Exhibit 10.1
EXECUTION COPY
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Published CUSIP Number: ________
AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of August 15, 2005
among
CONSECO, INC.,
BANK OF AMERICA, N.A.,
as Agent,
JPMORGAN CHASE BANK, N.A.,
as Syndication Agent,
and
THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO
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BANC OF AMERICA SECURITIES LLC
and
▇.▇. ▇▇▇▇▇▇ SECURITIES INC.
Joint Lead Arrangers and Joint Bookrunners
TABLE OF CONTENTS
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ARTICLE 1 Definitions.............................................................................................1
Section 1.01. Certain Defined Terms......................................................................1
Section 1.02. Other Interpretive Provisions.............................................................26
Section 1.03. Classification of Loans and Borrowings....................................................27
Section 1.04. Accounting Principles.....................................................................27
Section 1.05. Amendment and Restatement of Existing Credit Agreement....................................28
ARTICLE 2 The Credits............................................................................................28
Section 2.01. Term Loan.................................................................................28
Section 2.02. Revolving Credit Loans....................................................................28
Section 2.03. Borrowing, Conversion and Continuation of Loans...........................................29
Section 2.04. Notes; Loan Accounts......................................................................30
Section 2.05. Termination or Reduction of Commitments...................................................31
Section 2.06. Payment at Maturity.......................................................................31
Section 2.07. Repayment of Loans........................................................................32
Section 2.08. Optional and Mandatory Prepayments........................................................32
Section 2.09. Interest..................................................................................35
Section 2.10. Fees......................................................................................36
Section 2.11. Computation of Fees and Interest..........................................................36
Section 2.12. Payments Generally........................................................................36
Section 2.13. Sharing of Payments by Lenders............................................................38
Section 2.14. Incremental Facility......................................................................39
ARTICLE 3 Taxes, Yield Protection and Illegality.................................................................39
Section 3.01. Taxes.....................................................................................39
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Section 3.02. Illegality................................................................................41
Section 3.03. Increased Costs and Reduction of Return...................................................41
Section 3.04. Funding Losses............................................................................42
Section 3.05. Inability to Determine Rates..............................................................42
Section 3.06. Certificates of Lenders...................................................................43
Section 3.07. Substitution of Lenders...................................................................43
Section 3.08. Survival..................................................................................43
ARTICLE 4 Conditions Precedent...................................................................................43
Section 4.01. Conditions of Initial Borrowing...........................................................43
Section 4.02. Conditions to All Subsequent Borrowings...................................................46
Section 4.03. Determinations Under Section 4.01.........................................................47
ARTICLE 5 Representations and Warranties.........................................................................47
Section 5.01. Corporate Existence and Power.............................................................47
Section 5.02. Corporate Authorization; No Contravention.................................................47
Section 5.03. Governmental Authorization................................................................48
Section 5.04. Binding Effect............................................................................48
Section 5.05. Litigation................................................................................48
Section 5.06. No Default................................................................................48
Section 5.07. ERISA Compliance..........................................................................48
Section 5.08. Margin Regulations........................................................................49
Section 5.09. Title to Properties.......................................................................49
Section 5.10. Taxes.....................................................................................49
Section 5.11. Financial Condition.......................................................................50
Section 5.12. Environmental Matters.....................................................................50
Section 5.13. Regulated Activities and Regulated Entities...............................................52
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Section 5.14. Subsidiaries..............................................................................52
Section 5.15. Insurance Licenses........................................................................52
Section 5.16. Full Disclosure...........................................................................52
Section 5.17. Solvency..................................................................................52
Section 5.18. Security Interests........................................................................53
Section 5.19. Insurance.................................................................................53
ARTICLE 6 Affirmative Covenants..................................................................................53
Section 6.01. Financial Statements......................................................................53
Section 6.02. Certificates; Other Information...........................................................54
Section 6.03. Notices...................................................................................57
Section 6.04. Preservation of Corporate Existence, Etc..................................................58
Section 6.05. Insurance.................................................................................59
Section 6.06. Payment of Obligations....................................................................59
Section 6.07. Compliance with Laws......................................................................59
Section 6.08. Compliance with ERISA.....................................................................59
Section 6.09. Inspection of Property and Books and Records; Expense Reimbursement.......................59
Section 6.10. Information Regarding Collateral..........................................................60
Section 6.11. Casualty and Condemnation.................................................................60
Section 6.12. Additional Subsidiaries; Immaterial Subsidiaries..........................................60
Section 6.13. Further Assurances........................................................................61
Section 6.14. Use of Proceeds...........................................................................61
Section 6.15. Insurance Subsidiary Compliance Certificates..............................................61
ARTICLE 7 Negative Covenants.....................................................................................62
Section 7.01. Limitation on Indebtedness; Certain Capital Stock.........................................62
Section 7.02. Liens.....................................................................................64
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Section 7.03. Disposition of Assets.....................................................................65
Section 7.04. Other Agreements..........................................................................67
Section 7.05. Transactions with Affiliates..............................................................68
Section 7.06. Change in Business........................................................................68
Section 7.07. Fundamental Changes.......................................................................68
Section 7.08. Restricted Payments.......................................................................68
Section 7.09. Investments and Acquisitions..............................................................70
Section 7.10. Prepayments of Indebtedness; Modifications of Certain Agreements; Synthetic Purchase
Agreements..............................................................................71
Section 7.11. Debt to Total Capitalization Ratio........................................................71
Section 7.12. Interest Coverage Ratio...................................................................72
Section 7.13. [Intentionally Omitted.]..................................................................72
Section 7.14. Aggregate RBC Ratio.......................................................................72
Section 7.15. Combined Statutory Capital and Surplus Level..............................................72
Section 7.16. Investment Portfolio Requirement..........................................................72
Section 7.17. Restrictive Agreements....................................................................73
Section 7.18. Holding Company Activities................................................................74
Section 7.19. Changes in Accounting Policies; Fiscal Year...............................................74
ARTICLE 8 Events of Default......................................................................................74
Section 8.01. Events of Default.........................................................................74
Section 8.02. Remedies..................................................................................77
Section 8.03. Rights Not Exclusive......................................................................77
ARTICLE 9 The Agent..............................................................................................78
Section 9.01. Appointment and Authority.................................................................78
Section 9.02. Rights as a Lender........................................................................78
Section 9.03. Exculpatory Provisions....................................................................78
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Section 9.04. Reliance by Agent.........................................................................79
Section 9.05. Delegation of Duties......................................................................79
Section 9.06. Resignation of Agent......................................................................79
Section 9.07. Non-Reliance on Agent and Other Lenders...................................................80
Section 9.08. No Other Duties, Etc......................................................................80
Section 9.09. Agent May File Proofs of Claim............................................................80
Section 9.10. Collateral and Guaranty Matters...........................................................81
Section 9.11. Indemnification of Agent..................................................................81
Section 9.12. Withholding Tax...........................................................................82
ARTICLE 10 Miscellaneous.........................................................................................83
Section 10.01. Amendments and Waivers...................................................................83
Section 10.02. Notices..................................................................................85
Section 10.03. No Waiver; Cumulative Remedies...........................................................86
Section 10.04. Costs and Expenses.......................................................................86
Section 10.05. Company Indemnification; Damage Waiver...................................................86
Section 10.06. Payments Set Aside.......................................................................87
Section 10.07. Assignments, Participations, Etc.........................................................87
Section 10.08. Confidentiality..........................................................................90
Section 10.09. Set-off..................................................................................91
Section 10.10. Notification of Addresses, Lending Offices, Etc..........................................91
Section 10.11. Counterparts.............................................................................91
Section 10.12. Survival of Representations and Warranties...............................................92
Section 10.13. Severability.............................................................................92
Section 10.14. Replacement of Defaulting Lenders and Non-Consenting Lenders.............................92
Section 10.15. Governing Law; Jurisdiction; Consent to Service of Process...............................92
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Section 10.16. Waiver of Jury Trial.....................................................................93
Section 10.17. USA PATRIOT Act Notice...................................................................93
Section 10.18. Entire Agreement.........................................................................93
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SCHEDULES
Schedule 2.01 Commitments
Schedule 5.05 Litigation
Schedule 5.07 ERISA
Schedule 5.13 Investment Companies
Schedule 5.14 Subsidiaries
Schedule 7.01 Existing Indebtedness
Schedule 7.02 Existing Liens
Schedule 7.09 Committed Investments
Schedule 7.10 Amendment of Debt Agreements
Schedule 7.17 Restrictive Agreements
Schedule 10.02 Addresses for Notices
Schedule 10.07(b) Assignee Group Assignment and Assumption Fee Schedule
EXHIBITS
Exhibit A Form of Compliance Certificate
Exhibit B-1 Form of Term Note
Exhibit B-2 Form of Revolving Credit Note
Exhibit C Form of Loan Notice
Exhibit D Form of Assignment and Assumption
Exhibit E Eurodollar Rate Funding Loss Determination Methodology
Exhibit F Form of Security Agreement
Exhibit G Subordination Provisions
Exhibit H-1 Form of Opinion of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
Exhibit H-2 Form of Opinion of ▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
Exhibit I Form of Affirmation and Consent of Subsidiary Guarantor
Exhibit J Form of Term Loan Conversion Notice
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AMENDED AND RESTATED CREDIT AGREEMENT
This AMENDED AND RESTATED CREDIT AGREEMENT is entered into as of August 15,
2005, among CONSECO, INC., a Delaware corporation (together with its successors,
the "Company"), the several financial institutions from time to time party to
this Agreement (collectively, the "Lenders"; individually, a "Lender"), BANK OF
AMERICA, N.A., as administrative agent for the Lenders, and JPMORGAN CHASE BANK,
N.A., as syndication agent.
WHEREAS, the Company desires to obtain from the Lenders (a) a term loan
facility maturing on June 22, 2010 in a principal amount of $447,020,512 the
proceeds of which (together with the proceeds from the Permitted Convertible
Indebtedness (as defined hereafter)) will be used solely to (i) refinance (the
"Refinancing") in full all indebtedness outstanding under the Credit Agreement
dated as of June 22, 2004 (the "Existing Credit Agreement"), among the Company,
the lenders named therein, and Bank of America, N.A., as agent for such lenders,
and (ii) pay fees and expenses incurred in connection with the Refinancing, (b)
a revolving credit facility maturing on June 22, 2009 in a principal amount of
$80,000,000 the proceeds of which will be used for general corporate purposes;
WHEREAS, the Company is willing to secure its obligations under this
Agreement and certain other obligations by granting Liens on substantially all
of its assets to the Agent as provided in the Security Documents; and
WHEREAS, the Company is willing to cause each of its current and future
Domestic Subsidiaries (other than Insurance Subsidiaries, Subsidiaries of
Insurance Subsidiaries and Immaterial Subsidiaries) to (i) guarantee the
foregoing obligations of the Company and (ii) to secure such guarantee thereof
by granting Liens on substantially all of the assets of such Subsidiaries to the
Agent as provided in the Security Documents;
NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained herein, the parties agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.01. Certain Defined Terms. The following terms have the following
meanings:
"Account Control Agreement" has the meaning specified in the Security
Agreement.
"Acquisition" means (i) any Investment by the Company or any of its
Subsidiaries in a Person (other than an existing Wholly-Owned Subsidiary)
whereby such Person becomes a direct or indirect Subsidiary of the Company or is
merged with and into the Company or such Subsidiary or (ii) an acquisition by
the Company or any of its Subsidiaries of the property and assets of any Person
(other than an existing Wholly-Owned Subsidiary) that constitutes all or
substantially all of the assets of such Person or any division, line of business
or other business unit of such Person; provided that capital expenditures (as
determined in accordance with GAAP) that do not, individually or as part of a
series of related transactions, result in the
acquisition of all or substantially all of the assets of any Person or any
division, line of business or other business unit of such Person shall be deemed
not to be Acquisitions.
"Affiliate" means, as to any Person, any other Person that, directly or
indirectly, is in control of, is controlled by or is under common control with,
such Person. A Person shall be deemed to control another Person if the
controlling Person possesses, directly or indirectly, the power (a) to vote 10%
or more of the securities (on a fully diluted basis) having ordinary voting
power for the election of directors or managing general partners of the other
Person or (b) to direct or cause the direction of the management and policies of
the other Person, whether through the ownership of voting securities, membership
interests, by contract or otherwise.
"Affirmation and Consent" has the meaning specified in Section 4.01(a)(ii).
"Agent" means Bank of America, N.A., in its capacity as administrative
agent under the Loan Documents, and its successors and assigns in such capacity.
"Agent-Related Persons" means the initial Agent and any successor agent,
together with their respective Affiliates, and the officers, directors,
employees, agents and attorneys-in-fact of such Persons and Affiliates.
"Agent's Office" means the Agent's address and, as appropriate, account as
set forth on Schedule 10.02 or such other address or account as the Agent may
from time to time specify.
"Aggregate RBC Ratio" means, with respect to the Insurance Subsidiaries
taken as a whole, on any date of determination, one-half of the ratio (expressed
as a percentage) of (a) the aggregate Total Adjusted Capital (as defined by each
relevant Insurance Subsidiary's Department) for the Insurance Subsidiaries to
(b) the aggregate Authorized Control Level Risk-Based Capital (as defined by
each relevant Insurance Subsidiary's Department) for the Insurance Subsidiaries.
"Agreement" means this Credit Agreement.
"A.M. Best" means A.M. Best Company.
"Annual Statement" means the annual statutory financial statement of any
Insurance Subsidiary required to be filed with the insurance commissioner (or
similar authority) of its jurisdiction of incorporation, which statement shall
be in the form required by such Insurance Subsidiary's jurisdiction of
incorporation or, if no specific form is so required, in the form of financial
statements permitted by such insurance commissioner (or such similar authority)
to be used for filing annual statutory financial statements and shall contain
the type of information permitted or required by such insurance commissioner (or
such similar authority) to be disclosed therein, together with all exhibits or
schedules filed therewith.
"Applicable Margin" means, for any day, a percentage per annum equal to (a)
with respect to any Eurodollar Rate Loan, 2.00% or (b) with respect to any Base
Rate Loan, 1.00%; provided, however, that if and for so long as the Company's
senior secured Indebtedness is rated at least Ba3 by ▇▇▇▇▇'▇ and BB- by S&P, in
each case with a stable outlook, such percentages shall be reduced by 0.25%.
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"Approved Fund" has the meaning specified in Section 10.07(g).
"Asset Sale" means any Disposition of property or series of related
Dispositions of property, excluding any such Disposition permitted by Section
7.03(a), Section 7.03(b), Section 7.03(c), Section 7.03(d), Section 7.03(e)(i)
and Section 7.03(e)(ii) (but only to the extent proceeds therefrom are required
to be retained by any Insurance Subsidiary pursuant to regulatory restrictions),
Section 7.03(f), Section 7.03(h) and Section 7.03(i).
"Assignee Group" has the meaning set forth in Section 10.07(b).
"Assignment and Assumption" means an assignment and assumption entered into
by a Lender and an Eligible Assignee substantially in the form of Exhibit D.
"Attorney Costs" means and includes all reasonable fees, out-of pocket
expenses and out-of pocket disbursements of any law firm or other external legal
counsel and, without duplication, the reasonable allocated cost of internal
legal services and all reasonable out-of pocket expenses and out-of pocket
disbursements of internal counsel.
"Available Period" refers to the Revolving Credit Facility and means the
period from and including the Effective Date to the earliest of (i) the
Termination Date, (ii) the date of termination of the Revolving Credit
Commitments pursuant to Section 2.05, and (iii) the date of termination of the
commitment of each Revolving Credit Lender to make Revolving Credit Loans
pursuant to Section 8.02.
"Bankers Life Group" means Bankers Life and Casualty Company, Bankers Life
Insurance Company of Illinois and Colonial Penn Life Insurance Company.
"Base Rate" means, for any day, a fluctuating rate per annum equal to the
higher of: (a) 0.50% per annum above the latest Federal Funds Rate and (b) the
rate of interest in effect for such day as publicly announced from time to time
by BofA as its "prime rate." The "prime rate" is a rate set by BofA based upon
various factors, including BofA's costs and desired return, general economic
conditions and other factors, and is used as a reference point for pricing some
loans, which may be priced at, above or below such announced rate. Any change in
such rate announced by BofA shall take effect at the opening of business on the
day specified in the public announcement of such change.
"Base Rate Loan" means a Loan that bears interest based on the Base Rate.
"BofA" means Bank of America, N.A., a national banking association, and its
successors.
"Borrowing" means Loans of the same Interest Type made, converted or
continued on the same day and, in the case of Eurodollar Rate Loans, as to which
the same Interest Period is in effect.
"Business Day" means any day other than a Saturday, Sunday or other day on
which commercial banks are authorized to close under the laws of, or are in fact
closed in, the state where the Agent's Office is located or New York City and,
if such day relates to any Eurodollar
3
Rate Loan, means any such day on which dealings in Dollar deposits are conducted
by and between banks in the London interbank eurodollar market.
"Calculation Period" means, with respect to any ratio or calculation, the
period for which such ratio or calculation is being calculated.
"Capital Adequacy Regulation" means any guideline, request or directive of
any central bank or other Governmental Authority, or any other law, rule or
regulation, whether or not having the force of law, in each case, regarding
capital adequacy of any bank or of any corporation controlling a bank.
"Capital and Surplus" means, as to any Insurance Subsidiary, as of any
date, the total amount shown on line 38, page 3, column 1 of the Annual
Statement of such Insurance Subsidiary as of such date, or an amount determined
in a consistent manner for any date other than one as of which an Annual
Statement is prepared.
"Capital Expenditures" means, for any period, (a) the additions to
property, plant and equipment capitalized in accordance with GAAP and other
capital expenditures of the Company and its Subsidiaries that are (or would be)
set forth in a consolidated statement of cash flows of the Company and its
Subsidiaries for such period prepared in accordance with GAAP and (b) any
Capitalized Lease Liabilities incurred by the Company and its Subsidiaries
during such period.
"Capital Stock" means any and all shares, interests, participations or
other equivalents (however designated) of capital stock of a corporation, any
and all equivalent ownership interests in a Person (other than a corporation)
and any and all warrants, rights or options to purchase any of the foregoing;
provided that, for the avoidance of doubt, Capital Stock shall not be deemed to
include Permitted Convertible Indebtedness.
"Capitalized Lease Liabilities" means, with respect to any Person, all
monetary obligations of such Person under any leasing or similar arrangement
that, in accordance with GAAP, would be classified as a capitalized lease, and,
for purposes of this Agreement, the amount of such obligations shall be the
capitalized amount thereof, determined in accordance with GAAP, and the stated
maturity thereof shall be the date of the last payment of rent or any other
amount due under such lease prior to the first date upon which such lease may be
terminated by the lessee without payment of a penalty.
"Cash Equivalents" means (a) marketable direct obligations issued by, or
unconditionally guaranteed by, the United States government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one year from the date of acquisition; (b)
certificates of deposit, time deposits, eurodollar time deposits or overnight
bank deposits having maturities of twelve months or less from the date of
acquisition issued by any commercial bank organized under the laws of the United
States or any state thereof having combined capital and surplus of not less than
$500,000,000 and a short term deposit rating of at least A-1 by S&P and P-l by
▇▇▇▇▇'▇, or carrying an equivalent rating by a nationally recognized rating
agency, if both of the two named rating agencies cease publishing ratings of
commercial paper issuers generally; (c) commercial paper of an issuer rated at
least A-1
4
by S&P and P-l by ▇▇▇▇▇'▇, or carrying an equivalent rating by a nationally
recognized rating agency, if both of the two named rating agencies cease
publishing ratings of commercial paper issuers generally, and maturing within
nine months from the date of acquisition; (d) repurchase obligations of any
Lender or of any commercial bank satisfying the requirements of clause (b) of
this definition, having a term of not more than 30 days, with respect to
securities issued or fully guaranteed or insured by the United States
government; (e) securities with maturities of one year or less from the date of
acquisition issued or fully guaranteed by any state, commonwealth or territory
of the United States, by any political subdivision or taxing authority of any
such state, commonwealth or territory or by any foreign government, the
securities of which state, commonwealth, territory, political subdivision,
taxing authority or foreign government (as the case may be) are rated at least A
by S&P and A2 by ▇▇▇▇▇'▇; (f) securities with maturities of one year or less
from the date of acquisition backed by standby letters of credit issued by any
Lender or any commercial bank satisfying the requirements of clause (b) of this
definition; or (g) shares of money market mutual or similar funds that invest
exclusively in assets satisfying the requirements of clauses (a) through (f) of
this definition.
"Cash Interest Expense" means, for any Calculation Period, the sum of (a)
total interest expense, to the extent paid or payable in cash, of the Company
and its Subsidiaries determined on a consolidated basis in accordance with GAAP,
excluding interest paid or, without duplication, accrued but unpaid by any
Insurance Subsidiary to the extent otherwise included in total interest expense
in this clause (a) and (b) total dividends paid or payable in cash on any
preferred stock issued by the Company to the extent the terms of such preferred
stock require payment of cash dividends, in each case for such Calculation
Period.
"Casualty Event" means any casualty or other insured damage to any property
of the Company or any of its Subsidiaries (other than Insurance Subsidiaries or
Subsidiaries of Insurance Subsidiaries), or any taking of any such property
under power of eminent domain or by condemnation or similar proceeding, or any
transfer of any such property in lieu of a condemnation or similar taking
thereof.
"CBOs" means notes or other instruments (other than CMOs) secured by
collateral consisting primarily of debt securities and/or other types of debt
obligations, including loans.
"CDOC" means CDOC, Inc., a Delaware corporation, and a direct Wholly-Owned
Subsidiary of the Company on the Effective Date.
"CDOC Preferred Stock" means preferred stock of CDOC that is held by one or
more of the Insurance Subsidiaries.
"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980.
"CERCLIS" means the Comprehensive Environmental Response, Compensation and
Liability Information System List.
"Change of Control" means (a) any acquisition, directly or indirectly, by
any Person, or two or more Persons acting in concert, of beneficial ownership
(within the meaning of Rule 13d-3 of the SEC under the Exchange Act) of 40% or
more of the outstanding shares of voting stock
5
of the Company, (b) during any period of 12 consecutive calendar months,
commencing on the Effective Date, the ceasing of those individuals (the
"Continuing Directors") who (i) were directors of the Company on the first day
of each such period or (ii) who subsequently became directors of the Company and
whose election or initial nomination for election subsequent to that date was
approved by a majority of the Continuing Directors then on the board of
directors of the Company, to constitute a majority of the board of directors of
the Company, or (c) the occurrence of a "change of control" (howsoever defined)
in the indenture or any other instrument evidencing Permitted Convertible
Indebtedness or Permitted Refinancing Indebtedness or in any instrument
evidencing the CDOC Preferred Stock or the Class B Preferred Stock.
"Class B Preferred Stock" means the 5.50% Class B Mandatorily Convertible
Preferred Stock of the Company issued on May 12, 2004 and May 21, 2004 pursuant
to that certain Underwriting Agreement dated as of May 6, 2004, among the
Company, ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated.
"CMOs" means notes or other instruments secured by collateral consisting
primarily of mortgages, mortgage-backed securities and/or other types of
mortgage-related obligations.
"Code" means the Internal Revenue Code of 1986, and regulations promulgated
thereunder.
"Collateral" means any and all "Collateral," as defined in any Security
Document.
"Collateral and Guarantee Requirement" means the requirement that:
(a) the Agent shall have received from each Obligor either (i) a
counterpart of the Security Agreement duly executed and delivered on behalf
of such Obligor or (ii) in the case of any Person that becomes an Obligor
after the Effective Date, a supplement to the Security Agreement, in the
form specified therein, duly executed and delivered on behalf of such
Obligor;
(b) all outstanding Capital Stock in any Subsidiary owned by or on
behalf of any Obligor shall have been pledged pursuant to the Security
Agreement (except that the Obligors shall be required to pledge only 65% of
the outstanding voting Capital Stock in any first-tier Foreign Subsidiary
that is not an Obligor and none of the Capital stock of any Foreign
Subsidiary that is not first tier) and the Agent shall have received all
certificates or other instruments representing such Capital Stock, together
with stock powers or other instruments of transfer with respect thereto
endorsed in blank;
(c) all documents and instruments, including Uniform Commercial Code
financing statements, required by law or reasonably requested by the Agent
to be filed, registered or recorded to create the Liens intended to be
created by the Security Documents and perfect or record such Liens to the
extent, and with the priority, required by the Security Agreement, shall
have been filed, registered or recorded or delivered to the Agent for
filing, registration or recording;
(d) each Obligor shall have obtained all consents and approvals
required to be obtained by it in connection with the execution and delivery
of all Security Documents to
6
which it is a party, the performance of its obligations thereunder and the
granting of the Liens granted by it thereunder; and
(e) each Obligor shall have taken all other action required under the
Security Documents to perfect, register and/or record the Liens granted by
it thereunder.
"Combined Statutory Capital and Surplus" means, as of the last day of any
Fiscal Quarter, the sum of the amounts shown on the Combined Statutory Statement
of the Insurance Subsidiaries as of the last day of such Fiscal Quarter on (i)
p. 3, line 38 and (ii) p. 3, line 24.1.
"Combined Statutory Statement" means a statement combining the Quarterly
Statements or Annual Statements, as applicable, of all the Insurance
Subsidiaries.
"Commitment" means a Term Commitment or a Revolving Credit Commitment, as
the context may require.
"Commitment Increase" has the meaning specified in Section 2.14.
"Company" has the meaning specified in the introduction to this Agreement.
"Compensation Period" has the meaning specified in Section 2.12(c)(ii).
"Compliance Certificate" means a certificate substantially in the form of
Exhibit A.
"Conseco Available Cash Flow" means, for any Calculation Period, the sum,
without duplication, of (a) dividends paid in cash to the Company by any
Subsidiary plus (b) interest paid in cash to the Company by any Subsidiary
pursuant to any intercompany Indebtedness owing by such Subsidiary to the
Company plus (c) interest or principal paid in cash to the Company with respect
to any Surplus Debenture plus (d) amounts paid in cash to the Company under the
Tax Sharing Agreement plus (e) management and other similar fees received by the
Company under servicing agreements or otherwise from any Subsidiary plus (f)
amounts paid in cash to the Company pursuant to a loan made to it by any
Subsidiary plus (g) the Company's Investment Income received in cash minus (h)
cash operating expenses of the Company minus (i) Capital Expenditures of the
Company made in cash minus (j) any amounts paid by the Company in respect of
interest on or in repayment of any loan referred to in clause (f) above plus (k)
non-recurring cash and non-cash charges (not to exceed $40,000,000 in the
aggregate (of which up to $25,000,000 may be cash charges) for all Calculation
Periods) related to restructuring, consolidation, severance or discontinuance of
any portion of the operations, employees and/or management of the Company minus
(l) any amounts paid in cash by the Company to any Insurance Subsidiary in
respect of any overpayment by such Insurance Subsidiary of amounts required to
be paid by such Insurance Subsidiary to the Company under the Tax Sharing
Agreement, in each case for such Calculation Period. Amounts received by the
Company or any of its Subsidiaries and required to be applied to prepay the
Borrowings pursuant to Section 2.08 (other than pursuant to Section 2.08(b)(iv))
shall, to the extent otherwise included in Conseco Available Cash Flow for any
Calculation Period, be excluded from this calculation for such Calculation
Period.
7
"Conseco Excess Cash Flow" means, for any Excess Cash Calculation Period,
Conseco Available Cash Flow for such Excess Cash Calculation Period minus,
without duplication, the sum of (a) cash income taxes paid or to be paid by the
Company with respect to such Excess Cash Calculation Period, (b) cash interest
expense paid by the Company with respect to such Excess Cash Calculation Period
and not reflected in the calculation of Conseco Available Cash Flow for such
Excess Cash Calculation Period, (c) scheduled or mandatory permanent repayments
of Indebtedness by the Company during such Excess Cash Calculation Period, other
than repayments already reflected in the calculation of Conseco Available Cash
Flow for such Excess Cash Calculation Period and (d) dividends paid on the Class
B Preferred Stock.
"Conseco Insurance Group" means all Insurance Subsidiaries of the Company
from time to time, other than any Insurance Subsidiary that is part of the
Bankers Life Group.
"Contingent Obligation" means, without duplication, any agreement,
undertaking or arrangement by which any Person guarantees, endorses or otherwise
becomes or is contingently liable upon (by direct or indirect agreement,
contingent or otherwise, to provide funds for payment, to supply funds to, or
otherwise to invest in, a debtor, or otherwise to assure a creditor against
loss) the debt, obligation or other liability of any other Person (other than by
endorsements of instruments in the course of collection or indemnities under
contracts entered into in the ordinary course of business and not in respect of
Indebtedness or the issuance of Capital Stock), or guarantees the payment of
dividends or other distributions upon the shares of any other Person; provided
that the obligations of any Person under Reinsurance Agreements or in connection
with Investments of Insurance Subsidiaries permitted by the applicable
Department shall not be deemed Contingent Obligations of such Person. The amount
of any Contingent Obligation of any Person shall (subject to any limitation set
forth therein) be deemed to be an amount equal to the stated or determinable
amount of the related primary obligation, or portion thereof, in respect of
which such Contingent Obligation is made or, if not stated or determinable, the
maximum reasonably anticipated liability in respect thereof as determined by
such Person in good faith.
"Contractual Obligation" means, as to any Person, any provision of any
security issued by such Person or of any agreement, undertaking, contract,
indenture, mortgage, deed of trust or other instrument, document or agreement to
which such Person is a party or by which it or any of its property is bound.
"Debt to Total Capitalization Ratio" means, as of any date of
determination, without duplication, the ratio of (a) the principal amount of and
accrued but unpaid interest on all Indebtedness of the Company outstanding on
such date, other than (i) Indebtedness owing to any Subsidiary Guarantor and
(ii) Indebtedness of the kind referred to in clause (e) of the definition of
"Indebtedness," to (b) Total Capitalization on such date.
"Default" means any event or circumstance that constitutes an Event of
Default or that, with the giving of notice, the lapse of time, or both, would
(if not cured or otherwise remedied during such time) constitute an Event of
Default.
"Defaulting Lender" means any Lender that (a) has failed to fund any
portion of the Loans required to be funded by it hereunder within one Business
Day of the date required to be
8
funded by it hereunder, (b) has otherwise failed to pay over to the Agent or any
other Lender any other amount required to be paid by it hereunder within one
Business Day of the date when due, unless the subject of a good faith dispute,
or (c) has been deemed insolvent or become the subject of a bankruptcy or
insolvency proceeding.
"Department" means, with respect to any Insurance Subsidiary, the
Governmental Authority of such Insurance Subsidiary's state of domicile with
which such Insurance Subsidiary is required to file its Annual Statement.
"Disposition" means the sale, assignment, leasing as lessor (other than in
the ordinary course), transfer, contribution, conveyance, issuance or other
disposal of, or granting of options, warrants or other rights with respect to,
any of a Person's assets (including any transaction pursuant to a Reinsurance
Agreement or a sale and leaseback transaction and, in the case of any
Subsidiary, the issuance or sale of its Capital Stock). The terms "Dispose" and
"Disposed of" shall have correlative meaning.
"Dollars", "dollars" and "$" each mean lawful money of the United States.
"Domestic Subsidiary" means a Subsidiary that is not a Foreign Subsidiary.
"Effective Date" means the date on which all conditions precedent set forth
in Section 4.01 are satisfied or waived in accordance with Section 10.01 (or, in
the case of subsection 4.01(f), waived by the Person entitled to receive any
payment required thereunder).
"Eligible Assignee" has the meaning specified in Section 10.07.
"Environmental Claims" means all written claims, complaints, notices or
inquiries, by any Governmental Authority or other Person alleging potential
liability or responsibility for violation of any Environmental Law, or for
release or injury to the environment or threat to public health, personal injury
(including sickness, disease or death), property damage, natural resources
damage, or otherwise alleging liability or responsibility for damages (punitive
or otherwise), cleanup, removal, remedial or response costs, restitution, civil
or criminal penalties, injunctive relief or other type of relief, resulting from
or based upon the presence, placement, discharge, emission or release (including
intentional or unintentional, negligent or non-negligent, sudden or nonsudden or
accidental or non-accidental placement, spills, leaks, discharges, emissions or
releases) of any Hazardous Material at, in or from property, whether or not
owned by the Company or any of its Subsidiaries.
"Environmental Laws" means all federal, state or local Requirements of Law,
statutes, common law duties, rules, regulations, ordinances and codes, together
with all administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental Authorities
(in each case having the force of law), in each case relating to environmental,
health and safety, as now or hereafter in effect.
"Equity Issuances" means the issuances by the Company of common stock and
the Class B Preferred Stock, in each case consummated in May 2004.
