Administrative Agent shall notify the Borrowers and each Bank. SECTION 12.12 SUBMISSION TO JURISDICTION; WAIVER OF VENUE. THE ---------------------------------------------------------- ADMINISTRATIVE AGENT, EACH BANK AND GUARANTOR (A) HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF THE SUPREME COURT OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK OVER ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER DOCUMENTS CONTEMPLATED HEREBY, AND THE ADMINISTRATIVE AGENT, EACH BANK AND GUARANTOR HEREBY IRREVOCABLY AGREE THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE OR FEDERAL COURT, AND (B) AGREE NOT TO INSTITUTE ANY LEGAL ACTION OR PROCEEDING AGAINST ANOTHER PARTY OR THE DIRECTORS, OFFICERS, EMPLOYEES, AGENTS OR PROPERTY OF ANY THEREOF, ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER DOCUMENTS CONTEMPLATED HEREBY, IN ANY COURT OTHER THAN AS HEREINABOVE SPECIFIED IN THIS SECTION 12.12. THE ADMINISTRATIVE AGENT, EACH BANK AND GUARANTOR HEREBY IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION IT OR THEY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE IN ANY ACTION OR PROCEEDING (WHETHER BROUGHT BY ANY BORROWER, GUARANTOR, THE ADMINISTRATIVE AGENT, ANY BANK, OR OTHERWISE) IN ANY COURT HEREINABOVE SPECIFIED IN THIS SECTION 12.12 AS WELL AS ANY RIGHT IT OR THEY MAY NOW OR HEREAFTER HAVE TO REMOVE ANY SUCH ACTION OR PROCEEDING, ONCE COMMENCED, TO ANOTHER COURT ON THE GROUNDS OF FORUM NON CONVENIENS OR OTHERWISE. THE ADMINISTRATIVE AGENT, EACH BANK AND GUARANTOR AGREE THAT A FINAL 12 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. SECTION 12.13 Successors and Assigns. This Agreement shall be ------------------------------------- binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns; provided, however, that Guarantor may not assign or transfer its rights or obligations under this Agreement or any other document contemplated hereby without the prior written consent of all Banks. Nothing contained herein shall limit the rights of the Banks to make assignments or grant participations are subject to the provisions of Section 12 of the Existing Credit Agreement; provided, however, that any such assignments and participations insofar as such assignees' rights against or obligations to the Guarantor (including the Guarantor's rights with respect to the Commitment) and CIHC shall be subject to the provisions of this Agreement. SECTION 12.14 Interpretation. The headings preceding the text of ----------------------------- Articles and Sections included in this Agreement and the headings to Schedules attached to this Agreement are for convenience only and shall not be deemed part of this Agreement or be given any effect in interpreting this Agreement. The use of the masculine, feminine or neuter gender or the singular or plural form of words herein shall not limit any provision of this Agreement. The use of the terms "including" or "include" shall in all cases herein mean "including, without limitation" or "include", without limitation," respectively. Reference to any person or entity includes such person's or entity's successors and assigns to the extent such successors and assigns are permitted by the terms of any applicable agreement, and reference to a person or entity in a particular capacity excludes such person or entity in any other capacity or individually. Reference to any agreement (including this Agreement), document or instrument means such agreement, document or instrument as amended or modified and in effect from time to time in accordance with the terms thereof and, if applicable, the terms hereof. Reference to any law means such law as amended, modified, codified, replaced or re-enacted, in whole or in part, and in effect on the date hereof, including rules, regulations, enforcement procedures and any interpretations promulgated thereunder. Underscored references to Articles, Sections, clauses, Exhibits or Schedules shall refer to those portions of this Agreement, and any underscored references to a clause shall, unless otherwise identified, refer to the appropriate clause within the same Section in which such reference occurs. The use of the terms "hereunder", "hereof", "hereto" and words of similar import shall refer to this Agreement as a whole and not to any particular Article, Section or clause of or Exhibit or Schedule to this Agreement. All terms defined in this Agreement shall have the above-defined meanings when used in any certificate, report or other document made or delivered pursuant to this Agreement, unless the context therein shall clearly otherwise require. In the computation of periods of time in this Agreement from a specified date to a later specified date, the word "from" means "from and including" and the words "to" and "until" each means "to but excluding." This Agreement and the other documents relating to this Agreement are the result of negotiations among and have been reviewed by counsel to the Administrative Agent, Guarantor and the other parties, and are the products of all parties. Accordingly, they shall not be construed against the Banks or the Administrative Agent merely because of the Administrative Agent's or Banks' involvement in their preparation. 13 SECTION 12.15 WAIVER OF JURY TRIAL. GUARANTOR, THE ADMINISTRATIVE ---------------------------------- AGENT AND EACH BANK HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM CONCERNING ANY RIGHTS UNDER THIS AGREEMENT, ANY OTHER DOCUMENT CONTEMPLATED HEREBY OR ANY OTHER DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH, OR ARISING FROM ANY BANKING RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT, AND AGREE THAT ANY SUCH ACTION, PROCEEDING OR COUNTERCLAIM SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY; THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES ENTERING INTO THIS AGREEMENT. * * * [Signature Pages Follow] 14 Executed as of the date and year first written above. GUARANTOR: CONSECO, INC. By: /s/ Thomas M. Hagerty ---------------------- Name: Thomas M. Hagerty Title: Acting Chief Financial Officer Notice Address: 11825 N. Pennsylvania Street Carmel, IN 46032 Attention: David Herzog Telephone: (317) 817-5031 Facsimile: (317) 817-6327 with a copy to: Weil, Gotshal & Manges LLP 100 Crescent Court, Suite 1300 Dallas, Texas 75201-6950 Attention: Angela L. Fontana, Esq. Telephone: (214)746-7000 Facsimile: (214) 746-7700 ADMINISTRATIVE AGENT: THE CHASE MANHATTAN BANK By:_______________________ Name: Title: Lending Office Address: 270 Park Avenue New York, NY 10017 Attention: Helen Newcomb Telephone: (212) 270-6260 Facsimile: (212) 270-1511 Notice Address Address: 270 Park Avenue New York, NY 10017 Attention: Helen Newcomb Telephone: (212) 270-6260 Facsimile: (212) 270-1511 BANKS: THE CHASE MANHATTAN BANK By:_______________________ Name: Title: Lending Office Address: 270 Park Avenue New York, NY 10017 Attention: Helen Newcomb Telephone: (212) 270-6260 Facsimile: (212) 270-1511 Notice Address Address: 270 Park Avenue New York, NY 10017 Attention: Helen Newcomb Telephone: (212) 270-6260 Facsimile: (212) 270-1511 BANK OF AMERICA, N.A. By:_______________________ Name: Title: Lending Office Address: 231 S. LaSalle Street Chicago, IL 60697 Attention: Debra Basler Telephone: (312) 828-3734 Facsimile: (312) 987-0889 Notice Address: Address: 231 S. LaSalle Street Chicago, IL 60697 Attention: Debra Basler Telephone: (312) 828-3734 Facsimile: (312) 987-0889 Schedule II - Appendix ================================================================================ APPENDIX CONSECO, INC. $3,028,576,848 CREDIT FACILITIES DATED AS OF SEPTEMBER 22, 2000 BANK OF AMERICA, N.A. AND THE CHASE MANHATTAN BANK, AS JOINT LEAD ARRANGERS AND JOINT BOOK MANAGERS ================================================================================ TABLE OF CONTENTS
Page ARTICLE IDEFINITIONS....................................................................................................1 ----------- 1.01 Certain Defined Terms..............................................................................1 --------------------- 1.02 Other Interpretive Provisions.....................................................................20 ----------------------------- 1.03 Accounting Principles.............................................................................21 --------------------- ARTICLE IIMANDATORY CASH APPLICATIONS..................................................................................21 --------------------------- 2.01 General Application of Available Net Proceeds.....................................................21 --------------------------------------------- 2.02 Application of Available Net Proceeds Allocated to Facilities.....................................22 ------------------------------------------------------------- 2.03 Exempt Covenant/Waterfall Amounts.................................................................22 --------------------------------- ARTICLE IIIAFFIRMATIVE COVENANTS.......................................................................................23 --------------------- 3.01 Financial Statements..............................................................................23 -------------------- 3.02 Certificates; Other Information...................................................................24 ------------------------------- 3.03 Notices...........................................................................................24 ------- 3.04 Preservation of Corporate Existence, Etc. ........................................................26 ----------------------------------------- 3.05 Insurance.........................................................................................26 --------- 3.06 Payment of Obligations............................................................................26 ---------------------- 3.07 Compliance with Laws..............................................................................26 -------------------- 3.08 Compliance with ERISA.............................................................................26 --------------------- 3.09 Inspection of Property and Books and Records; Expense Reimbursement...............................26 ------------------------------------------------------------------- 3.10 Tritel Disposition................................................................................27 ------------------ 3.11 Conversion of FELINE PRIDES.......................................................................27 --------------------------- ARTICLE IVNEGATIVE COVENANTS...........................................................................................27 ------------------ 4.01 Limitation on Indebtedness........................................................................27 -------------------------- 4.02 Liens.............................................................................................28 ----- 4.03 Disposition of Assets.............................................................................30 --------------------- 4.04 Other Agreements..................................................................................31 ---------------- 4.05 Transactions with Affiliates......................................................................31 ---------------------------- 4.06 Change in Business................................................................................31 ------------------ 4.07 Fundamental Changes...............................................................................31 ------------------- 4.08 Restricted Payments...............................................................................32 ------------------- 4.09 Investments.......................................................................................32 ----------- 4.10 Optional Payments; Modifications of Certain Agreements; Synthetic Purchase Agreements.............33 ------------------------------------------------------------------------------------- 4.11 Negative Pledge on Tritel and Argosy Riverboat....................................................33 ---------------------------------------------- 4.12 Reserve Account...................................................................................34 --------------- 4.13 Debt to Capitalization Ratio......................................................................34 ---------------------------- 4.14 Interest Coverage Ratio...........................................................................34 ----------------------- 4.15 Conseco Adjusted Earnings.........................................................................35 ------------------------- 4.16 Conseco Finance Tangible Net Worth................................................................35 ---------------------------------- 4.17 Risk-Based Capital Ratio..........................................................................35 ------------------------ ARTICLE VEVENTS OF DEFAULT.............................................................................................36 ----------------- 5.01 Events of Default.................................................................................36 -----------------
SCHEDULES Schedule 1.01A Certain Material Insurance Subsidiaries Schedule 1.01B Specified Cash Events Schedule 1.01C Changes in Future Loss Reserves Schedule 1.01D Persons Not Subsidiaries Schedule 2.02 Exposure on Effective Date Schedule 4.01(c) Indebtedness Schedule 4.02(c) Existing Liens Schedule 4.02(g) Permitted Indentures Schedule 4.03(m) Dispositions of Investments Schedule 4.06 Business Activities Schedule 4.09(b) Proposed Investments EXHIBITS Exhibit A Form of Compliance Certificate Exhibit B Form of Reserve Account Agreement ARTICLE I DEFINITIONS I.1 Certain Defined Terms. The following terms, when used in this Appendix, have the following meanings: "Affiliate" means, as to any Person, any other Person which, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person. A Person shall be deemed to control another Person if the controlling Person possesses, directly or indirectly, the power (a) to vote 10% or more of the securities (on a fully diluted basis) having ordinary voting power for the election of directors or managing general partners, or (b) to direct or cause the direction of the management and policies of the other Person, whether through the ownership of voting securities, membership interests, by contract, or otherwise. "Agent" means any "Relevant Agent" under and as defined in the documents governing any Facility. "A.M. Best" means A.M. Best Company, together with any Person succeeding thereto by merger, consolidation or acquisition of all or substantially all of its assets, including substantially all of its business of rating insurance companies. "A.M. Best A- Status" means the circumstance that each Material Insurance Subsidiary listed on Schedule 1.01A has a claims paying rating of at least A- from A.M. Best. "Annual Statement" means the annual statutory financial statement of any Insurance Subsidiary required to be filed with the insurance commissioner (or similar authority) of its jurisdiction of incorporation, which statement shall be in the form required by such Insurance Subsidiary's jurisdiction of incorporation or, if no specific form is so required, in the form of financial statements permitted by such insurance commissioner (or such similar authority) to be used for filing annual statutory financial statements and shall contain the type of information permitted or required by such insurance commissioner (or such similar authority) to be disclosed therein, together with all exhibits or schedules filed therewith. "Appendix" means this Appendix as amended, restated, supplemented or otherwise modified from time to time. "Asset Backed Security" means a security of a Conseco Finance Entity that is collateralized by loans, leases, receivables, installment contracts or interests in or components of Interest Only Securities. "Asset Sale" means any Disposition of property or series of related Dispositions of property, excluding any such Disposition permitted by clauses (a) through (m) and clause (o) of Section 4.03 (but in any event including (whether or not permitted by any of the foregoing clauses) any direct or indirect (a) Disposition of all or any part of the Capital Stock issued by Conseco Finance, Tritel, Inc., Conseco Entertainment, Inc. or CNC Entertainment LLC, (b) Disposition of all or any part of the assets of Tritel, Inc. or CNC Entertainment LLC and (c) receipt of cash proceeds in respect of any Specified Cash Event (each, a "Disposition Transaction") that yields gross proceeds to Conseco and its Subsidiaries in excess of $10,000,000, provided that, once the aggregate gross proceeds from Disposition Transactions received during any Proceeds Test Period yielding gross proceeds between $2,000,000 and $10,000,000 exceeds $20,000,000, the first reference to $10,000,000 in this definition shall automatically be deemed to be changed to $2,000,000 for the remainder of such Proceeds Test Period. As used in this definition, "Proceeds Test Period" means (i) the period from the Effective Date through the Near-Term Facilities Termination Date and (ii) each subsequent one-year period commencing on the Near-Term Facilities Termination Date or an anniversary thereof. "Available Basket Amount" means, at any time, an amount equal to (a) ten percent (10%) of Total Shareholders' Equity at such time minus (b) the aggregate then outstanding amount of Indebtedness secured by Liens, without duplication, pursuant to Section 4.02(i)(i), (ii) (of Conseco or any "Significant Subsidiary" (as defined in the Public Debt)), (iii) or (iv). "Available Net Proceeds" means any Net Proceeds received by Conseco or any of its Subsidiaries in connection with any Prepayment Event other than Exempt Covenant/Waterfall Amounts and Exempt Waterfall Amounts applied in the manner described in clause (b) of the definition of "Exempt Waterfall Amounts". "B-Share Financings" means the financing of fees or commissions related to B-Shares. "B-Shares" means those shares of ownership representing a mutual interest in a pool of assets on which l2b-1 fees or contingent deferred sales commissions (CDSC), as defined under the Investment Company Act of 1940, are applicable. "Bank" means each "Relevant Bank" under and as defined in the documents governing any Facility. "Bankruptcy Code" means the Federal Bankruptcy Reform Act of 1978 (11 U.S.C.ss.101, et seq.). "Business Day" means any day other than a Saturday, Sunday or other day on which commercial banks in Chicago or New York City are authorized or required by law to close. "Calculation Period" means, with respect to any ratio or calculation, the period for which such ratio or calculation is being calculated. "Capital and Surplus" means, as to any Insurance Subsidiary, as of any date, the total amount shown on line 38, page 3, column I of the Annual Statement of such Insurance Subsidiary, or an amount determined in a consistent manner for any date other than one as of which an Annual Statement is prepared. "Capitalized Lease Liabilities" means, with respect to any Person, all monetary obligations of such Person under any leasing or similar arrangement which, in accordance with GAAP, would be classified as a capitalized lease, and, for purposes of this Appendix, the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP, and the stated maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be terminated by the lessee without payment of a penalty. 2 "Capital Stock" means any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person (other than a corporation) and any and all warrants, rights or options to purchase any of the foregoing. "Cash Collateral Agreement" means any cash collateral agreement provided to secure obligations of Conseco or any of its Subsidiaries pursuant to any D&O Facility. "Cash Equivalents" means (a) marketable direct obligations issued by, or unconditionally guaranteed by, the United States government or issued by any agency thereof and backed by the full faith and credit of the United States, in each case maturing within one year from the date of acquisition; (b) certificates of deposit, time deposits, eurodollar time deposits or overnight bank deposits having maturities of six months or less from the date of acquisition issued by any commercial bank organized under the laws of the United States or any state thereof having combined capital and surplus of not less than $500,000,000 and a short term deposit rating of at least A-1 by S&P and P-1 by Moody's, or carrying an equivalent rating by a nationally recognized rating agency, if both of the two named rating agencies cease publishing ratings of commercial paper issuers generally; (c) commercial paper of an issuer rated at least A-1 by S&P and P-1 by Moody's, or carrying an equivalent rating by a nationally recognized rating agency, if both of the two named rating agencies cease publishing ratings of commercial paper issuers generally, and maturing within six months from the date of acquisition; (d) repurchase obligations of any Relevant Bank or of any commercial bank satisfying the requirements of clause (b) of this definition, having a term of not more than 30 days, with respect to securities issued or fully guaranteed or insured by the United States government; (e) securities with maturities of one year or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States, by any political subdivision or taxing authority of any such state, commonwealth or territory or by any foreign government, the securities of which state, commonwealth, territory, political subdivision, taxing authority or foreign government (as the case may be) are rated at least A by S&P and A2 by Moody's; (f) securities with maturities of six months or less from the date of acquisition backed by standby letters of credit issued by any Relevant Bank or any commercial bank satisfying the requirements of clause (b) of this definition; or (g) shares of money market mutual or similar funds which invest exclusively in assets satisfying the requirements of clauses (a) through (f) of this definition. "Cash on Hand Target" has the meaning set forth in Section 2.01(b). "CBOs" means notes or other instruments (other than CMOs) secured by collateral consisting primarily of debt securities and/or other types of debt obligations, including loans. "CERCLA" means the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended. "CERCLIS" means the Comprehensive Environmental Response, Compensation and Liability Information System List. 3 "Change of Control" means (a) any acquisition by any Person, or two or more Persons acting in concert, of beneficial ownership (within the meaning of Rule l3d-3 of the Securities and Exchange Commission under the Exchange Act) of 30% or more of the outstanding shares of voting stock of Conseco (other than an acquisition by any Person or Persons who are officers or directors of Conseco on the Effective Date or any Affiliate thereof controlled by the relevant officer or director); or (b) during any period of 25 consecutive calendar months, commencing on the Effective Date, the ceasing of those individuals who were not borrowers under any of the D&O Facilities (the "Continuing Directors") who (i) were directors of Conseco on the first day of each such period or (ii) subsequently became directors of Conseco and whose actual election or initial nomination for election subsequent to that date was approved by a majority of the Continuing Directors then on the board of directors of Conseco, to constitute a majority of the board of directors of Conseco; or (c) Gary Wendt or such other Person as shall be reasonably satisfactory to the Required Banks shall cease to be the Chief Executive Officer of Conseco (other than by reason of death or disability) at any time prior to the Near-Term Facilities Termination Date. "CIHC" means CIHC, Incorporated, a Delaware corporation, and a direct Wholly-Owned Subsidiary of Conseco. "CIHC Guaranty" means any "Relevant CIHC Guaranty" under and as defined in the documents governing any Facility. "CMOs" means notes or other instruments secured by collateral consisting primarily of mortgages, mortgage-backed securities and/or other types of mortgage-related obligations. "Code" means the Internal Revenue Code of 1986, as amended, and regulations promulgated thereunder. "Collateral Agreement" means the Collateral Agreement, dated as of May 30, 2000, made by Conseco and CIHC in favor of the Collateral Agent named therein. "Compliance Certificate" means a certificate substantially in the form of Exhibit A. "Conseco" means Conseco, Inc., an Indiana corporation. "Conseco Adjusted Earnings" means, for any Calculation Period, the consolidated Net Income of Conseco for such period plus, without duplication and to the extent reflected as a charge in the statement of such Net Income for such period, the sum of (a) income tax expense, (b) interest expense, amortization or writeoff of debt discount and debt issuance costs and commissions, discounts and other fees and charges associated with Indebtedness, (c) depreciation and amortization expense, (d) amortization of intangibles (including, but not limited to, goodwill, deferred acquisition costs, the present value of future profits and changes in future loss reserves described on Schedule 1.01C) and organization costs, (e) net changes in Interest Only Securities, (f) any extraordinary, unusual or non-recurring non-cash expenses or losses (including, whether or not otherwise includable as a separate item in the statement of such Net Income for such period, non-cash losses on sales of assets outside of the ordinary course of business), (g) any other non-cash charges (provided that the after tax amounts described in clauses (f) and (g) shall not exceed in the aggregate$500,000,000 for any Calculation Period ending on or before September 30, 2001, and $50,000,000 for any Calculation Period ending thereafter), and (h) realized or unrealized losses on Investments of Insurance Subsidiaries, and minus, to the extent included in the statement of such Net Income for such period, the sum of (a) any extraordinary, unusual or non-recurring income or gains (including, whether or not otherwise includable as a separate item in the statement of such Net Income for such period, gains on the sales of assets outside of the ordinary course of business) and (b) realized or unrealized gains on Investments of Insurance Subsidiaries, all as determined on a consolidated basis. 4 "Conseco Available Cash Flow" means, for any Calculation Period, the sum, without duplication, of (a) dividends paid in cash to Conseco by any Subsidiary, plus (b) interest paid in cash to Conseco by any Subsidiary pursuant to any intercompany Indebtedness owing by such Subsidiary to Conseco, plus (c) interest or principal paid in cash to Conseco with respect to the Surplus Debentures, plus (d) amounts paid in cash to Conseco under the Tax Sharing Agreement, plus (e) management and other similar fees received by Conseco under servicing agreements or otherwise from any Subsidiary, plus (f) amounts paid in cash to Conseco pursuant to a loan made to it by any Subsidiary, plus (g) amounts paid in cash to Conseco by Conseco Finance pursuant to the redemption by Conseco Finance of preferred equity issued by Conseco Finance and owned by Conseco plus (h) Conseco's Investment Income received in cash, plus (i) in respect of any Fiscal Quarter ended on or prior to December 31, 2000, amounts paid by Conseco in closing out swaps in an amount not to exceed $15,000,000 less the value of the collateral attributable to the relevant swaps, minus (j) cash operating expenses of Conseco, minus (k) capital expenditures of Conseco, minus (l) any amounts paid by Conseco in repayment of any loan referred to in clause (f) above. Amounts received by Conseco or any of its Subsidiaries in respect of any Specified Cash Event shall be excluded from this calculation. "Conseco Finance" means Conseco Finance Corp., a Delaware corporation. "Conseco Finance Entities" means, collectively, Conseco Finance and its consolidated Subsidiaries and "Conseco Finance Entity" means any one of them individually. "Conseco Finance Tangible Net Worth" means, at any date, all amounts that would, in conformity with GAAP, be included on a consolidated balance sheet of Conseco Finance and its Subsidiaries under stockholders' equity at such date, as adjusted by the following items to the extent increasing or reducing, as the case may be, such amounts: plus (a) unrealized losses (or, if applicable, minus unrealized gains), plus (b) any non-cash charges specified in clause (f) or (g) of the definition of Conseco Adjusted Earnings (subject to the limits applicable thereto) minus (c) goodwill, minus (d) Interest Only Securities, minus (e) servicing rights plus (f) the amount of any cash dividends paid by Conseco Finance to Conseco (directly or indirectly). If all or any portion of any intercompany Indebtedness owing to Conseco or any of its Subsidiaries by Conseco Finance or any of its Subsidiaries is converted into equity, no positive impact of such conversion shall be included in determining Conseco Finance Tangible Net Worth. "Conseco Guaranty" means any "Relevant Conseco Guaranty" under and as defined in the documents governing any Facility. "Conseco Series F Preferred Stock" means $500,000,000 stated value of Conseco's Series F Common Linked Convertible Preferred Stock, without par value and any replacement thereof, except to the extent held by any Person (other than Thomas H. Lee or any Person, fund or individual affiliated therewith) that acquires such stock pursuant to a bona fide arm's length transaction. "Conseco's Cash On Hand" means, on any date of determination, the aggregate amount of cash and Cash Equivalents then held by (a) Conseco or (b) Conseco Finance or any of its Subsidiaries in connection with Investments made pursuant to Section 4.09(a)(i)(y) or (z), excluding amounts in the Reserve and amounts required on such date to be distributed pursuant to Section 2.01(b). 5 "Contingent Obligation" means, without duplication, any agreement, undertaking or arrangement by which any Person guarantees, endorses or otherwise becomes or is contingently liable upon (by direct or indirect agreement, contingent or otherwise, to provide funds for payment, to supply funds to, or otherwise to invest in, a debtor, or otherwise to assure a creditor against loss) the debt, obligation or other liability of any other Person (other than by endorsements of instruments in the course of collection), or guarantees the payment of dividends or other distributions upon the shares of any other Person; provided, that (a) the obligations of any Person under Reinsurance Agreements or in connection with Investments of Insurance Subsidiaries, (b) the obligations of Conseco in connection with its guaranty of the Trust Preferred Securities, the Unit Securities and the FELINE PRIDES and (c) the obligations of any Person in connection with its guaranty of Asset Backed Securities shall not be deemed Contingent Obligations of any such Person or Conseco, as applicable. The amount of any Person's liability with respect to any Contingent Obligation shall (subject to any limitation set forth therein) be deemed to be the outstanding principal amount (or maximum outstanding principal amount, if larger) of the debt, obligation or other liability outstanding thereunder or, if not stated or if indeterminable, the maximum reasonably anticipated liability in respect thereof at the time of determination. "Contractual Obligation" means, as to any Person, any provision of any security issued by such Person or of any agreement, undertaking, contract, indenture, mortgage, deed of trust or other instrument, document or agreement to which such Person is a party or by which it or any of its property is bound. "D&O Facilities" means the collective reference to the $144 Million D&O Facility, the $181 Million D&O Facility and the $245 Million D&O Facility. "Debt to Total Capitalization Ratio" means, as of any date of determination, without duplication, the ratio of (a) the sum of (i) the principal amount of and accrued but unpaid interest on all Indebtedness for borrowed money of Conseco (including, without limitation, (x) any Indebtedness evidenced by bonds, debentures, notes or other similar instruments and (y) any Indebtedness resulting from any conversion of preferred stock) for which Conseco is directly liable on such date and which is neither a Contingent Obligation (except that Contingent Obligations of Conseco in respect of Indebtedness of the type described in clause (a) or (b) of the definition thereof (other than in respect of the D&O Facilities) shall nevertheless be included in such calculation) nor Indebtedness arising out of a Permitted Transaction and (ii) dividends on Trust Preferred Securities that are accrued but unpaid; to (b) Total Capitalization on such date; provided, however, that solely for the purposes of calculating the Debt to Total Capitalization Ratio, the term "Indebtedness" shall exclude preferred securities issued by business trusts formed by Conseco, guaranteed by Conseco and related to guarantees and intercompany notes. "Default" means any event or circumstance which, with the giving of notice, the lapse of time, or both, would (if not cured or otherwise remedied during such time) constitute an Event of Default. "Department" means, with respect to any Insurance Subsidiary, the Governmental Authority of such Insurance Subsidiary's state of domicile with which such Insurance Subsidiary is required to file its Annual Statement. "Disposition" means the sale, assignment, leasing, transfer, contribution, conveyance, issuance or other disposal of or granting of options, warrants or other rights with respect to any of a Person's assets (including any transaction pursuant to a Reinsurance Agreement and, in the case of any Subsidiary, the issuance or sale of its Capital Stock). The terms "Dispose" and "Disposed of" shall have correlative meanings. "Disposition Transaction" has the meaning specified in the definition of "Asset Sale". 6 "Dollars", "dollars" and "$" each mean lawful money of the United States. "Effective Date" September 22, 2000. "Environmental Laws" means all federal, state or local laws, statutes, common law duties, rules, regulations, ordinances and codes, together with all administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, Governmental Authorities, in each case relating to environmental, health, safety and land use matters. "ERISA" means the Employee Retirement Income Security Act of 1974 and regulations promulgated thereunder. "ERISA Affiliate" means any trade or business (whether or not incorporated) under common control with Conseco within the meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code). "ERISA Event" means (a) a Reportable Event with respect to a Pension Plan; (b) a withdrawal by Conseco or any ERISA Affiliate from a Pension 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) or a cessation of operations which is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by Conseco or any ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to terminate, the treatment of a Plan amendment as a termination under Section 4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (e) an event or condition which could reasonably be expected to constitute grounds under Section 4042 of ERISA for the termination of or the appointment of a trustee to administer, any Pension Plan or Multiemployer Plan; or (e) the imposition of any liability under Title IV of ERISA, other than PBGC premiums due but not delinquent under Section 4007 of ERISA, upon Conseco or any ERISA Affiliate. "Event of Default" means any of the events or circumstances specified in Section 5.01. "Exchange Act" means the Securities Exchange Act of 1934 and the regulations promulgated thereunder. "Exempt Covenant/Waterfall Amounts" means up to $500,000,000 of Net Proceeds from the issuance of Specified Junior Securities received after the Near-Term Facilities Termination Date. "Exempt Waterfall Amounts" means Net Proceeds of Specified Junior Securities (not designated as "Exempt Covenant/Waterfall Amounts") which are applied either (a) (i) prior to the Near-Term Facilities Termination Date, to the Near-Term Facilities (in the manner contemplated by Section 2.02(b)) and (ii) thereafter, to the $1.5 Billion Facility and the Specified D&O Facilities (in the manner contemplated by Section 2.02(c)) or (b) to make investments in Conseco's Subsidiaries to support their operations. 7 "Exposure" means, with respect to each Bank, (a) in the case of the $155 Million Facility, the $766 Million Facility and the $1.5 Billion Facility, any outstanding "Loans" made by such Bank thereunder and (b) in the case of the D&O Facilities, any outstanding "Loans" made by such Bank thereunder minus such Bank's pro rata share of any cash collateral provided pursuant to the applicable Cash Collateral Agreement. "Facilities" means the collective reference to the Near-Term Facilities, the D&O Facilities and the $1.5 Billion Facility. "FELINE PRIDES" means the units consisting of (a) 6.75% Trust Originated Preferred Securities issued by Conseco Financing Trust IV (the "PRIDES Preferred Securities") and (b) a purchase contract to purchase shares of common stock from Conseco (the "PRIDES Purchase Contracts"). "Fiscal Quarter" means any fiscal quarter of a Fiscal Year. "Fiscal Year" means any period of twelve consecutive calendar months ending on December 31. "Fixed Interest Charges" means, for any Calculation Period, (without duplication) (a) interest paid or, without duplication, accrued but unpaid on the Exposure under any Facility (other than the D&O Facilities) with respect to such Calculation Period, plus (b) interest paid or, without duplication, accrued but unpaid on any Indebtedness of Conseco set forth in clause (a), (b) or (d) of the definition thereof during such Calculation Period, minus (c) to the extent included in clause (b) above, interest paid or, without duplication, accrued but unpaid on any Indebtedness which has been eliminated from the balance sheet liabilities of Conseco on a consolidated basis in accordance with GAAP, minus (d) to the extent included in clause (b) above, interest paid or, without duplication, accrued but unpaid on any Indebtedness of any Conseco Finance Entity or any Insurance Subsidiary. Interest paid, or accrued and unpaid, in respect of Indebtedness related to the Trust Preferred Securities or the FELINE PRIDES shall be excluded from the above calculation. "FRB" means the Board of Governors of the Federal Reserve System, and any Governmental Authority succeeding to any of its principal functions. "FY 2000 Adjustments" has the meaning specified in the definition of "Total Capitalization". "GAAP" means generally accepted accounting principles set forth from time to time in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board (or agencies with similar functions of comparable stature and authority within the U.S. accounting profession), which are applicable to the circumstances as of the date of determination. "Governmental Authority" means any nation or government, any state or other political subdivision thereof, any central bank (or similar monetary or regulatory authority) thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, and any corporation or other entity owned or controlled, through stock or capital ownership or otherwise, by any of the foregoing, including any board of insurance, insurance department or insurance commissioner. "Income Taxes" means any Taxes based upon net income. 8 "Indebtedness" means, with respect to any Person, without duplication: (a) all obligations of such Person for borrowed money or in respect of loans or advances; (b) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments; (c) all obligations in respect of letters of credit, whether or not drawn, and bankers' acceptances issued for the account or upon the application or request of such Person; (d) all Capitalized Lease Liabilities of such Person; (e) all obligations of such Person in respect of Swap Contracts; (f) all obligations of such Person to pay the deferred purchase price of property or services which are included as liabilities in accordance with GAAP (other than trade payables entered into in the ordinary course of business on ordinary terms), and all obligations secured by a Lien on property owned or being purchased by such Person (including obligations arising under conditional sales or other title retention agreements); (g) any obligations of a partnership of the kind referred to in clauses (a) through (f) above or clause (h) below in which such Person is a general partner, and (h) all Contingent Obligations of such Person in connection with indebtedness or obligations of others of the kinds referred to in clauses (a) through (g) above; provided, however, that, except for the purpose of the proviso of Section 4.01(d), the term "Indebtedness" shall exclude (i) replevin bonds, surety bonds and other similar bonds (including, without limitation, bonds issued in connection with litigation and repossession activities) issued by an Insurance Subsidiary or a Conseco Finance Entity in the ordinary course of business and (ii) the obligations of any Person under letters of credit (whether or not drawn), bankers' acceptances and swap contracts issued or entered into in connection with any Asset Backed Security. "Independent Auditor" has the meaning specified in Section 3.01(a). "Insignificant Subsidiary" means any Subsidiary of Conseco that is not a Significant Subsidiary. "Insolvency Proceeding" means, with respect to any Person, (a) any case, action or proceeding with respect to such Person before any court or other Governmental Authority relating to bankruptcy, reorganization, insolvency, liquidation, conservation, rehabilitation, receivership, dissolution, winding-up or relief of debtors, or (b) any general assignment for the benefit of creditors, composition, marshalling of assets for creditors, or other, similar arrangement in respect of its creditors generally or any substantial portion of its creditors, in any case, undertaken under U.S. Federal, state or foreign law, including the Bankruptcy Code. "Insurance Subsidiary" means any Subsidiary which is required to be licensed as an insurer or reinsurer. "Interest Coverage Ratio" means, for any Calculation Period, the ratio of (a) Conseco Available Cash Flow for such Calculation Period to (b) Fixed Interest Charges for such Calculation Period. "Interest Only Security" means any interest, including servicing fees, retained by a Conseco Finance Entity relating to the sale or securitization of loans, leases, receivables or installment contracts, which constitutes either an interest only security or a servicing right asset in accordance with GAAP. "Investment" means any advance, loan, extension of credit (by way of guaranty or otherwise) or capital contribution to, or purchase of any Capital Stock, bonds, notes, debentures or other debt securities of, or any assets constituting a business unit of, or any other investment in, any Person. 