exhibit106.htm


    Exhibit 10.6

     

    

 

     
 

    45,000,000
Shares

     

    


     

    


     

    CONSECO,
INC.

     

    


     

    COMMON
STOCK, PAR VALUE $0.01 PER SHARE

     

    


     

    


     

    


     

    


     

    


     

    UNDERWRITING
AGREEMENT

     

     

    December
16, 2009

    



    
      
         


      

      
         


        
          

        

      

      
         


      

    


    December
16, 2009

     

    Morgan
Stanley & Co. Incorporated

    As
Representative of the Several

    Underwriters
listed in Schedule I hereto

    
      	
              c/o

            	
              Morgan
      Stanley & Co. Incorporated

            


    

    
      	
               
      

            	
              1585
      Broadway

            


    

    
      	
               
      

            	
              New
      York, New York 10036

            


    

     

    Ladies
and Gentlemen:

     

    Conseco,
Inc., a Delaware corporation (the “Company”), proposes to issue
and sell to the several Underwriters named in Schedule I hereto (the “Underwriters”), an aggregate
of 45,000,000 shares of common stock, par value $0.01 per share, of the Company
(the “Firm Shares”).

     

    The
Company also proposes to issue and sell to the several Underwriters not more
than an additional 4,500,000 shares of its common stock, par value $0.01 per
share (the “Additional
Shares”), if and to the extent that you, as Representative of the
Underwriters (the “Representative”), shall have
determined to exercise, on behalf of the Underwriters, the right to purchase
such Additional Shares in accordance with Section 2 hereof.  The
Firm Shares and the Additional Shares are hereinafter collectively referred to
as the “Shares.” The
shares of common stock, par value $0.01 per share, of the Company to be
outstanding after giving effect to the sales contemplated hereby are hereinafter
referred to as the “Common
Stock.”

     

    The
Company has filed with the Securities and Exchange Commission (the “Commission”) a registration
statement on Form S-1 (File No. 333-163204), including a prospectus, relating to
the Shares. The registration statement as amended at the time it became
effective, including the information (if any) deemed to be part of the
registration statement at the time of effectiveness pursuant to Rule 430A
under the Securities Act of 1933, as amended (the “Securities Act”), is
hereinafter referred to as the “Registration Statement”; the
prospectus in the form first used to confirm sales of Shares (or in the form
first made available to the Underwriters by the Company to meet requests of
purchasers pursuant to Rule 173 under the Securities Act) is hereinafter
referred to as the “Prospectus.” If the Company
has filed an abbreviated registration statement to register additional shares of
Common Stock pursuant to Rule 462(b) under the Securities Act (the “Rule 462 Registration
Statement”), then any reference herein to the term “Registration Statement” shall
be deemed to include such Rule 462 Registration Statement.

     

    For
purposes of this Agreement, “free writing prospectus” has
the meaning set forth in Rule 405 under the Securities Act, “Time of Sale 

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

       

      Prospectus” means the
preliminary prospectus together with the free writing prospectuses, if any, each
identified in Schedule II hereto, and “broadly available road show”
means a “bona fide electronic road show” as defined in Rule 433(h)(5) under the
Securities Act that has been made available without restriction to any
person.  As used herein, the terms “Registration Statement,”
“preliminary prospectus,” “Time of Sale Prospectus” and “Prospectus” shall
include the documents, if any, incorporated by reference
therein.

    

     

    1. Representations and Warranties of
the Company.  The Company represents and warrants to and agrees
with each of the Underwriters that:

     

    (a) The
Registration Statement has become effective; no stop order suspending the
effectiveness of the Registration Statement is in effect, and no proceedings for
such purpose are pending before or threatened by the Commission.

     

    (b) (i) Each
document, if any, filed pursuant to the Securities Exchange Act of 1934, as
amended (the “Exchange
Act”) and incorporated by reference in the Time of Sale Prospectus or the
Prospectus complied when so filed in all material respects with the Exchange Act
and the applicable rules and regulations of the Commission thereunder, (ii) the
Registration Statement, when it became effective, did not contain and, as
amended or supplemented, if applicable, will not contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading, (iii) the
Registration Statement and the Prospectus comply and, as amended or
supplemented, if applicable, will comply in all material respects with the
Securities Act and the applicable rules and regulations of the Commission
thereunder, (iv) the Time of Sale Prospectus does not, and at the time of each
sale of the Shares in connection with the offering when the Prospectus is not
yet available to prospective purchasers and at the Closing Date (as defined in
Section 4), the Time of Sale Prospectus, as then
amended or supplemented by the Company, if applicable, will not, contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading, (v) each broadly available road show, if any,
when considered together with the Time of Sale Prospectus, does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading and (vi) the Prospectus does not contain and, as
amended or supplemented, if applicable, will not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, except that the representations and warranties set forth
in this paragraph do not apply to statements or omissions in the Registration
Statement, the Time of Sale Prospectus, the broadly available road show or the
Prospectus based upon information relating to any Underwriter furnished to the
Company in writing by such Underwriter through you expressly for use therein;
provided that the parties agree that the only information provided 

     

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

       

      by Morgan
Stanley to the Company for inclusion in the Registration Statement, any
preliminary prospectus, the Time of Sale Prospectus, any issuer free writing
prospectus or the Prospectus or any amendment or supplement thereto is set forth
in Section 9(b).

    

     

    (c) The
Company is not an “ineligible issuer” in connection with the offering pursuant
to Rules 164, 405 and 433 under the Securities Act. Any free writing prospectus
that the Company is required to file pursuant to Rule 433(d) under the
Securities Act has been, or will be, filed with the Commission in accordance
with the requirements of the Securities Act and the applicable rules and
regulations of the Commission thereunder. Each free writing prospectus that the
Company has filed, or is required to file, pursuant to Rule 433(d) under the
Securities Act or that was prepared by or on behalf of or used or referred to by
the Company complies or will comply in all material respects with the
requirements of the Securities Act and the applicable rules and regulations of
the Commission thereunder. Except for the free writing prospectuses, if any,
identified in Schedule II hereto, and electronic road shows, if any, each
furnished to you before first use, the Company has not prepared, used or
referred to, and will not, without your prior consent, prepare, use or refer to,
any free writing prospectus.

     

    (d) Neither
the Company nor any of its subsidiaries has sustained since the date of the
latest audited financial statements included in the Time of Sale Prospectus any
loss or interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree, except to the extent that any
such loss or interference would not, individually or in the aggregate, have a
material adverse effect on the current or future business, consolidated
financial position, stockholders’ equity or results of operations of the Company
and its subsidiaries, taken as a whole (a “Material Adverse Effect”), or
otherwise than as set forth or contemplated in the Time of Sale Prospectus; and,
since the respective dates as of which information is given in the Registration
Statement, the Time of Sale Prospectus and the Prospectus, there has not been
any material change in the capital stock or long-term debt of the Company or any
of its subsidiaries or any material adverse change, or any development involving
a prospective material adverse change, in or affecting the general affairs,
management, financial position, stockholders’ equity or results of operations of
the Company and its subsidiaries taken as a whole, in each case otherwise than
as set forth or contemplated in the Time of Sale Prospectus.

     

    (e) The
Company has been duly incorporated and is validly existing as a corporation in
good standing under the laws of the State of Delaware, with power and authority
(corporate and other) to own its properties and conduct its business as
described in the Time of Sale Prospectus, and has been duly qualified as a
foreign corporation for the transaction of business and is in good standing
under the laws of each other jurisdiction in which it owns or leases properties
or conducts any business so as to require such qualification, except to the
extent that the failure to be so qualified or in good standing in any such
jurisdiction would 

     

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

       

      not,
individually or in the aggregate, have a Material Adverse Effect; and each
subsidiary of the Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of its jurisdiction of
incorporation, has the corporate power and authority to own its property and to
conduct its business as described in the Time of Sale Prospectus and is duly
qualified to transact business and is in good standing in each jurisdiction in
which the conduct of its business or its ownership or leasing of property
requires such qualification, except to the extent that the failure to be in good
standing would not, individually or in the aggregate, have a Material Adverse
Effect.

