Exhibit 10.1
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Published CUSIP Number: ________
CREDIT AGREEMENT
Dated as of June 22, 2004
among
CONSECO, INC.,
BANK OF AMERICA, N.A.,
as Agent,
and
THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO
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BANC OF AMERICA SECURITIES LLC
and
J.P. MORGAN SECURITIES INC.
Joint Lead Arrangers and Joint Bookrunners
TABLE OF CONTENTS
Page
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ARTICLE 1 Definitions.............................................................................................1
Section 1.01. Certain Defined Terms......................................................................1
Section 1.02. Other Interpretive Provisions.............................................................25
Section 1.03. Classification of Term Loans and Borrowings...............................................26
Section 1.04. Accounting Principles.....................................................................26
ARTICLE 2 The Credits............................................................................................26
Section 2.01. Commitments...............................................................................26
Section 2.02. Term Loans................................................................................27
Section 2.03. Borrowing, Conversion and Continuation of Loans...........................................27
Section 2.04. Notes; Loan Accounts......................................................................28
Section 2.05. Termination of Commitments................................................................29
Section 2.06. Payment at Maturity.......................................................................29
Section 2.07. Scheduled Amortization....................................................................29
Section 2.08. Optional and Mandatory Prepayments........................................................30
Section 2.09. Interest..................................................................................32
Section 2.10. Fees......................................................................................33
Section 2.11. Computation of Fees and Interest..........................................................33
Section 2.12. Payments Generally........................................................................33
Section 2.13. Sharing of Payments by Lenders............................................................34
ARTICLE 3 Taxes, Yield Protection and Illegality.................................................................35
Section 3.01. Taxes.....................................................................................35
Section 3.02. Illegality................................................................................36
Section 3.03. Increased Costs and Reduction of Return...................................................37
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Section 3.04. Funding Losses............................................................................38
Section 3.05. Inability to Determine Rates..............................................................38
Section 3.06. Certificates of Lenders...................................................................39
Section 3.07. Substitution of Lenders...................................................................39
Section 3.08. Survival..................................................................................39
ARTICLE 4 Conditions Precedent...................................................................................39
Section 4.01. Effective Date............................................................................39
ARTICLE 5 Representations and Warranties.........................................................................42
Section 5.01. Corporate Existence and Power.............................................................42
Section 5.02. Corporate Authorization; No Contravention.................................................43
Section 5.03. Governmental Authorization................................................................43
Section 5.04. Binding Effect............................................................................43
Section 5.05. Litigation................................................................................43
Section 5.06. No Default................................................................................44
Section 5.07. ERISA Compliance..........................................................................44
Section 5.08. Margin Regulations........................................................................45
Section 5.09. Title to Properties.......................................................................45
Section 5.10. Taxes.....................................................................................45
Section 5.11. Financial Condition.......................................................................45
Section 5.12. Environmental Matters.....................................................................46
Section 5.13. Regulated Entities........................................................................47
Section 5.14. Subsidiaries..............................................................................47
Section 5.15. Insurance Licenses........................................................................47
Section 5.16. Full Disclosure...........................................................................48
Section 5.17. Solvency..................................................................................48
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Section 5.18. Security Interests........................................................................48
Section 5.19. Insurance.................................................................................48
ARTICLE 6 Affirmative Covenants..................................................................................49
Section 6.01. Financial Statements......................................................................49
Section 6.02. Certificates; Other Information...........................................................50
Section 6.03. Notices...................................................................................53
Section 6.04. Preservation of Corporate Existence, Etc..................................................54
Section 6.05. Insurance.................................................................................54
Section 6.06. Payment of Obligations....................................................................55
Section 6.07. Compliance with Laws......................................................................55
Section 6.08. Compliance with ERISA.....................................................................55
Section 6.09. Inspection of Property and Books and Records; Expense Reimbursement.......................55
Section 6.10. Information Regarding Collateral..........................................................55
