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GUARANTY
Dated as of September 15, 1999
between
CONSECO, INC.,
as Guarantor,
and
THE CHASE MANHATTAN BANK,
as Administrative Agent
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EXHIBITS
EXHIBIT A-1 Form of Opinion of Xxxx X. Xxxx, counsel to Guarantor
EXHIBIT A-2 Form of Opinion of Xxxxx & Xxxxxxx, outside counsel to Guarantor
EXHIBIT B Form of Officer's Certificate
EXHIBIT C Form of Conseco Corporate Structure
GUARANTY
THIS GUARANTY (this "Guaranty") is entered into as of September 15,
1999 by CONSECO, INC., an Indiana corporation ("Guarantor"), in favor of THE
CHASE MANHATTAN BANK, as administrative agent (the "Administrative Agent") for
the financial institutions (the "Banks" and together with Administrative Agent,
collectively, the "Guarantied Parties") who are or from time to time may become
party to the Credit Agreement (as hereinafter defined). Unless otherwise defined
herein, capitalized terms used herein shall have the meanings assigned to such
terms pursuant to Article I hereof.
WITNESSETH:
WHEREAS, Guarantor has established a stock purchase program for certain
of its officers and directors to increase Guarantor's ability to attract and
retain able executive and senior officers and directors and, accordingly,
promote the interest of Guarantor and its stockholders, while at the same time
providing these individuals with additional incentive to work toward Guarantor's
future success;
WHEREAS, Guarantor has determined it to be in the best interest of
Guarantor and its stockholders to expand the stock purchase program to permit
the purchase of shares of common stock of Guarantor;
WHEREAS, concurrently with Guarantor's execution and delivery of this
Guaranty, certain other individuals (herein, collectively called, the
"Borrowers" and each individually, a "Borrower") will enter into that certain
Credit Agreement, dated as of September 15, 1999 (as from time to time, in whole
or in part, the same may be amended, modified, supplemented, restated,
refinanced, refunded or renewed, the "Credit Agreement"), among the Borrowers,
the Banks and the Administrative Agent, whereby the Banks, among other things,
have agreed to make term loans to the Borrowers in an aggregate principal amount
of $150,000,000 on the terms and subject to the conditions contained in the
Credit Agreement;
WHEREAS, as a condition precedent to the Banks executing and delivering
the Credit Agreement and making the initial Loans thereunder, Guarantor is
required to execute and deliver this Guaranty;
WHEREAS, Guarantor has been duly authorized to execute, deliver and
perform this Guaranty; and
WHEREAS, it is in the best interest of Guarantor to execute this
Guaranty inasmuch as Guarantor has and will derive substantial direct and
indirect benefits from the Loans made from time to time to the Borrowers by the
Banks pursuant to the Credit Agreement;
NOW THEREFORE, for good and valuable consideration the receipt and
sufficiency of which is hereby acknowledged, and in order to induce the Banks to
make Loans (including the initial Loans) to the Borrowers pursuant to the Credit
Agreement, Guarantor agrees, for the benefit of each Guarantied Party, as
follows:
ARTICLE I.
DEFINITIONS
SECTION 1.1. Certain Terms. Capitalized terms used herein, unless
otherwise defined herein, shall have the respective meanings assigned thereto in
the Credit Agreement; provided that such definitions shall survive any
termination of the Credit Agreement. In addition, when used herein the following
terms shall have the following meanings (such definitions to be equally
applicable to the singular and plural forms thereof):
"Administrative Agent" - see Preamble.
"Banks" or "Bank" - see Preamble.
"Borrowers" or "Borrower" - see third recital.
"Borrower Default" - see Section 6.1.
"Cash Collateral Account" shall mean the custody account, account
number 000-0-000000, maintained in the name of, and subject to the sole dominion
and control of, the Administrative Agent for the sole benefit of the Banks, for
the purpose of holding prepayments of the Obligations of the Borrowers by
Guarantor pursuant to Section 6.1.
"Credit Agreement" - see third recital.
"Guarantied Party" - see Preamble.
"Guaranty" - see Preamble.
"Indemnified Liabilities" - see Section 6.2.
"Indemnified Parties" - see Section 7.2.
"Obligations" - see Section 2.1.
"Permitted Liens" - see Section 4.4.
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"Subrogation Rights" - see Section 2.6.
"UCC" shall mean the Uniform Commercial Code or comparable statute or
any successor statutes thereto, as in effect from time to time in the relevant
jurisdiction.
ARTICLE II.
GUARANTY PROVISIONS
SECTION 2.1. Guaranty. Guarantor hereby absolutely, unconditionally and
irrevocably:
(a) guaranties to the Guarantied Parties the full and punctual payment
when due, whether at stated maturity, by required prepayment, declaration,
acceleration, demand or otherwise, and at all times thereafter, of all
obligations of each Borrower to the Guarantied Parties, howsoever created,
arising or evidenced, whether direct or indirect, absolute or contingent, or now
or hereafter existing, or due or to become due under the Credit Agreement,
whether for principal, interest, fees, expenses or otherwise (including all such
amounts which would become due but for the operation of the automatic stay
provisions under Section 362(a) of the United States Bankruptcy Code, 11 U.S.C.
ss.362(a), and the operation of Sections 502(b) and 506(b) of the United States
Bankruptcy Code, 11 U.S.C. ss.502(b) and ss.506(b)) (all such obligations
hereinafter collectively called the "Obligations"); and
(b) indemnifies and holds harmless each Guarantied Party or any holder
of any Loan for any and all costs and expenses (including, without limitation,
reasonable attorneys' fees and expenses) incurred by such Guarantied Party or
such holder, as the case may be, in enforcing any rights under this Guaranty;
This Guaranty constitutes a guaranty of payment when due and not of collection,
and Guarantor specifically agrees that, except as set forth in Article VI, it
shall not be necessary or required that any Guarantied Party or any holder of
any Loan exercise any right, assert any claim or demand or enforce any remedy
whatsoever against any Borrower or any other obligor (or any other Person)
before the performance of, or as a condition to, the obligations of Guarantor
hereunder.
