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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 8-K
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) March 17, 2000
------------------
UICI
(Exact name of registrant as specified in its charter)
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Delaware 0-14320 75-2044750
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(State or other jurisdiction of incorporation (Commission File (IRS Employer
or organization) Number) Identification No.)
4001 McEwen Drive, Suite 200, Dallas, Texas 75244
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(Address of principal executive offices) (Zip Code)
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Registrant's telephone number, including area code: (972) 392-6700
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Not Applicable
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(Former name or former address, if changed since last report)
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Item 5. OTHER EVENTS
On March 17, 2000, UICI (the "Company") announced that it expects to
report additional pre-tax operating losses at its United Credit National Bank
unit in the fourth quarter of 1999. The operating losses are primarily
attributable to increases in the Bank's credit card loan loss reserves in the
amount of $63.0 million. These operating losses are in addition to the estimated
pre-tax operating losses at UICI's United CreditServ unit in the amount of $79.0
million previously announced by UICI. For the full 1999 year, UICI currently
expects to report a pre-tax operating loss at its United CreditServ subsidiary
in the amount of approximately $147 million (including a write-off of $40
million, which had been previously recorded as goodwill).
In addition, following an evaluation of the future prospects of the
unit, UICI has determined that it intends to exit its United CreditServ credit
card business through a sale of the business. Finally, the Company announced
that debt outstanding under the Company's revolving credit facility with its
commercial banks has been reduced from $100.0 million to $25.0 million,
utilizing the proceeds of a $70.0 million loan extended to the Company by Ronald
L. Jensen, the Company's Chairman.
A copy of the Company's March 17, 2000 press release is filed as an
exhibit hereto, the terms of which are incorporated herein by reference thereto.
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
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Exhibit
Number Description of Exhibit
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99.1 Press release announcing additional losses at United Credit National
Bank, exit from United CreditServ credit card business and debt
restructuring
99.2 Amended and Restated Loan Agreement, dated as of March 10, 2000,
between UICI, the Banks named therein and Bank of America, NA, for
itself and as agent
99.3 Promissory Note, dated March 14, 2000, payable by UICI SUB I, Inc. to
LM Financial, LLC
99.4 Guaranty, dated March 14, 2000, from UICI to LM Financial, LLC
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
UICI
------------
(Registrant)
Date March 23, 2000 By /s/ Gregory T. Mutz
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Gregory T. Mutz
President and Chief Executive Officer
Date March 23, 2000 By /s/ William Benac
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William Benac
Executive Vice President and
Chief Financial Officer
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INDEX TO EXHIBITS
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Exhibit
Number Description of Exhibit
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99.1 Press release announcing additional losses at United Credit National
Bank, exit from United CreditServ credit card business and debt
restructuring
99.2 Amended and Restated Loan Agreement, dated as of March 10, 2000,
between UICI, the Banks named therein and Bank of America, NA, for
itself and as agent
99.3 Promissory Note, dated March 14, 2000, payable by UICI SUB I, Inc. to
LM Financial, LLC
99.4 Guaranty, dated March 14, 2000, from UICI to LM Financial, LLC
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EXHIBIT 99.1
UICI
Contact: Matthew R. Cassell
Vice President
UICI
News Release 4001 McEwen, Suite 200
Dallas, Texas 75244
Phone: (972) 392-6700
(For Immediate Release)
UICI ANNOUNCES ADDITIONAL 1999 LOSSES AT UNITED CREDITSERV UNIT
UICI ANNOUNCES EXIT FROM UNITED CREDITSERV BUSINESS
UICI ANNOUNCES COMPLETION OF DEBT RESTRUCTURING
Dallas, TX March 17, 2000: UICI (the "Company") (NYSE: Symbol "UCI") today
announced that it expects to report additional losses in 1999 at its United
CreditServ credit card unit. In addition, following an evaluation of the future
prospects of the unit, UICI has determined that it intends to exit the credit
card business through a sale of the business. Finally, the Company today
announced that debt outstanding under the Company's revolving credit facility
with its commercial banks has been reduced from $100.0 million to $25.0 million,
utilizing the proceeds of a $70.0 million loan extended to the Company by Ronald
L. Jensen, the Company's Chairman.
UNITED CREDITSERV
United Credit National Bank
On March 13, 2000, United Credit National Bank (an indirect, wholly
owned subsidiary of UICI and a special purpose national bank headquartered in
Sioux Falls, South Dakota) filed with the Office of the Comptroller of the
Currency an amended call report reflecting the financial condition and results
of operations of the Bank as of, and for the year ended, December 31, 1999. The
amended call report reflects additional pre-tax operating losses primarily
attributable to increases in the Bank's credit card loan loss reserves in the
amount of $63.0 million. These operating losses are in addition to the estimated
pre-tax operating losses at UICI's United CreditServ unit in the amount of $79.0
million previously announced by UICI. For the full 1999 year, UICI currently
expects to report a pre-tax operating loss at its United CreditServ subsidiary
in the amount of approximately $147 million (including a write-off of $40
million, which had been previously recorded as goodwill).
The increases to the loan loss reserves are attributable to adjustments
prompted by management's analyses of United CreditServ's operations, as well as
the OCC's recent examination of the Bank. The OCC's examination followed the
announcement by UICI in
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December 1999 of significant losses attributable to increases to the credit card
loan loss reserves at the Bank.
Losses at UICI's United CreditServ unit have created liquidity issues
for the Company. Since the Company first announced losses at its United
CreditServ unit in December 1999, UICI through United CreditServ has contributed
to the Bank as capital an aggregate of $88.0 million in cash, including
additional cash in the amount of $28.0 million contributed on March 13, 2000.
UICI has funded these cash contributions with the proceeds of sale of investment
securities, regular cash dividends from its insurance company subsidiaries and
cash on hand. The Company continues to explore means to achieve increased
liquidity, including through the issuance of additional UICI securities and/or
selected sales of investment securities and other assets.
As previously announced, the Bank is currently operating subject to a
Consent Order issued by the OCC on February 25, 2000. The Bank intends to submit
to the OCC for approval a plan for the orderly exit from the credit card
business. The plan will also set forth the Bank's plans and projections for the
maintenance and sources of adequate capital in future periods.
A liquidity and capital assurances agreement, dated May 15, 1998,
provides that, upon demand by the Bank, UICI will purchase certificates of
deposit issued by the Bank to assure sufficient liquidity to meet the Bank's
funding demands and will contribute capital to the Bank sufficient for the Bank
to comply with its stated policy of maintaining Tier I capital at a level equal
to at least 10% of total risk-weighted assets and a total risk-based capital
ratio of at least 12%. Total risk-based capital includes both Tier I and Tier II
capital.
Under the terms of the Consent Order, the Bank is currently prohibited
from accessing the brokered deposit market and from soliciting or accepting
deposits over the Internet. As of March 16, 2000, the Bank had approximately
$299.0 million of certificates of deposits outstanding, the majority of which
are scheduled to mature over the next 12 months. At March 16, 2000, the Bank
held approximately $145.0 million in cash, cash equivalents and short term U.S.
Treasury securities. At December 31, 1999, the Bank held approximately $300.0
million in gross credit card receivables, subject to a loan loss reserve of
$108.0 million, leaving a net receivable position of approximately $192.0
million.
UICI to Exit From United CreditServ Business
In light of UICI's continuing difficulties with its United CreditServ
unit, the Board of Directors of UICI has determined, after a thorough assessment
of the unit's prospects, that it will exit from its United CreditServ sub-prime
credit card business and that, as a result, it has designated the United
CreditServ unit as a discontinued operation for financial reporting purposes.
The Company currently expects to complete the sale of the United CreditServ unit
during the year 2000. UICI will be required to estimate and record in 1999 any
additional loss that it believes it will incur as part of any sale of the United
CreditServ unit. The Company currently estimates that such loss will be around
$100.0 million, of which approximately $75.0 million will be in cash. UICI
currently believes that such costs and loss will consist primarily of losses
upon disposition and continuing operating losses at Specialized Card Services,
Inc.
UICI COMPLETES DEBT RESTRUCTURING
UICI announced the completion of a significant paydown and
restructuring of its syndicated bank indebtedness, utilizing the proceeds of a
$70.0 million secured loan extended to the Company by Ronald L. Jensen, the
Company's Chairman.
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In particular, on March 14, 2000, UICI reduced indebtedness outstanding
under its bank credit facility from $100.0 million to $25.0 million, utilizing
$5.0 million of cash on hand and the proceeds of the loan from Mr. Jensen. The
bank credit facility has been amended to provide, among other things, that the
$25.0 million balance outstanding will be due and payable on July 10, 2000,
amounts outstanding under the facility are secured by a pledge of investment
securities and shares of Mid-West National Life Insurance Company of Tennessee,
and the restrictive covenants formerly applicable to UICI and its restricted
subsidiaries will now be applicable solely to Mid-West. Amounts outstanding
under the bank credit facility will continue to bear interest at LIBOR plus 100
basis points per annum.
Mr. Jensen has loaned $70.0 million to a newly-formed subsidiary of the
Company. The loan bears interest at the prevailing prime rate, is guaranteed by
UICI, is due and payable in July 2001 and is secured by a pledge of investment
securities, shares of the Company's National Motor Club unit and certain real
estates assets. No principal outstanding under the loan from Mr. Jensen can be
paid unless all amounts outstanding under the bank credit facility are paid in
full.
Giving effect to the restructuring, at March 13, 2000, UICI and its
consolidated subsidiaries had approximately $128.0 million of long and short
term indebtedness outstanding (other than indebtedness under student loan
funding facilities), bearing interest at a weighted average annual rate of
8.18%.
1999 YEAR END OPERATING RESULTS
UICI has previously announced that the release of its fourth quarter
and full year 1999 operating results has been delayed, pending completion of the
U.S. Office of Comptroller of the Currency's annual examination of United Credit
National Bank at December 31, 1999. Subject to the prompt completion of the
OCC's examination, UICI continues to believe that its annual report to be filed
with the Securities and Exchange Commission, which will include its 1999 audited
financial statements, will be filed in a timely manner on or before March 30,
2000.
CORPORATE PROFILE:
UICI, headquartered in Dallas, Texas, is a diversified financial services
company offering financial services, health administrative services and
insurance through its various subsidiaries and divisions to niche consumer and
institutional markets. UICI provides health insurance through its insurance
subsidiaries, UGA-Association Field Services and Cornerstone Marketing of
America; enrollment, billing and collection claims administration and risk
management services for healthcare payors and providers through UICI
Administrators;; financial services and products for college, undergraduates and
graduate students, including providing federally-guaranteed student loans
through the Educational Finance Group; and manages blocks of life insurance and
life insurance products to select markets through its OKC Division. UICI also
holds a 39% interest in HealthAxis.com, Inc., a leading web-based insurance
retailer providing fully integrated, end-to-end, web-enabled solutions for
health insurance distribution and administration.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995:
Certain statements in this press release are "forward looking statements" within
the meaning of the Private Securities Litigation Act of 1995. Such statements
involve known and unknown risks, uncertainties and other factors that may cause
actual results to differ materially. Such risks, uncertainties and other factors
include, but are not limited to, changes in general economic conditions; changes
in the regulatory environment; levels of competition (including managed
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health care competition in the health industry); availability of, and volatility
of interest rates associated with, funding sources to originate student loans
and credit card receivables; and other factors described in detail in the
Company's Annual Report on Form 10-K for the year ended December 31, 1998.
UICI press releases and other company information are available at UICI's
website located at www.uici.net.
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EXHIBIT 99.2
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AMENDED AND RESTATED LOAN AGREEMENT
among
UICI,
the banks named herein
BANK OF AMERICA, N.A.
as administrative agent
as of
10 March 2000
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TABLE OF CONTENTS
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Page
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ARTICLE 1 Definitions........................................................2
Section 1.1 Definitions.............................................2
Section 1.2 Other Definitional Provisions..........................10
Section 1.3 Accounting Terms and Determinations....................10
ARTICLE 2 Loans.............................................................10
Section 2.1 Loans..................................................10
Section 2.2 Notes..................................................10
Section 2.3 Repayment of Loans.....................................10
Section 2.4 Interest...............................................11
Section 2.5 Prepayments, Conversions, and Continuations of Loans...11
Section 2.6 Minimum Amounts........................................12
Section 2.7 Certain Notices........................................12
Section 2.8 Facility Fee...........................................12
Section 2.9 Computations...........................................12
ARTICLE 3 Payments..........................................................13
Section 3.1 Method of Payment......................................13
Section 3.2 Pro Rata Treatment.....................................13
Section 3.3 Sharing of Payments, Etc...............................13
Section 3.4 Non-Receipt of Funds by the Agent......................13
ARTICLE 4 Yield Protection and Illegality...................................14
Section 4.1 Increased Cost and Reduced Return......................14
Section 4.2 Limitation on Types of Loans...........................15
Section 4.3 Illegality.............................................15
Section 4.4 Treatment of Affected Loans............................15
Section 4.5 Compensation...........................................16
Section 4.6 Taxes..................................................16
ARTICLE 5 Conditions Precedent..............................................18
Section 5.1 Execution of Agreement.................................18
ARTICLE 6 Representations and Warranties....................................19
Section 6.1 Corporate Existence....................................19
Section 6.2 Financial Statements...................................19
Section 6.3 Corporate Action; No Breach............................19
Section 6.4 Operation of Business..................................20
Section 6.5 Litigation and Judgments...............................20
Section 6.6 Rights in Properties; Liens............................20
Section 6.7 Enforceability.........................................20
Section 6.8 Approvals..............................................20
Section 6.9 Debt...................................................20
Section 6.10 Taxes.................................................20
Section 6.11 Margin Securities.....................................20
Section 6.12 ERISA.................................................21
Section 6.13 Disclosure............................................21
Section 6.14 Subsidiaries; Capitalization..........................21
Section 6.15 Agreements............................................22
Section 6.16 Compliance with Laws..................................22
Section 6.17 Investment Company Act................................22
Section 6.18 Public Utility Holding Company Act....................22
Section 6.19 Environmental Matters.................................22
Section 6.20 Labor Disputes and Acts of God........................22
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Section 6.21 Year 2000 Compliance..................................22
Section 6.22 Collateral............................................23
ARTICLE 7 Positive Covenants................................................23
Section 7.1 Reporting Requirements.................................23
Section 7.2 Maintenance of Existence; Conduct of Business..........24
Section 7.3 Maintenance of Properties..............................24
Section 7.4 Taxes and Claims.......................................24
Section 7.5 Insurance..............................................24
Section 7.6 Inspection Rights......................................24
Section 7.7 Keeping Books and Records..............................24
Section 7.8 Compliance with Laws...................................24
Section 7.9 Compliance with Agreements.............................24
Section 7.10 Further Assurances....................................25
Section 7.11 Year 2000 Compliance..................................25
ARTICLE 8 Negative Covenants................................................25
Section 8.1 Debt...................................................25
Section 8.2 Limitation on Liens....................................25
Section 8.3 Mergers, Etc...........................................27
Section 8.4 Investments............................................27
Section 8.5 Transactions With Affiliates...........................28
Section 8.6 Disposition of Property................................28
Section 8.7 Lines of Business......................................28
Section 8.8 Restrictions on Insurance Subsidiaries.................28
Section 8.9 Prepayment of Debt.....................................29
ARTICLE 9 Financial Covenants...............................................29
Section 9.1 Mid-West Capital.......................................29
Section 9.2 Risk-Based Capital...........ERROR! BOOKMARK NOT DEFINED.
ARTICLE 10 Default..........................................................29
Section 10.1 Events of Default.....................................29
Section 10.2 Remedies..............................................31
Section 10.3 Performance by the Agent..............................32
Section 10.4 Continuance of Default................................32
Section 10.5 Setoff................................................32
ARTICLE 11 The Agent........................................................32
Section 11.1 Appointment, Powers and Immunities....................32
Section 11.2 Reliance by Agent.....................................33
Section 11.3 Defaults..............................................33
Section 11.4 Rights as Bank........................................33
Section 11.5 INDEMNIFICATION.......................................33
Section 11.6 Non-Reliance on Agent and Other Banks.................34
Section 11.7 Resignation of Agent..................................34
Section 11.8 Agent Fee.............................................34
ARTICLE 12 Miscellaneous....................................................35
Section 12.1 Expenses..............................................35
Section 12.2 INDEMNIFICATION.......................................35
Section 12.3 Limitation of Liability...............................35
Section 12.4 No Duty...............................................36
Section 12.5 No Fiduciary Relationship.............................36
Section 12.6 Equitable Relief......................................36
Section 12.7 No Waiver; Cumulative Remedies........................36
Section 12.8 Successors and Assigns................................36
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Section 12.9 Survival..............................................37
Section 12.10 Entire Agreement; Amended and Restatement; Release...38
Section 12.11 Amendments...........................................38
Section 12.12 Maximum Interest Rate................................39
Section 12.13 Notices..............................................39
Section 12.14 Governing Law; Submission to Jurisdiction............39
Section 12.15 Counterparts.........................................40
Section 12.16 Severability.........................................40
Section 12.17 Headings.............................................40
Section 12.18 Construction.........................................40
Section 12.19 Independence of Covenants............................40
Section 12.20 WAIVER OF JURY TRIAL.................................40
Section 12.21 Confidentiality......................................40
Section 12.22 Waiver of Defaults...................................41
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INDEX TO EXHIBITS
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Exhibit Description of Exhibit Section
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"A" Form of Note 2.2
"B" Matters to be Addressed by Opinion of Counsel 5.1(r)
"C" Form of Assignment and Acceptance 12.8
"D" Pledge Agreement 1.1
"E" Turnover Agreement 1.1
INDEX TO SCHEDULES
Schedule Description of Schedule
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8.1 Existing Debt
8.2 Existing Liens; Restrictions on Subsidiaries
8.4 Existing Investments
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AMENDED AND RESTATED LOAN AGREEMENT
THIS AMENDED AND RESTATED LOAN AGREEMENT (the "Agreement"), dated as of
March __, 2000, is among UICI, a corporation duly organized and validly existing
under the laws of the State of Delaware ("Borrower"), each of the banks or other
lending institutions which is or which may from time to time become a signatory
hereto or any successor or assignee thereof (individually, a "Bank" and,
collectively, the "Banks"), and BANK OF AMERICA, NATIONAL ASSOCIATION (formerly
NationsBank, N.A.), as administrative agent for itself and the other Banks (in
such capacity, together with its successors in such capacity, the "Agent").
R E C I T A L S
The Borrower is currently indebted to the Banks under a Loan Agreement
dated as of May 17, 1999, among the Borrower, NationsBank, N.A. (now known as
Bank of America, N.A.), Fleet National Bank and The First National Bank of
Chicago (now known as Bank One, NA) and Bank of America, N.A. as agent, (as
amended through the fourth amendment thereto, the "Existing Agreement" and
capitalized terms used in these recitals which are not otherwise defined herein,
shall have the meanings specified in the Existing Agreement). The Borrower's
Debt under the Existing Agreement is being restructured: (i) as a result of the
deteriorating financial condition of United Credit National Bank, a Subsidiary
of the Borrower and the Consent Order between United Credit National Bank and
the Office of the Comptroller of the Currency, which events have had a Material
Adverse Effect under the Existing Agreement, (ii) in response to the request of
the Borrower that it no longer be bound by the negative covenants in the
Existing Agreement in order to give it flexibility to address the issues raised
by the events described in clause (i), and (iii) to provide the Banks additional
security for the repayment of the Loans (as defined in the Existing Agreement),
in light of the occurrence of such events.
Immediately prior to the effectiveness of this Agreement, the Borrower
is prepaying the Loans under the Existing Agreement by an amount equal to Five
Million Dollars ($5,000,000) from cash available at the Borrower (the
"Repayment").
Immediately after such prepayment, LM Finance, LLC. ("LM Finance") is
purchasing from each Bank an interest in the Loans under the Existing Agreement
held by each Bank in an amount equal with respect to a Bank to such Bank's pro
rata portion of Seventy Million Dollars ($70,000,000), calculated based on such
Loans held by such Bank in comparison to such Loans held by all Banks. The
foregoing purchases will be consummated in accordance with an Assignment and
Acceptance (as defined in the Existing Agreement) between each Bank and LM
Finance (the transactions consummated pursuant to this paragraph are referred to
herein as the "Purchases").
Simultaneously with the Purchases, the Borrower is: (i) creating a new
wholly-owned, direct subsidiary named UICI Sub I, Inc., that shall be an
unrestricted subsidiary under the 8.75% Senior Note Agreement (herein "Newco");
and (ii) transferring to Newco all the Capital Stock of the National Motor Club
of America, Inc. owned by the Borrower and Two Million (2,000,000) shares of
HealthAxis.com, Inc. common stock (the "Transfers").
In consideration for the Transfers, Newco is issuing 100% of its
capital stock to the Borrower and assuming all the outstanding Loans under the
Existing Agreement acquired in the Purchases and held by LM Finance (the portion
of the Loans assumed by Newco, herein the "Newco Loan"), which Newco Loan is in
the amount of Seventy Million Dollars ($70,000,000) and will be guaranteed by
the Borrower and by Specialized Card Services, Inc., a Subsidiary (the
"Assumption"). The guarantee by Specialized Card Services, Inc. shall be secured
by a mortgage on the real property owned by Specialized Card Services, Inc.
located in South Dakota. LM Finance is also releasing Borrower from all
Obligations (as defined in the Existing Agreement and such release herein the
"Release").
AMENDED AND RESTATED LOAN AGREEMENT - Page 1
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After giving effect to the Repayment, the Transfers, the Release and
the Assumption, the outstanding principal amount of the Loans under the Existing
Agreement owed to the Banks by the Borrower is Twenty-Five Million Dollars
($25,000,000) with each Bank holding such loans in the amount reflected on their
signature pages hereto opposite their names (collectively the, "Bank Loans").
The Borrower has requested that the Bank Loans be evidenced and
governed by this Agreement rather than by the Existing Agreement and the Banks
are willing to agree to the Borrower's request. LM Finance is releasing the
Borrower from all obligations arising in connection with the Newco Loan and the
Newco Loan will no longer be governed by the Existing Agreement or this
Agreement
NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree that the obligations of the
Borrower with respect to the Bank Loans be amended and restated as herein
provided in substitution for and replacement of the Existing Agreement, such
amended and restated loan agreement to read in its entirety as follows:
ARTICLE
Definitions
Section 1.1 Definitions. As used in this Agreement, the following terms
have the following meanings:
"8.75% Senior Note Agreement" means that certain Note Purchase
Agreement dated as of June 1, 1994 among the Borrower and the purchasers party
thereto relating to the Borrower's 8.75% Senior Notes due 2004, as the same may
be amended or otherwise modified from time to time.
"Adjusted Libor Rate" means, for any Libor Loan for any Interest Period
therefor, the rate per annum (rounded upwards, if necessary, to the nearest
1/100 of 1%) determined by the Agent to be equal to the quotient obtained by
dividing (a) the Libor Rate for such Libor Loan for such Interest Period by (b)
1 minus the Reserve Requirement for such Libor Loan for such Interest Period.
"Affected Loan" has the meaning specified in Section 4.4.
"Affected Type" has the meaning specified in Section 4.4.
"Affiliate" means, as to any Person, any other Person (a) that directly
or indirectly, through one or more intermediaries, controls or is controlled by,
or is under common control with, such Person; (b) that directly or indirectly
beneficially owns or holds ten percent (10%) or more of the voting stock of such
Person; or (c) ten percent (10%) or more of the voting stock of which is
directly or indirectly beneficially owned or held by the Person in question. The
term "control" means the possession, directly or indirectly, of the power to
direct or cause direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract, or otherwise; provided,
however, in no event shall the Agent or any Bank be deemed an Affiliate of the
Borrower or any of the Subsidiaries.
"Applicable Lending Office" means for each Bank and each Type of Loan,
the Lending Office of such Bank (or of an Affiliate of such Bank) designated for
such Type of Loan below its name on the signature pages hereof or such other
office of such Bank (or of an Affiliate of such Bank) as such Bank may from time
to time specify to the Borrower and the Agent as the office by which its Loans
of such Type are to be made and maintained.
AMENDED AND RESTATED LOAN AGREEMENT - Page 2
<PAGE> 8
"Assignment and Acceptance" means an assignment and acceptance entered
into by a Bank and its Assignee and accepted by the Agent pursuant to Section
12.8, in substantially the form of Exhibit "C" hereto.
"Assignee" has the meaning specified in Section 12.8.
"Assigning Bank" has the meaning specified in Section 12.8.
"Assumption" has the meaning specified in the Recitals hereto.
"Bank of America" means Bank of America, National Association.
"Base Margin" has the meaning specified in Section 2.4 (b).
"Base Rate" means, for any day, the rate per annum equal to the higher
of (a) the Federal Funds Rate for such day plus one-half of one percent (0.50%)
and (b) the Prime Rate for such day. Any change in the Base Rate due to a change
in the Prime Rate or the Federal Funds Rate shall be effective on the effective
date of such change in the Prime Rate or Federal Funds Rate.
"Base Rate Loans" means the portions of the principal amounts
outstanding hereunder that bear interest at rates based upon the Base Rate.
"Business Day" means (a) any day on which commercial banks are not
authorized or required to close in Dallas, Texas; (b) with respect to all
borrowings, payments, Conversions, Continuations, Interest Periods, and notices
in connection with Libor Loans, any day which is a Business Day described in
clause (a) above and which is also a day on which dealings in Dollar deposits
are carried out in the London interbank market; and (c) with respect to the
determination of the Federal Funds Rate, any day which is a Business Day
described in clause (a) above and which is also a day on which such rate is
published by the Federal Reserve Bank of New York.