Section 6.11. Casualty and Condemnation.................................................................56
Section 6.12. Additional Subsidiaries; Immaterial Subsidiaries..........................................56
Section 6.13. Further Assurances........................................................................56
Section 6.14. Use of Proceeds...........................................................................57
ARTICLE 7 Negative Covenants.....................................................................................57
Section 7.01. Limitation on Indebtedness; Certain Capital Stock.........................................57
Section 7.02. Liens.....................................................................................59
Section 7.03. Disposition of Assets.....................................................................60
Section 7.04. Other Agreements..........................................................................62
Section 7.05. Transactions with Affiliates..............................................................62
Section 7.06. Change in Business........................................................................63
Section 7.07. Fundamental Changes.......................................................................63
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Section 7.08. Restricted Payments.......................................................................63
Section 7.09. Investments and Acquisitions..............................................................64
Section 7.10. Prepayments of Indebtedness; Modifications of Certain Agreements;
Synthetic Purchase Agreements.............................................................65
Section 7.11. Debt to Total Capitalization Ratio........................................................66
Section 7.12. Interest Coverage Ratio...................................................................66
Section 7.13. Conseco EBITDA............................................................................66
Section 7.14. Aggregate RBC Ratio.......................................................................67
Section 7.15. Combined Statutory Capital and Surplus Level..............................................67
Section 7.16. Investment Portfolio Requirement..........................................................67
Section 7.17. Restrictive Agreements....................................................................68
Section 7.18. Holding Company Activities................................................................68
Section 7.19. Changes in Accounting Policies; Fiscal Year...............................................69
ARTICLE 8 Events of Default......................................................................................69
Section 8.01. Events of Default.........................................................................69
Section 8.02. Remedies..................................................................................72
Section 8.03. Rights Not Exclusive......................................................................72
ARTICLE 9 The Agent..............................................................................................72
Section 9.01. Appointment and Authority.................................................................72
Section 9.02. Rights as a Lender........................................................................73
Section 9.03. Exculpatory Provisions....................................................................73
Section 9.04. Reliance by Agent.........................................................................74
Section 9.05. Delegation of Duties......................................................................74
Section 9.06. Resignation of Agent......................................................................74
Section 9.07. Non-Reliance on Agent and Other Lenders...................................................75
Section 9.08. No Other Duties, Etc......................................................................75
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Section 9.09. Agent May File Proofs of Claim............................................................75
Section 9.10. Collateral and Guaranty Matters...........................................................76
Section 9.11. Indemnification of Agent..................................................................76
Section 9.12. Withholding Tax...........................................................................77
ARTICLE 10 Miscellaneous.........................................................................................78
Section 10.01. Amendments and Waivers...................................................................78
Section 10.02. Notices..................................................................................79
Section 10.03. No Waiver; Cumulative Remedies...........................................................80
Section 10.04. Costs and Expenses.......................................................................80
Section 10.05. Company Indemnification; Damage Waiver...................................................81
Section 10.06. Payments Set Aside.......................................................................82
Section 10.07. Assignments, Participations, Etc.........................................................82
Section 10.08. Confidentiality..........................................................................85
Section 10.09. Set-off..................................................................................85
Section 10.10. Notification of Addresses, Lending Offices, Etc..........................................86
Section 10.11. Counterparts.............................................................................86
Section 10.12. Survival of Representations and Warranties...............................................86
Section 10.13. Severability.............................................................................86
Section 10.14. Governing Law; Jurisdiction; Consent to Service of Process...............................86
Section 10.15. Waiver of Jury Trial.....................................................................87
Section 10.16. USA PATRIOT Act Notice...................................................................87
Section 10.17. Entire Agreement.........................................................................87
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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
EXHIBITS
Exhibit A Form of Compliance Certificate
Exhibit B Form of 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 Kirkland & Ellis
Exhibit H-2 Form of Opinion of Baker & Daniels (as to insurance matters)
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CREDIT AGREEMENT
This CREDIT AGREEMENT is entered into as of June 22, 2004, 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") and BANK OF
AMERICA, N.A., as agent for the Lenders.
