Exhibit 4.31.14
THIRD AMENDMENT TO FIVE-YEAR CREDIT AGREEMENT
THIS THIRD AMENDMENT TO FIVE-YEAR CREDIT AGREEMENT, dated as of March
20, 2002 (this "Amendment"), is made by and among Conseco, Inc., an Indiana
corporation (the "Company"), the various financial institutions signatory hereto
(the "Banks") and Bank of America, N.A., individually and as agent for the Banks
(the "Agent").
W I T N E S S E T H:
WHEREAS, the Company, the Banks and the Agent are party to that certain
Five-Year Credit Agreement, dated as of September 25, 1998 (as heretofore
amended, the "Credit Agreement") and the Loan Documents referred to in the
Credit Agreement;
WHEREAS, the Company and the Banks have agreed to amend the Credit
Agreement on the terms and conditions herein set forth;
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Definitions. Capitalized terms used but not otherwise defined herein
shall have the meanings assigned to such terms in the Credit Agreement (as
amended hereby).
2. Amendments to Credit Agreement. The Credit Agreement is hereby
amended, effective on the date this Amendment becomes effective in accordance
with Section 3 hereof, as follows:
2.1 Appendix. The Appendix to the Credit Agreement is hereby
amended as set forth in Schedule I attached hereto.
2.2 Definition of Applicable Offshore Rate Margin. The definition
of "Applicable Offshore Rate Margin" in Section 1.01 is hereby amended by
deleting the reference to "2.50%" and replacing it with "3.25%."
2.3 Definition of Scheduled Maturity Date. The definition of
"Scheduled Maturity Date" in Section 1.01 is hereby amended by deleting the
references to "$150,000,000" and "$300,000,000" in clause (c) and replacing them
with "$200,000,000" and "$500,000,000" respectively.
2.4 Interest. Sections 2.12(a) and (c) of the Credit Agreement
are hereby amended to state in their entirety as follows:
(i) "(a) Each Committed Loan shall bear interest on the
outstanding principal amount thereof from the applicable Borrowing Date
at a rate per annum equal to the Offshore Rate plus the Applicable
Offshore Rate Margin or the Base Rate plus 2.25%, as the case may be
(and subject to the Company's right to convert to other Types of Loans
under Section 2.04)."
(ii) "(c) Notwithstanding Section 2.04 or subsection (a) of this
Section 2.12, upon the occurrence and during the continuance of an Event
of Default under Section 5.01(a) of the Appendix, the Company agrees to
pay interest on such unpaid principal or other amount, from the date
such amount becomes due until the date such amount is paid in full, and
after as well as before any entry of judgment thereon to the extent
permitted by law, payable on demand, at a fluctuating rate per annum
equal to the Base Rate plus 3.75% (the "Default Rate"); provided,
however, that the Company agrees to pay interest on the principal amount
of all outstanding Obligations at the Default Rate on any date on which
an Event of Default continues under Section 5.01(c) of the Appendix with
respect to the Company's failure to perform or observe any term,
covenant or agreement contained in Section 4.13, 4.14, 4.15, 4.16, or
4.17 of the Appendix as well as under Section 5.01(a) of the Appendix."
2.5 Assignments. Section 10.08 of the Credit Agreement is hereby
amended by deleting the number "$10,000,000" and substituting the number
"$5,000,000" therefor.
3. Conditions to Effectiveness of this Amendment. This Amendment
shall become effective upon the satisfaction of the following conditions:
3.1 Executed Amendment. Receipt by the Agent of duly executed
counterparts of this Amendment from the Company and the Required Banks.
3.2 Resolutions; Incumbency. Receipt by the Agent of the
following documents:
(i) copies of the resolutions of the board of directors of the
Company authorizing the transactions contemplated hereby, certified as
of the date hereof by the Secretary or an Assistant Secretary of the
Company; and
(ii) a certificate of the Secretary or an Assistant Secretary of
the Company, dated as of the date hereof, certifying the names and true
signatures of the officers of the Company authorized to execute, deliver
and perform, as applicable, this Amendment, and all other documents to
be delivered by the Company hereunder.
3.3 CIHC Guaranty. A Reaffirmation of the CIHC Guaranty in the
form attached as Exhibit A.
3.4 Resolutions; Incumbency - CIHC.
(i) Copies of the resolutions of the board of directors of CIHC
authorizing the transactions contemplated hereby, certified by the
Secretary or an Assistant Secretary of CIHC; and
(ii) A certificate of the Secretary or Assistant Secretary of
CIHC certifying the names and true signatures of the officers of CIHC
authorized to execute, deliver and perform, as applicable, all documents
to be delivered by it thereunder.
3.5 Organizational Documents; Good Standing. Receipt by the Agent
of (i) a certificate of the Secretary or an Assistant Secretary of the Company
and CIHC, dated as of the date hereof, certifying as to the form of the articles
2
of incorporation and bylaws of the Company and CIHC and (ii) a good standing
certificate of each of the Company and CIHC from its state of incorporation.
3.6 D & O Facilities. Copies of (i) the First Stage Amendment and
Agreement Re: 1997 D&O Loans, dated as of ▇▇▇▇▇ ▇▇, ▇▇▇▇, (▇▇) the First Stage
Amendment and Agreement Re: Non-Refinanced 1998 D&O Loans, dated as of ▇▇▇▇▇ ▇▇,
▇▇▇▇, (▇▇▇) the First Stage Amendment and Agreement Re: 1998 D&O Loans, dated as
of March 20, 2002, and (iv) the First Stage Amendment and Agreement Re: 1999 D&O
Loans dated as of March 20, 2002, each substantially in the form of Exhibit B
attached hereto.
3.7 Opinion of Counsel. (i) Receipt by the Agent of the opinion
of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, counsel of the Company and CIHC, substantially in the form
of Exhibit C, and addressing such other legal maters as the Administrative Agent
may reasonably require; and
(ii) Receipt by the Agent of the opinion of Weil, Gotshal &
▇▇▇▇▇▇ LLP, outside counsel to the Company and CIHC, substantially in
the form of Exhibit D, and addressing such other legal matters as the
Administrative Agent may reasonably require.
3.8 AM Best. Receipt by the Agent of a letter to the Banks
evidencing the Company's understanding if scheduled payments are not made on or
before the date that such scheduled payments become due and payable in respect
of all Trust Preferred Securities (as such term is defined in the Appendix), a
downgrade from A.M. Best A- Status (as such term is defined in the Appendix)
would occur.
3.9 Fee. Receipt by the Agent for the benefit of the Banks
executing and delivering this amendment on or before March 20, 2002, of an
amendment fee in an amount equal to 0.50% of the outstanding principal amount of
the Loans by such Banks under the Credit Agreement on the effective date hereof
after giving effect to the prepayments received on the effective date hereof.
3.10 Certificate. Receipt by the Agent of a certificate signed by
a Responsible Officer, dated as of the date hereof, stating that:
(i) no Default or Event of Default will exist after giving effect
to this Amendment; and
(ii) since September 30, 2001, there has been no Material Adverse
Effect (except for changes in or adverse effects upon, the business,
properties, condition (financial or otherwise) of the Company and its
Subsidiaries as disclosed in press releases, public filings or otherwise
in writing to the Agent).
3.11 Payment of Fees. Evidence of payment by the Company of all
accrued and unpaid fees, costs and expenses related to this Amendment, submitted
in detail prior to closing, to the extent then due and payable on the closing
date, together with Attorney Costs of the Agent to the extent invoiced prior to
or on the closing date, plus such additional amounts of reasonable Attorney
Costs as shall constitute the Agent's reasonable estimate of Attorney Costs
incurred or to be incurred by it through the closing proceedings (provided that
such estimate shall not thereafter preclude final settling of accounts between
the Company and the Agent).
