Document:

Exhibit 10.1 - 09.21.2012 notes

Exhibit 10.1

EXECUTION VERSION

$275,000,000
CNO FINANCIAL GROUP, INC.
6.375% SENIOR SECURED NOTES DUE 2020

PURCHASE AGREEMENT

September 20, 2012

1

September 20, 2012

Goldman, Sachs & Co.
J.P. Morgan Securities LLC
As Representatives of the Initial Purchasers
c/o Goldman, Sachs & Co.
200 West Street
New York, New York 10282-2198

Ladies and Gentlemen:
CNO FINANCIAL GROUP, INC., a Delaware corporation (the “Company”), proposes to issue and sell to the several purchasers named in Schedule I hereto (the “Initial Purchasers”), $275,000,000 aggregate principal amount of the Company's 6.375% Senior Secured Notes due 2020 (the “Notes”). Goldman, Sachs & Co. and J.P. Morgan Securities LLC have agreed to act as the representatives of the several Initial Purchasers (the “Representatives”) in connection with the offering and sale of the Notes.
The Securities (as defined herein) will be issued pursuant to the provisions of an indenture, to be dated as of September 28, 2012 (the “Indenture”), among the Company, the Guarantors (as defined herein) and Wilmington Trust, National Association, as trustee (in such capacity, the “Trustee”) and as collateral agent (in such capacity, the “Notes Collateral Agent”).
The payment of principal of, premium, if any, and interest on the Notes will be fully and unconditionally guaranteed on a senior secured basis, jointly and severally by (i) the entities listed on the signature pages hereof as “Guarantors” and (ii) any subsidiary of the Company formed or acquired after the Closing Date that executes an additional guarantee in accordance with the terms of the Indenture, and their respective successors and assigns (collectively, the “Guarantors”), pursuant to their guarantees (the “Guarantees”). The Notes and the Guarantees are herein collectively referred to as the “Securities”.
Concurrently with this offering, (A) the Company will enter into a new senior secured credit facility, consisting of (i) a $425.0 million six-year term loan facility, (ii) a $250.0 million four-year term loan facility and (iii) a $50.0 million three-year revolving credit facility (the “New Credit Facility”), and (B) the Company will use the proceeds from the New Credit Facility and the offering of the Securities to (i) repay all indebtedness outstanding under the Company's existing senior secured credit facility (the “Existing Credit Facility”), (ii) to fund an offer to purchase up to all of the Company's existing 9.00% Senior Secured Notes due 2018 (the “Existing Senior Notes”) and a concurrent solicitation of consents, and, to the extent any Existing Senior Notes are not repurchased pursuant to such offer, to redeem such remaining Existing Senior Notes and satisfy and discharge the indenture relating thereto, (iii) to fund the purchase of approximately $200.0 million aggregate principal amount of the Company's outstanding 7.00% Convertible Senior Debentures due 2016 (the “Existing Convertible Notes”) and (iv) to pay fees, costs and expenses in connection with the foregoing (the payment of such 

1

fees, costs and expenses, together with the refinancing of the Existing Credit Facility, the redemption and prepayment of the Existing Senior Notes and the repurchase of the Existing Convertible Notes, collectively, the “Refinancing”).
The Securities will be offered without being registered under the Securities Act of 1933, as amended (the “Securities Act”), to qualified institutional buyers in compliance with the exemption from registration provided by Rule 144A under the Securities Act and in offshore transactions in reliance on Regulation S under the Securities Act (“Regulation S”).
In connection with the sale of the Securities, the Company has prepared a preliminary offering circular dated September 13, 2012 (the “Preliminary Circular”) and will prepare a final offering circular dated the date hereof (the “Final Circular”) including or incorporating by reference a description of the terms of the Securities, the terms of the offering and a description of the Company. For purposes of this Agreement, “Additional Written Offering Communication” means any written communication (as defined in Rule 405 under the Securities Act) that constitutes an offer to sell or a solicitation of an offer to buy the Securities other than the Preliminary Circular or the Final Circular, “Time of Sale Circular” means the Preliminary Circular together with the Additional Written Offering Communications, if any, each identified in Schedule II hereto and “Time of Sale” means 1:00 p.m. on the date hereof, which the Initial Purchasers have advised the Company is the first time when sales of the Securities are made. As used herein, the terms Preliminary Circular, Time of Sale Circular and Final Circular shall include the documents, if any, incorporated by reference therein. The terms “supplement,” “amendment” and “amend” as used herein with respect to the Preliminary Circular, the Time of Sale Circular, the Final Circular or any Additional Written Offering Communication shall include all documents subsequently filed by the Company with the Securities and Exchange Commission (the “Commission”) pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that are deemed to be incorporated by reference therein.
The Notes will be secured on a first priority basis (subject to Permitted Liens (as defined in the Indenture)) by liens on the assets (the “Collateral”) of the Company and the Guarantors that, as of the Closing Date, have also been pledged on a first priority basis (subject to Permitted Liens (as defined in the Indenture)) as collateral securing the New Credit Facility and documented by a security agreement dated as of the Closing Date (the “Security Agreement”) and other instruments evidencing or creating a security interest (collectively with the Security Agreement, the “Security Documents”) in favor of the Notes Collateral Agent, for its benefit and the benefit of the Trustee and the holders of the Notes. The Securities will be subject to the provisions of a pari passu intercreditor agreement dated as of the Closing Date (the “Intercreditor Agreement”) between the Notes Collateral Agent and JPMorgan Chase Bank, N.A., as administrative agent and collateral agent under the New Credit Facility (the “Administrative Agent”) and acknowledged by the Company and the Guarantors.
1.Representations and Warranties. Each of the Company and the Guarantors, jointly and severally, represents and warrants to, and agrees with, you, as of the Time of Sale and as of the Closing Date, that:

(a)Each document incorporated or deemed to be incorporated by reference in the Time of Sale Circular at the time they were filed with the Commission (collectively, 

2

the “Incorporated Documents”) complied in all material respects with the Exchange Act and the applicable rules and regulations of the Commission thereunder.

(b)The Time of Sale Circular as of the Time of Sale does not and the Final Circular as of its date and as of the Closing Date will not contain any untrue statement of a material fact or omit to state a material fact necessary in order 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 Time of Sale Circular or the Final Circular based upon information relating to any Initial Purchaser furnished to the Company in writing by such Initial Purchaser through you expressly for use therein.

(c)Except for the Additional Written Offering Communications, if any, identified in Schedule II hereto, and electronic road shows, if any, 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 Additional Written Offering Communication.  Any Additional Written Offering Communication as of its date, when taken together with the Time of Sale Circular at the Time of Sale, did not, and as of the Closing Date will not, contain any untrue statement of a material fact or omit to state a material fact necessary in order 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 sentence do not apply to statements or omissions in the Additional Written Offering Communication based upon information relating to any Initial Purchaser furnished to the Company in writing by such Initial Purchaser through you expressly for use therein.

(d)The Company and each Guarantor has been duly incorporated or formed, as applicable, is validly existing as a corporation or limited liability company, as applicable, in good standing under the laws of the jurisdiction of its incorporation or formation, as applicable, has the corporate or limited liability company, as applicable, power and authority to own its property and to conduct its business as described in the Time of Sale Circular 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 so qualified or be in good standing would not have a Material Adverse Change (as defined below).

(e)Each subsidiary of the Company has been duly incorporated or formed, as applicable, is validly existing as a corporation or limited liability company, as applicable, in good standing under the laws of the jurisdiction of its incorporation or formation, as applicable, has the corporate or limited liability company, as applicable, power and authority to own its property and to conduct its business as described in the Time of Sale Circular 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 so qualified or be in good standing would not have a Material Adverse Change; 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, 

3

free and clear of all liens, encumbrances, equities or claims other than as expressly permitted in the Security Agreement or Indenture and, after giving effect to the offering of the Securities, under or pursuant to the Security Documents.

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

(g)The Indenture has been duly authorized by the Company and each of the Guarantors and, at the Closing Date, will have been duly executed and delivered by the Company and each of the Guarantors and, assuming due execution thereof by the other parties thereto, will constitute a valid and binding agreement of the Company and each of the Guarantors, enforceable against the Company and each of the Guarantors in accordance with its terms, except as the enforcement thereof may be limited by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally and equitable principles of general applicability.

(h)The Notes have been duly authorized by the Company and, when executed and authenticated in accordance with the provisions of the Indenture and delivered to and paid for by the Initial Purchasers in accordance with the terms of this Agreement, assuming due execution thereof by the other parties thereto will be valid and binding obligations of the Company, enforceable in accordance with their terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally and equitable principles of general applicability, and will be entitled to the benefits of the Indenture pursuant to which such Securities are to be issued.

(i)The Guarantees have been duly authorized by each of the Guarantors and, at the Closing Date, will have been duly executed and delivered by each of the Guarantors and, assuming due execution thereof by the other parties thereto, will constitute a valid and binding agreement of each of the Guarantors, enforceable against each of the Guarantors in accordance with its terms, except as the enforcement thereof may be limited by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally and equitable principles of general applicability.

(j)Each of the Security Documents and the Intercreditor Agreement have been duly authorized by the Company and each of the Guarantors, to the extent a party thereto, and on the Closing Date, will have been duly executed and delivered by the Company and each of the Guarantors, to the extent a party thereto, and assuming due execution and delivery thereof by the other parties thereto will constitute a valid and binding agreement of the Company and each of the Guarantors, enforceable against the Company and each of the Guarantors, to the extent a party thereto, in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally and equitable principles of general applicability.

4

(k)The Notes and the Guarantees to be purchased by the Initial Purchasers from the Company on the Closing Date will be in the form contemplated by the Indenture. The Securities, the Indenture, the Security Documents and the Intercreditor Agreement will conform in all material respects to the descriptions thereof in the Time of Sale Circular.

(l)The execution and delivery by the Company and each of the Guarantors of, and the performance by the Company and each of the Guarantors of their obligations under, this Agreement, the Indenture, the Security Documents, the Intercreditor Agreement and the Securities and the grant and perfection of security interests and the consummation of the transactions related to the New Credit Facility will not (i) result in any violation of the provisions of the certificate of incorporation or by-laws or other charter documents of the Company or any Guarantor, (ii) conflict with or result in a breach or violation of any agreement or other instrument binding upon the Company or any of its subsidiaries that is material to the Company and its subsidiaries, taken as a whole, or (iii) result in a violation of any provision of applicable law or any judgment, order or decree of any governmental body, agency or court having jurisdiction over the Company or any of its subsidiaries, except, (A) in the case of clauses (ii) and (iii) above, for any such violation, conflict or breach that would not have a material adverse effect on the Company and its subsidiaries, taken as a whole and (B) in the case of clause (ii) above after giving effect to the repayment and termination of the Existing Credit Facility and the Existing Senior Notes.