WHEREAS, the Company desires to obtain from the Lenders a six-year
term loan facility in a principal amount of $800,000,000 the proceeds of which
will be used to (i) refinance (the "Refinancing") in full all indebtedness
outstanding under the Credit Agreement dated as of September 10, 2003, as
amended (the "Existing Credit Agreement"), among the Company, the lenders named
therein, and Bank of America, N.A., as agent for such lenders, (ii) pay fees and
expenses incurred in connection with the Refinancing, (iii) repurchase the CDOC
Preferred Stock (as hereinafter defined) and (iv) finance other 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.
"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, 4.00% or (b) with respect to
any Base Rate Loan, 3.00%; provided, however, that if and for so long as the
Company's senior secured Indebtedness is rated at least B2 by Moody's and BB- by
S&P, in each case with a stable outlook, such percentages shall be reduced to
3.50% for Eurodollar Rate Loans and 2.50% for Base Rate Loans.
"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).
2
"Assignment and Assumption" means an Assignment and Assumption
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.
"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 Term 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 Term 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 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.
3
"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.
"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
Moody's, 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 by S&P and P-l by Moody's, 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 Moody's; (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.
4
"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 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 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, Goldman, Sachs & Co. and Morgan Stanley & Co. Incorporated.
5
"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 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, with respect to each Lender, the commitment of
such Lender to make a Term Loan on the Effective Date, expressed as an amount
representing the maximum
6
principal amount of such Term Loan. The initial amount of each Lender's
Commitment is set forth on Schedule 2.01. The initial aggregate amount of the
Term Loan Commitments is $800,000,000.
"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.
"Conseco EBITDA" means, for any Calculation Period, the consolidated
Net Income of the Company for such period plus, without duplication and to the
extent reflected as a charge in the statement of such consolidated Net Income
for such period, the sum of (a) income tax expense, (b) interest expense,
including, to the extent included as interest expense in accordance with GAAP,
amortization or write off of debt discount and debt issuance costs and
commissions, discounts and other fees and charges associated with Indebtedness,
(c) depreciation and amortization of tangible and intangible assets (including
any amortization of premium (or discount) associated with the Company's actively
managed fixed income maturities, which amortization is related to mark-to-market
adjustments made on August 31, 2003 pursuant to principles of fresh start
accounting), (d) any losses on sales of assets outside of the ordinary course of
business, (e) any realized or unrealized losses on Investments of Insurance
Subsidiaries, (f) non-recuring cash and non-cash charges (not exceeding
$40,000,000 in the aggregate (of which up to $25,000,000 may be cash charges)
for all Calculation Periods) and other non-cash charges, in each case related to
Acquisitions permitted hereunder by the
7
Company and its Subsidiaries, (g) any other non-recurring cash and non-cash
charges (not to exceed $25,000,000 in the aggregate for all Calculation Periods)
and non-recurring non-cash charges (unless and until such charges become cash
charges) taken by the Company and its Subsidiaries arising out of the
restructuring, consolidation, severance or discontinuance of any portion of the
operations, employees and/or management of the Company or such Subsidiary or any
businesses thereof, (h) non-cash charges reflecting the cumulative effect of
changes in GAAP to the extent such charges relate to any prior Calculation
Period and (i) non-cash charges taken to write off any goodwill included in the
Company's balance sheet on the Effective Date to the extent such charges are
required by FAS 142 (j) non-cash compensation expense, or other non-cash
expenses or charges, arising from the sale of stock, the granting of stock
options, the granting of stock appreciation rights and similar arrangements
(including any repricing, amendment, modification, substitution or change of any
such stock, stock option, stock appreciation rights or similar arrangements);
(k) any financial advisory fees, accounting fees, legal fees and other similar
advisory and consulting fees and related out-of-pocket expenses of the Borrower
incurred as a result of the Transactions, all determined in accordance with
GAAP; (l) other expenses to the extent reimbursed by third parties; (m) fees and
expenses incurred for the redemption of the Company's Class A Preferred Stock
issued to the lenders under the Existing Credit Agreement and the issuance of
the Class B Preferred Stock and the Company's common Capital Stock; and (n)
fees, costs and expenses of any Indebtedness issuance pursuant to Section
7.01(a)(iii), Section 7.01(a)(vii), Section 7.01(a)(xiii) and Section
7.01(a)(xiv), issuance of Capital Stock by the Company in any public offering,
Acquisitions or Asset Sales and minus, without duplication and to the extent
reflected as a gain in the statement of such consolidated Net Income for such
period, the sum of (a) any gains on sales of assets outside of the ordinary
course of business and (b) realized or unrealized gains on Investments of
Insurance Subsidiaries, all as determined on a consolidated basis for such
Calculation Period.