    

     

    (f) The
Company and its subsidiaries have good and marketable title in fee simple to all
real property and good and marketable title to all personal property owned by
them, in each case free and clear of all liens, encumbrances and defects except
such as are described in the Time of Sale Prospectus or such as would not,
individually or in the aggregate, have a Material Adverse Effect; and any real
property and buildings held under lease by the Company and its subsidiaries are
held by them under valid, subsisting and enforceable leases with such exceptions
as would not, individually or in the aggregate, have a Material Adverse
Effect.

     

    (g) The
Company has full corporate power and authority to take, and has duly taken, all
necessary action (corporate and otherwise) to authorize the issuance and sale of
Shares contemplated herein.

     

    (h) This
Agreement has been duly authorized, executed and delivered by the
Company.

     

    (i) The
Company has an authorized capitalization as set forth in the Time of Sale
Prospectus and as will be set forth in the Prospectus under the caption
“Description of Capital Stock”, and all of the issued shares of capital stock of
the Company have been duly and validly authorized and issued, are fully paid and
non-assessable and conform in all material respects to the description of the
capital stock contained in the Time of Sale Prospectus and as will be contained
in the Prospectus under the caption “Description of Capital Stock”; all of the
issued shares of capital stock of each subsidiary of the Company have been duly
and validly authorized and issued, are fully paid and non-assessable and are
owned directly by the Company, free and clear of all liens, encumbrances,
equities or claims, except for liens, encumbrances, equities or claims that
exist pursuant to the Second Amended and Restated Credit Agreement dated as of
October 10, 2006 among the Company, Bank of America, N.A., as Agent, J.P. Morgan
Chase Bank, N.A., as Syndication Agent, and the other parties thereto, as
amended by Amendment No. 1 thereto dated as of June 12, 2007, Amendment No. 2
thereto dated as of March 30, 2009 and Amendment No. 3 thereto dated as of
December 8, 2009 (the “Credit
Agreement”); and, except as disclosed in the Time of Sale Prospectus and
the Prospectus, no options, warrants or other rights to purchase, agreements or
other obligations to issue or other rights to convert any 

     

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

       

      obligations
into or exchange any securities for shares of capital stock of or ownership
interests in the Company’s subsidiaries are outstanding.

    

     

    (j) The
Shares to be sold by the Company have been duly authorized and, when issued and
delivered in accordance with the terms of this Agreement, will be validly
issued, fully paid and non-assessable, and the issuance of such Shares will not
be subject to any preemptive or similar rights, except as provided in the
Investor Rights Agreement dated as of November 13, 2009 (the “Investor Rights Agreement”)
between the Company and Paulson & Co. Inc.

     

    (k) None of
the transactions contemplated by this Agreement (including, without limitation,
the use of the proceeds from the sale of the Shares) will violate or result in a
violation of Section 7 of the Exchange Act, or any regulation promulgated
thereunder, including, without limitation, Regulations G, T, U, and X of the
Board of Governors of the Federal Reserve System.

     

    (l) Prior to
the date hereof, neither the Company nor any of its affiliates has taken any
action which is designed to or which has constituted or which might have been
expected to cause or result in stabilization or manipulation of the price of any
security of the Company in connection with the offering of the
Shares.

     

    (m) The issue
and sale of the Shares by the Company and the compliance by the Company with all
of the provisions of this Agreement and the consummation of the transactions
contemplated herein and in the Time of Sale Prospectus will not (i) result in
any violation of any provisions of the certificate of incorporation or by-laws
of the Company; (ii) conflict with or result in a breach or violation of any of
the terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument to
which the Company or any of its subsidiaries is a party or by which the Company
or any of its subsidiaries is bound or to which any of the property or assets of
the Company or any of its subsidiaries is subject; or (iii) result in any
violation of the provisions of any statute or any order, rule or regulation of
any court or governmental agency or body having jurisdiction over the Company or
any of its subsidiaries or any of their properties, except, with respect to
clauses (ii) and (iii), for such conflicts, breaches, violations, or defaults
which would not, individually or in the aggregate, have a Material Adverse
Effect; and no consent, approval, authorization, order, registration or
qualification of or with any such court or governmental agency or body is
required for the issuance of the Shares or the consummation by the Company of
the offer and sale contemplated herein, except for such consents, approvals,
authorizations, registrations or qualifications as may be required under state
securities or Blue Sky laws of the various states in connection with the offer
and sale of the Shares and for such consents, approvals, authorizations, orders,
registrations, or qualifications the absence of which would not have a Material
Adverse Effect or would not materially impede the ability of the Company to
consummate the offering contemplated herein or perform its obligations under
this Agreement.

     

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    (n) Neither
the Company nor any of its subsidiaries is (i) in violation of its certificate
or articles of incorporation or by-laws or (ii) in default in the performance or
observance of any obligation, agreement, covenant or condition contained in any
indenture, mortgage, deed of trust, loan agreement, lease or other agreement or
instrument to which it is a party or by which it or any of its properties may be
bound, except, with respect to clause (ii), for such defaults that would not,
individually or in the aggregate, have a Material Adverse Effect.

     

    (o) The
statements set forth under the captions “Description of Capital Stock” in the
Time of Sale Prospectus and the Prospectus, insofar as they purport to
constitute a summary of the terms of the Shares, under the captions “Certain
United States Federal Income and Estate Tax Considerations” and “Underwriting”
in the Time of Sale Prospectus, insofar as they purport to describe the
provisions of the federal laws of the United States and documents referred to
therein, in “Part I – Item 1 – Business of Conseco – Governmental Regulation” of
the Company’s most recent annual report on Form 10-K for the year ended
December 31, 2008 incorporated by reference in the Time of Sale Prospectus, and
in “Part I - Item 3 - Legal Proceedings” of the Company’s most recent annual
report on Form 10-K for the year ended December 31, 2008, and in “Part II -
Item 1 - Legal Proceedings” of the quarterly reports on Form 10-Q for the
periods ended March 31, 2009, June 30, 2009 and September 30, 2009 incorporated
by reference in the Time of Sale Prospectus and the Prospectus, are accurate and
complete in all material respects.

     

    (p) Other
than as set forth in the Time of Sale Prospectus, there are no legal or
governmental proceedings pending to which the Company, any of its subsidiaries
or any of its directors, officers or employees is a party or of which any
property of the Company or any of its subsidiaries is the subject which could
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect, or a material adverse effect on the power or ability of the
Company to perform its obligations under this Agreement, or to consummate the
offer of Shares contemplated herein; and to the Company’s knowledge, no such
proceedings are threatened or contemplated by governmental authorities or
threatened by others.

     

    (q) Each
preliminary prospectus relating to the shares filed as part of the Registration
Statement as originally filed or as part of any amendment thereto, or filed
pursuant to Rule 424 under the Securities Act, complied when so filed in
all material respects with the Securities Act and the applicable rules and
regulations of the Commission thereunder.

     

    (r) The
Company is not, and after giving effect to the offering and sale of the Shares
and the application of the proceeds thereof as described in the Prospectus will
not be, required to register as an “investment company” as such term is defined
in the Investment Company Act of 1940, as amended.

     

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    (s) The
financial statements included in the Time of Sale Prospectus and the Prospectus
present fairly the financial position of the Company and its consolidated
subsidiaries as of the dates shown and their results of operations and cash
flows for the periods shown, and such financial statements have been prepared in
conformity with the generally accepted accounting principles in the United
States applied on a consistent basis; and any schedules included in the Time of
Sale Prospectus and the Prospectus present fairly the information required to be
stated therein.

     

    (t) The
Company and its subsidiaries (i) are in compliance with any and all applicable
foreign, federal, state and local laws and regulations relating to the
protection of human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants (“Environmental Laws”), (ii)
have received all permits, licenses or other approvals required of them under
applicable Environmental Laws to conduct their respective businesses and (iii)
are in compliance with all terms and conditions of any such permit, license or
approval, except where such noncompliance with Environmental Laws, failure to
receive required permits, licenses or other approvals or failure to comply with
the terms and conditions of such permits, licenses or approvals would not,
individually or in the aggregate, have a Material Adverse Effect.

