In Re Conseco, Inc. Securities Litigation 00-CV-585-Notice Of Pendency

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In Re Conseco, Inc. Securities Litigation 00-CV-585-Notice Of Pendency Powered By Docstoc
					                                                    UNITED STATES DISTRICT COURT
                                                    SOUTHERN DISTRICT OF INDIANA
                                                        INDIANAPOLIS DIVISION

 IN RE CONSECO, INC. SECURITIES LITIGATION                                  IP-00-0585-C Y/S
                                                                            CLASS ACTION
 This Document Relates To All Actions

           NOTICE OF PENDENCY OF CLASS ACTION, PROPOSED SETTLEMENT AND SETTLEMENT HEARING

TO:   ALL PERSONS OR ENTITIES WHO DURING THE PERIOD FROM APRIL 28, 1999 THROUGH AND INCLUDING APRIL 14, 2000
      (“THE CLASS PERIOD”) EITHER:

      (I) PURCHASED OR OTHERWISE ACQUIRED ANY OF THE FOLLOWING PUBLICLY TRADED SECURITIES OF CONSECO, INC.
      (“CONSECO”), CONSECO FINANCE CORP. (“CONSECO FINANCE”), OR CONSECO FINANCING TRUSTS (“CONSECO TRUST”)
      I, II, III, IV, V, VI OR VII:

              CONSECO COMMON STOCK; CONSECO 7.6% NOTES;
              CONSECO 8.5% NOTES; CONSECO 9.0% NOTES;
              CONSECO 8.75% NOTES; CONSECO 7-7/8% NOTES;
              CONSECO 6.4% NOTES; CONSECO 6.8% NOTES;
              CONSECO 8 1/8% NOTES; CONSECO 10.5% NOTES;
              CONSECO 6.4% MANDATORY PAR PUT REMARKETED SECURITIES; CONSECO TRUST I SECURITIES;
              CONSECO TRUST II SECURITIES; CONSECO TRUST III SECURITIES;
              CONSECO TRUST IV SECURITIES (a/k/a FELINE PRIDES);
              CONSECO TRUST V SECURITIES; CONSECO TRUST VI SECURITIES;
              CONSECO TRUST VII SECURITIES; CONSECO FINANCE 10.25% NOTES;

        (II) PURCHASED OR OTHERWISE ACQUIRED PUBLICLY-TRADED CALL OPTIONS ON CONSECO COMMON STOCK
        (COLLECTIVELY, THE “CLASS SECURITIES”); OR
        (III) SOLD PUBLICLY-TRADED PUT OPTIONS ON CONSECO COMMON STOCK.
PLEASE READ THIS NOTICE CAREFULLY AND IN ITS ENTIRETY. THIS NOTICE RELATES TO A PROPOSED SETTLEMENT
OF THIS CLASS ACTION AND, IF YOU ARE A CLASS MEMBER, CONTAINS IMPORTANT INFORMATION AS TO YOUR
RIGHTS CONCERNING THE SETTLEMENT AS FURTHER DESCRIBED BELOW.
        1.     This Notice is given pursuant to Rule 23 of the Federal Rules of Civil Procedure and pursuant to an Order of the United States
District Court for the Southern District of Indiana. The purpose of this Notice is to inform you of the following: (i) the pendency of a class action
against Conseco, certain of its directors and officers, and underwriters of Conseco’s publicly- traded securities alleging violations of the federal
securities laws; (ii) that you may be a member of the Class in this action; (iii) Lead Plaintiffs and Conseco have reached an agreement to settle
the action for $120 million cash; and (iv) a hearing (the “Settlement Hearing”) will be held on August 7, 2002 at 1:00 p.m. in the United States
District Court for the Southern District of Indiana (the “Court”) to consider the fairness, reasonableness and adequacy of the proposed settlement
(“Settlement”), the Plan of Distribution of the Settlement Fund, and the application by Lead Counsel for an award of attorneys’ fees and expenses.
                                                         SUMMARY OF SETTLEMENT
        2.     Statement of Plaintiffs’ Recovery: The Settlement will create a settlement fund consisting of $120 million cash (the “Settlement
Fund”). This amount will be paid as follows: (a) $95 million cash has already been deposited into an escrow account (the “Escrow Account”)
and has been earning and will continue to earn interest; and (b) $25 million cash, plus interest at 6% simple interest per annum from February
1, 2002 through the date of deposit, will be deposited into the Escrow Account on the earlier of: (i) the conclusion of the litigation between
Conseco and one of its insurance carriers (Those Underwriters at Lloyd's, London Subscribing to Excess Directors and Officers and Company
Reimbursement Policies Nos. NB98AD0Q and NB99AD1W); or (ii) December 31, 2005. Based upon the damages analyses conducted by damages
experts retained by Lead Plaintiffs and Lead Counsel, and assuming that 100% of affected securities elect to participate in the Settlement, of the
$120 million Settlement Fund: (i) approximately $81.84 million will be allocated to Class Members who purchased or acquired securities issued
by Conseco or Conseco Trust VII during the Class Period, which are the Conseco 7.6% Notes, Conseco 8.5% Notes, Conseco 9.0% Notes, Conseco
8.75% Notes, and the Conseco Trust VII Securities; (ii) approximately $26.90 million will be allocated to Class Members who purchased or
acquired Conseco common stock during the Class Period; and (iii) approximately $11.26 million will be allocated to Class Members who sold
publicly-traded put options on Conseco common stock or purchased or acquired the remaining securities that are part of this Settlement, which
are the following: Conseco 7-7/8% Notes; Conseco 6.4% Notes; Conseco 6.8% Notes; Conseco 8-1/8% Notes; Conseco 10.5% Notes; Conseco
6.4% Mandatory Par Put Remarketed Securities; Conseco Trust I Securities; Conseco Trust II Securities; Conseco Trust III Securities; Conseco
Trust IV Securities; Conseco Trust V Securities; Conseco Trust VI Securities; Conseco Finance 10.25% Notes; and publicly-traded call options
on Conseco common stock.
        3.     Average Recovery Per Common Share: The average recovery per share of common stock depends on a number of variables,
including the number of shares affected and the amount of price inflation per share on each day of the Class Period. Lead Plaintiffs believe, based
on damages analyses conducted by the damages experts retained by Lead Plaintiffs, that the average damages per share of Conseco common stock
for the entire Class Period is approximately $1.31 and (assuming that 100% of affected securities elect to participate in the Settlement), the average
recovery per share of common stock is approximately $0.15. The average recovery per share will increase if less than 100% of affected securities
participate in the Settlement; for example, if only 70% elect to participate, the average recovery per share will increase by a factor of 1.43 to
approximately $0.21.
        4.     Average Recovery Per Security Subject to Section 11 Claims: Lead Plaintiffs believe, based on damages analyses conducted by the
damages experts retained by Lead Plaintiffs, that for those securities for which Class Members have claims pursuant to Section 11 of the Securities
                                                                                                                                           Form F7901
Act of 1933 (Conseco 7.6% Notes, Conseco 8.5% Notes, Conseco 8.75% Notes, Conseco 9.0% Notes and Conseco Trust VII securities) the
weighted average damages per security for the entire Class Period is approximately $14.41 and (assuming that 100% of affected securities elect
to participate in the Settlement), the weighted average recovery per security is approximately $3.23. The weighted average recovery per security
will increase if less than 100% of affected securities participate in the Settlement; for example, if only 70% elect to participate, the average
recovery per security will increase by a factor of 1.43 to approximately $4.62.
        5.     Distribution of the Recovery: The Settlement Fund (less fees and expenses approved by the Court) will be distributed to the Class
at three separate times, on a pro rata basis: (a) $90 million (less approved fees and expenses), plus interest, will be distributed after the Settlement
is approved by the Court and has become final and no longer subject to appeal; (b) $5 million, plus interest, will be distributed upon conclusion
of the litigation between Conseco and two of its insurance carriers (Royal & SunAlliance and RLI Insurance Company), but not before the
Settlement has become final; (c) and $25 million, plus interest, will be distributed after Conseco concludes its litigation with Lloyd’s or December
31, 2005, whichever is earlier.
        6.     Defendants Subject to the Settlement: The Settlement includes all defendants: (1) Stephen C. Hilbert, Rollin M. Dick, Thomas J.
Kilian, Bruce A. Crittenden, James S. Adams, Lawrence M. Coss, Ngaire E. Cuneo, David R. Decatur, M. Phil Hathaway, Donald F. Gongaware,
James D. Massey, Dennis E. Murray, Sr., John M. Mutz, Robert S. Nickoloff and David V. Harkins, (the “Individual Defendants”); (2) Conseco,
Conseco Finance and Conseco Financing Trust VII (“Conseco Trust VII”) (together with the Individual Defendants, the “Conseco Defendants”);
and (3) Merrill Lynch & Co., Lehman Brothers, Chase Securities Inc., Deutsche Bank Alex. Brown, Inc. and Bank of America Securities LLC
(the “Underwriter Defendants” and, together with the Conseco Defendants, “Defendants”).
        7.     Statement of Potential Outcome: Lead Plaintiffs and the Conseco Defendants do not agree on the amount of damages that would
be recoverable if plaintiffs prevailed on each claim asserted. The issues on which the parties disagree include (a) the appropriate economic model
for determining the amount by which Conseco’s common stock, debt securities, and publicly-traded options were artificially inflated during the
Class Period; (b) the amount by which Conseco’s common stock, debt securities, and publicly-traded options were allegedly artificially inflated
during the Class Period; (c) the effect of various market forces influencing the trading price of Conseco’s common stock, debt securities, and
publicly-traded options during the Class Period; (d) the extent to which external factors, such as general market conditions, influenced the trading
price of Conseco’s common stock, debt securities, and publicly-traded options during the Class Period; (e) the extent to which the various matters
that plaintiffs alleged were materially false and misleading influenced the trading price of Conseco’s common stock, debt securities, and publicly-
traded options during the Class Period; and (f) whether the statements alleged to be false and misleading were, in fact, false, material or otherwise
actionable under the federal securities laws. Defendants have asserted a number of defenses and dispute the maximum amount of damages
recoverable if the Class prevailed on each of the claims.
        8.     Statement of Attorneys’ Fees and Costs Sought: Plaintiffs’ Lead Counsel have not received any payment for their services in
conducting this litigation, nor have they been reimbursed for their own out-of-pocket expenditures. Plaintiffs’ Lead Counsel intends to apply for
an award of attorneys’ fees (the “Fee”) after payment of any expenses awarded by the Court in an amount equal to (i) thirteen percent of the first
$25 million deposited in the Settlement Fund, plus interest; (ii) fifteen percent of the next $75 million deposited in the Settlement Fund, plus
interest; and (iii) seventeen percent of the last $20 million deposited in the Settlement Fund, plus interest, or approximately $0.02 per damaged
share of common stock. The Fee sought results from an arms-length fee negotiation and written retainer agreement entered into between Lead
Plaintiffs and Plaintiffs’ Lead Counsel, which was executed prior to the filing of motions for lead plaintiff in this litigation. With respect to the
$25 million that has not been deposited into the Escrow Account, Plaintiffs’ Lead Counsel will not take any fee from that amount until it is actually
paid into the Escrow Account. The Fee sought is well below the 30% that is customarily sought in similar contingency fee litigation. Plaintiffs’
Lead Counsel also intends to apply for reimbursement of its out-of-pocket expenses incurred in the prosecution of the Action in an amount not
to exceed $2,750,000, or approximately $0.003 per damaged share of common stock.
        9.     Reasons for Settlement: Lead Plaintiffs and Lead Counsel believe that the Settlement is fair, reasonable, and adequate to members
of the Class. They have reached this conclusion after considering the immediate recovery to the Class, the uncertainty of the outcome of further
litigation, and the ability of Conseco to withstand a judgment against it in the absence of this Settlement. The Settlement also eliminates
uncertainty which is damaging to the Company and its shareholders.
        10. Identification of Attorneys’ Representatives: Any questions regarding the Settlement should be directed to Plaintiffs’ Lead Counsel:
Daniel L. Berger, Esq., Steven B. Singer, Esq., or Javier Bleichmar, Esq., Bernstein Litowitz Berger & Grossmann LLP, 1285 Avenue of the
Americas, New York, New York 10019.
                                                      I. DESCRIPTION OF THE ACTION
A.      Class Actions
        11. A class action is a lawsuit in which one or more persons sue on behalf of other persons or entities who have similar claims. The
members of this group are called the class. The settlement of a class action determines the rights of the entire class except for those who choose
to exclude themselves from the class (see ¶ 36 below). For this reason, the settlement of a class action must be approved by the judge. Those class
members who do not exclude themselves from the class may submit a claim (see ¶ 33 below) and receive payment of money. They may also object
to the terms of the settlement and still remain in the class (see ¶ 39 below).
Warning: If you are a member of the class and you do not exclude yourself OR file a claim, you will not share in the Settlement proceeds but
will be prohibited from pursuing your own case against the Defendants and others for the claims that are the subject of this lawsuit.
B.      The Class Action Against Conseco
        12. Beginning on April 7, 2000, numerous class actions were commenced against Conseco and certain of the other Defendants in the
United States District Court for the Southern District of Indiana. These actions (the “Consolidated Class Actions”) were consolidated pursuant
to the Court’s Order dated September 22, 2000 (the “Action”). On September 28, 2000, the Court appointed the Anchorage Police & Fire
Retirement System and The State of Louisiana Firefighters’ Retirement System, sophisticated institutional investors who purchased Conseco
publicly-traded securities during the Class Period, as Lead Plaintiffs for the Class.
        13. On January 12, 2001 Lead Plaintiffs filed the Amended and Consolidated Class Action Complaint (the “Complaint”). Prior to filing
the Complaint, Lead Counsel conducted an extensive investigation of the facts alleged in the Complaint. Lead Counsel and its investigators
interviewed numerous former Conseco employees and reviewed and analyzed Conseco’s public filings, press releases, newspaper and magazine
articles and other public statements.

