EXHIBIT 4
FOURTH AMENDMENT TO CREDIT AGREEMENT
This Fourth Amendment to Credit Agreement (the "Amendment") is made as of
this 27th day of April, 2001 by and among AMERICAN MEDICAL SECURITY GROUP, INC.
(the "Borrower"), the Lenders named in the Credit Agreement (the "Lenders") and
LASALLE BANK NATIONAL ASSOCIATION, as Agent and Swing Line Lender (the "Agent").
WITNESSETH
WHEREAS, the Borrower, the Agent and the Lenders are parties to that
certain Credit Agreement, dated as of March 24, 2000, as amended pursuant to
that certain First Amendment to Credit Agreement, dated as of July 18, 2000, as
further amended pursuant to that certain Second Amendment to Credit Agreement,
dated as of November 10, 2000, and as further amended pursuant to that certain
Third Amendment to Credit Agreement, dated as of January 29, 2001 (collectively,
the "Credit Agreement); and
WHEREAS, the parties desire to further amend the Credit Agreement, as more
fully set forth herein.
NOW, THEREFORE, in consideration of the mutual agreements herein contained
and other good and valuable consideration, the adequacy of which is hereby
acknowledged, and subject to the terms and conditions hereof, the parties hereto
agree as follows:
SECTION 1. DEFINITIONS. Unless otherwise defined herein, all capitalized terms
shall have the meaning given to them in the Credit Agreement.
SECTION 2. WAIVER OF CERTAIN COVENANT DEFAULTS. As of March 31, 2001, AMS has
failed to comply with Section 6.19.1 of the Credit Agreement. Such failure,
unless waived, would constitute an Event of Default under Section 7.3 of the
Credit Agreement. Subject to the terms hereof, the Agent and the Lenders hereby
waive compliance with Section 6.19.1 of the Credit Agreement, as of March 31,
2001, and agree, as of such date, that AMS may permit its Fixed Charge Coverage
Ratio to be less than 2.50:1.
As of March 31, 2001, AMS has failed to comply with Section 6.19.2 of the
Credit Agreement. Such failure, unless waived, would constitute an Event of
Default under Section 7.3 of the Credit Agreement. Subject to the terms hereof,
the Agent and the Lenders hereby waive compliance with Section 6.19.2 of the
Credit Agreement, as of March 31, 2001, and agree, as of such date, that AMS may
permit its Interest Coverage Ratio to be less than 5.50:1.
Except as expressly set forth herein, the above-referenced waivers are not
intended to be and shall not be construed as a waiver or amendment of any of the
terms and provisions of the Credit Agreement, which terms and provisions remain
in full force and effect. Furthermore, such waivers shall not constitute a
future waiver of compliance with any financial covenants or other provisions
under the Credit Agreement.
SECTION 3. AMENDMENTS TO CREDIT AGREEMENT.
3.1 The definition of "Applicable Margin" in Article I of the Credit
Agreement is hereby deleted in its entirety and amended by inserting the
following in its stead:
"Applicable Margin" means, with respect to Eurodollar Advances at any
time, 2.50% per annum (unless a Default or an Unmatured Default has
occurred that is continuing).
Notwithstanding anything to the contrary contained herein, if as of
September 30, 2001 First Union National Bank, National Association is a
Lender under the Credit Agreement, then all Loans which are Eurodollar
Loans shall accrue interest at the Eurodollar Rate with an Applicable
Margin of 3.00% per annum (unless a Default or an Unmatured Default has
occurred that is continuing) effective as of the next Interest Period
following September 30, 2001 if the then existing Interest Period does not
end on September 30, 2001; PROVIDEDHOWEVER, that in the event that (A) the
Applicable Margin is increased to 3.00% per annum as of September 30, 2001
and (B) Borrower makes an additional commitment reduction of $5,000,000 on
or before July 15, 2002 (the "Additional Commitment Reduction") in addition
to the scheduled mandatory commitment reductions set forth in Section 2.8
of the Credit Agreement, then all Loans which are Eurodollar Loans shall
accrue interest at the Eurodollar Rate with an Applicable Margin of 2.50%
per annum (unless a Default or an Unmatured Default has occurred that is
continuing) effective as of the next Interest Period following receipt of
such Additional Commitment Reduction; providedfurther, that in the event
that Borrower fails to make the Additional Commitment Reduction, then all
Loans which are Eurodollar Loans shall accrue interest at the Eurodollar
Rate with an Applicable Margin of 3.25% per annum (unless a Default or an
Unmatured Default has occurred that is continuing) effective as of the next
Interest Period following July 15, 2002 if the then existing Interest
Period does not end on July 15, 2002."