3
3.12 Hiring of Ernst and Young LLP. The Banks, with the approval
of the Company, shall have hired Ernst & Young LLP as a financial advisor to
review the financial condition and performance of the Company and its
Subsidiaries, and the Agent shall be satisfied as to the duration and scope of
such review.
3.13 Exchange Offer. The Exchange Offer (as defined in the
Appendix) and the disclosures made in connection therewith (including, without
limitation, pursuant to the Offering Memorandum (as defined in the Appendix))
shall be on terms and conditions satisfactory to the Agent.
3.14 Miscellaneous. Receipt by the Agent of such other documents,
certificates, instruments or opinions as may reasonably be requested by the
Agent or the Banks.
4. Certain Representations and Warranties by the Company. In
order to induce the Banks and the Agent to enter into this Amendment, the
Company represents and warrants to the Banks and the Agent that:
4.1 Authority. The Company has the right, power and capacity and
has been duly authorized and empowered by all requisite corporate and required
shareholder action, if any, to enter into, execute, deliver and perform this
Amendment.
4.2 Validity. This Amendment has been duly and validly executed
and delivered by the Company and constitutes its legal, valid and binding
obligation, enforceable against the Company in accordance with its terms, except
as enforcement thereof may be subject to the effect of any applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally and general principles of equity (regardless of
whether such enforcement is sought in a proceeding in equity or at law or
otherwise).
4.3 No Conflicts. The Company's execution, delivery and
performance of this Amendment do not and will not violate (i) its certificate or
articles of incorporation or by-laws, (ii) any law, rule, regulation, order,
writ, judgment, decree or award applicable to the Company or (iii) any
contractual obligation to which the Company is a party or to which the Company
or any of its properties are subject, except to the extent that any violations
as set forth in clauses (ii) or (iii) would not result in a Material Adverse
Effect.
4.4 Approvals. No authorization or approval or other action by,
and no notice to or filing or registration with, any Governmental Authority or
regulatory body (other than those which have been obtained and are in force and
effect) is required in connection with the Company's execution, delivery and
performance of this Amendment.
4.5 No Defaults. No Default or Event of Default exists after
giving effect to this Amendment.
5. Miscellaneous. The parties hereto hereby further agree as
follows:
5.1 Further Assurances. Each of the parties hereto hereby agrees
to do such further acts and things and to execute, deliver and acknowledge such
4
additional agreements, powers and instruments as any other party hereto may
reasonably request which are required to carry into effect the purposes of this
Amendment and the Credit Agreement, as amended hereby.
5.2 Payment of Costs and Expenses. The Company agrees to pay on
demand all expenses of the Agent (including the fees and out-of-pocket expenses
of counsel to the Agent) in connection with the negotiation, preparation,
execution and delivery of this Amendment.
5.3 Governing Law. THIS AMENDMENT SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF ILLINOIS.
5.4 Counterparts. This Amendment may be executed in one or more
counterparts, each of which, when executed and delivered, shall be deemed to be
an original and all of which counterparts, taken together, shall constitute but
one and the same document with the same force and effect as if the signatures of
all of the parties were on a single counterpart, and it shall not be necessary
in making proof of this Amendment to produce more than one such counterpart.
5.5 Headings. Headings used in this Amendment are for convenience
of reference only and shall not affect the construction of this Amendment.
5.6 No Release. Notwithstanding Section 5.6 of the First
Amendment to Five-Year Credit Agreement, dated September 22, 2000 (the "First
Amendment") and Section 5.14 of the CIHC Guaranty, the CIHC Guaranty shall not
be terminated and CIHC shall not be released from all of its obligations
thereunder on the first date after the Near-Term Facilities Termination Date on
which the Company has Investment Grade Ratings status, regardless of whether any
Default or Event of Default shall have occurred or not occurred and be
continuing or not continuing on such date. Section 5.6 of the First Amendment
and Section 5.14 of the CIHC Guaranty are hereby deleted.
5
IN WITNESS WHEREOF, this Amendment has been duly executed and
delivered as of the date first above written.
CONSECO, INC.
By:/s/▇▇▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Senior Vice President,
Chief Accounting Officer
and Treasurer
AG CAPITAL FUNDING PARTNERS LP
By:
--------------------------------------
Name:
Title:
AMMC CDO I LIMITED by American Money
Management Corporation, as
Collateral Manager
By:/s/▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
AMMC CDO II LTD by American Money
Management Corporation, as
Collateral Manager
By:/s/▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
BANK OF AMERICA, N.A., as Agent and as a
Bank
By:/s/▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Managing Director
BANK OF AMERICA TRADE
By:/s/▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Assistant Vice President
BANK OF NEW YORK
By:/s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
THE BANK OF TOKYO-MITSUBISHI, LTD.,
NEW YORK BRANCH
By:/s/▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
--------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇
Title: Vice President and Authorized
Signatory
BANKERS TRUST COMPANY
By:/s/▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇▇
Title: Attorney-in-Fact
BEAR ▇▇▇▇▇▇▇ & CO INC
By:
--------------------------------------
Name:
Title:
CIBC INC.
By:/s/▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Executive Director, CIBC World
Markets Corp., as Agent
CERES II FINANCE LTD
By:/s/▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Authorized Signatory
COMERICA BANK
By:/s/▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Assistant Vice President
CREDIT SUISSE FIRST BOSTON INC
By:/s/▇▇▇ ▇▇▇▇▇
--------------------------------------
Name: ▇▇▇ ▇▇▇▇▇
Title: Director
By:/s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Directors
DK ACQUISITION PARTNERS
By:/s/▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Partner
DEUTSCHE BANK AG, NEW YORK AND/OR
CAYMAN ISLAND BRANCHES
By:/s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
--------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Title: Director
By:/s/▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Managing Director
EVENT PARTNERS DEBT ACQUISITION LLC
By:
--------------------------------------
Name:
Title:
FIRST UNION NATIONAL BANK
By:/s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Title: Senior Vice President
FLEET NATIONAL BANK
By:/s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Senior Vice President
FRANKLIN CLO I LIMITED
By:/s/▇▇▇▇▇▇▇ ▇'▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇ ▇'▇▇▇▇▇▇▇
Title: Vice President
FRANKLIN CLO II, LIMITED
By:/s/▇▇▇▇▇▇▇ ▇'▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇ ▇'▇▇▇▇▇▇▇
Title: Vice President
FRANKLIN FLOATING RATE TRUST
By:/s/▇▇▇▇▇▇▇ ▇'▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇ ▇'▇▇▇▇▇▇▇
Title: Vice President
▇▇▇▇▇▇▇ ▇▇▇▇▇ CREDIT PARTNERS LP
By:
-------------------------------------
Name:
Title:
HARBOURVIEW CDO II LTD
By:
-------------------------------------
Name:
Title:
JPMORGAN CHASE BANK
By:/s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
▇.▇. ▇▇▇▇▇▇ SECURITIES INC
By:/s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Managing Director
KEYBANK NA
By:/s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice President
KZH CNC LLC
By:/s/▇▇▇▇▇ ▇▇▇▇▇▇-▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇-▇▇▇▇▇▇
Title: Authorized Agent
KZH RIVERSIDE LLC
By:/s/▇▇▇▇▇ ▇▇▇▇▇▇-▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇-▇▇▇▇▇▇
Title: Authorized Agent
LIBERTY-▇▇▇▇▇ ▇▇▇ ADVISOR
FLOATING RATE ADVANTAGE
FUND by ▇▇▇▇▇ ▇▇▇ & ▇▇▇▇▇▇▇
Incorporated as Advisor
By:/s/▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President
MARINER LDC
By:
-------------------------------------
Name:
Title:
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇
By:
-------------------------------------
Name:
Title:
NATIONAL CITY BANK OF INDIANA
By:/s/▇▇▇▇▇▇ ▇. ▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President
NORTHWOODS CAPITAL LIMITED
By:
-------------------------------------
Name:
Title:
NORTHWOODS CAPITAL II LTD
By:
-------------------------------------
Name:
Title:
NORTHWOODS CAPITAL III LIMITED
By:
-------------------------------------
Name:
Title:
NUVEEN SENIOR INCOME FUND
By:
-------------------------------------
Name:
Title:
NORDDEUTSCHE LANDESBNK GIROZENTRALE
By:/s/▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
By:/s/▇▇▇▇▇ ▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇
Title: Vice President
OAKTREE CAPITAL MANAGMENT LLC
By:
-------------------------------------
Name:
Title:
▇▇▇▇▇▇▇▇▇▇▇ SENIOR FLOATING FUND
By:
-------------------------------------
Name:
Title:
SATELLITE SENIOR INCOME FUND LLC
By:
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Name:
Title:
SALOMON BROTHERS HOLDING COMPANY
By:
-------------------------------------
Name:
Title:
SILVER OAK CAPITAL LLC
By:
-------------------------------------
Name:
Title:
SOCIETE GENERALE
By:/s/▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Vice President
SRF TRADING INC
By:/s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Assistant Vice President
SRF 2000 LLC
By:/s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Assistant Vice President
▇▇▇▇▇ ▇▇▇ FLOATING RATE LIMITED
LIABILITY COMPANY
By:/s/▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President,
▇▇▇▇▇ ▇▇▇ & Farnham Incorporated,
as Advisor to the ▇▇▇▇▇ ▇▇▇
Floating Rate Limited Liability
Company
SUNTRUST BANK
By:
-------------------------------------
Name:
Title:
US BANK NA
By:/s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
▇▇▇▇▇ FARGO BANK NA
By:/s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Senior Vice President
WINGED FOOT FUNDING TRUST
By:
-------------------------------------
Name:
Title:
Agreed to and Accepted by CIHC, INCORPORATED
By:/s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
---------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Title: Senior Vice President, Corporate Taxes
Schedule I
APPENDIX
AMENDMENT
AMENDMENT, dated as of March 20, 2002 (this "Amendment"), to the
Conseco, Inc. Appendix, dated as of September 22, 2000 (the "Appendix").