SECTION 2.2. Acceleration of Guaranty. Guarantor agrees that, in the
event of the insolvency of any Borrower, any other obligor with respect to the
Obligations of such Borrower, or Guarantor, as the case may be, or the inability
or failure of such Borrower, such other obligor or Guarantor to pay debts as
they become due, or an assignment by such Borrower, such other obligor or
Guarantor for the benefit of creditors, or the commencement of any case or
proceeding in respect of such Borrower, such other obligor or Guarantor under
any bankruptcy, insolvency or similar federal or state laws, and if such event
shall occur at a time when any of the Obligations of such Borrower or such
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other obligor may not then be due and payable, Guarantor will pay to the Banks
forthwith (a) if such event relates to such Borrower or any other obligor with
respect to the Obligations of such Borrower, the full amount which would be
payable hereunder by Guarantor if all Obligations of such Borrower were then due
and payable and (b) if such event relates to Guarantor or any other obligor with
respect to the obligations of Guarantor, the full amount which would be payable
hereunder by Guarantor if all the Obligations of all Borrowers were then due and
payable.
SECTION 2.3. Guaranty Absolute, etc. This Guaranty shall in all
respects be a continuing, absolute, unconditional and irrevocable guaranty of
payment, and shall remain in full force and effect until all Obligations of the
Borrowers and each other obligor have been paid in full, all obligations of
Guarantor hereunder shall have been paid in full and all Commitments shall have
terminated. Guarantor guarantees that the Obligations of the Borrowers and each
other obligor and their respective Subsidiaries, if any, will be paid strictly
in accordance with the terms of the Credit Agreement and each other Loan
Document under which they arise, regardless of any law, regulation or order now
or hereafter in effect in any jurisdiction affecting any of such terms or the
rights of any Guarantied Party or any holder of the Note(s) of any Borrower with
respect thereto. The liability of Guarantor under this Guaranty shall be
absolute, unconditional and irrevocable irrespective of:
(a) any lack of validity, legality or enforceability of the Credit
Agreement, any Note or any other Loan Document;
(b) the failure of any Guarantied Party or any holder of any Note:
(i) to assert any claim or demand or to enforce any right or
remedy against any Borrower, any other obligor or any other Person under the
provisions of the Credit Agreement, any Note, any other Loan Document or
otherwise; or
(ii) to exercise any right or remedy against any other guarantor
of, or collateral securing, any Obligations of any Borrower or any other
obligor;
(c) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations of any Borrower or any other
obligor, or any other extension, compromise or renewal of any Obligations of any
Borrower or any other obligor;
(d) any reduction, limitation, impairment or termination of the
Obligations of any Borrower or any other obligor for any reason, including any
claim of waiver, release, surrender, alteration or compromise, and shall not be
subject to (and Guarantor hereby waives any right to or claim of) any defense or
setoff, counterclaim, recoupment or termination whatsoever by reason of the
invalidity, illegality, nongenuineness, irregularity, compromise,
unenforceability of, or any other event or occurrence affecting, the Obligations
of any Borrower, any other obligor or otherwise;
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(e) any amendment to, rescission, waiver, or other modification of, or
any consent to any departure from, any of the terms of the Credit Agreement, any
Note or any other Loan Document;
(f) any addition, exchange, release, surrender or non-perfection of any
collateral, or any amendment to or waiver or release or addition of, or consent
to any departure from, any other guaranty, held by any Guarantied Party or any
holder of any Note securing any of the Obligations of any Borrower or any other
obligor; or
(g) any other circumstance which might otherwise constitute a defense
available to, or a legal or equitable discharge of, any Borrower, any other
obligor, any surety or any guarantor.
SECTION 2.4. Reinstatement, etc. Guarantor agrees that this Guaranty
shall continue to be effective or be reinstated, as the case may be, if at any
time any payment (in whole or in part) of any of the Obligations is rescinded or
must otherwise be restored by any Guarantied Party or any holder of any Note,
upon the insolvency, bankruptcy or reorganization of any Borrower, any other
obligor or otherwise, all as though such payment had not been made.
SECTION 2.5. Waiver, etc. Guarantor hereby waives promptness,
diligence, notice of acceptance and any other notice with respect to any of the
Obligations of the Borrower or any other obligor, and this Guaranty and any
requirement that the Administrative Agent, any other Guarantied Party or any
holder of any Note protect, secure, perfect or insure any security interest or
Lien, or any property subject thereto, or exhaust any right or take any action
against any Borrower, any other obligor or any other Person (including any other
guarantor) or entity or any collateral securing the Obligations of any Borrower
or any other obligor, as the case may be.
