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EXHIBIT 99.3
PROMISSORY NOTE
$70,000,000.00 Dallas, Texas March 14, 2000
FOR VALUE RECEIVED, the undersigned, UICI SUB I, INC., a Delaware
corporation ("Maker"), hereby promises to pay to the order of LM Finance, LLC.,
a Nevada limited liability company, and any assignees or successors thereof
("Payee"), at the time and in the manner hereinafter provided, the principal sum
of SEVENTY MILLION AND 00/100 DOLLARS ($70,000,000.00), together with interest
computed thereon at the rate hereinafter provided. All payments under this
Promissory Note ("Note") shall be payable at 2121 Precinct Line Road, Hurst,
Texas 76054 or such other address as is designated by Payee from time to time.
1. Payment and Interest. The outstanding principal amount of this Note
shall bear interest as it accrues commencing on the date hereof and continuing
until the due date at the lesser of the Maximum Rate or the Prime Rate (as
defined below). Unless otherwise accelerated by Payee as provided herein,
interest on this Note shall be payable monthly, as it accrues beginning April 1,
2000, and on the 1st day of each month thereafter and at maturity. Unless
otherwise accelerated by the Payee as provided herein, the entire principal
balance and all accrued unpaid interest shall be due and payable on September
14, 2001.
2. Guaranty and Collateral. Repayment of this Note is guaranteed by
Specialized Card Services, Inc. ("SCS") pursuant to that certain Guaranty of
even date herewith (the "SCS Guaranty") and by UICI ("UICI") pursuant to that
certain Guaranty of even date herewith (the "UICI Guaranty"). The repayment of
this Note is further secured by the Pledge Agreement of even date herewith,
executed by Maker for the benefit of Payee (the "Pledge Agreement") and the
covenants of SCS set forth in that certain Post-Closing Agreement of even date
herewith by and among Payee, SCS and Maker.
3. Prepayment. This Note may be prepaid in whole or in part from time
to time, without premium or penalty ("Optional Prepayment"). Any such Optional
Prepayment shall be applied first to accrued, but unpaid, interest hereon with
the remainder of any such Optional Prepayment being applied to the reduction of
principal due under this Note. Upon payment in full, this Note shall be canceled
and returned to Maker.
4. Default. The occurrence of any one of the following shall be a
default under this Note ("Default"):
(a) any principal, interest or other amount of money due under
this Note is not paid in full when due, regardless of how such amount
may have become due;
(b) a default in the payment of any indebtedness of UICI, or
any of its subsidiaries or Maker on obligations for borrowed money and
which results in the acceleration of such indebtedness by the holder
thereof;
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(c) Borrower or SCS shall fail to perform, observe or comply
with any covenant, agreement or term contained in any Loan Document;
(d) a sale or transfer of substantially all the assets or a
majority of the outstanding stock of UICI, Maker or SCS.
(e) Any representation, warranty or certification made by
UICI, Maker or SCS in any Loan Document or in any certificate, report,
notice, or financial statement furnished at any time in connection with
this Note shall be false, misleading, or erroneous in any material
respect when made or deemed to have been made.
(f) UICI, Maker or SCS shall admit in writing its inability
to, or be generally unable to, pay its debts as such debts become due.
(g) UICI, Maker or SCS shall fail to discharge within a period
of thirty (30) days after the commencement thereof any unstayed
attachment, sequestration, forfeiture, or similar proceeding or
proceedings involving an aggregate amount in excess of Ten Million
Dollars ($10,000,000) against any of its properties.
(h) A final judgment or judgments for the payment of money in
excess of Ten Million Dollars ($10,000,000) in the aggregate shall be
rendered by a court or courts against the UICI, Maker or SCS and the
same shall not be discharged (or provision shall not be made for such
discharge), or a stay of execution thereof shall not be procured,
within thirty (30) days from the date of entry thereof and the UICI,
Maker or SCS shall not, within said period of thirty (30) days, or such
longer period during which execution of the same shall have been
stayed, appeal therefrom and cause the execution thereof to be stayed
during such appeal.
(i) This Note or any other Loan Document shall cease to be in
full force and effect or shall be declared null and void or the
validity or enforceability thereof shall be contested or challenged by
the UICI, Maker or SCS or any of their respective shareholders, or the
Maker or Guarantor shall deny that it has any further liability or
obligation under any of the Loan Documents.