"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
8
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.
"Continuation Date" means any date on which, under Section 2.03, the
Company continues as Term Loans of the same Interest Type, but with a new
Interest Period, Term Loans having Interest Periods expiring on such date.
"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.
"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.
9
"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.
"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:
10
(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 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 Term 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.
"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
11
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.
"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 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.
12
"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.
"Income Taxes" means any Taxes based upon net income.
"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,
13
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 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 Term Loan shall extend beyond
the Maturity Date.
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 Term Loan or Borrowing,
refers to whether the rate of interest on such Term Loan, or on the Term 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
14
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.
"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 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
Term Loan from one Interest Type to the other or (c) a continuation of
Eurodollar Rate Loans, substantially in the form of Exhibit C.
15
"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 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 sixth anniversary of the Effective Date, or
if such day is not a Business Day, the next succeeding Business Day.
"Moody's" means Moody's 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.
16
"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 Term 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 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-Insurance Subsidiary" means any Subsidiary that is not an
Insurance Subsidiary.
"Notes" has the meaning specified in Section 2.04(b).
17
"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.
"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.
"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 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 payment (other than payments made in common
stock or Permitted Preferred Stock) to be made
18
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 Term 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 of the securities with cash
collateral, (d) transactions in which an investor makes loans of
19
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 (a) at any time at which the
Commitments remain outstanding, the percentage equivalent (expressed as a
decimal, rounded to the ninth decimal place) at such time of such Lender's
Commitment divided by the combined Commitments of all Lenders, and (b) after the
termination of the Commitments, the percentage equivalent (expressed as a
decimal, rounded to the ninth decimal place) at such time of the principal
amount of such Lender's outstanding Term Loans divided by the aggregate
principal amount of the outstanding Term Loans of all the Lenders.
20
"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.
"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 (a) prior to the Effective Date, Lenders then
holding more than 50% of the aggregate amount of the Commitments or (b) after
the Effective Date, Lenders then holding more than 50% of the aggregate unpaid
principal amount of the Term Loans.
"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
21
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.
"S&P" means Standard & Poor's Ratings Group, a division of
McGraw-Hill, 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 an Affiliate of a Lender) to hedge interest rate risk
of such Obligor and Subsidiaries that are not Insurance Subsidiaries.
"Security Agreement" means the Guarantee and Security Agreement among
the Obligors and the Agent, in substantially the form of Exhibit F.
"Security Documents" means the Security Agreement 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.
22
"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 ("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 hereof, become a
Subsidiary Guarantor pursuant to Section 23 of the Security Agreement.
"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 bill 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
mark-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
23
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.
"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 Loan" has the meaning set forth in Section 2.01.
"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 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 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 Term 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.
24
"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 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
25
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 Term Loans and Borrowings. For
purposes of this Agreement, Term 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 2003 Annual Statement or the March 31, 2004
Quarterly Statement, 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 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.
ARTICLE 2
THE CREDITS
Section 2.01. Commitments. Subject to the terms and conditions set
forth herein, each 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 Lender's
Commitment at such time. The Borrowing shall consist of Term Loans made
simultaneously by the Lenders ratably according to their
26
Commitments. Amounts borrowed under this Section 2.01 and repaid or prepaid may
not be reborrowed.
Section 2.02. Term Loans
(a) Each Term Loan shall be made as part of a Borrowing consisting of
Term Loans of the same Interest Type made by the Lenders ratably in accordance
with their respective Commitments.
(b) 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.