"Capital Lease Obligations" means, as to any Person, the obligations of
such Person to pay rent or other amounts under a lease of (or other agreement
conveying the right to use) real and/or personal property, which obligations are
required to be classified and accounted for as a capital lease on a balance
sheet of such Person under GAAP. For purposes of this Agreement, the amount of
such Capital Lease Obligations shall be the capitalized amount thereof,
determined in accordance with GAAP.
"Capital Stock" means any capital stock or other ownership interests of
any Person and any interests therein or relating thereto, including without
limitation, any options, warrants or other rights to acquire any interest
therein or thereto.
"CLICO" has the meaning specified in Section 2.5(a) hereto.
"Closing Date" means March 14, 2000.
"CMO Derivative Investment" has the meaning specified in Section 8.5.
"Code" means the Internal Revenue Code of 1986, as amended, and the
regulations promulgated and rulings issued thereunder.
"Collateral" means the property described as Collateral in the Pledge
Agreement.
AMENDED AND RESTATED LOAN AGREEMENT - Page 3
<PAGE> 9
"Continue", "Continuation", and "Continued" shall refer to the
continuation pursuant to Section 2.6 of a Libor Loan from one Interest Period to
the next Interest Period.
"Convert", "Conversion", and "Converted" shall refer to a conversion
pursuant to Section 2.6 or Article 4 of one Type of Loan into another Type of
Loan.
"Debt" means as to any Person at any time (without duplication): (a)
all obligations of such Person for borrowed money; (b) all obligations of such
Person evidenced by bonds, notes, debentures, or other similar instruments; (c)
all obligations of such Person to pay the deferred purchase price of property or
services, except trade accounts payable of such Person arising in the ordinary
course of business that are not past due by more than ninety (90) days; (d) all
Capital Lease Obligations of such Person; (e) all Debt or other obligations of
others Guaranteed by such Person; (f) all obligations secured by a Lien existing
on property owned by such Person, whether or not the obligations secured thereby
have been assumed by such Person or are non-recourse to the credit of such
Person; (g) all reimbursement obligations of such Person (whether contingent or
otherwise) in respect of letters of credit, bankers' acceptances, surety or
other bonds and similar instruments; (h) all obligations of such Person to
redeem or retire shares of Capital Stock of such Person except any obligations
to repurchase common Capital Stock of the Borrower issued to officers, employees
and agents of the Borrower or the Subsidiaries pursuant to a stock option plan,
stock purchase plan, other compensation plan or other compensation arrangement
authorized by the Board of Directors of Borrower; (i) all obligations and
liabilities of such Person under Interest Rate Protection Agreements; (j) all
liabilities of such Person in respect of unfunded vested benefits under any
Plan; (k) all obligations of such Person, contingent or otherwise, for the
payment of money under any noncompete, consulting or similar agreement or any
other similar arrangements providing for the deferred payment of the purchase
price for an acquisition; and (l) all other amounts required to be reflected as
a liability on a consolidated balance sheet of such Person in accordance with
GAAP other than accruals, taxes, time deposits and policy liabilities.
"Default" means an Event of Default or the occurrence of an event or
condition which with notice or lapse of time or both would become an Event of
Default.
"Default Rate" means a rate per annum during the period commencing on
the due date until such amount is paid in full equal to the sum of two percent
(2.0%) plus the Base Rate as in effect from time to time plus the Base Margin
(provided, that if such amount in default is principal of a Libor Loan and the
due date is a day other than the last day of an Interest Period therefor, the
"Default Rate" for such principal shall be, for the period from and including
the due date and to but excluding the last day of the Interest Period therefor,
two percent (2.0%) plus the Libor Rate applicable to such Interest Period plus
the Libor Margin, and, thereafter, the rate provided for above in this
definition).
"Dollars" and "$" mean lawful money of the United States of America.
"Domestic Insurance Subsidiary" means an Insurance Subsidiary organized
under the laws of a jurisdiction located within the United States of America.
"Eligible Assignee" means (i) a Bank; (ii) an Affiliate of a Bank; and
(iii) any other Person approved by the Agent and, if no Default exists, the
Borrower, which approval, in either case, shall not be unreasonably withheld;
provided, however, that neither the Borrower nor an Affiliate of the Borrower
shall qualify as an Eligible Assignee.
"Environmental Laws" means any and all federal, state, and local laws,
regulations, and requirements pertaining to health, safety, or the environment,
as such laws, regulations, and requirements may be amended or otherwise modified
from time to time.
AMENDED AND RESTATED LOAN AGREEMENT - Page 4
<PAGE> 10
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations and published interpretations
thereunder.
"ERISA Affiliate" means any corporation or trade or business which is a
member of the same controlled group of corporations (within the meaning of
Section 414(b) of the Code) as the Borrower or is under common control (within
the meaning of Section 414(c) of the Code) with the Borrower.
"Event of Default" has the meaning specified in Section 10.1.
"Existing Agreement" has the meaning specified in the Recitals hereto.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighted average
of the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers on such day, as published by
the Federal Reserve Bank of New York on the Business Day next succeeding such
day; provided that (a) if such day is not a Business Day, the Federal Funds Rate
for such day shall be such rate on such transactions on the next preceding
Business Day as so published on the next succeeding Business Day, and (b) if no
such rate is so published on such next succeeding Business Day, the Federal
Funds Rate for such day shall be the average rate charged to the Agent (in its
individual capacity) on such day on such transactions as determined by the
Agent.
"GAAP" means generally accepted accounting principles, applied on a
consistent basis, as set forth in Opinions of the Accounting Principles Board of
the American Institute of Certified Public Accountants and/or in statements of
the Financial Accounting Standards Board and/or their respective successors and
which are applicable in the circumstances as of the date in question. Accounting
principles are applied on a "consistent basis" when the accounting principles
applied in a current period are comparable in all material respects to those
accounting principles applied in a preceding period.
"Governmental Authority" means any nation or government, any state or
political subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory, or administrative functions of or pertaining to
government.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing the payment or
performance of any Debt or other obligation of any other Person and, without
limiting the generality of the foregoing, any obligation, direct or indirect,
contingent or otherwise, of such Person (a) to purchase or pay (or advance or
supply funds for the purchase or payment of) such Debt or other obligation
(whether arising by virtue of partnership arrangements, by agreement to
keep-well, to purchase assets, goods, securities or services, to take-or-pay, or
to maintain financial statement conditions or otherwise) and (b) entered into
for the purpose of assuring in any other manner the obligee of such Debt or
other obligation of the payment thereof or to protect the obligee against loss
in respect thereof (in whole or in part and including without limitation, any
agreement binding a Person to make Investments in or otherwise transfer funds to
or for the benefit of another Person for purposes of assuring such other
Person's financial liquidity, assuring such other Person's compliance with the
capital adequacy requirements imposed by agreement or applicable law or
otherwise assuring such other Person's compliance with financial covenants or
other financial statement conditions); provided that the term Guarantee shall
not include endorsements for collection or deposit in the ordinary course of
business. The term "Guarantee" used as a verb has a corresponding meaning.
"Hazardous Material" means any material which is or becomes listed,
regulated, or addressed under any Environmental Law.
AMENDED AND RESTATED LOAN AGREEMENT - Page 5
<PAGE> 11
"Insurance Regulatory Authority" shall mean, with respect to any
Domestic Insurance Subsidiary, the Governmental Authority of such Domestic
Insurance Subsidiary's state of domicile with whom such Domestic Insurance
Subsidiary is required to file its annual financial statement prepared in
accordance with SAP.
"Insurance Subsidiary" shall mean any Subsidiary that is authorized or
admitted to carry on or transact one or more aspects of the business of selling,
issuing or underwriting insurance or reinsurance.
"Interest Period" means, with respect to a Libor Loan, each period
commencing on the date such Libor Loan was made under the Existing Agreement or
Converted from a Base Rate Loan or the last day of the next preceding Interest
Period with respect to such Libor Loan, and ending on the numerically
corresponding day in the first, second or third calendar month thereafter, as
the Borrower may select as provided in Section 2.8 hereof or, with respect to
interest periods outstanding under the Existing Agreement as selected by
Borrower in Section 2.7 of the Existing Agreement or ending on any other day
offered by the Banks, except that each such Interest Period which commences on
the last Business Day of a calendar month (or on any day for which there is no
numerically corresponding day in the appropriate subsequent calendar month)
shall end on the last Business Day of the appropriate subsequent calendar month.
Notwithstanding the foregoing: (a) each Interest Period which would otherwise
end on a day which is not a Business Day shall end on the next succeeding
Business Day (or if such succeeding Business Day falls in the next succeeding
calendar month, on the next preceding Business Day); (b) any Interest Period
which would otherwise extend beyond the Termination Date shall end on the
Termination Date; (c) no more than three (3) Interest Periods shall be in effect
at the same time; and (d) unless offered by the Banks, no Interest Period shall
have a duration of less than one (1) month and, if the Interest Period would
otherwise be a shorter period, such Libor Loans shall not be available
hereunder.
"Interest Rate Protection Agreements" means, with respect to any
Person, an interest rate swap, cap or collar agreement or similar arrangement
between such Person and one or more financial institutions providing for the
transfer or mitigation of interest risks either generally or under specified
contingencies.
"Investments" has the meaning specified in Section 8.5.
"Jensen Family" has the meaning specified in Section 10.1(l).
"LM Finance" has the meaning specified in the Recitals hereto.
"Libor Loans" means the portions of the principal amounts outstanding
hereunder that bear interest at rates based upon the Adjusted Libor Rate.
"Libor Rate" means, for any Libor Loan for any Interest Period
therefor, the rate per annum (rounded upwards, if necessary, to the nearest
1/100 of 1%) appearing on Telerate Page 3750 (or any successor page) as the
London interbank offered rate for deposits in Dollars at approximately 11:00
a.m. (London time) two Business Days prior to the first day of such Interest
Period for a term comparable to such Interest Period. If for any reason such
rate is not available, the term "Libor Rate" shall mean, for any Libor Loan for
any Interest Period therefor, the rate per annum (rounded upwards, if necessary,
to the nearest 1/100 of 1%) appearing on Reuters Screen LIBO Page as the London
interbank offered rate for deposits in Dollars at approximately 11:00 a.m.
(London time) two Business Days prior to the first day of such Interest Period
for a term comparable to such Interest Period; provided, however, if more than
one rate is specified on Reuters Screen LIBO Page, the applicable rate shall be
the arithmetic mean of all such rates (rounded upwards, if necessary, to the
nearest 1/100 of 1%).
"Lien" means any lien, mortgage, security interest, tax lien, financing
statement, pledge, charge, hypothecation, assignment, preference, priority, or
other encumbrance of any kind or nature whatsoever
AMENDED AND RESTATED LOAN AGREEMENT - Page 6
<PAGE> 12
(including, without limitation, any conditional sale or title retention
agreement), whether arising by contract, operation of law, or otherwise.
"Loans" has the meaning specified in Section 2.1.
"Loan Documents" means this Agreement, the Pledge Agreement, the
Turnover Agreement, and all promissory notes, assignments, guaranties, security
agreements, financing statements and other agreements executed and delivered
pursuant to or in connection with this Agreement and all Interest Rate
Protection Agreements entered into by the Borrower or any Subsidiary with any
Bank, as such agreements may be amended or otherwise modified from time to time.
"Material Adverse Effect" means the occurrence of any event or the
existence of any condition that reasonably could be expected to have a material
adverse effect on (a) the properties, prospects, business, operations, condition
(financial or otherwise), liabilities, or capitalization of the Borrower or
Mid-West, (b) the ability of the Borrower to pay and perform the Obligations
when due, or (c) the validity or enforceability of any of the Loan Documents or
the rights and remedies of the Banks or the Agent thereunder. In determining
whether any individual event could reasonably be expected to result in a
Material Adverse Effect, notwithstanding that such event does not itself have
such effect, a Material Adverse Effect shall be deemed to have occurred if the
cumulative effect of such event and all other then existing events could
reasonably be expected to result in a Material Adverse Effect.
"Maximum Rate" with respect to any Bank, the maximum non-usurious
interest rate, if any, that any time or from time to time may be contracted for,
taken, reserved, charged, or received with respect to the Notes or on other
amounts, if any, payable to such Bank pursuant to this Agreement or any other
Loan Document, under laws applicable to such Bank which are presently in effect,
or, to the extent allowed by law, under such applicable laws which may hereafter
be in effect and which allow a higher maximum non-usurious interest rate than
applicable laws now allow. The Maximum Rate shall be calculated in a manner that
takes into account any and all fees, payments, and other charges in respect of
the Loan Documents that constitute interest under applicable law. Each change in
any interest rate provided for herein based upon the Maximum Rate resulting from
a change in the Maximum Rate shall take effect without notice to the Borrower at
the time of such change in the Maximum Rate. For purposes of determining the
Maximum Rate under Texas law, the applicable rate ceiling shall be the weekly
ceiling described in, and computed in accordance with the Texas Finance Code;
provided, however, that to the extent permitted by applicable law, the Agent
shall have the right to change the applicable rate ceiling from time to time in
accordance with applicable law.
"Mid-West" means Mid-West National Life Insurance Company of Tennessee.
"Multiemployer Plan" means a multiemployer plan defined as such in
Section 3(37) of ERISA to which contributions have been made by the Borrower or
any ERISA Affiliate and which is covered by Title IV of ERISA.
"NAIC" shall mean the National Association of Insurance Commissioners,
or any successor organization.
"Newco" has the meaning specified in the Recitals hereto.
"Newco Loan" has the meaning specified in the Recitals hereto.
"Notes" means the promissory notes provided for by Section 2.2 hereof,
and all extensions, renewals, and modifications thereof and all substitutions
therefor (including promissory notes issued by the Borrower pursuant to Section
12.8).
AMENDED AND RESTATED LOAN AGREEMENT - Page 7
<PAGE> 13
"Obligated Party" means any Person (exclusive of the Borrower and LM
Finance) who is or hereafter becomes party to any agreement that guarantees or
secures payment and performance of the Obligations or any part thereof.
"Obligations" means all obligations, indebtedness, and liabilities of
the Borrower to the Agent and the Banks, or any of them, arising pursuant to any
of the Loan Documents, now existing or hereafter arising, whether direct,
indirect, related, unrelated, fixed, contingent, liquidated, unliquidated,
joint, several, or joint and several, including, without limitation, the
obligation of the Borrower to repay the Loans, interest on the Loans, and all
fees, costs, and expenses (including reasonable attorney's fees) provided for in
the Loan Documents.
"Other Taxes" has the meaning specified in Section 4.6.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to all or any of its functions under ERISA.
"Person" means any individual, corporation, business trust,
association, company, partnership, joint venture, Governmental Authority, or
other entity.
"Plan" means any employee benefit or other plan established or
maintained by the Borrower or any ERISA Affiliate and which is covered by Title
IV of ERISA.
"Pledge Agreement" means the Pledge Agreement from the Borrower in
favor of the Agent for the benefit of the Banks, substantially in the form of
Exhibit D hereto.
"Prime Rate" means the per annum rate of interest established from time
to time by Bank of America as its prime rate, which rate may not be the lowest
rate of interest charged by Bank of America to its customers.
"Principal Office" means the principal office of the Agent, presently
located at 901 Main Street, 66th Floor, Dallas, Texas 75202.
"Prohibited Transaction" means any transaction set forth in Section 406
of ERISA or Section 4975 of the Code.
"Purchases" has the meaning specified in the Recitals hereto.
"Quarterly Payment Date" means the last day of each March, June,
September, and December of each year, the first of which shall be March 31,
2000.
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System as the same may be amended or supplemented from time to
time.
"Regulatory Change" means, with respect to any Bank, any change after
the date of this Agreement in United States federal, state, or foreign laws or
regulations (including Regulation D) or the adoption or making after such date
of any interpretations, directives, or requests applying to a class of banks
including such Bank of or under any United States federal or state, or any
foreign, laws or regulations (whether or not having the force of law) by any
court or governmental or monetary authority charged with the interpretation or
administration thereof.
"Repayment" has the meaning specified in the Recitals hereto.
AMENDED AND RESTATED LOAN AGREEMENT - Page 8
<PAGE> 14
"Required Banks" means Banks holding at least fifty-one percent (51%)
of the aggregate outstanding principal amount of the Loans.
"Reportable Event" means any of the events set forth in Section 4043 of
ERISA.
"Reserve Requirement" means, at any time, the maximum rate at which
reserves (including, without limitation, any marginal, special, supplemental, or
emergency reserves) are required to be maintained under regulations issued from
time to time by the Board of Governors of the Federal Reserve System (or any
successor) by member banks of the Federal Reserve System against "Eurocurrency
liabilities" (as such term is used in Regulation D). Without limiting the effect
of the foregoing, the Reserve Requirement shall reflect any other reserves
required to be maintained by such member banks with respect to (i) any category
of liabilities which includes deposits by reference to which the Adjusted Libor
Rate is to be determined, or (ii) any category of extensions of credit or other
assets which include Libor Loans. The Adjusted Libor Rate shall be adjusted
automatically on and as of the effective date of any change in the Reserve
Requirement.
"SAP" means, with respect to any Domestic Insurance Subsidiary,
statutory accounting practices prescribed or permitted by the insurance laws or
regulations or the Insurance Regulatory Authority in the jurisdiction of the
domicile of such Domestic Insurance Subsidiary for the preparation of financial
statements and other financial reports by insurance companies of the same type
as such Domestic Insurance Subsidiary. Statutory accounting practices are
applied on a "consistent basis" when the practices applied in a current period
are comparable in all material respects to those practices applied in a
preceding period.
"Subsidiary" means any corporation or other entity of which at least a
majority of the outstanding shares of stock or other ownership interests having
by the terms thereof ordinary voting power to elect a majority of the board of
directors (or Persons performing similar functions) of such corporation or
entity (irrespective of whether or not at the time, in the case of a
corporation, stock of any other class or classes of such corporation shall have
or might have voting power by reason of the happening of any contingency) is at
the time directly or indirectly owned or controlled by the Borrower or one or
more of the Subsidiaries or by the Borrower and one or more of the Subsidiaries.
"Taxes" has the meaning specified in Section 4.6.
"Termination Date" means July 10, 2000.
"Transaction Documents" means the Loan Documents and the documentation
evidencing and governing the other Transactions.
"Transactions" means the Repayment, the Purchases, the Transfers, the
Assumption, the Release, and the execution and delivery of the Transaction
Documents.
"Transfers" has the meaning specified in the Recitals hereto.
"Turnover Agreement" means the Turnover and Subordination Agreement
from LM Finance in favor of the Agent for the benefit of the Banks substantially
in the form of Exhibit E hereto.
"Type" means any type of Loan (i.e., Base Rate Loan or Libor Loans).
"Year 2000 Ready" has the meaning specified in Section 6.21.
AMENDED AND RESTATED LOAN AGREEMENT - Page 9
<PAGE> 15
"Year 2000 Problem" has the meaning specified in Section 6.21.
"UCC" means the Uniform Commercial Code as in effect in the State of
Texas.
Section 1.2 Other Definitional Provisions. All definitions contained in
this Agreement are equally applicable to the singular and plural forms of the
terms defined. The words "hereof", "herein", and "hereunder" and words of
similar import referring to this Agreement refer to this Agreement as a whole
and not to any particular provision of this Agreement. Unless otherwise
specified, all Article and Section references pertain to this Agreement. Terms
used herein that are defined in the UCC, unless otherwise defined herein, shall
have the meanings specified in the UCC.
Section 1.3 Accounting Terms and Determinations. Except as otherwise
expressly provided herein with respect to clause (g) of Section 8.4, Section 9.1
and the separate financial statements of the Domestic Insurance Subsidiaries,
all accounting terms used herein shall be interpreted, and all financial
statements and certificates and reports as to financial matters required to be
delivered to the Agent and the Banks hereunder shall be prepared, in accordance
with GAAP, on a basis consistent with those used in the preparation of the
financial statements referred to in Section 6.2 hereof. All calculations made
for the purposes of determining compliance with the provisions of this Agreement
(except the provisions of clause (g) of Section 8.4 and Section 9.1) shall be
made by application of GAAP, on a basis consistent with those used in the
preparation of the financial statements referred to in Section 6.2 hereof. The
calculations made for the purposes of determining compliance with clause (g) of
Section 8.4 and Section 9.1 shall be made by application of SAP, on a basis
consistent with those used in the preparation of the Mid-West financial
statements referred to in Section 6.2. All separate financial statements of
Mid-West delivered under Section 7.1 shall be prepared in accordance with SAP,
on a basis consistent with those used in the preparation of the Mid-West
financial statements referred to in Section 6.2. To enable the ready and
consistent determination of compliance by the Borrower with its obligations
under this Agreement, the Borrower will not change the last day of its fiscal
year from December 31, or the last days of the first three fiscal quarters of
the Borrower in each of its fiscal years from March 31, June 30, and September
30, respectively.
ARTICLE 2
Loans
Section 2.1 Loans. On the Closing Date, the outstanding principal
amount of the loans outstanding under the Existing Agreement equal Twenty-Five
Million Dollars ($25,000,000), with each Bank holding such loans in the amount
reflected on their signature pages hereto opposite their names. Such loans shall
hereafter constitute "Loans" under this Agreement of the same Type as are
outstanding under the Existing Agreement on the Closing Date. Subject to the
other terms and provisions of this Agreement, until the Termination Date, the
Borrower may Continue Libor Loans or Convert Loans of one Type into Loans of
another Type. Loans of each Type made by each Bank shall be made and maintained
at such Bank's Applicable Lending Office for Loans of such Type.
Section 2.2 Notes. The Loans made by each Bank shall be evidenced by a
single promissory note of the Borrower in substantially the form of Exhibit "A"
hereto, payable to the order of such Bank in a principal amount equal to its
Loan as of the Closing Date and otherwise duly completed. The Borrower
acknowledges that the Commitments (as defined in the Existing Agreement) are
hereby terminated.
Section 2.3 Repayment of Loans. The Borrower agrees to pay to the order
of the Agent for the account of the Banks the outstanding principal amount of
all of the Loans on the Termination Date.
AMENDED AND RESTATED LOAN AGREEMENT - Page 10
<PAGE> 16
Section 2.4 Interest.
(a) Interest Rate. The Borrower shall pay to the Agent for the
account of each Bank interest on the unpaid principal amount outstanding
hereunder, at the following rates per annum:
(i) with respect to each Base Rate Loan, the Base Rate
plus the Base Margin; and
(ii) with respect to each Libor Loan, the Adjusted Libor
Rate plus the Libor Margin.
(b) Applicable Margins and Facility Fee. The margins
identified in Section 2.4 (a) shall be defined as follows:
(i) "Base Margin" shall mean zero percent (0%) per annum.
(ii) "Libor Margin" shall mean one percent (1.00%) per
annum.
(c) Payment Dates. Accrued interest on the Loans shall be due
and payable as follows:
(i) in the case of accrued interest on Base Rate Loans, on
each Quarterly Payment Date;
(ii) in the case of accrued interest on each Libor Loan,
on the last day of the Interest Period with respect thereto;
(iii) in the case of the accrued interest on the principal
amount of any Libor Loan being prepaid, upon such prepayment of principal; and
(iv) on the Termination Date.
(d) Default Interest. Notwithstanding the foregoing, the
Borrower will pay to the Agent for the account of each Bank interest at the
applicable Default Rate on any principal of any Loan made by such Bank, and (to
the fullest extent permitted by law) on any other amount payable by the Borrower
under this Agreement or any other Loan Document to or for the account of Agent
or any such Bank which is not paid in full when due (whether at stated maturity,
by acceleration, or otherwise), for the period from and including the due date
thereof to but excluding the date the same is paid in full. Interest payable at
the Default Rate shall be payable from time to time on demand.
Section 2.5 Prepayments, Conversions, and Continuations of Loans.
(a) Mandatory Prepayments. The Borrower shall prepay the
outstanding Loans upon receipt of any dividends paid by Chesapeake Life
Insurance Company ("CLICO") or Mid-West in the amount of such dividends received
by the Borrower. In addition, if CLICO is permitted by law to pay an
extraordinary dividend (anticipated to be up to Ten Million Dollars
($10,000,000)) to the Borrower, the Borrower will cause CLICO to immediately
declare and pay such dividend to the Borrower in the maximum amount permissible.
Upon receipt of such dividend, the Borrower shall immediately prepay the
outstanding principal amount of the Loans by an amount equal to the dividend so
received. The Borrower will use commercially reasonable efforts to cause CLICO
to apply for and receive all necessary regulatory approvals for such
extraordinary dividend and to take all corporate and other actions necessary to
declare and pay the dividend as promptly as possible after the Closing Date.
AMENDED AND RESTATED LOAN AGREEMENT - Page 11
<PAGE> 17
(b) Optional Prepayments; Conversions and Continuations.
Subject to Section 2.6, the Borrower shall have the right from time to time to
prepay the Loans, or to Convert all or part of a Loan of one Type into a Loan of
another Type or to Continue Libor Loans as Libor Loans, provided that: (a) the
Borrower shall give the Agent notice of each such prepayment, Conversion, or
Continuation as provided in Section 2.7, (b) Libor Loans may only be Converted
on the last day of the Interest Period, and (c) except for Conversions into Base
Rate Loans, no Conversions or Continuations shall be made while a Default
exists.