(m)Except as set forth in the Time of Sale Circular, there has not occurred any material adverse change, or any development involving a material adverse change, in the condition, financial or otherwise, or in the earnings, business or operations of the Company and its subsidiaries, taken as a whole (any such change, a “Material Adverse Change”) subsequent to the date of the most recent financial statements incorporated by reference in Time of Sale Circular.

(n)Other than as set forth in the Time of Sale Circular, there are no legal or governmental proceedings pending or, to the knowledge of the Company and the Guarantors, threatened to which the Company or any of its subsidiaries is a party or to which any of the properties of the Company or any of its subsidiaries is subject that would have a Material Adverse Change or have a material adverse effect on the power or ability of the Company to perform its obligations under this Agreement, the Indenture or the Securities or to consummate the transactions contemplated by the Time of Sale Circular.

(o)The Company and its subsidiaries 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”), have received all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct their respective businesses and 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

5

 
with the terms and conditions of such permits, licenses or approvals would not, singly or in the aggregate, have a Material Adverse Change.

(p)There are no costs or liabilities associated with Environmental Laws (including, without limitation, any capital or operating expenditures required for cleanup, 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, singly or in the aggregate, have a Material Adverse Change.

(q)Neither the Company nor any Guarantor is, and after giving effect to the offering and sale of the Securities and the application of the proceeds thereof as described in the Final Circular will not be, required to register as an “investment company” as such term is defined in the Investment Company Act of 1940, as amended.

(r)Neither the Company nor any affiliate (as defined in Rule 501(b) of Regulation D under the Securities Act, an “Affiliate”) of the Company has directly, or through any agent, (i) sold, offered for sale, solicited offers to buy or otherwise negotiated in respect of, any security (as defined in the Securities Act) which is or will be integrated with the sale of the Securities in a manner that would require the registration under the Securities Act of the Securities or (ii) offered, solicited offers to buy or sold the Securities by any form of general solicitation or general advertising (as those terms are used in Regulation D under the Securities Act) or in any manner involving a public offering within the meaning of Section 4(2) of the Securities Act.

(s)None of the Company, its Affiliates or any person acting on its or their behalf has engaged or will engage in any directed selling efforts (within the meaning of Regulation S under the Securities Act) with respect to the Securities and the Company and its Affiliates and any person acting on its or their behalf have complied and will comply with the offering restrictions requirement of Regulation S, except no representation, warranty or agreement is made by the Company or the Guarantors in this paragraph with respect to the Initial Purchasers.

(t)It is not necessary in connection with the offer, sale and delivery of the Securities to the Initial Purchasers in the manner contemplated by this Agreement and the Time of Sale Circular to register the Securities under the Securities Act or to qualify the Indenture under the Trust Indenture Act of 1939, as amended.

(u)The Securities satisfy the requirements set forth in Rule 144A(d)(3) under the Securities Act.

(v)Neither the Company nor any of its subsidiaries or affiliates, nor any director, officer, or employee, nor, to the Company's and each Guarantor'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 (i) “government official” (including any officer or employee of a government or government-owned or controlled entity or of a public 

6

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) or (ii) to any “foreign official” (as defined in the Foreign Corrupt Practices Act of 1977, as amended) or any foreign political party or official thereof or any candidate for foreign political office, in each case, 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.

(w)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.

(x)(i) Neither the Company nor any of its subsidiaries (collectively, the “Entity”) or, to the knowledge of the Company and the Guarantors, any director, officer, employee, agent, affiliate or representative of the Entity, is an 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 (“OFAC”), the United Nations Security Council (“UNSC”), the European Union (“EU”), Her Majesty's Treasury (“HMT”), 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 Company and the Guarantors represents and covenants that the Entity 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:

7

(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 Company and the Guarantors represent and covenant that for the past 5 years, the Entity 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.

(y)The financial statements, together with the related schedules and notes, incorporated by reference in the Time of Sale Circular present fairly the consolidated financial position of the entities to which they relate as of and at the dates indicated and the results of their operations and cash flows for the periods specified. Such financial statements have been prepared in accordance with generally accepted accounting principles in the United States applied on a consistent basis throughout the periods involved, except as may be expressly stated in the related notes thereto. The financial data set forth in the Time of Sale Circular under the captions “Summary- Summary Historical Consolidated Financial and Operating Data,” and “Selected Historical Consolidated Financial and Operating Data” fairly present the information set forth therein on a basis consistent with that of the audited and unaudited financial statements incorporated by reference in the Time of Sale Circular. The statistical and market-related data and forward-looking statements included in the Time of Sale Circular are based on or derived from sources that the Company believes to be reliable and accurate in all material respects and represent their good faith estimates that are made on the basis of data derived from such sources.  The interactive data in eXtensible Business Reporting Language incorporated by reference in the Time of Sale Circular fairly presents the information called for in all material respects and has been prepared in accordance with the Commission's rules and guidelines applicable thereto.

(z)Except as set forth in the Time of Sale Circular, the Company and each of its subsidiaries possess such valid and current certificates, authorizations or permits issued by the appropriate state, federal or foreign regulatory agencies or bodies necessary to conduct their respective businesses, and neither the Company nor any of its subsidiaries have received any notice of proceedings relating to the revocation or modification of, or non-compliance with, any such certificate, authorization or permit which, singly or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would result in a Material Adverse Change.

(aa)None of the Company or any of the Guarantors has taken or will take, directly or indirectly, any action designed to or that might be reasonably expected to cause or result in stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Securities.

8

(bb)    The Company and the Guarantors, taken as a whole, is, and immediately after the Closing Date will be, Solvent. As used herein, the term “Solvent” means, with respect to any person on a particular date, that on such date (i) the fair market value of the assets of such person is greater than the total amount of liabilities (including contingent liabilities) of such person, (ii) the present fair salable value of the assets of such person is greater than the amount that will be required to pay the probable liabilities of such person on its debts as they become absolute and matured, (iii) such person is able to realize upon its assets and pay its debts and other liabilities, including contingent obligations, as they mature and (iv) such person does not have unreasonably small capital.

(cc)    The Company and its subsidiaries and their respective officers and directors are in compliance with the applicable provisions of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act,” which term, as used herein, includes the rules and regulations of the Commission promulgated thereunder).

(dd)    Except as set forth in the Time of Sale Circular, the Company and its subsidiaries maintain a system of “internal control over financial reporting” as defined in Rule 13a-15(f) under the Exchange Act  that is in compliance with the Sarbanes-Oxley Act and is sufficient to provide reasonable assurances 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 GAAP and to maintain accountability for assets; (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 existing assets at reasonable intervals and appropriate action is taken with respect to any differences.

(ee)    Except as set forth in the Time of Sale Circular, since the date of the latest audited financial statements incorporated by reference in the Time of Sale Circular, there has been no change in the Company's “internal control over financial reporting” as defined in Rule 13a-15(f) under the Exchange Act that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

(ff)    The Company has established and maintains “disclosure controls and procedures” (as such term is defined in Rules 13a-15(e) under the Exchange Act); such disclosure controls and procedures are designed to ensure that material information relating to the Company and its subsidiaries is made known to the chief executive officer and chief financial officer of the Company by others within the Company or any of its subsidiaries, and such disclosure controls and procedures are reasonably effective to perform the functions for which they were established subject to the limitations of any such control system; the Company and its subsidiaries have carried out evaluations of the effectiveness of their disclosure controls and procedures as required by Rule 13a-15 of the Exchange Act; the Company's auditors and the audit committee of the board of directors of the Company have been advised of: (i) any significant deficiencies or material weaknesses in the design or operation of internal controls which could adversely affect the Company's ability to record, process, summarize, and report financial data; and 

9

(ii) any fraud, whether or not material, that involves management or other employees who have a role in the Company's internal controls.

(gg)    Neither the Company nor any of its subsidiaries nor any agent thereof acting on their behalf (other than any Initial Purchaser, as to whom the Company and the Guarantors make no representation) has taken, and none of them will take, any action that might cause this Agreement or the issuance or sale of the Securities to violate Regulation T, Regulation U or Regulation X of the Board of Governors of the Federal Reserve System.

(hh)    The Company, the Guarantors and their respective affiliates and all persons acting on their behalf (other than the Initial Purchasers, as to whom the Company and the Guarantors make no representation) have complied with and will comply with the offering restrictions requirements of Regulation S in connection with the offering of the Securities outside the United States and, in connection therewith, the Time of Sale Circular will contain the disclosure required by Rule 902. The Company is a “reporting issuer”, as defined in Rule 902 under the Securities Act.

(ii)    Upon the delivery to the Administrative Agent of certificates representing shares of capital stock and the filing of financing statements or Mortgages filed as fixture filings (“Fixture Filings”), as applicable, with respect to the Collateral described in the Security Agreement and the fixtures described in the financing statements or Fixture Filings (the “Personal Property Collateral”), in the proper recording office and taking of other actions specified in the Security Documents, the security interests granted thereby will constitute valid, perfected first-priority liens and security interests in the Personal Property Collateral of each grantor or mortgagor, as applicable, in favor of the Notes Collateral Agent for the benefit of the Trustee and the holders of the Notes, enforceable in accordance with the terms contained therein, to the extent such security interests can be perfected by possession of such certificates representing shares of capital stock, by filing a financing statement under (A) the Uniform Commercial Code (the “UCC”) of the jurisdiction of organization of such grantor, or (B) the personal property security legislation applicable to the Personal Property Collateral, or under the local law of the jurisdiction in which the fixtures are located or by such other actions, and subject only to the liens, encumbrances and exceptions permitted in the Indenture and the Security Documents, and to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally and equitable principles of general applicability.

(jj)    The New Credit Facility has been duly and validly authorized by the Company and each of the Guarantors and, when duly executed and delivered by the Company and each of the Guarantors, will be the valid and legally binding obligation of the Company and each of the Guarantors, enforceable in accordance with its terms, except as the enforcement thereof may be limited by applicable applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally and equitable principles of general applicability.