                                                                                                                                             Form F7902
        14. The Complaint asserted claims under §§ 11, 12 and 15 of the Securities Act of 1933 (the “Securities Act”) and §§ 10(b) and 20 of
the Securities Exchange Act of 1934 (the “Exchange Act”) against Defendants. The claims arise out of Conseco’s false and misleading financial
statements for each of the first three quarters of 1999 and Conseco’s reported financial results for the fourth quarter and year ended December
31, 1999. Lead Plaintiffs allege that those financial results were false and misleading because the Conseco Defendants improperly reported the
value of the interest-only securities held by Conseco. Lead Plaintiffs further allege that the improper valuation of these securities had the effect
of overstating the Company’s income in Conseco’s press releases and Securities Exchange Commission filings from April 28, 1999 through and
including April 14, 2000.
        15. The first announcement indicating that Conseco had made false and misleading statements occurred before the opening of the market
on March 31, 1999, when Conseco disclosed that the valuation of its interest-only securities was inaccurate and that it would have to write down
the value of those securities by $350 million. As a result of the $350 million write down, on April 14, 2000 the Company filed its 1999 Form 10-K
and restated its financial statements for the first three quarters of 1999. The restatement reduced Conseco’s previously reported net income for
1999 by $367 million, or almost 40%, from $962.7 million to $595 million. Lead Plaintiffs allege that as a result of Conseco’s dissemination of
false and misleading statements relating to its financial condition during the Class Period, the market prices of the Class Securities were inflated
and the publicly-traded put options on Conseco common stock were artificially deflated, thereby causing damage to Class Members.
C.      The Members of the Class
        16. The Class includes all persons or entities who during the period from April 28, 1999 through and including April 14, 2000, either:
               (i) purchased or otherwise acquired any of the following publicly traded securities of Conseco, Conseco Finance, or Conseco Trusts
               I, II, III, IV, V, VI or VII: Conseco common stock; Conseco 7.6% Notes; Conseco 8.5% Notes; Conseco 9.0% Notes; Conseco 8.75%
               Notes; Conseco 7-7/8% Notes; Conseco 6.4% Notes; Conseco 6.8% Notes; Conseco 8-1/8% Notes; Conseco 10.5% Notes; Conseco
               6.4% Mandatory Par Put Remarketed Securities; Conseco Trust I Securities; Conseco Trust II Securities; Conseco Trust III
               Securities; Conseco Trust IV Securities; Conseco Trust V Securities; Conseco Trust VI Securities; Conseco Trust VII Securities;
               and Conseco Finance 10.25% Notes;
               (ii) purchased or otherwise acquired publicly-traded call options on Conseco common stock; or
               (iii) sold publicly-traded put options on Conseco common stock.
However, the Class does not include the following persons or entities:
               (i) Defendants;
               (ii) any subsidiaries or affiliates of any Defendant; unless such subsidiary or affiliate represents or constitutes an employee benefit
               plan or trust created and existing for the benefit of the employees of any of the Defendants or affiliates of the Defendants;
               (iii) members of the immediate family of any Individual Defendant;
               (iv) any entity in which any Defendant has a controlling interest; unless such entity represents or constitutes an employee benefit
               plan or trust created and existing for the benefit of the employees of any of the Defendants or affiliates of the Defendants;
               (v) any person who during the Class Period was an executive officer of Conseco (listed in the tables on page 12 of Conseco’s 2000
               Proxy Statement and/or page 10 of Conseco’s 2001 Proxy Statement) or a director of Conseco, Conseco Finance, Conseco Trust VII,
               the Underwriter Defendants or of any subsidiary or affiliate of any of them; and
               (vi) the legal representatives, heirs, successors or assigns of any such excluded party.
D.      Litigation and Settlement Discussions
        17. On April 27, 2001, the Conseco Defendants and the Underwriter Defendants each filed a motion to dismiss the Complaint. On June
15, 2001, Lead Plaintiffs responded to Defendants’ motions, and on August 3, 2001 the Conseco Defendants and the Underwriter Defendants both
replied, separately, to Lead Plaintiffs’ response.
        18. In August 2001, Lead Counsel and Counsel for Conseco met in New York City to discuss whether settlement of the action was
possible. No settlement was reached at this meeting and the parties agreed that any discussions were premature.
        19. In October 2001, Lead Plaintiffs and the Conseco Defendants, by their counsel, met again to discuss settlement. This meeting led
to arms-length settlement negotiations over a six month period, ending in April 2002, the result of which is the Settlement described below and
set forth more fully in the Stipulation. A key component of the settlement discussions was Conseco’s difficult financial condition, its results of
ongoing operations, and the possibility of bankruptcy. In investigating Conseco’s financial condition, Lead Counsel met on numerous occasions
with certain of Conseco’s senior officers. Lead Plaintiffs and Lead Counsel also obtained thousands of pages of non-public information from
Conseco, including earnings forecasts, budgets, cash flow projections, the Company’s covenants with its lenders, and private presentations Conseco
made during the 2001 fourth quarter regarding its financial condition to the banks and rating agencies.
        20. To assist in evaluating Conseco’s financial condition and ability to pay, Lead Counsel retained an independent financial advisor,
Dresdner Kleinwort Wasserstein, Ltd. (“DrKW”). DrKW is a prominent investment bank, specializing in global mergers and acquisitions
advisory and providing full-service financing and distribution capabilities on a global scale. Formed in January 2001 through the combination
of leading European-based investment bank, Dresdner Kleinwort Benson, and premier US-based investment bank, Wasserstein Perella, DrKW
now employs more than 8,500 people in 39 financial centers world-wide. DrKW reviewed the information received concerning Conseco’s
financial condition and prepared extensively detailed analyses regarding Conseco’s financial condition. DrKW also directly participated in the
settlement negotiations. Based upon the analysis of the claims and defenses asserted by the parties and Conseco’s financial condition, Lead
Plaintiffs and Lead Counsel concluded that the Settlement, which represents a substantial immediate cash benefit, is in the best interests of the
Class.
E.      Lead Plaintiffs’ Prosecution of the Action
        21. Lead Counsel conducted extensive discovery and investigation during the prosecution of the action, including: (1) the inspection
and analysis of tens of thousands of pages of documents produced by Conseco; (2) the interview of numerous former employees of Conseco; (3)
an accounting analysis conducted by Lead Plaintiffs’ accounting experts to assist Lead Counsel in understanding the complicated accounting issues
implicated by the alleged accounting improprieties; (4) a damages analysis conducted by Lead Plaintiffs’ damages expert concerning issues of
materiality, causation and the amount of damages sustained by the Class; (5) a financial analysis of Conseco conducted by Lead Plaintiffs’ financial
advisor to determine Conseco’s ability to satisfy a monetary settlement; and (6) the inspection and analysis of Conseco’s public filings, press
releases, newspaper and magazine articles and other public statements.
                                                                                                                                            Form F7903
F.      Defenses to Plaintiffs’ Claims
        22. Defendants believe that they have defenses to the claims asserted against them by Lead Plaintiffs. Nevertheless, relying on the
provisions of the Stipulation that the Settlement shall in no event be construed or deemed to be evidence, or an admission or a concession on the
part of any of the Defendants, or any fault or liability, Defendants consider it desirable and in the best interest of the Company and the Class that
this Action be dismissed on the terms set forth herein in order to eliminate continued uncertainty, which is damaging to the Company and its
shareholders, and to remove the risks and expenses of continued litigation.
                                               II. TERMS OF THE PROPOSED SETTLEMENT
        23. In full settlement of the Action, Conseco will pay or will cause to be paid a total of $120 million cash (the “Settlement Amount”)
for the benefit of the Class, as follows:
        24. On February 4, 2002, Conseco deposited $20 million of the $120 million Settlement Amount into an escrow account maintained
jointly by Lead Counsel and Conseco’s counsel (the “Escrow Account”). On February 11, 2002, National Union Fire Insurance Company of
Pittsburgh Pa. (“National Union”) deposited $10 million into the Escrow Account, satisfying the obligations of the insurance policy it wrote on
Conseco’s behalf. On April 19, 2002, Royal & SunAlliance and Westchester Fire Insurance Company deposited $15 million each into the Escrow
Account, satisfying the obligations of the insurance policies they each wrote on Conseco’s behalf. On April 22, 2002, RLI Insurance Company
deposited $10 million into the Escrow Account, satisfying the obligations of the insurance policy it wrote on Conseco’s behalf. On April 25, 2002,
Greenwich Insurance Company deposited $25 million into the Escrow Account, satisfying the obligations of the insurance policy it wrote on
Conseco’s behalf. Accordingly, as of April 25, 2002, the total amount in the Escrow Account was $95 million. Each payment described above
has been earning interest for the benefit of the Class since the date of its deposit into the Escrow Account and will continue to earn interest until
distributed to the Class. The remaining $25 million will be deposited into the Escrow Account on or before December 31, 2005.
        25. The Settlement Fund will not be distributed to Class Members unless the Settlement is approved by the Court and until claims are
fully reviewed and the Court issues an Order authorizing distribution to the Class, which may take many months after the deadline for submission
of Proofs of Claims. Further, $5 million of the $95 million that has been deposited into the Escrow Account shall remain in the Escrow Account
until the conclusion (by final judgment, settlement, dismissal or otherwise, which shall mean thirty (30) days after the last applicable time to
appeal or request transfer) of the action titled Conseco, Inc. v. National Union Fire Insurance Company of Pittsburgh, Pa. et. al., filed in Marion
Circuit Superior Court of Indiana on June 13, 2001 (the “Coverage Litigation”), to secure any payment obligations the Conseco Defendants may
be determined to have to Royal & SunAlliance and RLI Insurance Company as a result of the Coverage Litigation. Upon conclusion of the
Coverage Litigation the $5 million will be distributed on a pro rata basis. The distributions of the $90 million or the $5 million of the Settlement
Fund, however, are not contingent on the receipt of the last $25 million, which will be deposited into the Escrow Account on or before December
31, 2005. If any distributions of the Settlement Fund are made before the last $25 million is deposited into the Escrow Account, which Lead
Counsel believes is extremely likely, a subsequent pro rata distribution will be made after the last $25 million is deposited into the Escrow Account.
        26. The consideration for the Settlement Amount is the entry by the Court of an Order and Final Judgment which will dismiss the Action
against Defendants with prejudice, and bar and permanently enjoin Lead Plaintiffs and each Class Member (with the exception of those who
request exclusion from the Class by July 26, 2002 in the manner described herein), whether or not such Class Member has submitted a Proof of
Claim, from prosecuting the Released Claims, as defined below, and any such Class Member shall be conclusively deemed to have fully, finally
and forever released, relinquished and discharged any and all such Released Claims against each Released Person, as defined below.
        27. As used herein, “Released Person” means Conseco, Conseco Finance, Conseco Trust VII, the Individual Defendants, the Underwriter
Defendants, and the present and former agents, assigns, predecessors, successors, affiliates, subsidiaries, divisions, corporate parents, related
companies, or administrator of each of the foregoing; each Individual Defendant and their respective heirs, spouses, executors, administrators,
insurers, reinsurers, agents and assigns; and the current and former directors, officers, shareholders, employees, attorneys, accountants, auditors,
experts, insurers, reinsurers, investment bankers, representatives and/or agents of Conseco, Conseco Finance, Conseco Trust VII and each of the
Underwriter Defendants, and the heirs, executors, administrators, beneficiaries, predecessors, successors and assigns of each of the foregoing.
        28. As used herein, “Released Claims” means any and all manner of actions, causes of actions, suits, obligations, claims, debts, demands,
agreements, promises, liabilities, damages, losses, controversies, costs, expenses, and attorneys’ fees whatsoever, whether in law or in equity and
whether based on any federal law, state law, common law or foreign law right of action or of any other type or form, foreseen or unforeseen, actual
or potential, matured or unmatured, known or unknown, accrued or not accrued which each Lead Plaintiff and Class Member, or any of them,
ever had, now have, or can have, or shall or may hereafter have, either individually, or as a member of a class, against any and all Released
Persons, for, based on, by reason of, or arising from or relating to the conduct alleged in the Consolidated Class Actions or the Action, including,
but not limited to (i) claims which arise out of any of the facts, transactions, events, occurrences, acts or omissions mentioned or referred to in
the Complaint or other matters that are or could have been set forth, alleged, embraced or otherwise referred to in the Action or the Consolidated
Class Actions or which could have been brought against Defendants relating to a Class Member’s purchase or acquisition of Class Securities
during the Class Period or sale during the Class Period of publicly-traded put options on Conseco common stock; and (ii) claims arising out of
the prosecution or defense of the Action, including, but not limited to, claims related to the execution of, and entry into, the Stipulation, such as
but not limited to, claims for fraud in the inducement, negligent misrepresentation, or fraud; except for claims arising out of a violation or breach
of the Stipulation.
        29. Upon approval of the Settlement by the Court and upon satisfaction of the other conditions to the Settlement, the Settlement Fund
will be distributed as follows:
               A.     To pay all costs and expenses incurred in discharging the obligation to notify potential Class Members of the pendency of the
Action and of the Settlement either through direct mail or publication, as required by the Court ( the “Costs of Notice”);
               B.     To pay all costs and expenses incurred in connection with administering the claims process, including all fees and expenses
of the claims administrator (the “Costs of Administration”).
               C.     To pay the Fee and reimbursement of all out-of-pocket expenses incurred by Lead Plaintiffs and all counsel for plaintiffs in
connection with the prosecution of the Action in an amount not to exceed $2,750,000, which includes all fees and expenses of Lead Plaintiffs’
financial advisor, experts, consultants and investigators retained by counsel in connection with the Action (the “Out-of-Pocket Expenses”). Of
the Out-of-Pocket Expenses, $1,925,000 is for the fees of DrKW, Lead Plaintiffs’ financial advisors. DrKW’s fee results from an arms-length
fee negotiation and written retainer agreement entered into between DrKW, Lead Plaintiffs and Plaintiffs’ Lead Counsel, which was executed
prior to DrKW’s retention in this Action. Lead Plaintiffs and Plaintiffs’ Lead Counsel believe that DrKW significantly contributed to the
settlement of this Action and DrKW’s fee is fair, adequate and reasonable;
                                                                                                                                           Form F7904
               D.     To pay all compensation of the escrow agent, Citibank, N.A., holding the Settlement Fund (the “Escrow Agent”);
               E.     To pay all reasonable costs and expenses incurred by Lead Plaintiffs, up to a maximum of $50,000 (“Lead Plaintiffs’ Costs
and Expenses”);
               F.     To pay all reasonable costs incurred in the preparation of any tax returns required to be filed on behalf of the Settlement Fund
as well as the taxes (and any interest and penalties determined to be due thereon) owed by reason of the earnings of the Settlement Fund, including
taxes and tax expenses (the “Taxes”); and
               G.     Subject to the approval by the Court of the Plan of Distribution, which is attached to this Notice, the balance of the Settlement
Fund (the “Net Settlement Fund”), shall be distributed in accordance with the Plan of Distribution to Class Members who submit valid, timely
Proofs of Claim (“Authorized Claimants”).
                                                    III. BENEFITS OF THE SETTLEMENT
        30. Lead Plaintiffs and Lead Counsel have agreed to the Settlement, pursuant to the provisions of the Stipulation, after considering:
(i) the financial limitations of Conseco and the possibility of bankruptcy; (ii) the substantial and immediate benefits that the members of the Class
will receive from the Settlement; (iii) the attendant risks of trial, especially in complex actions such as this Action; (iv) the uncertainty relating
to the proof of the allegations contained in the Complaint, particularly with respect to intent; (v) the difficulty of collecting additional damages,
even if won at trial; (vi) the substantial likelihood that, even if plaintiffs prevailed at trial with respect to liability, Conseco would not be able to
satisfy the judgment; and (vii) the conclusion of Lead Counsel, which was based on a full understanding of the facts and the relative strengths
and weaknesses of the Class’ claims, that resolution of the Action upon the terms set forth in the Stipulation is in the best interests of the Class
and represents an excellent recovery for the Class.
        31. Of particular importance in this Action is the immediacy of the benefits of the Settlement in light of Conseco’s financial condition.
Specifically, from the time this Action was commenced, Conseco has been losing money and has announced the elimination, downsizing and/or
sale of certain business units and the restructuring of its debt. Conseco’s common stock, which traded as high as $35 during the Class Period,
has been trading below $4 a share in recent months. Conseco believes that the Settlement eliminates continued uncertainty which is damaging
to the Company and its shareholders. Lead Plaintiffs also believe that it is likely that it would have been difficult to collect a judgment against
the officers and directors who were most directly involved with the transactions that were improperly accounted for, and that it would have been
difficult for the Class to prove that the officers of the Company acted with the required intent.
