EXHIBIT 4.1
AMENDMENT NO. 1 TO AMENDED AND RESTATED CREDIT AGREEMENT
This Amendment No. 1 to Amended and Restated Credit Agreement (this
"Amendment Agreement") is entered into as of November 5, 1999 by and among
American Medical Security Group, Inc. and United Wisconsin Life Insurance
Company (collectively, the "Borrowers"), the undersigned lenders (the "Lenders")
and Bank One, NA (f/k/a The First National Bank of Chicago), as agent (the
"Agent") and swing line lender.
W I T N E S S E T H :
WHEREAS, the Borrowers, the Lenders and the Agent entered into that certain
Amended and Restated Credit Agreement dated as of October 15, 1998 (the "Credit
Agreement"); and
WHEREAS, the Borrowers, the Lenders and the Agent have agreed to amend the
Credit Agreement on the terms and conditions herein set forth.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. DEFINED TERMS. Capitalized terms used herein and not otherwise defined herein
shall have the meanings attributed to such terms in the Credit Agreement, as
amended hereby.
2. AMENDMENTS TO CREDIT AGREEMENT.
2.1 Article I of the Credit Agreement is hereby amended by (a) deleting
clause (d) of the definition of "Cash Equivalent Investments" in its entirety
and replacing it with the following:
(d) certificates of deposit issued by and overnight repurchase agreements
and time deposits with commercial banks (whether domestic or foreign)
having capital and surplus in excess of $100,000,000;
(b) adding the words ", the Pledge Agreements" to the definition of "Loan
Documents" following the reference to "the Guaranty", (c) adding the definitions
of "Asset Disposition", "EBITDA" and "Pledge Agreements" as follows:
"Asset Disposition" means any sale, transfer or other disposition of
any asset of Group or any Subsidiary in a single transaction or in a series
of related transactions, other than the sale of Investments in the ordinary
course of business by Insurance Subsidiaries.
"EBITDA" means, for any period, for Group on a stand alone basis,
determined in accordance with GAAP, the sum of (a) the net income (or net
loss) for such period, PLUS (b) all amounts treated as expenses for
depreciation and interest and the amortization of intangibles of any kind
to the extent included in the determination of such net income (or loss),
PLUS (c) all accrued taxes on or measured by income to the extent included
in the determination of such net income (or loss).
"Pledge Agreements" means, collectively, (a) that certain Stock Pledge
Agreement dated as of the date hereof between Group and the Agent, as it
may be amended, supplemented or modified from time to time, and (b) that
certain Stock Pledge Agreement dated as of the date hereof between Holdings
and the Agent, as it may be amended, supplemented or modified from time to
time.
and (d) deleting the definitions of "Interest Coverage Ratio" and "Net Available
Proceeds" in their entirety and replacing them with the following:
"Interest Coverage Ratio" means, as of any date of determination, the
ratio of (a) the sum of (i) the lesser of (A) 10% of UWLIC's Statutory
Surplus as of such date and (B) UWLIC's aggregate Statutory Net Income for
the period of four Fiscal Quarters ending on such date, without regard to
realized capital gains in such period (determined on a pre-tax basis) and
determined without double counting, plus (ii) Group's EBITDA for the period
of four Fiscal Quarters ending on such date, to (b) Consolidated Interest
Expense for the period of four Fiscal Quarters ending on such date;
PROVIDED, that for determinations made through September 30, 2000, the
amount determined pursuant to clause (b) above shall be equal to the
Consolidated Interest Expense for the period beginning on October 1, 1999
and ending on the date of determination, divided by the number of quarters
in such period and multiplied by 4.