(j) Maker, SCS or UICI shall commence a voluntary case or
other proceedings seeking liquidation, reorganization or other relief
with respect to any of them or their debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect or seeking
an appointment of a trustee, receiver, liquidator, custodian or other
similar official of any of them or any substantial part of their
property, or shall consent to any relief or to the appointment or
taking possession by any such official in an involuntary case or other
proceeding commenced against any of them, or shall make a general
assignment for the benefit of creditors, or shall fail generally to pay
their debts as they become due, or shall take any corporate action
authorizing the foregoing; or
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(k) an involuntary case or other proceeding, shall be
commenced against Maker, SCS or UICI seeking liquidation,
reorganization or other relief with respect to any of them or their
debts under bankruptcy, insolvency or similar law now or hereafter in
effect or seeking the appointment of a trustee, receiver, liquidator,
custodian or other similar official of any of them or any substantial
part of their property, and such involuntary case or other proceeding
shall remain undismissed and unstayed for a period of thirty (30) days;
or an order for relief shall be entered against Maker, UICI or SCS
under the federal bankruptcy laws as now or hereinafter in effect.
5. Remedies. Upon occurrence of any Default specified in subparagraph
4(j) or (k) above, the entire principal amount due under this Note and all
interest then accrued thereon, and any other liabilities of Maker hereunder,
shall become immediately due and payable all without notice and without
presentment, demand, protest, notice of protest or dishonor, notice of
acceleration or any other notice of default of any kind, all of which are hereby
expressly waived by Maker. Upon the occurrence of any other Default hereunder,
Maker shall have ten business days from the date of such Default to cure such
Default. If such Default is not timely cured, the Holder hereof shall have the
right to declare the entire outstanding principal balance hereof and all accrued
but unpaid interest on this Note at once due and payable (and upon such
declaration, the same shall be at once due and payable) without presentment or
demand for payment and to exercise any of its other right, power and remedies
under this Note or at law or in equity.
6. Default Rate. It is understood and agreed that time is of the
essence respecting this Note. It is understood and agreed that any past due
principal and/or interest shall bear interest from the date it is due until
paid, at the Maximum Rate.
7. Representations, Warranties and Covenants of the Maker. The Maker
represents, warrants and covenants to the Payee that the Maker:
(a) is a corporation duly organized, validly existing, and in
good standing under the laws of the State of Delaware;
(b) has all requisite corporate power and authority to own,
lease, license and use its properties and assets and to conduct the
business in which it is engaged; and
(c) is duly licensed or qualified and is in good standing as a
foreign corporation in each jurisdiction wherein the nature of the
business transacted by it or the nature of the property owned or leased
by it makes such licensing or qualification necessary, the failure of
which would have a material adverse effect on the business, operations,
properties or condition (financial or otherwise) of the Maker.
8. Waivers. Except as provided for herein, the Maker and each surety,
guarantor, endorser, or any party ever liable for payment of any sum of money
payable on this Note does hereby severally waive demand, grace, presentment for
payment, notice of dishonor, notice of intent to accelerate, notice of
acceleration, protest, and diligence in
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collecting sums due hereunder and in bringing suit against any party hereto. The
Maker and each surety, guarantor, endorser, or any other party ever liable for
payment of any sum of money payable on this Note further agrees (i) to all
extensions and partial payments, with or without notice, before or after
maturity, (ii) to any substitution, exchange or release of any security now or
hereafter given for this Note, (iii) to the release of any party primarily or
secondarily liable hereon, and (iv) that it will not be necessary for the holder
hereof, in order to enforce payment of this Note, to first institute or exhaust
such holder's remedy against the Maker or any other party liable therefor or
against any security for this Note. No delay or omission on the part of the
Payee in exercising any power or right under this Note shall operate as a waiver
of such power or right, nor shall any single or partial exercise of any power or
right preclude further exercise of that power or right.
