-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NFDFC/ThkPmYIocpOqbKCVNhKFwDHUgN8i/4PbWSvreGzTJGQI+Q9tRXhJKCHDy0 bGR6NJ1crafyvGVMEGH/lw== 0001224608-04-000026.txt : 20040623 0001224608-04-000026.hdr.sgml : 20040623 20040623165314 ACCESSION NUMBER: 0001224608-04-000026 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20040622 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits ITEM INFORMATION: Regulation FD Disclosure FILED AS OF DATE: 20040623 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CONSECO INC CENTRAL INDEX KEY: 0001224608 STANDARD INDUSTRIAL CLASSIFICATION: ACCIDENT & HEALTH INSURANCE [6321] IRS NUMBER: 753108137 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-31792 FILM NUMBER: 04877743 BUSINESS ADDRESS: STREET 1: 11825 N PENNSYLVANIA ST CITY: CARMEL STATE: IN ZIP: 46032 BUSINESS PHONE: 3178176100 MAIL ADDRESS: STREET 1: 11825 NORTH PENNSYLVANIA STREET CITY: CARMEL STATE: IN ZIP: 46032 8-K 1 cnc.txt FORM 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ----------- FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 ----------- Date of Report (Date of earliest event reported): June 22, 2004 CONSECO, INC. (Exact name of registrant as specified in its charter) Delaware 001-31792 75-3108137 - ---------------------- ---------------- -------------- (State or other (Commission (I.R.S. Employer jurisdiction of File Number) Identification No.) organization) 11825 North Pennsylvania Street Carmel, Indiana 46032 - -------------------------------------- ---------- (Address of principal executive offices) (Zip Code) (317) 817-6100 ------------------------- (Registrant's telephone number, including area code) Not Applicable ---------------- (Former name or former address, if changed since last report) Item 5. Other Events. On June 22, 2004, Conseco, Inc. (the "Company") announced the completion of its $800 million bank refinancing and recapitalization. A copy of the Company's press release is filed as Exhibit 99.1 to this Current Report on Form 8-K. Item 7. Financial Statements and Exhibits. (c) Exhibits 10.1 Credit Agreement dated as of June 22, 2004 among Conseco, Inc., Bank of America, N.A., as Agent, and other financial institutions. 10.4 Guarantee and Security Agreement dated as of June 22, 2004 among Conseco, Inc., the Subsidiary Guarantors Party Thereto and Bank of America, N.A., as Agent. 99.1 Press release of Conseco, Inc. issued June 22, 2004. 99.2 Press release of Conseco, Inc. issued June 23, 2004. Item 9. Regulation FD Disclosure. On June 23, 2004, the Company issued a press release to announce that it has declared a dividend on the outstanding shares of Class B 5.50% Mandatorily Convertible Preferred Stock. The Company also announced that its annual meeting of shareholders will be held on August 24, 2004. A copy of the Company's press release is filed as Exhibit 99.2 to this Current Report on Form 8-K. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized. CONSECO, INC. June 23, 2004 By: /s/ John R. Kline ------------------------ John R. Kline Senior Vice President and Chief Accounting Officer EX-10 2 creditagree.txt EXHIBIT 10.1 Exhibit 10.1 - ------------------------------------------------------------------------------- Published CUSIP Number: ________ CREDIT AGREEMENT Dated as of June 22, 2004 among CONSECO, INC., BANK OF AMERICA, N.A., as Agent, and THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO - ------------------------------------------------------------------------------- BANC OF AMERICA SECURITIES LLC and J.P. MORGAN SECURITIES INC. Joint Lead Arrangers and Joint Bookrunners TABLE OF CONTENTS
Page ---- ARTICLE 1 Definitions.............................................................................................1 Section 1.01. Certain Defined Terms......................................................................1 Section 1.02. Other Interpretive Provisions.............................................................25 Section 1.03. Classification of Term Loans and Borrowings...............................................26 Section 1.04. Accounting Principles.....................................................................26 ARTICLE 2 The Credits............................................................................................26 Section 2.01. Commitments...............................................................................26 Section 2.02. Term Loans................................................................................27 Section 2.03. Borrowing, Conversion and Continuation of Loans...........................................27 Section 2.04. Notes; Loan Accounts......................................................................28 Section 2.05. Termination of Commitments................................................................29 Section 2.06. Payment at Maturity.......................................................................29 Section 2.07. Scheduled Amortization....................................................................29 Section 2.08. Optional and Mandatory Prepayments........................................................30 Section 2.09. Interest..................................................................................32 Section 2.10. Fees......................................................................................33 Section 2.11. Computation of Fees and Interest..........................................................33 Section 2.12. Payments Generally........................................................................33 Section 2.13. Sharing of Payments by Lenders............................................................34 ARTICLE 3 Taxes, Yield Protection and Illegality.................................................................35 Section 3.01. Taxes.....................................................................................35 Section 3.02. Illegality................................................................................36 Section 3.03. Increased Costs and Reduction of Return...................................................37 i
Section 3.04. Funding Losses............................................................................38 Section 3.05. Inability to Determine Rates..............................................................38 Section 3.06. Certificates of Lenders...................................................................39 Section 3.07. Substitution of Lenders...................................................................39 Section 3.08. Survival..................................................................................39 ARTICLE 4 Conditions Precedent...................................................................................39 Section 4.01. Effective Date............................................................................39 ARTICLE 5 Representations and Warranties.........................................................................42 Section 5.01. Corporate Existence and Power.............................................................42 Section 5.02. Corporate Authorization; No Contravention.................................................43 Section 5.03. Governmental Authorization................................................................43 Section 5.04. Binding Effect............................................................................43 Section 5.05. Litigation................................................................................43 Section 5.06. No Default................................................................................44 Section 5.07. ERISA Compliance..........................................................................44 Section 5.08. Margin Regulations........................................................................45 Section 5.09. Title to Properties.......................................................................45 Section 5.10. Taxes.....................................................................................45 Section 5.11. Financial Condition.......................................................................45 Section 5.12. Environmental Matters.....................................................................46 Section 5.13. Regulated Entities........................................................................47 Section 5.14. Subsidiaries..............................................................................47 Section 5.15. Insurance Licenses........................................................................47 Section 5.16. Full Disclosure...........................................................................48 Section 5.17. Solvency..................................................................................48
ii Section 5.18. Security Interests........................................................................48 Section 5.19. Insurance.................................................................................48 ARTICLE 6 Affirmative Covenants..................................................................................49 Section 6.01. Financial Statements......................................................................49 Section 6.02. Certificates; Other Information...........................................................50 Section 6.03. Notices...................................................................................53 Section 6.04. Preservation of Corporate Existence, Etc..................................................54 Section 6.05. Insurance.................................................................................54 Section 6.06. Payment of Obligations....................................................................55 Section 6.07. Compliance with Laws......................................................................55 Section 6.08. Compliance with ERISA.....................................................................55 Section 6.09. Inspection of Property and Books and Records; Expense Reimbursement.......................55 Section 6.10. Information Regarding Collateral..........................................................55 Section 6.11. Casualty and Condemnation.................................................................56 Section 6.12. Additional Subsidiaries; Immaterial Subsidiaries..........................................56 Section 6.13. Further Assurances........................................................................56 Section 6.14. Use of Proceeds...........................................................................57 ARTICLE 7 Negative Covenants.....................................................................................57 Section 7.01. Limitation on Indebtedness; Certain Capital Stock.........................................57 Section 7.02. Liens.....................................................................................59 Section 7.03. Disposition of Assets.....................................................................60 Section 7.04. Other Agreements..........................................................................62 Section 7.05. Transactions with Affiliates..............................................................62 Section 7.06. Change in Business........................................................................63 Section 7.07. Fundamental Changes.......................................................................63
iii Section 7.08. Restricted Payments.......................................................................63 Section 7.09. Investments and Acquisitions..............................................................64 Section 7.10. Prepayments of Indebtedness; Modifications of Certain Agreements; Synthetic Purchase Agreements.............................................................65 Section 7.11. Debt to Total Capitalization Ratio........................................................66 Section 7.12. Interest Coverage Ratio...................................................................66 Section 7.13. Conseco EBITDA............................................................................66 Section 7.14. Aggregate RBC Ratio.......................................................................67 Section 7.15. Combined Statutory Capital and Surplus Level..............................................67 Section 7.16. Investment Portfolio Requirement..........................................................67 Section 7.17. Restrictive Agreements....................................................................68 Section 7.18. Holding Company Activities................................................................68 Section 7.19. Changes in Accounting Policies; Fiscal Year...............................................69 ARTICLE 8 Events of Default......................................................................................69 Section 8.01. Events of Default.........................................................................69 Section 8.02. Remedies..................................................................................72 Section 8.03. Rights Not Exclusive......................................................................72 ARTICLE 9 The Agent..............................................................................................72 Section 9.01. Appointment and Authority.................................................................72 Section 9.02. Rights as a Lender........................................................................73 Section 9.03. Exculpatory Provisions....................................................................73 Section 9.04. Reliance by Agent.........................................................................74 Section 9.05. Delegation of Duties......................................................................74 Section 9.06. Resignation of Agent......................................................................74 Section 9.07. Non-Reliance on Agent and Other Lenders...................................................75 Section 9.08. No Other Duties, Etc......................................................................75
iv Section 9.09. Agent May File Proofs of Claim............................................................75 Section 9.10. Collateral and Guaranty Matters...........................................................76 Section 9.11. Indemnification of Agent..................................................................76 Section 9.12. Withholding Tax...........................................................................77 ARTICLE 10 Miscellaneous.........................................................................................78 Section 10.01. Amendments and Waivers...................................................................78 Section 10.02. Notices..................................................................................79 Section 10.03. No Waiver; Cumulative Remedies...........................................................80 Section 10.04. Costs and Expenses.......................................................................80 Section 10.05. Company Indemnification; Damage Waiver...................................................81 Section 10.06. Payments Set Aside.......................................................................82 Section 10.07. Assignments, Participations, Etc.........................................................82 Section 10.08. Confidentiality..........................................................................85 Section 10.09. Set-off..................................................................................85 Section 10.10. Notification of Addresses, Lending Offices, Etc..........................................86 Section 10.11. Counterparts.............................................................................86 Section 10.12. Survival of Representations and Warranties...............................................86 Section 10.13. Severability.............................................................................86 Section 10.14. Governing Law; Jurisdiction; Consent to Service of Process...............................86 Section 10.15. Waiver of Jury Trial.....................................................................87 Section 10.16. USA PATRIOT Act Notice...................................................................87 Section 10.17. Entire Agreement.........................................................................87
v SCHEDULES Schedule 2.01 Commitments Schedule 5.05 Litigation Schedule 5.07 ERISA Schedule 5.13 Investment Companies Schedule 5.14 Subsidiaries Schedule 7.01 Existing Indebtedness Schedule 7.02 Existing Liens Schedule 7.09 Committed Investments Schedule 7.10 Amendment of Debt Agreements Schedule 7.17 Restrictive Agreements Schedule 10.02 Addresses for Notices
EXHIBITS Exhibit A Form of Compliance Certificate Exhibit B Form of Note Exhibit C Form of Loan Notice Exhibit D Form of Assignment and Assumption Exhibit E Eurodollar Rate Funding Loss Determination Methodology Exhibit F Form of Security Agreement Exhibit G Subordination Provisions Exhibit H-1 Form of Opinion of Kirkland & Ellis Exhibit H-2 Form of Opinion of Baker & Daniels (as to insurance matters)
vi CREDIT AGREEMENT This CREDIT AGREEMENT is entered into as of June 22, 2004, among CONSECO, INC., a Delaware corporation (together with its successors, the "Company"), the several financial institutions from time to time party to this Agreement (collectively, the "Lenders"; individually, a "Lender") and BANK OF AMERICA, N.A., as agent for the Lenders. WHEREAS, the Company desires to obtain from the Lenders a six-year term loan facility in a principal amount of $800,000,000 the proceeds of which will be used to (i) refinance (the "Refinancing") in full all indebtedness outstanding under the Credit Agreement dated as of September 10, 2003, as amended (the "Existing Credit Agreement"), among the Company, the lenders named therein, and Bank of America, N.A., as agent for such lenders, (ii) pay fees and expenses incurred in connection with the Refinancing, (iii) repurchase the CDOC Preferred Stock (as hereinafter defined) and (iv) finance other general corporate purposes; WHEREAS, the Company is willing to secure its obligations under this Agreement and certain other obligations by granting Liens on substantially all of its assets to the Agent as provided in the Security Documents; and WHEREAS, the Company is willing to cause each of its current and future Domestic Subsidiaries (other than Insurance Subsidiaries, Subsidiaries of Insurance Subsidiaries and Immaterial Subsidiaries) to (i) guarantee the foregoing obligations of the Company and (ii) to secure such guarantee thereof by granting Liens on substantially all of the assets of such Subsidiaries to the Agent as provided in the Security Documents; NOW, THEREFORE, in consideration of the mutual agreements, provisions and covenants contained herein, the parties agree as follows: ARTICLE 1 DEFINITIONS Section 1.01. Certain Defined Terms. The following terms have the following meanings: "Account Control Agreement" has the meaning specified in the Security Agreement. "Acquisition" means (i) any Investment by the Company or any of its Subsidiaries in a Person (other than an existing Wholly-Owned Subsidiary) whereby such Person becomes a direct or indirect Subsidiary of the Company or is merged with and into the Company or such Subsidiary or (ii) an acquisition by the Company or any of its Subsidiaries of the property and assets of any Person (other than an existing Wholly-Owned Subsidiary) that constitutes all or substantially all of the assets of such Person or any division, line of business or other business unit of such Person; provided that capital expenditures (as determined in accordance with GAAP) that do not, individually or as part of a series of related transactions, result in the acquisition of all or substantially all of the assets of any Person or any division, line of business or other business unit of such Person shall be deemed not to be Acquisitions. "Affiliate" means, as to any Person, any other Person that, directly or indirectly, is in control of, is controlled by or is under common control with, such Person. A Person shall be deemed to control another Person if the controlling Person possesses, directly or indirectly, the power (a) to vote 10% or more of the securities (on a fully diluted basis) having ordinary voting power for the election of directors or managing general partners of the other Person or (b) to direct or cause the direction of the management and policies of the other Person, whether through the ownership of voting securities, membership interests, by contract or otherwise. "Agent" means Bank of America, N.A., in its capacity as administrative agent under the Loan Documents, and its successors and assigns in such capacity. "Agent-Related Persons" means the initial Agent and any successor agent, together with their respective Affiliates, and the officers, directors, employees, agents and attorneys-in-fact of such Persons and Affiliates. "Agent's Office" means the Agent's address and, as appropriate, account as set forth on Schedule 10.02 or such other address or account as the Agent may from time to time specify. "Aggregate RBC Ratio" means, with respect to the Insurance Subsidiaries taken as a whole, on any date of determination, one-half of the ratio (expressed as a percentage) of (a) the aggregate Total Adjusted Capital (as defined by each relevant Insurance Subsidiary's Department) for the Insurance Subsidiaries to (b) the aggregate Authorized Control Level Risk-Based Capital (as defined by each relevant Insurance Subsidiary's Department) for the Insurance Subsidiaries. "Agreement" means this Credit Agreement. "A.M. Best" means A.M. Best Company. "Annual Statement" means the annual statutory financial statement of any Insurance Subsidiary required to be filed with the insurance commissioner (or similar authority) of its jurisdiction of incorporation, which statement shall be in the form required by such Insurance Subsidiary's jurisdiction of incorporation or, if no specific form is so required, in the form of financial statements permitted by such insurance commissioner (or such similar authority) to be used for filing annual statutory financial statements and shall contain the type of information permitted or required by such insurance commissioner (or such similar authority) to be disclosed therein, together with all exhibits or schedules filed therewith. "Applicable Margin" means, for any day, a percentage per annum equal to (a) with respect to any Eurodollar Rate Loan, 4.00% or (b) with respect to any Base Rate Loan, 3.00%; provided, however, that if and for so long as the Company's senior secured Indebtedness is rated at least B2 by Moody's and BB- by S&P, in each case with a stable outlook, such percentages shall be reduced to 3.50% for Eurodollar Rate Loans and 2.50% for Base Rate Loans. "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)(i) and Section 7.03(e)(ii) (but only to the extent proceeds therefrom are required to be retained by any Insurance Subsidiary pursuant to regulatory restrictions), Section 7.03(f), Section 7.03(h) and Section 7.03(i). 