"Net Available Proceeds" means (a) with respect to any Asset
Disposition, the sum of cash or readily marketable cash equivalents
received (including by way of a cash generating sale or discounting of a
note or account receivable) therefrom, whether at the time of such
disposition or subsequent thereto, or (b) with respect to any sale or
issuance of equity securities of Group or any Subsidiary, cash or readily
marketable cash equivalents received therefrom, whether at the time of
disposition or subsequent thereto, net, in either case, of all legal, tax
and recording expenses, commissions and other fees and all costs and
expenses incurred and, in the case of an Asset Disposition, net of all
payments made by Group or any Subsidiary on any Indebtedness which is
secured by such assets pursuant to a permitted Lien upon or with respect to
such assets or which must, by the terms of such Lien, in order to obtain a
necessary consent to such Asset Disposition, or by applicable law, be
repaid out of the proceeds from such Asset Disposition.
2.2 Article II of the Credit Agreement is hereby amended by (a) deleting
the table in clause (a) of Section 2.8 and replacing it with the following:
DATE AGGREGATE COMMITMENT
November 5, 1999 $40,000,000
July 31, 2001 $30,000,000 (or such lesser amount
as shall then be in effect)
(b) adding a new paragraph (b) to Section 2.8 as follows:
(b) The Borrowers shall make permanent reductions in the Aggregate
Commitment in amounts equal to the following:
(i) within 30 days after the receipt thereof by Group or any
Subsidiary, an amount equal to 100% of the aggregate Net Available
Proceeds realized upon all Asset Dispositions in any Fiscal Year of
Group; PROVIDED, that no such prepayment or commitment reduction shall
be required (A) if such amount is less than $1,000,000 in any Fiscal
Year, or (B) as a result of any Asset Disposition permitted pursuant
to SECTION 6.13(A), (B) or (C); and
(ii) within 30 days after the receipt thereof by Group or any of
its Subsidiaries an amount equal to 100% of the Net Available Proceeds
realized upon the sale by Group or such Subsidiary of any of its
equity securities.
Contemporaneously with any automatic reductions in the Aggregate Commitment
pursuant to this SECTION 2.8(B), Group shall prepay the Revolving Loans in
an amount equal to the lesser of (A) the outstanding principal amount of
the Revolving Loans and (B) the amount of such reduction; PROVIDED, that no
such prepayment shall be required if, at such time, Group could satisfy the
conditions set forth in SECTION 4.2(B) for the reborrowing thereof. The
preceding sentence shall not affect the obligations of the Borrowers under
SECTION 2.1(B).
and (c) relabelling existing paragraphs (b) and (c) of Section 2.8 as paragraphs
(c) and (d).
2.3 Article V of the Credit Agreement is hereby amended by adding Section
5.31 as follows:
5.31 SECURITY. Each Pledge Agreement is effective to create and give
the Agent, for the benefit of the Lenders, as security for the repayment of
the obligations secured thereby, a legal, valid, perfected and enforceable
first priority Lien upon and security interest in the capital stock pledged
thereunder.
2.4 Article VI of the Credit Agreement is hereby amended as follows:
(a) Section 6.10 is hereby deleted in its entirety and replaced with
the following:
6.10 DIVIDENDS. Neither Borrower will, nor will it permit any
Subsidiary to, declare or pay any dividends or make any distributions
on its capital stock (other than dividends payable in its own capital
stock) or redeem, repurchase or otherwise acquire or retire any of its
capital stock at any time outstanding, except that any Subsidiary may
declare and pay dividends to a Wholly-Owned Subsidiary or to Group.
(b) Section 6.11(g) is hereby amended by deleting the references
therein to "$10,000,000" and "$5,000,000" and replacing them with
references to "$5,000,000" and "$1,000,000", respectively.