Section 2.6 Minimum Amounts. Except for Conversions and prepayments
pursuant to Article 4 and Conversions into Libor Loans, each Conversion and each
optional prepayment of principal of the Loans shall be in an amount at least
equal to One Million Dollars ($1,000,000) (prepayments or Conversions of or into
Loans of different Types or, in the case of Libor Loans, having different
Interest Periods at the same time hereunder to be deemed separate Conversions
and prepayments for purposes of the foregoing, one for each Type or Interest
Period). Anything in this Agreement to the contrary notwithstanding, the
aggregate principal amount of Libor Loans having the same Interest Period shall
be at least equal to Five Million Dollars ($5,000,000).
Section 2.7 Certain Notices. Notices by the Borrower to the Agent of
Conversions, Continuations and prepayments of Loans and of the duration of
Interest Periods shall be irrevocable and shall be effective only if received by
the Agent not later than 11:00 a.m. Dallas, Texas, time on the Business Day of
the Conversion to or prepayment of a Base Rate Loan and on three (3) Business
Days prior to the date of the relevant other Conversion, Continuation or
prepayment of Libor Loans. Each such notice of Conversion, Continuation, or
prepayment shall specify the Loans to be Converted, Continued, or prepaid and
the amount (subject to Section 2.6 hereof) and Type of the Loans to be
Converted, Continued or prepaid (and, in the case of a Conversion, the Type of
Loans to result from such Conversion) and the date of Conversion, Continuation,
or prepayment (which shall be a Business Day). Each such notice of the duration
of an Interest Period shall specify the Loans to which such Interest Period is
to relate. The Agent shall promptly notify the Banks of the contents of each
such notice. In the event the Borrower fails to select the Type of Loan, or the
duration of any Interest Period for any Libor Loan, within the time period and
otherwise as provided in this Section 2.7, such Loan (if outstanding as a Libor
Loan) will be automatically Converted into a Base Rate Loan on the last day of
the preceding Interest Period for such Loan or (if outstanding as a Base Rate
Loan) will remain as, or (if not then outstanding) will be made as, a Base Rate
Loan. The Borrower may not Convert any Loans into Libor Loans, or Continue any
Loans as Libor Loans if the interest rate for such Libor Loan would exceed the
Maximum Rate or if a Default exists.
Section 2.8 Facility Fee. The Borrower agrees to pay to the Agent for
the account of each Bank a facility fee on the daily average amount of such
Bank's outstanding Loans for the period from and including the date of this
Agreement to and including the Termination Date, at the rate equal to one
quarter of One percent (.25%) per annum. Accrued facility fee shall be payable
in arrears on each Quarterly Payment Date and on the Termination Date.
Section 2.9 Computations. Interest and fees payable by the Borrower
hereunder and under the other Loan Documents shall be computed as follows: (i)
with respect to Libor Loans on the basis of a year of 360 days and the actual
number of days elapsed (including the first day but excluding the last day)
occurring in the period for which payable unless such calculation would result
in a usurious rate, in which case interest shall be calculated on the basis of a
year of 365 or 366 days, as the case may be; (ii) with respect to Base Rate
Loans and Loans accruing interest at the Default Rate, on the basis of a year of
365 or 366 days and the actual number of days elapsed (including the first day
but excluding the last day) occurring in the period for which payable; and (iii)
with respect to the facility fees payable hereunder and any other interest
payable hereunder, on the basis of a year of 360 days and the actual number of
days elapsed (including the first day but excluding the last day) occurring in
the period for which payable unless such calculation would result in a usurious
rate, in which case such fees shall be calculated on the basis of a year of 365
or 366 days, as the case may be.
AMENDED AND RESTATED LOAN AGREEMENT - Page 12
<PAGE> 18
ARTICLE 3
Payments
Section 3.1 Method of Payment. All payments of principal, interest, and
other amounts to be made by the Borrower under this Agreement and the other Loan
Documents shall be made to the Agent at the Principal Office for the account of
each Bank's Applicable Lending Office in Dollars and in immediately available
funds, without setoff, deduction, or counterclaim, not later than 11:00 a.m.,
Dallas, Texas time on the date on which such payment shall become due (each such
payment made after such time on such due date to be deemed to have been made on
the next succeeding Business Day). The Borrower shall, at the time of making
each such payment, specify to the Agent the sums payable by the Borrower under
this Agreement and the other Loan Documents to which such payment is to be
applied (and in the event that the Borrower fails to so specify, or if an Event
of Default exists, the Agent may apply such payment to the Obligations in such
order and manner as it may elect in its sole discretion, subject to Section 3.2
hereof). Each payment received by the Agent under this Agreement or any other
Loan Document for the account of a Bank shall be paid promptly to such Bank, in
immediately available funds, for the account of such Bank's Applicable Lending
Office. Whenever any payment under this Agreement or any other Loan Document
shall be stated to be due on a day that is not a Business Day, such payment may
be made on the next succeeding Business Day, and such extension of time shall in
such case be included in the computation of the payment of interest and fee, as
the case may be.
Section 3.2 Pro Rata Treatment. Except to the extent otherwise provided
herein: (a) each payment of the facility fee under Section 2.8 shall be made for
the account of the Banks, pro rata according to the respective outstanding
principal amount of the Loans; (b) the making, Conversion, and Continuation of
Loans of a particular Type (other than Conversions provided for by Section 4.4)
shall be made pro rata among the Banks holding Loans of such Type according to
the amounts of their respective outstanding principal amount of the Loans; (c)
each payment and prepayment of principal of or interest on Loans by the Borrower
of a particular Type shall be made to the Agent for the account of the Banks
holding Loans of such Type pro rata in accordance with the respective unpaid
principal amounts of such Loans held by such Banks; and (d) Interest Periods for
Loans of a particular Type shall be allocated among the Banks holding Loans of
such Type pro rata according to the respective principal amounts held by such
Banks.
Section 3.3 Sharing of Payments, Etc. If a Bank shall obtain payment of
any principal of or interest on any of the Obligations due to such Bank
hereunder through the exercise of any right of set-off, banker's lien,
counterclaim or similar right, or otherwise, it shall promptly purchase from the
other Banks participations in the Obligations held by the other Banks in such
amounts, and make such adjustments from time to time as shall be equitable to
the end that all the Banks shall share pro rata in accordance with the unpaid
principal of the Obligations then due to each of them. To such end, all of the
Banks shall make appropriate adjustments among themselves (by the resale of
participations sold or otherwise) if all or any portion of such excess payment
is thereafter rescinded or must otherwise be restored. The Borrower agrees, to
the fullest extent it may effectively do so under applicable law, that any Bank
so purchasing a participation in the Obligations by the other Banks may exercise
all rights of set-off, banker's lien, counterclaim, or similar rights with
respect to such participation as fully as if such Bank were a direct holder of
Obligations to the Borrower in the amount of such participation. Nothing
contained herein shall require any Bank to exercise any such right or shall
affect the right of any Bank to exercise, and retain the benefits of exercising,
any such right with respect to any other indebtedness or obligation of the
Borrower.
Section 3.4 Non-Receipt of Funds by the Agent. Unless the Agent shall
have been notified by a Bank or the Borrower (the "Payor") prior to the date on
which such Bank is to make payment to the Agent of the proceeds of a Loan to be
made by it hereunder or the Borrower is to make a payment to the Agent for the
account
AMENDED AND RESTATED LOAN AGREEMENT - Page 13
<PAGE> 19
of one or more of the Banks, as the case may be (such payment being herein
called the "Required Payment"), which notice shall be effective upon receipt,
that the Payor does not intend to make the Required Payment to the Agent, the
Agent may assume that the Required Payment has been made and may, in reliance
upon such assumption (but shall not be required to), make the amount thereof
available to the intended recipient on such date and, if the Payor has not in
fact made the Required Payment to the Agent, the recipient of such payment
shall, on demand, pay to the Agent the amount made available to it together with
interest thereon in respect of the period commencing on the date such amount was
so made available by the Agent until the date the Agent recovers such amount at
a rate per annum equal to the Federal Funds Rate for such period.
ARTICLE 4
Yield Protection and Illegality
Section 4.1 Increased Cost and Reduced Return.
(a) If, after the date hereof, the adoption of any applicable
law, rule, or regulation, or any change in any applicable law, rule, or
regulation, or any change in the interpretation or administration thereof by any
Governmental Authority, central bank, or comparable agency charged with the
interpretation or administration thereof, or compliance by any Bank (or its
Applicable Lending Office) with any request or directive (whether or not having
the force of law) of any such Governmental Authority, central bank, or
comparable agency:
(i) shall subject such Bank (or its Applicable Lending
Office) to any tax, duty, or other charge with respect to any Libor Loans, its
Note, or its obligation to make Libor Loans, or change the basis of taxation of
any amounts payable to such Bank (or its Applicable Lending Office) under this
Agreement or its Note in respect of any Libor Loans (other than taxes imposed on
the overall net income of such Bank by the jurisdiction in which such Bank has
its principal office or such Applicable Lending Office);
(ii) shall impose, modify, or deem applicable any reserve,
special deposit, assessment, compulsory loan, or similar requirement (other than
the Reserve Requirement utilized in the determination of the Adjusted Libor
Rate) relating to any extensions of credit or other assets of, or any deposits
with or other liabilities or commitments of, such Bank (or its Applicable
Lending Office); or
(iii) shall impose on such Bank (or its Applicable Lending
Office) or on the London interbank market any other condition affecting this
Agreement or its Note or any of such extensions of credit or liabilities or
commitments;
and the result of any of the foregoing is to increase the cost to such Bank (or
its Applicable Lending Office) of making, Converting into, Continuing, or
maintaining any Libor Loans or its commitment to make Libor Loans or to reduce
any sum received or receivable by such Bank (or its Applicable Lending Office)
under this Agreement or its Note with respect to any Libor Loans or its
commitment to make Libor Loans, then the Borrower shall pay to such Bank on
demand such amount or amounts as will compensate such Bank for such increased
cost or reduction. If any Bank requests compensation by the Borrower under this
Section 4.1(a), the Borrower may, by notice to such Bank (with a copy to the
Agent), suspend the obligation of such Bank to make or Continue Libor Loans or
to Convert Base Rate Loans into Libor Loans, until the event or condition giving
rise to such request ceases to be in effect (in which case the provisions of
Section 4.4 shall be applicable); provided that such suspension shall not affect
the right of such Bank to receive the compensation so requested as to any Libor
Loans that remain outstanding as the date of such request.
AMENDED AND RESTATED LOAN AGREEMENT - Page 14
<PAGE> 20
(b) If, after the date hereof, any Bank shall have determined
that the adoption of any applicable law, rule, or regulation regarding capital
adequacy or any change therein or in the interpretation or administration
thereof by any Governmental Authority, central bank, or comparable agency
charged with the interpretation or administration thereof, or any request or
directive regarding capital adequacy (whether or not having the force of law) of
any such Governmental Authority, central bank, or comparable agency, has or
would have the effect of reducing the rate of return on the capital of such Bank
or any corporation controlling such Bank as a consequence of such Bank's
obligations hereunder to a level below that which such Bank or such corporation
could have achieved but for such adoption, change, request, or directive (taking
into consideration its policies with respect to capital adequacy), then from
time to time upon demand the Borrower shall pay to such Bank such additional
amount or amounts as will compensate such Bank for such reduction.
(c) Each Bank shall promptly notify the Borrower and the Agent
of any event of which it has knowledge, occurring after the date hereof, which
will entitle such Bank to compensation pursuant to this Section and will
designate a different Applicable Lending Office if such designation will avoid
the need for, or reduce the amount of, such compensation and will not, in the
judgment of such Bank, be otherwise disadvantageous to it. Any Bank claiming
compensation under this Section shall furnish to the Borrower and the Agent a
statement setting forth the additional amount or amounts to be paid to it
hereunder which shall be conclusive in the absence of manifest error. In
determining such amount, such Bank shall use reasonable averaging and
attribution methods.
Section 4.2 Limitation on Types of Loans. If on or prior to the first
day of any Interest Period for any Libor Loan:
(a) the Agent determines (which determination shall be
conclusive) that by reason of circumstances affecting the relevant market,
adequate and reasonable means do not exist for ascertaining the Libor Rate for
such Interest Period; or
(b) the Required Banks determine (which determination shall be
conclusive) and notify the Agent that the Adjusted Libor Rate will not
adequately and fairly reflect the cost to the Banks of funding Libor Loans for
such Interest Period;
then the Agent shall give the Borrower prompt notice thereof and so long as such
condition remains in effect, the Banks shall be under no obligation to make
additional Libor Loans, Continue Libor Loans, or to Convert Loans of any other
Type into Libor Loans and the Borrower shall, on the last day(s) of the then
current Interest Period(s) for the outstanding Libor Loans, either prepay such
Loans or Convert such Loans into another Type of Loan in accordance with the
terms of this Agreement.
Section 4.3 Illegality. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Bank or its Applicable
Lending Office to make, maintain, or fund Libor Loans hereunder, then such Bank
shall promptly notify the Borrower thereof and such Bank's obligation to make or
Continue Libor Loans and to Convert other Types of Loans into Libor Loans shall
be suspended until such time as such Bank may again make, maintain, and fund
Libor Loans (in which case the provisions of Section 4.4 shall be applicable).
Section 4.4 Treatment of Affected Loans. If the obligation of any Bank
to make a Libor Loan or to Continue, or to Convert Loans of any other Type into,
Libor Loans shall be suspended pursuant to Section 4.1 or 4.3 hereof (Loans of
such Type being herein called "Affected Loans" and such Type being herein called
the "Affected Type"), such Bank's Affected Loans shall be automatically
Converted into Base Rate Loans on the last day(s) of the then current Interest
Period(s) for Affected Loans (or, in the case of a Conversion required by
Section 4.3 hereof, on such earlier date as such Bank may be required to effect
a Conversion and specifies to the
AMENDED AND RESTATED LOAN AGREEMENT - Page 15
<PAGE> 21
Borrower with a copy to the Agent) and, unless and until such Bank gives notice
as provided below that the circumstances specified in Section 4.1 or 4.3 hereof
that gave rise to such Conversion no longer exist:
(a) to the extent that such Bank's Affected Loans have been so
Converted, all payments and prepayments of principal that would otherwise be
applied to such Bank's Affected Loans shall be applied instead to its Base Rate
Loans; and
(b) all Loans that would otherwise be made or Continued by
such Bank as Libor Loans shall be made or Continued instead as Base Rate Loans,
and all Loans of such Bank that would otherwise be Converted into Libor Loans
shall be Converted instead into (or shall remain as) Base Rate Loans.
If such Bank gives notice to the Borrower (with a copy to the Agent) that the
circumstances specified in Section 4.1 or 4.3 hereof that gave rise to the
Conversion of such Bank's Affected Loans pursuant to this Section 4.4 no longer
exist (which such Bank agrees to do promptly upon such circumstances ceasing to
exist) at a time when Libor Loans made by other Banks are outstanding, such
Bank's Base Rate Loans shall be automatically Converted, on the first day(s) of
the next succeeding Interest Period(s) for such outstanding Libor Loans, to the
extent necessary so that, after giving effect thereto, all Loans held by the
Banks holding Libor Loans and by such Bank are held pro rata (as to principal
amounts, Types, and Interest Periods) in accordance with the unpaid principal
amount of the Loans owing to each.
Section 4.5 Compensation. Upon the request of any Bank, the Borrower
shall pay to such Bank such amount or amounts as shall be sufficient (in the
reasonable opinion of such Bank) to compensate it for any loss, cost, or expense
(including loss of anticipated profits) incurred by it as a result of:
(a) any payment, prepayment, or Conversion of a Libor Loan for
any reason (including, without limitation, the acceleration of the Loans
pursuant to Section 10.2 or the repayment of Loans pursuant to Section 2.12(b))
on a date other than the last day of the Interest Period for such Loan; or
(b) any failure by the Borrower for any reason (including,
without limitation, the failure of any condition precedent specified in Article
5 to be satisfied) to Convert, Continue, or prepay a Libor Loan on the date for
such Conversion, Continuation, or prepayment specified in the relevant notice of
borrowing, prepayment, Continuation, or Conversion under this Agreement.
Section 4.6 Taxes.
(a) Any and all payments by the Borrower to or for the account
of any Bank or the Agent hereunder or under any other Loan Document shall be
made free and clear of and without deduction for any and all present or future
taxes, duties, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, excluding, in the case of each Bank and the
Agent, taxes imposed on its overall income, gross receipts, capital or gains and
franchise or similar taxes, in each case, imposed on it by the jurisdiction
under the laws of which such Bank (or its Applicable Lending Office) or the
Agent (as the case may be) is organized or any political subdivision thereof
(all such non-excluded taxes, duties, levies, imposts, deductions, charges,
withholdings, and liabilities being hereinafter referred to as "Taxes"). If the
Borrower shall be required by law to deduct any Taxes from or in respect of any
sum payable under this Agreement or any other Loan Document to any Bank or the
Agent, (i) the sum payable shall be increased as necessary so that after making
all required deductions (including deductions applicable to additional sums
payable under this Section 4.6) such Bank or the Agent receives an amount equal
to the sum it would have received had no such deductions been made, (ii) the
Borrower shall make such deductions, (iii) the Borrower shall pay the full
amount deducted to the relevant taxation authority or other authority in
accordance with applicable law, and (iv) the Borrower shall furnish to the Agent
the original or a certified copy of a receipt evidencing payment thereof.
AMENDED AND RESTATED LOAN AGREEMENT - Page 16
<PAGE> 22
(b) In addition, the Borrower agrees to pay any and all
present or future stamp or documentary taxes and any other excise or property
taxes or charges or similar levies which arise from any payment made under this
Agreement or any other Loan Document or from the execution or delivery of, or
otherwise with respect to, this Agreement or any other Loan Document
(hereinafter referred to as "Other Taxes").
(c) The Borrower agrees to indemnify each Bank and the Agent
for the full amount of Taxes and Other Taxes (including, without limitation, any
Taxes or Other Taxes imposed or asserted by any jurisdiction on amounts payable
under this Section 4.6) paid by such Bank or the Agent (as the case may be) and
any liability (including penalties, interest, and expenses) arising therefrom or
with respect thereto.
(d) Each Bank organized under the laws of a jurisdiction
outside the United States, on or prior to the date of its execution and delivery
of this Agreement in the case of each Bank listed on the signature pages hereof
and on or prior to the date on which it becomes a Bank in the case of each other
Bank, and from time to time thereafter if requested in writing by the Borrower
or the Agent (but only so long as such Bank remains lawfully able to do so),
shall provide the Borrower and the Agent with (i) Internal Revenue Service Form
1001 or 4224, as appropriate, or any successor form prescribed by the Internal
Revenue Service, certifying that such Bank is entitled to benefits under an
income tax treaty to which the United States is a party which reduces the rate
of withholding tax on payments of interest or certifying that the income
receivable pursuant to this Agreement is effectively connected with the conduct
of a trade or business in the United States, (ii) Internal Revenue Service Form
W-8 or W-9, as appropriate, or any successor form prescribed by the Internal
Revenue Service, and (iii) any other form or certificate required by any taxing
authority (including any certificate required by Sections 871(h) and 881(c) of
the Internal Revenue Code), certifying that such Bank is entitled to an
exemption from or a reduced rate of tax on payments pursuant to this Agreement
or any of the other Loan Documents.
(e) For any period with respect to which a Bank has failed to
provide the Borrower and the Agent with the appropriate form pursuant to this
Section 4.6 (unless such failure is due to a change in applicable treaty, law,
or regulation occurring subsequent to the date on which a form originally was
required to be provided in which case such Bank will comply with Section 4.6(d)
promptly after such change), such Bank shall not be entitled to indemnification
under Section 4.6(a) or 4.6(b) with respect to Taxes imposed by the United
States; provided, however, that should a Bank, which is otherwise exempt from or
subject to a reduced rate of withholding tax, become subject to Taxes because of
its failure to deliver a form required hereunder, the Borrower shall take such
steps as such Bank shall reasonably request to assist such Bank to recover such
Taxes and such Bank shall pay all of the Borrower's reasonable fees and expenses
incurred in connection therewith.
(f) If the Borrower is required to pay additional amounts to
or for the account of any Bank pursuant to this Section 4.6, then such Bank will
agree to use reasonable efforts to change the jurisdiction of its Applicable
Lending Office so as to eliminate or reduce any such additional payment which
may thereafter accrue if such change, in the judgment of such Bank, is not
otherwise disadvantageous to such Bank.
(g) Within thirty (30) days after the date of any payment of
Taxes, the Borrower shall furnish to the Agent the original or a certified copy
of a receipt evidencing such payment.
(h) Without prejudice to the survival of any other agreement
of the Borrower hereunder, the agreements and obligations of the Borrower
contained in this Section 4.6 shall survive the payment in full of the Notes.
(i) If a Bank shall become aware that it is entitled to claim
a refund from, or to a tax credit on any tax return filed by such Bank with, a
Governmental Authority in respect of Taxes or Other Taxes as to which it has
been indemnified by Borrower, or with respect to which Borrower has paid
additional amounts,
AMENDED AND RESTATED LOAN AGREEMENT - Page 17
<PAGE> 23
pursuant to this Section 4.6, it shall promptly notify Borrower of the
availability of such refund claim or right to a tax credit and shall, within
thirty (30) days after receipt of a request by Borrower, make a claim to such
Governmental Authority for such refund, or claim such credit on the next such
tax return filed by it, in each case, at Borrower's expense. If a Bank receives
a refund (including pursuant to a claim for refund made pursuant to the
preceding sentence) in respect of any Taxes or Other Taxes as to which it has
been indemnified by Borrower or with respect to which Borrower had paid
additional amounts pursuant to this Section 4.6 or receives benefit from such
tax credit, it shall within thirty (30) days from the date of the receipt of
such refund or such benefit pay over such refund or an amount equal to such
benefit to Borrower (but only to the extent of indemnity payments made, or
additional amounts paid, by Borrower under this Section 4.6 with respect to the
Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket
expenses of the Bank and without interest (other than interest paid by the
relevant Governmental Authority with respect to such refund); provided, however,
that Borrower, upon the request of such Bank, agrees to repay the amount paid
over to Borrower (plus penalties, interest or other charges) to such Bank in the
event such Bank is required to repay such refund to such Governmental Authority.
ARTICLE 5
Conditions Precedent
Section 5.1 Execution of Agreement. The obligation of each Bank to
enter into this Agreement is subject to the following conditions precedent:
(a) that the Agent shall have received on or before the
Closing Date all of the following, each dated (unless otherwise indicated) the
date hereof, in form and substance satisfactory to the Agent:
(i) Resolutions. Resolutions of the Board of Directors of
the Borrower certified by its Secretary or an Assistant Secretary which
authorize the execution, delivery, and performance by the Borrower of this
Agreement and the other Transaction Documents to which the Borrower is or is to
be a party;
(ii) Incumbency Certificate. A certificate of incumbency
certified by the Secretary or an Assistant Secretary of the Borrower certifying
the name of each officer of the Borrower (A) who is authorized to sign this
Agreement and each of the other Transaction Documents to which the Borrower is
or is to be a party (including the certificates contemplated herein) together
with specimen signatures of each such officer and (B) who will, until replaced
by other officers duly authorized for that purpose, act as its representative
for the purposes of signing documents and giving notices and other
communications in connection with this Agreement and the transactions
contemplated hereby;
(iii) Certificate of Incorporation. The certificate of
incorporation of each of Borrower, Mid-West and HealthAxis.com, Inc. certified
by the Secretary of State of the state of their respective states of
organization and dated a current date;
(iv) Bylaws. The bylaws of the Borrower and Mid-West
certified by a Secretary or an Assistant Secretary of Borrower and, if
available, the bylaws of HealthAxis.com, Inc. certified by a Secretary or an
Assistant Secretary of Borrower;
(v) Governmental Certificates. Certificates of the
appropriate government officials of the state of incorporation of each of
Borrower, Mid-West and HealthAxis.com, Inc. as to its existence and good
standing, each dated a current date;
(vi) Notes. The Notes executed by the Borrower;
AMENDED AND RESTATED LOAN AGREEMENT - Page 18
<PAGE> 24
(vii) Pledge Agreement, Turnover Agreement and Stock
Certificates. The Pledge Agreement executed by the Borrower, the Turnover
Agreement executed by LM Finance, and stock certificates and stock powers for
100% of the Capital Stock of Mid-West and 4,000,000 shares of the Capital Stock
of HealthAxis.com, Inc.;
(viii) Opinion of Counsel. A favorable opinion of legal
counsel to the Borrower, as to the matters set forth in Exhibit "B" hereto, and
such other matters as the Agent may reasonably request; and
(ix) Attorneys' Fees and Expenses. Evidence that the costs
and expenses (including reasonable attorney's fees) referred to in Section 12.1,
to the extent incurred, shall have been paid in full by the Borrower;
(b) No Default. No Default hereunder or under the 8.75% Senior
Note shall have occurred and be continuing or would result from the execution of
this Agreement or consummation of the Transactions;
(c) Representations and Warranties. All of the representations
and warranties contained in Article 6 hereof and in the other Loan Documents
shall be true, correct and complete in all material respects; and
(d) Transactions. The Repayment and the Purchases shall have
occurred, Agent shall have received evidence that the Transfers, the Assumption
and the Release shall have occurred and Agent shall have received copies of all
Transaction Documents.
(e) Additional Documentation. The Agent shall have received
such additional approvals, opinions, or documents as the Agent or its legal
counsel, Jenkens & Gilchrist, a Professional Corporation, may reasonably
request.