        32. Lead Counsel believes that the Settlement is in the best interests of the Class. Further, Lead Plaintiffs are sophisticated institutional
investors and have been intimately involved in all aspects of this litigation, including the settlement negotiations. Lead Plaintiffs have also
concluded that the Settlement represents an excellent recovery for the Class and is therefore fair, reasonable and adequate.
                                   IV. PARTICIPATION IN THE SETTLEMENT; PROOFS OF CLAIM
        33. Only those Class Members who purchased or otherwise acquired Class Securities or sold publicly-traded put options on Conseco
common stock during the Class Period will share in the distribution of the Settlement Fund. As a condition of the Settlement, each person
claiming to be an Authorized Claimant shall be required to submit a separate Proof of Claim no later than November 30, 2002, to the address set
forth in the attached Proof of Claim form. Unless otherwise ordered by the Court, any Class Member who fails to submit a Proof of Claim by
November 30, 2002, shall be forever barred from receiving any payments pursuant to the Settlement set forth in the Stipulation, but will, in all
other respects, be subject to the provisions of the Stipulation, including the terms of any judgment entered and the releases given.
        34. The Proof of Claim, which is enclosed herewith, includes a general release of all Released Persons and Released Claims. Extra copies
of the Proof of Claim can be obtained from the address noted below.
        35. The Court has reserved jurisdiction to allow, disallow or adjust the claim of any Class Member on equitable grounds. The Court
also reserves the right to modify the Plan of Distribution without further notice to the Class. Payment pursuant to the Plan of Distribution attached
hereto shall be conclusive against all Authorized Claimants. No person shall have any claim against Lead Counsel or the Claims Administrator
or other agent designated by Lead Counsel based on the distributions made substantially in accordance with the Stipulation and the Settlement
contained therein, the Plan of Distribution, or further orders of the Court. Defendants and the Released Persons shall have no responsibility for
or liability whatsoever for the investment or distribution of the Settlement Fund, the Net Settlement Fund, the Plan of Distribution or the
determination, administration, calculation, or payment of claims or non-performance of its duties, the payment or withholding of taxes owed by
the Settlement Fund or any losses incurred in connection therewith.
                                                  V. YOUR RIGHTS AS A CLASS MEMBER
        36. A member of the Class will be bound by the proposed Settlement provided for in the Stipulation, in the event it is approved by the
Court, and by any judgment or determination of the Court affecting the Class, unless such member shall mail by first-class mail a written request
for exclusion from the Class, postmarked no later than July 26, 2002, addressed to each of the following: (i) In re Conseco Securities Litigation,
Post Office Box 3560, Portland, Oregon 97208-3560; (ii) Daniel L. Berger, Esq., Bernstein Litowitz Berger & Grossmann LLP, 1285 Avenue
of the Americas, New York, New York 10019; and (iii) Gregory P. Joseph Law Offices LLC, 805 Third Avenue, New York, New York 10022.
Such request for exclusion must state the name and address of the person seeking exclusion and identify by date, quantity, and purchase,
acquisition or sales price, all transactions during the Class Period in the Class Securities and put options on Conseco common stock. A request
for exclusion shall not be effective unless it is made in the manner and within the time set forth in this paragraph. If a member of the Class
requests to be excluded, that Class Member will not receive any benefit provided for in the Stipulation, in the event that the Settlement is approved
by the Court.
        37. Any member of the Class who does not request exclusion in the manner provided for herein may, but need not, enter an appearance
in this Action, at his own cost, through counsel of his own choice. If he does not enter an appearance, he will be represented by Lead Counsel
identified above. If the Settlement is finally approved by the Court, it will be binding on all Class Members who have not timely elected to be
excluded from the Class.
                                                                VI. THE HEARING
        38. A hearing (the “Settlement Hearing”) will be held before the Honorable Richard L. Young, United States District Court Judge, on
August 7, 2002 at 1:00 p.m. at the United States Courthouse, Southern District of Indiana, Indianapolis Division, 46 East Ohio Street,
Indianapolis, Indiana 46204, for the purpose of determining whether an Order and Final Judgment should be entered: (1) approving the Settlement
as fair, reasonable and adequate; (2) dismissing the Action on the merits and with prejudice against Defendants; (3) approving the Plan of
Distribution which is attached hereto; (4) awarding attorneys’ fees and expenses from the Settlement Fund; and (5) barring Lead Plaintiffs and
                                                                                                                                              Form F7905
all Class Members from prosecuting, pursuing, or litigating any of the Released Claims against any Released Person. The Settlement Hearing
may be continued or adjourned from time to time by the Court at the Settlement Hearing or any continued or adjourned session thereof without
further notice.
       39. Any Member of the Class who does not request exclusion by July 26, 2002, may appear at the Settlement Hearing and be heard on
any of the foregoing matters; provided, however, that no such person shall be heard, unless his, her or its objection or opposition is made in writing
and is filed, together with copies of all other papers and briefs to be submitted to the Court at the Settlement Hearing, by him, her or it (including
proof of all transactions in Class Securities and put options on Conseco common stock as set forth in the Proof of Claim form enclosed herewith)
with the Clerk of the United States District Court for the Southern District of Indiana no later than July 26, 2002 and showing due proof of service
by hand or overnight mail on: Daniel L. Berger, Esq., Bernstein Litowitz Berger & Grossmann LLP, 1285 Avenue of the Americas, New York,
NY 10019, Lead Counsel; and Gregory P. Joseph, Esq., Gregory P. Joseph Law Offices LLC, 805 Third Avenue, New York, New York 10022,
Counsel for the Conseco Defendants.
       40. Unless otherwise ordered by the Court, any member of the Class who does not make his, her or its objection or opposition in the
manner provided herein shall be deemed to have waived all objections to the foregoing matters.
                                             VII. ATTORNEYS’ FEES, COSTS AND EXPENSES
       41. Lead Counsel will apply to the Court prior to the Settlement Hearing described above for the Fee, in the amount of 13 % of the first
$25 million of the Settlement Fund (including interest, but after deduction of Out of Pocket Expenses), 15 % of the next $75 million of the
Settlement Fund, and 17 % of the last $20 million of Settlement Fund. The Fee will be paid only on monies actually received in the Settlement
Fund. In total, the Fee will amount to approximately 14.6 % of the Settlement Fund. This Fee application is in compliance with the fee
parameters in the grid set forth below that was arrived at in an arms-length negotiation between Lead Plaintiffs and Lead Counsel.
 Stage of Litigation That Recovery is Obtained                                                     Amount of Recovery              Fee Percentage
 Commencement of Action to completion of briefing on motion to dismiss                             $0 - $25,000,000                13%
                                                                                                   $25,000,001 - $100,000,000 15%
                                                                                                   Greater than $100,000,000       17%
 Completion of briefing on motion to dismiss to completion of briefing on summary                  $0 - $25,000,000                17%
 judgment motions                                                                                  $25,000,001 - $100,000,000 19%
                                                                                                   Greater than $100,000,000       21%
 After completion of summary judgment briefing                                                     $0 - $25,000,000                20%
                                                                                                   $25,000,001 - $100,000,000 22%
                                                                                                   Greater than $100,000,000       24%
       42. Lead Counsel is seeking Fees pursuant to the first row of the fee grid because the Settlement was reached prior to the hearing on
the motion to dismiss and before any discovery occurred, although Lead Counsel would have been entitled to seek Fees pursuant to the second
row since the Settlement was reached after briefing for the motion to dismiss was completed. Further, with respect to the $25 million that has
not been deposited into the Escrow Account, Lead Counsel will not take any fee on that amount until it is actually paid into the Escrow Account.
       43. The Fee was negotiated between Lead Counsel, the Director of Anchorage Police & Fire Retirement System, and the Chairman of
The State of Louisiana Firefighters’ Retirement System, prior to the filing of motions for lead plaintiff in this litigation. Lead Plaintiffs have
concluded that the Fee sought is fair, adequate and reasonable. Lead Counsel will also apply for reimbursement of Out-of-Pocket Expenses, Costs
of Notice, Costs of Administration, Taxes, all compensation to the Escrow Agent, and Lead Plaintiffs’ Costs and Expenses. Any amounts awarded
will be paid out of the Settlement Fund.
                                   VIII. NOTICE TO BANKS, BROKERS, AND OTHER NOMINEES
       44. Banks, brokerage firms, institutions, and other persons who are nominees for beneficial purchasers who purchased or acquired Class
Securities or who sold Conseco publicly-traded put options during the Class Period of April 28, 1999 through April 14, 2000, inclusive, are
requested within ten (10) days of receipt of this Notice, to: (1) provide Lead Counsel with the names and addresses of such beneficial purchasers;
or (2) forward a copy of this Notice to each such beneficial purchaser and provide Lead Counsel with written confirmation that the Notice has
been so forwarded. Lead Counsel offers to pay your reasonable costs and expenses of complying with this provision upon submission of
appropriate documentation. Additional postage pre-paid copies of this Notice may be obtained from Lead Counsel for forwarding to such
beneficial owners. All such correspondence to Lead Counsel should be addressed as follows:
              In re Conseco Securities Litigation
              Post Office Box 3560
              Portland, Oregon 97208-3560
                                            IX. EXAMINATION OF PAPERS AND INQUIRIES
       45. This Notice contains only a summary of the terms of the Settlement. For a more detailed statement of the matters involved in this
Action, reference is made to the pleadings, to the Stipulation and to other papers filed in this Action which may be inspected at the Office of the
Clerk of the United States District Court, United States Courthouse, Southern District of Indiana, Indianapolis Division, 46 East Ohio Street,
Indianapolis, Indiana 46204, during business hours of each business day.
       46. You may obtain a copy of the Notice, Plan of Distribution, Proof of Claim form with instructions, and additional information
              regarding the Settlement at www.consecosecuritiesclassaction.com. Inquiries regarding this Action should be addressed as follows:
              In re Conseco Securities Litigation
              Post Office Box 3560
              Portland, Oregon 97208-3560
              Phone Number: 1-877-528-4642
                               PLEASE DO NOT CONTACT THE COURT REGARDING THIS NOTICE.
DATED: June 11, 2002                      BY ORDER OF THE COURT
                                                                                                                                            Form F7906
                                                             PLAN OF DISTRIBUTION
I.     GENERAL PROVISIONS
       To receive a distribution from the Net Settlement Fund, all persons or entities MUST:
               1.      Establish membership in the Class;
               2.      Complete a valid Proof of Claim form and supply all required documentation; and
               3.      Submit the completed Proof of Claim form and documentation so that it is postmarked for mailing to the Claims Administrator
on or before November 30, 2002.
II.    CALCULATION OF LOSS AMOUNT
       Each Authorized Claimant will be assigned a “Loss Amount” for each (i) purchase or acquisition of any of the following publicly traded
securities of Conseco, Conseco Finance, or Conseco Trusts I, II, III, IV, V, VI or VII: Conseco common stock; Conseco 7.6% Notes; Conseco
8.5% Notes; Conseco 9.0% Notes; Conseco 8.75% Notes; Conseco 7-7/8% Notes; Conseco 6.4% Notes; Conseco 6.8% Notes; Conseco 8-1/8%
Notes; Conseco 10.5% Notes; Conseco 6.4% Mandatory Par Put Remarketed Securities; Conseco Trust I Securities; Conseco Trust II Securities;
Conseco Trust III Securities; Conseco Trust IV Securities; Conseco Trust V Securities; Conseco Trust VI Securities; Conseco Trust VII Securities;
and Conseco Finance 10.25% Notes; (ii) purchase or acquisition of publicly-traded call options on Conseco common stock; or (iii) sale of publicly-
traded put options on Conseco common stock.
       A.      CALCULATION OF THE LOSS AMOUNT
       The calculation of the Loss Amount will depend upon several factors:
               1.      The type of security purchased or otherwise acquired;
               2.      When the security was purchased, acquired or sold; and
               3.      Whether the security was held until the conclusion of the Class Period (April 14, 2000) or whether it was sold during the Class
Period and, if so, when it was sold.
       For (i) all Class Securities purchased or acquired during the period from April 28, 1999 through the close of trading on March 30, 2000,
and that were sold during that same time period (i.e., sold prior to the opening of trading on March 31, 2000), and (ii) all put options on Conseco
common stock sold during the period from April 28, 1999 through the close of trading on March 30, 2000, and that were covered during that same
time period (i.e., covered prior to the opening of trading on March 31, 2000), the Loss Amount is $0, because both the purchase and sale occurred
before any adverse information about Conseco’s alleged accounting improprieties was publicly disclosed, and there is no evidence that any decline
in the price of the security that occurred prior to the opening of trading on March 31, 2000 was related to the alleged misstatements.
       B.      INFORMATION REQUIRED ON PROOF OF CLAIM FORM
       Each Proof of Claim form must separately indicate each Claimant’s opening position in each of the publicly-traded securities of Conseco,
Conseco Finance, and Conseco Trusts I, II, III, IV, V, VI or VII, and publicly-traded call or put options on Conseco common stock, as of April
28, 1999 (the first day of the Class Period) and the closing position in the common stock and options on Conseco common stock, as of the close
of business on April 14, 2000, the last day of the Class Period. For transactions in Conseco common stock or options on Conseco common stock,
each Proof of Claim form must also list all transactions i.e., purchases, acquisitions and sales made during the Class Period (April 28, 1999
through and including April 14, 2000). For all other securities, each Proof of Claim form must also list all transactions, i.e., purchases,
acquisitions and sales made after April 28, 1999, to date. In calculating the Loss Amount for each claim, a sale of the security during the Class
Period will be matched first against that security’s opening position, and then matched chronologically against each purchase or acquisition of
that security during the Class Period. For this reason, among others, claimants must supply all of the documentation required by the Proof of
Claim Form.
       The date of purchase or sale is the “contract” or “trade” date as distinguished from the "settlement" or “payment” date.
III. BASIS FOR CALCULATION OF LOSS AMOUNT FOR SECURITIES SUBJECT TO CLAIMS PURSUANT TO SECTION 10(b)
       OF THE SECURITIES EXCHANGE ACT OF 1934 (THE “EXCHANGE ACT”)
       The Loss Amount for each security subject to claims pursuant to Section 10(b) of the Exchange Act will be reduced by 50 percent because
the likelihood of recovery pursuant to Section 10(b) is significantly more uncertain than for the claims asserted pursuant to Section 11 of the
Securities Act of 1933. Accordingly, this reduction in the Loss Amount will not affect claims pursuant to Section 11. The likelihood of recovery
under Section 10(b) is significantly more uncertain than under Section 11 because under Section 10(b) plaintiffs are required to prove that
defendants acted with intent to deceive or defraud. Defendants vigorously contest that they had any intent to deceive or defraud. In contrast, proof
of intent is not an element of the claim under Section 11, which only requires that Conseco have made a false statement in connection with the
sale of securities. Accordingly, the certainty of recovery for purchasers of securities that have Section 11 claims is materially higher than for
purchasers of securities that have Section 10(b) claims.
       Section 10(b) of the Exchange Act applies to (i) the following securities that were purchased or acquired in the open market during the Class
Period: Conseco common stock; Conseco 7-7/8% Notes; Conseco 6.4% Notes; Conseco 6.8% Notes; Conseco 8-1/8% Notes; Conseco 10.5% Notes;
Conseco 6.4% Mandatory Par Put Remarketed Securities; Conseco Trust I Securities; Conseco Trust II Securities; Conseco Trust III Securities;
Conseco Trust IV Securities; Conseco Trust V Securities; Conseco Trust VI Securities; Conseco Finance 10.25% Notes; publicly-traded call
options on Conseco common stock; and (ii) publicly-traded put options on Conseco common stock that were sold during the Class Period.
       Section 11 of the Securities Act applies only to the following securities, each of which was issued during the Class Period: Conseco 7.6%
Notes; Conseco 8.5% Notes; Conseco 9.0% Notes; Conseco 8.75% Notes; and Conseco Trust VII Securities.
       A.      COMMON STOCK
       The Loss Amount for transactions in common stock is based on the artificial inflation in the stock on the date it was purchased and sold.
Plaintiffs’ damages expert, Forensic Economics, Inc., calculated the dollar amount of artificial inflation in the daily closing prices for Conseco
common stock for each day in the Class Period that, in its opinion, was attributable to the alleged wrongdoing. Plaintiffs’ expert analyzed the
market price reaction to public disclosures that revealed the alleged misrepresentations and measured the amount of the decline associated with
each disclosure, adjusted that price reaction to eliminate the effects, if any, attributable to general market or industry conditions or company
specific factors which were unrelated to the alleged wrongdoing and then used statistical techniques to ensure that price reaction was statistically
significant (i.e., greater than the normal variation in the security price). Plaintiffs’ expert, thus, isolated the price effect that it reasonably believed
was caused by the alleged fraud.