2 "Assignment and Assumption" means an Assignment and Assumption substantially in the form of Exhibit D. "Attorney Costs" means and includes all reasonable fees, out-of pocket expenses and out-of pocket disbursements of any law firm or other external legal counsel and, without duplication, the reasonable allocated cost of internal legal services and all reasonable out-of pocket expenses and out-of pocket disbursements of internal counsel. "Bankers Life Group" means Bankers Life and Casualty Company, Bankers Life Insurance Company of Illinois and Colonial Penn Life Insurance Company. "Base Rate" means, for any day, a fluctuating rate per annum equal to the higher of: (a) 0.50% per annum above the latest Federal Funds Rate and (b) the rate of interest in effect for such day as publicly announced from time to time by BofA as its "prime rate." The "prime rate" is a rate set by BofA based upon various factors, including BofA's costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above or below such announced rate. Any change in such rate announced by BofA shall take effect at the opening of business on the day specified in the public announcement of such change. "Base Rate Loan" means a Term Loan that bears interest based on the Base Rate. "BofA" means Bank of America, N.A., a national banking association, and its successors. "Borrowing" means Term Loans of the same Interest Type made, converted or continued on the same day and, in the case of Eurodollar Rate Loans, as to which the same Interest Period is in effect. "Business Day" means any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close under the laws of, or are in fact closed in, the state where the Agent's Office is located or New York City and, if such day relates to any Eurodollar Rate Loan, means any such day on which dealings in Dollar deposits are conducted by and between banks in the London interbank eurodollar market. "Calculation Period" means, with respect to any ratio or calculation, the period for which such ratio or calculation is being calculated. "Capital Adequacy Regulation" means any guideline, request or directive of any central bank or other Governmental Authority, or any other law, rule or regulation, whether or not having the force of law, in each case, regarding capital adequacy of any bank or of any corporation controlling a bank. "Capital and Surplus" means, as to any Insurance Subsidiary, as of any date, the total amount shown on line 38, page 3, column 1 of the Annual Statement of such Insurance Subsidiary as of such date, or an amount determined in a consistent manner for any date other than one as of which an Annual Statement is prepared. 3 "Capital Expenditures" means, for any period, (a) the additions to property, plant and equipment capitalized in accordance with GAAP and other capital expenditures of the Company and its Subsidiaries that are (or would be) set forth in a consolidated statement of cash flows of the Company and its Subsidiaries for such period prepared in accordance with GAAP and (b) any Capitalized Lease Liabilities incurred by the Company and its Subsidiaries during such period. "Capital Stock" means any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person (other than a corporation) and any and all warrants, rights or options to purchase any of the foregoing. "Capitalized Lease Liabilities" means, with respect to any Person, all monetary obligations of such Person under any leasing or similar arrangement that, in accordance with GAAP, would be classified as a capitalized lease, and, for purposes of this Agreement, the amount of such 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. "Cash Equivalents" means (a) marketable direct obligations issued by, or unconditionally guaranteed by, the United States government or issued by any agency thereof and backed by the full faith and credit of the United States, in each case maturing within one year from the date of acquisition; (b) certificates of deposit, time deposits, eurodollar time deposits or overnight bank deposits having maturities of twelve months or less from the date of acquisition issued by any commercial bank organized under the laws of the United States or any state thereof having combined capital and surplus of not less than $500,000,000 and a short term deposit rating of at least A-1 by S&P and P-l by Moody's, or carrying an equivalent rating by a nationally recognized rating agency, if both of the two named rating agencies cease publishing ratings of commercial paper issuers generally; (c) commercial paper of an issuer rated at least A-1 by S&P and P-l by Moody's, or carrying an equivalent rating by a nationally recognized rating agency, if both of the two named rating agencies cease publishing ratings of commercial paper issuers generally, and maturing within nine months from the date of acquisition; (d) repurchase obligations of any Lender or of any commercial bank satisfying the requirements of clause (b) of this definition, having a term of not more than 30 days, with respect to securities issued or fully guaranteed or insured by the United States government; (e) securities with maturities of one year or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States, by any political subdivision or taxing authority of any such state, commonwealth or territory or by any foreign government, the securities of which state, commonwealth, territory, political subdivision, taxing authority or foreign government (as the case may be) are rated at least A by S&P and A2 by Moody's; (f) securities with maturities of one year or less from the date of acquisition backed by standby letters of credit issued by any Lender or any commercial bank satisfying the requirements of clause (b) of this definition; or (g) shares of money market mutual or similar funds that invest exclusively in assets satisfying the requirements of clauses (a) through (f) of this definition. 4 "Cash Interest Expense" means, for any Calculation Period, the sum of (a) total interest expense, to the extent paid or payable in cash, of the Company and its Subsidiaries determined on a consolidated basis in accordance with GAAP, excluding interest paid or, without duplication, accrued but unpaid by any Insurance Subsidiary to the extent otherwise included in total interest expense in this clause (a) and (b) total dividends paid or payable in cash on any preferred stock issued by the Company to the extent the terms of such preferred stock require payment of cash dividends, in each case for such Calculation Period. "Casualty Event" means any casualty or other insured damage to any property of the Company or any of its Subsidiaries (other than Insurance Subsidiaries or Subsidiaries of Insurance Subsidiaries), or any taking of any such property under power of eminent domain or by condemnation or similar proceeding, or any transfer of any such property in lieu of a condemnation or similar taking thereof. "CBOs" means notes or other instruments (other than CMOs) secured by collateral consisting primarily of debt securities and/or other types of debt obligations, including loans. "CDOC" means CDOC, Inc., a Delaware corporation, and a direct Wholly-Owned Subsidiary of the Company on the Effective Date. "CDOC Preferred Stock" means preferred stock of CDOC that is held by one or more of the Insurance Subsidiaries. "CERCLA" means the Comprehensive Environmental Response, Compensation and Liability Act of 1980. "CERCLIS" means the Comprehensive Environmental Response, Compensation and Liability Information System List. "Change of Control" means (a) any acquisition, directly or indirectly, by any Person, or two or more Persons acting in concert, of beneficial ownership (within the meaning of Rule 13d-3 of the SEC under the Exchange Act) of 40% or more of the outstanding shares of voting stock of the Company, (b) during any period of 12 consecutive calendar months, commencing on the Effective Date, the ceasing of those individuals (the "Continuing Directors") who (i) were directors of the Company on the first day of each such period or (ii) who subsequently became directors of the Company and whose election or initial nomination for election subsequent to that date was approved by a majority of the Continuing Directors then on the board of directors of the Company, to constitute a majority of the board of directors of the Company, or (c) the occurrence of a "change of control" (howsoever defined) in the indenture or any other instrument evidencing Permitted Refinancing Indebtedness or in any instrument evidencing the CDOC Preferred Stock or the Class B Preferred Stock. "Class B Preferred Stock" means the 5.50% Class B Mandatorily Convertible Preferred Stock of the Company issued on May 12, 2004 and May 21, 2004 pursuant to that certain Underwriting Agreement dated as of May 6, 2004, among the Company, Goldman, Sachs & Co. and Morgan Stanley & Co. Incorporated. 5 "CMOs" means notes or other instruments secured by collateral consisting primarily of mortgages, mortgage-backed securities and/or other types of mortgage-related obligations. "Code" means the Internal Revenue Code of 1986, and regulations promulgated thereunder. "Collateral" means any and all "Collateral," as defined in any Security Document. "Collateral and Guarantee Requirement" means the requirement that: (a) the Agent shall have received from each Obligor either (i) a counterpart of the Security Agreement duly executed and delivered on behalf of such Obligor or (ii) in the case of any Person that becomes an Obligor after the Effective Date, a supplement to the Security Agreement, in the form specified therein, duly executed and delivered on behalf of such Obligor; (b) all outstanding Capital Stock in any Subsidiary owned by or on behalf of any Obligor shall have been pledged pursuant to the Security Agreement (except that the Obligors shall be required to pledge only 65% of the outstanding voting Capital Stock in any first-tier Foreign Subsidiary that is not an Obligor and none of the Capital stock of any Foreign Subsidiary that is not first tier) and the Agent shall have received all certificates or other instruments representing such Capital Stock, together with stock powers or other instruments of transfer with respect thereto endorsed in blank; (c) all documents and instruments, including Uniform Commercial Code financing statements, required by law or reasonably requested by the Agent to be filed, registered or recorded to create the Liens intended to be created by the Security Documents and perfect or record such Liens to the extent, and with the priority, required by the Security Agreement, shall have been filed, registered or recorded or delivered to the Agent for filing, registration or recording; (d) each Obligor shall have obtained all consents and approvals required to be obtained by it in connection with the execution and delivery of all Security Documents to which it is a party, the performance of its obligations thereunder and the granting of the Liens granted by it thereunder; and (e) each Obligor shall have taken all other action required under the Security Documents to perfect, register and/or record the Liens granted by it thereunder. "Combined Statutory Capital and Surplus" means, as of the last day of any Fiscal Quarter, the sum of the amounts shown on the Combined Statutory Statement of the Insurance Subsidiaries as of the last day of such Fiscal Quarter on (i) p. 3, line 38 and (ii) p. 3, line 24.1. "Combined Statutory Statement" means a statement combining the Quarterly Statements or Annual Statements, as applicable, of all the Insurance Subsidiaries. "Commitment" means, with respect to each Lender, the commitment of such Lender to make a Term Loan on the Effective Date, expressed as an amount representing the maximum 6 principal amount of such Term Loan. The initial amount of each Lender's Commitment is set forth on Schedule 2.01. The initial aggregate amount of the Term Loan Commitments is $800,000,000. "Company" has the meaning specified in the introduction to this Agreement. "Compensation Period" has the meaning specified in Section 2.12(c)(ii). "Compliance Certificate" means a certificate substantially in the form of Exhibit A. "Conseco Available Cash Flow" means, for any Calculation Period, the sum, without duplication, of (a) dividends paid in cash to the Company by any Subsidiary plus (b) interest paid in cash to the Company by any Subsidiary pursuant to any intercompany Indebtedness owing by such Subsidiary to the Company plus (c) interest or principal paid in cash to the Company with respect to any Surplus Debenture plus (d) amounts paid in cash to the Company under the Tax Sharing Agreement plus (e) management and other similar fees received by the Company under servicing agreements or otherwise from any Subsidiary plus (f) amounts paid in cash to the Company pursuant to a loan made to it by any Subsidiary plus (g) the Company's Investment Income received in cash minus (h) cash operating expenses of the Company minus (i) Capital Expenditures of the Company made in cash minus (j) any amounts paid by the Company in respect of interest on or in repayment of any loan referred to in clause (f) above plus (k) non-recurring cash and non-cash charges (not to exceed $40,000,000 in the aggregate (of which up to $25,000,000 may be cash charges) for all Calculation Periods) related to restructuring, consolidation, severance or discontinuance of any portion of the operations, employees and/or management of the Company minus (l) any amounts paid in cash by the Company to any Insurance Subsidiary in respect of any overpayment by such Insurance Subsidiary of amounts required to be paid by such Insurance Subsidiary to the Company under the Tax Sharing Agreement, in each case for such Calculation Period. Amounts received by the Company or any of its Subsidiaries and required to be applied to prepay the Borrowings pursuant to Section 2.08 (other than pursuant to Section 2.08(b)(iv)) shall, to the extent otherwise included in Conseco Available Cash Flow for any Calculation Period, be excluded from this calculation for such Calculation Period. "Conseco EBITDA" means, for any Calculation Period, the consolidated Net Income of the Company for such period plus, without duplication and to the extent reflected as a charge in the statement of such consolidated Net Income for such period, the sum of (a) income tax expense, (b) interest expense, including, to the extent included as interest expense in accordance with GAAP, amortization or write off of debt discount and debt issuance costs and commissions, discounts and other fees and charges associated with Indebtedness, (c) depreciation and amortization of tangible and intangible assets (including any amortization of premium (or discount) associated with the Company's actively managed fixed income maturities, which amortization is related to mark-to-market adjustments made on August 31, 2003 pursuant to principles of fresh start accounting), (d) any losses on sales of assets outside of the ordinary course of business, (e) any realized or unrealized losses on Investments of Insurance Subsidiaries, (f) non-recuring cash and non-cash charges (not exceeding $40,000,000 in the aggregate (of which up to $25,000,000 may be cash charges) for all Calculation Periods) and other non-cash charges, in each case related to Acquisitions permitted hereunder by the 7 Company and its Subsidiaries, (g) any other non-recurring cash and non-cash charges (not to exceed $25,000,000 in the aggregate for all Calculation Periods) and non-recurring non-cash charges (unless and until such charges become cash charges) taken by the Company and its Subsidiaries arising out of the restructuring, consolidation, severance or discontinuance of any portion of the operations, employees and/or management of the Company or such Subsidiary or any businesses thereof, (h) non-cash charges reflecting the cumulative effect of changes in GAAP to the extent such charges relate to any prior Calculation Period and (i) non-cash charges taken to write off any goodwill included in the Company's balance sheet on the Effective Date to the extent such charges are required by FAS 142 (j) non-cash compensation expense, or other non-cash expenses or charges, arising from the sale of stock, the granting of stock options, the granting of stock appreciation rights and similar arrangements (including any repricing, amendment, modification, substitution or change of any such stock, stock option, stock appreciation rights or similar arrangements); (k) any financial advisory fees, accounting fees, legal fees and other similar advisory and consulting fees and related out-of-pocket expenses of the Borrower incurred as a result of the Transactions, all determined in accordance with GAAP; (l) other expenses to the extent reimbursed by third parties; (m) fees and expenses incurred for the redemption of the Company's Class A Preferred Stock issued to the lenders under the Existing Credit Agreement and the issuance of the Class B Preferred Stock and the Company's common Capital Stock; and (n) fees, costs and expenses of any Indebtedness issuance pursuant to Section 7.01(a)(iii), Section 7.01(a)(vii), Section 7.01(a)(xiii) and Section 7.01(a)(xiv), issuance of Capital Stock by the Company in any public offering, Acquisitions or Asset Sales and minus, without duplication and to the extent reflected as a gain in the statement of such consolidated Net Income for such period, the sum of (a) any gains on sales of assets outside of the ordinary course of business and (b) realized or unrealized gains on Investments of Insurance Subsidiaries, all as determined on a consolidated basis for such Calculation Period. "Conseco Excess Cash Flow" means, for any Excess Cash Calculation Period, Conseco Available Cash Flow for such Excess Cash Calculation Period minus, without duplication, the sum of (a) cash income taxes paid or to be paid by the Company with respect to such Excess Cash Calculation Period, (b) cash interest expense paid by the Company with respect to such Excess Cash Calculation Period and not reflected in the calculation of Conseco Available Cash Flow for such Excess Cash Calculation Period, (c) scheduled or mandatory permanent repayments of Indebtedness by the Company during such Excess Cash Calculation Period, other than repayments already reflected in the calculation of Conseco Available Cash Flow for such Excess Cash Calculation Period and (d) dividends paid on the Class B Preferred Stock. "Conseco Insurance Group" means all Insurance Subsidiaries of the Company from time to time, other than any Insurance Subsidiary that is part of the Bankers Life Group. "Contingent Obligation" means, without duplication, 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 indemnities under contracts entered into in the ordinary course of business and not in respect of Indebtedness or the issuance of Capital Stock), or guarantees the payment of dividends or other distributions upon the shares of 8 any other Person; provided that the obligations of any Person under Reinsurance Agreements or in connection with Investments of Insurance Subsidiaries permitted by the applicable Department shall not be deemed Contingent Obligations of such Person. The amount of any Contingent Obligation of any Person shall (subject to any limitation set forth therein) be deemed to be an amount equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect of which such Contingent Obligation is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by such Person in good faith. "Continuation Date" means any date on which, under Section 2.03, the Company continues as Term Loans of the same Interest Type, but with a new Interest Period, Term Loans having Interest Periods expiring on such date. "Contractual Obligation" means, as to any Person, any provision of any security issued by such Person or of any agreement, undertaking, contract, indenture, mortgage, deed of trust or other instrument, document or agreement to which such Person is a party or by which it or any of its property is bound. "Debt to Total Capitalization Ratio" means, as of any date of determination, without duplication, the ratio of (a) the principal amount of and accrued but unpaid interest on all Indebtedness of the Company outstanding on such date, other than (i) Indebtedness owing to any Subsidiary Guarantor and (ii) Indebtedness of the kind referred to in clause (e) of the definition of "Indebtedness," to (b) Total Capitalization on such date. "Default" means any event or circumstance that constitutes an Event of Default or that, with the giving of notice, the lapse of time, or both, would (if not cured or otherwise remedied during such time) constitute an Event of Default. "Department" means, with respect to any Insurance Subsidiary, the Governmental Authority of such Insurance Subsidiary's state of domicile with which such Insurance Subsidiary is required to file its Annual Statement. "Disposition" means the sale, assignment, leasing as lessor (other than in the ordinary course), transfer, contribution, conveyance, issuance or other disposal of, or granting of options, warrants or other rights with respect to, any of a Person's assets (including any transaction pursuant to a Reinsurance Agreement or a sale and leaseback transaction and, in the case of any Subsidiary, the issuance or sale of its Capital Stock). The terms "Dispose" and "Disposed of" shall have correlative meaning. "Dollars", "dollars" and "$" each mean lawful money of the United States. "Domestic Subsidiary" means a Subsidiary that is not a Foreign Subsidiary. "Effective Date" means the date on which all conditions precedent set forth in Section 4.01 are satisfied or waived in accordance with Section 10.01 (or, in the case of subsection 4.01(f), waived by the Person entitled to receive any payment required thereunder). "Eligible Assignee" has the meaning specified in Section 10.07. 