(c) 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 2.03. Borrowing, Conversion and Continuation of Loans. (a) The
Borrowing, each conversion of Term 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 Borrowing, a conversion of Term 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 Term Loans to be borrowed,
converted or continued, (iv) the Interest Type of Term Loans to be borrowed or
to which existing Term 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 Term Loan in a
Loan Notice or if the Company fails to give a timely notice requesting a
conversion or continuation, then the Term 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 Term
Loans, and if no timely notice of a
27
conversion or continuation is provided by the Company, the Agent shall notify
each Lender of 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 Term 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 Term 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 Term Loan on the date of such Borrowing, but no
Lender shall be responsible for the failure of any other Lender to make the Term
Loan to be made by such other Lender on the date of any Borrowing.
Section 2.04. Notes; Loan Accounts. (a) Each Term 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 Term 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 Term 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 Term Loans made by each Lender may be
evidenced by one or more notes in substantially the form of Exhibit B hereto
(each such note, a "Note," and collectively, the
28
"Notes"). Each Lender shall endorse on the schedules annexed to its Note the
date, amount and maturity of each Term 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 Term 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 of Commitments. Unless previously
terminated, the Commitments will terminate on the Effective Date immediately
after the closing hereunder.
Section 2.06. Payment at Maturity. The Company shall repay to the
Agent on the Maturity Date, for the account of each Lender, the then unpaid
principal amount of such Lender's Term Loans together with accrued and unpaid
interest thereon to but excluding the date of such payment.
Section 2.07. Scheduled Amortization. The Company shall repay to the
Agent, for the ratable account of the Lenders, the aggregate principal amount of
all Term Loans outstanding on the following dates in the respective amounts set
forth opposite such dates (which amounts 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 Amount
----------------------------- -----------------------
----------------------------- -----------------------
----------------------------- -----------------------
----------------------------- -----------------------
September 30, 2004 $2,000,000.00
----------------------------- -----------------------
----------------------------- -----------------------
December 31, 2004 $2,000,000.00
----------------------------- -----------------------
----------------------------- -----------------------
March 31, 2005 $2,000,000.00
----------------------------- -----------------------
----------------------------- -----------------------
June 30, 2005 $2,000,000.00
----------------------------- -----------------------
----------------------------- -----------------------
September 30, 2005 $2,000,000.00
----------------------------- -----------------------
----------------------------- -----------------------
December 31, 2005 $2,000,000.00
----------------------------- -----------------------
----------------------------- -----------------------
March 31, 2006 $2,000,000.00
----------------------------- -----------------------
----------------------------- -----------------------
June 30, 2006 $2,000,000.00
----------------------------- -----------------------
----------------------------- -----------------------
September 30, 2006 $2,000,000.00
----------------------------- -----------------------
----------------------------- -----------------------
December 31, 2006 $2,000,000.00
----------------------------- -----------------------
----------------------------- -----------------------
March 31, 2007 $2,000,000.00
----------------------------- -----------------------
----------------------------- -----------------------
June 30, 2007 $2,000,000.00
----------------------------- -----------------------
----------------------------- -----------------------
September 30, 2007 $2,000,000.00
----------------------------- -----------------------
----------------------------- -----------------------
December 31, 2007 $2,000,000.00
----------------------------- -----------------------
----------------------------- -----------------------
March 31, 2008 $2,000,000.00
----------------------------- -----------------------
----------------------------- -----------------------
June 30, 2008 $2,000,000.00
----------------------------- -----------------------
----------------------------- -----------------------
September 30, 2008 $2,000,000.00
----------------------------- -----------------------
----------------------------- -----------------------
December 31, 2008 $2,000,000.00
----------------------------- -----------------------
----------------------------- -----------------------
March 31, 2009 $2,000,000.00
----------------------------- -----------------------
----------------------------- -----------------------
June 30, 2009 $2,000,000.00
----------------------------- -----------------------
----------------------------- -----------------------
September 30, 2009 $2,000,000.00
----------------------------- -----------------------
----------------------------- -----------------------
December 31, 2009 $2,000,000.00
----------------------------- -----------------------
----------------------------- -----------------------
March 31, 2010 $2,000,000.00
----------------------------- -----------------------
----------------------------- -----------------------
Maturity Date $754,000,000.00
----------------------------- -----------------------
29
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. So long as the Interest Coverage Ratio is
less than 4.0:1.0:
(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 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
30
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 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
Term 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 Term 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).