     

    (u) There are
no costs or liabilities associated with Environmental Laws (including, without
limitation, any capital or operating expenditures required for clean-up, closure
of properties or compliance with Environmental Laws or any permit, license or
approval, any related constraints on operating activities and any potential
liabilities to third parties) which would individually or in the aggregate, have
a Material Adverse Effect.

     

    (v) There are
no contracts, agreements or understandings between the Company and any person
granting such person the right to require the Company to file a registration
statement under the Securities Act with respect to any securities of the Company
or to require the Company to include such securities with the Shares registered
pursuant to the Registration Statement, except as provided in the Investor
Rights Agreement.

     

    (w) No labor
dispute with the employees of the Company or any subsidiary exists or, to the
knowledge of the Company, is imminent that would reasonably be expected to have
a Material Adverse Effect.

     

    (x) The
Company and its subsidiaries own, possess or can acquire on reasonable terms,
adequate trademarks, trade names and other rights to inventions, know-how,
patents, copyrights, confidential information and other intellectual property
(collectively, “Intellectual
Property Rights”) necessary to conduct the business now operated by them,
or presently employed by them, and have not received any notice of infringement
of or conflict with asserted rights of others with respect to any Intellectual
Property Rights that, if determined 

     

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

       

      adversely
to the Company or any of its subsidiaries, would individually or in the
aggregate have a Material Adverse Effect.

    

     

    (y) The
Company and each of its subsidiaries maintain a system of internal accounting
controls sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management’s general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain asset accountability; (iii) access to assets is permitted only in
accordance with management’s general or specific authorization; and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences. The Company maintains disclosure controls and procedures (as such
term is defined in Rule 13a-14 under the Exchange Act) that are effective in
ensuring that information required to be disclosed by the Company in the reports
that it files or submits under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the rules and
forms of the Commission, including, without limitation, controls and procedures
designed to ensure that information required to be disclosed by the Company in
the reports that it files or submits under the Exchange Act is accumulated and
communicated to the Company’s management, including its principal executive
officer or officers and its principal financial officer or officers, as
appropriate to allow timely decisions regarding required
disclosure.

     

    (z) Except as
disclosed in the Time of Sale Prospectus and the Prospectus, since the end of
the Company’s most recent audited fiscal year, the Company is not aware of any
material weakness or significant deficiency in the Company’s internal control
over financial reporting (whether or not remediated).

     

    (aa) Each of
the Company and its subsidiaries that is required to be organized or licensed as
an insurance company in its jurisdiction of incorporation (each an “Insurance Subsidiary” or
collectively “Insurance
Subsidiaries”) has all necessary consents, licenses, authorizations,
approvals, exemptions, orders, certificates and permits (collectively, the
“Consents”) of and from,
and has made all filings and declarations (collectively, the “Filings”) with, all insurance
regulatory authorities, all federal, state, local and other governmental
authorities, all self-regulatory organizations and all courts and other
tribunals, necessary to own, lease, license and use its properties and assets
and to conduct its business in the manner described in the Time of Sale
Prospectus and the Prospectus, and has paid all fees and assessments due and
payable in connection therewith, except where the failure to have such Consents
or to make such Filings or payments would not, individually or in the aggregate,
have a Material Adverse Effect; as of their respective dates, such Consents and
Filings complied in all material respects with all the laws, rules and
regulations of the applicable regulatory authority with which they were filed,
except where the failure to so comply would not, individually or in the
aggregate, have a Material Adverse Effect, and are, as of the date hereof, in
full force and effect; the Company and its Insurance Subsidiaries 

     

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

       

      are in
compliance with such Consents and neither the Company nor any of its Insurance
Subsidiaries has received any notice of any inquiry, investigation or proceeding
that would reasonably be expected to result in the suspension, revocation or
limitation of any such Consent or otherwise impose any limitation on the conduct
of the business of the Company or any of its respective Insurance Subsidiaries,
except as set forth in the Time of Sale Prospectus and the Prospectus or except
as any such failure to be in full force and effect, failure to be in compliance
with, suspension, revocation or limitation would not, individually or in the
aggregate, have a Material Adverse Effect; to the Company’s knowledge, no
insurance regulatory agency or body has issued, or commenced any proceeding for
the issuance of, any order or decree impairing, restricting or prohibiting the
payment of dividends by any Insurance Subsidiary to its parent (other than with
respect to profits derived from Washington National Insurance Company’s Florida
Home Health Care policies); to the Company’s knowledge, each of the Company and
its Insurance Subsidiaries is in compliance with, and conducts its businesses in
conformity with, all applicable insurance laws and regulations, except where the
failure to so comply or conform would not, individually or in the aggregate,
have a Material Adverse Effect; except for statutory or regulatory restrictions
of general application to life and health insurance companies, no governmental
authority has placed any material restriction on the business or properties of
the Company or any Insurance Subsidiary.

    

     

    (bb) All
reinsurance contracts, agreements or other arrangements to which the Company is
a party are in full force and effect, and the Company is not in violation of, or
in default in the performance, observance or fulfillment of, any obligation,
agreement, covenant or condition contained therein, except to the extent that
any such violation or default would not have a Material Adverse Effect; the
Company has not received any notice from any of the other parties to such
contracts, agreements or other arrangements that such other party intends not to
perform in any material respect such contracts, agreements or other
arrangements, and, to the best of its knowledge, the Company has no reason to
believe that any of the other parties to such contracts, agreements or other
arrangements will be unable or unwilling to perform such contracts, agreements
or other arrangements.

     

    (cc) The 2008
statutory annual statements of each Insurance Subsidiary and the statutory
balance sheets and income statements included in such statutory annual
statements together with related schedules and notes have been prepared, in all
material respects, in conformity with statutory accounting principles and
practices (“SAP”)
required or permitted by the appropriate insurance regulator of the jurisdiction
of domicile of each such Insurance Subsidiary, and such SAP have been applied on
a consistent basis throughout the periods involved, except as may otherwise be
indicated therein or in the notes thereto, and present fairly, in all material
respects, the statutory financial position of such Insurance Subsidiaries as of
the dates thereof, and the statutory basis results of operations of such
Insurance Subsidiaries for the periods covered thereby.

     

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    (dd) The
balance sheets of the Insurance Subsidiaries at dates after December 31, 2008,
and the related statements of income, surplus and cash flows, which have been
filed with the applicable insurance regulatory authorities (the “2009 Quarterly SAP
Statements”, and together with the 2008 statutory annual statements of
each Insurance Subsidiary described above, the “SAP Statements”), copies of
which have been made available to the Underwriters by the Company, have been
prepared in accordance with SAP applied on a consistent basis and present fairly
in all material respects the applicable Insurance Subsidiaries’ respective
statutory financial conditions as of such dates and the results of their
respective operations and cash flows.

     

    (ee) The
aggregate reserves of the Insurance Subsidiaries as recorded in the Company SAP
Statements have been determined in all material respects in accordance with
generally accepted actuarial principles consistently applied (except as set
forth therein). All reserves of the Insurance Subsidiaries set forth in the SAP
Statements are fairly stated in accordance with sound actuarial principles and
meet the requirements of all applicable insurance laws including the applicable
SAP, except where failure to so state reserves or meet such requirements,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect.

     

    (ff) Each
Insurance Subsidiary (i) is in compliance with all applicable insurance
regulatory minimum capital or surplus requirements; (ii) has not become subject
to any “Company Action Level” pursuant to applicable risk-based capital
guidelines, and has not received notice of any pending action that would result
in its becoming so subject; (iii) has not taken any steps towards commencing,
and has not received notice of any actions taken by the relevant regulatory
authorities to commence, any rehabilitation, delinquency or insolvency
proceedings under applicable insurance laws in any state or foreign
jurisdiction; and (iv) has assets that exceed its respective total reserves, all
as computed in accordance with the applicable SAP applied consistently with past
practice.