3.2 Section 2.8(a) of the Credit Agreement is hereby deleted in its
entirety and amended by inserting the following in its stead:
"2.8.MANDATORY COMMITMENT REDUCTIONS. (a) The Aggregate Commitment
shall be automatically and permanently reduced to the following amounts on
the following dates:
DATE AVAILABILITY REDUCTION AGGREGATE COMMITMENT
November 10, 2000 $ 5,000,000 $40,000,000
April 27, 2001 $ 4,842,228 $35,157,772
February 15, 2002 $ 5,000,000 $30,157,772
February 15, 2003 $10,000,000 $20,157,772
February 15, 2004 $10,000,000 $10,157,772
February 15, 2005 $10,157,772 $ 0
PROVIDED, HOWEVER, that in the event that Borrower makes the
Additional Commitment Reduction of $5,000,000 on or before July 15, 2002,
then the Aggregate Commitment shall be automatically and permanently
reduced as follows:
DATE AVAILABILITY REDUCTION AGGREGATE COMMITMENT
April 27, 2001 $ 4,842,228 $35,157,772
February 15, 2002 $ 5,000,000 $30,157,772
Date of Additional
Commitment Reduction $ 5,000,000 $25,157,772
February 15, 2003 $10,000,000 $15,157,772
February 15, 2004 $10,000,000 $ 5,157,772
February 15, 2005 $5,157,772 $ 0"
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3.2 Section 6.19.1 of the Credit Agreement is hereby deleted in its
entirety and amended by inserting the following in its stead:
"6.19.1 FIXED CHARGE COVERAGE RATIO. AMS will not permit its Fixed
Charge Coverage Ratio, determined as of the end of each Fiscal Quarter for
the period of four Fiscal Quarters ending on such date, to be less than (a)
1.50 to 1.0 from January 1, 2001 through March 31, 2001, (b) 1.30 to 1.0
from April 1, 2001 through June 30, 2001, (c) 1.30 to 1.0 from July 1, 2001
through September 30, 2001, (d) 1.75 to 1.0 from October 1, 2001 through
December 31, 2001, (e) 3.00 to 1.0 from January 1, 2002 through December
31, 2002, and (f) 3.25 to 1.0 from January 1 through December 31 of each
year thereafter; PROVIDED, HOWEVER, there shall be excluded from the
calculation of EBITDA within the Fixed Charge Coverage Ratio the one-time
charges relating to the pre-tax reserve strengthening in the third quarter
of 2000 and the Minnesota special assessment in the third quarter of 2000
for AMS and its Subsidiaries and also the balloon payment due in the year
2004 on the loan made by M&I Marshall & Ilsley Bank that is secured by the
real property of AMS and it Subsidiaries located at 3100 AMS Boulevard,
Green Bay, Wisconsin 54313."
2.3 Section 6.19.2 of the Credit Agreement is hereby deleted in its
entirety and amended by inserting the following in its stead:
"6.19.2 INTEREST COVERAGE RATIO. AMS will not permit its Interest
Coverage Ratio, determined as of the end of each Fiscal Quarter for the
period of four Fiscal Quarters ending on such date, to be less than (a)
3.50 to 1.0 from January 1, 2001 through March 31, 2001, (b) 3.25 to 1.0
from April 1, 2001 through June 30, 2001, (c) 3.00 to 1.0 from July 1, 2001
through September 30, 2001, (d) 4.00 to 1.0 from October 1, 2001 through
December 31, 2001 and (e) 6.00 to 1.0 from January 1 through December 1 of
each year thereafter; PROVIDED, HOWEVER, there shall be excluded from the
calculation of EBITDA within the Interest Coverage Ratio the one-time
charges relating to the pre-tax reserve strengthening in the third quarter
of 2000 and the Minnesota special assessment in the third quarter of 2000
for AMS and its Subsidiaries."