9. Maximum Rate. All agreements between the Maker and the holder
hereof, whether now existing or hereafter arising and whether written or oral,
are hereby expressly limited so that in no contingency or event whatsoever,
shall the amount paid, or agreed to be paid, to the holder hereof for the use,
forbearance, or detention of the funds advanced pursuant to this Note, or
otherwise, or for the payment or performance of any covenant or obligation
contained herein or any other document or instrument evidencing, securing, or
pertaining to this Note, exceed the maximum amount permissible under applicable
law (the "Maximum Rate"). If, from any circumstances whatsoever, fulfillment of
any provision hereof or of any other document or instrument exceeds the Maximum
Rate, then ipso facto, the obligation to be fulfilled shall be reduced to the
limit of such validity, and if from any such circumstances the holder hereof
shall ever receive anything of value deemed interest by applicable law which
would exceed interest at the highest lawful rate, such amount would be excessive
interest, and would be applied to the unpaid principal balance of this Note, or
on account of any other principal indebtedness of the Maker to the holder
hereof, and not to the payment of interest, or if such excessive interest
exceeds the unpaid principal balance of this Note and such other indebtedness,
such excess shall be refunded to the Maker. All sums paid, or agreed to be paid,
by the Maker for the use, forbearance, or detention of the indebtedness of the
Maker to the holder of this Note shall, to the extent permitted by applicable
law, be amortized, pro-rated, allocated, and spread throughout the full term of
such indebtedness until payment in full so that the actual rate of interest on
account of such indebtedness is uniform throughout the term hereof. The terms
and provisions of this paragraph shall control and supersede every other
provision of all agreements between the Maker and the holder hereof.
10. Costs and Fees. If there is a Default under this Note, or if this
Note is placed in the hands of an attorney or agency for collection, regardless
of whether or not suit is filed, or if this Note is collected by suit or legal
process, including, but not limited to, through the probate court or bankruptcy
proceedings, Maker agrees to pay all costs of collection, including reasonable
attorney's fees and court costs in addition to other amounts due. Additionally,
Maker agrees to pay all reasonable attorney's fees and expenses of Payee and its
affiliates incurred in connection with the negotiation, preparation,
administration, enforcement and collection of this Note and the Loan Documents
immediately upon request thereof by Payee.
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11. Definitions. As used in this Note, the following terms have the
following meaning:
"Holder" shall mean the Payee or other endorsee of this Note
who is in possession of it, or the bearer of such Note, if this Note is
at the time payable to the bearer.
"Loan Documents" means this Note, the Pledge Agreement, the
Guaranty, the Post-Closing Agreement, and all promissory notes,
assignments, guaranties, security agreements, financing statements and
other agreements executed and delivered pursuant to or in connection
with this Note as such agreements may be amended or otherwise modified
from time to time.
"Prime Rate" means the "prime rate" published from time to
time in the Money Rates column of The Wall Street Journal (Central
Edition); provided, however, if the Money Rates column of The Wall
Street Journal (Central Edition) ceases to be published or otherwise
does not designate a "prime rate" as of any business day, "Prime Rate"
shall mean the rate of interest per annum publicly announced by The
Chase Manhattan Bank as its prime rate in effect at its principal
office in New York City; in each case each change in such rate shall be
effective from and including the business day such change is published
or announced, as the case may be.
12. Notices. Any notice hereunder shall be in writing, and if given by
hand delivery, telegram, telefax, or telex, shall be deemed to have been given
when sent and, if mailed, shall be deemed to have been given three (3) days
after the date when sent, if sent by registered or certified mail, postage
prepaid, and addressed as follows (or such other address for which all parties
listed below have been notified):
If to Maker: UICI SUB I, INC.
Gregory T. Mutz, President and
Chief Executive Officer
4001 McEwen Drive, Suite 200
Dallas, Texas 75244
Telephone: (972) 392-6733
Telecopier: (972) 392-6721
If to Payee: LM FINANCE, LLC.
Gary L. Friedman, Secretary
2121 Precinct Line Road
Hurst, Texas 76054
Telephone: (817) 428-3883
Telecopier: (817) 428-3898
13. GOVERNING LAW. THIS NOTE IS EXECUTED AND DELIVERED IN TEXAS AND
SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
TEXAS.
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14. NOTICE. THIS NOTE AND THE LOAN DOCUMENTS REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
Effective as of the date first above written.
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MAKER:
UICI SUB I, INC.
By:
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Name: Gregory T. Mutz
Title: President
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