(c) Section 6.14 is hereby amended by (i) deleting clause (a)(iv) in
its entirety and replacing it with the following:
(iv) Acquisitions of businesses or entities engaged in the life,
accident and health insurance business (other than assets or stock of
any member of the UWS Group) which do not constitute hostile takeovers
(and Investments in Subsidiaries formed to Acquire such businesses or
Acquired after the date of this Agreement) made for consideration
consisting of Group's capital stock not to exceed $75,000,000 in the
aggregate after the Initial Closing Date (measured by reference to the
market value of such stock as of the consummation of such
Acquisition); and
(ii) deleting clause (b)(v) in its entirety and replacing it with the
following:
(v) Acquisitions of blocks of insurance business, from Persons
other than any member of the UWS Group, through assumptive
reinsurance, co-insurance or indemnity reinsurance, so long as the
only consideration paid in connection therewith consists of (A)
premium sharing and (B) payments of up to $5,000,000 in the aggregate
after the date hereof for the processing or administration of such
insurance business or in reimbursement of expenses of the cedent of
such insurance business.
and (iii) deleting clause (b)(vi) in its entirety and replacing it with a
reference to "Intentionally Omitted".
(d) Section 6.19.1 is hereby amended by deleting clauses (a), (b) and
(c) in their entirety and replacing them with the following:
(a) 3.25 to 1.0 from November 5, 1999 through December 31, 1999, (b)
3.5 to 1.0 from January 1, 2000 through March 31, 2000, (c) 4.5 to 1.0
from April 1, 2000 through June 30, 2000, (d) 5.0 to 1.0 from July 1,
2000 through September 30, 2000, (e) 5.5 to 1.0 from October 1, 2000
through December 31, 2000 and (f) 6.0 to 1.0 thereafter.
(e) Section 6.19.3 is hereby deleted in its entirety and replaced with
the following:
6.19.3. TANGIBLE NET WORTH. Group will at all times maintain a
Consolidated Tangible Net Worth of not less than the sum of (a)
$119,000,000, plus (b) 50% of the positive Consolidated Net Income
earned by Group in each Fiscal Quarter ending after September 30, 1999
and on or prior to the date of determination, plus (c) 50% of the Net
Available Proceeds received by Group or any Subsidiary from the
issuance of equity securities after September 30, 1999.
2.5 Article VII of the Credit Agreement is hereby amended by adding Section
7.17 as follows:
7.17 Any Pledge Agreement shall for any reason fail to create a valid
and perfected, first priority security interest in any collateral purported
to be covered thereby, except as permitted by the terms of such Pledge
Agreement, or any Pledge Agreement shall fail to remain in full force or
effect or any action shall be taken by any Person to discontinue such
Pledge Agreement or by Group or any of its Subsidiaries to assert the
invalidity or unenforceability of such Pledge Agreement, or a default shall
occur under such Pledge Agreement.
2.6 The Pricing Schedule to the Credit Agreement is hereby amended by (a)
deleting the tables set forth therein in their entirety and replacing them with
the following:
---------------------- ------------------ ------------------- ----------------- ----------------- ------------------
APPLICABLE LEVEL I LEVEL II LEVEL III LEVEL IV LEVEL V
MARGIN STATUS STATUS STATUS STATUS STATUS
---------------------- ------------------ ------------------- ----------------- ----------------- ------------------
---------------------- ------------------ ------------------- ----------------- ----------------- ------------------
<50% Usage 0.60% 0.675% 0.75% 1.00% 1.25%
---------------------- ------------------ ------------------- ----------------- ----------------- ------------------
---------------------- ------------------ ------------------- ----------------- ----------------- ------------------
>50% Usage 0.725% 0.80% 0.875% 1.25% 1.50%
-
---------------------- ------------------ ------------------- ----------------- ----------------- ------------------
---------------------- ------------------ ------------------- ----------------- ----------------- ------------------
APPLICABLE LEVEL I LEVEL II LEVEL III LEVEL IV LEVEL V
FEE RATE STATUS STATUS STATUS STATUS STATUS
---------------------- ------------------ ------------------- ----------------- ----------------- ------------------
---------------------- ------------------ ------------------- ----------------- ----------------- ------------------
Facility Fee 0.15% 0.20% 0.25% 0.25% 0.30%
---------------------- ------------------ ------------------- ----------------- ----------------- ------------------
(b) deleting the reference to "1.5" in the definition of "Level I Status" and
replacing it with a reference to "1.0", (c) deleting the reference to "2.5" in
the definition of "Level II Status" and replacing it with a reference to "2.0",
(d) deleting the reference to "3.5" in the definition of "Level III Status" and
replacing it with a reference to "3.0", (e) deleting the definitions of "Debt
Coverage Ratio" and "Level IV Status" in their entirety and replacing them with
the following:
"Debt Coverage Ratio" means, as of any date of determination, the
ratio of (a) Consolidated Indebtedness of Group as of such date, to (b) the
sum of (i) the lesser of (A) ten percent of UWLIC's Statutory Surplus as of
such date and (B) UWLIC's aggregate Statutory Net Income for the period of
four Fiscal Quarters ending on the date of determination, without regard to
realized capital gains in such period (determined on a pre-tax basis) and
determined without double counting, plus (ii) Group's EBITDA for the Fiscal
Quarter ending on such date.