10

(kk)    The statements set forth in the Time of Sale Circular and the Final Circular under the caption “Description of the Notes,” insofar as they purport to constitute a summary of the terms of the Securities, “Plan of Distribution,” insofar as they purport to constitute a summary of this Agreement and under the caption “Description of Certain Indebtedness,” insofar as they purport to describe the documents referred to therein, fairly summarize the subject matter thereof in all material respects.

(ll)    PricewaterhouseCoopers LLP, which has audited certain financial statements of the Company and its subsidiaries is an independent registered public accounting firm with respect to the Company and its subsidiaries as required by the Securities Act and the rules and regulations of the Commission thereunder and the rules and regulations of the Public Company Accounting Oversight Board.

2.Agreements to Sell and Purchase. Each of the Company and the Guarantors hereby agrees to sell to the several Initial Purchasers, and each Initial Purchaser, 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 and the Guarantors the respective principal amount of Securities set forth in Schedule I hereto opposite its name at a purchase price of 98.25% of the principal amount thereof (the “Purchase Price”) plus accrued and unpaid interest, if any, from September 28, 2012 to the Closing Date (as defined below).  The Company will not be obligated to deliver any of the Securities except upon payment for all the Securities to be purchased as provided herein.

3.Terms of Offering. You have advised the Company that the Initial Purchasers will make an offering of the Securities purchased by the Initial Purchasers hereunder as soon as practicable after this Agreement is entered into as in your judgment is advisable.

4.Payment and Delivery. Payment for the Securities shall be made to the Company in Federal or other funds immediately available in New York City against delivery of such Securities for the respective accounts of the several Initial Purchasers at 10:00 a.m., New York City time, on September 28, 2012, or at such other time on the same or such other date, not more than three Business Days after the foregoing date, as shall be designated in writing by the Representatives. The time and date of such payment are hereinafter referred to as the “Closing Date.”

The Notes shall be in definitive form or global form, as specified by the Representatives, and registered in such names and in such denominations as the Representatives shall request in writing not later than one full business day prior to the Closing Date. The Securities shall be delivered to the Representatives on the Closing Date for the respective accounts of the several Initial Purchasers, with any transfer taxes payable in connection with the transfer of the Securities to the Initial Purchasers duly paid, against payment of the Purchase Price therefor plus accrued and unpaid interest, if any, to the date of payment and delivery.
5.Conditions to the Initial Purchasers' Obligations. The several obligations of the several Initial Purchasers to purchase and pay for the Securities on the Closing Date are subject to the following conditions:

11

(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 in Section 3(a)(62) of the Exchange Act; and

(ii)there shall not have occurred any Material Adverse Change that, in your judgment, makes it impracticable to proceed with the offering, sale or delivery of the Securities on the terms and in the manner contemplated in the Time of Sale Circular.

(b)The representations and warranties of the Company and the Guarantors contained in this Agreement shall be true and correct on and as of the Time of Sale and on and as of the Closing Date as if made on and as of the Closing Date; the statements of the Company's officers made pursuant to any certificate delivered in accordance with the provisions hereof shall be true and correct in all material respects (except to the extent already qualified by materiality) on and as of the date made and on and as of the Closing Date; the Company and each of the Guarantors shall have performed all covenants and agreements and satisfied all conditions on their part to be performed or satisfied hereunder at or prior to the Closing Date.

(c)The Initial Purchasers 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 Sections 1(m) and 5(a)(i) 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.
(d)The Initial Purchasers shall have received on the Closing Date (i) an opinion and negative assurance letter of Simpson Thacher & Bartlett LLP, counsel for the Company, dated the Closing Date, (ii) an opinion of Karl W. Kindig, corporate counsel of the Company, (iii) an opinion of Faegre Baker Daniels LLP, Indiana counsel to the Company and certain Guarantors and (iv) an opinion of Porter Hedges LLP, Texas counsel to the Company and certain Guarantors, in each case, in form and substance satisfactory to the Representatives. Such opinion shall be rendered to the Initial Purchasers at the request of the Company and shall so state therein. 

12

(e)The Initial Purchasers shall have received on the Closing Date an opinion and negative assurance letter of Latham & Watkins LLP, counsel for the Initial Purchasers, dated the Closing Date, in form and substance satisfactory to the Representatives.

(f)The Initial Purchasers 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 the Representatives, from PricewaterhouseCoopers LLP, independent public accountants, containing statements and information of the type ordinarily included in accountants' “comfort letters” to underwriters with respect to the financial statements and certain financial information contained in or incorporated by reference into the Time of Sale Circular and the Final Circular; provided that the letter delivered on the Closing Date shall use a “cut-off date” not earlier than three business days prior to the date of such letter.

(g)The Company and each of the Guarantors shall have executed and delivered the Indenture, in form and substance reasonably satisfactory to the Initial Purchasers, and the Initial Purchasers shall have received executed copies thereof.

(h)The Notes shall be eligible for clearance and settlement through The Depository Trust Company, Clearstream Banking and the Euroclear System.

(i)Subject to the terms of the Intercreditor Agreement, the Company and each of the Guarantors shall have entered into the Security Agreement, the perfection certificate related thereto and the other Security Documents and the Representatives shall have received counterparts, conformed as executed, thereof.

(j)The Representatives shall have received the results of recent UCC lien searches (or lien searches under the personal property security legislation applicable to the Personal Property Collateral, as applicable) for the Company and each Guarantor in each of the jurisdictions in which any of the Company or the Guarantors is located and, if reasonably requested by the Representatives, tax and judgment lien searches for the Company in each jurisdiction in which material assets of the Company or any of its subsidiaries is located, and such searches shall reveal no liens on any of the assets of the Company or any of its subsidiaries other than Permitted Liens.

(k)Subject to the terms of the Intercreditor Agreement, any delivery to the Administrative Agent of certificates representing shares of capital stock required to be pledged as Collateral shall be delivered to the Administrative Agent and any UCC financing statement required by the Security Agreement to be filed on or prior to the Closing Date, in order to create in favor of the Notes Collateral Agent for its benefit and the benefit of the Trustee and the holders of the Notes, a perfected first-priority lien (subject to Permitted Liens (as defined in the Indenture)) and security interest in the Collateral which can be perfected by the making of such filings prior and superior to the right of any other person, shall be in proper form for filing or delivered, as applicable.

13

(l)The sale of the Securities shall not be enjoined (temporarily or permanently) on the Closing Date.

On or prior to the Closing Date, (a) the Company shall have entered into the New Credit Facility and the Representatives shall have received an executed copy thereof and (b) the Representatives shall have received satisfactory evidence that the Refinancing has been consummated and that all liens encumbering the collateral secured by the Existing Credit Facility and the Existing Notes have been released.
6.Covenants of the Company. Each of the Company and the Guarantors covenants with each Initial Purchaser as follows:

(a)To furnish to you in New York City, without charge, prior to 10:00 a.m. New York City time on the business day next succeeding the date of this Agreement and during the period mentioned in Section 6(c) or (d), as many copies of the Time of Sale Circular, the Final Circular and any supplements and amendments thereto as you may reasonably request.

(b)Before amending or supplementing the Preliminary Circular, the Time of Sale Circular or the Final Circular, to furnish to you a copy of each such proposed amendment or supplement and not to use any such proposed amendment or supplement to which the Representatives reasonably object.

(c)To furnish to you a copy of each proposed Additional Written Offering Communication 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 Additional Written Offering Communication to which the Representatives reasonably object.

(d)If the Time of Sale Circular is being used to solicit offers to buy the Securities at a time when the Final Circular is not yet available to prospective purchasers and any event shall occur or condition exist as a result of which the Time of Sale Circular would include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances, not misleading, or if, in the judgment of the Representatives or their counsel, it is necessary to amend or supplement the Time of Sale Circular to comply with applicable law, forthwith to prepare and furnish, at its own expense, to the Initial Purchasers and to any dealer upon request, either amendments or supplements to the Time of Sale Circular so that the Time of Sale Circular as so amended or supplemented will not include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances, not misleading or so that the Time of Sale Circular, as amended or supplemented, will comply with applicable law.
  
(e)If, during such period after the date hereof and prior to the date on which all of the Securities shall have been sold by the Initial Purchasers, any event shall occur or condition exist as a result of which the Final Circular would include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances, not misleading, or if, in the 

14

judgment of the Representatives or their counsel, it is necessary to amend or supplement the Final Circular to comply with applicable law, forthwith to prepare and furnish, at its own expense, to the Initial Purchasers, either amendments or supplements to the Final Circular so that the Final Circular as so amended or supplemented will not include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances, not misleading or so that the Final Circular, as amended or supplemented, will comply with applicable law.
 
(f)To endeavor to qualify the Securities for offer and sale under the securities or Blue Sky laws of such jurisdictions as you shall reasonably request provided that neither the Company nor any of the Guarantors shall be required to (i) qualify as a foreign corporation or other entity or as a dealer in securities in any such jurisdiction where it would not otherwise be required to so qualify, (ii) file any general consent to service of process in any such jurisdiction or (iii) subject itself to taxation in any such jurisdiction if it is not otherwise so subject.

(g)Whether or not the transactions contemplated in this Agreement are consummated or this Agreement is terminated, to pay or cause to be paid all expenses incident to the performance of its 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 issuance and sale of the Securities and the granting and perfecting of the security interests and all other fees or expenses in connection with the preparation of the Preliminary Circular, the Time of Sale Circular, the Final Circular, any Additional Written Offering Communication prepared by or on behalf of, used by, or referred to by the Company and any amendments and supplements to any of the foregoing, including all printing costs associated therewith, and the delivering of copies thereof to the Initial Purchasers, in the quantities herein above specified, (ii) all costs and expenses related to the transfer and delivery of the Securities to the Initial Purchasers, 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 Securities under state securities laws and all expenses in connection with the qualification of the Securities for offer and sale under state securities laws as provided in Section 6(e) hereof, including filing fees and the reasonable fees and disbursements of counsel for the Initial Purchasers in connection with such qualification and in connection with the Blue Sky or legal investment memorandum, (iv) any fees charged by rating agencies for the rating of the Securities, (v) the costs and charges of the Notes Collateral Agent, the Trustee and any transfer agent, registrar or depositary, (vi) the cost of the preparation, issuance and delivery of the Securities, (vii) 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 Securities, including, without limitation, expenses associated with the preparation or dissemination of any electronic road show, expenses associated with 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, (viii) the document production charges and expenses associated with printing this Agreement and (ix) all other cost and expenses incident to 

15

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 8, and the last paragraph of Section 10, the Initial Purchasers will pay all of their costs and expenses, including fees and disbursements of their counsel, transfer taxes payable on resale of any of the Securities by them and any advertising expenses connected with any offers they may make.