2.4 Section 6.19.5 of the Credit Agreement is hereby deleted in its
entirety and amended by inserting the following in its stead:
"6.19.5 STATUTORY CAPITAL AND SURPLUS. AMS will at all times cause
UWLIC to maintain a Statutory Capital and Surplus of not less than the sum
of $130,000,000, plus (b) 50% of the positive Statutory Net Income earned
by UWLIC in each Fiscal Quarter ending after March 31, 2001 and on or prior
to the date of determination (excluding changes in unrealized gain/loss)."
SECTION 3. CONDITIONS PRECEDENT. The effectiveness of this Amendment is
expressly conditioned upon satisfaction of the following conditions precedent:
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3.1 The Agent and the Lenders shall have received copies of this Amendment
duly executed by the Borrower.
3.2 The Agent shall have received, for the benefit of the Agent and the
Lenders, an amendment fee of $175,789 due and payable and deemed fully earned on
the date hereof.
3.3 The Agent and the Lenders shall have received such other documents,
certificates and assurances as they shall reasonably request.
SECTION 4. REAFFIRMATION OF THE BORROWER. The Borrower hereby represents and
warrants to the Agent and the Lenders that (i) the warranties set forth in
Article 5 of the Credit Agreement are true and correct on and as of the date
hereof, except to the extent (a) that any such warranties relate to a specific
date, or (b) changes thereto are a result of transactions for which the Agent
and the Lenders have granted their consent; (ii) the Borrower is on the date
hereof in compliance with all of the terms and provisions set forth in the
Credit Agreement as hereby amended; and (iii) upon execution hereof no Event of
Default has occurred and is continuing or has not previously been waived.
SECTION 5. FULL FORCE AND EFFECT. Except as herein amended, the Credit Agreement
and all other Loan Documents shall remain in full force and effect.
SECTION 6. COUNTERPARTS. This Amendment may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same document.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have executed this Amendment on the
day and year specified above.
AMERICAN MEDICAL SECURITY GROUP, INC.
By: /S/ CAROL P. SANDERS
Name: Carol P. Sanders
Title: Vice President and Treasurer
LASALLE BANK NATIONAL ASSOCIATION
By: /S/ LINDA A. WHITTAKER
Name: Linda A. Whittaker
Title: Assistant Vice President
FIRST UNION NATIONAL BANK, NATIONAL ASSOCIATION
By: /S/ THOMAS L. STITCHBERRY
Name: Thomas L. Stitchberry
Title: Senior Vice President
ASSOCIATED BANK GREEN BAY, NATIONAL ASSOCIATION
By: /S/ DENIS F. HOGAN
Name: Denis F. Hogan
Title: Senior Vice President
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ACKNOWLEDGMENT AND AGREEMENT OF GUARANTOR
The undersigned, AMERICAN MEDICAL SECURITY HOLDINGS, INC., hereby ratifies
and reaffirms that certain Guaranty dated March 24, 2000 (the "Guaranty") made
by the undersigned in favor of the Agent and the Lenders and each of the terms
and provisions contained therein, and agrees that the Guaranty continues in full
force and effect following the execution and delivery of the foregoing
Amendment. The undersigned represents and warrants to the Agent and the Lenders
that the Guaranty was, on the date of the execution and delivery thereof, and
continues to be, the valid and binding obligation of the undersigned enforceable
in accordance with its terms and that the undersigned has no claims or defenses
to the enforcement of the rights and remedies of the Agent and the Lenders under
the Guaranty.
IN WITNESS WHEREOF, this Acknowledgment and Agreement of Guarantor has been
duly authorized as of this 27th day of April, 2001.
AMERICAN MEDICAL SECURITY HOLDINGS, INC.
By: /S/ CAROL P. SANDERS
Name: Carol P. Sanders
Title: Vice President and Treasurer
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