Contract
Exhibit 10.1
AMENDMENT
NO. 3 TO THE
SECOND
AMENDED AND RESTATED CREDIT AGREEMENT
AMENDMENT
NO. 3 TO THE SECOND AMENDED AND RESTATED CREDIT AGREEMENT (this “Amendment”), dated as of
December 8, 2009, by and among CONSECO, INC., a Delaware corporation (the “Borrower”), the lenders
signatory hereto and Wilmington Trust FSB, as administrative agent (the “Agent”) for the
Lenders.
PRELIMINARY
STATEMENTS:
(1) The
Borrower, the Subsidiary Guarantors referred to therein, the Lenders, the
Increasing Lenders, the Agent and JPMorgan Chase Bank, N.A., as syndication
agent, have entered into a Second Amended and Restated Credit Agreement dated as
of October 10, 2006, as amended by Amendment No. 1 to the Second Amended and
Restated Credit Agreement dated as of June 12, 2007, as further amended by
Amendment No. 2 to the Second Amended and Restated Credit Agreement dated as of
March 30, 2009 (as amended, restated, supplemented or otherwise modified through
the date hereof, the “Existing
Credit Agreement”). Capitalized terms not otherwise defined in
this Amendment have the same meanings as specified in the Existing Credit
Agreement.
(2) The
Borrower, the Agent, the Lenders and the Increasing Lenders desire to amend
certain provisions of the Existing Credit Agreement as provided more fully
herein below.
NOW,
THEREFORE, in consideration of the premises and for other good and valuable
consideration, the sufficiency and receipt of all of which is hereby
acknowledged, the parties hereto hereby agree as follows:
SECTION
1. Amendments to Existing
Credit Agreement. Upon, and subject to, the satisfaction (or waiver) of
the conditions precedent set forth in Section 2
below, the Existing Credit Agreement is hereby amended as
follows:
(a) Section
1.01 of the Existing Credit Agreement is hereby amended by adding in the
appropriate alphabetical order the following new definitions:
““Amendment No. 3” means
Amendment No. 3 to this Agreement dated as of December 8, 2009.”
““Amendment No. 3 Effective
Date” means December [__], 2009, which is the date of satisfaction (or
waiver) of the conditions precedent set forth in Section 2 of Amendment No. 3.”
““Policies” means life insurance
policies, health insurance policies, long term care policies, annuity contracts,
and other insurance policies, insurance contracts, investment agreements and
other similar agreements issued by the Insurance Subsidiaries in the ordinary
course of their business.”
(b) The
definition of “Applicable Margin” contained in Section 1.01 to the Existing
Credit Agreement is hereby amended in its entirety to read as
follows:
““Applicable Margin” means, for
any day, a percentage per
annum equal to (a) with respect to any Eurodollar Rate Loan, 5.00% or (b)
with respect to any Base Rate Loan, 4.00%.”
(c) The
definition of “Asset Sale” contained in Section 1.01 to the Existing Credit
Agreement is hereby amended in its entirety to read as follows:
““Asset Sale” means any
Disposition of property or series of related Dispositions of property, excluding
any such Disposition permitted by Section 7.03(a), Section 7.03(b), Section
7.03(c), Section 7.03(d), Section 7.03(e), Section 7.03(f), Section 7.03(h) and
Section 7.03(i).”
(d) The
definition of “Steering Committee” contained in Section 1.01 to the Existing
Credit Agreements is hereby amended in its entirety as follows:
““Steering Committee” has the
meaning specified in Section 6.16.”