(h)Neither the Company nor any Affiliate will sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in the Securities Act) which could be integrated with the sale of the Securities in a manner which would require the registration under the Securities Act of the Securities.

(i)Not to solicit any offer to buy or offer or sell the Securities by means of any form of general solicitation or general advertising (as those terms are used in Regulation D under the Securities Act) or in any manner involving a public offering within the meaning of Section 4(2) of the Securities Act.

(j)While any of the Securities remain “restricted securities” within the meaning of the Securities Act, to make available, upon request, to any seller of such Securities the information specified in Rule 144A(d)(4) under the Securities Act, unless the Company is then subject to Section 13 or 15(d) of the Exchange Act.

(k)None of the Company, its Affiliates or any person acting on its or their behalf (other than the Initial Purchasers) will engage in any directed selling efforts (as that term is defined in Regulation S) with respect to the Securities, and the Company and its Affiliates and each person acting on its or their behalf (other than the Initial Purchasers) will comply with the offering restrictions requirement of Regulation S.

(l)During the period of one year after the Closing Date the Company will not, and will not permit any of its affiliates (as defined in Rule 144 under the Securities Act) to resell any of the Securities which constitute “restricted securities” under Rule 144 that have been reacquired by any of them.

(m)Not to take any action prohibited by Regulation M under the Exchange Act in connection with the distribution of the Securities contemplated hereby.

(n)To apply the net proceeds from the sale of the Securities in the manner described under the caption “Use of Proceeds” in the Time of Sale Circular and the Final Circular.

The Company also agrees that, without the prior written consent of the Representatives on behalf of the Initial Purchasers, it will not, during the period beginning on the date hereof and continuing to and including the date that is 60 days following the Closing Date, offer, sell, contract to sell or otherwise dispose of any debt securities of the Company or debt securities of the Company or any of its subsidiaries substantially similar to the Securities (other than the sale of the Securities under this Agreement).
7.Offering of Securities; Restrictions on Transfer.

16

(a)Each Initial Purchaser, severally and not jointly, represents and warrants to the Company that such Initial Purchaser is a qualified institutional buyer as defined in Rule 144A under the Securities Act (a “QIB”) and an accredited investor within the meaning of Rule 501(a) of Regulation D under the Securities Act. Each Initial Purchaser, severally and not jointly, agrees with the Company that (i) it will not solicit offers for, or offer or sell, such Securities by any form of general solicitation or general advertising (as those terms are used in Regulation D under the Securities Act) or in any manner involving a public offering within the meaning of Section 4(2) of the Securities Act and (ii) it will solicit offers for such Securities only from, and will offer such Securities only to, persons that it reasonably believes to be (a) in the case of offers inside the United States, QIBs and (b) in the case of offers outside the United States, to persons other than U.S. persons (“foreign purchasers,” which term shall include dealers or other professional fiduciaries in the United States acting on a discretionary basis for foreign beneficial owners (other than an estate or trust)) in reliance upon Regulation S under the Securities Act that, in each case, in purchasing such Securities are deemed to have represented and agreed as provided in the Final Circular under the caption “Notice to Investors”.

(b)Each Initial Purchaser, severally and not jointly, represents, warrants, and agrees with respect to offers and sales outside the United States that:

(i)such Initial Purchaser understands that no action has been or will be taken in any jurisdiction by the Company that would permit a public offering of the Securities, or possession or distribution of the Preliminary Circular, the Time of Sale Circular, the Final Circular or any other offering or publicity material relating to the Securities, in any country or jurisdiction where action for that purpose is required;

(ii)such Initial Purchaser will comply with all applicable laws and regulations in each jurisdiction in which it acquires, offers, sells or delivers Securities or has in its possession or distributes the Preliminary Circular, the Time of Sale Circular, the Final Circular or any such other material, in all cases at its own expense;

(iii)the Securities have not been registered under the Securities Act and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons except in accordance with Rule 144A or Regulation S under the Securities Act or pursuant to another exemption from the registration requirements of the Securities Act;

(iv)such Initial Purchaser has offered the Securities and will offer and sell the Securities (a) as part of its distribution at any time and (b) otherwise until 40 days after the later of the commencement of the offering and the Closing Date, only in accordance with Rule 903 of Regulation S or as otherwise permitted in Section 7(a); accordingly, neither such Initial Purchaser, its Affiliates nor any persons acting on its or their behalf have engaged or will engage in any directed selling efforts (within the meaning of Regulation S) with respect to the Securities, 

17

and any such Initial Purchaser, its Affiliates and any such persons have complied and will comply with the offering restrictions requirement of Regulation S;

(v)such Initial Purchaser, in relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (as defined below) (each, a “Relevant Member State”), an offer to the public of any Securities which are the subject of the offering contemplated by the Time of Sale Offering Circular and the Final Circular may not be made in that Relevant Member State, except that an offer to the public in that Relevant Member State of any Securities may be made at any time under the following exemptions under the Prospectus Directive, if they have been implemented in that Relevant Member State: (a) to any legal entity which is a qualified investor as defined in the Prospectus Directive; (b) to fewer than 100 or, if the Relevant Member State has implemented the relevant provision of the 2010 PD Amending Directive, 150, natural or legal persons (other than qualified investors as defined in the Prospectus Directive), as permitted under the Prospectus Directive, subject to obtaining the prior consent of the relevant dealer or dealers nominated by the Company for any such offer; or (c) in any other circumstances falling within Article 3(2) of the Prospectus Directive, provided that no such offer of Securities shall require the Company or any Initial Purchaser to publish a prospectus pursuant to Article 3 of the Prospectus Directive or supplement a prospectus pursuant to Article 16 of the Prospectus Directive;

the expression “an offer of Securities to the public” in relation to any Securities in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the Securities to be offered so as to enable an investor to decide to purchase or subscribe the Securities, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State, the expression “Prospectus Directive” means Directive 2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive, to the extent implemented in the Relevant Member State), and includes any relevant implementing measure in the Relevant Member State and the expression “2010 PD Amending Directive” means Directive 2010/73/EU;
(vi)such Initial Purchaser has represented and agreed that it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the Financial Services and Markets Act 2000) in connection with the issue or sale of the Securities in circumstances in which Section 21(1) of such Act does not apply to us and it has complied and will comply with all applicable provisions of such Act with respect to anything done by it in relation to any Securities in, from or otherwise involving the United Kingdom;

(vii)such Initial Purchaser understands that the Securities have not been and will not be registered under the Securities and Exchange Law of Japan, and 

18

represents that it has not offered or sold, and agrees not to offer or sell, directly or indirectly, any Securities in Japan or for the account of any resident thereof except pursuant to any exemption from the registration requirements of the Securities and Exchange Law of Japan and otherwise in compliance with applicable provisions of Japanese law; and

(viii)such Initial Purchaser agrees that, at or prior to confirmation of sales of the Securities, it will have sent to each distributor, dealer or person receiving a selling concession, fee or other remuneration that purchases Securities from it during the restricted period a confirmation or notice to substantially the following effect: 

“The Securities covered hereby have not been registered under the U.S. Securities Act of 1933 (the “Securities Act”) and may not be offered and sold within the United States or to, or for the account or benefit of, U.S. persons (i) as part of their distribution at any time or (ii) otherwise until 40 days after the later of the commencement of the offering and the closing date, except in either case in accordance with Regulation S (or Rule 144A if available) under the Securities Act. Terms used above have the meaning given to them by Regulation S.”

Terms used in this Section 7(b) have the meanings given to them by Regulation S.
8.Indemnity and Contribution.

(a)The Company and each Guarantor, jointly and severally, agrees to indemnify and hold harmless each Initial Purchaser, each person, if any, who controls any Initial Purchaser within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act, and each affiliate of any Initial Purchaser 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) arising out of or based upon any untrue statement or alleged untrue statement of a material fact contained in the Preliminary Circular, the Time of Sale Circular, any Additional Written Offering Communication prepared by or on behalf of, used by, or referred to by the Company, or the Final Circular or any amendment or supplement thereto, or caused by any omission or alleged omission to state therein a material fact necessary in order to make the statements therein in the light of the circumstances under which they were made not misleading, except insofar as such losses, claims, damages or liabilities arise out of or are based upon any such untrue statement or omission or alleged untrue statement or omission based upon information relating to any Initial Purchaser furnished to the Company in writing by such Initial Purchaser through you expressly for use therein.

(b)Each Initial Purchaser agrees, severally and not jointly, to indemnify and hold harmless the Company, its directors, its officers and each person, if any, who controls the Company within the meaning of either Section 15 of the Securities Act or 

19

Section 20 of the Exchange Act to the same extent as the foregoing indemnity from the Company to such Initial Purchaser, but only with reference to information relating to such Initial Purchaser furnished to the Company in writing by such Initial Purchaser through you expressly for use in the Preliminary Circular, the Time of Sale Circular, any Additional Written Offering Communication prepared by or on behalf of, used by or referred to by the Company, or the Final Circular or any amendment or supplement thereto.

(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 8(a) or 8(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 (i) the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel or (ii) the named parties to any such proceeding (including any impleaded parties) include both the indemnifying party and the indemnified party and the indemnified party shall have reasonably concluded that (A) representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them or (B) there may be legal defenses available to it that are different from or in addition to those available to the indemnifying party. 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 the fees and expenses of more than one separate firm (in addition to any local counsel) for all such indemnified parties and that all such fees and expenses shall be reimbursed as they are incurred. Such firm shall be designated in writing by the Representatives, in the case of parties indemnified pursuant to Section 8(a), and by the Company, in the case of parties indemnified pursuant to Section 8(a). The indemnifying party shall not be liable 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 (i) includes an unconditional release of the indemnified party from all liability arising out of such action or claim and (ii) does not include a statement as to, or an admission of, fault, culpability or a failure to act, by or on behalf of any indemnified party.