SECTION 2.6. Waiver of Subrogation; Subordination. Guarantor hereby
irrevocably waives with respect to any Borrower, until termination of the
Commitments of the Banks with respect to such Borrower and thereafter until the
prior indefeasible payment in full in cash of all Obligations of such Borrower
under the Loan Documents, any claim or other rights which it may now or
hereafter acquire against such Borrower or any other obligor that arises from
the existence, payment, performance or enforcement of Guarantor's obligations
under this Guaranty or any other Loan Document or otherwise, including any right
of subrogation, reimbursement, exoneration, or indemnification, any right to
participate in any claim or remedy of the Guarantied Parties against such
Borrower or any other obligor or any collateral which the Administrative Agent
now has or hereafter acquires, whether or not such claim, remedy or right (all
such claims, remedies and rights being collectively called "Subrogation Rights")
arises in equity, or under contract, statute or common law, including the right
to take or receive from such Borrower or any other obligor, directly or
indirectly, in cash or other property or by set-off or in any manner, payment or
security on account of such claim or other rights. If any amount shall be paid
to Guarantor in violation of the preceding sentence and the Obligations shall
not have been paid in cash, in full, and the Commitments of the Banks with
respect to such Borrower have not been terminated, such amount shall be deemed
to have been paid to Guarantor
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for the benefit of, and held in trust for, the Guarantied Parties, and shall
forthwith be paid to the Guarantied Parties to be credited and applied upon the
Obligations of such Borrower, whether matured or unmatured. Guarantor
acknowledges that it will receive direct and indirect benefits from the
financing arrangements contemplated by the Credit Agreement and that the waiver
set forth in this Section is knowingly made in contemplation of such benefits.
Notwithstanding the foregoing, the Subrogation Rights of Guarantor shall not
include (and Guarantor acknowledges that it has no interest in) any of the
collateral pledged by any of the Borrowers under the Pledge Agreement.
SECTION 2.7. Successors, Transferees and Assigns; Transfers of Notes,
etc. This Guaranty shall:
(a) be binding upon Guarantor, and its successors, transferees and
assigns; and
(b) inure to the benefit of and be enforceable by the Administrative
Agent and each other Guarantied Party.
Without limiting the generality of clause (b), any Bank may assign or otherwise
transfer (in whole or in part) any Note or Loan held by it to any other Person,
and such other Person shall thereupon become vested with all rights and benefits
in respect thereof granted to such Bank under any Loan Document (including this
Guaranty) or otherwise. Notwithstanding anything contained in this Section 2.7
to the contrary, this Section 2.7 shall not be deemed to enlarge or create
additional rights with respect to any Bank's ability to assign any portion of
its Loans or rights under any Note or any other Loan Document pursuant to
Section 12 of the Credit Agreement, and this Section 2.7 is expressly made
subject thereto.
SECTION 2.8. Payments Free and Clear of Taxes, etc. Guarantor hereby
agrees that:
(a) any and all payments made by Guarantor hereunder shall be made in
accordance with Section 4.7 of the Credit Agreement free and clear of, and
without deduction for, any and all Charges, to the same extent as if Guarantor
were a Borrower.
(b) Guarantor hereby indemnifies and holds harmless each Guarantied
Party and each holder of a Loan for the full amount of any Charges paid by such
Guarantied Party or such holder, as the case may be, and any liability
(including penalties, interest and expenses) arising therefrom or with respect
thereto, whether or not such Charges were correctly or legally asserted.
(c) Without prejudice to the survival of any other agreement of
Guarantor hereunder, the agreements and obligations of Guarantor contained in
this Section 2.8 shall survive the payment in full of the principal of and
interest on the Loans.
SECTION 2.9. Right of Offset. In addition to and not in limitation of
all rights of offset that any Guarantied Party or other holder of a Note may
have under applicable law or any
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other Loan Document, subject to the terms of the Credit Agreement, each
Guarantied Party or other holder of a Note shall upon the occurrence of any
Event of Default and whether or not such Guarantied Party or such holder has
made any demand or Guarantor's obligations are matured, have the right to
appropriate and apply to the payment of Guarantor's obligations hereunder all
deposits (general or special, time or demand, provisional or final) then or
thereafter held by, and other indebtedness or property then or thereafter owing
to, such Guarantied Party or other holder, whether or not related to this
Guaranty or any transaction hereunder.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES;
INCORPORATION BY REFERENCE
To induce the Guarantied Parties to enter into the Credit Agreement and to
make the Loans thereunder, Guarantor represents and warrants to each Guarantied
Party that:
SECTION 3.1. Organization, etc. Guarantor and each of its Subsidiaries
is a corporation, partnership or limited liability company duly organized,
validly existing and in good standing under the laws of the state of its
incorporation or formation and each of Guarantor and its Subsidiaries is duly
qualified to transact business and in good standing as a foreign corporation,
partnership or limited liability company authorized to do business in each
jurisdiction where the nature of its business makes such qualification necessary
and failure to so qualify could reasonably be expected to have a Material
Adverse Effect.
SECTION 3.2. Authorization. Guarantor (a) has the power to execute,
deliver and perform this Guaranty and the other Loan Documents to which it is a
party, and (b) has taken all necessary action to authorize the execution,
delivery and performance by it of this Guaranty and the other Loan Documents to
which it is a party.
SECTION 3.3. No Conflict. The execution, delivery and performance by
Guarantor of this Guaranty and the other Loan Documents to which it is a party
does not and will not (a) contravene or conflict with any provision of any law,
statute, rule or regulation, (b) contravene or conflict with, result in any
breach of, or constitute a default under, any material agreement or instrument
binding on Guarantor or any of its Subsidiaries (including, without limitation,
any writ, judgment, injunction or other similar court order), (c) result in the
creation or imposition of or the obligation to create or impose any Lien (except
for Permitted Liens) upon any of the property or assets of Guarantor or any of
its Subsidiaries or (d) contravene or conflict with any provision of the
articles of incorporation or bylaws of Guarantor.
SECTION 3.4. Margin Regulations.