     

    (gg) The
Company and the subsidiaries have filed all Federal, State, local and foreign
tax returns which have been required to be filed and have paid all taxes
indicated by such returns and all assessments received by them or any of them to
the extent that such taxes have become due (other than any such taxes which are
currently being contested in good faith), except to the extent that any failure
to so file or pay would not reasonably be expected to result in a Material
Adverse Effect; all tax liabilities have been adequately provided for in the
consolidated financial statements of the Company described above, and the
Company does not know of any actual or proposed additional material tax
assessments applicable to it.

     

    (hh) Except as
would not reasonably be expected to result in a Material Adverse Effect, the
Company and each subsidiary are in compliance with all presently applicable
provisions of the Employee Retirement Income Security Act of 1974, as amended,
including the regulations and published interpretations 

     

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

       

      thereunder
(“ERISA”); no
“reportable event” (as defined in ERISA) has occurred with respect to any
“pension plan” (as defined in ERISA) for which the Company or any subsidiary
would have any liability; neither the Company nor any subsidiary has incurred or
expects to incur any liability under (i) Title IV of ERISA with respect to
termination of, or withdrawal from, any “pension plan” or (ii) Sections 412 or
4971 of the Internal Revenue Code of 1986, as amended, including the regulations
and published interpretations thereunder (the “Code”); and each “pension
plan” for which the Company or any subsidiary would have any liability that is
intended to be qualified under Section 401(a) of the Code is so qualified in all
material respects and nothing has occurred, whether by action or by failure to
act, which would cause the loss of such qualification.

    

     

    (ii) Neither
the Company nor any of its subsidiaries or affiliates, nor any director,
officer, or employee, nor, to the Company’s knowledge, any agent or
representative of the Company or of any of its subsidiaries or affiliates, has
taken or will take any action in furtherance of an offer, payment, promise to
pay, or authorization or approval of the payment or giving of money, property,
gifts or anything else of value, directly or indirectly, to any “government
official” (including any officer or employee of a government or government-owned
or controlled entity or of a public international organization, or any person
acting in an official capacity for or on behalf of any of the foregoing, or any
political party or party official or candidate for political office) to
influence official action or secure an improper advantage; and the Company and
its subsidiaries and affiliates have conducted their businesses in compliance
with applicable anti-corruption laws and have instituted and maintain and will
continue to maintain policies and procedures designed to promote and achieve
compliance with such laws and with the representation and warranty contained
herein.

     

    (jj) The
operations of the Company and its subsidiaries are and have been conducted at
all times in material compliance with all applicable financial recordkeeping and
reporting requirements, including those of the Bank Secrecy Act, as amended by
Title III of the Uniting and Strengthening America by Providing Appropriate
Tools Required to Intercept and Obstruct Terrorism Act of 2001 (USA PATRIOT
Act), and the applicable anti-money laundering statutes of jurisdictions where
the Company and its subsidiaries conduct business, the rules and regulations
thereunder and any related or similar rules, regulations or guidelines, issued,
administered or enforced by any governmental agency (collectively, the “Anti-Money Laundering Laws”),
and no action, suit or proceeding by or before any court or governmental agency,
authority or body or any arbitrator involving the Company or any of its
subsidiaries with respect to the Anti-Money Laundering Laws is pending or, to
the best knowledge of the Company, threatened.

     

    (kk) (i) The
Company, represents that neither the Company nor any of its subsidiaries
(collectively, the “Entity”) or, to the knowledge
of the Entity, any director, officer, employee, agent, affiliate or
representative of the Entity, is an

     

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

       

      individual
or entity (“Person”)
that is, or is owned or controlled by a Person that is:

    

     

    (A) the
subject of any sanctions administered or enforced by the U.S. Department of
Treasury’s Office of Foreign Assets Control, the United Nations Security
Council, the European Union, Her Majesty’s Treasury, or other relevant sanctions
authority (collectively, “Sanctions”), nor

     

    (B) located,
organized or resident in a country or territory that is the subject of Sanctions
(including, without limitation, Burma/Myanmar, Cuba, Iran, North Korea, Sudan
and Syria).

     

    (ii) The Entity represents and
covenants that it will not, directly or indirectly, use the proceeds of the
offering, or lend, contribute or otherwise make available such proceeds to any
subsidiary, joint venture partner or other Person:

     

    (A) to fund
or facilitate any activities or business of or with any Person or in any country
or territory that, at the time of such funding or facilitation, is the subject
of Sanctions; or

     

    (B) in any
other manner that will result in a violation of Sanctions by any Person
(including any Person participating in the offering, whether as underwriter,
advisor, investor or otherwise).

     

    (iii) The Entity represents and
covenants that, for the past three years, it has not knowingly engaged in, is
not now knowingly engaged in, and will not engage in, any dealings or
transactions with any Person, or in any country or territory, that at the time
of the dealing or transaction is or was the subject of Sanctions.

     

    2. Agreements to Sell and
Purchase. The Company hereby agrees to sell to the several Underwriters,
and each Underwriter, upon the basis of the representations and warranties
herein contained, but subject to the conditions hereinafter stated, agrees,
severally and not jointly, to purchase from the Company the respective number of
Firm Shares set forth in Schedule I hereto opposite the name of such Underwriter
(subject to such adjustments to eliminate fractional shares as you may
determine), at $4.5125 a share (the “Purchase Price”).

     

    On the
basis of the representations and warranties contained in this Agreement, and
subject to its terms and conditions, the Company agrees to sell to the
Underwriters the Additional Shares, and the Underwriters shall have the right to
purchase, severally and not jointly, up to 4,500,000 of the Additional Shares at
the Purchase Price. You may exercise this right in whole or from time to time in
part by giving written notice not later than 30 days after the date of this
Agreement.  Any exercise notice shall specify the number of Additional
Shares to be purchased by the Underwriters and the date on which such shares are
to be 

     

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

       

      purchased.  Each
purchase date must be at least one business day after the written notice is
given and may not be earlier than the closing date for the Firm Shares nor later
than ten business days after the date of such notice. Additional Shares may be
purchased as provided in Section 4 hereof solely
for the purpose of covering over-allotments made in connection with the offering
of the Firm Shares.  On each day, if any, that Additional Shares are
to be purchased (an “Option
Closing Date”), each Underwriter agrees, severally and not jointly, to
purchase the number of Additional Shares (subject to such adjustments to
eliminate fractional shares as you may determine) that bears the same proportion
to the total number of Additional Shares to be purchased on such Option Closing
Date as the number of Firm Shares set forth in Schedule I hereto opposite the
name of such Underwriter bears to the total number of Firm
Shares.

    

     

    3. Terms of Public Offering. The
Company is advised by you that the Underwriters propose to make a public
offering of their respective portions of the Shares as soon after the
Registration Statement and this Agreement have become effective as in your
judgment is advisable.  The Company is further advised by you that the
Shares are to be offered to the public initially at $4.75 a share (the “Public Offering Price”) and to
certain dealers selected by you at a price that represents a concession not in
excess of $0.1425 a share under the Public Offering Price.

     

    4. Payment and Delivery. Payment
for the Firm Shares sold by the Company shall be made to the Company in Federal
or other funds immediately available in New York City against delivery of such
Firm Shares for the respective accounts of the several Underwriters at
10:00 a.m., New York City time, on December 22, 2009, or at such other time
on the same or such other date, not later than December 30, 2009, as shall be
designated in writing by you.  The time and date of such payment are
hereinafter referred to as the “Closing Date.”

     

    Payment
for any Additional Shares shall be made to the Company in Federal or other funds
immediately available in New York City against delivery of such Additional
Shares for the respective accounts of the several Underwriters at
10:00 a.m., New York City time, on the date specified in the corresponding
notice described in Section 2 or at such other time on the same or on such other
date, in any event not later than February 1, 2010, as shall be designated in
writing by you.