ARTICLE 6
Representations and Warranties
To induce the Agent and the Banks to enter into this Agreement, the
Borrower represents and warrants to the Agent and the Banks that:
Section 6.1 Corporate Existence. Each of the Borrower and Mid-West (a)
is a corporation duly organized, validly existing, and in good standing under
the laws of the jurisdiction of its incorporation or organization; (b) has all
requisite power and authority to own its assets and carry on its business as now
being or as proposed to be conducted; and (c) is qualified to do business in all
jurisdictions in which the nature of its business makes such qualification
necessary and where failure to so qualify would have a Material Adverse Effect.
The Borrower has the corporate power and authority and legal right to execute,
deliver, and perform its obligations under this Agreement and the other Loan
Documents to which it is or may become a party.
Section 6.2 Financial Statements. The Borrower has delivered to the
Agent and the Banks financial statements for Mid-West as at and for the fiscal
year ended December 31, 1999. Such financial statements are complete and
correct, have been prepared in accordance with SAP, and fairly and accurately
present the financial condition of Mid-West as of the date indicated therein and
the results of operations for the period indicated therein subject to normal
year end audit adjustments.
Section 6.3 Corporate Action; No Breach. The execution, delivery, and
performance by the Borrower of this Agreement and the other Transaction
Documents to which the Borrower is or may become a
AMENDED AND RESTATED LOAN AGREEMENT - Page 19
<PAGE> 25
party and compliance with the terms and provisions hereof and thereof have been
duly authorized by all requisite corporate action on the part of the Borrower
and do not and will not (a) violate or conflict with, or result in a breach of,
or require any consent under (i) the certificate of incorporation or bylaws of
the Borrower or Mid-West, (ii) any applicable law, rule, or regulation or any
order, writ, injunction, or decree of any Governmental Authority or arbitrator,
or (iii) any agreement or instrument to which the Borrower or Mid-West is a
party or by which any of them or any of their property is bound or subject
(except for such agreements and instruments which if so violated or breached
could not reasonably be expected to have a Material Adverse Effect and such
consents thereunder which if not obtained could not reasonably be expected to
have a Material Adverse Effect), or (b) constitute a default under any such
agreement or instrument, or result in the creation or imposition of any Lien
upon any of the property of the Borrower or Mid-West. Without limiting the
generality of the foregoing, (i) all Debt outstanding hereunder, is permitted to
be incurred by the Borrower pursuant to Section 8.4 of the 8.75% Senior Note
Agreement and (ii) all Liens granted pursuant to the Transactions are permitted
pursuant to Section 8.5 of the 8.75% Senior Note Agreement.
Section 6.4 Operation of Business. Mid-West possesses all licenses,
permits, franchises, patents, copyrights, trademarks, and tradenames, or rights
thereto, necessary to conduct its business substantially as now conducted and as
currently proposed to be conducted without Material Adverse Effect and Mid-West
is not in violation in any material respect of any valid rights of others with
respect to any of the foregoing.
Section 6.5 Litigation and Judgments. As of the date hereof, there is
no action, suit, investigation, or proceeding before or by any Governmental
Authority or arbitrator pending, or to the knowledge of the Borrower, threatened
against or affecting Mid-West which, if adversely determined, could reasonably
be expected to have a Material Adverse Effect. There are no unstayed or
undischarged judgments against Mid-West which would constitute an Event of
Default under Section 10.1 (h).
Section 6.6 Rights in Properties; Liens. Mid-West has good and
indefeasible title to or valid leasehold interests in its properties, real and
personal, including the properties and leasehold interests reflected in the
financial statements described in Section 6.2, and none of the properties or
leasehold interests of Mid-West is subject to any Lien, except as permitted by
Section 8.2.
Section 6.7 Enforceability. This Agreement constitutes, and the other
Transaction Documents to which the Borrower is party, when executed and
delivered, shall constitute the legal, valid, and binding obligations of the
Borrower, enforceable against the Borrower in accordance with their respective
terms, except as limited by bankruptcy, insolvency, or other laws of general
application relating to the enforcement of creditors' rights and general
principles of equity.
Section 6.8 Approvals. No authorization, approval, or consent of, and
no filing or registration with, any Governmental Authority or third party is or
will be necessary for the execution, delivery, or performance by the Borrower of
this Agreement and the other Transaction Documents to which the Borrower is or
may become a party or for the validity or enforceability thereof. Without
limiting the generality of the forgoing, no authorization, approval, or consent
of, and no filing or registration with, any Insurance Regulatory Authority is
required for the pledge of the Mid-West Capital Stock by Borrower.
Section 6.9 Debt. Mid-West has no Debt, except as permitted by Section
8.1.
Section 6.10 Taxes. Mid-West has filed all tax returns (federal, state,
and local) required to be filed, including all income, franchise, employment,
property, and sales tax returns, and has paid all of its liabilities for taxes,
assessments, governmental charges, and other levies that are due and payable
except for those liabilities whose amount, applicability, or validity is being
contested in good faith by appropriate proceedings being diligently pursued, and
for which adequate reserves have been established. The Borrower knows of no
pending
AMENDED AND RESTATED LOAN AGREEMENT - Page 20
<PAGE> 26
investigation of Mid-West by any taxing authority or of any pending but
unassessed material tax liability of Mid-West.
Section 6.11 Margin Securities. Neither the Borrower nor Mid-West 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 (within
the meaning of Regulations T, U, or X of the Board of Governors of the Federal
Reserve System), and no part of the proceeds of any Loan will be used to
purchase or carry any margin stock or to extend credit to others for the purpose
of purchasing or carrying margin stock.
Section 6.12 ERISA. Mid-West is in compliance in all material respects with
all applicable provisions of ERISA. Neither a Reportable Event nor a Prohibited
Transaction has occurred and is continuing with respect to any Plan. No notice
of intent to terminate a Plan has been filed, nor has any Plan been terminated.
No circumstances exist which constitute grounds entitling the PBGC to institute
proceedings to terminate, or appoint a trustee to administer, a Plan, nor has
the PBGC instituted any such proceedings. Mid-West has not completely or
partially withdrawn from a Multiemployer Plan. Mid-West has met its minimum
funding requirements under ERISA with respect to all of its Plans, and the
present value of all vested benefits under each Plan do not exceed the fair
market value of all Plan assets allocable to such benefits, as determined on the
most recent valuation date of the Plan and in accordance with ERISA. Mid-West
has incurred no liability to the PBGC under ERISA.
Section 6.13 Disclosure. No statement, information, report, representation,
or warranty made by the Borrower in respect of Mid-West contains any untrue
statement of a material fact or omits to state any material fact necessary to
make the statements therein not misleading in light of the circumstances under
which such statement, information, report, representation or warranty was
provided. There is no fact known to the Borrower which has had or which could
reasonably be expected to have a material adverse effect on (a) the properties,
prospects, business, operations, condition (financial or otherwise),
liabilities, or capitalization of Mid-West, or (b) the value of the Collateral
or the validity, priority or perfection of the Lien on the Collateral, or (c)
the validity or enforceability of any of the Loan Documents or the rights and
remedies of the Banks or the Agent thereunder.
Section 6.14 Subsidiaries; Capitalization. The Borrower owns 100% of the
Capital Stock of Mid-West. Mid-West is a duly organized and validly existing
insurance company organized under the laws of the State of Tennessee. Mid-West's
authorized Capital Stock is 2,000,000 shares of common stock, $2.00 par value,
1,000,000 shares of which are issued and outstanding. HealthAxis.com, Inc.'s
authorized Capital Stock is 100,000,000 shares of common stock, no par value,
per share, and 20,000,000 shares of Preferred Stock, par value $1.00 per share.
All of the outstanding Capital Stock of Mid-West and the Capital Stock of
HealthAxis.com, Inc. pledged under the terms of the Pledge Agreement have been
validly issued, are fully paid, and are nonassessable. There are no outstanding
subscriptions, options, warrants, calls, or rights (including preemptive rights)
to acquire, and no outstanding securities or instruments convertible into,
Capital Stock of either Mid-West or the Capital Stock of HealthAxis.com, Inc.
pledged under the terms of the Pledge Agreement. Except for this Agreement, the
Pledge Agreement, the 8.75% Senior Note Agreement, that certain Shareholder
Agreement, dated as of January 7, 2000, by and among HealthAxis.com, Inc. and
certain Persons named therein and that certain Registration Rights Agreement,
dated January 7, 2000, between HealthAxis.com, Inc. and the Borrower, neither
the Borrower nor the Collateral is subject to any agreement (including without
limitation, any voting rights agreement, registration rights agreement or
shareholder agreement) restricting or otherwise effecting the right to vote on
matters with respect to the Collateral, the right to buy or sell any of the
Collateral, the right to register the Collateral under any securities laws and
regulations, the right to transfer the Collateral or any other right, title or
interest in or to the Collateral. The Collateral is not subject to any
restriction on transfer or assignment except for compliance with applicable
securities laws and regulations and except that the ability of the Agent to sell
the Mid-West Capital Stock under the terms of the Pledge Agreement is subject to
compliance with insurance laws and regulations applicable to the change in
control of insurance companies. Neither Mid-West
AMENDED AND RESTATED LOAN AGREEMENT - Page 21
<PAGE> 27
West nor HealthAxis.com, Inc. is required to submit reports to any securities
exchange or the Securities and Exchange Commission and the Collateral is not
listed on any securities exchange.
Section 6.15 Agreements. Mid-West is not a party to any indenture, loan, or
credit agreement, or to any lease or other agreement or instrument, or subject
to any charter or corporate restriction that could reasonably be expected to
have a Material Adverse Effect in absence of a default thereunder. Mid-West is
not in default in any material respect in the performance, observance, or
fulfillment of any of the obligations, covenants, or conditions contained in any
agreement or instrument material to its business to which it is a party.
Section 6.16 Compliance with Laws. Mid-West is not in violation in any
material respect of any applicable law, rule, regulation, order, or decree of
any Governmental Authority or arbitrator, including, without limitation, any
Environmental Law.
Section 6.17 Investment Company Act. Neither the Borrower nor Mid-West is
an "investment company" within the meaning of the Investment Company Act of
1940, as amended.
Section 6.18 Public Utility Holding Company Act. Neither the Borrower nor
Mid-West is a "holding company" or a "subsidiary company" of a "holding company"
or an "affiliate" of a "holding company" or a "public utility" within the
meaning of the Public Utility Holding Company Act of 1935, as amended.
Section 6.19 Environmental Matters. Except for instances of noncompliance
with or exceptions to the following that should not have, individually or in the
aggregate, a Material Adverse Effect: (i) no Hazardous Materials exist on,
about, or within or have been used, generated, stored, transported, disposed of
on, or released from any of the properties of Mid-West except in compliance with
applicable Environmental Laws and (ii) the use which Mid-West makes and intends
to make of its properties will not result in the use, generation, storage,
transportation, accumulation, disposal, or release of any Hazardous Material on,
in, or from any of its properties except in compliance with applicable
Environmental Laws.
Section 6.20 Labor Disputes and Acts of God. Neither the business nor the
properties of Mid-West are affected by any fire, explosion, accident, strike,
lockout, or other labor dispute, drought, storm, hail, earthquake, embargo, act
of God or of the public enemy, or other casualty (whether or not covered by
insurance) that is having or could have a Material Adverse Effect.
Section 6.21 Year 2000 Compliance.
(a) Mid-West has (i) undertaken a detailed review and assessment of
all areas within its business and operations that could be adversely affected by
the "Year 2000 Problem" (that is, the risk that computer applications used by
Mid-West may be unable to recognize and perform properly date-sensitive
functions involving certain dates prior to and any date after December 31,
1999), (ii) developed a detailed plan and time line for addressing the Year 2000
Problem on a timely basis, and (iii) to date, implemented that plan in
accordance with that timetable in all material respects. Mid-West reasonably
anticipates that all computer applications that are material to its business and
operations will on a timely basis be able to perform properly date-sensitive
functions for all dates before and after January 1, 2000 (that is, be "Year 2000
Ready").
(b) Mid-West has inquired with each of its key suppliers, vendors
and customers as to whether such Persons are Year 2000 Ready in all material
respects. Mid-West has not received any indication that leads it to believe that
any such key supplier, vendor or customer will fail to be Year 2000 Ready in a
manner that will result in a Material Adverse Effect. For purposes hereof, "key
suppliers, vendors and customers" refers to those suppliers, vendors and
customers of Mid-West the business failure of which would with reasonable
probability be expected to have a Material Adverse Effect.
AMENDED AND RESTATED LOAN AGREEMENT - Page 22
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Section 6.22 Collateral. Borrower owns, and with respect to Collateral
acquired after the date hereof, Borrower will own, legally and beneficially, the
Collateral free and clear of any Lien, security interest, pledge, claim, or
other encumbrance or any right or option on the part of any third Person to
purchase or otherwise acquire the Collateral or any part thereof, except for the
security interest granted under the Pledge Agreement. Borrower has the
unrestricted right to pledge the Collateral as contemplated by the Pledge
Agreement. The principal place of business and chief executive office of
Borrower, and the office where Borrower keeps its books and records, is located
at the address for notices of Borrower set forth in this Agreement.
ARTICLE 7
Positive Covenants
The Borrower covenants and agrees that, as long as the Obligations or any
part thereof are outstanding, the Borrower will perform and observe the
following positive covenants unless the Required Banks otherwise agree:
Section 7.1 Reporting Requirements. The Borrower will furnish to the Agent
and each Bank:
(a) Quarterly Financial Statements. As soon as available, and in
any event within ninety (90) days after the end of each of the quarters of each
fiscal year of the Borrower commencing with the fiscal quarter ended March 31,
2000, (i) a copy of an unaudited financial report of the Borrower and the
Subsidiaries as of the end of such fiscal quarter and for the portion of the
fiscal year then ended containing, on a consolidated, consolidating and business
segment basis, balance sheets and statements of income, stockholders' equity,
and cash flow, in each case setting forth in comparative form the figures for
the corresponding period of the preceding fiscal year, all in reasonable detail
certified by the chief financial officer of the Borrower to have been prepared
in accordance with GAAP (except for such exceptions therefrom which are
disclosed therein) and to fairly and accurately present (subject to year-end
audit adjustments) the financial condition and results of operations of the
Borrower and the Subsidiaries, on a consolidated, consolidating and business
segment basis, at the date and for the periods indicated therein and (ii) a copy
of an unaudited financial report of Mid-West as of the end of such fiscal
quarter and for the portion of the fiscal year then ended prepared in accordance
with SAP as filed with the applicable Insurance Regulatory Authority and
certified by the chief financial officer of the Borrower to have been prepared
in accordance with SAP and to fairly and accurately present (subject to year-end
audit adjustments) the financial condition and results of operations of
Mid-West, at the date and for the periods indicated therein;
(b) Notice of Litigation. Promptly after the commencement thereof,
notice of all actions, suits, and proceedings by or before any Governmental
Authority or arbitrator affecting the Borrower or Mid-West which, if determined
adversely to the Borrower or Mid-West, could have a Material Adverse Effect;
(c) Notice of Default. As soon as possible and in any event within
five (5) days after the Borrower becomes aware of any Default, a written notice
setting forth the details of such Default and the action that the Borrower has
taken and proposes to take with respect thereto;
(d) Notice of Material Adverse Change. As soon as possible and in
any event within five (5) days after the Borrower becomes aware of occurrence
thereof, written notice of any matter that could have a Material Adverse Effect;
and
(e) General Information. Promptly, such other information
concerning the Borrower or Mid-West (including financial statements of and other
reports regarding Mid-West) as the Agent or any Bank may from time to time
reasonably request.
AMENDED AND RESTATED LOAN AGREEMENT - Page 23
<PAGE> 29
Section 7.2 Maintenance of Existence; Conduct of Business. The Borrower
will, and will cause Mid-West to, preserve and maintain its corporate existence
and all of its leases, privileges, licenses, permits, franchises,
qualifications, and rights that are necessary or desirable in the ordinary
conduct of its business. The Borrower will, and will cause Mid-West to, conduct
its business in an orderly and efficient manner in accordance with good business
practices.
Section 7.3 Maintenance of Properties. The Borrower will, and will cause
Mid-West to, maintain, keep, and preserve all of its properties necessary or
useful in the proper conduct of its business in good repair, working order, and
condition and make all necessary repairs, renewals, replacements, betterments,
and improvements thereof.
Section 7.4 Taxes and Claims. The Borrower will, and will cause Mid-West
to, pay or discharge at or before maturity or before becoming delinquent (a) all
taxes, levies, assessments, and governmental charges imposed on it or its income
or profits or any of its property, and (b) all lawful claims for labor,
material, and supplies, which, if unpaid, might become a Lien upon any of its
property; provided, however, that neither the Borrower nor Mid-West shall be
required to pay or discharge any tax, levy, assessment, or governmental charge
or claim for labor, material, or supplies whose amount, applicability, or
validity is being contested in good faith by appropriate proceedings being
diligently pursued and for which adequate reserves have been established.
Section 7.5 Insurance. The Borrower will, and will cause Mid-West to, keep
insured by financially sound and reputable insurers all property of a character
usually insured by Persons engaged in the same or similar business similarly
situated against loss or damage of the kinds and in the amounts customarily
insured against by such Persons and carry such other insurance as is usually
carried by such Persons.
Section 7.6 Inspection Rights. When no Event of Default exists and subject
to all confidentiality agreements entered into by the Borrower or Mid-West in
the ordinary course of its business (including those entered into in connection
with equity and asset acquisitions and the acquisition and use of intellectual
property) and the limitations on disclosure imposed therein, the Borrower will,
and will cause Mid-West to, permit representatives of the Agent and each Bank,
during normal business hours and upon no less than two (2) Business Days prior
notice, to examine, copy, and make extracts from its books and records, to visit
and inspect its properties, and to discuss its business, operations, and
financial condition with its officers, employees, and independent certified
public accountants. If an Event of Default exists, the Borrower will, and will
cause Mid-West to, permit representatives of the Agent and each Bank, during
normal business hours but without prior notice, to examine, copy, and make
extracts from its books and records, to visit and inspect its properties, and to
discuss its business, operations, and financial condition with its officers,
employees, and independent certified public accountants.
Section 7.7 Keeping Books and Records. The Borrower will, and will cause
Mid-West to, maintain proper books of record and account in which full, true,
and correct entries in conformity with GAAP (and with respect to Mid-West, SAP)
shall be made of all dealings and transactions in relation to its business and
activities.
Section 7.8 Compliance with Laws. The Borrower will, and will cause
Mid-West to, comply in all material respects with all applicable laws, rules,
regulations, orders, and decrees of any Governmental Authority or arbitrator.
Section 7.9 Compliance with Agreements. The Borrower will, and will cause
Mid-West to, comply in all material respects with all agreements, contracts, and
instruments binding on it or affecting its properties or business.
AMENDED AND RESTATED LOAN AGREEMENT - Page 24
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Section 7.10 Further Assurances. The Borrower will, and will cause Mid-West
to, execute and deliver such further documents and take such further action as
may be requested by the Agent to carry out the provisions and purposes of this
Agreement and the other Transaction Documents.
Section 7.11 Year 2000 Compliance. The Borrower will promptly notify the
Agent in the event the Borrower discovers or determines that any computer
application (including those of its key suppliers, vendors and customers) will
not be Year 2000 Ready on a timely basis and a Material Adverse Effect will
occur as a result thereof.
ARTICLE 8
Negative Covenants
The Borrower covenants and agrees that, as long as the Obligations or any
part thereof are outstanding, the Borrower will perform and observe the
following negative covenants unless the Required Banks otherwise agree:
Section 8.1 Debt. The Borrower will not permit Mid-West to incur, create,
assume, or permit to exist any Debt, except:
(a) Debt in the amount disclosed on Schedule 8.1 (including any
advances made on or after the Closing Date pursuant to the commitments to lend
disclosed on Schedule 8.1) hereto and any extensions, renewals or refinancings
of such existing Debt so long as (i) the principal amount of such Debt after
such renewal, extension or refinancing shall not exceed the principal amount of
such Debt which was outstanding immediately prior to such renewal, extension or
refinancing, and (ii) such Debt shall not be secured by any assets other than
assets securing such Debt, if any, prior to such renewal, extension or
refinancing;
(b) Guaranties given in the ordinary course of business with
respect to surety and appeal bonds, performance and return-of-money bonds and
other similar obligations; and
(c) Debt constituting obligations to reimburse worker's
compensation insurance companies for claims paid by such companies on Mid-West's
behalf in accordance with the policies issued to Mid-West.
Section 8.2 Limitation on Liens. The Borrower will not permit Mid-West to
incur, create, assume, or permit to exist any Lien upon any of its property,
whether now owned or hereafter acquired, except the following:
(a) Liens disclosed on Schedule 8.2 hereto, and Liens created and
existing in connection with any extensions, renewals or refinancings of the Debt
secured by such Liens as permitted under Section 8.1(a) provided that (i) no
such Lien is expanded to cover any additional property (other than after
acquired title in or on such property and proceeds of the existing collateral
and other than property having no greater fair market value than the existing
collateral for which such property is being substituted as new collateral) after
the date hereof; and (ii) no such Lien is spread to secure any additional Debt
after the date hereof;
(b) Encumbrances consisting of easements, zoning restrictions, or
other restrictions on the use of real property that do not (individually or in
the aggregate) materially affect the value of the property encumbered thereby or
materially impair the ability of Mid-West to use such property in its business,
and none of which is violated in any material respect by existing or proposed
structures or land use;
AMENDED AND RESTATED LOAN AGREEMENT - Page 25
<PAGE> 31
(c) Liens (other than Liens relating to liabilities resulting from
the violation of Environmental Laws or ERISA) for taxes, assessments, or other
governmental charges that are not delinquent or which are being contested in
good faith and for which adequate reserves have been established;
(d) Liens of mechanics, materialmen, warehousemen, carriers, or
other similar statutory Liens securing obligations that are not yet due and are
incurred in the ordinary course of business or which are being contested in good
faith and for which adequate reserves have been established;
(e) Liens resulting from good faith deposits to (i) secure payments
of workmen's compensation or other social security programs, (ii) secure the
performance of tenders, statutory obligations, surety and appeal bonds, bids,
contracts (other than for payment of Debt), or leases made in the ordinary
course of business, (iii) satisfy escrow obligations under reinsurance
agreements and (iv) satisfy statutory obligations imposed by applicable
Insurance Regulatory Authorities;
(f) Purchase-money Liens on any property hereafter acquired or a
Lien incurred in connection with any conditional sale or other title retention
agreement or Capital Lease Obligation; provided that:
(i) any property subject to the foregoing is acquired by
Mid-West in the ordinary course of its business and the Lien on the property
attaches concurrently or within sixty (60) days after the acquisition thereof;
(ii) the Debt secured by any Lien so created, assumed, or
existing shall not exceed the lesser of the cost or fair market value at the
time of acquisition of the property covered thereby;
(iii) each such Lien shall attach only to the property so
acquired; and
(iv) the Debt incurred is permitted by Section 8.1(d);
(g) Any extension, renewal or replacement of any of the Liens
described in clauses (b) through (f), provided that Liens permitted thereby
shall not be spread to cover any additional Debt or property (other than after
acquired title in or on such property and proceeds of the existing collateral
and other than property having no greater fair market value than the existing
collateral for which such property is being substituted as collateral);
(h) Any attachment or judgment Lien not constituting an Event of
Default;
(i) Any interest or title of a licensor, lessor or sublessor under
any license or lease incurred in the ordinary course of business; and
(j) Liens against equipment arising from precautionary UCC
financing statement filings regarding operating leases entered into by Mid-West
in the ordinary course of business.
Mid-West shall not enter into or assume any agreement prohibiting the creation
or assumption of any Lien upon its properties, whether now owned or hereafter
acquired unless such agreement permits the granting of Liens to secure the
Obligations; provided that, in connection with any Debt permitted to be incurred
under Section 8.1 which is used to finance the acquisition of an asset and any
Lien securing the payment thereof permitted by this Section 8.2, Mid-West may
agree that it will not permit any other Liens to encumber the asset so acquired.
Except as provided herein, as disclosed in Schedule 8.2 and as may be imposed by
any applicable laws and regulations, Borrower will not directly or indirectly
create or otherwise cause or suffer to exist or become effective any consensual
encumbrance or restriction of any kind on the ability of Mid-West to: (1) pay
dividends or make
AMENDED AND RESTATED LOAN AGREEMENT - Page 26
<PAGE> 32
any other distribution on any of its Capital Stock; or (2) subject to
subordination provisions, pay any Debt owed to the Borrower.
Section 8.3 Mergers, Etc. The Borrower will not and will not permit
Mid-West to become a party to a merger or consolidation, or purchase or
otherwise acquire all of the properties of any Person or purchase or acquire
properties of a Person with a book value in excess of ten percent (10%) of the
book value of all properties of such Person (as determined as of the date of
acquisition) or any shares or other evidence of beneficial ownership of any
Person, or wind-up, dissolve, or liquidate itself.