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(a) None of the transactions contemplated hereunder or in connection
herewith will in any way violate, contravene or conflict with any of the
provisions of Regulation U;
(b) None of the obligations of any Borrower to Guarantor is or will be
directly or indirectly secured by "margin stock" (as defined in Regulation U);
(c) Neither Guarantor nor any third party acting on behalf of Guarantor
has taken or will take possession of any Borrower's "margin stock" to secure,
directly or indirectly, any of the Obligations of such Borrower or the
obligations of Guarantor under this Guaranty or any of the Loan Documents;
(d) Guarantor does not and will not have any right to prohibit any
Borrower from selling, pledging, encumbering or otherwise disposing of any
margin stock owned by such Borrower so long as this Guaranty is in effect or any
of the Obligations of such Borrower or the obligations of Guarantor under this
Guaranty or any of the Loan Documents remain outstanding;
(e) None of the Borrowers have granted or will grant Guarantor or any
third party acting on behalf of Guarantor the right to accelerate repayment of
any of the Obligations of such Borrower if any of the margin stock owned by such
Borrower is sold by such Borrower or otherwise; and
(f) There is no agreement or other arrangement between any Borrower and
Guarantor or any third party acting on behalf of Guarantor (and no such
agreement or arrangement shall be entered into so long as this Guaranty is in
effect or any of the Obligations of such Borrower or the obligations of
Guarantor under this Guaranty or any of the Loan Documents remain outstanding)
under which the margin stock of such Borrower would be made more readily
available as security to Guarantor than to other creditors of such Borrower.
SECTION 3.5. Conseco Corporate Structure. The corporate structure of
Guarantor and its Subsidiaries as of the date hereof is as set forth on Exhibit
C.
SECTION 3.6. No Default or Event of Default. No Default or Event of
Default has occurred and is continuing with respect to Guarantor and no default
or event of default has occurred and is continuing under the Revolving Credit
Agreement.
SECTION 3.7. Incorporation by Reference.. Guarantor agrees that the
representations and warranties of Guarantor set forth in Section 5 of the
Revolving Credit Agreement shall be incorporated by reference in this Guaranty
in their entirety as if fully set forth herein with the same effect as if
applied to this Guaranty. All capitalized terms set forth in such Sections shall
have the meanings provided in the Revolving Credit Agreement; provided that for
purposes of this Guaranty, to the extent set forth in the Revolving Credit
Agreement (a) the term "Borrower" shall be deemed to refer to Guarantor and (b)
the terms "Administrative Agent", "Agreement", "Banks", "Liabilities", "Required
Banks", "Loan Documents", "Collateral", "Material Adverse Effect", and "Material
Adverse Change"
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shall have the respective meanings provided in the Credit Agreement. Such
representations and warranties shall not be affected in any manner by the
termination of the Revolving Credit Agreement.
Notwithstanding the foregoing, if Section 5 of the Revolving Credit
Agreement (or any successor section thereto) or any definitions set forth or
used therein are amended or modified in accordance with the terms of the
Revolving Credit Agreement either as the result of an amendment or modification
to such section in the Revolving Credit Agreement or Guarantor's execution and
delivery of a new credit facility in replacement, restatement or substitution
for the Revolving Credit Agreement, this Section 3.7 shall be deemed to be
amended and modified to the extent set forth in the Revolving Credit Agreement
(as amended or modified) or any new credit facility entered into in replacement,
restatement or substitution for the Revolving Credit Agreement; provided, that
each of the Banks has received at least 10 days prior written notice of any such
amendment, modification, replacement, restatement or substitution and the
Required Banks (either directly or through the Administrative Agent) have not
prior to the end of such 10 day period given notice to Guarantor that such
amendment, modification, replacement, restatement or substitution is not
acceptable.
ARTICLE IV.
COVENANTS
SECTION 4.1. Guarantor agrees that, on and after the date hereof until
the termination or expiration of the Commitments and for so long thereafter as
any of the Obligations or the obligations of Guarantor hereunder remain unpaid
or outstanding (except Obligations which by the terms hereof survive the payment
in full of the Loans and termination of this Guaranty), Guarantor will comply
with the covenants set forth Sections 6 and 7 of the Revolving Credit Agreement
and the terms and provisions set forth therein shall be incorporated by
reference in this Guaranty in their entirety as if fully set forth herein with
the same effect as if applied to this Guaranty. All capitalized terms set forth
in Sections 6 and 7 of the Revolving Credit Agreement shall have the meanings
provided in the Revolving Credit Agreement; provided that for purposes of this
Guaranty, to the extent set forth in the Revolving Credit Agreement (a) the term
"Borrower" shall be deemed to refer to Guarantor and (b) the terms
"Administrative Agent", "Agreement", "Banks", "Liabilities", "Required Banks",
"Loan Documents", "Collateral", "Material Adverse Effect", and "Material Adverse
Change" shall have the respective meanings provided in the Credit Agreement.
Such covenants shall not be affected in any manner by the termination of the
Revolving Credit Agreement.
Notwithstanding the foregoing, if Sections 6 or 7 of the Revolving
Credit Agreement (or any successor section thereto) or any definitions set forth
or used therein are amended or modified in accordance with the terms of the
Revolving Credit Agreement either as the result of an amendment or modification
to such section in the Revolving Credit Agreement or Guarantor's execution and
delivery of a new credit facility in replacement, restatement or substitution
for the Revolving Credit Agreement, this Section 4.1 shall be deemed to be
amended and modified to the extent set forth in the Revolving Credit Agreement
(as amended or modified) or any new credit facility entered into in replacement,
restatement or substitution for the Revolving
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Credit Agreement; provided, that each of the Banks has received at least 10 days
prior written notice of any such amendment, modification, replacement,
restatement or substitution and the Required Banks (either directly or through
the Administrative Agent) have not prior to the end of such 10 day period given
notice to Guarantor that such amendment, modification, replacement, restatement
or substitution is not acceptable.
SECTION 4.2. Certain Indebtedness. Guarantor shall not, and shall not
permit any of its Subsidiaries to amend or modify any provision of the Revolving
Credit Agreement or the other Revolving Credit Loan Documents if such amendment
or modification could reasonably be expected to have a material adverse effect
on the Banks, Guarantor or any material provision of the Loan Documents.