(d)To the extent the indemnification provided for in Section 8(a) or 8(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 

20

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 (i) in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and the Initial Purchasers on the other hand from the offering of the Securities or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company on the one hand and of the Initial Purchasers 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 Initial Purchasers on the other hand in connection with the offering of the Securities shall be deemed to be in the same respective proportions as the net proceeds from the offering of the Securities (before deducting expenses) received by the Company and the total discounts and commissions received by the Initial Purchasers bear to the aggregate offering price of the Securities. The relative fault of the Company on the one hand and of the Initial Purchasers 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 Initial Purchasers and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Initial Purchasers' respective obligations to contribute pursuant to this Section 8 are several in proportion to the respective principal amount of Securities they have purchased hereunder, and not joint.

(e)The Company and the Initial Purchasers agree that it would not be just or equitable if contribution pursuant to this Section 8 were determined by pro rata allocation (even if the Initial Purchasers were treated as one entity for such purpose) or by any other method of allocation that does not take account of the equitable considerations referred to in Section 8(d). The amount paid or payable by an indemnified party as a result of the losses, claims, damages and liabilities referred to in Section 8(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 8, no Initial Purchaser shall be required to contribute any amount in excess of the amount by which the total price at which the Securities resold by it in the initial placement of such Securities were offered to investors exceeds the amount of any damages that such Initial Purchaser 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 8 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 8 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 (i) any 

21

termination of this Agreement, (ii) any investigation made by or on behalf of any Initial Purchaser, any person controlling any Initial Purchaser or any affiliate of any Initial Purchaser or by or on behalf of the Company, its officers or directors or any person controlling the Company and (iii) acceptance of and payment for any of the Securities.

9.Termination. The Representatives may terminate this Agreement by notice given 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 NASDAQ Global Market or any other board or exchange on which the Company's securities are traded, (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 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 Representatives' judgment, is material and adverse and which, singly or together with any other event specified in this clause (v), makes it, in the Representatives' judgment, impracticable or inadvisable to proceed with the offer, sale or delivery of the Securities on the terms and in the manner contemplated in the Time of Sale Circular or the Final Circular.

10.Effectiveness; Defaulting Initial Purchasers. This Agreement shall become effective upon the execution and delivery hereof by the parties hereto. The respective indemnities, agreements, representations, warranties and other statements of the Company, the Guarantors, their respective officers and the several Initial Purchasers set forth in or made pursuant to this Agreement will remain in full force and effect, regardless of any investigation made by or on behalf of any Initial Purchaser, the Company, any Guarantor or any of their officers or directors or any controlling person, as the case may be, and will survive delivery of and payment for the Securities sold hereunder and any termination of this Agreement.

If, on the Closing Date, any one or more of the several Initial Purchasers shall fail or refuse to purchase Securities that it or they have agreed to purchase hereunder on the Closing Date, and the aggregate principal amount of Securities which such defaulting Initial Purchaser or Initial Purchasers agreed but failed or refused to purchase is not more than one-tenth of the aggregate principal amount of Securities to be purchased on the Closing Date, the other Initial Purchasers shall be obligated severally in the proportions that the principal amount of Securities set forth opposite their respective names in Schedule I bears to the aggregate principal amount of Securities set forth opposite the names of all such non-defaulting Initial Purchasers, or in such other proportions as you may specify, to purchase the Securities which such defaulting Initial Purchaser or Initial Purchasers agreed but failed or refused to purchase on the Closing Date; provided that in no event shall the principal amount of Securities that any Initial Purchaser has agreed to purchase pursuant to this Agreement be increased pursuant to this Section 10 by an amount in excess of one-ninth of such principal amount of Securities without the written consent of such Initial Purchaser. If, on the Closing Date any Initial Purchaser or Initial Purchasers shall fail or refuse to purchase Securities which it or they have agreed to purchase hereunder on such date and the aggregate principal amount of Securities with respect to which such default occurs is more than one-tenth of the aggregate principal amount of Securities to be purchased on such date, and arrangements satisfactory to you and the Company for the purchase of such Securities 

22

are not made within 36 hours after such default, this Agreement shall terminate without liability on the part of any non-defaulting Initial Purchaser or of 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 Time of Sale Circular, the Final Circular or in any other documents or arrangements may be effected. Any action taken under this paragraph shall not relieve any defaulting Initial Purchaser from liability in respect of any default of such Initial Purchaser under this Agreement.
If this Agreement shall be terminated by the Initial Purchasers, 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 Initial Purchasers or such Initial Purchasers 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 Initial Purchasers in connection with this Agreement or the offering contemplated hereunder.
11.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 Securities, represents the entire agreement between the Company and the Initial Purchasers with respect to the preparation of the Preliminary Circular, the Time of Sale Circular, the Final Circular, the conduct of the offering, and the purchase and sale of the Securities.

(b)The Company acknowledges that in connection with the offering of the Securities: (i) the Initial Purchasers have acted at arms length, are not agents of, and owe no fiduciary duties to, the Company or any other person, (ii) the Initial Purchasers 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 Initial Purchasers 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 Initial Purchasers arising from an alleged breach of fiduciary duty in connection with the offering of the Securities.

12.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. Delivery of an executed counterpart of a signature page to this Agreement by telecopier, facsimile or other electronic transmission (i.e., a “pdf” or “tif”) shall be effective as delivery of a manually executed counterpart thereof.

13.Successors. This Agreement will inure to the benefit of and be binding upon the parties hereto, and to the benefit of the indemnified parties referred to in Section 8 hereof, and in each case their respective successors, and no other person will have any right or obligation hereunder. The term “successors” shall not include any other purchaser of the Securities as such from any of the Initial Purchasers merely by reason of such purchase.

23

14.Authority of the Representatives. Any action by the Initial Purchasers hereunder may be taken by the Representatives on behalf of the Initial Purchasers, and any such action taken by the Representatives shall be binding upon the Initial Purchasers.

15.Applicable Law. This Agreement and any claim, controversy or dispute arising under or related to this Agreement shall be governed by and construed in accordance with the internal laws of the State of New York.

16.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.

17.Notices. All communications hereunder shall be in writing and effective only upon receipt and if to the Initial Purchasers shall be delivered, mailed or sent to you in care of Goldman, Sachs & Co. at 200 West Street, New York, New York 10282-2198, facsimile number (646) 769-7607, Attention: Liability Management Group and J.P. Morgan Securities LLC at 383 Madison Avenue, New York, New York 10179, facsimile number (212) 270-1063, Attention: Warfield Price; and if to the Company shall be delivered, mailed or sent to CNO Financial Group, Inc., 11825 North Pennsylvania Street, Carmel, IN 46032, Attention Karl W. Kindig.

18.Patriot Act.  In accordance with the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)), the Initial Purchasers are required to obtain, verify and record information that identifies their respective clients, including the Company, which information may include the name and address of their respective clients, as well as other information that will allow the Initial Purchasers to properly identify their respective clients.

[Signature Page to Follow]

24

Very truly yours,

CNO FINANCIAL GROUP, INC.

	
		
	By:
	/s/ Erik M. Helding

	 
	Name:  Erik M. Helding

	 
	Title:  Senior Vice President, Treasury &

	 
	Investor Relations

[Signature Page to the Purchase Agreement]

40|86 ADVISORS, INC.

	
		
	By:
	/s/ Erik M. Helding

	 
	Name:  Erik M. Helding

	 
	Title:  Senior Vice President and Treasurer

40|86 MORTGAGE CAPITAL, INC.

	
		
	By:
	/s/ Erik M. Helding

	 
	Name:  Erik M. Helding

	 
	Title:  Senior Vice President and Treasurer

AMERICAN LIFE AND CASUALTY MARKETING DIVISION CO.

	
		
	By:
	/s/ Erik M. Helding

	 
	Name:  Erik M. Helding

	 
	Title:  Senior Vice President and Treasurer

CDOC, INC.

	
		
	By:
	/s/ Erik M. Helding

	 
	Name:  Erik M. Helding

	 
	Title:  Senior Vice President and Treasurer

CNO MANAGEMENT SERVICES COMPANY

	
		
	By:
	/s/ Erik M. Helding

	 
	Name:  Erik M. Helding

	 
	Title:  Senior Vice President and Treasurer

[Signature Page to the Purchase Agreement]

PERFORMANCE MATTERS ASSOCIATES, INC.

	
		
	By:
	/s/ Erik M. Helding

	 
	Name:  Erik M. Helding

	 
	Title:  Senior Vice President and Treasurer

PERFORMANCE MATTERS ASSOCIATES OF TEXAS, INC.

	
		
	By:
	/s/ Erik M. Helding

	 
	Name:  Erik M. Helding

	 
	Title:  Senior Vice President and Treasurer

CNO SERVICES, LLC

	
		
	By:
	/s/ Erik M. Helding

	 
	Name:  Erik M. Helding

	 
	Title:  Senior Vice President, Treasury and

	 
	Investor Relations

K.F. AGENCY, INC.

	
		
	By:
	/s/ Erik M. Helding

	 
	Name:  Erik M. Helding

	 
	Title:  Senior Vice President and Treasurer

[Signature Page to the Purchase Agreement]

Accepted as of the date hereof

Goldman, Sachs & Co.
J.P. Morgan Securities LLC
Acting severally on behalf of themselves and the several Initial Purchasers named in Schedule I hereto.

GOLDMAN, SACHS & CO.

	
		
	By:
	/s/ Michael Hickey

	 
	Name:  Michael Hickey

	 
	Title:  Vice President

    

J.P. MORGAN SECURITIES LLC

	
		
	By:
	/s/ Meghann N. Dotson

	 
	Name:  Meghann N. Dotson

	 
	Title:  Vice President

[Signature Page to the Purchase Agreement]

SCHEDULE I

	
					
	Initial Purchaser
	 
	Principal Amount of Notes to be Purchased

	Goldman, Sachs & Co.
	 
	$
	116,875,000
	

	J.P. Morgan Securities LLC
	 
	103,125,000
	

	RBC Capital Markets, LLC
	 
	27,500,000
	

	Wedbush Securities Inc.
	 
	20,625,000
	

	FBR Capital Markets & Co.
	 