1. Definitions. Unless otherwise defined herein, terms defined in
the Appendix and used herein shall have the meanings given to them in the
Appendix.
Amendment to Section 1.01. Section 1.01 is hereby amended as
follows:
(i) (a) by deleting in its entirety the definition of "Cash
on Hand Target".
(b) by amending the definition of "Conseco Adjusted Earnings" as
follows:
(i) by deleting the term "non-cash" each time it appears in
clauses (f) and (g) thereof;
(ii) by deleting the phrase "(provided that the after tax
amounts described in clauses (f) and (g) shall not exceed in the
aggregate $500,000,000 for any Calculation Period ending on or before
September 30, 2001, and $50,000,000 for any Calculation Period ending
thereafter)" where it appears after clause (g) thereof and inserting in
lieu thereof the following:
"(provided that the after tax amounts described in clauses (f)
and (g) shall not exceed (i) more than $500,000,000 in the
aggregate accrued or incurred during Fiscal Year 2002 (provided
that no more than $50,000,000 (accrued or incurred during Fiscal
Year 2002) of such expenses, losses or other charges in the
aggregate may be in cash), and (ii) more than $50,000,000 in the
aggregate accrued or incurred for any Fiscal Year thereafter)";
and
(iii) by inserting the following sentence at the end
thereof:
"Notwithstanding the foregoing, Conseco Adjusted Earnings shall
exclude any income or gain, or expense, loss or charge, (x)
associated with Conseco's ownership of AT&T Wireless Stock, (y)
resulting from any impairment of the D&O Facilities or (z) set
forth on Annex II attached hereto, provided that the amounts set
forth for the fiscal periods on such Annex may be excluded in the
applicable Calculation Period prior to the date of the Amendment
as well as any Calculation Period after the date of the Amendment
that includes such fiscal period(s)."
I-1
(c) by amending the definition of "Conseco Finance Tangible Net
Worth" by deleting the text of clause (b) where it occurs in the definition
thereof and inserting in lieu thereof the following:
"(b) any charges specified in clause (f) or (g) of the
definition of Conseco Adjusted Earnings; provided that such
charges shall not be permitted to exceed $150,000,000 on an
after tax basis in the aggregate and no more than
$15,000,000 of such $150,000,000 of charges on an after-tax
basis may be in cash"
(d) by amending the definition of "Interest Coverage Ratio" by
inserting the following sentence at the end thereof:
"For purposes of determining the Interest Coverage Ratio,
the term "Conseco Available Cash Flow" shall exclude the
amount of (i) Net Proceeds received by Conseco in connection
with any Disposition of any right or interest of Conseco or
any of its Subsidiaries in the General Motors Building less
(ii) the statutory carrying value of Conseco and its
Subsidiaries in respect of the General Motors Building (the
amount of clause (i) less the amount of clause (ii), the "GM
Gain"); provided, that in connection with determining the
Interest Coverage Ratio for purposes of compliance with any
conditions precedent to an extension of the maturity date of
the $1.5 Billion Facility or any of the D&O Facilities, only
the first $250,000,000 of any such GM Gain may be included
in such determination."
(e) by amending the definition of "Relevant CIHC Guaranty" by
deleting the second sentence thereof.
(f) by deleting in its entirety the definition of "$144 Million
D&O Credit Agreement" and inserting in lieu thereof the following:
"$144 Million D&O Credit Agreement" means the Credit
Agreement, dated as of November 22, 2000, as amended,
supplemented or otherwise modified or refinanced, among the
individual borrowers parties thereto, the banks parties
thereto and JPMorgan Chase Bank as administrative agent
(relating to all of the then-existing loans under the $144
Million D&O Facility).
(g) by deleting in its entirety the definition of "$181 Million
D&O Credit Agreement" and inserting in lieu thereof the following:
"$181 Million D&O Credit Agreement" means collectively (i)
the Credit Agreement, dated as of August 21, 1998, among the
individual borrowers parties thereto, the banks parties
thereto and Bank of America, N.A., as administrative agent,
as amended, supplemented or otherwise modified or
refinanced, and (ii) the Credit Agreement, dated as of
November 22, 2000, as amended, supplemented or otherwise
modified or refinanced, (relating to certain but not all of
the then-existing loans under the $181 Million D&O Facility)
pursuant to which Bank of America, N.A. is the
administrative agent.
I-2
(h) by deleting in its entirety the definition of "$245 Million
D&O Credit Agreement" and inserting in lieu thereof the following:
"$245 Million D&O Credit Agreement" means the Credit
Agreement, dated as of November 22, 2000, as amended,
supplemented or otherwise modified or refinanced, among the
individual borrowers parties thereto, the banks parties
thereto and Bank of America, N.A., as administrative agent
(relating to all of the then-existing loans under the $245
Million D&O Facility).
(i) by adding thereto the following new definitions in the
appropriate alphabetical order:
"Amendment" means this Amendment, dated as of March 202002,
in respect of the Appendix.
"Amendment Effective Date" means the "Effective Date" as
defined in the Amendment.
"AT&T Wireless Stock" means 10,319,050 shares of AT&T
Wireless Services, Inc. common stock par value $.01 per
share.
"Exchange Offer" means the exchange offer pursuant to the
Offering Memorandum dated as of March 18, 2002, pursuant to
which Conseco offered to exchange Specified Existing Public
Debt for New Exchange Offer Public Debt in accordance with
the terms of such Offering Memorandum, any exchange offer in
connection with the registration of the New Exchange Offer
Public Debt with the Securities and Exchange Commission and
any exchange offer on terms substantially similar to the
foregoing exchange offers.