9 "Investment Grade Ratings Status" means the circumstance that Conseco has a senior unsecured non-credit enhanced long-term debt rating of at least BBB- from S&P and at least Baa3 from Moody's. "Investment Income" means the amount of earnings of Conseco on Investments, net of expenses actually incurred in connection with such Investments and taking into account realized gains and losses on such Investments. "IRS" means the Internal Revenue Service or any Governmental Authority succeeding to any of its principal functions under the Code. "Lehman" means Lehman Brothers Holdings Inc., and any successors. "Lehman Agreement" means, collectively, (a) the Amended and Restated Agreement, dated as of September 22, 2000, by and among Conseco Finance Corp., Conseco, CIHC, Green Tree Residual Finance Corp. I, Green Tree Finance Corp. - Five and Lehman, (b) Amendment to the Warehouse Debt Facility, dated as of September 22, 2000, by and among Lehman Commercial Paper Inc. and Green Tree Finance Corp. - Five and acknowledged and consented to by Conseco Finance Corp. and CIHC, (c) Amendment to the First Residual Facility (Asset Assignment Agreement), dated as of September 22, 2000, by and among Lehman ALI Inc. and Green Tree Residual Finance Corp. I and (d) Amendment to the Second Residual Facility (Master Repurchase Agreement), dated as of September 22, 2000, by and among Lehman Brothers Inc. and Green Tree Residual Finance Corp. I, in each case, as amended, supplemented or otherwise modified from time to time, and any related document or agreement (including the agreements amended or modified by the agreements specified above). "License" means any license, certificate of authority, permit or other authorization which is required to be obtained from any Governmental Authority in connection with the operation, ownership or transaction of insurance business. "Lien" means any security interest, mortgage, deed of trust, pledge, hypothecation, assignment, charge or deposit arrangement, encumbrance, lien (statutory or other) or preferential arrangement of any kind or nature whatsoever in respect of any property (including those created by, arising under or evidenced by any conditional sale or other title retention agreement, the interest of a lessor under a capital lease or any financing lease having substantially the same economic effect as any of the foregoing) and any contingent or other agreement to provide any of the foregoing, but not including the interest of a lessor under an operating lease or the contingent obligation to equally and ratably secure the Public Debt. "Litigation" means any litigation (including, without limitation, any governmental proceeding or arbitration proceeding), tax audit or investigative proceeding, claim, lawsuit, and/or investigation pending or threatened against or involving Conseco or any of its Subsidiaries or any of its or their businesses or operations. "Loan Documents" means the "Loan Documents" under and as defined in the documents governing the Relevant Facility, including, in any event, this Appendix and the Relevant CIHC Guaranty. 10 "Longer-Term Public Debt" means Conseco's 8.5% Notes due October 15, 2002, 6.4% Notes due February 10, 2003, 8-1/8% Senior Notes due February 15, 2003, 10.5% Senior Notes due December 15, 2004, 8.75% Notes due February 9, 2004, 6.8% Notes due June 15, 2005 and 9% Notes due October 15, 2006. "Material Adverse Effect" means (a) a material adverse change in, or a material adverse effect upon, the business, properties, condition (financial or otherwise) of Conseco or Conseco and its Subsidiaries taken as a whole; (b) a material impairment of the ability of Conseco to perform under any Loan Document; or (c) a material adverse effect upon the legality, validity, binding effect or enforceability against Conseco of any Loan Document. "Material Insurance Subsidiary" means an Insurance Subsidiary having Capital and Surplus of $50,000,000 or more. "Moody's" means Moody's Investors Service, Inc., together with any Person succeeding thereto by merger, consolidation or acquisition of all or substantially all of its assets, including substantially all of its business of rating securities. "Multiemployer Plan" means a "multiemployer plan", within the meaning of Section 4001(a)(3) of ERISA, to which Conseco or any ERISA Affiliate makes, is making, or is obligated to make contributions or, during the preceding three calendar years, has made, or been obligated to make, contributions. "NAIC" means the National Association of Insurance Commissioners or any successor thereto, or in absence of the National Association of Insurance Commissioners or such successor, any other association, agency or other organization performing advisory, coordination or other like functions among insurance departments, insurance commissioners and similar Governmental Authorities of the various states of the United States toward the promotion of uniformity in the practices of such Governmental Authorities. "Near-Term Facilities" means the collective reference to the $155 Million Facility and the $766 Million Facility. "Near-Term Facilities Termination Date" means the date on which all "Obligations" under and as defined in the documents governing the $155 Million Facility and the $766 Million Facility have, in both cases, been paid in full in cash. "Net Income" means, for any Person for any Calculation Period, the net income (or loss) of such Person for such period as determined in accordance with GAAP. 11 "Net Proceeds" means (a) with respect to any Disposition by any Person, the aggregate amount of cash and Cash Equivalents received by such Person in respect of such Disposition (including any such amounts received by way of deferred payment of principal pursuant to a note or installment receivable or purchase price adjustment receivable or otherwise, but only as and when received) minus the sum of (i) costs and expenses (including legal fees, notarial fees, accountants fees, investment banking fees, survey costs, title insurance premiums, amounts applied to the repayment of Indebtedness (other than under a Facility) secured by a Lien expressly permitted hereunder on any asset that is the subject of such Disposition, costs of discontinuance (including, without limitation, any reasonable severance payments), Taxes other than Income Taxes (after taking into account any available tax credits or deductions and any tax sharing arrangements) and other customary fees and expenses) incurred in connection with such Disposition and required to be paid in cash or deducted from the proceeds of such Disposition, (ii) the estimated Income Tax actually required to be paid in cash by such Person in connection with such Disposition (after taking into account any available tax credits or deductions and any tax sharing arrangements), (iii) purchase price adjustments reasonably expected to be payable in connection therewith (not to exceed 10% of the purchase price for the relevant Disposition) so long as, if any such amount ceases to be payable, it shall then become "Net Proceeds", (iv) for an Insurance Subsidiary, any amounts which the Department will not permit such Insurance Subsidiary to pay out as a result of such Disposition and (v) for a Conseco Finance Entity, any amounts which the Lehman Agreement will not permit such Conseco Finance Entity to distribute to CIHC or Conseco as a result of such Disposition, so long as, if any such amount becomes so distributable under the Lehman Agreement, it shall then become "Net Proceeds", and (b) with respect to any issuance of Capital Stock of Conseco, any incurrence of Indebtedness by Conseco or any of its Subsidiaries, the occurrence of any Specified Cash Event or the receipt of any amount pursuant to any Permitted Tritel Hedge Transaction, the proceeds thereof in the form of cash and Cash Equivalents minus the costs and expenses incurred in connection therewith (including legal fees, notarial fees, accountants fees, investment banking fees, underwriting discounts and commissions and other customary fees and expenses incurred in connection therewith) and required to be paid in cash or deducted from the proceeds of such Disposition. For purposes of this definition, the Net Proceeds received by any Person in respect of any Disposition shall include such cash or Cash Equivalents as may be received ("subsequent cash proceeds") by such Person at any time or from time to time in connection with the sale, transfer, lease or other disposition, or otherwise in respect of, any consideration other than cash or Cash Equivalents received by such Person in respect of such Disposition, less the estimated Income Tax to be paid in connection with the receipt of such subsequent cash proceeds (after taking into account any available tax credits or deductions and any tax sharing arrangements) that was not theretofore deducted in computing Net Proceeds. "Ninety-Percent Owned Subsidiary" means any Person in which (other than directors' qualifying shares required by law) at least 90% of the Capital Stock of each class having ordinary voting power (or, in the case of Persons other than corporations, membership interests or other equity interests), at the time as of which any determination is being made, is owned, beneficially and of record, directly or indirectly, by Conseco, or by one or more Wholly-Owned Subsidiaries, or both. "Non-Finance Subsidiary" means any Subsidiary which is not a Conseco Finance Entity. "Non-Insurance Subsidiary" means any Subsidiary which is not an Insurance Subsidiary. "Obligations" means all advances, debts, liabilities, obligations, covenants and duties for the payment of money arising under any Loan Document owing by Conseco to the Relevant Banks (or, if such defined term is included in the documents governing the Relevant Facility, any "Indemnified Person"), whether direct or indirect (including those acquired by assignment), absolute or contingent, due or to become due, now existing or hereafter arising. To the extent that any of the foregoing have been cash collateralized, such amounts shall nevertheless be deemed to remain outstanding for the purposes of this Appendix. "PBGC" means the Pension Benefit Guaranty Corporation, or any Governmental Authority succeeding to any of its principal functions under ERISA. 12 "Pension Plan" means a pension plan (as defined in Section 3(2) of ERISA) subject to Title IV of ERISA which Conseco or any ERISA Affiliate sponsors, maintains, or to which it makes, is making, or is obligated to make contributions, or in the case of a multiple employer plan (as described in Section 4064(a) of ERISA) has made contributions at any time during the immediately preceding five (5) plan years. "Permitted Lien" has the meaning specified in Section 4.02. "Permitted Nonrecourse Indebtedness" means (a) nonrecourse Indebtedness of Subsidiaries of Conseco resulting from the sale or securitization of (i) non-admitted assets, policy loans, B-Share Financings, CBOs and CMOs and (ii) loans, leases, receivables, installment contracts and other financial products originated, acquired, sold or securitized by a Conseco Finance Entity and (b) nonrecourse Indebtedness of a Conseco Finance Entity with respect to Interest Only Securities. "Permitted Swap Obligations" means all obligations (contingent or otherwise) of Conseco or any Subsidiary existing or arising under Swap Contracts, provided that each of the following criteria is satisfied: (a) such obligations are (or were) entered into by such Person in the ordinary course of business for the purpose of directly mitigating risks associated with liabilities, commitments or assets held by such Person, or changes in the value of securities issued by such Person in conjunction with a securities repurchase program not otherwise prohibited hereunder, and not for purposes of speculation or taking a "market view;" and (b) such Swap Contracts do not contain any provision ("walk-away" provision) exonerating the non-defaulting Party from its obligation to make payments on outstanding transactions to the defaulting party. "Permitted Transactions" means (a) mortgage-backed security transactions in which an investor sells mortgage collateral, such as securities issued by the Government National Mortgage Association and the Federal Home Loan Mortgage Corporation for delivery in the current month while simultaneously contracting to repurchase "substantially the same" (as determined by the Public Securities Association and GAAP) collateral for a later settlement, (b) transactions in which an investor lends cash to a primary dealer and the primary dealer collateralizes the borrowing of the cash with certain securities, (c) transactions in which an investor lends securities to a primary dealer and the primary dealer collateralizes the borrowing of the securities with cash collateral, (d) transactions in which an investor makes loans of securities to a broker-dealer under an agreement requiring such loans to be continuously secured by cash collateral or United States government securities, (e) transactions in which a federal home loan mortgage bank (a "FHLMB") makes loans, which are sufficiently secured by appropriate assets consisting of government agency mortgage-backed securities, in accordance with the rules, regulations and guidelines of such FHLMB for its loan programs, (f) financing transactions in which a Conseco Finance Entity sells or transfers as collateral loans, leases, receivables or installment contracts to a third party while simultaneously contracting to repurchase or reacquire substantially the same assets and (g) the issuance of any Asset Backed Securities by any Conseco Finance Entity. "Permitted Tritel Hedge Transaction" has the meaning specified in Section 4.11. "Person" means an individual, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture or Governmental Authority or other entity of whatever nature. "Plan" means an employee benefit plan (as defined in Section 3(3) of ERISA) which Conseco sponsors or maintains or to which Conseco makes, is making, or is obligated to make contributions and includes any Pension Plan. 13 "prepay" means, when used with respect to Public Debt, prepay, repurchase, redeem or otherwise optionally or voluntarily defease or segregate funds with respect thereto; and "prepaid" and "prepayment" shall have correlative meanings. "Prepayment Events" means (a) the occurrence of any Specified Cash Event or the consummation of any other Asset Sale, (b) the incurrence by Conseco or any of its Subsidiaries of any Indebtedness of the type described in clause (a) or (b) of the definition thereof, excluding Indebtedness permitted by Section 4.01 other than as set forth in Section 4.01(b) (to the extent required to be applied as a Prepayment Event as set forth in the definition of "Exempt Waterfall Amounts"), (c) the issuance of any Capital Stock by Conseco and (d) any receipt of Net Proceeds in connection with any Permitted Tritel Hedge Transaction. "PRIDES Documents" means the PRIDES Purchase Contracts, the PRIDES Preferred Securities, the Subordinated Indenture dated as of December 8, 1997 between Conseco and The First National Bank of Chicago, as amended by the First Supplemental Indenture, dated as of December 8, 1997, the 6.75% Debentures issued to the PRIDES Trust pursuant to such Indenture, the Amended and Restated Declaration of Trust of the PRIDES Trust, the Preferred Securities Guarantee dated as of December 12, 1997 executed by Conseco, the Common Securities Guarantee dated as of December 12, 1997 executed by Conseco, and the other documents, agreements, schedules, exhibits and instruments referenced in the foregoing agreements and instruments. "PRIDES Preferred Securities" has the meaning set forth in the definition of FELINE PRIDES. "PRIDES Purchase Contracts" has the meaning set forth in the definition of FELINE PRIDES. "PRIDES Trust" means Conseco Financing Trust IV, a Delaware business trust. "Public Debt" means the collective reference to the 2000 Public Debt, the 2001 Public Debt and the Longer-Term Public Debt. "Purchase Money Debt" means Indebtedness incurred by a Person in connection with the purchase of fixed or capital assets by such Person, in which such assets the seller or financier thereof has taken or retained a Lien therein, provided that any such Lien attaches to such asset concurrently with or within one hundred twenty (120) days after the purchase thereof by such Person. "Quarterly Statement" means the quarterly statutory financial statement of any Insurance Subsidiary required to be filed with the insurance commissioner (or similar authority) of its jurisdiction of incorporation or, if no specific form is so required, in the form of financial statements permitted by such insurance commissioner (or such similar authority) to be used for filing quarterly statutory financial statements and shall contain the type of financial information permitted by such insurance commissioner (or such similar authority) to be disclosed therein, together with all exhibits or schedules filed therewith. 14 "Reinsurance Agreements" means any agreement, contract, treaty, certificate or other arrangement by which any Insurance Subsidiary agrees to transfer or cede to another insurer all or part of the liability assumed or assets held by it under one or more insurance, annuity, reinsurance or retrocession policies, agreements, contracts, treaties, certificates or similar arrangements. Reinsurance Agreements shall include, but not be limited to, any agreement, contract, treaty, certificate or other arrangement which is treated as such by the applicable Department. "Relevant Agent" means the "Agent" or "Administrative Agent", as applicable, under the Relevant Facility. "Relevant Banks" means any Bank to which Obligations are owing under the Relevant Facility. "Relevant Cash Collateral Agreement" means, if the Relevant Facility is a D&O Facility, any cash collateral agreement entered into by Conseco or any of its Subsidiaries in favor of the Agent thereunder in order to cash collateralize the Conseco Guaranty relating to such Facility. "Relevant CIHC Guaranty" means the Guaranty and Subordination Agreement, dated as of the Effective Date, made by CIHC in favor of the Relevant Agent and the Relevant Banks. It is agreed that the Relevant CIHC Guaranty shall be terminated and CIHC shall be released from all of its obligations thereunder on the first date after the Near-Term Facilities Termination Date on which Conseco has Investment Grade Ratings Status, so long as no Default or Event of Default shall have occurred and be continuing on such date. "Relevant Conseco Guaranty" means, if the Relevant Facility is a D&O Facility, any guaranty issued by Conseco in favor of the Agent thereunder in order to guaranty the obligations of the individual borrowers under such Facility. "Relevant Facility" means the Facility being amended pursuant to the amendment to which this Appendix is attached. "Reportable Event" means any of the events set forth in Section 4043(c) of ERISA or the regulations thereunder, other than any such event for which the 30-day notice requirement under ERISA has been waived in regulations issued by the PBGC. "Required Banks" means the "Required Banks" under and as defined in the documents governing the Relevant Facility. "Requirement of Law" means, as to any Person, any law (statutory or common), treaty, rule or regulation or determination of an arbitrator or of a Governmental Authority, in each case applicable to or binding upon the Person or any of its property or to which the Person or any of its property is subject. "Reserve" means the collective reference to one or more restricted accounts opened by Conseco with any one or more Banks, on terms and conditions substantially as set forth on Exhibit B hereto. It is understood that any contractual right of setoff contained in the documents governing any Facility will not apply to any Reserve. "Responsible Officer" means the chief executive officer, chief operating officer, chief financial officer or treasurer of Conseco, or any other officer having substantially the same authority and responsibility including, with respect to Section 3.01, any vice-president with responsibility for or knowledge of financial matters of Conseco. "Restricted Payments" has the meaning set forth in Section 4.08. 15 "Risk-Based Capital Ratio" means, with respect to the Insurance Subsidiaries (other than Conseco Direct Life Insurance Company) taken as a whole, on any date of determination, the ratio (expressed as a percentage) of (a) the aggregate Total Adjusted Capital (as defined by the NAIC) for such Insurance Subsidiaries to (b) the aggregate Authorized Control Level Risk-Based Capital (as defined by the NAIC) for such Insurance Subsidiaries. "S&P" means Standard & Poor's Ratings Services, together with any Person succeeding thereto by merger, consolidation or acquisition of all or substantially all of its assets, including substantially all of its business of rating securities. "SAP" means, with respect to any Insurance Subsidiary, the statutory accounting practices prescribed or permitted by the insurance commissioner (or other similar authority) in the jurisdiction of domicile of such Person for the preparation of annual statements and other financial reports by insurance companies of the same type as such Person, which are applicable to the circumstances as of the date of filing of such statement or report. "SEC" means the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions. "Significant Subsidiary" means any Subsidiary of Conseco with, after the elimination of intercompany accounts, (a) assets which constituted at least 5% of Conseco's consolidated total assets, or (b) revenues which constituted at least 5% of Conseco's consolidated total revenue or (c) net earnings which constituted at least 5% of Conseco's consolidated total net earnings, but not less than $10,000,000, all as determined as of the date of Conseco's most recently prepared quarterly financial statements for the 12-month period then ended. "Single Employer Pension Plan" means a pension plan as such term is defined in Section 3(2) of ERISA, other than a multiemployer plan as defined in Section 4001(a)(3) of ERISA, to which Conseco or any other ERISA Affiliate may have liability, including any liability by reason of having been a substantial employer within the meaning of Section 4063 of ERISA at any time during the preceding five years, or by reason of being deemed to be a contributing sponsor under Section 4069 of ERISA. "Specified Cash Events" means the receipt of cash by Conseco or any of its Subsidiaries in connection with the events described on Schedule 1.01B, whether or not in connection with a Disposition. "Specified D&O Facilities" means the collective reference to the $181 Million D&O Facility and the $245 Million D&O Facility. "Specified Junior Securities" means (a) common stock of Conseco and (b) preferred stock of Conseco and subordinated Indebtedness of Conseco that, in each case, does not require cash dividend or cash interest payments prior to September 30, 2005 (other than any requirement that is limited to payments with the proceeds of available Exempt Covenant/Waterfall Amounts received and held aside or otherwise identified prior to the date such preferred stock or subordinated Indebtedness is issued or incurred) or scheduled redemption or principal payments prior to March 31, 2006 and, in the case of subordinated Indebtedness, having subordination and related terms satisfactory to each Agent. "Statutory Net Income" means, for any period, the net income of an Insurance Subsidiary determined in accordance with SAP. 16 "Subordinated Obligations" shall be the collective reference to the unpaid principal of and accrued and unpaid interest on any subordinated Indebtedness and all other subordinated obligations and liabilities of Conseco to the lenders thereof (including, without limitation, interest accruing at the then applicable rate provided in the applicable loan documents for such Indebtedness or obligations after the maturity of the subordinated loans and interest accruing at the then applicable rate provided in such loan documents after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to Conseco, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding), whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, which may arise under, out of, or in connection with, this Appendix, or such loan documents for such subordinated Indebtedness, in each case whether on account of principal, interest, reimbursement obligations, fees, indemnities, costs, expenses or otherwise (including, without limitation, all fees and disbursements of counsel to the lenders thereof that are required to be paid by Conseco pursuant to the terms of the loan documents therefor or this Appendix). "Subsidiary" of a Person means any corporation, partnership, limited liability company, limited liability partnership, joint venture, trust, association or other unincorporated organization of which or in which such Person and such Person's Subsidiaries own directly or indirectly more than 50% of (a) the combined voting power of all classes of stock having general voting power under ordinary circumstances to elect a majority of the board of directors, if it is a corporation, (b) the voting or managing interests (which shall mean the general partner in the case of a partnership), if it is a partnership, joint venture or similar entity, (c) the beneficial interest, if it is a trust, association or other unincorporated organization or (d) the membership interest, if it is a limited liability company; provided, that, with respect to any Investment made by Conseco in any Person in the ordinary course of business solely for investment purposes, such Person shall not be considered a Subsidiary of Conseco for the purposes of this Appendix if such Person is not integral to the business or operations of Conseco or any Significant Subsidiary and, by way of illustration only, Schedule 1.01D, sets forth a nonexclusive list of such Persons who are not Subsidiaries of Conseco because of the operation of this clause. "Surplus Debentures" means, as to any Insurance Subsidiary, debt securities of such Insurance Subsidiary the proceeds of which are permitted to be included, in whole or in part, as Capital and Surplus of such Insurance Subsidiary as approved and permitted by the applicable Department. "Swap Contract" means any agreement whether or not in writing, relating to any transaction that is a rate swap, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap or option, bond, note or bill option, interest rate option, forward foreign exchange transaction, cap, collar or floor transaction, currency swap, cross-currency rate swap, swaption, currency option or any other, similar transaction (including any option to enter into any of the foregoing) or any combination of the foregoing, and, unless the context otherwise clearly requires, any master agreement relating to or governing any or all of the foregoing. 17 "Swap Termination Value" means, in respect of any one or more Swap Contracts, after taking into account the effect of any legally enforceable netting agreement relating to such Swap Contracts, (a) for any date on or after the date such Swap Contracts have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in clause (a) the amount(s) determined as the mark-to-market value(s) for such Swap Contracts, as determined by Conseco based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Swap Contracts (which may include any Relevant Bank). "Synthetic Purchase Agreement" means any agreement pursuant to which Conseco or any of its Subsidiaries is or may become obligated to make (a) any payment in connection with the purchase by any third party from a Person other than Conseco or any of its Subsidiaries (other than any Subsidiary that is a Subsidiary of an Insurance Subsidiary but is not itself an Insurance Subsidiary) of any Capital Stock or Indebtedness of Conseco or any of its Subsidiaries (other than any Subsidiary that is a Subsidiary of an Insurance Subsidiary but is not itself an Insurance Subsidiary) or (b) any payment the amount of which is determined by reference to the price or value at any time of any such Capital Stock or Indebtedness; provided, that (i) no phantom stock or similar plan providing for payments only to current or former directors, officers or employees of Conseco or any of its Subsidiaries (or to their heirs or estates), (ii) no such agreement in respect of any Public Debt that is permitted to be prepaid at such time pursuant to Section 4.10 and (iii) no such agreement in respect of any Disposition of any Capital Stock of a Subsidiary of Conseco that is permitted by Section 4.03 shall be deemed to be a Synthetic Purchase Agreement. "Taxes" means any and all present or future taxes, levies, assessments, imposts, duties, deductions, fees, withholdings or similar charges, and all liabilities with respect thereto. "Tax Sharing Agreement" means the tax sharing agreement dated February 29, 1989, as amended, among Conseco and certain of its Subsidiaries. "Total Capitalization" means, without duplication, (a) the amount described in clause (a) of the definition of "Debt to Total Capitalization Ratio", plus (b) the Total Shareholders' Equity of Conseco, minus (c) the carrying value of Interest Only Securities and servicing rights. Total Capitalization shall be determined without giving effect to (a) the impact of charges or writedowns taken in the third or fourth Fiscal Quarter of the Fiscal Year ending December 31, 2000 ("FY 2000 Adjustments") so long as the aggregate after-tax amount thereof does not exceed $500,000,000 and (b) the impact of any on balance sheet treatment of the D&O Facilities. "Total Shareholders' Equity" means the sum of, without duplication, (a) total common and preferred shareholders' equity of Conseco as determined in accordance with GAAP (calculated excluding unrealized gains (losses) of securities as determined in accordance with FAS 115) and (b) the redemption value or liquidation preference (or if less, the purchase price), as applicable, of the Trust Preferred Securities, the FELINE PRIDES and the Unit Securities. "Trust Preferred Securities" mean preferred securities (a) issued by one or more Delaware business trusts formed by Conseco and (b) guaranteed by Conseco, including specifically, "MIPS," "QuIPS," "TOPrS" and "TruPS", provided that the aggregate face amount of all Trust Preferred Securities does not exceed the greater of $1,930,000,000 or 15% of Total Capitalization at any time. "2000 Public Debt" means Conseco's $150,000,000 7-7/8% Notes due December 15, 2000. "2001 Public Debt" means Conseco's 7.6% Senior Notes due June 21, 2001 and 6.4% Mandatory Par Put Remarketed Securities due June 15, 2011. 18 "Unfunded Pension Liability" means the excess of a Plan's benefit liabilities under Section 4001(a)(16) of ERISA, over the current value of that Plan's assets, determined in accordance with the assumptions used for funding the Pension Plan pursuant to Section 412 of the Code for the applicable plan year. "United States" and "U.S." each means the United States of America. "Unit Securities" means investment units comprised of (a) mandatorily redeemable preferred securities (i) issued by one or more Delaware business trusts formed by Conseco and (ii) guaranteed by Conseco, including specifically, "MIPS," QuIPS," "TOPrS" and "TruPS," and (b) equity forward contracts for the purchase of common stock of Conseco (which forward contracts shall have a settlement date that is earlier than the stated maturity of such preferred securities) collateralized by such preferred securities or government securities in lieu thereof (including, without limitation, principal and interest strips thereof). "Voting Shares" means, with respect to any Person, capital stock issued by such Person, the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or persons performing similar functions) of such Person, even though the right so to vote has been suspended by the happening of any such contingency. "Wholly-Owned Subsidiary"means any corporation in which (other than directors' qualifying shares required by law) 100% of the capital stock of each class having ordinary voting power, and 100% of the capital stock of every other class, in each case (or, in the case of Persons other than corporations, membership interests or other equity interests), at the time as of which any determination is being made, is owned, beneficially and of record, by Conseco, or by one or more of the other Wholly-Owned Subsidiaries, or both. "$50 Million Credit Agreement" means the ECN Dealer Agreement between Conseco and Merrill Lynch, Pierce, Fenner & Smith Incorporated dated September 28, 1999 and the letter dated September 28, 1999 addressed by Merrill Lynch, Pierce, Fenner & Smith Incorporated to Conseco, including the Extendible Commercial Notes Memorandum attached thereto. "$144 Million D&O Credit Agreement" means the Termination and Replacement Agreement, dated as of May 30, 2000, among the individual borrowers parties thereto, the banks parties thereto, Chase, as administrative agent and Chase Securities Inc. and Banc of America Securities LLC as co-lead arrangers and co-lead book managers. "$155 Million Credit Agreement" means the Senior Secured Revolving Credit Agreement, dated as of May 30, 2000, among Conseco, the banks parties thereto, Chase, as administrative agent and Chase Securities Inc. and Banc of America Securities LLC as co-lead arrangers and co-lead book managers. "$181 Million D&O Credit Agreement" means the Credit Agreement, dated as of August 21, 1998, among the individual borrowers parties thereto, the banks parties thereto and BofA, as administrative agent. "$245 Million D&O Credit Agreement" means the Amended and Restated Credit Agreement, dated as of August 26, 1997, among the individual borrowers parties thereto, the banks parties thereto and BofA, as administrative agent. 19 "$766 Million Credit Agreement" means the 364-Day Credit Agreement, dated as of September 25, 1998, among Conseco, the banks parties thereto, the syndication agents and documentation agent named therein and BofA, as agent, as amended on the Effective Date to incorporate the obligations of Conseco under the $50 Million Credit Agreement. "$1.5 Billion Credit Agreement" means the Five-Year Credit Agreement, dated as of September 25, 1998, among Conseco, the banks parties thereto, the syndication agents and documentation agent named therein and BofA, as agent. "$144 Million D&O Facility" means the credit facility evidenced by the $144 Million D&O Credit Agreement and the documents related thereto. "$155 Million Facility" means the credit facility evidenced by the $155 Million Credit Agreement and the documents related thereto. "$181 Million D&O Facility" means the credit facility evidenced by the $181 Million D&O Credit Agreement and the documents related thereto. "$245 Million D&O Facility" means the credit facility evidenced by the $245 Million D&O Credit Agreement and the documents related thereto. "$766 Million Facility" means the credit facility evidenced by the $766 Million Credit Agreement and the documents related thereto. "$1.5 Billion Facility" means the credit facility evidenced by the $1.5 Billion Credit Agreement and the documents related thereto. I.2 Other Interpretive Provisions. (a) The meanings of defined terms are equally applicable to the singular and plural forms of the defined terms. (b) The words "hereof", "herein", "hereunder" and similar words refer to this Appendix as a whole and not to any particular provision of this Appendix; and subsection, Section, Schedule and Exhibit references are to this Appendix unless otherwise specified. (c) (i) The term "including" is not limiting and means "including without limitation." (ii) In the computation of periods of time from a specified date to a later specified date, the word "from" means "from and including"; the words "to" and "until" each mean "to but excluding", and the word "through" means "to and including." (d) Unless otherwise expressly provided herein, (i) references to agreements (including this Appendix) and other contractual instruments shall be deemed to include all subsequent amendments and other modifications thereto, but only to the extent such amendments and other modifications are not prohibited by the terms of any Loan Document, and (ii) references to any statute or regulation are to be construed as including all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting the statute or regulation. (e) The captions and headings of this Appendix are for convenience of reference only and shall not affect the interpretation of this Appendix. 20 (f) This Appendix and other Loan Documents may use several different limitations, tests or measurements to regulate the same or similar matters. Unless otherwise expressly provided, any reference to any action of the Relevant Agent or the Relevant Banks by way of consent, approval or waiver shall be deemed modified by the phrase "in its/their sole and reasonable discretion. (g) This Appendix and the other Loan Documents are the result of negotiations among and have been reviewed by counsel to the Relevant Agent, Conseco and the other parties to the Loan Documents, and are the products of all parties. Accordingly, they shall not be construed against the Relevant Banks or the Relevant Agent merely because of the Relevant Agent's or the Relevant Banks' involvement in their preparation. I.3 Accounting Principles. (a) Unless the context otherwise clearly requires, all accounting terms not expressly defined herein shall be construed, and all financial computations required under this Appendix shall be made, in accordance with GAAP, consistently applied. (b) References hereto in particular columns, lines or sections of any Person's Annual Statement shall be deemed, where appropriate, to be references to the corresponding column, line or section of such Person's Quarterly Statement, or if no such corresponding column, line or section exists or if any report form changes, then to the corresponding item referenced thereby. In the event the column , lines or sections of the Annual Statement referenced herein are changed or renumbered from the columns, lines and sections applicable to the 1999 Annual Statement, all such references shall be deemed references to such column, line or section as so renumbered or changed. ARTICLE II MANDATORY CASH APPLICATIONS II.1 General Application of Available Net Proceeds. (a) On the Effective Date, Available Net Proceeds in the aggregate amount of $392,861,025 shall be applied to the Facilities in the manner specified in Section 2.02(a). 21 (b) On the Effective Date and thereafter, within three Business Days after Conseco or any of its Subsidiaries receives any Available Net Proceeds (other than as described in paragraph (a) above), such Available Net Proceeds shall be applied as follows: first, the first $100,000,000 (or such lesser amount as is necessary to increase the amount of Conseco's Cash on Hand to the Cash on Hand Target) shall be retained by Conseco; second, the next $700,000,000 shall be applied 1/7th per transaction to the Near-Term Facilities and 6/7ths per transaction to fund the Reserve; third, the next $200,000,000 shall be applied to fund the Reserve; fourth, all subsequent Available Net Proceeds until the occurrence of the Near-Term Facilities Termination Date shall be applied 80% per transaction to the Near-Term Facilities, with the remainder being retained by Conseco until it has Cash on Hand equal to the Cash on Hand Target at the time of such transaction, and then 100% to the Near-Term Facilities until the occurrence of the Near-Term Facilities Termination Date; and fifth, all Available Net Proceeds received after the occurrence of the Near-Term Facilities Termination Date shall be applied 50% per transaction to the $1.5 Billion Facility and the Specified D&O Facilities (in the manner contemplated by Section 2.02(c)), with the remainder being retained by Conseco. Notwithstanding the foregoing, the first $30,000,000 of Available Net Proceeds received by Conseco or any of its Subsidiaries on or after the Effective Date after giving effect to Section 2.01(a) may be retained by Conseco. Any Available Net Proceeds referred to in this paragraph as being available for retention by Conseco (i) must, if received by a Subsidiary, be distributed to Conseco for such purpose if such distribution is not prohibited by law, rule or regulation or the Lehman Agreement and (ii) may be used by Conseco for any purpose permitted by this Appendix. Notwithstanding anything to the contrary in this Section 2.01(b), in the event that, in the case of Available Net Proceeds received at any time when clause second or third is applicable, if Conseco's Cash on Hand is less than the Cash on Hand Target, such Available Net Proceeds may be applied to increase Conseco's Cash on Hand (but not above the Cash on Hand Target), provided, that in no event shall the aggregate amount applied to increase Conseco's Cash on Hand pursuant to clause first and this sentence exceed $100,000,000. As used in this paragraph, "Cash on Hand Target" means $330,000,000 minus the amount of any Investment made by Conseco pursuant to Section 4.09(a)(i)(x) (except to the extent such amount was paid back to Conseco, directly or indirectly). (c) After the Reserve has been funded in an amount sufficient to pay the remaining maturities for the 2000 Public Debt and the 2001 Public Debt, if any such Public Debt is, or has been, repurchased at a discount with amounts from the Reserve, an amount from the Reserve equal to the difference between the face amount of the relevant Public Debt and the repurchase price of the relevant Public Debt shall be applied to the Near-Term Facilities or, after the Near-Term Facilities Termination Date, to the $1.5 Billion Facility and the Specified D&O Facilities (in the manner contemplated by Section 2.02(c)). II.2 Application of Available Net Proceeds Allocated to Facilities. (a) The application of Available Net Proceeds described in Section 2.01(a) shall be allocated to the Near-Term Facilities, and to the Exposure of the Banks thereunder, such that, after giving effect thereto, the respective Exposures of the Banks thereunder shall be as set forth on Schedule 2.02 (and any inconsistent provision in the Relevant Facility shall not apply). (b) Any application of Available Net Proceeds allocated to the Near-Term Facilities pursuant to Section 2.01(b) or (c) (and any application of Net Proceeds pursuant to clause (a)(i) of the definition of "Exempt Waterfall Amounts") shall be allocated to each Bank on a pro rata basis based on the percentage of the aggregate then outstanding amount of Exposure under such Facilities held by such Bank. In the case of any Bank having Exposure under more than one Near-Term Facility, such Bank may, by notice to Conseco and the applicable Agent, allocate its reduction in Exposure to one or more such Facilities in such respective amounts as it shall select in its sole discretion (and any inconsistent provision in the Relevant Facility shall not apply). (c) Any application of Available Net Proceeds allocated to the $1.5 Billion Facility and the Specified D&O Facilities pursuant to Section 2.01(b) or (c) (and any application of Net Proceeds pursuant to clause (a)(ii) of the definition of "Exempt Waterfall Amounts") shall be allocated ratably to each such Facility based on the aggregate Exposure then outstanding under such Facilities, and ratably to the Exposure of each Bank under each such Facility. The Available Net Proceeds so allocated to each Specified D&O Facility, at the discretion of Conseco, shall be either (i) deposited in a cash collateral account pursuant to the applicable Cash Collateral Agreement or (ii) applied to repay "Loans" made to the individual borrowers pursuant to the applicable Specified D&O Facility. II.3 Exempt Covenant/Waterfall Amounts. Notwithstanding anything to the contrary in Article IV, Conseco and its Subsidiaries shall be permitted to use Exempt Covenant/Waterfall Amounts for any purpose that would otherwise be prohibited by Article IV (other than to redeem, pay dividends on or otherwise make Restricted Payments in respect of Conseco's common stock or the Conseco Series F Preferred Stock), and any such use shall not constitute a violation of any of the covenants contained in Article IV or usage of any of the basket amounts described therein. 