Section 8.4 Investments. The Borrower will not permit Mid-West to make or
permit to remain outstanding any advance, loan, extension of credit, or capital
contribution to or investment in any Person, or purchase or own any stock,
bonds, notes, debentures, or other securities of any Person, or be or become a
joint venturer with or partner of any Person or purchase all the properties of a
Person or purchase properties of a Person with a book value in excess of ten
percent (10%) of the book value of all properties of such Person determined as
of the date of acquisition (all such transactions being herein called
"Investments"), except:
(a) Mid-West may make Investments in readily marketable direct
obligations of the United States of America or any agency thereof or readily
marketable direct obligations guaranteed or insured as to principal and interest
by the United States of America or any agency thereof;
(b) Mid-West may make Investments in (i) fully insured certificates
of deposit; and (ii) other certificates of deposit issued by any commercial bank
operating in the United States of America having capital and surplus in excess
of $500,000,000 and rated in one of the four highest unsecured long-term debt
ratings of Standard & Poor's Ratings Group ("S&P") or Moody's Investors Service,
Inc. ("Moody's");
(c) Mid-West may make Investments in commercial paper of a domestic
issuer if at the time of purchase such paper is rated in one of the two highest
ratings of S&P or Moody's;
(d) Mid-West may in the ordinary course of business (i) make
advances to agents, officers, directors and employees for business expenses
incurred in the ordinary course of business; and (ii) make advances to agents
against future commissions in accordance with past practices or standard
industry practice;
(e) Mid-West may hold Investments received in connection with the
bankruptcy or reorganization of vendors, suppliers and customers and in
connection with the settlement of delinquent obligations of, and disputes with,
vendors, customers and suppliers arising in the ordinary course of business;
(f) Mid-West may make extensions of trade credit in the ordinary
course of business; and
(g) Mid-West may make Investments in the following:
(i) Debt securities (excluding CMO Derivative Investments, as
defined below) rated BBB- or better by S& P, Baa3 or better by Moody's or NAIC-2
or better by the NAIC; provided that any such Investment which, at any time
after which it is made ceases to meet such rating requirements, shall not be
prohibited until a period of forty-five (45) days after the date on which such
rating requirement is no longer met;
(ii) preferred stock by issuers whose debt instruments meet the
rating requirements specified in clause (g)(i) above; provided that the
aggregate book value of the Investments made pursuant to the permissions of this
clause (h)(ii) shall not exceed twenty percent (20%) of the statutory surplus of
Mid-West determined in accordance with SAP;
AMENDED AND RESTATED LOAN AGREEMENT - Page 27
<PAGE> 33
(iii) insurance policy loans made to insureds in the ordinary
course of business; and
(iv) CMO Derivative Investments of Mid-West in an amount not to
exceed, in the aggregate five percent (5%) of the statutory surplus of Mid-West
determined in accordance with SAP (As used herein, the term "CMO Derivative
Investments" means any interest in a volatile tranche of a collateralized
mortgage obligation, including without limitation, such interests typically
classified as z bonds, inverse floaters, PAC II, PAC III, Ioettes, support
bonds, interest-only investments, principal-only investments, residuals, inverse
IO's and super floaters); and
(h) Mid-West may maintain the Investments described on Schedule 8.4
hereto.
Mid-West may not make investments under any of the permissions of this Section
8.4 in any Subsidiary engaged in the credit card business (including, without
limitation, United Credit National Bank) or any Subsidiary owning such a
Subsidiary.
Section 8.5 Transactions With Affiliates. The Borrower will not permit
Mid-West to enter into any transaction, including, without limitation, the
purchase, sale, or exchange of property or the rendering of any service, with
any Affiliate of the Borrower, except in the ordinary course of and pursuant to
the reasonable requirements of Mid-West's business and upon fair and reasonable
terms no less favorable to Mid-West than would be obtained in a comparable
arms-length transaction with a Person not an Affiliate of the Borrower or such
Subsidiary.
Section 8.6 Disposition of Property. The Borrower will not permit Mid-West
to sell, lease, assign, transfer, or otherwise dispose of any of its property,
except (a) dispositions of inventory, in the ordinary course of business,
including any sale or other transfer pursuant to a securitization; (b)
dispositions of assets reasonably and in good faith determined by Mid-West to be
obsolete or no longer necessary to its business if no Default exists or would
result therefrom; (c) licenses, sublicenses, leases and subleases of
intellectual property, general intangibles, or other property (other than
Capital Stock), in each case in the ordinary course of business, that do not
materially interfere with the business of Mid-West; (d) the sale of overdue
accounts receivable arising in the ordinary course of business, but only in
connection with the compromise or settlement thereof; (e) the disposition of
property by Mid-West in connection with reinsurance treaties or agreements
entered into in the ordinary course of business; and (f) the disposition of
Investments in the ordinary course of business in connection with the management
of its investment portfolio provided the proceeds thereof are utilized to
satisfy policy liabilities and expenses incurred in the ordinary course of
business, are reinvested in accordance with Section 8.4 or are held as cash. The
Borrower shall not sell or otherwise dispose of any of its assets for any
consideration with a value that is less than a value equivalent to the value of
the assets which have been sold or otherwise disposed of, with such equivalent
value being conclusively determined for purposes of this covenant by a written
resolution of the Board of Directors of the Borrower.
Section 8.7 Lines of Business. The Borrower will not permit Mid-West to
engage in any line or lines of business activity other than the insurance
business, other businesses in which it is engaged on the date hereof, any
businesses reasonably related thereto and the sale of products or services
utilizing the existing channels of distribution currently utilized by Mid-West.
Section 8.8 Restrictions on Insurance Subsidiaries. Borrower will not
permit any Insurance Subsidiary to make any Investment in, provide any Guarantee
for the benefit of, or make any type of deposit with any Subsidiary engaged in
the credit card business (including, without limitation, United Credit National
Bank) or any Subsidiary owning such a Subsidiary.
AMENDED AND RESTATED LOAN AGREEMENT - Page 28
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Section 8.9 Prepayment of Debt. The Borrower will not prepay the Debt
outstanding pursuant to the 8.75% Senior Note Agreement except (i) for
prepayments resulting from a refinancing of the entire amount thereof; (ii)
Borrower may prepay such Debt if the Consolidated Net Worth immediately prior to
such prepayment is Six Hundred Fifty Million Dollars ($650,000,000) or more; and
(iii) Borrower may make mandatory prepayments pursuant to Section 5.1 of the
8.75% Senior Note Agreement.
ARTICLE 9
Financial Covenants
The Borrower covenants and agrees that, as long as the Obligations or any
part thereof are outstanding, the Borrower will perform and observe the
following financial covenants unless the Required Banks otherwise agree:
Section 9.1 Mid-West Capital. The Borrower shall cause the statutory
capital and surplus of Mid-West, as determined in accordance with SAP, at all
times to be no less than Fifty Million Dollars ($50,000,000).
ARTICLE 10
Default
Section 10.1 Events of Default. Each of the following shall be deemed an
"Event of Default":
(a) The Borrower shall fail to pay (i) when due any principal
payable under any Loan Document or any part thereof; (ii) within three (3)
Business Days of the date due any interest or fees payable under the Loan
Documents or any part thereof; and (iii) within five (5) Business Days after the
date the Borrower receives written notice of the failure to pay when due any
other Obligation or any part thereof.
(b) Any representation, warranty or certification made or deemed
made by the Borrower or any Obligated Party (or any of their respective
officers) in any Loan Document or in any certificate, report, notice, or
financial statement furnished at any time in connection with this Agreement
shall be false, misleading, or erroneous in any material respect when made or
deemed to have been made.
(c) The Borrower shall fail to perform, observe, or comply with any
covenant, agreement, or term contained in clauses (a), (b), (c) and (d) of
Section 7.1, Article 8, or Article 9 of this Agreement. LM Finance shall fail to
perform, observe, or comply with any covenant, agreement, or term contained in
Sections 1, 5, 8 or 9 of the Turnover Agreement. LM Finance shall fail to
perform, observe, or comply with any covenant, agreement, or term contained of
the Turnover Agreement other than the Sections referred to in the prior sentence
and such failure shall continue for a period of ten (10) days after the date the
Agent or any Bank provides LM Finance with notice thereof. The Borrower or any
Obligated Party shall fail to perform, observe, or comply with any other
covenant, agreement, or term contained in this Agreement or any other Loan
Document (other than covenants to pay the Obligations) and such failure shall
continue for a period of ten (10) days after the earlier of (i) the date the
Agent or any Bank provides the Borrower with notice thereof or (ii) the date the
Borrower should have notified the Agent thereof in accordance with Section
7.1(c) hereof.
(d) The Borrower, Mid-West, or any Obligated Party shall admit in
writing its inability to, or be generally unable to, pay its debts as such debts
become due.
(e) The Borrower, Mid-West, or any Obligated Party shall (i) apply
for or consent to the appointment of, or the taking of possession by, a
receiver, rehabilitator, conservator, custodian, trustee, liquidator
AMENDED AND RESTATED LOAN AGREEMENT - Page 29
<PAGE> 35
or the like of itself or of all or a substantial part of its property, (ii) make
a general assignment for the benefit of its creditors, (iii) commence a
voluntary case under the United States Bankruptcy Code (as now or hereafter in
effect, the "Bankruptcy Code"), (iv) institute any proceeding or file a petition
seeking to take advantage of any other law relating to bankruptcy, insolvency,
reorganization, liquidation, dissolution, winding-up, or composition or
readjustment of debts, (v) fail to controvert in a timely and appropriate
manner, or acquiesce in writing to, any petition filed against it in an
involuntary case under the Bankruptcy Code or under any other such law, or (vi)
take any corporate or other action for the purpose of effecting any of the
foregoing.
(f) A proceeding or case shall be commenced, without the
application, approval or consent of the Borrower, Mid-West, or any Obligated
Party, in any court of competent jurisdiction, seeking (i) its reorganization,
liquidation, dissolution, arrangement or winding-up, or the composition or
readjustment of its debts, (ii) the appointment of a receiver, rehabilitator,
conservator, custodian, trustee, liquidator or the like of the Borrower,
Mid-West or any Obligated Party or of all or any substantial part of its
property, or (iii) similar relief in respect of the Borrower, Mid-West or any
Obligated Party under any law relating to bankruptcy, insolvency,
reorganization, winding-up, or composition or adjustment of debts, and such
proceeding or case shall continue undismissed, or an order, judgment or decree
approving or ordering any of the foregoing shall be entered and continue
unstayed and in effect, for a period of sixty (60) or more days; or an order for
relief against the Borrower, Mid-West, or any Obligated Party shall be entered
in an involuntary case under the Bankruptcy Code.
(g) Mid-West shall fail to discharge within a period of thirty (30)
days after the commencement thereof any unstayed attachment, sequestration,
forfeiture, or similar proceeding or proceedings involving an aggregate amount
in excess of Ten Million Dollars ($10,000,000) against any of its properties.
Borrower shall fail to discharge within a period of thirty (30) days after the
commencement thereof any unstayed attachment, sequestration, forfeiture, or
similar proceeding or proceedings involving the Collateral. The Collateral shall
for any reason become subject to any Lien other than the Liens of the Agent
created by the Pledge Agreement.
(h) A final judgment or judgments for the payment of money in
excess of Ten Million Dollars ($10,000,000) in the aggregate shall be rendered
by a court or courts against Mid-West and the same shall not be discharged (or
provision shall not be made for such discharge), or a stay of execution thereof
shall not be procured, within thirty (30) days from the date of entry thereof
and Mid-West shall not, within said period of thirty (30) days, or such longer
period during which execution of the same shall have been stayed, appeal
therefrom and cause the execution thereof to be stayed during such appeal.
(i) Mid-West shall fail to pay when due any principal of or
interest on any Debt (other than the Obligations) in excess of Five Million
Dollars ($5,000,000), or the maturity of any such Debt shall have been
accelerated, or any such Debt shall have been required to be prepaid in full
prior to the stated maturity thereof, or any event shall have occurred that
permits (or, with the giving of notice or lapse of time or both, would permit)
any holder or holders of such Debt or any Person acting on behalf of such holder
or holders to accelerate the maturity thereof or require any such prepayment.
(j) This Agreement or any other Loan Document shall cease to be in
full force and effect or shall be declared null and void or the validity or
enforceability thereof shall be contested or challenged by the Borrower,
Mid-West, any Obligated Party or any of their respective shareholders, or any
lien or security interest created or intended to be created by the Loan
Documents shall for any reason (other than the fault of the Agent) cease to be
or shall not be a valid, first priority, perfected security interest in and lien
upon any of the Collateral purported to be covered thereby, the Borrower or any
Obligated Party shall deny that it has any further liability or obligation under
any of the Loan Documents or the failure to deliver certificates evidencing the
HealthAxis.com, Inc. Capital Stock pledged as Collateral under the Pledge
Agreement on or before March 17, 2000.
AMENDED AND RESTATED LOAN AGREEMENT - Page 30
<PAGE> 36
(k) Any of the following events shall occur or exist with respect
to the Borrower or Mid-West: (i) any Prohibited Transaction involving any Plan;
(ii) any Reportable Event with respect to any Plan; (iii) the filing under
Section 4041 of ERISA of a notice of intent to terminate any Plan or the
termination of any Plan; (iv) any event or circumstance that might constitute
grounds entitling the PBGC to institute proceedings under Section 4042 of ERISA
for the termination of, or for the appointment of a trustee to administer, any
Plan, or the institution by the PBGC of any such proceedings; or (v) complete or
partial withdrawal under Section 4201 or 4204 of ERISA from a Multiemployer Plan
or the reorganization, insolvency, or termination of any Multiemployer Plan; and
in each case above, such event or condition, together with all other events or
conditions, if any, have subjected or could in the reasonable opinion of
Required Banks subject the Borrower to any tax, penalty, or other liability to a
Plan, a Multiemployer Plan, the PBGC, or otherwise (or any combination thereof)
which in the aggregate exceed or could reasonably be expected to exceed Ten
Million Dollars ($10,000,000).
(l) Any Person or group (as defined in Section 13(d)(3) or 14(d)(2)
of the Securities Exchange Act of 1934, as amended) other than the Jensen Family
or the employees and agents of the Borrower and the Subsidiaries shall become
the direct or indirect beneficial owner (as defined in Rule 13(d)(3) under the
Securities Exchange Act of 1934, as amended) of more than twenty-five percent
(25%) of the total voting power of all the classes of Capital Stock then
outstanding of the Borrower entitled (without regard to the occurrence of any
contingency) to vote in the election of directors of the Borrower. The term
"Jensen Family" means Mr. Ronald L. Jensen, his spouse, his adult children, any
trusts controlled by any such persons or of which such persons (individually or
together with any persons) are beneficiaries and any foundations controlled by
any such persons. Harvard Management Company, Inc. shall become the direct or
indirect beneficial owner (as defined in the first sentence of this clause (l))
of more than fifteen percent (15%) of the total voting power of all the classes
of Capital Stock then outstanding of the Borrower entitled (without regard to
the occurrence of any contingency) to vote in the election of directors of the
Borrower.
(m) Borrower, Mid-West or any of their respective officers,
directors, employees, or agents becomes subject to any order, agreement or other
enforcement action of any Insurance Regulatory Authority applicable to the
violation or alleged violation of any insurance laws or regulations applicable
to Mid-West or applicable to the financial condition, investments or other
business affairs of Mid-West.
Section 10.2 Remedies. If any Event of Default exists, the Agent may (and
if directed by Required Banks, shall) do any one or more of the following:
(a) Acceleration. By notice to the Borrower, declare all
outstanding principal of and accrued and unpaid interest on the Notes and all
other amounts payable by the Borrower under the Loan Documents immediately due
and payable, and the same shall thereupon become immediately due and payable,
without any other notice, demand, presentment, notice of dishonor, notice of
acceleration, notice of intent to accelerate, protest, or other formalities of
any kind, all of which are hereby expressly waived by the Borrower.
(b) Judgment. Reduce any claim to judgment.
(c) Foreclosure. Foreclose or otherwise enforce any Lien granted to
the Agent for the benefit of itself and the Banks to secure payment and
performance of the Obligations in accordance with the terms of the Loan
Documents.
(d) Rights. Exercise any and all rights and remedies afforded by
the laws of the State of Texas or any other jurisdiction, by any of the Loan
Documents, by equity, or otherwise.
AMENDED AND RESTATED LOAN AGREEMENT - Page 31
<PAGE> 37
Provided, however, that upon the occurrence of an Event of Default under Section
10.1(d), (e) or (f), the outstanding principal of and accrued and unpaid
interest on the Notes and all other amounts payable by the Borrower under the
Loan Documents shall thereupon become immediately due and payable without
notice, demand, presentment, notice of dishonor, notice of acceleration, notice
of intent to accelerate, protest, or other formalities of any kind, all of which
are hereby expressly waived by the Borrower.
Section 10.3 Performance by the Agent. If the Borrower shall fail to
perform any covenant or agreement in accordance with the terms of the Loan
Documents, the Agent may, at the direction of Required Banks, perform or attempt
to perform such covenant or agreement on behalf of the Borrower. In such event,
the Borrower shall, at the request of the Agent, promptly pay any amount
expended by the Agent or the Banks in connection with such performance or
attempted performance to the Agent at the Principal Office, together with
interest thereon at the applicable Default Rate from and including the date of
such expenditure to but excluding the date such expenditure is paid in full.
Notwithstanding the foregoing, it is expressly agreed that neither the Agent nor
any Bank shall have any liability or responsibility for the performance of any
obligation of the Borrower under this Agreement or any of the other Loan
Documents.
Section 10.4 Continuance of Default. For purposes of all Loan Documents,
(a) a Default which is capable of being remedied shall be deemed to exist until
the Agent shall have actually received evidence reasonably satisfactory to Agent
that such Default shall have been remedied and (b) a Default not capable of
being remedied shall be deemed to exist until waived in accordance with the Loan
Document.
Section 10.5 Setoff. If an Event of Default shall have occurred and be
continuing, each Bank is hereby authorized at any time and from time to time,
without notice to the Borrower (any such notice being hereby expressly waived by
the Borrower), to set off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held and other indebtedness at
any time owing by such Bank to or for the credit or the account of the Borrower
against any and all of the Obligations, irrespective of whether or not the Agent
or such Bank shall have made any demand under any Loan Document and although
such Obligations may be unmatured. Each Bank agrees promptly to notify the
Borrower (with a copy to the Agent) after any such setoff and application,
provided that the failure to give such notice shall not affect the validity of
such setoff and application. The rights and remedies of each Bank hereunder are
in addition to other rights and remedies (including, without limitation, other
rights of setoff) which such Bank may have.
ARTICLE 11
The Agent
Section 11.1 Appointment, Powers and Immunities. Each Bank hereby
irrevocably appoints and authorizes the Agent to act as its agent under this
Agreement and the other Loan Documents with such powers and discretion as are
specifically delegated to the Agent by the terms of this Agreement and the other
Loan Documents, together with such other powers as are reasonably incidental
thereto. The Agent (which term as used in this sentence and in Section 11.5 and
the first sentence of Section 11.6 hereof shall include its Affiliates and its
own and its Affiliates' officers, directors, employees, and agents): (a) shall
not have any duties or responsibilities except those expressly set forth in this
Agreement and shall not be a trustee or fiduciary for any Bank; (b) shall not be
responsible to the Banks for any recital, statement, representation, or warranty
(whether written or oral) made in or in connection with any Loan Document or any
certificate or other document referred to or provided for in, or received by any
of them under, any Loan Document, or for the value, validity, effectiveness,
genuineness, enforceability, or sufficiency of any Loan Document, or any other
document referred to or provided for therein or for any failure by Borrower or
any Obligated Party or any other Person to perform any of its obligations
thereunder; (c) shall not be responsible for or have any duty to ascertain,
inquire into, or verify the performance or observance of any covenants or
agreements by Borrower or any Obligated Party or the
AMENDED AND RESTATED LOAN AGREEMENT - Page 32
<PAGE> 38
satisfaction of any condition or to inspect the property (including the books
and records) of Borrower or any Obligated Party or any of the Subsidiaries or
Affiliates of Borrower; (d) shall not be required to initiate or conduct any
litigation or collection proceedings under any Loan Document; and (e) shall not
be responsible for any action taken or omitted to be taken by it under or in
connection with any Loan Document, except for its own gross negligence or
willful misconduct. The Agent may employ agents and attorneys-in-fact and shall
not be responsible for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it with reasonable care.
Section 11.2 Reliance by Agent. The Agent shall be entitled to rely upon
any certification, notice, instrument, writing, or other communication
(including, without limitation, any thereof by telephone or telecopy) believed
by it to be genuine and correct and to have been signed, sent or made by or on
behalf of the proper Person or Persons, and upon advice and statements of legal
counsel (including counsel for the Borrower or any Obligated Party), independent
accountants, and other experts selected by the Agent. The Agent may deem and
treat the payee of any Note as the holder thereof for all purposes hereof unless
and until the Agent receives and accepts an Assignment and Acceptance executed
in accordance with Section 12.8 hereof. As to any matters not expressly provided
for by this Agreement, the Agent shall not be required to exercise any
discretion or take any action, but shall be required to act or to refrain from
acting (and shall be fully protected in so acting or refraining from acting)
upon the instructions of the Required Banks, and such instructions shall be
binding on all of the Banks; provided, however, that the Agent shall not be
required to take any action that exposes the Agent to personal liability or that
is contrary to any Loan Document or applicable law or unless it shall first be
indemnified to its satisfaction by the Banks against any and all liability and
expense which may be incurred by it by reason of taking any such action.
Section 11.3 Defaults. The Agent shall not be deemed to have knowledge or
notice of the occurrence of a Default or Event of Default unless the Agent has
received written notice from a Bank or the Borrower specifying such Default or
Event of Default and stating that such notice is a "Notice of Default". In the
event that the Agent receives such a notice of the occurrence of a Default or
Event of Default, the Agent shall give prompt notice thereof to the Banks. The
Agent shall (subject to Section 11.2 hereof) take such action with respect to
such Default or Event of Default as shall reasonably be directed by the Required
Banks, provided that, unless and until the Agent shall have received such
directions, the Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interest of the Banks.
Section 11.4 Rights as Bank. With respect to the Loans made by it, Bank of
America (and any successor acting as Agent) in its capacity as a Bank hereunder
shall have the same rights and powers hereunder as any other Bank and may
exercise the same as though it were not acting as the Agent, and the term "Bank"
or "Banks" shall, unless the context otherwise indicates, include the Agent in
its individual capacity. Bank of America (and any successor acting as Agent) and
its Affiliates may (without having to account therefor to any Bank) accept
deposits from, lend money to, make investments in, provide services to, and
generally engage in any kind of lending, trust, or other business with Borrower
or any Obligated Party or any of the Subsidiaries or Affiliates of Borrower as
if it were not acting as Agent, and Bank of America (and any successor acting as
Agent) and its Affiliates may accept fees and other consideration from Borrower
or any Obligated Party or any of the Subsidiaries or Affiliates of Borrower for
services in connection with this Agreement or otherwise without having to
account for the same to the Banks.
Section 11.5 INDEMNIFICATION. THE BANKS AGREE TO INDEMNIFY THE AGENT (TO
THE EXTENT NOT REIMBURSED UNDER SECTION 12.1 OR 12.2 HEREOF, BUT WITHOUT
LIMITING THE OBLIGATIONS OF THE BORROWER UNDER SUCH SECTIONS) RATABLY IN
ACCORDANCE WITH THE OUTSTANDING PRINCIPAL AMOUNT OF THE LOANS HELD BY EACH, FOR
ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS,
JUDGMENTS, SUITS,
AMENDED AND RESTATED LOAN AGREEMENT - Page 33
<PAGE> 39
COSTS, EXPENSES (INCLUDING REASONABLE ATTORNEYS' FEES), OR DISBURSEMENTS OF ANY
KIND AND NATURE WHATSOEVER THAT MAY BE IMPOSED ON, INCURRED BY OR ASSERTED
AGAINST THE AGENT (INCLUDING BY ANY BANK) IN ANY WAY RELATING TO OR ARISING OUT
OF ANY LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY OR ANY ACTION
TAKEN OR OMITTED BY THE AGENT UNDER ANY LOAN DOCUMENT; PROVIDED THAT NO BANK
SHALL BE LIABLE FOR ANY OF THE FOREGOING TO THE EXTENT THEY ARISE FROM THE GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT OF THE PERSON TO BE INDEMNIFIED. WITHOUT
LIMITING ANY PROVISION OF ANY LOAN DOCUMENT, IT IS THE EXPRESS INTENTION OF THE
PARTIES HERETO THAT EACH PERSON TO BE INDEMNIFIED UNDER THIS SECTION SHALL BE
INDEMNIFIED FROM AND HELD HARMLESS AGAINST ANY AND ALL LOSSES, LIABILITIES,
CLAIMS, DAMAGES, PENALTIES, JUDGMENTS, DISBURSEMENTS, COSTS, AND EXPENSES
(INCLUDING REASONABLE ATTORNEYS' FEES) ARISING OUT OF OR RESULTING FROM THE SOLE
OR CONTRIBUTORY NEGLIGENCE OF SUCH PERSON. WITHOUT LIMITATION OF THE FOREGOING,
EACH BANK AGREES TO REIMBURSE THE AGENT PROMPTLY UPON DEMAND FOR ITS RATABLE
SHARE OF ANY COSTS OR EXPENSES PAYABLE BY THE BORROWER UNDER SECTION 12.1, TO
THE EXTENT THAT THE AGENT IS NOT PROMPTLY REIMBURSED FOR SUCH COSTS AND EXPENSES
BY THE BORROWER. THE AGREEMENTS CONTAINED IN THIS SECTION SHALL SURVIVE PAYMENT
IN FULL OF THE LOANS AND ALL OTHER AMOUNTS PAYABLE UNDER THIS AGREEMENT.