(e) Section
2.07(a) of the Existing Credit Agreement is hereby amended in its entirety to
read as follows:
“(a) Term Loans. The
Company shall repay to the Agent, for the ratable account of the Term Lenders
(and the Increasing Lenders), the following amounts of all Term Loans (including
the Additional Term Loans) on the following dates:
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Date
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Amount
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|
March
31, 2011
|
$8,750,000
|
|
June
30, 2011
|
$8,750,000
|
|
September
30, 2011
|
$8,750,000
|
|
December
31, 2011
|
$8,750,000
|
|
March
31, 2012
|
$10,000,000
|
|
June
30, 2012
|
$10,000,000
|
|
September
30, 2012
|
$10,000,000
|
|
December
31, 2012
|
$10,000,000
|
|
March
31, 2013
|
$13,333,333.33
|
|
June
30, 2013
|
$13,333,333.33
|
|
September
30, 2013
|
$13,333,333.34
|
|
Maturity
Date
|
Remaining
outstanding amount
|
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(f) Section
2.08(b)(v) of the Existing Credit Agreement is hereby amended in its entirety to
read as follows:
“(v) [reserved].”
(g) Section
2.08(c) of the Existing Credit Agreement is hereby amended in its entirety to
read as follows:
“(c) Application of
Prepayments. Each prepayment of any Borrowing pursuant to
Sections
2.08(b)(i) to (v) shall be applied
first to the Term Loans for application to the next four scheduled principal
payments thereof after the occurrence of the event giving rise to such
prepayment in direct order of maturity, and, second, to the Term Loans for
application ratably to the remaining principal repayment installments thereof
until paid in full. Each prepayment pursuant to Section 2.08(a) shall
be applied as directed by the Borrower. Notwithstanding anything to
the contrary contained in this Section 2.08(c), any
prepayments made in connection with Amendment No. 3 as referenced in Section 2(b) of Amendment No. 3 shall be applied first
to the Term Loans for application to the next five scheduled principal payments
thereof in direct order of maturity, and, second, to the Term Loans for
application ratably to the remaining principal repayment installments thereof
until paid in full prior to giving effect to the amendment to Section 2.07(a)
set forth in Section 1(e) of Amendment No. 3 and
such prepayments shall not reduce the required amortization payments in effect
on the Amendment No. 3 Effective Date.”
(h) As a
result of the increase in the Applicable Margin described in Section 1(b) above, Section 2.10(b) of the Existing Credit
Agreement is hereby deleted in its entirety.
(i) Section
6.13(b) of the Existing Credit Agreement is hereby amended in its entirety to
read as follows:
“(b) The
Company will, and will cause each Subsidiary Guarantor (within sixty (60) days
of the Amendment No. 3 Effective Date (or such later date as the Agent shall
determine in its sole discretion)) to, maintain main concentration accounts
solely with depositaries that have entered into an Account Control Agreement
with the Agent and the relevant Obligor on the terms, and subject to the
exceptions, set forth in the Security Agreement. Within sixty (60)
days of the Amendment No. 3 Effective Date (or such later date as the Agent
shall determine in its sole discretion), subject to the exclusions set forth in
the Security Agreement, the Company and each Subsidiary Guarantor, as
applicable, shall enter into an Account Control Agreement with respect to the
Accounts listed in Schedule 6.13(b)
attached hereto and made a part hereof. Thereafter, subject to
the
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exclusions
set forth in the Security Agreement, the Company and each Subsidiary Guarantor
shall use its commercially reasonable efforts to enter into an Account Control
Agreement with respect to any Accounts the Agent shall require in its reasonable
discretion.”
(j) Section
7.03(e) of the Existing Credit Agreement is hereby amended in its entirety to
read as follows:
“(e) (i)
any Disposition pursuant to a Reinsurance Agreement covering Policies which are
first issued during the term of such Reinsurance Agreement provided that such
Reinsurance Agreement is issued on terms which are customary for the line of
business reinsured where the purpose and effect of such reinsurance transaction
is the sharing of risk and (ii) any Disposition pursuant to a Reinsurance
Agreement covering Policies which are in force at the commencement of the term
of such Reinsurance Agreement provided that the ceding commission (whether
positive or negative) from the aggregate of all such Dispositions pursuant to
this clause (ii) in any Fiscal Year shall not exceed twenty five million dollars
in the Fiscal Year ending December 31, 2010 and ten million dollars in each
Fiscal Year thereafter (excluding any ceding commission (whether positive or
negative) deriving or resulting from the Reinsurance Agreement, dated as of
November 20, 2009, between Bankers Life and Casualty Company and Wilton
Reassurance Company).”