22 ARTICLE III AFFIRMATIVE COVENANTS So long as any Exposure or other Obligation shall remain unpaid or unsatisfied under the Relevant Facility, unless the Required Banks waive compliance in writing: III.1 Financial Statements Conseco shall deliver to the Relevant Agent and each Relevant Bank: (a) as soon as available, but not later than 120 days after the end of each Fiscal Year, copies of the audited consolidated balance sheet of Conseco and its Subsidiaries and the unaudited consolidating balance sheet of Conseco and its Subsidiaries as at the end of such year and the related consolidated statements of earnings, shareholders' equity and cash flows for such year, setting forth in the case of the audited consolidated statements in comparative form the figures for the previous Fiscal Year, and accompanied by the opinion of PricewaterhouseCoopers or another nationally-recognized independent public accounting firm ("Independent Auditor"), which report shall state that such audited consolidated financial statements present fairly the financial position and result of operations of Conseco and its Subsidiaries for the periods indicated in conformity with GAAP applied on a basis consistent with prior years, except as stated therein. Such opinion shall not be qualified or limited because of a restricted or limited examination by the Independent Auditor of any material portion of Conseco's or any Subsidiary's records; (b) as soon as available, but not later than 60 days after the end of each of the first three Fiscal Quarters of each Fiscal Year, copies of the condensed unaudited consolidated and consolidating balance sheet of Conseco and its Subsidiaries as of the end of such quarter and the related condensed unaudited statements of earnings, shareholders' equity and cash flows for the period commencing on the first day and ending on the last day of such quarter, and certified by a Responsible Officer as fairly presenting, in accordance with GAAP (subject to the absence of footnotes and ordinary, good faith year-end and audit adjustments), the financial position and the results of operations of Conseco and the Subsidiaries; (c) as soon as available but not later than 75 days after the close of each Fiscal Year of each Insurance Subsidiary, copies of the unaudited Annual Statement of such Insurance Subsidiary, certified by a Responsible Officer of such Insurance Subsidiary, all such statements to be prepared in accordance with SAP consistently applied throughout the periods reflected therein and, if required by the applicable Governmental Authority, audited and certified by independent certified public accountants of recognized national standing; (d) as soon as available but not later than 60 days after the close of each of the first three (3) Fiscal Quarters of each Fiscal Year of each Insurance Subsidiary which is a Significant Subsidiary, copies of the Quarterly Statement of each of the Insurance Subsidiaries, certified by a Responsible Officer of such Insurance Subsidiary, all such statements to be prepared in accordance with SAP consistently applied through the period reflected herein; (e) within 15 days after being delivered to any Insurance Subsidiary constituting a Significant Subsidiary, any draft or final Triennial Examination Report issued by the applicable Department or the NAIC that results in material adjustments to the financial statements referred to in subsection (a), (b) or (c); and 23 (f) within 90 days after the close of each Fiscal Year of each Insurance Subsidiary, a copy of the "Statement of Actuarial Opinion" and "Management Discussion and Analysis" for each such Insurance Subsidiary which is provided to the applicable Department (or equivalent information should such Department no longer require such a statement) as to the adequacy of loss reserves of such Insurance Subsidiary, such opinion to be in the format prescribed by the insurance code of the state of domicile of such Insurance Subsidiary. III.2 Certificates; Other Information. Conseco shall furnish to the Relevant Agent, with sufficient copies for each Relevant Bank (other than in the case of clause (e)): (a) concurrently with the delivery of the financial statements referred to in Sections 3.01(a) and (b), a Compliance Certificate executed by a Responsible Officer, (b) promptly, (i) copies of all Forms 10-K and 10-Q that Conseco or any Subsidiary may file with the SEC or (ii) copies of the certificate and related financial information provided pursuant to the Lehman Agreement in connection with evidencing periodic compliance with financial covenants therein, and promptly upon the Relevant Agents' request, financial statements and reports that Conseco sends to its shareholders and copies of all other financial statements and regular, periodic or special reports (including Form 8-K) that Conseco or any Subsidiary may make to, or file with, the SEC; (c) promptly and in any event within three Business Days after learning thereof, notification of any changes after the date hereof in the rating given by S&P or Moody's in respect of Conseco's senior unsecured Indebtedness or by A.M. Best in respect of the Insurance Subsidiaries; (d) (i) concurrently with the consummation of any Disposition Transaction yielding gross proceeds in excess of $2,000,000, (x) a description of such transaction and (y) a calculation of the gross proceeds thereof and (ii) concurrently with the occurrence of any Prepayment Event or the issuance of any Specified Junior Securities, (i) a description of the relevant transaction, (ii) a calculation of the Net Proceeds (including an accounting of the items deducted from the cash or Cash Equivalents received in connection with such transaction) thereof and (iii) if applicable its intention to treat such Net Proceeds of the type described in the definition of either (i) Exempt Covenant/Waterfall Amount or (ii) Exempt Waterfall Amount as an Exempt Covenant/Waterfall Amount or an Exempt Waterfall Amount, respectively (including, if an Exempt Waterfall Amount, whether the Net Proceeds will be applied under clause (a) or (b) of such definition); and (e) promptly, such additional information regarding the business, financial or corporate affairs of Conseco or any Subsidiary as the Relevant Agent, at the request of any Relevant Bank, may from time to time reasonably request. III.3 Notices. Conseco shall promptly notify the Relevant Agent: (a) of the occurrence of any Default or Event of Default; (b) of any matter that has resulted in a Material Adverse Effect, including (i) any breach or non-performance of, or any default under, a Contractual Obligation of Conseco or any Subsidiary; (ii) any dispute, litigation, investigation, proceeding or suspension between Conseco or any Subsidiary and any Governmental Authority; or (iii) the commencement of, or any material development in, any Litigation affecting Conseco or any Subsidiary, including pursuant to any applicable Environmental Laws; 24 (c) of the commencement of, or the occurrence of any development in, any litigation or proceeding (i) which seeks to enjoin, prohibit, discontinue or otherwise impacts the validity or enforceability of this Appendix or any of the other Loan Documents or other transactions contemplated hereby or thereby, or (ii) which could be reasonably expected to have a Material Adverse Effect. (d) of the occurrence of any of the following events affecting Conseco or any ERISA Affiliate (but in no event more than 10 days after such event) and deliver to the Relevant Agent and each Relevant Bank a copy of any notice with respect to such event that is filed with a Governmental Authority and any notice delivered by a Governmental Authority to Conseco or any ERISA Affiliate with respect to such event: (i) an ERISA Event; or (ii) a material increase in the Unfunded Pension Liabilities of any Pension Plan; (iii) the adoption of or the commencement of contributions to, any Plan subject to Section 412 of the Code by Conseco or any ERISA Affiliate; or (iv) the adoption of any amendment to a Plan subject to Section 412 of the Code, if such amendment results in a material increase in contributions or Unfunded Pension Liability; provided, however, that no such notice will be required under this Section 3.03(d) with respect to the occurrence of any such event if such occurrence does not result in, and is not reasonably expected to result in, any liability to Conseco of more than $65,000,000 or any liability to any ERISA Affiliate of more than $20,000,000. (e) of any material change in accounting policies or financial reporting practices by Conseco or any of its Subsidiaries; (f) of the receipt of any notice from any Governmental Authority of the expiration without renewal, revocation, suspension or restriction of or the institution of any proceedings to revoke, suspend or restrict, any License now or hereafter held by any Insurance Subsidiary which is required to conduct insurance business in compliance with all applicable laws and regulations and the expiration, revocation or suspension of which could reasonably be expected to have a Material Adverse Effect; (g) of the receipt of any notice from any Governmental Authority of the institution of any disciplinary proceedings against or in respect of any Insurance Subsidiary, or the issuance of any order, the taking of any action or any request for an extraordinary audit for cause by any Governmental Authority which could reasonably be expected to have a Material Adverse Effect; (h) of any judicial or administrative order limiting or controlling the insurance business of any Insurance Subsidiary (and not the insurance industry generally) which has been issued or adopted and which has had, or which could reasonably be expected to have, a Material Adverse Effect, or (i) of any actual or proposed changes in any applicable insurance code which could reasonably be expected to have a Material Adverse Effect. Each notice under this Section shall be accompanied by a written statement by a Responsible Officer setting forth details of the occurrence referred to therein, and stating what action Conseco or any affected Subsidiary proposes to take with respect thereto and at what time. Each notice under Section 3.03(a) shall describe with particularity any and all clauses or provisions of this Appendix or other Loan Document that have been (or reasonably foreseeably will be) breached or violated. 25 III.4 Preservation of Corporate Existence, Etc. Conseco shall, and shall cause each Significant Subsidiary to (except as permitted by Section 4.03 or 4.07): (a) preserve and maintain in full force and effect its corporate existence and good standing under the laws of its state or jurisdiction of incorporation; (b preserve and maintain in full force and effect all governmental rights, privileges, qualifications, permits, licenses and franchises necessary in the normal conduct of its business, except where such failure to preserve and maintain could not reasonably be expected to have a Material Adverse Effect; and (c use reasonable efforts, in the ordinary course of business, to preserve its business organization and goodwill. III.5 Insurance. Conseco shall maintain, and shall cause each Significant Subsidiary to maintain, with financially sound and reputable independent insurers, insurance with respect to its properties and business against loss or damage of the kinds customarily insured against by Persons engaged in the same or similar business, of such types and in such amounts as are customarily carried under similar circumstances by such other Persons. III.6 Payment of Obligations. Conseco shall, and shall cause each Significant Subsidiary to, pay and discharge as the same shall become due and payable, all of the following: (a all material tax liabilities, assessments and governmental charges or levies upon it or its material properties or assets, unless the same are not overdue for a period of more than 60 days or are being contested in good faith by appropriate proceedings and adequate reserves in accordance with GAAP are being maintained by Conseco or such Subsidiary; and (b all material indebtedness, as and when due and payable, but subject to any subordination provisions contained in any instrument or agreement evidencing such Indebtedness. III.7 Compliance with Laws. Conseco shall comply, and shall cause each Subsidiary to comply, in all material respects with all Requirements of Law of any Governmental Authority having jurisdiction over it or its business (including the Federal Fair Labor Standards Act and all applicable Environmental Laws), the noncompliance with which could reasonably be expected to have a Material Adverse Effect, except such as may be contested in good faith or as to which a bona fide dispute may exist. III.8 Compliance with ERISA. Conseco shall, and shall cause each of its ERISA Affiliates to: (a) maintain each Plan in compliance in all material respects with the applicable provisions of ERISA, the Code and other federal or state law; (b) cause each Plan which is qualified under Section 401(a) of the Code to maintain such qualification; and (c) make all required contributions to any Plan subject to Section 412 of the Code, except where such failure to maintain as set forth in (a) or (b) or to make contributions as set forth in (c) could not be reasonably expected to have a Material Adverse Effect. 26 III.9 Inspection of Property and Books and Records; Expense Reimbursement. Conseco shall maintain and shall cause each Subsidiary to maintain proper books of record and account, in which full, true and correct entries in all material respects in conformity with GAAP or SAP, as applicable, consistently applied (except as stated therein) shall be made of all financial transactions and matters involving the assets and business of Conseco and such Subsidiary. Conseco shall permit, and shall cause each Subsidiary to permit, representatives and independent contractors of the Relevant Agent or any Relevant Bank to visit and inspect any of their respective properties, to examine their respective corporate, financial and operating records, and make copies thereof or abstracts therefrom, and to discuss their respective affairs, finances and accounts with their respective directors, officers, and independent public accountants, all at such reasonable times during normal business hours and as often as may be reasonably desired, upon reasonable advance notice to Conseco, provided, however, when an Event of Default exists the Relevant Agent or any Relevant Bank may do any of the foregoing at any time during normal business hours and without advance notice. III.10 Tritel Disposition. Conseco shall use commercially reasonable efforts to Dispose of all or substantially all of its interest in Tritel, Inc. prior to March 31, 2001. III.11 Conversion of FELINE PRIDES. Conseco shall issue shares of common stock to holders of FELINE PRIDES in accordance with the terms of the PRIDES Documents. Otherwise, and except as required by the terms of the PRIDES Documents, Conseco shall, and shall cause its Affiliates to, refrain from purchasing or redeeming any FELINE PRIDES, PRIDES Purchase Contracts or PRIDES Preferred Securities, whether in the open market or otherwise. Nothing in this provision shall have the effect of preventing Conseco or the PRIDES Trust from complying with the terms and conditions set forth in the PRIDES Documents. ARTICLE IV NEGATIVE COVENANTS So long as any Exposure or other Obligation shall remain unpaid or unsatisfied under the Relevant Facility, unless the Required Banks waive compliance in writing: IV.1 Limitation on Indebtedness. Conseco shall not, and shall not permit any of its Subsidiaries to, incur or at any time be liable with respect to, any Indebtedness, except: (a Permitted Swap Obligations and Permitted Transactions; (b Specified Junior Securities; (c Indebtedness of Conseco or any Subsidiary pursuant to (i) the items set forth on Schedule 4.01(c) and (ii) extensions, renewals or replacements thereof, provided that no such extension, renewal or replacement shall increase the principal amount thereof, except to the extent the increase would otherwise be permitted under this Section 4.01; 27 (d Contingent Obligations of: (i) CIHC in respect of (A) Conseco's obligations under any Facility, and (B) obligations of one or more Conseco Finance Entities (I) in an aggregate amount not to exceed $125,000,000 in respect of obligations to Lehman or an Affiliate thereof, (II) in an aggregate amount not to exceed $125,000,000 in respect of cash management or a swing line credit facility for the general corporate purposes of one or more of the Conseco Finance Entities and (III) in an aggregate amount not to exceed $50,000,000 incurred for general corporate purposes (so long as, in each case, the documentation governing any such Contingent Obligation (including any related subordination arrangement) is not at any time materially more favorable to the beneficiaries thereof than the Relevant CIHC Guaranty); (ii) Conseco in respect of any individual borrower's obligations under any D&O Facility; (iii) any Conseco Finance Entity relating to loans, leases, receivables, installment contracts and other financial products originated, acquired or sold by such Conseco Finance Entity or any other Conseco Finance Entity; and (iv) Conseco or any Subsidiary in the ordinary course of business not otherwise described above in an aggregate amount not to exceed at any time (A) ten percent (10%) of Total Shareholders' Equity minus (B) the aggregate amount of Conseco's Contingent Obligations under clause (ii) of this paragraph at any time, provided that (I) Contingent Obligations in respect of Indebtedness of the type described in clause (a) or (b) of the definition thereof shall not be permitted by this clause (iv) and (II) the documentation governing any Contingent Obligation of CIHC pursuant to this clause (iv) (including any related subordination arrangement) shall not at any time be materially more favorable to the beneficiaries thereof than the Relevant CIHC Guaranty; provided, that in no event shall Conseco or any of its Subsidiaries (other than a Conseco Finance Entity) have any Contingent Obligations (including obligations as an account party) pursuant to this paragraph (d) in respect of any Indebtedness incurred by or for the benefit of any Conseco Finance Entity other than as specifically permitted in clause (i)(B) above; (e Indebtedness (including Contingent Obligations) of any Conseco Finance Entity to the extent that (i) neither Conseco nor any Non-Finance Subsidiary is directly liable thereon, and (ii) neither Conseco nor any Non-Finance Subsidiary has any Contingent Obligation in respect of such Indebtedness (other than a Contingent Obligation of CIHC permitted by Section 4.01(d)(i) above); (f Permitted Nonrecourse Indebtedness; (g secured Indebtedness, including, without limitation, Capitalized Lease Liabilities and Purchase Money Debt, provided, that (i) the aggregate outstanding principal amount of Indebtedness of this type does not exceed at any time ten percent (10%) of Total Shareholders' Equity at such time and (ii) such Indebtedness shall not be secured by any Lien other than a Lien expressly permitted by Section 4.02(i); (h Indebtedness among Conseco and its Subsidiaries (other than Conseco Finance Entities); (i Indebtedness owing by any Conseco Finance Entity to the extent the related Investment is permitted under Section 4.09(a); (j Indebtedness (other than for borrowed money) subject to Liens permitted under Section 4.02(b), (d), (e) or (f); (k Indebtedness in respect of Surplus Debentures entered into by an Insurance Subsidiary; (l unsecured Indebtedness of Conseco in an aggregate principal amount not to exceed $100,000,000 at any time outstanding; and (m Indebtedness in respect of the Facilities. IV.2 Liens. Conseco shall not, and shall not permit any of its Subsidiaries to, create, assume or suffer to exist any Lien on any asset now owned or hereafter acquired by it, except for the following (collectively called "Permitted Liens"): (a Liens in connection with Permitted Transactions; (b Liens for Taxes which are not overdue for more than 60 days or for Taxes being contested in good faith and by appropriate proceedings and with respect to which adequate reserves are being maintained in accordance with GAAP; 28 (c Liens shown on Schedule 4.02(c), including extensions, renewals and replacements of such Liens; provided that (i) no such Lien is spread to cover any additional property (other than after acquired title in or on such property and proceeds of the existing collateral in accordance with the document creating such Lien) and (ii) the Indebtedness secured thereby is not increased by more than 10% (of the aggregate principal amount of such Indebtedness outstanding on the Effective Date) except as otherwise permitted under Section 4.01 (in which case the portion representing any additional increase must be permitted by another paragraph of this Section 4.02); (d Liens incurred in the ordinary course of business in connection with worker's compensation, unemployment insurance or other forms of governmental insurance or benefits or to secure performance of tenders, statutory obligations, leases and contracts (other than for borrowed money) entered into in the ordinary course of business or to secure obligations on surety or appeal bonds; (e Liens of mechanics, carriers, and materialmen and other like Liens arising in the ordinary course of business in respect of obligations which are not overdue for more than 60 days or which are being contested in good faith and by appropriate proceedings and with respect to which adequate reserves are being maintained in accordance with GAAP; (f Liens arising in the ordinary course of business for sums being contested in good faith and by appropriate proceedings and with respect to which adequate reserves are being maintained in accordance with GAAP, or for sums not due, and in either case not involving any deposits or advances for borrowed money or the deferred purchase price of property or services; (g Liens in favor of the trustee on sums required to be deposited with the trustee under the indentures described on Schedule 4.02(g); (h Liens incurred on assets of Subsidiaries that are Conseco Finance Entities securing Indebtedness which is expressly permitted by Section 4.01(e) or (f); (i Liens securing Indebtedness permitted by Section 4.01(g); provided that such Liens consist exclusively of: (i) Liens securing the Relevant Facility, (ii) Liens pursuant to any Cash Collateral Agreement (and a Lien may be incurred on the collateral under the Cash Collateral Agreement in favor of the Public Debt secured by the Collateral Agreement), (iii) Liens on "Collateral" as defined in the Collateral Agreement, (iv) Liens on Conseco's interest in Tritel, Inc. in existence of the Effective Date securing $25,000,000 of notes payable to Ericsson, Inc., and (v) Liens on other assets that (1) are not subject to a Lien incurred pursuant to clause (i), (ii), (iii) or (iv) above and (2) are not described on Schedule 1.01B securing Indebtedness in an aggregate principal amount not to exceed (x) 25% of the Available Basket Amount at any time prior to the Near-Term Facilities Termination Date or (y) 50% of the Available Basket Amount at any time thereafter; (j easements, rights-of-way, zoning restrictions, restrictions and other similar encumbrances incurred in the ordinary course of business and which do not materially interfere with the ordinary course of business of Conseco and its Subsidiaries; (k Liens on property of Conseco and its Subsidiaries in favor of landlords securing licenses, subleases or leases of property permitted hereunder; (l licenses, leases or subleases permitted hereunder granted to others not materially interfering in any material respect in the business of Conseco and its Subsidiaries; 29 (m attachment or judgment Liens not constituting an Event of Default under Section 5.01(i); (n Liens arising from precautionary Uniform Commercial Code financing statement filings with respect to operating leases or consignment arrangements entered into by Conseco and its Subsidiaries in the ordinary course of business; and (o Liens in connection with a Permitted Tritel Hedge Transaction. None of the Permitted Liens shall be permitted on the Reserve or any of the Reserve Amounts (as defined in the relevant agreement governing the Reserve). IV.3 Disposition of Assets. Conseco shall not and shall not permit any of its Subsidiaries to, sell, assign, lease, transfer or otherwise Dispose of (whether in one or a series of transactions) any property (including accounts and notes receivable with or without recourse and Capital Stock of any Subsidiary whether newly issued or otherwise) or enter into any agreement to do any of the foregoing, except: (a Dispositions of inventory or equipment (including, without limitation, repossessed and/or off lease property of Conseco Finance), all in the ordinary course of business consistent with past practices; (b the sale of equipment to the extent that such equipment is exchanged for credit against the purchase price of similar replacement equipment, or the proceeds of such sale are reasonably promptly applied to the purchase price of such replacement equipment; (c Dispositions of Investments by Insurance Subsidiaries (other than any of their respective Investments in Persons engaged in insurance lines of business) in the ordinary course of business consistent with past practices; (d Dispositions of (i) in the case of any Conseco Finance Entity, loans, leases, receivables, installment contracts and other financial products originated, acquired, sold or securitized by such Conseco Finance Entity or (ii) interests in or components of Interest Only Securities; (e intercompany Dispositions made between or among Conseco and its Subsidiaries (or Subsidiaries of Conseco with other Subsidiaries of Conseco or Conseco), in each case, in the ordinary course of business; (f (i) any Disposition pursuant to a Reinsurance Agreement so long as such Disposition is entered into in the ordinary course of business for the purpose of managing insurance risk consistent with industry practice and (ii) any other Disposition pursuant to a Reinsurance Agreement so long as (x) the proceeds therefrom are retained by an Insurance Subsidiary, (y) such proceeds are used for the general corporate purposes of the Insurance Subsidiaries (including for reinvestment within insurance lines of business similar to Conseco's insurance lines of business at the time of the relevant transaction) and (z) the aggregate statutory profit and/or gains on insurance policy sales or other portfolio transfers resulting from all Dispositions described in this clause (ii) consummated after August 25, 2000 shall not exceed $250,000,000; (g obsolete or worn out property disposed of by Conseco or any of its Subsidiaries in the ordinary course of business and consistent with past practices of Conseco and its Subsidiaries; 30 (h transfers resulting from any casualty or condemnation of property or assets; (i licenses or sublicenses of intellectual property and general intangibles and licenses, leases or subleases of other property in the ordinary course of business and consistent with the past practices of Conseco and its Subsidiaries and which do not materially interfere with the business of Conseco and its Subsidiaries; (j any consignment arrangements or similar arrangements for the sale of assets in the ordinary course of business and consistent with the past practices of Conseco and its Subsidiaries; (k the sale or discount of overdue accounts receivable arising in the ordinary course of business and consistent with the past practices of Conseco and its Subsidiaries, but only in connection with the compromise or collection thereof; (l Dispositions permitted by Section 4.07(a); (m Dispositions of Investments set forth on Schedule 4.03(m); (n Dispositions not otherwise permitted hereunder, provided that, in the case of Dispositions constituting Asset Sales, (i) 75% of the consideration received in connection therewith shall consist of cash, Cash Equivalents and/or readily marketable securities that are immediately saleable and (ii) 100% of the Net Proceeds thereof shall consist of Available Net Proceeds and shall be applied as described in Article II; and (o the exercise of the put rights set forth in the PRIDES Documents in connection with a remarketing thereunder in accordance with such documents and Section 3.11. Notwithstanding anything to the contrary in this Section 4.03, no issuance or sale of Capital Stock of any Subsidiary of Conseco (other than any Insignificant Subsidiary) shall be permitted if, after giving effect thereto, Conseco owns, directly or indirectly, 50% or less (but greater than 0%) of the voting Capital Stock of such Subsidiary. IV.4 Other Agreements. Conseco shall not, and shall not permit any of its Subsidiaries to, enter into any agreement (other than agreements with insurance regulators) containing any provision which (a) would be violated or breached by the performance of its obligations hereunder or under any instrument or document delivered or to be delivered by it hereunder or in connection herewith or (b) prohibits or restricts the ability of Conseco to amend or otherwise modify this Appendix or any other document executed in connection herewith. IV.5 Transactions with Affiliates. Conseco shall not, and shall not suffer or permit any Significant Subsidiary to, enter into any material transaction with any Affiliate of Conseco (other than Conseco or a Ninety-Percent Owned Subsidiary), except upon fair and reasonable terms no less favorable to Conseco or such Subsidiary than would be obtained in a comparable arm's-length transaction with a Person not an Affiliate of Conseco or such Subsidiary, and except for insurance transactions, intercompany pooling and other reinsurance transactions entered into in the ordinary course of business and consistent with past practice. IV.6 Change in Business. Conseco shall not, and shall not suffer or permit any Significant Subsidiary to, fundamentally change the type of business in which it is presently engaged as listed on Schedule 4.06. 31 IV.7 Fundamental Changes. Unless the Obligations shall be paid in full concurrently therewith, Conseco shall not enter into any merger, consolidation or amalgamation, or liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution), or Dispose of, all or substantially all of its property or business, other than any merger, consolidation or amalgamation (a) of any Subsidiary of Conseco into Conseco, (b) solely for the purpose of reincorporating Conseco in a different State of the United States or (c) solely for the purpose of consummating an investment permitted by Section 4.09(b)(iii) or (iv). IV.8 Restricted Payments. Conseco shall not declare or pay any dividend (other than dividends payable solely in common stock, or the same class of capital stock as to which the dividend is paid, of the Person making such dividend) on (or make any payment to a related trust for the purpose of paying a dividend), or make any payment on account of, or set apart assets for a sinking or other analogous fund for, the purchase, redemption, defeasance, retirement or other acquisition of, any Capital Stock of Conseco (or any related trust), whether now or hereafter outstanding, or make any other distribution in respect thereof, either directly or indirectly, whether in cash or property or in obligations of Conseco (collectively, "Restricted Payments"), except that (a) Conseco may declare and pay dividends on its common stock so long as, at the time of declaration of the relevant dividend, Conseco has Investment Grade Ratings Status and the Near-Term Facilities Termination Date has occurred, (b) Conseco may declare and pay regularly scheduled dividends on its preferred stock (and permit any related trust to do the same) so long as, at the time of declaration of the relevant dividend, Conseco has Investment Grade Ratings Status and the Near-Term Facilities Termination Date has occurred, (c) Conseco may declare and pay regularly scheduled payments of interest and principal on its debentures underlying the Trust Preferred Securities and the FELINE PRIDES (and the related trusts may pay regularly scheduled dividends under such Trust Preferred Securities and such FELINE PRIDES) so long as (i) Conseco's Cash on Hand on average for the 90 days prior to the date of such declaration is equal to or greater than $100,000,000, (ii) Conseco's Cash on Hand on the date of such payment, after giving effect to the payment of said dividend on such date, is equal to or greater than $100,000,000 and (iii) no Event of Default shall have occurred and be continuing at the time of such payment, (d) Conseco may make cash payments in respect of fractional shares of its preferred stock in an aggregate amount not to exceed $10,000,000 and (e) Conseco may pay dividends to Bankers National Life Insurance Company in respect of its Preferred Series E Capital Stock in an amount not to exceed $36,000,000 per year. IV.9 Investments. (a) Conseco and its Subsidiaries (other than Conseco Finance and its Subsidiaries) shall not, directly or indirectly, make any Investment in Conseco Finance or any of its Subsidiaries after the Effective Date, except (i) intercompany Investments in the ordinary course of business in an aggregate amount not to exceed $250,000,000 at any time outstanding of which (x) $50,000,000 may be made on a permanent basis, (y) $100,000,000 may be made so long as each such Investment pursuant to this clause (y) is repaid within three months of the date of Investment and within each three month period there shall be a three Business Day period during which no Investment pursuant to clause (y) of this clause (i) shall be outstanding, and (z) $100,000,000 may be made so long as each such Investment pursuant to this clause (z) is repaid within six months of the date of Investment and within each six month period there shall be a three Business Day period during which no Investment pursuant to clause (z) of this clause (i) shall be outstanding, and (ii) additional Investments made at any time after the Near-Term Facilities Termination Date in an aggregate amount not to exceed $150,000,000 at any time outstanding. 32 (b) Conseco and CIHC shall not, directly or indirectly, make any Investment in any Person (other than a Subsidiary of Conseco to support its operations in the ordinary course of business) except: (i) Investments made with common stock issued by Conseco, (ii) Investments agreed to but not made prior to the date hereof and set forth on Schedule 4.09(b), (iii) Investments not otherwise permitted hereby in an aggregate amount expended not to exceed $25,000,000 in any Fiscal Year, (iv) Investments made in connection with a sale of assets permitted by Section 4.03 to the extent of the non-cash consideration received by Conseco or a Subsidiary, (v) as permitted by Section 4.09(a) and (vi) Conseco may repurchase its 6.4% Mandatory Par Put Remarketed Securities due June 15, 2011 if required to do so pursuant to the terms and conditions thereof, which repurchase (if so required) shall be conducted in accordance with the terms and conditions of such instruments. It is understood that Investments of the type described in Section 4.09(a) may not be made pursuant to clauses (i) through (iii) of this paragraph (b). IV.10 Optional Payments; Modifications of Certain Agreements; Synthetic Purchase Agreements. (a) Conseco shall not, and shall not permit any of its Subsidiaries (other than Conseco Finance or any of its Subsidiaries) to make any optional or voluntary payment, prepayment, repurchase or redemption of or otherwise optionally or voluntarily defease or segregate funds with respect to Indebtedness (other than the Reserve), other than (i) prepayments of Indebtedness of a Subsidiary of Conseco owed to Conseco or another Subsidiary of Conseco or of Conseco owed to a Subsidiary of Conseco, in each case to the extent prepaid or repaid in the ordinary course of business, which Indebtedness is (A) not related to the Trust Preferred Securities and (B) not a prepayment of loans referred to in clause (f) of the definition of "Conseco Available Cash Flow" unless, in the case of this clause (B), at the time of, and after giving pro forma effect to, such prepayment, Conseco is in compliance with Section 4.14, (ii) prepayments of the 2000 Public Debt, (iii) prepayments of the 2001 Public Debt so long as on the date of such prepayment (or, if earlier, the date on which Conseco enters into an obligation to make such prepayment), Conseco has A.M. Best A- Status, (iv) prepayments of the Longer-Term Public Debt made after the Near-Term Facilities Termination Date so long as the scheduled maturity of the Public Debt being prepaid is earlier than the earliest scheduled maturity then in effect with respect to the remaining Facilities, (v) prepayments of Capital Lease Liabilities in connection with the Disposition of the related asset or property and (vi) prepayments not otherwise permitted by the foregoing clauses so long as the aggregate amount expended in connection therewith does not exceed $25,000,000. (b) Conseco shall not, and shall not permit any of its Subsidiaries (other than Conseco Finance or any of its Subsidiaries) to amend, modify, waive or otherwise change, or consent or agree to any amendment, modification, waiver or other change to, any of the material terms of any subordinated Indebtedness of Conseco or any of its Subsidiaries (other than Conseco Finance or any of its Subsidiaries) the aggregate principal amount of which exceeds $10,000,000 (other than any such amendment, modification, waiver or other change that (i) would extend the maturity or reduce the amount of any payment of principal thereof or reduce the rate or extend any date for payment of interest thereon and (ii) does not involve the payment of a consent fee that is not customary under the circumstances). (c) Conseco shall not, and shall not permit any of its Subsidiaries (other than Conseco Finance or any of its Subsidiaries) to amend, modify, waive or otherwise change, or consent or agree to any amendment, modification, waiver or other change to, any of the material terms of any preferred stock issued by Conseco or any of its Subsidiaries or any related trust (other than any such amendment, modification, waiver or other change that (i) would extend the scheduled redemption date or reduce the amount of any scheduled redemption payment or reduce the rate or extend any date for payment of dividends thereon and (ii) does not involve the payment of a consent fee that is not customary under the circumstances). (d) Conseco shall not, and shall not permit any of its Subsidiaries to enter into or be party to, or make any payment under, any Synthetic Purchase Agreement. 33 IV.11 Negative Pledge on Tritel and Argosy Riverboat. Conseco shall not, and shall not permit any of its Subsidiaries to, pledge or create any security interest or Lien upon (a) any of the Capital Stock of Tritel, Inc. (or any successor thereto) directly or indirectly owned by it (other than (i) any such Lien described in Section 4.02(i)(iv) and (ii) Liens securing obligations under hedging transactions relating to the value of such Capital Stock with counterparties having a senior unsecured non-credit enhanced long-term debt rating of at least A2 from Moody's and A from S&P (a "Permitted Tritel Hedge Transaction")) or (b) the Capital Stock or assets of Conseco Entertainment Inc. or CNC Entertainment LLC. IV.12 Reserve Account. Conseco shall not permit the amounts in the Reserve (a) to be invested in anything other than Cash Equivalents or (b) to be used for any purpose other than to prepay or repay the 2000 Public Debt, the 2001 Public Debt or Exposure under the Facilities, except that, with the prior written consent of each of the Agents, Conseco may use up to 20% of the amounts in the Reserve at any time (but in an aggregate amount not to exceed $160,000,000) for other general corporate purposes permitted by the Loan Documents, including this Appendix. IV.13 Debt to Capitalization Ratio. Conseco shall not permit the Debt to Total Capitalization Ratio as of the end of each Fiscal Quarter set forth below to be greater than the ratio set forth below for such date: ---------------------------------------------------------- --------------- Fiscal Quarter Ending Ratio ---------------------------------------------------------- --------------- December 31, 2000 0.450:1.0 ---------------------------------------------------------- --------------- March 31, 2001 0.435:1.0 ---------------------------------------------------------- --------------- June 30, 2001 0.425:1.0 ---------------------------------------------------------- --------------- September 30, 2001 0.425:1.0 ---------------------------------------------------------- --------------- December 31, 2001 0.400:1.0 ---------------------------------------------------------- --------------- March 31, 2002 0.400:1.0 ---------------------------------------------------------- --------------- June 30, 2002 0.400:1.0 ---------------------------------------------------------- --------------- September 30, 2002 0.375:1.0 ---------------------------------------------------------- --------------- December 31, 2002 0.375:1.0 ---------------------------------------------------------- --------------- March 31, 2003 0.350:1.0 ---------------------------------------------------------- --------------- June 30, 2003 0.350:1.0 ---------------------------------------------------------- --------------- September 30, 2003 0.350:1.0 ---------------------------------------------------------- --------------- December 31, 2003 0.350:1.0 ---------------------------------------------------------- --------------- March 31, 2004 0.300:1.0 ---------------------------------------------------------- --------------- June 30, 2004 0.300:1.0 ---------------------------------------------------------- --------------- September 30, 2004 0.300:1.0 ---------------------------------------------------------- --------------- December 31, 2004 and thereafter 0.300:1.0 ---------------------------------------------------------- --------------- For each $2,830,000 by which the aggregate amount of the FY 2000 Adjustments is less than $500,000,000, each ratio set forth above for periods ending on or prior to September 30, 2001 shall be reduced by 0.01%. IV.14 Interest Coverage Ratio. Conseco shall not permit the Interest Coverage Ratio as of the end of each Fiscal Quarter set forth below for the four Fiscal Quarters then ended (or, if less, the number of full Fiscal Quarters commencing after the Effective Date) to be less than the ratio set forth below for such date: ---------------------------------------------------------- ---------------- Fiscal Quarter Ending Ratio ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- December 31, 2000 1.00:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- March 31, 2001 1.00:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- June 30, 2001 1.10:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- September 30, 2001 1.10:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- December 31, 2001 1.20:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- March 31, 2002 1.25:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- June 30, 2002 1.30:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- September 30, 2002 1.40:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- December 31, 2002 1.40:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- March 31, 2003 1.60:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- June 30, 2003 1.75:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- September 30, 2003 1.90:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- December 31, 2003 2.00:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- March 31, 2004 2.00:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- June 30, 2004 2.00:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- September 30, 2004 2.00:1.0 ---------------------------------------------------------- ---------------- ---------------------------------------------------------- ---------------- December 31, 2004 and thereafter 2.00:1.0 ---------------------------------------------------------- ---------------- IV.15 Conseco Adjusted Earnings. Conseco shall not permit the Conseco Adjusted Earnings for any period of four Fiscal Quarters (or, in the case of the tests as at March 31, 2001, June 30, 2001 and September 30, 2001, two Fiscal Quarters, two Fiscal Quarters and three Fiscal Quarters, respectively) ended on any date set forth below to be less than the amount set forth below for such date: ---------------------------------------------------------- ------------------- Fiscal Quarter Ending Amount ---------------------------------------------------------- ------------------- March 31, 2001 $650,000,000 ---------------------------------------------------------- ------------------- June 30, 2001 $750,000,000 ---------------------------------------------------------- ------------------- 34 ---------------------------------------------------------- ------------------- September 30, 2001 $1,150,000,000 ---------------------------------------------------------- ------------------- December 31, 2001 $1,600,000,000 ---------------------------------------------------------- ------------------- March 31, 2002 $1,600,000,000 ---------------------------------------------------------- ------------------- June 30, 2002 $1,650,000,000 ---------------------------------------------------------- ------------------- September 30, 2002 $1,700,000,000 ---------------------------------------------------------- ------------------- December 31, 2002 $1,750,000,000 ---------------------------------------------------------- ------------------- March 31, 2003 $1,800,000,000 ---------------------------------------------------------- ------------------- June 30, 2003 $1,850,000,000 ---------------------------------------------------------- ------------------- September 30, 2003 $1,925,000,000 ---------------------------------------------------------- ------------------- December 31, 2003 $2,000,000,000 ---------------------------------------------------------- ------------------- March 