9 "Environmental Claims" means all written claims, complaints, notices or inquiries, by any Governmental Authority or other Person alleging potential liability or responsibility for violation of any Environmental Law, or for release or injury to the environment or threat to public health, personal injury (including sickness, disease or death), property damage, natural resources damage, or otherwise alleging liability or responsibility for damages (punitive or otherwise), cleanup, removal, remedial or response costs, restitution, civil or criminal penalties, injunctive relief or other type of relief, resulting from or based upon the presence, placement, discharge, emission or release (including intentional or unintentional, negligent or non-negligent, sudden or nonsudden or accidental or non-accidental placement, spills, leaks, discharges, emissions or releases) of any Hazardous Material at, in or from property, whether or not owned by the Company or any of its Subsidiaries. "Environmental Laws" means all federal, state or local Requirements of Law, statutes, common law duties, rules, regulations, ordinances and codes, together with all administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authorities (in each case having the force of law), in each case relating to environmental, health and safety, as now or hereafter in effect. "Equity Issuances" means the issuances by the Company of common stock and the Class B Preferred Stock, in each case consummated in May 2004. "ERISA" means the Employee Retirement Income Security Act of 1974 and the regulations promulgated thereunder. "ERISA Affiliate" means any trade or business (whether or not incorporated) under common control with the Company within the meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code). "ERISA Event" means (a) a Reportable Event with respect to a Pension Plan; (b) a withdrawal by the Company or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of operations which is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by the Company or any ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to terminate, the treatment of a Plan amendment as a termination under Section 4041 or 4041A of ERISA or the commencement of proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (e) an event or condition that could reasonably be expected to constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan or Multiemployer Plan; or (f) the imposition of any liability under Title IV of ERISA, other than PBGC premiums due but not delinquent under Section 4007 of ERISA, upon the Company or any ERISA Affiliate. "Eurodollar Rate" means for any Interest Period with respect to a Eurodollar Rate Loan: 10 (a) the rate per annum equal to the rate determined by the Agent to be the offered rate that appears on the page of the Telerate screen (or any successor thereto) that displays an average British Bankers Association Interest Settlement Rate for deposits in Dollars (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period, determined as of approximately 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period, or (i) if the rate referenced in the preceding clause (a) does not appear on such page or service or such page or service shall not be available, the rate per annum equal to the rate determined by the Agent to be the offered rate on such other page or other service that displays an average British Bankers Association Interest Settlement Rate for deposits in Dollars (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period, determined as of approximately 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period, or (ii) if the rates referenced in the preceding clauses (a) and (b) are not available, the rate per annum determined by the Agent as the rate of interest at which deposits in Dollars for delivery on the first day of such Interest Period in same day funds in the approximate amount of the Eurodollar Rate Loan being made, continued or converted by BofA and with a term equivalent to such Interest Period would be offered by BofA's London Branch to major banks in the London interbank eurodollar market at their request at approximately 4:00 p.m. (London time) two Business Days prior to the first day of such Interest Period. "Eurodollar Rate Loan" means a Term Loan that bears interest at a rate based on the Eurodollar Rate. "Event of Default" has the meaning specified in Section 8.01. "Excess Cash Calculation Period" means (i) initially, the period beginning on the first day of the first full Fiscal Quarter after the Effective Date and ending on the last day of the Fiscal Year in which the Effective Date occurs and (ii) thereafter, each subsequent Fiscal Year. "Exchange Act" means the Securities Exchange Act of 1934 and the regulations promulgated thereunder. "Excluded Subsidiary" means any Subsidiary that is a Foreign Subsidiary, non-Wholly-Owned Subsidiary or Immaterial Subsidiary. "Existing Credit Agreement" has the meaning set forth in the recitals hereto. "Existing Reinsurance Transactions" means the reinsurance transactions consummated in 2002 by Bankers Life and Casualty Company and Colonial Penn Life Insurance Company. "Federal Funds Rate" means, for any day, the rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided that (a) if 11 such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate (rounded upward, if necessary, to a whole multiple of 1/100 of 1%) charged to BofA on such day on such transactions as determined by the Agent. "Fiscal Quarter" means any fiscal quarter of a Fiscal Year. "Fiscal Year" means any period of twelve consecutive calendar months ending on December 31. "Foreign Subsidiary" means a Subsidiary (which may be a corporation, limited liability company, partnership or other legal entity) organized under the laws of a jurisdiction outside the United States and conducting substantially all its operations outside the United States, other than any such entity that is (whether as a matter of law, pursuant to an election by such entity or otherwise) treated as a partnership in which any Obligor is a partner or as a branch of any Obligor for United States income tax purposes. "40/86 Advisors" means 40/86 Advisors, Inc., a Delaware corporation. "FRB" means the Board of Governors of the Federal Reserve System and any Governmental Authority succeeding to any of its principal functions. "Further Taxes" means any and all present or future taxes, levies, assessments, imposts, duties, deductions, fees, withholdings or similar charges (including net income taxes and franchise taxes), and all liabilities with respect thereto, imposed by any jurisdiction on account of amounts payable or paid pursuant to Section 3.01. "GAAP" means generally accepted accounting principles set forth from time to time in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board (or agencies with similar functions of comparable stature and authority within the U.S. accounting profession), that are applicable to the circumstances as of the date of determination. "Governmental Authority" means any nation or government, any state or other political subdivision thereof, any central bank (or similar monetary or regulatory authority) thereof, any entity exercising executive, legislative, judicial or regulatory functions of or pertaining to government and any corporation or other entity owned or controlled, through stock or capital ownership or otherwise, by any of the foregoing, including any board of insurance, insurance department or insurance commissioner. "Hazardous Material" means: (a) any "hazardous substance," as defined by CERCLA; (b) any "hazardous waste," as defined by the Resource Conservation and Recovery Act; (c) any petroleum product; or (d) any pollutant or contaminant or hazardous, dangerous or toxic chemical, material or substance as to which liability or standards of conduct may be imposed under any Environmental Law, all as amended or hereafter amended. 12 "Immaterial Subsidiary" means any Non-Insurance Subsidiary that (a) has assets with an aggregate fair market value less than $5,000,000, (b) has aggregate revenues less than $10,000,000 for the period of four consecutive Fiscal Quarters most recently ended, (c) has no Indebtedness (other than Indebtedness existing on the date hereof and listed in Schedule 7.01 or permitted under Section 7.01(a)(x) and other Indebtedness in an aggregate principal amount not exceeding at any time one-half of the fair market value of the assets of such Subsidiary at such time), (d) is not integral to the business or operations of the Company or its Subsidiaries (other than Immaterial Subsidiaries), (e) has no Subsidiaries (other than Immaterial Subsidiaries) and (f) is not an Obligor; provided that (x) notwithstanding not meeting the requirements of clauses (a) through (f) above, Conseco Equity Sales, Inc. shall be deemed to be an Immaterial Subsidiary for a period of 90 days after the Effective Date, but shall thereafter no longer be deemed to be an Immaterial Subsidiary unless it meets such requirements and (y) Conseco Management Services Company shall not be deemed to be an Immaterial Subsidiary so long as it is the manager of Conseco Services, LLC pursuant to the latter's limited liability company agreement. "Income Taxes" means any Taxes based upon net income. "Indebtedness" means, with respect to any Person, without duplication: (a) all obligations of such Person for borrowed money or in respect of loans or advances; (b) all obligations of such Person 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 and letters of guaranty issued for the account or upon the application or request of such Person; (d) all Capitalized Lease Liabilities of such Person; (e) the liabilities (if any) of such Person in respect of Swap Contracts as determined by reference to the Swap Termination Value thereof; (f) all obligations of such Person to pay the deferred purchase price of property or services that are included as liabilities in accordance with GAAP (other than accrued expenses incurred and trade accounts payable in each case in the ordinary course of business) and all obligations secured by a Lien on property owned or being purchased by such Person, but only to the extent of the lesser of the obligations secured or the value of the property to which such Lien is attached (including obligations arising under conditional sales or other title retention agreements); (g) any obligations of a partnership of the kind referred to in clauses (a) through (f) above or clause (h) or (i) below in which such Person is a general partner; (h) solely for purposes of Section 7.11, all obligations in respect of preferred stock (other than Class B Preferred Stock and other preferred stock that qualifies as permanent equity for purposes of GAAP) of such Person; and (i) all Contingent Obligations of such Person in connection with Indebtedness or obligations of others of the kinds referred to in clauses (a) through (h) above; provided that in no event shall "Indebtedness" include the Company's obligations in respect of any Recharacterized Portion. "Indemnified Liabilities" has the meaning specified in Section 10.05. "Indemnified Person" has the meaning specified in Section 10.05. "Independent Auditor" has the meaning specified in Section 6.01(a). "Insolvency Proceeding" means, with respect to any Person, (a) any case, action or proceeding with respect to such Person before any court or other Governmental Authority relating to bankruptcy, reorganization, insolvency, liquidation, conservation, rehabilitation, 13 receivership, dissolution, winding-up or relief of debtors or (b) any general assignment for the benefit of creditors, composition, marshalling of assets for creditors or other similar arrangement in respect of its creditors generally or any substantial portion of its creditors, in any case, undertaken under U.S. Federal, state or foreign law, including title 11 of the United States Code. "Insurance Subsidiary" means any Subsidiary that is required to be licensed as an insurer or reinsurer. "Interest Coverage Ratio" means, for any Calculation Period, the ratio of (a) Conseco Available Cash Flow for such Calculation Period to (b) Cash Interest Expense for such Calculation Period. "Interest Payment Date" means (a) with respect to any Base Rate Loan, the last Business Day of each calendar quarter and (b) with respect to any Eurodollar Rate Loan, the last day of each Interest Period applicable to the Borrowing of which such Loan is a part; provided that if any Interest Period for a Eurodollar Rate Loan exceeds three months, the date that falls three months after the beginning of such Interest Period and after each Interest Payment Date thereafter is also an Interest Payment Date (but in each case, subject to the definition of "Interest Period"). "Interest Period" means, with respect to any Eurodollar Rate Borrowing, the period beginning on the date of such Borrowing and ending on the numerically corresponding day in the calendar month that is one, two, three or six months thereafter, as the Company may elect; provided that: (i) if any Interest Period would otherwise end on a day that is not a Business Day, that Interest Period shall be extended to the following Business Day unless the result of such extension would be to carry such Interest Period into another calendar month, in which event such Interest Period shall end on the preceding Business Day; (ii) any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month at the end of such Interest Period; and (iii) no Interest Period for any Term Loan shall extend beyond the Maturity Date. For purposes hereof, the date of a Borrowing initially shall be the date on which such Borrowing is made and thereafter shall be the effective date of the most recent continuation of such Borrowing. "Interest Type", when used with respect to any Term Loan or Borrowing, refers to whether the rate of interest on such Term Loan, or on the Term Loans comprising such Borrowing, is determined by reference to the Eurodollar Rate or the Base Rate. "Investment" means any advance, loan, extension of credit (by way of guaranty or otherwise) or capital contribution to, or purchase (including purchases financed with equity) of 14 any Capital Stock, bonds, notes, debentures or other debt securities of, or any other investment in, any Person. "Investment Grade Asset" means any Investment with a fixed maturity that has a rating of (x) at least BBB- by S&P and, if such Investment is rated by Moody's, at least Ba2 from Moody's or (y) at least Baa3 by Moody's and, if such Investment is rated by S&P, at least BB from S&P, or, if such Investment is not rated by either S&P or Moody's, an NAIC rating of at least Class 2. "Investment Income" means the amount of earnings of the Company on Investments, net of expenses actually incurred in connection with such Investments and taking into account realized gains and losses on such Investments. "IRS" means the Internal Revenue Service or any Governmental Authority succeeding to any of its principal functions under the Code. "Lenders" has the meaning specified in the introduction to this Agreement and includes any other Person that shall have become a party hereto pursuant to an Assignment and Assumption in accordance with Section 10.07, other than any such Person that ceases to be a party hereto pursuant to an Assignment and Assumption. "Lending Office" means, as to any Lender, the office or offices of such Lender specified as its "Lending Office" or "Domestic Lending Office" or "Eurodollar Lending Office," as the case may be, on Schedule 10.02 or in its administrative questionnaire delivered to the Agent, or such other office or offices as such Lender may from time to time notify the Company and the Agent. "License" means any license, certificate of authority, permit or other authorization that is required to be obtained from any Governmental Authority in connection with the operation, ownership or transaction of insurance business. "Lien" means any security interest, mortgage, deed of trust, pledge, hypothecation, assignment, charge or deposit arrangement, encumbrance, lien (statutory or other) or preferential arrangement of any kind or nature whatsoever in respect of any property (including those created by, arising under or evidenced by, any conditional sale or other title retention agreement, the interest of a lessor under a capital lease or any financing lease having substantially the same economic effect as any of the foregoing) and any contingent or other agreement to provide any of the foregoing, but not including the interest of a lessor under an operating lease or a licensor under a license that does not otherwise secure an obligation. "Loan Documents" means this Agreement, all Notes, the Security Documents and any fee letter agreement entered into pursuant to Section 2.10, and in the case of the Security Documents, all Secured Swap Contracts. "Loan Notice" means a notice of (a) Borrowing, (b) a conversion of a Term Loan from one Interest Type to the other or (c) a continuation of Eurodollar Rate Loans, substantially in the form of Exhibit C. 15 "Margin Stock" means "margin stock" as such term is defined in Regulation T, U or X of the FRB. "Material Acquisition" means any acquisition of assets by the Company or its Subsidiaries in a transaction or series of related transactions for consideration exceeding $80,000,000, other than any such acquisition by any Insurance Subsidiary in the ordinary course of business in compliance with Section 7.16 and the investment policy approved by the board of directors of such Insurance Subsidiary. "Material Adverse Effect" means (a) a material adverse change in, or a material adverse effect upon, the business, properties or condition (financial or otherwise) of the Company or the Company and its Subsidiaries taken as a whole; (b) a material impairment of the ability of any Obligor to perform under any Loan Document to which it is a party; or (c) a material adverse effect upon the legality, validity, binding effect or enforceability against any Obligor of any Loan Document to which it is a party. "Material Disposition" means any disposition of assets by the Company or its Subsidiaries in a transaction or series of related transactions for consideration exceeding $80,000,000, other than any such disposition by any Insurance Subsidiary in the ordinary course of business consistent with past practices and the investment policy approved by the board of directors of such Insurance Subsidiary. "Maturity Date" means the sixth anniversary of the Effective Date, or if such day is not a Business Day, the next succeeding Business Day. "Moody's" means Moody's Investors Service, Inc., together with any Person succeeding thereto by merger, consolidation or acquisition of all or substantially all of its assets, including substantially all of its business of rating securities. "Multiemployer Plan" means a "multiemployer plan," within the meaning of Section 4001(a)(3) of ERISA, to which the Company or any ERISA Affiliate makes, is making or is obligated to make contributions or, during the preceding three calendar years, has made, or been obligated to make, contributions. "NAIC" means the National Association of Insurance Commissioners or any successor thereto, or in the absence of the National Association of Insurance Commissioners or such successor, any other association, agency or other organization performing advisory, coordination or other like functions among insurance departments, insurance commissioners and similar Governmental Authorities of the various states of the United States toward the promotion of uniformity in the practices of such Governmental Authorities. "NASD" means the National Association of Securities Dealers, Inc. or any Person succeeding to any of its principal functions. "Net Income" means, for any Person for any Calculation Period, the net income (or loss) of such Person for such period as determined in accordance with GAAP. 16 "Net Proceeds" means (a) with respect to any Asset Sale or Casualty Event, the aggregate amount of cash and cash equivalents received in respect of such Asset Sale or Casualty Event, as the case may be (including any such amounts received by way of deferred payment of principal pursuant to a note or installment receivable or purchase price adjustment receivable or otherwise, but only as and when received and, in the case of a Casualty Event, insurance proceeds, condemnation awards and similar payments), minus the sum of (i) all costs and expenses (including legal fees, notarial fees, accountants' fees, investment banking fees, survey costs and title insurance premiums) paid by the Company or any of its Subsidiaries to third parties, amounts applied to the repayment of Indebtedness (other than the Term Loans) secured by a Lien expressly permitted hereunder on any asset that is the subject of such Asset Sale or Casualty Event, costs of discontinuance (including any reasonable severance payments), Taxes other than Income Taxes (after taking into account any available tax credits, exemptions or deductions and any tax sharing arrangements) and other customary fees and expenses incurred in connection with such Asset Sale or Casualty Event and required to be paid in cash or deducted from the proceeds of such Asset Sale or Casualty Event, (ii) the estimated Income Tax or other Taxes to the extent payable by the Person selling or Disposing of such asset actually required to be paid in cash in connection with such Asset Sale (after taking into account any available tax credits, exemptions or deductions and any tax sharing arrangements), (iii) purchase price adjustments reasonably expected to be payable in connection therewith (not to exceed [10%] of the purchase price for the relevant Asset Sale) so long as, if any such amount ceases to be payable, it shall then become "Net Proceeds" and (iv) for an Insurance Subsidiary, any amounts that the Department will not permit such Insurance Subsidiary to distribute (including as a dividend or otherwise) directly or indirectly to the Company as a result of such Asset Sale or Casualty Event and (b) with respect to any issuance of Capital Stock of, or capital contribution to, the Company or any Subsidiary, or any incurrence of Indebtedness by the Company or any of its Subsidiaries, the proceeds thereof in the form of cash and cash equivalents, minus the costs and expenses paid or payable within 90 days of incurrence (so long as, if any such amount is not paid within such period, it shall become "Net Proceeds" on the last day of such period) by the Company or any of its Subsidiaries to third parties in connection therewith (including legal fees, notarial fees, accountants' fees, investment banking fees, underwriting discounts and commissions and other customary fees and expenses incurred in connection therewith) and required to be paid in cash or deducted from the proceeds of such issuance, contribution or incurrence. For purposes of this definition, the Net Proceeds received by any Person in respect of any Disposition shall include such cash or cash equivalents as may be received ("subsequent cash proceeds") by such Person at any time or from time to time in connection with the sale, transfer, lease or other disposition, or otherwise in respect of, any consideration other than cash or cash equivalents received by such Person in respect of such Disposition, less the estimated Income Tax or other Taxes to the extent payable by the Person selling or Disposing of such asset to be paid in connection with the receipt of such subsequent cash proceeds (after taking into account any available tax credits, exemptions or deductions and any tax sharing arrangements) that was not theretofore deducted in computing Net Proceeds. "Non-Insurance Subsidiary" means any Subsidiary that is not an Insurance Subsidiary. "Notes" has the meaning specified in Section 2.04(b). 