9
"ERISA" means the Employee Retirement Income Security Act of 1974 and the
regulations promulgated thereunder.
"ERISA Affiliate" means any trade or business (whether or not incorporated)
under common control with the Company within the meaning of Section 414(b) or
(c) of the Code (and Sections 414(m) and (o) of the Code for purposes of
provisions relating to Section 412 of the Code).
"ERISA Event" means (a) a Reportable Event with respect to a Pension Plan;
(b) a withdrawal by the Company or any ERISA Affiliate from a Pension Plan
subject to Section 4063 of ERISA during a plan year in which it was a
substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation
of operations which is treated as such a withdrawal under Section 4062(e) of
ERISA; (c) a complete or partial withdrawal by the Company or any ERISA
Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is
in reorganization; (d) the filing of a notice of intent to terminate, the
treatment of a Plan amendment as a termination under Section 4041 or 4041A of
ERISA or the commencement of proceedings by the PBGC to terminate a Pension Plan
or Multiemployer Plan; (e) an event or condition that could reasonably be
expected to constitute grounds under Section 4042 of ERISA for the termination
of, or the appointment of a trustee to administer, any Pension Plan or
Multiemployer Plan; or (f) the imposition of any liability under Title IV of
ERISA, other than PBGC premiums due but not delinquent under Section 4007 of
ERISA, upon the Company or any ERISA Affiliate.
"Eurodollar Rate" means for any Interest Period with respect to a
Eurodollar Rate Loan:
(a) the rate per annum equal to the rate determined by the Agent to be
the offered rate that appears on the page of the Telerate screen (or any
successor thereto) that displays an average British Bankers Association
Interest Settlement Rate for deposits in Dollars (for delivery on the first
day of such Interest Period) with a term equivalent to such Interest
Period, determined as of approximately 11:00 a.m. (London time) two
Business Days prior to the first day of such Interest Period, or
(i) if the rate referenced in the preceding clause (a) does not appear
on such page or service or such page or service shall not be available, the
rate per annum equal to the rate determined by the Agent to be the offered
rate on such other page or other service that displays an average British
Bankers Association Interest Settlement Rate for deposits in Dollars (for
delivery on the first day of such Interest Period) with a term equivalent
to such Interest Period, determined as of approximately 11:00 a.m. (London
time) two Business Days prior to the first day of such Interest Period, or
(ii) if the rates referenced in the preceding clauses (a) and (b) are
not available, the rate per annum determined by the Agent as the rate of
interest at which deposits in Dollars for delivery on the first day of such
Interest Period in same day funds in the approximate amount of the
Eurodollar Rate Loan being made, continued or converted by BofA and with a
term equivalent to such Interest Period would be offered by BofA's London
Branch to major banks in the London interbank eurodollar market at
10
their request at approximately 4:00 p.m. (London time) two Business Days
prior to the first day of such Interest Period.
"Eurodollar Rate Loan" means a Loan that bears interest at a rate based on
the Eurodollar Rate.
"Event of Default" has the meaning specified in Section 8.01.
"Excess Cash Calculation Period" means (i) initially, the period beginning
on the first day of the first full Fiscal Quarter after the Effective Date and
ending on the last day of the Fiscal Year in which the Effective Date occurs and
(ii) thereafter, each subsequent Fiscal Year.
"Exchange Act" means the Securities Exchange Act of 1934 and the
regulations promulgated thereunder.
"Excluded Subsidiary" means any Subsidiary that is a Foreign Subsidiary,
non-Wholly-Owned Subsidiary or Immaterial Subsidiary.
"Existing Credit Agreement" has the meaning set forth in the recitals
hereto.
"Existing Reinsurance Transactions" means the reinsurance transactions
consummated in 2002 by Bankers Life and Casualty Company and Colonial Penn Life
Insurance Company.
"Facility" means the Term Facility or the Revolving Credit Facility, as the
context may require.
"Federal Funds Rate" means, for any day, the rate per annum equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day; provided that (a) if such day is not a Business Day,
the Federal Funds Rate for such day shall be such rate on such transactions on
the next preceding Business Day as so published on the next succeeding Business
Day and (b) if no such rate is so published on such next succeeding Business
Day, the Federal Funds Rate for such day shall be the average rate (rounded
upward, if necessary, to a whole multiple of 1/100 of 1%) charged to BofA on
such day on such transactions as determined by the Agent.
"Financial Strength Rating Condition" has the meaning specified in Section
2.08(b).
"Fiscal Quarter" means any fiscal quarter of a Fiscal Year.
"Fiscal Year" means any period of twelve consecutive calendar months ending
on December 31.
"Foreign Subsidiary" means a Subsidiary (which may be a corporation,
limited liability company, partnership or other legal entity) organized under
the laws of a jurisdiction outside the United States and conducting
substantially all its operations outside the United States, other than any such
entity that is (whether as a matter of law, pursuant to an election by such
entity or
11
otherwise) treated as a partnership in which any Obligor is a partner or as a
branch of any Obligor for United States income tax purposes.
"40/86 Advisors" means 40/86 Advisors, Inc., a Delaware corporation.
"FRB" means the Board of Governors of the Federal Reserve System and any
Governmental Authority succeeding to any of its principal functions.
"Further Taxes" means any and all present or future taxes, levies,
assessments, imposts, duties, deductions, fees, withholdings or similar charges
(including net income taxes and franchise taxes), and all liabilities with
respect thereto, imposed by any jurisdiction on account of amounts payable or
paid pursuant to Section 3.01.
"GAAP" means generally accepted accounting principles set forth from time
to time in the opinions and pronouncements of the Accounting Principles Board
and the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the U.S. accounting
profession), that are applicable to the circumstances as of the date of
determination.
"Governmental Authority" means any nation or government, any state or other
political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any entity exercising executive, legislative,
judicial or regulatory functions of or pertaining to government and any
corporation or other entity owned or controlled, through stock or capital
ownership or otherwise, by any of the foregoing, including any board of
insurance, insurance department or insurance commissioner.
"Hazardous Material" means: (a) any "hazardous substance," as defined by
CERCLA; (b) any "hazardous waste," as defined by the Resource Conservation and
Recovery Act; (c) any petroleum product; or (d) any pollutant or contaminant or
hazardous, dangerous or toxic chemical, material or substance as to which
liability or standards of conduct may be imposed under any Environmental Law,
all as amended or hereafter amended.
"Immaterial Subsidiary" means any Non-Insurance Subsidiary that (a) has
assets with an aggregate fair market value less than $5,000,000, (b) has
aggregate revenues less than $10,000,000 for the period of four consecutive
Fiscal Quarters most recently ended, (c) has no Indebtedness (other than
Indebtedness existing on the date hereof and listed in Schedule 7.01 or
permitted under Section 7.01(a)(x) and other Indebtedness in an aggregate
principal amount not exceeding at any time one-half of the fair market value of
the assets of such Subsidiary at such time), (d) is not integral to the business
or operations of the Company or its Subsidiaries (other than Immaterial
Subsidiaries), (e) has no Subsidiaries (other than Immaterial Subsidiaries) and
(f) is not an Obligor; provided that (x) notwithstanding not meeting the
requirements of clauses (a) through (f) above, Conseco Equity Sales, Inc. shall
be deemed to be an Immaterial Subsidiary for a period of 90 days after the
Effective Date, but shall thereafter no longer be deemed to be an Immaterial
Subsidiary unless it meets such requirements and (y) Conseco Management Services
Company shall not be deemed to be an Immaterial Subsidiary so long as it is the
manager of Conseco Services, LLC pursuant to the latter's limited liability
company agreement.
12
"Income Taxes" means any Taxes based upon net income.
"Increase Date" has the meaning specified in Section 2.14.
"Indebtedness" means, with respect to any Person, without duplication: (a)
all obligations of such Person for borrowed money or in respect of loans or
advances; (b) all obligations of such Person evidenced by bonds, debentures,
notes or other similar instruments; (c) all obligations in respect of letters of
credit, whether or not drawn, and bankers' acceptances and letters of guaranty
issued for the account or upon the application or request of such Person; (d)
all Capitalized Lease Liabilities of such Person; (e) the liabilities (if any)
of such Person in respect of Swap Contracts as determined by reference to the
Swap Termination Value thereof; (f) all obligations of such Person to pay the
deferred purchase price of property or services that are included as liabilities
in accordance with GAAP (other than accrued expenses incurred and trade accounts
payable in each case in the ordinary course of business) and all obligations
secured by a Lien on property owned or being purchased by such Person, but only
to the extent of the lesser of the obligations secured or the value of the
property to which such Lien is attached (including obligations arising under
conditional sales or other title retention agreements); (g) any obligations of a
partnership of the kind referred to in clauses (a) through (f) above or clause
(h) or (i) below in which such Person is a general partner; (h) solely for
purposes of Section 7.11, all obligations in respect of preferred stock (other
than Class B Preferred Stock and other preferred stock that qualifies as
permanent equity for purposes of GAAP) of such Person; and (i) all Contingent
Obligations of such Person in connection with Indebtedness or obligations of
others of the kinds referred to in clauses (a) through (h) above; provided that
in no event shall "Indebtedness" include the Company's obligations in respect of
any Recharacterized Portion.
"Indemnified Liabilities" has the meaning specified in Section 10.05.
"Indemnified Person" has the meaning specified in Section 10.05.
"Independent Auditor" has the meaning specified in Section 6.01(a).
"Insolvency Proceeding" means, with respect to any Person, (a) any case,
action or proceeding with respect to such Person before any court or other
Governmental Authority relating to bankruptcy, reorganization, insolvency,
liquidation, conservation, rehabilitation, receivership, dissolution, winding-up
or relief of debtors or (b) any general assignment for the benefit of creditors,
composition, marshalling of assets for creditors or other similar arrangement in
respect of its creditors generally or any substantial portion of its creditors,
in any case, undertaken under U.S. Federal, state or foreign law, including
title 11 of the United States Code.
"Insurance Subsidiary" means any Subsidiary that is required to be licensed
as an insurer or reinsurer.
"Interest Coverage Ratio" means, for any Calculation Period, the ratio of
(a) Conseco Available Cash Flow for such Calculation Period to (b) Cash Interest
Expense for such Calculation Period.
"Interest Payment Date" means (a) with respect to any Base Rate Loan, the
last Business Day of each calendar quarter and (b) with respect to any
Eurodollar Rate Loan, the last
13
day of each Interest Period applicable to the Borrowing of which such Loan is a
part; provided that if any Interest Period for a Eurodollar Rate Loan exceeds
three months, the date that falls three months after the beginning of such
Interest Period and after each Interest Payment Date thereafter is also an
Interest Payment Date (but in each case, subject to the definition of "Interest
Period").
"Interest Period" means, with respect to any Eurodollar Rate Borrowing, the
period beginning on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is one, two, three or six months
thereafter, as the Company may elect; provided that:
(i) if any Interest Period would otherwise end on a day that is not a
Business Day, that Interest Period shall be extended to the following
Business Day unless the result of such extension would be to carry such
Interest Period into another calendar month, in which event such Interest
Period shall end on the preceding Business Day;
(ii) any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding
day in the calendar month at the end of such Interest Period) shall end on
the last Business Day of the calendar month at the end of such Interest
Period; and
(iii) no Interest Period for any Loan shall extend beyond (A) the
Maturity Date, with respect to Term Loans and (B) the Termination Date,
with respect to Revolving Credit Loans.
For purposes hereof, the date of a Borrowing initially shall be the date on
which such Borrowing is made and thereafter shall be the effective date of the
most recent continuation of such Borrowing.
"Interest Type", when used with respect to any Loan or Borrowing, refers to
whether the rate of interest on such Loan, or on the Loans comprising such
Borrowing, is determined by reference to the Eurodollar Rate or the Base Rate.
"Investment" means any advance, loan, extension of credit (by way of
guaranty or otherwise) or capital contribution to, or purchase (including
purchases financed with equity) of any Capital Stock, bonds, notes, debentures
or other debt securities of, or any other investment in, any Person.
"Investment Grade Asset" means any Investment with a fixed maturity that
has a rating of (x) at least BBB- by S&P and, if such Investment is rated by
Moody's, at least Ba2 from Moody's or (y) at least Baa3 by Moody's and, if such
Investment is rated by S&P, at least BB from S&P, or, if such Investment is not
rated by either S&P or Moody's, an NAIC rating of at least Class 2.
"Investment Income" means the amount of earnings of the Company on
Investments, net of expenses actually incurred in connection with such
Investments and taking into account realized gains and losses on such
Investments.
14
"IRS" means the Internal Revenue Service or any Governmental Authority
succeeding to any of its principal functions under the Code.
"Lenders" has the meaning specified in the introduction to this Agreement
and includes any other Person that shall have become a party hereto pursuant to
an Assignment and Assumption in accordance with Section 10.07, other than any
such Person that ceases to be a party hereto pursuant to an Assignment and
Assumption.
"Lending Office" means, as to any Lender, the office or offices of such
Lender specified as its "Lending Office" or "Domestic Lending Office" or
"Eurodollar Lending Office," as the case may be, on Schedule 10.02 or in its
administrative questionnaire delivered to the Agent, or such other office or
offices as such Lender may from time to time notify the Company and the Agent.
"License" means any license, certificate of authority, permit or other
authorization that is required to be obtained from any Governmental Authority in
connection with the operation, ownership or transaction of insurance business.
"Lien" means any security interest, mortgage, deed of trust, pledge,
hypothecation, assignment, charge or deposit arrangement, encumbrance, lien
(statutory or other) or preferential arrangement of any kind or nature
whatsoever in respect of any property (including those created by, arising under
or evidenced by, any conditional sale or other title retention agreement, the
interest of a lessor under a capital lease or any financing lease having
substantially the same economic effect as any of the foregoing) and any
contingent or other agreement to provide any of the foregoing, but not including
the interest of a lessor under an operating lease or a licensor under a license
that does not otherwise secure an obligation.
"Loan" means a Term Loan or a Revolving Credit Loan, as the context may
require.
"Loan Documents" means this Agreement, all Notes, the Security Documents
and any fee letter agreement entered into pursuant to Section 2.10, and in the
case of the Security Documents, all Secured Swap Contracts.
"Loan Notice" means a notice of (a) Borrowing, (b) a conversion of a Loan
from one Interest Type to the other or (c) a continuation of Eurodollar Rate
Loans, substantially in the form of Exhibit C.
"Margin Stock" means "margin stock" as such term is defined in Regulation
T, U or X of the FRB.
"Material Acquisition" means any acquisition of assets by the Company or
its Subsidiaries in a transaction or series of related transactions for
consideration exceeding $80,000,000, other than any such acquisition by any
Insurance Subsidiary in the ordinary course of business in compliance with
Section 7.16 and the investment policy approved by the board of directors of
such Insurance Subsidiary.
"Material Adverse Effect" means (a) a material adverse change in, or a
material adverse effect upon, the business, properties or condition (financial
or otherwise) of the Company or the
15
Company and its Subsidiaries taken as a whole; (b) a material impairment of the
ability of any Obligor to perform under any Loan Document to which it is a
party; or (c) a material adverse effect upon the legality, validity, binding
effect or enforceability against any Obligor of any Loan Document to which it is
a party.
"Material Disposition" means any disposition of assets by the Company or
its Subsidiaries in a transaction or series of related transactions for
consideration exceeding $80,000,000, other than any such disposition by any
Insurance Subsidiary in the ordinary course of business consistent with past
practices and the investment policy approved by the board of directors of such
Insurance Subsidiary.
"Maturity Date" means the earlier of (i) June 22, 2010, or if such day is
not a Business Day, the next succeeding Business Day and (ii) the date that is
91 days prior to the first scheduled put or call right under the Permitted
Convertible Indebtedness.
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc., together with any Person
succeeding thereto by merger, consolidation or acquisition of all or
substantially all of its assets, including substantially all of its business of
rating securities.
"Multiemployer Plan" means a "multiemployer plan," within the meaning of
Section 4001(a)(3) of ERISA, to which the Company or any ERISA Affiliate makes,
is making or is obligated to make contributions or, during the preceding three
calendar years, has made, or been obligated to make, contributions.
"NAIC" means the National Association of Insurance Commissioners or any
successor thereto, or in the absence of the National Association of Insurance
Commissioners or such successor, any other association, agency or other
organization performing advisory, coordination or other like functions among
insurance departments, insurance commissioners and similar Governmental
Authorities of the various states of the United States toward the promotion of
uniformity in the practices of such Governmental Authorities.
"NASD" means the National Association of Securities Dealers, Inc. or any
Person succeeding to any of its principal functions.
"Net Income" means, for any Person for any Calculation Period, the net
income (or loss) of such Person for such period as determined in accordance with
GAAP.
"Net Proceeds" means (a) with respect to any Asset Sale or Casualty Event,
the aggregate amount of cash and cash equivalents received in respect of such
Asset Sale or Casualty Event, as the case may be (including any such amounts
received by way of deferred payment of principal pursuant to a note or
installment receivable or purchase price adjustment receivable or otherwise, but
only as and when received and, in the case of a Casualty Event, insurance
proceeds, condemnation awards and similar payments), minus the sum of (i) all
costs and expenses (including legal fees, notarial fees, accountants' fees,
investment banking fees, survey costs and title insurance premiums) paid by the
Company or any of its Subsidiaries to third parties, amounts applied to the
repayment of Indebtedness (other than the Loans) secured by a Lien expressly
permitted hereunder on any asset that is the subject of such Asset Sale or
Casualty Event, costs of discontinuance (including any reasonable severance
payments), Taxes other than
16
Income Taxes (after taking into account any available tax credits, exemptions or
deductions and any tax sharing arrangements) and other customary fees and
expenses incurred in connection with such Asset Sale or Casualty Event and
required to be paid in cash or deducted from the proceeds of such Asset Sale or
Casualty Event, (ii) the estimated Income Tax or other Taxes to the extent
payable by the Person selling or Disposing of such asset actually required to be
paid in cash in connection with such Asset Sale (after taking into account any
available tax credits, exemptions or deductions and any tax sharing
arrangements), (iii) purchase price adjustments reasonably expected to be
payable in connection therewith (not to exceed 10% of the purchase price for the
relevant Asset Sale) so long as, if any such amount ceases to be payable, it
shall then become "Net Proceeds" and (iv) for an Insurance Subsidiary, any
amounts that the Department will not permit such Insurance Subsidiary to
distribute (including as a dividend or otherwise) directly or indirectly to the
Company as a result of such Asset Sale or Casualty Event and (b) with respect to
any issuance of Capital Stock of, or capital contribution to, the Company or any
Subsidiary, or any incurrence of Indebtedness by the Company or any of its
Subsidiaries, the proceeds thereof in the form of cash and cash equivalents,
minus the costs and expenses paid or payable within 90 days of incurrence (so
long as, if any such amount is not paid within such period, it shall become "Net
Proceeds" on the last day of such period) by the Company or any of its
Subsidiaries to third parties in connection therewith (including legal fees,
notarial fees, accountants' fees, investment banking fees, underwriting
discounts and commissions and other customary fees and expenses incurred in
connection therewith) and required to be paid in cash or deducted from the
proceeds of such issuance, contribution or incurrence. For purposes of this
definition, the Net Proceeds received by any Person in respect of any
Disposition shall include such cash or cash equivalents as may be received
("subsequent cash proceeds") by such Person at any time or from time to time in
connection with the sale, transfer, lease or other disposition, or otherwise in
respect of, any consideration other than cash or cash equivalents received by
such Person in respect of such Disposition, less the estimated Income Tax or
other Taxes to the extent payable by the Person selling or Disposing of such
asset to be paid in connection with the receipt of such subsequent cash proceeds
(after taking into account any available tax credits, exemptions or deductions
and any tax sharing arrangements) that was not theretofore deducted in computing
Net Proceeds.
"Non-Consenting Lender" means a Lender under a Facility that does not
consent to an amendment or waiver pursuant to Section 10.01 that requires the
consent of all of the Lenders under such Facility in order to become effective
and as to which Lenders holding at least two-thirds of the interests under such
Facility entitled to consent to such amendment or waiver have consented.
"Non-Insurance Subsidiary" means any Subsidiary that is not an Insurance
Subsidiary.
"Notes" has the meaning specified in Section 2.04(b).
"Obligations" means all advances, debts, liabilities, obligations,
covenants and duties for the payment of money arising under any Loan Document
owing by the Company to the Agent, the Lenders or any Indemnified Person,
whether direct or indirect (including those acquired by assignment), absolute or
contingent, due or to become due, now existing or hereafter arising.
"Obligors" means the Company and the Subsidiary Guarantors.
17
"Organization Documents" means (i) with respect to any corporation, the
certificate or articles of incorporation, the bylaws, any certificate of
designation or instrument relating to the rights of preferred shareholders of
such corporation, any shareholder rights agreement, and all applicable
resolutions of the board of directors (or any committee thereof) of such
corporation, (ii) with respect to any limited liability company, the certificate
or articles of formation or organization and operating agreement, and all
applicable resolutions or consents of the governing body (or any committee
thereof) of such limited liability company and (iii) with respect to any
partnership, joint venture, trust or other form of business entity, the
partnership, joint venture or other applicable agreement of formation or
organization and any agreement, instrument, filing or notice with respect
thereto filed in connection with its formation or organization with the
applicable Governmental Authority in the jurisdiction of its formation or
organization and, if applicable, any certificate or articles of formation or
organization of such entity, and all applicable resolutions or consents of the
governing body (or any committee thereof), or in the case of clauses (i), (ii)
and (iii), the equivalent or comparable constituent documents with respect to
any Foreign Subsidiary.
"Other Taxes" means any present or future recording, stamp, court or
documentary taxes or any other excise, sales or property taxes, charges or
similar levies that arise from any payment made under this Agreement or any
other Loan Document or from the execution, delivery, performance, enforcement or
registration of, or otherwise with respect to, this Agreement or any other Loan
Document.
"Outstanding Amount" means, with respect to Term Loans and Revolving Credit
Loans on any date, the aggregate outstanding principal amount thereof after
giving effect to any borrowings and prepayments or repayments of Term Loans and
Revolving Credit Loans, as the case may be, occurring on such date.
"Participant" has the meaning specified in subsection 10.07(d).
"Patriot Act" has the meaning specified in Section 10.16.
"PBGC" means the Pension Benefit Guaranty Corporation or any Governmental
Authority succeeding to any of its principal functions under ERISA.
"Pension Plan" means a pension plan (as defined in Section 3(2) of ERISA)
subject to Title IV of ERISA that the Company or any ERISA Affiliate sponsors or
maintains, or to which it makes, is making or is obligated to make
contributions, or in the case of a multiple employer plan (as described in
Section 4064(a) of ERISA) has made contributions at any time during the
immediately preceding five plan years.
"Perfection Certificate" means a certificate in the form of Exhibit E to
the Security Agreement or any other form approved by the Agent.
"Permitted Convertible Indebtedness" has the meaning specified in Section
7.01(a)(xviii).
"Permitted Preferred Stock" means (a) preferred stock of the Company that
(i) does not require (or permit at the option of the holder) any dividend,
interest, sinking fund or redemption
18
payment (other than payments made in common stock or Permitted Preferred Stock)
to be made and (ii) is not convertible or exchangeable (unless at the sole
option of the Company) for debt securities or any Capital Stock other than
Capital Stock of the type described in clause (i) and (b) the Class B Preferred
Stock.
"Permitted Refinancing Indebtedness" means Indebtedness of the Company that
(i) does not require mandatory principal payments prior to the first anniversary
of the Maturity Date, (ii) contains covenants and events of default no more
restrictive to the Company than those in the Loan Documents and (iii) is
subordinated to the Loans on substantially the terms set forth in Exhibit G
hereto or otherwise on terms reasonably satisfactory to the Required Lenders;
provided that (x) no Event of Default shall have occurred and be continuing at
the time or immediately after such Indebtedness is incurred and (y) immediately
after giving effect to the incurrence of such Indebtedness and the application
of the proceeds thereof, the Company and its Subsidiaries are in compliance with
all of the covenants contained in the Loan Documents (including all financial
and ratings covenants) calculated on a Pro Forma Basis.
"Permitted Refinancing Preferred Stock" means preferred stock of the
Company that (i) does not require (or permit at the option of the holder) (x)
the declaration or payment of cash dividend payments in an aggregate amount
exceeding the maximum amount that the Company could have paid during the
applicable Calculation Period without contravening Section 7.12 as of the end of
the most recently ended Fiscal Quarter calculated on a Pro Forma Basis or (y)
any sinking fund or redemption payment (other than payments made in common stock
or Permitted Refinancing Preferred Stock) to be made prior to the first
anniversary of the Maturity Date and (ii) is not convertible or exchangeable
(unless at the sole option of the Company) for debt securities or any Capital
Stock other than common stock of the Company, Permitted Preferred Stock or
Permitted Refinancing Preferred Stock prior to the first anniversary of the
Maturity Date.
"Permitted Swap Obligations" means all obligations (contingent or
otherwise) of the Company or any Subsidiary existing or arising under Swap
Contracts, provided that each of the following criteria is satisfied: (a) such
obligations are (or were) entered into by such Person in the ordinary course of
business for the purpose of directly mitigating risks associated with
liabilities, commitments or assets held by such Person, or changes in the value
of securities issued by such Person in conjunction with a securities repurchase
program not otherwise prohibited hereunder, and not for purposes of speculation
or taking a "market view" and (b) such Swap Contracts do not contain any
provision ("walk-away" provision) exonerating the non-defaulting party from its
obligation to make payments on outstanding transactions to the defaulting party.
"Permitted Transactions" means (a) mortgage-backed security transactions in
which an investor sells mortgage collateral, such as securities issued by the
Government National Mortgage Association and the Federal Home Loan Mortgage
Corporation for delivery in the current month while simultaneously contracting
to repurchase "substantially the same" (as determined by the Public Securities
Association and GAAP) collateral for a later settlement, (b) transactions in
which an investor lends cash to a primary dealer and the primary dealer
collateralizes the borrowing of the cash with certain securities, (c)
transactions in which an investor lends securities to a primary dealer and the
primary dealer collateralizes the borrowing
19
of the securities with cash collateral, (d) transactions in which an investor
makes loans of securities to a broker-dealer under an agreement requiring such
loans to be continuously secured by cash collateral or United States government
securities and (e) transactions in which a federal home loan mortgage bank (a
"FHLMB") makes loans to an Insurance Subsidiary, that are sufficiently secured
by appropriate assets of such Insurance Subsidiary consisting of government
agency mortgage-backed securities in accordance with the rules, regulations and
guidelines of such FHLMB for its loan programs.
"Person" means an individual, partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated association,
joint venture or Governmental Authority or other entity of whatever nature.
"Plan" means an employee benefit plan (as defined in Section 3(3) of ERISA)
that the Company sponsors or maintains or to which the Company makes, is making
or is obligated to make contributions and includes any Pension Plan.
"Prior Effective Date" means the "Effective Date" under the Existing Credit
Agreement.
"Pro Forma Basis" means, with respect to compliance with any test or
covenant hereunder and in connection with any event or transaction requiring a
calculation on a Pro Forma Basis for any period, compliance with such test or
covenant after giving effect to such event or transaction, and (i) in the case
of any Material Acquisition or Material Disposition, including pro forma
adjustments only to the extent consistent with Article 11 of Regulation S-X
under the Securities Act and using for purposes of determining such compliance
(x) in the case of any Material Acquisition, the historical financial statements
of all entities or assets so acquired or to be acquired and (y) the consolidated
financial statements of the Company and its Subsidiaries, which shall be
reformulated as if such Material Acquisition or Material Disposition, and any
other Material Acquisitions or Material Dispositions that have been consummated
during such period, had been consummated on the first day of such period, (ii)
in the case of any incurrence of Indebtedness, assuming such Indebtedness was
incurred on the first day of such period and assuming that such Indebtedness
bears interest during the portion of such period prior to the date of incurrence
at, in the case of Indebtedness bearing interest at a floating rate, the
weighted average of the interest rates applicable to outstanding Loans during
such period and, in the case of Indebtedness bearing interest at a fixed rate,
such fixed rate, (iii) in the case of any prepayment of Indebtedness, assuming
that such prepayment had occurred on the first day of such period, (iv) in the
case of the declaration or payment of any dividend, assuming such dividend had
been declared and paid on the first day of such period and (v) making such other
pro forma adjustments as would be permitted or required by Regulation S-K under
the Securities Act.
"Pro Rata Share" means, as to any Lender under a Facility (a) at any time
at which the Commitments under such Facility remain outstanding, the percentage
equivalent (expressed as a decimal, rounded to the ninth decimal place) at such
time of such Lender's Commitment under such Facility divided by the combined
Commitments of all Lenders under such Facility, and (b) after the termination of
the Commitments under such Facility, the percentage equivalent (expressed as a
decimal, rounded to the ninth decimal place) at such time of the principal
amount
20
of such Lender's outstanding Loans under such Facility divided by the aggregate
principal amount of the outstanding Loans of all the Lenders under such
Facility.
"Purchase Money Debt" means Indebtedness incurred by a Person in connection
with the purchase of fixed or capital assets by such Person, in which assets the
seller or financier thereof has taken or retained a Lien; provided that (x) any
such Lien attaches to such assets concurrently with or within 120 days after the
purchase thereof by such Person and (y) at the time of incurrence of such
Indebtedness, the aggregate principal amount of such Indebtedness shall not
exceed the costs of the assets so purchased plus fees and expenses reasonably
related thereto.
"Quarterly Statement" means the quarterly statutory financial statement of
any Insurance Subsidiary required to be filed with the insurance commissioner
(or similar authority) of its jurisdiction of incorporation or, if no specific
form is so required, in the form of financial statements permitted by such
insurance commissioner (or such similar authority) to be used for filing
quarterly statutory financial statements and shall contain the type of financial
information permitted by such insurance commissioner (or such similar authority)
to be disclosed therein, together with all exhibits or schedules filed
therewith.
"Recharacterized Portion" means the portion, if any, of any Permitted
Refinancing Preferred Stock that qualified as permanent equity for purposes of
GAAP at the time of initial issuance but no longer qualifies as permanent equity
for purposes of GAAP on the Company's consolidated balance sheet as a result of
a change in GAAP after the date of such issuance.
"Reduction Amount" has the meaning set forth in Section 2.08(d).
"Refinancing" has the meaning set forth in the recitals hereto.
"Register" has the meaning specified in Section 10.7(c).
"Reinsurance Agreements" means any agreement, contract, treaty, certificate
or other arrangement by which any Insurance Subsidiary agrees to transfer or
cede to another insurer all or part of the liability assumed or assets held by
it under one or more insurance, annuity, reinsurance or retrocession policies,
agreements, contracts, treaties, certificates or similar arrangements.
Reinsurance Agreements shall include, but not be limited to, any agreement,
contract, treaty, certificate or other arrangement that is treated as such by
the applicable Department.
"Related Parties" means, with respect to any Person, such Person's
Affiliates and the partners, directors, officers, employees, agents and advisors
of such Person and of such Person's Affiliates.
"Reportable Event" means any of the events set forth in Section 4043(c) of
ERISA or the regulations thereunder, other than any such event for which the
30-day notice requirement under ERISA has been waived in regulations issued by
the PBGC.
"Required Lenders" means, as of any date of determination, Lenders holding
more than 50% of the sum of the (a) Total Outstandings and (b) aggregate unused
Revolving Credit
21
Commitments; provided that the unused Revolving Credit Commitment of, and the
portion of the Total Outstandings held or deemed held by, any Defaulting Lender
shall be excluded for purposes of making a determination of Required Lenders.
"Required Revolving Credit Lenders" means, as of any date of determination,
Revolving Credit Lenders holding more than 50% of the sum of the (a) Total
Revolving Credit Outstandings and (b) aggregate unused Revolving Credit
Commitments; provided that the unused Revolving Credit Commitment of, and the
portion of the Total Revolving Credit Outstandings held or deemed held by, any
Defaulting Lender shall be excluded for purposes of making a determination of
Required Revolving Credit Lenders.
"Required Term Lenders" means, as of any date of determination, Term
Lenders holding more than 50% of the aggregate principal amount of the Term
Loans outstanding on such date; provided that the Term Loans held by any
Defaulting Lender shall be excluded for purposes of making a determination of
Required Term Lenders.
"Requirement of Law" means, as to any Person, any law (statutory or
common), treaty, rule or regulation or determination of an arbitrator or of a
Governmental Authority, in each case applicable to or legally binding upon the
Person or any of its property or to which the Person or any of its property is
subject.