     

    The Firm
Shares and Additional Shares shall be registered in such names and in such
denominations as you shall request in writing not later than one full business
day prior to the Closing Date or the applicable Option Closing Date, as the case
may be. The Firm Shares and Additional Shares shall be delivered to you on the
Closing Date or an Option Closing Date, as the case may be, for the respective
accounts of the several Underwriters, with any transfer taxes payable in
connection with the transfer of the Shares to the Underwriters duly paid,
against payment of the Purchase Price therefor.

     

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    5. Conditions to the Underwriters’
Obligations. The obligation of the Company to sell the Shares to the
Underwriters and the several obligations of the Underwriters to purchase and pay
for the Shares on the Closing Date are subject to the condition that the
Registration Statement shall have become effective not later than 10:00 am (New
York City time) on the date hereof.

     

    The
several obligations of the Underwriters are subject to the following further
conditions:

     

    (a) Subsequent
to the execution and delivery of this Agreement and prior to the Closing
Date:

     

    (i) there
shall not have occurred any downgrading, nor shall any notice have been given of
any intended or potential downgrading or of any review for a possible change
that does not indicate the direction of the possible change, in the rating
accorded the Company or any of the securities of the Company or any of its
subsidiaries or in the rating outlook for the Company by any “nationally
recognized statistical rating organization,” as such term is defined for
purposes of Rule 436(g)(2) under the Securities Act; and

     

    (ii) there
shall not have occurred any change, or any development involving a prospective
change, in the condition, financial or otherwise, or in the earnings, business
or operations of the Company and its subsidiaries, taken as a whole, from that
set forth in the Time of Sale Prospectus as of the date of this Agreement that,
in your judgment, is material and adverse and that makes it, in your judgment,
impracticable to market the Shares on the terms and in the manner contemplated
in the Time of Sale Prospectus.

     

    (b) The
Underwriters shall have received on the Closing Date a certificate, dated the
Closing Date and signed by an executive officer of the Company, to the effect
set forth in Section
  5(a)(i) above
and to the effect that the representations and warranties of the Company
contained in this Agreement are true and correct as of the Closing Date and that
the Company has complied with all of the agreements and satisfied all of the
conditions on its part to be performed or satisfied hereunder on or before the
Closing Date.

     

    The
officer signing and delivering such certificate may rely upon the best of his or
her knowledge as to proceedings threatened.

     

    (c) The
Underwriters shall have received on the Closing Date an opinion of Simpson
Thacher & Bartlett, LLP, outside counsel for the Company, dated the Closing
Date, substantially to the effect set forth in Exhibit A.

     

    (d) The
Underwriters shall have received on the Closing Date a negative assurance letter
from Simpson Thacher & Bartlett, LLP, outside counsel 

     

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

       

      for the
Company, dated the Closing Date, substantially to the effect set forth in
Exhibit B.

    

     

    (e) The
Underwriters shall have received on the Closing Date an opinion of Karl W.
Kindig, Secretary of the Company, dated the Closing Date, substantially to the
effect set forth in Exhibit C.

     

    (f) The
Underwriters shall have received on the Closing Date an opinion of Davis Polk
& Wardwell LLP, counsel for the Underwriters, dated the Closing Date,
satisfactory to the Underwriters.

     

    The
opinion of Simpson Thacher & Bartlett, LLP, described in Section 5(c) above shall be rendered to the Underwriters at the
request of the Company, and shall so state therein.

     

    (g) The
Underwriters shall have received, on each of the date hereof and the Closing
Date, a letter dated the date hereof or the Closing Date, as the case may be, in
form and substance satisfactory to you and PricewaterhouseCoopers LLP,
independent registered public accountants, containing statements and information
of the type included in accountants’ comfort letters prepared in accordance with
AU Section 634, Letters for
Underwriters and Certain Other Requesting Parties, to underwriters with
respect to the financial statements and certain financial information contained
in the Registration Statement, the Time of Sale Prospectus and the Prospectus;
provided that the
letter delivered on the Closing Date shall use a “cut-off date” not earlier than
the date hereof.

     

    (h) The
“lock-up” agreements, each substantially in the form of Exhibit D and Exhibit E
hereto, between you and certain shareholders, officers and directors of the
Company, whose names are set forth on Schedule III hereto, relating to sales and
certain other dispositions of shares of Common Stock or certain other
securities, delivered to you on or before the date hereof, shall be in full
force and effect on the Closing Date.

     

    The
several obligations of the Underwriters to purchase Additional Shares hereunder
is subject to the delivery to you on the applicable Option Closing Date of such
documents as you may reasonably request with respect to the good standing of the
Company, the due authorization and issuance of the Additional Shares to be sold
on such Option Closing Date and other matters related to the issuance of such
Additional Shares.

     

    6. Covenants of the Company. The
Company covenants with the Underwriters as follows:

     

    (a) To
furnish to the Underwriters, without charge, two conformed copies of the
Registration Statement (including exhibits thereto and documents incorporated by
reference) and to furnish to the Underwriters in New York City, without charge,
prior to 10:00 a.m. New York City time on the business day next


     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

       

      succeeding
the date of this Agreement and during the period mentioned in Section 
6(e) or

6(f) below, as many copies of the Time of Sale Prospectus,
the Prospectus, any documents incorporated by reference therein and any
supplements and amendments thereto or to the Registration Statement as the
Underwriters may reasonably request.

    

     

    (b) Before
amending or supplementing the Registration Statement, the Time of Sale
Prospectus or the Prospectus, to furnish to you a copy of each such proposed
amendment or supplement and not to file any such proposed amendment or
supplement to which you reasonably object, and to file with the Commission
within the applicable period specified in Rule 424(b) under the Securities
Act any prospectus required to be filed pursuant to such Rule.

     

    (c) To
furnish to you a copy of each proposed free writing prospectus to be prepared by
or on behalf of, used by, or referred to by the Company and not to use or refer
to any proposed free writing prospectus to which you reasonably
object.

     

    (d) Not to
take any action that would result in an Underwriter or the Company being
required to file with the Commission pursuant to Rule 433(d) under the
Securities Act a free writing prospectus prepared by or on behalf of an
Underwriter that an Underwriter otherwise would not have been required to file
thereunder.

     

    (e) If the
Time of Sale Prospectus is being used to solicit offers to buy the Shares at a
time when the Prospectus is not yet available to prospective purchasers and any
event shall occur or condition exist as a result of which it is necessary to
amend or supplement the Time of Sale Prospectus in order to make the statements
therein, in the light of the circumstances, not misleading, or if any event
shall occur or condition exist as a result of which the Time of Sale Prospectus
conflicts with the information contained in the Registration Statement then on
file, or if, in the opinion of counsel for the Underwriters, it is necessary to
amend or supplement the Time of Sale Prospectus to comply with applicable law,
forthwith to prepare, file with the Commission and furnish, at its own expense,
to the Underwriters and to any dealer upon request, either amendments or
supplements to the Time of Sale Prospectus so that the statements in the Time of
Sale Prospectus as so amended or supplemented will not, in the light of the
circumstances when it is delivered to a prospective purchaser, be misleading or
so that the Time of Sale Prospectus, as amended or supplemented, will no longer
conflict with the Registration Statement, or so that the Time of Sale
Prospectus, as amended or supplemented, will comply with applicable
law.

     

    (f) If,
during such period after the first date of the public offering of the Shares as
in the opinion of counsel for the Underwriters the Prospectus (or in lieu
thereof the notice referred to in Rule 173(a) of the Securities Act) is required
by law to be delivered in connection with sales by an Underwriter or any dealer,
any event shall occur or condition exist as a result of which it is necessary to


     

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

       

      amend or
supplement the Prospectus in order to make the statements therein, in the light
of the circumstances when the Prospectus (or in lieu thereof the notice referred
to in Rule 173(a) of the Securities Act) is delivered to a purchaser, not
misleading, or if, in the opinion of counsel for the Underwriters, it is
necessary to amend or supplement the Prospectus to comply with applicable law,
forthwith to prepare, file with the Commission and furnish, at its own expense,
to the Underwriters and to the dealers (whose names and addresses you will
furnish to the Company) to which Shares may have been sold by you on behalf of
the Underwriters and to any other dealers upon request, either amendments or
supplements to the Prospectus so that the statements in the Prospectus as so
amended or supplemented will not, in the light of the circumstances when the
Prospectus (or in lieu thereof the notice referred to in Rule 173(a) of the
Securities Act) is delivered to a purchaser, be misleading or so that the
Prospectus, as amended or supplemented, will comply with applicable
law.