31, 2004 $2,025,000,000 ---------------------------------------------------------- ------------------- June 30, 2004 $2,075,000,000 ---------------------------------------------------------- ------------------- September 30, 2004 $2,125,000,000 ---------------------------------------------------------- ------------------- December 31, 2004 and thereafter $2,175,000,000 ---------------------------------------------------------- ------------------- IV.16 Conseco Finance Tangible Net Worth. Conseco shall not permit Conseco Finance Tangible Net Worth as at the end of any Fiscal Quarter ending during any Fiscal Year set forth below (commencing with the Fiscal Quarter ending December 31, 2000) to be less than the relevant amount set forth below: ---------------------------------------------------------- ----------------- Fiscal Quarter Ending During Amount ---------------------------------------------------------- ----------------- Fiscal Year Ending December 31, 2000 $950,000,000 ---------------------------------------------------------- ----------------- Fiscal Year Ending December 31, 2001 $1,200,000,000 ---------------------------------------------------------- ----------------- Fiscal Year Ending December 31, 2002 $1,400,000,000 ---------------------------------------------------------- ----------------- Fiscal Year Ending December 31, 2003 $1,650,000,000 ---------------------------------------------------------- ----------------- Fiscal Year Ending December 31, 2004 and thereafter $2,000,000,000 ---------------------------------------------------------- ----------------- 35 IV.17 Risk-Based Capital Ratio. Conseco shall not permit the Risk-Based Capital Ratio as at the end of any Fiscal Quarter to be less than 200%. ARTICLE V EVENTS OF DEFAULT V.1 Events of Default. Each of the following shall constitute an "Event of Default": (a Non Payment. Conseco fails to pay, (i) when and as required to be paid herein, any amount of principal of any Loan, or (ii) within five days after the same becomes due, any interest, fee or any other amount payable hereunder or under any other Loan Document; or (b Representation or Warranty. Any representation or warranty by Conseco or any of its Subsidiaries made or deemed made herein or in any other Loan Document, or contained in any certificate, document or financial or other statement by Conseco, any Subsidiary or any Responsible Officer, furnished at any time in connection with this Appendix or in connection with any other Loan Document, is incorrect in any material respect on or as of the date made or deemed made; or (c Specific Defaults. Conseco fails to perform or observe any term, covenant or agreement contained in any of Section 3.03(a), 4.01, 4.02, 4.03, 4.04, 4.06, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.14, 4.15, 4.16 or 4.17; or (d Other Defaults. Conseco or any of its Subsidiaries fails to perform or observe any other term or covenant contained in this Appendix or any other Loan Document, and such default shall continue unremedied for a period of 30 days after the date upon which written notice thereof is given to Conseco by the Relevant Agent or any Relevant Bank; or 36 (e Cross-Default. (i) Conseco or any Significant Subsidiary (A) fails to make any payment in respect of any Indebtedness or Contingent Obligation (other than in respect of Swap Contracts) or any similar financing arrangement related to the Lehman Agreement, having an aggregate principal amount (including undrawn committed or available amounts and including amounts owing to all creditors under any combined or syndicated credit arrangement) of more than $50,000,000, when due (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise) and such failure continues after the applicable grace or notice period, if any, specified in the relevant document on the date of such failure; or (B) fails to perform or observe any other condition or covenant, or any other event shall occur or condition exist (other than an alleged breach which Conseco or such Significant Subsidiary is contesting in good faith and which does not relate to a payment default or a breach of a financial covenant), under any agreement or instrument relating to any such Indebtedness, and such failure continues after the applicable grace or notice period, if any, specified in the relevant document on the date of such failure if the effect of such failure, event or condition is to cause, or to permit the holder or holders of such Indebtedness or beneficiary or beneficiaries of such Indebtedness or any similar financing arrangement related to the Lehman Agreement (or a trustee or agent on behalf of such holder or holders or beneficiary or beneficiaries) to cause, such Indebtedness to be declared to be due and payable prior to its stated maturity, or, in the case of any such Indebtedness consisting of Contingent Obligations, to become payable or cash collateral in respect thereof to be demanded or, in the case of any similar financing arrangement related to the Lehman Agreement, otherwise permit Lehman or an Affiliate thereof to terminate its obligations or commitments thereunder; or (ii) there occurs under any Swap Contract an Early Termination Date (as defined in such Swap Contract) resulting from (1) any event of default under such Swap Contract as to which Conseco or any Subsidiary is the Defaulting Party (as defined in such Swap Contract) or (2) any Termination Event (as so defined) as to which Conseco or any Subsidiary is an Affected Party (as so defined), and, in either event, the Swap Termination Value owed by Conseco or such Subsidiary as a result thereof is greater than $50,000,000; or (f Insolvency; Voluntary Proceedings. Conseco or any Significant Subsidiary (i) ceases or fails to be solvent, or generally fails to pay, or admits in writing its inability to pay, its debts as they become due, subject to applicable grace periods, if any, whether at stated maturity or otherwise; (ii) voluntarily ceases to conduct its business in the ordinary course; (iii) commences any Insolvency Proceeding with respect to itself; or (iv) takes any action to effectuate or authorize any of the foregoing; or (g Involuntary Proceedings. (i) Any involuntary Insolvency Proceeding is commenced or filed against Conseco or any Significant Subsidiary, or any writ, judgment, warrant of attachment, execution or similar process, is issued or levied against a substantial part of Conseco's or any Significant Subsidiary's properties, and any such proceeding or petition shall not be dismissed, or such writ, judgment, warrant of attachment, execution or similar process shall not be released, vacated or fully bonded within 60 days after commencement, filing or levy; (ii) Conseco, any Significant Subsidiary or any Material Insurance Subsidiary admits the material allegations of a petition against it in any Insolvency Proceeding, or an order for relief (or similar order under non-U.S. law) is ordered in any Insolvency Proceeding; (iii) Conseco, any Significant Subsidiary or any Material Insurance Subsidiary acquiesces in the appointment of a receiver, trustee, custodian, conservator, liquidator, mortgagee in possession (or agent therefor), or other similar Person for itself or a substantial portion of its property or business; or (iv) any Material Insurance Subsidiary shall become subject to any conservation, rehabilitation or liquidation order, directive or mandate issued by any Governmental Authority; or (h Pension Plans and Welfare Plans. With respect to any Single Employer Pension Plan as to which Conseco or any other ERISA Affiliate may have any liability, there shall exist a deficiency of more than $20,000,000 as to any ERISA Affiliate (other than Conseco) or $65,000,000 as to Conseco in the Pension Plan assets available to satisfy the benefits guaranteeable under ERISA with respect to such Pension Plan, and steps are undertaken to terminate such plan or such Pension Plan is terminated or Conseco or any other ERISA Affiliate withdraws from or institutes steps to withdraw from such Pension Plan, or Conseco has knowledge that steps have been taken to terminate any Multiemployer Plan and such termination may result in liability to any ERISA Affiliate (other than Conseco) in excess of $20,000,000 or $65,000,000 as to Conseco or any Reportable Event with respect to such Pension Plan has occurred which could result in the incurrence of liability by any ERISA Affiliate (other than Conseco) in excess of $20,000,000 or $65,000,000 as to Conseco or steps are taken to terminate any Multiemployer Plan and such termination may result in any liability of any ERISA Affiliate (other than Conseco) in excess of $20,000,000 or $65,000,000 as to Conseco shall occur; or (i Material Judgments. One or more judgments or decrees shall be entered against Conseco or any of its Subsidiaries involving in the aggregate a liability (not paid or fully covered by insurance as to which the relevant insurance company has not denied coverage) of $50,000,000 or more, and all such judgments or decrees shall not have been vacated, discharged, stayed or bonded pending appeal within 30 days from the entry thereof ; or 37 (j Material Regulatory Matters. (i) If an Insurance Subsidiary shall not make a scheduled payment of interest or principal on any surplus note or similar form of subordinated indebtedness (due to actions of any Governmental Authority or otherwise), (ii) if at any time an Insurance Subsidiary's ability to pay fees to its Affiliates under existing agreements (or extensions of existing agreements) shall be restricted due to actions of any Governmental Authority or otherwise or (iii) if in any Fiscal Year, an Insurance Subsidiary's ability to pay dividends to its stockholders is restricted in any manner (due to actions of any Governmental Authority or otherwise), other than by restrictions under the insurance law of the Insurance Subsidiary's state of domicile that apply generally to other insurance companies domiciled in the state, and, in the case of clauses (i) through (iii) above, such event or condition (x) was not in effect as of the date hereof and (y) such event or condition, together with all other such events or conditions, could reasonably be expected to have a Material Adverse Effect; or (k Change of Control. There occurs any Change of Control; or (l A.M. Best A- Status. Conseco shall not have obtained A.M. Best A- Status prior to March 31, 2001; or (m CIHC Guarantee. The guarantee contained in the Relevant CIHC Guaranty shall cease, for any reason, to be in full force and effect (other than in accordance with the definition thereof or if released by the Relevant Agent at the direction of each of the Relevant Banks) or Conseco or any Subsidiary of Conseco shall so assert; or (n Subordination to CIHC Obligations. Any "Subordinated Debt" under and as defined in the Relevant CIHC Guaranty shall cease, for any reason, to be validly subordinated to the obligations of CIHC under the Relevant CIHC Guaranty as provided in the relevant provisions of the Relevant CIHC Guaranty, or Conseco or any Subsidiary of Conseco shall so assert; or (o Subordination to Obligations. Any Subordinated Obligations or the guarantees thereof shall cease, for any reason, to be validly subordinated to the Obligations or the obligations of Conseco under the Relevant Conseco Guaranty, as the case may be, as provided in the documents governing such Subordinated Obligations, or Conseco or any Subsidiary of Conseco or any trustee or material holders of such Subordinated Obligations shall so assert. 38 EX-4 8 0008.txt EXHIBIT 4.7 EXHIBIT 4.7 ================================================================================ GUARANTY AND SUBORDINATION AGREEMENT Dated as of September 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 Senior Secured Revolving Credit Agreement, dated as of May 30, 2000 ================================================================================ GUARANTY AND SUBORDINATION AGREEMENT This Guaranty and Subordination Agreement (this "Agreement") is entered into as of September 22, 2000 by CIHC, INCORPORATED and CONSECO, INC. in favor of THE CHASE MANHATTAN BANK, as administrative agent (in such capacity, the "Agent") for the financial institutions (the "Banks" and together with the Agent, collectively, the "Guarantied Parties") who are or from time to time may become party to the Senior Secured Revolving Credit Agreement, dated as of May 30, 2000 (as the same may be amended, supplemented, restated or otherwise modified from time to time, the "Credit Agreement"), among Conseco, Inc., the Banks and the Agent. Unless otherwise defined herein, capitalized terms used herein shall have the meanings assigned to such terms pursuant to Article I hereof. W I T N E S S E T H: ------------------- WHEREAS, pursuant to an Amendment of even date herewith (the "Restructuring Document") with respect to the Credit Agreement, the Banks have agreed, among other things, to extend the maturity date of the Loans made pursuant to the Credit Agreement; WHEREAS, the Agreement Parties will derive substantial direct and indirect benefit from the Restructuring Document; and WHEREAS, it is a condition precedent to the obligation of the Banks to enter into the Restructuring Document that the Agreement Parties shall have executed and delivered this Agreement; NOW THEREFORE, for good and valuable consideration the receipt and sufficiency of which is hereby acknowledged and to induce the Banks to enter into the Restructuring Document, each Agreement Party agrees, for the benefit of each Guarantied Party, as follows: ARTICLE I. DEFINITIONS SECTION I.1. Certain Terms. Capitalized terms used herein, unless otherwise defined herein, shall have the respective meanings assigned thereto in the Credit Agreement or the Appendix; provided that such definitions shall survive any termination of the Credit Agreement. In the event that any such capitalized term is defined both in the Appendix and any other document referred to above, the definition contained in the Appendix shall govern. In addition, when used herein the following terms shall have the following meanings (such definitions to be equally applicable to the singular and plural forms thereof): "Agreement Party" means each of Obligor, Guarantor, Subordinated Lender and Subordinated Borrower. "Appendix" has the meaning set forth in the Restructuring Document. "Charges" means the collective reference to Taxes, Other Taxes and Further Taxes (as each such term is defined in the Credit Agreement). "Credit Agreement" has the meaning set forth in the Preamble. "Guarantied Obligations" has the meaning set forth in Section 2.1. "Guarantied Parties" has the meaning set forth in the Preamble. "Guarantor" means CIHC, Incorporated, in its capacity as guarantor of the Guarantied Obligations. "Indemnified Parties" has the meaning set forth in Section 5.1. "Obligations" has the meaning assigned to such term in the Credit Agreement, and shall include, in any event, interest accruing at the then applicable rate provided in the Credit Agreement after the maturity of the Loans and interest accruing at the then applicable rate provided in the Credit Agreement after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to Obligor, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding. "Obligor" means Conseco, Inc., in its capacity as obligor in respect of the Obligations. "Reorganization" has the meaning set forth in Section 3.2(a). "Restructuring Document" has the meaning set forth in the Preamble. "Senior Creditors" means any holder or beneficiary of any Senior Debt, or any authorized representative thereof. "Senior Debt" means (a) all obligations of Guarantor under Article II, (b) all "Senior Debt" under and as defined in any other CIHC Guaranty, (c) all "Senior Debt" under and as defined in the Guaranty and Subordination Agreement entered into in connection with the Lehman Agreement and (d) all other "Senior Debt" (or comparable concept) under and as defined in any subordination provision or agreement relating to or entered into in connection with any Contingent Obligation of CIHC pursuant to Section 4.01(d)(i) or (d)(iv) of the Appendix. "Subordinated Borrower" means CIHC, Incorporated, in its capacity as obligor in respect of the Subordinated Debt. "Subordinated Debt" means the principal amount of any Indebtedness owing by Subordinated Borrower to Subordinated Lender from time to time outstanding and unpaid, together with accrued and unpaid interest thereon. "Subordinated Lender" means Conseco, Inc., in its capacity as holder of the Subordinated Debt. "Subrogation Rights" has the meaning set forth in Section 2.6. ARTICLE II. GUARANTY PROVISIONS SECTION II.1. Guaranty. Guarantor hereby absolutely, unconditionally and irrevocably: (a) guaranties to the Guarantied Parties the full and punctual payment when due, whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise, and at all times thereafter, of all Obligations (including all such amounts which would 2 become due but for the operation of the automatic stay provisions under Section 362(a) of the United States Bankruptcy Code, 11 U.S.C. ss.362(a), and the operation of Sections 502(b) and 506(b) of the United States Bankruptcy Code, 11 U.S.C. ss.502(b) and ss.506(b)) (all such Obligations collectively called the "Guarantied Obligations"); and (b) indemnifies and holds harmless each Guarantied Party or any other holder of any Guarantied Obligations for any and all costs and expenses (including, without limitation, reasonable attorneys' fees and expenses) incurred by such Guarantied Party or such holder, as the case may be, in enforcing any rights under this Agreement; The guaranty set forth in this Article II constitutes a guaranty of payment when due and not of collection, and Guarantor specifically agrees that it shall not be necessary or required that any Guarantied Party or any other holder of any Guarantied Obligations exercise any right, assert any claim or demand or enforce any remedy whatsoever against Obligor or any other Person before the performance of, or as a condition to, the obligations of Guarantor hereunder. Anything herein or in any other Loan Document to the contrary notwithstanding, the maximum liability of Guarantor hereunder shall in no event exceed the amount which can be guaranteed by Guarantor under applicable federal and state laws relating to the insolvency of debtors. SECTION II.2. Acceleration of Guaranty. Guarantor agrees that, in the event of the insolvency of Guarantor, or the inability or failure of Guarantor to pay debts as they become due, or an assignment by Guarantor for the benefit of creditors, or the commencement of any case or proceeding in respect of Obligor or Guarantor under any bankruptcy, insolvency or similar federal or state laws, and if such event shall occur at a time when any of the Guarantied Obligations may not then be due and payable, Guarantor will pay to the Banks forthwith the full amount which would be payable hereunder by Guarantor if all the Guarantied Obligations were then due and payable. SECTION II.3. Guaranty Absolute, etc. This Agreement shall in all respects be a continuing, absolute, unconditional and irrevocable guaranty of payment, and shall remain in full force and effect until all Guarantied Obligations have been paid in full and all obligations of Guarantor hereunder shall have been paid in full. Guarantor guarantees that the Guarantied Obligations will be paid strictly in accordance with the terms of the Credit Agreement and each other Loan Document under which they arise, regardless of any law, regulation or order now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of any Guarantied Party or any holder of any Guarantied Obligations. The liability of Guarantor under this Agreement shall be absolute, unconditional and irrevocable irrespective of: (a) any lack of validity, legality or enforceability of the Credit Agreement or any other Loan Document; (b) the failure of any Guarantied Party: (i) to assert any claim or demand or to enforce any right or remedy against Obligor or any other Person under the provisions of the Credit Agreement, any other Loan Document or otherwise; or (ii) to exercise any right or remedy against any other guarantor of, or collateral securing, any Guarantied Obligations; 3 (c) any change in the time, manner or place of payment of, or in any other term of, all or any of the Guarantied Obligations, or any other extension, compromise or renewal of any Guarantied Obligations; (d) any reduction, limitation, impairment or termination of the Guarantied Obligations for any reason, including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to (and Guarantor hereby waives any right to or claim of) any defense or setoff, counterclaim, recoupment or termination whatsoever by reason of the invalidity, illegality, nongenuineness, irregularity, compromise, unenforceability of, or any other event or occurrence affecting, the Guarantied Obligations; (e) any amendment to, rescission, waiver, or other modification of, or any consent to any departure from, any of the terms of the Credit Agreement or any other Loan Document; (f) any addition, exchange, release, surrender or non-perfection of any collateral, or any amendment to or waiver or release or addition of, or consent to any departure from, any other guaranty held by any Guarantied Party or any other holder of the Guarantied Obligations; or (g) any other circumstance which might otherwise constitute a defense available to, or a legal or equitable discharge of, Obligor, any surety or any guarantor. SECTION II.4. Reinstatement, etc. Guarantor agrees that this Agreement shall continue to be effective or be reinstated, as the case may be, if at any time any payment (in whole or in part) of any of the Guarantied Obligations is rescinded or must otherwise be restored by any Guarantied Party or any other holder of any Guarantied Obligations, upon the insolvency, bankruptcy or reorganization of Obligor, all as though such payment had not been made. SECTION II.5. Waiver, etc. Guarantor hereby waives promptness, diligence, notice of acceptance and any other notice with respect to any of the Guarantied Obligations, and this Agreement and any requirement that the Agent, any other Guarantied Party or any other holder of Guarantied Obligations protect, secure, perfect or insure any security interest or Lien, or any property subject thereto, or exhaust any right or take any action against Obligor or any other Person (including any other guarantor) or entity or any collateral securing the Guarantied Obligations. SECTION II.6. Waiver of Subrogation; Subordination. Guarantor hereby irrevocably waives with respect to Obligor, until the prior indefeasible payment in full in cash of all Guarantied Obligations, any claim or other rights which it may now or hereafter acquire against Obligor that arises from the existence, payment, performance or enforcement of Guarantor's obligations under this Article II, including any right of subrogation, reimbursement, exoneration, or indemnification, any right to participate in any claim or remedy of the Guarantied Parties against Obligor or any collateral which the Agent now has or hereafter acquires, whether or not such claim, remedy or right (all such claims, remedies and rights being collectively called "Subrogation Rights") arises in equity, or under contract, statute or common law, including the right to take or receive from Obligor, directly or indirectly, in cash or other property or by set-off or in any manner, payment or security on account of such claim or other rights. If any amount shall be paid to Guarantor in violation of the preceding sentence and the Guarantied Obligations shall not have been paid in cash, in full, such amount shall be deemed to have been paid to Guarantor for the benefit of, and held in trust for, the Guarantied Parties, and shall forthwith be paid to the Guarantied Parties to be credited and applied upon the Guarantied Obligations, whether matured or unmatured. Guarantor acknowledges that it will receive direct and indirect benefits from the Restructuring Document and that 4 the waiver set forth in this Section 2.6 is knowingly made in contemplation of such benefits. SECTION II.7. Successors, Transferees and Assigns; Transfers of Guarantied Obligations, etc. This Agreement shall: (a) be binding upon Guarantor, and its successors, transferees and assigns; and (b) inure to the benefit of and be enforceable by the Agent and each other Guarantied Party. Without limiting the generality of clause (b), any Bank may assign or otherwise transfer (in whole or in part) any Guarantied Obligation held by it to any other Person upon the terms and conditions set forth in the Credit Agreement, and such other Person shall thereupon become vested with all rights and benefits in respect thereof granted to such Bank under any Loan Document (including this Agreement) or otherwise. SECTION II.8. Payments Free and Clear of Taxes, etc. Guarantor hereby agrees that: (a) any and all payments made by Guarantor hereunder shall be made in accordance with Section 3.01 of the Credit Agreement free and clear of, and without deduction for, any and all Charges, to the same extent as if Guarantor were the Obligor thereunder; (b) Guarantor hereby indemnifies and holds harmless each Guarantied Party and each other holder of any Guarantied Obligation for the full amount of any Charges paid by such Guarantied Party or such holder, as the case may be, and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto; and (c) without prejudice to the survival of any other agreement of Guarantor hereunder, the agreements and obligations of Guarantor contained in this Section 2.8 shall survive the payment in full of the Guarantied Obligations. SECTION II.9. Right of Offset. In addition to and not in limitation of all rights of offset that any Guarantied Party or any other holder of any Guarantied Obligation may have under applicable law or any other Loan Document, subject to the terms of the Credit Agreement, each Guarantied Party or other holder of any Guarantied Obligation shall, during the continuance of any Event of Default and whether or not such Guarantied Party or such holder has made any demand or whether or not Guarantor's obligations are matured, have the right to appropriate and apply to the payment of Guarantor's obligations hereunder all deposits (general or special, time or demand, provisional or final) then or thereafter held by, and other indebtedness or property then or thereafter owing to, such Guarantied Party or other holder, whether or not related to this Agreement or any transaction hereunder. 5 ARTICLE III. SUBORDINATION SECTION III.1. Payments on Subordinated Debt. Notwithstanding anything to the contrary in the terms or arrangements governing the Subordinated Debt, no payment or prepayment of principal of or interest on the Subordinated Debt may be made, directly or indirectly, at any time after (a) the acceleration of the stated maturity of the Loans under the Credit Agreement (including, without limitation, pursuant to automatic acceleration provisions) or (b) a Reorganization (including any proceeding in respect thereof) shall have been commenced. SECTION III.2. Subordination. (a) Subject to Section 3.1, payment of the Subordinated Debt is and shall be expressly subordinate and junior in right of payment to the prior payment in full in cash of the Senior Debt to the extent and in the manner set forth herein, and the Subordinated Debt is hereby so subordinated as a claim against Subordinated Borrower or any of the assets of Subordinated Borrower, whether such claim be (i) in the event of any distribution of the assets of Subordinated Borrower upon any voluntary or involuntary dissolution, winding-up, total or partial liquidation or reorganization, or bankruptcy, insolvency, receivership or other statutory or common law proceedings or arrangements involving Subordinated Borrower or the readjustment of its liabilities or any assignment for the benefit of creditors or any marshaling of its assets or liabilities (collectively called a "Reorganization"), or (ii) other than in connection with a Reorganization, to the prior payment in full in cash of the Senior Debt. (b) If Subordinated Lender shall receive any payment in violation of the terms hereof, it shall hold such payment in trust for the benefit of the Senior Creditors and forthwith pay it over to the Senior Creditors, ratably according to the aggregate amounts remaining unpaid on account of the Senior Debt, for application to and payment of the Senior Debt. (c) In the event of any Reorganization relative to Subordinated Borrower or its properties, then all of the Senior Debt shall first be paid in full in cash before any payment is made upon the Subordinated Debt, and in any such proceedings any payment or distribution of any kind or character, whether in cash or property or securities, which may be payable or deliverable in respect of the Subordinated Debt shall be paid or delivered directly to the Senior Creditors, ratably according to the aggregate amounts remaining unpaid on account of the Senior Debt, for application in payment of the Senior Debt, unless and until all the Senior Debt is paid in full in cash, and Subordinated Lender hereby irrevocably authorizes the Agent, as attorney-in-fact for Subordinated Lender, to vote any claim or proof of claim in such proceedings in respect of the Subordinated Debt, to file or prove any claim in such proceedings in respect of the Subordinated Debt, to demand, sue for, collect and receive any such payment or distribution, to apply such payment or distribution to the payment of the Senior Debt, and to take such other action (including acceptance or rejection of any plan of Reorganization) in the name of Subordinated Lender or of the relevant Senior Creditors as the Agent may deem necessary or advisable for the enforcement of the provisions hereof. Subordinated Lender shall execute and deliver such other and further powers of attorney, assignments, proofs of claim or other instruments, and take such other actions, as may be requested by the Agent in order to enable the Agent to accomplish any of the foregoing, but only with respect to Subordinated Lender's capacity as a holder hereof and not in respect of any other relationship between Subordinated Lender and Subordinated Borrower. Consistent with, but not in limitation of, the foregoing, in such an event, the Agent shall be deemed to be the assigned (and thus the holder) of such claims or proof of claims and shall have the right to assert and vote such claims in any Reorganization, including, without limitation, through the filing of any proof of claim therein and the casting of any ballots to accept or reject any plan of reorganization proposed by, for, or with respect to any such Reorganization. (d) In the event that, notwithstanding the foregoing, upon any such Reorganization, any payment or distribution of the assets of Subordinated Borrower of any kind or character, whether in cash, property or securities, 6 shall be received by Subordinated Lender in respect of the Subordinated Debt before all Senior Debt is paid in full in cash, such payment or distribution shall be held in trust for the Senior Creditors and shall forthwith be paid over to the Senior Creditors, ratably according to the aggregate amounts remaining unpaid on account of the Senior Debt, for application to the payment of the Senior Debt until all Senior Debt shall have been paid in full in cash. (e) Subordinated Lender agrees that, until the Senior Debt has been paid in full in cash, except as expressly provided by Section 3.1, it will not take, demand or receive, or take any action to accelerate or collect, any payment of all or any part of the Subordinated Debt. (f) The Senior Creditors, or any of them, may, at any time and from time to time, without the consent of or notice to Subordinated Lender, without incurring any responsibility to Subordinated Lender, and without impairing or releasing any of the rights of any Senior Creditor, or any of the obligations of Subordinated Lender: (i) change the amount or terms of or renew or extend any Senior Debt or enter into or amend in any manner any agreement relating to any Senior Debt; (ii) sell, exchange, release or otherwise deal with any property at any time pledged or mortgaged to secure any Senior Debt; (iii) release anyone liable in any manner for the payment or collection of any Senior Debt; and (iv) exercise or refrain from exercising any rights against Subordinated Borrower and others (including Subordinated Lender). (g) Subordinated Lender hereby waives notice of or proof of reliance by any Senior Creditor upon the provisions hereof, and the Senior Debt shall conclusively be deemed to have been created, contracted, incurred or maintained in reliance upon the provisions hereof. (h) Each Senior Creditor shall be a third-party beneficiary of the provisions of this Section 3.2. ARTICLE IV. REPRESENTATIONS AND WARRANTIES Each Agreement Party represents and warrants to each Guarantied Party that: SECTION IV.1. Authorization. Such Agreement Party (a) has the power to execute, deliver and perform this Agreement and (b) has taken all necessary action to authorize the execution, delivery and performance by it of this Agreement. SECTION IV.2. No Conflict. The execution, delivery and performance by such Agreement Party of this Agreement does not and will not (a) contravene or conflict with any provision of any law, statute, rule or regulation, (b) contravene or conflict with, result in any breach of, or constitute a default under, any material agreement or instrument binding on such Agreement Party or any of its Subsidiaries (including, without limitation, any 7 writ, judgment, injunction or other similar court order), (c) result in the creation or imposition of or the obligation to create or impose any Lien upon any of the property or assets of such Agreement Party or any of its Subsidiaries or (d) contravene or conflict with any provision of the articles of incorporation or bylaws of such Agreement Party. SECTION IV.3. Binding Effect. This Agreement constitutes the legal, valid and binding obligations of such Agreement Party, enforceable against such Agreement Party in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, or similar laws affecting the enforcement of creditors' rights generally or by equitable principles relating to enforceability. SECTION 4.4 Solvent. After giving effect to this Agreement, Guarantor and its Subsidiaries, taken as a whole, are Solvent. As used in this Section 4.4, "Solvent" shall mean, with respect to any Person on a particular date, that on such date: (a) the fair value of the property of such Person is greater than the amount of such Person's liabilities (including disputed, contingent and unliquidated liabilities) as such value is established and liabilities evaluated for purposes of Section 101(31) of the Bankruptcy Code and, in the alternative, for purposes of the Uniform Fraudulent Transfer Act or Uniform Fraudulent Conveyance Act; (b) the present fair saleable value of the property of such Person is not less than the amount that will be required to pay the probably liability of such Person on its debts as they become absolute and matured; (c) such Person is able to realize is able to realize upon its property and pay its debts and other liabilities (including disputed, contingent and unliquidated liabilities) as they mature in the normal course of business; (d) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person's ability to pay as such debts and liabilities mature; and (e) such Person is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which such Person's property would constitute unreasonably small capital. ARTICLE V. MISCELLANEOUS SECTION V.1. Indemnity. Each Agreement Party agrees to indemnify the Agent, each Bank, their Affiliates and their respective directors, officers, employees, persons controlling or controlled by any of them or their respective agents, consultants, attorneys and advisors (the "Indemnified Parties") and hold each Indemnified Party harmless from and against any and all liabilities, losses, claims, damages, costs and expenses of any kind to which any of the Indemnified Parties may become subject, whether directly or indirectly (including, without limitation, the reasonable fees and disbursements of counsel for any Indemnified Party), relating to or arising out of this Agreement; provided, that no Indemnified Party shall have the right to be indemnified hereunder for its own gross negligence or willful misconduct as determined by a court of competent jurisdiction. All obligations of each Agreement Party provided for in this Section 5.1 shall survive termination of the Credit Agreement and this Agreement. SECTION V.2. Notices. All notices, requests and other communications to any party hereunder shall be in writing (including facsimile or similar writing) and shall be given to such party at its address or facsimile number set forth on the signature pages hereof or such other address or facsimile number as such party may hereafter specify for the purpose by written notice to the Agent. Each such notice, request or other communication shall be effective (a) if given by facsimile, when such facsimile is transmitted to the 8 facsimile number specified in this Section 5.2, (b) if given by mail, seventy-two (72) hours after such communication is deposited in the mails with first class postage prepaid, addressed as aforesaid or (c) if given by any other means, when delivered at the address specified in this Section 5.2. SECTION V.3. Successors and Assigns. This Agreement, and the terms, covenants and conditions hereof, shall be binding upon and inure to the benefit of the parties hereto, and their respective successors and assigns, except no Agreement Party shall be permitted to assign this Agreement nor any interest or obligation herein without the consent of the Agent. SECTION V.4. SUBMISSION TO JURISDICTION, ETC. EACH AGREEMENT PARTY AND THE AGENT HEREBY IRREVOCABLY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE SUPREME COURT OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK OVER ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND EACH AGREEMENT PARTY AND THE AGENT HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE OR TO THE EXTENT PERMITTED BY LAW, FEDERAL COURT. EACH AGREEMENT PARTY AND THE AGENT HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE IN ANY ACTION OR PROCEEDING (WHETHER BROUGHT BY ANY AGREEMENT PARTY OR ANY OF THEIR RESPECTIVE SUBSIDIARIES, THE AGENT, ANY BANK OR OTHERWISE) IN ANY COURT HEREIN ABOVE SPECIFIED IN THIS SECTION 5.4 AS WELL AS ANY RIGHT IT MAY NOW OR HEREAFTER HAVE TO REMOVE ANY SUCH ACTION OR PROCEEDING, ONCE COMMENCED, TO ANOTHER COURT ON THE GROUNDS OF FORUM NON CONVENIENS OR OTHERWISE. EACH AGREEMENT PARTY AND THE AGENT 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. SECTION V.5. Amendments; Release. Notwithstanding anything to the contrary contained in the Credit Agreement, the provisions of this Agreement may from time to time be amended, modified or waived, if such amendment, modification or waiver is in writing and consented to by each affected Agreement Party and the Agent (with the consent of the Required Banks), and then any such amendment, modification, waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided that, except as set forth in Section 5.14 of this Agreement, no such amendment, modification or waiver which would permit the release or termination of all or a substantial portion of Guarantor's obligations under this Agreement shall be effective without the consent of each Bank. SECTION V.6. Section Headings. The section headings in this Agreement are inserted for convenience of reference and shall not be considered a part of this Agreement or used in its interpretation. SECTION V.7. Acknowledgments. No action of the Agent permitted hereunder shall in any way affect or impair the rights of the Agent and the obligations of each Agreement Party under this Agreement. Each Agreement Party hereby acknowledges that there are no conditions to the effectiveness of this Agreement. 9 SECTION V.8. Obligations Not Limited. All obligations of the Guarantor and rights of the Guarantied Parties in respect of the Guarantied Obligations expressed in this Agreement shall be in addition to and not in limitation of those provided in applicable law or in any other written instrument or agreement relating to any of the Guarantied Obligations. SECTION V.9. GOVERNING LAW. THIS AGREEMENT SHALL BE A CONTRACT MADE UNDER AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. SECTION V.10. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall for all purposes be deemed an original, but all such counterparts shall constitute but one and the same agreement. Each Agreement Party hereby acknowledges receipt of a true, correct and complete counterpart of this Agreement. SECTION V.11. Agent. The Agent acts herein as agent for itself, the Banks and any and all future holders of the Guarantied Obligations. SECTION V.12. WAIVER OF TRIAL BY JURY. EACH AGREEMENT PARTY AND THE AGENT HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM CONCERNING ANY RIGHTS UNDER THIS AGREEMENT OR ANY OTHER DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH, OR ARISING FROM ANY BANKING RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT AND AGREES THAT ANY SUCH ACTION, PROCEEDING OR COUNTERCLAIM SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY; THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE GUARANTIED PARTIES ENTERING INTO THE RESTRUCTURING DOCUMENT. SECTION V.13. No Limitation on Remedies. No failure to exercise and no delay in exercising, on the part of the Agent or any other Guarantied Party, any right, remedy, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law. SECTION V.14. Release of This Agreement. This Agreement shall be terminated and Guarantor shall be released from all of its obligations hereunder on the first date after the Near-Term Facilities Termination Date on which Conseco, Inc. has Investment Grade Ratings Status, as long as no Default or Event of Default shall have occurred and be continuing on such date. 10 IN WITNESS WHEREOF, each Agreement Party has caused this Guaranty and Subordination Agreement to be duly executed and delivered by its officer thereunto duly authorized as of the date first above written. CIHC, INCORPORATED, as Guarantor and Subordinated Borrower By: /s/ David A. Hill -------------------------------------- Name: David A. Hill Title: Vice-President Address for Notices: 11825 North Pennsylvania Street Carmel, Indiana 46032 Attention: Fax: 317-817-6100 CONSECO, INC., as Obligor and Subordinated Lender By: /s/ Thomas M. Hagerty -------------------------------------- Name: Thomas M. Hagerty Title: Acting Chief Financial Officer Address for Notices: 11825 North Pennsylvania Street Carmel, Indiana 46032 Attention: Fax: 317-817-6100 11 EX-4 9 0009.txt EXHIBIT 4.8 Exhibit 4.8 ================================================================================ GUARANTY AND SUBORDINATION AGREEMENT Dated as of September 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 May 30, 2000 ================================================================================ GUARANTY AND SUBORDINATION AGREEMENT This Guaranty and Subordination Agreement (this "Agreement") is entered into as of September 22, 2000 by CIHC, INCORPORATED and CONSECO, INC. in favor of THE CHASE MANHATTAN BANK, as administrative agent (in such capacity, the "Agent") for the financial institutions (the "Banks" and together with the Agent, collectively, the "Guarantied Parties") who are or from time to time may become party to the Credit Agreement, dated as of May 30, 2000 (as the same may be amended, supplemented, restated or otherwise modified from time to time, the "Credit Agreement"), among the individual borrowers party thereto, the Banks and the Agent. Unless otherwise defined herein, capitalized terms used herein shall have the meanings assigned to such terms pursuant to Article I hereof. W I T N E S S E T H: ------------------- WHEREAS, pursuant to an Agreement of even date herewith (the "Restructuring Document") with respect to the Credit Agreement and the Guaranty referred to in the Credit Agreement (as the same may be amended, supplemented, restated or otherwise modified from time to time, the "Conseco Guaranty"), the Banks have agreed, among other things, to refrain from exercising certain remedies in respect of the Credit Agreement and/or the Conseco Guaranty; WHEREAS, the Agreement Parties will derive substantial direct and indirect benefit from the Restructuring Document; and WHEREAS, it is a condition precedent to the obligation of the Banks to enter into the Restructuring Document that the Agreement Parties shall have executed and delivered this Agreement; NOW THEREFORE, for good and valuable consideration the receipt and sufficiency of which is hereby acknowledged and to induce the Banks to enter into the Restructuring Document, each Agreement Party agrees, for the benefit of each Guarantied Party, as follows: ARTICLE I. DEFINITIONS SECTION I.1. Certain Terms. Capitalized terms used herein, unless otherwise defined herein, shall have the respective meanings assigned thereto in the Credit Agreement, the Appendix or the Conseco Guaranty Documents; provided that such definitions shall survive any termination of the Credit Agreement or any Conseco Guaranty Document. In the event that any such capitalized term is defined both in the Appendix and any other document referred to above, the definition contained in the Appendix shall govern. In addition, when used herein the following terms shall have the following meanings (such definitions to be equally applicable to the singular and plural forms thereof): "Agreement Party" means each of Obligor, Guarantor, Subordinated Lender and Subordinated Borrower. "Appendix" has the meaning set forth in the Restructuring Document. "Charges" has the meaning assigned to such term in the Credit Agreement. "Conseco Guaranty" has the meaning set forth in the Preamble. "Conseco Guaranty Documents" means the collective reference to the Conseco Guaranty, the Restructuring Document and any other agreement entered into by Obligor in connection therewith. "Credit Agreement" has the meaning set forth in the Preamble. "Guarantied Obligations" has the meaning set forth in Section 2.1. "Guarantied Parties" has the meaning set forth in the Preamble. "Guarantor" means CIHC, Incorporated, in its capacity as guarantor of the Guarantied Obligations. "Indemnified Parties" has the meaning set forth in Section 5.1. "Obligations" means all debts, liabilities, obligations, covenants and duties for the payment of money owing by Obligor pursuant to any Conseco Guaranty Document, whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising. "Obligor" means Conseco, Inc., in its capacity as obligor in respect of the Obligations. "Reorganization" has the meaning set forth in Section 3.2(a). "Restructuring Document" has the meaning set forth in the Preamble. "Senior Creditors" means any holder or beneficiary of any Senior Debt, or any authorized representative thereof. "Senior Debt" means (a) all obligations of Guarantor under Article II, (b) all "Senior Debt" under and as defined in any other CIHC Guaranty, (c) all "Senior Debt" under and as defined in the Guaranty and Subordination Agreement entered into in connection with the Lehman Agreement and (d) all other "Senior Debt" (or comparable concept) under and as defined in any subordination provision or agreement relating to or entered into in connection with any Contingent Obligation of CIHC pursuant to Section 4.01(d)(i) or (d)(iv) of the Appendix. "Subordinated Borrower" means CIHC, Incorporated, in its capacity as obligor in respect of the Subordinated Debt. "Subordinated Debt" means the principal amount of any Indebtedness owing by Subordinated Borrower to Subordinated Lender from time to time outstanding and unpaid, together with accrued and unpaid interest thereon. "Subordinated Lender" means Conseco, Inc., in its capacity as holder of the Subordinated Debt. "Subrogation Rights" has the meaning set forth in Section 2.6. 