GUARANTEE AGREEMENT
GUARANTEE AGREEMENT, dated as of September 30, 1996 ("Guarantee
Agreement"), executed and delivered by Conseco, Inc., an Indiana corporation
(the "Guarantor"), for the benefit of the Holders (as defined below) of the 11
1/4% Senior Subordinated Notes Due 2004 (the "Notes") of American Life Holding
Company, a Delaware corporation (the "Company").
WHEREAS, on September 29, 1994, the Company completed a public offering
of $150 million of Notes, of which $150 million are currently outstanding;
WHEREAS, pursuant to certain stock purchases on September 30, 1996 by
the Guarantor and its affiliates, the Company became a majority owned subsidiary
of the Guarantor;
WHEREAS, the Guarantor believes that certain benefits will result to
the Guarantor and its subsidiaries through its guarantee of the Notes as
provided herein;
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration the sufficiency of which is hereby acknowledged the
Guarantor executes and delivers this Guarantee Agreement for the benefit of the
Holders.
ARTICLE I
Definitions
As used in this Guarantee Agreement, the terms set forth below shall,
unless the context otherwise requires, have the following meanings.
AFFILIATE: of any specified Person, any Person directly or
indirectly controlling or controlled by, or under direct or indirect
common control with such specified Person. For purposes of this
definition, "control" when used with respect to any specified Person
means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
BUSINESS DAY: each day that is not a Saturday, Sunday or
a legal holiday in New York, New York.
CAPITALIZED LEASE OBLIGATION: all monetary obligations of
Guarantor under any leasing or similar arrangement which, in
accordance with GAAP, would be classified as a capitalized lease, and,
for purposes of this Agreement, the amount of such
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obligations shall be the capitalized amount thereof, determined in
accordance with GAAP, and the stated maturity thereof shall be the date
of the last payment of rent or any other amount due under such lease
prior to the first date upon which such lease may be terminated by the
lessee without payment of a penalty.
CAPITAL STOCK: any and all shares, interests, rights to
purchase, warrants, options, participations or other equivalents of or
interests in (however designated) corporate stock.
CONTINGENT OBLIGATION: any agreement, undertaking or
arrangement by which any Person guarantees, endorses or otherwise
becomes or is contingently liable upon (by direct or indirect
agreement, contingent or otherwise, to provide funds for payment, to
supply funds to, or otherwise to invest in, a debtor, or otherwise to
assure a creditor against loss) the debt, obligation or other liability
of any other Person (other than by endorsements of instruments in the
course of collection), or guarantees the payment of dividends or other
distributions upon the shares of any other Person. The amount of any
Person's liability with respect to any Contingent Obligation shall
(subject to any limitation set forth therein) be deemed to be the
outstanding principal amount (or maximum outstanding principal amount,
if larger) of the debt, obligation or other liability outstanding
thereunder.
DEBT: of any Person means, without duplication,
(i) the principal of and due and payable premium (if any), and
interest in respect of (1) indebtedness of such Person for money
borrowed and (2) indebtedness evidenced by notes, debentures, bonds or
other similar interests for the payment of which such Person is
responsible or liable (but excluding sight drafts that evidence trade
accounts payable arising in the ordinary course of business and
excluding Capital Stock);
(ii) all Capitalized Lease Obligations of such Person;
(iii) all obligations of such person issued or assumed as the
deferred purchase price of property;
(iv) all obligations of such person for the reimbursement of
any obligor on any letter of credit, banker's acceptance or similar
credit transaction (other than obligations with respect to letters of
credit securing obligations (other than obligations described in (i),
(ii) and (iii) above), entered into in the ordinary course of business
of such person to the extent such letters of credit are not drawn upon,
or, if and to the extent drawn upon, such drawing is reimbursed no
later
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than the third Business Day following receipt by such person of a
demand for reimbursement following payment on the letter of credit);
(v) all obligations of the type referred to in clauses (i)
through (iv) of other Persons and all dividends of other Persons the
payment of which, in either case, such Person is responsible or liable
as obligor, guarantor or otherwise; and
(vi) all obligations of the type referred to in clauses (i)
through (v) of other Persons secured by any Lien on any property or
asset of such Person (whether or not such obligation is assumed by such
Person), the amount of such obligation being deemed to be the lesser of
the value of such property or assets or the amount of the obligation so
secured; provided that Debt shall not include obligations with respect
to insurance policies, annuities, guaranteed investment contracts, and
similar products underwritten by, or reinsurance agreements entered
into by, any Person that is an insurance corporation.
EVENT OF DEFAULT: as defined in the Subordinated Indenture and
in any supplemental indenture.
GAAP: generally accepted accounting principles.
GUARANTEE PAYMENTS: the following payments, without
duplication, to the extent not paid by the Company: (i) any accrued
and unpaid interest under the Notes and (ii) the principal amounts
outstanding under the Notes when due and payable.