    

     

    (g) To
endeavor to qualify the Shares for offer and sale under the securities or Blue
Sky laws of such jurisdictions as you shall reasonably request.

     

    (h) To make
generally available to the Company’s security holders and to you as soon as
practicable an earning statement covering a period of at least twelve months
beginning with the first fiscal quarter of the Company occurring after the date
of this Agreement which shall satisfy the provisions of Section 11(a) of
the Securities Act and the rules and regulations of the Commission thereunder.
 

     

    The
Company hereby agrees that, without the prior written consent of Morgan Stanley,
it will not, during the period ending 90 days after the date of the
Prospectus, (i) offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase, lend, or otherwise transfer or dispose of,
directly or indirectly, any shares of Common Stock beneficially owned (as such
term is used in Rule 13d-3 of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”)) or
any other securities so owned convertible into or exercisable or exchangeable
for Common Stock or (ii) enter into any swap or other arrangement that transfers
to another, in whole or in part, any of the economic consequences of ownership
of the Common Stock, whether any such transaction described in clause (i)
or (ii) above is to be settled by delivery of Common Stock or such other
securities, in cash or otherwise or (iii) file any registration statement with
the Commission relating to the offering of any shares of Common Stock or any
securities convertible into or exercisable or exchangeable for Common
Stock.

     

    The
restrictions contained in the preceding paragraph shall not apply to
(i) the Shares to be sold hereunder, (ii) the issuance by the Company
of shares of Common Stock upon the exercise of an option or warrant or the
conversion of a security outstanding on the date hereof of which the
Underwriters have been advised in writing, (iii) grants by the Company of
employee stock options or other 

     

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

       

      equity-based
compensation pursuant to the terms of a plan in effect on the date of this
Agreement, or (iv) the establishment of a trading plan pursuant to Rule 10b5-1
under the Exchange Act for the transfer of shares of Common Stock, provided that such plan does
not provide for the transfer of Common Stock during the 90-day restricted
period.

    

     

    The
Company will issue stop transfer instructions to the transfer agent for its
common stock with respect to any transaction or contemplated transaction that
would constitute a breach or default under any applicable “lock-up”
agreement.

     

    7. Expenses.  Whether
or not the transactions contemplated in this Agreement are consummated or this
Agreement is terminated, the Company agrees to pay or cause to be paid all
expenses incident to the performance of their obligations under this Agreement,
including: i) the fees, disbursements and expenses of the Company’s counsel and
the Company’s accountants in connection with the registration and delivery of
the Shares under the Securities Act and all other fees or expenses in connection
with the preparation and filing of the Registration Statement, any preliminary
prospectus, the Time of Sale Prospectus, the Prospectus, any free writing
prospectus prepared by or on behalf of, used by, or referred to by the Company
and amendments and supplements to any of the foregoing, including all printing
costs associated therewith, and the mailing and delivering of copies thereof to
the Underwriters and dealers, in the quantities hereinabove specified, ii) all
costs and expenses related to the transfer and delivery of the Shares to the
Underwriters, including any transfer or other taxes payable thereon, iii) the
cost of printing or producing any Blue Sky or Legal Investment memorandum in
connection with the offer and sale of the Shares under state securities laws and
all expenses in connection with the qualification of the Shares for offer and
sale under state securities laws as provided in Section 
 6(g) hereof, including filing fees and the reasonable
fees and disbursements of counsel for the Underwriters in connection with such
qualification and in connection with the Blue Sky or Legal Investment
memorandum, iv) all filing fees and the reasonable fees and disbursements of
counsel to the Underwriters incurred in connection with the review and
qualification of the offering of the Shares by the Financial Industry Regulatory
Authority, v) all costs and expenses incident to listing the Shares on the New
York Stock Exchange, vi) the cost of printing certificates representing the
Shares, vii) the costs and charges of any transfer agent, registrar or
depositary, viii) the costs and expenses of the Company relating to investor
presentations on any road show undertaken in connection with the marketing of
the offering of the Shares, including, without limitation, expenses associated
with the preparation or dissemination of any electronic “road show,” expenses
associated with the production of road show slides and graphics, fees and
expenses of any consultants engaged in connection with the road show
presentations with the prior approval of the Company, travel and lodging
expenses of the representatives and officers of the Company and any such
consultants, and the cost of any aircraft chartered in connection with the road
show, ix) the document production charges and expenses associated with printing
this Agreement and x) all other costs and expenses 

     

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

       

      incident
to the performance of the obligations of the Company hereunder for which
provision is not otherwise made in this Section. It is understood, however, that
except as provided in this Section, Section 9 entitled “Indemnity and
Contribution” and the last paragraph of Section 11 below, the Underwriters
will pay all of their costs and expenses, including fees and disbursements of
their counsel, stock transfer taxes payable on resale of any of the Shares by
them.
 

    

     

    8. Covenants of the
Underwriters.  Each Underwriter, severally and not jointly,
covenants with the Company not to take any action that would result in the
Company being required to file with the Commission under Rule 433(d) a free
writing prospectus prepared by or on behalf of any such Underwriter that
otherwise would not be required to be filed by the Company thereunder, but for
the action of such Underwriter.

     

    9. Indemnity and
Contribution.  
 (a) The
Company agrees to indemnify and hold harmless each Underwriter, each person, if
any, who controls each Underwriter within the meaning of either Section 15
of the Securities Act or Section 20 of the Exchange Act, and each affiliate of
any Underwriter within the meaning of Rule 405 under the Securities Act
from and against any and all losses, claims, damages and liabilities (including,
without limitation, any legal or other expenses reasonably incurred in
connection with defending or investigating any such action or claim) that are
(i) caused by any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement or any amendment thereof, or caused
by any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
and (ii) caused by any untrue statement or alleged untrue statement of a
material fact contained in any preliminary prospectus, the Time of Sale
Prospectus, any issuer free writing prospectus as defined in Rule 433(h) under
the Securities Act, any road show, any Company information that the Company has
filed, or is required to file, pursuant to Rule 433(d) under the Securities Act,
or the Prospectus or any amendment or supplement thereto, or caused by any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, except insofar as such
losses, claims, damages or liabilities are caused by any such untrue statement
or omission or alleged untrue statement or omission based upon information
relating to any Underwriter furnished to the Company in writing by you expressly
for use therein, provided that the parties agree that the only information
provided by such Underwriter through you to the Company for inclusion in the
Registration Statement, any preliminary prospectus, the Time of Sale Prospectus,
any issuer free writing prospectus or the Prospectus or any amendment or
supplement thereto is set forth in Section 9(b).

     

    (b)           Each
Underwriter agrees, severally and not jointly, to indemnify and hold harmless
the Company, the directors of the Company, the officers of the Company who sign
the Registration Statement and each person, if any, who controls the Company
within the meaning of either Section 15 of the Securities 

     

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    Act or
Section 20 of the Exchange Act to the same extent as the indemnity in
Section 9(a) from the Company to such Underwriter, but only with reference to
information relating to such Underwriter furnished to the Company in writing by
such Underwriter through you expressly for use in the Registration Statement,
any preliminary prospectus, the Time of Sale Prospectus, any road show, any
issuer free writing prospectus or the Prospectus or any amendment or supplement
thereto. The Company hereby acknowledges that the only information that the
Underwriters have furnished to the Company expressly for use in the Registration
Statement, any preliminary prospectus, the Time of Sale Prospectus, any road
show, any issuer free writing prospectus or the Prospectus or any amendment or
supplement thereto are the statements set forth in the 18th,
19th,
25th,
26th,
30th and
31st
paragraphs under the caption “Underwriting” in the preliminary prospectus, the
Time of Sale Prospectus and the Prospectus.