	6,875,000
	

	Total:
	 
	$
	275,000,000
	

I-1

SCHEDULE II

Additional Written Offering Communications
1.    Pricing Supplement dated September 20, 2012

II-1

	
		
	PRICING SUPPLEMENT
	STRICTLY CONFIDENTIAL

$275,000,000
CNO Financial Group, Inc.
6.375% Senior Secured Notes due 2020

September 20, 2012

This Pricing Supplement should be read together with the Preliminary Offering Circular, dated September 13, 2012, relating to the notes (the “Preliminary Offering Circular”).  The information in this Pricing Supplement supplements the Preliminary Offering Circular, supersedes the information in the Preliminary Offering Circular to the extent inconsistent with the information in the Preliminary Offering Circular, and is otherwise qualified in its entirety by reference to the Preliminary Offering Circular.  Terms used herein and not defined herein have the meanings assigned in the Preliminary Offering Circular.
Increase in Size of Offering and New Senior Secured Credit Agreement
The aggregate principal amount of notes to be issued in the offering has been increased from $250.0 million to $275.0 million.  In addition, the six-year facility under the New Senior Secured Credit Agreement has been increased from $400.0 million to $425.0 million, all of which will be drawn upon closing.  As a result, all corresponding references in the Preliminary Offering Circular relating to the aggregate principal amount of the notes offered and borrowings under the New Senior Secured Credit Agreement are hereby updated and all references in the Preliminary Offering Circular to the amount of outstanding indebtedness as adjusted for the offering of the notes and borrowings under the New Senior Secured Credit Agreement are hereby increased by the corresponding amounts. The net proceeds received from the increased amounts will be used in connection with the Concurrent Transactions and to pay fees and expenses related to the offering of the notes and the Concurrent Transactions with any remaining amounts to be used for general corporate purposes.

	
		
	Issuer:
	CNO Financial Group, Inc.

	Ratings:
	[Intentionally Omitted] 1

	Securities:
	6.375% Senior Secured Notes due 2020

	Maturity:
	October 1, 2020

	Interest Payment Dates:
	April 1 and October 1, beginning April 1, 2013

	Record Dates:
	March 15 and September 15

	First Interest Payment Date:
	April 1, 2013

	Principal Amount:
	$275,000,000

	Gross Proceeds:
	$275,000,000

	Coupon:
	6.375%

_______________________________
		
	1 
	These securities ratings have been provided by Moody's and S&P.  Neither of these ratings is a recommendation to buy, sell or hold these securities.  Each rating may be subject to revision or withdrawal at any time, and should be evaluated independently of any other rating.

1

	
		
	Issue Price:
	100%

	Yield-to-Maturity:
	6.375%

	Spread to Benchmark Treasury:
	+ 498 basis points

	Benchmark Treasury:
	2.625% UST due November 15, 2020

	Optional Redemption Upon Certain Equity Offerings:
	Prior to October 1, 2015 up to 35% at 106.375%, plus accrued and unpaid interest, if any

	Optional Redemption:
	On or after October 1 of each of the years indicated below:
2015........................................................104.781%
2016........................................................103.188%
2017........................................................101.594%
2018 and thereafter.................................100.000%

	Optional Redemption Based on a Make-Whole Premium:
	Prior to October 1, 2015 at a make-whole premium based on the yield on U.S. treasuries with a maturity closest to October 1, 2015 plus 50 basis points

	Trade Date:
	September 20, 2012

	Settlement:
	September 28, 2012 (T + 6 business days)

	Distribution:
	144A and Regulation S

	CUSIP / ISIN:
	144A Note:
CUSIP: 12621E AG8
ISIN: US12621EAG89

Regulation S Note:
CUSIP: U1746E AB9
ISIN: USU1746EAB93

	Joint Book-Running Managers:
	Goldman, Sachs & Co.
J.P. Morgan Securities LLC

	Co-Managers
	FBR Capital Markets & Co.
RBC Capital Markets, LLC
Wedbush Securities Inc.

Changes from Description of the Notes in the Preliminary Offering Circular
-Certain Covenants-Limitation on Indebtedness
On page 204 of the Preliminary Offering Circular, the basket permitting the incurrence of Indebtedness pursuant to Debt Facilities (clause (2) of the second paragraph under “-Limitation on Indebtedness”) shall be increased from $950.0 million to $975.0 million.
-Certain Definitions-Permitted Portfolio Investments
On page 258 of the Preliminary Offering Circular, clause (d) of the proviso to the definition of “Permitted Portfolio Investments” shall be revised such that the reference to 3.0% shall be increased to 5.0%.

2

RESULTS THROUGH CONSENT DATE OF
9.0% Notes Tender Offer and Consent Solicitation

Pursuant to CNO's previously announced offer to purchase and solicitation of consents for its 9.00% Senior Secured Notes due 2018 (the “9.0% Notes”), CNO received tenders and consents from the holders of approximately $273.8 million, or 99.6%, of the total outstanding principal amount of the 9.0% Notes by the expiration of the consent payment deadline at 5:00 p.m., New York City time, on September 17, 2012.  The consents received exceed the amount needed to approve the proposed amendments to the indenture under which the 9.0% Notes were issued.

Changes resulting from increased Size of 
Offering and New Senior Secured Credit Agreement

Summary Historical Consolidated Financial and Operating Data

On p. 18 of the Preliminary Offering Circular: (i) Net Operating Income shall be replaced with $184.2 million (rather than $182.3 million); (ii) the Debt to Total Capital Ratio shall be replaced with 22.8% (rather than 22.0%) and the reconciliation in note (e) shall be updated to reflect the increase in the size of the offering and in the six-year term loan facility; and (iii) the Interest Coverage Ratio shall be replaced with 6.1X (rather than 5.8X).
Risk Factors-Risks Related to CNO Financial Group
On p. 34 of the Preliminary Offering Circular, the first three paragraphs of the risk factor titled “-We have and, following the consummation of this offering and the Concurrent Transactions, will have substantial indebtedness that will require a significant portion of the cash available to CNO, restricting our ability to take advantage of business, strategic or financing opportunities”, will be replaced in their entirety as follows:
The following tables set forth (i) CNO's direct corporate obligations and (ii) the scheduled principal payments of CNO's direct corporate obligations, in each case, as of June 30, 2012, on an actual basis and on an as adjusted basis to give effect to this offering and the Concurrent Transactions:
	
							
	Debt:
	Actual
	As Adjusted

	(dollars in millions)

	New Senior Secured Credit Agreement
	$
	—
	

	$
	675.0
	

	Unamortized discount on New Senior Secured Credit Agreement
	—
	

	(5.5
	)

	Notes offered hereby
	—
	

	275.0
	

	Existing Senior Secured Credit Agreement (1)
	224.0
	

	—
	

	Unamortized discount on Existing Senior Secured Credit Agreement
	(1.7
	)
	—
	

	9.0% Notes
	275.0
	

	—
	

	7.0% Debentures due 2016
	293.0
	

	93.0
	

	Unamortized discount on 7.0% Debentures
	(12.1
	)
	(4.0
	)

	Direct corporate obligations
	$
	778.2
	

	$
	1,033.5
	

____________________________
(1) The assumed repayment of outstanding borrowings under the Existing Senior Secured Credit Agreement would result in an after tax debt extinguishment charge of $3.2 million if such repayment had been completed on June 30, 2012. The Existing Senior Secured Credit Agreement will be repaid in full and terminated in connection with this offering.

3

	
							
	 
	Actual
	As Adjusted

	(dollars in millions)

	Remainder of 2012
	$
	20.0
	

	$
	13.6
	

	2013
	55.0
	

	54.3
	

	2014
	75.0
	

	60.5
	

	2015
	74.0
	

	79.2
	

	2016
	293.0
	

	153.5
	

	2017
	—
	

	4.2
	

	Thereafter
	275.0
	

	677.7
	

	 
	$
	792.0
	

	$
	1,043.0
	

In addition, at June 30, 2012, CNO's non-guarantor subsidiaries had approximately $1.7 billion of investment borrowings, $24.6 billion of policyholder obligations and $417.3 million of other liabilities (excluding intercompany balances).
Following the consummation of this offering and the Concurrent Transactions, our indebtedness is expected to require approximately $24.8 million in cash to service principal and interest from October 1, 2012 through December 31, 2012 (assuming no borrowings under our new revolving credit facility).
Use of Proceeds
On page 53 of the Preliminary Offering Circular the text and tables under will be replaced in their entirety as follows:
We estimate that the net proceeds from this offering, after deducting initial purchasers' discounts and commissions and estimated offering expenses payable by us, will be approximately $267 million. We intend to use the net proceeds from this offering, together with borrowings under the New Senior Secured Credit Agreement, to (i) repay all amounts outstanding under our Existing Senior Secured Credit Agreement, (ii) purchase up to all outstanding 9.0% Notes tendered in the Tender Offer and Consent Solicitation (and to redeem any 9.0% Notes not purchased pursuant to the Tender Offer), (iii) purchase approximately $200.0 million aggregate principal amount of our 7.0% Debentures pursuant to the Repurchase Agreement, and (iv) pay fees and expenses related to this offering and the Concurrent Transactions.  Any remaining amounts will be used for general corporate purposes.

4

The following table sets forth the estimated sources and uses of proceeds in this offering and the Concurrent Transactions, assuming that this offering and the Concurrent Transactions had closed on June 30, 2012. The actual amounts may differ at the time of the consummation of this offering and the Concurrent Transactions.
	
									
	Sources
	 
	Uses

	(In millions)

	New Senior Secured Credit Agreement (1)
	$
	675.0
	

	 
	Purchase of 7.0% Debentures (3)
	$
	355.0
	

	Notes offered hereby (2)
	275.0
	

	 
	Repayment of Existing Senior Secured Credit
	 

	 
	 
	 
	Agreement (4)
	224.0
	

	 
	 
	 
	Purchase of 9.0% Notes (5)
	323.0
	

	 
	 
	 
	Estimated fees and expenses (6)
	30.0
	

	 
	 
	 
	General corporate purposes
	18.0
	

	Total sources
	$
	950.0
	

	 
	Total uses
	$
	950.0
	

		
	(1)
	The New Senior Secured Credit Agreement will provide for a $425.0 million six-year term loan facility, a $250.0 million four-year term loan facility and a $50.0 million three-year revolving credit facility. See “Description of Certain Indebtedness-New Senior Secured Credit Agreement.” On the closing date of this offering, we expect to borrow only under the term loan facilities and do not expect to have any amounts outstanding under the revolving credit facility.