Section 11.6 Non-Reliance on Agent and Other Banks. Each Bank agrees that
it has, independently and without reliance on the Agent or any other Bank, and
based on such documents and information as it has deemed appropriate, made its
own credit analysis of the Borrower, the Obligated Parties and the Subsidiaries
and decision to enter into this Agreement and that it will, independently and
without reliance upon the Agent or any other Bank, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own analysis and decisions in taking or not taking action under the Loan
Documents. Except for notices, reports, and other documents and information
expressly required to be furnished to the Banks by the Agent hereunder, the
Agent shall not have any duty or responsibility to provide any Bank with any
credit or other information concerning the affairs, financial condition, or
business of the Borrower or any Obligated Party or any of the Subsidiaries or
Affiliates of Borrower that may come into the possession of the Agent or any of
its Affiliates.
Section 11.7 Resignation of Agent. The Agent may resign at any time by
giving notice thereof to the Banks and the Borrower. Upon any such resignation,
the Required Banks shall have the right to appoint a successor Agent. If no
successor Agent shall have been so appointed by the Required Banks and shall
have accepted such appointment within thirty (30) days after the retiring
Agent's giving of notice of resignation, then the retiring Agent may, on behalf
of the Banks, appoint a successor Agent which shall be a commercial bank
organized under the laws of the United States of America having combined capital
and surplus of at least $500,000,000. Upon the acceptance of any appointment as
Agent hereunder by a successor, such successor shall thereupon succeed to and
become vested with all the rights, powers, discretion, privileges, and duties of
the retiring Agent, and the retiring Agent shall be discharged from its duties
and obligations hereunder. After any retiring Agent's resignation hereunder as
Agent, the provisions of this Article 11 shall continue in effect for its
benefit in respect of any actions taken or omitted to be taken by it while it
was acting as Agent.
Section 11.8 Agent Fee. The Borrower agrees to pay to the Agent on May 17,
2000 the administrative agency fee Borrower has agreed to pay to the Agent
pursuant to that certain letter dated March 1, 1999 among the Borrower,
NationsBank (now known as Bank of America, N.A.) and NationsBanc Montgomery
Securities LLC (now known as Banc of America Securities LLC).
AMENDED AND RESTATED LOAN AGREEMENT - Page 34
<PAGE> 40
ARTICLE 12
Miscellaneous
Section 12.1 Expenses. The Borrower hereby agrees to pay on demand: (a) all
out-of-pocket costs and expenses of the Agent in connection with the
preparation, negotiation, execution, and delivery of this Agreement and the
other Transaction Documents and any and all amendments, modifications, renewals,
extensions, and supplements thereof and thereto, including, without limitation,
the reasonable fees and expenses of legal counsel for the Agent, (b) all
out-of-pocket costs and expenses of the Agent and the Banks in connection with
any Default and the enforcement of this Agreement or any other Loan Document,
including, without limitation, the reasonable fees and expenses of legal counsel
for the Agent and the Banks, (c) all transfer, stamp, documentary, or other
similar taxes, assessments, or charges levied by any Governmental Authority in
respect of this Agreement or any of the other Transaction Documents, and (d) all
other out-of-pocket costs and expenses incurred by the Agent in connection with
this Agreement or any other Transaction Document.
Section 12.2 INDEMNIFICATION. THE BORROWER SHALL INDEMNIFY THE AGENT AND
EACH BANK AND EACH AFFILIATE THEREOF AND THEIR RESPECTIVE OFFICERS, DIRECTORS,
EMPLOYEES, ATTORNEYS, AND AGENTS FROM, AND HOLD EACH OF THEM HARMLESS AGAINST,
ANY AND ALL LOSSES, LIABILITIES, CLAIMS, DAMAGES, PENALTIES, JUDGMENTS,
DISBURSEMENTS, COSTS, AND EXPENSES (INCLUDING REASONABLE ATTORNEYS' FEES) TO
WHICH ANY OF THEM MAY BECOME SUBJECT WHICH DIRECTLY OR INDIRECTLY ARISE FROM OR
RELATE TO (A) THE NEGOTIATION, EXECUTION, DELIVERY, PERFORMANCE, ADMINISTRATION,
OR ENFORCEMENT OF ANY OF THE TRANSACTION DOCUMENTS, (B) ANY OF THE TRANSACTIONS
CONTEMPLATED BY THE TRANSACTION DOCUMENTS, (C) ANY BREACH BY THE BORROWER OF ANY
REPRESENTATION, WARRANTY, COVENANT, OR OTHER AGREEMENT CONTAINED IN ANY OF THE
LOAN DOCUMENTS, (D) THE PRESENCE, RELEASE, THREATENED RELEASE, DISPOSAL,
REMOVAL, OR CLEANUP OF ANY HAZARDOUS MATERIAL LOCATED ON, ABOUT, WITHIN, OR
AFFECTING ANY OF THE PROPERTIES OF THE BORROWER OR ANY SUBSIDIARY, OR (E) ANY
INVESTIGATION, LITIGATION, OR OTHER PROCEEDING, INCLUDING, WITHOUT LIMITATION,
ANY THREATENED INVESTIGATION, LITIGATION, OR OTHER PROCEEDING RELATING TO ANY OF
THE FOREGOING. WITHOUT LIMITING ANY PROVISION OF THIS AGREEMENT OR OF ANY OTHER
LOAN DOCUMENT, IT IS THE EXPRESS INTENTION OF THE PARTIES HERETO THAT EACH
PERSON TO BE INDEMNIFIED UNDER THIS SECTION SHALL (i) BE INDEMNIFIED FROM AND
HELD HARMLESS AGAINST ANY AND ALL LOSSES, LIABILITIES, CLAIMS, DAMAGES,
PENALTIES, JUDGMENTS, DISBURSEMENTS, COSTS, AND EXPENSES (INCLUDING REASONABLE
ATTORNEYS' FEES) ARISING OUT OF OR RESULTING FROM THE SOLE OR CONTRIBUTORY
NEGLIGENCE OF SUCH PERSON AND (ii) SHALL NOT BE INDEMNIFIED OR HELD HARMLESS
AGAINST ANY AND ALL LOSSES, LIABILITIES, CLAIMS, DAMAGES, PENALTIES, JUDGMENTS,
DISBURSEMENTS, COSTS, AND EXPENSES (INCLUDING REASONABLE ATTORNEY FEES) ARISING
OUT OF OR RESULTING FROM THE WILLFUL MISCONDUCT OR GROSS NEGLIGENCE OF SUCH
PERSON.
Section 12.3 Limitation of Liability. None of the Agent, any Bank, or any
Affiliate, officer, director, employee, attorney, or agent thereof shall have
any liability with respect to, and the Borrower hereby waives, releases, and
agrees not to sue any of them upon, any claim for any special, indirect,
incidental, consequential, exemplary or punitive damages suffered or incurred by
the Borrower in connection with, arising out of, or in any way related to, this
Agreement or any of the other Transaction Documents, or any of the transactions
contemplated by this Agreement or any of the other Transaction Documents. None
of the Borrower, any Obligated Party nor any Affiliate, officer, director,
employee, attorney, or agent thereof shall have any liability with respect to,
and the Agent and each Bank hereby waives, releases, and agrees not to sue any
of them upon,
AMENDED AND RESTATED LOAN AGREEMENT - Page 35
<PAGE> 41
any claim for any special, indirect, incidental, consequential, exemplary or
punitive damages suffered or incurred by any of them in connection with, arising
out of, or in any way related to, this Agreement or any of the other Transaction
Documents, or any of the transactions contemplated by this Agreement or any of
the other Transaction Documents.
Section 12.4 No Duty. All attorneys, accountants, appraisers, and other
professional Persons and consultants retained by the Agent and the Banks shall
have the right to act exclusively in the interest of the Agent and the Banks and
shall have no duty of disclosure, duty of loyalty, duty of care, or other duty
or obligation of any type or nature whatsoever to the Borrower or any of the
Borrower's shareholders or any other Person.
Section 12.5 No Fiduciary Relationship. The relationship between the
Borrower and each Bank is solely that of debtor and creditor, and neither the
Agent nor any Bank has any fiduciary or other special relationship with the
Borrower, and no term or condition of any of the Transaction Documents shall be
construed so as to deem the relationship between the Borrower and any Bank to be
other than that of debtor and creditor. No joint venture or partnership is
created by this Agreement among the Banks or among the Borrower and the Banks.
Section 12.6 Equitable Relief. The Borrower recognizes that in the event
the Borrower fails to pay, perform, observe, or discharge any or all of the
Obligations, any remedy at law may prove to be inadequate relief to the Agent
and the Banks. The Borrower therefore agrees that the Agent and the Banks, if
the Agent or the Banks so request, shall be entitled to temporary and permanent
injunctive relief in any such case without the necessity of proving actual
damages.
Section 12.7 No Waiver; Cumulative Remedies. No failure on the part of the
Agent or any Bank to exercise and no delay in exercising, and no course of
dealing with respect to, any right, power, or privilege under this Agreement or
any other Loan Document shall operate as a waiver thereof, nor shall any single
or partial exercise of any right, power, or privilege under this Agreement or
any other Loan Document preclude any other or further exercise thereof or the
exercise of any other right, power, or privilege. The rights and remedies
provided for in this Agreement and the other Loan Documents are cumulative and
not exclusive of any rights and remedies provided by law.
Section 12.8 Successors and Assigns.
(a) This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns. The Borrower
may not assign or transfer any of its rights or obligations hereunder without
the prior written consent of the Agent and the Banks. Each Bank may assign to
one or more Eligible Assignees all or a portion of its rights and obligations
under this Agreement (including, without limitation, all or a portion of its
Loans and its Note); provided, however, that
(i) each such assignment shall be to an Eligible Assignee;
(ii) except in the case of an assignment to another Bank or an
assignment of all of a Bank's rights and obligations under this Agreement, any
such partial assignment shall be in an amount at least equal to Five Million
Dollars ($5,000,000);
(iii) each such assignment by a Bank shall be of a constant,
and not varying, percentage of all of its rights and obligations under this
Agreement and the Note held by it; and
AMENDED AND RESTATED LOAN AGREEMENT - Page 36
<PAGE> 42
(iv) the parties to such assignment shall execute and deliver
to the Agent for its acceptance an Assignment and Acceptance in the form of
Exhibit "C" hereto, together with any Note subject to such assignment and a
processing fee of $3,500.
Upon execution, delivery, and acceptance of such Assignment and Acceptance, the
assignee thereunder shall be a party hereto and, to the extent of such
assignment, have the obligations, rights, and benefits of a Bank hereunder and
the assigning Bank shall, to the extent of such assignment, relinquish its
rights and be released from its obligations under this Agreement. Upon the
consummation of any assignment pursuant to this Section, the assignor, the Agent
and the Borrower shall make appropriate arrangements so that, if required, new
Notes are issued to the assignor, if it does not assign all of its interests in
the Loans then outstanding, and the assignee. If the assignee is not
incorporated under the laws of the United States of America or a state thereof,
it shall deliver to the Borrower and the Agent certification as to exemption
from deduction or withholding of Taxes in accordance with Section 4.6.
(b) The Agent shall maintain at its address referred to in Section
12.13 a copy of each Assignment and Acceptance delivered to and accepted by it
and a register for the recordation of the names and addresses of the Banks and
the principal amount of the Loans owing to each Bank from time to time (the
"Register"). The entries in the Register shall be conclusive and binding for all
purposes, absent manifest error, and the Borrower, the Agent and the Banks may
treat each Person whose name is recorded in the Register as a Bank hereunder for
all purposes of this Agreement. The Register shall be available for inspection
by the Borrower or any Bank at any reasonable time and from time to time upon
reasonable prior notice.
(c) Upon its receipt of an Assignment and Acceptance executed by
the parties thereto and otherwise made in accordance herewith, together with any
Note subject to such assignment and payment of the processing fee, the Agent
shall, if such Assignment and Acceptance has been completed and is in
substantially the form of Exhibit "C" hereto, (i) accept such Assignment and
Acceptance, (ii) record the information contained therein in the Register and
(iii) give prompt notice thereof to the parties thereto.
(d) Each Bank may sell participations to one or more Persons in all
or a portion of its rights and obligations under this Agreement (including all
or a portion of its Loans); provided, however, that: (i) such Bank's obligations
under this Agreement shall remain unchanged, (ii) such Bank shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(iii) the participant shall be entitled to the benefit of the yield protection
provisions contained in Article 4 and the right of set-off contained in Section
10.5, and (iv) the Borrower shall continue to deal solely and directly with such
Bank in connection with such Bank's rights and obligations under this Agreement,
and such Bank shall retain the sole right to enforce the obligations of the
Borrower relating to its Loans and its Note and to approve any amendment,
modification, or waiver of any provision of this Agreement (other than
amendments, modifications, or waivers decreasing the amount of principal of or
the rate at which interest is payable on such Loans or Note, extending any
scheduled principal payment date or date fixed for the payment of interest on
such Loans or Note).
(e) Notwithstanding any other provision set forth in this
Agreement, any Bank may at any time assign and pledge all or any portion of its
Loans and its Note to any Federal Reserve Bank as collateral security. No such
assignment and pledge shall release the assigning Bank from its obligations
hereunder.
(f) Any Bank may furnish any information concerning the Borrower,
any Obligated Party or any of the Subsidiaries in the possession of such Bank
from time to time to assignees and participants (including prospective assignees
and participants).
Section 12.9 Survival. All representations and warranties made or deemed
made in this Agreement or any other Loan Document or in any document, statement,
or certificate furnished in connection with this
AMENDED AND RESTATED LOAN AGREEMENT - Page 37
<PAGE> 43
Agreement shall survive the execution and delivery of this Agreement and the
other Loan Documents and the making of the Loans, and no investigation by the
Agent or any Bank or any closing shall affect the representations and warranties
or the right of the Agent or any Bank to rely upon them. Without prejudice to
the survival of any other obligation of the Borrower hereunder, the obligations
of the Borrower under Article 4 and Sections 12.1 and 12.2 shall survive
repayment of the Notes.
Section 12.10 Entire Agreement; Amended and Restatement; Release. THIS
AGREEMENT, THE NOTES, AND THE OTHER LOAN DOCUMENTS REFERRED TO HEREIN EMBODY THE
FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND SUPERSEDE ANY AND ALL PRIOR
COMMITMENTS, AGREEMENTS, REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR
ORAL, RELATING TO THE SUBJECT MATTER HEREOF (INCLUDING, WITHOUT LIMITATION, THE
EXISTING AGREEMENT) AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES
HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES THERETO. This
Agreement amends and restates in its entirety the Existing Agreement. The
execution of this Agreement, the Notes and the other Loan Documents executed in
connection herewith does not extinguish the indebtedness outstanding in
connection with the Existing Agreement nor does it constitute a novation with
respect to such indebtedness; provided that this Agreement shall no longer
govern or control the terms of the Newco Loan. THE BORROWER REPRESENTS AND
WARRANTS THAT AS OF THE CLOSING DATE THERE ARE NO CLAIMS OR OFFSETS AGAINST OR
DEFENSES OR COUNTERCLAIMS TO ITS OBLIGATIONS UNDER THE EXISTING AGREEMENT OR THE
DOCUMENTATION RELATING THERETO. TO INDUCE THE BANKS AND THE AGENT TO ENTER INTO
THIS AGREEMENT, THE BORROWER WAIVES ANY AND ALL CLAIMS, OFFSETS, DEFENSES OR
COUNTERCLAIMS, WHETHER KNOWN OR UNKNOWN, ARISING PRIOR TO THE DATE HEREOF AND
HEREBY RELEASES AGENT, THE BANKS AND THEIR RESPECTIVE OFFICERS, DIRECTORS,
EMPLOYEES, AGENTS AND ATTORNEYS (COLLECTIVELY THE "RELEASED PARTIES") FROM ANY
AND ALL OBLIGATIONS, INDEBTEDNESS, LIABILITY, CLAIMS, RIGHTS, CAUSES OF ACTION
OR DEMANDS WHATSOEVER, WHETHER KNOWN OR UNKNOWN, SUSPECTED OR UNSUSPECTED WHICH
THE BORROWER EVER HAD, NOW HAS, CLAIMS TO HAVE OR MAY HAVE AGAINST ANY RELEASED
PARTY ARISING PRIOR TO THE CLOSING DATE AND FROM OR IN CONNECTION WITH THE
EXISTING AGREEMENT OR THE DOCUMENTATION EXECUTED IN CONNECTION THEREWITH OR THE
TRANSACTIONS CONTEMPLATED THEREBY.
Section 12.11 Amendments. No amendment or waiver of any provision of this
Agreement, the Notes, or any other Loan Document to which the Borrower is a
party, nor any consent to any departure by the Borrower therefrom, shall in any
event be effective unless the same shall be agreed or consented to by Required
Banks and the Borrower, 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 amendment, waiver, or consent shall, unless in writing and signed by all
of the Banks and the Borrower, do any of the following: (a) subject the Banks to
any additional obligations; (b) reduce the principal of, or interest on, the
Notes or any fees or other amounts payable hereunder; (c) postpone any date
fixed for any payment of principal of, or interest on, the Notes or any fees or
other amounts payable hereunder; (d) change the percentage of the aggregate
unpaid principal amount of the Notes or the number of Banks which shall be
required for the Banks or any of them to take any action under this Agreement;
or (e) change any provision contained in this Section 12.11. Notwithstanding
anything to the contrary contained in this Section, no amendment, waiver, or
consent shall be made with respect to Article 11 hereof without the prior
written consent of the Agent.
AMENDED AND RESTATED LOAN AGREEMENT - Page 38
<PAGE> 44
Section 12.12 Maximum Interest Rate.
(a) No interest rate specified in this Agreement or any other Loan
Document shall at any time exceed the Maximum Rate. If at any time the interest
rate (the "Contract Rate") for any Obligation shall exceed the Maximum Rate,
thereby causing the interest accruing on such Obligation to be limited to the
Maximum Rate, then any subsequent reduction in the Contract Rate for such
Obligation shall not reduce the rate of interest on such Obligation below the
Maximum Rate until the aggregate amount of interest accrued on such Obligation
equals the aggregate amount of interest which would have accrued on such
Obligation if the Contract Rate for such Obligation had at all times been in
effect.
(b) Notwithstanding anything to the contrary contained in this
Agreement or the other Loan Documents, none of the terms and provisions of this
Agreement or the other Loan Documents shall ever be construed to create a
contract or obligation to pay interest at a rate in excess of the Maximum Rate;
and neither the Agent nor any Bank shall ever charge, receive, take, collect,
reserve or apply, as interest on the Obligations, any amount in excess of the
Maximum Rate. The parties hereto agree that any interest, charge, fee, expense
or other obligation provided for in this Agreement or in the other Loan
Documents which constitutes interest under applicable law shall be, ipso facto
and under any and all circumstances, limited or reduced to an amount equal to
the lesser of (i) the amount of such interest, charge, fee, expense or other
obligation that would be payable in the absence of this Section 12.12(b), or
(ii) an amount, which when added to all other interest payable under this
Agreement or the other Loan Documents, equals the Maximum Rate. If,
notwithstanding the foregoing, the Agent or any Bank ever contracts for,
charges, receives, takes, collects, reserves or applies as interest any amount
in excess of the Maximum Rate, such amount which would be deemed excessive
interest shall be deemed a partial payment or prepayment of principal of the
Obligations and treated hereunder as such; and if the Obligations, or applicable
portions thereof, are paid in full, any remaining excess shall promptly be paid
to the Borrower. In determining whether the interest paid or payable, under any
specific contingency, exceeds the Maximum Rate, the Borrower, the Agent, and the
Banks shall, to the maximum extent permitted by applicable law, (i) characterize
any nonprincipal payment as an expense, fee or premium rather than as interest,
(ii) exclude voluntary prepayments and the effects thereof, and (iii) amortize,
prorate, allocate and spread in equivalent unequal parts the total amount of
interest throughout the entire contemplated term of the Obligations, or
applicable portions thereof, so that the interest rate does not exceed the
Maximum Rate at any time during the term of the Obligations; provided that, if
the unpaid principal balance is paid and performed in full prior to the end of
the full contemplated term thereof, and if the interest received for the actual
period of existence thereof exceeds the Maximum Rate, the Agent and/or the
Banks, as appropriate, shall refund to the Borrower the amount of such excess
and, in such event, the Agent and the Banks shall not be subject to any
penalties provided by any laws for contracting for, charging, receiving, taking,
collecting, reserving or applying interest in excess of the Maximum Rate.
(c) The provisions of Chapter 346 of the Finance Code of Texas are
specifically declared by the parties hereto not to be applicable to any Loan
Documents or to the transactions contemplated thereby.
Section 12.13 Notices. All notices and other communications provided for in
this Agreement and the other Loan Documents to which the Borrower is a party
shall be given or made in writing and telecopied, mailed by certified mail
return receipt requested, or delivered to the intended recipient at the "Address
for Notices" specified below its name on the signature pages hereof; or, as to
any party, at such other address as shall be designated by such party in a
notice to each other party given in accordance with this Section. Except as
otherwise provided in this Agreement, all such communications shall be deemed to
have been duly given when transmitted by telecopy, subject to telephone
confirmation of receipt, or personally delivered or, in the case of a mailed
notice, upon receipt, in each case given or addressed as aforesaid.
Section 12.14 Governing Law; Submission to Jurisdiction. This Agreement and
the Notes shall be governed by, and construed in accordance with, the laws of
the State of Texas and applicable laws of the United
AMENDED AND RESTATED LOAN AGREEMENT - Page 39
<PAGE> 45
States of America. THE BORROWER HEREBY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION
OF THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS AND OF
ANY TEXAS STATE COURT SITTING IN DALLAS, TEXAS, FOR THE PURPOSES OF ALL LEGAL
PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER TRANSACTION
DOCUMENT, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. THE BORROWER
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH
IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING
BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A
COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORM.
Section 12.15 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement.
Section 12.16 Severability. Any provision of this Agreement held by a court
of competent jurisdiction to be invalid or unenforceable shall not impair or
invalidate the remainder of this Agreement and the effect thereof shall be
confined to the provision held to be invalid or illegal.
Section 12.17 Headings. The headings, captions, and arrangements used in
this Agreement are for convenience only and shall not affect the interpretation
of this Agreement.
Section 12.18 Construction. The Borrower, the Agent, and each Bank
acknowledges that each of them has had the benefit of legal counsel of its own
choice and has been afforded an opportunity to review this Agreement and the
other Loan Documents with its legal counsel and that this Agreement and the
other Loan Documents shall be construed as if jointly drafted by the parties
hereto.
Section 12.19 Independence of Covenants. All covenants hereunder shall be
given independent effect so that if a particular action or condition is not
permitted by any of such covenants, the fact that it would be permitted by an
exception to, or be otherwise within the limitations of, another covenant shall
not avoid the occurrence of a Default if such action is taken or such condition
exists.
Section 12.20 WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND EXPRESSLY
WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM
(WHETHER BASED UPON CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF OR RELATING TO
ANY OF THE TRANSACTION DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY OR THE
ACTIONS OF THE AGENT OR ANY BANK IN THE NEGOTIATION, ADMINISTRATION, OR
ENFORCEMENT THEREOF.
Section 12.21 Confidentiality. The Agent and each Bank (each a "Lending
Party") agrees to keep any Designated Information (as defined below) delivered
or made available by the Borrower to it confidential from anyone other than
Persons employed or retained by such Lending Party who are, or are expected to
be, engaged in evaluating, approving, structuring or administering the credit
facility provided herein; provided that nothing herein shall prevent any Lending
Party from disclosing such Designated Information: (a) to any other Lending
Party, (b) upon the order of any court or administrative agency, (c) upon the
request or demand of any regulatory agency or authority with which the Lending
Party is required to comply, (d) which had been publicly disclosed other than as
a result of a disclosure by any Lending Party prohibited by this Agreement, (e)
in connection with any litigation to which such Lending Party or any of its
Affiliates may be a party, (f) to the extent necessary in connection with the
exercise of any remedy hereunder, (g) to such Lending Party's legal counsel and
independent auditors, (h) to any Affiliate of such Lending Party, solely in
connection with this Agreement, and (i) subject to provisions substantially
similar to those contained in this Section, to any actual or proposed
participant or
AMENDED AND RESTATED LOAN AGREEMENT - Page 40
<PAGE> 46
assignee of any of its rights and obligations under the Loan Documents in
accordance with the terms hereof. The term "Designated Information" means any
information which has been designated by the Borrower in writing as
confidential. If a Lending Party or any Person to whom a Lending Party gives
Designated Information is to disclose any Designated Information pursuant to
clause (b) or (e), such Person shall notify the Borrower of the proposed
disclosure promptly after determining it must make such disclosure so that the
Borrower or a Subsidiary may seek a protective order as necessary to protect the
unnecessary disclosures of Designated Information.
Section 12.22 Waiver of Defaults. Each of the Banks waives any Default (as
defined in the Existing Agreement) that may have existed under the terms of the
Existing Agreement and agrees not to exercise any rights or remedies available
as a result of the occurrence thereof or the occurrence of any of the events
described in the Recitals hereto. To induce the Agent and the Banks to agree to
the terms of this Agreement (including without limitation, this Section 12.22,
Borrower agrees that the foregoing waiver shall not constitute and shall not be
deemed a waiver of any Default hereunder, whether arising as a result of the
further violation of covenants or representations contained in the Existing
Agreement which are continued hereunder or otherwise, or a waiver of any rights
or remedies arising as a result of such Defaults under this Agreement. The
breach of any representation or warranty set forth herein or the failure to
comply with any covenants set forth herein on or after the Closing Date shall
constitute a Default.
AMENDED AND RESTATED LOAN AGREEMENT - Page 41
<PAGE> 47
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.