     

           
(c)           In case any
proceeding (including any governmental investigation) shall be instituted
involving any person in respect of which indemnity may be sought pursuant to
Section 9(a) or (b), such person (the “indemnified party”) shall
promptly notify the person against whom such indemnity may be sought (the “indemnifying party”) in
writing and the indemnifying party, upon request of the indemnified party, shall
retain counsel reasonably satisfactory to the indemnified party to represent the
indemnified party and any others the indemnifying party may designate in such
proceeding and shall pay the fees and disbursements of such counsel related to
such proceeding.  In any such proceeding, any indemnified party shall
have the right to retain its own counsel, but the fees and expenses of such
counsel shall be at the expense of such indemnified party unless (1) the
indemnifying party and the indemnified party shall have mutually agreed to the
retention of such counsel or (2) the named parties to any such proceeding
(including any impleaded parties) include both the indemnifying party and the
indemnified party and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between
them.  It is understood that the indemnifying party shall not, in
respect of the legal expenses of any indemnified party in connection with any
proceeding or related proceedings in the same jurisdiction, be liable for (i)
the fees and expenses of more than one separate firm (in addition to any local
counsel) for all Underwriters and all persons, if any, who control any
Underwriter within the meaning of either Section 15 of the Securities Act
or Section 20 of the Exchange Act or who are affiliates of any Underwriter
within the meaning of Rule 405 under the Securities Act, and (ii) the fees
and expenses of more than one separate firm (in addition to any local counsel)
for the Company, its directors, its officers who sign the Registration Statement
and each person, if any, who controls the Company within the meaning of either
such Section, and that all such fees and expenses shall be reimbursed as they
are incurred.  In the case of any such separate firm for the
Underwriters and such control persons and affiliates of any Underwriters, such
firm shall be designated in writing by Morgan Stanley & Co., Incorporated.
In the case of any such separate firm for the Company, and such directors,
officers and control persons of the Company, such firm shall be designated in
writing by the Company.  The indemnifying party shall not be liable


     

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    for any
settlement of any proceeding effected without its written consent, but if
settled with such consent or if there be a final judgment for the plaintiff, the
indemnifying party agrees to indemnify the indemnified party from and against
any loss or liability by reason of such settlement or judgment. No indemnifying
party shall, without the prior written consent of the indemnified party, effect
any settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding and does not include a statement
as to or an admission of fault, culpability or a failure to act, by or on behalf
of any indemnified party.

     

    (d)           To
the extent the indemnification provided for in Section 9(a) or (b) is
unavailable to an indemnified party or insufficient in respect of any losses,
claims, damages or liabilities referred to therein, then each indemnifying party
under such paragraph, in lieu of indemnifying such indemnified party thereunder,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities 
(1) in such proportion as is appropriate to
reflect the relative benefits received by the indemnifying party or parties on
the one hand and the indemnified party or parties on the other hand from the
offering of the Shares or (2) if the allocation provided by clause 9(d)(1)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause 9(d)(1)
above but also the relative fault of the indemnifying party or parties on the
one hand and of the indemnified party or parties on the other hand in connection
with the statements or omissions that resulted in such losses, claims, damages
or liabilities, as well as any other relevant equitable
considerations.  The relative benefits received by the Company on the
one hand and the Underwriters on the other hand in connection with the offering
of the Shares shall be deemed to be in the same respective proportions as the
net proceeds from the offering of the Shares (before deducting expenses)
received by the Company and the total underwriting discounts and commissions
received by the Underwriters, in each case as set forth in the table on the
cover of the Prospectus, bear to the aggregate Public Offering Price of the
Shares.  The relative fault of the Company on the one hand and the
Underwriters on the other hand shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or by the Underwriters and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Underwriters’ respective obligations to contribute
pursuant to this Section 9 are several in proportion to the respective
number of Shares they have purchased hereunder, and not joint.

     

    (e)           The
Company and the Underwriters agree that it would not be just or equitable if
contribution pursuant to this Section 9 were determined by pro rata allocation (even if
the Underwriters were treated as one entity for such purpose) 

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    or by any
other method of allocation that does not take account of the equitable
considerations referred to in Section 9(d).  The amount paid or
payable by an indemnified party as a result of the losses, claims, damages and
liabilities referred to in Section 9(d) shall be deemed to include, subject to
the limitations set forth above, any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or defending any such
action or claim.  Notwithstanding the provisions of this
Section 9, no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Shares underwritten
by it and distributed to the public were offered to the public exceeds the
amount of any damages that such Underwriter has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission or alleged
omission.  No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.  The remedies provided for in this Section 9
are not exclusive and shall not limit any rights or remedies which may otherwise
be available to any indemnified party at law or in equity.

     

    (f)           The
indemnity and contribution provisions contained in this Section 9 and the
representations, warranties and other statements of the Company contained in
this Agreement shall remain operative and in full force and effect regardless of
(1) any termination of this Agreement, (2) any investigation made by or on
behalf of any Underwriter, any person controlling any Underwriter or any
affiliate of any Underwriter, or the Company, its officers or directors or any
person controlling the Company and (3) acceptance of and payment for any of the
Shares.
 

     

    10. Termination. The
Representative may terminate this Agreement by notice given by it to the
Company, if after the execution and delivery of this Agreement and prior to the
Closing Date (i) trading generally shall have been suspended or materially
limited on, or by, as the case may be, any of the New York Stock Exchange, the
American Stock Exchange, or the NASDAQ Global Market, (ii) trading of any
securities of the Company shall have been suspended on any exchange or in any
over-the-counter market, (iii) a material disruption in securities settlement,
payment or clearance services in the United States shall have occurred, (iv) any
general moratorium on commercial banking activities shall have been declared by
Federal or New York State authorities or (v) there shall have occurred any
outbreak or escalation of hostilities, or any change in financial markets or any
calamity or crisis that, in the judgment of the Representative, is material and
adverse and which, singly or together with any other event specified in this
clause(v), makes it, in the judgment of the Representative, impracticable or
inadvisable to proceed with the offer, sale or delivery of the Shares on the
terms and in the manner contemplated in the Time of Sale Prospectus or the
Prospectus.
 

     

    11. Effectiveness; Defaulting
Underwriters. This Agreement shall become effective upon the execution
and delivery hereof by the parties hereto.  

     

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

    If, on
the Closing Date or an Option Closing Date, as the case may be, any one or more
of the Underwriters shall fail or refuse to purchase Shares that it has or they
have agreed to purchase hereunder on such date, and the aggregate number of
Shares which such defaulting Underwriter or Underwriters agreed but failed or
refused to purchase is not more than one-tenth of the aggregate number of the
Shares to be purchased on such date, the other Underwriters shall be obligated
severally in the proportions that the number of Firm Shares set forth opposite
their respective names in Schedule I bears to the aggregate number of Firm
Shares set forth opposite the names of all such non-defaulting Underwriters, or
in such other proportions as you may specify, to purchase the Shares which such
defaulting Underwriter or Underwriters agreed but failed or refused to purchase
on such date; provided
that in no event shall the number of Shares that any Underwriter has agreed to
purchase pursuant to this Agreement be increased pursuant to this Section 11 by
an amount in excess of one-ninth of such number of Shares without the written
consent of such Underwriter.  If, on the Closing Date, any Underwriter
or Underwriters shall fail or refuse to purchase Firm Shares and the aggregate
number of Firm Shares with respect to which such default occurs is more than
one-tenth of the aggregate number of Firm Shares to be purchased on such date,
and arrangements satisfactory to you and the Company for the purchase of such
Firm Shares are not made within 36 hours after such default, this Agreement
shall terminate without liability on the part of any non-defaulting Underwriter
or the Company.  In any such case either you or the Company shall have
the right to postpone the Closing Date, but in no event for longer than seven
days, in order that the required changes, if any, in the Registration Statement,
in the Time of Sale Prospectus, in the Prospectus or in any other documents or
arrangements may be effected.  If, on an Option Closing Date, any
Underwriter or Underwriters shall fail or refuse to purchase Additional Shares
and the aggregate number of Additional Shares with respect to which such default
occurs is more than one-tenth of the aggregate number of Additional Shares to be
purchased on such Option Closing Date, the non-defaulting Underwriters shall
have the option to (i) terminate their obligation hereunder to purchase the
Additional Shares to be sold on such Option Closing Date or (ii) purchase not
less than the number of Additional Shares that such non-defaulting Underwriters
would have been obligated to purchase in the absence of such
default.  Any action taken under this paragraph shall not relieve any
defaulting Underwriter from liability in respect of any default of such
Underwriter under this Agreement.