"Responsible Officer" means the chief executive officer, president, chief
financial officer, treasurer or assistant treasurer of an Obligor. Any document
delivered under any Loan Document that is signed by a Responsible Officer of an
Obligor shall be conclusively presumed to have been authorized by all necessary
corporate, partnership and/or other action on the part of such Obligor and such
Responsible Officer shall be conclusively presumed to have acted on behalf of
such Obligor. Unless otherwise specified, "Responsible Officer" means a
Responsible Officer of the Company.
"Restricted Payments" has the meaning set forth in Section 7.08.
"Revolving Credit Commitment" means, as to each Revolving Credit Lender,
its obligation to make Revolving Credit Loans to the Company pursuant to Section
2.02 in an aggregate principal amount at any one time outstanding not to exceed
the amount set forth opposite such Lender's name on Schedule 2.01 under the
caption "Revolving Credit Commitment" or opposite such caption in the Assignment
and Assumption pursuant to which such Lender becomes a party hereto, as
applicable, as such amount may be adjusted from time to time in accordance with
this Agreement.
"Revolving Credit Facility" means, at any time, the aggregate amount of the
Revolving Credit Lenders' Revolving Credit Commitments at such time.
"Revolving Credit Lender" means, at any time, any Lender that has a
Revolving Credit Commitment at such time.
"Revolving Credit Loan" has the meaning specified in Section 2.02(a).
"Revolving Credit Note" has the meaning specified in Section 2.04(b).
22
"S&P" means Standard & Poor's Ratings Group, a division of ▇▇▇▇▇▇-▇▇▇▇,
Inc., together with any Person succeeding thereto by merger, consolidation or
acquisition of all or substantially all of its assets, including substantially
all of its business of rating securities.
"SAP" means, with respect to any Insurance Subsidiary, the statutory
accounting practices prescribed or permitted by the insurance commissioner (or
other similar authority) in the jurisdiction of such Insurance Subsidiary for
the preparation of annual statements and other financial reports by insurance
companies of the same type as such Insurance Subsidiary that are applicable to
the circumstances as of the date of filing of such statement or report.
"SEC" means the Securities and Exchange Commission or any Governmental
Authority succeeding to any of its principal functions.
"Secured Guarantee" has the meaning specified in the Security Agreement.
"Secured Obligations" has the meaning specified in the Security Agreement.
"Secured Swap Contract" means any Swap Contract entered into by an Obligor
with a Lender or a lender under the Existing Credit Agreement (or an Affiliate
of a Lender or of a lender under the Existing Credit Agreement), at the time
such Swap Contract was entered into, to hedge interest rate risk of such Obligor
and Subsidiaries that are not Insurance Subsidiaries.
"Security Agreement" means the Guarantee and Security Agreement, dated as
of June 22, 2004, among the Obligors and the Agent.
"Security Documents" means the Security Agreement, each Affirmation and
Consent and each other security agreement, instrument or document executed and
delivered pursuant thereto or pursuant to Section 6.10 or Section 6.11 to secure
any of the Secured Obligations.
"Single Employer Pension Plan" means a pension plan as such term is defined
in section 3(2) of ERISA, other than a multiemployer plan as defined in section
4001(a)(3) of ERISA, to which the Company or any other ERISA Affiliate may have
liability, including any liability by reason of having been a substantial
employer within the meaning of section 4063 of ERISA at any time during the
preceding five years or by reason of being deemed to be a contributing sponsor
under section 4069 of ERISA.
"Statutory Net Income" means, for any period, the net income of an
Insurance Subsidiary determined in accordance with SAP.
"Subsidiary" of a Person means any corporation, partnership, limited
liability company, limited liability partnership, joint venture, trust,
association or other unincorporated organization of which or in which such
Person and such Person's Subsidiaries own directly or indirectly more than 50%
of (a) the combined voting power of all classes of stock having general voting
power under ordinary circumstances to elect a majority of the board of
directors, if it is a corporation, (b) the voting or managing interests (which
shall mean the general partner in the case of a partnership), if it is a
partnership, joint venture or similar entity, (c) the beneficial interest, if it
is a trust, association or other unincorporated organization or (d) the
membership interest, if it is a limited liability company; provided that none of
Paladin Entertainment Holdings, LLC
23
("Paladin"), Resortport Investment Partnership or any Subsidiary of the
foregoing shall be considered a Subsidiary for any purpose of this Agreement.
Unless otherwise specified, "Subsidiary" means a Subsidiary of the Company.
"Subsidiary Guarantors" means each Subsidiary listed on the signature pages
of the Security Agreement under the caption "Subsidiary Guarantors" and each
Subsidiary that shall, at any time after the date thereof, become a Subsidiary
Guarantor pursuant to Section 23 of the Security Agreement.
"Sufficient Liquidity" has the meaning specified in Section
7.01(a)(xviii)(B).
"Surplus Debentures" means, as to any Insurance Subsidiary, debt securities
of such Insurance Subsidiary issued to the Company or any other Subsidiary the
proceeds of which are permitted to be included, in whole or in part, as Capital
and Surplus of such Insurance Subsidiary as approved and permitted by the
applicable Department.
"Swap Contract" means any agreement, relating to any transaction that is a
rate swap, basis swap, forward rate transaction, commodity swap, commodity
option, equity or equity index swap or option, bond, note or ▇▇▇▇ option,
interest rate option, forward foreign exchange transaction, cap, collar or floor
transaction, currency swap, cross-currency rate swap, swaption, currency option
or any other similar transaction (including any option to enter into any of the
foregoing) or any combination of the foregoing, and any master agreement
relating to or governing any or all of the foregoing.
"Swap Termination Value" means, in respect of any one or more Swap
Contracts, after taking into account the effect of any legally enforceable
netting agreement relating to such Swap Contracts, (a) for any date on or after
the date such Swap Contracts have been closed out and termination value(s)
determined in accordance therewith, such termination value(s) and (b) for any
date prior to the date referenced in clause (a), the amount(s) determined as the
▇▇▇▇-to-market value(s) for such Swap Contracts, as determined by the Company
based upon one or more mid-market or other readily available quotations provided
by any recognized dealer in such Swap Contracts (which may include any Lender).
"Synthetic Purchase Agreement" means any agreement pursuant to which the
Company or any of its Subsidiaries is or may become obligated to make (a) any
payment in connection with the purchase by any third party from a Person other
than the Company or any of its Subsidiaries (other than any Subsidiary that is a
Subsidiary of an Insurance Subsidiary but is not itself an Insurance Subsidiary)
of any Capital Stock or Indebtedness of the Company or any of its Subsidiaries
(other than any Subsidiary that is a Subsidiary of an Insurance Subsidiary but
is not itself an Insurance Subsidiary) or (b) any payment the amount of which is
determined by reference to the price or value at any time of any such Capital
Stock or Indebtedness; provided that (i) no phantom stock or similar plan
providing for payments only to current or former directors, officers or
employees of the Company or any of its Subsidiaries (or to their heirs or
estates) and (ii) no such agreement in respect of any Disposition of any Capital
Stock of a Subsidiary of the Company that is permitted by Section 7.03 shall in
either case be deemed to be a Synthetic Purchase Agreement.
24
"Tax Sharing Agreement" means the amended and restated consolidated income
tax agreement dated January 1, 2004 among the Company and certain of its
Subsidiaries.
"Taxes" means any and all present or future taxes, levies, assessments,
imposts, duties, deductions, fees, withholdings or similar charges, and all
liabilities with respect thereto, excluding, in the case of each Lender and the
Agent, respectively, taxes imposed as a result of a connection between such
Lender or the Agent and the jurisdiction imposing such tax (other than any
connection arising solely from such Lender or the Agent having executed,
delivered or performed its obligations or received a payment under this
Agreement or any other Loan Document) including the jurisdiction (or any
political subdivision thereof) under the laws of which such Lender or the Agent,
as the case may be, is organized or maintains its Lending Office.
"Term Commitment" means, as to each Term Lender, its obligation to make
Term Loans to the Company pursuant to Section 2.01 in an aggregate principal
amount at any one time outstanding not to exceed the amount set forth opposite
such Term Lender's name on Schedule 2.01 under the caption "Term Commitment" or
opposite such caption in the Assignment and Assumption pursuant to which such
Term A Lender becomes a party hereto, as applicable, as such amount may be
adjusted from time to time in accordance with this Agreement.
"Term Facility" means, at any time, (a) on or prior to the Effective Date,
the aggregate amount of the Term Commitments at such time and (b) thereafter,
the aggregate principal amount of the Term Loans of all Term Lenders outstanding
at such time.
"Term Lender" means (a) at any time on or prior to the Effective Date, any
Lender that has a Term Commitment at such time and (b) at any time after the
Effective Date, any Lender that holds Term Loans at such time.
"Term Loan" has the meaning set forth in Section 2.01.
"Term Loan Conversion Notice" has the meaning specified in Section 10.11.
"Term Note" has the meaning specified in Section 2.04(b).
"Termination Date" refers to Revolving Credit Loans and means June 22,
2009, or if such day is not a Business Day, the next succeeding Business Day.
"Total Capitalization" means, without duplication, (a) the amount described
in clause (a) of the definition of "Debt to Total Capitalization Ratio" plus (b)
the Total Shareholders' Equity of the Company.
"Total Outstandings" means the aggregate Outstanding Amount of all Loans.
"Total Revolving Credit Outstandings" means the aggregate Outstanding
Amount of all Revolving Credit Loans.
"Total Shareholders' Equity" means the total common and preferred
shareholders' equity of the Company as determined in accordance with GAAP
(calculated including any Recharacterized Portion, but excluding (i) unrealized
gains (losses) on securities as determined in accordance with FAS 115 and (ii)
any charges taken to write off any goodwill included on the
25
Company's balance sheet on the Effective Date to the extent such charges are
required by FAS 142).
"Transaction Liens" means the Liens granted by the Obligors under the
Security Documents.
"Transactions" means the execution, delivery and performance by each
Obligor of the Loan Documents to which it is to be a party and the borrowing of
the Loans hereunder.
"Unfunded Pension Liability" means the excess of a Plan's benefit
liabilities under Section 400l(a)(16) of ERISA over the current value of that
Plan's assets, determined in accordance with the assumptions used for funding
the Pension Plan pursuant to Section 412 of the Code for the applicable plan
year.
"United States" and "U.S." each means the United States of America.
"Wholly-Owned Subsidiary" means any corporation in which (other than
directors' and national citizen qualifying shares or similar de minimis holdings
by another Person, in each case, as required by law) 100% of the capital stock
of each class having ordinary voting power, and 100% of the capital stock of
every other class, in each case (or, in the case of Persons other than
corporations, membership interests or other equity interests), at the time as of
which any determination is being made, is owned, beneficially and of record, by
the Company, or by one or more of the other Wholly-Owned Subsidiaries, or both.
Section 1.02. Other Interpretive Provisions. (a) The meanings of defined
terms are equally applicable to the singular and plural forms of the defined
terms.
(b) The words "hereof", "herein", "hereunder" and similar words refer to
this Agreement as a whole and not to any particular provision of this Agreement;
and subsection, Section, Schedule and Exhibit references are to this Agreement
unless otherwise specified.
(c) (i) The term "documents" includes any and all instruments, documents,
agreements, certificates, indentures, notices and other writings, however
evidenced.
(ii) The term "including" is not limiting and means "including without
limitation."
(iii) In the computation of periods of time from a specified date to a
later specified date, the word "from" means "from and including," the words "to"
and "until" each mean "to but excluding" and the word "through" means "to and
including."
(d) Unless otherwise expressly provided herein or the context requires
otherwise, (i) references to agreements (including this Agreement) and other
contractual instruments shall be deemed to include all subsequent amendments and
other modifications thereto, but only to the extent such amendments and other
modifications are not prohibited by the terms of any Loan Document, (ii)
references to any statute or regulation are to be construed as including all
statutory and regulatory provisions consolidating, amending, replacing,
supplementing or interpreting the statute or regulation, (iii) any reference
herein to a Person shall be construed to include such Person's permitted
successors and assigns and (iv) the word "property" shall be
26
construed to refer to any and all tangible and intangible assets and properties,
including cash, securities, accounts and contract rights.
(e) The captions and headings of this Agreement are for convenience of
reference only and shall not affect the interpretation of this Agreement.
(f) This Agreement and other Loan Documents may use several different
limitations, tests or measurements to regulate the same or similar matters. All
such limitations, tests and measurements are cumulative and shall each be
performed in accordance with their terms. Unless otherwise expressly provided,
any reference to any action of the Agent or the Lenders by way of consent,
approval or waiver shall be deemed modified by the phrase "in its/their sole and
reasonable discretion."
(g) This Agreement and the other Loan Documents are the result of
negotiations among and have been reviewed by counsel to the Agent, the Company
and the other parties, and are the products of all parties. Accordingly, they
shall not be construed against the Lenders or the Agent merely because of the
Agent's or Lenders' involvement in their preparation.
Section 1.03. Classification of Loans and Borrowings. For purposes of this
Agreement, Loans may be classified and referred to by Interest Type (e.g., a
"Eurodollar Rate Loan"). Borrowings also may be classified and referred to by
Interest Type (e.g., a "Eurodollar Rate Borrowing").
Section 1.04. Accounting Principles. (a) Unless the context otherwise
clearly requires, all accounting terms not expressly defined herein shall be
construed, and all financial computations required under this Agreement shall be
made, in accordance with GAAP as in effect from time to time, consistently
applied.
(b) References herein to particular columns, lines or sections of any
Person's Annual Statement shall be deemed, where appropriate, to be references
to the corresponding column, line or section of such Person's Quarterly
Statement, or if no such corresponding column, line or section exists or if any
report form changes, then to the corresponding item referenced thereby. In the
event the columns, lines or sections of the Annual Statement or Quarterly
Statement referenced herein are changed or renumbered from the columns, lines
and sections applicable to the 2004 Annual Statement, or the March 31, ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, all such references shall be deemed references to such
column, line or section as so renumbered or changed.
(c) In the event of any future Material Acquisition or Material
Disposition, determinations of compliance with the financial covenants contained
herein for any applicable calculation period shall be made on a Pro Forma Basis.
(d) If, at any time after the date of this Agreement, any material change
is made to GAAP or the Company's accounting practices that would affect in any
material respect the determination of compliance with the covenants set forth in
this Agreement, the Company shall notify the Agent of the change and the Company
and the Agent shall negotiate in good faith to amend such covenant, subject to
the approval of the Required Lenders, to restore the Company and the Lenders to
the position they occupied before the implementation of such material change in
GAAP or accounting practices; provided that if the Company and the Agent are
unable to
27
reach agreement within 30 days following the implementation of such material
change, the Agent shall be permitted, acting in good faith, to make such
amendments, in each case subject to the approval of the Required Lenders, to the
covenants set forth in this Agreement as it reasonably determines are necessary
to restore the Company and the Lenders to the position they occupied prior to
the implementation thereof.
Section 1.05. Amendment and Restatement of Existing Credit Agreement. This
Agreement amends and restates the Existing Credit Agreement and on and after the
date hereof, each reference in any Loan Document to "this Agreement", "herein",
"hereof", "hereunder" or words of similar import when referring to the Existing
Credit Agreement shall mean and be a reference to the Existing Credit Agreement
as amended and restated hereby.
ARTICLE 2
THE CREDITS
Section 2.01. Term Loan
(a) Subject to the terms and conditions set forth herein, each Term Lender
severally agrees to make a single loan (a "Term Loan") to the Company on the
Effective Date in an amount not to exceed such Term Lender's Term Commitment at
such time. The Borrowing shall consist of Term Loans made simultaneously by the
Term Lenders ratably according to their Term Commitments. Amounts borrowed under
this Section 2.01(a) and repaid or prepaid may not be reborrowed.
(b) Each Term Loan shall be made as part of a Borrowing consisting of Term
Loans of the same Interest Type made by the Term Lenders ratably in accordance
with their respective Term Commitments.
(c) Subject to Section 2.03, Term Loans may be Base Rate Loans or
Eurodollar Rate Loans, provided that any Eurodollar Rate Loans made on the
Effective Date shall have an Interest Period of not greater than one month.
(d) Term Loans shall be convertible from one Interest Type to the other;
provided that (x) the Company may not select the Eurodollar Rate for any
Borrowing if the aggregate amount of such Borrowing is less than $5,000,000 and
(y) there shall not be more than 10 different Interest Periods in effect in
respect of all Term Loans then outstanding.
Section 2.02. Revolving Credit Loans
(a) Subject to the terms and conditions set forth herein, each Revolving
Credit Lender severally agrees to make loans (each such loan, a "Revolving
Credit Loan") to the Company from time to time, on any Business Day during the
Available Period, in an aggregate amount not to exceed at any time outstanding
the amount of such Lender's Revolving Credit Commitment; provided, however, that
after giving effect to any Borrowing of Revolving Credit Loans, (i) the Total
Revolving Credit Outstandings at such time shall not exceed the Revolving Credit
Facility at such time, and (ii) the aggregate Outstanding Amount of the
Revolving Credit Loans of any Lender shall not exceed such Revolving Credit
Lender's Revolving Credit Commitment. Within the limits of each Revolving Credit
Lender's Revolving Credit Commitment, and subject to the
28
other terms and conditions hereof, the Company may borrow under this Section
2.02(a), prepay under Section 2.08, and reborrow under this Section 2.02(a).
(b) Each Revolving Credit Loan shall be made as part of a Borrowing
consisting of Revolving Credit Loans of the same Interest Type made by the
Revolving Credit Lenders ratably in accordance with their respective Revolving
Credit Commitments.
(c) Subject to Section 2.03, Revolving Credit Loans may be Base Rate Loans
or Eurodollar Rate Loans, provided that any Eurodollar Rate Loans made on the
Effective Date shall have an Interest Period of not greater than one month.
(d) Revolving Credit Loans shall be convertible from one Interest Type to
the other; provided that (x) the Company may not select the Eurodollar Rate for
any Borrowing if the aggregate amount of such Borrowing is less than $5,000,000
and (y) there shall not be more than 10 different Interest Periods in effect in
respect of all Revolving Credit Loans then outstanding.
Section 2.03. Borrowing, Conversion and Continuation of Loans. (a) Each
Borrowing and each conversion of Loans from one Interest Type to the other, and
each continuation of Eurodollar Rate Loans shall be made upon the Company's
irrevocable written notice to the Agent in the form of a Loan Notice,
appropriately completed and signed by a Responsible Officer of the Company. Each
such notice must be received by the Agent not later than 12:00 Noon (New York
City time) (i) on the requested date of a Borrowing of Base Rate Loans, and (ii)
three Business Days prior to the requested date of a Borrowing or any conversion
to or continuation of Eurodollar Rate Loans or of any conversion of Eurodollar
Rate Loans to Base Rate Loans; provided that, in the case of any Borrowing of
Eurodollar Rate Loans on the Effective Date, such notice shall be accompanied by
a customary funding indemnity letter in favor of the Agent, and in form and
substance reasonably satisfactory to the Agent.
(b) Each Loan Notice shall specify (i) whether the Company is requesting a
Term Borrowing, a Revolving Credit Borrowing, a conversion of Loans from one
Interest Type to the other, or a continuation of Eurodollar Rate Loans, (ii) the
requested date of the Borrowing, conversion or continuation, as the case may be
(which shall be a Business Day), (iii) the principal amount of Loans to be
borrowed, converted or continued, (iv) the Interest Type of Loans to be borrowed
or to which existing Loans are to be converted, and (v) if applicable, the
duration of the Interest Period with respect thereto (each such Interest Period
shall comply with the provisions of the definition of "Interest Period").
(c) If the Company fails to specify an Interest Type of Loan in a Loan
Notice or if the Company fails to give a timely notice requesting a conversion
or continuation, then such Loans shall be continued as of the last day of the
applicable Interest Period as Eurodollar Rate Loans having a one month Interest
Period. If the Company requests a Borrowing of, conversion to, or continuation
of, Eurodollar Rate Loans in any such Loan Notice, but fails to specify an
Interest Period, it will be deemed to have specified an Interest Period of one
month.
(d) Following receipt of a Loan Notice, the Agent shall promptly notify
each Lender of the amount of its Pro Rata Share of the applicable Loans, and if
no timely notice of a conversion or continuation is provided by the Company, the
Agent shall notify each Lender of
29
the details of any automatic extension of such Eurodollar Rate Loan for a one
month Interest Period. In the case of a Borrowing, each Lender shall make the
amount of its Loan available to the Agent in immediately available funds at the
Agent's Office not later than 1:00 p.m (New York City time). on the Business Day
specified in the applicable Loan Notice. Upon satisfaction of the applicable
conditions set forth in Section 4.01, the Agent shall make all funds so received
available to the Company in like funds as received by the Agent either by (i)
crediting the account of the Company on the books of BofA with the amount of
such funds or (ii) wire transfer of such funds, in each case in accordance with
instructions provided to (and reasonably acceptable to) the Agent by the
Company.
(e) Except as otherwise provided herein, a Eurodollar Rate Loan may be
continued or converted only on the last day of an Interest Period for such
Eurodollar Rate Loan.
(f) Notwithstanding any contrary provision hereof, if an Event of Default
as set forth in Section 8.01(a), (f) or (g) has occurred and is continuing,
unless the Required Lenders otherwise consent or any other Event of Default has
occurred and is continuing and the Required Lenders have requested, each
Borrowing will be converted into a Base Rate Borrowing at the end of the
Interest Period applicable thereto.
(g) The Agent shall promptly notify the Company and the Lenders of the
interest rate applicable to any Interest Period for Eurodollar Rate Loans upon
determination of such interest rate. The determination of the Eurodollar Rate by
the Agent shall be conclusive in the absence of manifest error. At any time that
Base Rate Loans are outstanding, the Agent shall notify the Company and the
Lenders of any change in BofA's prime rate used in determining the Base Rate
promptly following the public announcement of such change.
(h) The failure of any Lender to make the Loan to be made by it as part of
any Borrowing shall not relieve any other Lender of its obligation, if any,
hereunder to make its Loan on the date of such Borrowing, but no Lender shall be
responsible for the failure of any other Lender to make the Loan to be made by
such other Lender on the date of any Borrowing.
Section 2.04. Notes; Loan Accounts. (a) Each Loan made by each Lender shall
be evidenced by one or more loan accounts or records maintained by such Lender
and by the Agent in the ordinary course of business. The loan accounts or
records maintained by the Agent and each Lender shall be presumptive evidence of
the amount of the Loans made by the Lenders to the Company and the interest and
payments thereon. Any failure so to record or any error in doing so shall not,
however, limit or otherwise affect the obligation of the Company hereunder to
pay any amount owing with respect to the Loans. In the event of any conflict
between the accounts and records maintained by any Lender and the accounts and
records of the Agent in respect of such matters, the accounts and records of the
Agent shall control in the absence of manifest error.
(b) Upon the request of any Lender made through the Agent, instead of or in
addition to loan accounts, the Loans made by each Lender may be evidenced by one
or more notes in substantially the form of Exhibit B-1 hereto, in the case of
Term Loans (each such note, a "Term Note"), and Exhibit B-2 hereto, in the case
of Revolving Credit Loans (each such note, a "Revolving Credit Note," and,
together with Term Notes, collectively, the "Notes"). Each
30
Lender shall endorse on the schedules annexed to its Note the date, amount and
maturity of each Loan deemed made by it and the amount of each payment of
principal made by the Company with respect thereto. Each such Lender is
irrevocably authorized by the Company to endorse its Note and each Lender's
record shall be conclusive absent demonstrable error; provided that the failure
of a Lender to make, or an error in making, a notation thereon with respect to
any Loan shall not limit or otherwise affect the obligations of the Company
hereunder or under any such Note to such Lender.
Section 2.05. Termination or Reduction of Commitments
(a) Optional. The Company may, upon notice to the Agent, terminate or
reduce the unused portions of the Revolving Credit Commitments; provided that
(i) any such notice shall be received by the Agent not later than 12:00 noon
three Business Days prior to the date of termination or reduction, (ii) any such
partial reduction shall be in an aggregate amount of $3,000,000 or any whole
multiple of $1,000,000 in excess thereof and (iii) the Company shall not
terminate or reduce the unused portions of the Revolving Credit Commitments if,
after giving effect thereto and to any concurrent prepayments hereunder, the
Total Revolving Credit Outstandings would exceed the Revolving Credit Facility.
(b) Mandatory.
(i) Unless previously terminated, the Term Loan Commitments under the
Term Facility will terminate on the Effective Date immediately after the
closing hereunder.
(ii) Unless earlier terminated, the Revolving Credit Commitments under
the Revolving Credit Facility will terminate on the Termination Date.
(iii) The Revolving Credit Facility shall be automatically and
permanently reduced on each date on which the prepayment of Revolving
Credit Loans outstanding thereunder is required to be made pursuant to
Section 2.08(b) by an amount equal to the applicable Reduction Amount.
(c) The Agent will promptly notify the Lenders of any termination or
reduction of unused portions of the unused Revolving Credit Commitment under
this Section 2.05. Upon any reduction of the unused Revolving Credit
Commitments, the Revolving Credit Commitment of each Revolving Credit Lender
shall be reduced by such Lender's Pro Rata Share of such reduction amount.
(d) All fees accrued until the effective date of any termination or
reduction of the Commitments shall be paid on the effective date of such
termination or reduction.
Section 2.06. Payment at Maturity. The Company shall repay to the Agent (i)
with respect to Term Loans, on the Maturity Date, and (ii) with respect to
Revolving Credit Loans, on the Termination Date, for the account of each Lender,
the then unpaid principal amount of such Lender's Loans together with accrued
and unpaid interest thereon to but excluding the date of such payment.
31
Section 2.07. Repayment of Loans
(a) Term Loans. The Company shall repay to the Agent, for the ratable
account of the Term Lenders, the following percentages of the initial aggregate
principal amount of all Term Loans on the following dates (which percentages
shall be reduced as a result of the application of prepayments in accordance
with the order of priority set forth in Section 2.08(c)):
----------------------------- -----------------------
Date Percentage
----------------------------- -----------------------
----------------------------- -----------------------
September 30, 2005 0.25%
----------------------------- -----------------------
----------------------------- -----------------------
December 31, 2005 0.25%
----------------------------- -----------------------
----------------------------- -----------------------
March 31, 2006 0.25%
----------------------------- -----------------------
----------------------------- -----------------------
June 30, 2006 0.25%
----------------------------- -----------------------
----------------------------- -----------------------
September 30, 2006 0.25%
----------------------------- -----------------------
----------------------------- -----------------------
December 31, 2006 0.25%
----------------------------- -----------------------
----------------------------- -----------------------
March 31, 2007 0.25%
----------------------------- -----------------------
----------------------------- -----------------------
June 30, 2007 0.25%
----------------------------- -----------------------
----------------------------- -----------------------
September 30, 2007 0.25%
----------------------------- -----------------------
----------------------------- -----------------------
December 31, 2007 0.25%
----------------------------- -----------------------
----------------------------- -----------------------
March 31, 2008 0.25%
----------------------------- -----------------------
----------------------------- -----------------------
June 30, 2008 0.25%
----------------------------- -----------------------
----------------------------- -----------------------
September 30, 2008 0.25%
----------------------------- -----------------------
----------------------------- -----------------------
December 31, 2008 0.25%
----------------------------- -----------------------
----------------------------- -----------------------
March 31, 2009 0.25%
----------------------------- -----------------------
----------------------------- -----------------------
June 30, 2009 0.25%
----------------------------- -----------------------
----------------------------- -----------------------
September 30, 2009 0.25%
----------------------------- -----------------------
----------------------------- -----------------------
December 31, 2009 0.25%
----------------------------- -----------------------
----------------------------- -----------------------
March 31, 2010 0.25%
----------------------------- -----------------------
----------------------------- -----------------------
Maturity Date 95.25%
----------------------------- -----------------------
----------------------------- -----------------------
Total 100.00%
----------------------------- -----------------------
----------------------------- -----------------------
(b) Revolving Credit Loans. The Company shall repay to the Agent for the
ratable account of the Revolving Credit Lenders on the Termination Date the
aggregate principal amount of all Revolving Credit Loans outstanding on such
date.
Section 2.08. Optional and Mandatory Prepayments
(a) Optional Prepayments. The Company will have the right at any time to
prepay any Borrowing in whole or in part, in minimum amounts of $3,000,000 or
any multiple of $1,000,000 in excess thereof, subject to the provisions of this
Section.
(b) Mandatory Prepayments. The Company shall be required to make mandatory
prepayments as set forth in subclauses (i) to (v) below unless (x) the Debt to
Total Capitalization Ratio is equal to or less than 20% and (y) each of the
Company's Insurance Subsidiaries (other than Conseco Senior Health Insurance
Company, Bankers Life Insurance Company of Illinois, Conseco Life Insurance
Company of Texas and Conseco Life Insurance Company of New York) has a financial
strength rating of not less than A- from A.M. Best Company, in each case at the
time such prepayment is required to be made (the "Financial Strength Rating
Condition"); provided, however, that the foregoing exclusion from the obligation
to make mandatory
32
prepayments will not apply to prepayments required in respect of the Net
Proceeds of unsecured Indebtedness permitted under Section 7.01(a)(xiv) in
excess of $100,000,000 in the aggregate and Permitted Convertible Indebtedness.
(i) Indebtedness. Within five Business Days after any Net Proceeds are
received by or on behalf of the Company or any Subsidiary in respect of the
incurrence of any Indebtedness by the Company or such Subsidiary, including
Permitted Refinancing Indebtedness, unsecured Indebtedness permitted under
Section 7.01(a)(xiv) in excess of $100,000,000 in the aggregate and
Permitted Convertible Indebtedness, but excluding all other Indebtedness
permitted pursuant to Section 7.01, the Company shall prepay Borrowings in
an aggregate amount equal to such Net Proceeds.
(ii) Equity Issuances. Within five Business Days after any Net
Proceeds are received by or on behalf of the Company or any Subsidiary in
respect of the issuance by the Company or such Subsidiary of any Capital
Stock, or the receipt by the Company or such Subsidiary of any capital
contribution (other than (x) issuances of Capital Stock to the Company or
its Subsidiaries or capital contributions between the Company and its
Subsidiaries or between Subsidiaries or (y) the issuance of Capital Stock
to, or otherwise acquired by, directors, officers or employees of the
Company or its Subsidiaries pursuant to any stock option, restricted stock
or similar compensation plan approved by the board of directors of the
Company or (z) the issuance of Capital Stock as consideration for an
Acquisition permitted under this Agreement), the Company shall prepay
Borrowings in an aggregate amount equal to 50% of such Net Proceeds.
(iii) Asset Sales. Within five Business Days after any Net Proceeds
are received by or on behalf of the Company or any Subsidiary in respect of
the occurrence of any Asset Sale, the Company shall prepay Borrowings in an
aggregate amount equal to such Net Proceeds; provided that a prepayment of
the Borrowings shall be required pursuant to this paragraph only to the
extent that the aggregate Net Proceeds of all Asset Sales in any Fiscal
Year exceeds $5,000,000; provided that so long as no Event of Default shall
have occurred and be continuing, and except in the case of the Net Proceeds
from any sale of an Insurance Subsidiary that would constitute a Material
Disposition, the Company may reinvest all or any portion of such Net
Proceeds in assets useful in its business so long as, within 180 days after
the receipt of such Net Proceeds, such reinvestment shall have been
consummated or the Company shall have entered into a definitive agreement
for such reinvestment, and such reinvestment shall have been consummated no
later than 270 days after the receipt of such Net Proceeds (in each case,
as certified by the Company in writing to the Agent); and provided further
that any Net Proceeds not subject to such definitive agreement or so
reinvested by such 180th or 270th day, as the case may be, shall be
immediately applied to the prepayment of the Loans as set forth in this
Section 2.08(b)(iii).
(iv) Casualty Events. Within five Business Days after any Net Proceeds
are received by or on behalf of the Company or any Subsidiary (that is not
an Insurance Subsidiary or a Subsidiary of an Insurance Subsidiary) in
respect of the occurrence of any Casualty Event, the Company shall prepay
Borrowings in an aggregate amount equal to such Net Proceeds; provided that
a prepayment of the Borrowings shall be required
33
pursuant to this paragraph only to the extent that the aggregate Net
Proceeds of all Casualty Events in any Fiscal Year exceeds $5,000,000;
provided that so long as no Event of Default shall have occurred and be
continuing, the Company may apply all or any portion of such Net Proceeds
to the repair of the property subject to such Casualty Event or the
acquisition of replacement property so long as within 180 days after the
receipt of such Net Proceeds, such repair or replacement shall have been
consummated or the Company shall have entered into definitive agreement for
such repair or replacement, and such repair or replacement shall have been
consummated no later than 270 days after the receipt of such Net Proceeds
(in each case, as certified by the Company in writing to the Agent); and
provided further that any Net Proceeds not subject to such definitive
agreement or so applied by such 180th or 270th day, as the case may be,
shall be immediately applied to the prepayment of the Loans as set forth in
this Section 2.08(b)(iv).