BORROWER:
UICI,
a Delaware Corporation
By:
----------------------------------
Gregory T. Mutz, President
and Chief Executive Officer
Address for Notices:
4001 McEwen Drive, Suite 200
Dallas, Texas 75244
Telephone No.: 972-392-6733
Telecopy No.: 972-392-6721
Attention: Chief Financial Officer
AMENDED AND RESTATED LOAN AGREEMENT - Page 42
<PAGE> 48
BANK OF AMERICA, N.A.
as Administrative Agent and as a Bank
Closing Date Outstanding Loan:
$10,000,000
By:
-----------------------------------
Jim V. Miller
Managing Director
Address for Notices:
901 Main Street, 66th Floor
Dallas, Texas 75202
Telephone No.: 214-209-0559
Telecopy No.: 214-209-3742
Attention: Jim V. Miller
Lending Office for Base Rate Loans and
Libor Loans
901 Main Street, 66th Floor
Dallas, Texas 75202
AMENDED AND RESTATED LOAN AGREEMENT - Page 43
<PAGE> 49
BANK ONE, NA (formerly THE FIRST
NATIONAL BANK OF CHICAGO)
Closing Date Outstanding Loan:
$8,750,000
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
Address for Notices:
One First National Plaza, Suite IL1-0085
Chicago, Illinois 60670
Telephone: 312-732-3881
Telecopy No.: 312-732-4033
Attention: Tom Doddridge
Lending Office for Base Rate Loans and
Libor Loans:
One First National Plaza
Chicago, Illinois 60670
AMENDED AND RESTATED LOAN AGREEMENT - Page 44
<PAGE> 50
FLEET NATIONAL BANK
Closing Date Outstanding Loans:
$6,250,000
By:
-------------------------------------
Celeste Echlin,
Vice President
Address for Notices:
Insurance Industry Group
CT-MO-0250
777 Main Street, 25th Floor
Hartford, CT 06115
Lending Office for Base Rate Loans and
Libor Loans:
777 Main Street, 25th Floor
Hartford, CT
AMENDED AND RESTATED LOAN AGREEMENT - Page 45
<PAGE> 1
EXHIBIT 99.3
PROMISSORY NOTE
$70,000,000.00 Dallas, Texas March 14, 2000
FOR VALUE RECEIVED, the undersigned, UICI SUB I, INC., a Delaware
corporation ("Maker"), hereby promises to pay to the order of LM Finance, LLC.,
a Nevada limited liability company, and any assignees or successors thereof
("Payee"), at the time and in the manner hereinafter provided, the principal sum
of SEVENTY MILLION AND 00/100 DOLLARS ($70,000,000.00), together with interest
computed thereon at the rate hereinafter provided. All payments under this
Promissory Note ("Note") shall be payable at 2121 Precinct Line Road, Hurst,
Texas 76054 or such other address as is designated by Payee from time to time.
1. Payment and Interest. The outstanding principal amount of this Note
shall bear interest as it accrues commencing on the date hereof and continuing
until the due date at the lesser of the Maximum Rate or the Prime Rate (as
defined below). Unless otherwise accelerated by Payee as provided herein,
interest on this Note shall be payable monthly, as it accrues beginning April 1,
2000, and on the 1st day of each month thereafter and at maturity. Unless
otherwise accelerated by the Payee as provided herein, the entire principal
balance and all accrued unpaid interest shall be due and payable on September
14, 2001.
2. Guaranty and Collateral. Repayment of this Note is guaranteed by
Specialized Card Services, Inc. ("SCS") pursuant to that certain Guaranty of
even date herewith (the "SCS Guaranty") and by UICI ("UICI") pursuant to that
certain Guaranty of even date herewith (the "UICI Guaranty"). The repayment of
this Note is further secured by the Pledge Agreement of even date herewith,
executed by Maker for the benefit of Payee (the "Pledge Agreement") and the
covenants of SCS set forth in that certain Post-Closing Agreement of even date
herewith by and among Payee, SCS and Maker.
3. Prepayment. This Note may be prepaid in whole or in part from time
to time, without premium or penalty ("Optional Prepayment"). Any such Optional
Prepayment shall be applied first to accrued, but unpaid, interest hereon with
the remainder of any such Optional Prepayment being applied to the reduction of
principal due under this Note. Upon payment in full, this Note shall be canceled
and returned to Maker.
4. Default. The occurrence of any one of the following shall be a
default under this Note ("Default"):
(a) any principal, interest or other amount of money due under
this Note is not paid in full when due, regardless of how such amount
may have become due;
(b) a default in the payment of any indebtedness of UICI, or
any of its subsidiaries or Maker on obligations for borrowed money and
which results in the acceleration of such indebtedness by the holder
thereof;
PROMISSORY NOTE - PAGE 1
<PAGE> 2
(c) Borrower or SCS shall fail to perform, observe or comply
with any covenant, agreement or term contained in any Loan Document;
(d) a sale or transfer of substantially all the assets or a
majority of the outstanding stock of UICI, Maker or SCS.
(e) Any representation, warranty or certification made by
UICI, Maker or SCS in any Loan Document or in any certificate, report,
notice, or financial statement furnished at any time in connection with
this Note shall be false, misleading, or erroneous in any material
respect when made or deemed to have been made.
(f) UICI, Maker or SCS shall admit in writing its inability
to, or be generally unable to, pay its debts as such debts become due.
(g) UICI, Maker or SCS shall fail to discharge within a period
of thirty (30) days after the commencement thereof any unstayed
attachment, sequestration, forfeiture, or similar proceeding or
proceedings involving an aggregate amount in excess of Ten Million
Dollars ($10,000,000) against any of its properties.
(h) A final judgment or judgments for the payment of money in
excess of Ten Million Dollars ($10,000,000) in the aggregate shall be
rendered by a court or courts against the UICI, Maker or SCS and the
same shall not be discharged (or provision shall not be made for such
discharge), or a stay of execution thereof shall not be procured,
within thirty (30) days from the date of entry thereof and the UICI,
Maker or SCS shall not, within said period of thirty (30) days, or such
longer period during which execution of the same shall have been
stayed, appeal therefrom and cause the execution thereof to be stayed
during such appeal.
(i) This Note or any other Loan Document shall cease to be in
full force and effect or shall be declared null and void or the
validity or enforceability thereof shall be contested or challenged by
the UICI, Maker or SCS or any of their respective shareholders, or the
Maker or Guarantor shall deny that it has any further liability or
obligation under any of the Loan Documents.
(j) Maker, SCS or UICI shall commence a voluntary case or
other proceedings seeking liquidation, reorganization or other relief
with respect to any of them or their debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect or seeking
an appointment of a trustee, receiver, liquidator, custodian or other
similar official of any of them or any substantial part of their
property, or shall consent to any relief or to the appointment or
taking possession by any such official in an involuntary case or other
proceeding commenced against any of them, or shall make a general
assignment for the benefit of creditors, or shall fail generally to pay
their debts as they become due, or shall take any corporate action
authorizing the foregoing; or
PROMISSORY NOTE - PAGE 2
<PAGE> 3
(k) an involuntary case or other proceeding, shall be
commenced against Maker, SCS or UICI seeking liquidation,
reorganization or other relief with respect to any of them or their
debts under bankruptcy, insolvency or similar law now or hereafter in
effect or seeking the appointment of a trustee, receiver, liquidator,
custodian or other similar official of any of them or any substantial
part of their property, and such involuntary case or other proceeding
shall remain undismissed and unstayed for a period of thirty (30) days;
or an order for relief shall be entered against Maker, UICI or SCS
under the federal bankruptcy laws as now or hereinafter in effect.
5. Remedies. Upon occurrence of any Default specified in subparagraph
4(j) or (k) above, the entire principal amount due under this Note and all
interest then accrued thereon, and any other liabilities of Maker hereunder,
shall become immediately due and payable all without notice and without
presentment, demand, protest, notice of protest or dishonor, notice of
acceleration or any other notice of default of any kind, all of which are hereby
expressly waived by Maker. Upon the occurrence of any other Default hereunder,
Maker shall have ten business days from the date of such Default to cure such
Default. If such Default is not timely cured, the Holder hereof shall have the
right to declare the entire outstanding principal balance hereof and all accrued
but unpaid interest on this Note at once due and payable (and upon such
declaration, the same shall be at once due and payable) without presentment or
demand for payment and to exercise any of its other right, power and remedies
under this Note or at law or in equity.
6. Default Rate. It is understood and agreed that time is of the
essence respecting this Note. It is understood and agreed that any past due
principal and/or interest shall bear interest from the date it is due until
paid, at the Maximum Rate.
7. Representations, Warranties and Covenants of the Maker. The Maker
represents, warrants and covenants to the Payee that the Maker:
(a) is a corporation duly organized, validly existing, and in
good standing under the laws of the State of Delaware;
(b) has all requisite corporate power and authority to own,
lease, license and use its properties and assets and to conduct the
business in which it is engaged; and
(c) is duly licensed or qualified and is in good standing as a
foreign corporation in each jurisdiction wherein the nature of the
business transacted by it or the nature of the property owned or leased
by it makes such licensing or qualification necessary, the failure of
which would have a material adverse effect on the business, operations,
properties or condition (financial or otherwise) of the Maker.
8. Waivers. Except as provided for herein, the Maker and each surety,
guarantor, endorser, or any party ever liable for payment of any sum of money
payable on this Note does hereby severally waive demand, grace, presentment for
payment, notice of dishonor, notice of intent to accelerate, notice of
acceleration, protest, and diligence in
PROMISSORY NOTE - PAGE 3
<PAGE> 4
collecting sums due hereunder and in bringing suit against any party hereto. The
Maker and each surety, guarantor, endorser, or any other party ever liable for
payment of any sum of money payable on this Note further agrees (i) to all
extensions and partial payments, with or without notice, before or after
maturity, (ii) to any substitution, exchange or release of any security now or
hereafter given for this Note, (iii) to the release of any party primarily or
secondarily liable hereon, and (iv) that it will not be necessary for the holder
hereof, in order to enforce payment of this Note, to first institute or exhaust
such holder's remedy against the Maker or any other party liable therefor or
against any security for this Note. No delay or omission on the part of the
Payee in exercising any power or right under this Note shall operate as a waiver
of such power or right, nor shall any single or partial exercise of any power or
right preclude further exercise of that power or right.
9. Maximum Rate. All agreements between the Maker and the holder
hereof, whether now existing or hereafter arising and whether written or oral,
are hereby expressly limited so that in no contingency or event whatsoever,
shall the amount paid, or agreed to be paid, to the holder hereof for the use,
forbearance, or detention of the funds advanced pursuant to this Note, or
otherwise, or for the payment or performance of any covenant or obligation
contained herein or any other document or instrument evidencing, securing, or
pertaining to this Note, exceed the maximum amount permissible under applicable
law (the "Maximum Rate"). If, from any circumstances whatsoever, fulfillment of
any provision hereof or of any other document or instrument exceeds the Maximum
Rate, then ipso facto, the obligation to be fulfilled shall be reduced to the
limit of such validity, and if from any such circumstances the holder hereof
shall ever receive anything of value deemed interest by applicable law which
would exceed interest at the highest lawful rate, such amount would be excessive
interest, and would be applied to the unpaid principal balance of this Note, or
on account of any other principal indebtedness of the Maker to the holder
hereof, and not to the payment of interest, or if such excessive interest
exceeds the unpaid principal balance of this Note and such other indebtedness,
such excess shall be refunded to the Maker. All sums paid, or agreed to be paid,
by the Maker for the use, forbearance, or detention of the indebtedness of the
Maker to the holder of this Note shall, to the extent permitted by applicable
law, be amortized, pro-rated, allocated, and spread throughout the full term of
such indebtedness until payment in full so that the actual rate of interest on
account of such indebtedness is uniform throughout the term hereof. The terms
and provisions of this paragraph shall control and supersede every other
provision of all agreements between the Maker and the holder hereof.
10. Costs and Fees. If there is a Default under this Note, or if this
Note is placed in the hands of an attorney or agency for collection, regardless
of whether or not suit is filed, or if this Note is collected by suit or legal
process, including, but not limited to, through the probate court or bankruptcy
proceedings, Maker agrees to pay all costs of collection, including reasonable
attorney's fees and court costs in addition to other amounts due. Additionally,
Maker agrees to pay all reasonable attorney's fees and expenses of Payee and its
affiliates incurred in connection with the negotiation, preparation,
administration, enforcement and collection of this Note and the Loan Documents
immediately upon request thereof by Payee.
PROMISSORY NOTE - PAGE 4
<PAGE> 5
11. Definitions. As used in this Note, the following terms have the
following meaning:
"Holder" shall mean the Payee or other endorsee of this Note
who is in possession of it, or the bearer of such Note, if this Note is
at the time payable to the bearer.
"Loan Documents" means this Note, the Pledge Agreement, the
Guaranty, the Post-Closing Agreement, and all promissory notes,
assignments, guaranties, security agreements, financing statements and
other agreements executed and delivered pursuant to or in connection
with this Note as such agreements may be amended or otherwise modified
from time to time.
"Prime Rate" means the "prime rate" published from time to
time in the Money Rates column of The Wall Street Journal (Central
Edition); provided, however, if the Money Rates column of The Wall
Street Journal (Central Edition) ceases to be published or otherwise
does not designate a "prime rate" as of any business day, "Prime Rate"
shall mean the rate of interest per annum publicly announced by The
Chase Manhattan Bank as its prime rate in effect at its principal
office in New York City; in each case each change in such rate shall be
effective from and including the business day such change is published
or announced, as the case may be.
12. Notices. Any notice hereunder shall be in writing, and if given by
hand delivery, telegram, telefax, or telex, shall be deemed to have been given
when sent and, if mailed, shall be deemed to have been given three (3) days
after the date when sent, if sent by registered or certified mail, postage
prepaid, and addressed as follows (or such other address for which all parties
listed below have been notified):
If to Maker: UICI SUB I, INC.
Gregory T. Mutz, President and
Chief Executive Officer
4001 McEwen Drive, Suite 200
Dallas, Texas 75244
Telephone: (972) 392-6733
Telecopier: (972) 392-6721
If to Payee: LM FINANCE, LLC.
Gary L. Friedman, Secretary
2121 Precinct Line Road
Hurst, Texas 76054
Telephone: (817) 428-3883
Telecopier: (817) 428-3898
13. GOVERNING LAW. THIS NOTE IS EXECUTED AND DELIVERED IN TEXAS AND
SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
TEXAS.
PROMISSORY NOTE - PAGE 5
<PAGE> 6
14. NOTICE. THIS NOTE AND THE LOAN DOCUMENTS REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
Effective as of the date first above written.
PROMISSORY NOTE - PAGE 6
<PAGE> 7
MAKER:
UICI SUB I, INC.
By:
----------------------------------------
Name: Gregory T. Mutz
Title: President
PROMISSORY NOTE - PAGE 7
<PAGE> 1
EXHIBIT 99.4
GUARANTY
This GUARANTY is entered into as of the 14th day of March, 2000, by
UICI, a Delaware corporation ("Guarantor"), in favor of and for the benefit of
LM FINANCE, LLC., a Nevada limited liability company ("Lender") and its
successors and assigns.
RECITALS
A. UICI SUB I, INC., a Delaware corporation ( "Borrower") has entered
into that certain Promissory Note dated as of March 14, 2000, in favor of Lender
(said Promissory Note, as amended, supplemented or otherwise modified from time
to time being the "Promissory Note"; capitalized terms not otherwise defined
herein shall have the meaning ascribed to such terms in the Promissory Note).
B. Borrower is a wholly-owned subsidiary of Guarantor. Guarantor will
receive direct and indirect benefits from the transactions contemplated by the
Promissory Note in an amount at least equal to the obligations of Guarantor
under this Guaranty, and the loans to the Borrower pursuant to the Promissory
Note will produce direct financial benefits to the Guarantor.
C. It is a condition of the Promissory Note that Borrower's obligations
thereunder be guaranteed by Guarantor.
D. Guarantor is willing irrevocably and unconditionally to guaranty
such obligations of Borrower subject to the terms and provisions hereof.
NOW, THEREFORE, based upon the foregoing and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
in order to induce Lender to enter into the Promissory Note and to make the
loans thereunder, Guarantor hereby agrees as follows:
SECTION 1. DEFINITIONS
1.1 Certain Defined Terms. As used in this Guaranty, the following
terms shall have the following meanings unless the context otherwise requires:
"Guaranteed Obligations" means:
(a) all principal, interest, reasonable attorneys' fees
actually incurred, liabilities for costs and expenses and other
indebtedness, obligations and liabilities owed to Lender from Borrower,
Guarantor or any other party guaranteeing or granting collateral for
the Promissory Note and any other Loan Document (as defined in the
Promissory Note) and any renewals, modifications, increases and
extensions of the Promissory Note or any Loan Document; and
GUARANTY - PAGE 1
<PAGE> 2
(b) all costs, expenses and fees, including but not limited to
court costs and reasonable attorneys' fees, arising in connection with
the collection of any or all amounts, indebtedness, obligations and
liabilities described above.
"Guaranty" means this Guaranty, dated as of March 14, 2000, as
it may be amended, supplemented or otherwise modified from time to
time.
"payment in full" or "paid in full" means the final and
indefeasible payment in full - in cash or such other type of payment or
satisfaction as Lender may approve.
1.2 Interpretation.
(a) References to "Sections" and "subsections" shall be to
Sections and subsections, respectively, of this Guaranty unless
otherwise specifically provided.
(b) In the event of any conflict or inconsistency between the
terms, conditions and provisions of this Guaranty and the terms,
conditions and provisions of the Promissory Note, the terms, conditions
and provisions of this Guaranty shall prevail.
SECTION 2. THE GUARANTY
2.1 Guaranty of the Guaranteed Obligations. Subject to the provisions
of subsection 2.2(a), Guarantor hereby irrevocably and unconditionally
guarantees, as a primary obligor and not merely as a surety, the due and
punctual payment in full of all Guaranteed Obligations when the same shall
become due, whether at stated maturity, by required prepayment, acceleration,
demand or otherwise (including amounts that would become due but for the
operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11
U.S.C. ss. 362(a)), as amended.
2.2 Limitation on Amount Guaranteed; Contribution by Guarantor. (a)
Anything contained in this Guaranty to the contrary notwithstanding, the
obligations of Guarantor hereunder shall be limited to a maximum aggregate
amount equal to the largest amount that would not render its obligations
hereunder subject to avoidance as a fraudulent transfer or conveyance under
Section 548 of Title 11 of the United States Code, as amended, or any applicable
provisions of comparable state law (collectively, the "Fraudulent Transfer
laws"), in each case after giving effect to all other liabilities of Guarantor,
contingent or otherwise, that are relevant under the Fraudulent Transfer laws
(specifically excluding, however, any liabilities of Guarantor in respect of
intercompany indebtedness to Borrower or other subsidiaries or affiliates of
Borrower to the extent that such indebtedness would be discharged in an amount
equal to the amount paid by Guarantor hereunder and after giving effect as
assets to the value (as determined under the applicable provisions of the
Fraudulent Transfer laws) of any rights to subrogation or contribution of
Guarantor pursuant to (i) applicable law or (ii) any agreement providing for an
equitable allocation among Guarantor and other subsidiaries or affiliates of
Borrower of obligations arising under guaranties by such parties.
(b) Guarantor under this Guaranty, and each guarantor under other
guaranties, if any, relating to the Promissory Note (the "Related Guaranties")
which contain a contribution provision
GUARANTY - PAGE 2
<PAGE> 3
similar to that set forth in this subsection 2.2(b), together desire to allocate
among themselves (collectively, the "Contributing Guarantors"), in a fair and
equitable manner, their obligations arising under this Guaranty and the Related
Guaranties. Accordingly, in the event any payment or distribution is made by
Guarantor under this Guaranty or a guarantor under a Related Guaranty (a
"Funding Guarantor") that exceeds its Fair Share (as defined below), that
Funding Guarantor shall be entitled to a contribution from each of the other
Contributing Guarantors in the amount of such other Contributing Guarantor's
Fair Share Shortfall (as defined below), with the result that all such
contributions will cause each Contributing Guarantor's Aggregate Payments (as
defined below) to equal its Fair Share. "Fair Share" means, with respect to a
Contributing Guarantor as of any date of determination, an amount equal to (i)
the ratio of (x) the Adjusted Maximum Amount (as defined below) with respect to
such Contributing Guarantor to (y) the aggregate of the Adjusted Maximum Amounts
with respect to all Contributing Guarantors, multiplied by (ii) the aggregate
amount paid or distributed on or before such date by all Funding Guarantors
under this Guaranty and the Related Guaranties in respect of the obligations
guarantied. "Fair Share Shortfall" means, with respect to a Contributing
Guarantor as of any date of determination, the excess, if any, of the Fair Share
of such Contributing Guarantor over the Aggregate Payments of such Contributing
Guarantor. "Adjusted Maximum Amount" means, with respect to a Contributing
Guarantor as of any date of determination, the maximum aggregate amount of the
obligations of such Contributing Guarantor under this Guaranty and the Related
Guaranties, determined in accordance with subsection 2.2(a) or, if applicable, a
similar provision contained in a Related Guaranty; provided that, solely for
purposes of calculating the "Adjusted Maximum Amount" with respect to any
Contributing Guarantor for purposes of this subsection 2.2(b), the assets or
liabilities arising by virtue of any rights to or obligations of contribution
hereunder or under any similar provision contained in a Related Guaranty shall
not be considered as assets or liabilities of such Contributing Guarantor.
"Aggregate Payments" means, with respect to a Contributing Guarantor as of any
date of determination, the aggregate amount of all payments and distributions
made on or before such date by such Contributing Guarantor in respect of this
Guaranty and the Related Guaranties (including, without limitation, in respect
of this subsection 2.2(b) or any similar provision contained in a Related
Guaranty). The amounts payable as contributions hereunder and under similar
provisions in the Related Guaranties shall be determined as of the date on which
the related payment or distribution is made by the applicable Funding Guarantor.
The allocation among Contributing Guarantors of their obligations as set forth
in this subsection 2.2(b) or any similar provision contained in a Related
Guaranty shall not be construed in any way to limit the liability of any
Contributing Guarantor hereunder or under a Related Guaranty. Each Contributing
Guarantor under a Related Guaranty is a third party beneficiary to the
contribution agreement set forth in this subsection 2.2(b).
2.3 Liability of Guarantor Absolute. Guarantor agrees that its
obligations hereunder are irrevocable, absolute, independent and unconditional
and shall not be affected by any circumstance which constitutes a legal or
equitable discharge of a guarantor or surety other than payment in full of the
Guaranteed Obligations. In furtherance of the foregoing and without limiting the
generality thereof, Guarantor agrees as follows:
(a) This Guaranty is a guaranty of payment when due and not of
collectibility.
GUARANTY - PAGE 3
<PAGE> 4
(b) Lender may enforce this Guaranty upon the occurrence of
and during the continuation of a Default under the Promissory Note
notwithstanding the existence of any dispute between Lender and
Borrower with respect to the existence of such Default.
(c) The obligations of Guarantor hereunder are independent of
the obligations of Borrower under the Loan Documents and the
obligations of any other guarantor of the obligations of Borrower under
the Loan Documents, and a separate action or actions may be brought and
prosecuted against Guarantor whether or not any action is brought
against Borrower or any of such other guarantors and whether or not
Borrower is joined in any such action or actions.
(d) Guarantor's payment of a portion, but not all, of the
Guaranteed Obligations shall in no way limit, affect, modify or abridge
Guarantor's liability for any portion of the Guaranteed Obligations
which has not been paid. Without limiting the generality of the
foregoing, if Lender is awarded a judgment in any suit brought to
enforce Guarantor's covenants to pay a portion of the Guaranteed
Obligations, such judgment shall not be deemed to release Guarantor
from its covenant to pay the portion of the Guaranteed Obligations that
is not the subject of such suit.
(e) Subject to the terms of the Promissory Note, Lender, upon
such terms as it deems appropriate, without notice or demand and
without affecting the validity or enforceability of this Guaranty or
giving rise to any reduction, limitation, impairment, discharge or
termination of Guarantor's liability hereunder, at any time and from
time to time, may (i) renew, extend, accelerate, increase the rate of
interest on, or otherwise change the time, place, manner or terms of
payment of the Guaranteed Obligations, (ii) settle, compromise, release
or discharge, or accept or refuse any offer of performance with respect
to, or substitutions for, the Guaranteed Obligations or any agreement
relating thereto and/or subordinate the payment of the same to the
payment of any other obligations; (iii) request and accept other
guaranties of the Guaranteed Obligations and take and hold security for
the payment of this Guaranty or the Guaranteed Obligations; (iv)
release, surrender, exchange, substitute, compromise, settle, rescind,
waive, alter, subordinate or modify, with or without consideration, any
security for payment of the Guaranteed Obligations, any other
guaranties of the Guaranteed Obligations, including, without
limitation, any Related Guaranties or any other obligation of any
person with respect to the Guaranteed Obligations; (v) enforce and
apply any security now or hereafter held by or for the benefit of
Lender in respect of this Guaranty or the Guaranteed Obligations and
direct the order or manner of sale thereof, or exercise any other right
or remedy that Lender may have against any such security, as Lender in
its discretion may determine consistent with the Promissory Note and
any applicable security agreement, including foreclosure on any such
security pursuant to one or more judicial or nonjudicial sales, whether
or not every aspect of any such sale is commercially reasonable, and
even though such action operates to impair or extinguish any right of
reimbursement or subrogation or other right or remedy of Guarantor
against Borrower or any security for the Guaranteed Obligations; and
(vi) exercise any other rights available to it under the Loan
Documents.