                                                                                                                                                 Form F7907
       By accumulating the total isolated market reaction attributable to the public disclosures of the alleged fraud, plaintiffs’ damages expert
determined, in its expert opinion, the reasonable amount of total artificial inflation in the market price of Conseco common stock throughout the
Class Period. There were four materially false and misleading earnings statements made during the period of April 28, 1999, the first day of the
Class Period, through and including April 14, 2000, the last day of the Class Period. The first false and misleading statement was on April 28,
1999, when Conseco issued a press release announcing its results for the first quarter of 1999. Accordingly, there was no artificial inflation in
Conseco common stock prior to April 28, 1999. Other false and misleading statements occurred on July 28, 1999, when Conseco announced its
results for the second quarter of 1999; October 27, 1999, when Conseco announced its results for the third quarter of 1999; and February 23, 2000,
when Conseco announced its results for the fourth quarter and full year 1999. The Company overstated each quarter’s income throughout the
entire Class Period. As demonstrated in Table A, attached hereto, some artificial inflation was removed from the price of Conseco common stock
on March 31, 2000, the first trading day after Conseco announced that it would take a $350 million charge to reduce the value of its interest-only
securities and that it was seeking to sell Conseco Finance. All of the price inflation was removed from the stock on April 17, 2000, the first trading
day after the Company filed its Form 10-K for 1999 on April 14, 2000, restating its previously issued quarterly financial statements for the first
three quarters of 1999 and revising its fourth quarter and full year 1999 results.
       For each share of Conseco common stock purchased or acquired during the period from April 28, 1999 through and including April
14, 2000:
       1.      And that was still held as of the close of trading on April 14, 2000: The Loss Amount is 50% of the Artificial Inflation indicated
in Table A for the date that share was purchased or acquired.
       2.      And that was sold during the period from March 31, 2000 through the close of trading on April 14, 2000: The Loss Amount
is 50% of the lesser of (i) the amount by which the Artificial Inflation per share on the date of purchase or acquisition exceeds the Artificial
Inflation per share on the date of sale, each as set forth in Table A, or (ii) the purchase price minus the sales price.
       B.      CONSECO 7-7/8% NOTES MATURING DECEMBER 12, 2000
       For Conseco 7-7/8% Notes maturing December 12, 2000 (the “Conseco 7-7/8% Notes”) purchased or acquired during the period from April
28, 1999 through and including April 14, 2000:
       1.      And that were sold during the period from March 31, 2000 through the close of trading on December 12, 2000: The Loss
Amount is 50% of (i) the lesser of the purchase price or $99.64 (the price on March 30, 2000), minus (ii) the greater of $90.00 (the price on April
17, 2000) or the sales price.
       2.      And that were redeemed at par on December 12, 2000: The Loss Amount is $0, because there were no losses suffered and all
principal and interest was duly paid.
       C.      CONSECO 6.4% NOTES MATURING FEBRUARY 10, 2003, EXTENDED TO FEBRUARY 10, 2004
       For Conseco 6.4% Notes maturing February 10, 2003 and extended to February 10, 2004 (the “Conseco 6.4% Notes”) purchased or acquired
during the period from April 28, 1999 through and including April 14, 2000:
       1.      And that were still held as of the close of trading on April 14, 2000:
The Loss Amount is 50% of (i) the lesser of the purchase price or $93.65 (the price on March 30, 2000), minus (ii) the greater of $76.00 (the price
on April 17, 2000) or the sales price.
       2.      And that were sold during the period from March 31, 2000 through the close of trading on April 14, 2000: The Loss Amount
is 50% of (i) the lesser of the purchase price or $93.65 (the price on March 30, 2000), minus (ii) the greater of $76.00 (the price on April 17, 2000)
or the sales price.
       D.      CONSECO 6.8% NOTES MATURING JUNE 15, 2005 EXTENDED TO JUNE 15, 2007
       For Conseco 6.8% Notes maturing June 15, 2005 and extended to June 15, 2007 (the “Conseco 6.8% Notes”) purchased or acquired during
the period from April 28, 1999 through and including April 14, 2000:
       1.      And that were still held as of the close of trading on April 14, 2000:
The Loss Amount is 50% of (i) the lesser of the purchase price or $91.10 (the price on March 30, 2000), minus (ii) the greater of $73.00 (the price
on April 17, 2000) or the sales price.
       2.      And that were sold during the period from March 31, 2000 through the close of trading on April 14, 2000: The Loss Amount
is 50% of (i) the lesser of the purchase price or $91.10 (the price on March 30, 2000), minus (ii) the greater of $73.00 (the price on April 17, 2000)
or the sales price.
       E.      CONSECO 8-1/8% NOTES MATURING FEBRUARY 15, 2003
       For Conseco 8-1/8% Notes maturing February 15, 2003 (the “Conseco 8-1/8% Notes”) purchased or acquired during the period from April
28, 1999 through and including April 14, 2000:
       1.      And that were still held as of the close of trading on April 14, 2000:
The Loss Amount is 50% of (i) the lesser of the purchase price or $98.63 (the price on March 30, 2000), minus (ii) the greater of $77.13 (the price
on April 17, 2000) or the sales price.
       2.      And that were sold during the period from March 31, 2000 through the close of trading on April 14, 2000: The Loss Amount
is 50% of (i) the lesser of the purchase price or $98.63 (the price on March 30, 2000), minus (ii) the greater of $77.13 (the price on April 17, 2000)
or the sales price.