17 "Obligations" means all advances, debts, liabilities, obligations, covenants and duties for the payment of money arising under any Loan Document owing by the Company to the Agent, the Lenders or any Indemnified Person, whether direct or indirect (including those acquired by assignment), absolute or contingent, due or to become due, now existing or hereafter arising. "Obligors" means the Company and the Subsidiary Guarantors. "Organization Documents" means (i) with respect to any corporation, the certificate or articles of incorporation, the bylaws, any certificate of designation or instrument relating to the rights of preferred shareholders of such corporation, any shareholder rights agreement, and all applicable resolutions of the board of directors (or any committee thereof) of such corporation, (ii) with respect to any limited liability company, the certificate or articles of formation or organization and operating agreement, and all applicable resolutions or consents of the governing body (or any committee thereof) of such limited liability company and (iii) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation or organization and any agreement, instrument, filing or notice with respect thereto filed in connection with its formation or organization with the applicable Governmental Authority in the jurisdiction of its formation or organization and, if applicable, any certificate or articles of formation or organization of such entity, and all applicable resolutions or consents of the governing body (or any committee thereof), or in the case of clauses (i), (ii) and (iii), the equivalent or comparable constituent documents with respect to any Foreign Subsidiary. "Other Taxes" means any present or future recording, stamp, court or documentary taxes or any other excise, sales or property taxes, charges or similar levies that arise from any payment made under this Agreement or any other Loan Document or from the execution, delivery, performance, enforcement or registration of, or otherwise with respect to, this Agreement or any other Loan Document. "Participant" has the meaning specified in subsection 10.07(d). "Patriot Act" has the meaning specified in Section 10.16. "PBGC" means the Pension Benefit Guaranty Corporation or any Governmental Authority succeeding to any of its principal functions under ERISA. "Pension Plan" means a pension plan (as defined in Section 3(2) of ERISA) subject to Title IV of ERISA that the Company or any ERISA Affiliate sponsors or maintains, or to which it makes, is making or is obligated to make contributions, or in the case of a multiple employer plan (as described in Section 4064(a) of ERISA) has made contributions at any time during the immediately preceding five plan years. "Perfection Certificate" means a certificate in the form of Exhibit E to the Security Agreement or any other form approved by the Agent. "Permitted Preferred Stock" means (a) preferred stock of the Company that (i) does not require (or permit at the option of the holder) any dividend, interest, sinking fund or redemption payment (other than payments made in common stock or Permitted Preferred Stock) to be made 18 and (ii) is not convertible or exchangeable (unless at the sole option of the Company) for debt securities or any Capital Stock other than Capital Stock of the type described in clause (i) and (b) the Class B Preferred Stock. "Permitted Refinancing Indebtedness" means Indebtedness of the Company that (i) does not require mandatory principal payments prior to the first anniversary of the Maturity Date, (ii) contains covenants and events of default no more restrictive to the Company than those in the Loan Documents and (iii) is subordinated to the Term Loans on substantially the terms set forth in Exhibit G hereto or otherwise on terms reasonably satisfactory to the Required Lenders; provided that (x) no Event of Default shall have occurred and be continuing at the time or immediately after such Indebtedness is incurred and (y) immediately after giving effect to the incurrence of such Indebtedness and the application of the proceeds thereof, the Company and its Subsidiaries are in compliance with all of the covenants contained in the Loan Documents (including all financial and ratings covenants) calculated on a Pro Forma Basis. "Permitted Refinancing Preferred Stock" means preferred stock of the Company that (i) does not require (or permit at the option of the holder) (x) the declaration or payment of cash dividend payments in an aggregate amount exceeding the maximum amount that the Company could have paid during the applicable Calculation Period without contravening Section 7.12 as of the end of the most recently ended Fiscal Quarter calculated on a Pro Forma Basis or (y) any sinking fund or redemption payment (other than payments made in common stock or Permitted Refinancing Preferred Stock) to be made prior to the first anniversary of the Maturity Date and (ii) is not convertible or exchangeable (unless at the sole option of the Company) for debt securities or any Capital Stock other than common stock of the Company, Permitted Preferred Stock or Permitted Refinancing Preferred Stock prior to the first anniversary of the Maturity Date. "Permitted Swap Obligations" means all obligations (contingent or otherwise) of the Company or any Subsidiary existing or arising under Swap Contracts, provided that each of the following criteria is satisfied: (a) such obligations are (or were) entered into by such Person in the ordinary course of business for the purpose of directly mitigating risks associated with liabilities, commitments or assets held by such Person, or changes in the value of securities issued by such Person in conjunction with a securities repurchase program not otherwise prohibited hereunder, and not for purposes of speculation or taking a "market view" and (b) such Swap Contracts do not contain any provision ("walk-away" provision) exonerating the non-defaulting party from its obligation to make payments on outstanding transactions to the defaulting party. "Permitted Transactions" means (a) mortgage-backed security transactions in which an investor sells mortgage collateral, such as securities issued by the Government National Mortgage Association and the Federal Home Loan Mortgage Corporation for delivery in the current month while simultaneously contracting to repurchase "substantially the same" (as determined by the Public Securities Association and GAAP) collateral for a later settlement, (b) transactions in which an investor lends cash to a primary dealer and the primary dealer collateralizes the borrowing of the cash with certain securities, (c) transactions in which an investor lends securities to a primary dealer and the primary dealer collateralizes the borrowing of the securities with cash collateral, (d) transactions in which an investor makes loans of 19 securities to a broker-dealer under an agreement requiring such loans to be continuously secured by cash collateral or United States government securities and (e) transactions in which a federal home loan mortgage bank (a "FHLMB") makes loans to an Insurance Subsidiary, that are sufficiently secured by appropriate assets of such Insurance Subsidiary consisting of government agency mortgage-backed securities in accordance with the rules, regulations and guidelines of such FHLMB for its loan programs. "Person" means an individual, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture or Governmental Authority or other entity of whatever nature. "Plan" means an employee benefit plan (as defined in Section 3(3) of ERISA) that the Company sponsors or maintains or to which the Company makes, is making or is obligated to make contributions and includes any Pension Plan. "Prior Effective Date" means the "Effective Date" under the Existing Credit Agreement. "Pro Forma Basis" means, with respect to compliance with any test or covenant hereunder and in connection with any event or transaction requiring a calculation on a Pro Forma Basis for any period, compliance with such test or covenant after giving effect to such event or transaction, and (i) in the case of any Material Acquisition or Material Disposition, including pro forma adjustments only to the extent consistent with Article 11 of Regulation S-X under the Securities Act and using for purposes of determining such compliance (x) in the case of any Material Acquisition, the historical financial statements of all entities or assets so acquired or to be acquired and (y) the consolidated financial statements of the Company and its Subsidiaries, which shall be reformulated as if such Material Acquisition or Material Disposition, and any other Material Acquisitions or Material Dispositions that have been consummated during such period, had been consummated on the first day of such period, (ii) in the case of any incurrence of Indebtedness, assuming such Indebtedness was incurred on the first day of such period and assuming that such Indebtedness bears interest during the portion of such period prior to the date of incurrence at, in the case of Indebtedness bearing interest at a floating rate, the weighted average of the interest rates applicable to outstanding Loans during such period and, in the case of Indebtedness bearing interest at a fixed rate, such fixed rate, (iii) in the case of any prepayment of Indebtedness, assuming that such prepayment had occurred on the first day of such period, (iv) in the case of the declaration or payment of any dividend, assuming such dividend had been declared and paid on the first day of such period and (v) making such other pro forma adjustments as would be permitted or required by Regulation S-K under the Securities Act. "Pro Rata Share" means, as to any Lender (a) at any time at which the Commitments remain outstanding, the percentage equivalent (expressed as a decimal, rounded to the ninth decimal place) at such time of such Lender's Commitment divided by the combined Commitments of all Lenders, and (b) after the termination of the Commitments, the percentage equivalent (expressed as a decimal, rounded to the ninth decimal place) at such time of the principal amount of such Lender's outstanding Term Loans divided by the aggregate principal amount of the outstanding Term Loans of all the Lenders. 20 "Purchase Money Debt" means Indebtedness incurred by a Person in connection with the purchase of fixed or capital assets by such Person, in which assets the seller or financier thereof has taken or retained a Lien; provided that (x) any such Lien attaches to such assets concurrently with or within 120 days after the purchase thereof by such Person and (y) at the time of incurrence of such Indebtedness, the aggregate principal amount of such Indebtedness shall not exceed the costs of the assets so purchased plus fees and expenses reasonably related thereto. "Quarterly Statement" means the quarterly statutory financial statement of any Insurance Subsidiary required to be filed with the insurance commissioner (or similar authority) of its jurisdiction of incorporation or, if no specific form is so required, in the form of financial statements permitted by such insurance commissioner (or such similar authority) to be used for filing quarterly statutory financial statements and shall contain the type of financial information permitted by such insurance commissioner (or such similar authority) to be disclosed therein, together with all exhibits or schedules filed therewith. "Recharacterized Portion" means the portion, if any, of any Permitted Refinancing Preferred Stock that qualified as permanent equity for purposes of GAAP at the time of initial issuance but no longer qualifies as permanent equity for purposes of GAAP on the Company's consolidated balance sheet as a result of a change in GAAP after the date of such issuance. "Refinancing" has the meaning set forth in the recitals hereto. "Register" has the meaning specified in Section 10.7(c). "Reinsurance Agreements" means any agreement, contract, treaty, certificate or other arrangement by which any Insurance Subsidiary agrees to transfer or cede to another insurer all or part of the liability assumed or assets held by it under one or more insurance, annuity, reinsurance or retrocession policies, agreements, contracts, treaties, certificates or similar arrangements. Reinsurance Agreements shall include, but not be limited to, any agreement, contract, treaty, certificate or other arrangement that is treated as such by the applicable Department. "Related Parties" means, with respect to any Person, such Person's Affiliates and the partners, directors, officers, employees, agents and advisors of such Person and of such Person's Affiliates. "Reportable Event" means any of the events set forth in Section 4043(c) of ERISA or the regulations thereunder, other than any such event for which the 30-day notice requirement under ERISA has been waived in regulations issued by the PBGC. "Required Lenders" means (a) prior to the Effective Date, Lenders then holding more than 50% of the aggregate amount of the Commitments or (b) after the Effective Date, Lenders then holding more than 50% of the aggregate unpaid principal amount of the Term Loans. "Requirement of Law" means, as to any Person, any law (statutory or common), treaty, rule or regulation or determination of an arbitrator or of a Governmental Authority, in each case 21 applicable to or legally binding upon the Person or any of its property or to which the Person or any of its property is subject. "Responsible Officer" means the chief executive officer, president, chief financial officer, treasurer or assistant treasurer of an Obligor. Any document delivered under any Loan Document that is signed by a Responsible Officer of an Obligor shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of such Obligor and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Obligor. Unless otherwise specified, "Responsible Officer" means a Responsible Officer of the Company. "Restricted Payments" has the meaning set forth in Section 7.08. "S&P" means Standard & Poor's Ratings Group, a division of McGraw-Hill, Inc., together with any Person succeeding thereto by merger, consolidation or acquisition of all or substantially all of its assets, including substantially all of its business of rating securities. "SAP" means, with respect to any Insurance Subsidiary, the statutory accounting practices prescribed or permitted by the insurance commissioner (or other similar authority) in the jurisdiction of such Insurance Subsidiary for the preparation of annual statements and other financial reports by insurance companies of the same type as such Insurance Subsidiary that are applicable to the circumstances as of the date of filing of such statement or report. "SEC" means the Securities and Exchange Commission or any Governmental Authority succeeding to any of its principal functions. "Secured Guarantee" has the meaning specified in the Security Agreement. "Secured Obligations" has the meaning specified in the Security Agreement. "Secured Swap Contract" means any Swap Contract entered into by an Obligor with a Lender (or an Affiliate of a Lender) to hedge interest rate risk of such Obligor and Subsidiaries that are not Insurance Subsidiaries. "Security Agreement" means the Guarantee and Security Agreement among the Obligors and the Agent, in substantially the form of Exhibit F. "Security Documents" means the Security Agreement and each other security agreement, instrument or document executed and delivered pursuant thereto or pursuant to Section 6.10 or Section 6.11 to secure any of the Secured Obligations. "Single Employer Pension Plan" means a pension plan as such term is defined in section 3(2) of ERISA, other than a multiemployer plan as defined in section 4001(a)(3) of ERISA, to which the Company or any other ERISA Affiliate may have liability, including any liability by reason of having been a substantial employer within the meaning of section 4063 of ERISA at any time during the preceding five years or by reason of being deemed to be a contributing sponsor under section 4069 of ERISA. 22 "Statutory Net Income" means, for any period, the net income of an Insurance Subsidiary determined in accordance with SAP. "Subsidiary" of a Person means any corporation, partnership, limited liability company, limited liability partnership, joint venture, trust, association or other unincorporated organization of which or in which such Person and such Person's Subsidiaries own directly or indirectly more than 50% of (a) the combined voting power of all classes of stock having general voting power under ordinary circumstances to elect a majority of the board of directors, if it is a corporation, (b) the voting or managing interests (which shall mean the general partner in the case of a partnership), if it is a partnership, joint venture or similar entity, (c) the beneficial interest, if it is a trust, association or other unincorporated organization or (d) the membership interest, if it is a limited liability company; provided that none of Paladin Entertainment Holdings, LLC ("Paladin"), Resortport Investment Partnership or any Subsidiary of the foregoing shall be considered a Subsidiary for any purpose of this Agreement. Unless otherwise specified, "Subsidiary" means a Subsidiary of the Company. "Subsidiary Guarantors" means each Subsidiary listed on the signature pages of the Security Agreement under the caption "Subsidiary Guarantors" and each Subsidiary that shall, at any time after the date hereof, become a Subsidiary Guarantor pursuant to Section 23 of the Security Agreement. "Surplus Debentures" means, as to any Insurance Subsidiary, debt securities of such Insurance Subsidiary issued to the Company or any other Subsidiary the proceeds of which are permitted to be included, in whole or in part, as Capital and Surplus of such Insurance Subsidiary as approved and permitted by the applicable Department. "Swap Contract" means any agreement, relating to any transaction that is a rate swap, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap or option, bond, note or bill option, interest rate option, forward foreign exchange transaction, cap, collar or floor transaction, currency swap, cross-currency rate swap, swaption, currency option or any other similar transaction (including any option to enter into any of the foregoing) or any combination of the foregoing, and any master agreement relating to or governing any or all of the foregoing. "Swap Termination Value" means, in respect of any one or more Swap Contracts, after taking into account the effect of any legally enforceable netting agreement relating to such Swap Contracts, (a) for any date on or after the date such Swap Contracts have been closed out and termination value(s) determined in accordance therewith, such termination value(s) and (b) for any date prior to the date referenced in clause (a), the amount(s) determined as the mark-to-market value(s) for such Swap Contracts, as determined by the Company based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Swap Contracts (which may include any Lender). "Synthetic Purchase Agreement" means any agreement pursuant to which the Company or any of its Subsidiaries is or may become obligated to make (a) any payment in connection with the purchase by any third party from a Person other than the Company or any of its Subsidiaries (other than any Subsidiary that is a Subsidiary of an Insurance Subsidiary but is not 23 itself an Insurance Subsidiary) of any Capital Stock or Indebtedness of the Company or any of its Subsidiaries (other than any Subsidiary that is a Subsidiary of an Insurance Subsidiary but is not itself an Insurance Subsidiary) or (b) any payment the amount of which is determined by reference to the price or value at any time of any such Capital Stock or Indebtedness; provided that (i) no phantom stock or similar plan providing for payments only to current or former directors, officers or employees of the Company or any of its Subsidiaries (or to their heirs or estates) and (ii) no such agreement in respect of any Disposition of any Capital Stock of a Subsidiary of the Company that is permitted by Section 7.03 shall in either case be deemed to be a Synthetic Purchase Agreement. "Tax Sharing Agreement" means the amended and restated consolidated income tax agreement dated January 1, 2004 among the Company and certain of its Subsidiaries. "Taxes" means any and all present or future taxes, levies, assessments, imposts, duties, deductions, fees, withholdings or similar charges, and all liabilities with respect thereto, excluding, in the case of each Lender and the Agent, respectively, taxes imposed as a result of a connection between such Lender or the Agent and the jurisdiction imposing such tax (other than any connection arising solely from such Lender or the Agent having executed, delivered or performed its obligations or received a payment under this Agreement or any other Loan Document) including the jurisdiction (or any political subdivision thereof) under the laws of which such Lender or the Agent, as the case may be, is organized or maintains its Lending Office. "Term Loan" has the meaning set forth in Section 2.01. "Total Capitalization" means, without duplication, (a) the amount described in clause (a) of the definition of "Debt to Total Capitalization Ratio" plus (b) the Total Shareholders' Equity of the Company. "Total Shareholders' Equity" means the total common and preferred shareholders' equity of the Company as determined in accordance with GAAP (calculated including any Recharacterized Portion, but excluding (i) unrealized gains (losses) on securities as determined in accordance with FAS 115 and (ii) any charges taken to write off any goodwill included on the Company's balance sheet on the Effective Date to the extent such charges are required by FAS 142). "Transaction Liens" means the Liens granted by the Obligors under the Security Documents. "Transactions" means the execution, delivery and performance by each Obligor of the Loan Documents to which it is to be a party and the borrowing of the Term Loans hereunder. "Unfunded Pension Liability" means the excess of a Plan's benefit liabilities under Section 400l(a)(16) of ERISA over the current value of that Plan's assets, determined in accordance with the assumptions used for funding the Pension Plan pursuant to Section 412 of the Code for the applicable plan year. 24 "United States" and "U.S." each means the United States of America. "Wholly-Owned Subsidiary" means any corporation in which (other than directors' and national citizen qualifying shares or similar de minimis holdings by another Person, in each case, as required by law) 100% of the capital stock of each class having ordinary voting power, and 100% of the capital stock of every other class, in each case (or, in the case of Persons other than corporations, membership interests or other equity interests), at the time as of which any determination is being made, is owned, beneficially and of record, by the Company, or by one or more of the other Wholly-Owned Subsidiaries, or both. Section 1.02. Other Interpretive Provisions. (a) The meanings of defined terms are equally applicable to