2 ARTICLE II. GUARANTY PROVISIONS SECTION II.1. Guaranty. Guarantor hereby absolutely, unconditionally and irrevocably: (a) guaranties to the Guarantied Parties the full and punctual payment when due, whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise, and at all times thereafter, of all Obligations (including all such amounts which would become due but for the operation of the automatic stay provisions under Section 362(a) of the United States Bankruptcy Code, 11 U.S.C. ss.362(a), and the operation of Sections 502(b) and 506(b) of the United States Bankruptcy Code, 11 U.S.C. ss.502(b) and ss.506(b)) (all such Obligations collectively called the "Guarantied Obligations"); and (b) indemnifies and holds harmless each Guarantied Party or any other holder of any Guarantied Obligations for any and all costs and expenses (including, without limitation, reasonable attorneys' fees and expenses) incurred by such Guarantied Party or such holder, as the case may be, in enforcing any rights under this Agreement; The guaranty set forth in this Article II constitutes a guaranty of payment when due and not of collection, and Guarantor specifically agrees that it shall not be necessary or required that any Guarantied Party or any other holder of any Guarantied Obligations exercise any right, assert any claim or demand or enforce any remedy whatsoever against Obligor or any other Person before the performance of, or as a condition to, the obligations of Guarantor hereunder. Anything herein or in any other Loan Document to the contrary notwithstanding, the maximum liability of Guarantor hereunder shall in no event exceed the amount which can be guaranteed by Guarantor under applicable federal and state laws relating to the insolvency of debtors. SECTION II.2. Acceleration of Guaranty. Guarantor agrees that, in the event of the insolvency of Guarantor, or the inability or failure of Guarantor to pay debts as they become due, or an assignment by Guarantor for the benefit of creditors, or the commencement of any case or proceeding in respect of Obligor or Guarantor under any bankruptcy, insolvency or similar federal or state laws, and if such event shall occur at a time when any of the Guarantied Obligations may not then be due and payable, Guarantor will pay to the Banks forthwith the full amount which would be payable hereunder by Guarantor if all the Guarantied Obligations were then due and payable. SECTION II.3. Guaranty Absolute, etc. This Agreement shall in all respects be a continuing, absolute, unconditional and irrevocable guaranty of payment, and shall remain in full force and effect until all Guarantied Obligations have been paid in full and all obligations of Guarantor hereunder shall have been paid in full. Guarantor guarantees that the Guarantied Obligations will be paid strictly in accordance with the terms of the Conseco Guaranty Documents and each other Loan Document under which they arise, regardless of any law, regulation or order now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of any Guarantied Party or any holder of any Guarantied Obligations. The liability of Guarantor under this Agreement shall be absolute, unconditional and irrevocable irrespective of: (a) any lack of validity, legality or enforceability of the Credit Agreement, any Conseco Guaranty Document or any other Loan Document; (b) the failure of any Guarantied Party: 3 (i) to assert any claim or demand or to enforce any right or remedy against Obligor or any other Person under the provisions of the Credit Agreement, any Conseco Guaranty Document, any other Loan Document or otherwise; or (ii) to exercise any right or remedy against any other guarantor of, or collateral securing, any Guarantied Obligations; (c) any change in the time, manner or place of payment of, or in any other term of, all or any of the Guarantied Obligations, or any other extension, compromise or renewal of any Guarantied Obligations; (d) any reduction, limitation, impairment or termination of the Guarantied Obligations for any reason, including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to (and Guarantor hereby waives any right to or claim of) any defense or setoff, counterclaim, recoupment or termination whatsoever by reason of the invalidity, illegality, nongenuineness, irregularity, compromise, unenforceability of, or any other event or occurrence affecting, the Guarantied Obligations; (e) any amendment to, rescission, waiver, or other modification of, or any consent to any departure from, any of the terms of the Credit Agreement, any Conseco Guaranty Document or any other Loan Document; (f) any addition, exchange, release, surrender or non-perfection of any collateral, or any amendment to or waiver or release or addition of, or consent to any departure from, any other guaranty held by any Guarantied Party or any other holder of the Guarantied Obligations; or (g) any other circumstance which might otherwise constitute a defense available to, or a legal or equitable discharge of, Obligor, any surety or any guarantor. SECTION II.4. Reinstatement, etc. Guarantor agrees that this Agreement shall continue to be effective or be reinstated, as the case may be, if at any time any payment (in whole or in part) of any of the Guarantied Obligations is rescinded or must otherwise be restored by any Guarantied Party or any other holder of any Guarantied Obligations, upon the insolvency, bankruptcy or reorganization of Obligor, all as though such payment had not been made. SECTION II.5. Waiver, etc. Guarantor hereby waives promptness, diligence, notice of acceptance and any other notice with respect to any of the Guarantied Obligations, and this Agreement and any requirement that the Agent, any other Guarantied Party or any other holder of Guarantied Obligations protect, secure, perfect or insure any security interest or Lien, or any property subject thereto, or exhaust any right or take any action against Obligor or any other Person (including any other guarantor) or entity or any collateral securing the Guarantied Obligations. SECTION II.6. Waiver of Subrogation; Subordination. Guarantor hereby irrevocably waives with respect to Obligor, until the prior indefeasible payment in full in cash of all Guarantied Obligations, any claim or other rights which it may now or hereafter acquire against Obligor that arises from the existence, payment, performance or enforcement of Guarantor's obligations under this Article II, including any right of subrogation, reimbursement, exoneration, or indemnification, any right to participate in any claim or remedy of the Guarantied Parties against Obligor or any collateral which the Agent now has or hereafter acquires, whether or not such claim, remedy or right (all such claims, 4 remedies and rights being collectively called "Subrogation Rights") arises in equity, or under contract, statute or common law, including the right to take or receive from Obligor, directly or indirectly, in cash or other property or by set-off or in any manner, payment or security on account of such claim or other rights. If any amount shall be paid to Guarantor in violation of the preceding sentence and the Guarantied Obligations shall not have been paid in cash, in full, such amount shall be deemed to have been paid to Guarantor for the benefit of, and held in trust for, the Guarantied Parties, and shall forthwith be paid to the Guarantied Parties to be credited and applied upon the Guarantied Obligations, whether matured or unmatured. Guarantor acknowledges that it will receive direct and indirect benefits from the Restructuring Document and that the waiver set forth in this Section 2.6 is knowingly made in contemplation of such benefits. SECTION II.7. Successors, Transferees and Assigns; Transfers of Guarantied Obligations, etc. This Agreement shall: (a) be binding upon Guarantor, and its successors, transferees and assigns; and (b) inure to the benefit of and be enforceable by the Agent and each other Guarantied Party. Without limiting the generality of clause (b), any Bank may assign or otherwise transfer (in whole or in part) any Guarantied Obligation held by it to any other Person upon the terms and conditions set forth in the Credit Agreement, and such other Person shall thereupon become vested with all rights and benefits in respect thereof granted to such Bank under any Loan Document (including this Agreement) or otherwise. SECTION II.8. Payments Free and Clear of Taxes, etc. Guarantor hereby agrees that: (a) any and all payments made by Guarantor hereunder shall be made in accordance with Section 4.7 of the Credit Agreement free and clear of, and without deduction for, any and all Charges, to the same extent as if Guarantor were a "Borrower" thereunder; (b) Guarantor hereby indemnifies and holds harmless each Guarantied Party and each other holder of any Guarantied Obligation for the full amount of any Charges paid by such Guarantied Party or such holder, as the case may be, and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto; and (c) without prejudice to the survival of any other agreement of Guarantor hereunder, the agreements and obligations of Guarantor contained in this Section 2.8 shall survive the payment in full of the Guarantied Obligations. SECTION II.9. Right of Offset. In addition to and not in limitation of all rights of offset that any Guarantied Party or any other holder of any Guarantied Obligation may have under applicable law or any other Loan Document, subject to the terms of the Credit Agreement, each Guarantied Party or other holder of any Guarantied Obligation shall, during the continuance of any Event of Default and whether or not such Guarantied Party or such holder has made any demand or whether or not Guarantor's obligations are matured, have the right to appropriate and apply to the payment of Guarantor's obligations hereunder all deposits (general or special, time or demand, provisional or final) then or thereafter held by, and other indebtedness or property then or thereafter owing to, such Guarantied Party or other holder, whether or not related to this Agreement or any transaction hereunder. 5 ARTICLE III. SUBORDINATION SECTION III.1. Payments on Subordinated Debt. Notwithstanding anything to the contrary in the terms or arrangements governing the Subordinated Debt, no payment or prepayment of principal of or interest on the Subordinated Debt may be made, directly or indirectly, at any time after (a) (i) any Guarantied Party has made a claim under the Conseco Guaranty in respect of the principal amount of any of the Loans under the Credit Agreement or (ii) Obligor's obligations under the Conseco Guaranty shall have been accelerated (including, without limitation, pursuant to the provision in the Conseco Guaranty that is the equivalent of Section 2.2 of this Agreement) or (b) a Reorganization (including any proceeding in respect thereof) shall have been commenced. SECTION III.2. Subordination. (a) Subject to Section 3.1, payment of the Subordinated Debt is and shall be expressly subordinate and junior in right of payment to the prior payment in full in cash of the Senior Debt to the extent and in the manner set forth herein, and the Subordinated Debt is hereby so subordinated as a claim against Subordinated Borrower or any of the assets of Subordinated Borrower, whether such claim be (i) in the event of any distribution of the assets of Subordinated Borrower upon any voluntary or involuntary dissolution, winding-up, total or partial liquidation or reorganization, or bankruptcy, insolvency, receivership or other statutory or common law proceedings or arrangements involving Subordinated Borrower or the readjustment of its liabilities or any assignment for the benefit of creditors or any marshaling of its assets or liabilities (collectively called a "Reorganization"), or (ii) other than in connection with a Reorganization, to the prior payment in full in cash of the Senior Debt. (b) If Subordinated Lender shall receive any payment in violation of the terms hereof, it shall hold such payment in trust for the benefit of the Senior Creditors and forthwith pay it over to the Senior Creditors, ratably according to the aggregate amounts remaining unpaid on account of the Senior Debt, for application to and payment of the Senior Debt. (c) In the event of any Reorganization relative to Subordinated Borrower or its properties, then all of the Senior Debt shall first be paid in full in cash before any payment is made upon the Subordinated Debt, and in any such proceedings any payment or distribution of any kind or character, whether in cash or property or securities, which may be payable or deliverable in respect of the Subordinated Debt shall be paid or delivered directly to the Senior Creditors, ratably according to the aggregate amounts remaining unpaid on account of the Senior Debt, for application in payment of the Senior Debt, unless and until all the Senior Debt is paid in full in cash, and Subordinated Lender hereby irrevocably authorizes the Agent, as attorney-in-fact for Subordinated Lender, to vote any claim or proof of claim in such proceedings in respect of the Subordinated Debt, to file or prove any claim in such proceedings in respect of the Subordinated Debt, to demand, sue for, collect and receive any such payment or distribution, to apply such payment or distribution to the payment of the Senior Debt, and to take such other action (including acceptance or rejection of any plan of Reorganization) in the name of Subordinated Lender or of the relevant Senior Creditors as the Agent may deem necessary or advisable for the enforcement of the provisions hereof. Subordinated Lender shall execute and deliver such other and further powers of attorney, assignments, proofs of claim or other instruments, and take such other actions, as may be requested by the Agent in order to enable the Agent to accomplish any of the foregoing, but only with respect to Subordinated Lender's capacity as a holder hereof and not in respect of any other relationship between Subordinated Lender and Subordinated Borrower. Consistent with, but not in limitation of, the foregoing, in such an event, the Agent shall be deemed to be the assigned (and thus the holder) of such claims or proof of claims and shall have the right to assert and vote such claims in any Reorganization, including, without limitation, through the filing of any proof of claim therein and the casting of any ballots to accept or reject any plan of reorganization proposed by, for, or with respect to any such Reorganization. 6 (d) In the event that, notwithstanding the foregoing, upon any such Reorganization, any payment or distribution of the assets of Subordinated Borrower of any kind or character, whether in cash, property or securities, shall be received by Subordinated Lender in respect of the Subordinated Debt before all Senior Debt is paid in full in cash, such payment or distribution shall be held in trust for the Senior Creditors and shall forthwith be paid over to the Senior Creditors, ratably according to the aggregate amounts remaining unpaid on account of the Senior Debt, for application to the payment of the Senior Debt until all Senior Debt shall have been paid in full in cash. (e) Subordinated Lender agrees that, until the Senior Debt has been paid in full in cash, except as expressly provided by Section 3.1, it will not take, demand or receive, or take any action to accelerate or collect, any payment of all or any part of the Subordinated Debt. (f) The Senior Creditors, or any of them, may, at any time and from time to time, without the consent of or notice to Subordinated Lender, without incurring any responsibility to Subordinated Lender, and without impairing or releasing any of the rights of any Senior Creditor, or any of the obligations of Subordinated Lender: (i) change the amount or terms of or renew or extend any Senior Debt or enter into or amend in any manner any agreement relating to any Senior Debt; (ii) sell, exchange, release or otherwise deal with any property at any time pledged or mortgaged to secure any Senior Debt; (iii) release anyone liable in any manner for the payment or collection of any Senior Debt; and (iv) exercise or refrain from exercising any rights against Subordinated Borrower and others (including Subordinated Lender). (g) Subordinated Lender hereby waives notice of or proof of reliance by any Senior Creditor upon the provisions hereof, and the Senior Debt shall conclusively be deemed to have been created, contracted, incurred or maintained in reliance upon the provisions hereof. (h) Each Senior Creditor shall be a third-party beneficiary of the provisions of this Section 3.2. ARTICLE IV. REPRESENTATIONS AND WARRANTIES Each Agreement Party represents and warrants to each Guarantied Party that: SECTION IV.1. Authorization. Such Agreement Party (a) has the power to execute, deliver and perform this Agreement and (b) has taken all necessary action to authorize the execution, delivery and performance by it of this Agreement. 7 SECTION IV.2. No Conflict. The execution, delivery and performance by such Agreement Party of this Agreement does not and will not (a) contravene or conflict with any provision of any law, statute, rule or regulation, (b) contravene or conflict with, result in any breach of, or constitute a default under, any material agreement or instrument binding on such Agreement Party or any of its Subsidiaries (including, without limitation, any writ, judgment, injunction or other similar court order), (c) result in the creation or imposition of or the obligation to create or impose any Lien upon any of the property or assets of such Agreement Party or any of its Subsidiaries or (d) contravene or conflict with any provision of the articles of incorporation or bylaws of such Agreement Party. SECTION IV.3. Binding Effect. This Agreement constitutes the legal, valid and binding obligations of such Agreement Party, enforceable against such Agreement Party in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, or similar laws affecting the enforcement of creditors' rights generally or by equitable principles relating to enforceability. SECTION 4.4 Solvent. After giving effect to this Agreement, Guarantor and its Subsidiaries, taken as a whole, are Solvent. As used in this Section 4.4, "Solvent" shall mean, with respect to any Person on a particular date, that on such date: (a) the fair value of the property of such Person is greater than the amount of such Person's liabilities (including disputed, contingent and unliquidated liabilities) as such value is established and liabilities evaluated for purposes of Section 101(31) of the Bankruptcy Code and, in the alternative, for purposes of the Uniform Fraudulent Transfer Act or Uniform Fraudulent Conveyance Act; (b) the present fair saleable value of the property of such Person is not less than the amount that will be required to pay the probably liability of such Person on its debts as they become absolute and matured; (c) such Person is able to realize is able to realize upon its property and pay its debts and other liabilities (including disputed, contingent and unliquidated liabilities) as they mature in the normal course of business; (d) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person's ability to pay as such debts and liabilities mature; and (e) such Person is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which such Person's property would constitute unreasonably small capital. ARTICLE V. MISCELLANEOUS SECTION V.1. Indemnity. Each Agreement Party agrees to indemnify the Agent, each Bank, their Affiliates and their respective directors, officers, employees, persons controlling or controlled by any of them or their respective agents, consultants, attorneys and advisors (the "Indemnified Parties") and hold each Indemnified Party harmless from and against any and all liabilities, losses, claims, damages, costs and expenses of any kind to which any of the Indemnified Parties may become subject, whether directly or indirectly (including, without limitation, the reasonable fees and disbursements of counsel for any Indemnified Party), relating to or arising out of this Agreement; provided, that no Indemnified Party shall have the right to be indemnified hereunder for its own gross negligence or willful misconduct as determined by a court of competent jurisdiction. All obligations of each Agreement Party provided for in this Section 5.1 shall survive termination of the Credit Agreement, any Conseco Guaranty Document and this Agreement. 8 SECTION V.2. Notices. All notices, requests and other communications to any party hereunder shall be in writing (including facsimile or similar writing) and shall be given to such party at its address or facsimile number set forth on the signature pages hereof or such other address or facsimile number as such party may hereafter specify for the purpose by written notice to the Agent. Each such notice, request or other communication shall be effective (a) if given by facsimile, when such facsimile is transmitted to the facsimile number specified in this Section 5.2, (b) if given by mail, seventy-two (72) hours after such communication is deposited in the mails with first class postage prepaid, addressed as aforesaid or (c) if given by any other means, when delivered at the address specified in this Section 5.2. SECTION V.3. Successors and Assigns. This Agreement, and the terms, covenants and conditions hereof, shall be binding upon and inure to the benefit of the parties hereto, and their respective successors and assigns, except no Agreement Party shall be permitted to assign this Agreement nor any interest or obligation herein without the consent of the Agent. SECTION V.4. SUBMISSION TO JURISDICTION, ETC. EACH AGREEMENT PARTY AND THE AGENT HEREBY IRREVOCABLY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE SUPREME COURT OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK OVER ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND EACH AGREEMENT PARTY AND THE AGENT HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE OR TO THE EXTENT PERMITTED BY LAW, FEDERAL COURT. EACH AGREEMENT PARTY AND THE AGENT HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE IN ANY ACTION OR PROCEEDING (WHETHER BROUGHT BY ANY AGREEMENT PARTY OR ANY OF THEIR RESPECTIVE SUBSIDIARIES, THE AGENT, ANY BANK OR OTHERWISE) IN ANY COURT HEREIN ABOVE SPECIFIED IN THIS SECTION 5.4 AS WELL AS ANY RIGHT IT MAY NOW OR HEREAFTER HAVE TO REMOVE ANY SUCH ACTION OR PROCEEDING, ONCE COMMENCED, TO ANOTHER COURT ON THE GROUNDS OF FORUM NON CONVENIENS OR OTHERWISE. EACH AGREEMENT PARTY AND THE AGENT 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. SECTION V.5. Amendments; Release. Notwithstanding anything to the contrary contained in the Credit Agreement, the provisions of this Agreement may from time to time be amended, modified or waived, if such amendment, modification or waiver is in writing and consented to by each affected Agreement Party and the Agent (with the consent of the Required Banks), and then any such amendment, modification, waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided that, except as set forth in Section 5.14 of this Agreement, no such amendment, modification or waiver which would permit the release or termination of all or a substantial portion of Guarantor's obligations under this Agreement shall be effective without the consent of each Bank. SECTION V.6. Section Headings. The section headings in this Agreement are inserted for convenience of reference and shall not be considered a part of this Agreement or used in its interpretation. 9 SECTION V.7. Acknowledgments. No action of the Agent permitted hereunder shall in any way affect or impair the rights of the Agent and the obligations of each Agreement Party under this Agreement. Each Agreement Party hereby acknowledges that there are no conditions to the effectiveness of this Agreement. SECTION V.8. Obligations Not Limited. All obligations of the Guarantor and rights of the Guarantied Parties in respect of the Guarantied Obligations expressed in this Agreement shall be in addition to and not in limitation of those provided in applicable law or in any other written instrument or agreement relating to any of the Guarantied Obligations. SECTION V.9. GOVERNING LAW. THIS AGREEMENT SHALL BE A CONTRACT MADE UNDER AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. SECTION V.10. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall for all purposes be deemed an original, but all such counterparts shall constitute but one and the same agreement. Each Agreement Party hereby acknowledges receipt of a true, correct and complete counterpart of this Agreement. SECTION V.11. Agent. The Agent acts herein as agent for itself, the Banks and any and all future holders of the Guarantied Obligations. SECTION V.12. WAIVER OF TRIAL BY JURY. EACH AGREEMENT PARTY AND THE AGENT HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM CONCERNING ANY RIGHTS UNDER THIS AGREEMENT OR ANY OTHER DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH, OR ARISING FROM ANY BANKING RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT AND AGREES THAT ANY SUCH ACTION, PROCEEDING OR COUNTERCLAIM SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY; THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE GUARANTIED PARTIES ENTERING INTO THE RESTRUCTURING DOCUMENT. SECTION V.13. No Limitation on Remedies. No failure to exercise and no delay in exercising, on the part of the Agent or any other Guarantied Party, any right, remedy, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law. SECTION V.14. Release of This Agreement. This Agreement shall be terminated and Guarantor shall be released from all of its obligations hereunder on the first date after the Near-Term Facilities Termination Date on which Conseco, Inc. has Investment Grade Ratings Status, as long as no Default or Event of Default shall have occurred and be continuing on such date. 10 IN WITNESS WHEREOF, each Agreement Party has caused this Guaranty and Subordination Agreement to be duly executed and delivered by its officer thereunto duly authorized as of the date first above written. CIHC, INCORPORATED, as Guarantor and Subordinated Borrower By: /s/ David A. Hill -------------------------------------- Name: David A. Hill Title: Vice-President Address for Notices: 11825 North Pennsylvania Street Carmel, Indiana 46032 Attention: Fax: 317-817-6100 CONSECO, INC., as Obligor and Subordinated Lender By: /s/ Thomas M. Hagerty -------------------------------------- Name: Thomas M. Hagerty Title: Acting Chief Financial Officer Address for Notices: 11825 North Pennsylvania Street Carmel, Indiana 46032 Attention: Fax: 317-817-6100 11 EX-4 10 0010.txt EXHIBIT 4.9 Exhibit 4.9 ================================================================================ GUARANTY AND SUBORDINATION AGREEMENT Dated as of September 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, N.A., as Administrative Agent under the Amended and Restated Credit Agreement dated as of August 26, 1997 ================================================================================ GUARANTY AND SUBORDINATION AGREEMENT This Guaranty and Subordination Agreement (this "Agreement") is entered into as of September 22, 2000 by CIHC, INCORPORATED and CONSECO, INC. in favor of BANK OF AMERICA, N.A., as administrative agent (in such capacity, the "Agent") for the financial institutions (the "Banks" and together with the Agent, collectively, the "Guarantied Parties") who are or from time to time may become party to the Amended and Restated Credit Agreement, dated as of August 26, 1997 (as the same may be amended, supplemented, restated or otherwise modified from time to time, the "Credit Agreement"), among the individual borrowers party thereto, the Banks and the Agent. Unless otherwise defined herein, capitalized terms used herein shall have the meanings assigned to such terms pursuant to Article I hereof. W I T N E S S E T H: ------------------- WHEREAS, pursuant to an Agreement of even date herewith relating to 1997 Director & Officer Loan Agreement (the "Restructuring Document") with respect to the Credit Agreement and the Guaranty referred to in the Credit Agreement (as the same may be amended, supplemented, restated or otherwise modified from time to time, the "Conseco Guaranty"), the Banks have agreed, among other things, to refrain from exercising certain remedies in respect of the Conseco Guaranty; WHEREAS, the Agreement Parties will derive substantial direct and indirect benefit from the Restructuring Document; and WHEREAS, it is a condition precedent to the obligation of the Banks to enter into the Restructuring Document that the Agreement Parties shall have executed and delivered this Agreement; NOW THEREFORE, for good and valuable consideration the receipt and sufficiency of which is hereby acknowledged and to induce the Banks to enter into the Restructuring Document, each Agreement Party agrees, for the benefit of each Guarantied Party, as follows: ARTICLE I. DEFINITIONS SECTION 1.1. Certain Terms. Capitalized terms used herein, unless otherwise defined herein, shall have the respective meanings assigned thereto in the Credit Agreement or the Conseco Guaranty Documents; provided that such definitions shall survive any termination of the Credit Agreement or any Conseco Guaranty Document. In addition, when used herein the following terms shall have the following meanings (such definitions to be equally applicable to the singular and plural forms thereof): "Agreement Party" means each of Obligor, Guarantor, Subordinated Lender and Subordinated Borrower. "Charges" has the meaning assigned to such term in the Credit Agreement. "Conseco Guaranty" has the meaning set forth in the Preamble. "Conseco Guaranty Documents" means the collective reference to the Conseco Guaranty, the Restructuring Document and any other agreement entered into by Obligor in connection therewith. "Credit Agreement" has the meaning set forth in the Preamble. 2 "Guarantied Obligations" has the meaning set forth in Section 2.1. "Guarantied Parties" has the meaning set forth in the Preamble. "Guarantor" means CIHC, Incorporated, in its capacity as guarantor of the Guarantied Obligations. "Indemnified Parties" has the meaning set forth in Section 5.1. "Obligations" means all debts, liabilities, obligations, covenants and duties for the payment of money owing by Obligor pursuant to any Conseco Guaranty Document, whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising. "Obligor" means Conseco, Inc., in its capacity as obligor in respect of the Obligations. "Reorganization" has the meaning set forth in Section 3.2(a). "Restructuring Document" has the meaning set forth in the first Recital. "Senior Creditors" means any holder or beneficiary of any Senior Debt, or any authorized representative thereof. "Senior Debt" means (a) all obligations of Guarantor under Article II, (b) all "Senior Debt" under and as defined in any other CIHC Guaranty, (c) all "Senior Debt" under and as defined in the Guaranty and Subordination Agreement entered into in connection with the Lehman Agreement and (d) all other "Senior Debt" (or comparable concept) under and as defined in any subordination provision or agreement relating to or entered into in connection with any Contingent Obligation of CIHC pursuant to Section 4.01(d)(i) or (d)(iv) of the Appendix. "Subordinated Borrower" means CIHC, Incorporated, in its capacity as obligor in respect of the Subordinated Debt. "Subordinated Debt" means the principal amount of any Indebtedness owing by Subordinated Borrower to Subordinated Lender from time to time outstanding and unpaid, together with accrued and unpaid interest thereon. "Subordinated Lender" means Conseco, Inc., in its capacity as holder of the Subordinated Debt. "Subrogation Rights" has the meaning set forth in Section 2.6. ARTICLE II. GUARANTY PROVISIONS SECTION 2.1. Guaranty. Guarantor hereby absolutely, unconditionally and irrevocably: (a) guaranties to the Guarantied Parties the full and punctual payment when due, whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise, and at 3 all times thereafter, of all Obligations (including all such amounts which would become due but for the operation of the automatic stay provisions under Section 362(a) of the United States Bankruptcy Code, 11 U.S.C. ss.362(a), and the operation of Sections 502(b) and 506(b) of the United States Bankruptcy Code, 11 U.S.C. ss.502(b) and ss.506(b)) (all such Obligations collectively called the "Guarantied Obligations"); and (b) indemnifies and holds harmless each Guarantied Party or any other holder of any Guarantied Obligations for any and all costs and expenses (including, without limitation, reasonable attorneys' fees and expenses) incurred by such Guarantied Party or such holder, as the case may be, in enforcing any rights under this Agreement; The guaranty set forth in this Article II constitutes a guaranty of payment when due and not of collection, and Guarantor specifically agrees that it shall not be necessary or required that any Guarantied Party or any other holder of any Guarantied Obligations exercise any right, assert any claim or demand or enforce any remedy whatsoever against Obligor or any other Person before the performance of, or as a condition to, the obligations of Guarantor hereunder. Anything herein or in any other Loan Document to the contrary notwithstanding, the maximum liability of Guarantor hereunder shall in no event exceed the amount which can be guaranteed by Guarantor under applicable federal and state laws relating to the insolvency of debtors. SECTION 2.2. Acceleration of Guaranty. Guarantor agrees that, in the event of the insolvency of Guarantor, or the inability or failure of Guarantor to pay debts as they become due, or an assignment by Guarantor for the benefit of creditors, or the commencement of any case or proceeding in respect of Obligor or Guarantor under any bankruptcy, insolvency or similar federal or state laws, and if such event shall occur at a time when any of the Guarantied Obligations may not then be due and payable, Guarantor will pay to the Banks forthwith the full amount which would be payable hereunder by Guarantor if all the Guarantied Obligations were then due and payable. SECTION 2.3. Guaranty Absolute, etc. This Agreement shall in all respects be a continuing, absolute, unconditional and irrevocable guaranty of payment, and shall remain in full force and effect until all Guarantied Obligations have been paid in full and all obligations of Guarantor hereunder shall have been paid in full. Guarantor guarantees that the Guarantied Obligations will be paid strictly in accordance with the terms of the Conseco Guaranty Documents and each other Loan Document under which they arise, regardless of any law, regulation or order now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of any Guarantied Party or any holder of any Guarantied Obligations. The liability of Guarantor under this Agreement shall be absolute, unconditional and irrevocable irrespective of: (a) any lack of validity, legality or enforceability of the Credit Agreement, any Conseco Guaranty Document or any other Loan Document; (b) the failure of any Guarantied Party: (i) to assert any claim or demand or to enforce any right or remedy against Obligor or any other Person under the provisions of the Credit Agreement, any Conseco Guaranty Document, any other Loan Document or otherwise; or (ii) to exercise any right or remedy against any other guarantor of, or collateral securing, any Guarantied Obligations; 4 (c) any change in the time, manner or place of payment of, or in any other term of, all or any of the Guarantied Obligations, or any other extension, compromise or renewal of any Guarantied Obligations; (d) any reduction, limitation, impairment or termination of the Guarantied Obligations for any reason, including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to (and Guarantor hereby waives any right to or claim of) any defense or setoff, counterclaim, recoupment or termination whatsoever by reason of the invalidity, illegality, nongenuineness, irregularity, compromise, unenforceability of, or any other event or occurrence affecting, the Guarantied Obligations; (e) any amendment to, rescission, waiver, or other modification of, or any consent to any departure from, any of the terms of the Credit Agreement, any Conseco Guaranty Document or any other Loan Document; (f) any addition, exchange, release, surrender or non-perfection of any collateral, or any amendment to or waiver or release or addition of, or consent to any departure from, any other guaranty held by any Guarantied Party or any other holder of the Guarantied Obligations; or (g) any other circumstance which might otherwise constitute a defense available to, or a legal or equitable discharge of, Obligor, any surety or any guarantor. SECTION 2.4. Reinstatement, etc. Guarantor agrees that this Agreement shall continue to be effective or be reinstated, as the case may be, if at any time any payment (in whole or in part) of any of the Guarantied Obligations is rescinded or must otherwise be restored by any Guarantied Party or any other holder of any Guarantied Obligations, upon the insolvency, bankruptcy or reorganization of Obligor, all as though such payment had not been made. SECTION 2.5. Waiver, etc. Guarantor hereby waives promptness, diligence, notice of acceptance and any other notice with respect to any of the Guarantied Obligations, and this Agreement and any requirement that the Agent, any other Guarantied Party or any other holder of Guarantied Obligations protect, secure, perfect or insure any security interest or Lien, or any property subject thereto, or exhaust any right or take any action against Obligor or any other Person (including any other guarantor) or entity or any collateral securing the Guarantied Obligations. SECTION 2.6. Waiver of Subrogation; Subordination. Guarantor hereby irrevocably waives with respect to Obligor, until the prior indefeasible payment in full in cash of all Guarantied Obligations, any claim or other rights which it may now or hereafter acquire against Obligor that arises from the existence, payment, performance or enforcement of Guarantor's obligations under this Article II, including any right of subrogation, reimbursement, exoneration, or indemnification, any right to participate in any claim or remedy of the Guarantied Parties against Obligor or any collateral which the Agent now has or hereafter acquires, whether or not such claim, remedy or right (all such claims, remedies and rights being collectively called "Subrogation Rights") arises in equity, or under contract, statute or common law, including the right to take or receive from Obligor, directly or indirectly, in cash or other property or by set-off or in any manner, payment or security on account of such claim or other rights. If any amount shall be paid to Guarantor in violation of the preceding sentence and the Guarantied Obligations shall not have been paid in cash, in full, such amount shall be deemed to have been paid to Guarantor for the benefit of, and held in trust for, the Guarantied Parties, and shall forthwith be paid to the Guarantied Parties to be credited and applied upon the Guarantied Obligations, whether matured or unmatured. Guarantor acknowledges that it will receive direct and indirect benefits from the 5 Restructuring Document and that the waiver set forth in this Section 2.6 is knowingly made in contemplation of such benefits. SECTION 2.7. Successors, Transferees and Assigns; Transfers of Guarantied Obligations, etc. This Agreement shall: (a) be binding upon Guarantor, and its successors, transferees and assigns; and (b) inure to the benefit of and be enforceable by the Agent and each other Guarantied Party. Without limiting the generality of clause (b), any Bank may assign or otherwise transfer (in whole or in part) any Guarantied Obligation held by it to any other Person upon the terms and conditions set forth in the Credit Agreement, and such other Person shall thereupon become vested with all rights and benefits in respect thereof granted to such Bank under any Loan Document (including this Agreement) or otherwise. SECTION 2.8. Payments Free and Clear of Taxes, etc. Guarantor hereby agrees that: (a) any and all payments made by Guarantor hereunder shall be made in accordance with Section 4.7 of the Credit Agreement free and clear of, and without deduction for, any and all Charges, to the same extent as if Guarantor were a "Borrower" thereunder; (b) Guarantor hereby indemnifies and holds harmless each Guarantied Party and each other holder of any Guarantied Obligation for the full amount of any Charges paid by such Guarantied Party or such holder, as the case may be, and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto; and (c) without prejudice to the survival of any other agreement of Guarantor hereunder, the agreements and obligations of Guarantor contained in this Section 2.8 shall survive the payment in full of the Guarantied Obligations. SECTION 2.9. Right of Offset. In addition to