                                                                                                                                           Form F7908
       F.      CONSECO 10.5% NOTES MATURING DECEMBER 15, 2004
       For Conseco 10.5% Notes maturing December 15, 2004 (the “Conseco 10.5% Notes”) purchased or acquired during the period from April
28, 1999 through and including April 14, 2000:
       1.      And that were still held as of the close of trading on April 14, 2000: The Loss Amount is 50% of (i) the lesser of the purchase
price or $108.05 (the price on March 30, 2000), minus (ii) the greater of $86.00 (the price on April 17, 2000) or the sales price.
       2.      And that were sold during the period from March 31, 2000 through the close of trading on April 14, 2000: The Loss Amount
is 50% of (i) the lesser of the purchase price or $108.05 (the price on March 30, 2000), minus (ii) the greater of $86.00 (the price on April 17,
2000) or the sales price.
       G.      CONSECO 6.4% MANDATORY PAR PUT REMARKETED SECURITIES MATURING JUNE 15, 2001
       For Conseco 6.4% Mandatory Par Put Remarketed Securities maturing June 15, 2001 (the “Conseco 6.4% Mandatory Par Put Remarketed
Securities”) purchased or acquired during the period from April 28, 1999 through and including April 14, 2000:
       1.      And that were sold during the period from March 31, 2000 through the close of trading on June 15, 2001: The Loss Amount
is 50% of (i) the lesser of the purchase price or $97.84 (the price on March 30, 2000), minus (ii) the greater of $76.00 (the price on April 17, 2000)
or the sales price.
       2.      And that were redeemed at par on June 15, 2001: The Loss Amount is $0, because there were no losses suffered and all principal
and interest was duly paid.
       H.      CONSECO FINANCING TRUST I 9.16% (TOPRS(SM))
       For Conseco Financing Trust I 9.16% Trust Originated Preferred Securities (the “Conseco Trust I Securities”) purchased or acquired during
the period from April 28, 1999 through and including April 14, 2000:
       1.      And that were still held as of the close of trading on April 14, 2000: The Loss Amount is 50% of (i) the lesser of the purchase
price or $18.63 (the closing price on March 30, 2000), minus (ii) the greater of $10.63 (the closing price on April 17, 2000) or the sales price.
       2.      And that were sold during the period from March 31, 2000 through the close of trading on April 14, 2000: The Loss Amount
is 50% of (i) the lesser of the purchase price or $18.63 (the closing price on March 30, 2000), minus (ii) the greater of $10.63 (the closing price
on April 17, 2000) or the sales price.
       I.      CONSECO FINANCING TRUST II 8.70% CAPITAL TRUST PASS-THROUGH SECURITIES (TRUPS(SM))
       For Conseco Financing Trust II Capital Trust Pass-Through Securities (the “Conseco Trust II Securities”) purchased or acquired during
the period from April 28, 1999 through and including April 14, 2000:
       1.      And that were still held as of the close of trading on April 14, 2000: The Loss Amount is 50% of (i) the lesser of the purchase
price or $83.66 (the price on March 30, 2000), minus (ii) the greater of $46.00 (the price on April 17, 2000) or the sales price.
       2.      And that were sold during the period from March 31, 2000 through the close of trading on April 14, 2000: The Loss Amount
is 50% of (i) the lesser of the purchase price or $83.66 (the price on March 30, 2000), minus (ii) the greater of $46.00 (the price on April 17, 2000)
or the sales price.
       J.      CONSECO FINANCING TRUST III 8.796% CAPITAL SECURITIES
       For Conseco Financing Trust III 8.796% Capital Securities (the “Conseco Trust III Securities”) purchased or acquired during the period
from April 28, 1999 through and including April 14, 2000:
       1.      And that were still held as of the close of trading on April 14, 2000: The Loss Amount is 50% of (i) the lesser of the purchase
price or $84.49 (the price on March 30, 2000), minus (ii) the greater of $46.00 (the price on April 17, 2000) or the sales price.
       2.      And that were sold during the period from March 31, 2000 through the close of trading on April 14, 2000: The Loss Amount
is 50% of (i) the lesser of the purchase price or $84.49 (the price on March 30, 2000), minus (ii) the greater of $46.00 (the price on April 17, 2000)
or the sales price.
       K.      CONSECO FINANCING TRUST IV VARIABLE RATE FELINE PRIDES SECURITIES
       For Conseco Financing Trust IV Variable Rate Feline Prides Securities (the “Conseco Trust IV Securities”) purchased or acquired during
the period from April 28, 1999 through and including April 14, 2000:
       1.      And that were sold during the period from March 31, 2000 through the close of trading on February 16, 2001: The Loss
Amount is 50% of (i) the lesser of the purchase price or $19.50 (the closing price on March 30, 2000), minus (ii) the greater of $10.94 (the closing
price on April 17, 2000) or the sales price.
       2.      And that were converted to Conseco common stock on February 16, 2001: The Loss Amount is 50% of the lesser of the purchase
price or $19.50 (the closing price on March 30, 2000) minus $17.63 (the last traded price prior to conversion).
       L.      CONSECO FINANCING TRUST V 8.70% (TOPRS(SM))
       For Conseco Financing Trust V 8.70% TOPrS (Trust Originated Preferred Securities) (the “Conseco Trust V Securities”) purchased or
acquired during the period from April 28, 1999 through and including April 14, 2000:
       1.      And that were still held as of the close of trading on April 14, 2000: The Loss Amount is 50% of (i) the lesser of the purchase
price or $17.56 (the closing price on March 30, 2000), minus (ii) the greater of $10.13 (the closing price on April 17, 2000) or the sales price.
       2.      And that were sold during the period from March 31, 2000 through the close of trading on April 14, 2000: The Loss Amount
is 50% of (i) the lesser of the purchase price or $17.56 (the closing price on March 30, 2000), minus (ii) the greater of $10.13 (the closing price
on April 17, 2000) or the sales price.
       M. CONSECO FINANCING TRUST VI 9% (TOPRS(SM))
       For Conseco Financing Trust VI 9% TOPrS (Trust Originated Preferred Securities) (the “Conseco Trust VI Securities”) purchased or
acquired during the period from April 28, 1999 through and including April 14, 2000:
       1.      And that were still held as of the close of trading on April 14, 2000: The Loss Amount is 50% of (i) the lesser of the purchase
price or $18.19 (the closing price on March 30, 2000), minus (ii) the greater of $10.50 (the closing price on April 17, 2000) or the sales price.
       2.      And that were sold during the period from March 31, 2000 through the close of trading on April 14, 2000: The Loss Amount
is 50% of (i) the lesser of the purchase price or $18.19 (the closing price on March 30, 2000), minus (ii) the greater of $10.50 (the closing price
on April 17, 2000) or the sales price.
       N.      CONSECO FINANCE 10.25% NOTES MATURING JUNE 1, 2002
       For Conseco Finance 10.25% Notes maturing June 1, 2002 (the Conseco Finance 10.25% Notes”) purchased or acquired during the period
from April 28, 1999 through and including April 14, 2000:
       1.      And that were sold between the close of trading on March 31, 2000 and the close of trading on June 1, 2002: The Loss Amount
is 50% of (i) the lesser of the purchase price or $100.99 (the price on March 30, 2000), minus (ii) the greater of $75.00 (the price on April 17,
2000) or the sales price.
                                                                                                                                           Form F7909
        2.     And that were redeemed at par on June 1, 2002: The Loss Amount is $0, because there were no losses suffered and all principal
and interest was duly paid.
        O.     OPTIONS
        Option losses were calculated as the change in the publicly-traded option price attributed to the alleged fraud after the disclosures in the
March 31, 2000 press release and the filing of the Company’s 1999 Form 10-K on April 14, 2000. To be considered damaged by a disclosure,
a publicly-traded call option must have suffered a decline in price and a publicly-traded put option must have increased in price.
        1.     The Loss Amount for each publicly-traded call option on Conseco common stock purchased or acquired during the period
from April 28, 1999 through April 14, 2000 is calculated as follows:
               a.     If the publicly-traded call option was still held as of April 14, 2000: The Loss Amount per publicly-traded call option is
50% of the amount of artificial inflation indicated in Table B attached hereto for the date that the call option was purchased or acquired.
               b.     If the publicly-traded call option was sold during the period from March 31, 2000 through and including April 14, 2000:
The Loss Amount per publicly-traded call option is 50% of the lesser of: (a) the amount by which the purchase or acquisition price per publicly-
traded call option exceeded the sale price per publicly-traded call option; or (b) the amount by which the artificial inflation per publicly-traded
call option on the date of purchase or acquisition exceeds the artificial inflation per publicly-traded call option on the date of sale, each as set forth
in Table B attached hereto.
               c.     If the publicly-traded call option was exercised during the period from March 31, 2000 through and including April
14, 2000: The Loss Amount per publicly-traded call option is 50% of the amount by which the artificial inflation per publicly-traded call option
on the date of purchase or acquisition exceeds the artificial inflation per publicly-traded call option on the date of exercise, each as set forth in
Table B attached hereto.
        2.     The Loss Amount for each publicly-traded put option on Conseco common stock sold during the period from April 28, 1999
through and including April 14, 2000 is calculated as follows:
               a.     If the publicly-traded put option was still open as of the close of trading on April 14, 2000: The Loss Amount per publicly-
traded put option is 50% of the amount of artificial deflation indicated in Table C attached hereto for the date that the publicly-traded put option
was sold.
               b.     If the publicly-traded put option was covered during the period from March 31, 2000 through the close of trading on
April 14, 2000: The Loss Amount per publicly-traded put option is 50% of the lesser of: (a) the amount by which the sale price per publicly-traded
put option exceeded the cover price per publicly-traded put option; or (b) the amount by which the artificial deflation per publicly-traded put option
on the date of sale exceeds the artificial deflation per publicly-traded put option on the date of cover, each as set forth in Table C attached hereto.
               c.     If the publicly-traded put option was exercised during the period from March 31, 2000 through the close of trading
on April 14, 2000: The Loss Amount per publicly-traded put option is 50% of the amount by which the artificial deflation per publicly-traded
put option on the date of sale exceeds the artificial deflation per publicly-traded put option on the date of exercise, each as set forth in Table C
attached hereto.
IV. BASIS FOR CALCULATION OF LOSS AMOUNT FOR SECURITIES SUBJECT TO CLAIMS PURSUANT TO SECTION 11
        OF THE SECURITIES ACT
        A.     CONSECO 7.6% NOTES MATURING JUNE 21, 2001
        1.     For Conseco 7.6% Notes maturing June 21, 2001 (the “Conseco 7.6% Notes”) purchased or acquired during the period from June
15, 1999 (the date of issue) through the close of trading on April 14, 2000, and that were sold during the period from March 31, 2000 through
the close of trading on June 21, 2001: The Loss Amount is (i) the lesser of the purchase price or $99.01 (the price on March 30, 2000) minus
(ii) the greater of $90.85 or the sales price.
        2.     For the Conseco 7.6% Notes purchased or acquired during the period from April 28, 1999 through the close of trading on April 14,
2000, and that were redeemed at par on June 21, 2001 the Loss Amount is $0, because there were no losses suffered and all principal and interest
was duly paid.
        B.     CONSECO 8.5% NOTES MATURING OCTOBER 15, 2002 EXTENDED TO OCTOBER 15, 2003
        1.     For Conseco 8.5% Notes maturing October 15, 2002 and extended to October 15, 2003 (the “Conseco 8.5% Notes”), purchased or
acquired during the period from October 18, 1999 (the date of issue) through the close of trading on April 14, 2000:
               a.     And that were still held as of the close of trading on April 14, 2000: The Loss Amount is (i) the lesser of the purchase price
or $98.96 (the price on March 30, 2000) minus (ii) the greater of $84.00 or the sale price.
               b.     And that were sold during the period from March 31, 2000 through the close of trading on April 14, 2000: The Loss
Amount is (i) the lesser of the purchase price or $98.96 minus (ii) the greater of $84.00 or the sale price.
        C.     CONSECO 9.0% NOTES MATURING OCTOBER 15, 2006 EXTENDED TO APRIL 15, 2008
        1.     For Conseco 9.0% Notes maturing October 15, 2006 and extended to April 15, 2008 (the “Conseco 9.0% Notes”) purchased or
acquired during the period from October 18, 1999 (the date of issue) through the close of trading on April 14, 2000:
               a.     And that were still held as of the close of trading on April 14, 2000: The Loss Amount is (i) the lesser of the purchase price
or $99.16 (the price on March 30, 2000) minus (ii) the greater of $81.13 or the sales price.
               b.     And that were sold during the period from March 31, 2000 through the close of trading on April 14, 2000: The Loss
Amount is (i) the lesser of the purchase price or $99.16 minus (ii) the greater of $81.13 or the sale price.
        D.     CONSECO 8.75% NOTES MATURING FEBRUARY 9, 2004 EXTENDED TO AUGUST 9, 2006
        1.     For Conseco 8.75% Notes maturing February 9, 2004 and extended to August 9, 2006 (the “Conseco 8.75% Notes”) purchased or
acquired during the period from February 2, 2000 (the date of issue) through the close of trading on April 14, 2000:
               a.     And that were still held as of the close of trading on April 14, 2000: The Loss Amount is (i) the lesser of the purchase price
or $99.21 (the price on March 30, 2000) minus (ii) the greater of $83.11 or the sales price.
               b.     And that were sold during the period from March 31, 2000 through the close of trading on April 14, 2000: The Loss
Amount is (i) the lesser of the purchase price or $99.21 minus (ii) the greater of $83.11 or the sale price.
        E.     CONSECO TRUST VII 9.44% TOPrS
        1.     For Conseco Financing Trust VII 9.44% TOPrS (Trust Originated Preferred Securities) (the “Conseco Trust VII Securities”)
purchased or acquired during the period from August 20, 1999 (the date of issue) through the close of trading on April 14, 2000:
               a.     And that were still held as of the close of trading on April 14, 2000: The Loss Amount is (i) the lesser of the purchase price
or $18.94 (the closing price on March 30, 2000) minus (ii) the greater of $14.00 or the sales price.
               b.     And that were sold during the period from March 31, 2000 through the close of trading on April 14, 2000: The Loss
Amount is (i) the lesser of the purchase price or $18.94 minus (ii) the greater of $14.00 or the sale price.