(v) Conseco Excess Cash Flow. Commencing with the Excess Cash
Calculation Period ending December 31, 2004, the Company shall prepay
Borrowings in an aggregate amount equal to 50% of the Conseco Excess Cash
Flow for each Excess Cash Calculation Period; provided that the amount, if
any, required to be applied towards prepayment of Borrowings pursuant to
this subsection (v) shall be reduced by (A) any amount that any Department
shall require the Company to reinvest in or otherwise return to any
Insurance Subsidiary to the extent that such amount is included in the
calculation of the amount determined pursuant to this subsection (v), in
each case as certified by a Responsible Officer pursuant to a certificate
delivered to the Agent at the time of prepayment (or, if no prepayment is
required with respect to any Excess Cash Calculation Period, within 120
days after the end of such Excess Cash Calculation Period) and (B) the
aggregate amount of voluntary prepayments of the Loans made by the Company
during such Calculation Period. Each such prepayment shall be made on or
before the date on which financial statements are delivered pursuant to
Section 6.01(a) with respect to the relevant Excess Cash Calculation Period
(and in any event within 120 days after the end of such Excess Cash
Calculation Period).
(vi) Revolving Credit Facility. If for any reason the Total Revolving
Credit Outstandings at any time exceed the Revolving Credit Facility at
such time, the Company shall immediately prepay Revolving Credit Loans in
an aggregate amount equal to such excess.
(c) Application of Prepayments. Each prepayment of any Borrowing pursuant
to Sections 2.08(b)(i) to (v) shall be applied first to the Term Loans for
application to the next four scheduled principal payments thereof after the
occurrence of the event giving rise to such prepayment in direct order of
maturity, second, to the Term Loans for application ratably to the remaining
principal repayment installments thereof until paid in full and, third, to the
Revolving Credit Facility in the manner set forth in Section 2.08(d). Each
prepayment pursuant to Section 2.08(a) shall be applied as directed by the
Borrower.
(d) Reduction Amount. After the prepayment in full of the Term Loans
pursuant to Section 2.08(c) above, prepayments of the Revolving Credit Facility
made pursuant to Section 2.08(b) (other than pursuant to clause (vi) thereof)
shall initially be applied ratably to the
34
outstanding Revolving Credit Loans, and, in the case of prepayments of the
Revolving Credit Facility required pursuant to clause (i), (ii), (iii), (iv) or
(v) of Section 2.08(b), the amount remaining, if any, after the prepayment in
full of all Revolving Credit Loans outstanding at such time may be retained by
the Company for use in the ordinary course of its business. The Commitments
under the Revolving Credit Facility shall be automatically and permanently
reduced by the sum of (i) any mandatory prepayment amount and (ii) any remaining
amount retained by the Company, in each case, pursuant to Section 2.08(b)(iii)
or (iv) (being, collectively, the "Reduction Amount") as set forth in Section
2.05(b)(iii).
(e) Accrued Interest. Each prepayment of a Borrowing shall be accompanied
by accrued interest on the amount prepaid.
(f) Notice of Prepayments. The Company shall notify the Agent in writing of
any prepayment of any Borrowing hereunder (i) in the case of a Eurodollar Rate
Borrowing, not later than 12:00 Noon (New York City time) three Business Days
before the date of prepayment and (ii) in the case of a Base Rate Borrowing, not
later than 12:00 Noon (New York City time) on the prepayment date. Each such
notice shall be irrevocable and shall specify the prepayment date, the principal
amount of each Borrowing or portion thereof to be prepaid and, without limiting
Section 6.02, in the case of a mandatory prepayment, a reasonably detailed
calculation of the amount of such prepayment. Promptly after it receives any
such notice, the Agent shall advise the Lenders of the contents thereof.
Section 2.09. Interest. (a) Each Base Rate Loan shall bear interest on the
outstanding principal amount thereof for each day at a rate per annum equal to
the Base Rate plus the Applicable Margin.
(b) Each Eurodollar Rate Loan shall bear interest on the outstanding
principal amount for each Interest Period applicable thereto at a rate per annum
equal to the Eurodollar Rate for such Interest Period plus the Applicable
Margin.
(c) Notwithstanding the foregoing, upon the occurrence of any Event of
Default, for so long as such Event of Default shall be continuing, the principal
of and interest on each Loan shall, without further notice in the case of any
Event of Default pursuant to Section 8.01(a), Section 8.01(f) or Section
8.01(g), and upon notice from the Agent (upon the instruction of the Required
Lenders) in the case of any other Event of Default, bear interest, after as well
as before judgment to the extent permitted by law, at a rate per annum equal to
2% plus the rate otherwise applicable to such Loan as provided in the preceding
subsections of this Section. In addition, if any fee or other amount (other than
principal or interest on any Loan) payable by the Company pursuant to any Loan
Document is not paid when due, whether upon acceleration or otherwise, such
overdue amount shall bear interest, after as well as before judgment to the
extent permitted by law, at a rate per annum equal to 2.0% plus the rate
otherwise applicable to such Loan as provided in the preceding subsections of
this Section.
(d) Interest on each Loan shall be paid in arrears on each Interest Payment
Date for such Loan; provided that (i) interest accrued pursuant to Section
2.09(c) shall be payable on demand of the Agent (upon the instruction of the
Required Lenders), (ii) upon any repayment of any Loan, interest accrued on the
principal amount repaid shall be payable on the date of such
35
repayment and (iii) upon any conversion of a Eurodollar Rate Loan before the end
of the current Interest Period therefor, interest accrued on such Loan shall be
payable on the effective date of such conversion.
(e) Anything herein to the contrary notwithstanding, the obligations of the
Company to any Lender hereunder shall be subject to the limitation that payments
of interest shall not be required for any period for which interest is computed
hereunder to the extent (but only to the extent) that contracting for or
receiving such payment by such Lender would be contrary to the provisions of any
law applicable to such Lender limiting the highest rate of interest that may be
lawfully contracted for, charged or received by such Lender, and in such event
the Company shall pay such Lender interest at the highest rate permitted by
applicable law.
Section 2.10. Fees. (a) The Company shall pay to the Agent, for its own
account, fees payable in the amounts and at the times separately agreed upon by
the Company and the Agent. Such fees shall be fully earned when paid and shall
not be refundable under any circumstances.
(b) The Company shall pay to the Agent for the account of each Revolving
Credit Lender in accordance with its Pro Rata Share of the aggregate Revolving
Credit Commitments, a commitment fee equal to 0.50% of the unused portion of the
Revolving Credit Facility, such fee to be payable quarterly in arrears and on
the date of termination, reduction or expiration of the Revolving Credit
Commitments under the Revolving Credit Facility. The commitment fee shall accrue
at all times during the period of this Agreement, including at any time during
which one or more of the conditions in Section 4.02 is not met, and shall be due
and payable quarterly in arrears on the last Business Day of each March, June,
September and December, commencing with the first such date to occur after the
Effective Date, and on the Termination Date. The commitment fee shall be
calculated quarterly in arrears. Notwithstanding anything herein to the
contrary, the commitment fee shall cease to accrue on that portion of the
Revolving Credit Commitment held by a Defaulting Lender so long as such Lender
is a Defaulting Lender.
Section 2.11. Computation of Fees and Interest. (a) All computations of
interest for Base Rate Loans when the Base Rate is determined by BofA's "prime
rate" shall be made on the basis of a year of 365 or 366 days, as the case may
be, and actual days elapsed. All other computations of fees and interest shall
be made on the basis of a 360-day year and actual days elapsed (which results in
more interest being paid than if computed on the basis of a 365-day year).
Interest and fees shall accrue during each period during which interest or such
fees are computed from the first day thereof to the last day thereof.
(b) Each determination of an interest rate by the Agent shall be conclusive
and binding on the Company and the Lenders in the absence of demonstrable error.
The Agent will, at the request of the Company or any Lender, deliver to the
Company or the Lender, as the case may be, a statement showing the quotations
used by the Agent in determining any interest rate and the resulting interest
rate.
Section 2.12. Payments Generally. (a) All payments to be made by the
Company under the Loan Documents shall be made without condition or deduction
for any defense, set-off, recoupment or counterclaim. Except as otherwise
expressly provided in any Loan Document, all payments to be made by the Company
under any Loan Document shall be made to the Agent for
36
the account of the Lenders at the Agent's Office, and shall be made in dollars
and in immediately available funds, no later than 3:00 p.m. (New York City time)
on the date specified in such Loan Document. The Agent will promptly distribute
to each Lender its Pro Rata Share (or other applicable share as expressly
provided herein) of such payment in like funds as received. Any payment received
by the Agent later than 3:00 p.m. (New York City time) shall be deemed to have
been received on the following Business Day and any applicable interest or fee
shall continue to accrue.
(b) Subject to the provisions set forth in the definition of "Interest
Period" herein, whenever any payment is due on a day other than a Business Day,
such payment shall be made on the following Business Day, and such extension of
time shall in such case be included in the computation of interest or fees, as
the case may be.
(c) Unless the Company or any Lender has notified the Agent, prior to the
date any payment is required to be made by it to the Agent hereunder, that the
Company or such Lender, as the case may be, will not make such payment, the
Agent may assume that the Company or such Lender, as the case may be, has timely
made such payment and may (but shall not be so required to), in reliance
thereon, make available a corresponding amount to the Person entitled thereto.
If and to the extent that such payment was not in fact made to the Agent in
immediately available funds, then:
(i) if the Company failed to make such payment, each Lender shall
forthwith on demand repay to the Agent the portion of such assumed payment
that was made available to such Lender in immediately available funds,
together with interest thereon in respect of each day from and including
the date such amount was made available by the Agent to such Lender to the
date such amount is repaid to the Agent in immediately available funds at
the Federal Funds Rate from time to time in effect; and
(ii) if any Lender failed to make such payment, such Lender shall
forthwith on demand pay to the Agent the amount thereof in immediately
available funds, together with interest thereon for the period from the
date such amount was made available by the Agent to the Company to the date
such amount is recovered by the Agent (the "Compensation Period") at a rate
per annum equal to the Federal Funds Rate from time to time in effect. If
such Lender pays such amount to the Agent, then such amount shall
constitute such Lender's Loan included in the applicable Borrowing. If such
Lender does not pay such amount forthwith upon the Agent's demand therefor,
the Agent may make a demand therefor upon the Company, and the Company
shall pay such amount to the Agent, together with interest thereon for the
Compensation Period at a rate per annum equal to the rate of interest
applicable to the applicable Borrowing. Nothing herein shall be deemed to
relieve any Lender from its obligation to fulfill its Commitment or to
prejudice any rights that the Agent or the Company may have against any
Lender as a result of any default by such Lender hereunder.
A notice of the Agent to any Lender or the Company with respect to any
amount owing under this subsection (c) shall be conclusive, absent manifest
error.
37
(d) If any Lender makes available to the Agent funds for any Loan to be
made by such Lender as provided in the foregoing provisions of this Article 2,
and such funds are not made available to the Company by the Agent because the
conditions to the extension of Loans set forth in Article 4 are not satisfied or
waived in accordance with the terms hereof, the Agent shall return such funds
(in like funds as received from such Lender) to such Lender, without interest.
(e) The obligations of the Lenders hereunder to make Loans are several and
not joint. The failure of any Lender to make any Loan on any date required
hereunder shall not relieve any other Lender of its corresponding obligation to
do so on such date, and no Lender shall be responsible for the failure of any
other Lender to so make its Loan.
(f) Nothing herein shall be deemed to obligate any Lender to obtain the
funds for any Loan in any particular place or manner or to constitute a
representation by any Lender that it has obtained or will obtain the funds for
any Loan in any particular place or manner.
Section 2.13. Sharing of Payments by Lenders. If any Lender shall, by
exercising any right of setoff or counterclaim or otherwise, obtain payment (a)
on account of any Obligations due and payable hereunder and under the other Loan
Documents at such time resulting in such Lender receiving payment in excess of
its ratable share (calculated according to the proportion of (i) the amount of
such Obligations due and payable to such Lender at such time to (ii) the
aggregate amount of the Obligations due and payable to all Lenders hereunder and
under the other Loan Documents at such time) of payments on account of the
Obligations due and payable to all Lenders hereunder and under the other Loan
Documents at such time obtained by all the Lenders at such time or (b) of or on
account of any of Obligations owing (but not due and payable) to such Lender
hereunder and under the other Loan Documents at such time in excess of its
ratable share (calculated according to the proportion of (i) the amount of such
Obligations owing (but not due and payable) to such Lender at such time to (ii)
the aggregate amount of Obligations owing (but not due and payable) to all
Lenders hereunder and under the other Loan Documents at such time) of payments
on account of Obligations owing (but not due and payable) to all Lenders
hereunder and under the other Loan Documents at such time obtained by all the
Lenders at such time, then in each case, such Lender shall (x) notify the Agent
of such fact, and (y) purchase (for cash at face value) participations in the
Obligations of the other Lenders due and payable or owing, as the case may be,
or make such other adjustments as shall be equitable, so that the benefit of
such excess payments shall be shared by all such Lenders, provided that:
(A) if any such participations are purchased and all or any
portion of the payment giving rise thereto is recovered, such
participations shall be rescinded and the purchase price restored to
the extent of such recovery, without interest; and
(B) the provisions of this Section shall not be construed to
apply to (1) any payment made by the Company pursuant to and in
accordance with the express terms of this Agreement or (2) any payment
obtained by a Lender as consideration for the assignment of or sale of
a participation in any of its Loans to any assignee or participant,
other than to the Company or any Subsidiary thereof (as to which the
provisions of this Section shall apply).
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Each Obligor consents to the foregoing and agrees, to the extent it may
effectively do so under applicable law, that any Lender acquiring a
participation pursuant to the foregoing arrangements may exercise against such
Obligor rights of setoff and counterclaim (subject to Section 10.09) with
respect to such participation as fully as if such Lender were a direct creditor
of such Obligor in the amount of such participation.
Section 2.14. Incremental Facility. The Company may, at one time prior to
the Maturity Date, by notice to the Agent, request the addition of a new
facility or an increase in the Term Facility (such increase or any new facility
being a "Commitment Increase") equal to up to $325,000,000 in the aggregate for
all Commitment Increases, to be effective as of a date that is at least 90 days
prior to the scheduled Maturity Date (for such Commitment Increase, the
"Increase Date") as specified in the related notice to the Agent; provided,
however, that (i) on the Increase Date the Company shall be in pro forma
compliance with all financial covenants set forth in Sections 7.11, 7.12, 7.14
and 7.15; (ii) on the Increase Date no Default or Event of Default shall have
occurred and be continuing; (iii) such Commitment Increase shall be documented
on other terms and conditions that are reasonably satisfactory to the Agent and
the Company; and (iv) if on the closing of the Commitment Increase, the
applicable margin on the Commitment Increase is greater than 0.25% per annum
above the Applicable Margin on the Term Facility, the Applicable Margin on the
Term Facility shall be increased to a percentage per annum equal to (A) the
applicable margin on the Commitment Increase minus (B) 0.25% per annum; and (v)
notwithstanding any other provision of any Loan Document (including, without
limitation, Section 10.01), the Loan Documents may be amended by the Agent and
the Company, if necessary, to provide for terms applicable to each Commitment
Increase consistent with the terms hereof.
ARTICLE 3
TAXES, YIELD PROTECTION AND ILLEGALITY
Section 3.01. Taxes. (a) Any and all payments by the Company to any Lender
or the Agent under this Agreement and any other Loan Document shall be made free
and clear of, and without deduction or withholding for, any Taxes. In addition,
the Company shall pay all Other Taxes.
(b) If the Company shall be required by law to deduct or withhold any
Taxes, Other Taxes or Further Taxes from or in respect of any sum payable
hereunder to any Lender or the Agent and, in the case of Taxes, such Taxes arise
as a result of a change in law occurring after the date hereof, then:
(i) the sum payable shall be increased as necessary so that, after
making all required deductions and withholdings (including deductions and
withholdings applicable to additional sums payable under this Section
3.01), such Lender or the Agent, as the case may be, receives and retains
an amount equal to the sum it would have received and retained had no such
deductions or withholdings been made;
(ii) the Company shall make such deductions and withholdings;
39
(iii) the Company shall pay the full amount deducted or withheld to
the relevant taxing authority or other authority in accordance with
applicable law; and
(iv) the Company shall also pay to each Lender or the Agent, at the
time interest is paid, Further Taxes in the amount that the respective
Lender or the Agent specifies as necessary to preserve the after-tax yield
the Lender or the Agent would have received if such Taxes, Other Taxes or
Further Taxes had not been imposed.
(c) The Company agrees to indemnify and hold harmless each Lender and the
Agent for the full amount of Taxes, Other Taxes and Further Taxes (provided
that, in the case of Taxes, such Taxes arise as a result of a change in law
occurring after the date hereof) in the amount that the respective Lender or the
Agent specifies as necessary to preserve the after-tax yield the Lender or the
Agent would have received if such Taxes, Other Taxes or Further Taxes had not
been imposed, and any liability (including penalties, interest, additions to tax
and expenses) arising therefrom or with respect thereto, whether or not such
Taxes, Other Taxes or Further Taxes were correctly or legally asserted. Payment
under this indemnification shall be made within 30 days after the date the
Lender or the Agent makes written demand therefor; provided that the Company
shall not be required to indemnify for any additional penalties, interest,
additions to tax and expenses arising more than 120 days prior to the date the
Lender or the Agent delivers such demand. If any Lender receives a refund in
respect of any Taxes, Other Taxes or Further Taxes as to which it has been
indemnified by the Company or with respect to which the Company (or any Person
on behalf of the Company) has paid additional amounts pursuant to this Section
3.01, it shall promptly repay such refund to the Company (but only to the extent
of indemnity payments made, or additional amounts paid, by the Company (or such
Person acting on behalf of the Company) under this Section 3.01 with respect to
the Taxes, Other Taxes or Further Taxes giving rise to such refund), net of all
out-of-pocket expenses of such Lender or the Agent, as the case may be; provided
that the Company, upon the request of such Lender or the Agent, agrees to return
such refund (together with any penalties, interest or other charges due in
connection therewith to the appropriate taxing authority or other Governmental
Authority) to such Lender or the Agent in the event such Lender or the Agent is
required to pay or to return such refund to the relevant taxing authority or
other Governmental Authority. Nothing contained herein shall require any Lender
to disclose its tax records to the Company or any other Person except for such
tax records as relate solely to Taxes, Other Taxes and Further Taxes as to which
it has been indemnified by the Company or with respect to which the Company (or
any Person on behalf of the Company) has paid additional amounts pursuant to
this Section 3.01.
(d) Within 30 days after the date of any payment by the Company of any
Taxes, Other Taxes or Further Taxes that relate to the Agent or any Lender, the
Company shall furnish to each affected Lender or the Agent, as applicable, the
original or a certified copy of a receipt evidencing payment thereof or other
evidence of payment reasonably satisfactory to such Lender or the Agent.
(e) If the Company is required to pay any amount to any Lender pursuant to
subsection (b) or (c) of this Section 3.01, then such Lender shall use
reasonable efforts (consistent with legal and regulatory restrictions) to change
the jurisdiction of its Lending Office so as to eliminate any such additional
payment by the Company which may thereafter accrue, if
40
such change, in the sole reasonable judgment of such Lender, is not otherwise
disadvantageous to such Lender.
Section 3.02. Illegality. (a) If any Lender determines that the
introduction of any Requirement of Law, or any change in any Requirement of Law,
or in the interpretation or administration of any Requirement of Law, has made
it unlawful, or that any central bank or other Governmental Authority has
asserted that it is unlawful, for any Lender or its applicable Lending Office to
make Eurodollar Rate Loans, then, on notice thereof by the Lender to the Company
through the Agent, any obligation of that Lender to make Eurodollar Rate Loans
shall be suspended until the Lender notifies the Agent and the Company that the
circumstances giving rise to such determination no longer exist.
(b) If a Lender determines that it is unlawful for such Lender to maintain
any Eurodollar Rate Loan, the Company shall, upon its receipt of written notice
of such fact and demand from such Lender (with a copy to the Agent), prepay in
full such Eurodollar Rate Loans of that Lender then outstanding, together with
interest accrued thereon and amounts required under Section 3.04, either on the
last day of the Interest Period thereof, if the Lender may lawfully continue to
maintain such Eurodollar Rate Loans to such day, or immediately, if the Lender
may not lawfully continue to maintain such Eurodollar Rate Loan. If the Company
is required to so prepay any Eurodollar Rate Loan, then concurrently with such
prepayment, the Company shall borrow from the affected Lender, in the amount of
such prepayment, a Base Rate Loan.
(c) If the obligation of any Lender to make or maintain Eurodollar Rate
Loans has been so terminated or suspended, the Company may elect, by giving
notice to the Lender through the Agent, that all Loans which would otherwise be
made or maintained by the Lender as Eurodollar Rate Loans shall instead be Base
Rate Loans.
(d) Before giving any notice to the Agent under this Section 3.02, the
affected Lender shall designate a different Lending Office with respect to its
Eurodollar Rate Loans if such designation will avoid the need for giving such
notice or making such demand and will not, in the judgment of the Lender, be
illegal or otherwise disadvantageous to the Lender.
Section 3.03. Increased Costs and Reduction of Return. (a) If any Lender
determines that, due to either (i) the introduction of or any change in or in
the interpretation of any law or regulation or (ii) the compliance by that
Lender with any guideline or request from any central bank or other Governmental
Authority (whether or not having the force of law), there shall be any increase
in the cost to such Lender of agreeing to make or making, funding or maintaining
any Eurodollar Rate Loans, then the Company shall be liable for, and shall from
time to time, upon written demand (with a copy of such demand to be sent to the
Agent), pay to the Agent for the account of such Lender, additional amounts as
are sufficient to compensate such Lender for such increased costs.
(b) If any Lender shall have determined that (i) the introduction of any
Capital Adequacy Regulation, (ii) any change in any Capital Adequacy Regulation,
(iii) any change in the interpretation or administration of any Capital Adequacy
Regulation by any central bank or other Governmental Authority charged with the
interpretation or administration thereof, or (iv)
41
compliance by the Lender (or its Lending Office) or any corporation controlling
the Lender with any Capital Adequacy Regulation, affects or would affect the
amount of capital required or expected to be maintained by the Lender or any
corporation controlling the Lender and (taking into consideration such Lender's
or such corporation's policies with respect to capital adequacy and such
Lender's desired return on capital) determines that the amount of such capital
is increased as a consequence of its Commitment, loans, credits or obligations
under this Agreement, then, thirty (30) days after written demand by such Lender
to the Company through the Agent, the Company shall pay to the Lender, from time
to time as specified by the Lender, additional amounts sufficient to compensate
the Lender for such increase; provided that the Company shall not be required to
compensate a Lender for any such increases in capital for any period more than
120 days prior to the date such Lender delivers such demand.
(c) Section 3.01 and not this Section 3.03 shall be the only Section of
this Agreement that applies to increased costs with respect to Taxes, Further
Taxes and Other Taxes.
Section 3.04. Funding Losses. The Company shall reimburse each Lender and
hold each Lender harmless from any loss or expense which the Lender may sustain
or incur as a consequence of:
(a) the failure of the Company to make on a timely basis any payment
of principal of any Eurodollar Rate Loan;
(b) the failure of the Company to continue a Loan after the Company
has given (or is deemed to have given) a Notice of Continuation;
(c) the failure of the Company to make any prepayment of any Loan in
accordance with any notice delivered under Section 2.08; or
(d) the prepayment (including pursuant to Section 2.08) or other
payment (including after acceleration thereof) of a Eurodollar Rate Loan on
a day that is not the last day of the relevant Interest Period;
including any such loss or expense arising from the liquidation or reemployment
of funds obtained by it to maintain its Eurodollar Rate Loans or from fees
payable to terminate the deposits from which such funds were obtained, but
excluding any administrative fee or other amount chargeable by such Lender for
the calculation of such loss. For purposes of calculating amounts payable by the
Company to the Lenders under this Section 3.04 and under subsection 3.03(a),
each Eurodollar Rate Loan made by a Lender (and each related reserve, special
deposit or similar requirement) shall be conclusively deemed to have been funded
at the Eurodollar Rate used in determining the Eurodollar Rate for such
Eurodollar Rate Loan by a matching deposit or other borrowing in the interbank
eurodollar market for a comparable amount and for a comparable period, whether
or not such Eurodollar Rate Loan is in fact so funded.
Section 3.05. Inability to Determine Rates. If the Required Lenders
determine that for any reason adequate and reasonable means do not exist for
determining the Eurodollar Rate for any requested Interest Period with respect
to a proposed Eurodollar Rate Loan, or that the Eurodollar Rate for any
requested Interest Period with respect to a proposed Eurodollar Rate Loan does
not adequately and fairly reflect the cost to such Lenders of funding such Loan,
the
42
Agent will promptly so notify the Company and each Lender. Thereafter, the
obligation of the Lenders to make or maintain Eurodollar Rate Loans shall be
suspended until the Agent (upon the instruction of the Required Lenders) revokes
such notice in writing. Upon receipt of such notice, the Company may revoke any
Notice of Continuation then submitted by it. If the Company does not revoke such
Notice of Continuation, the Lenders shall make, convert or continue the Loans,
as proposed by the Company, in the amount specified in the applicable notice
submitted by the Company, but such Loans shall be made, converted or continued
as Base Rate Loans instead of Eurodollar Rate Loans. Notwithstanding the
foregoing, the Agent and each Lender shall take any reasonable actions available
to them (including designation of different Lending Offices), consistent with
legal and regulatory restrictions, that will avoid the need to take the steps
described in this Section 3.05, which will not, in the reasonable judgment of
the Agent or such Lender, be materially disadvantageous to the Agent, such
Lender or the Company, as compared to the steps described in this Section 3.05.
Section 3.06. Certificates of Lenders. Any Lender claiming reimbursement or
compensation under this Article shall deliver to the Company (with a copy to the
Agent) a certificate setting forth in reasonable detail the amount payable to
the Lender hereunder and such certificate shall be conclusive and binding on the
Company in the absence of demonstrable error. Such certificate shall set forth
in reasonable detail (in the form of Exhibit E hereto for amounts claimed with
respect to Eurodollar Rate Loans under Section 3.04 and in a form reasonably
determined by the applicable Lender with respect to Base Rate Loans) the
methodology used in determining the amount payable to the Lender.
Section 3.07. Substitution of Lenders. If the Company receives notice from
any Lender of a claim for compensation under Section 3.01, 3.02 or 3.03, the
Company may, upon notice to such Lender and the Agent, replace such Lender by
causing such Lender to assign its Loans (with the assignment fee to be paid by
the Company in such instance) pursuant to Section 10.07(b) to one or more other
Lenders or Eligible Assignees procured by the Company; provided that (x) the
Company shall be obligated to replace all Lenders that have made similar
requests for compensation and (y) each such Lender shall have received payment
of an amount equal to the outstanding principal of its Loans, accrued interest
thereon, accrued fees and all other amounts payable to it under the Loan
Documents from the applicable assignee (to the extent of such outstanding
principal and accrued interest and fees) or the Company (in the case of all
other amounts). The Company shall release such Lender from its obligations under
the Loan Documents. Any Lender being replaced shall execute and deliver an
Assignment and Assumption with respect to such Lender's outstanding Loans.
Section 3.08. Survival. The agreements and obligations of the Company in
Section 3.01, Section 3.03, Section 3.04 and Section 3.06 shall survive the
termination of this Agreement and the payment of all other Obligations for a
period of one year.
ARTICLE 4
CONDITIONS PRECEDENT
Section 4.01. Conditions of Initial Borrowing. The obligations of each
Lender to make any Loan hereunder, and the amendment and restatement of the
Existing Credit Agreement
43
pursuant to the terms hereof, shall not become effective until the date on which
each of the following conditions is satisfied (or waived in accordance with
Section 10.01):
(a) The Agent shall have received each of the following, each of which
shall be originals or facsimiles or Adobe PDFs delivered by electronic mail
(followed promptly by originals) unless otherwise specified, each properly
executed by a Responsible Officer of the signing Obligor, each dated the
Effective Date (or, in the case of certificates of governmental officials, a
recent date before the Effective Date) and each in form and substance reasonably
satisfactory to the Agent and each of the Lenders:
(i) executed counterparts of this Agreement, sufficient in number for
distribution to the Agent, each Lender and the Company;
(ii) executed affirmations and consents to this Agreement from each
Subsidiary Guarantor substantially in the form of Exhibit I (each, an
"Affirmation and Consent"); and
(iii) a Note executed by the Company in favor of each Lender that has
requested a Note.
(b) The Agent shall have received (i) a certificate with respect to each
Obligor dated the Effective Date and signed by a Responsible Officer or other
executive officer of such Obligor certifying that the Collateral and Guarantee
Requirement has been and continues to be satisfied with respect to such Obligor
and that each Security Document is in full force and effect together with such
evidence that the Agent may reasonably request in connection therewith and (ii)
reasonably satisfactory evidence that all insurance required by the Loan
Documents is in effect.
(c) The Agent shall have received:
(i) copies of the resolutions of the board of directors, authorized
subcommittee thereof, or other equivalent body of each Obligor authorizing
the Transactions to which such Obligor is a party, certified as of the
Effective Date by the Secretary or an Assistant Secretary of such Obligor;
and
(ii) a certificate of the Secretary or Assistant Secretary of each
Obligor certifying the names and true signatures of the officers of such
Obligor authorized to execute, deliver and perform, as applicable, this
Agreement and all other Loan Documents to be delivered by such Obligor
hereunder.
(d) The Agent shall have received:
(i) the articles or certificate of incorporation or equivalent
document of each Obligor as in effect on the Effective Date, certified by
the Secretary of State of its state of incorporation or organization as of
a recent date;
(ii) the bylaws or equivalent document of each Obligor as in effect on
the Effective Date, certified by the Secretary or Assistant Secretary of
such Obligor as of the Effective Date;
44
(iii) a certificate of good standing or equivalent document for each
Obligor from the Secretary of State (or similar, applicable Governmental
Authority) of its state of incorporation or organization as of a recent
date; and
(iv) a compliance certificate for each Insurance Subsidiary (other
than with respect to Conseco Health Insurance Company, Conseco Life
Insurance Company and Conseco Life Insurance Company of Texas) from the
Department of Insurance of its jurisdiction of domicile as of a recent
date.
(e) The Agent shall have received a favorable written opinion (addressed to
the Agent and the Lenders and dated the Effective Date) of each of (i) ▇▇▇▇▇▇▇▇
& ▇▇▇▇▇ LLP, counsel for the Obligors, substantially in the form of Exhibit H-1
and (ii) ▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, Indiana counsel for the Obligors, substantially in
the form of Exhibit H-2.
(f) The Agent and each Lender shall have been paid all accrued and unpaid
fees, and reasonable costs and expenses to the extent then due and payable to
the Agent or such Lender on or before the Effective Date, including Attorney
Costs of the Agent or such Lender to the extent invoiced prior to or on the
Effective Date, plus such additional amounts of 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) including any such reasonable costs, fees and out-of-pocket expenses
arising under or referenced in Section 2.10 and 10.04.
(g) Each lender under the Existing Credit Agreement shall have been
reimbursed its losses and expenses to which it is entitled pursuant to Section
3.04(d) of the Existing Credit Agreement.
(h) The Agent shall have received a certificate signed by a Responsible
Officer on behalf of the Company, dated as of the Effective Date, confirming the
satisfaction of the conditions set forth in Section 4.01(i) and Section 4.01(j)
and confirming that the Company and its Subsidiaries have received all required
approvals of the transactions contemplated hereby and by the other Loan
Documents, including the Transactions, from each applicable Governmental
Authority.
(i) The fact that (i) the representations and warranties of each Obligor
that are not qualified as to materiality contained in the Loan Documents shall
be true and correct in all material respects and (ii) the representations and
warranties of each Obligor that are qualified as to materiality contained in the
Loan Documents shall be true and correct, in each case, on and as of the
Effective Date, as though made on and as of such date.
(j) The fact that, no Default or Event of Default shall have occurred and
be continuing on such date or immediately after giving effect to the
Transactions.
(k) Simultaneously with the initial extension of Term Loans, the Company
shall have repaid all of the Indebtedness under the Existing Credit Agreement
and the commitments of the lenders thereunder shall have been terminated.
45
(l) All governmental authorizations and third party approvals (or
arrangements reasonably satisfactory to the Lenders in lieu of such approvals)
necessary in connection with the financing contemplated hereby and the
continuing operations of the Company and its Subsidiaries shall have been
obtained and be in full force and effect, in each case except for such
authorizations and approvals as would not be reasonably likely to have a
Material Adverse Effect, and all material waiting periods shall have expired
without any action being taken by any competent authority which restrains,
prevents, or imposes materially adverse conditions upon, the consummation of the
transactions contemplated herein.