"General Motors Building" means the building located at ▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇.
"New Exchange Offer Public Debt" means the senior notes
issued pursuant to an Exchange Offer in exchange for
Specified Existing Public Debt or other New Exchange Offer
Public Debt.
"Specified Existing Public Debt" means collectively
Conseco's 8.5% Senior Notes due October 15, 2002, 6.4%
Senior Notes due February 10, 2003, 8.75% Senior Notes due
February 9, 2004, 6.8% Senior Notes due June 15, 2005, 9%
Senior Notes due October 15, 2006 and 10.75% Senior Notes
due June 15, 2008.
"Trigger Date" means (i) in the case of the sale of
Sufficient Assets, the Reduction Date and (ii) in the case
of any other Approved Strategic Alternative, the date such
Approved Strategic Alternative is approved by the Required
Banks.
I-3
2. Amendment to Section 1.03. Section 1.03 of the Appendix is
hereby amended by inserting at the end thereof a new Section 1.03(c):
"(c) For purposes of calculating any financial covenants or
related definitions hereunder, any charges taken to writeoff
goodwill to the extent required by the Financial Accounting
Standards Board of the American Institute of Certified
Public Accountants Statement No. 142 shall be excluded."
(a) Amendment to Section 2.01. (a) Section 2.01(a) of the
Appendix is hereby amended by deleting such Section in its entirety and
substituting in lieu thereof the following:
"(a) [Intentionally Omitted.]"
(b) Section 2.01(b) of the Appendix is hereby amended by deleting
such Section 2.01(b) in its entirety and substituting in lieu thereof the
following:
"(b) On the Amendment Effective Date and thereafter, within
three Business Days after Conseco or any of its Subsidiaries
receives any Available Net Proceeds, such Available Net
Proceeds shall be applied as follows: first, the first
$352,000,000 shall be retained by Conseco; second, the next
$313,000,000 shall be applied pro rata to the $1.5 Billion
Facility and the Specified D&O Facilties (in the manner
contemplated by Section 2.02(c)); third, following the
application of $313,000,000 pursuant to clause second above
and thereafter until the earlier of (i) December 31, 2003
and (ii) the application of an additional $250 million
pursuant to this clause, 50% per transaction of any
Available Net Proceeds shall be retained by Conseco and 50%
per transaction of any Available Net Proceeds shall be
applied pro rata to the $1.5 Billion Facility and the
Specified D&O Facilities (in the manner contemplated by
Section 2.02(c)); fourth, after the earlier of (i) December
31, 2003 and (ii) the application of an additional $250
million pursuant to clause third above, 25% per transaction
of any Available Net Proceeds shall be retained by Conseco
and 75% per transaction of any Available Net Proceeds shall
be applied pro rata to the $1.5 Billion Facility and the
Specified D&O Facilities (in the manner contemplated by
Section 2.02(c)); and fifth, after March 31, 2004, 50% per
transaction of any Available Net Proceeds shall be retained
by Conseco and 50% per transaction of any Available Net
Proceeds shall be applied pro rata to the $1.5 Billion
Facility and the Specified D&O Facilities (in the manner
contemplated by Section 2.02(c)); provided that in the event
that the Relevant Banks under the D&O Facilities agree to
grant Conseco an option to extend the date by which Conseco
is required to pay, purchase or cash collateralize in full
I-4
the D&O Facilities or the related Conseco Guaranty from
December 31, 2003 until March 31, 2005, the application of
Available Net Proceeds pursuant to this Section 2.01(b) to
the $1.5 Billion Facility and the D&O Facilities shall be as
follows: (i) in clause second above, after $50,000,000 of
Available Net Proceeds have been applied to the Specified
D&O Facilities, the remainder shall be applied pro rata to
the $1.5 Billion Facility and the D&O Facilities (in the
manner contemplated by Section 2.02(c)); and (ii) in clauses
third, fourth and fifth above, the references to the
Specified D&O Facilities shall be deemed to be references to
the D&O Facilities. Any Available Net Cash Proceeds referred
to in this paragraph as being available for retention by
Conseco (A) must, if received by a Subsidiary, be
distributed to Conseco for such purpose if such distribution
is not prohibited by law, rule or regulation or the ▇▇▇▇▇▇
Agreement and (B) may be used by Conseco for any purpose
permitted by this Appendix.
(c) Section 2.01(c) is hereby amended by deleting such Section in
its entirety and substituting in lieu thereof the following:
"(c) [Intentionally Omitted]."
(d) Amendment to Section 2.02. (a) Section 2.02(a) is hereby
amended by deleting such Section in its entirety and substituting in lieu
thereof the following:
"(a) [Intentionally Omitted]."
(e) Section 2.02(b) is hereby amended by deleting such Section in
its entirety and substituting in lieu thereof the following:
"(b) [Intentionally Omitted]."
(f) Section 2.02(c) is hereby amended by deleting such Section in
its entirety and substituting in lieu thereof the following:
"(c) Any application of Available Net Proceeds allocated to
the $1.5 Billion Facility and the Specified D&O Facilities
or the D&O Facilities, as applicable, pursuant to Section
2.01(b) (and any application of Net Proceeds pursuant to
clause (a)(ii) of the definition of "Exempt Waterfall
Amounts") shall be allocated ratably to each such Facility
based on the aggregate Exposure then outstanding under such
Facilities, and ratably to the Exposure of each Bank under
each such Facility. The Available Net Proceeds so allocated
to each Specified D&O Facility and D&O Facility, as
applicable, at the discretion of Conseco, shall be either
(i) deposited in a cash collateral account pursuant to the
applicable Cash Collateral Agreement or (ii) applied to
purchase or repay "Loans" made to the individual borrowers
pursuant to the applicable Specified D&O Facility or D&O
Facility, as applicable or (iii) applied to pay the related
Conseco Guaranty."
(g) Amendment to Article III. Article III of the Appendix is
hereby amended by adding at the end thereof the following new Sections 3.12 and
3.13:
"3.12. Hiring of Ernst & Young. Conseco hereby agrees to (i)
the hiring by the Banks of Ernst & Young LLP as a financial
advisor to review the financial condition and performance of
Conseco and its Subsidiaries, the duration and scope of such
review to be at the direction and under the control of
Conseco and the Agents (and Conseco agrees to use reasonable
best efforts to facilitate such review) and (ii) paying all
fees, costs and expenses incurred from time to time in
connection with such review promptly upon receipt of an
invoice for such services.
I-5
3.13. A.M. Best Rating Reduction Remedy. If on any date (the
"Reduction Date") the rating from A.M. Best Company is
reduced to less than B+ on Bankers Life and Casualty
Company, Conseco Annuity Assurance Company, Conseco Health
Insurance Company, Conseco Life Insurance Company or Conseco
Senior Health Insurance Company, Conseco shall be obligated
to retain an investment banker of national recognition (the
"Investment Banker") reasonably satisfactory to the Agents
to explore strategic alternatives ("Strategic Alternatives")
to repaying in full in cash all Obligations under the $1.5
Billion Facility and each of the D&O Facilities (or, in the
case of the D&O Facilities, cash collateralize such
Facilities), which Strategic Alternatives shall include
either (i) the sale of one or more of its Subsidiaries
("Sufficient Assets") the value of which will be sufficient
to repay in full in cash all such Obligations, (ii) such
other Strategic Alternative(s) approved by the Required
Banks or (iii) both the sale of Sufficient Assets and one or
more other Strategic Alternatives approved by the Required
Banks (clauses (i), (ii) or (iii), individually, an
"Approved Strategic Alternative"). At any time, the Required
Banks may amend, supplement or otherwise modify the
requirements of this Section 3.13, including amending the
terms and/or conditions of an Approved Strategic
Alternative, releasing Conseco from its obligations to
proceed with the sale of Sufficient Assets or otherwise.