                                                                                                                                              Form F79010
V.     DISTRIBUTION OF THE NET SETTLEMENT FUND
       A.     Each Authorized Claimant shall recover a percentage of his, her or its Aggregate Net Defined Loss (as defined below in paragraph
IV.C.). However, in the event that the sum total of Aggregate Net Defined Losses of all Authorized Claimants who are entitled to receive payment
out of the Net Settlement Fund is greater than the Net Settlement Fund, each such Authorized Claimant shall receive his/her pro rata share of
the Net Settlement Fund, which shall be his/her Aggregate Net Defined Loss divided by the total of all Aggregate Net Defined Losses to be paid
from the Net Settlement Fund, multiplied by the total amount in the Net Settlement Fund.
       B.     If the Net Settlement Fund exceeds the sum total amount of the Aggregate Net Defined Losses of all Authorized Claimants entitled
to receive payment out of the Net Settlement Fund, the excess amount in the Net Settlement Fund shall be distributed pro rata to all Authorized
Claimants entitled to receive payment out of the Net Settlement Fund until such Authorized Claimants have received interest in an amount equal
to 100% of their Aggregate Net Defined Losses.
       C.      The sum of all Defined Profits (as defined below in this sub-paragraph) on (i) transactions during the Class Period of publicly traded
securities of Conseco, Conseco Finance, and Conseco Trusts I, II, III, IV, V, VI or VII, (ii) transactions during the Class Period of publicly-traded
call options on Conseco common stock, and (iii) transactions during the Class Period of publicly-traded put options on Conseco common stock,
shall be offset against the sum of all Loss Amounts on (1) purchases or acquisitions during the Class Period of publicly traded securities of
Conseco, Conseco Finance, and Conseco Trusts I, II, III, IV, V, VI or VII, (2) purchases or acquisitions during the Class Period of publicly-traded
call options on Conseco common stock, and (3) sales during the Class Period of publicly-traded put options on Conseco common stock to arrive
at the Aggregate Net Defined Loss. Any transaction during the Class Period of (a) publicly traded securities of Conseco, Conseco Finance, and
Conseco Trusts I, II, III, IV, V, VI or VII, (b) publicly-traded call options on Conseco common stock, and (c) publicly-traded put options on
Conseco common stock, that resulted in an actual, or realized, profit will be assigned a Defined Profit.
        D.     The Defined Profit for each transaction (except with respect to publicly-traded options on Conseco common stock) is the lesser of
(but not less than zero): (i) the amount by which the sale price of the securities sold exceeded the purchase price of the securities purchased; or
(ii) the amount by which the Artificial Inflation on the date of sale of the securities exceeds the Artificial Inflation on the date of the purchase of
the securities. If the Aggregate Net Defined Loss is a negative number, the net claim is zero.
        E.    The Defined Profit for transactions in publicly-traded call options on Conseco common stock is the lesser of (but not less than zero):
(i) the amount by which the sale price per publicly-traded call option on Conseco common stock exceeded the purchase or acquisition price; or
(ii) the amount by which the artificial inflation per publicly traded call option on Conseco common stock on the date of sale, expiration or exercise
exceeds the artificial inflation on the date of purchase or acquisition.
        F.   The Defined Profit for transactions in publicly traded put options on Conseco common stock is the lesser of (but not less than zero):
(i) the amount by which the sale price per publicly-traded put option on Conseco common stock exceeded the purchase or acquisition price; or
(ii) the amount by which the artificial deflation per publicly traded put option on Conseco common stock on the date of purchase or acquisition
exceeds the artificial deflation on the date of sale, expiration or exercise.
       G.       If the Authorized Claimant during the Class Period (i) acquired publicly traded securities of Conseco, Conseco Finance, or Conseco
Trusts I, II, III, IV, V, VI or VII, (ii) publicly-traded call options on Conseco common stock, or (iii) sold publicly-traded put options on Conseco
common stock by means of a gift, inheritance or operation of law, the Authorized Claimant's Claim will be computed by using the price of the
security on the original date of purchase and not the date of transfer, unless the transfer resulted in a taxable event or other change in the cost basis
of the securities. To the extent that the security was originally purchased prior to commencement of the Class Period, and there was no such
taxable event or change in cost basis at the time of transfer, the Authorized Claimant's Claim for that acquisition shall be zero.