SECTION 4.3. Margin Regulations. Guarantor shall take such actions and
execute and deliver such instruments or documents from time to time as the
Administrative Agent shall reasonably request to maintain continuous compliance
with Regulation U.
SECTION 4.4. [Reserved]
SECTION 4.5. Limitation on Additional Purpose Credit/Sale of Assets.
Notwithstanding any other provision of this Guaranty, the Credit Agreement or
the Revolving Credit Agreement to the contrary, Guarantor will not, and will not
permit any of its Wholly-Owned Subsidiaries and/or Significant Subsidiaries to
(a) incur or assume any Indebtedness which constitutes "purpose credit" secured
"directly or indirectly" as defined in Regulation U by Margin Stock or (b) sell,
transfer or otherwise dispose of any of its assets (other than as permitted in
Section 7.03 of the Revolving Credit Agreement) unless in the case of both
clauses (a) and (b) the Administrative Agent shall have been given at least 10
days' prior written notice thereof and either:
(x) in the case of a disposition of assets, either (i) if permitted by
the Revolving Credit Agreement, an amount equal to the Net Proceeds (as
defined in the Revolving Credit Agreement) received by Guarantor, such
Wholly-Owned Subsidiary and/or such Significant Subsidiary, as the case may
be, in connection with any such disposition of assets shall be promptly
applied to repay, pro rata, the principal amount of the Loans made to the
Borrowers (together with any interest accrued thereon); provided that to
the extent the Net Proceeds of any such disposition exceed the amount of
the Loans, or the Loans shall have been paid in full, such Net Proceeds
shall be applied to repay any remaining Liabilities or (ii) the Borrowers
shall prepay their respective Liabilities hereunder in an amount equal to
the product of (A) the Net Proceeds received by Guarantor, such
Wholly-Owned Subsidiary and/or such Significant Subsidiary, as the case may
be, in connection with such disposition of assets, multiplied by a
fraction, the numerator of which is the Liabilities of such Borrower and
the denominator of which is the aggregate of all Liabilities of all the
Borrowers; or
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(y) (i) no Default or Event of Default exists under the Credit
Agreement or this Guaranty or shall result therefrom;
(ii) the Required Banks have determined, in their sole and absolute
discretion, that such proposed incurrence of Indebtedness or proposed
disposition of assets, as the case may be, will not in any way violate,
contravene or conflict with Regulation U (and the Administrative Agent
shall have received such information from the Guarantor as may be requested
by the Administrative Agent to make such determination, including a
calculation of the "good faith loan value" of the assets comprising the
Indirect Collateral remaining after giving effect to such incurrence of
Indebtedness and/or disposition of assets);
(iii) if requested by the Administrative Agent, the Banks shall
have received (A) a certificate of the chief financial officer or a vice
president with responsibility for or knowledge of financial matters of the
Guarantor setting forth a calculation of the Collateral Ratio (which
calculation shall reflect any adjustment in the "good faith loan value" of
the Indirect Collateral as determined by the Required Lenders pursuant to
clause (ii) above) and/or (B) an opinion of counsel satisfactory to the
Administrative Agent and its counsel to the effect that such proposed
incurrence of Indebtedness or disposition of assets, as the case may be,
will not in way violate, contravene or conflict with Regulation U
addressing such other legal matters as reasonably requested by the
Administrative Agent; and
(iv) after giving effect to the incurrence of such Indebtedness
and/or the disposition of such assets, the Collateral Ratio shall be at
least 2 to 1.
SECTION 4.6. Compliance with Credit Agreement; Provision of Collateral
Ratio Information. Guarantor acknowledges that it is the attorney-in-fact of
each of the Borrowers and further acknowledges that it has certain obligations
and responsibilities to the Banks under the Credit Agreement (including, without
limitation, under Section 8.1.4 of the Credit Agreement). Guarantor hereby
agrees to comply with and satisfy such obligations and responsibilities under
the Credit Agreement. Furthermore, Guarantor shall provide to the Administrative
Agent and the Banks such information as may be reasonably requested from time to
time by the Administrative Agent or the Required Banks to permit the
Administrative Agent or the Required Banks, as the case may be, to determine the
"maximum good faith loan value" (as defined in Regulation U) of the Indirect
Collateral and do such other acts and execute such other documentation to
continue to comply with Regulation U.
ARTICLE V.
CONDITIONS AND EFFECTIVENESS OF THIS AGREEMENT
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The obligation of the Banks to make the Loans is (in addition to the
conditions precedent set forth in Section 9 of the Credit Agreement) subject to
the performance by Guarantor of all of the obligations under this Guaranty and
to the satisfaction of the following conditions precedent:
SECTION 5.1. Initial Loans. Prior to or concurrent with the making of the
initial Loans under the Credit Agreement, the Administrative Agent shall have
received all of the following, each, except to the extent otherwise specified
below, duly executed by a Responsible Officer of Guarantor, dated the date of
the initial Loans (or such earlier date as shall be satisfactory to the
Administrative Agent), in form and substance satisfactory to the Administrative
Agent, each in sufficient number of signed counterparts or copies to provide one
for each Bank and the Administrative Agent:
5.1.1. A favorable opinion of Xxxx X. Xxxx, counsel of Guarantor and
its Subsidiaries, substantially in the form of Exhibit A-1, and addressing
such other legal matters as the Administrative Agent may require;
5.1.2. A favorable opinion of Xxxxx & Xxxxxxx, outside counsel to
Guarantor and its Subsidiaries, substantially in the form of Exhibit A-2,
and addressing such other legal matters as the Administrative Agent may
require;
5.1.3. An officer's certificate of Guarantor, substantially in the form
of Exhibit C, and dated as of the Closing Date, signed by a Responsible
Officer of Guarantor, and attested to by the secretary thereof, together
with certified copies of Guarantor's articles of incorporation, bylaws and
directors resolutions;
5.1.4. Evidence of the good standing or certificates of compliance of
Guarantor in the jurisdiction in which Guarantor was incorporated as of the
Closing Date;
5.1.5. Evidence that Guarantor paid to the Administrative Agent the
fees and expenses provided for herein;
5.1.6. Evidence satisfactory to the Administrative Agent of compliance
by Guarantor with Regulation U; and
5.1.7. Such other information and documents as may reasonably be
required by the Administrative Agent and the Administrative Agent's
counsel.