Conseco and its Subsidiaries shall diligently pursue and
take material steps toward achieving each Approved Strategic
Alternative, including, to the extent applicable, the
preparation and distribution of offering materials with
respect to each Approved Strategic Alternative, facilitating
advisors of Conseco in making contact with potential
purchasers or other relevant parties in their due diligence
processes, using reasonable best efforts to prepare,
negotiate and execute transaction documents with respect
thereto and consummate such transactions.
Conseco shall provide the Agents with bi-weekly written reports
(in form and scope acceptable to the Agents), describing the status of its
progress in pursuing, and actions it has taken and is planning on taking toward
achieving each Approved Strategic Alternative. Without limiting the generality
of Conseco's obligations set forth above, Conseco shall have:
(A) Engaged the Investment Banker to explore Strategic
Alternatives no later than 30 days after the Reduction Date;
(B) Distributed offering materials, and provided copies thereof
to the Agents, with respect to any Approved Strategic Alternative, no later than
90 days after the Trigger Date;
(C) Used reasonable best efforts to receive written expressions
of interest, and provided copies thereof to the Agents, with respect to each
Approved Strategic Alternative, no later than 120 days after the Trigger Date;
(D) Used reasonable best efforts to sign the appropriate
transaction documents with respect to any Approved Strategic Alternative no
later than 180 days after the Trigger Date, unless the Required Banks have
agreed to extend such date; and
(E) Used reasonable best efforts to consummate any Approved
Strategic Alternative no later than 270 days after the Trigger Date, unless the
Required Banks have agreed to extend such date."
I-6
(h) Amendment to Section 4.01. Section 4.01 of the Appendix is
hereby amended by (i) deleting from Section 4.01(l) the word "and" where it
appears at the end of such Section 4.01, (ii) replacing in Section 4.01(m) the
"." where it appears at the end of such Section with a "; and" and (iii) adding
at the end thereof the following new subsection 4.01(n):
"(n) subordinated Contingent Obligations of CIHC in respect
of the New Exchange Offer Public Debt (the "Subordinated
CIHC Guaranty"), provided that (i) such Subordinated CIHC
Guaranty shall contain terms and conditions and shall be
subordinated to any and all Obligations under the $1.5
Billion Facility and each of the D&O Facilities, in each
case on terms and conditions satisfactory to the Agents and
(ii) the Exchange Offer and the disclosures made in
connection therewith (including, without limitation,
pursuant to the Offering Memorandum) shall be on terms and
conditions satisfactory to the Agents.
3. Amendment to Section 4.08. Section 4.08(c) of the Appendix is
hereby amended by replacing the number "$100,000,000" where it appears in
Sections 4.08(c)(i) and 4.08(c)(ii) thereof with the number "$50,000,000".
4. Amendment to Section 4.14. Section 4.14 of the Appendix is
hereby amended by deleting the table contained therein in its entirety and
inserting in lieu thereof the following table:
"Fiscal Quarter
Ending Ratio
--------------- -----
December 31, 2001 1.20 to 1.0
March 31, 2002 1.25 to 1.0
June 30, 2002 1.25 to 1.0
September 30, 2002 1.10 to 1.0
December 31, 2002 1.10 to 1.0
March 31, 2003 1.30 to 1.0
June 30, 2003 1.75 to 1.0
September 30, 2003 1.90 to 1.0
December 31, 2003 2.15 to 1.0
March 31, 2004 2.25 to 1.0
June 30, 2004 2.50 to 1.0
September 30, 2004 2.50 to 1.0
December 31, 2004 and thereafter 2.50 to 1.0"
5. Amendment to Section 4.15. Section 4.15 of the Appendix is
hereby amended by (i) deleting the parenthetical contained therein and (ii)
deleting the table contained therein in its entirety and inserting in lieu
thereof the following table:
I-7
"Fiscal Quarter
Ending Amount
--------------- ------
December 31, 2001 $1,600,000,000
March 31, 2002 $1,200,000,000
June 30, 2002 $1,200,000,000
September 30, 2002 $1,200,000,000
December 31, 2002 $1,300,000,000
March 31, 2003 $1,300,000,000
June 30, 2003 $1,350,000,000
September 30, 2003 $1,400,000,000
December 31, 2003 $1,400,000,000
March 31, 2004 $1,500,000,000
June 30, 2004 $1,500,000,000
September 30, 2004 $1,700,000,000
December 31, 2004 and thereafter $1,700,000,000"
6. Amendment to Section 4.16. Section 4.16 of the Appendix is
hereby amended by deleting such Section in its entirety and inserting in lieu
thereof the following:
"4.16. Conseco Finance Tangible Net Worth. Conseco shall not
permit Conseco Finance Tangible Net Worth as at the end of
any Fiscal Quarter set forth below to be less than the
relevant amount set forth below:
Fiscal Quarter
Ending Amount
-------------- ------
December 31, 2001 $1,200,000,000
March 31, 2002 $1,200,000,000
June 30, 2002 $1,200,000,000
September 30, 2002 $1,200,000,000
December 31, 2002 $1,200,000,000
March 31, 2003 $1,200,000,000
June 30, 2003 $1,200,000,000
September 30, 2003 $1,200,000,000
December 31, 2003 $1,300,000,000
March 31, 2004 $1,300,000,000
June 30, 2004 $1,300,000,000
September 30, 2004 $1,300,000,000
December 31, 2004 $1,300,000,000
March 31, 2005 and thereafter $1,600,000,000"
7. Amendment to Section 4.17. Section 4.17 is hereby amended by
replacing the percentage "200%" where it appears therein with the percentage
"250%".
8. Amendment to Section 5.01. Section 5.01(c) is hereby amended
by deleting the reference therein to "3.03(a), 4.01" and substituting in lieu
thereof a reference to "3.03(a), 3.12(i), 3.13(A), (B) or (E), 4.01".
I-8
ANNEX II
Consolidated Adjusted Earnings
Excluded Transactions
Conseco, Inc.
Analysis of Special Charges
Four Quarters Ended December 31,
2001
1Q01 2Q01 3Q01 4Q01 2001
--------------------------------------------------------------------------------
Employment-Related (600,000) 4,968,600 4,745,126 2,350,000 11,463,726
Exit Costs/Restructuring 20,709,158 1,047,338 791,676 3,441,534 25,989,706
Advisory Fees 86,275 2,044,264 1,512,020 144,034 3,786,593
Legal Fees 4,382,435 3,100,000 - 26,748,986 34,231,421
Loss on Disposition of Asset 8,624,576 2,400,000 - - 11,024,576
Outsourcing - 2,454,000 4,372,000 3,798,000 10,624,000
Miscellaneous 401,045 178,636 124,516 (2,539,550) (1,835,353)
Amort. of deferred sales - - 3,176,576 - 3,176,576
Valuation Adjustments 6,000,000 - - (2,500,000) 3,500,000
--------------------------------------------------------------------------------
39,603,490 16,192,838 14,721,914 31,443,004 101,961,246
Less Cash Special Charges 46,475 (6,467,182) (5,852,042) - (12,272,749)
Cap on Special Charge Basket - - - (12,115,401) (12,115,401)
--------------------------------------------------------------------------------
Sub-total - Accrued Special Charges 39,649,965 9,725,656 8,869,872 19,327,603 77,573,096
Income Taxes on Accrued Special
Charges (14,300,000) (3,403,980) (3,104,455) (6,764,661) (27,573,096)
--------------------------------------------------------------------------------
Total Conseco, Inc. and
Subsidiaries Special Charges After
Tax 25,349,965 6,321,676 5,765,417 1,562,942 50,000,000
================================================================================
I-9
Exhibit A
Form of Reaffirmation
March ___, 2002
Bank of America, N.A., as Administrative Agent
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ________________
Re: Third Amendment to Five Year Credit Agreement, dated March
20, 2002 (the "Amendment"), among Conseco, Inc. ("Conseco"),
the financial institutions party thereto (collectively, the
"Banks"), Bank of America, N.A., as Agent (the "Agent") and
CIHC, Incorporated ("CIHC")
Ladies and Gentlemen:
Reference is made to the Amendment. Capitalized terms used herein,
unless otherwise defined herein, shall have the meaning assigned thereto in the
Amendment.