"Level IV Status" exists at any date if, as of the last day of the
Fiscal Quarter of Group referred to in the most recent Financials, (a)
Group has not qualified for Level I, Level II or Level III status and (b)
the Debt Coverage Ratio is less than 4.0 to 1.0.
and (f) adding a definition of "Level V Status" as follows:
"Level V Status" exists at any date if Group has not qualified for
Level I Status, Level II Status, Level III Status or Level IV Status.
and (g) deleting the last sentence of the last paragraph of the Pricing Schedule
and replacing it with the following:
Notwithstanding the foregoing, until the last day of any Fiscal Quarter as
to which UWLIC has provided the Agent a written certificate demonstrating
that for the period of four Fiscal Quarters ending on such date, UWLIC had
Statutory Net Income of at least $14,000,000, the Applicable Margin shall
be equal to 2.125% and the Applicable Fee Rate shall be equal to .375%.
3. REPRESENTATIONS AND WARRANTIES OF THE BORROWERS.
3.1 Each Borrower represents and warrants that the execution, delivery and
performance by such Borrower of this Amendment Agreement have been duly
authorized by all necessary corporate action and that this Amendment Agreement
is a legal, valid and binding obligation of such Borrower, enforceable against
such Borrower in accordance with its terms, except as the enforcement thereof
may be subject to (a) the effect of any applicable bankruptcy, insolvency,
reorganization, moratorium or similar law affecting creditors' rights generally
and (b) general principles of equity (regardless of whether such enforcement is
sought in a proceeding in equity or at law).
3.2 Each Borrower hereby certifies that each of the representations and
warranties contained in the Credit Agreement is true and correct in all material
respects on and as of the date hereof as if made on the date hereof.
4. ADDITIONAL RESTRICTIONS.
(a) Each Borrower hereby agrees that, until the last day of any Fiscal
Quarter as to which UWLIC has provided the Agent a written certificate
demonstrating that for the period of four Fiscal Quarters ending on such
date, UWLIC had Statutory Net Income of at least $14,000,000, Group shall
not request the Lenders to make any Revolving Loans; PROVIDED, that such
limitation shall not restrict (i) UWLIC's ability to request the Swing Line
Lender to make Swing Line Loans to the extent otherwise permitted under the
terms of the Credit Agreement or (ii) the making of any Revolving Loan
pursuant to Section 2.12(b) of the Credit Agreement.
(b) Notwithstanding any provision of the Waiver dated August 3, 1999
to the contrary, neither Group nor any Subsidiary may purchase, redeem or
retire any shares of Group's capital stock unless it has previously
provided evidence to the Agent that, after giving effect thereto, the
restriction set forth in Section 6.19.3 of the Credit Agreement would
continue to be satisfied.
5. WAIVER. The undersigned Lenders hereby waive any Default to the extent that
such Default arises solely from a breach by the Borrowers of (a) Section 6.19.1
of the Credit Agreement as of September 30, 1999 and (b) Section 6.19.3 of the
Credit Agreement for the period from September 30, 1999 through November 4,
1999.