(m) Simultaneously with the initial extension of the Term Loans, the
Permitted Convertible Indebtedness shall be issued and all proceeds therefrom
(together with the proceeds from the Term Loans) shall be applied to refinance
in full the aggregate principal amount of all loans outstanding under the
Existing Credit Agreement and to pay related transaction fees, costs and
expenses.
(n) The fact that there are no changes, occurrences or developments that
could have a Material Adverse Effect.
(o) The Agent shall have received such other approvals, opinions, documents
or materials as the Agent may reasonably request, all in form and substance
reasonably satisfactory to the Agent.
Section 4.02. Conditions to All Subsequent Borrowings. The obligation of
each Lender to honor any Loan Notice (other than a notice of conversion
requesting only a conversion of Loans to the other Type, or a continuation of
Eurodollar Rate Loans) is subject to the following conditions precedent:
(a) The representations and warranties of the Company contained in Article
5 or any other Loan Document, or which are contained in any document furnished
at any time under or in connection herewith or therewith, (x) which are not
qualified as to materiality shall be true and correct in all material respects
and (y) which are qualified as to materiality shall be true and correct, in each
case, on and as of the date of such Loan Notice, except to the extent that such
representations and warranties specifically refer to an earlier date, in which
case they shall be true and correct in all material respects, or true and
correct, as the case may be, as of such earlier date, and except that for
purposes of this Section 4.02, the representations and warranties contained in
Section 5.11(a) and (b) shall be deemed to refer to the most recent statements
furnished pursuant to Sections 6.01(a) and (b), respectively.
(b) The fact that, no Default or Event of Default shall have occurred and
be continuing on such date or immediately after giving effect to the proposed
Borrowing.
(c) The Agent shall have received a Loan Notice in accordance with the
requirements hereof.
Each Loan Notice (other than a notice of conversion requesting only a
conversion of Loans to the other Type, or a continuation of Eurodollar Rate
Loans) submitted by the Company shall be deemed to be a representation and
warranty that the conditions specified in Sections 4.02(a) and (b) have been
satisfied on and as of the date of the applicable Borrowing.
46
Section 4.03. Determinations Under Section 4.01. For purposes of
determining compliance with the conditions specified in Section 4.01, each of
the Lenders shall be deemed to have consented to, approved or accepted or to be
satisfied with each document or other matter required thereunder to be consented
to or approved by, or acceptable or satisfactory to, the Lenders unless an
officer of the Agent responsible for the Transactions shall have received notice
from such Lender prior to the Effective Date specifying its objection thereto
and, in the case of any Lender, such Lender shall not have made available to the
Agent on the Effective Date such Lender's Pro Rata Share of the Borrowing to be
made on such date.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to the Agent and each Lender that:
Section 5.01. Corporate Existence and Power. The Company and each of its
Subsidiaries:
(a) is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation or organization;
(b) has the corporate (or other organizational) power and authority
and all governmental licenses, authorizations, consents and approvals (i)
to own its assets and carry on its business and (ii) to execute, deliver,
and perform its obligations under the Loan Documents;
(c) is duly qualified and is licensed and in good standing under the
laws of each jurisdiction where its ownership, lease or operation of
property or the conduct of its business requires such qualification or
license;
(d) is in compliance with all Requirements of Law; and
(e) has a fiscal year ending December 31;
except, in each case referred to in clauses (a) through (d), to the extent that
the failure to do so, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect.
Section 5.02. Corporate Authorization; No Contravention. The Transactions
to be entered into by each Obligor are within its corporate or other
organizational powers. The Transactions (including the execution, delivery and
performance by each Obligor of each Loan Document to which it is a party) have
been duly authorized by all necessary corporate or other organizational action
of each Obligor, and do not and will not:
(a) contravene the terms of any of such Obligor's Organization
Documents;
(b) conflict with or result in any breach or contravention of, or
result in or require the creation of any Lien (other than the Transaction
Liens) under, any document evidencing any material Contractual Obligation
to which such Obligor is a party or any
47
order, injunction, writ or decree of any Governmental Authority to which
such Obligor or its property is subject; or
(c) violate any Requirement of Law, except to the extent that such
violations, in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.
Section 5.03. Governmental Authorization. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority is necessary or required in connection with the
Transactions (including the execution, delivery or performance by, or
enforcement against, each Obligor of each Loan Document to which it is a party),
except (i) such as have been obtained and are in full force and effect and (ii)
filings necessary to perfect the Transaction Liens.
Section 5.04. Binding Effect. This Agreement has been duly executed and
delivered by the Company and constitutes, and each other Loan Document to which
any Obligor is to be a party, when executed and delivered by such Obligor, will
constitute, a legal, valid and binding obligation of the Company or such
Obligor, as the case may be, in each case enforceable against the Company or
such Obligor, as the case may be, in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency, or similar
laws affecting the enforcement of creditors' rights generally or by equitable
principles relating to enforceability.
Section 5.05. Litigation. Except as set forth on Schedule 5.05, there are
no actions, suits, proceedings, claims or disputes pending, or to the knowledge
of the Company, threatened or contemplated, at law, in equity, in arbitration or
before any Governmental Authority, against the Company or its Subsidiaries or
any of their respective properties that: (a) purport to affect or pertain to
this Agreement or any other Loan Document, or any of the transactions (including
the Transactions) contemplated hereby or thereby; or (b) individually or in the
aggregate could reasonably be expected to have a Material Adverse Effect. No
injunction, writ, temporary restraining order or any order of any nature has
been issued by any court or other Governmental Authority purporting to enjoin or
restrain the execution, delivery or performance of this Agreement or any other
Loan Document or directing that the transactions (including the Transactions)
provided for herein or therein not be consummated as herein or therein provided.
Section 5.06. No Default. No Default has occurred and is continuing.
Without limiting the foregoing, no Default would result from the consummation of
the Transactions. As of the Effective Date, neither the Company nor any
Subsidiary is in default under or with respect to any Contractual Obligation in
any respect that, individually or together with all such defaults, could
reasonably be expected to have a Material Adverse Effect.
Section 5.07. ERISA Compliance. (a) Each Plan is in compliance with the
applicable provisions of ERISA, the Code and other federal or state law except
to the extent that such non-compliance could not reasonably be expected to have
a Material Adverse Effect. Each Plan that is intended to qualify under Section
401(a) of the Code has either (i) received a favorable determination letter from
the IRS and to the knowledge of the Company, nothing has occurred which would
reasonably be expected to cause the loss of such qualification or (ii) with
respect to the Plans identified on Schedule 5.07, is in the process of
requesting a favorable determination letter from the IRS as to its qualified
status, and the Company is not aware of any fact or issue
48
that would reasonably be expected to cause the IRS to fail to issue a favorable
determination letter, except where such non-qualification could not reasonably
be expected to have a Material Adverse Effect. The Company and each ERISA
Affiliate has made all required contributions to any Plan subject to Section 412
of the Code, and no application for a funding waiver or an extension of any
amortization period pursuant to Section 412 of the Code has been made with
respect to any Plan, except where such lack of contribution or application for
funding waiver could not reasonably be expected to have a Material Adverse
Effect.
(b) Except as set forth on Schedule 5.07, there are no pending or, to the
knowledge of the Company, threatened claims, actions or lawsuits, or action by
any Governmental Authority, with respect to any Plan that could reasonably be
expected to have a Material Adverse Effect. To the knowledge of the Company,
there has been no prohibited transaction or violation of the fiduciary
responsibility rules with respect to any Plan that could reasonably be expected
to have a Material Adverse Effect.
(c) Except for occurrences or circumstances that individually or in the
aggregate could not reasonably be expected to have a Material Adverse Effect,
(i) except as set forth on Schedule 5.07, since December 31, 2003, no ERISA
Event has occurred or is reasonably expected to occur; (ii) except as set forth
on Schedule 5.07, since December 31, 2003, no Pension Plan has any Unfunded
Pension Liability; (iii) neither the Company nor any ERISA Affiliate has
incurred, or reasonably expects to incur, any liability under Title IV of ERISA
with respect to any Pension Plan (other than premiums due and not delinquent
under Section 4007 of ERISA); (iv) neither the Company nor any ERISA Affiliate
has incurred, or reasonably expects to incur, any liability (and no event has
occurred that, with the giving of notice under Section 4219 of ERISA, would
result in such liability) under Section 4201 or 4243 of ERISA with respect to a
Multiemployer Plan; and (v) neither the Company nor any ERISA Affiliate has
engaged in a transaction that could be subject to Section 4069 or 4212(c) of
ERISA.
Section 5.08. Margin Regulations. Neither the Company nor any Subsidiary is
engaged principally, or as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying Margin Stock. Margin
Stock does not constitute more than 25% of the value of the consolidated assets
of the Company and its Subsidiaries. None of the transactions contemplated by
this Agreement (including the direct or indirect use of the proceeds of the
Loans) will violate or result in a violation of the Securities Act of 1933, as
amended, or the Exchange Act, or regulations issued pursuant thereto, or
Regulation T, U or X of the FRB.
Section 5.09. Title to Properties. The Company and each Subsidiary have
good legal title in fee simple or rights in and power to transfer, or valid
leasehold interests in, all real property necessary or used in the ordinary
conduct of their respective businesses, except for such defects in title or
interests as could not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect. As of the Effective Date, the property of the
Company and its Subsidiaries is subject to no Liens, other than Liens permitted
under Section 7.02.
Section 5.10. Taxes. The Company and its Subsidiaries have timely filed all
federal Tax, material Income Tax and other material Tax returns and reports
required to be filed, and have paid all federal Tax, Income Tax and other
material Taxes levied or imposed upon them or their properties, income or assets
otherwise due and payable, except those that are being contested in
49
good faith by appropriate proceedings and for which adequate reserves have been
provided in accordance with SAP or GAAP, as applicable. There is no proposed Tax
assessment against the Company or any Subsidiary for which a notice of
deficiency or similar notice has been issued that would, if made, individually
or in the aggregate, have a Material Adverse Effect or for which adequate
reserves in accordance with GAAP are not being maintained by the Company or such
Subsidiary.
Section 5.11. Financial Condition. (a) Each of (i) the audited consolidated
financial statements of the Company and its Subsidiaries dated December 31,
2004, and the related consolidated statements of income, shareholders' equity
and cash flows for the Fiscal Year ended on that date, reported on by
PricewaterhouseCoopers, LLP, independent public accountants, (ii) the unaudited
consolidated financial statements of the Company and its Subsidiaries dated June
30, 2005, and the related consolidated statements of income, shareholders'
equity and cash flows for the period ended on that date, (iii) the December 31,
2004 Annual Statement of each Insurance Subsidiary and (iv) the March 31, 2005
Quarterly Statement of each Insurance Subsidiary:
(A) were prepared in accordance with GAAP or SAP, as applicable,
consistently applied throughout the period covered thereby, except as
otherwise expressly noted therein, subject, in the case of such unaudited
financial statements, to ordinary, good faith year end and audit
adjustments and the absence of footnote disclosure;
(B) fairly present in all material respects the financial condition of
the Company and its Subsidiaries as of the date thereof and results of
operations for the period covered thereby; and
(C) show all material indebtedness and other liabilities, direct or
contingent, of the Company and its consolidated Subsidiaries as of the date
thereof, including liabilities for Taxes, material commitments and
Contingent Obligations.
(b) The financial projections provided to the Agent prior to the date
hereof (i) have been prepared in good faith based on reasonable assumptions and
(ii) are based on the best information available to the Company after due
inquiry (it being understood that financial projections are inherently
unreliable and no assurances are given by the Company and its Subsidiaries that
the results forecast in any projection will be realized and that actual results
may differ materially therefrom).
(c) Since December 31, 2004, there has been no material adverse change in
the business, assets, operations or condition, financial or otherwise, of the
Company and its Subsidiaries, taken as a whole.
Section 5.12. Environmental Matters. (a) All facilities and property
(including underlying groundwater) owned or leased by the Company or any of its
Subsidiaries have been, and continue to be, owned or leased by the Company and
its Subsidiaries in material compliance with all Environmental Laws, except
where failure to so comply could not, individually or in the aggregate, be
reasonably expected to have a Material Adverse Effect;
50
(b) there have been no past, and there are no pending or threatened,
Environmental Claims against the Company or any of its Subsidiaries, except
where such Environmental Claims could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect;
(c) there have been no releases of Hazardous Materials at, on or under any
property now or previously owned or leased by the Company or any of its
Subsidiaries that, individually or in the aggregate, have had, or could
reasonably be expected to have, a Material Adverse Effect;
(d) the Company and each of its Subsidiaries have been issued and are in
material compliance with all permits, certificates, approvals, licenses and
other authorizations relating to environmental matters and necessary for their
businesses except where failure to obtain or comply with the foregoing could
not, individually or in the aggregate, be reasonably expected to have a Material
Adverse Effect;
(e) no property now or previously owned or leased by the Company or any of
its Subsidiaries is listed or, to the Company's knowledge, proposed for listing
(with respect to owned property only) on the National Priorities List pursuant
to CERCLA, on the CERCLIS or on any similar state list of sites requiring
investigation or clean-up, except where such listing could not, individually or
in the aggregate, be reasonably expected to have a Material Adverse Effect;
(f) there are no underground storage tanks, active or abandoned, including
petroleum storage tanks, on or under any property now or previously owned or
leased by the Company or any of its Subsidiaries that, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect;
(g) neither the Company nor any of its Subsidiaries has directly
transported or directly arranged for the transportation of any Hazardous
Material to any location that is listed or, to Company's knowledge, proposed for
listing on the National Priorities List pursuant to CERCLA, on the CERCLIS or on
any similar state list or that is the subject of federal, Governmental Authority
or local enforcement actions or other investigations that could reasonably be
expected to lead to material claims against the Company or any of its
Subsidiaries for any remedial work, damage to natural resources or personal
injury, including claims under CERCLA, except where such claims could not,
individually or in the aggregate, be reasonably expected to have a Material
Adverse Effect;
(h) there are no polychlorinated biphenyls or friable asbestos present at
any property now or previously owned or leased by the Company or any of its
Subsidiaries that, individually or in the aggregate, could be reasonably
expected to have a Material Adverse Effect; and
(i) no conditions exist at, on or under any property now or previously
owned or leased by the Company or any of its Subsidiaries that, with the passage
of time, or the giving of notice or both, would give rise to liability under any
Environmental Law, except where such liability could not, individually or in the
aggregate, be reasonably expected to have a Material Adverse Effect.
51
Section 5.13. Regulated Activities and Regulated Entities. Except as
disclosed on Schedule 5.13, none of the Company, any Person controlling the
Company, or any Subsidiary, is an "Investment Company" within the meaning of, or
subject to regulation under, the Investment Company Act of 1940. None of the
Company or any Subsidiary is subject to regulation under the Public Utility
Holding Company Act of 1935, the Federal Power Act, the Interstate Commerce Act,
any state public utilities code or any other Federal or state statute or
regulation limiting its ability to incur Indebtedness.
Section 5.14. Subsidiaries. Schedule 5.14 sets forth the name of, and the
ownership interest of the Company (or the applicable Subsidiary) in, each of its
Subsidiaries and identifies each Subsidiary that is a Subsidiary Guarantor, a
Foreign Subsidiary, an Immaterial Subsidiary and/or an Insurance Subsidiary, in
each case as of the Effective Date. All the Company's Subsidiaries are, and will
at all times be, fully consolidated in its consolidated financial statements. As
of the Effective Date (i) each Subsidiary is a Wholly-Owned Subsidiary and (ii)
each Subsidiary (other than the Insurance Subsidiaries, Subsidiaries of
Insurance Subsidiaries, Foreign Subsidiaries and Immaterial Subsidiaries) is
also a Subsidiary Guarantor.
Section 5.15. Insurance Licenses. No License of the Company or any
Insurance Subsidiary, the loss of which individually or in the aggregate could
reasonably be expected to have a Material Adverse Effect, is the subject of a
proceeding for suspension or revocation. To the Company's knowledge, there is no
sustainable basis for such suspension or revocation, and no such suspension or
revocation has been threatened by any Governmental Authority.
Section 5.16. Full Disclosure. The Company has disclosed to the Lenders all
agreements, instruments and corporate or other restrictions to which it or any
Subsidiary is subject, and all other matters known to any of them, that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect. None of the representations or warranties made by any
Obligor in any Loan Document to which it is a party as of the date such
representations and warranties are made or deemed made, and none of the
exhibits, reports, statements or certificates furnished by or on behalf of the
Company or any Subsidiary pursuant to the Loan Documents, taken as a whole,
contains any untrue statement of a material fact or omits any material fact
required to be stated therein or necessary to make the statements made therein,
in light of the circumstances under which they are made, not misleading as of
the time when made or delivered.
Section 5.17. Solvency. Immediately after the Transactions to occur on the
Effective Date are consummated, (a) the fair value of the assets of each
Obligor, at a fair valuation, will exceed its debts and liabilities,
subordinated, contingent or otherwise; (b) the present fair saleable value of
the property of each Obligor will exceed the amount that will be required to pay
the probable liability of its debts and other liabilities, subordinated,
contingent or otherwise, as such debts and other liabilities become absolute and
matured; (c) each Obligor will be able to pay its debts and liabilities,
subordinated, contingent or otherwise, as such debts and liabilities become
absolute and matured; and (d) no Obligor will have unreasonably small capital
with which to conduct the business in which it is engaged as such business is
now conducted and proposed to be conducted after the Effective Date; provided
that in the case of any Obligor that is a going concern, the value of the assets
of such Obligor (for purposes of clauses (a) and (b) above) shall be determined
on a going-concern basis.
52
Section 5.18. Security Interests. On the Effective Date, the Security
Documents will create valid security interests in the Collateral to the extent
set forth therein. At all times thereafter, the Security Documents will create
valid and, when financing statements are filed in the offices specified in the
Perfection Certificates delivered pursuant to the Security Agreement, perfected
security interests in the Collateral from time to time covered or purportedly
covered thereby to the extent that a security interest in such Collateral may be
perfected by filing under the Uniform Commercial Code. Such security interests
will be prior to all other Liens (except Liens permitted under Section 7.02(c),
Section 7.02(d), Section 7.02(e), Section 7.02(f), Section 7.02(g), Section
7.02(h), Section 7.02(i), Section 7.02(k), Section 7.02(l), Section 7.02(o),
Section 7.02(q) and Section 7.02(r) on the Collateral until the applicable
Security Interest are released in accordance with the Loan Documents.
Section 5.19. Insurance. The insurance maintained by or reserved on the
books of the Company and its Subsidiaries is sufficient to protect the Company
and its Subsidiaries and their respective directors and officers against such
risks as are usually insured against in accordance with industry practice by
companies in the same or similar business.
ARTICLE 6
AFFIRMATIVE COVENANTS
Until all principal of and interest on each Loan and all fees and other
amounts payable hereunder have been paid in full (other than contingent
indemnification obligations not yet due and payable), the Company covenants and
agrees with the Lenders that:
Section 6.01. Financial Statements. The Company shall deliver to the Agent
and each Lender:
(a) promptly upon filing thereof with the SEC (including as part of a Form
10-K) but not later than 90 days after the end of each Fiscal Year, copies of
the audited consolidated and the unaudited consolidating balance sheet of the
Company and its Subsidiaries as at the end of such year and the related audited
consolidated and unaudited consolidating statements of operations, shareholders'
equity and cash flows for such year, setting forth in the case of the audited
consolidated statements in comparative form the figures for the previous Fiscal
Year, and accompanied by the opinion of PricewaterhouseCoopers LLP or another
nationally-recognized independent public accounting firm ("Independent
Auditor"), which opinion shall state that such audited consolidated financial
statements present fairly in all material respects the financial position and
result of operations of the Company and its Subsidiaries for the periods
indicated in conformity with GAAP applied on a basis consistent with prior
years, except as stated therein. Such opinion shall be without a "going concern"
or like qualification and shall not be qualified or limited because of a
restricted or limited examination by the Independent Auditor of any material
portion of the Company's or any Subsidiary's records;
(b) promptly upon filing thereof with the SEC (including as part of a Form
10-Q) but not later than 50 days after the end of each of the first three Fiscal
Quarters of each Fiscal Year, copies of the condensed unaudited consolidated and
consolidating balance sheet of the Company and its Subsidiaries as of the end of
such quarter and the related condensed unaudited consolidated and consolidating
statements of operations, shareholders' equity and cash flows for
53
the period commencing on the first day and ending on the last day of such
quarter and for the then elapsed portion of such Fiscal Year, setting forth in
the case of the consolidated statements in comparative form the figures for the
corresponding period or periods of (or, in the case of the balance sheet, as of
the end of) the previous Fiscal Year, and certified by a Responsible Officer as
fairly presenting in all material respects, in accordance with GAAP (subject to
the absence of footnotes and year-end audit adjustments), the financial position
and the results of operations of the Company and the Subsidiaries;
(c) as soon as available but not later than 75 days (or, in the case of the
Annual Statement prepared on a combined basis, 90 days) after the close of each
Fiscal Year of each Insurance Subsidiary, copies of the unaudited Annual
Statement of such Insurance Subsidiary on a stand-alone basis and on a combined
basis for all Insurance Subsidiaries, the stand-alone Annual Statement to be
certified by a Responsible Officer of such Insurance Subsidiary, all such
statements to be prepared in accordance with SAP consistently applied throughout
the periods reflected therein and, if required by the applicable Governmental
Authority, audited and certified by independent certified public accountants of
recognized national standing (such audited Annual Statement to be delivered as
soon as available but not later than June 15 of each Fiscal Year of such
Insurance Subsidiary);
(d) as soon as available but not later than 60 days (or, in the case of the
Quarterly Statement prepared on a combined basis, 75 days) after the close of
each of the first three Fiscal Quarters of each Fiscal Year of each Insurance
Subsidiary, copies of the Quarterly Statement of such Insurance Subsidiary on a
stand-alone basis and on a combined basis for all Insurance Subsidiaries, the
stand-alone Quarterly Statement to be certified by a Responsible Officer of such
Insurance Subsidiary, all such statements to be prepared in accordance with SAP
consistently applied through the period reflected therein;
(e) promptly following the delivery to or receipt by the Company or any of
its Subsidiaries of any regular or periodic final Triennial Examination Reports,
risk adjusted capital reports or results of any market conduct examination or
examination by any Department or the NAIC of the financial condition and
operations of, or any notice of any assertion as to violation of any Requirement
of Law by, any Insurance Subsidiary, or any report with respect to any Insurance
Subsidiary (including any summary report from the NAIC with respect to the
performance of such Insurance Subsidiary as measured against the ratios and
other financial measurements developed by the NAIC under its Insurance
Regulatory Information System as in effect from time to time that could
reasonably be expected to result in a Material Adverse Effect);
(f) within 90 days after the close of each Fiscal Year of each Insurance
Subsidiary, a copy of the "Statement of Actuarial Opinion" and "Management
Discussion and Analysis" for each such Insurance Subsidiary that is provided to
the applicable Department (or equivalent information should such Department no
longer require such a statement) as to the adequacy of reserves of such
Insurance Subsidiary, such opinion to be in the format prescribed by the
insurance code of the state of domicile of such Insurance Subsidiary.
Section 6.02. Certificates; Other Information. The Company shall furnish to
the Agent, with sufficient copies for each Lender (other than in the case of
Section 6.02(l)):
54
(a) concurrently with the delivery of the financial statements referred to
in Section 6.01(a) and Section 6.01(b), a Compliance Certificate executed by a
Responsible Officer;
(b) concurrently with the delivery of the financial statements referred to
in Section 6.01(a), a certificate of the accounting firm that reported on such
financial statements stating (i) whether during the course of their examination
of such financial statements they obtained knowledge of any Default relating to
accounting matters (which certificate may be limited to the extent required by
auditing rules or guidelines), (ii) if a Default relating to accounting matters
has come to their attention, specifying the nature and period of existence
thereof and (iii) stating whether or not, based on their audit examination,
anything has come to their attention that causes them to believe that the
matters set forth in Schedule 3 to the Compliance Certificate delivered pursuant
to Section 6.02(a) for the applicable Fiscal Year to the extent such matters
relate to accounting are not stated in accordance with the terms of this
Agreement;
(c) promptly upon receipt thereof, copies of all final reports submitted to
the Company by independent public accountants in connection with each annual,
interim or special audit of the financial statements of the Company made by such
accountants, including the comment letter submitted by such accountants to
management in connection with their annual audit;
(d) promptly, copies of all Forms 10-K and 10-Q that the Company or any
Subsidiary may file with the SEC, all financial statements and reports that the
Company sends to its shareholders and copies of all other financial statements
and regular, periodic or special reports (including Form 8-K) that the Company
or any Subsidiary may make to, or file with, the SEC;
(e) promptly and in any event within three Business Days after learning
thereof, notification of any changes after the date hereof in the rating given
by S&P or ▇▇▇▇▇'▇ in respect of the Company's senior secured Indebtedness or by
A.M. Best in respect of any Insurance Subsidiary;
(f) concurrently with the occurrence of any event described in Section
2.08(b)(i) through Section 2.08(b)(iv), (i) a description of such event and (ii)
a calculation of the Net Proceeds (including an accounting of the items deducted
from the cash or cash equivalents received in connection with such event);
(g) at least 5 days before the beginning of each Fiscal Year, a detailed
consolidated budget for the next Fiscal Year (including statements of projected
operations and cash flows for such period and setting forth the assumptions used
in preparing such budget) and, promptly when available, any significant
revisions of such budget;
(h) to the extent not otherwise provided under Section 6.01 or Section
6.02, promptly upon receipt thereof, or delivery thereof by the Company or any
Insurance Subsidiary, as applicable, a copy of any written communication setting
forth or relating to any matter that could reasonably be expected to have a
Material Adverse Effect, delivered to or received from any applicable Department
or any other applicable insurance regulatory authority;
(i) to the extent not otherwise provided under Section 6.01 or Section
6.02, promptly upon receipt thereof, or delivery thereof by the Company or any
Subsidiary, as applicable, a copy
55
of any written communication addressed to the Company or any of its Subsidiaries
setting forth or relating to the Company's and its Subsidiaries' operations that
may reasonably be expected to be materially adverse to the interests of the
Company, such Subsidiary or the Lenders delivered to or received from S&P,
▇▇▇▇▇'▇ or A.M. Best or any other rating agency;
(j) as soon as available but not later than five Business Days after
receipt, execution or delivery of any Reinsurance Agreement (other than any
Reinsurance Agreement entered into in the ordinary course of business for the
purpose of managing insurance risk consistent with industry practice), including
any proposal, binder, cover note or line slip (where the Person to be reinsured
or reinsured is an Insurance Subsidiary), (i) a written notice specifying each
Person party to such agreement, (ii) for each such Person, its most recently
published rating, if any, (iii) the subject matter of each such agreement and
(iv) if requested by the Agent or any Lender, attaching thereto, a true and
complete copy of such agreement;
(k) promptly after receipt of any notice of termination, cancellation
(which cancellation notice is not accompanied by a corresponding request for
renewal), commutation or recapture of any Reinsurance Agreement (other than any
Reinsurance Agreement that was entered into in the ordinary course of business
for the purpose of managing insurance risk consistent with industry practice)
where the Person reinsured is an Insurance Subsidiary, a copy thereof; and
(l) promptly, such additional information regarding the business, financial
or corporate affairs of the Company or any Subsidiary, or compliance with the
terms of any Loan Document, as the Agent, for itself or at the request of any
Lender, may from time to time reasonably request.
Documents required to be delivered pursuant to Section 6.01, Section 6.02(d) or
Section 6.02(f) (to the extent any such documents are included in materials
otherwise filed with the SEC, the NAIC or any other Governmental Authority) may
be delivered electronically and if so delivered, shall be deemed to have been
delivered on the date (i) on which the Company posts such documents or provides
a link thereto on the Company's website on the Internet at the website address
listed on Schedule 10.02; or (ii) on which such documents are posted on the
Company's behalf on IntraLinks/IntraAgency or another relevant website, if any,
to which each Lender and the Agent have access (whether a commercial,
third-party website or whether sponsored by the Agent); provided that: (i) the
Company shall deliver paper copies of such documents to the Agent or any Lender
that requests the Company to deliver such paper copies until a written request
to cease delivering paper copies is given by the Agent or such Lender and (ii)
the Company shall notify (which may be by facsimile or electronic mail) the
Agent and each Lender of the posting of any such documents and provide to the
Agent by electronic mail electronic versions (i.e., soft copies) of such
documents. Except for such Compliance Certificates, the Agent shall have no
obligation to request the delivery or to maintain copies of the documents
referred to above, and in any event shall have no responsibility to monitor
compliance by the Company with any such request for delivery, and each Lender
shall be solely responsible for requesting delivery to it or maintaining its
copies of such documents.
The Company hereby acknowledges that (a) the Agent will make available
information and projections (collectively, "Company Materials") to the Lenders
by posting the Company
56
Materials on IntraLinks or another similar secure electronic system (the
"Platform") and (b) certain of the Lenders may be "public-side" Lenders (i.e.,
Lenders that do not wish to receive material non-public information with respect
to the Company or its securities) (each, a "Public Lender"). The Company hereby
agrees that (w) it will use commercially reasonable efforts to identify that
portion of the Company Materials that may be distributed to the Public Lenders
and that all such Company Materials shall be clearly and conspicuously marked
"PUBLIC," which, at a minimum, shall mean that the word "PUBLIC" shall appear
prominently on the first page thereof; (x) by marking Company Materials
"PUBLIC," the Company shall be deemed to have authorized the Agent and the
Lenders to treat such Company Materials as not containing any material
non-public information with respect to the Company or its securities for
purposes of United States federal and state securities laws, it being understood
that such Company Materials are subject to Section 10.08; (y) all Company
Materials marked "PUBLIC" are permitted to be made available through a portion
of the Platform designated "Public Investor;" and (z) the Agent shall be
entitled to treat any Company Materials that are not marked "PUBLIC" as being
suitable only for posting on a portion of the Platform not designated "Public
Investor."
Section 6.03. Notices. The Company shall promptly notify the Agent:
(a) of the occurrence of any Default;
(b) of any matter that has resulted in, or could reasonably be expected to
result in, a Material Adverse Effect, including any of the following that could
reasonably be expected to have a Material Adverse Effect: (i) any breach or
non-performance of, or any default under, a Contractual Obligation of the
Company or any Subsidiary; (ii) any dispute, litigation, investigation,
proceeding or suspension between the Company or any Subsidiary and any
Governmental Authority; or (iii) the commencement of, or any material
development in, any litigation (including any governmental proceeding or
arbitration proceeding), tax audit or investigative proceeding, claim, lawsuit,
and/or investigation against or involving the Company or any of its Subsidiaries
or any of its or their businesses or operations, including pursuant to any
applicable Environmental Laws;
(c) of the filing or commencement of, or the occurrence of any development
in, any litigation or proceeding that seeks to enjoin, prohibit, discontinue or
otherwise impacts (i) the validity or enforceability of this Agreement or any of
the other Loan Documents or (ii) the transactions contemplated hereby or thereby
and, in the case of clause (ii), that could reasonably be expected to have a
Material Adverse Effect;
(d) of the occurrence of any of the following events affecting the Company
or any ERISA Affiliate (but in no event more than 10 days after such event) and
deliver to the Agent and each Lender a copy of any notice with respect to such
event that is filed with a Governmental Authority and any notice delivered by a
Governmental Authority to the Company or any ERISA Affiliate with respect to
such event:
(i) an ERISA Event; or
(ii) a material increase in the Unfunded Pension Liabilities of any
Pension Plan;
57
(iii) the adoption of or the commencement of contributions to any Plan
subject to Section 412 of the Code by the Company or any ERISA Affiliate;
or
(iv) the adoption of any amendment to a Plan subject to Section 412 of
the Code, if such amendment results in a material increase in contributions
or Unfunded Pension Liability;
provided that no such notice will be required under this Section 6.03(d)
with respect to the occurrence of any such event if such occurrence does not
result in, and is not reasonably expected to result in, any liability to the
Company or any ERISA Affiliate of more than $30,000,000 in the aggregate;
(e) of any material change in accounting policies or financial reporting
practices by the Company or any of its Subsidiaries;
(f) of the receipt of any notice from any Governmental Authority of the
expiration without renewal, revocation, suspension or restriction of, or the
institution of any proceedings to revoke, suspend or restrict, any License now
or hereafter held by any Insurance Subsidiary that is required to conduct
insurance business in compliance with all applicable laws and regulations;
provided that the Company shall be required to deliver a notice under this
paragraph (f) only if such event, together with all other such events, could
reasonably be expected to have a Material Adverse Effect;
(g) of the receipt of any notice from any Governmental Authority of the
institution of any disciplinary proceedings against or in respect of any
Insurance Subsidiary, or the issuance of any order, the taking of any action or
any request for an extraordinary audit for cause by any Governmental Authority;
provided that the Company shall be required to deliver a notice under this
paragraph (g) only if such event, together with all other such events, could
reasonably be expected to have a Material Adverse Effect; or
(h) of any judicial or administrative order limiting or controlling the
insurance business of any Insurance Subsidiary (and not the insurance industry
generally) that has been issued or adopted; provided that the Company shall be
required to deliver a notice under this paragraph (h) only if such event,
together with all other such events, has had or could reasonably be expected to
have a Material Adverse Effect.