This letter is intended to constitute the reaffirmation (this
"Reaffirmation") of specified documents referenced in the Amendment, and, as
such, is being delivered to satisfy the condition of Section 3.3 of the
Amendment, which requires a reaffirmation of the CIHC Guaranty as a condition to
the effectiveness of the Amendment. This letter is for the benefit of the Agent
and the Banks.
CIHC hereby reaffirms the CIHC Guaranty in each and every respect,
including, without limitation, the validity of any and all of its obligations
under the CIHC Guaranty including, without limitation, regardless of:
(a) any defense any Conseco has, may have, or may otherwise assert
with respect to his, her, or its liability for any loans or otherwise with
respect to any other obligation Conseco may have under the Five-Year Credit
Agreement, dated as of September 25, 1998, as amended, among Conseco, the
Banks and the Administrative Agent (the "Credit Agreement"), or any Loan
Document relating thereto, including, without limitation, any defense
asserted or that might be asserted by any such borrower as arising from:
(i) the execution, delivery and performance or non-performance by
any party under of the D&O Facilities, or
(ii) the execution, delivery, and performance or non-performance
by any party under the Credit Agreement,
(b) any past, present, or future exercise or non-exercise by the Agent
of any right, power and/or remedy against Conseco under the Credit
A-1
Agreement (and/ or his, her, or its property), any Cash Collateral Deposits
(as such term is defined in the September 22, 2000 Agreement), or CIHC
(and/or its property).
Furthermore, CIHC hereby (a) confirms that it has requested the Agent
and the Banks to enter into the Amendment and (b) acknowledges that the Agent
and the Banks would not enter into the Amendment in the absence of its
reaffirmation of the CIHC Guaranty and that the Agent and the Banks are thus
relying upon such reaffirmation.
The undersigned represents and warrants that he or she has been
properly authorized to execute and deliver this Reaffirmation on behalf of CIHC.
Finally, the undersigned acknowledge that each of the Agent, the
Banks, and their respective successors and assigns shall be entitled to rely
upon this Reaffirmation and that this Reaffirmation is governed by Illinois law.
[signature follows]
A-2
Very truly yours,
CIHC, INCORPORATED
By:
-------------------------------------
Name:
Title:
A-3
Exhibit B
Form of First Stage Amendment and Agreement
Re: 199[x] D&O Loans
THIS FIRST STAGE AMENDMENT AND AGREEMENT, dated as of March ___, 2002
(this "Agreement"), among Conseco, Inc. ("Conseco"), CDOC, Inc. ("CDOC"), CIHC,
Incorporated ("CIHC"), Bank of America, N.A., as administrative agent (in such
capacity, the "Administrative Agent"), as Collateral Agent (in such capacity,
the "Collateral Agent") and as Depositary Bank (in such capacity, the
"Depositary Bank"), the various financial institutions parties hereto (each a
"Bank" and collectively, the "Banks").
W I T N E S S E T H:
WHEREAS, Conseco, the Banks and the Administrative Agent are parties to
that certain Agreement, dated as of September 22, 2000, relating to the 199[x]
Director and Officer Loan Credit Agreement (the "September 22, 2000 Agreement");
WHEREAS, Conseco has requested that the Administrative Agent and the
Banks amend the September 22, 2000 Agreement as more fully described herein;
WHEREAS, CDOC, the Collateral Agent and the Depositary Bank are parties
to that certain Amended and Restated Cash Collateral Pledge Agreement, dated as
of November 22, 2000 (the "Cash Collateral Agreement");
WHEREAS, CDOC has requested that the Administrative Agent and the Banks
amend the Cash Collateral Agreement as more fully described herein;
WHEREAS, Conseco, pursuant to a Guaranty, dated as of _________
___, _____, (the "Conseco Guaranty") has guaranteed the obligations of the
borrowers under the Credit Agreement, dated as of _________ ___, _____,
among the persons listed on the signature pages thereto as Borrowers, the Banks,
and the Administrative Agent, [relating to the refinancing of certain loans
under that certain [Amended and Restated] Credit Agreement, dated as of ______
___, 199[x]] (the "Credit Agreement");
WHEREAS, Conseco has requested that the Administrative Agent and the
Banks amend the Conseco Guaranty as more fully described herein;
WHEREAS, CIHC, pursuant to a Guaranty and Subordination Agreement, dated
as of ______ 22, 2000 (the "CIHC Guaranty"), has, among other things,
guaranteed the obligations Conseco under the Conseco Guaranty;
B-1
WHEREAS, CIHC has requested that the Administrative Agent and the Banks
amend the CIHC Guaranty as more fully described herein;
WHEREAS, Articles II, III and IV to the Appendix to that certain
Five-Year Credit Agreement, dated as of September 25, 1998, as amended (the
"Five-Year Credit Agreement"), was incorporated by reference into the September
22, 2000 Agreement [and Articles II, III and IV were incorporated by reference
into the Conseco Guaranty];
WHEREAS, the parties to the Five-Year Credit Agreement now wish to amend
the Appendix and the parties hereto wish to consent to the amendment of the
Appendix; and
WHEREAS, Conseco will agree to pay certain fees as more fully described
below;
NOW, THEREFORE, in consideration of the mutual promises herein contained
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
Section 1. DEFINITIONS. Capitalized terms used and not otherwise
defined in this Agreement shall have the meanings assigned thereto in the Credit
Agreement. As used herein, the following terms shall have the following
meanings:
"A.M. Best A- Status" shall have the meaning set forth in Section 1.01
of the Appendix.
"Agreement Fee" shall have the meaning set forth in Section 7.1(a)
hereof.
"Appendix" shall have the meaning set forth in Section 6.1 hereof.
"Appendix Amendment" shall have the meaning set forth in Section 6.1
hereof.
"D&O Facilities" shall have the meaning set forth in Section 1.01 of the
Appendix.
"Effective Date" shall have the meaning set forth in Section 8 hereof.
"Exchange Offer" shall have the meaning set forth in Section 1.01 of the
Appendix.
"Fees" shall have the meaning set forth in Section 7.1 hereof.
"Specified D&O Facilities" shall have the meaning set forth in Section
1.01 of the Appendix.
"Trust Preferred Securities" shall have the meaning set forth in Section
1.01 of the Appendix.
Section 2. AMENDMENTS TO SEPTEMBER 22, 2000 AGREEMENT.
2.1 Section 1.1 of the September 22, 2000 Agreement is hereby amended as
follows:
(a) The definition of "CDOC" is hereby added to Section 1.1 of
the September 22, 2000 Agreement in its proper alphabetical order and
reads as follows:
"CDOC" shall mean CDOC, Inc., a Delaware corporation.
(b) The definition of "Required Banks" is hereby added to Section
1.1 of the September 22, 2000 Agreement in its proper alphabetical order
and reads as follows:
B-2
"Required Banks" shall have (a) with respect to the Loans,
the meaning assigned thereto in the Loan Documents and (b)
with respect to the New Loans, the meaning assigned thereto
in the New Loan Documents.
(c) [The definition of "Regulation U" is hereby added to Section
1.1 of the September 22, 2000 Agreement in its proper alphabetical order
and reads as follows:
"Regulation U" shall have the meaning set forth in the
Existing Guaranty.]