ARTICLE VI.
SALE AND RELEASE OF PLEDGED SHARES; CASH COLLATERAL
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SECTION 6.1. Sale of Pledged Shares. Notwithstanding any provision set
forth in any of the Loan Documents to the contrary (other than Section 6.6), the
Administrative Agent agrees that after the occurrence and during the continuance
of a Default under Section 10.1.2 of the Credit Agreement or any Event of
Default with respect to any Borrower, the effect of which is to cause the
Obligations of such Borrower to be due and payable under the Credit Agreement (a
"Borrower Default"), subject to the provisions of Section 6.2, 6.4 and 6.6
below, it will not demand that Guarantor pay the Obligations of such Borrower
(constituting outstanding principal and interest of such Borrower), until after
the Administrative Agent has used its reasonable best efforts, in good faith, to
sell the Pledged Shares of such Borrower, such sale to be consummated in one or
a series of open market transactions through one or more reputable
broker-dealers at the then fair market value of such Pledged Shares.
SECTION 6.2. Conditions to Sale of Pledged Shares. The obligation of
the Administrative Agent not to demand payment hereunder pursuant to Section 6.1
is subject to the following conditions:
(a) Guarantor, within three (3) Business Days after receipt of written
notice of a Borrower Default from the Administrative Agent, shall deposit with
the Administrative Agent in the Cash Collateral Account an amount equal to the
then outstanding Obligations of the Borrower related to such Borrower Default
and, thereafter, upon written notice from the Administrative Agent, Guarantor
shall continue to deposit funds in the Cash Collateral Account in sufficient
amounts to pay in full any additional interest accrued on the Loans of such
Borrower after the date of the initial deposit to the Cash Collateral Account;
and
(b) none of the following has occurred at the time of such Borrower
Default or shall occur thereafter:
(i) a suspension or material limitation in trading in securities
generally or trading in the common stock of Guarantor on the New York Stock
Exchange or any other exchange upon which the common stock of Guarantor may then
be traded;
(ii) a general moratorium on commercial banking activities in New
York is declared by any Federal or New York State authorities;
(iii) the Administrative Agent is prohibited or materially limited
from selling the Pledged Shares as a result of any federal or state securities
laws (including, without limitation, the rules promulgated thereunder relating
to the disclosure of material information); or
(iv) any other event (including, without limitation, commencement
of any suit, action or litigation, filing of any claim or any other similar
proceeding or any change in any applicable law) has occurred
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which, in the reasonable opinion of the Administrative Agent, would prohibit,
have a material adverse effect on, or materially limit the Administrative
Agent's ability to sell the Pledged Shares as contemplated by the terms of
Section 6.1.
(c) Guarantor agrees that in any sale of any of the Pledged Shares, the
Administrative Agent is authorized to comply with any limitation or restriction
in connection with such sale as counsel may advise the Administrative Agent is
necessary, in the reasonable opinion of such counsel, in order to avoid any
violation of applicable law (including, without limitation, compliance with such
procedures as may restrict the number of prospective bidders and purchasers,
require that such prospective bidders and purchasers have certain
qualifications, and restrict such prospective bidders and purchasers to persons
who will represent and agree that they are purchasing for their own account for
investment and not with a view to the distribution or resale of such
Collateral), or in order to obtain any required approval of the sale or of the
purchaser by any governmental regulatory authority or official, and Guarantor
further agrees that such compliance shall not result in such sale being
considered or deemed not to have been made in a commercially reasonable manner,
nor shall the Administrative Agent be liable or accountable to Guarantor for any
discount allowed by reason of the fact that such Pledged Shares are sold in
compliance with any such limitation or restriction.
(d) Guarantor further agrees to indemnify and hold harmless the
Administrative Agent and the Banks and each of their respective officers,
directors, employees, agents, successors and assigns, and any Person in control
of any thereof, from and against any loss, liability, claim, damage and expense,
including, without limitation, reasonable attorneys' fees actually incurred (in
this paragraph collectively called the "Indemnified Liabilities"), under federal
and state securities laws or otherwise resulting from the action or failure to
act by Guarantor or any Borrower; provided, that no such Person shall have the
right to be indemnified hereunder for its own gross negligence or willful
misconduct as determined by a court of competent jurisdiction.
SECTION 6.3. Release of Pledged Shares. The Administrative Agent agrees
that, so long as Guarantor is in compliance with Section 6.2(a) and none of the
events set forth in Section 6.2(b) has occurred, it shall not release any of the
Pledged Shares of any Borrower from the Lien granted under the Pledge Agreement
until after the termination of this Guaranty and the obligations of Guarantor
hereunder with respect to such Borrower. Notwithstanding the foregoing, the
Administrative Agent shall be entitled to (i) release the Pledged Shares of such
Borrower if such Pledged Shares are replaced by additional common stock of
Guarantor and (ii) sell the Pledged Shares pursuant to Section 6.1.