the singular and plural forms of the defined terms. (b) The words "hereof", "herein", "hereunder" and similar words refer to this Agreement as a whole and not to any particular provision of this Agreement; and subsection, Section, Schedule and Exhibit references are to this Agreement unless otherwise specified. (c) (i) The term "documents" includes any and all instruments, documents, agreements, certificates, indentures, notices and other writings, however evidenced. (ii) The term "including" is not limiting and means "including without limitation." (iii) In the computation of periods of time from a specified date to a later specified date, the word "from" means "from and including," the words "to" and "until" each mean "to but excluding" and the word "through" means "to and including." (d) Unless otherwise expressly provided herein or the context requires otherwise, (i) references to agreements (including this Agreement) and other contractual instruments shall be deemed to include all subsequent amendments and other modifications thereto, but only to the extent such amendments and other modifications are not prohibited by the terms of any Loan Document, (ii) references to any statute or regulation are to be construed as including all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting the statute or regulation, (iii) any reference herein to a Person shall be construed to include such Person's permitted successors and assigns and (iv) the word "property" shall be construed to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights. (e) The captions and headings of this Agreement are for convenience of reference only and shall not affect the interpretation of this Agreement. (f) This Agreement and other Loan Documents may use several different limitations, tests or measurements to regulate the same or similar matters. All such limitations, tests and measurements are cumulative and shall each be performed in accordance with their terms. Unless otherwise expressly provided, any reference to any action of the Agent or the Lenders by way of consent, approval or waiver shall be deemed modified by the phrase "in its/their sole and reasonable discretion." (g) This Agreement and the other Loan Documents are the result of negotiations among and have been reviewed by counsel to the Agent, the Company and the other parties, and 25 are the products of all parties. Accordingly, they shall not be construed against the Lenders or the Agent merely because of the Agent's or Lenders' involvement in their preparation. Section 1.03. Classification of Term Loans and Borrowings. For purposes of this Agreement, Term Loans may be classified and referred to by Interest Type (e.g., a "Eurodollar Rate Loan"). Borrowings also may be classified and referred to by Interest Type (e.g., a "Eurodollar Rate Borrowing"). Section 1.04. Accounting Principles. (a) Unless the context otherwise clearly requires, all accounting terms not expressly defined herein shall be construed, and all financial computations required under this Agreement shall be made, in accordance with GAAP as in effect from time to time, consistently applied. (b) References herein to particular columns, lines or sections of any Person's Annual Statement shall be deemed, where appropriate, to be references to the corresponding column, line or section of such Person's Quarterly Statement, or if no such corresponding column, line or section exists or if any report form changes, then to the corresponding item referenced thereby. In the event the columns, lines or sections of the Annual Statement or Quarterly Statement referenced herein are changed or renumbered from the columns, lines and sections applicable to the 2003 Annual Statement or the March 31, 2004 Quarterly Statement, all such references shall be deemed references to such column, line or section as so renumbered or changed. (c) In the event of any future Material Acquisition or Material Disposition, determinations of compliance with the financial covenants contained herein for any applicable calculation period shall be made on a Pro Forma Basis. (d) If, at any time after the date of this Agreement, any material change is made to GAAP or the Company's accounting practices that would affect in any material respect the determination of compliance with the covenants set forth in this Agreement, the Company shall notify the Agent of the change and the Company and the Agent shall negotiate in good faith to amend such covenant, subject to the approval of the Required Lenders, to restore the Company and the Lenders to the position they occupied before the implementation of such material change in GAAP or accounting practices; provided that if the Company and the Agent are unable to reach agreement within 30 days following the implementation of such material change, the Agent shall be permitted, acting in good faith, to make such amendments, in each case subject to the approval of the Required Lenders, to the covenants set forth in this Agreement as it reasonably determines are necessary to restore the Company and the Lenders to the position they occupied prior to the implementation thereof. ARTICLE 2 THE CREDITS Section 2.01. Commitments. Subject to the terms and conditions set forth herein, each Lender severally agrees to make a single loan (a "Term Loan") to the Company on the Effective Date in an amount not to exceed such Lender's Commitment at such time. The Borrowing shall consist of Term Loans made simultaneously by the Lenders ratably according to their 26 Commitments. Amounts borrowed under this Section 2.01 and repaid or prepaid may not be reborrowed. Section 2.02. Term Loans (a) Each Term Loan shall be made as part of a Borrowing consisting of Term Loans of the same Interest Type made by the Lenders ratably in accordance with their respective Commitments. (b) Subject to Section 2.03, Term Loans may be Base Rate Loans or Eurodollar Rate Loans, provided that any Eurodollar Rate Loans made on the Effective Date shall have an Interest Period of not greater than one month. (c) Term Loans shall be convertible from one Interest Type to the other; provided that (x) the Company may not select the Eurodollar Rate for any Borrowing if the aggregate amount of such Borrowing is less than $5,000,000 and (y) there shall not be more than 10 different Interest Periods in effect in respect of all Term Loans then outstanding. Section 2.03. Borrowing, Conversion and Continuation of Loans. (a) The Borrowing, each conversion of Term Loans from one Interest Type to the other, and each continuation of Eurodollar Rate Loans shall be made upon the Company's irrevocable written notice to the Agent in the form of a Loan Notice, appropriately completed and signed by a Responsible Officer of the Company. Each such notice must be received by the Agent not later than 12:00 Noon (New York City time) (i) on the requested date of a Borrowing of Base Rate Loans, and (ii) three Business Days prior to the requested date of a Borrowing or any conversion to or continuation of Eurodollar Rate Loans or of any conversion of Eurodollar Rate Loans to Base Rate Loans; provided that, in the case of any Borrowing of Eurodollar Rate Loans on the Effective Date, such notice shall be accompanied by a customary funding indemnity letter in favor of the Agent, and in form and substance reasonably satisfactory to the Agent. (b) Each Loan Notice shall specify (i) whether the Company is requesting a Borrowing, a conversion of Term Loans from one Interest Type to the other, or a continuation of Eurodollar Rate Loans, (ii) the requested date of the Borrowing, conversion or continuation, as the case may be (which shall be a Business Day), (iii) the principal amount of Term Loans to be borrowed, converted or continued, (iv) the Interest Type of Term Loans to be borrowed or to which existing Term Loans are to be converted, and (v) if applicable, the duration of the Interest Period with respect thereto (each such Interest Period shall comply with the provisions of the definition of "Interest Period"). (c) If the Company fails to specify an Interest Type of Term Loan in a Loan Notice or if the Company fails to give a timely notice requesting a conversion or continuation, then the Term Loans shall be continued as of the last day of the applicable Interest Period as Eurodollar Rate Loans having a one month Interest Period. If the Company requests a Borrowing of, conversion to or continuation of Eurodollar Rate Loans in any such Loan Notice, but fails to specify an Interest Period, it will be deemed to have specified an Interest Period of one month. (d) Following receipt of a Loan Notice, the Agent shall promptly notify each Lender of the amount of its Pro Rata Share of the applicable Term Loans, and if no timely notice of a 27 conversion or continuation is provided by the Company, the Agent shall notify each Lender of the details of any automatic extension of such Eurodollar Rate Loan for a one month Interest Period. In the case of a Borrowing, each Lender shall make the amount of its Term Loan available to the Agent in immediately available funds at the Agent's Office not later than 1:00 p.m (New York City time). on the Business Day specified in the applicable Loan Notice. Upon satisfaction of the applicable conditions set forth in Section 4.01, the Agent shall make all funds so received available to the Company in like funds as received by the Agent either by (i) crediting the account of the Company on the books of BofA with the amount of such funds or (ii) wire transfer of such funds, in each case in accordance with instructions provided to (and reasonably acceptable to) the Agent by the Company. (e) Except as otherwise provided herein, a Eurodollar Rate Loan may be continued or converted only on the last day of an Interest Period for such Eurodollar Rate Loan. (f) Notwithstanding any contrary provision hereof, if an Event of Default as set forth in Section 8.01(a), (f) or (g) has occurred and is continuing, unless the Required Lenders otherwise consent or any other Event of Default has occurred and is continuing and the Required Lenders have requested, each Borrowing will be converted into a Base Rate Borrowing at the end of the Interest Period applicable thereto. (g) The Agent shall promptly notify the Company and the Lenders of the interest rate applicable to any Interest Period for Eurodollar Rate Loans upon determination of such interest rate. The determination of the Eurodollar Rate by the Agent shall be conclusive in the absence of manifest error. At any time that Base Rate Loans are outstanding, the Agent shall notify the Company and the Lenders of any change in BofA's prime rate used in determining the Base Rate promptly following the public announcement of such change. (h) The failure of any Lender to make the Term Loan to be made by it as part of any Borrowing shall not relieve any other Lender of its obligation, if any, hereunder to make its Term Loan on the date of such Borrowing, but no Lender shall be responsible for the failure of any other Lender to make the Term Loan to be made by such other Lender on the date of any Borrowing. Section 2.04. Notes; Loan Accounts. (a) Each Term Loan made by each Lender shall be evidenced by one or more loan accounts or records maintained by such Lender and by the Agent in the ordinary course of business. The loan accounts or records maintained by the Agent and each Lender shall be presumptive evidence of the amount of the Term Loans made by the Lenders to the Company and the interest and payments thereon. Any failure so to record or any error in doing so shall not, however, limit or otherwise affect the obligation of the Company hereunder to pay any amount owing with respect to the Term Loans. In the event of any conflict between the accounts and records maintained by any Lender and the accounts and records of the Agent in respect of such matters, the accounts and records of the Agent shall control in the absence of manifest error. (b) Upon the request of any Lender made through the Agent, instead of or in addition to loan accounts, the Term Loans made by each Lender may be evidenced by one or more notes in substantially the form of Exhibit B hereto (each such note, a "Note," and collectively, the 28 "Notes"). Each Lender shall endorse on the schedules annexed to its Note the date, amount and maturity of each Term Loan deemed made by it and the amount of each payment of principal made by the Company with respect thereto. Each such Lender is irrevocably authorized by the Company to endorse its Note and each Lender's record shall be conclusive absent demonstrable error; provided that the failure of a Lender to make, or an error in making, a notation thereon with respect to any Term Loan shall not limit or otherwise affect the obligations of the Company hereunder or under any such Note to such Lender. Section 2.05. Termination of Commitments. Unless previously terminated, the Commitments will terminate on the Effective Date immediately after the closing hereunder. Section 2.06. Payment at Maturity. The Company shall repay to the Agent on the Maturity Date, for the account of each Lender, the then unpaid principal amount of such Lender's Term Loans together with accrued and unpaid interest thereon to but excluding the date of such payment. Section 2.07. Scheduled Amortization. The Company shall repay to the Agent, for the ratable account of the Lenders, the aggregate principal amount of all Term Loans outstanding on the following dates in the respective amounts set forth opposite such dates (which amounts shall be reduced as a result of the application of prepayments in accordance with the order of priority set forth in Section 2.08(c)):
----------------------------- ----------------------- Date Amount ----------------------------- ----------------------- ----------------------------- ----------------------- ----------------------------- ----------------------- ----------------------------- ----------------------- September 30, 2004 $2,000,000.00 ----------------------------- ----------------------- ----------------------------- ----------------------- December 31, 2004 $2,000,000.00 ----------------------------- ----------------------- ----------------------------- ----------------------- March 31, 2005 $2,000,000.00 ----------------------------- ----------------------- ----------------------------- ----------------------- June 30, 2005 $2,000,000.00 ----------------------------- ----------------------- ----------------------------- ----------------------- September 30, 2005 $2,000,000.00 ----------------------------- ----------------------- ----------------------------- ----------------------- December 31, 2005 $2,000,000.00 ----------------------------- ----------------------- ----------------------------- ----------------------- March 31, 2006 $2,000,000.00 ----------------------------- ----------------------- ----------------------------- ----------------------- June 30, 2006 $2,000,000.00 ----------------------------- ----------------------- ----------------------------- ----------------------- September 30, 2006 $2,000,000.00 ----------------------------- ----------------------- ----------------------------- ----------------------- December 31, 2006 $2,000,000.00 ----------------------------- ----------------------- ----------------------------- ----------------------- March 31, 2007 $2,000,000.00 ----------------------------- ----------------------- ----------------------------- ----------------------- June 30, 2007 $2,000,000.00 ----------------------------- ----------------------- ----------------------------- ----------------------- September 30, 2007 $2,000,000.00 ----------------------------- ----------------------- ----------------------------- ----------------------- December 31, 2007 $2,000,000.00 ----------------------------- ----------------------- ----------------------------- ----------------------- March 31, 2008 $2,000,000.00 ----------------------------- ----------------------- ----------------------------- ----------------------- June 30, 2008 $2,000,000.00 ----------------------------- ----------------------- ----------------------------- ----------------------- September 30, 2008 $2,000,000.00 ----------------------------- ----------------------- ----------------------------- ----------------------- December 31, 2008 $2,000,000.00 ----------------------------- ----------------------- ----------------------------- ----------------------- March 31, 2009 $2,000,000.00 ----------------------------- ----------------------- ----------------------------- ----------------------- June 30, 2009 $2,000,000.00 ----------------------------- ----------------------- ----------------------------- ----------------------- September 30, 2009 $2,000,000.00 ----------------------------- ----------------------- ----------------------------- ----------------------- December 31, 2009 $2,000,000.00 ----------------------------- ----------------------- ----------------------------- ----------------------- March 31, 2010 $2,000,000.00 ----------------------------- ----------------------- ----------------------------- ----------------------- Maturity Date $754,000,000.00 ----------------------------- -----------------------
29 Section 2.08. Optional and Mandatory Prepayments. (a) Optional Prepayments. The Company will have the right at any time to prepay any Borrowing in whole or in part, in minimum amounts of $3,000,000 or any multiple of $1,000,000 in excess thereof, subject to the provisions of this Section. (b) Mandatory Prepayments. So long as the Interest Coverage Ratio is less than 4.0:1.0: (i) Indebtedness. Within five Business Days after any Net Proceeds are received by or on behalf of the Company or any Subsidiary in respect of the incurrence of any Indebtedness by the Company or such Subsidiary, including Permitted Refinancing Indebtedness but excluding all other Indebtedness permitted pursuant to Section 7.01, the Company shall prepay Borrowings in an aggregate amount equal to such Net Proceeds. (ii) Equity Issuances. Within five Business Days after any Net Proceeds are received by or on behalf of the Company or any Subsidiary in respect of the issuance by the Company or such Subsidiary of any Capital Stock, or the receipt by the Company or such Subsidiary of any capital contribution (other than (x) issuances of Capital Stock to the Company or its Subsidiaries or capital contributions between the Company and its Subsidiaries or between Subsidiaries or (y) the issuance of Capital Stock to, or otherwise acquired by, directors, officers or employees of the Company or its Subsidiaries pursuant to any stock option, restricted stock or similar compensation plan approved by the board of directors of the Company or (z) the issuance of Capital Stock as consideration for an Acquisition permitted under this Agreement), the Company shall prepay Borrowings in an aggregate amount equal to 50% of such Net Proceeds. (iii) Asset Sales. Within five Business Days after any Net Proceeds are received by or on behalf of the Company or any Subsidiary in respect of the occurrence of any Asset Sale, the Company shall prepay Borrowings in an aggregate amount equal to such Net Proceeds; provided that a prepayment of the Borrowings shall be required pursuant to this paragraph only to the extent that the aggregate Net Proceeds of all Asset Sales in any Fiscal Year exceeds $5,000,000; provided that so long as no Event of Default shall have occurred and be continuing, and except in the case of the Net Proceeds from any sale of an Insurance Subsidiary that would constitute a Material Disposition, the Company may reinvest all or any portion of such Net Proceeds in assets useful in its business so long as, within 180 days after the receipt of such Net Proceeds, such reinvestment shall have been consummated or the Company shall have entered into a definitive agreement for such reinvestment, and such reinvestment shall have been consummated no later than 270 days after the receipt of such Net Proceeds (in each case, as certified by the Company in writing to the Agent); and provided further that any Net Proceeds not subject to such definitive agreement or so reinvested by such 180th or 270th day, as the case may be, shall be immediately applied to the prepayment of the Loans as set forth in this Section 2.08(b)(iii). (iv) Casualty Events. Within five Business Days after any Net Proceeds are received by or on behalf of the Company or any Subsidiary (that is not an Insurance Subsidiary or a Subsidiary of an Insurance Subsidiary) in respect of the occurrence of any 30 Casualty Event, the Company shall prepay Borrowings in an aggregate amount equal to such Net Proceeds; provided that a prepayment of the Borrowings shall be required pursuant to this paragraph only to the extent that the aggregate Net Proceeds of all Casualty Events in any Fiscal Year exceeds $5,000,000; provided that so long as no Event of Default shall have occurred and be continuing, the Company may apply all or any portion of such Net Proceeds to the repair of the property subject to such Casualty Event or the acquisition of replacement property so long as within 180 days after the receipt of such Net Proceeds, such repair or replacement shall have been consummated or the Company shall have entered into definitive agreement for such repair or replacement, and such repair or replacement shall have been consummated no later than 270 days after the receipt of such Net Proceeds (in each case, as certified by the Company in writing to the Agent); and provided further that any Net Proceeds not subject to such definitive agreement or so applied by such 180th or 270th day, as the case may be, shall be immediately applied to the prepayment of the Term Loans as set forth in this Section 2.08(b)(iv). (v) Conseco Excess Cash Flow. Commencing with the Excess Cash Calculation Period ending December 31, 2004, the Company shall prepay Borrowings in an aggregate amount equal to 50% of the Conseco Excess Cash Flow for each Excess Cash Calculation Period; provided that the amount, if any, required to be applied towards prepayment of Borrowings pursuant to this subsection (v) shall be reduced by (A) any amount that any Department shall require the Company to reinvest in or otherwise return to any Insurance Subsidiary to the extent that such amount is included in the calculation of the amount determined pursuant to this subsection (v), in each case as certified by a Responsible Officer pursuant to a certificate delivered to the Agent at the time of prepayment (or, if no prepayment is required with respect to any Excess Cash Calculation Period, within 120 days after the end of such Excess Cash Calculation Period) and (B) the aggregate amount of voluntary prepayments of the Term Loans made by the Company during such Calculation Period. Each such prepayment shall be made on or before the date on which financial statements are delivered pursuant to Section 6.01(a) with respect to the relevant Excess Cash Calculation Period (and in any event within 120 days after the end of such Excess Cash Calculation