(c) Application of Prepayments. Each prepayment of any Borrowing shall
be applied ratably to the Term Loans, first, in direct order of maturity to the
next four scheduled prepayments after the occurrence of the event giving rise to
such prepayment and second, ratably to the remaining principal repayment
installments thereof.
(d) Accrued Interest. Each prepayment of a Borrowing shall be
accompanied by accrued interest on the amount prepaid.
(e) 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
31
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.
(f) Call Premium. Notwithstanding anything to the contrary contained
in this Agreement, in the event that the Company refinances or otherwise repays
in full the outstanding principal amount of the Term Loans at any time prior to
the first anniversary of the Effective Date, prepayment of the Term Loans shall
be subject to a prepayment fee in an amount equal to 1.0% of the then
outstanding principal amount of the Term Loans.
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 Term 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 Term 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 Term 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 Term Loan as provided in the preceding
subsections of this Section.
(d) Interest on each Term Loan shall be paid in arrears on each
Interest Payment Date for such Term 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 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.
32
Section 2.10. Fees. 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.
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 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
33
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 Term 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 Borrower 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.
(d) If any Lender makes available to the Agent funds for any Term 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 initial extension of Term 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 Term Loans are
several and not joint. The failure of any Lender to make any Term 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 Term Loan.
(f) Nothing herein shall be deemed to obligate any Lender to obtain
the funds for any Term 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 Term 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 in
respect of any principal of or interest on any of the Term Loans made by it,
resulting in such Lender's receiving payment of a proportion of the aggregate
amount of such Term Loans and accrued interest thereon greater than its pro rata
share thereof as provided herein, then the Lender receiving such greater
proportion shall (a) notify the Agent of such fact and (b) purchase (for cash at
face value) participations in the Loans Term and of the other Lenders, or make
such other adjustments as shall be equitable, so that the benefit of all such
payments shall be shared by the Lenders ratably in accordance with the aggregate
amount of principal of and accrued interest on their respective Term Loans and
other amounts owing them, provided that:
34
(i) 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
(ii) the provisions of this Section shall not be construed to
apply to (x) any payment made by the Company pursuant to and in
accordance with the express terms of this Agreement or (y) any payment
obtained by a Lender as consideration for the assignment of or sale of
a participation in any of its Term Loans to any assignee or
participant.
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.
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;
(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,
35
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 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
36
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) 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
37
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 Term 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 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 Term
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
38
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. Effective Date. The obligations of each Lender to make
any Term Loan hereunder 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 Closing
Date (or, in the case of certificates of governmental officials, a recent date
before the Closing Date) and each in form and substance reasonably satisfactory
to the Agent and each of the Lenders:
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(i) executed counterparts of this Agreement, sufficient in number
for distribution to the Agent, each Lender and the Company; and
(ii) a Note executed by the Company in favor of each Lender that
has requested a Note.
(b) The Collateral and Guarantee Requirement shall have been satisfied
and the Agent shall have received (i) a completed Perfection Certificate with
respect to each Obligor dated the Effective Date and signed by a Responsible
Officer or other executive officer of such Obligor, together with all
attachments contemplated thereby, including the results of a search of the
Uniform Commercial Code (or equivalent) filings made with respect to such
Obligor in the jurisdictions contemplated by such Perfection Certificate and
copies of the financing statements (or similar documents) disclosed by such
search and evidence reasonably satisfactory to the Agent that the Liens
indicated by such financing statements (or similar documents) are permitted by
Section 7.02 or have been released, (ii) satisfactory evidence that
concentration account arrangements with respect to the Company contemplated by
the Security Agreement have been established and (iii) 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 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;
(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 Conseco Health Insurance Company) from the Department of
its jurisdiction of domicile as of a recent date.
40
(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) Kirkland & Ellis, counsel for the Obligors, substantially in the form of
Exhibit H-1 and (ii) Baker & Daniels, Indiana and insurance regulatory 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) 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(h) and
Section 4.01(i) 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.
(h) The fact that the representations and warranties of each Obligor
contained in the Loan Documents shall be true and correct on and as of the
Effective Date, as though made on and as of such date.