SECTION 6.4. Borrower Event of Default. Guarantor hereby acknowledges
and agrees that Sections 6.1 and 6.3 shall not apply to any Default or Event of
Default relating to Guarantor or any of its Subsidiaries and, upon the
occurrence of an Event of Default relating to Guarantor or any of its
Subsidiaries, the Administrative Agent expressly reserves its rights and
remedies under this Guaranty to demand payment hereunder to satisfy the
Obligations of all Borrowers and the obligations of Guarantor hereunder whether
or not the Administrative Agent has sold or attempted to sell the Pledged Shares
of any Borrower or otherwise exercised its rights and remedies under the
14
Pledge Agreement or any other Loan Document. Furthermore nothing contained
herein shall be deemed to prohibit or limit in any way whatsoever the
Administrative Agent's or any Bank's right or ability to receive its portion of
the assets of Guarantor upon the exercise by the Revolving Credit Agent or the
Revolving Credit Banks of their rights and remedies under the Revolving Credit
Loan Documents or any other creditor of Guarantor.
SECTION 6.5. Application of Cash Collateral. If after compliance by the
Administrative Agent with the provisions set forth in Section 6.1 any
Obligations remain unpaid with respect to any applicable Borrower, any funds
held in the Cash Collateral Account may be applied by the Administrative Agent
against the payment of the Obligations of such Borrower. The Administrative
Agent, prior to applying such funds against the Obligations of such Borrower,
will certify to Guarantor (a) if the Pledged Shares of such Borrower are sold
pursuant to Section 6.1, the net proceeds (including a calculation thereof in
reasonable detail) received by the Administrative Agent from the sale of such
Pledged Shares and (b) if the Pledged Shares of such Borrower are not sold
pursuant to Section 6.1, the reason or reasons why such sale could not be
accomplished. Any funds remaining in the Cash Collateral Account after
application thereof to the Obligations as set forth above shall be returned to
Guarantor. The Administrative Agent agrees that it shall deliver to Guarantor,
after the application of such funds to the Obligations of such Borrower, a
calculation in reasonable detail of the Obligations of such Borrower (including
principal and interest of the Loans of such Borrower) and the application of
such funds thereto.
SECTION 6.6. No Requirement to Comply with Section 6.1 in Certain
Circumstances. Notwithstanding the provisions of Section 6.1, the Administrative
Agent shall not be required to attempt to sell the Pledged Shares of any
Borrower in the manner contemplated by Section 6.1 prior to demanding payment
from the Guarantor in respect of such Borrower's Obligations if (a) the
Administrative Agent would not be legally permitted to do so by reason of
restrictions imposed by the United States Bankruptcy Code, (b) the
Administrative Agent would be required to comply with any restrictions on the
immediate sale of such Pledged Shares imposed by federal securities laws or
regulations or (c) in respect of the Loans of any Borrower, if the
Administrative Agent shall not have received (i) counterparts, duly executed by
such Borrower, of all documents contemplated by the Credit Agreement to be
executed by such Borrower or (ii) a duly perfected first priority security
interest in all shares of common stock of the Guarantor purchased by such
Borrower with proceeds of such Loans.
ARTICLE VII.
MISCELLANEOUS
SECTION 7.1. Guarantor agrees to pay on demand all reasonable expenses
of the Administrative Agent (including the non-duplicative fees and reasonable
expenses of counsel (including expenses of in-house counsel) and of local
counsel, if any, who may be retained by such counsel) in connection with:
15
(i) the negotiation, preparation, execution, syndication and
delivery of the Credit Agreement, this Guaranty and the other Loan Documents,
including schedules and exhibits, and any amendments, waivers, consents,
supplements or other modifications to the Credit Agreement, this Guaranty or the
other Loan Documents as may from time to time hereafter be required, whether or
not the transactions contemplated hereby or thereby are consummated; and
(ii) the preparation and/or review of the form of any document or
instrument relevant to the Credit Agreement, this Guaranty or any other Loan
Document.
Guarantor further agrees to pay, and to save the Administrative Agent and the
Banks, and their respective Affiliates, harmless from all liability for, any
stamp or other Taxes (other than income taxes of the Administrative Agent or the
Banks) which may be payable in connection with the execution or delivery of the
Credit Agreement, any Borrowing thereunder, the issuance of the Notes, if any,
this Guaranty or any other Loan Document. Guarantor also agrees to reimburse the
Administrative Agent and each Bank upon demand for all reasonable expenses
(including attorneys' fees and legal expenses) incurred by the Administrative
Agent or such Bank in connection with the enforcement of any Obligations or
obligations hereunder and the consideration of legal issues relevant hereto and
thereto whether or not such expenses are incurred by the Administrative Agent on
its own behalf or on behalf of the Banks. All obligations of Guarantor provided
for in this Section 7.1 shall survive termination of this Agreement.
Notwithstanding the foregoing, the Administrative Agent or a Bank shall not have
the right to reimbursement under this Section 7.1 for amounts determined by a
court of competent jurisdiction to have arisen from the gross negligence or
willful misconduct of the Administrative Agent or a Bank.
SECTION 7.2. Guarantor agrees to indemnify the Administrative Agent,
each Bank, their Affiliates and their respective directors, officers, employees,
persons controlling or controlled by any of them or their respective agents,
consultants, attorneys and advisors (the "Indemnified Parties") and hold each
Indemnified Party harmless from and against any and all liabilities, losses,
claims, damages, costs and expenses of any kind to which any of the Indemnified
Parties may become subject, whether directly or indirectly (including, without
limitation, the reasonable fees and disbursements of counsel for any Indemnified
Party), relating to or arising out of the Credit Agreement, this Guaranty, the
other Loan Documents, or any actual or proposed use of the proceeds of the Loans
hereunder; provided, that no Indemnified Party shall have the right to be
indemnified hereunder for its own gross negligence or willful misconduct as
determined by a court of competent jurisdiction. All obligations of the
Borrowers and Guarantor provided for in this Section 7.2 shall survive
termination of the Credit Agreement and this Guaranty.