Period). (c) Application of Prepayments. Each prepayment of any Borrowing shall be applied ratably to the Term Loans, first, in direct order of maturity to the next four scheduled prepayments after the occurrence of the event giving rise to such prepayment and second, ratably to the remaining principal repayment installments thereof. (d) Accrued Interest. Each prepayment of a Borrowing shall be accompanied by accrued interest on the amount prepaid. (e) Notice of Prepayments. The Company shall notify the Agent in writing of any prepayment of any Borrowing hereunder (i) in the case of a Eurodollar Rate Borrowing, not later than 12:00 Noon (New York City time) three Business Days before the date of prepayment and (ii) in the case of a Base Rate Borrowing, not later than 12:00 Noon (New York City time) on the prepayment date. Each such notice shall be irrevocable and shall specify the prepayment date, the principal amount of each Borrowing or portion thereof to be prepaid and, without limiting 31 Section 6.02, in the case of a mandatory prepayment, a reasonably detailed calculation of the amount of such prepayment. Promptly after it receives any such notice, the Agent shall advise the Lenders of the contents thereof. (f) Call Premium. Notwithstanding anything to the contrary contained in this Agreement, in the event that the Company refinances or otherwise repays in full the outstanding principal amount of the Term Loans at any time prior to the first anniversary of the Effective Date, prepayment of the Term Loans shall be subject to a prepayment fee in an amount equal to 1.0% of the then outstanding principal amount of the Term Loans. Section 2.09. Interest. (a) Each Base Rate Loan shall bear interest on the outstanding principal amount thereof for each day at a rate per annum equal to the Base Rate plus the Applicable Margin. (b) Each Eurodollar Rate Loan shall bear interest on the outstanding principal amount for each Interest Period applicable thereto at a rate per annum equal to the Eurodollar Rate for such Interest Period plus the Applicable Margin. (c) Notwithstanding the foregoing, upon the occurrence of any Event of Default, for so long as such Event of Default shall be continuing, the principal of and interest on each Term Loan shall, without further notice in the case of any Event of Default pursuant to Section 8.01(a), Section 8.01(f) or Section 8.01(g), and upon notice from the Agent (upon the instruction of the Required Lenders) in the case of any other Event of Default, bear interest, after as well as before judgment to the extent permitted by law, at a rate per annum equal to 2% plus the rate otherwise applicable to such Term Loan as provided in the preceding subsections of this Section. In addition, if any fee or other amount (other than principal or interest on any Term Loan) payable by the Company pursuant to any Loan Document is not paid when due, whether upon acceleration or otherwise, such overdue amount shall bear interest, after as well as before judgment to the extent permitted by law, at a rate per annum equal to 2.0% plus the rate otherwise applicable to such Term Loan as provided in the preceding subsections of this Section. (d) Interest on each Term Loan shall be paid in arrears on each Interest Payment Date for such Term Loan; provided that (i) interest accrued pursuant to Section 2.09(c) shall be payable on demand of the Agent (upon the instruction of the Required Lenders), (ii) upon any repayment of any Loan, interest accrued on the principal amount repaid shall be payable on the date of such repayment and (iii) upon any conversion of a Eurodollar Rate Loan before the end of the current Interest Period therefor, interest accrued on such Loan shall be payable on the effective date of such conversion. (e) Anything herein to the contrary notwithstanding, the obligations of the Company to any Lender hereunder shall be subject to the limitation that payments of interest shall not be required for any period for which interest is computed hereunder to the extent (but only to the extent) that contracting for or receiving such payment by such Lender would be contrary to the provisions of any law applicable to such Lender limiting the highest rate of interest that may be lawfully contracted for, charged or received by such Lender, and in such event the Company shall pay such Lender interest at the highest rate permitted by applicable law. 32 Section 2.10. Fees. The Company shall pay to the Agent, for its own account, fees payable in the amounts and at the times separately agreed upon by the Company and the Agent. Such fees shall be fully earned when paid and shall not be refundable under any circumstances. Section 2.11. Computation of Fees and Interest. (a) All computations of interest for Base Rate Loans when the Base Rate is determined by BofA's "prime rate" shall be made on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed. All other computations of fees and interest shall be made on the basis of a 360-day year and actual days elapsed (which results in more interest being paid than if computed on the basis of a 365-day year). Interest and fees shall accrue during each period during which interest or such fees are computed from the first day thereof to the last day thereof. (b) Each determination of an interest rate by the Agent shall be conclusive and binding on the Company and the Lenders in the absence of demonstrable error. The Agent will, at the request of the Company or any Lender, deliver to the Company or the Lender, as the case may be, a statement showing the quotations used by the Agent in determining any interest rate and the resulting interest rate. Section 2.12. Payments Generally. (a) All payments to be made by the Company under the Loan Documents shall be made without condition or deduction for any defense, set-off, recoupment or counterclaim. Except as otherwise expressly provided in any Loan Document, all payments to be made by the Company under any Loan Document shall be made to the Agent for the account of the Lenders at the Agent's Office, and shall be made in dollars and in immediately available funds, no later than 3:00 p.m. (New York City time) on the date specified in such Loan Document. The Agent will promptly distribute to each Lender its Pro Rata Share (or other applicable share as expressly provided herein) of such payment in like funds as received. Any payment received by the Agent later than 3:00 p.m. (New York City time) shall be deemed to have been received on the following Business Day and any applicable interest or fee shall continue to accrue. (b) Subject to the provisions set forth in the definition of "Interest Period" herein, whenever any payment is due on a day other than a Business Day, such payment shall be made on the following Business Day, and such extension of time shall in such case be included in the computation of interest or fees, as the case may be. (c) Unless the Company or any Lender has notified the Agent, prior to the date any payment is required to be made by it to the Agent hereunder, that the Company or such Lender, as the case may be, will not make such payment, the Agent may assume that the Company or such Lender, as the case may be, has timely made such payment and may (but shall not be so required to), in reliance thereon, make available a corresponding amount to the Person entitled thereto. If and to the extent that such payment was not in fact made to the Agent in immediately available funds, then: (i) if the Company failed to make such payment, each Lender shall forthwith on demand repay to the Agent the portion of such assumed payment that was made available to such Lender in immediately available funds, together with interest thereon in respect of each day from and including the date such amount was made available by the 33 Agent to such Lender to the date such amount is repaid to the Agent in immediately available funds at the Federal Funds Rate from time to time in effect; and (ii) if any Lender failed to make such payment, such Lender shall forthwith on demand pay to the Agent the amount thereof in immediately available funds, together with interest thereon for the period from the date such amount was made available by the Agent to the Company to the date such amount is recovered by the Agent (the "Compensation Period") at a rate per annum equal to the Federal Funds Rate from time to time in effect. If such Lender pays such amount to the Agent, then such amount shall constitute such Lender's Term Loan included in the applicable Borrowing. If such Lender does not pay such amount forthwith upon the Agent's demand therefor, the Agent may make a demand therefor upon the Company, and the Company shall pay such amount to the Agent, together with interest thereon for the Compensation Period at a rate per annum equal to the rate of interest applicable to the applicable Borrowing. Nothing herein shall be deemed to relieve any Lender from its obligation to fulfill its Commitment or to prejudice any rights that the Agent or the Borrower may have against any Lender as a result of any default by such Lender hereunder. A notice of the Agent to any Lender or the Company with respect to any amount owing under this subsection (c) shall be conclusive, absent manifest error. (d) If any Lender makes available to the Agent funds for any Term Loan to be made by such Lender as provided in the foregoing provisions of this Article 2, and such funds are not made available to the Company by the Agent because the conditions to the initial extension of Term Loans set forth in Article 4 are not satisfied or waived in accordance with the terms hereof, the Agent shall return such funds (in like funds as received from such Lender) to such Lender, without interest. (e) The obligations of the Lenders hereunder to make Term Loans are several and not joint. The failure of any Lender to make any Term Loan on any date required hereunder shall not relieve any other Lender of its corresponding obligation to do so on such date, and no Lender shall be responsible for the failure of any other Lender to so make its Term Loan. (f) Nothing herein shall be deemed to obligate any Lender to obtain the funds for any Term Loan in any particular place or manner or to constitute a representation by any Lender that it has obtained or will obtain the funds for any Term Loan in any particular place or manner. Section 2.13. Sharing of Payments by Lenders. If any Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of the Term Loans made by it, resulting in such Lender's receiving payment of a proportion of the aggregate amount of such Term Loans and accrued interest thereon greater than its pro rata share thereof as provided herein, then the Lender receiving such greater proportion shall (a) notify the Agent of such fact and (b) purchase (for cash at face value) participations in the Loans Term and of the other Lenders, or make such other adjustments as shall be equitable, so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Term Loans and other amounts owing them, provided that: 34 (i) if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest; and (ii) the provisions of this Section shall not be construed to apply to (x) any payment made by the Company pursuant to and in accordance with the express terms of this Agreement or (y) any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Term Loans to any assignee or participant. Each Obligor consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against such Obligor rights of setoff and counterclaim (subject to Section 10.09) with respect to such participation as fully as if such Lender were a direct creditor of such Obligor in the amount of such participation. ARTICLE 3 TAXES, YIELD PROTECTION AND ILLEGALITY Section 3.01. Taxes. (a) Any and all payments by the Company to any Lender or the Agent under this Agreement and any other Loan Document shall be made free and clear of, and without deduction or withholding for, any Taxes. In addition, the Company shall pay all Other Taxes. (b) If the Company shall be required by law to deduct or withhold any Taxes, Other Taxes or Further Taxes from or in respect of any sum payable hereunder to any Lender or the Agent and, in the case of Taxes, such Taxes arise as a result of a change in law occurring after the date hereof, then: (i) the sum payable shall be increased as necessary so that, after making all required deductions and withholdings (including deductions and withholdings applicable to additional sums payable under this Section 3.01), such Lender or the Agent, as the case may be, receives and retains an amount equal to the sum it would have received and retained had no such deductions or withholdings been made; (ii) the Company shall make such deductions and withholdings; (iii) the Company shall pay the full amount deducted or withheld to the relevant taxing authority or other authority in accordance with applicable law; and (iv) the Company shall also pay to each Lender or the Agent, at the time interest is paid, Further Taxes in the amount that the respective Lender or the Agent specifies as necessary to preserve the after-tax yield the Lender or the Agent would have received if such Taxes, Other Taxes or Further Taxes had not been imposed. (c) The Company agrees to indemnify and hold harmless each Lender and the Agent for the full amount of Taxes, Other Taxes and Further Taxes (provided that, in the case of Taxes, 35 such Taxes arise as a result of a change in law occurring after the date hereof) in the amount that the respective Lender or the Agent specifies as necessary to preserve the after-tax yield the Lender or the Agent would have received if such Taxes, Other Taxes or Further Taxes had not been imposed, and any liability (including penalties, interest, additions to tax and expenses) arising therefrom or with respect thereto, whether or not such Taxes, Other Taxes or Further Taxes were correctly or legally asserted. Payment under this indemnification shall be made within 30 days after the date the Lender or the Agent makes written demand therefor; provided that the Company shall not be required to indemnify for any additional penalties, interest, additions to tax and expenses arising more than 120 days prior to the date the Lender or the Agent delivers such demand. If any Lender receives a refund in respect of any Taxes, Other Taxes or Further Taxes as to which it has been indemnified by the Company or with respect to which the Company (or any Person on behalf of the Company) has paid additional amounts pursuant to this Section 3.01, it shall promptly repay such refund to the Company (but only to the extent of indemnity payments made, or additional amounts paid, by the Company (or such Person acting on behalf of the Company) under this Section 3.01 with respect to the Taxes, Other Taxes or Further Taxes giving rise to such refund), net of all out-of-pocket expenses of such Lender or the Agent, as the case may be; provided that the Company, upon the request of such Lender or the Agent, agrees to return such refund (together with any penalties, interest or other charges due in connection therewith to the appropriate taxing authority or other Governmental Authority) to such Lender or the Agent in the event such Lender or the Agent is required to pay or to return such refund to the relevant taxing authority or other Governmental Authority. Nothing contained herein shall require any Lender to disclose its tax records to the Company or any other Person except for such tax records as relate solely to Taxes, Other Taxes and Further Taxes as to which it has been indemnified by the Company or with respect to which the Company (or any Person on behalf of the Company) has paid additional amounts pursuant to this Section 3.01. (d) Within 30 days after the date of any payment by the Company of any Taxes, Other Taxes or Further Taxes that relate to the Agent or any Lender, the Company shall furnish to each affected Lender or the Agent, as applicable, the original or a certified copy of a receipt evidencing payment thereof or other evidence of payment reasonably satisfactory to such Lender or the Agent. (e) If the Company is required to pay any amount to any Lender pursuant to subsection (b) or (c) of this Section 3.01, then such Lender shall use reasonable efforts (consistent with legal and regulatory restrictions) to change the jurisdiction of its Lending Office so as to eliminate any such additional payment by the Company which may thereafter accrue, if such change, in the sole reasonable judgment of such Lender, is not otherwise disadvantageous to such Lender. Section 3.02. Illegality. (a) If any Lender determines that the introduction of any Requirement of Law, or any change in any Requirement of Law, or in the interpretation or administration of any Requirement of Law, has made it unlawful, or that any central bank or other Governmental Authority has asserted that it is unlawful, for any Lender or its applicable Lending Office to make Eurodollar Rate Loans, then, on notice thereof by the Lender to the Company through the Agent, any obligation of that Lender to make Eurodollar Rate Loans shall 36 be suspended until the Lender notifies the Agent and the Company that the circumstances giving rise to such determination no longer exist. (b) If a Lender determines that it is unlawful for such Lender to maintain any Eurodollar Rate Loan, the Company shall, upon its receipt of written notice of such fact and demand from such Lender (with a copy to the Agent), prepay in full such Eurodollar Rate Loans of that Lender then outstanding, together with interest accrued thereon and amounts required under Section 3.04, either on the last day of the Interest Period thereof, if the Lender may lawfully continue to maintain such Eurodollar Rate Loans to such day, or immediately, if the Lender may not lawfully continue to maintain such Eurodollar Rate Loan. If the Company is required to so prepay any Eurodollar Rate Loan, then concurrently with such prepayment, the Company shall borrow from the affected Lender, in the amount of such prepayment, a Base Rate Loan. (c) If the obligation of any Lender to make or maintain Eurodollar Rate Loans has been so terminated or suspended, the Company may elect, by giving notice to the Lender through the Agent, that all Loans which would otherwise be made or maintained by the Lender as Eurodollar Rate Loans shall instead be Base Rate Loans. (d) Before giving any notice to the Agent under this Section 3.02, the affected Lender shall designate a different Lending Office with respect to its Eurodollar Rate Loans if such designation will avoid the need for giving such notice or making such demand and will not, in the judgment of the Lender, be illegal or otherwise disadvantageous to the Lender. Section 3.03. Increased Costs and Reduction of Return. (a) If any Lender determines that, due to either (i) the introduction of or any change in or in the interpretation of any law or regulation or (ii) the compliance by that Lender with any guideline or request from any central bank or other Governmental Authority (whether or not having the force of law), there shall be any increase in the cost to such Lender of agreeing to make or making, funding or maintaining any Eurodollar Rate Loans, then the Company shall be liable for, and shall from time to time, upon written demand (with a copy of such demand to be sent to the Agent), pay to the Agent for the account of such Lender, additional amounts as are sufficient to compensate such Lender for such increased costs. (b) If any Lender shall have determined that (i) the introduction of any Capital Adequacy Regulation, (ii) any change in any Capital Adequacy Regulation, (iii) any change in the interpretation or administration of any Capital Adequacy Regulation by any central bank or other Governmental Authority charged with the interpretation or administration thereof, or (iv) compliance by the Lender (or its Lending Office) or any corporation controlling the Lender with any Capital Adequacy Regulation, affects or would affect the amount of capital required or expected to be maintained by the Lender or any corporation controlling the Lender and (taking into consideration such Lender's or such corporation's policies with respect to capital adequacy and such Lender's desired return on capital) determines that the amount of such capital is increased as a consequence of its Commitment, loans, credits or obligations under this Agreement, then, thirty (30) days after written demand by such Lender to the Company through the Agent, the Company shall pay to the Lender, from time to time as specified by the Lender, additional amounts sufficient to compensate the Lender for such increase; provided that the 37 Company shall not be required to compensate a Lender for any such increases in capital for any period more than 120 days prior to the date such Lender delivers such demand. (c) Section 3.01 and not this Section 3.03 shall be the only Section of this Agreement that applies to increased costs with respect to Taxes, Further Taxes and Other Taxes. Section 3.04. Funding Losses. The Company shall reimburse each Lender and hold each Lender harmless from any loss or expense which the Lender may sustain or incur as a consequence of: (a) the failure of the Company to make on a timely basis any payment of principal of any Eurodollar Rate Loan; (b) the failure of the Company to continue a Term Loan after the Company has given (or is deemed to have given) a Notice of Continuation; (c) the failure of the Company to make any prepayment of any Loan in accordance with any notice delivered under Section 2.08; or (d) the prepayment (including pursuant to Section 2.08) or other payment (including after acceleration thereof) of a Eurodollar Rate Loan on a day that is not the last day of the relevant Interest Period; including any such loss or expense arising from the liquidation or reemployment of funds obtained by it to maintain its Eurodollar Rate Loans or from fees payable to terminate the deposits from which such funds were obtained, but excluding any administrative fee or other amount chargeable by such Lender for the calculation of such loss. For purposes of calculating amounts payable by the Company to the Lenders under this Section 3.04 and under subsection 3.03(a), each Eurodollar Rate Loan made by a Lender (and each related reserve, special deposit or similar requirement) shall be conclusively deemed to have been funded at the Eurodollar Rate used in determining the Eurodollar Rate for such Eurodollar Rate Loan by a matching deposit or other borrowing in the interbank eurodollar market for a comparable amount and for a comparable period, whether or not such Eurodollar Rate Loan is in fact so funded. Section 3.05. Inability to Determine Rates. If the Required Lenders determine that for any reason adequate and reasonable means do not exist for determining the Eurodollar Rate for any requested Interest Period with respect to a proposed Eurodollar Rate Loan, or that the Eurodollar Rate for any requested Interest Period with respect to a proposed