     

    If this
Agreement shall be terminated by the Underwriters, or any of them, because of
any failure or refusal on the part of the Company to comply with the terms or to
fulfill any of the conditions of this Agreement, or if for any reason the
Company shall be unable to perform its obligations under this Agreement, the
Company will reimburse the Underwriters or such Underwriters as have so
terminated this Agreement with respect to themselves, severally, for all
out-of-pocket expenses (including the fees and disbursements of their counsel)
reasonably incurred by such Underwriters in connection with this Agreement or
the offering contemplated hereunder.

     

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

    12. Entire
Agreement.  (a) This Agreement, together with any
contemporaneous written agreements and any prior written agreements (to the
extent not superseded by this Agreement) that relate to the offering of the
Shares, represents the entire agreement between the Company, on the one hand,
and the Underwriters, on the other, with respect to the preparation of any
preliminary prospectus, the Time of Sale Prospectus, the Prospectus, the conduct
of the offering, and the purchase and sale of the Shares.

     

    (b) The Company acknowledges that in
connection with the offering of the Shares:  (i) the Underwriters have
acted at arms length, are not agents of, and owe no fiduciary duties to, the
Company or any other person, (ii) the Underwriters owe the Company only those
duties and obligations set forth in this Agreement and prior written agreements
(to the extent not superseded by this Agreement), if any, and (iii) the
Underwriters may have interests that differ from those of the
Company.  The Company waives to the full extent permitted by
applicable law any claims it may have against the Underwriters arising from an
alleged breach of fiduciary duty in connection with the offering of the
Shares.

     

    13. Counterparts.  This
Agreement may be signed in two or more counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and hereto were upon
the same instrument.
 

     

    14. Applicable
Law.  This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York.
 

     

    15. Headings.  The
headings of the sections of this Agreement have been inserted for convenience of
reference only and shall not be deemed a part of this Agreement.

     

    16. Notices.  All
communications hereunder shall be in writing and effective only upon receipt and
if to the Underwriters shall be delivered, mailed or sent to Morgan Stanley
& Co. Incorporated at 1585 Broadway, New York, New York 10036,
Attention: Equity Syndicate Desk, with a copy to the Legal Department; if to the
Company shall be delivered, mailed or sent to Conseco, Inc. at 11825 North
Pennsylvania Street, Carmel, Indiana 46032, Attention: Karl W.
Kindig.

     


    
      
        
           

        

         


      

      
        24

        
          

        

      

      
         


      

    


    


     

    
      	
                                                     Very
      truly yours,

            
	
                                                     CONSECO,
      INC.

            
	
                                                    
      By:

            	
               
      

              /s/
      John R. Kline

            
	 
      	
              Name:

            	
              John
      R. Kline

            
	 
      	
              Title:

            	
              Senior
      Vice President and

              Chief
      Accounting Officer

            


    

    


    


    


    


    


    


    


     

    


    


    


    


    


    


    


    


    


    


    


    


    


    


    


    


    


    


    


    


    


    


    [Signature page to the Underwriting
Agreement]


    
      
         


      

      
        25

        
          

        

      

      
         


      

    


    
      	
               
      

            	 


    

     

    
      	
               
      

            	
              Accepted
      as of the date hereof

            


    

     

    


     

    


     

    
      	 
      	
              MORGAN
      STANLEY & CO. INCORPORATED

               

            
	
                        By:

            	 /s/
      Ken Pott
	 
      	
              Name:

            	
              Ken
      Pott

            
	 
      	
              Title:

            	
              Managing
      Director

            


    

    


              For itself and as
Representative of the several

              Underwriters listed
in Schedule I hereto

    


    


    


    


    


    


    


    


    


    


    


    


    


    


    


    


    


    


    


    


    


    


    


    


    


    


    


    [Signature page to the Underwriting
Agreement]


    
      
         


      

      
        26

        
          

        

      

      
         


      

    


    Schedule I

    


    


    


    


      


      
        	
                Underwriters

              	 	
                Number of Shares

              	 
	 
      	 	 	 
	 
      	 	 	 
	
                Morgan
      Stanley & Co., Incorporated

              	 	 	29,250,000	 
	
                Credit
      Suisse Securities (USA) LLC

              	 	 	5,250,000	 
	
                FBR
      Capital Markets & Co. 

              	 	 	5,250,000	 
	
                Macquarie
      Capital (USA) Inc.

              	 	 	5,250,000	 
	
                Total

              	 	 	45,000,000	 


      






    
      
        
        

         


      

      
         


        
          

        

      

      
         


      

    


    
SCHEDULE II

     

    Time
of Sale Prospectus

     

    
      	
              1.  

            	
              Preliminary
      Prospectus issued dated December 14,
2009

            


    

     

    
      	
              2.  

            	
              Pricing
      Term Sheet

            


    

     

    


     


    
      
        
        

         


      

      
         


        
          

        

      

      
         


      

    


    Pricing Term
Sheet

     

    Conseco,
Inc.

     

    


     

    45,000,000
Shares of Common Stock

     

    


    

       

       

      
        	
                Issuer:

              	 	
                Conseco,
      Inc.

              	 
	
                Symbol:

              	 	
                CNO
      (New York Stock Exchange)

              	 
	
                Size:

              	 	
                45,000,000
      shares of common stock

              	 
	
                Price
      to Public:

              	 	
                $4.75
      per share

              	 
	
                Aggregate
      gross proceeds:

              	 	$213,750,000	 	 
	
                Underwriting
      discounts and commissions:

              	 	$10,687,500	 	 
	
                Over-allotment
      option:

              	 	
                4,500,000
      shares of common stock

              	 
	
                Pricing
      date:

              	 	
                December
      16, 2009

              	 
	
                Closing
      date:

              	 	
                December
      22, 2009

              	 
	
                CUSIP
      No.:

              	 	208464883	
              	 
	
                Sole
      Book-Running Manager:

              	 	
                Morgan
      Stanley & Co. Incorporated

              	 
	
                Co-Managers:

              	 	
                Credit
      Suisse Securities (USA) LLC

                FBR
      Capital Markets & Co.

                Macquarie
      Capital (USA) Inc.

              	 


      



     

    


    Copies of
the preliminary prospectus and final prospectus relating to the shares of common
stock offered in this offering may be obtained by contacting Morgan Stanley
& Co. Incorporated, c/o Prospectus Department, 180 Varick Street 2/F, New
York, NY 10014 or by email at prospectus@morganstanley.com.

    


    


     


    
      
        
          1         

        

         


      

      
         


        
          

        

      

      
         


      

    


    SCHEDULE
III

     

    


     

    Directors
of Conseco, Inc.

    


    R. Glenn
Hilliard

    Donna A.
James

    Debra J.
Perry

    C. James
Prieur

    Neal C.
Schneider

    Michael
T. Tokarz

    John G.
Turner

    Doreen A.
Wright

    R. Keith
Long

    


    Officers
of Conseco, Inc.

    


    Edward J.
Bonach

    Russell
M. Bostick

    Eric R.
Johnson

    John R.
Kline

    Susan L.
Menzel

    Christopher
J. Nickele

    C. James
Prieur

    Matthew
J. Zimpfer

    


    Shareholders
of Conseco, Inc.

    


    Paulson
& Co. Inc.

    


     
 

     

    



    
      
        
          2