EXHIBIT 10.3
AMENDMENT NO. 4
TO
LOAN AGREEMENT
THIS AMENDMENT, is made and entered into as of September, 1998, but
effective as of July 15, 1998, among LIFE USA HOLDING, INC., as Borrower,
EMPLOYERS REASSURANCE CORPORATION, as Agent and one of the Lenders, and
REPUBLIC-VANGUARD LIFE INSURANCE COMPANY and WINTERTHUR LIFE RE INSURANCE
COMPANY, as the other Lenders.
W I T N E S S E T H:
WHEREAS, the parties hereto have entered into the Loan Agreement dated
as of May 17, 1996, as amended by Amendment No. 1 dated as of December 30, 1996,
Amendment No. 2 dated as of May 30, 1997, and Amendment No. 3 dated as of
January 30, 1998 (the "Agreement"), pursuant to which the Lenders have agreed to
make advances to Borrower on the terms and conditions set forth therein; and
WHEREAS, Borrower has advised the Agent and the Lenders that it has
obtained approval of its Board of Directors effective July 15, 1998 to initiate
a program to repurchase up to 4,000,000 shares of its outstanding Common Stock
in open market transactions (the "Stock Repurchase Plan"); and
WHEREAS, Borrower, the Agent and the Lenders wish to amend the
Agreement as provided in this Amendment in connection with the Stock Repurchase
Plan,
NOW, THEREFORE, in consideration of these premises and of the
covenants, conditions and promises hereinafter set forth and for One Dollar
($1.00) and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:
1. Intention of Amendment. The purpose of this Amendment is to
permit the use of the proceeds of any Term Loan Advance to
purchase Borrower's Common Stock pursuant to the Stock
Repurchase Plan and to make such other modifications to the
Agreement as are necessary or appropriate to permit such
application of proceeds. All terms defined in the Agreement
are used herein as defined in the Agreement.
2. Amendment of Section 1 of the Agreement. Section 1 of the
Agreement is hereby amended by adding a definition for "Stock
Repurchase Plan" as follows:
"Stock Repurchase Plan" shall mean the program to repurchase
up to 4,000,000 shares of the Borrower's outstanding Stock in
open market
transactions, as approved by the Board of Directors of the
Borrower effective July 15, 1998.
3. Amendment of Section 2.4 of Agreement. Subsection 2.4 of the
Agreement is hereby amended in its entirety to read as
follows:
"2.4. Use of Proceeds. Borrower shall apply the proceeds of
each Term Loan Advance (i) to fund, or reimburse Borrower for
payments made after April 1, 1996 for, the cash portion of any
FMO Investment, (ii) to fund, or reimburse Borrower for
payments made after April 1, 1996 for, the Capital and Surplus
of LifeUSA, (iii) to make, or reimburse Borrower for payments
made after April 1, 1996 for, any Capital Expenditures
permitted pursuant to Section 7.10 hereof or investment
permitted pursuant to Section 7.2 hereof or (iv) to fund, or
reimburse Borrower for payments made for, purchases of
Borrower's Common Stock pursuant to the Stock Repurchase
Plan."
4. Amendment of Section 7.2 of Agreement. Subsection (b) of
Section 7.2 of the Agreement is hereby amended in its entirety
to read as follows:
"(b) Borrower shall not, and shall not permit any Subsidiary
to make or commit to make, any advance, loan, extension of
credit or capital contribution to, or purchase of any stock,
bonds, notes, debentures or other securities of any Person
(including, without limitation, any such Person which would
constitute a Subsidiary), or make any other investment in any
Person or otherwise engage in any investment activities,
except for (i) FMO Investments by Borrower or any Subsidiary,
provided that the aggregate amount of cash used by Borrower
and its Subsidiaries to make such investments shall not exceed
$25,000,000 outstanding at any one time, (ii) those
investments and investment activities set forth on Schedule
7.2 hereto (the "Investment Guidelines"), as such Investment
Guidelines are modified from time to time by the Board of
Directors of LifeUSA Insurance Company, (iii) as permitted by
subsection (a) hereof and (iv) purchases of Borrower's Common
Stock pursuant to the Stock Repurchase Plan, but subject to
compliance with Section 7.14 hereof."