Eurodollar Rate Loan does not adequately and fairly reflect the cost to such Lenders of funding such Loan, the Agent will promptly so notify the Company and each Lender. Thereafter, the obligation of the Lenders to make or maintain Eurodollar Rate Loans shall be suspended until the Agent (upon the instruction of the Required Lenders) revokes such notice in writing. Upon receipt of such notice, the Company may revoke any Notice of Continuation then submitted by it. If the Company does not revoke such Notice of Continuation, the Lenders shall make, convert or continue the Term Loans, as proposed by the Company, in the amount specified in the applicable notice submitted by the Company, but such Loans shall be made, converted or continued as Base Rate Loans instead of Eurodollar Rate Loans. Notwithstanding the foregoing, the Agent and each Lender shall take any reasonable actions available to them (including designation of different Lending 38 Offices), consistent with legal and regulatory restrictions, that will avoid the need to take the steps described in this Section 3.05, which will not, in the reasonable judgment of the Agent or such Lender, be materially disadvantageous to the Agent, such Lender or the Company, as compared to the steps described in this Section 3.05. Section 3.06. Certificates of Lenders. Any Lender claiming reimbursement or compensation under this Article shall deliver to the Company (with a copy to the Agent) a certificate setting forth in reasonable detail the amount payable to the Lender hereunder and such certificate shall be conclusive and binding on the Company in the absence of demonstrable error. Such certificate shall set forth in reasonable detail (in the form of Exhibit E hereto for amounts claimed with respect to Eurodollar Rate Loans under Section 3.04 and in a form reasonably determined by the applicable Lender with respect to Base Rate Loans) the methodology used in determining the amount payable to the Lender. Section 3.07. Substitution of Lenders. If the Company receives notice from any Lender of a claim for compensation under Section 3.01, 3.02 or 3.03, the Company may, upon notice to such Lender and the Agent, replace such Lender by causing such Lender to assign its Loans (with the assignment fee to be paid by the Company in such instance) pursuant to Section 10.07(b) to one or more other Lenders or Eligible Assignees procured by the Company; provided that (x) the Company shall be obligated to replace all Lenders that have made similar requests for compensation and (y) each such Lender shall have received payment of an amount equal to the outstanding principal of its Loans, accrued interest thereon, accrued fees and all other amounts payable to it under the Loan Documents from the applicable assignee (to the extent of such outstanding principal and accrued interest and fees) or the Company (in the case of all other amounts). The Company shall release such Lender from its obligations under the Loan Documents. Any Lender being replaced shall execute and deliver an Assignment and Assumption with respect to such Lender's outstanding Loans. Section 3.08. Survival. The agreements and obligations of the Company in Section 3.01, Section 3.03, Section 3.04 and Section 3.06 shall survive the termination of this Agreement and the payment of all other Obligations for a period of one year. ARTICLE 4 CONDITIONS PRECEDENT Section 4.01. Effective Date. The obligations of each Lender to make any Term Loan hereunder shall not become effective until the date on which each of the following conditions is satisfied (or waived in accordance with Section 10.01): (a) The Agent shall have received each of the following, each of which shall be originals or facsimiles or Adobe PDFs delivered by electronic mail (followed promptly by originals) unless otherwise specified, each properly executed by a Responsible Officer of the signing Obligor, each dated the Closing Date (or, in the case of certificates of governmental officials, a recent date before the Closing Date) and each in form and substance reasonably satisfactory to the Agent and each of the Lenders: 39 (i) executed counterparts of this Agreement, sufficient in number for distribution to the Agent, each Lender and the Company; and (ii) a Note executed by the Company in favor of each Lender that has requested a Note. (b) The Collateral and Guarantee Requirement shall have been satisfied and the Agent shall have received (i) a completed Perfection Certificate with respect to each Obligor dated the Effective Date and signed by a Responsible Officer or other executive officer of such Obligor, together with all attachments contemplated thereby, including the results of a search of the Uniform Commercial Code (or equivalent) filings made with respect to such Obligor in the jurisdictions contemplated by such Perfection Certificate and copies of the financing statements (or similar documents) disclosed by such search and evidence reasonably satisfactory to the Agent that the Liens indicated by such financing statements (or similar documents) are permitted by Section 7.02 or have been released, (ii) satisfactory evidence that concentration account arrangements with respect to the Company contemplated by the Security Agreement have been established and (iii) reasonably satisfactory evidence that all insurance required by the Loan Documents is in effect. (c) The Agent shall have received: (i) copies of the resolutions of the board of directors or other equivalent body of each Obligor authorizing the Transactions to which such Obligor is a party, certified as of the Effective Date by the Secretary or an Assistant Secretary of such Obligor; and (ii) a certificate of the Secretary or Assistant Secretary of each Obligor certifying the names and true signatures of the officers of such Obligor authorized to execute, deliver and perform, as applicable, this Agreement and all other Loan Documents to be delivered by such Obligor hereunder. (d) The Agent shall have received: (i) the articles or certificate of incorporation or equivalent document of each Obligor as in effect on the Effective Date, certified by the Secretary of State of its state of incorporation or organization as of a recent date; (ii) the bylaws or equivalent document of each Obligor as in effect on the Effective Date, certified by the Secretary or Assistant Secretary of such Obligor as of the Effective Date; (iii) a certificate of good standing or equivalent document for each Obligor from the Secretary of State (or similar, applicable Governmental Authority) of its state of incorporation or organization as of a recent date; and (iv) a compliance certificate for each Insurance Subsidiary (other than Conseco Health Insurance Company) from the Department of its jurisdiction of domicile as of a recent date. 40 (e) The Agent shall have received a favorable written opinion (addressed to the Agent and the Lenders and dated the Effective Date) of each of (i) Kirkland & Ellis, counsel for the Obligors, substantially in the form of Exhibit H-1 and (ii) Baker & Daniels, Indiana and insurance regulatory counsel for the Obligors, substantially in the form of Exhibit H-2. (f) The Agent and each Lender shall have been paid all accrued and unpaid fees, and reasonable costs and expenses to the extent then due and payable to the Agent or such Lender on or before the Effective Date, including Attorney Costs of the Agent or such Lender to the extent invoiced prior to or on the Effective Date, plus such additional amounts of Attorney Costs as shall constitute the Agent's reasonable estimate of Attorney Costs incurred or to be incurred by it through the closing proceedings (provided that such estimate shall not thereafter preclude final settling of accounts between the Company and the Agent) including any such reasonable costs, fees and out-of-pocket expenses arising under or referenced in Section 2.10 and 10.04. (g) The Agent shall have received a certificate signed by a Responsible Officer on behalf of the Company, dated as of the Effective Date, confirming the satisfaction of the conditions set forth in Section 4.01(h) and Section 4.01(i) and confirming that the Company and its Subsidiaries have received all required approvals of the transactions contemplated hereby and by the other Loan Documents, including the Transactions, from each applicable Governmental Authority. (h) The fact that the representations and warranties of each Obligor contained in the Loan Documents shall be true and correct on and as of the Effective Date, as though made on and as of such date. (i) The fact that, no Default or Event of Default shall have occurred and be continuing on such date or immediately after giving effect to the Transactions. (j) Simultaneously with the initial extension of Term Loans, the Company shall have repaid all of the Existing Credit Agreement Indebtedness and the commitments of the lenders thereunder shall have been terminated. Any liens and security interests granted in respect of the Existing Credit Agreement Indebtedness shall have been released and the Agent shall have received a "pay-off" letter reasonably satisfactory to it with respect to the Existing Credit Agreement Indebtedness. (k) The Lenders shall have received the pro forma financial statements described in Section 5.11(b); and such pro forma financial statements shall be reasonably satisfactory to the Lenders. Immediately after giving effect to the Transactions, no Obligor shall have outstanding any shares of preferred stock (other than the Class B Preferred Stock) or any Indebtedness, except, in each case, as described on Schedule 7.01. (l) There shall not exist any (i) pending or threatened action, suit, investigation, proceeding or other litigation in which the Required Lenders determine there is a reasonable likelihood of a decision which could reasonably be expected to have a Material Adverse Effect or a material adverse effect on the rights of the Lenders under the Loan Documents or that seeks to enjoin the Transactions or the Loan Documents or the transactions contemplated thereby or 41 (ii) order or injunction restraining the Transactions or the Loan Documents or the transaction contemplated thereby. (m) All agreements, orders and other restrictions binding on the Company or any of its Subsidiaries on the Effective Date, and the corporate and capital structure of the Obligors and all organizational documents thereof, shall be reasonably satisfactory to the Required Lenders. (n) All governmental authorizations and third party approvals (or arrangements reasonably satisfactory to the Lenders in lieu of such approvals) necessary in connection with the financing contemplated hereby and the continuing operations of the Company and its Subsidiaries shall have been obtained and be in full force and effect, in each case except for such authorizations and approvals as would not be reasonably likely to have a Material Adverse Effect, and all material waiting periods shall have expired without any action being taken by any competent authority which restrains, prevents, or imposes materially adverse conditions upon, the consummation of the transactions contemplated herein. (o) A solvency certificate of a senior financial officer of the Company, certifying as to the Company's Solvency in accordance with Section 5.17 hereto. (p) The Agent shall have received such other approvals, opinions, documents or materials as the Agent may reasonably request, all in form and substance reasonably satisfactory to the Agent. SECTION 4.02. Determinations Under Section 4.01. For purposes of determining compliance with the conditions specified in Section 4.01, each of the Lenders shall be deemed to have consented to, approved or accepted or to be satisfied with each document or other matter required thereunder to be consented to or approved by, or acceptable or satisfactory to, the Lenders unless an officer of the Agent responsible for the Transactions shall have received notice from such Lender prior to the Effective Date specifying its objection thereto and, in the case of any Lender, such Lender shall not have made available to the Agent on the Effective Date such Lender's Pro Rata Share of the Borrowing to be made on such date. ARTICLE 5 REPRESENTATIONS AND WARRANTIES The Company represents and warrants to the Agent and each Lender that: Section 5.01. Corporate Existence and Power. The Company and each of its Subsidiaries: (a) is duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization; (b) has the corporate (or other organizational) power and authority and all governmental licenses, authorizations, consents and approvals (i) to own its assets and carry on its business and (ii) to execute, deliver, and perform its obligations under the Loan Documents; 42 (c) is duly qualified and is licensed and in good standing under the laws of each jurisdiction where its ownership, lease or operation of property or the conduct of its business requires such qualification or license; (d) is in compliance with all Requirements of Law; and (e) has a fiscal year ending December 31; except, in each case referred to in clauses (a) through (d), to the extent that the failure to do so, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. Section 5.02. Corporate Authorization; No Contravention. The Transactions to be entered into by each Obligor are within its corporate or other organizational powers. The Transactions (including the execution, delivery and performance by each Obligor of each Loan Document to which it is a party) have been duly authorized by all necessary corporate or other organizational action of each Obligor, and do not and will not: (a) contravene the terms of any of such Obligor's Organization Documents; (b) conflict with or result in any breach or contravention of, or result in or require the creation of any Lien (other than the Transaction Liens) under, any document evidencing any material Contractual Obligation to which such Obligor is a party or any order, injunction, writ or decree of any Governmental Authority to which such Obligor or its property is subject; or (c) violate any Requirement of Law, except to the extent that such violations, in the aggregate, could not reasonably be expected to have a Material Adverse Effect. Section 5.03. Governmental Authorization. No approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority is necessary or required in connection with the Transactions (including the execution, delivery or performance by, or enforcement against, each Obligor of each Loan Document to which it is a party), except (i) such as have been obtained and are in full force and effect and (ii) filings necessary to perfect the Transaction Liens. Section 5.04. Binding Effect. This Agreement has been duly executed and delivered by the Company and constitutes, and each other Loan Document to which any Obligor is to be a party, when executed and delivered by such Obligor, will constitute, a legal, valid and binding obligation of the Company or such Obligor, as the case may be, in each case enforceable against the Company or such Obligor, as the case may be, in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, or similar laws affecting the enforcement of creditors' rights generally or by equitable principles relating to enforceability. Section 5.05. Litigation. Except as set forth on Schedule 5.05, there are no actions, suits, proceedings, claims or disputes pending, or to the knowledge of the Company, threatened or contemplated, at law, in equity, in arbitration or before any Governmental Authority, against the Company or its Subsidiaries or any of their respective properties that: (a) purport to affect or 43 pertain to this Agreement or any other Loan Document, or any of the transactions (including the Transactions) contemplated hereby or thereby; or (b) individually or in the aggregate could reasonably be expected to have a Material Adverse Effect. No injunction, writ, temporary restraining order or any order of any nature has been issued by any court or other Governmental Authority purporting to enjoin or restrain the execution, delivery or performance of this Agreement or any other Loan Document or directing that the transactions (including the Transactions) provided for herein or therein not be consummated as herein or therein provided. Section 5.06. No Default. No Default has occurred and is continuing. Without limiting the foregoing, no Default would result from the consummation of the Transactions. As of the Effective Date, neither the Company nor any Subsidiary is in default under or with respect to any Contractual Obligation in any respect that, individually or together with all such defaults, could reasonably be expected to have a Material Adverse Effect. Section 5.07. ERISA Compliance. (a) Each Plan is in compliance with the applicable provisions of ERISA, the Code and other federal or state law except to the extent that such non-compliance could not reasonably be expected to have a Material Adverse Effect. Each Plan that is intended to qualify under Section 401(a) of the Code has either (i) received a favorable determination letter from the IRS and to the knowledge of the Company, nothing has occurred which would reasonably be expected to cause the loss of such qualification or (ii) with respect to the Plans identified on Schedule 5.07, is in the process of requesting a favorable determination letter from the IRS as to its qualified status, and the Company is not aware of any fact or issue that would reasonably be expected to cause the IRS to fail to issue a favorable determination letter, except where such non-qualification could not reasonably be expected to have a Material Adverse Effect. The Company and each ERISA Affiliate has made all required contributions to any Plan subject to Section 412 of the Code, and no application for a funding waiver or an extension of any amortization period pursuant to Section 412 of the Code has been made with respect to any Plan, except where such lack of contribution or application for funding waiver could not reasonably be expected to have a Material Adverse Effect. (b) Except as set forth on Schedule 5.07, there are no pending or, to the knowledge of the Company, threatened claims, actions or lawsuits, or action by any Governmental Authority, with respect to any Plan that could reasonably be expected to have a Material Adverse Effect. To the knowledge of the Company, there has been no prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan that could reasonably be expected to have a Material Adverse Effect. (c) Except for occurrences or circumstances that individually or in the aggregate could not reasonably be expected to have a Material Adverse Effect, (i) except as set forth on Schedule 5.07, since December 31, 2003, no ERISA Event has occurred or is reasonably expected to occur; (ii) except as set forth on Schedule 5.07, since December 31, 2003, no Pension Plan has any Unfunded Pension Liability; (iii) neither the Company nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability under Title IV of ERISA with respect to any Pension Plan (other than premiums due and not delinquent under Section 4007 of ERISA); (iv) neither the Company nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability (and no event has occurred that, with the giving of notice under Section 4219 of ERISA, would result in such liability) under Section 4201 or 4243 of ERISA with 44 respect to a Multiemployer Plan; and (v) neither the Company nor any ERISA Affiliate has engaged in a transaction that could be subject to Section 4069 or 4212(c) of ERISA. Section 5.08. Margin Regulations. Neither the Company nor any Subsidiary is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying Margin Stock. Margin Stock does not constitute more than 25% of the value of the consolidated assets of the Company and its Subsidiaries. None of the transactions contemplated by this Agreement (including the direct or indirect use of the proceeds of the Term Loans) will violate or result in a violation of the Securities Act of 1933, as amended, or the Exchange Act, or regulations issued pursuant thereto, or Regulation T, U or X of the FRB. Section 5.09. Title to Properties. The Company and each Subsidiary have good legal title in fee simple or rights in and power to transfer, or valid leasehold interests in, all real property necessary or used in the ordinary conduct of their respective businesses, except for such defects in title or interests as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. As of the Effective Date, the property of the Company and its Subsidiaries is subject to no Liens, other than Liens permitted under Section 7.02. Section 5.10. Taxes. The Company and its Subsidiaries have timely filed all federal Tax, material Income Tax and other material Tax returns and reports required to be filed, and have paid all federal Tax, Income Tax and other material Taxes levied or imposed upon them or their properties, income or assets otherwise due and payable, except those that are being contested in good faith by appropriate proceedings and for which adequate reserves have been provided in accordance with SAP or GAAP, as applicable. There is no proposed Tax assessment against the Company or any Subsidiary for which a notice of deficiency or similar notice has been issued that would, if made, individually or in the aggregate, have a Material Adverse Effect or for which adequate reserves in accordance with GAAP are not being maintained by the Company or such Subsidiary. Section 5.11. Financial Condition. (a) Each of (i) the audited consolidated financial statements of the Company and its Subsidiaries dated December 31, 2003, and the related consolidated statements of income, shareholders' equity and cash flows for the Fiscal Year ended on that date, reported on by PricewaterhouseCoopers, LLP, independent public accountants, (ii) the unaudited consolidated financial statements of the Company and its Subsidiaries dated March 31, 2004, and the related consolidated statements of income, shareholders' equity and cash flows for the period ended on that date, (iii) the December 31, 2003 Annual Statement of each Insurance Subsidiary and (iv) the March 31, 2004 Quarterly Statement of each Insurance Subsidiary: (A) were prepared in accordance with GAAP or SAP, as applicable, consistently applied throughout the period covered thereby, except as otherwise expressly noted therein, subject, in the case of such unaudited financial statements, to ordinary, good faith year end and audit adjustments and the absence of footnote disclosure; (B) fairly present in all material respects the financial condition of the Company and its Subsidiaries as of the date thereof and results of operations for the period covered thereby; and 45 (C) show all material indebtedness and other liabilities, direct or contingent, of the Company and its consolidated Subsidiaries as of the date thereof, including liabilities for Taxes, material commitments and Contingent Obligations. (b) The Company has heretofore furnished to the Lenders its pro forma consolidated