Each notice under this Section shall be accompanied by a written statement by a
Responsible Officer setting forth details of the occurrence referred to therein,
and stating what action the Company or any affected Subsidiary proposes to take
with respect thereto and at what time. Each notice under Section 6.03(a) shall
describe with particularity any and all clauses or provisions of this Agreement
or other Loan Document that have been (or reasonably foreseeably will be)
breached or violated.
Section 6.04. Preservation of Corporate Existence, Etc. The Company shall,
and shall cause each Subsidiary (other than any Immaterial Subsidiary) to
(except as permitted by Section 7.03 or Section 7.07):
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(a) preserve and maintain in full force and effect its existence and good
standing under the laws of its state or jurisdiction of incorporation or
organization, as applicable;
(b) preserve and maintain in full force and effect all governmental rights,
privileges, qualifications, permits, licenses and franchises necessary in the
normal conduct of its business, except where such failure to preserve and
maintain could not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect; and
(c) use reasonable efforts, in the ordinary course of business, to preserve
its business organization and goodwill.
Section 6.05. Insurance. The Company shall, and shall cause each Subsidiary
to, maintain with financially sound and reputable independent insurers insurance
against losses or damage of the kinds customarily insured against by Persons
engaged in the same or similar business, of such types and in such amounts as
are customarily carried under similar circumstances by such other Persons.
Section 6.06. Payment of Obligations. The Company shall, and shall cause
each Subsidiary to, pay and discharge as the same shall become due and payable,
all of the following: all material Tax liabilities imposed upon it or its
material properties or assets, unless the same (a) are not overdue for a period
of more than 90 days or (b) are being contested in good faith by appropriate
proceedings and adequate reserves in accordance with GAAP are being maintained
by the Company or such Subsidiary and such contest effectively suspends
collection of the same and the enforcement of any Lien securing the same.
Section 6.07. Compliance with Laws. The Company shall, and shall cause each
Subsidiary to, comply with all Requirements of Law of any Governmental Authority
having jurisdiction over it or its business (including the Federal Fair Labor
Standards Act, the Patriot Act and all applicable Environmental Laws), except
(i) for such noncompliance that could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect or (ii) as may be
contested in good faith and by appropriate proceedings and with respect to which
adequate reserves are being maintained in accordance with GAAP.
Section 6.08. Compliance with ERISA. The Company shall, and shall cause
each of its ERISA Affiliates to: (a) maintain each Plan in compliance in all
material respects with the applicable provisions of ERISA, the Code and other
federal or state law; (b) cause each Plan that is qualified under Section 401(a)
of the Code to maintain such qualification, and (c) make all required
contributions to any Plan subject to Section 412 of the Code, except where such
failure to maintain as set forth in (a) or (b) or to make contributions as set
forth in (c) could not, individually or in the aggregate, be reasonably expected
to have a Material Adverse Effect.
Section 6.09. Inspection of Property and Books and Records; Expense
Reimbursement. The Company shall, and shall cause each Subsidiary to, maintain
proper books of record and account, in which full, true and correct entries in
all material respects in conformity with GAAP or SAP, as applicable,
consistently applied (except as stated therein) shall be made of all financial
transactions and matters involving the assets and business of the Company and
such Subsidiary. Unless an Event of Default has occurred and is continuing, not
more than once per
59
fiscal year, the Company shall permit, and shall cause each Subsidiary to
permit, representatives and independent contractors of the Agent or its
designees to visit and inspect any of their respective properties, to examine
their respective corporate, financial and operating records, and make copies
thereof or abstracts therefrom, and to discuss their respective affairs,
finances and accounts with their respective directors, officers, and independent
public accountants, all at such reasonable times during normal business hours
and as often as may be reasonably desired, upon reasonable advance notice to the
Company; provided that members of senior management will be notified and
permitted to be present during any such meetings; and provided further that when
an Event of Default exists the Agent or any Lender may do any of the foregoing
at any time during normal business hours and without advance notice.
Section 6.10. Information Regarding Collateral. The Company will furnish to
the Agent prompt written notice of any change in (i) any Obligor's legal name or
any Obligor's location (determined as provided in Section 9-307 of the Uniform
Commercial Code), (ii) any Obligor's identity or corporate structure or (iii)
any Obligor's Federal Taxpayer Identification Number or organization
identification number. The Company will not effect or permit any change referred
to in the preceding sentence unless all filings have been made under the Uniform
Commercial Code (which filings may be made by the Company if the Agent has
failed to act after 30 days following notice of any such changes) and all other
actions have been taken that are required so that such change will not at any
time adversely affect the validity, perfection or priority of any Transaction
Lien on any of the Collateral.
Section 6.11. Casualty and Condemnation. The Company (a) will furnish to
the Agent and the Lenders prompt written notice of any casualty or other insured
damage to any material portion of the Collateral or the commencement of any
action or proceeding for the taking of any material portion of the Collateral
under power of eminent domain or by condemnation or similar proceeding and (b)
will ensure that the Net Proceeds of any such event (whether in the form of
insurance proceeds, condemnation awards or otherwise) are collected and applied
in accordance with this Section and Section 2.08.
Section 6.12. Additional Subsidiaries; Immaterial Subsidiaries. (a) If any
additional Subsidiary is formed or acquired after the Effective Date, the
Company will, within five Business Days after such Subsidiary is formed or
acquired, notify the Agent and the Lenders thereof and cause any Capital Stock
in or Indebtedness of such Subsidiary owned by or on behalf of any Obligor to be
added to the Collateral (except that the Obligors shall not be required to
pledge more than 65% of the outstanding voting Capital Stock in any Foreign
Subsidiary that is not an Obligor). If such Subsidiary is or subsequently
becomes a Domestic Subsidiary and is not an Insurance Subsidiary or a Subsidiary
of an Insurance Subsidiary or an Immaterial Subsidiary, the Company shall
promptly cause the Collateral and Guarantee Requirement to be satisfied with
respect to such Subsidiary, whereupon such Subsidiary will become an "Obligor,"
a "Subsidiary Guarantor" and "Lien Grantor" for purposes of the Loan Documents.
Without limiting the preceding sentence, if any Domestic Immaterial Subsidiary
that is not an Insurance Subsidiary or a Subsidiary of an Insurance Subsidiary
loses its status as an Immaterial Subsidiary, the Company shall promptly cause
the Collateral and Guarantee Requirement to be satisfied with respect to such
Subsidiary, whereupon such Subsidiary will become an "Obligor," a "Subsidiary
Guarantor" and "Lien Grantor" for purposes of the Loan Documents.
60
(b) If at any time (i) the aggregate fair market value of the assets of all
Immaterial Subsidiaries exceeds $40,000,000 or (ii) the aggregate revenues of
all Immaterial Subsidiaries for the period of four consecutive Fiscal Quarters
most recently ended exceeds $30,000,000, the Company shall promptly cause the
Collateral and Guarantee Requirement to be satisfied with respect to one or more
of the Immaterial Subsidiaries to the extent necessary to ensure that
immediately after giving effect thereto (x) the aggregate fair market value of
the assets of all Immaterial Subsidiaries shall not exceed $40,000,000 and (y)
the aggregate revenues of all Immaterial Subsidiaries for the period of four
consecutive Fiscal Quarters most recently ended shall not exceed $30,000,000,
whereupon each such Subsidiary will become an "Obligor," a "Subsidiary
Guarantor" and "Lien Grantor" for purposes of the Loan Documents.
Section 6.13. Further Assurances. (a) The Company will, and will cause each
other Obligor to, execute and deliver any and all further documents, financing
statements, agreements and instruments, and take all such further actions
(including the filing and recording of financing statements, fixture filings,
mortgages, deeds of trust and other documents), that may be required under any
applicable law to cause the Collateral and Guarantee Requirement to be and
remain satisfied, all at the Company's expense. The Company will provide to the
Agent, from time to time upon request, evidence reasonably satisfactory to the
Agent as to the perfection and priority of the Transaction Liens created or
intended to be created by the Security Documents.
(b) The Company will maintain main concentration accounts solely with
depositaries that have entered into an Account Control Agreement with the Agent
and the Company on the terms, and subject to the exceptions, set forth in the
Security Agreement.
(c) If any material assets (including any real property or improvements
thereto or any interest therein) are acquired by the Company or any Subsidiary
Guarantor, or cease to be subject to Liens permitted pursuant to Section 7.02
after the Effective Date (other than assets constituting Collateral that become
subject to Transaction Liens upon acquisition thereof), the Company will notify
the Agent and the Lenders thereof, and, if requested by the Agent or the
Required Lenders, will cause such assets to be subjected to a Transaction Lien
securing the Secured Obligations and will take, or cause the relevant Subsidiary
Guarantor to take, such actions as may be necessary to grant and perfect or
record such Transaction Lien, including actions described in Section 6.13(a),
all at the Company's expense.
Section 6.14. Use of Proceeds.(a) The Term Loans shall be used solely to
(a) effect the Refinancing and (b) pay fees and expenses incurred in connection
with the Refinancing.
(b) Any Revolving Credit Loans shall be used solely for general corporate
purposes of the Company and its Subsidiaries.
Section 6.15. Insurance Subsidiary Compliance Certificates. Within 30 days
of the date hereof, the Company shall deliver a compliance certificate for each
of Conseco Health Insurance Company, Conseco Life Insurance Company and Conseco
Life Insurance Company of Texas from the Department of Insurance of each such
Insurance Subsidiary's jurisdiction of domicile as of a recent date.
61
ARTICLE 7
NEGATIVE COVENANTS
Until all principal of and interest on each Loan and all fees and other
amounts payable hereunder have been paid in full (other than contingent
indemnification obligations not yet due and payable), the Company covenants and
agrees with the Lenders that:
Section 7.01. Limitation on Indebtedness; Certain Capital Stock. (a) The
Company shall not, and shall not permit any of its Subsidiaries to, incur or at
any time be liable with respect to any Indebtedness, except:
(i) Indebtedness under the Loan Documents;
(ii) any Surplus Debentures issued by any Insurance Subsidiary to the
Company or any of its Subsidiaries that remain outstanding on the Effective
Date, and extensions, renewals or replacements thereof;
(iii) Permitted Refinancing Indebtedness;
(iv) Permitted Transactions entered into by Insurance Subsidiaries;
(v) Permitted Swap Obligations;
(vi) Indebtedness existing on the date hereof and listed in Schedule
7.01, and extensions, renewals or replacements thereof, provided that no
such extension, renewal or replacement shall increase the principal amount
thereof, except to the extent the increase would otherwise be permitted
under this Section, or result in an earlier maturity date or decreased
average weighted life;
(vii) non-recourse Indebtedness of Insurance Subsidiaries incurred in
the ordinary course of business resulting from the sale or securitization
of non-admitted assets, policy loans, CBOs and CMOs;
(viii) (A) Capitalized Lease Liabilities and Purchase Money Debt in an
aggregate principal amount not to exceed $40,000,000 at any time
outstanding and (B) Capitalized Lease Liabilities arising from the sale and
leaseback of the Company's headquarters pursuant to Section 7.03(m);
(ix) intercompany Indebtedness (including Surplus Debentures) among
the Company and its Subsidiaries (other than Excluded Subsidiaries) and
among the Subsidiaries (other than Excluded Subsidiaries);
(x) intercompany Indebtedness of Excluded Subsidiaries in an aggregate
principal amount not to exceed $30,000,000 at any time outstanding;
(xi) Indebtedness in respect of letters of credit issued in connection
with reinsurance transactions entered into in the ordinary course of
business;
62
(xii) Indebtedness in respect of surety and other similar bonds in the
ordinary course of business and consistent with past practice;
(xiii) other secured Indebtedness in an aggregate principal amount not
to exceed $75,000,000 at any time outstanding;
(xiv) other unsecured Indebtedness; provided that, to the extent the
aggregate principal amount of any such Indebtedness exceeds $100,000,000,
such Indebtedness shall (i) have a maturity date that is at least one year
following the later of (A) the Maturity Date and (B) the Termination Date,
and (ii) contain covenants and events of default that are no more
restrictive, taken as a whole, to the Borrower than the Loan Documents, and
the Company shall be required to prepay the Loans in accordance with
Section 2.08 with the net proceeds thereof.
(xv) Contingent Obligations in respect of Indebtedness permitted under
Section 7.01(a)(vi), Section 7.01(a)(viii), Section 7.01(a)(xiii) or
Section 7.01(a)(xiv);
(xvi) Indebtedness consisting of the deferred purchase price of equity
interests (or option or warrants or similar instruments) of departing
officers, directors and employees of any Obligor or any Subsidiary issued
(whether in the form of notes or otherwise) for the purchase or redemption
thereof pursuant to the terms of an existing compensation plan or
employment contract; and
(xvii) Indebtedness in respect of netting services, overdraft
protections and similar arrangements entered into in respect of deposit
accounts, in each case in the ordinary course of business consistent with
the Company's past practices.
(xviii) unsecured convertible notes issued by the Company on the
Effective Date ("Permitted Convertible Indebtedness") having terms
(including, without limitation, terms relating to interest rates, fees,
amortization, maturity, redemption, conversion, put rights, events of
default, remedies) reasonably acceptable to the Agent, including, without
limitation:
(A) the Initial Redemption Date shall occur no earlier than the
fifth anniversary of the Effective Date; and
(B) the repayment of the principal amount of any conversion of
notes prior the Initial Redemption Date shall be made solely in
additional debt securities (on terms reasonably acceptable to the
Agent) unless, in each case after giving effect to such payment, (1)
the Company has Sufficient Liquidity (as defined below), (2) the
Company is in pro forma compliance with Sections 7.11, 7.12, 7.14 and
7.15 of this Agreement and (3) no Default or Event of Default shall
have occurred and be continuing. "Sufficient Liquidity" means cash and
Cash Equivalents (including, without limitation, availability under
the Revolving Credit Facility) in an aggregate amount equal to 105% of
the sum of (A) any settlement amounts, where settlement amounts means,
(1) for any conversion notices delivered prior to the date that is one
year prior to the Maturity Date, the principal amount of bonds
surrendered for conversion, and (2) for any notices delivered
63
thereafter, the principal amount initially issued under the Permitted
Convertible Indebtedness less any principal amount of bonds that have
been previously converted, (B) succeeding twelve months of regularly
scheduled interest payments with respect to the Permitted Convertible
Indebtedness, (C) succeeding twelve months of regularly scheduled
principal and interest payments under this Agreement, (D) succeeding
twelve months of scheduled preferred dividend payments (to the extent
permitted under the terms of this Agreement) and (E) estimated twelve
months of holding company expenses paid in cash (net of amounts
reimbursed by its Subsidiaries).
(b) The Company shall not permit any of its Subsidiaries to issue any
Capital Stock other than to the Company or another Subsidiary. The Company shall
not issue any preferred stock other than Permitted Preferred Stock and Permitted
Refinancing Preferred Stock.
(c) The Company shall not at any time permit any Person, other than an
Insurance Subsidiary, to own any CDOC Preferred Stock.
Section 7.02. Liens. The Company shall not, and shall not permit any of its
Subsidiaries to, create, assume or suffer to exist any Lien on any property now
owned or hereafter acquired by it, except for the following:
(a) Transaction Liens;
(b) Liens in connection with Permitted Transactions;
(c) cash collateral securing Permitted Swap Obligations in an aggregate
amount not to exceed, at any time, $35,000,000;
(d) Liens for Taxes that are not overdue for more than 90 days or for Taxes
being contested in good faith and by appropriate proceedings and with respect to
which adequate reserves are being maintained in accordance with GAAP;
(e) Liens existing on the date hereof and listed in Schedule 7.02,
including extensions, renewals and replacements of such Liens; provided that (i)
such Lien shall not apply to any additional property (other than after acquired
title in or on such property and proceeds of the existing collateral in
accordance with the document creating such Lien) and (ii) the Indebtedness
secured thereby is not increased except as otherwise permitted under Section
7.01 (in which case the portion representing any additional increase must be
permitted by another paragraph of this Section 7.02);
(f) (i) Liens incurred in the ordinary course of business in connection
with worker's compensation, unemployment insurance or other forms of
governmental insurance or benefits or to secure performance of tenders,
statutory obligations, leases and contracts (other than for borrowed money)
entered into in the ordinary course of business or to secure obligations on
surety or appeal bonds and (ii) cash collateral securing letters of credit
issued in respect of obligations to insurers in an aggregate amount not to
exceed $15,000,000 at any time outstanding;
64
(g) (i) Liens of attorneys retained by the Company on a contingency fee
basis and (ii) Liens of mechanics, carriers, and materialmen and other like
Liens imposed by law and arising in the ordinary course of business in respect
of obligations that in the case of clause (ii) hereof are not overdue for more
than 60 days or that are being contested in good faith and by appropriate
proceedings and with respect to which adequate reserves are being maintained in
accordance with GAAP;
(h) Liens arising in the ordinary course of business for sums being
contested in good faith and by appropriate proceedings and with respect to which
adequate reserves are being maintained in accordance with GAAP, or for sums not
due, and in either case not involving any deposits or advances for borrowed
money or the deferred purchase price of property or services;
(i) Liens securing Indebtedness permitted by Section 7.01(a)(viii);
provided that such Liens are limited to the assets subject to the relevant
capital lease or purchase money transaction;
(j) easements, rights-of-way, zoning restrictions, restrictions and other
similar encumbrances incurred in the ordinary course of business that do not
secure any monetary obligation and which do not materially interfere with the
ordinary course of business of the Company and its Subsidiaries;
(k) Liens on property of the Company and its Subsidiaries in favor of
landlords securing licenses, subleases or leases of property not otherwise
prohibited hereunder;
(l) licenses, leases or subleases permitted hereunder granted to others not
materially interfering in any material respect in the business of the Company
and its Subsidiaries;
(m) attachment or judgment Liens not constituting an Event of Default under
Section 8.01(i);
(n) Liens arising from precautionary Uniform Commercial Code financing
statement filings with respect to operating leases or consignment arrangements
entered into by the Company and its Subsidiaries in the ordinary course of
business;
(o) customary set-off rights in favor of depositary banks;
(p) other Liens securing Indebtedness or other obligations in an aggregate
amount not exceeding $75,000,000 at any time outstanding;
(q) any Lien on any asset of any Person existing at the time such Person
becomes a Subsidiary of the Company, is merged or consolidated with or into the
Company or a Subsidiary of the Company, or prior to the Acquisition thereof by
the Company or a Subsidiary of the Company, and not created in contemplation of
such event; and
(r) Liens attaching solely to ▇▇▇▇ ▇▇▇▇▇▇▇ money deposits required to be
made under the terms of any letter of intent or purchase agreement for a
permitted Acquisition.
Section 7.03. Disposition of Assets. The Company shall not, and shall not
permit any of its Subsidiaries to, sell, assign, lease, transfer or otherwise
Dispose of (whether in one or a series
65
of transactions) any property (including accounts and notes receivable with or
without recourse and Capital Stock of any Subsidiary whether newly issued or
otherwise) or enter into any agreement to do any of the foregoing, except:
(a) Dispositions of inventory, equipment and Cash Equivalents, all in the
ordinary course of business consistent with past practices;
(b) the sale of equipment to the extent that such equipment is exchanged
for credit against the purchase price of similar replacement equipment or the
proceeds of such sale are reasonably promptly applied to the purchase price of
such replacement equipment;
(c) Dispositions of Investments by any Insurance Subsidiary (other than any
of its Investments in Subsidiaries engaged in insurance lines of business) in
the ordinary course of business consistent with past practices and the
investment policy approved by the board of directors of such Insurance
Subsidiary;
(d) intercompany Dispositions in the ordinary course of business (i) among
the Company and its Subsidiaries (other than Dispositions to Excluded
Subsidiaries) and among the Subsidiaries (other than Dispositions to Excluded
Subsidiaries) and (ii) to Excluded Subsidiaries in an aggregate amount not to
exceed $30,000,000;
(e) (i) any Dispositions pursuant to a Reinsurance Agreement so long as
such Disposition is entered into in the ordinary course of business for the
purpose of managing insurance risk consistent with industry practice and (ii)
any other Dispositions pursuant to a Reinsurance Agreement so long as the
aggregate statutory profit and/or gains on insurance policy sales or other
portfolio transfers resulting from all Dispositions described in this clause
(ii) consummated after the Prior Effective Date do not exceed $400,000,000 in
the aggregate during the term of this Agreement or $150,000,000 in any Fiscal
Year; provided that (x) the Net Proceeds therefrom are, unless required to be
retained by any Insurance Subsidiary pursuant to regulatory restrictions,
applied to prepay the Loans as provided in Section 2.08 and (y) any Net Proceeds
therefrom that are required to be retained by any Insurance Subsidiary pursuant
to regulatory restrictions are so retained by such Insurance Subsidiary;
(f) obsolete or worn out property disposed of by the Company or any of its
Subsidiaries in the ordinary course of business and consistent with past
practices of the Company and its Subsidiaries;
(g) transfers resulting from any casualty or condemnation of property or
assets;
(h) licenses or sublicenses of intellectual property and general
intangibles and licenses, leases or subleases of other property in the ordinary
course of business and consistent with the past practices of the Company and its
Subsidiaries and which do not materially interfere with the business of the
Company and its Subsidiaries;
(i) Dispositions consisting of intercompany mergers and consolidations
among the Company and its Subsidiaries, or of any liquidation, winding up or
dissolution of any Immaterial Subsidiary, in each case to the extent permitted
by Section 7.07(b);
66
(j) Dispositions of shares of Capital Stock in order to qualify members of
the board of directors or equivalent governing body of an Obligor or such other
nominal shares required to be held other than by the Company or such Obligor, as
required by applicable law;
(k) the sale, discount, forgiveness or other compromise of notes or other
accounts in the ordinary course of business or in connection with collection
thereof;
(l) issuances of Capital Stock by the Company;
(m) the sale and leaseback of the Company's headquarters located in Carmel,
Indiana, on fair and reasonable terms (as certified to the Agent in writing by a
Responsible Officer of the Company);
(n) Dispositions not otherwise permitted hereunder (other than pursuant to
Reinsurance Agreements, which shall be subject to the limitations in clause (e)
above); provided that (w) such Dispositions shall be for fair market value
(which determination must be supported by a fairness opinion in form and
substance reasonably satisfactory to the Agent from a nationally-recognized
investment banking firm in connection with any Disposition or series of
Dispositions the aggregate consideration for which exceeds $125,000,000;
provided that no fairness opinion is required in respect of any Disposition or
series of Dispositions made at any time when (i) the Debt to Total
Capitalization Ratio is equal to or less than 20% and (ii) the Financial
Strength Rating Condition is satisfied) and at least 75% of the consideration
received in connection therewith at closing shall consist of cash, (x) on a Pro
Forma Basis after giving effect to such Disposition, the Company and its
Subsidiaries would be in compliance with all of the covenants contained in the
Loan Documents (including all financial and ratings covenants), (y) no such
Disposition shall include the sale of any capital stock of any Subsidiary unless
100% of the capital stock of such Subsidiary owned by the Obligors is sold and
(z) the Net Proceeds thereof shall be applied to prepay the Loans in accordance
with Section 2.08; and
(o) the dissolution, liquidation or winding up of immaterial Subsidiaries,
so long as the assets of such Subsidiaries are distributed to the Company or its
Subsidiaries.
Upon consummation of a sale, transfer or other Disposition permitted under this
Section 7.03, liens created under the Security Documents in respect of the
assets Disposed of shall be automatically released and the Agent shall (to the
extent applicable) deliver to the Company, upon the Company's request and at the
Company's expense, such documentation as necessary to evidence the release of
the Agent's security interests, if any, in the assets being Disposed of,
including amendments or terminations of Uniform Commercial Code financing
statements, if any, the return of stock certificates, if any, and the release of
any Subsidiary being Disposed of in its entirety from all of its obligations, if
any, under the Loan Documents.
Section 7.04. Other Agreements. The Company shall not, and shall not permit
any of its Subsidiaries to, enter into any agreement (other than any agreement
with any Department to the extent required by such Department) containing any
provision that (a) would be violated or breached in any material respect by the
performance of its obligations hereunder or under any other Loan Document or
under any instrument or document delivered or to be delivered by it hereunder or
thereunder in connection herewith or therewith or (b) prohibits or restricts the
67
ability of the Company or such Subsidiary to amend or otherwise modify this
Agreement, any other Loan Document or any other document executed in connection
herewith or therewith, and such breach, violation, prohibition or restriction,
individually or in the aggregate, could reasonably be expected to adversely
affect the rights and remedies of the Agent and the Lenders under the Loan
Documents.
Section 7.05. Transactions with Affiliates. The Company shall not, and
shall not suffer or permit any Subsidiary to, enter into any transaction with
any Affiliate of the Company, except (a) upon fair and reasonable terms no less
favorable to the Company or such Subsidiary than would be obtained in a
comparable arm's-length transaction with a Person not an Affiliate of the
Company or such Subsidiary and that, (b) for insurance transactions,
intercompany pooling and other reinsurance transactions entered into in the
ordinary course of business and consistent with past practice, (c) intercompany
transactions in the ordinary course and consistent with past practices between
or among the Company and its Subsidiaries (other than Excluded Subsidiaries) and
between or among Subsidiaries (other than Excluded Subsidiaries), (d) any
Restricted Payment permitted by Section 7.08 and (e) arrangements for
indemnification payments for directors and officers of the Company and its
Subsidiaries.
Section 7.06. Change in Business. The Company shall not, and shall not
suffer or permit any Subsidiary (other than any Immaterial Subsidiary) to,
fundamentally change the type of business in which it is engaged as of the
Effective Date; provided that any Subsidiary may cease to engage in any type of
business in which such Subsidiary is engaged as of the Effective Date if the
board of directors of the Company or such Subsidiary shall determine that
ceasing to engage in such type of business is in the best interests of the
Company and its Subsidiaries, taken as a whole, or such Subsidiary.
Section 7.07. Fundamental Changes. Unless the Obligations shall be paid in
full concurrently therewith, the Company shall not, and shall not suffer or
permit any of its Subsidiaries to, enter into any merger, consolidation,
amalgamation, or sale of all or substantially all of the assets of the Company
and its Subsidiaries taken as a whole, or liquidate, wind up or dissolve itself
(or suffer any liquidation or dissolution), except (a) in connection with a
Disposition of a Subsidiary otherwise permitted by Section 7.03) and (b) if at
the time thereof and immediately after giving effect thereto no Event of Default
shall have occurred and be continuing, (i) any Subsidiary Guarantor (other than
CDOC) may merge, consolidate or amalgamate into the Company in a transaction in
which the Company is the surviving corporation, (ii) any Subsidiary Guarantor
may merge, consolidate or amalgamate into any Subsidiary in a transaction in
which the surviving entity is a Subsidiary Guarantor (and if CDOC is a party to
such transaction, CDOC is the surviving entity), (iii) any two Subsidiaries that
are not Subsidiary Guarantors may merge, consolidate or amalgamate; provided
that if either such Subsidiary is a direct Subsidiary of an Obligor, the
surviving entity shall be a direct Subsidiary of an Obligor.
Section 7.08. Restricted Payments. The Company shall not, and shall not
suffer or permit any Subsidiary to, declare or pay any dividend on (or make any
payment to a related trust for the purpose of paying a dividend), or make any
payment on account of, or set apart assets for a sinking or other analogous fund
for, the purchase, redemption, defeasance, retirement or other acquisition of,
any Capital Stock of the Company or such Subsidiary (or any related trust),
68
whether now or hereafter outstanding, or make any other distribution in respect
thereof, either directly or indirectly, whether in cash or property or in
obligations of the Company or such Subsidiary (collectively, "Restricted
Payments"), except that:
(a) (i) any Subsidiary may declare or pay dividends with respect to its
Capital Stock to the Company and to any Wholly-Owned Subsidiary (and in the case
of a non-Wholly-Owned Subsidiary, to the Company and any Subsidiary and to each
other owner of Capital Stock or other equity interests of such Subsidiary on a
pro rata basis based on their relative ownership interests) and (ii) the Company
may from time to time redeem the CDOC Preferred Stock;
(b) the Company may pay dividends solely in the form of shares of common
stock or additional shares of Permitted Preferred Stock to the holders of the
Permitted Preferred Stock;
(c) the Company may pay dividends solely in the form of shares of common
stock or additional shares of Permitted Refinancing Preferred Stock to the
holders of the Permitted Refinancing Preferred Stock;
(d) so long as no Event of Default is continuing (both before and
immediately after giving effect to the payment thereto), the Company may pay
cash dividends on the Permitted Refinancing Preferred Stock to the extent the
terms thereof (as in effect on the date of initial issuance) require cash
dividend payments;
(e) the Company may pay dividends to the holders of Class B Preferred Stock
on the terms in effect on the Effective Date;
(f) the Company may purchase shares of common stock held by employees of
the Company pursuant to the Company's 2003 Long-Term Equity Incentive Plan, as
in effect on the Effective Date to allow employees to meet their tax obligations
(with such amendments or modifications as may be reasonably acceptable to the
Agent);
(g) the Company may make Restricted Payments in any Fiscal Year, in each
case so long as no amount is outstanding under the Revolving Credit Facility
immediately after giving effect to any such Restricted Payment, of up to an
aggregate amount equal to the sum of (i) $50,000,000 (less any amount thereof
paid in any prior Fiscal Year) and (ii) 25% of Conseco Excess Cash Flow from the
prior Fiscal Year, so long as, solely with respect to this clause (ii), (w) no
Event of Default has occurred and is continuing, or will result therefrom, (x)
the Debt to Total Capitalization Ratio is equal to or less than 20% (after
giving effect to any such Restricted Payment), (y) the Financial Strength Rating
Condition is satisfied and (z) each of the Facilities has a senior secured debt
rating of not less than Ba3 from ▇▇▇▇▇'▇ and BB- from S&P, in each case at the
time any such Restricted Payment is made; and
(h) the Company may repurchase Capital Stock converted from Permitted
Convertible Indebtedness so long as (i) no Event of Default has occurred and is
continuing or will result therefrom, (ii) the Debt to Total Capitalization Ratio
is equal to or less than 20%, (iii) the Financial Strength Rating Condition is
satisfied and (iv) each of the Facilities has a senior secured debt rating of
not less than Ba3 from ▇▇▇▇▇'▇ and BB- from S&P, in each case at the time any
such repurchase is made.
69
Section 7.09. Investments and Acquisitions. The Company shall not, and
shall not suffer or permit any Subsidiary to, directly or indirectly, make any
Acquisition or hold or make any other Investment in any Person, except:
(a) Investments in existence on the Effective Date and commitments to make
Investments existing on the Effective Date and listed on Schedule 7.09;
(b) Investments consisting of non-cash consideration received in connection
with a permitted asset sale;
(c) Investments received in connection with the bankruptcy or
reorganization of customers and suppliers in the ordinary course of business;
(d) Investments consisting of Contingent Obligations permitted by Section
7.01 of Indebtedness permitted by Section 7.01;
(e) Investments in Cash Equivalents;
(f) Investments by any Insurance Subsidiary (including by any Subsidiary of
such Insurance Subsidiary that is not itself an Insurance Subsidiary) in the
ordinary course of business in compliance with Section 7.16 and consistent with
the investment policy approved by the board of directors of such Insurance
Subsidiary;
(g) intercompany Investments other than in Excluded Subsidiaries in the
ordinary course of business;
(h) intercompany Investments in Excluded Subsidiaries in the ordinary
course of business in an aggregate amount expended not to exceed $30,000,000;
(i) security deposits or pledges held or made in the ordinary course of
business;
(j) loans and advances in the ordinary course of business to employees for
moving, relocation or travel purposes, in each case subject to compliance with
the Requirements of Law;
(k) Permitted Swap Obligations;
(l) (i) Acquisitions (other than Acquisitions that constitute Investments
permitted by Section 7.09(f) above or Section 7.09(m) below), for aggregate
consideration in an amount not to exceed $100,000,000 in any Fiscal Year or
$300,000,000 during the term of this Agreement, which consideration will include
all cash expended and the value of any Capital Stock of the Company (other than
Capital Stock prohibited under Section 7.01(b) and not permitted to be used for
such purpose) used to consummate such Acquisition; provided that at the time of
such Acquisition no Event of Default shall be continuing and immediately after
giving effect to such Acquisition no Default (including any failure to be in
compliance with the financial covenants calculated on a Pro Forma Basis) would
occur; and (ii) in the event (x) the Debt to Total Capitalization Ratio is equal
to or less than 20% (calculated on a Pro Forma Basis), (y) the Financial
Strength Rating Condition is satisfied (calculated on a Pro Forma Basis) and (z)
the consideration for such Acquisitions consists solely of such Capital Stock,
the limits referred to
70
above shall be increased to $250,000,000 in any Fiscal Year and $500,000,000
during the term of this Agreement; and
(m) Investments not otherwise permitted hereby in an aggregate amount
expended not to exceed $50,000,000 in any Fiscal Year.