		
	(2)
	Represents the aggregate principal amount of the Notes offered hereby, before giving effect to initial purchasers' discounts or commissions.

		
	(3)
	CNO has agreed to repurchase approximately $200.0 million in principal amount of 7.0% Debentures, which would otherwise mature on December 30, 2016, from the Paulson Holders. See “Summary-Concurrent Transactions-7.0% Debentures Repurchase Agreement.”

		
	(4)
	Consists of payment of $224.0 million of borrowings under a term loan facility which accrued interest at 6.25% as of June 30, 2012 and matures on September 30, 2016.

		
	(5)
	Assumes all outstanding 9.0% Notes, which would otherwise mature on January 15, 2018, are tendered on or prior to the consent date and are purchased in the Tender Offer and holders receive total consideration of $1,173.65 for each $1,000 principal amount of 9.0% Notes (consisting of a $30 consent payment and $1,143.65 in tender offer consideration). To the extent that less than 100% of the 9.0% Notes are validly tendered and accepted for purchase in the Tender Offer, we intend to call for redemption any remaining 9.0% Notes and to satisfy and discharge our obligations under the 9.0% Notes Indenture concurrently with the closing of this offering of Notes and the funding of the New Senior Secured Credit Agreement. Upon such satisfaction and discharge, substantially all of the restrictive covenants contained in the 9.0% Notes Indenture will cease to have effect and all of the collateral for the 9.0% Notes under the 9.0% Notes Indenture and the related security documents will automatically be released.

		
	(6)
	Consists of estimated fees and expenses related to this offering and the Concurrent Transactions, including legal, accounting and advisory fees and other transaction or debt extinguishment costs and original issue discount on the term loans. These estimates are subject to change. The actual fees and expenses incurred as part of this offering and the Concurrent Transactions may be greater or less than our current estimates.

5

Capitalization
On page 54 of the Preliminary Offering Circular the table under “Capitalization” will be replaced in its entirety as follows:
	
							
	 
	As of June 30, 2012

	Actual
	As Adjusted

	(dollars in millions)

	CNO's cash and investments(1) 
	$
	198.0
	

	$
	216.0
	

	Debt:
	 
	 

	Existing Senior Secured Credit Agreement(2)
	$
	224.0
	

	$
	—
	

	New Senior Secured Credit Agreement(3) 
	—
	

	675.0
	

	9.0% Notes(4) 
	275.0
	

	—
	

	Notes offered hereby
	—
	

	275.0
	

	7.0% Debentures
	293.0
	

	93.0
	

	Less unamortized discount
	(13.8
	)
	(9.5
	)

	Total debt
	778.2
	

	1,033.5
	

	Shareholders' equity:
	 
	 

	Common stock ($0.01 par value, 8,000,000,000 shares authorized; 234,026,409
	 
	 

	    shares issued and outstanding)
	2.3
	

	2.3
	

	Additional paid-in capital(5)
	4,312.0
	

	4,288.0
	

	Accumulated other comprehensive income
	990.8
	

	990.8
	

	Accumulated deficit(6)
	(412.0
	)
	(592.2
	)

	Total shareholders' equity
	4,893.1
	

	4,688.9
	

	Total capitalization
	$
	5,671.3
	

	$
	5,722.4
	

_________________________
		
	(1)
	Includes $76.0 million of cash and money markets, $75.7 million of liquid fixed income investments and $46.0 million of alternative investments, all of which were held by CNO as reflected in the Actual column.

		
	(2)
	The assumed repayment of outstanding borrowings under the Existing Senior Secured Credit Agreement would result in an after tax debt extinguishment charge of $3.2 million if such repayment had been completed on June 30, 2012. The Existing Senior Secured Credit Agreement will be repaid in full and terminated in connection with this offering.

		
	(3)
	The New Senior Secured Credit Agreement will provide for a $425.0 million six-year term loan facility, a $250.0 million four-year term loan facility and a $50.0 million three-year revolving credit facility. See “Description of Certain Indebtedness-New Senior Secured Credit Agreement.” On the closing date of this offering, we expect to borrow only under the term loan facilities and do not expect to have any amounts outstanding under the revolving credit facility.

		
	(4)
	As Adjusted information assumes all outstanding 9.0% Notes are validly tendered and not withdrawn and are purchased in the Tender Offer. To the extent that less than 100% of the 9.0% Notes are validly tendered and accepted for purchase in the Tender Offer, we intend to call for redemption any remaining 9.0% Notes and to satisfy and discharge our obligations under the 9.0% Notes Indenture concurrently with the closing of this offering of Notes and the funding of the New Senior Secured Credit Agreement.

		
	(5)
	The As Adjusted balance of additional paid-in capital reflects a $24 million reduction for the cost to extinguish the beneficial conversion feature associated with the 7.0% Debentures.

		
	(6)
	The As Adjusted balance of accumulated deficit reflects a $180.2 million reduction for the loss on the extinguishment of the Existing Senior Secured Credit Agreement, the 9.0% Notes and the 7.0% Debentures.

6

______________________________________
Other information presented in the Preliminary Offering Circular is deemed to have changed to the extent affected by the changes described herein.
The notes have not been registered under the Securities Act of 1933, as amended (the “Act”), and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Act.  Accordingly, the notes are being offered and sold only (a) to “qualified institutional buyers” (as defined in Rule 144A under the Act) and (b) outside the United States to non-U.S. persons in compliance with Regulation S under the Act.  For details about eligible offers, deemed representations and agreements by investors and transfer restrictions, see “Notice to Investors” in the Preliminary Offering Circular.
This material is confidential and is for your information only and is not intended to be used by anyone other than you.  This information does not purport to be a complete description of these securities or the offering.  Please refer to the offering circular for a complete description. This communication is being distributed in the United States solely to qualified institutional buyers (as defined in Rule 144A under the Act) and outside the United States solely to non-U.S. persons as defined under Regulation S.  This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities in any jurisdiction to any person to whom it is unlawful to make such offer or solicitation in such jurisdiction.
Any disclaimers or notices that may appear on this communication below the text of this legend are not applicable to this communication and should be disregarded.  Such disclaimers or notices may have been electronically generated as a result of this communication being sent via, or posted on, Bloomberg or another electronic mail or communication system.
A copy of the offering circular for the offering can be obtained from your Goldman, Sachs & Co. sales person or Goldman, Sachs & Co., 200 West Street, New York, NY 10282-2198 Attention: Prospectus Department (1-866-471-2526).  

7CONVERTIBLE
PROMISSORY NOTE

 

	 US $50,000	 August
    23, 2012

 

For
good and valuable
consideration, Amarantus BioSciences,Inc.,
a Delaware corporation, ("Maker"),
hereby makes and delivers this Convertible Promissory Note (this
''Note") in favor of PENSCO Trust Co.FBO Robert L. Harris, ("Holder"),
and hereby agree as follows:

 

1.
Principal Obligation and Interest. For value received,
Maker promises to pay to Holder, in currently available funds of the United
States,  the principal sum of Fifty Thousand United States Dollars. Maker's obligation
under this Note shall accrue interest at the rate of six Percent (6.0%) per annum from
the date hereof until paid in full. Interest
shall be computed on the basis of
a 365-day year or 366-day year, as applicable, and actual days lapsed.

 

2.
Payment Terms.

 

a.
 All principal and accrued interest then
outstanding shall be due and payable by the Maker to the Holder on or before One
Hundred and Eighty (180) Days from the date of
issuance of this Note, unless extended at the option of Holder for an additional term
of one hundred and eighty (180) days upon
written notice to Maker delivered not less than ten (10) days prior to the expiration
of the initial term.

 

 

b.
Maker shall have the right to prepay all or any part of the principal under this

Note
without penalty upon not less than ten (10) days prior written notice to Holder.

 

c.
 Holder may, upon not less than five (5) days written notice to
Maker, convert all or part of the then unpaid principal and accrued interest balance
due of this Note into common stock of the Maker pursuant
to the terms set forth herein.

 

3.
Conversion. The Holder shall have the right, from time to time, to convert
any part of the outstanding interest or principal amount of this Note into fully paid and non assessable shares of Common Stock
of the Maker (the "Conversion Stock") at the Conversion Price determined as provided
herein. Promptly after delivery to Maker
of a Notice of Conversion of Convertible Note in the form attached hereto as
Exhibit  1, properly completed and duly executed 
by the Holder (a "Conversion
Notice"), the Maker shall issue and deliver to the Holder that number of shares of Common
Stock for the that portion of this Note to be converted as shall

be
determined in accordance herewith.

    	1

    	 

    

No
fraction of a share or scrip representing
a fraction of a share will be issued on conversion, but the number of shares issuable
shall be rounded to the nearest whole share. The date on which Notice of
Conversion is given (the "Conversion Date") shall be deemed to be the
date on which the Holder faxes the Notice of Conversion duly executed to the
Maker. Facsimile delivery of the Notice of
Conversion shall be accepted by the Maker at
facsimile number (408) 852-4427 Attn.: Gerald Commissiong.
Certificates representing Common Stock upon conversion will be delivered to the
Holder within five (5) trading days from the date the Notice of Conversion is
delivered to the Maker. Delivery of shares upon conversion shall be made to the address specified by
the Holder or its assigns in the Notice of Conversion.

 

4.
Conversion Price. Upon any conversion of this Note,
the conversion price shall be $0.015 per share, subject to adjustment from time to
time upon the happening of certain events (the "Conversion Price") as set
forth below.

 

a.
Stock Splits, etc. In case the Maker shall: (i)
pay a dividend in shares of Common Stock or make a distribution in shares of Common
Stock to holders of its outstanding Common Stock, (ii) subdivide its outstanding shares
of Common Stock into a greater number of shares of Common Stock, (iii) combine its
outstanding shares of Common Stock into a smaller number of shares of Common Stock,
or (iv) issue any shares of
its capital stock in a reclassification
of the Common Stock, then the
number of shares of Common Stock issuable upon conversion of this Note
immediately prior thereto shall be adjusted so that the holder of this Note shall
be entitled to receive the kind and number of shares of Common Stock which he would have
owned or have been entitled to receive had such Note
been converted in advance thereof. An adjustment made pursuant to this paragraph
shall become effective immediately after the effective date of
such event retroactive to the record date, if any, for such event.