(k) Section
7.03 of the Existing Credit Agreement is further amended by (i) deleting the
word “and” at the end of Section 7.03(n), (ii) deleting the “.” at the end of
Section 7.03(o) and inserting “; and” in lieu thereof and (iii) adding the
following new clause (p):
“(p) Dispositions
of less than substantially all of the assets of the Company or any of its
Subsidiaries to any unaffiliated Person on terms determined by the Company’s
board of directors to be arms’ length; provided that (i) at
the time of such Disposition, no Default shall exist or would result from such
Disposition, (ii) a minimum of eighty percent (80%) of the purchase price for
such asset(s) shall be paid to the Company or such Subsidiary in cash, and (iii)
the terms and conditions of such Disposition shall be in form and substance
satisfactory to the Agent and the Required Lenders and the Agent and the
Required Lenders shall have provided written consent to such
Disposition.”
(l) Section
7.11 to the Existing Credit Agreement is hereby amended in its entirety to read
as follows:
“Debt to Total Capitalization
Ratio. The Company shall maintain at all times a Debt to Total
Capitalization Ratio of (a) for the period from and including March 31, 2009
through December 31, 2009, not more than 32.5% and (b) thereafter, not more than
30%.”
(m) Section
7.12 to the Existing Credit Agreement is hereby amended in its entirety to read
as follows:
“Interest Coverage
Ratio. The Company shall not permit the Interest Coverage
Ratio as of the end of any Fiscal Quarter for the four Fiscal Quarters then
ended to be (a)
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for the
period from and including March 31, 2009 through December 31, 2010, less than
1.50 to 1 for such Fiscal Quarter; (b) for the period from and
including March 31, 2011 through December 31, 2011, less than 1.75 to 1 for such
Fiscal Quarter; and (c) thereafter, less than 2.00 to 1 for such Fiscal
Quarter.”
(n) Section
7.14 to the Existing Credit Agreement is hereby amended in its entirety to read
as follows:
“Aggregate RBC
Ratio. The Company shall not permit the Aggregate RBC Ratio as
of the end of any Fiscal Quarter to be (a) for the period from and including
March 31, 2009 through December 31, 2010, less than 200% for such Fiscal
Quarter; (b) for the period from and including March 31, 2011 through
December 31, 2011, less than 225% for such Fiscal Quarter; and (c)
thereafter, less than 250% for such Fiscal Quarter.”
(o) Section
7.15 to the Existing Credit Agreement is hereby amended in its entirety to read
as follows:
“Combined Statutory Capital and
Surplus Level. The Company shall not permit the Combined
Statutory Capital and Surplus of the Insurance Subsidiaries as of the end of any
Fiscal Quarter to be (a) for the period from and including March 31,
2009 through December 31, 2010, less than $1,100,000,000; (b) for the
period from and including March 31, 2011 through December 31, 2011, less than
$1,200,000,000; and (b) thereafter, less than $1,300,000,000.”
(p) Section
8.02 of the Credit Agreement is hereby amended by replacing the reference to
“Section 8.01(g)” in the proviso with a reference to “Section
8.01(g)(i)”.
(q) The
Existing Credit Agreement is hereby amended by adding a new Schedule 6.13(b)
attached to this Amendment as Schedule
6.13(b).
SECTION
2. Conditions to
Effectiveness. This Amendment shall become effective as of the
date on or before January 15, 2010, unless extended by the Agent on which the
following conditions shall have been satisfied (or waived):
(a) The Agent
shall have received the following documents, each dated as of the Amendment No.