SECTION 7.3. All notices, requests and other communications to any
party hereunder shall be in writing (including bank wire, telex, facsimile or
similar writing) and shall be given to such party at its address, facsimile or
telex number set forth on the signature or acknowledgement
16
pages hereof or such other address, facsimile or telex number as such party may
hereafter specify for the purpose by written notice to the Administrative Agent
and Guarantor. Each such notice, request or other communication shall be
effective (a) if given by facsimile or telex, when such facsimile or telex is
transmitted to the facsimile or telex number specified in this Section and, in
the case of telex, the appropriate answerback is received, (b) if given by mail,
seventy-two (72) hours after such communication is deposited in the mails with
first class postage prepaid, addressed as aforesaid or (c) if given by any other
means, when delivered at the address specified in this Section.
SECTION 7.4. This Guaranty, and the terms, covenants and conditions
hereof, shall be binding upon and inure to the benefit of the parties hereto,
and their respective successors and assigns, except Guarantor shall not be
permitted to assign this Guaranty nor any interest herein nor in the Collateral,
nor any part thereof, except in accordance with the terms of the Credit
Agreement.
SECTION 7.5. EACH OF GUARANTOR AND THE ADMINISTRATIVE AGENT HEREBY
IRREVOCABLY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE SUPREME COURT OF THE
STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT
COURT FOR THE SOUTHERN DISTRICT OF NEW YORK OVER ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS GUARANTY OR THE OTHER LOAN DOCUMENTS, AND
EACH OF GUARANTOR AND THE ADMINISTRATIVE AGENT HEREBY IRREVOCABLY AGREES THAT
ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED
IN SUCH NEW YORK STATE OR TO THE EXTENT PERMITTED BY LAW, FEDERAL COURT. EACH OF
GUARANTOR AND THE ADMINISTRATIVE AGENT HEREBY IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF VENUE IN ANY ACTION OR PROCEEDING (WHETHER BROUGHT BY GUARANTOR, ANY
OF ITS SUBSIDIARIES, THE ADMINISTRATIVE AGENT, ANY BANK OR OTHERWISE) IN ANY
COURT HEREIN ABOVE SPECIFIED IN THIS SECTION 7.5 AS WELL AS ANY RIGHT IT MAY NOW
OR HEREAFTER HAVE TO REMOVE ANY SUCH ACTION OR PROCEEDING, ONCE COMMENCED, TO
ANOTHER COURT ON THE GROUNDS OF FORUM NON CONVENIENS OR OTHERWISE. EACH OF
GUARANTOR AND THE ADMINISTRATIVE AGENT AGREES THAT A FINAL JUDGMENT IN ANY SUCH
ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.
SECTION 7.6. Subject to Section 13.1 of the Credit Agreement, the
provisions of this Guaranty may from time to time be amended, modified or
waived, if such amendment, modification or waiver is in writing and consented to
by Guarantor and by the Administrative Agent (at the request of the Required
Banks), and then any such amendment, modification, waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
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SECTION 7.7. The section headings in this Guaranty are inserted for
convenience of reference and shall not be considered a part of this Guaranty or
used in its interpretation.
SECTION 7.8. No action of the Administrative Agent permitted hereunder
shall in any way affect or impair the rights of the Administrative Agent and the
obligations of Guarantor under this Guaranty. Guarantor hereby acknowledges that
there are no conditions to the effectiveness of this Guaranty.
SECTION 7.9. All obligations of Guarantor and rights of the
Administrative Agent or obligation expressed in this Guaranty shall be in
addition to and not in limitation of those provided in applicable law or in any
other written instrument or agreement relating to any of the Obligations.
SECTION 7.10. THIS GUARANTY SHALL BE A CONTRACT MADE UNDER AND GOVERNED
BY THE LAWS OF THE STATE OF NEW YORK. ALL OBLIGATIONS OF THE BORROWERS AND
GUARANTOR AND RIGHTS OF THE ADMINISTRATIVE AGENT AND THE BANKS IN RESPECT OF THE
OBLIGATIONS AND THE OBLIGATIONS OF GUARANTOR EXPRESSED HEREIN OR IN THE OTHER
LOAN DOCUMENTS SHALL BE IN ADDITION TO AND NOT IN LIMITATION OF THOSE PROVIDED
BY APPLICABLE LAW.
SECTION 7.11. This Guaranty may be executed in any number of
counterparts, each of which shall for all purposes be deemed an original, but
all such counterparts shall constitute but one and the same agreement. Guarantor
hereby acknowledges receipt of a true, correct and complete counterpart of this
Guaranty.
SECTION 7.12. The Administrative Agent acts herein as agent for itself,
the Banks and any and all future holders of the Obligations.
SECTION 7.13. EACH OF GUARANTOR AND THE ADMINISTRATIVE AGENT HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN
ANY ACTION, PROCEEDING OR COUNTERCLAIM CONCERNING ANY RIGHTS UNDER THIS
GUARANTY, ANY OTHER LOAN DOCUMENT OR ANY OTHER DOCUMENT OR AGREEMENT DELIVERED
OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH, OR
ARISING FROM ANY BANKING RELATIONSHIP EXISTING IN CONNECTION WITH THIS GUARANTY
AND AGREES THAT ANY SUCH ACTION, PROCEEDING OR COUNTERCLAIM SHALL BE TRIED
BEFORE A COURT AND NOT BEFORE A JURY; THIS PROVISION IS A MATERIAL INDUCEMENT
FOR THE PARTIES ENTERING INTO THIS GUARANTY.
* * *
IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
CONSECO, INC.
By: /s/Xxxxxx X. Xxxx
--------------------------------
Name: Xxxxxx X. Xxxx
Title: Executive Vice President
and Chief Financial Officer