                                                                                                                                             Form F79011
                                                                                TABLE A
                                                                     COMMON STOCK ARTIFICIAL INFLATION



                    Artificial                       Artificial                        Artificial                      Artificial                       Artificial                       Artificial
  Date      Price   Inflation      Date      Price   Inflation      Date       Price   Inflation    Date       Price   Inflation      Date      Price   Inflation      Date      Price   Inflation
4/28/1999     32.63       0.32    7/9/1999     31.50       0.31    9/20/1999     22.13       2.20 11/30/1999     20.25       2.83   1/18/2000     15.81       2.23    3/3/2000     14.00       5.52
4/29/1999     31.25       0.31   7/12/1999     31.63       0.31    9/21/1999     21.56       2.14 12/1/1999      20.69       2.89   1/19/2000     15.63       2.20    3/6/2000     13.25       5.22
4/30/1999     31.31       0.31   7/13/1999     30.75       0.30    9/22/1999     21.06       2.09 12/2/1999      20.06       2.80   1/20/2000     15.31       2.16    3/7/2000     12.63       4.98
 5/3/1999     32.63       0.32   7/14/1999     31.31       0.31    9/23/1999     20.13       2.00 12/3/1999      21.13       2.95   1/21/2000     15.56       2.19    3/8/2000     12.63       4.98
 5/4/1999     32.56       0.32   7/15/1999     31.00       0.30    9/24/1999     20.31       2.02 12/6/1999      20.56       2.87   1/24/2000     15.13       2.13    3/9/2000     12.94       5.10
 5/5/1999     32.94       0.32   7/16/1999     30.56       0.30    9/27/1999     20.13       2.00 12/7/1999      20.19       2.82   1/25/2000     14.50       2.04   3/10/2000     12.44       4.90
 5/6/1999     33.31       0.33   7/19/1999     30.75       0.30    9/28/1999     19.63       1.95 12/8/1999      20.00       2.79   1/26/2000     15.19       2.14   3/13/2000     12.25       4.83
 5/7/1999     33.88       0.33   7/20/1999     30.75       0.30    9/29/1999     19.75       1.96 12/9/1999      19.31       2.70   1/27/2000     15.25       2.15   3/14/2000     11.81       4.66
5/10/1999     35.19       0.34   7/21/1999     30.94       0.30    9/30/1999     19.00       1.89 12/10/1999     19.50       2.72   1/28/2000     14.81       2.09   3/15/2000     12.56       4.95
5/11/1999     34.63       0.34   7/22/1999     30.94       0.30    10/1/1999     20.69       2.06 12/13/1999     18.94       2.64   1/31/2000     15.25       2.15   3/16/2000     13.63       5.39
5/12/1999     34.13       0.33   7/23/1999     30.06       0.30    10/4/1999     21.44       2.13 12/14/1999     17.75       2.48    2/1/2000     15.38       2.17   3/17/2000     13.00       5.14
5/13/1999     34.50       0.34   7/26/1999     29.94       0.29    10/5/1999     21.63       2.15 12/15/1999     18.06       2.52    2/2/2000     15.31       2.16   3/20/2000     13.19       5.22
5/14/1999     32.75       0.32   7/27/1999     29.50       0.29    10/6/1999     22.81       2.27 12/16/1999     17.81       2.51    2/3/2000     15.31       2.16   3/21/2000     13.81       5.47
5/17/1999     31.88       0.31   7/28/1999     29.81       2.94    10/7/1999     22.38       2.23 12/17/1999     17.50       2.46    2/4/2000     16.31       2.30   3/22/2000     14.19       5.61
5/18/1999     32.13       0.31   7/29/1999     29.44       2.91    10/8/1999     22.75       2.26 12/20/1999     17.38       2.45    2/7/2000     17.06       2.40   3/23/2000     14.69       5.81
5/19/1999     32.75       0.32   7/30/1999     28.63       2.83   10/11/1999     23.25       2.31 12/21/1999     17.00       2.39    2/8/2000     17.44       2.46   3/24/2000     14.50       5.74
5/20/1999     32.69       0.32    8/2/1999     28.50       2.82   10/12/1999     23.31       2.32 12/22/1999     17.00       2.39    2/9/2000     17.06       2.40   3/27/2000     13.56       5.37
5/21/1999     33.00       0.32    8/3/1999     27.81       2.75   10/13/1999     21.69       2.16 12/23/1999     17.88       2.52   2/10/2000     16.81       2.37   3/28/2000     13.75       5.44
5/24/1999     31.50       0.31    8/4/1999     27.44       2.71   10/14/1999     21.25       2.11 12/27/1999     17.00       2.39   2/11/2000     16.19       2.28   3/29/2000     13.75       5.44
5/25/1999     31.44       0.31    8/5/1999     26.88       2.65   10/15/1999     20.88       2.08 12/28/1999     17.38       2.45   2/14/2000     16.13       2.27   3/30/2000     13.69       5.42
5/26/1999     31.94       0.31    8/6/1999     26.38       2.61   10/18/1999     21.19       2.11 12/29/1999     17.19       2.42   2/15/2000     16.19       2.28   3/31/2000     11.44       3.07
5/27/1999     31.25       0.31    8/9/1999     25.88       2.56   10/19/1999     20.44       2.03 12/30/1999     17.38       2.45   2/16/2000     15.75       2.22    4/3/2000      9.38       0.71
5/28/1999     30.56       0.30   8/10/1999     25.88       2.56   10/20/1999     19.81       1.97 12/31/1999     17.81       2.51   2/17/2000     16.94       2.39    4/4/2000      8.94       0.68
 6/1/1999     30.63       0.30   8/11/1999     26.00       2.57   10/21/1999     20.69       2.06   1/3/2000     17.19       2.42   2/18/2000     15.88       2.24    4/5/2000      8.50       0.65
 6/2/1999     31.31       0.31   8/12/1999     26.00       2.57   10/22/1999     21.69       2.16   1/4/2000     17.25       2.43   2/22/2000     15.75       2.22    4/6/2000      8.06       0.61
 6/3/1999     31.25       0.31   8/13/1999     26.50       2.62   10/25/1999     22.00       2.19   1/5/2000     16.94       2.39   2/23/2000     15.13       5.96    4/7/2000      7.25       0.55
 6/4/1999     31.19       0.31   8/16/1999     26.81       2.65   10/26/1999     22.00       2.19   1/6/2000     16.88       2.38   2/24/2000     15.13       5.96   4/10/2000      8.31       0.63
 6/7/1999     31.13       0.30   8/17/1999     27.06       2.67   10/27/1999     22.06       3.08   1/7/2000     16.75       2.36   2/25/2000     14.63       5.77   4/11/2000      7.88       0.60
 6/8/1999     31.00       0.30   8/18/1999     26.69       2.64   10/28/1999     23.50       3.28 1/10/2000      16.75       2.36   2/28/2000     14.50       5.72   4/12/2000      7.88       0.60
 6/9/1999     31.13       0.30   8/19/1999     26.94       2.66   10/29/1999     24.38       3.40 1/11/2000      16.44       2.31   2/29/2000     14.63       5.77   4/13/2000      7.88       0.60
6/10/1999     30.38       0.30   8/20/1999     26.50       2.62    11/1/1999     23.00       3.21 1/12/2000      15.69       2.21    3/1/2000     14.88       5.86   4/14/2000      7.56       0.99
6/11/1999     30.44       0.30   8/23/1999     27.88       2.75    11/2/1999     23.31       3.26 1/13/2000      15.56       2.19    3/2/2000     14.31       5.64   4/17/2000      6.75       0.00
6/14/1999     30.31       0.30   8/24/1999     27.56       2.72    11/3/1999     23.13       3.23 1/14/2000      16.31       2.30
6/15/1999     30.44       0.30   8/25/1999     27.50       2.72    11/4/1999     22.56       3.15
6/16/1999     30.81       0.30   8/26/1999     27.19       2.69    11/5/1999     22.88       3.19
6/17/1999     31.38       0.31   8/27/1999     26.56       2.62    11/8/1999     21.50       3.00
6/18/1999     31.13       0.31   8/30/1999     25.06       2.48    11/9/1999     20.69       2.89
6/21/1999     31.19       0.31   8/31/1999     23.88       2.36   11/10/1999     20.06       2.80
6/22/1999     30.88       0.30    9/1/1999     24.00       2.37   11/11/1999     19.94       2.78
6/23/1999     30.25       0.30    9/2/1999     23.31       2.30   11/12/1999     20.44       2.85
6/24/1999     29.81       0.29    9/3/1999     24.50       2.42   11/15/1999     20.88       2.92
6/25/1999     29.31       0.29    9/7/1999     23.81       2.35   11/16/1999     21.81       3.05
6/28/1999     29.06       0.29    9/8/1999     25.00       2.47   11/17/1999     21.00       2.93
6/29/1999     29.19       0.29    9/9/1999     24.88       2.46   11/18/1999     20.75       2.90
6/30/1999     30.44       0.30   9/10/1999     23.31       2.30   11/19/1999     20.19       2.82
 7/1/1999     31.06       0.31   9/13/1999     23.06       2.28   11/22/1999     19.69       2.75
 7/2/1999     31.00       0.30   9/14/1999     22.44       2.22   11/23/1999     19.44       2.71
 7/6/1999     30.75       0.30   9/15/1999     22.19       2.19   11/24/1999     19.38       2.71
 7/7/1999     30.94       0.30   9/16/1999     22.31       2.22   11/26/1999     19.63       2.74
 7/8/1999     31.13       0.31   9/17/1999     22.69       2.26   11/29/1999     18.56       2.59
                          TABLE B
      PUBLICLY-TRADED CALL OPTIONS ARTIFICIAL INFLATION