GUARANTY - PAGE 4
<PAGE> 5
(f) This Guaranty and the obligations of Guarantor hereunder
shall be valid and enforceable and shall not be subject to any
reduction, limitation, impairment, discharge or termination for any
reason (other than payment in full of the Guaranteed Obligations),
including without limitation the occurrence of any of the following,
whether or not Guarantor shall have had notice or knowledge of any of
them: (i) any failure or omission to assert or enforce or agreement or
election not to assert or enforce, or the stay or enjoining, by order
of court, by operation of law or otherwise, of the exercise or
enforcement of, any claim or demand or any right, power or remedy
(whether arising under the Loan Documents, at law, in equity or
otherwise) with respect to the Guaranteed Obligations or any agreement
relating thereto, or with respect to any other guaranty of or security
for the payment of the Guaranteed Obligations; (ii) any rescission,
waiver, amendment or modification of, or any consent to departure from,
any of the terms or provisions (including without limitation provisions
relating to events of default) of the Promissory Note, any of the other
Loan Documents or any agreement or instrument executed pursuant
thereto, or of any other guaranty or security for the Guaranteed
Obligations, (iii) the Guaranteed Obligations, or any agreement
relating thereto, at any time being found to be illegal, invalid or
unenforceable in any respect; (iv) the application of payments received
from any source (other than payments received pursuant to the other
Loan Documents or from the proceeds of any security for the Guaranteed
Obligations) to the payment of indebtedness other than the Guaranteed
Obligations, even though Lender might have elected to apply such
payment to any part or all of the Guaranteed Obligations; (v) Lender's
consent to the change, reorganization or termination of the corporate
structure or existence of Borrower and to any corresponding
restructuring of the Guaranteed Obligations; (vi) any failure to
perfect or continue perfection of a security interest in any collateral
which secures any of the Guaranteed Obligations; (vii) any defenses,
set-offs or counterclaims which Borrower may allege or assert against
Lender in respect of the Guaranteed Obligations, including but not
limited to failure of consideration, breach of warranty, statute of
frauds, statute of limitations, accord and satisfaction and usury; and
(viii) any other act or thing or omission, or delay to do any other act
or thing, which may or might in any manner or to any extent vary the
risk of Guarantor as obligor in respect of the Guaranteed Obligations.
2.4 Waivers by Guarantor. Guarantor hereby waives, for the benefit of
Lender:
(a) any right to require Lender, as a condition of payment or
performance by Guarantor, to (i) proceed against Borrower, any other
guarantor of the Guaranteed Obligations or any other person, (ii)
proceed against or exhaust any security held from Borrower, any other
guarantor of the Guaranteed Obligations or any other person, (iii)
proceed against or have resort to any balance of any deposit account or
credit on the books of Lender in favor of Borrower or any other person,
or (iv) pursue any other remedy in the power of Lender whatsoever;
(b) any defense arising by reason of the incapacity, lack of
authority or any disability or other defense of Borrower including,
without limitation, any defense based on or arising out of the lack of
validity or the unenforceability of the Guaranteed Obligations or any
agreement or instrument relating thereto or by reason of the cessation
of the liability of Borrower from any cause other than payment in full
of the Guaranteed Obligations;
GUARANTY - PAGE 5
<PAGE> 6
(c) any defense based upon any statute or rule of law which
provides that the obligation of a surety must be neither larger in
amount nor in other respects more burdensome than that of the
principal;
(d) any defense based upon Lender's errors or omissions in the
administration of the Guaranteed Obligations, except behavior which
amounts to gross negligence or willful misconduct as determined by a
court of competent jurisdiction;
(e) (i) any principles or provisions of law, statutory or
otherwise, which are or might be in conflict with the terms of this
Guaranty and any legal or equitable discharge of Guarantor's
obligations hereunder, (ii) the benefit of any statute of limitations
affecting Guarantor's liabilities hereunder or the enforcement hereof,
(iii) any rights to set-offs, recoupments and counterclaims, and (iv)
promptness, diligence and any requirement that Lender protect, secure,
perfect or insure any security interest or lien or any property subject
thereto;
(f) notices, demands, presentments, protests, notices of
protest, notices of dishonor and notices of any action or inaction,
including acceptance of this Guaranty, notices of default under the
Promissory Note or any agreement or instrument related thereto, notices
of any renewal, extension or modification of the Guaranteed Obligations
or any agreement related thereto, notices of any extension of credit to
Borrower and notices of any of the matters referred to in subsection
2.3 and any right to consent to any thereof; and
(g) any defenses or benefits that may be derived from or
afforded by law which limit the liability of or exonerate guarantors or
sureties, or which may conflict with the terms of this Guaranty.
2.5 Payment by Guarantor; Application of Payments. Subject to the
provisions of subsection 2.2(a), Guarantor hereby agrees in furtherance of the
foregoing and not in limitation of any other right which Lender or any other
person may have at law or in equity against Guarantor by virtue hereof, that
upon the failure of Borrower to pay any of the Guaranteed Obligations when and
as the same shall become due, whether at stated maturity, by required
prepayment, declaration, acceleration, demand or otherwise (including amounts
that would become due but for the operation of the automatic stay under Section
362(a) of the Bankruptcy Code, 11 U.S.C. ss. 362(a)), Guarantor will forthwith
pay, or cause to be paid, in cash, to Lender, an amount equal to the sum of the
unpaid principal amount of all Guaranteed Obligations then due as aforesaid,
accrued and unpaid interest on such Guaranteed Obligations (including, without
limitation, interest which, but for the filing of a petition in bankruptcy with
respect to Borrower, would have accrued on such Guaranteed Obligations, whether
or not a claim is allowed against Borrower for such interest in any such
bankruptcy proceeding) and all other Guaranteed Obligations then owed to Lender
as aforesaid. All such payments shall be applied promptly from time to time by
Lender:
GUARANTY - PAGE 6
<PAGE> 7
First, to the payment of the costs and expenses of any
collection or other realization under this Guaranty, including
reasonable compensation to Lender and its agents and counsel, and all
expenses, liabilities and advances made or incurred by Lender in
connection therewith;
Second, to the payment of all other Guaranteed Obligations;
and
Third, after payment in full of all Guaranteed Obligations, to
the payment to Guarantor, or its successors or assigns, or to
whomsoever may be lawfully entitled to receive the same or as a court
of competent jurisdiction may direct, of any surplus then remaining
from such payments.
2.6 Subrogation. Until the Guaranteed Obligations shall have been paid
in full, Guarantor shall withhold exercise of (a) any right of subrogation, (b)
any right of contribution Guarantor may have against any other guarantor of the
Guaranteed Obligations, (c) any right to enforce any remedy which Lender now has
or may hereafter have against Borrower or (d) any benefit of, and any right to
participate in, any security now or hereafter held by Lender. Guarantor further
agrees that, to the extent the withholding of the exercise of its rights of
subrogation and contribution as set forth herein is found by a court of
competent jurisdiction to be void or voidable for any reason, any rights of
subrogation Guarantor may have against Borrower or against any collateral or
security, and any rights of contribution Guarantor may have against any other
guarantor, shall be junior and subordinate to any rights Lender may have against
Borrower, to all right, title and interest Lender may have in any such
collateral or security, and to any right Lender may have against such other
guarantor. Lender, may use, sell or dispose of any item of collateral or
security as it sees fit without regard to any subrogation rights Guarantor may
have, and upon any such disposition or sale any rights of subrogation Guarantor
may have with respect to such sale or disposition shall terminate. If any amount
shall be paid to Guarantor on account of such subrogation rights at any time
when all Guaranteed Obligations shall not have been paid in full, such amount
shall be held in trust for Lender and shall forthwith be paid over to Lender to
be credited and applied against the Guaranteed Obligations, whether matured or
unmatured, in accordance with the terms of the Promissory Note or any applicable
security agreement.
2.7 Subordination of Other Obligations of Borrower. Any indebtedness of
Borrower now or hereafter held by Guarantor is hereby subordinated in right of
payment to the Guaranteed Obligations, provided prior to a Default, Guarantor
may receive ordinary course or regularly scheduled payments of such
indebtedness. Any such indebtedness of Borrower to Guarantor collected or
received by Guarantor after a Default has occurred and is continuing shall be
held in trust for Lender and shall forthwith be paid over to Lender to be
credited and applied against the Guaranteed Obligations but without affecting,
impairing or limiting in any manner the liability of Guarantor under any other
provision of this Guaranty.
2.8 Expenses. Guarantor agrees to pay, or cause to be paid, and to save
Lender harmless against liability for, any and all reasonable costs and expenses
(including reasonable fees and disbursements of counsel and allocated costs of
internal counsel) incurred or expended by Lender in connection with the
enforcement of or preservation of any rights under this Guaranty.
GUARANTY - PAGE 7
<PAGE> 8
2.9 Continuing Guaranty. This Guaranty is a continuing guaranty and
shall remain in effect until all of the Guaranteed Obligations shall have been
paid in full.
2.10 Financial Condition of Borrower. Any future extensions of credit
may be granted to Borrower or continued from time to time without notice to or
authorization from Guarantor regardless of the financial or other condition of
Borrower at the time of any such grant or continuation. Lender shall have no
obligation to disclose or discuss with Guarantor their assessment, or
Guarantor's assessment, of the financial condition of Borrower. Guarantor has
adequate means to obtain information from Borrower on a continuing basis
concerning the financial condition of Borrower and its ability to perform its
obligations under the Loan Documents, and Guarantor assumes the responsibility
for being and keeping informed of the financial condition of Borrower and of all
circumstances bearing upon the risk of nonpayment of the Guaranteed Obligations.
Guarantor hereby waives and relinquishes any duty on the part of Lender to
disclose any matter, fact or thing relating to the business, operations or
conditions of Borrower now known or hereafter known by Lender.
2.11 Rights Cumulative. The rights, powers and remedies given to Lender
by this Guaranty are cumulative and shall be in addition to and independent of
all rights, powers and remedies given to Lender by virtue of any statute or rule
of law or in any of the other Loan Documents or any agreement between Guarantor
and Lender or between Borrower and Lender. Any forbearance or failure to
exercise, and any delay by Lender in exercising, any right, power or remedy
hereunder shall not impair any such right, power or remedy or be construed to be
a waiver thereof, nor shall it preclude the further exercise of any such right,
power or remedy.
2.12 Bankruptcy: Post-Petition Interest: Reinstatement of Guaranty.
(a) So long as any Guaranteed Obligations remain outstanding,
Guarantor shall not, without the prior written consent of Lender in
accordance with the terms of the Promissory Note, commence or join with
any other person in commencing any bankruptcy, reorganization or
insolvency proceedings of or against Borrower. The obligations of
Guarantor under this Guaranty shall not be reduced, limited, impaired,
discharged, deferred, suspended or terminated by any proceeding,
voluntary or involuntary, involving the bankruptcy, insolvency,
receivership, reorganization, liquidation or arrangement of Borrower or
by any defense which Borrower may have by reason of the order, decree
or decision of any court or administrative body resulting from any such
proceeding.
(b) Guarantor acknowledges and agrees that any interest on any
portion of the Guaranteed Obligations which accrues after the
commencement of any proceeding referred to in clause (a) above (or, if
interest on any portion of the Guaranteed Obligations ceases to accrue
by operation of law by reason of the commencement of said proceeding,
such interest as would have accrued on such portion of the Guaranteed
Obligations if said proceedings had not been commenced) shall be
included in the Guaranteed Obligations because it is the intention of
Guarantor and Lender that the Guaranteed Obligations which are
guaranteed by Guarantor pursuant to this Guaranty should be determined
without
GUARANTY - PAGE 8
<PAGE> 9
regard to any rule of law or order which may relieve Borrower of any
portion of such Guaranteed Obligations. Guarantor will permit any
trustee in bankruptcy, receiver, debtor in possession, assignee for the
benefit of creditors or similar person to pay Lender, or allow the
claim of Lender in respect of, any such interest accruing after the
date on which such proceeding is commenced.
(c) In the event that all or any portion of the Guaranteed
Obligations are paid by Borrower, the obligations of Guarantor
hereunder shall continue and remain in full force and effect or be
reinstated, as the case may be, in the event that all or any part of
such payment(s) are rescinded or recovered directly or indirectly from
Lender as a preference, fraudulent transfer or otherwise, and any such
payments which are so rescinded or recovered shall constitute
Guaranteed Obligations for all purposes under this Guaranty.
2.13 Notice of Events. As soon as Guarantor obtains knowledge thereof,
and to the extent Borrower had such knowledge would be required to do so under
any Loan Document, Guarantor shall give Lender written notice of any condition
or event which has resulted or might reasonably be expected to result in (a) a
material adverse change in the financial condition of Guarantor and Borrower,
taken as a whole, or (b) a breach of or noncompliance with any term, condition
or covenant contained herein or in the Promissory Note, any other Loan Document
or in any document delivered pursuant hereto or thereto, or (c) a material
breach of, or material noncompliance with, any material term, condition or
covenant of any material contract to which Guarantor or Borrower is a party or
by which Guarantor or Borrower or Guarantor's or Borrower's property may be
bound.
2.14 Set Off. In addition to any other rights Lender may have under law
or in equity, if any amount shall at any time be due and owing by Guarantor to
Lender under this Guaranty from and after the occurrence of a Default and during
the continuation thereof, Lender is authorized at any time or from time to time,
without notice (any such notice being hereby expressly waived), to set off and
to appropriate and to apply any and all deposits (general or special, including
but not limited to indebtedness evidenced by certificates of deposit, whether
matured or unmatured) and any other indebtedness of Lender owing to Guarantor
and any other property of Guarantor held by Lender to or for the credit or the
account of Guarantor against and on account of the Guaranteed Obligations and
liabilities of Guarantor to Lender under this Guaranty. After exercising any
right to set off, appropriate or apply any deposits or other indebtedness of
Guarantor, Lender exercising such right shall endeavor to provide notice of such
set off, appropriation or application to Guarantor promptly, but any failure to
do so shall not affect the validity of any such set off, appropriation or
application.
SECTION 3. REPRESENTATIONS AND WARRANTIES
In order to induce Lender to accept this Guaranty and to enter into the
Promissory Note and extend credit to Borrower thereunder, Guarantor hereby
represents and warrants to Lender that the following statements are true and
correct:
GUARANTY - PAGE 9
<PAGE> 10
3.1 Corporate Existence. Guarantor is duly organized, validly existing
and in good standing under the laws of the state of its incorporation, has the
corporate power to own its assets and to transact the business in which it is
now engaged and is duly qualified as a foreign corporation and in good standing
under the laws of each jurisdiction where its ownership or lease of property or
the conduct of its business requires such qualification.
3.2 Corporate Power: Authorization: Enforceable Obligations. Guarantor
has the corporate power, authority and legal right to execute, deliver and
perform this Guaranty and all other Loan Documents to which Guarantor is a party
(all such agreements herein collectively referred to as the "Guarantor
Agreements") and all obligations required under the Guarantor Agreements and has
taken all necessary corporate action to authorize the Guarantor Agreements on
the terms and conditions of such agreements and its execution, delivery and
performance of the Guarantor Agreements and all obligations required under such
agreements. No consent of any other person including, without limitation,
stockholders and creditors of Guarantor, and no license, permit, approval or
authorization of, exemption by, notice or report to, or registration, filing or
declaration with, any governmental authority is required by Guarantor in
connection with the Guarantor Agreements or the execution, delivery,
performance, validity or enforceability of the Guarantor Agreements and the
obligations required under such agreements except for (i) such consents which
have been validly obtained, or (ii) in the case of any leasehold interest of
Guarantor, Guarantor has used commercially reasonable efforts to obtain any such
consent and the failure of Guarantor to obtain any such consent is the result of
the exercise by a landlord of such landlord's existing contractual right to
withhold such consent. The Guarantor Agreements have been, and each instrument
or document required in connection with such agreements will be, executed and
delivered by a duly authorized officer of Guarantor, and the Guarantor
Agreements constitute, and each instrument or document required in connection
therewith when executed and delivered will constitute, the legally valid and
binding obligation of Guarantor, enforceable against Guarantor in accordance
with its respective terms, except as enforcement may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws or
equitable principles relating to or limiting creditors' rights generally.
3.3 No Legal Bar to this Guaranty. The execution, delivery and
performance of the Guarantor Agreements and the documents or instruments
required in connection therewith, and the use of the proceeds of the borrowings
under the Promissory Note, will not violate any provision of any existing law or
regulation binding on Guarantor, or any order, judgment, award or decree of any
court, arbitrator or governmental authority binding on Guarantor, or the
certificate of incorporation or bylaws of Guarantor or any securities issued by
Guarantor, or any mortgage, indenture, lease, contract or other agreement,
instrument or undertaking to which Guarantor is a party or by which Guarantor or
any of its assets may be bound, the violation of which would have a material
adverse effect on the business, operations, assets or financial condition of
Guarantor and will not result in, or require, the creation or imposition of any
lien on any of its property, assets or revenues pursuant to the provisions of
any such mortgage, indenture, lease, contract or other agreement, instrument or
undertaking.
3.4 Benefit to Guarantor. Borrower is a subsidiary of Guarantor, and
Guarantor's board of directors has determined, as evidenced by resolution duly
adopted and in full force and effect on the date hereof, that Guarantor will
receive direct and indirect benefit from the
GUARANTY - PAGE 10
<PAGE> 11
transactions contemplated by the Promissory Note in an amount at least equal to
the obligations of Guarantor under this Guaranty, and that loans to Borrower
produce direct financial benefits to Guarantor. Therefore, the value of the
consideration received and to be received by Guarantor as a result of
Guarantor's entering into this Guaranty and each of the other Loan Documents to
which it is a party is reasonably worth at least as much as the liability and
obligations of Guarantor hereunder and under the other Loan Documents to which
Guarantor is a party and such liability and obligations have benefitted and may
reasonably be expected to benefit Guarantor directly.
SECTION 4. COVENANTS.
Guarantor covenants and agrees that, unless and until all of the
Guaranteed Obligations shall have been paid in full, unless Lender shall
otherwise consent in writing:
4.1 Corporate Existence, Etc. Guarantor shall at all times preserve and
keep in full force and effect its corporate existence and all rights and
franchises material to its business, except as may be expressly provided in the
Promissory Note.
4.2 Compliance with Laws, Etc. Guarantor shall comply in all material
respects with all applicable laws, rules, regulations and orders, such
compliance to include, without limitation, paying when due all taxes,
assessments and governmental charges imposed upon it or upon any of its
properties or assets or in respect of any of its franchises, businesses, income
or property before any penalty or interest accrues thereon unless such tax,
assessment or charge is being contested in good faith by appropriate proceedings
promptly instituted and diligently conducted and Guarantor has established such
reserve or other appropriate provision, if any, as shall be required in
conformity with general accepted accounting principals; provided that Guarantor
shall in any event pay such taxes, assessments and governmental charges not
later than five (5) days prior to the date of any proposed sale under any
judgment, writ or warrant of attachment entered or filed against Guarantor as a
result of the failure to make such payment.
4.3 Books and Records. Guarantor shall keep and maintain books of
record and account with respect to its operations in accordance with generally
accepted accounting principles and shall permit Lender and its respective
officers, employees and authorized agents to examine, copy and make excerpts
from the books and records of Guarantor, if any, and to inspect the properties
of Guarantor, both real and personal, at such reasonable times as Lender may
request.
SECTION 5. MISCELLANEOUS
5.1 Survival of Warranties. All agreements, representations and
warranties made herein shall survive the execution and delivery of this Guaranty
and the execution and delivery of the Promissory Note.
5.2 Notices. Any communications between Lender and Guarantor and any
notices or requests provided herein to be given may be given by mailing the
same, postage prepaid, or by telex, facsimile transmission or cable to each such
party at its address set forth in or determined pursuant to the Promissory Note,
on the signature pages hereof or to such other addresses as each
GUARANTY - PAGE 11
<PAGE> 12
such party may in writing hereafter indicate. Any notice, request or demand to
or upon Lender or Guarantor shall not be effective until received.
5.3 Severability. In case any provision in or obligation under this
Guaranty shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
5.4 Amendments and Waivers. No amendment, modification, termination or
waiver of any provision of this Guaranty, or consent to any departure by
Guarantor therefrom, shall in any event be effective unless in writing and
signed by Lender. Any waiver or consent shall be effective only in the specific
instance and for the specific purpose for which it was given.
5.5. Headings. Section and subsection headings in this Guaranty are
included herein for convenience of reference only and shall not constitute a
part of this Guaranty for any other purpose or be given any substantive effect.
5.6 Applicable Law. THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF
GUARANTOR AND LENDER HEREUNDER AND ALL OTHER ASPECTS HEREOF SHALL BE DEEMED TO
BE MADE UNDER, SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS APPLICABLE TO CONTRACTS MADE AND
PERFORMED IN SUCH STATE.
5.7 Successors and Assigns; Reliance by Lender. This Guaranty is a
continuing guaranty and shall be binding upon Guarantor and its successors and
assigns. This Guaranty shall inure to the benefit of Lender and its respective
successors and assigns, including, without limitation, any subsequent holder of
all or any part of the Obligations. Guarantor shall not assign this Guaranty nor
any of the rights or obligations of Guarantor hereunder without the prior
written consent of Lender. Lender may, without notice or consent, assign its
interest in this Guaranty in whole or in part as part of a sale or other
transfer of the Promissory Note, and/or all or any portion of its interest in
the Loans (whether by direct transfer, transfer of a participation interest, or
otherwise). The terms and provisions of this Guaranty shall inure to the benefit
of any assignee or transferee of the Promissory Note and/or any interest in the
Promissory Note, and in the event of such transfer or assignment the rights and
privileges herein conferred upon Lender shall automatically extend to and be
vested in such transferee or assignee, all subject to the terms and conditions
hereof.
5.8 Consent to Jurisdiction and Service of Process. ALL JUDICIAL
PROCEEDINGS BROUGHT AGAINST GUARANTOR ARISING OUT OF OR RELATING TO THIS
GUARANTY OR ANY OTHER LOAN DOCUMENT TO WHICH GUARANTOR IS A PARTY MAY BE BROUGHT
IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION LOCATED IN THE STATE OF
TEXAS AND BY EXECUTION AND DELIVERY OF THIS GUARANTY GUARANTOR ACCEPTS FOR
ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE
NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY
GUARANTY - PAGE 12
<PAGE> 13
DEFENSE OF FORUM NON CONVENIENS AND IRREVOCABLY AGREES TO BE BOUND BY ANY
JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS GUARANTY AND/OR ANY OTHER LOAN
DOCUMENT TO WHICH GUARANTOR IS A PARTY. Guarantor hereby agrees that service of
process sufficient for personal jurisdiction in any action against Guarantor in
the State of Texas may be made by registered or certified mail, return receipt
requested, to Guarantor in accordance with subsection 5.2, and Guarantor hereby
acknowledges that such service shall be effective and binding in every respect.
Nothing herein shall affect the right to serve process in any other manner
permitted by law or shall limit the right of Lender to bring proceedings against
Guarantor in the courts of any other jurisdiction.
5.9 Waiver of Trial by Jury. GUARANTOR AND, BY ITS ACCEPTANCE OF THE
BENEFITS HEREOF, AND LENDER HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
GUARANTY OR ANY OTHER LOAN DOCUMENT TO WHICH GUARANTOR IS A PARTY. The scope of
this waiver is intended to be all-encompassing of any and all disputes that may
be filed in any court and that relate to the subject matter of this transaction,
including without limitation contract claims, tort claims, breach of duty claims
and all other common law and statutory claims. Guarantor and, by their
acceptance of the benefits hereof, Lender (i) acknowledges that this waiver is a
material inducement for Guarantor, Lender to enter into a business relationship,
that Guarantor, Lender has already relied on this waiver in entering into this
Guaranty or accepting the benefits thereof, as the case may be, and that each
will continue to rely on this waiver in their related future dealings and (ii)
further warrants and represents that each has reviewed this waiver with its
legal counsel, and that each knowingly and voluntarily waives its jury trial
rights following consultation with legal counsel. THIS WAIVER IS IRREVOCABLE,
MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER
SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS
TO THIS GUARANTY AND ANY OTHER LOAN DOCUMENT TO WHICH GUARANTOR IS A PARTY. In
the event of litigation, this Guaranty may be filed as a written consent to a
trial by the court.
5.10 No Other Writing. This writing is intended by Guarantor and Lender
as the final expression of this Guaranty and is also intended as a complete and
exclusive statement of the terms of their agreement with respect to the matters
covered hereby. No course of dealing, course of performance or trade usage, and
no parol evidence of any nature, shall be used to supplement or modify any terms
of this Guaranty. There are no conditions to the full effectiveness of this
Guaranty.
5.11 Further Assurances. At any time or from time to time, upon the
request of Lender, Guarantor shall execute and deliver such further documents
and do such other acts and things as Lender may reasonably request in order to
effect fully the purposes of this Guaranty.
(SIGNATURE PAGE FOLLOWS)
GUARANTY - PAGE 13
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IN WITNESS WHEREOF, Guarantor has executed this Guaranty by its duly
authorized officer as of the date first above written.
UICI,
a Delaware corporation
By:
-------------------------------------
Name: Glenn W. Reed
Title: Executive Vice President
Address: 4001 McEwen Blvd., Suite 200
Dallas, Texas 75244
Telephone: 972-392-6719
Telecopy: 972-392-6717
Accepted by:
LM FINANCE, LLC.
By:
------------------------------
Name: Gary L. Friedman
Title: Secretary
GUARANTY - SIGNATURE PAGE