Section 7.10. Prepayments of Indebtedness; Modifications of Certain
Agreements; Synthetic Purchase Agreements. (a) The Company shall not, and shall
not permit any of its Subsidiaries to, make or agree to pay or make, directly or
indirectly, any payment or other distribution (whether in cash, securities or
other property, and including optional prepayments and open market purchases) of
or in respect of principal of or interest on any Permitted Refinancing
Indebtedness, or any payment or other distribution (whether in cash, securities
or other property), including any sinking fund or similar deposit, on account of
the purchase, redemption, defeasance or termination of any Permitted Refinancing
Indebtedness, other than payment of regularly scheduled interest and principal
payments as and when due in respect thereof, except payments in respect thereof
prohibited by the subordination provisions thereof.
(b) The Company shall not, and shall not permit any of its Subsidiaries to,
amend, modify, waive or otherwise change, or consent or agree to any amendment,
modification, waiver or other change to, any of the material terms of any
Indebtedness of the Company or any of its Subsidiaries specified on Schedule
7.10 hereto or any Permitted Refinancing Indebtedness (other than any such
amendment, modification, waiver or other change that (i) would extend the
maturity or reduce the amount of any payment of principal thereof or reduce the
rate or extend any date for payment of interest thereon and (ii) does not
involve the payment of a consent fee that is not customary under the
circumstances).
(c) The Company shall not, and shall not permit any of its Subsidiaries to,
amend, modify, waive or otherwise change, or consent or agree to any amendment,
modification, waiver or other change to, any of the material terms of any
preferred stock issued by the Company or any of its Subsidiaries (including the
Class B Preferred Stock, Permitted Preferred Stock and the Permitted Refinancing
Preferred Stock) or any related trust in a manner that adversely affects the
interests of the Lenders, it being understood that the following shall be
permitted: any such amendment, modification, waiver or other change that (i)
would extend the scheduled redemption date or reduce the amount of any scheduled
redemption payment or reduce the rate or extend any date for payment of
dividends thereon and (ii) does not involve the payment of a consent fee that is
not customary under the circumstances.
(d) The Company shall not, and shall not permit any of its Subsidiaries to,
amend or modify its respective Organization Documents, other than any amendments
or modifications that do not, individually or in the aggregate, adversely affect
the interests of the Lenders.
(e) The Company shall not, and shall not permit any of its Subsidiaries to,
enter into or be party to, or make any payment under, any Synthetic Purchase
Agreement.
Section 7.11. Debt to Total Capitalization Ratio. The Company shall
maintain at all times a Debt to Total Capitalization Ratio of not more than 25%.
71
Section 7.12. Interest Coverage Ratio. The Company shall not permit the
Interest Coverage Ratio as of the end of any Fiscal Quarter ending during each
period set forth below for the four Fiscal Quarters then ended (or, if less, the
number of full Fiscal Quarters commencing after the Effective Date) to be less
than the ratio set forth below for such Fiscal Quarter:
============================================================================
Period Ratio
----------------------------------------------------------------------------
----------------------------------------------------------------------------
From Effective Date through June 30, 2007 2.00 to 1
----------------------------------------------------------------------------
----------------------------------------------------------------------------
From July 1, 2007 and at all times thereafter 2.50 to 1
============================================================================
Section 7.13. [Intentionally Omitted.]
Section 7.14. Aggregate RBC Ratio. The Company shall not permit the
Aggregate RBC Ratio as of the end of any Fiscal Quarter ending during each
period set forth below to be less than the ratio set forth below for such Fiscal
Quarter:
============================================================================
Period Ratio
----------------------------------------------------------------------------
----------------------------------------------------------------------------
From Effective Date through March 31, 2006 245%
----------------------------------------------------------------------------
----------------------------------------------------------------------------
From April 1, 2006 and for each Fiscal Quarter 250%
thereafter
============================================================================
Section 7.15. Combined Statutory Capital and Surplus Level. The Company
shall not permit the Combined Statutory Capital and Surplus of the Insurance
Subsidiaries as of the end of any Fiscal Quarter to be less than $1,270,000,000.
Section 7.16. Investment Portfolio Requirement. The Company shall not
permit any Insurance Subsidiary to purchase, make or otherwise acquire:
(a) any Investment that is not an Investment Grade Asset, unless, after
giving effect thereto, the aggregate fair market value of all Investments of the
Insurance Subsidiaries that are not Investment Grade Assets (exclusive of the
Investments referred to in paragraphs (b),(c), and (d) below and policy loans as
specified on page 2, line 6 of the Company's Annual Statements) will not exceed
10% of the aggregate fair market value of all Investments held by the Insurance
Subsidiaries;
(b) any Investment that is non-NAIC rated, unless, after giving effect
thereto, the aggregate fair market value of all Investments of the Insurance
Subsidiaries that are non-NAIC rated (exclusive of the Investments referred to
in paragraphs (a),(c) and (d) hereof and policy
72
loans as specified on page 2, line 6 of the Company's Annual Statement) will not
exceed 6% of the aggregate fair market value of all Investments held by the
Insurance Subsidiaries;
(c) any Investment in real property mortgage loans classified on Schedule
B-Part 1 of the Annual Statement, unless, after giving effect thereto, the
aggregate fair market value of all Investments of the Insurance Subsidiaries in
such loans (exclusive of Investments referred to in paragraphs (a), (b) and (d)
hereof) will not exceed 12% of the aggregate fair market value of all
Investments held by the Insurance Subsidiaries; and
(d) any Investment involving Capital Stock, unless, after giving effect
thereto, the aggregate fair market value of all Investments of the Insurance
Subsidiaries in Capital Stock (exclusive of Investments referred to in
paragraphs (a), (b) and (c) hereof) will not exceed 1% of the aggregate fair
market value of all Investments held by the Insurance Subsidiaries;
provided that (x) any Insurance Subsidiary shall be permitted to make any
Investment that it is committed to make as of the Prior Effective Date and
listed on Schedule 7.09 (it being understood, however, that each such Investment
shall be taken into account for purposes of determining whether any additional
Investments may be purchased, made or otherwise acquired hereunder). If one or
more of the percentage thresholds referred in clauses (a), (b), (c) or (d) above
is exceeded solely as a result of the making of any Investment permitted to be
made pursuant to the foregoing proviso (after giving effect to any Investments
made prior thereto), such event shall not constitute a Default for purposes
hereof.
Section 7.17. Restrictive Agreements. The Company shall not, and shall not
permit any of its Subsidiaries to, directly or indirectly, enter into or permit
to exist any agreement or other arrangement that prohibits, restricts or imposes
any condition on (a) the ability of the Company or any Subsidiary to create or
permit to exist any Lien on any of its property or (b) the ability of any
Subsidiary to pay dividends or other distributions with respect to any shares of
its Capital Stock or to make, repay or prepay loans or advances to the Company
or any other Subsidiary or to Dispose of assets to the Company or any other
Subsidiary; provided that (i) the foregoing shall not apply to restrictions and
conditions imposed by applicable law (including pursuant to regulatory
restrictions), (ii) the foregoing shall not apply to restrictions and conditions
existing on the date hereof and identified on Schedule 7.17 (but shall apply to
any amendment or modification expanding the scope of, or any extension or
renewal of, any such restriction or condition), (iii) the foregoing shall not
apply to customary restrictions and conditions contained in agreements relating
to the sale of a Subsidiary or assets or property of the Company or any
Subsidiary pending such sale, provided that such restrictions and conditions
apply only to the Subsidiary or assets or property that is to be sold and such
sale is permitted hereunder, (iv) the foregoing shall not apply to restrictions
that are not more restrictive than those contained in this Agreement contained
in any documents governing any Indebtedness incurred after the Effective Date in
accordance with the provisions of this Agreement, (v) clause (a) of this Section
shall not apply to restrictions or conditions imposed by any agreement relating
to secured Indebtedness (including Capitalized Lease Liabilities and Purchase
Money Debt) permitted by this Agreement if such restrictions or conditions apply
only to the collateral securing such Indebtedness and (vi) clause (a) of this
Section shall not apply to customary provisions in leases or licenses or other
contracts and agreements restricting the assignment, subletting or sublicensing
thereof.
73
Section 7.18. Holding Company Activities. The Company shall not, and shall
not permit CDOC to, engage in any business or activity except owning all the
outstanding shares of Capital Stock of their respective Subsidiaries and
activities related or incidental thereto. The Company shall not permit CDOC to
own or acquire any assets (except shares of Capital Stock of its Subsidiaries
and cash and Cash Equivalents and other assets owned by it on the Effective
Date) or incur any liabilities (except liabilities under the Loan Documents,
liabilities imposed by law, including tax liabilities, liabilities in existence
on the Effective Date and other liabilities incidental to its existence and
permitted business and activities).
Section 7.19. Changes in Accounting Policies; Fiscal Year. The Company
shall not, and shall not permit any of its Subsidiaries to, (a) make any change
to its accounting policies or reporting practices, except as required or
permitted by GAAP or (b) change the last day of its fiscal year from December 31
of each year.
ARTICLE 8
EVENTS OF DEFAULT
Section 8.01. Events of Default. Each of the following shall constitute an
"Event of Default":
(a) Non Payment. The Company fails to pay (i) when and as required to be
paid herein, whether at the due date thereof or at a date fixed for prepayment
thereof or otherwise, any amount of principal of any Loan, or (ii) within five
days after the same becomes due, any interest, fee or any other amount payable
hereunder or under any other Loan Document; or
(b) Representation or Warranty. Any representation or warranty by the
Company or any of its Subsidiaries made or deemed made herein or in connection
with any other Loan Document or any amendment or modification hereof or thereof
or waiver hereunder or thereunder, or contained in any certificate, document or
financial or other statement by the Company, any Subsidiary or any Responsible
Officer, furnished at any time in connection with this Agreement or in
connection with any other Loan Document or any amendment or modification hereof
or thereof or waiver hereunder or thereunder, is incorrect in any material
respect on or as of the date made or deemed made; or
(c) Specific Defaults. The Company fails to perform or observe any term,
covenant or agreement contained in any of (i) Section 6.03(a), Section 6.04(a)
(with respect to the Company's corporate existence) or Article 7 (other than
Section 7.16) or (ii) Section 7.16 and, in the case of clause (ii), such default
shall continue unremedied for a period of 30 days (it being understood that if
the Company takes any action during such 30 day period which action, if it had
been taken on or prior to the relevant date on which compliance with Section
7.16, as applicable, was tested, would have resulted in the Company being in
compliance with such Section on such test date, such default shall be deemed to
have been remedied on the date on which such action was taken); or
(d) Other Defaults. The Company or any of its Subsidiaries fails to perform
or observe any other term or covenant contained in this Agreement or any other
Loan Document,
74
and such default shall continue unremedied for a period of 30 days after the
date upon which written notice thereof is given to the Company by the Agent or
any Lender; or
(e) Cross-Default. (i) The Company or any Subsidiary (A) fails to make any
payment in respect of any Indebtedness or Contingent Obligation (other than in
respect of Swap Contracts), having an aggregate principal amount of more than
$40,000,000, when due (whether by scheduled maturity, required prepayment,
acceleration, demand, or otherwise); or (B) fails to perform or observe any
other condition or covenant, or any other event shall occur or condition exist,
under any agreement or instrument relating to any such Indebtedness (and, solely
in the case of a failure to comply with any financial statement or other
information delivery or reporting requirement or in the case of the entry of any
judgment or decree, so long as such judgment or decree constitutes a Default but
not an Event of Default under Section 8.01(i), such failure or event continues
after the applicable grace or notice period, if any, specified in the relevant
document on the date of such failure or event) if the effect of such failure,
event or condition is to cause, or to permit (or, with the giving of notice or
lapse of time or both, would permit) the holder or holders of such Indebtedness
or beneficiary or beneficiaries of such Indebtedness (or a trustee or agent on
behalf of such holder or holders or beneficiary or beneficiaries) to cause, such
Indebtedness to be declared to be due and payable prior to its stated maturity,
or, in the case of any such Indebtedness consisting of Contingent Obligations,
to become payable or cash collateral in respect thereof to be demanded; or (ii)
there occurs under any Swap Contract an Early Termination Date (as defined in
such Swap Contract) resulting from (x) any event of default under such Swap
Contract as to which the Company or any Subsidiary is the Defaulting Party (as
defined in such Swap Contract) or (y) any Termination Event (as so defined) as
to which the Company or any Subsidiary is an Affected Party (as so defined),
and, in either event, the Swap Termination Value owed by the Company or such
Subsidiary as a result thereof is greater than $40,000,000; or
(f) Insolvency; Voluntary Proceedings. The Company or any Subsidiary (other
than an Immaterial Subsidiary) (i) ceases or fails to be solvent, or generally
fails to pay, or admits in writing its inability to pay, its debts as they
become due, subject to applicable grace periods, if any, whether at stated
maturity or otherwise; (ii) voluntarily ceases to conduct its business in the
ordinary course; (iii) commences any Insolvency Proceeding with respect to
itself; (iv) applies for or consents to the appointment of a receiver, trustee,
custodian, conservator, liquidator, mortgagee in possession (or agent therefor),
or other similar Person for itself or for a substantial part of its assets, or
(v) takes any action to effectuate or authorize any of the foregoing; or
(g) Involuntary Proceedings. (i) Any involuntary Insolvency Proceeding is
commenced or filed against the Company or any Subsidiary (other than an
Immaterial Subsidiary), or any writ, judgment, warrant of attachment, execution
or similar process, is issued or levied against a substantial part of the
Company's or any Subsidiary's (other than an Immaterial Subsidiary's)
properties, and any such proceeding or petition shall not be dismissed, or such
writ, judgment, warrant of attachment, execution or similar process shall not be
released, vacated or fully bonded within 60 days after commencement, filing or
levy; (ii) the Company or any Subsidiary (other than an Immaterial Subsidiary)
admits the material allegations of a petition against it in any Insolvency
Proceeding, or an order for relief (or similar order under non-U.S. law) is
ordered in any Insolvency Proceeding; (iii) the Company or any Subsidiary (other
than an Immaterial Subsidiary) acquiesces in the appointment of a receiver,
trustee, custodian,
75
conservator, liquidator, mortgagee in possession (or agent therefor), or other
similar Person for itself or a substantial portion of its property or business;
or (iv) any Subsidiary (other than an Immaterial Subsidiary) shall become
subject to any conservation, rehabilitation or liquidation order, directive or
mandate issued by any Governmental Authority; or
(h) Pension Plans and Welfare Plans. With respect to any Single Employer
Pension Plan as to which the Company or any other ERISA Affiliate may have any
liability, there shall exist an Unfunded Pension Liability of more than
$30,000,000 in the aggregate as to the Company or any ERISA Affiliate, and steps
are undertaken to terminate such plan or such Pension Plan is terminated or the
Company or any other ERISA Affiliate withdraws from or institutes steps to
withdraw from such Pension Plan, or the Company has knowledge that steps have
been taken to terminate any Multiemployer Plan and such termination may result
in liability to the Company or any ERISA Affiliate in excess of $30,000,000 in
the aggregate or any Reportable Event with respect to such Pension Plan has
occurred that could result in the incurrence of liability by the Company or any
ERISA Affiliate in excess of $30,000,000 in the aggregate or steps are taken to
terminate any Multiemployer Plan and such termination may result in any
liability of the Company or any ERISA Affiliate in excess of $30,000,000 in the
aggregate; or
(i) Material Judgments. One or more judgments or decrees shall be entered
against the Company or any of its Subsidiaries involving in the aggregate a
liability (not paid or fully covered by insurance as to which the relevant
insurance company has not denied coverage) of $40,000,000 or more, and all such
judgments or decrees shall not have been vacated, discharged, stayed or bonded
pending appeal within 30 days from the entry thereof, or any action shall be
taken by a judgment creditor to attach or levy upon any asset of the Company or
any of its Subsidiaries to enforce any such judgment or decree; or
(j) Material Regulatory Matters. At any time either (x) the Debt to Total
Capitalization Ratio is greater than 20% or (y) the Financial Strength Rating
Condition is not satisfied, and (i) any Insurance Subsidiary shall not make a
scheduled payment of interest or principal on any surplus note or similar form
of indebtedness (due to actions of any Governmental Authority or otherwise),
(ii) any Insurance Subsidiary's ability to pay fees to its Affiliates under
existing agreements (or extensions of existing agreements) shall be restricted
(due to actions of any Governmental Authority or otherwise) or (iii) in any
Fiscal Year, an Insurance Subsidiary's ability to pay dividends to its
stockholders is restricted in any manner (due to actions of any Governmental
Authority or otherwise), other than by restrictions relating to dividends that
apply generally to other insurance companies domiciled in the Insurance
Subsidiary's state of domicile under the insurance law of the state, and (x) in
the cases of clauses (i) through (iii) above, such event or condition, together
with all other such events or conditions, could reasonably be expected to have a
Material Adverse Effect and (y) in each case, such event or condition was not in
effect as of the date hereof; or
(k) Change of Control. There occurs any Change of Control; or
(l) Subsidiary Guarantee. Any Subsidiary Guarantor's Secured Guarantee
shall cease, for any reason, to constitute a valid and binding agreement of such
Subsidiary Guarantor or to be in full force and effect (other than in accordance
with the terms thereof or if released by
76
the Agent at the direction of the Required Lenders) or the Company or any
Subsidiary of the Company shall so assert; or
(m) Liens. Any Lien purported to be created under any Security Document
shall cease to be, or shall be asserted by the Company or any Subsidiary of the
Company not to be, a valid and perfected Lien on any Collateral covered thereby,
with the priority required by the applicable Security Document (except as a
result of a sale or other disposition of the applicable Collateral in a
transaction permitted under the Loan Documents or as a result of the Agent's
failure to maintain possession of any stock certificates, promissory notes or
other documents or possessory collateral delivered to it under the Security
Agreement or if released by the Agent), except to the extent that such cessation
would not, together with all other such cessations, be with respect to
Collateral having a fair market value in excess of $25,000,000; or
(n) Subordination Provisions. Any subordination provisions applicable to
any Permitted Refinancing Indebtedness shall cease to be, or shall be asserted
by the Company or any Subsidiary or by holders of 25% or more of the aggregate
principal amount of such Indebtedness then outstanding not to be, valid and
enforceable in accordance with the terms thereof; or the Obligations shall cease
to constitute "Senior Debt" (howsoever defined) for purposes of any Permitted
Refinancing Indebtedness.
Section 8.02. Remedies. If any Event of Default shall have occurred and be
continuing, the Agent shall, at the request of, or may, with the consent of, the
Required Lenders,
(a) declare the obligation of each Lender to make extensions or
conversions of the Loans to be terminated;
(b) declare the unpaid principal amount of all outstanding Loans, all
interest accrued and unpaid thereon and all other amounts owing or payable
hereunder or under any other Loan Document to be immediately due and
payable, whereupon such Loans, all interest accrued and unpaid thereon and
all other amounts owing or payable hereunder or under any other Loan
Document shall become immediately due and payable, without presentment,
demand, protest or other notice of any kind, all of which are hereby
expressly waived by the Company; and
(c) exercise on behalf of itself and the Lenders all rights and
remedies available to it and the Lenders under the Loan Documents or
applicable law;
provided that upon the occurrence of any event specified in Section 8.01(f) or
Section 8.01(g) upon the expiration of the 60-day period mentioned therein, the
obligation of each Lender to make Loans shall automatically terminate and the
unpaid principal amount of all outstanding Loans and all interest and other
amounts as aforesaid shall automatically become due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived by the Company.
Section 8.03. Rights Not Exclusive. The rights provided for in this
Agreement and the other Loan Documents are cumulative and are not exclusive of
any other rights, powers, privileges or remedies provided by law or in equity,
or under any other instrument, document or agreement now existing or hereafter
arising.
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ARTICLE 9
THE AGENT
Section 9.01. Appointment and Authority. Each of the Lenders hereby
irrevocably appoints BofA to act on its behalf as the Agent hereunder and under
the other Loan Documents and authorizes the Agent to take such actions on its
behalf and to exercise such powers as are delegated to the Agent by the terms
hereof or thereof, together with such actions and powers as are reasonably
incidental thereto. The provisions of this Article are solely for the benefit of
the Agent and the Lenders, and neither the Company nor any other Obligor shall
have rights as a third party beneficiary of any of such provisions.
Section 9.02. Rights as a Lender. The Person serving as the Agent hereunder
shall have the same rights and powers in its capacity as a Lender as any other
Lender and may exercise the same as though it were not the Agent and the term
"Lender" or "Lenders" shall, unless otherwise expressly indicated or unless the
context otherwise requires, include the Person serving as the Agent hereunder in
its individual capacity. Such Person and its Affiliates may accept deposits
from, lend money to, act as the financial advisor or in any other advisory
capacity for and generally engage in any kind of business with the Company or
any Subsidiary or other Affiliate thereof as if such Person were not the Agent
hereunder and without any duty to account therefor to the Lenders.
Section 9.03. Exculpatory Provisions. The Agent shall not have any duties
or obligations except those expressly set forth herein and in the other Loan
Documents. Without limiting the generality of the foregoing, the Agent:
(a) shall not be subject to any fiduciary or other implied duties,
regardless of whether a Default has occurred and is continuing;
(b) shall not have any duty to take any discretionary action or
exercise any discretionary powers, except discretionary rights and powers
expressly contemplated hereby or by the other Loan Documents that the Agent
is required to exercise as directed in writing by the Required Lenders (or
such other number or percentage of the Lenders as shall be expressly
provided for herein or in the other Loan Documents), provided that the
Agent shall not be required to take any action that, in its opinion or the
opinion of its counsel, may expose the Agent to liability or that is
contrary to any Loan Document or applicable law; and
(c) shall not, except as expressly set forth herein and in the other
Loan Documents, have any duty to disclose, and shall not be liable for the
failure to disclose, any information relating to the Company or any of its
Affiliates that is communicated to or obtained by the Person serving as the
Agent or any of its Affiliates in any capacity.
The Agent shall not be liable for any action taken or not taken by it (i)
with the consent or at the request of the Required Lenders (or such other number
or percentage of the Lenders as shall be necessary, or as the Agent shall
believe in good faith shall be necessary, under the circumstances as provided in
Sections 8.02 and 10.01) or (ii) in the absence of its own gross negligence or
willful misconduct. The Agent shall be deemed not to have knowledge of any
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Default unless and until notice describing such Default is given to the Agent by
the Company or a Lender.
The Agent shall not be responsible for or have any duty to ascertain or
inquire into (i) any statement, warranty or representation made in or in
connection with this Agreement or any other Loan Document, (ii) the contents of
any certificate, report or other document delivered hereunder or thereunder or
in connection herewith or therewith, (iii) the performance or observance of any
of the covenants, agreements or other terms or conditions set forth herein or
therein or the occurrence of any Default, (iv) the validity, enforceability,
effectiveness or genuineness of this Agreement, any other Loan Document or any
other agreement, instrument or document or (v) the satisfaction of any condition
set forth in Article 4 or elsewhere herein, other than to confirm receipt of
items expressly required to be delivered to the Agent.
Section 9.04. Reliance by Agent. The Agent shall be entitled to rely upon,
and shall not incur any liability for relying upon, any notice, request,
certificate, consent, statement, instrument, document or other writing
(including any electronic message, Internet or intranet website posting or other
distribution) believed by it to be genuine and to have been signed, sent or
otherwise authenticated by the proper Person. The Agent also may rely upon any
statement made to it orally or by telephone and believed by it to have been made
by the proper Person, and shall not incur any liability for relying thereon. In
determining compliance with any condition hereunder to the making of a Loan that
by its terms must be fulfilled to the satisfaction of a Lender, the Agent may
presume that such condition is satisfactory to such Lender unless the Agent
shall have received notice to the contrary from such Lender prior to the making
of such Loan. The Agent may consult with legal counsel (who may be counsel for
the Company), independent accountants and other experts selected by it, and
shall not be liable for any action taken or not taken by it in accordance with
the advice of any such counsel, accountants or experts.
Section 9.05. Delegation of Duties. The Agent may perform any and all of
its duties and exercise its rights and powers hereunder or under any other Loan
Document by or through any one or more sub-agents appointed by the Agent. The
Agent and any such sub-agent may perform any and all of its duties and exercise
its rights and powers by or through their respective Related Parties. The
exculpatory provisions of this Article shall apply to any such sub-agent and to
the Related Parties of the Agent and any such sub-agent, and shall apply to
their respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as Agent.
Section 9.06. Resignation of Agent. The Agent may at any time give notice
of its resignation to the Lenders and the Company. Upon receipt of any such
notice of resignation, the Required Lenders shall have the right, in
consultation with the Company, to appoint a successor, which shall be a bank
with an office in the United States, or an Affiliate of any such bank with an
office in the United States. If no such successor shall have been so appointed
by the Required Lenders and shall have accepted such appointment within 30 days
after the retiring Agent gives notice of its resignation, then the retiring
Agent may on behalf of the Lenders, appoint a successor Agent meeting the
qualifications set forth above; provided that if the Agent shall notify the
Company and the Lenders that no qualifying Person has accepted such appointment,
then such resignation shall nonetheless become effective in accordance with such
notice and (1) the
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retiring Agent shall be discharged from its duties and obligations hereunder and
under the other Loan Documents (except that in the case of any collateral
security held by the Agent on behalf of the Lenders under any of the Loan
Documents, the retiring Agent shall continue to hold such collateral security
until such time as a successor Agent is appointed) and (2) all payments,
communications and determinations provided to be made by, to or through the
Agent shall instead be made by or to each Lender directly, until such time as
the Required Lenders appoint a successor Agent as provided for above in this
Section. Upon the acceptance of a successor's appointment as Agent hereunder,
such successor shall succeed to and become vested with all of the rights,
powers, privileges and duties of the retiring (or retired) Agent, and the
retiring Agent shall be discharged from all of its duties and obligations
hereunder or under the other Loan Documents (if not already discharged therefrom
as provided above in this Section). The fees payable by the Company to a
successor Agent shall be the same as those payable to its predecessor unless
otherwise agreed between the Company and such successor. After the retiring
Agent's resignation hereunder and under the other Loan Documents, the provisions
of this Article and Sections 10.04 and 10.05 shall continue in effect for the
benefit of such retiring Agent, its sub-agents and their respective Related
Parties in respect of any actions taken or omitted to be taken by any of them
while the retiring Agent was acting as Agent.
Section 9.07. Non-Reliance on Agent and Other Lenders. Each Lender
acknowledges that it has, independently and without reliance upon the Agent or
any other Lender or any of their Related Parties and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon the Agent or any other Lender or
any of their Related Parties and based on such documents and information as it
shall from time to time deem appropriate, continue to make its own decisions in
taking or not taking action under or based upon this Agreement, any other Loan
Document or any related agreement or any document furnished hereunder or
thereunder.
Section 9.08. No Other Duties, Etc.. Anything herein to the contrary
notwithstanding, none of the joint lead arrangers or joint bookrunners listed on
the cover page hereof shall have any powers, duties or responsibilities under
this Agreement or any of the other Loan Documents, except in its capacity, as
applicable, as the Agent or a Lender hereunder.
Section 9.09. Agent May File Proofs of Claim. In case of the pendency of
any receivership, insolvency, liquidation, bankruptcy, reorganization,
arrangement, adjustment, composition or other judicial proceeding relative to
any Obligor, the Agent (irrespective of whether the principal of any Loan shall
then be due and payable as herein expressed or by declaration or otherwise and
irrespective of whether the Agent shall have made any demand on the Company)
shall be entitled and empowered, by intervention in such proceeding or otherwise
(a) to file and prove a claim for the whole amount of the principal
and interest owing and unpaid in respect of the Loans and all other
Obligations that are owing and unpaid and to file such other documents as
may be necessary or advisable in order to have the claims of the Lenders
and the Agent (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Lenders and the Agent and their
respective agents and counsel and all other amounts due the Lenders and the
Agent under Sections 2.10, 10.04 and 10.05) allowed in such judicial
proceeding; and
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(b) to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Lender to make such payments to the Agent and, in the event that the Agent
shall consent to the making of such payments directly to the Lenders, to pay to
the Agent any amount due for the reasonable compensation, expenses,
disbursements and advances of the Agent and its agents and counsel, and any
other amounts due the Agent under Sections 2.10, 10.04 and 10.05.
Nothing contained herein shall be deemed to authorize the Agent to
authorize or consent to or accept or adopt on behalf of any Lender any plan of
reorganization, arrangement, adjustment or composition affecting the Obligations
or the rights of any Lender or to authorize the Agent to vote in respect of the
claim of any Lender in any such proceeding.
Section 9.10. Collateral and Guaranty Matters The Lenders irrevocably
authorize the Agent, at its option and in its discretion,
(a) to release any Lien on any property granted to or held by the
Agent under any Loan Document (i) upon payment in full of all Obligations
(other than contingent indemnification obligations), (ii) that is sold or
otherwise disposed of or to be sold or otherwise disposed of as part of or
in connection with any sale permitted hereunder or under any other Loan
Document or (iii) subject to Section 10.01, if approved, authorized or
ratified in writing by the Required Lenders;
(b) to subordinate any Lien on any property granted to or held by the
Agent under any Loan Document to the holder of any Lien on such property
that is permitted by Section 7.02(i); and
(c) to release any Subsidiary Guarantor from its obligations under the
Secured Guarantee if such Person ceases to be a Subsidiary as a result of a
transaction permitted hereunder.
Upon request by the Agent at any time, the Required Lenders will confirm in
writing the Agent's authority to release or subordinate its interest in
particular types or items of property, or to release any Subsidiary Guarantor
from its obligations under the Secured Guarantee pursuant to this Section 9.10.
Section 9.11. Indemnification of Agent. Whether or not the transactions
contemplated hereby are consummated, the Lenders shall indemnify upon demand
each Agent-Related Person (to the extent not reimbursed by or on behalf of the
Company and without limiting the obligation of the Company to do so), pro rata,
and hold harmless each Agent-Related Person from and against any and all
Indemnified Liabilities incurred by it; provided that no Lender shall be liable
for the payment to any Agent-Related Person of any portion of such Indemnified
Liabilities to the extent determined in a final, nonappealable judgment by a
court of competent jurisdiction to have resulted from such Agent-Related
Person's own gross negligence or willful misconduct; and provided further that
no action taken in accordance with the directions of the Required
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Lenders shall be deemed to constitute gross negligence or willful misconduct for
purposes of this Section. Without limitation of the foregoing, each Lender shall
reimburse the Agent upon demand for its ratable share of any costs or
out-of-pocket expenses (including Attorney Costs) incurred by the Agent in
connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Loan Document or any document
contemplated by or referred to herein, to the extent that the Agent is not
reimbursed for such expenses by or on behalf of the Company. The undertaking in
this Section shall survive the payment of all other Obligations and the
resignation of the Agent.
Section 9.12. Withholding Tax. (a) If any Lender (including a Lender that
becomes a party to this Agreement by assignment in accordance with Section
10.07) is not a "United Stated Person" for U.S. federal income tax purposes as
defined in Section 7701(a)(30) of the Code and such Lender claims exemption
from, or a reduction of, U.S. withholding tax under Sections 1441 or 1442 of the
Code, such Lender agrees with and in favor of the Agent and the Company to
deliver to the Agent and the Company:
(i) if such Lender claims an exemption from, or a reduction of,
withholding tax under a United States tax treaty, two properly completed
and executed copies of IRS Form W-8BEN (or any successor form) before the
payment of any interest in the first calendar year and before the payment
of any interest in each third succeeding calendar year during which
interest may be paid under this Agreement;
(ii) if such Lender claims that interest paid under this Agreement is
exempt from United States withholding tax because it is effectively
connected with a United States trade or business of such Lender, two
properly completed and executed copies of IRS Form W-8ECI (or any successor
form) before the payment of any interest is due in the first taxable year
of such Lender and in each third succeeding taxable year of such Lender
during which interest may be paid under this Agreement; and
(iii) such other form or forms as may be required under the Code or
other laws of the United States as a condition to exemption from, or
reduction of, United States withholding tax.