Expiration   Exercise   4/28/99 -              4/3/00 -
  Date        Price      3/30/00    3/31/00    4/13/00     4/14/00    4/17/00 on
 4/22/2000       5.00        2.69       2.69        0.25       0.56         -
 4/22/2000       7.50        2.13       2.13         -         0.31         -
 4/22/2000      10.00        3.13       0.94         -          -           -
 4/22/2000      12.50        1.44       0.19         -          -           -
 4/22/2000      15.00        0.50       0.06         -          -           -
 4/22/2000      17.50         -          -           -          -           -
 4/22/2000      20.00         -          -           -          -           -
 5/20/2000       5.00        0.13       0.13        0.13       0.56         -
 5/20/2000       7.50        0.19       0.19        0.19       0.38         -
 5/20/2000      10.00        3.25       0.94        0.06       0.13         -
 5/20/2000      12.50        1.94       0.50        0.06       0.25         -
 5/20/2000      15.00        1.06       0.25         -          -           -
 5/20/2000      17.50        0.44       0.25        0.13       0.13         -
 5/20/2000      20.00        0.13        -           -          -           -
 5/20/2000      22.50        0.09       0.06         -          -           -
 5/20/2000      25.00         -          -           -          -           -
 8/19/2000       5.00        0.50       0.50        0.50       0.75         -
 8/19/2000       7.50        0.50       0.50        0.50       0.50         -
 8/19/2000      10.00        3.13       1.31         -         0.25         -
 8/19/2000      12.50        2.38       0.69        0.13       0.19         -
 8/19/2000      15.00        1.75       0.50        0.13       0.31         -
 8/19/2000      17.50        0.94       0.25         -          -           -
 8/19/2000      20.00        0.75       0.31         -          -           -
 8/19/2000      22.50         -          -           -          -           -
11/18/2000       5.00        1.94       1.94        0.13       0.56         -
11/18/2000       7.50        0.19       0.19        0.19       0.50         -
11/18/2000      10.00        3.56       1.69        0.50       0.50         -
11/18/2000      12.50        2.06       0.81        0.13       0.25         -
11/18/2000      15.00        2.38       1.00        0.31       0.38         -
11/18/2000      17.50        1.63       0.75        0.13       0.25         -
 1/20/2001       7.50        0.19       0.19        0.19       0.41         -
 1/20/2001      10.00        0.44       0.44        0.44       0.50         -
 1/20/2001      12.50        2.50       0.75         -         0.25         -
 1/20/2001      15.00        1.94       0.63        0.19       0.31         -
 1/20/2001      17.50        1.31       0.56        0.06       0.13         -
 1/20/2001      20.00        1.22       0.41        0.22       0.25         -
 1/20/2001      25.00        0.63        -           -          -           -
 1/20/2001      30.00        0.25       0.13        0.13       0.16         -
 1/20/2001      35.00        0.44       0.38        0.19       0.19         -
 1/20/2001      40.00        0.19       0.13         -          -           -
 1/20/2001      45.00        0.13        -           -          -           -
 1/20/2001      50.00         -          -           -          -           -
 1/20/2001      55.00         -          -           -          -           -
 1/20/2001      60.00         -          -           -          -           -
 1/19/2002       7.50        0.50       0.50        0.50       0.75         -
 1/19/2002      10.00        0.25       0.25        0.25       0.50         -
 1/19/2002      12.50        3.75       2.00        0.63       0.63         -
 1/19/2002      15.00        2.25       1.25        0.13       0.25         -
 1/19/2002      17.50        1.25        -           -          -           -
 1/19/2002      20.00        1.88       1.38        0.31       0.38         -
 1/19/2002      25.00        0.94       0.13         -         0.13         -
 1/19/2002      30.00        1.13       0.44        0.31       0.38         -
 1/19/2002      35.00        0.69       0.19         -         0.13         -
 1/19/2002      40.00        0.75       0.31        0.13       0.13         -
 1/19/2002      45.00        0.47       0.16        0.03       0.03         -
 1/19/2002      50.00        0.31       0.13         -          -           -
 1/19/2002      55.00        0.25       0.13         -          -           -
 1/19/2002      60.00        0.25       0.13         -          -           -
                          TABLE C
      PUBLICLY-TRADED PUT OPTIONS ARTIFICIAL DEFLATION

Expiration   Exercise   4/28/99 -              4/3/00 -
  Date        Price      3/30/00    3/31/00    4/13/00     4/14/00    4/17/00 on
 4/22/2000       5.00         -          -           -          -           -
 4/22/2000       7.50        0.50       0.50        0.25       0.38         -
 4/22/2000      10.00        2.00       1.75        0.50       0.69         -
 4/22/2000      12.50        3.25       2.31         -         0.19         -
 4/22/2000      15.00        2.88       0.75        0.25       0.75         -
 4/22/2000      17.50        4.69       2.50        0.13       0.63         -
 4/22/2000      20.00        4.75       2.50        0.63       0.88         -
 5/20/2000       5.00         -          -           -          -           -
 5/20/2000       7.50        0.13       0.13        0.13       0.31         -
 5/20/2000      10.00        2.38       2.06        0.38       0.63         -
 5/20/2000      12.50        3.44       2.25        0.75       0.88         -
 5/20/2000      15.00        4.63       2.75        0.38       0.88         -
 5/20/2000      17.50        4.94       2.75        0.75       1.00         -
 5/20/2000      20.00        4.25       2.13        0.25       0.50         -
 5/20/2000      22.50        4.69       2.69        0.31       0.69         -
 5/20/2000      25.00        5.75       4.50        0.13       0.38         -
 8/19/2000       5.00        0.06       0.06        0.06       0.06         -
 8/19/2000       7.50        0.38       0.38        0.38       0.50         -
 8/19/2000      10.00        1.81       0.94        0.31       0.38         -
 8/19/2000      12.50        3.00       2.00        0.63       0.75         -
 8/19/2000      15.00        3.25       1.75        0.38       0.75         -
 8/19/2000      17.50        5.00       3.25        0.88       1.00         -
 8/19/2000      20.00        4.00       2.13        0.75       1.00         -
 8/19/2000      22.50         -          -           -          -           -
11/18/2000       5.00         -          -           -          -           -
11/18/2000       7.50        0.13       0.13        0.13       0.19         -
11/18/2000      10.00        1.13       0.50        0.13       0.25         -
11/18/2000      12.50        1.63       1.00        0.38       0.50         -
11/18/2000      15.00        2.81       1.56         -         0.38         -
11/18/2000      17.50        3.63       2.13        0.50       0.75         -
 1/20/2001       7.50         -          -           -         0.03         -
 1/20/2001      10.00         -          -           -          -           -
 1/20/2001      12.50        1.69       1.00        0.25       0.50         -
 1/20/2001      15.00        3.13       1.25         -          -           -
 1/20/2001      17.50        3.63       2.25        0.38       0.63         -
 1/20/2001      20.00        3.63       1.63        0.63       1.13         -
 1/20/2001      25.00        5.50       2.75        0.38       0.63         -
 1/20/2001      30.00        4.94       2.69        0.88       1.13         -
 1/20/2001      35.00        5.13       2.25        0.63       0.88         -
 1/20/2001      40.00        4.56       2.31         -         0.75         -
 1/20/2001      45.00        4.88       2.50        0.25       0.75         -
 1/20/2001      50.00        4.56       2.31        0.25       0.75         -
 1/20/2001      55.00        5.25       2.88        0.63       0.88         -
 1/20/2001      60.00        4.56       2.31        0.25       0.75         -
 1/19/2002       7.50        0.19       0.19        0.19       0.19         -
 1/19/2002      10.00        0.38       0.38        0.38       0.50         -
 1/19/2002      12.50        1.38       0.50        0.25       0.50         -
 1/19/2002      15.00        2.19       1.00         -         0.13         -
 1/19/2002      17.50        2.63       1.50         -          -           -
 1/19/2002      20.00        3.06       2.00        0.38       0.75         -
 1/19/2002      25.00        5.00       2.75        0.50       0.75         -
 1/19/2002      30.00        3.88       1.75        0.63       0.88         -
 1/19/2002      35.00        4.88       2.88        0.38       0.75         -
 1/19/2002      40.00        5.00       2.75        0.38       0.75         -
 1/19/2002      45.00        5.25       2.88        0.63       0.88         -
 1/19/2002      50.00        5.25       2.88        0.63       0.88         -
 1/19/2002      55.00        5.00       2.75        0.38       0.75         -
 1/19/2002      60.00        4.38       2.13        0.63       0.88         -