2.2 [Section 3 of the September 22, 2000 Agreement is hereby amended by:
(a) deleting "No Default Acknowledgment" appearing therein and
substituting in lieu thereof "No Default Acknowledgments";
(b) inserting "(a)" immediately prior to the first sentence of
such section; and
(c) inserting a new clause (b) to read as follows:
"(b) The Administrative Agent and the Banks hereby
acknowledge that the Guarantor will not be in default of
Section 3.4 or Section 4.3 of the Existing Guaranty (and
CIHC will not be in default of the CIHC Guaranty) if the
Guarantor, in furtherance of its rights set forth in Section
5(e) of this Agreement in respect of the Existing Loans,
takes possession of any Borrower's "margin stock" (as
defined in Regulation U) so long as Guarantor complies with
the provisions of Regulation U in connection therewith."]
2.3 The following sentence is hereby added to the end of Section 5(a) of
the September 22, 2000 Agreement to read as follows: "For purposes of this
Section 5(a), in making any calculation to determine Cash Collateral Deposits
required to be made or held, such required amounts will be reduced by the amount
of any application of cash collateral under Section 5(e) hereof."
2.4 Section 5(e) is hereby added to the September 22, 2000 Agreement to
read as follows:
"(e) The Guarantor may, at its option, direct the
Administrative Agent to apply the cash collateral provided
by CDOC in respect of the Specified D&O Facilities as
follows: (i) to the payment of the Specified D&O Facilities
(or to all the D&O Facilities, as applicable under Article
II of the Appendix), pro rata as to the Specified D&O
Facilities (or to all the D&O Facilities, as applicable
under Article II of the Appendix), but such allocation
thereof need not be pro rata as to the underlying borrowers;
(ii) to the payment under the Existing Guaranty or the New
Conseco Guaranty of the Specified D&O Facilities (or to all
the D&O Facilities, as applicable under Article II of the
Appendix), pro rata as to the Specified D&O Facilities (or
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to all the D&O Facilities, as applicable under Article II of
the Appendix), but such allocation thereof need not be pro
rata as to the underlying borrowers or (iii) to the
Guarantor's purchase of Borrowers' loans, subject to
intercreditor rights satisfactory to the Required Banks and
the Guarantor, provided that the Guarantor may only purchase
an individual Borrower's loans if the Guarantor
simultaneously purchases all loans under the D&O Facilities
of such Borrower. To the extent the Guarantor purchases an
individual Borrower's loans pursuant to clause (iii) of the
preceding sentence, each Bank hereby consents to the
Administrative Agent (in its sole discretion) entering into
an amendment of the Credit Agreement with such Borrower
subsequent to the Effective Date which (x) amends the
definition of "Eligible Assignee" in the New Loan Documents
to include the Guarantor and (y) provides for any other
amendments of any other provisions of the New Loan Documents
necessary to provide that the purchase of such Borrower's
loans may be non-pro-rata as to the assigning Bank and the
other underlying Borrowers."
2.5 [Section 5(f) is hereby added to the September 22, 2000 Agreement to
read as follows:
"(c) If for any reason the Guarantor believes that any
payment made by it pursuant to Section 5(e) of this
Agreement in respect of the Existing Loans would not be
subject to subrogation rights under Section 2.6 of the
Existing Guaranty, the Guarantor and the Required Banks in
their sole discretion, may agree to an alternative procedure
to preserve substantially equivalent economic rights to the
Guarantor and substantially equivalent economic results for
the Banks. Without limiting the foregoing, if the Guarantor
is paying all of the Existing Loans of a particular
Borrower, the Banks will assign their rights in respect of
said Existing Loans to the Guarantor, subject to
intercreditor rights satisfactory to the Required Banks and
the Guarantor."]
Section 3. AMENDMENTS TO CASH COLLATERAL AGREEMENT. The following
sentence shall be added at the end of Section 4.5 of the Cash Collateral
Agreement: "The Grantor shall have the right to make withdrawals to the extent
such withdrawals are simultaneously applied as set forth in Section 5(e) of the
Agreements Re: Specified D&O Facilities."
Section 4. [AMENDMENTS TO CONSECO GUARANTY.
4.1 Section 2.6 of the Conseco Guaranty is hereby amended by the
addition of the following at the end of such section:
"If for any reason the Guarantor believes that any payment
made by it of the Guaranteed Obligations would not be
subject to subrogation rights under this Section 2.6, the
Guarantor and the Required Banks in their sole discretion,
may agree to an alternative procedure to preserve
substantially equivalent rights to the Guarantor and
substantially equivalent economic results for the Banks.
Without limiting the foregoing, if the Guarantor is paying
all the Guaranteed Obligations of a participant Borrower,
the Banks will assign their rights in respect of said
Guaranteed Obligations to the Guarantor, subject to
intercreditor rights satisfactory to the Required Banks and
the Guarantor."
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4.2 Section 3.4 of the Conseco Guaranty is hereby amended and restated
in its entirety to read as follows:
"SECTION 3.4. Margin Regulations.
(a) None of the transactions contemplated hereunder or in
connection herewith will in any way violate, contravene or
conflict with any of the provisions of Regulation U;
(b) None of the obligations of any Borrower to Guarantor is
or will be directly or indirectly secured by "margin stock" (as
defined in Regulation U) unless the Guarantor complies with the
provisions of Regulation U in connection therewith;
(c) Neither Guarantor nor any third party acting on behalf
of Guarantor has taken or will take possession of any Borrower's
"margin stock" to secure, directly or indirectly, any of the
Guaranteed Obligations of such Borrower or the obligations of
Guarantor under this Guaranty unless Guarantor complies with the
provisions of Regulation U in connection therewith;
(d) Guarantor does not and will not have any right to
prohibit any Borrower from selling, pledging, encumbering or
otherwise disposing of any margin stock owned by such Borrower so
long as this Guaranty is in effect or any of the Guaranteed
Obligations of such Borrower or the obligations of Guarantor
under this Guaranty remain outstanding unless Guarantor complies
with the provisions of Regulation U in connection therewith;
(e) None of the Borrowers have granted or will grant
Guarantor or any third party acting on behalf of Guarantor the
right to accelerate repayment of any of the Guaranteed
Obligations of such Borrower if any of the margin stock owned by
such Borrower is sold by such Borrower or otherwise unless
Guarantor complies with the provisions of Regulation U in
connection therewith; and
(f) There is no agreement or other arrangement between any
Borrower and Guarantor or any third party acting on behalf of
Guarantor (and no such agreement or arrangement shall be entered
into so long as this Guaranty is in effect or any of the
Guaranteed Obligations of such Borrower or the obligations of
Guarantor under this Guaranty remain outstanding) under which the
margin stock of such Borrower would be made more readily
available as security to Guarantor than to other creditors of
such Borrower unless Guarantor complies with the provisions of
Regulation U in connection therewith."
4.3 Section 4.3 of the Conseco Guaranty is hereby amended and restated
in its entirety to read as follows:
"SECTION 4.3. Limitation on Additional Purpose Credit.
Notwithstanding any other provision of this Guaranty, the Credit
Agreement or the Revolving Credit Agreement to the
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contrary, Guarantor will not, and will not permit any of its
Wholly-Owned Subsidiaries and/or Significant Subsidiaries to
incur or assume any Indebtedness which constitutes "purpose
credit" secured "directly or indirectly" (as defined in
Regulation U) by Margin Stock unless Guarantor complies with the
provisions of Regulation U."]
Section 5. AMENDMENT TO CIHC GUARANTY. Section 5.14 of the CIHC Guaranty
is hereby deleted.
Section 6. CONSENT.