and not in limitation of all rights of offset that any Guarantied Party or any other holder of any Guarantied Obligation may have under applicable law or any other Loan Document, subject to the terms of the Credit Agreement, each Guarantied Party or other holder of any Guarantied Obligation shall, during the continuance of any Event of Default and whether or not such Guarantied Party or such holder has made any demand or whether or not Guarantor's obligations are matured, have the right to appropriate and apply to the payment of Guarantor's obligations hereunder all deposits (general or special, time or demand, provisional or final) then or thereafter held by, and other indebtedness or property then or thereafter owing to, such Guarantied Party or other holder, whether or not related to this Agreement or any transaction hereunder. ARTICLE III. SUBORDINATION SECTION 3.1. Payments on Subordinated Debt. Notwithstanding anything to the contrary in the terms or arrangements governing the Subordinated Debt, no payment or prepayment of principal of or interest on the Subordinated Debt may be made, directly or indirectly, at any time after (a) (i) any Guarantied Party has made a claim under the Conseco Guaranty in respect of the principal amount of any of the Loans under the Credit Agreement or (ii) Obligor's obligations under the Conseco Guaranty 6 shall have been accelerated (including, without limitation, pursuant to the provision in the Conseco Guaranty that is the equivalent of Section 2.2 of this Agreement) or (b) a Reorganization (including any proceeding in respect thereof) shall have been commenced. SECTION 3.2. Subordination. (a) Subject to Section 3.1, payment of the Subordinated Debt is and shall be expressly subordinate and junior in right of payment to the prior payment in full in cash of the Senior Debt to the extent and in the manner set forth herein, and the Subordinated Debt is hereby so subordinated as a claim against Subordinated Borrower or any of the assets of Subordinated Borrower, whether such claim be (i) in the event of any distribution of the assets of Subordinated Borrower upon any voluntary or involuntary dissolution, winding-up, total or partial liquidation or reorganization, or bankruptcy, insolvency, receivership or other statutory or common law proceedings or arrangements involving Subordinated Borrower or the readjustment of its liabilities or any assignment for the benefit of creditors or any marshaling of its assets or liabilities (collectively called a "Reorganization"), or (ii) other than in connection with a Reorganization, to the prior payment in full in cash of the Senior Debt. (b) If Subordinated Lender shall receive any payment in violation of the terms hereof, it shall hold such payment in trust for the benefit of the Senior Creditors and forthwith pay it over to the Senior Creditors, ratably according to the aggregate amounts remaining unpaid on account of the Senior Debt, for application to and payment of the Senior Debt. (c) In the event of any Reorganization relative to Subordinated Borrower or its properties, then all of the Senior Debt shall first be paid in full in cash before any payment is made upon the Subordinated Debt, and in any such proceedings any payment or distribution of any kind or character, whether in cash or property or securities, which may be payable or deliverable in respect of the Subordinated Debt shall be paid or delivered directly to the Senior Creditors, ratably according to the aggregate amounts remaining unpaid on account of the Senior Debt, for application in payment of the Senior Debt, unless and until all the Senior Debt is paid in full in cash, and Subordinated Lender hereby irrevocably authorizes the Agent, as attorney-in-fact for Subordinated Lender, to vote any claim or proof of claim in such proceedings in respect of the Subordinated Debt, to file or prove any claim in such proceedings in respect of the Subordinated Debt, to demand, sue for, collect and receive any such payment or distribution, to apply such payment or distribution to the payment of the Senior Debt, and to take such other action (including acceptance or rejection of any plan of Reorganization) in the name of Subordinated Lender or of the relevant Senior Creditors as the Agent may deem necessary or advisable for the enforcement of the provisions hereof. Subordinated Lender shall execute and deliver such other and further powers of attorney, assignments, proofs of claim or other instruments, and take such other actions, as may be requested by the Agent in order to enable the Agent to accomplish any of the foregoing, but only with respect to Subordinated Lender's capacity as a holder hereof and not in respect of any other relationship between Subordinated Lender and Subordinated Borrower. Consistent with, but not in limitation of, the foregoing, in such an event, the Agent shall be deemed to be the assigned (and thus the holder) of such claims or proof of claims and shall have the right to assert and vote such claims in any Reorganization, including, without limitation, through the filing of any proof of claim therein and the casting of any ballots to accept or reject any plan of reorganization proposed by, for, or with respect to any such Reorganization. (d) In the event that, notwithstanding the foregoing, upon any such Reorganization, any payment or distribution of the assets of Subordinated Borrower of any kind or character, whether in cash, property or securities, shall be received by Subordinated Lender in respect of the Subordinated Debt before all Senior Debt is paid in full in cash, such payment or distribution shall be held in trust for the Senior Creditors and shall forthwith be paid over to the Senior Creditors, ratably according to the 7 aggregate amounts remaining unpaid on account of the Senior Debt, for application to the payment of the Senior Debt until all Senior Debt shall have been paid in full in cash. (e) Subordinated Lender agrees that, until the Senior Debt has been paid in full in cash, except as expressly provided by Section 3.1, it will not take, demand or receive, or take any action to accelerate or collect, any payment of all or any part of the Subordinated Debt. (f) The Senior Creditors, or any of them, may, at any time and from time to time, without the consent of or notice to Subordinated Lender, without incurring any responsibility to Subordinated Lender, and without impairing or releasing any of the rights of any Senior Creditor, or any of the obligations of Subordinated Lender: (i) change the amount or terms of or renew or extend any Senior Debt or enter into or amend in any manner any agreement relating to any Senior Debt; (ii) sell, exchange, release or otherwise deal with any property at any time pledged or mortgaged to secure any Senior Debt; (iii) release anyone liable in any manner for the payment or collection of any Senior Debt; and (iv) exercise or refrain from exercising any rights against Subordinated Borrower and others (including Subordinated Lender). (g) Subordinated Lender hereby waives notice of or proof of reliance by any Senior Creditor upon the provisions hereof, and the Senior Debt shall conclusively be deemed to have been created, contracted, incurred or maintained in reliance upon the provisions hereof. (h) Each Senior Creditor shall be a third-party beneficiary of the provisions of this Section 3.2. ARTICLE IV. REPRESENTATIONS AND WARRANTIES Each Agreement Party represents and warrants to each Guarantied Party that: SECTION 4.1. Authorization. Such Agreement Party (a) has the power to execute, deliver and perform this Agreement and (b) has taken all necessary action to authorize the execution, delivery and performance by it of this Agreement. SECTION 4.2. No Conflict. The execution, delivery and performance by such Agreement Party of this Agreement does not and will not (a) contravene or conflict with any provision of any law, statute, rule or regulation, (b) contravene or conflict with, result in any breach of, or constitute a default under, any material agreement or instrument binding on such Agreement Party or any of its Subsidiaries (including, without limitation, any writ, judgment, injunction or other similar court order), (c) result in the creation or imposition of or the obligation to create or impose any Lien upon any of the property or assets of such Agreement Party or any of its Subsidiaries or (d) contravene or conflict with any provision of the articles of incorporation or bylaws of such Agreement Party. 8 SECTION 4.3. Binding Effect. This Agreement constitutes the legal, valid and binding obligations of such Agreement Party, enforceable against such Agreement Party in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, or similar laws affecting the enforcement of creditors' rights generally or by equitable principles relating to enforceability. ARTICLE V. MISCELLANEOUS SECTION 5.1. Indemnity. Each Agreement Party agrees to indemnify the Agent, each Bank, their Affiliates and their respective directors, officers, employees, persons controlling or controlled by any of them or their respective agents, consultants, attorneys and advisors (the "Indemnified Parties") and hold each Indemnified Party harmless from and against any and all liabilities, losses, claims, damages, costs and expenses of any kind to which any of the Indemnified Parties may become subject, whether directly or indirectly (including, without limitation, the reasonable fees and disbursements of counsel for any Indemnified Party), relating to or arising out of this Agreement; provided, that no Indemnified Party shall have the right to be indemnified hereunder for its own gross negligence or willful misconduct as determined by a court of competent jurisdiction. All obligations of each Agreement Party provided for in this Section 5.1 shall survive termination of the Credit Agreement, any Conseco Guaranty Document and this Agreement. SECTION 5.2. Notices. All notices, requests and other communications to any party hereunder shall be in writing (including facsimile or similar writing) and shall be given to such party at its address or facsimile number set forth on the signature pages hereof or such other address or facsimile number as such party may hereafter specify for the purpose by written notice to the Agent. Each such notice, request or other communication shall be effective (a) if given by facsimile, when such facsimile is transmitted to the facsimile number specified in this Section 5.2, (b) if given by mail, seventy-two (72) hours after such communication is deposited in the mails with first class postage prepaid, addressed as aforesaid or (c) if given by any other means, when delivered at the address specified in this Section 5.2. SECTION 5.3. Successors and Assigns. This Agreement, and the terms, covenants and conditions hereof, shall be binding upon and inure to the benefit of the parties hereto, and their respective successors and assigns, except no Agreement Party shall be permitted to assign this Agreement nor any interest or obligation herein without the consent of the Agent. SECTION 5.4. SUBMISSION TO JURISDICTION, ETC. EACH AGREEMENT PARTY AND THE AGENT HEREBY IRREVOCABLY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE SUPREME COURT OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK OVER ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND EACH AGREEMENT PARTY AND THE AGENT HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE OR TO THE EXTENT PERMITTED BY LAW, FEDERAL COURT. EACH AGREEMENT PARTY AND THE AGENT HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE IN ANY ACTION OR PROCEEDING (WHETHER BROUGHT BY ANY AGREEMENT PARTY OR ANY OF THEIR RESPECTIVE SUBSIDIARIES, THE AGENT, ANY BANK OR OTHERWISE) IN ANY COURT HEREIN 9 ABOVE SPECIFIED IN THIS SECTION 5.4 AS WELL AS ANY RIGHT IT MAY NOW OR HEREAFTER HAVE TO REMOVE ANY SUCH ACTION OR PROCEEDING, ONCE COMMENCED, TO ANOTHER COURT ON THE GROUNDS OF FORUM NON CONVENIENS OR OTHERWISE. EACH AGREEMENT PARTY AND THE AGENT 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. SECTION 5.5. Amendments; Release. Notwithstanding anything to the contrary contained in the Credit Agreement, the provisions of this Agreement may from time to time be amended, modified or waived, if such amendment, modification or waiver is in writing and consented to by each affected Agreement Party and the Agent (with the consent of the Required Banks), and then any such amendment, modification, waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided that, except as set forth in Section 5.14 of this Agreement, no such amendment, modification or waiver which would permit the release or termination of all or a substantial portion of Guarantor's obligations under this Agreement shall be effective without the consent of each Bank. SECTION 5.6. Section Headings. The section headings in this Agreement are inserted for convenience of reference and shall not be considered a part of this Agreement or used in its interpretation. SECTION 5.7. Acknowledgments. No action of the Agent permitted hereunder shall in any way affect or impair the rights of the Agent and the obligations of each Agreement Party under this Agreement. Each Agreement Party hereby acknowledges that there are no conditions to the effectiveness of this Agreement. SECTION 5.8. Obligations Not Limited. All obligations of the Guarantor and rights of the Guarantied Parties in respect of the Guarantied Obligations expressed in this Agreement shall be in addition to and not in limitation of those provided in applicable law or in any other written instrument or agreement relating to any of the Guarantied Obligations. SECTION 5.9. GOVERNING LAW. THIS AGREEMENT SHALL BE A CONTRACT MADE UNDER AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. SECTION 5.10. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall for all purposes be deemed an original, but all such counterparts shall constitute but one and the same agreement. Each Agreement Party hereby acknowledges receipt of a true, correct and complete counterpart of this Agreement. SECTION 5.11. Agent. The Agent acts herein as agent for itself, the Banks and any and all future holders of the Guarantied Obligations. SECTION 5.12. WAIVER OF TRIAL BY JURY. EACH AGREEMENT PARTY AND THE AGENT HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM CONCERNING ANY RIGHTS UNDER THIS AGREEMENT OR ANY OTHER DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH, OR ARISING FROM ANY BANKING RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT AND AGREES 10 THAT ANY SUCH ACTION, PROCEEDING OR COUNTERCLAIM SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY; THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE GUARANTIED PARTIES ENTERING INTO THE RESTRUCTURING DOCUMENT. SECTION 5.13. No Limitation on Remedies. No failure to exercise and no delay in exercising, on the part of the Agent or any other Guarantied Party, any right, remedy, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law. SECTION 5.14. Release of This Agreement. This Agreement shall be terminated and Guarantor shall be released from all of its obligations hereunder on the first date after the Near-Term Facilities Termination Date on which Conseco, Inc. has Investment Grade Ratings Status, as long as no Default or Event of Default shall have occurred and be continuing on such date. 11 IN WITNESS WHEREOF, each Agreement Party has caused this Guaranty and Subordination Agreement to be duly executed and delivered by its officer thereunto duly authorized as of the date first above written. CIHC, INCORPORATED, as Guarantor and Subordinated Borrower By: /s/ David A. Hill ---------------------------------- Name: David A. Hill Address for Notices: 11825 North Pennsylvania Street Carmel, Indiana 46032 Attention: Telephone: 317-817-5031 Fax: 317-817-6327 CONSECO, INC., as Obligor and Subordinated Lender By: /s/ Thomas M. Hagerty ---------------------------------- Address for Notices: 11825 North Pennsylvania Street Carmel, Indiana 46032 Attention: Telephone: 317-817-5031 Fax: 317-817-6327 EX-4 11 0011.txt EXHIBIT 4.10 Exhibit 4.10 ================================================================================ GUARANTY AND SUBORDINATION AGREEMENT Dated as of September 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, N.A. (formerly known as Bank of America National Trust and Savings Association), as Agent under the 364-Day Credit Agreement dated as of September 25, 1998 among Conseco, Inc., Bank of America, N.A., as Agent, First Union National Bank and The Chase Manhattan Bank, as Syndication Agents, Morgan Guaranty Trust Company of New York as Documentation Agent and certain financial institutions, as amended ================================================================================ GUARANTY AND SUBORDINATION AGREEMENT This Guaranty and Subordination Agreement (this "Agreement") is entered into as of September 22, 2000 by CIHC, INCORPORATED and CONSECO, INC. in favor of BANK OF AMERICA, N.A., as agent (in such capacity, the "Agent") for the financial institutions (the "Banks" and together with the Agent, collectively, the "Guarantied Parties") who are or from time to time may become party to the 364-Day Credit Agreement, dated as of September 25, 1998, as amended (as the same may be amended, supplemented, restated or otherwise modified from time to time, the "Credit Agreement"), among Conseco, Inc., the Banks, First Union National Bank and The Chase Manhattan Bank, as Syndication Agents, Morgan Guaranty Trust Company of New York as Documentation Agent and the Agent. Unless otherwise defined herein, capitalized terms used herein shall have the meanings assigned to such terms pursuant to Article I hereof. W I T N E S S E T H: ------------------- WHEREAS, pursuant to a Second Amendment to 364-Day Credit Agreement and Amendment and Restatement of the $50,000,000 Extendible Commercial Notes of even date herewith (the "Restructuring Document") with respect to the Credit Agreement, the Banks have agreed, among other things, to extend the maturity date of the Loans made pursuant to the Credit Agreement; WHEREAS, the Agreement Parties will derive substantial direct and indirect benefit from the Restructuring Document; and WHEREAS, it is a condition precedent to the obligation of the Banks to enter into the Restructuring Document that the Agreement Parties shall have executed and delivered this Agreement; NOW THEREFORE, for good and valuable consideration the receipt and sufficiency of which is hereby acknowledged and to induce the Banks to enter into the Restructuring Document, each Agreement Party agrees, for the benefit of each Guarantied Party, as follows: ARTICLE I. DEFINITIONS SECTION 1.1. Certain Terms. Capitalized terms used herein, unless otherwise defined herein, shall have the respective meanings assigned thereto in the Credit Agreement; provided that such definitions shall survive any termination of the Credit Agreement. In addition, when used herein the following terms shall have the following meanings (such definitions to be equally applicable to the singular and plural forms thereof): 1 "Agreement Party" means each of Obligor, Guarantor, Subordinated Lender and Subordinated Borrower. "Charges" the collective reference to Taxes, Other Taxes and Further Taxes (as each such term is defined in the Credit Agreement). "Credit Agreement" has the meaning set forth in the Preamble. "Guarantied Obligations" has the meaning set forth in Section 2.1. "Guarantied Parties" has the meaning set forth in the Preamble. "Guarantor" means CIHC, Incorporated, in its capacity as guarantor of the Guarantied Obligations. "Indemnified Parties" has the meaning set forth in Section 5.1. "Obligations" has the meaning assigned to such term in the Credit Agreement, and shall include, in any event, interest accruing at the then applicable rate provided in the Credit Agreement after the maturity of the Loans and interest accruing at the then applicable rate provided in the Credit Agreement after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to Obligor, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding. "Obligor" means Conseco, Inc., in its capacity as obligor in respect of the Obligations. "Reorganization" has the meaning set forth in Section 3.2(a). "Restructuring Document" has the meaning set forth in the first recital. "Senior Creditors" means any holder or beneficiary of any Senior Debt, or any authorized representative thereof. "Senior Debt" means (a) all obligations of Guarantor under Article II, (b) all "Senior Debt" under and as defined in any other CIHC Guaranty, (c) all "Senior Debt" under and as defined in the Guaranty and Subordination Agreement entered into in connection with the Lehman Agreement and (d) all other "Senior Debt" (or comparable concept) under and as defined in any subordination provision or agreement relating to or entered into in connection with any Contingent Obligation of CIHC pursuant to Section 4.01(d)(i) or (d)(iv) of the Appendix. "Subordinated Borrower" means CIHC, Incorporated, in its capacity as obligor in respect of the Subordinated Debt. 2 "Subordinated Debt" means the principal amount of any Indebtedness owing by Subordinated Borrower to Subordinated Lender from time to time outstanding and unpaid, together with accrued and unpaid interest thereon. "Subordinated Lender" means Conseco, Inc., in its capacity as holder of the Subordinated Debt. "Subrogation Rights" has the meaning set forth in Section 2.6. ARTICLE II. GUARANTY PROVISIONS SECTION 2.1. Guaranty. Guarantor hereby absolutely, unconditionally and irrevocably: (a) guaranties to the Guarantied Parties the full and punctual payment when due, whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise, and at all times thereafter, of all Obligations (including all such amounts which would become due but for the operation of the automatic stay provisions under Section 362(a) of the United States Bankruptcy Code, 11 U.S.C. ss.362(a), and the operation of Sections 502(b) and 506(b) of the United States Bankruptcy Code, 11 U.S.C. ss.502(b) and ss.506(b)) (all such Obligations collectively called the "Guarantied Obligations"); and (b) indemnifies and holds harmless each Guarantied Party or any other holder of any Guarantied Obligations for any and all costs and expenses (including, without limitation, reasonable attorneys' fees and expenses) incurred by such Guarantied Party or such holder, as the case may be, in enforcing any rights under this Agreement; The guaranty set forth in this Article II constitutes a guaranty of payment when due and not of collection, and Guarantor specifically agrees that it shall not be necessary or required that any Guarantied Party or any other holder of any Guarantied Obligations exercise any right, assert any claim or demand or enforce any remedy whatsoever against Obligor or any other Person before the performance of, or as a condition to, the obligations of Guarantor hereunder. Anything herein or in any other Loan Document to the contrary notwithstanding, the maximum liability of Guarantor hereunder shall in no event exceed the amount which can be guaranteed by Guarantor under applicable federal and state laws relating to the insolvency of debtors. SECTION 2.2. Acceleration of Guaranty. Guarantor agrees that, in the event of the insolvency of Guarantor, or the inability or failure of Guarantor to pay debts as they become due, or an assignment by Guarantor for the benefit of creditors, or the commencement of any case or proceeding in respect of Obligor or Guarantor under any bankruptcy, insolvency or 3 similar federal or state laws, and if such event shall occur at a time when any of the Guarantied Obligations may not then be due and payable, Guarantor will pay to the Banks forthwith the full amount which would be payable hereunder by Guarantor if all the Guarantied Obligations were then due and payable. SECTION 2.3. Guaranty Absolute, etc. This Agreement shall in all respects be a continuing, absolute, unconditional and irrevocable guaranty of payment, and shall remain in full force and effect until all Guarantied Obligations have been paid in full and all obligations of Guarantor hereunder shall have been paid in full. Guarantor guarantees that the Guarantied Obligations will be paid strictly in accordance with the terms of the Credit Agreement and each other Loan Document under which they arise, regardless of any law, regulation or order now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of any Guarantied Party or any holder of any Guarantied Obligations. The liability of Guarantor under this Agreement shall be absolute, unconditional and irrevocable irrespective of: (a) any lack of validity, legality or enforceability of the Credit Agreement or any other Loan Document; (b) the failure of any Guarantied Party: (i) to assert any claim or demand or to enforce any right or remedy against Obligor or any other Person under the provisions of the Credit Agreement, any other Loan Document or otherwise; or (ii) to exercise any right or remedy against any other guarantor of, or collateral securing, any Guarantied Obligations; (c) any change in the time, manner or place of payment of, or in any other term of, all or any of the Guarantied Obligations, or any other extension, compromise or renewal of any Guarantied Obligations; (d) any reduction, limitation, impairment or termination of the Guarantied Obligations for any reason, including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to (and Guarantor hereby waives any right to or claim of) any defense or setoff, counterclaim, recoupment or termination whatsoever by reason of the invalidity, illegality, nongenuineness, irregularity, compromise, unenforceability of, or any other event or occurrence affecting, the Guarantied Obligations; (e) any amendment to, rescission, waiver, or other modification of, or any consent to any departure from, any of the terms of the Credit Agreement or any other Loan Document; 4 (f) any addition, exchange, release, surrender or non-perfection of any collateral, or any amendment to or waiver or release or addition of, or consent to any departure from, any other guaranty held by any Guarantied Party or any other holder of the Guarantied Obligations; or (g) any other circumstance which might otherwise constitute a defense available to, or a legal or equitable discharge of, Obligor, any surety or any guarantor. SECTION 2.4. Reinstatement, etc. Guarantor agrees that this Agreement shall continue to be effective or be reinstated, as the case may be, if at any time any payment (in whole or in part) of any of the Guarantied Obligations is rescinded or must otherwise be restored by any Guarantied Party or any other holder of any Guarantied Obligations, upon the insolvency, bankruptcy or reorganization of Obligor, all as though such payment had not been made. SECTION 2.5. Waiver, etc. Guarantor hereby waives promptness, diligence, notice of acceptance and any other notice with respect to any of the Guarantied Obligations, and this Agreement and any requirement that the Agent, any other Guarantied Party or any other holder of Guarantied Obligations protect, secure, perfect or insure any security interest or Lien, or any property subject thereto, or exhaust any right or take any action against Obligor or any other Person (including any other guarantor) or entity or any collateral securing the Guarantied Obligations. SECTION 2.6. Waiver of Subrogation; Subordination. Guarantor hereby irrevocably waives with respect to Obligor, until the prior indefeasible payment in full in cash of all Guarantied Obligations, any claim or other rights which it may now or hereafter acquire against Obligor that arises from the existence, payment, performance or enforcement of Guarantor's obligations under this Article II, including any right of subrogation, reimbursement, exoneration, or indemnification, any right to participate in any claim or remedy of the Guarantied Parties against Obligor or any collateral which the Agent now has or hereafter acquires, whether or not such claim, remedy or right (all such claims, remedies and rights being collectively called "Subrogation Rights") arises in equity, or under contract, statute or common law, including the right to take or receive from Obligor, directly or indirectly, in cash or other property or by set-off or in any manner, payment or security on account of such claim or other rights. If any amount shall be paid to Guarantor in violation of the preceding sentence and the Guarantied Obligations shall not have been paid in cash, in full, such amount shall be deemed to have been paid to Guarantor for the benefit of, and held in trust for, the Guarantied Parties, and shall forthwith be paid to the Guarantied Parties to be credited and applied upon the Guarantied Obligations, whether matured or unmatured. Guarantor acknowledges that it will receive direct and indirect benefits from the Restructuring Document and that the waiver set forth in this Section 2.6 is knowingly made in contemplation of such benefits. SECTION 2.7. Successors, Transferees and Assigns; Transfers of Guarantied Obligations, etc. This Agreement shall: 5 (a) be binding upon Guarantor, and its successors, transferees and assigns; and (b) inure to the benefit of and be enforceable by the Agent and each other Guarantied Party. Without limiting the generality of clause (b), any Bank may assign or otherwise transfer (in whole or in part) any Guarantied Obligation held by it to any other Person upon the terms and conditions set forth in the Credit Agreement, and such other Person shall thereupon become vested with all rights and benefits in respect thereof granted to such Bank under any Loan Document (including this Agreement) or otherwise. SECTION 2.8. Payments Free and Clear of Taxes, etc. Guarantor hereby agrees that: (a) any and all payments made by Guarantor hereunder shall be made in accordance with Article III of the Credit Agreement free and clear of, and without deduction for, any and all Charges, to the same extent as if Guarantor were the Obligor thereunder; (b) Guarantor hereby indemnifies and holds harmless each Guarantied Party and each other holder of any Guarantied Obligation for the full amount of any Charges paid by such Guarantied Party or such holder, as the case may be, and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto; and (c) without prejudice to the survival of any other agreement of Guarantor hereunder, the agreements and obligations of Guarantor contained in this Section 2.8 shall survive the payment in full of the Guarantied Obligations. SECTION 2.9. Right of Offset. In addition to and not in limitation of all rights of offset that any Guarantied Party or any other holder of any Guarantied Obligation may have under applicable law or any other Loan Document, subject to the terms of the Credit Agreement, each Guarantied Party or other holder of any Guarantied Obligation shall, during the continuance of any Event of Default and whether or not such Guarantied Party or such holder has made any demand or whether or not Guarantor's obligations are matured, have the right to appropriate and apply to the payment of Guarantor's obligations hereunder all deposits (general or special, time or demand, provisional or final) then or thereafter held by, and other indebtedness or property then or thereafter owing to, such Guarantied Party or other holder, whether or not related to this Agreement or any transaction hereunder. 6 ARTICLE III. SUBORDINATION SECTION 3.1. Payments on Subordinated Debt. Notwithstanding anything to the contrary in the terms or arrangements governing the Subordinated Debt, no payment or prepayment of principal of or interest on the Subordinated Debt may be made, directly or indirectly, at any time after (a) the acceleration of the stated maturity of the Loans under the Credit Agreement (including, without limitation, pursuant to automatic acceleration provisions) or (b) a Reorganization (including any proceeding in respect thereof) shall have been commenced. SECTION 3.2. Subordination. (a) Subject to Section 3.1, payment of the Subordinated Debt is and shall be expressly subordinate and junior in right of payment to the prior payment in full in cash of the Senior Debt to the extent and in the manner set forth herein, and the Subordinated Debt is hereby so subordinated as a claim against Subordinated Borrower or any of the assets of Subordinated Borrower, whether such claim be (i) in the event of any distribution of the assets of Subordinated Borrower upon any voluntary or involuntary dissolution, winding-up, total or partial liquidation or reorganization, or bankruptcy, insolvency, receivership or other statutory or common law proceedings or arrangements involving Subordinated Borrower or the readjustment of its liabilities or any assignment for the benefit of creditors or any marshaling of its assets or liabilities (collectively called a "Reorganization"), or (ii) other than in connection with a Reorganization, to the prior payment in full in cash of the Senior Debt. (b) If Subordinated Lender shall receive any payment in violation of the terms hereof, it shall hold such payment in trust for the benefit of the Senior Creditors and forthwith pay it over to the Senior Creditors, ratably according to the aggregate amounts remaining unpaid on account of the Senior Debt, for application to and payment of the Senior Debt. (c) In the event of any Reorganization relative to Subordinated Borrower or its properties, then all of the Senior Debt shall first be paid in full in cash before any payment is made upon the Subordinated Debt, and in any such proceedings any payment or distribution of any kind or character, whether in cash or property or securities, which may be payable or deliverable in respect of the Subordinated Debt shall be paid or delivered directly to the Senior Creditors, ratably according to the aggregate amounts remaining unpaid on account of the Senior Debt, for application in payment of the Senior Debt, unless and until all the Senior Debt is paid in full in cash, and Subordinated Lender hereby irrevocably authorizes the Agent, as attorney-in-fact for Subordinated Lender, to vote any claim or proof of claim in such proceedings in respect of the Subordinated Debt, to file or prove any claim in such proceedings in respect of the Subordinated Debt, to demand, sue for, collect and receive any such payment or distribution, to apply such payment or distribution to the payment of the Senior Debt, and to take such other action (including acceptance or rejection of any plan of Reorganization) in the name of Subordinated Lender or of the relevant Senior Creditors as the Agent may deem necessary or advisable for the enforcement of the provisions hereof. Subordinated Lender shall execute and deliver such other and further powers of attorney, assignments, proofs of claim or other instruments, and take such other actions, as may be requested by the Agent in order to enable the Agent to accomplish any of the foregoing, but only with respect to Subordinated Lender's capacity as a holder hereof and not in respect of any other relationship between Subordinated Lender and Subordinated Borrower. Consistent with, but not in limitation of, the foregoing, in such an event, the Agent shall be deemed to be the assigned (and 7 thus the holder) of such claims or proof of claims and shall have the right to assert and vote such claims in any Reorganization, including, without limitation, through the filing of any proof of claim therein and the casting of any ballots to accept or reject any plan of reorganization proposed by, for, or with respect to any such Reorganization. (d) In the event that, notwithstanding the foregoing, upon any such Reorganization, any payment or distribution of the assets of Subordinated Borrower of any kind or character, whether in cash, property or securities, shall be received by Subordinated Lender in respect of the Subordinated Debt before all Senior Debt is paid in full in cash, such payment or distribution shall be held in trust for the Senior Creditors and shall forthwith be paid over to the Senior Creditors, ratably according to the aggregate amounts remaining unpaid on account of the Senior Debt, for application to the payment of the Senior Debt until all Senior Debt shall have been paid in full in cash. (e) Subordinated Lender agrees that, until the Senior Debt has been paid in full in cash, except as expressly provided by Section 3.1, it will not take, demand or receive, or take any action to accelerate or collect, any payment of all or any part of the Subordinated Debt. (f) The Senior Creditors, or any of them, may, at any time and from time to time, without the consent of or notice to Subordinated Lender, without incurring any responsibility to Subordinated Lender, and without impairing or releasing any of the rights of any Senior Creditor, or any of the obligations of Subordinated Lender: (i) change the amount or terms of or renew or extend any Senior Debt or enter into or amend in any manner any agreement relating to any Senior Debt; (ii) sell, exchange, release or otherwise deal with any property at any time pledged or mortgaged to secure any Senior Debt; (iii) release anyone liable in any manner for the payment or collection of any Senior Debt; and (iv) exercise or refrain from exercising any rights against Subordinated Borrower and others (including Subordinated Lender). (g) Subordinated Lender hereby waives notice of or proof of reliance by any Senior Creditor upon the provisions hereof, and the Senior Debt shall conclusively be deemed to have been created, contracted, incurred or maintained in reliance upon the provisions hereof. (h) Each Senior Creditor shall be a third-party beneficiary of the provisions of this Section 3.2. ARTICLE IV. REPRESENTATIONS AND WARRANTIES Each Agreement Party represents and warrants to each Guarantied Party that: 8 SECTION 4.1. Authorization. Such Agreement Party (a) has the power to execute, deliver and perform this Agreement and (b) has taken all necessary action to authorize the execution, delivery and performance by it of this Agreement. SECTION 4.2. No Conflict. The execution, delivery and performance by such Agreement Party of this Agreement does not and will not (a) contravene or conflict with any provision of any law, statute, rule or regulation, (b) contravene or conflict with, result in any breach of, or constitute a default under, any material agreement or instrument binding on such Agreement Party or any of its Subsidiaries (including, without limitation, any writ, judgment, injunction or other similar court order), (c) result in the creation or imposition of or the obligation to create or impose any Lien upon any of the property or assets of such Agreement Party or any of its Subsidiaries or (d) contravene or conflict with any provision of the articles of incorporation or bylaws of such Agreement Party. SECTION 4.3. Binding Effect. This Agreement constitutes the legal, valid and binding obligations of such Agreement Party, enforceable against such Agreement Party in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, or similar laws affecting the enforcement of creditors' rights generally or by equitable principles relating to enforceability. SECTION 4.4. Solvent. After giving effect to this Agreement, the Guarantor and its Subsidiaries, taken as a whole, are Solvent. As used in this Section 4.4, "Solvent" shall mean, with respect to any Person, (a) the fair value of the property of such Person is greater than the amount of such Person's liabilities (including disputed, contingent and unliquidated liabilities) as such value is established and liabilities evaluated for purposes of Section 101(31) of the Bankruptcy Code and, in the alternative, for purposes of the Uniform Fraudulent Transfer Act or Uniform Fraudulent Conveyance Act; (b) such Person is able to realize upon its property and pay its debts and other liabilities (including disputed, contingent and unliquidated liabilities) as they mature in the normal course of business; (c) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person's ability to pay as such debts and liabilities mature; and (d) such Person is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which such Person's property would constitute unreasonably small capital. 9 ARTICLE V. MISCELLANEOUS SECTION 5.1. Indemnity. Each Agreement Party agrees to indemnify the Agent, each Bank, their Affiliates and their respective directors, officers, employees, persons controlling or controlled by any of them or their respective agents, consultants, attorneys and advisors (the "Indemnified Parties") and hold each Indemnified Party harmless from and against any and all liabilities, losses, claims, damages, costs and expenses of any kind to which any of the Indemnified Parties may become subject, whether directly or indirectly (including, without limitation, the reasonable fees and disbursements of counsel for any Indemnified Party), relating to or arising out of this Agreement; provided, that no Indemnified Party shall have the right to be indemnified hereunder for its own gross negligence or willful misconduct as determined by a court of competent jurisdiction. All obligations of each Agreement Party provided for in this Section 5.1 shall survive termination of the Credit Agreement and this Agreement. SECTION 5.2. Notices. All notices, requests and other communications to any party hereunder shall be in writing (including facsimile or similar writing) and shall be given to such party at its address or facsimile number set forth on the signature pages hereof or such other address or facsimile number as such party may hereafter specify for the purpose by written notice to the Agent. Each such notice, request or other communication shall be effective (a) if given by facsimile, when such facsimile is transmitted to the facsimile number specified in this Section 5.2, (b) if given by mail, seventy-two (72) hours after such communication is deposited in the mails with first class postage prepaid, addressed as aforesaid or (c) if given by any other means, when delivered at the address specified in this Section 5.2. SECTION 5.3. Successors and Assigns. This Agreement, and the terms, covenants and conditions hereof, shall be binding upon and inure to the benefit of the parties hereto, and their respective successors and assigns, except no Agreement Party shall be permitted to assign this Agreement nor any interest or obligation herein without the consent of the Agent. SECTION 5.4. SUBMISSION TO JURISDICTION, ETC. EACH AGREEMENT PARTY AND THE AGENT HEREBY IRREVOCABLY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE SUPREME COURT OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK OVER ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND EACH AGREEMENT PARTY AND THE AGENT HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE OR TO THE EXTENT PERMITTED BY LAW, FEDERAL COURT. EACH AGREEMENT PARTY AND THE AGENT HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION IT MAY NOW 10 OR HEREAFTER HAVE TO THE LAYING OF VENUE IN ANY ACTION OR PROCEEDING (WHETHER BROUGHT BY ANY AGREEMENT PARTY OR ANY OF THEIR RESPECTIVE SUBSIDIARIES, THE AGENT, ANY BANK OR OTHERWISE) IN ANY COURT HEREIN ABOVE SPECIFIED IN THIS SECTION 5.4 AS WELL AS ANY RIGHT IT MAY NOW OR HEREAFTER HAVE TO REMOVE ANY SUCH ACTION OR PROCEEDING, ONCE COMMENCED, TO ANOTHER COURT ON THE GROUNDS OF FORUM NON CONVENIENS OR OTHERWISE. EACH AGREEMENT PARTY AND THE AGENT 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. SECTION 5.5. Amendments; Release. Notwithstanding anything to the contrary contained in the Credit Agreement, the provisions of this Agreement may from time to time be amended, modified or waived, if such amendment, modification or waiver is in writing and consented to by each affected Agreement Party and the Agent (with the consent of the Required Banks), and then any such amendment, modification, waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided that, except as set forth in Section 5.14 of this Agreement, no such amendment, modification or waiver which would permit the release or termination of all or a substantial portion of Guarantor's obligations under this Agreement shall be effective without the consent of each Bank. SECTION 5.6. Section Headings. The section headings in this Agreement are inserted for convenience of reference and shall not be considered a part of this Agreement or used in its interpretation. SECTION 5.7. Acknowledgments. No action of the Agent permitted hereunder shall in any way affect or impair the rights of the Agent and the obligations of each Agreement Party under this Agreement. Each Agreement Party hereby acknowledges that there are no conditions to the effectiveness of this Agreement. SECTION 5.8. Obligations Not Limited. All obligations of the Guarantor and rights of the Guarantied Parties in respect of the Guarantied Obligations expressed in this Agreement shall be in addition to and not in limitation of those provided in applicable law or in any other written instrument or agreement relating to any of the Guarantied Obligations. SECTION 5.9. GOVERNING LAW. THIS AGREEMENT SHALL BE A CONTRACT MADE UNDER AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. SECTION 5.10. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall for all purposes be deemed an original, but all such counterparts shall constitute but one and the same agreement. Each Agreement Party hereby acknowledges receipt of a true, correct and complete counterpart of this Agreement. 11 SECTION 5.11. Agent. The Agent acts herein as agent for itself, the Banks and any and all future holders of the Guarantied Obligations. SECTION 5.12. WAIVER OF TRIAL BY JURY. EACH AGREEMENT PARTY AND THE AGENT HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM CONCERNING ANY RIGHTS UNDER THIS AGREEMENT OR ANY OTHER DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH, OR ARISING FROM ANY BANKING RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT AND AGREES THAT ANY SUCH ACTION, PROCEEDING OR COUNTERCLAIM SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY; THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE GUARANTIED PARTIES ENTERING INTO THE RESTRUCTURING DOCUMENT. SECTION 5.13. No Limitation on Remedies. No failure to exercise and no delay in exercising, on the part of the Agent or any other Guarantied Party, any right, remedy, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law. 12 IN WITNESS WHEREOF, each Agreement Party has caused this Guaranty and Subordination Agreement to be duly executed and delivered by its officer thereunto duly authorized as of the date first above written. CIHC, INCORPORATED, as Guarantor and Subordinated Borrower By: /s/ David A. Hill ---------------------------------- Name: David A. Hill Address for Notices: 11825 North Pennsylvania Street Carmel, Indiana 46032 Attention: David K. Herzog Telephone: 317-817-5031 Fax: 317-817-6327 CONSECO, INC., as Obligor and Subordinated Lender By: /s/ Thomas M. Hagerty ---------------------------------- Address for Notices: 11825 North Pennsylvania Street Carmel, Indiana 46032 Attention: David K. Herzog Telephone: 317-817-5031 Fax: 317-817-6327 13 EX-4 12 0012.txt EXHIBIT 4.11 Exhibit 4.11 ================================================================================ GUARANTY AND SUBORDINATION AGREEMENT Dated as of September 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, N.A. (formerly known as Bank of America National Trust and Savings Association), as Agent under the Five-Year Credit Agreement dated as of September 25, 1998 among Conseco, Inc., Bank of America, N.A., as Agent, First Union National Bank and The Chase Manhattan Bank, as Syndication Agents, Morgan Guaranty Trust Company of New York as Documentation Agent and certain financial institutions ================================================================================ GUARANTY AND SUBORDINATION AGREEMENT This Guaranty and Subordination Agreement (this "Agreement") is entered into as of September 22, 2000 by CIHC, INCORPORATED and CONSECO, INC. in favor of BANK OF AMERICA, N.A., as agent (in such capacity, the "Agent") for the financial institutions (the "Banks" and together with the Agent, collectively, the "Guarantied Parties") who are or from time to time may become party to the Five-Year Credit Agreement, dated as of September 25, 1998 (as the same may be amended, supplemented, restated or otherwise modified from time to time, the "Credit Agreement"), among Conseco, Inc., the Banks, First Union National Bank and The Chase Manhattan Bank, as Syndication Agents, Morgan Guaranty Trust Company of New York as Documentation Agent and the Agent. Unless otherwise defined herein, capitalized terms used herein shall have the meanings assigned to such terms pursuant to Article I hereof. W I T N E S S E T H: ------------------- WHEREAS, pursuant to a First Amendment to Five-Year Credit Agreement of even date herewith (the "Restructuring Document") with respect to the Credit Agreement, the Banks have agreed, among other things, to extend the maturity date of the Loans made pursuant to the Credit Agreement; WHEREAS, the Agreement Parties will derive substantial direct and indirect benefit from the Restructuring Document; and WHEREAS, it is a condition precedent to the obligation of the Banks to enter into the Restructuring Document that the Agreement Parties shall have executed and delivered this Agreement; NOW THEREFORE, for good and valuable consideration the receipt and sufficiency of which is hereby acknowledged and to induce the Banks to enter into the Restructuring Document, each Agreement Party agrees, for the benefit of each Guarantied Party, as follows: ARTICLE I. DEFINITIONS SECTION 1.1. Certain Terms. Capitalized terms used herein, unless otherwise defined herein, shall have the respective meanings assigned thereto in the Credit Agreement; provided that such definitions shall survive any termination of the Credit Agreement. In addition, when used herein the following terms shall have the following meanings (such definitions to be equally applicable to the singular and plural forms thereof): 1 "Agreement Party" means each of Obligor, Guarantor, Subordinated Lender and Subordinated Borrower. "Charges" the collective reference to Taxes, Other Taxes and Further Taxes (as each such term is defined in the Credit Agreement). "Credit Agreement" has the meaning set forth in the Preamble. "Guarantied Obligations" has the meaning set forth in Section 2.1. "Guarantied Parties" has the meaning set forth in the Preamble. "Guarantor" means CIHC, Incorporated, in its capacity as guarantor of the Guarantied Obligations. "Indemnified Parties" has the meaning set forth in Section 5.1. "Obligations" has the meaning assigned to such term in the Credit Agreement, and shall include, in any event, interest accruing at the then applicable rate provided in the Credit Agreement after the maturity of the Loans and interest accruing at the then applicable rate provided in the Credit Agreement after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to Obligor, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding. "Obligor" means Conseco, Inc., in its capacity as obligor in respect of the Obligations. "Reorganization" has the meaning set forth in Section 3.2(a). "Restructuring Document" has the meaning set forth in the first recital. "Senior Creditors" means any holder or beneficiary of any Senior Debt, or any authorized representative thereof. "Senior Debt" means (a) all obligations of Guarantor under Article II, (b) all "Senior Debt" under and as defined in any other CIHC Guaranty, (c) all "Senior Debt" under and as defined in the Guaranty and Subordination Agreement entered into in connection with the Lehman Agreement and (d) all other "Senior Debt" (or comparable concept) under and as defined in any subordination provision or agreement relating to or entered into in connection with any Contingent Obligation of CIHC pursuant to Section 4.01(d)(i) or (d)(iv) of the Appendix. "Subordinated Borrower" means CIHC, Incorporated, in its capacity as obligor in respect of the Subordinated Debt. 2 "Subordinated Debt" means the principal amount of any Indebtedness owing by Subordinated Borrower to Subordinated Lender from time to time outstanding and unpaid, together with accrued and unpaid interest thereon. "Subordinated Lender" means Conseco, Inc., in its capacity as holder of the Subordinated Debt. "Subrogation Rights" has the meaning set forth in Section 2.6. ARTICLE II. GUARANTY PROVISIONS SECTION 2.1. Guaranty. Guarantor hereby absolutely, unconditionally and irrevocably: (a) guaranties to the Guarantied Parties the full and punctual payment when due, whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise, and at all times thereafter, of all Obligations (including all such amounts which would become due but for the operation of the automatic stay provisions under Section 362(a) of the United States Bankruptcy Code, 11 U.S.C. ss.362(a), and the operation of Sections 502(b) and 506(b) of the United States Bankruptcy Code, 11 U.S.C. ss.502(b) and ss.506(b)) (all such Obligations collectively called the "Guarantied Obligations"); and (b) indemnifies and holds harmless each Guarantied Party or any other holder of any Guarantied Obligations for any and all costs and expenses (including, without limitation, reasonable attorneys' fees and expenses) incurred by such Guarantied Party or such holder, as the case may be, in enforcing any rights under this Agreement; The guaranty set forth in this Article II constitutes a guaranty of payment when due and not of collection, and Guarantor specifically agrees that it shall not be necessary or required that any Guarantied Party or any other holder of any Guarantied Obligations exercise any right, assert any claim or demand or enforce any remedy whatsoever against Obligor or any other Person before the performance of, or as a condition to, the obligations of Guarantor hereunder. Anything herein or in any other Loan Document to the contrary notwithstanding, the maximum liability of Guarantor hereunder shall in no event exceed the amount which can be guaranteed by Guarantor under applicable federal and state laws relating to the insolvency of debtors. SECTION 2.2. Acceleration of Guaranty. Guarantor agrees that, in the event of the insolvency of Guarantor, or the inability or failure of Guarantor to pay debts as they become due, or an assignment by Guarantor for the benefit of creditors, or the commencement of any case or proceeding in respect of Obligor or Guarantor under any bankruptcy, insolvency or 3 similar federal or state laws, and if such event shall occur at a time when any of the Guarantied Obligations may not then be due and payable, Guarantor will pay to the Banks forthwith the full amount which would be payable hereunder by Guarantor if all the Guarantied Obligations were then due and payable. SECTION 2.3. Guaranty Absolute, etc. This Agreement shall in all respects be a continuing, absolute, unconditional and irrevocable guaranty of payment, and shall remain in full force and effect until all Guarantied Obligations have been paid in full and all obligations of Guarantor hereunder shall have been paid in full. Guarantor guarantees that the Guarantied Obligations will be paid strictly in accordance with the terms of the Credit Agreement and each other Loan Document under which they arise, regardless of any law, regulation or order now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of any Guarantied Party or any holder of any Guarantied Obligations. The liability of Guarantor under this Agreement shall be absolute, unconditional and irrevocable irrespective of: (a) any lack of validity, legality or enforceability of the Credit Agreement or any other Loan Document; (b) the failure of any Guarantied Party: (i) to assert any claim or demand or to enforce any right or remedy against Obligor or any other Person under the provisions of the Credit Agreement, any other Loan Document or otherwise; or (ii) to exercise any right or remedy against any other guarantor of, or collateral securing, any Guarantied Obligations; (c) any change in the time, manner or place of payment of, or in any other term of, all or any of the Guarantied Obligations, or any other extension, compromise or renewal of any Guarantied Obligations; (d) any reduction, limitation, impairment or termination of the Guarantied Obligations for any reason, including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to (and Guarantor hereby waives any right to or claim of) any defense or setoff, counterclaim, recoupment or termination whatsoever by reason of the invalidity, illegality, nongenuineness, irregularity, compromise, unenforceability of, or any other event or occurrence affecting, the Guarantied Obligations; (e) any amendment to, rescission, waiver, or other modification of, or any consent to any departure from, any of the terms of the Credit Agreement or any other Loan Document; 4 (f) any addition, exchange, release, surrender or non-perfection of any collateral, or any amendment to or waiver or release or addition of, or consent to any departure from, any other guaranty held by any Guarantied Party or any other holder of the Guarantied Obligations; or (g) any other circumstance which might otherwise constitute a defense available to, or a legal or equitable discharge of, Obligor, any surety or any guarantor. SECTION 2.4. Reinstatement, etc. Guarantor agrees that this Agreement shall continue to be effective or be reinstated, as the case may be, if at any time any payment (in whole or in part) of any of the Guarantied Obligations is rescinded or must otherwise be restored by any Guarantied Party or any other holder of any Guarantied Obligations, upon the insolvency, bankruptcy or reorganization of Obligor, all as though such payment had not been made. SECTION 2.5. Waiver, etc. Guarantor hereby waives promptness, diligence, notice of acceptance and any other notice with respect to any of the Guarantied Obligations, and this Agreement and any requirement that the Agent, any other Guarantied Party or any other holder of Guarantied Obligations protect, secure, perfect or insure any security interest or Lien, or any property subject thereto, or exhaust any right or take any action against Obligor or any other Person (including any other guarantor) or entity or any collateral securing the Guarantied Obligations. SECTION 2.6. Waiver of Subrogation; Subordination. Guarantor hereby irrevocably waives with respect to Obligor, until the prior indefeasible payment in full in cash of all Guarantied Obligations, any claim or other rights which it may now or hereafter acquire against Obligor that arises from the existence, payment, performance or enforcement of Guarantor's obligations under this Article II, including any right of subrogation, reimbursement, exoneration, or indemnification, any right to participate in any claim or remedy of the Guarantied Parties against Obligor or any collateral which the Agent now has or hereafter acquires, whether or not such claim, remedy or right (all such claims, remedies and rights being collectively called "Subrogation Rights") arises in equity, or under contract, statute or common law, including the right to take or receive from Obligor, directly or indirectly, in cash or other property or by set-off or in any manner, payment or security on account of such claim or other rights. If any amount shall be paid to Guarantor in violation of the preceding sentence and the Guarantied Obligations shall not have been paid in cash, in full, such amount shall be deemed to have been paid to Guarantor for the benefit of, and held in trust for, the Guarantied Parties, and shall forthwith be paid to the Guarantied Parties to be credited and applied upon the Guarantied Obligations, whether matured or unmatured. Guarantor acknowledges that it will receive direct and indirect benefits from the Restructuring Document and that the waiver set forth in this Section 2.6 is knowingly made in contemplation of such benefits. SECTION 2.7. Successors, Transferees and Assigns; Transfers of Guarantied Obligations, etc. This Agreement shall: 5 (a) be binding upon Guarantor, and its successors, transferees and assigns; and (b) inure to the benefit of and be enforceable by the Agent and each other Guarantied Party. Without limiting the generality of clause (b), any Bank may assign or otherwise transfer (in whole or in part) any Guarantied Obligation held by it to any other Person upon the terms and conditions set forth in the Credit Agreement, and such other Person shall thereupon become vested with all rights and benefits in respect thereof granted to such Bank under any Loan Document (including this Agreement) or otherwise. SECTION 2.8. Payments Free and Clear of Taxes, etc. Guarantor hereby agrees that: (a) any and all payments made by Guarantor hereunder shall be made in accordance with Article III of the Credit Agreement free and clear of, and without deduction for, any and all Charges, to the same extent as if Guarantor were the Obligor thereunder; (b) Guarantor hereby indemnifies and holds harmless each Guarantied Party and each other holder of any Guarantied Obligation for the full amount of any Charges paid by such Guarantied Party or such holder, as the case may be, and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto; and (c) without prejudice to the survival of any other agreement of Guarantor hereunder, the agreements and obligations of Guarantor contained in this Section 2.8 shall survive the payment in full of the Guarantied Obligations. SECTION 2.9. Right of Offset. In addition to and not in limitation of all rights of offset that any Guarantied Party or any other holder of any Guarantied Obligation may have under applicable law or any other Loan Document, subject to the terms of the Credit Agreement, each Guarantied Party or other holder of any Guarantied Obligation shall, during the continuance of any Event of Default and whether or not such Guarantied Party or such holder has made any demand or whether or not Guarantor's obligations are matured, have the right to appropriate and apply to the payment of Guarantor's obligations hereunder all deposits (general or special, time or demand, provisional or final) then or thereafter held by, and other indebtedness or property then or thereafter owing to, such Guarantied Party or other holder, whether or not related to this Agreement or any transaction hereunder. 6 ARTICLE III. SUBORDINATION SECTION 3.1. Payments on Subordinated Debt. Notwithstanding anything to the contrary in the terms or arrangements governing the Subordinated Debt, no payment or prepayment of principal of or interest on the Subordinated Debt may be made, directly or indirectly, at any time after (a) the acceleration of the stated maturity of the Loans under the Credit Agreement (including, without limitation, pursuant to automatic acceleration provisions) or (b) a Reorganization (including any proceeding in respect thereof) shall have been commenced. SECTION 3.2. Subordination. (a) Subject to Section 3.1, payment of the Subordinated Debt is and shall be expressly subordinate and junior in right of payment to the prior payment in full in cash of the Senior Debt to the extent and in the manner set forth herein, and the Subordinated Debt is hereby so subordinated as a claim against Subordinated Borrower or any of the assets of Subordinated Borrower, whether such claim be (i) in the event of any distribution of the assets of Subordinated Borrower upon any voluntary or involuntary dissolution, winding-up, total or partial liquidation or reorganization, or bankruptcy, insolvency, receivership or other statutory or common law proceedings or arrangements involving Subordinated Borrower or the readjustment of its liabilities or any assignment for the benefit of creditors or any marshaling of its assets or liabilities (collectively called a "Reorganization"), or (ii) other than in connection with a Reorganization, to the prior payment in full in cash of the Senior Debt. (b) If Subordinated Lender shall receive any payment in violation of the terms hereof, it shall hold such payment in trust for the benefit of the Senior Creditors and forthwith pay it over to the Senior Creditors, ratably according to the aggregate amounts remaining unpaid on account of the Senior Debt, for application to and payment of the Senior Debt. (c) In the event of any Reorganization relative to Subordinated Borrower or its properties, then all of the Senior Debt shall first be paid in full in cash before any payment is made upon the Subordinated Debt, and in any such proceedings any payment or distribution of any kind or character, whether in cash or property or securities, which may be payable or deliverable in respect of the Subordinated Debt shall be paid or delivered directly to the Senior Creditors, ratably according to the aggregate amounts remaining unpaid on account of the Senior Debt, for application in payment of the Senior Debt, unless and until all the Senior Debt is paid in full in cash, and Subordinated Lender hereby irrevocably authorizes the Agent, as attorney-in-fact for Subordinated Lender, to vote any claim or proof of claim in such proceedings in respect of the Subordinated Debt, to file or prove any claim in such proceedings in respect of the Subordinated Debt, to demand, sue for, collect and receive any such payment or distribution, to apply such payment or distribution to the payment of the Senior Debt, and to take such other action (including acceptance or rejection of any plan of Reorganization) in the name of Subordinated Lender or of the relevant Senior Creditors as the Agent may deem necessary or advisable for the enforcement of the provisions hereof. Subordinated Lender shall execute and deliver such other and further powers of attorney, assignments, proofs of claim or other instruments, and take such other actions, as may be requested by the Agent in order to enable the Agent to accomplish any of the foregoing, but only with respect to Subordinated Lender's capacity as a holder hereof and not in respect of any other relationship between Subordinated Lender and Subordinated Borrower. Consistent with, but not in limitation of, the foregoing, in such an event, the Agent shall be deemed to be the assigned (and 7 thus the holder) of such claims or proof of claims and shall have the right to assert and vote such claims in any Reorganization, including, without limitation, through the filing of any proof of claim therein and the casting of any ballots to accept or reject any plan of reorganization proposed by, for, or with respect to any such Reorganization. (d) In the event that, notwithstanding the foregoing, upon any such Reorganization, any payment or distribution of the assets of Subordinated Borrower of any kind or character, whether in cash, property or securities, shall be received by Subordinated Lender in respect of the Subordinated Debt before all Senior Debt is paid in full in cash, such payment or distribution shall be held in trust for the Senior Creditors and shall forthwith be paid over to the Senior Creditors, ratably according to the aggregate amounts remaining unpaid on account of the Senior Debt, for application to the payment of the Senior Debt until all Senior Debt shall have been paid in full in cash. (e) Subordinated Lender agrees that, until the Senior Debt has been paid in full in cash, except as expressly provided by Section 3.1, it will not take, demand or receive, or take any action to accelerate or collect, any payment of all or any part of the Subordinated Debt. (f) The Senior Creditors, or any of them, may, at any time and from time to time, without the consent of or notice to Subordinated Lender, without incurring any responsibility to Subordinated Lender, and without impairing or releasing any of the rights of any Senior Creditor, or any of the obligations of Subordinated Lender: (i) change the amount or terms of or renew or extend any Senior Debt or enter into or amend in any manner any agreement relating to any Senior Debt; (ii) sell, exchange, release or otherwise deal with any property at any time pledged or mortgaged to secure any Senior Debt; (iii) release anyone liable in any manner for the payment or collection of any Senior Debt; and (iv) exercise or refrain from exercising any rights against Subordinated Borrower and others (including Subordinated Lender). (g) Subordinated Lender hereby waives notice of or proof of reliance by any Senior Creditor upon the provisions hereof, and the Senior Debt shall conclusively be deemed to have been created, contracted, incurred or maintained in reliance upon the provisions hereof. (h) Each Senior Creditor shall be a third-party beneficiary of the provisions of this Section 3.2. ARTICLE IV. REPRESENTATIONS AND WARRANTIES Each Agreement Party represents and warrants to each Guarantied Party that: 8 SECTION 4.1. Authorization. Such Agreement Party (a) has the power to execute, deliver and perform this Agreement and (b) has taken all necessary action to authorize the execution, delivery and performance by it of this Agreement. SECTION 4.2. No Conflict. The execution, delivery and performance by such Agreement Party of this Agreement does not and will not (a) contravene or conflict with any provision of any law, statute, rule or regulation, (b) contravene or conflict with, result in any breach of, or constitute a default under, any material agreement or instrument binding on such Agreement Party or any of its Subsidiaries (including, without limitation, any writ, judgment, injunction or other similar court order), (c) result in the creation or imposition of or the obligation to create or impose any Lien upon any of the property or assets of such Agreement Party or any of its Subsidiaries or (d) contravene or conflict with any provision of the articles of incorporation or bylaws of such Agreement Party. SECTION 4.3. Binding Effect. This Agreement constitutes the legal, valid and binding obligations of such Agreement Party, enforceable against such Agreement Party in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, or similar laws affecting the enforcement of creditors' rights generally or by equitable principles relating to enforceability. SECTION 4.4. Solvent. After giving effect to this Agreement, the Guarantor and its Subsidiaries, taken as a whole, are Solvent. As used in this Section 4.4, "Solvent" shall mean, with respect to any Person, (a) the fair value of the property of such Person is greater than the amount of such Person's liabilities (including disputed, contingent and unliquidated liabilities) as such value is established and liabilities evaluated for purposes of Section 101(31) of the Bankruptcy Code and, in the alternative, for purposes of the Uniform Fraudulent Transfer Act or Uniform Fraudulent Conveyance Act; (b) such Person is able to realize upon its property and pay its debts and other liabilities (including disputed, contingent and unliquidated liabilities) as they mature in the normal course of business; (c) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person's ability to pay as such debts and liabilities mature; and (d) such Person is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which such Person's property would constitute unreasonably small capital. 9 ARTICLE V. MISCELLANEOUS SECTION 5.1. Indemnity. Each Agreement Party agrees to indemnify the Agent, each Bank, their Affiliates and their respective directors, officers, employees, persons controlling or controlled by any of them or their respective agents, consultants, attorneys and advisors (the "Indemnified Parties") and hold each Indemnified Party harmless from and against any and all liabilities, losses, claims, damages, costs and expenses of any kind to which any of the Indemnified Parties may become subject, whether directly or indirectly (including, without limitation, the reasonable fees and disbursements of counsel for any Indemnified Party), relating to or arising out of this Agreement; provided, that no Indemnified Party shall have the right to be indemnified hereunder for its own gross negligence or willful misconduct as determined by a court of competent jurisdiction. All obligations of each Agreement Party provided for in this Section 5.1 shall survive termination of the Credit Agreement and this Agreement. SECTION 5.2. Notices. All notices, requests and other communications to any party hereunder shall be in writing (including facsimile or similar writing) and shall be given to such party at its address or facsimile number set forth on the signature pages hereof or such other address or facsimile number as such party may hereafter specify for the purpose by written notice to the Agent. Each such notice, request or other communication shall be effective (a) if given by facsimile, when such facsimile is transmitted to the facsimile number specified in this Section 5.2, (b) if given by mail, seventy-two (72) hours after such communication is deposited in the mails with first class postage prepaid, addressed as aforesaid or (c) if given by any other means, when delivered at the address specified in this Section 5.2. SECTION 5.3. Successors and Assigns. This Agreement, and the terms, covenants and conditions hereof, shall be binding upon and inure to the benefit of the parties hereto, and their respective successors and assigns, except no Agreement Party shall be permitted to assign this Agreement nor any interest or obligation herein without the consent of the Agent. SECTION 5.4. SUBMISSION TO JURISDICTION, ETC. EACH AGREEMENT PARTY AND THE AGENT HEREBY IRREVOCABLY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE SUPREME COURT OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK OVER ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND EACH AGREEMENT PARTY AND THE AGENT HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE OR TO THE EXTENT PERMITTED BY LAW, FEDERAL COURT. EACH AGREEMENT PARTY AND THE AGENT HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION IT MAY NOW 10 OR HEREAFTER HAVE TO THE LAYING OF VENUE IN ANY ACTION OR PROCEEDING (WHETHER BROUGHT BY ANY AGREEMENT PARTY OR ANY OF THEIR RESPECTIVE SUBSIDIARIES, THE AGENT, ANY BANK OR OTHERWISE) IN ANY COURT HEREIN ABOVE SPECIFIED IN THIS SECTION 5.4 AS WELL AS ANY RIGHT IT MAY NOW OR HEREAFTER HAVE TO REMOVE ANY SUCH ACTION OR PROCEEDING, ONCE COMMENCED, TO ANOTHER COURT ON THE GROUNDS OF FORUM NON CONVENIENS OR OTHERWISE. EACH AGREEMENT PARTY AND THE AGENT 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. SECTION 5.5. Amendments; Release. Notwithstanding anything to the contrary contained in the Credit Agreement, the provisions of this Agreement may from time to time be amended, modified or waived, if such amendment, modification or waiver is in writing and consented to by each affected Agreement Party and the Agent (with the consent of the Required Banks), and then any such amendment, modification, waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided that, except as set forth in Section 5.14 of this Agreement, no such amendment, modification or waiver which would permit the release or termination of all or a substantial portion of Guarantor's obligations under this Agreement shall be effective without the consent of each Bank. SECTION 5.6. Section Headings. The section headings in this Agreement are inserted for convenience of reference and shall not be considered a part of this Agreement or used in its interpretation. SECTION 5.7. Acknowledgments. No action of the Agent permitted hereunder shall in any way affect or impair the rights of the Agent and the obligations of each Agreement Party under this Agreement. Each Agreement Party hereby acknowledges that there are no conditions to the effectiveness of this Agreement. SECTION 5.8. Obligations Not Limited. All obligations of the Guarantor and rights of the Guarantied Parties in respect of the Guarantied Obligations expressed in this Agreement shall be in addition to and not in limitation of those provided in applicable law or in any other written instrument or agreement relating to any of the Guarantied Obligations. SECTION 5.9. GOVERNING LAW. THIS AGREEMENT SHALL BE A CONTRACT MADE UNDER AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. SECTION 5.10. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall for all purposes be deemed an original, but all such counterparts shall constitute but one and the same agreement. Each Agreement Party hereby acknowledges receipt of a true, correct and complete counterpart of this Agreement. 11 SECTION 5.11. Agent. The Agent acts herein as agent for itself, the Banks and any and all future holders of the Guarantied Obligations. SECTION 5.12. WAIVER OF TRIAL BY JURY. EACH AGREEMENT PARTY AND THE AGENT HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM CONCERNING ANY RIGHTS UNDER THIS AGREEMENT OR ANY OTHER DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH, OR ARISING FROM ANY BANKING RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT AND AGREES THAT ANY SUCH ACTION, PROCEEDING OR COUNTERCLAIM SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY; THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE GUARANTIED PARTIES ENTERING INTO THE RESTRUCTURING DOCUMENT. SECTION 5.13. No Limitation on Remedies. No failure to exercise and no delay in exercising, on the part of the Agent or any other Guarantied Party, any right, remedy, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law. SECTION 5.14. Release of This Agreement. This Agreement shall be terminated and Guarantor shall be released from all of its obligations hereunder on the first date after the Near-Term Facilities Termination Date on which Conseco, Inc. has Investment Grade Ratings Status, as long as no Default or Event of Default shall have occurred and be continuing on such date. 12 IN WITNESS WHEREOF, each Agreement Party has caused this Guaranty and Subordination Agreement to be duly executed and delivered by its officer thereunto duly authorized as of the date first above written. CIHC, INCORPORATED, as Guarantor and Subordinated Borrower By: /s/ David A. Hill ---------------------------------- Name: David A. Hill Address for Notices: 11825 North Pennsylvania Street Carmel, Indiana 46032 Attention: David K. Herzog Telephone: 317-817-5031 Fax: 317-817-6327 CONSECO, INC., as Obligor and Subordinated Lender By: /s/ Thomas M. Hagerty ---------------------------------- Address for Notices: 11825 North Pennsylvania Street Carmel, Indiana 46032 Attention: David K. Herzog Telephone: 317-817-5031 Fax: 317-817-6327 13 EX-4 13 0013.txt EX-4.12 Exhibit 4.12 ================================================================================ GUARANTY AND SUBORDINATION AGREEMENT Dated as of September 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, N.A., as Administrative Agent under the Credit Agreement dated as of August 28, 1998 ================================================================================ GUARANTY AND SUBORDINATION AGREEMENT This Guaranty and Subordination Agreement (this "Agreement") is entered into as of September 22, 2000 by CIHC, INCORPORATED and CONSECO, INC. in favor of BANK OF AMERICA, N.A., as administrative agent (in such capacity, the "Agent") for the financial institutions (the "Banks" and together with the Agent, collectively, the "Guarantied Parties") who are or from time to time may become party to the Credit Agreement, dated as of August 28, 1998 (as the same may be amended, supplemented, restated or otherwise modified from time to time, the "Credit Agreement"), among the individual borrowers party thereto, the Banks and the Agent. Unless otherwise defined herein, capitalized terms used herein shall have the meanings assigned to such terms pursuant to Article I hereof. W I T N E S S E T H: ------------------- WHEREAS, pursuant to an Agreement of even date herewith relating to 1998 Director & Officer Loan Agreement (the "Restructuring Document") with respect to the Credit Agreement and the Guaranty referred to in the Credit Agreement (as the same may be amended, supplemented, restated or otherwise modified from time to time, the "Conseco Guaranty"), the Banks have agreed, among other things, to refrain from exercising certain remedies in respect of the Conseco Guaranty; WHEREAS, the Agreement Parties will derive substantial direct and indirect benefit from the Restructuring Document; and WHEREAS, it is a condition precedent to the obligation of the Banks to enter into the Restructuring Document that the Agreement Parties shall have executed and delivered this Agreement; NOW THEREFORE, for good and valuable consideration the receipt and sufficiency of which is hereby acknowledged and to induce the Banks to enter into the Restructuring Document, each Agreement Party agrees, for the benefit of each Guarantied Party, as follows: ARTICLE I. DEFINITIONS SECTION I.1. Certain Terms. Capitalized terms used herein, unless otherwise defined herein, shall have the respective meanings assigned thereto in the Credit Agreement or the Conseco Guaranty Documents; provided that such definitions shall survive any termination of the Credit Agreement or any Conseco Guaranty Document. In addition, when used herein the following terms shall have the following meanings (such definitions to be equally applicable to the singular and plural forms thereof): "Agreement Party" means each of Obligor, Guarantor, Subordinated Lender and Subordinated Borrower. "Charges" has the meaning assigned to such term in the Credit Agreement. "Conseco Guaranty" has the meaning set forth in the Preamble. "Conseco Guaranty Documents" means the collective reference to the Conseco Guaranty, the Restructuring Document and any other agreement entered into by Obligor in connection therewith. "Credit Agreement" has the meaning set forth in the Preamble. "Guarantied Obligations" has the meaning set forth in Section 2.1. "Guarantied Parties" has the meaning set forth in the Preamble. "Guarantor" means CIHC, Incorporated, in its capacity as guarantor of the Guarantied Obligations. "Indemnified Parties" has the meaning set forth in Section 5.1. "Obligations" means all debts, liabilities, obligations, covenants and duties for the payment of money owing by Obligor pursuant to any Conseco Guaranty Document, whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising. "Obligor" means Conseco, Inc., in its capacity as obligor in respect of the Obligations. "Reorganization" has the meaning set forth in Section 3.2(a). "Restructuring Document" has the meaning set forth in the first Recital. "Senior Creditors" means any holder or beneficiary of any Senior Debt, or any authorized representative thereof. "Senior Debt" means (a) all obligations of Guarantor under Article II, (b) all "Senior Debt" under and as defined in any other CIHC Guaranty, (c) all "Senior Debt" under and as defined in the Guaranty and Subordination Agreement entered into in connection with the Lehman Agreement and (d) all other "Senior Debt" (or comparable concept) under and as defined in any subordination provision or agreement relating to or entered into in connection with any Contingent Obligation of CIHC pursuant to Section 4.01(d)(i) or (d)(iv) of the Appendix. "Subordinated Borrower" means CIHC, Incorporated, in its capacity as obligor in respect of the Subordinated Debt. "Subordinated Debt" means the principal amount of any Indebtedness owing by Subordinated Borrower to Subordinated Lender from time to time outstanding and unpaid, together with accrued and unpaid interest thereon. "Subordinated Lender" means Conseco, Inc., in its capacity as holder of the Subordinated Debt. "Subrogation Rights" has the meaning set forth in Section 2.6. 2 ARTICLE II. GUARANTY PROVISIONS SECTION II.1. Guaranty. Guarantor hereby absolutely, unconditionally and irrevocably: (a) guaranties to the Guarantied Parties the full and punctual payment when due, whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise, and at all times thereafter, of all Obligations (including all such amounts which would become due but for the operation of the automatic stay provisions under Section 362(a) of the United States Bankruptcy Code, 11 U.S.C. ss.362(a), and the operation of Sections 502(b) and 506(b) of the United States Bankruptcy Code, 11 U.S.C. ss.502(b) and ss.506(b)) (all such Obligations collectively called the "Guarantied Obligations"); and (b) indemnifies and holds harmless each Guarantied Party or any other holder of any Guarantied Obligations for any and all costs and expenses (including, without limitation, reasonable attorneys' fees and expenses) incurred by such Guarantied Party or such holder, as the case may be, in enforcing any rights under this Agreement; The guaranty set forth in this Article II constitutes a guaranty of payment when due and not of collection, and Guarantor specifically agrees that it shall not be necessary or required that any Guarantied Party or any other holder of any Guarantied Obligations exercise any right, assert any claim or demand or enforce any remedy whatsoever against Obligor or any other Person before the performance of, or as a condition to, the obligations of Guarantor hereunder. Anything herein or in any other Loan Document to the contrary notwithstanding, the maximum liability of Guarantor hereunder shall in no event exceed the amount which can be guaranteed by Guarantor under applicable federal and state laws relating to the insolvency of debtors. SECTION II.2. Acceleration of Guaranty. Guarantor agrees that, in the event of the insolvency of Guarantor, or the inability or failure of Guarantor to pay debts as they become due, or an assignment by Guarantor for the benefit of creditors, or the commencement of any case or proceeding in respect of Obligor or Guarantor under any bankruptcy, insolvency or similar federal or state laws, and if such event shall occur at a time when any of the Guarantied Obligations may not then be due and payable, Guarantor will pay to the Banks forthwith the full amount which would be payable hereunder by Guarantor if all the Guarantied Obligations were then due and payable. SECTION II.3. Guaranty Absolute, etc. This Agreement shall in all respects be a continuing, absolute, unconditional and irrevocable guaranty of payment, and shall remain in full force and effect until all Guarantied Obligations have been paid in full and all obligations of Guarantor hereunder shall have been paid in full. Guarantor guarantees that the Guarantied Obligations will be paid strictly in accordance with the terms of the Conseco Guaranty Documents and each other Loan Document under which they arise, regardless of any law, regulation or order now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of any Guarantied Party or any holder of any Guarantied Obligations. The liability of Guarantor under this Agreement shall be absolute, unconditional and irrevocable irrespective of: 3 (a) any lack of validity, legality or enforceability of the Credit Agreement, any Conseco Guaranty Document or any other Loan Document; (b) the failure of any Guarantied Party: (i) to assert any claim or demand or to enforce any right or remedy against Obligor or any other Person under the provisions of the Credit Agreement, any Conseco Guaranty Document, any other Loan Document or otherwise; or (ii) to exercise any right or remedy against any other guarantor of, or collateral securing, any Guarantied Obligations; (c) any change in the time, manner or place of payment of, or in any other term of, all or any of the Guarantied Obligations, or any other extension, compromise or renewal of any Guarantied Obligations; (d) any reduction, limitation, impairment or termination of the Guarantied Obligations for any reason, including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to (and Guarantor hereby waives any right to or claim of) any defense or setoff, counterclaim, recoupment or termination whatsoever by reason of the invalidity, illegality, nongenuineness, irregularity, compromise, unenforceability of, or any other event or occurrence affecting, the Guarantied Obligations; (e) any amendment to, rescission, waiver, or other modification of, or any consent to any departure from, any of the terms of the Credit Agreement, any Conseco Guaranty Document or any other Loan Document; (f) any addition, exchange, release, surrender or non-perfection of any collateral, or any amendment to or waiver or release or addition of, or consent to any departure from, any other guaranty held by any Guarantied Party or any other holder of the Guarantied Obligations; or (g) any other circumstance which might otherwise constitute a defense available to, or a legal or equitable discharge of, Obligor, any surety or any guarantor. SECTION II.4. Reinstatement, etc. Guarantor agrees that this Agreement shall continue to be effective or be reinstated, as the case may be, if at any time any payment (in whole or in part) of any of the Guarantied Obligations is rescinded or must otherwise be restored by any Guarantied Party or any other holder of any Guarantied Obligations, upon the insolvency, bankruptcy or reorganization of Obligor, all as though such payment had not been made. SECTION II.5. Waiver, etc. Guarantor hereby waives promptness, diligence, notice of acceptance and any other notice with respect to any of the Guarantied Obligations, and this Agreement and any requirement that the Agent, any other Guarantied Party or any other holder of Guarantied Obligations protect, secure, perfect or insure any security interest or Lien, or any property subject thereto, or exhaust any right or take any action against Obligor or any other Person (including any other guarantor) or entity or any collateral securing the Guarantied Obligations. 