 

b.
Reorganization, Reclassification, Merger, Consolidation or Disposition of Assets.
In case the Maker shall reorganize its capita4 reclassify its
capital stock, consolidate or merge with or into another corporation (where the
Maker is not the surviving corporation or where there is a change in or distribution
with respect to the Common Stock of the
Maker), or sell, transfer or otherwise dispose
of all or substantially all its property,
assets or business to another corporation and, pursuant to the
terms of such reorganization, reclassification, merger, consolidation or disposition of
assets, shares of common stock of the
successor or acquiring corporation, or any cash, shares of stock or other
securities or property of any nature whatsoever (including warrants or other subscription 
or purchase rights) in addition  to or in lieu of common stock of the successor
 or acquiring corporation ("Other Property"), are to be received by or distributed
to the holders of Common Stock of the Maker, then Holder shall have the right thereafter
to receive, upon conversion of this
Note, the number of shares of common stock of the successor or acquiring
corporation or of the Maker,
if it is the surviving corporation, and Other
Property receivable upon or as a result of
such reorganization, reclassification, merger, consolidation or disposition
of assets by a holder of the number of shares of Common Stock into
which this Note is convertible immediately
prior to such event. In case of any such reorganization, reclassification, merger,
consolidation or disposition of assets, the successor or acquiring corporation (if other than the Maker) shall
expressly assume the due and punctual observance and performance
of each and every covenant and condition of this Note to
be performed and observed by the Maker
and all the obligations and liabilities hereunder,
subject to such modifications as may be deemed appropriate
(as determined in good faith by resolution
of the Board
of Directors of the Maker) in order to provide for adjustments of the number of shares
of common stock into which this Note is convertible which shall be as nearly equivalent
as practicable to the adjustments provided for in this Section 2.4(b).

    	2

    	 

    

For purposes of this Section
2.4(b),"common stock of the successor or acquiring corporation" shall include
stock of such corporation of any class which is not preferred as to dividends
or assets over any other class
of stock of such corporation and which is not subject to redemption and
shall also include any evidences of indebtedness,
shares of stock or other securities which are convertible into
or exchangeable for any such stock, either immediately or upon the arrival of
a specified date or the happening of a specified event and any warrants or other
rights to subscribe for or purchase any such stock. The foregoing provisions
of this Section 2.4(b) shall similarly apply to
successive reorganizations, reclassifications, mergers, consolidations or disposition
of assets.

 

c.
Notice of Adjustment. Whenever the number of shares of Common Stock or number
or kind of securities or other property issuable upon the conversion of this Note or the Conversion 
Price is adjusted, as herein provided, the Maker shall promptly mail by registered or certified mail, return receipt requested,
to the Holder of this Note notice of such adjustment  or adjustments setting forth
the number of shares of Common Stock (and other securities or property) issuable upon the conversion of
this Note and the Conversion Price of such shares of Common Stock (and other securities or property) after such adjustment,
setting forth a brief statement of the facts requiring such
adjustment and setting forth the computation by which such adjustment was
made. Such notice, in the absence of manifest error, shall be conclusive evidence
of the correctness of such adjustment.

 

5.
Representations and Warranties of Maker. Maker hereby represents and warrants
the following to Holder:

 

a.
Maker and those executing this Note on
its behalf have the full right, power, and authority to execute,
deliver and perform the Obligations under this Note, which are not prohibited
or restricted under the articles of incorporation or bylaws of Maker.  This Note has
been duly executed and delivered by an authorized officer of Maker and constitutes a valid and legally binding obligation of Maker
enforceable in accordance with its terms.

 

b.
The execution of this Note and Maker's
compliance with the terms,conditions and provisions
hereof does not conflict with or violate any provision of any agreement, contract, lease, deed of trust,
indenture, or instrument to which Maker
is a party or by which Maker is bound, or constitute a default thereunder.

 

6.
Defaults. The following events shall
be defaults under this Note:

 

a.
Maker's failure to remit any payment under this Note on before the date due, if such failure is not cured in full
within ten (10) days of written notice of
default;

    	3

    	 

    

b.
 Maker's failure to perform or breach of any non-monetary obligation 
or covenant set forth in this Note or in the Agreement if such failure is not cured in full within ten (10)
days following delivery of written notice thereof from Holder to Maker;

 

c.
If Maker is dissolved, whether pursuant to  any 
applicable articles of incorporation or bylaws, and/or any applicable laws, or otherwise;

 

d.
The entry of a decree or order by a court having jurisdiction in the premises adjudging the
Maker bankrupt or insolvent, or approving as
properly filed a petition seeking reorganization, arrangement, adjustment or composition of
or in respect of the Maker under the federal Bankruptcy code or any other
applicable federal or state law, or appointing a receiver,
liquidator, assignee or trustee of the
Maker, or any substantial part if its property,
or ordering the winding up or liquidation of its affairs, and the continuance of any such
decree or order unstayed and in effect for a period of twenty
(20) days; or

 

g.
Maker's institution of proceedings to be adjudicated a bankrupt or insolvent, or the consent by it to the institution of
bankruptcy or insolvency proceedings against it, or its filing of a petition or answer or consent seeking reorganization or relief
under the federal Bankruptcy Code or any other applicable federal or state law, or its consent to the filing of any such petition
or to the appointment of a receiver, liquidator, assignee or trustee of the company, or of any substantial part of its property,
or its making of an assignment for the benefit of creditors or the admission by it in writing of its inability to pay its debts
generally as they become due, or the taking of corporate action by the Maker in furtherance of any such action.

 

h.
The failure by Maker to timely file with the United States Securities and Exchange Commission ("SEC")
all reports and other documents required of the Maker under the Securities Act of 1933 ("Securities Act") and the Securities
Exchange Act of 1934 ("Exchange Act").

 

7.
 Interest To Accrue Upon Default. Upon the occurrence of an event of default
by Maker under this Note, the balance then owing under the terms of this Note
shall accrue interest at the rate of Twelve
Percent percent (12.0%)) per annum from the date of default until Holder is
satisfied in full.

 

8.
Choice of Laws. This Note shall be constructed and construed in accordance with the internal substantive laws of the
State of Nevada, without regard to the choice of law principles of said
State.

 

9.
Usury Savings Clause. Maker expressly agrees and acknowledges that Maker
and Holder intend and agree that this Note shall not
be subject to the usury laws of any state
other than the State of Nevada. Notwithstanding anything contained in this Note to
the contrary, if collection from Maker of interest at the rate set forth herein would be contrary to applicable laws, then
the applicable
interest rate upon default shall be the highest interest rate that may
be collected from Maker under applicable laws at such time.

    	4

    	 

    

10.
Costs of Collection. Should the indebtedness represented by this Note,
or any part hereof, be collected at law, in equity, or in any bankruptcy, receivership
or other court proceeding, or this Note be
placed in the hands of any attorney for collection
after default, Maker agrees to pay, in addition to the principal and interest due
hereon, all reasonable attorneys' fees, plus all other costs and expenses of
collection and enforcement, including any fees incurred in connection with such proceedings
or collection of the Note.

 

11.
Miscellaneous.

 

a.
 This Note shall be binding
upon Maker and shall inure to the benefit of Holder and its
successors, assigns, heirs, and legal representatives.

 

b.
Any failure or delay by Holder to insist upon the strict performance of any term, condition,
covenant or agreement of this Note, or to exercise any right, power or remedy hereunder
shall not constitute a waiver of any such
term, condition, covenant, agreement, right, power or remedy.

 

c.
Any provision of this Note that is unenforceable shall be severed from this Note to
the extent reasonably possible without invalidating or affecting the intent, validity
or enforceability of any other provision of this
Note.

 

d.
This Note may not be modified or amended in any respect except in a writing executed
by the party to be charged.

 

e.
Time is of the essence.

 

12.
Notices. All notices required to be given under this Note shall be given
as follows or at such other
address as a party may designate by
written notice to the other parties:

 

To
Maker:

 

Amarantus
BioSciences, Inc. Attn: Gerald Comrnissiong

675
Almanor Ave. Sunyvale, CA 94085

 

To
Holder:

 

PENSCO
Trust Co. FBO Robert L. Harris

    	5

    	 

    

Notices
may be transmitted by facsimile, certified mail,
private delivery, or any other commercially reasonable means, and shall be deemed given
upon receipt by the Party to whom they are addressed.

 

13.
Waiver of Certain Formalities. All parties
to this Note hereby waive presentment,
dishonor, notice of dishonor and protest. All parties
hereto consent to, and Holder is hereby expressly authorized
to make, without notice, any and all renewals,
extensions, modifications or waivers of
the time for or the terms of payment of any sum or sums due hereunder, or under
any documents or instruments relating to
or securing this Note, or of the performance of any covenants, conditions or agreements
hereof or thereof. Any such action taken
by Holder shall not discharge the liability
of any party to this Note.

 

IN
WITNESS WHEREOF, this Note has
been executed effective the date and place first written above.

 

Amarantus
BioSciences, Inc. "Maker":

 

 

By:
/s/ Marc E. Faerber

 

Its:
Chief Financial Officer

 

Print
Name: Marc E. Faerber

 

 

Date:
August 23, 2012

 

 

PENSCO
Trust Co. FBO Robert L. Harris “Holder":

 

/s/
Robert L. Harris

 

 

Date:
August 23, 2012

    	6

    	 

    

 EXHIBIT
1

CONVERSION
NOTICE

 

(To
be executed by the Holder in order to Convert the Note)

 

TO: ________________

 

The
undersigned hereby irrevocably elects to convert US $_______ of the Principal Amount of the above Note into Shares of Common Stock
of Amarantus BioSciences, Inc., according to the conditions stated therein, as of the
Conversion Date written below. If shares are to
be issued in the name
of a person other than the undersigned,
the undersigned will pay all transfer taxes payable with respect thereto and
is delivering herewith such certificates and opinions as reasonably requested by the
Maker in accordance therewith. No fee will be charged to the Holder for any
conversion, except for such transfer taxes, if any.

 

Conversion
Date: ________________

 

Applicable
Conversion Price: $________________

 

 

 

Signature:
________________

Name:
________________

Address:
 ________________

 

Tax
I.D. or Soc. Sec. No: _______________

 

Principal
Amount to be converted:

US$________________

 

 

Amount
of Note unconverted:

US$________________

 

 

Number
of shares of Common Stock to be issued: ______________

    	7

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00208-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00208-of-00352.parquet"}]]