HEDGING OBLIGATIONS: all liabilities of Guarantor under
interest rate swap agreements, interest rate cap agreements and
interest rate collar agreements or agreements designed to protect
against fluctuations in interest rates or currency exchange rates.
HOLDER: any registered owner from time to time of Notes
provided, however, that in determining whether the Holders of the
requisite percentage of the Notes have given any request, notice,
consent or waiver hereunder, "Holder" shall not include the Guarantor
or any Affiliate of the Guarantor, either directly or indirectly.
LIEN: any security interest, mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or
other), claim or other priority or preferential arrangement of any
kind or nature whatsoever.
PERSON: any individual, corporation, partnership, joint
venture, limited liability company, association, joint-stock
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company, trust, unincorporated organization or government or any agency
or political subdivision thereof.
SENIOR INDEBTEDNESS: at any date, without duplication, whether
outstanding on the date of execution of this Agreement or thereafter
created, assumed or otherwise incurred: (a) all obligations of
Guarantor for borrowed money or in respect of loans or advances; (b)
all obligations of Guarantor evidenced by bonds, debentures, notes or
other similar instruments; (c) all obligations in respect of letters of
credit, whether or not drawn, and bankers' acceptances issued for the
account of Guarantor; (d) all Capitalized Lease Obligations in
accordance with GAAP, and Debt secured by a Lien on property owned or
being purchased by Guarantor (including Debt arising under conditional
sales or other title retention agreements); (e) any Debt of a
partnership in which Guarantor is a general partner; and (f) all
Contingent Obligations of Guarantor in connection with the foregoing;
provided that Senior Indebtedness shall not be deemed to include any
Senior Indebtedness of the type described above under clauses (a)
through (f) which is subordinate or junior in ranking to the Guarantee
Payments.
SENIOR SUBORDINATED DEBT: any Debt of the Guarantor (whether
outstanding on the date hereof or hereafter incurred) that specifically
provides that such Debt ranks pari passu with other Senior Subordinated
Debt of the Guarantor and is not subordinated to any Debt of the
Guarantor which is not Senior Indebtedness.
SUBORDINATED DEBT: any Debt of the Guarantor (whether
outstanding on the date hereof or hereafter incurred) which is
subordinate or junior in right of payment to any Senior Subordinated
Debt.
SUBORDINATED INDENTURE: the Indenture, dated as of September
29, 1994, between the Company and LTCB Trust Company, as Trustee.
ARTICLE II
The Guarantee
2.1. The Guarantor irrevocably and unconditionally agrees to pay in
full to the Holders the Guarantee Payments (except to the extent paid by the
Company), as and when due. The Guarantor's obligation to make a Guarantee
Payment may be satisfied by direct payment of the required amounts by the
Guarantor to the Holders or by causing the Company to pay such amounts to the
Holders.
2.2. The Guarantor hereby waives notice of acceptance of this Guarantee
Agreement and of any liability to which it applies or may
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apply, presentment, demand for payment, protest, notice of nonpayment, notice of
dishonor, notice of redemption and all other notices and demands.
2.3. The obligations, covenants, agreements and duties of the Guarantor
under this Guarantee Agreement shall in no way be affected or impaired by reason
of the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise,
of the performance or observance by the Company of any express or
implied agreement, covenant, term or condition relating to the Notes to
be performed or observed by the Company;
(b) the extension of time for the payment by the Company of
all or any portion of the sums payable under the terms of the Notes or
the extension of time for the performance of any other obligations
under, arising out of, or in connection with, the Notes;
(c) any failure, omission, delay or lack of diligence on the
part of the Holders to enforce, assert or exercise any right,
privilege, power or remedy conferred on the Holders pursuant to the
terms of the Notes or any action on the part of the Company granting
indulgence or extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution,
sale of any collateral, receivership, insolvency, bankruptcy,
assignment for the benefit of creditors, reorganization, arrangement,
composition or readjustment of debt of, or other similar proceedings
affecting, the Company or any of the assets of the Company;
(e) any invalidity or illegality of, or defect or deficiency
in, any of the Notes;
(f) the settlement or compromise of any obligation hereby
guaranteed or incurred;
(g) any reduction, limitation, impairment or termination of
the obligations of the Company under the Notes 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 the
Company under the Notes; or
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(h) any other condition or event that would otherwise release
the Guarantor from its obligations under this Guarantee Agreement.
There shall be no obligation of the Holders to give notice to, or obtain consent
of, the Guarantor with respect to the happening of any of the foregoing.
2.4. This Guarantee Agreement shall be reinstated in respect of any of
the obligations under the Notes if at any time payment, or any part thereof, of
such obligations is rescinded or must otherwise be restored or returned by a
Holder upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of the Company or the Guarantor, or upon or as a result of the
appointment of a receiver, intervenor or conservator of, or trustee or similar
officer for, the Company or the Guarantor or any substantial part of its
property, or otherwise, all as though such payments had not been made.