4 SECTION II.6. Waiver of Subrogation; Subordination. Guarantor hereby irrevocably waives with respect to Obligor, until the prior indefeasible payment in full in cash of all Guarantied Obligations, any claim or other rights which it may now or hereafter acquire against Obligor that arises from the existence, payment, performance or enforcement of Guarantor's obligations under this Article II, including any right of subrogation, reimbursement, exoneration, or indemnification, any right to participate in any claim or remedy of the Guarantied Parties against Obligor or any collateral which the Agent now has or hereafter acquires, whether or not such claim, remedy or right (all such claims, remedies and rights being collectively called "Subrogation Rights") arises in equity, or under contract, statute or common law, including the right to take or receive from Obligor, directly or indirectly, in cash or other property or by set-off or in any manner, payment or security on account of such claim or other rights. If any amount shall be paid to Guarantor in violation of the preceding sentence and the Guarantied Obligations shall not have been paid in cash, in full, such amount shall be deemed to have been paid to Guarantor for the benefit of, and held in trust for, the Guarantied Parties, and shall forthwith be paid to the Guarantied Parties to be credited and applied upon the Guarantied Obligations, whether matured or unmatured. Guarantor acknowledges that it will receive direct and indirect benefits from the Restructuring Document and that the waiver set forth in this Section 2.6 is knowingly made in contemplation of such benefits. SECTION II.7. Successors, Transferees and Assigns; Transfers of Guarantied Obligations, etc. This Agreement shall: (a) be binding upon Guarantor, and its successors, transferees and assigns; and (b) inure to the benefit of and be enforceable by the Agent and each other Guarantied Party. Without limiting the generality of clause (b), any Bank may assign or otherwise transfer (in whole or in part) any Guarantied Obligation held by it to any other Person upon the terms and conditions set forth in the Credit Agreement, and such other Person shall thereupon become vested with all rights and benefits in respect thereof granted to such Bank under any Loan Document (including this Agreement) or otherwise. SECTION II.8. Payments Free and Clear of Taxes, etc. Guarantor hereby agrees that: (a) any and all payments made by Guarantor hereunder shall be made in accordance with Section 4.7 of the Credit Agreement free and clear of, and without deduction for, any and all Charges, to the same extent as if Guarantor were a "Borrower" thereunder; (b) Guarantor hereby indemnifies and holds harmless each Guarantied Party and each other holder of any Guarantied Obligation for the full amount of any Charges paid by such Guarantied Party or such holder, as the case may be, and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto; and (c) without prejudice to the survival of any other agreement of Guarantor hereunder, the agreements and obligations of Guarantor contained in this Section 2.8 shall survive the payment in full of the Guarantied Obligations. SECTION II.9. Right of Offset. In addition to and not in limitation of all rights of offset that any Guarantied Party or any other holder of any Guarantied Obligation may have under applicable law or any other Loan Document, subject to the terms of the Credit Agreement, each Guarantied Party or other holder of any Guarantied Obligation shall, during the continuance of any Event of Default and whether or not such Guarantied Party or such holder has made any demand or whether or not Guarantor's obligations are matured, have the right to appropriate and apply to the payment of Guarantor's obligations hereunder all deposits (general or special, time or demand, provisional or final) then or thereafter held by, and other indebtedness or property then or 5 thereafter owing to, such Guarantied Party or other holder, whether or not related to this Agreement or any transaction hereunder. ARTICLE III. SUBORDINATION SECTION III.1. Payments on Subordinated Debt. Notwithstanding anything to the contrary in the terms or arrangements governing the Subordinated Debt, no payment or prepayment of principal of or interest on the Subordinated Debt may be made, directly or indirectly, at any time after (a) (i) any Guarantied Party has made a claim under the Conseco Guaranty in respect of the principal amount of any of the Loans under the Credit Agreement or (ii) Obligor's obligations under the Conseco Guaranty shall have been accelerated (including, without limitation, pursuant to the provision in the Conseco Guaranty that is the equivalent of Section 2.2 of this Agreement) or (b) a Reorganization (including any proceeding in respect thereof) shall have been commenced. SECTION III.2. Subordination. (a) Subject to Section 3.1, payment of the Subordinated Debt is and shall be expressly subordinate and junior in right of payment to the prior payment in full in cash of the Senior Debt to the extent and in the manner set forth herein, and the Subordinated Debt is hereby so subordinated as a claim against Subordinated Borrower or any of the assets of Subordinated Borrower, whether such claim be (i) in the event of any distribution of the assets of Subordinated Borrower upon any voluntary or involuntary dissolution, winding-up, total or partial liquidation or reorganization, or bankruptcy, insolvency, receivership or other statutory or common law proceedings or arrangements involving Subordinated Borrower or the readjustment of its liabilities or any assignment for the benefit of creditors or any marshaling of its assets or liabilities (collectively called a "Reorganization"), or (ii) other than in connection with a Reorganization, to the prior payment in full in cash of the Senior Debt. (b) If Subordinated Lender shall receive any payment in violation of the terms hereof, it shall hold such payment in trust for the benefit of the Senior Creditors and forthwith pay it over to the Senior Creditors, ratably according to the aggregate amounts remaining unpaid on account of the Senior Debt, for application to and payment of the Senior Debt. (c) In the event of any Reorganization relative to Subordinated Borrower or its properties, then all of the Senior Debt shall first be paid in full in cash before any payment is made upon the Subordinated Debt, and in any such proceedings any payment or distribution of any kind or character, whether in cash or property or securities, which may be payable or deliverable in respect of the Subordinated Debt shall be paid or delivered directly to the Senior Creditors, ratably according to the aggregate amounts remaining unpaid on account of the Senior Debt, for application in payment of the Senior Debt, unless and until all the Senior Debt is paid in full in cash, and Subordinated Lender hereby irrevocably authorizes the Agent, as attorney-in-fact for Subordinated Lender, to vote any claim or proof of claim in such proceedings in respect of the Subordinated Debt, to file or prove any claim in such proceedings in respect of the Subordinated Debt, to demand, sue for, collect and receive any such payment or distribution, to apply such payment or distribution to the payment of the Senior Debt, and to take such other action (including acceptance or rejection of any plan of Reorganization) in the name of Subordinated Lender or of the relevant Senior Creditors as the Agent may deem necessary or advisable for the enforcement of the provisions hereof. Subordinated Lender shall execute and deliver such other and further powers of 6 attorney, assignments, proofs of claim or other instruments, and take such other actions, as may be requested by the Agent in order to enable the Agent to accomplish any of the foregoing, but only with respect to Subordinated Lender's capacity as a holder hereof and not in respect of any other relationship between Subordinated Lender and Subordinated Borrower. Consistent with, but not in limitation of, the foregoing, in such an event, the Agent shall be deemed to be the assigned (and thus the holder) of such claims or proof of claims and shall have the right to assert and vote such claims in any Reorganization, including, without limitation, through the filing of any proof of claim therein and the casting of any ballots to accept or reject any plan of reorganization proposed by, for, or with respect to any such Reorganization. (d) In the event that, notwithstanding the foregoing, upon any such Reorganization, any payment or distribution of the assets of Subordinated Borrower of any kind or character, whether in cash, property or securities, shall be received by Subordinated Lender in respect of the Subordinated Debt before all Senior Debt is paid in full in cash, such payment or distribution shall be held in trust for the Senior Creditors and shall forthwith be paid over to the Senior Creditors, ratably according to the aggregate amounts remaining unpaid on account of the Senior Debt, for application to the payment of the Senior Debt until all Senior Debt shall have been paid in full in cash. (e) Subordinated Lender agrees that, until the Senior Debt has been paid in full in cash, except as expressly provided by Section 3.1, it will not take, demand or receive, or take any action to accelerate or collect, any payment of all or any part of the Subordinated Debt. (f) The Senior Creditors, or any of them, may, at any time and from time to time, without the consent of or notice to Subordinated Lender, without incurring any responsibility to Subordinated Lender, and without impairing or releasing any of the rights of any Senior Creditor, or any of the obligations of Subordinated Lender: (i) change the amount or terms of or renew or extend any Senior Debt or enter into or amend in any manner any agreement relating to any Senior Debt; (ii) sell, exchange, release or otherwise deal with any property at any time pledged or mortgaged to secure any Senior Debt; (iii) release anyone liable in any manner for the payment or collection of any Senior Debt; and (iv) exercise or refrain from exercising any rights against Subordinated Borrower and others (including Subordinated Lender). (g) Subordinated Lender hereby waives notice of or proof of reliance by any Senior Creditor upon the provisions hereof, and the Senior Debt shall conclusively be deemed to have been created, contracted, incurred or maintained in reliance upon the provisions hereof. (h) Each Senior Creditor shall be a third-party beneficiary of the provisions of this Section 3.2. 7 ARTICLE IV. REPRESENTATIONS AND WARRANTIES Each Agreement Party represents and warrants to each Guarantied Party that: SECTION IV.1. Authorization. Such Agreement Party (a) has the power to execute, deliver and perform this Agreement and (b) has taken all necessary action to authorize the execution, delivery and performance by it of this Agreement. SECTION IV.2. No Conflict. The execution, delivery and performance by such Agreement Party of this Agreement does not and will not (a) contravene or conflict with any provision of any law, statute, rule or regulation, (b) contravene or conflict with, result in any breach of, or constitute a default under, any material agreement or instrument binding on such Agreement Party or any of its Subsidiaries (including, without limitation, any writ, judgment, injunction or other similar court order), (c) result in the creation or imposition of or the obligation to create or impose any Lien upon any of the property or assets of such Agreement Party or any of its Subsidiaries or (d) contravene or conflict with any provision of the articles of incorporation or bylaws of such Agreement Party. SECTION IV.3. Binding Effect. This Agreement constitutes the legal, valid and binding obligations of such Agreement Party, enforceable against such Agreement Party in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, or similar laws affecting the enforcement of creditors' rights generally or by equitable principles relating to enforceability. ARTICLE V. MISCELLANEOUS SECTION V.1. Indemnity. Each Agreement Party agrees to indemnify the Agent, each Bank, their Affiliates and their respective directors, officers, employees, persons controlling or controlled by any of them or their respective agents, consultants, attorneys and advisors (the "Indemnified Parties") and hold each Indemnified Party harmless from and against any and all liabilities, losses, claims, damages, costs and expenses of any kind to which any of the Indemnified Parties may become subject, whether directly or indirectly (including, without limitation, the reasonable fees and disbursements of counsel for any Indemnified Party), relating to or arising out of this Agreement; provided, that no Indemnified Party shall have the right to be indemnified hereunder for its own gross negligence or willful misconduct as determined by a court of competent jurisdiction. All obligations of each Agreement Party provided for in this Section 5.1 shall survive termination of the Credit Agreement, any Conseco Guaranty Document and this Agreement. SECTION V.2. Notices. All notices, requests and other communications to any party hereunder shall be in writing (including facsimile or similar writing) and shall be given to such party at its address or facsimile number set forth on the signature pages hereof or such other address or facsimile number as such party may hereafter specify for the purpose by written notice to the Agent. Each such notice, request or other communication shall be effective (a) if given by facsimile, when such facsimile is transmitted to the facsimile number specified in this Section 5.2, (b) if given by mail, seventy-two (72) hours after such communication is deposited in the mails with 8 first class postage prepaid, addressed as aforesaid or (c) if given by any other means, when delivered at the address specified in this Section 5.2. SECTION V.3. Successors and Assigns. This Agreement, and the terms, covenants and conditions hereof, shall be binding upon and inure to the benefit of the parties hereto, and their respective successors and assigns, except no Agreement Party shall be permitted to assign this Agreement nor any interest or obligation herein without the consent of the Agent. SECTION V.4. SUBMISSION TO JURISDICTION, ETC. EACH AGREEMENT PARTY AND THE AGENT HEREBY IRREVOCABLY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE SUPREME COURT OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK OVER ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND EACH AGREEMENT PARTY AND THE AGENT HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE OR TO THE EXTENT PERMITTED BY LAW, FEDERAL COURT. EACH AGREEMENT PARTY AND THE AGENT HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE IN ANY ACTION OR PROCEEDING (WHETHER BROUGHT BY ANY AGREEMENT PARTY OR ANY OF THEIR RESPECTIVE SUBSIDIARIES, THE AGENT, ANY BANK OR OTHERWISE) IN ANY COURT HEREIN ABOVE SPECIFIED IN THIS SECTION 5.4 AS WELL AS ANY RIGHT IT MAY NOW OR HEREAFTER HAVE TO REMOVE ANY SUCH ACTION OR PROCEEDING, ONCE COMMENCED, TO ANOTHER COURT ON THE GROUNDS OF FORUM NON CONVENIENS OR OTHERWISE. EACH AGREEMENT PARTY AND THE AGENT 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. SECTION V.5. Amendments; Release. Notwithstanding anything to the contrary contained in the Credit Agreement, the provisions of this Agreement may from time to time be amended, modified or waived, if such amendment, modification or waiver is in writing and consented to by each affected Agreement Party and the Agent (with the consent of the Required Banks), and then any such amendment, modification, waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided that, except as set forth in Section 5.14 of this Agreement, no such amendment, modification or waiver which would permit the release or termination of all or a substantial portion of Guarantor's obligations under this Agreement shall be effective without the consent of each Bank. SECTION V.6. Section Headings. The section headings in this Agreement are inserted for convenience of reference and shall not be considered a part of this Agreement or used in its interpretation. SECTION V.7. Acknowledgments. No action of the Agent permitted hereunder shall in any way affect or impair the rights of the Agent and the obligations of each Agreement Party under this Agreement. Each Agreement Party hereby acknowledges that there are no conditions to the effectiveness of this Agreement. 9 SECTION V.8. Obligations Not Limited. All obligations of the Guarantor and rights of the Guarantied Parties in respect of the Guarantied Obligations expressed in this Agreement shall be in addition to and not in limitation of those provided in applicable law or in any other written instrument or agreement relating to any of the Guarantied Obligations. SECTION V.9. GOVERNING LAW. THIS AGREEMENT SHALL BE A CONTRACT MADE UNDER AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. SECTION V.10. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall for all purposes be deemed an original, but all such counterparts shall constitute but one and the same agreement. Each Agreement Party hereby acknowledges receipt of a true, correct and complete counterpart of this Agreement. SECTION V.11. Agent. The Agent acts herein as agent for itself, the Banks and any and all future holders of the Guarantied Obligations. SECTION V.12. WAIVER OF TRIAL BY JURY. EACH AGREEMENT PARTY AND THE AGENT HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM CONCERNING ANY RIGHTS UNDER THIS AGREEMENT OR ANY OTHER DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH, OR ARISING FROM ANY BANKING RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT AND AGREES THAT ANY SUCH ACTION, PROCEEDING OR COUNTERCLAIM SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY; THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE GUARANTIED PARTIES ENTERING INTO THE RESTRUCTURING DOCUMENT. SECTION V.13. No Limitation on Remedies. No failure to exercise and no delay in exercising, on the part of the Agent or any other Guarantied Party, any right, remedy, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law. SECTION V.14. Release of This Agreement. This Agreement shall be terminated and Guarantor shall be released from all of its obligations hereunder on the first date after the Near-Term Facilities Termination Date on which Conseco, Inc. has Investment Grade Ratings Status, as long as no Default or Event of Default shall have occurred and be continuing on such date. 10 IN WITNESS WHEREOF, each Agreement Party has caused this Guaranty and Subordination Agreement to be duly executed and delivered by its officer thereunto duly authorized as of the date first above written. CIHC, INCORPORATED, as Guarantor and Subordinated Borrower By: /s/ David A. Hill ------------------------------------- Name: David A. Hill Title: Vice-President Address for Notices: 11825 North Pennsylvania Street Carmel, Indiana 46032 Attention: David K. Herzog Telephone: 317-817-5031 Fax: 317-817-6327 CONSECO, INC., as Obligor and Subordinated Lender By: /s/ Thomas M. Hagerty ------------------------------------- Name: Thomas M. Hagerty Title: Acting Chief Financial Officer Address for Notices: 11825 North Pennsylvania Street Carmel, Indiana 46032 Attention: David K. Herzog Telephone: 317-817-5031 Fax: 317-817-6327 11 EX-99 14 0014.txt EXHIBIT 99.1 Exhibit 99.1 FOR RELEASE Immediate CONTACTS (NEWS MEDIA) Mark Lubbers, EVP, External Relations 317.817.4418 (INVESTORS) Tammy Hill, SVP, Investor Relations 317.817.2893 CONSECO "RESTORATION PLAN" MOVES FORWARD COMPANY AND BANKS CLOSE ON DEBT RESTRUCTURING DEBT TO BE CUT BY $3 BILLION OVER 3 YEARS INDIANAPOLIS, IND.: SEPT. 22, 2000 - Conseco, Inc. (NYSE:CNC) today announced that its lender banks have signed amendments that will restructure the company's credit facilities. The restructuring of this debt is a key component of the "Restoration Plan" initiated by Gary C. Wendt after he joined Conseco on June 29 as Chairman and CEO. The agreement with the banks covers $2.8 billion of debt held by a 25-bank consortium led by Bank of America and Chase Manhattan Bank. Wendt called the terms of the debt restructuring important news, but said, "the larger story here - what we call the Conseco Restoration Plan - is the complete re-engineering of the company's financial structure. We are executing a plan that provides long term stability and flexibility for our capital structure." Over the past four years, Conseco's bank and public debt had increased to approximately $5.9 billion. The Restoration Plan calls for reducing the company's debt by more than $3 billion by year-end 2003, reducing Conseco's debt from 41% of total capital to less than 25%. More importantly, the Restoration Plan allows Conseco to meet its debt obligations and improve its capital structure dramatically without impacting its core businesses. The beginning elements of the Conseco Restoration Plan center around two initiatives: (1) selling non-strategic assets of the company, and (2) restructuring the operations of Conseco Finance. These initiatives to generate cash were implemented by Wendt soon after his arrival at Conseco; they have proceeded ahead of schedule. -more- Conseco (2) Sept. 22, 2000 Over the next three years, these two cash-generating components of the Restoration Plan are designed to enable Conseco to repay $1.52 billion in bank debt and $1.56 billion in public debt. To begin the debt reduction program the company has identified more than $2 billion in assets to be sold or monetized. More than $700 million of proceeds from these activities have already been realized; total proceeds are expected to exceed $1 billion by year-end 2000. The initial stages of the restructuring of Conseco Finance operations were announced on July 27. That plan, designed to assure stable growth, included the lay-off of 2000 employees and over $150 million in annual expense reductions. Major elements of the Restoration Plan, including terms of the bank debt restructuring, include: o Payment of $650 million in bank debt on September 22, 2000; o Payment of 2001 and 2002 public debt as scheduled ($131 million in December 2000 and $668 million in June 2001); o Extension of $571 million of bank debt to December 31, 2001 funded by the sale of non-strategic assets; o Payment of 2003 and 2004 public debt as scheduled ($450 million in October 2002 and $310 million in February 2003); o On $1.5 billion of bank debt previously due September 2003, payments of $150 million in each of 2002 and 2003, with an option to extend the remaining $1.2 billion to 2005; o Extension to December 2003 of the $570 million of loans and related Conseco guarantees comprising the Conseco directors and officers stock purchase program (to qualify for the loan and guarantee extensions, borrowers will be required to enter into a revised lending program, which will be finalized in the 4th quarter); o Suspension of the dividend on Conseco common stock beginning in the current quarter (providing approximately $18 million per quarter toward the financial restructuring); Wendt said that winning back top-drawer insurance and debt ratings would be the next step in the Restoration Plan. "With a stable and flexible financial structure in place, we can turn our full attention to building consistently profitable business operations." - # # # # - WORLD WIDE WEB http://www.conseco.com INVESTOR HOTLINE 800.4.CONSECO FAX-ON-DEMAND 800.344.6452 Conseco (3) Sept. 22, 2000 Note on forward-looking statements: All statements, trend analyses and other information contained in this release 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," "intend," "will," "should," "could," "goal," "target," "on track," "comfortable with," "optimistic" and other similar expressions, constitute forward-looking statements under the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to known and unknown risks, uncertainties and other factors which may cause actual results to be materially different from those contemplated by the forward-looking statements. Such factors include, among other things: (1) 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; (2) Conseco's ability to achieve anticipated synergies and levels of operational efficiencies; (3) customer response to new products, distribution channels and marketing initiatives; (4) mortality, morbidity, usage of health care services and other factors which may affect the profitability of Conseco's insurance products; (5) performance of our investments; (6) changes in the Federal income tax laws and regulations which may affect the relative tax advantages of some of Conseco's products; (7) increasing competition in the sale of insurance and annuities and in the finance business; (8) regulatory changes or actions, including those relating to regulation of financial services affecting (among other things) bank sales and underwriting of insurance products, regulation of the sale, underwriting and pricing of products, and health care regulation affecting health insurance products; (9) the outcome of Conseco's efforts to sell assets and reduce, refinance or modify indebtedness and the availability and cost of capital in connection with this process; (10) actions by rating agencies and the effects of past or future actions by these agencies on Conseco's business; and (11) the risk factors or uncertainties listed from time to time in Conseco's filings with the Securities and Exchange Commission. EX-99 15 0015.txt EXHIBIT 99.2 Exhibit 99.2 CONSECO LOGO Security Analysts Update COMPREHENSIVE DEBT RESTRUCTURING PROGRAM Restores responsible debt levels and stability to the balance sheet and in the operating Businesses. Forward-Looking Statement Conseco Logo Note on forward-looking statements: All statements, trend analyses and other information contained in this release 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," "intend," "will," "should," "could," "goal," "target," "on track," "comfortable with," "optimistic" and other similar expressions, constitute forward-looking statements under the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to known and unknown risks, uncertainties and other factors which may cause actual results to be materially different from those contemplated by the forward-looking statements. Such factors include, among other things: (1) 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; (2) Conseco's ability to achieve anticipated synergies and levels of operational efficiencies; (3) customer response to new products, distribution channels and marketing initiatives; (4) mortality, morbidity, usage of health care services and other factors which may affect the profitability of Conseco's insurance products; (5) performance of our investments; (6) changes in the Federal income tax laws and regulations which may affect the relative tax advantages of some of Conseco's products; (7) increasing competition in the sale of insurance and annuities and in the finance business; (8) regulatory changes or actions, including those relating to regulation of financial services affecting (among other things) bank sales and underwriting of insurance products, regulation of the sale, underwriting and pricing of products, and health care regulation affecting health insurance products; (9) the outcome of Conseco's efforts to sell assets and reduce, refinance or modify indebtedness and the availability and cost of capital in connection with this process; (10) actions by rating agencies and the effects of past or future actions by these agencies on Conseco's business; and (11) the risk factors or uncertainties listed from time to time in Conseco's filings with the Securities and Exchange Commission. 2 The Market's View of Conseco? Conseco Logo Image of a weight lifter with the word FINANCE written on his left arm and the word INSURANCE written on his right struggling to lift a dumbbell that has the word HOLDING on it 3 What is Conseco? Conseco Logo The appropriate depiction of Conseco, as we see it. Insurance Co's Finance Co - -------------- ---------- Strengths Strengths - --------- --------- o Valuable distribution o Disciplined credit risk and -#1 in agent-produced medial pricing philosophies supplement insurance o 30% market share in manufactured -#2 in long-term care insurance housing -#3 in equity-indexed annuities o Growing position in less o Solid RBC (2.58 at 6/30/00) competitive home equity market o Highly liquid investment-grade bond o Sophisticated target marketing portfolio and segmentation o Emerging Conseco Capital Mgt. Holding Co. ----------- o Bloated debt o "Corporate" expenses o Non-strategic equity inv. 4 Conseco Parent: Debt and Trust Preferred Securities (Accumulation Period) Conseco Logo (MM) Outstandings Bar Chart Graphic demonstrating levels of Public - ------------ Debt, Bank Debt and Trust Preferreds. Total Debt + Preferreds
1st 1/2 1996 1997 1998 1999 2000 ---------------------------------------------------------------------- CASH Inflow From Operating Activities -------------------------------- Insurance Companies $ 221.2 $ 326.0 $ 277.7 $ 361.8 $ 225.0 Finance Company - - (1,971.0) (1,246.0) (284.0)(1) Other 1.6 (19.9) 17.6 (23.3) 28.5 ---------------------------------------------------------------------- Total Operating Cash Flow $ 222.8 $ 306.1 $ (1,675.7) $ (907.5) $ (30.5) ====================================================================== CASH Outflow to Service H.C. Debt ---------------------------- Bank and Public Debt Interest $ 78.6 $ 143.9 $ 236.3 $ 345.5 $ 222.8 Preferred Dividends 2.9 65.7 132.6 193.7 115.6 ---------------------------------------------------------------------- Total Fixed Charges $ 81.5 $ 209.6 $ 368.9 $ 539.2 $ 338.4 ======================================================================
(1) Does not include proceeds to parent from whole loan sale in May 2000 Two Issues: 1. Total Debt 2. Finance Cash Flow 5 New Team Assembled In Early July Faced Conseco Logo Immediate Motivating "Total Debt" Issue June 29, 2000 July 10, 2000 July 10, 2000 ------------- ------------- ------------- 1)Gary Wendt employed 2)Street, Keenoy, Borom employed 3)Tom Hagerty employed as CEO as "Restoration Activists" as acting CFO July 2000 Debt Maturities 2000 and 2001 (excluding Officer & Director Guarantees) - ----------------------------------------------------------------------- Bank Debt 9/22/00 $1,221.0 Public Debt 12/15/00 131.5 Subtotal 2000 $1,352.5 ============== Public Debt Due June, 2001 $668.9 Total $2,021.4 ============== Objective: Find a Solution that Looks Beyond "Sept 01" - ------------------------------------------------------- 6 Responsive Actions Began Immediately Conseco Logo Objective: Reduce debt to responsible levels without disrupting income producing activities June 29, 2000 July 10, 2000 July 10, 2000 ------------- ------------- ------------- 1)Gary Wendt employed 2)Street, Keenoy, Borom employed 3)Tom Hagerty employed as CEO as "Restoration Activists" as acting CFO July 2000 New Management lifted the bar with two actions: Graphic of dumbbell the length of the page Nonstrategic assets Major restructuring of Conseco Finance underway "rounded up" and - 5 business activities to be sold/closed; sales underway - 15 branches in MH being closed; - 31 branches in home equity being closed; - 2000 total employees laid off; - $150 million expense reductions - Plus: Slow the Growth Actions would provide $2 billion for debt repayment over the next five quarters and stop the need to invest more in Finance without changing strategic position 7 Solved By Proposing a Comprehensive Program Conseco Logo For Debt Reduction: Years 2000 and 2001 - ------------- -------------- ----------- Parent Co. Insurance Cos. Private Equity Finance Co. Investments - ------------- -------------- ----------- | | | | | | | | | | | | | | Non-strategic | Non-strategic | | ------------------- | -------------- | assets | | | assets | | | | | \|/ \|/ \|/ | ------------------------------- | "The Box" |Cash from |reinsurance 1. Assets to be sold/run down - ------------------- in non-fire sale mode proceeds, 2. All cash to be used to pay if necessary debt ------------------------------- /\ / \ / \ / \ / \ Pay public debt Reduce bank debt as required ($1.2 billion repaid by the ($800 million due end of 2001) 2000 and 2001) 8 Significant Non-Strategic Assets Were Identified That Conseco Logo Would Result in Significant Cash Proceeds and Elimination of Expenses Progress in Restoration Activities Taken Thus Far Is Very Positive:
Net Cash Potential When Item: Proceeds Change Expected Comments on Potential Upside --------------------------------------------------------------------------------- Sub Prime Auto Receivables $ 150 mm DONE VISA/MC Portfolio 150 + 32 DONE Projected collections on delinquent A/R not sold as part of transaction Identify Ineligible Inventory 25 DONE Move Credit Card to CNC Bank 245 + 33 DONE Incremental PLCC available to be Refinancing of B-2's 80 + 20 AGREED transferred Part of Lehman agreement ABL Portfolio 40 + 3 DONE Completed LOC for Servicer Advances 30 Champion Home 30 Fleetwood/Palm Harbor 100 + 10 Incremental overconcentration from Renegotiate Repo Lines with Merrill Lynch 45 + 7 WORK Patriot Homes Merrill proposal to Financing/Sale of Insurance Receivables 90 UNDER increase advance rates Argosy Riverboat 225 + 65 WAY Appraisals support higher valuation Vendor Services 110 + 10 Fifteen oral indications of interest. Tritel 500 Major Medical Line 150 Truck Portfolio 50 + 30 New strategy to sell truck lease ------------ ---------- portfolio; run-off loans SUBTOTAL -Sales/Restructurings $ 2,020 mm $ 210 Apply Cash Available 155 ------------ TOTAL $ 2,175 mm ============
-------------------------------- No fire sales! Strategy works! -------------------------------- 9 Operating "The Box" - 2000 / 2001 Conseco Logo Cash at Closing Status - --------------- ------ MC Visa Cash $150 mm - Done $700mm [$650 TO BANKS] Subprime Auto Cash $150 - Done -------> Private Label Credit Card $245 - Done [$50 TO BANKS Cash on Hand $155 FOR D&O ---- COLLATERAL] $700 - -------------------------------------------------------------------------------- Expected 2000 Asset Sales Status - ------------------------- ------ ABL Portfolio $ 40 - Done Ineligible Inventory $ 25 - Done B-2's $ 80 - Agreement from Lehman Palm Harbor/Fleetwood $100 - Oral Agreement to Repay $800mm [$100 TO CNC] Servicer Advances $ 30 - Discussions Commenced -------> [$100 TO BANKS] Renegotiate Repo lines $ 45 - Oral Agreement with ML [$600 FOR PUBLIC DEBT] Monetize Insurance Rec. $ 90 - Process Underway Champion Homes $ 30 - Company In Agreement to Repay Argosy $225 - Appraisals Received Vendor Services $110 - Preliminary Bids Due 9/15 Truck Leasing $ 25 ----- $800 - -------------------------------------------------------------------------------- Expected 2001 Asset Sales Status - ------------------------- ------ Monetize Tritel $500 - Discussions Underway $675mm [$200 FOR PUBLIC DEBT] Insurance Lines $150 - Offering Memo Complete -------> [$475 TO BANKS] Truck Leasing $ 25 - Run-off ---- $675
10 Why Conseco Finance Now Cash Positive Conseco Logo O DRAMATIC REDUCTION IN GROWTH o $20 billion managed receivable growth mid 1998-2000 o Restructured business plan assumes managed receivables growth thru 2004 grows less than $5 billion O OVER $1 BILLION IN B-2 PIECE MID 1998-2000 o Prior strategy was to retain assets which yielded above cost of borrowing o Now selling of B-2's as part of plan - - consistent with past practices O EXPENSE IMPLICATIONS OF RESTRUCTURED BUSINESS PLAN o Significantly downsized expense structure results in $150 million ongoing expense savings o Elimination of sub-scale/unprofitable business lines (e.g. Truck and ABL) O RECENT FINANCING TRANSACTIONS O CORPORATE TAX STATUS UPDATE o Recent securitizations require o Completion of 1999 returns 5% cash vs. 7% cash in business indicates ongoing NOL's. model. o Warehouse efficiencies and line o Intercompany tax sharing reduction will free up working payments are well in capital. excess of corporate tax obligations. O COMPETITIVE ENVIRONEMNT o Decreased competition will allow for whole loan sales. o Better spreads available for retained business. 11 Progress in Restructuring The Finance Company Conseco Logo - - 5 BUSINESS ACTIVITIES TO BE - 31 BRANCHES IN HOME EQUITY - $150 MILLION EXPENSE SOLD/CLOSED; BEING CLOSED; REDUCTIONS ; - - 15 BRANCHES IN MH BEING CLOSED; - 2000 TOTAL EMPLOYEES LAID OFF; - SLOW THE GROWTH
2000 2001 2002 2003 2004 ------------- ------------- ------------- ------------- ------------- ORIGINATION POTENTIAL ($16.6B IN 1999) $15.0 BILLION $15.0 BILLION $15.0 BILLION $15.0 BILLION $15.0 BILLION ORIGINATIONS SOUGHT $10.0 BILLION $10.0 BILLION $11.0 BILLION $12.0 BILLION $12.0 BILLION USED TO REPLACE/BUILD $9.9 BILLION $7.5 BILLION $7.5 BILLION $7.5 BILLION $8.0 BILLION ------------- ------------- ------------- ------------- ------------- Available for outplacement $.1 Billion $2.5 Billion $3.5 Billion $4.5 Billion $4.0 Billion Operating cash flows $ 404 $ 507 $ 544 $ 653 $ 713 ===================================================================================== REQUIRED FOR DEBT REPAYMENT @ CORP. NA $ 250 $ 335 $ 385 $ 450 ============= ============= ============= ============= =============
12 Insurance Operating Results - GAAP Basis Conseco Logo
1999 2000 2001 2002 2003 2004 ----------- ----------- ------------ ---------- ---------- ----------- Revenue Insurance policy income $ 3,149.3 $ 3,291.8 $ 3,446.6 $ 3,672.8 $ 3,866.8 $ 4,164.5 Net investment income 1,819.5 1,809.3 1,818.5 1,863.1 1,940.1 2,091.5 Other income - 1.2 - - ----------- ----------- ------------ ---------- ---------- ----------- Total revenue $ 4,968.8 $ 5,102.3 $ 5,265.1 $ 5,535.9 $ 5,806.9 $ 6,256.0 =========== =========== ============ ========== ========== =========== Cash to Parent $ 361.8 $ 450.0 $ 450.0 $ 475.0 $ 510.0 $ 510.0 =========== =========== ============ ========== ========== ===========
o Aggressive expense management and staff reductions o Review of operating process to improve productivity o Focus on most profitable products - add to product offerings where appropriate o Target revenue growth of 5 - 6% per year Note: Projections exclude major medical. 13 Comprehensive Debt Restructuring Debt Repayment 2000-2003; 2005 Conseco Logo
- ------------------------------------------------------------------------------------------------------------------------------ Sept.-Dec. Sept.-Dec. 2000 2001 2002 2003 -------------- --------------- -------------- -------------- Cash Sources: Cash on Hand $ 280 $ 330 $ 420 $ 263 Operating Cash: Insurance 160 450 475 510 Finance 73 250 335 385 -------------- --------------- -------------- -------------- Subtotal Operating Cash 233 700 810 895 CNC "Box" Participation 130 - 90 - -------------- --------------- -------------- -------------- Total Cash Sources 643 1,030 1,320 1,158 ------------- SEE THE "BOX" Prepay $90 ------> ------------- Cash Uses: Principal Payments: Banks 60 150 Public 450 310 Interest 163 430 375 315 Dividends 95 180 172 172 Fees 55 - - - -------------- --------------- -------------- -------------- Total Cash Uses 313 610 1,057 947 -------------- --------------- -------------- -------------- Ending Cash $ 330 $ 420 $ 263 $ 211 ============== =============== ============== ============== - ------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- '03 OPTION GRANTED BY BANKS TO COMPANY EXTEND 12/31/03 MATURITY TO 3/31/05 - Libor plus 250 - 3.5% fee (added to loan amount) - -------------------------------------------------------------------------------- 14 Liquidity Overview at Closing Conseco Logo
HOLDING FINANCE ($'S IN MILLIONS) COMPANY COMPANY TOTAL ------------- ------------- -------------- CASH/LIQUIDITY-PRE CLOSE $ 1,165 $ 100 $ 1,265 REPAYMENTS OF DEBT (650) - (650) D&O COLLATERAL (50) - (50) ------------- ------------- -------------- TOTAL LIQUIDITY AFTER CLOSING $ 465 $ 100 $ 565 ============= ============= ==============
- -------------------------------------------------------------------------------- ALREADY HAVE CASH TO PAY DEC. '00 DEBT OF $131 MILLION AND $175 MILLION TOWARDS JUNE '01 MATURITY, WHILE MAINTAINING IN EXCESS OF $200 MILLION OF OVERALL LIQUIDITY. - -------------------------------------------------------------------------------- 15 Restoration Program Outcome Conseco Logo - Debt and preferred paydown exceed $3.5 billion under plan - Lowest debt/equity ratio since 1996 by end of 2003
---------------- DEBT ($'s in millions) 12/31/97 12/31/98 12/31/99 6/30/00 12/31/00 12/31/01 12/31/02 12/31/03 PAID DOWN --------------------------------------------- --------------------------------------------- ---------------- Bank debt $ 1,850 $ 2,280 $ 2,180 $ 2,720 $ 1,970 $ 1,500 $ 1,350 $ 1,200 $ 1,520 Public debt 500 1,540 2,660 3,180 3,040 2,380 1,930 1,620 1,560 --------------------------------------------- --------------------------------------------- ---------------- Total debt 2,350 3,820 4,840 5,900 5,010 3,880 3,280 2,820 $ 3,080 ================ Trust preferreds 1,400 2,130 2,680 2,430 2,430 1,930 1,930 1,930 $ 500 ---------------- Common equity 5,220 5,300 6,330 5,890 5,890 6,900 7,420 7,950 $3,580 --------------------------------------------- --------------------------------------------- Total capital $ 8,970 $ 11,250 $ 13,850 $ 14,220 $ 13,330 $ 12,710 $ 12,630 $ 12,700 = TOTAL PAYDOWNS ============================================= ============================================= ---------------- ---------------- Debt to total capital 26.2% 34.0% 34.9% 41.5% 37.6% 30.5% 26.0% 22.2%
------------------------------------- At Close, Net Debt = $4,941 mm Debt Service = $500 mm Running Rate '01 Cash from Operations = $700 mm Coverage on Bank & Public Debt = 1.4X Total Coverage = 1.1X ------------------------------------- 16 Strong Operating Businesses Will Cover Fixed Charges Conseco Logo During '01 (first time since '97) Debt and Trust Preferred Paydown Plan Bar Chart Graphic demonstrating levels of Public Debt, Bank Debt and Trust Preferreds.
First Half CASH INFLOWS 1996 1997 1998 1999 2000 --------------------------------------------------------------------------------- Insurance Companies $221.2 $326.0 $ 277.7 $ 361.8 $225.0 Finance Company - - (1,971.0) (1,246.0) (284.0) Other 1.6 (19.9) 17.6 (23.3) 28.5 --------------------------------------------------------------------------------- Total Operating Cash Flow $222.8 $306.1 $(1,675.7) $ (907.5) $(30.5) ================================================================================= Second Half CASH INFLOWS 2000 2001 2002 2003 --------------------------------------------------------------------- Insurance Companies $ 225.0 $450.0 $475.0 $510.0 Finance Company 50.0 250.0 335.0 385.0 Other - - - - --------------------------------------------------------------------- Total Operating Cash Flow $ 275.0 $700.0 $810.0 $895.0 =====================================================================
17 Conclusion Conseco Logo o The Company Has Achieved the First Major Stride in Its "Restoration Plan" o Restructuring: o Manage Holding Company Debt -- Agreements in Place o Disposing of or Closing Non-Strategic Assets --Well Underway o Realignment o Cost Reductions --Executed at Finance --Begun Process at Insurance Operations o Setting Responsible - but Stretch Goals --Done o Pay for Performance --In Process o Reinvigoration o Quality o Productivity o Growth 18 How to View the New Conseco! Conseco Logo Image of a weight lifter with the word FINANCE written on his left arm and the word INSURANCE written on his right easily lifting a dumbbell that has the word HOLDING on it. Left side of weight lifter image: "Middle Market" - with arrow pointing to right arm. Sales Focus - - several strong positions - - non-insurance company efficiencies Positive Cash - with arrow pointing to dumbbell Minimum expenses - with arrow pointing to dumbbell Right side of weight lifter image: Market Leaders in - - M.H. financing - with arrow pointing to left arm - - Home improvement financing - with arrow pointing to left arm Positive Cash - with arrow pointing to dumbbell Responsible Debt - with arrow pointing to dumbbell 19 -----END PRIVACY-ENHANCED MESSAGE-----