6. CONDITIONS TO EFFECTIVENESS. This Amendment Agreement shall become effective
as of the date first above written; PROVIDED, that the Agent has received:
(a) counterparts of (i) this Amendment Agreement duly executed by each
Borrower and each Lender, (ii) the Reaffirmation of Guaranty duly executed
by Holdings, and (iii) the Pledge Agreements executed by Group and
Holdings, together with the stock certificates pledged thereunder and stock
powers with respect thereto executed in blank;
(b) payment of the fees payable upon the execution and delivery of
this Amendment Agreement in the amounts which have been separately agreed
to;
(c) copies of a certificate of existence (or its equivalent) for each
of Group, Holdings and UWLIC, each certified by the appropriate
governmental officer in its jurisdiction of incorporation;
(d) copies of a secretary's certificate for each of Group, Holdings
and UWLIC as to charter, by-laws, resolutions and incumbency;
(e) a written opinion of Xxxxxxx & Xxxxx LLP, counsel to Group,
Holdings and UWLIC, addressed to the Agent and the Lenders and in form and
substance acceptable to the Agent and its counsel;
(f) receipt of any required regulatory approvals from any Governmental
Authority with respect to the transactions contemplated by this Amendment
Agreement;
(g) evidence that Group is concurrently repaying the outstanding
balance of the Revolving Loans in an amount of at least $10,000,000;
(h) evidence that the consent of M&I Xxxxxxxx & Ilsley Bank to the
execution and delivery of the Pledge Agreements has been obtained; and
(i) such other documents as the Agent or any Lender may have
reasonably requested.
7. REFERENCE TO AND EFFECT ON THE CREDIT AGREEMENT.
7.1 Upon the effectiveness of this Amendment Agreement, each reference in
the Credit Agreement to "this Agreement," "hereunder," "hereof," "herein" or
words of like import and each reference to the Credit Agreement in each Loan
Document shall mean and be a reference to the Credit Agreement as amended
hereby.
7.2 Except as specifically set forth above, all of the terms, conditions
and covenants of the Credit Agreement and the other Loan Documents shall remain
unaltered and in full force and effect and shall be binding upon each Borrower
in all respects and are hereby ratified and confirmed.
7.3 The execution, delivery and effectiveness of this Amendment Agreement
shall not operate as a waiver of (a) any right, power or remedy of any Lender or
the Agent under the Credit Agreement or any of the Loan Documents, or (b) any
Default or Unmatured Default under the Credit Agreement.
8. COSTS AND EXPENSES. The Borrowers agree, jointly and severally, to pay on
demand all costs and expenses of the Agent in connection with the preparation,
execution and delivery of this Amendment Agreement, including the reasonable
fees and out-of-pocket expenses of counsel for the Agent with respect thereto.
9. CHOICE OF LAW. THIS AMENDMENT AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF ILLINOIS, BUT
GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
10. EXECUTION IN COUNTERPARTS. This Amendment Agreement 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 one and the same agreement.
[signature pages to follow]
IN WITNESS WHEREOF, the Borrowers, the Agent and the Lenders have executed
this Amendment Agreement as of the date first above written.
AMERICAN MEDICAL SECURITY GROUP, INC.
BY:____________________________________
TITLE:_________________________________
UNITED WISCONSIN LIFE INSURANCE COMPANY
BY:____________________________________
TITLE:_________________________________
BANK ONE, NA,
Individually and as Agent
BY:____________________________________
TITLE:_________________________________
FIRST UNION NATIONAL BANK
BY:____________________________________
TITLE:_________________________________
FLEET NATIONAL BANK
BY:____________________________________
TITLE:_________________________________
M&I XXXXXXXX AND XXXXXX BANK
BY:____________________________________
TITLE:_________________________________