3 Effective Date:
(i) counterparts
of this Amendment executed by the Loan Parties and the Required
Lenders;
(ii) counterparts
of the Consent executed by the Subsidiary Guarantors; and
(iii) a
certificate of a Responsible Officer of the Borrower, the statements in which
shall be true, certifying that (i) the representations and warranties set forth
in Article 5 of the Existing Credit Agreement (as amended by this Amendment) are
true and correct in all material respects as of the Amendment No. 3 Effective
Date, with the same effect as though made on and as of such date, except to the
extent such representations and warranties expressly relate to an earlier date
(in which case such representations and
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warranties
shall be true and correct in all material respects as of such earlier date),
(ii) immediately prior to and after giving effect to the Amendment No. 3
Effective Date, no Default or Event of Default shall have occurred and be
continuing and (iii) immediately prior to and after giving effect to the
Amendment No. 3 Effective Date, the Borrower is in compliance, on a pro forma
basis, with Sections 7.11, 7.12, 7.14 and 7.15 of the Existing Credit
Agreement.
(b) The
Borrower shall have paid the sum of $150,000,000 plus fifty percent (50%) of the
Net Proceeds in excess of $200,000,000 from the registered offering of the
common stock of the Borrower to be issued pursuant to the registration statement
filed by the Borrower with the SEC on November 19, 2009 to the Agent for
prepayment of the Borrowings as set forth in Section 2.08(c) of
the Existing Credit Agreement.
(c) The
Borrower shall have paid or caused to be paid, in cash, to the Agent, for the
ratable account of each Lender entitled to such payment, the Accrued Fee
(including all capitalized Accrued Fees) outstanding immediately prior to the
Amendment No. 3 Effective Date, such payment to equal approximately
$5,950,580.08 in the aggregate.
(d) The
Borrower shall have paid or caused to be paid, in cash, to the Agent, for the
account of each Lender consenting to this Amendment (such consent to be
evidenced by such Lender’s execution and delivery of its signature page hereto)
by 5:00 pm eastern on Monday, December 14, 2009 (provided that such Lender is
not a Defaulting Lender on the Amendment No. 3 Effective Date), a fee equal to
0.25% of the aggregate amount of the outstanding Term Loans of such Lender, the
outstanding fees of the Agent as of the Amendment No. 3 Effective Date and all
reasonable and invoiced out-of-pocket expenses of the Agent in connection with
this Amendment, including the reasonable fees, charges and expenses of Xxxxxxx
XxXxxxxxx LLP and the financial advisor engaged under Section 6.16 of the
Existing Credit Agreement.
SECTION
3. Covenant. Within
thirty (30) days of the Amendment No. 3 Effective Date (or such later date as
the Agent shall determine in its sole discretion), each of the Borrower, the
Subsidiary Guarantors and the Agent shall have entered into such amendments to
the Security Agreement and other Loan Documents as shall be necessary to give
effect to the amendments to collateral arrangements contemplated herein, and
otherwise to give effect to this Amendment. Such amendments shall
include, without limitation, an amendment to Section 12 of the Security
Agreement to include a representation, warranty and covenant by the Borrower and
each Subsidiary Guarantor that all cash owned by the Borrower and each
Subsidiary Guarantor shall be deposited, upon or promptly after the receipt
thereof, in one or more Controlled Deposit Accounts. Such amendments
will also address maximum threshold amounts and other exceptions for Deposit
Accounts that are not Controlled Deposit Accounts, such amounts and exceptions
to be negotiated in good faith between each Obligor and the Agent.
SECTION
4.Reference to and Effect on
the Existing Credit Agreement and the Loan Documents. (a) On and after
the effectiveness of this Amendment, each reference in the Existing Credit
Agreement to “this Agreement”, “hereunder”, “hereof” or words of like import
referring to the Existing Credit Agreement, and each reference in the Notes and
each of the other Loan Documents to “the Credit Agreement”, “thereunder”,
“thereof” or words of like import referring
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to the
Existing Credit Agreement, shall mean and be a reference to the Existing Credit
Agreement, as amended by this Amendment.