(i) 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.
(j) Simultaneously with the initial extension of Term Loans, the
Company shall have repaid all of the Existing Credit Agreement Indebtedness and
the commitments of the lenders thereunder shall have been terminated. Any liens
and security interests granted in respect of the Existing Credit Agreement
Indebtedness shall have been released and the Agent shall have received a
"pay-off" letter reasonably satisfactory to it with respect to the Existing
Credit Agreement Indebtedness.
(k) The Lenders shall have received the pro forma financial statements
described in Section 5.11(b); and such pro forma financial statements shall be
reasonably satisfactory to the Lenders. Immediately after giving effect to the
Transactions, no Obligor shall have outstanding any shares of preferred stock
(other than the Class B Preferred Stock) or any Indebtedness, except, in each
case, as described on Schedule 7.01.
(l) There shall not exist any (i) pending or threatened action, suit,
investigation, proceeding or other litigation in which the Required Lenders
determine there is a reasonable likelihood of a decision which could reasonably
be expected to have a Material Adverse Effect or a material adverse effect on
the rights of the Lenders under the Loan Documents or that seeks to enjoin the
Transactions or the Loan Documents or the transactions contemplated thereby or
41
(ii) order or injunction restraining the Transactions or the Loan Documents or
the transaction contemplated thereby.
(m) All agreements, orders and other restrictions binding on the
Company or any of its Subsidiaries on the Effective Date, and the corporate and
capital structure of the Obligors and all organizational documents thereof,
shall be reasonably satisfactory to the Required Lenders.
(n) 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.
(o) A solvency certificate of a senior financial officer of the
Company, certifying as to the Company's Solvency in accordance with Section 5.17
hereto.
(p) 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. 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;
42
(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 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
43
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 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
44
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 Term 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 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, 2003, 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 March 31, 2004, and the related consolidated statements of
income, shareholders' equity and cash flows for the period ended on that date,
(iii) the December 31, 2003 Annual Statement of each Insurance Subsidiary and
(iv) the March 31, 2004 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
45
(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 Company has heretofore furnished to the Lenders its pro forma
consolidated balance sheet as of the last day of the Fiscal Quarter most
recently ended prior to the Effective Date for which financial statements have
been prepared (the "Preparation Date"), prepared giving effect to the
Transactions as if the Transactions had occurred on such date. Such pro forma
consolidated balance sheet (i) have been prepared in good faith based on
reasonable assumptions, (ii) are based on the best information available to the
Company after due inquiry, (iii) accurately reflect all material adjustments
necessary to give effect to the Transactions and the Equity Issuances and (iv)
present fairly, in all material respects, the pro forma financial position of
the Company and its consolidated Subsidiaries as of the Preparation Date as if
the Transactions had occurred on such date.
(c) Since December 31, 2003, 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;
(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;
46
(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.
Section 5.13. 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.
47
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.
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.
48
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 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
49
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)):
(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;
50
(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 Moody's 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 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, Moody's 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;
51
(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;
(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; and
(m) no later than 20 days after the Closing Date, a compliance
certificate for Conseco Health Insurance Company from the Department of the
jurisdiction of domicile of Conseco Health Insurance Company dated as of a
recent date.
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
to the Lenders materials and/or information provided by or on behalf of the
Company hereunder (collectively, "Company Materials") by posting the Company
Materials on IntraLinks or another similar 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) all Company Materials that are to be made available to Public Lenders
shall be clearly and conspicuously marked "PUBLIC," which 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 either publicly
available information or not material information (although it may be sensitive
and proprietary) with respect to the Company or its securities for purposes of
United
52
States Federal and state securities laws; (v) 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 treat any Company
Materials that are not marked "PUBLIC" as being suitable for posting only 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;
(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;
53
(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):
(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
54
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 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
55
(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.
(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
56
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, (b) pay fees and expenses incurred in connection
with the Refinancing, (c) advance funds to CDOC to enable it to repurchase CDOC
Preferred Stock from the Insurance Subsidiaries and (d) provide for general
corporate purposes.