6.1 The parties hereto consent to the amendment of the Appendix as
attached hereto as Exhibit A (the "Appendix Amendment"). The parties hereto
further agree that all references in the September 22, 2000 Agreement and the
Conseco Guaranty to the Appendix shall mean the Appendix as so amended by the
Appendix Amendment (the "Appendix").
6.2 Conseco may, at its option, make payments or purchases under the
Specified D&O Facilities (or to all the D&O Facilities, as applicable under
Article II of the Appendix or the related Conseco guaranty), pro rata as to the
Specified D&O Facilities (or to all the D&O Facilities, as applicable under
Article II of the Appendix), but such allocation thereof need not be pro rata as
to the underlying borrowers.
Section 7. FEES.
7.1 Conseco hereby agrees that, upon the effectiveness of this Agreement
pursuant to the provisions of Section 8 hereof, Conseco shall be obligated to
pay, and shall pay, to the Administrative Agent, for the pro rata benefit of the
Banks, the following fees (the "Fees"):
(a) On the Effective Date, an agreement fee (the "Agreement Fee")
in immediately available funds equal 0.50% of the principal amount of
the Loans outstanding on such date, net of a proportionate share (which
share shall equal the share of the Loans payable to such Bank divided by
the outstanding Loans under all the Specified D&O Facilities) of the
cash collateral then on deposit securing Conseco's obligations relating
to the Credit Agreement; provided that the Agreement Fee shall only be
payable to those Banks that execute and deliver this Agreement by March
20, 2002; and
(b) From and after the Effective Date and until all Loans are
paid in full, a continuing per annum fee equal to 0.75% of all Loans
then outstanding, payable quarterly in arrears, quarterly on the last
Business Day of each calendar quarter, with payment commencing on March
31, 2002.
7.2 Conseco's obligation to pay each of the Fees shall be irrevocable,
unconditional, and absolute and, consistent therewith, shall not terminate in
the event that this Agreement shall otherwise be terminated pursuant to its
provisions. Such fees shall be in addition to any fees provided for under the
September 22, 2000 Agreement or the Credit Agreement.
Section 8. CONDITIONS PRECEDENT. This Agreement shall become effective
on such date (the "Effective Date") when each of the conditions precedent set
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forth in this Section 8 shall have been satisfied, and notice thereof shall have
been given by the Administrative Agent to Conseco and the Banks.
8.1 Receipt of Documents. The Administrative Agent shall have received
all of the following documents duly executed, dated the date hereof or such
other date as shall be acceptable to the Administrative Agent, and in form and
substance satisfactory to the Administrative Agent:
(a) This Agreement, duly executed by Conseco, CDOC, CIHC, the
Administrative Agent and the Required Banks;
(b) A certificate of the Secretary or Assistant Secretary of
Conseco (i) certifying the names and true signatures of the officers of
Conseco authorized to execute, deliver and performance, as applicable,
this Agreement, and all other documents to be delivered by it hereunder
and (ii) attaching copies of the resolutions of the board of directors
of Conseco authorizing the transactions contemplated hereby;
(c) A certificate of the Secretary or Assistant Secretary of CIHC
(i) certifying the names and true signatures of the officers of CIHC
authorized to execute, deliver and perform, as applicable, all documents
to be delivered by it hereunder and (ii) attaching copies of the
resolutions of the board of directors of CIHC authorizing the
transactions contemplated hereby;
(d) A certificate of the Secretary or Assistant Secretary of CDOC
(i) certifying the names and true signatures of the officers of CDOC
authorized to execute, deliver and perform, as applicable, all documents
to be delivered by it hereunder and (ii) attaching copies of the
resolutions of the board of directors of CDOC authorizing the
transactions contemplated hereby;
(e) The Reaffirmation of (i) the Conseco Guaranty, (ii) the CIHC
Guaranty and (iii) the Amended and Restated Cash Collateral Agreement,
in the form of Exhibit B attached hereto;
(f) The opinion of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, counsel of Conseco and CIHC,
substantially in the form of Exhibit C, and addressing such other legal
matters as the Administrative Agent may reasonably require;
(g) The opinion of Weil, Gotshal & ▇▇▇▇▇▇ LLP, outside counsel to
Conseco and CIHC, substantially in the form of Exhibit D, and addressing
such other legal matters as the Administrative Agent may reasonably
require;
(h) Duly authorized, executed and delivered copies of (i) the
First Stage Amendment and Agreement Re: 199[ ] D&O Loans, dated as of
March ___, 2002, (ii) the First Stage Amendment and Agreement Re: 199__
D&O Loans, dated as of March ___, 2002, and (iii) the First Stage
Amendment and Agreement Re: 199__ D&O Loans, dated as of March ___,
2002, substantially in the form hereof;
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(i) A duly authorized, executed and delivered copy of Third
Amendment to Five-Year Credit Agreement, dated as of March ___, 2002,
among Conseco, the various financial institutions party thereto, and
Bank of America, N.A. as agent thereunder; and
(j) Receipt by the Administrative Agent of a letter to the Banks
evidencing Conseco's understanding if scheduled payments are not made on
or before the date that such scheduled payments become due and payable
in respect of all Trust Preferred Securities, a downgrade from A.M. Best
A- Status would occur.
8.2 Additional Conditions. The effectiveness of this Agreement and the
consent of the Banks are subject to the following further conditions precedent:
(a) With respect to Conseco, no Default exists and no Event of
Default will exist after giving effect to this Agreement;
(b) The representations and warranties of Conseco contained in
Article III of the Conseco Guaranty, are true and correct in all
material respects with the same effect as though made on the Effective
Date, except, to the extent that any such representations and warranties
relate expressly to an earlier date, such representations and warranties
shall have been true and correct in all material respects as of such
earlier date;
(c) No Material Litigation exists other than the litigation
described in Schedule I attached hereto;
(d) No Material Adverse Change has occurred with respect to
Conseco or CIHC since September 30, 2001 (except for changes in or
adverse effects upon, the business, properties, condition (financial or
otherwise) of Conseco and CIHC as disclosed in press releases, public
filings or otherwise in writing to the Administrative Agent);
(e) Conseco shall have paid all accrued and unpaid fees, costs,
expenses and other disbursements to date, including attorneys' fees and
costs, including those to be incurred in connection, negotiation, and
execution of this Agreement. Conseco shall remain liable and shall
promptly reimburse the Administrative Agent for such future fees, costs
expenses and other disbursements as provided for in the existing Loan
Documents;
(f) The Banks, with the approval of Conseco, shall have hired
Ernst & Young LLP as a financial advisor to review the financial
condition and performance of Conseco and its Subsidiaries, and the
Administrative Agent shall be satisfied as to the duration and scope of
such review; and
(g) The Exchange Offer and the disclosures made in connection
therewith (including, without limitation, pursuant to the related
offering memorandum) shall be on terms and conditions satisfactory to
the Administrative Agent.
Section 9. MISCELLANEOUS.
9.1 Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such provision and such
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jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of this Agreement
or affecting the validity or enforceability of such provision in any other
jurisdiction.
9.2 Headings. The various headings of this Agreement are inserted for
convenience only and shall not affect the meaning or interpretation of this
Agreement or any provisions hereof.
9.3 Execution in Counterparts. This Agreement may be executed by the
parties hereto in several counterparts, each of which shall be deemed to be an
original and all of which shall constitute together but one and the same
agreement.
9.4 Governing Law. THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACT MADE
UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF ILLINOIS.
9.5 Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and assigns.
[signatures follow]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
CONSECO, INC.
By:
----------------------------------------
Name:
Title:
CIHC, INCORPORATED
By:
----------------------------------------
Name:
Title:
CDOC, INC.
By:
----------------------------------------
Name:
Title:
BANK OF AMERICA, N.A., as Administrative
Agent, as a Bank, as Collateral Agent and
as Depositary Bank
By:
----------------------------------------
Name:
Title:
[BANKS]
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