(b) The
Existing Credit Agreement, the Notes and each of the other Loan Documents, as
specifically amended by this Amendment (and as contemplated to be amended,
modified, supplemented, restated, substituted or replaced by this Amendment) are
and shall continue to be in full force and effect. Without limiting
the generality of the foregoing, the Security Documents and all of the
Collateral described therein do and shall continue to secure the payment of all
Obligations of the Obligors under the Loan Documents, in each case, as amended
by this Amendment.
(c) The
execution, delivery and effectiveness of this Amendment shall not, except as
expressly provided herein, operate as a waiver of any right, power or remedy of
any Lender, any Issuing Bank or the Agent under any of the Loan Documents, nor
constitute a waiver of any provision of any of the Loan Documents.
(d) The
Borrower hereby ratifies and confirms all of its Obligations to the Lenders and
the Agent, including, without limitation, the Loans, and the Borrower hereby
affirms its absolute and unconditional promise to pay to the Lenders the Loans,
the Obligations, and all other amounts due under the Existing Credit Agreement
and the Security Agreement, each as amended hereby, the Notes, and the other
Loan Documents, at the times and in the amounts provided for therein and subject
to the terms hereof.
SECTION
5. Expenses. The
Borrower agrees that all reasonable out-of-pocket expenses incurred by the Agent
and the Steering Committee in connection with the preparation, execution,
delivery and administration, modification and amendment of this Amendment and
the other instruments and documents to be delivered hereunder or in connection
herewith (including, without limitation, the reasonable fees, charges and
disbursements of counsel for the Agent and the Steering Committee and reasonable
fees and expenses of the financial advisor retained by the Agent and/or Steering
Committee), are expenses that the Borrower is required to pay or reimburse
pursuant to Section
10.04 of the Existing Credit Agreement and the Fee
Agreement.
SECTION
6. Releases.
(a) In
consideration of the agreements of the Agent, the Steering Committee and the
Lenders contained herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Borrower on behalf
of itself and each of its Subsidiaries (collectively, the “Releasing Parties”), on behalf
of the Releasing Party and their respective successors, assigns, and other legal
representatives, hereby absolutely, unconditionally and irrevocably releases,
remises and forever discharges the Agent, the Steering Committee and each of the
Lenders and their respective successors and assigns, and their respective
present and former shareholders, affiliates, subsidiaries, divisions,
predecessors, directors, officers, attorneys, financial advisors, employees,
agents and other representatives (the Agent, the Lenders and all such other
Persons being hereinafter referred to collectively as the “Releasees” and individually
as a “Releasee”), of and
from all demands, actions, causes of action, suits, covenants, contracts,
controversies, agreements, promises, sums of money, accounts, bills, reckonings,
damages and any and all other claims, counterclaims, defenses, rights of set
off, demands and liabilities
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whatsoever
(individually, a “Claim”
and collectively, “Claims”) of every name and
nature, known or unknown, suspected or unsuspected, both at law and in equity,
which such Releasing Party or any of its successors, assigns, or other legal
representatives may now or hereafter own, hold, have or claim to have against
the Releasees or any of them for, upon, or by reason of any circumstance,
action, cause or thing whatsoever which arises at any time on or prior to the
day and date of this Amendment for or on account of, or in relation to, or in
any way in connection with the Existing Credit Agreement, this Amendment or any
related documents or transactions thereunder or related thereto.
(b) Each
Releasing Party understands, acknowledges and agrees that the release set forth
above may be pleaded as a full and complete defense and may be used as a basis
for an injunction against any action, suit or other proceeding which may be
instituted, prosecuted or attempted in breach of the provisions of such
release.
(c) Each
Releasing Party agrees that no fact, event, circumstance, evidence or
transaction which could now be asserted or which may hereafter be discovered
shall affect in any manner the final, absolute and unconditional nature of the
release set forth above. Each Releasing Party acknowledges and agrees
that the Releasees have fully performed all obligations and undertakings owed to
the Releasing Parties under or in any way in connection with the Existing Credit
Agreement, this Amendment or any related documents or transactions thereunder or
related thereto as of the date hereof.