2.5. This is a guarantee of payment and not of collection. A Holder may
enforce this Guarantee Agreement directly against the Guarantor, and the
Guarantor will waive any right or remedy to require that any action be brought
against the Company or any other person or entity before proceeding against the
Guarantor. Subject to Section 2.5, all waivers herein contained shall be without
prejudice to the Holders' right, at the Holders' option, to proceed against the
Company, whether by separate action or by joinder. The Guarantor agrees that
this Guarantee Agreement shall not be discharged except by payment of the
Guarantee Payments in full (to the extent not paid by the Company) and by
complete performance of all obligations of the Guarantor contained in this
Guarantee Agreement.
2.6. The Guarantor shall be subrogated to all rights (if any) of the
Holders against the Company in respect of any amounts paid to the Holders by the
Guarantor under this Guarantee Agreement and shall have the right to waive
payment of any amount in respect of which payment has been made to the Holders
by the Guarantor pursuant to Section 2.1; provided, however, that the Guarantor
shall not (except to the extent required by mandatory provisions of law)
exercise any rights which it may acquire by way of subrogation or any indemnity,
reimbursement or other agreement, in all cases as a result of a payment under
this Guarantee Agreement, if at the time of any such payment, any amounts are
due and unpaid under this Guarantee Agreement. If any amount shall be paid to
the Guarantor in violation of the preceding sentence, the Guarantor agrees to
pay over such amount to the Holders.
2.7. The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Company with respect to the Notes and that
the Guarantor shall be liable as principal and sole debtor hereunder to make
Guarantee Payments
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pursuant to the terms of this Guarantee Agreement notwithstanding the occurrence
of any event referred to in subsections (a) through (h), inclusive, of Section
2.3.
ARTICLE III
Status of the Guarantee
This Guarantee Agreement constitutes an unsecured obligation of the
Guarantor. Guarantor and the Company covenant and agree that all Guarantee
Payments shall be subordinated and subject to the prior payment in full, in cash
or payment provided for in cash or cash equivalents in a manner satisfactory to
the holders of Senior Indebtedness, of all Senior Indebtedness. The obligations
of the Guarantor hereunder shall in all respects rank pari passu with all
Subordinated Debt, and only indebtedness of the Guarantor which is Senior
Indebtedness or Senior Subordinated Debt shall rank senior to the obligations of
the Guarantor hereunder in accordance with the provisions set forth herein. The
provisions of this Article III are made for the benefit of all present and
future holders of Senior Indebtedness, and any such holder may proceed to
enforce such provisions.
ARTICLE IV
Termination of the Guarantee
4.1. This Guarantee Agreement shall terminate and be of no further
force and effect as to the Notes upon either (i) full payment of the redemption
price (including all accrued and unpaid interest) for all outstanding Notes or
(ii) full payment of the amounts payable to the Holders under the Notes.
ARTICLE V
Miscellaneous Agreements and Provisions
5.1. All guarantees and agreements contained in this Guarantee
Agreement shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the Holders.
The Guarantor shall not assign its obligations hereunder without the prior
approval of the Holders (excluding the Guarantor and any of its Affiliates) of
not less than 50% of the principal amount of the Notes then outstanding given
either in writing or by vote at a duly constituted meeting of such Holders.
Notwithstanding the foregoing, no assignment hereunder shall be binding against
a Holder who did not vote in favor of such assignment unless such assignment was
by operation of law or the assignee has a credit rating from Standard & Poors
Corporation of the same as or better than the Guarantor.
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5.2. Except with respect to amendments that do not adversely affect the
rights of Holders (in which case no vote will be required), this Guarantee
Agreement may only be amended with the prior approval of the Holders (excluding
the Guarantor and any of its Affiliates) of not less than 50% in principal
amount of the Notes then outstanding given either in writing or by vote at a
duly constituted meeting of such Holders who may be present in person or by
proxy.
5.3. Any notice, request or other communication required or permitted
to be given hereunder to the Guarantor shall be given in writing and delivered
personally or by telegram, facsimile transmission or registered or certified
mail (return receipt requested) at the following address and, if so given, shall
be deemed effective when received, to it:
Conseco, Inc.
00000 X. Xxxxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxx 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxxxxx X. Xxxxx, Esq.,
Executive Vice President
and General Counsel
Any notice, request or other communication required or permitted to be given
hereunder to the Holders shall be given by the Guarantor in the same manner as
notices sent by the Company to the Holders.
5.4. The masculine and neuter genders used herein shall
include the masculine, feminine and neuter genders.
5.5 This Guarantee Agreement is solely for the benefit of the
Holders and is not separately transferable from the Notes.
5.6. THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
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THIS GUARANTEE AGREEMENT is executed as of the day and year first above
written.
CONSECO, INC.
By: /s/ XXXXXX X. XXXX
-----------------------------
Xxxxxx X. Xxxx,
Executive Vice President
Accepted and Agreed:
AMERICAN LIFE HOLDING COMPANY
By: /S/ XXXXXX X. XXXXXXXXX
------------------------
Xxxxxx X. Xxxxxxxxx,
Executive Vice President
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