Such Lender agrees to promptly notify the Agent and the Company of any change in
circumstances which would modify or render invalid any claimed exemption or
reduction.
(b) If any Lender claims exemption from, or reduction of, withholding tax
under a United States tax treaty by providing an IRS Form ▇-▇▇▇▇, ▇-▇▇▇▇ or
other required form and such Lender sells, assigns, grants a participation in,
or otherwise transfers all or part of the Obligations of the Company to such
Lender, such Lender agrees to notify the Agent and the Company of the percentage
amount in which it is no longer the beneficial owner of Obligations of the
Company to such Lender. To the extent of such percentage amount, the Agent and
the Company will treat such Lender's IRS Form ▇-▇▇▇▇, ▇-▇▇▇▇ or other required
form as no longer valid.
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(c) If any Lender claiming exemption from United States withholding tax by
filing IRS Form W-8ECI with the Agent sells, assigns, grants a participation in
or otherwise transfers all or part of the Obligations of the Company to such
Lender, such Lender agrees to undertake sole responsibility for complying with
the withholding tax requirements imposed by Sections 1441 and 1442 of the Code.
(d) If any Lender is entitled to a reduction in the applicable withholding
tax, the Company may withhold from any interest payment to such Lender (or the
Agent) an amount equivalent to the applicable withholding tax after taking into
account such reduction. However, if the forms or other documentation required by
subsection (a) of this Section are not delivered to the Company and the Agent,
or if any Lender is not entitled to submit such forms or other documentation,
then the Company may withhold from any interest payment to such Lender (or the
Agent) an amount equivalent to the applicable withholding tax imposed by
Sections 1441 and 1442 of the Code, without reduction. If the Company withholds
tax from any interest payment, it shall deliver to the Agent on the Interest
Payment Date a written notice setting forth in reasonable detail the amount of
withholding made and the reason for said calculation of such amount.
(e) If the IRS or any other Governmental Authority of the United States or
other jurisdiction asserts a claim that the Company or the Agent did not
properly withhold tax from amounts paid to or for the account of any Lender
(because the appropriate form was not delivered or was not properly executed,
because such Lender failed to notify the Company or the Agent of a change in
circumstances which rendered the exemption from, or reduction of, withholding
tax ineffective or for any other reason) such Lender shall indemnify the Company
or the Agent, as the case may be, fully for all amounts paid, directly or
indirectly, by the Company or the Agent as tax or otherwise, including penalties
and interest and including any taxes imposed by any jurisdiction on the amounts
payable to the Company or the Agent under this Section, together with all costs
and expenses (including Attorney Costs). The obligation of the Lenders under
this subsection shall survive the payment of all Obligations and the resignation
or replacement of the Agent.
(f) Any amounts withheld from a Lender as a result of the failure of such
Lender to claim an exemption from withholding available to it or otherwise to
comply with this Section 9.12 shall not be subject to indemnification under
Section 3.01, Section 10.05 or otherwise.
ARTICLE 10
MISCELLANEOUS
Section 10.01. Amendments and Waivers. No amendment or waiver of any
provision of this Agreement or any other Loan Document, and no consent to any
departure by the Company or any other Obligor therefrom, shall be effective
unless in writing signed by the Required Lenders and the Company or the
applicable Obligor, as the case may be, and acknowledged by the Agent, and each
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given; provided that no such amendment, waiver or
consent shall:
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(a) extend or increase the Commitment of any Lender (or reinstate any
Commitment terminated pursuant to Section 8.02) without the written consent
of such Lender;
(b) postpone or delay the maturity of the Loans, or any scheduled date
of payment of the principal amount of the Term Loans under Section 2.07, or
any date for the payment of any interest or fees due to the Lenders (or any
of them) hereunder or under any other Loan Document, or reduce the amount
of, waive or excuse any such payment, without the written consent of each
Lender affected thereby;
(c) change the percentage of the Commitments or of the aggregate
unpaid principal amount, in each case, under a Facility, of the Loans that
is required for the Lenders under such Facility or any of them to take any
action hereunder without the written consent of each Lender under such
Facility;
(d) amend the definition of "Interest Period" under a Facility to
permit Interest Periods under such Facility with a duration of longer than
six months without the written consent of each Lender such Facility;
(e) release all or any substantial part of the Collateral from the
Transaction Liens (except as expressly permitted hereunder or in the
Security Agreement) without the written consent of each Lender;
(f) amend this Section 10.01 without the written consent of each
Lender;
(g) change (i) Section 2.13 in a manner that would alter the pro rata
sharing of payments required thereby without the written consent of each
Lender or (ii) the order of application of any reduction in the Revolving
Credit Commitments or any prepayment of Loans among the Facilities from the
application thereof set forth in the applicable provisions of Section
2.05(c) or 2.08(c), respectively, in any manner that materially and
adversely affects the Lenders under a Facility without the written consent
of (i) if such Facility is the Term Facility, the Required Term Lenders,
(ii) if such Facility is the Revolving Credit Facility, the Required
Revolving Credit Lenders; or
(h) impose any greater restriction on the ability of any Lender under
a Facility to assign any of its rights or obligations hereunder without the
written consent of (i) if such Facility is the Term Facility, the Required
Term Lenders and (ii) if such Facility is the Revolving Credit Facility,
the Required Revolving Credit Lenders;
and provided further that (i) no such agreement shall, unless in writing and
signed by the Agent in addition to the Required Lenders or all the Lenders, as
the case may be, affect the rights or duties of the Agent under this Agreement
or any other Loan Document (except with respect to the removal of the Agent) and
(ii) any fee agreement referred to in Section 2.10 may be amended, or rights or
privileges thereunder waived, in a writing executed by the parties thereto.
Notwithstanding anything to the contrary herein, no Defaulting Lender shall have
any right to approve or disapprove any amendment, waiver or consent hereunder,
except for any amendment, waiver or consent pursuant to Section 10.01(a), (b) or
(c).
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Section 10.02. Notices. (a) Unless otherwise expressly provided herein, all
notices and other communications provided for hereunder shall be in writing
(including by facsimile transmission). All such written notices shall be mailed,
faxed or delivered to the applicable address, facsimile number (provided that
any matter transmitted by the Company by facsimile (1) shall be immediately
confirmed by a telephone call to the recipient at the number specified on
Schedule 10.02, and (2) shall be followed promptly by delivery of a hard copy
original thereof) or (subject to subsection (c) below) electronic mail address,
and all notices and other communications expressly permitted hereunder to be
given by telephone shall be made to the applicable telephone number, as follows:
(i) if to the Company or the Agent, to the address, facsimile number,
electronic mail address or telephone number specified for such Person on
Schedule 10.02 or to such other address, facsimile number, electronic mail
address or telephone number as shall be designated by such party in a
notice to the other parties; and
(ii) if to any other Lender, to the address, facsimile number,
electronic mail address or telephone number specified in its administrative
questionnaire or to such other address, facsimile number, electronic mail
address or telephone number as shall be designated by such party in a
notice to the Company and the Agent.
All such notices and other communications shall be deemed to be given or
made upon the earlier to occur of (i) actual receipt by the relevant party
hereto and (ii) (A) if delivered by hand or by courier, when signed for by or on
behalf of the relevant party hereto; (B) if delivered by mail, four Business
Days after deposit in the mails, postage prepaid; (C) if delivered by facsimile,
when sent and receipt has been confirmed by telephone; and (D) if delivered by
electronic mail (which form of delivery is subject to the provisions of
subsection (c) below), when delivered; provided that notices and other
communications to the Agent pursuant to Article 2 shall not be effective until
actually received by such Person. In no event shall a voicemail message be
effective as a notice, communication or confirmation hereunder.
(b) Loan Documents may be transmitted and/or signed by facsimile or Adobe
PDF delivered by electronic mail. The effectiveness of any such documents and
signatures shall, subject to applicable law, have the same force and effect as
manually-signed originals and shall be binding on all Obligors, the Agent and
the Lenders. The Agent may also require that any such documents and signatures
be confirmed by a manually-signed original thereof; provided that the failure to
request or deliver the same shall not limit the effectiveness of any facsimile
document or signature.
(c) Electronic mail and Internet and intranet websites may be used only to
distribute routine communications, such as financial statements and other
information as provided in Section 6.02, and to distribute Loan Documents for
execution by the parties thereto and may not be used for any other purpose.
(d) The Agent and the Lenders shall be entitled to rely and act upon any
notices purportedly given by or on behalf of the Company even if (i) such
notices were not made in a manner specified herein, were incomplete or were not
preceded or followed by any other form of notice specified herein or (ii) the
terms thereof, as understood by the recipient, varied from any
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confirmation thereof. The Company shall indemnify each Agent-Related Person and
each Lender from all losses, costs, out-of-pocket expenses and liabilities
resulting from the reliance by such Person on each notice purportedly given by
or on behalf of the Company; provided that such indemnity shall not, as to any
such Person, be available to the extent that such losses, costs, expenses or
liabilities are determined by a court of competent jurisdiction by final and
nonappealable judgment to have resulted from the gross negligence or willful
misconduct of such Person. All telephonic notices to and other communications
with the Agent may be recorded by the Agent, and each of the parties hereto
hereby consents to such recording.
Section 10.03. No Waiver; Cumulative Remedies. No failure to exercise and
no delay in exercising, on the part of the Agent or any Lender, any right,
remedy, power or privilege hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, remedy, power or privilege
hereunder preclude any other or further exercise thereof or the exercise of any
other right, remedy, power or privilege.
Section 10.04. Costs and Expenses. The Company agrees (a) to pay or
reimburse the Agent for all reasonable costs and out-of-pocket expenses incurred
in connection with the development, preparation, negotiation and execution of
this Agreement and the other Loan Documents and any amendment, waiver, consent
or other modification of the provisions hereof and thereof (whether or not the
transactions contemplated hereby or thereby are consummated) and the
consummation and administration of the transactions contemplated hereby and
thereby, including all Attorney Costs, and (b) to pay or reimburse the Agent and
each Lender for all costs and expenses incurred in connection with the
enforcement, attempted enforcement or preservation of any rights or remedies
under this Agreement or the other Loan Documents (including all such costs and
expenses incurred during any "workout" or restructuring in respect of the
Obligations and during any legal proceeding, including in any Insolvency
Proceeding or appellate proceeding), including all fees, expenses and
disbursements of any law firm or other external legal counsel and, without
duplication, the allocated cost of internal legal services and all expenses and
disbursements of internal counsel. The foregoing costs and expenses shall
include all search, filing, recording, title insurance and appraisal charges and
fees and taxes related thereto and other out-of-pocket expenses incurred by the
Agent and the cost of independent public accountants and other outside experts
retained by the Agent or any Lender. All amounts due under this Section shall be
payable within ten Business Days after written demand therefor together with, if
requested by the Company, backup documentation supporting such payment or
reimbursement request. The agreements in this Section shall survive the
repayment of the Loans and the other Obligations.
Section 10.05. Company Indemnification; Damage Waiver. (a) Whether or not
the transactions contemplated hereby are consummated, the Company shall
indemnify and hold harmless each Agent-Related Person, each Lender and their
respective Affiliates, directors, officers, employees, counsel, agents and
attorneys-in-fact involved with the refinancing or the Transactions
(collectively the "Indemnified Persons") from and against any and all
liabilities, obligations, losses, damages, penalties, claims, demands, actions,
judgments, suits, charges and reasonable costs, expenses and disbursements
(including Attorney Costs) of any kind or nature whatsoever (including those
arising from or relating to any environmental matters) that may at any time be
imposed on, incurred by or asserted against any such Indemnified Person in any
way relating to or arising out of or in connection with (a) the execution,
delivery, enforcement,
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performance or administration of any Loan Document or any other agreement,
letter or instrument delivered in connection with the transactions contemplated
thereby or the consummation of the transactions contemplated thereby, (b) any
Commitment or Loan or the use or proposed use of the proceeds therefrom or (c)
any actual or prospective claim, litigation, investigation or proceeding
relating to any of the foregoing, whether based on contract, tort or any other
theory (including any investigation of, preparation for or defense of any
pending or threatened claim, investigation, litigation or proceeding) and
regardless of whether any Indemnified Person is a party thereto (all the
foregoing, collectively, the "Indemnified Liabilities"), in all cases, whether
or not caused by or arising, in whole or in part, out of the negligence of the
Indemnified Person; provided that such indemnity shall not, as to any
Indemnified Person, be available to the extent that such liabilities,
obligations, losses, damages, penalties, claims, demands, actions, judgments,
suits, costs, expenses or disbursements are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the gross
negligence or willful misconduct of such Indemnified Person. No Indemnified
Person shall be liable for any damages arising from the use by others of any
information or other materials obtained through IntraLinks or other similar
information transmission systems in connection with this Agreement, nor shall
any Indemnified Person have any liability for any indirect or consequential
damages relating to this Agreement or any other Loan Document or arising out of
its activities in connection herewith or therewith (whether before or after the
Effective Date). All amounts due under this Section shall be payable within
thirty days after written demand therefor together with, if requested by the
Company, backup documentation supporting such indemnification request. The
agreements in this Section shall survive the resignation of the Agent, the
replacement of any Lender and the repayment, satisfaction or discharge of all
the other Obligations.
(b) To the extent permitted by applicable law, the Company shall not
assert, and hereby waives, any claim against any Indemnified Person, on any
theory of liability, for special, indirect, consequential or punitive damages
(as opposed to direct or actual damages) arising out of, in connection with or
as a result of this Agreement or any agreement or instrument contemplated
hereby, the Transactions, any Loan or the use of the proceeds thereof.
Section 10.06. Payments Set Aside. To the extent that the Company makes a
payment to the Agent or the Lenders, or the Agent or the Lenders exercise their
right of set-off, and such payment or the proceeds of such set-off or any part
thereof are subsequently invalidated, declared to be fraudulent or preferential,
set aside or required (including pursuant to any settlement entered into by the
Agent or such Lender in its discretion) to be repaid to a trustee, receiver or
any other party, in connection with any Insolvency Proceeding or otherwise, then
(a) to the extent of such recovery the obligation or part thereof originally
intended to be satisfied shall be revived and continued in full force and effect
as if such payment had not been made or such set-off had not occurred and (b)
each Lender severally agrees to pay to the Agent upon demand its pro rata share
of any amount so recovered from or repaid by the Agent.
Section 10.07. Assignments, Participations, Etc. (a) The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns permitted hereby, except that the
Company may not assign or otherwise transfer any of its rights or obligations
hereunder without the prior written consent of each Lender and no Lender may
assign or otherwise transfer any of its rights or obligations hereunder except
(i) to an
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Eligible Assignee in accordance with the provisions of subsection (b) of this
Section, (ii) by way of participation in accordance with the provisions of
subsection (d) of this Section or (iii) by way of pledge or assignment of a
security interest subject to the restrictions of subsection (f) or (h) of this
Section (and any other attempted assignment or transfer by any party hereto
shall be null and void). Nothing in this Agreement, expressed or implied, shall
be construed to confer upon any Person (other than the parties hereto, their
respective successors and assigns permitted hereby, Participants to the extent
provided in subsection (d) of this Section and, to the extent expressly
contemplated hereby, the Indemnified Persons and their permitted successors and
assigns) any legal or equitable right, remedy or claim under or by reason of
this Agreement.
(b) Any Lender may at any time assign to one or more Eligible Assignees all
or a portion of its rights and obligations under this Agreement (including all
or a portion of its Loans at the time owing to it); provided that (i) except in
the case of an assignment of the entire remaining amount of the assigning
Lender's Loans at the time owing to it or in the case of an assignment to a
Lender or an Affiliate of a Lender or an Approved Fund (as defined in subsection
(g) of this Section) with respect to a Lender, the aggregate amount of the Loans
subject to each such assignment, determined as of the date the Assignment and
Assumption with respect to such assignment is delivered to the Agent or, if
"Trade Date" is specified in the Assignment and Assumption, as of the Trade
Date, shall not be less than $1,000,000 unless each of the Agent and, so long as
no Event of Default has occurred and is continuing, the Company otherwise
consents (each such consent not to be unreasonably withheld or delayed); (ii)
each partial assignment shall be made as an assignment of a proportionate part
of all the assigning Lender's rights and obligations under this Agreement with
respect to the Loans assigned; (iii) any assignment of a Revolving Credit Loan
or a Revolving Credit Commitment must be approved by the Agent unless the Person
that is the proposed assignee is itself a Revolving Credit Lender (whether or
not the proposed assignee would otherwise qualify as an Eligible Assignee); and
(iv) the parties to each assignment shall execute and deliver to the Agent an
Assignment and Assumption, together with a processing and recordation fee of
$2,500 (which fee shall not, except in the case of an assignment pursuant to
Section 3.07 (if such fee is not paid by the assignee), be payable by the
Company); provided that no such fee shall be payable in the case of any
assignment by a Lender to an Affiliate or Approved Fund of such Lender; provided
further that in the case of two or more concurrent assignments to two or more
Eligible Assignees that are Affiliates of one another or two or more Approved
Funds managed by the same investment advisor (in each case, collectively, an
"Assignee Group") (which may be effected by a suballocation of an assigned
amount among members of such Assignee Group) or two or more concurrent
assignments by members of the same Assignee Group to a single Eligible Assignee
(or to an Eligible Assignee and members of its Assignee Group), the fees payable
with respect to such assignments and assumptions are set forth in Schedule
10.07(b) hereto. Subject to acceptance and recording thereof by the Agent
pursuant to subsection (c) of this Section (but without prejudice to any right
of the assigning Lender otherwise specified herein to make assignments hereunder
without the consent of the Agent), from and after the effective date specified
in each Assignment and Assumption, the Eligible Assignee thereunder shall be a
party to this Agreement and, to the extent of the interest assigned by such
Assignment and Assumption, have the rights and obligations of a Lender under
this Agreement (provided that, with respect to circumstances in effect on the
effective date of such Assignment and Assumption, an Eligible Assignee shall not
be entitled to receive any greater payment under Section 3.01 than the
applicable Lender would have been entitled to receive had the assignment not
taken place),
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and the assigning Lender thereunder shall, to the extent of the interest
assigned by such Assignment and Assumption, be released from its obligations
under this Agreement (and, in the case of an Assignment and Assumption covering
all of the assigning Lender's rights and obligations under this Agreement, such
Lender shall cease to be a party hereto but shall continue to be entitled to the
benefits of Section 3.01, Section 3.03, Section 3.04, Section 10.04 and Section
10.05 with respect to facts and circumstances occurring prior to the effective
date of such assignment). Upon request, the Company (at its expense) shall
execute and deliver a Note to the assignee Lender. Any assignment or transfer by
a Lender of rights or obligations under this Agreement that does not comply with
this subsection shall be treated for purposes of this Agreement as a sale by
such Lender of a participation in such rights and obligations in accordance with
subsection (d) of this Section.
(c) The Agent, acting solely for this purpose as an agent of the Company,
shall maintain at the Agent's Office a copy of each Assignment and Assumption
delivered to it and a register for the recordation of the names and addresses of
the Lenders, and the principal amounts of the Loans owing to each Lender
pursuant to the terms hereof from time to time (the "Register"). The entries in
the Register shall be conclusive, and the Company, the Agent and the Lenders may
treat each Person whose name is recorded in the Register pursuant to the terms
hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding
notice to the contrary. The Register shall be available for inspection by the
Company and any Lender at any reasonable time and from time to time upon
reasonable prior notice.
(d) Any Lender may at any time, without the consent of, or notice to, the
Company or the Agent, sell participations to any Person (other than a natural
person or the Company or any of the Company's Subsidiaries) (each, a
"Participant") in all or a portion of such Lender's rights and/or obligations
under this Agreement (including all or a portion of the Loans owing to it);
provided that (i) such Lender's obligations under this Agreement shall remain
unchanged, (ii) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations and (iii) the Company, the Agent
and the other Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under this
Agreement. Any agreement or instrument pursuant to which a Lender sells such a
participation shall provide that such Lender shall retain the sole right to
enforce this Agreement and to approve any amendment, modification or waiver of
any provision of this Agreement; provided that such agreement or instrument may
provide that such Lender will not, without the consent of the Participant, agree
to any amendment, waiver or other modification described in the first proviso to
Section 10.01 that directly affects such Participant. Subject to subsection (e)
of this Section, the Company agrees that each Participant shall be entitled to
the benefits of Section 3.01, Section 3.03, and Section 3.04 to the same extent
as if it were a Lender and had acquired its interest by assignment pursuant to
subsection (b) of this Section. To the extent permitted by law, each Participant
also shall be entitled to the benefits of Section 10.09 as though it were a
Lender, provided such Participant agrees to be subject to Section 2.13 as though
it were a Lender.
(e) A Participant shall not be entitled to receive any greater payment
under Section 3.01 or Section 3.03 than the applicable Lender would have been
entitled to receive with respect to the participation sold to such Participant,
unless the sale of the participation to such Participant is made with the
Company's prior written consent. A Participant that is not a "United States
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person" within the meaning of Section 7701(a)(30) of the Code shall not be
entitled to the benefits of Section 3.01 unless the Company is notified of the
participation sold to such Participant and such Participant agrees, for the
benefit of the Company, to comply with Section 9.12 as though it were a Lender.
(f) Any Lender may at any time pledge or assign a security interest in all
or any portion of its rights under this Agreement (including under its Note, if
any) to secure obligations of such Lender, including any pledge or assignment to
secure obligations to a Federal Reserve Lender; provided that no such pledge or
assignment shall release such Lender from any of its obligations hereunder or
substitute any such pledgee or assignee for such Lender as a party hereto.
(g) As used herein, the following terms have the following meanings:
"Eligible Assignee" means (a) a Lender; (b) an Affiliate of a Lender; (c)
an Approved Fund; and (d) any other Person (other than a natural person)
approved by (i) the Agent and (ii) unless an Event of Default has occurred
and is continuing, the Company (each such approval not to be unreasonably
withheld or delayed); provided that notwithstanding the foregoing,
"Eligible Assignee" shall not include the Company or any of the Company's
Subsidiaries.
"Fund" means any Person (other than a natural person) that is (or will be)
engaged in making, purchasing, holding or otherwise investing in commercial
loans and similar extensions of credit in the ordinary course of its
business.
"Approved Fund" means any Fund that is administered or managed by (a) a
Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an
entity that administers or manages a Lender.
(h) Notwithstanding anything to the contrary contained herein, any Lender
that is a Fund may create a security interest in all or any portion of the Loans
owing to it and the Note, if any, held by it to the trustee for holders of
obligations owed, or securities issued, by such Fund as security for such
obligations or securities, provided that unless and until such trustee actually
becomes a Lender in compliance with the other provisions of this Section, (i) no
such pledge shall release the pledging Lender from any of its obligations under
the Loan Documents and (ii) such trustee shall not be entitled to exercise any
of the rights of a Lender under the Loan Documents even though such trustee may
have acquired ownership rights with respect to the pledged interest through
foreclosure or otherwise.
Section 10.08. Confidentiality. Each Lender agrees to take and to cause its
Affiliates to take normal and reasonable precautions and exercise due care to
maintain the confidentiality of all information provided to it by the Company or
any Subsidiary, or by the Agent on the Company's or such Subsidiary's behalf,
under this Agreement or any other Loan Document, and neither it nor any of its
Affiliates shall use any such information (x) other than in connection with or
in enforcement of this Agreement and the other Loan Documents or in connection
with other business now or hereafter existing or contemplated with the Company
or any Subsidiary or (y) in any manner that would constitute a violation of
applicable laws, except, in either case, to
90
the extent such information (i) was or becomes generally available to the public
other than as a result of disclosure by the Lender, or (ii) was or becomes
available on a non-confidential basis from a source other than the Company,
provided that such source is not bound by a confidentiality agreement with the
Company known to the Lender; provided further that any Lender may disclose such
information (a) at the request or pursuant to any requirement of any
Governmental Authority to which the Lender is subject or in connection with an
examination of such Lender by any such authority; (b) pursuant to subpoena or
other court process; (c) when required to do so in accordance with the
provisions of any applicable Requirement of Law; (d) to the extent reasonably
required in connection with any litigation or proceeding to which the Agent or
any Lender or their respective Affiliates may be party; (e) to the extent
reasonably required in connection with the exercise of any remedy hereunder or
under any other Loan Document; (f) to such Lender's independent auditors and
other professional advisors; (g) to any Participant or Eligible Assignee, actual
or potential, provided that such Person agrees in writing to keep such
information confidential to the same extent required of the Lenders hereunder;
(h) as to any Lender or its Affiliate, as expressly permitted under the terms of
any other document or agreement regarding confidentiality to which the Company
or any Subsidiary is party with such Lender or such Affiliate; (i) to its
Affiliates, provided that such Affiliates are not insurance companies; (j) to
any other party to this Agreement; and (k) to any pledgee referred to in Section
10.07(f) or any direct contractual counterparty or prospective counterparty (or
such counterparty's or prospective counterparty's professional advisor) to any
credit derivative transaction relating to obligations of the Obligors (so long
as all parties, including all counterparties and advisors agree to be bound by
the provisions of this Section 10.08).
Section 10.09. Set-off. In addition to any rights and remedies of the
Lenders provided by law, if an Event of Default shall have occurred and be
continuing, each Lender and each of its Affiliates is authorized at any time and
from time to time, without prior notice to the Company, any such notice being
waived by the Company, to the fullest extent permitted by law, to set off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held by, and other indebtedness at any time owing by, such
Lender or Affiliate to or for the credit or the account of the Company against
any and all Obligations owing to such Lender, now or hereafter existing,
irrespective of whether or not the Agent or such Lender shall have made demand
under this Agreement or any Loan Document and although such Obligations may be
contingent or unmatured; provided that neither any Lender nor any of its
Affiliates shall be entitled to exercise any such set off with respect to any
trust or payroll account. Each Lender agrees to promptly notify the Company and
the Agent after any such set-off and application made by such Lender; provided
that the failure to give such notice shall not affect the validity of such
set-off and application.
Section 10.10. Notification of Addresses, Lending Offices, Etc. Each Lender
shall notify the Agent in writing of any changes in the address to which notices
to the Lender should be directed, of addresses of any Lending Office, of payment
instructions in respect of all payments to be made to it hereunder and of such
other administrative information as the Agent shall reasonably request.
Section 10.11. Counterparts. This Agreement may be executed in any number
of separate counterparts, each of which, when so executed, shall be deemed an
original, and all of said counterparts taken together shall be deemed to
constitute but one and the same instrument. Notwithstanding the foregoing, any
lender under the Existing Credit Agreement that has elected to convert all or a
portion of its "Term Loan" thereunder into a Term Loan hereunder may become a
Lender hereunder by executing a notice (a "Term Loan Conversion Notice") in
substantially the form attached hereto as Exhibit J. Delivery by a Lender of a
duly executed Term Loan Conversion Notice with respect to its Converted Term
Loan (as defined in such Term Loan Conversion Notice) shall obviate the need for
such Lender to execute this Agreement. Such Term Loan Conversion Notice shall be
deemed for all purposes to be a signature to this Agreement and such Converted
Term Loan shall be deemed to be a Term Loan for all purposes hereunder.
91
Section 10.12. Survival of Representations and Warranties. All
representations and warranties made hereunder and in any other Loan Document or
other document delivered pursuant hereto or thereto or in connection herewith or
therewith shall survive the execution and delivery hereof and thereof. Such
representations and warranties have been or will be relied upon by the Agent and
each Lender, regardless of any investigation made by the Agent or any Lender or
on their behalf, and shall continue in full force and effect as long as any Loan
or any other Obligation hereunder shall remain unpaid or unsatisfied.
Section 10.13. Severability. If any provision of any Loan Document is
invalid, illegal or unenforceable in any jurisdiction then, to the fullest
extent permitted by law, (i) such provision shall, as to such jurisdiction, be
ineffective to the extent (but only to the extent) of such invalidity,
illegality or unenforceability, (ii) the other provisions of the Loan Documents
shall remain in full force and effect in such jurisdiction and shall be
liberally construed in favor of the Lenders in order to carry out the intentions
of the parties thereto as nearly as may be possible and (iii) the invalidity,
illegality or unenforceability of any such provision in any jurisdiction shall
not affect the validity, legality or enforceability of such provision in any
other jurisdiction.
Section 10.14. Replacement of Defaulting Lenders and Non-Consenting
Lenders. If any Lender is a Defaulting Lender or a Non-Consenting Lender, then
the Company may, at its sole expense and effort, upon notice to such Lender and
the Agent, require such Lender to assign and delegate, without recourse (in
accordance with and subject to the restrictions contained in, and consents
required by, Section 10.07), all of its interests, rights and obligations under
this Agreement and the related Loan Documents to an assignee that shall assume
such obligations (which assignee may be another Lender, if a Lender accepts such
assignment), provided that:
(a) the Agent shall have received the assignment fee specified in Section
10.07(b);
(b) such Lender shall have received payment of an amount equal to the
outstanding principal of its Loans, accrued interest thereon, accrued fees and
all other amounts payable to it hereunder and under the other Loan Documents
(including any amounts under Section 3.04) from the assignee (to the extent of
such outstanding principal and accrued interest and fees) or the Company (in the
case of all other amounts).
A Lender shall not be required to make any such assignment or delegation
if, prior thereto, as a result of a waiver by such Lender or otherwise, the
circumstances entitling the Company to require such assignment and delegation
cease to apply.
Section 10.15. Governing Law; Jurisdiction; Consent to Service of Process.
(a) This Agreement shall be construed in accordance with and governed by the law
of the State of New York.
(b) The Company irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of the Supreme Court of the State of
New York sitting in New York County and of the United States District Court of
the Southern District of New York, and any relevant appellate court, in any
action or proceeding arising out of or relating to any Loan Document, or for
recognition or enforcement of any judgment, and each party hereto irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be
92
heard and determined in such New York State court or, to the extent permitted by
law, in such Federal court. Each party hereto agrees that a final judgment in
any such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in any Loan Document shall affect any right that any Lender or the Agent
may otherwise have to bring any action or proceeding relating to any Loan
Document against any Obligor or its properties in the courts of any
jurisdiction.
(c) The Company irrevocably and unconditionally waives, to the fullest
extent it may legally and effectively do so, any objection that it may now or
hereafter have to the laying of venue of any suit, action or proceeding arising
out of or relating to any Loan Document in any court referred to in subsection
(b) of this Section. Each party hereto irrevocably waives, to the fullest extent
permitted by law, the defense of an inconvenient forum to the maintenance of any
such suit, action or proceeding in any such court.
(d) Each party hereto irrevocably consents to service of process in the
manner provided for notices in Section 10.02. Nothing in any Loan Document will
affect the right of any party hereto to serve process in any other manner
permitted by law.
Section 10.16. Waiver of Jury Trial. EACH PARTY TO THIS AGREEMENT HEREBY
EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION ARISING UNDER ANY LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH OR
RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH
RESPECT TO ANY LOAN DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE
WHETHER NOW EXISTING OR HEREAFTER ARISING AND WHETHER FOUNDED IN CONTRACT OR
TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT
A JURY AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR
A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE
SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY. THIS WAIVER
SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS
TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
Section 10.17. USA PATRIOT Act Notice. Each Lender and the Agent (for
itself and not on behalf of any Lender) hereby notifies the Company that
pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56
(signed into law October 26, 2001)) (the "Patriot Act"), it is required to
obtain, verify and record information that identifies the Company, which
information includes the name and address of the Company and other information
that will allow such Lender or the Agent, as applicable, to identify the Company
in accordance with the Patriot Act.
Section 10.18. Entire Agreement. This Agreement, together with the other
Loan Documents and any separate agreements with respect to fees payable to the
Agent, embodies the entire agreement and understanding among the Company, the
Lenders and the Agent and
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supersedes all prior or contemporaneous agreements and understandings of such
Persons, verbal or written, relating to the subject matter hereof and thereof.
[signature pages to follow]
94
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their proper and duly authorized officers as of the day and
year first above written.
CONSECO, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice President and
Treasurer
BANK OF AMERICA, N.A.,
as Agent and as Lender
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Senior Vice President
JPMORGAN CHASE BANK, N.A.,
as Syndication Agent and as Lender
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
LENDER:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ SENIOR FUNDING, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Senior Funding, Inc.
▇▇▇▇▇▇▇ SACHS CREDIT PARTNERS L.P.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Authorized Signatory
LENDER: ▇▇▇▇▇▇ Commercial Paper Inc.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Authorized Signatory