(d) Each
Releasing Party, on behalf of itself and its successors, assigns, and other
legal representatives, hereby absolutely, unconditionally and irrevocably,
covenants and agrees with and in favor of each Releasee that it will not xxx (at
law, in equity, in any regulatory proceeding or otherwise) any Releasee on the
basis of any Claim released, remised and discharged by such Releasing Party
pursuant to this Section 6. If any
Releasing Party or any of their successors, assigns or other legal
representatives violates the foregoing covenant, such Person, for itself and its
successors, assigns and legal representatives, agrees to pay, in addition to
such other damages as any Releasee may sustain as a result of such violation,
all attorneys’ fees and costs incurred by any Releasee as a result of such
violation.
SECTION
7. Execution in
Counterparts. This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute but one and the same agreement. Delivery of
an executed counterpart of a signature page to this Amendment by telecopier or
electronic transmission (e.g., .pdf or .tif file) shall be effective as delivery
of a manually executed counterpart of this Amendment.
SECTION
8. Governing Law. This
Amendment shall be governed by, and construed in accordance with, the laws of
the State of New York.
[The remainder of this page is
intentionally left blank]
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IN
WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by
their respective officers thereunto duly authorized, as of the date first above
written.
CONSECO,
INC., as Borrower
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By
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/s/
Xxxx X. Xxxxxx
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Name:
Xxxx X. Xxxxxx
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Title:
SVP & Treasurer
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WILMINGTON
TRUST FSB, as
Agent
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By
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/s/
Xxxxx X. Xxxxxx
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Name:
Xxxxx X. Xxxxxx
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Title:
Vice President
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CONSENT
Dated as
of December 8, 2009
Each of
the undersigned, as a Subsidiary Guarantor under the Existing Credit Agreement
referred to in the foregoing Amendment, hereby consents to such Amendment and
the transactions contemplated by such Amendment and hereby confirms and agrees
that (a) notwithstanding the effectiveness of such Amendment, the Security
Agreement is, and shall continue to be, in full force and effect and is hereby
ratified and confirmed in all respects, except that, on and after the
effectiveness of such Amendment, each reference in the Security Agreement to the
“Credit Agreement”, “thereunder”, “thereof” or words of like import shall mean
and be a reference to the Existing Credit Agreement, as amended by such
Amendment, and (b) the Security Documents to which such Guarantor is a party and
all of the Collateral described therein do, and shall continue to, secure the
payment of all of the obligations to be secured thereunder.
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AMERICAN
LIFE AND CASUALTY MARKETING DIVISION
CO.
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CDOC,
INC.
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CONSECO
MANAGEMENT SERVICES COMPANY
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By
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/s/
Xxxx X. Xxxxxx
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Name:
Xxxx X. Xxxxxx
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Title:
SVP & Treasurer
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CODELINKS,
LLC
By:
CDOC, Inc., its Manager
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By
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/s/
Xxxx X. Xxxxxx
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Name:
Xxxx X. Xxxxxx
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Title:
SVP & Treasurer
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40|86
ADVISORS, INC.
40|86
MORTGAGE CAPITAL, INC.
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By
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/s/
Xxxx X. Xxxxxx
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Name:
Xxxx X. Xxxxxx
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Title:
SVP & Treasurer
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PERFORMANCE
MATTERS ASSOCIATES, INC.
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PERFORMANCE
MATTERS ASSOCIATES OF TEXAS, INC.
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By
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/s/
Xxxx X. Xxxxxx
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Name:
Xxxx X. Xxxxxx
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Title:
SVP & Treasurer
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CONSECO
SERVICES, LLC
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By
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/s/
Xxxx X. Xxxxxx
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Name:
Xxxx X. Xxxxxx
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Title:
SVP & Treasurer
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Acknowledged
as of the date hereof:
WILMINGTON
TRUST FSB, as
Agent
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By
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/s/
Xxxxx X. Xxxxxx
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Name:
Xxxxx X. Xxxxxx
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Title:
Vice President
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