5. Amendment of Section 7.5 of Agreement. Subsection (b) of
Section 7.5 of the Agreement is hereby amended in its entirety
to read as follows:
"(b) Borrower shall not make or permit any Subsidiary of
Borrower to make any changes in its capital structure, amend
its certificate of incorporation or bylaws, or make or permit
any Subsidiary or Borrower to make any changes in any of its
business objectives, purposes or operations which might in any
way adversely affect the repayment of the Obligations or have
a Material Adverse Effect, provided that any amendment to the
certificate of incorporation of Borrower to increase the
number of
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authorized shares of Common Stock shall not require the prior
written consent of the Required Lenders."
6. Amendment to Section 7.14 of Agreement. Section 7.14 of the
Agreement is hereby amended in its entirety to read as
follows:
"7.14 Restricted Payments. Borrower shall not and shall not
permit any Subsidiary of Borrower to make any Restricted
Payments, except that during any Fiscal Year commencing with
the year beginning January 1, 1998, Borrower may pay dividends
in an amount up to 25% of Excess Cash Flow for the prior
Fiscal Year, and Borrower may repurchase its Common Stock
pursuant to the Stock Repurchase Plan, provided, in each case,
(i) no Default or Event of Default has occurred and is
continuing or would result from the making of such Restricted
Payment and (ii) Borrower's Consolidated Net Worth after
giving effect to such Restricted Payment shall equal at least
$207,000,000."
7. Representations and Warranties. Borrower represents and
warrants to Agent and Lenders as follows:
(a) All of the representations and warranties of Borrower
contained in the Agreement or any of the Loan
Documents are true and correct in all material
respects on the date hereof as though made on such
date, except to the extent that any such
representation or warranty expressly relates to an
earlier date and for changes permitted or
contemplated by the Agreement, except as such
representations and warranties were modified or
supplemented since the date of the original
Agreement. As of the date hereof, no Default or Event
of Default under the Agreement as amended by this
Amendment has occurred which is continuing.
(b) The execution, delivery and performance by Borrower
of this Amendment have been duly authorized by all
necessary or proper corporate action and do not
require the consent or approval of any Person which
has not been obtained.
(c) This Amendment has been duly executed and delivered
by Borrower and constitutes a legal, valid and
binding obligation of Borrower, enforceable against
Borrower in accordance with its terms.
8. Fees and Expenses. Pursuant to Section 10.2 of the Agreement,
Borrower shall pay all reasonable out-of-pocket costs and
expenses of Agent in connection with the preparation of this
Amendment, including the reasonable fees and expenses of its
counsel.
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9. Full Force and Effect. Except as expressly set forth herein,
the Agreement, as amended hereby, shall continue in full force
and effect in accordance with its terms.
10. 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 and delivered,
shall be deemed to be an original and all of which taken
together shall constitute but one and the same instrument.
11. Governing Law. This Amendment shall be governed by and
construed in accordance with the laws of the State of New
York, without regard to the principles thereof regarding
conflicts of laws.
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IN WITNESS WHEREOF, the parties have executed this Agreement, each as
of the date first above written.
LIFE USA HOLDING, INC., as Borrower
By: /s/ Xxxx X. Xxxxxxxx
-------------------------------------------
Xxxx X. Xxxxxxxx
Executive Vice President and
Chief Financial Officer
EMPLOYERS REASSURANCE CORPORATION,
as Agent and Lender
By: /s/ Xxxxx X. Xxxxxx
-------------------------------------------
Its: Executive Vice President & Actuary
REPUBLIC-VANGUARD LIFE INSURANCE
COMPANY, as Lender
By: /s/ Xxxx Xxxxx
-------------------------------------------
Its: Senior Vice President & Treasurer
WINTERTHUR LIFE RE INSURANCE COMPANY,
as Lender
By: /s/ Xxxx Xxxxx
-------------------------------------------
Its: Senior Vice President & Treasurer
SIGNATURE PAGE TO
AMENDMENT NO. 4 TO LOAN AGREEMENT