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;
57
(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;
(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 $50,000,000 at any time outstanding;
(xiv) other unsecured Indebtedness in an aggregate principal
amount not to exceed $100,000,000 at any time outstanding;
(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.
58
(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 million at any time outstanding;
(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;
59
(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 $50,000,000 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 cash earnest 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 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;
60
(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 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 Term 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);
(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;
61
(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); and
(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 $80,000,000) 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 Term Loans in accordance with Section 2.08.
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 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),
62
(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),
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;
63
(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; and
(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).
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;
64
(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) 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 $300,000,000 during the term of this
Agreement or $100,000,000 in any Fiscal Year, 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
(m) Investments not otherwise permitted hereby in an aggregate amount
expended not to exceed $25,000,000 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
65
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%.
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, 2004 N/A
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
From July 1, 2004 through September 30, 2004 1.85 to 1
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
From October 1, 2004 through June 30, 2007 2.00 to 1
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
From July 1, 2007 and at all times thereafter 2.50 to 1
============================================================================
Section 7.13. Conseco EBITDA. Until such time as the Term Loan shall
have received debt ratings of not less than Ba3 from Moody's and BB- from S&P,
in each case with stable outlook, the Company shall not permit the Conseco
EBITDA as of the end of any Fiscal Quarter ending during each period set forth
below for the four Fiscal Quarters then ended (or, in the case of the Fiscal
Quarter ending June 30, 2004, the three Fiscal Quarters then ending) to be less
than the amount set forth below for such Fiscal Quarter.
============================================================================
Period Ratio
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
For the three Fiscal Quarters ended June 30, $600,000,000
2004
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
From July 1, 2004 through December 31, 2005 $725,000,000
- ----------------------------------------------------------------------------
66
- ----------------------------------------------------------------------------
From January 1, 2006 through December 31, 2006 $775,000,000
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
From January 1, 2007 and for each Fiscal $825,000,000
Quarter thereafter
============================================================================
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, 2005 240%
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
From April 1, 2005 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 loans as specified on page 2,
line 6 of the Company's Annual Statement) will not exceed 4% 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
67
paragraphs (a), (b) and (d) hereof) will not exceed 10% 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.
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,
68
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 Term 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, 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
69
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, 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
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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 $35,000,000 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. (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 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
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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 Term Loans to be terminated;
(b) declare the unpaid principal amount of all outstanding Term
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 Term 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 Term Loans shall automatically terminate and
the unpaid principal amount of all outstanding Term 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.
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
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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
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
73
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 Term 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 Term 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 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
74
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 Term 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 Term 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
(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,
75
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
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
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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 W-8BEN, W-8ECI 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 W-8BEN, W-8ECI or other required
form as no longer valid.
(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
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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:
(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 Term 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;
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(c) change the percentage of the Commitments or of the aggregate
unpaid principal amount of the Term Loans that is required for the
Lenders or any of them to take any action hereunder without the
written consent of each Lender;
(d) amend the definition of "Interest Period" to permit Interest
Periods with a duration of longer than six months without the written
consent of each Lender;
(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; or
(f) amend this Section 10.01 or Section 2.13 without the written
consent of each Lender;
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.
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
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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 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
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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 Term 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, 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,
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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 Term 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 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 Term 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 Term Loans assigned; and (iii) the parties to
each assignment shall execute and deliver to the Agent an Assignment and
Assumption, together with a processing and recordation fee of $3,500 (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
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any assignment by a Lender to an Affiliate or Approved Fund of such Lender.
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), 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 Term 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 Term 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
83
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
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 Term 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
84
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 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 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
85
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.
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 Term
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. 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 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.
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(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 10.15. 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 10.16. 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 10.17. 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 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]
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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/Daniel J. Murphy
--------------------------------
Name: Daniel J. Murphy
Title: Senior Vice President
and Treasurer
BANK OF AMERICA, N.A., as Agent
By:/s/Molly J. Oxford
---------------------------------
Name: Molly J. Oxford
Title: Vice President
BANK OF AMERICA, N.A., as a Lender
By:/s/Leslie Nannen
--------------------------------
Name: Leslie Nannen
Title: Principal
[OTHER SIGNATURE BLOCKS]
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