balance sheet as of the last day of the Fiscal Quarter most recently ended prior to the Effective Date for which financial statements have been prepared (the "Preparation Date"), prepared giving effect to the Transactions as if the Transactions had occurred on such date. Such pro forma consolidated balance sheet (i) have been prepared in good faith based on reasonable assumptions, (ii) are based on the best information available to the Company after due inquiry, (iii) accurately reflect all material adjustments necessary to give effect to the Transactions and the Equity Issuances and (iv) present fairly, in all material respects, the pro forma financial position of the Company and its consolidated Subsidiaries as of the Preparation Date as if the Transactions had occurred on such date. (c) Since December 31, 2003, there has been no material adverse change in the business, assets, operations or condition, financial or otherwise, of the Company and its Subsidiaries, taken as a whole. Section 5.12. Environmental Matters. (a) All facilities and property (including underlying groundwater) owned or leased by the Company or any of its Subsidiaries have been, and continue to be, owned or leased by the Company and its Subsidiaries in material compliance with all Environmental Laws, except where failure to so comply could not, individually or in the aggregate, be reasonably expected to have a Material Adverse Effect; (b) there have been no past, and there are no pending or threatened, Environmental Claims against the Company or any of its Subsidiaries, except where such Environmental Claims could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect; (c) there have been no releases of Hazardous Materials at, on or under any property now or previously owned or leased by the Company or any of its Subsidiaries that, individually or in the aggregate, have had, or could reasonably be expected to have, a Material Adverse Effect; (d) the Company and each of its Subsidiaries have been issued and are in material compliance with all permits, certificates, approvals, licenses and other authorizations relating to environmental matters and necessary for their businesses except where failure to obtain or comply with the foregoing could not, individually or in the aggregate, be reasonably expected to have a Material Adverse Effect; (e) no property now or previously owned or leased by the Company or any of its Subsidiaries is listed or, to the Company's knowledge, proposed for listing (with respect to owned property only) on the National Priorities List pursuant to CERCLA, on the CERCLIS or on any similar state list of sites requiring investigation or clean-up, except where such listing could not, individually or in the aggregate, be reasonably expected to have a Material Adverse Effect; 46 (f) there are no underground storage tanks, active or abandoned, including petroleum storage tanks, on or under any property now or previously owned or leased by the Company or any of its Subsidiaries that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect; (g) neither the Company nor any of its Subsidiaries has directly transported or directly arranged for the transportation of any Hazardous Material to any location that is listed or, to Company's knowledge, proposed for listing on the National Priorities List pursuant to CERCLA, on the CERCLIS or on any similar state list or that is the subject of federal, Governmental Authority or local enforcement actions or other investigations that could reasonably be expected to lead to material claims against the Company or any of its Subsidiaries for any remedial work, damage to natural resources or personal injury, including claims under CERCLA, except where such claims could not, individually or in the aggregate, be reasonably expected to have a Material Adverse Effect; (h) there are no polychlorinated biphenyls or friable asbestos present at any property now or previously owned or leased by the Company or any of its Subsidiaries that, individually or in the aggregate, could be reasonably expected to have a Material Adverse Effect; and (i) no conditions exist at, on or under any property now or previously owned or leased by the Company or any of its Subsidiaries that, with the passage of time, or the giving of notice or both, would give rise to liability under any Environmental Law, except where such liability could not, individually or in the aggregate, be reasonably expected to have a Material Adverse Effect. Section 5.13. Regulated Entities. Except as disclosed on Schedule 5.13, none of the Company, any Person controlling the Company, or any Subsidiary, is an "Investment Company" within the meaning of, or subject to regulation under, the Investment Company Act of 1940. None of the Company or any Subsidiary is subject to regulation under the Public Utility Holding Company Act of 1935, the Federal Power Act, the Interstate Commerce Act, any state public utilities code or any other Federal or state statute or regulation limiting its ability to incur Indebtedness. Section 5.14. Subsidiaries. Schedule 5.14 sets forth the name of, and the ownership interest of the Company (or the applicable Subsidiary) in, each of its Subsidiaries and identifies each Subsidiary that is a Subsidiary Guarantor, a Foreign Subsidiary, an Immaterial Subsidiary and/or an Insurance Subsidiary, in each case as of the Effective Date. All the Company's Subsidiaries are, and will at all times be, fully consolidated in its consolidated financial statements. As of the Effective Date (i) each Subsidiary is a Wholly-Owned Subsidiary and (ii) each Subsidiary (other than the Insurance Subsidiaries, Subsidiaries of Insurance Subsidiaries, Foreign Subsidiaries and Immaterial Subsidiaries) is also a Subsidiary Guarantor. Section 5.15. Insurance Licenses. No License of the Company or any Insurance Subsidiary, the loss of which individually or in the aggregate could reasonably be expected to have a Material Adverse Effect, is the subject of a proceeding for suspension or revocation. To the Company's knowledge, there is no sustainable basis for such suspension or revocation, and no such suspension or revocation has been threatened by any Governmental Authority. 47 Section 5.16. Full Disclosure. The Company has disclosed to the Lenders all agreements, instruments and corporate or other restrictions to which it or any Subsidiary is subject, and all other matters known to any of them, that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect. None of the representations or warranties made by any Obligor in any Loan Document to which it is a party as of the date such representations and warranties are made or deemed made, and none of the exhibits, reports, statements or certificates furnished by or on behalf of the Company or any Subsidiary pursuant to the Loan Documents, taken as a whole, contains any untrue statement of a material fact or omits any material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances under which they are made, not misleading as of the time when made or delivered. Section 5.17. Solvency. Immediately after the Transactions to occur on the Effective Date are consummated, (a) the fair value of the assets of each Obligor, at a fair valuation, will exceed its debts and liabilities, subordinated, contingent or otherwise; (b) the present fair saleable value of the property of each Obligor will exceed the amount that will be required to pay the probable liability of its debts and other liabilities, subordinated, contingent or otherwise, as such debts and other liabilities become absolute and matured; (c) each Obligor will be able to pay its debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured; and (d) no Obligor will have unreasonably small capital with which to conduct the business in which it is engaged as such business is now conducted and proposed to be conducted after the Effective Date; provided that in the case of any Obligor that is a going concern, the value of the assets of such Obligor (for purposes of clauses (a) and (b) above) shall be determined on a going-concern basis. Section 5.18. Security Interests. On the Effective Date, the Security Documents will create valid security interests in the Collateral to the extent set forth therein. At all times thereafter, the Security Documents will create valid and, when financing statements are filed in the offices specified in the Perfection Certificates delivered pursuant to the Security Agreement, perfected security interests in the Collateral from time to time covered or purportedly covered thereby to the extent that a security interest in such Collateral may be perfected by filing under the Uniform Commercial Code. Such security interests will be prior to all other Liens (except Liens permitted under Section 7.02(c), Section 7.02(d), Section 7.02(e), Section 7.02(f), Section 7.02(g), Section 7.02(h), Section 7.02(i), Section 7.02(k), Section 7.02(l), Section 7.02(o), Section 7.02(q) and Section 7.02(r) on the Collateral until the applicable Security Interest are released in accordance with the Loan Documents. Section 5.19. Insurance. The insurance maintained by or reserved on the books of the Company and its Subsidiaries is sufficient to protect the Company and its Subsidiaries and their respective directors and officers against such risks as are usually insured against in accordance with industry practice by companies in the same or similar business. 48 ARTICLE 6 AFFIRMATIVE COVENANTS Until all principal of and interest on each Loan and all fees and other amounts payable hereunder have been paid in full (other than contingent indemnification obligations not yet due and payable), the Company covenants and agrees with the Lenders that: Section 6.01. Financial Statements. The Company shall deliver to the Agent and each Lender: (a) promptly upon filing thereof with the SEC (including as part of a Form 10-K) but not later than 90 days after the end of each Fiscal Year, copies of the audited consolidated and the unaudited consolidating balance sheet of the Company and its Subsidiaries as at the end of such year and the related audited consolidated and unaudited consolidating statements of operations, shareholders' equity and cash flows for such year, setting forth in the case of the audited consolidated statements in comparative form the figures for the previous Fiscal Year, and accompanied by the opinion of PricewaterhouseCoopers LLP or another nationally-recognized independent public accounting firm ("Independent Auditor"), which opinion shall state that such audited consolidated financial statements present fairly in all material respects the financial position and result of operations of the Company and its Subsidiaries for the periods indicated in conformity with GAAP applied on a basis consistent with prior years, except as stated therein. Such opinion shall be without a "going concern" or like qualification and shall not be qualified or limited because of a restricted or limited examination by the Independent Auditor of any material portion of the Company's or any Subsidiary's records; (b) promptly upon filing thereof with the SEC (including as part of a Form 10-Q) but not later than 50 days after the end of each of the first three Fiscal Quarters of each Fiscal Year, copies of the condensed unaudited consolidated and consolidating balance sheet of the Company and its Subsidiaries as of the end of such quarter and the related condensed unaudited consolidated and consolidating statements of operations, shareholders' equity and cash flows for the period commencing on the first day and ending on the last day of such quarter and for the then elapsed portion of such Fiscal Year, setting forth in the case of the consolidated statements in comparative form the figures for the corresponding period or periods of (or, in the case of the balance sheet, as of the end of) the previous Fiscal Year, and certified by a Responsible Officer as fairly presenting in all material respects, in accordance with GAAP (subject to the absence of footnotes and year-end audit adjustments), the financial position and the results of operations of the Company and the Subsidiaries; (c) as soon as available but not later than 75 days (or, in the case of the Annual Statement prepared on a combined basis, 90 days) after the close of each Fiscal Year of each Insurance Subsidiary, copies of the unaudited Annual Statement of such Insurance Subsidiary on a stand-alone basis and on a combined basis for all Insurance Subsidiaries, the stand-alone Annual Statement to be certified by a Responsible Officer of such Insurance Subsidiary, all such statements to be prepared in accordance with SAP consistently applied throughout the periods reflected therein and, if required by the applicable Governmental Authority, audited and certified by independent certified public accountants of recognized national standing (such audited 49 Annual Statement to be delivered as soon as available but not later than June 15 of each Fiscal Year of such Insurance Subsidiary); (d) as soon as available but not later than 60 days (or, in the case of the Quarterly Statement prepared on a combined basis, 75 days) after the close of each of the first three Fiscal Quarters of each Fiscal Year of each Insurance Subsidiary, copies of the Quarterly Statement of such Insurance Subsidiary on a stand-alone basis and on a combined basis for all Insurance Subsidiaries, the stand-alone Quarterly Statement to be certified by a Responsible Officer of such Insurance Subsidiary, all such statements to be prepared in accordance with SAP consistently applied through the period reflected therein; (e) promptly following the delivery to or receipt by the Company or any of its Subsidiaries of any regular or periodic final Triennial Examination Reports, risk adjusted capital reports or results of any market conduct examination or examination by any Department or the NAIC of the financial condition and operations of, or any notice of any assertion as to violation of any Requirement of Law by, any Insurance Subsidiary, or any report with respect to any Insurance Subsidiary (including any summary report from the NAIC with respect to the performance of such Insurance Subsidiary as measured against the ratios and other financial measurements developed by the NAIC under its Insurance Regulatory Information System as in effect from time to time that could reasonably be expected to result in a Material Adverse Effect); (f) within 90 days after the close of each Fiscal Year of each Insurance Subsidiary, a copy of the "Statement of Actuarial Opinion" and "Management Discussion and Analysis" for each such Insurance Subsidiary that is provided to the applicable Department (or equivalent information should such Department no longer require such a statement) as to the adequacy of reserves of such Insurance Subsidiary, such opinion to be in the format prescribed by the insurance code of the state of domicile of such Insurance Subsidiary. Section 6.02. Certificates; Other Information. The Company shall furnish to the Agent, with sufficient copies for each Lender (other than in the case of Section 6.02(l)): (a) concurrently with the delivery of the financial statements referred to in Section 6.01(a) and Section 6.01(b), a Compliance Certificate executed by a Responsible Officer; (b) concurrently with the delivery of the financial statements referred to in Section 6.01(a), a certificate of the accounting firm that reported on such financial statements stating (i) whether during the course of their examination of such financial statements they obtained knowledge of any Default relating to accounting matters (which certificate may be limited to the extent required by auditing rules or guidelines), (ii) if a Default relating to accounting matters has come to their attention, specifying the nature and period of existence thereof and (iii) stating whether or not, based on their audit examination, anything has come to their attention that causes them to believe that the matters set forth in Schedule 3 to the Compliance Certificate delivered pursuant to Section 6.02(a) for the applicable Fiscal Year to the extent such matters relate to accounting are not stated in accordance with the terms of this Agreement; 50 (c) promptly upon receipt thereof, copies of all final reports submitted to the Company by independent public accountants in connection with each annual, interim or special audit of the financial statements of the Company made by such accountants, including the comment letter submitted by such accountants to management in connection with their annual audit; (d) promptly, copies of all Forms 10-K and 10-Q that the Company or any Subsidiary may file with the SEC, all financial statements and reports that the Company sends to its shareholders and copies of all other financial statements and regular, periodic or special reports (including Form 8-K) that the Company or any Subsidiary may make to, or file with, the SEC; (e) promptly and in any event within three Business Days after learning thereof, notification of any changes after the date hereof in the rating given by S&P or Moody's in respect of the Company's senior secured Indebtedness or by A.M. Best in respect of any Insurance Subsidiary; (f) concurrently with the occurrence of any event described in Section 2.08(b)(i) through Section 2.08(b)(iv), (i) a description of such event and (ii) a calculation of the Net Proceeds (including an accounting of the items deducted from the cash or cash equivalents received in connection with such event; (g) at least 5 days before the beginning of each Fiscal Year, a detailed consolidated budget for the next Fiscal Year (including statements of projected operations and cash flows for such period and setting forth the assumptions used in preparing such budget) and, promptly when available, any significant revisions of such budget; (h) to the extent not otherwise provided under Section 6.01 or Section 6.02, promptly upon receipt thereof, or delivery thereof by the Company or any Insurance Subsidiary, as applicable, a copy of any written communication setting forth or relating to any matter that could reasonably be expected to have a Material Adverse Effect, delivered to or received from any applicable Department or any other applicable insurance regulatory authority; (i) to the extent not otherwise provided under Section 6.01 or Section 6.02, promptly upon receipt thereof, or delivery thereof by the Company or any Subsidiary, as applicable, a copy of any written communication addressed to the Company or any of its Subsidiaries setting forth or relating to the Company's and its Subsidiaries' operations that may reasonably be expected to be materially adverse to the interests of the Company, such Subsidiary or the Lenders delivered to or received from S&P, Moody's or A.M. Best or any other rating agency; (j) as soon as available but not later than five Business Days after receipt, execution or delivery of any Reinsurance Agreement (other than any Reinsurance Agreement entered into in the ordinary course of business for the purpose of managing insurance risk consistent with industry practice), including any proposal, binder, cover note or line slip (where the Person to be reinsured or reinsured is an Insurance Subsidiary), (i) a written notice specifying each Person party to such agreement, (ii) for each such Person, its most recently published rating, if any, (iii) the subject matter of each such agreement and (iv) if requested by the Agent or any Lender, attaching thereto, a true and complete copy of such agreement; 51 (k) promptly after receipt of any notice of termination, cancellation (which cancellation notice is not accompanied by a corresponding request for renewal), commutation or recapture of any Reinsurance Agreement (other than any Reinsurance Agreement that was entered into in the ordinary course of business for the purpose of managing insurance risk consistent with industry practice) where the Person reinsured is an Insurance Subsidiary, a copy thereof; (l) promptly, such additional information regarding the business, financial or corporate affairs of the Company or any Subsidiary, or compliance with the terms of any Loan Document, as the Agent, for itself or at the request of any Lender, may from time to time reasonably request; and (m) no later than 20 days after the Closing Date, a compliance certificate for Conseco Health Insurance Company from the Department of the jurisdiction of domicile of Conseco Health Insurance Company dated as of a recent date. Documents required to be delivered pursuant to Section 6.01, Section 6.02(d) or Section 6.02(f) (to the extent any such documents are included in materials otherwise filed with the SEC, the NAIC or any other Governmental Authority) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date (i) on which the Company posts such documents or provides a link thereto on the Company's website on the Internet at the website address listed on Schedule 10.02; or (ii) on which such documents are posted on the Company's behalf on IntraLinks/IntraAgency or another relevant website, if any, to which each Lender and the Agent have access (whether a commercial, third-party website or whether sponsored by the Agent); provided that: (i) the Company shall deliver paper copies of such documents to the Agent or any Lender that requests the Company to deliver such paper copies until a written request to cease delivering paper copies is given by the Agent or such Lender and (ii) the Company shall notify (which may be by facsimile or electronic mail) the Agent and each Lender of the posting of any such documents and provide to the Agent by electronic mail electronic versions (i.e., soft copies) of such documents. Except for such Compliance Certificates, the Agent shall have no obligation to request the delivery or to maintain copies of the documents referred to above, and in any event shall have no responsibility to monitor compliance by the Company with any such request for delivery, and each Lender shall be solely responsible for requesting delivery to it or maintaining its copies of such documents. The Company hereby acknowledges that (a) the Agent will make available to the Lenders materials and/or information provided by or on behalf of the Company hereunder (collectively, "Company Materials") by posting the Company Materials on IntraLinks or another similar electronic system (the "Platform") and (b) certain of the Lenders may be "public-side" Lenders (i.e., Lenders that do not wish to receive material non-public information with respect to the Company or its securities) (each a "Public Lender"). The Company hereby agrees that (w) all Company Materials that are to be made available to Public Lenders shall be clearly and conspicuously marked "PUBLIC," which shall mean that the word "PUBLIC" shall appear prominently on the first page thereof; (x) by marking Company Materials "PUBLIC", the Company shall be deemed to have authorized the Agent and the Lenders to treat such Company Materials as either publicly available information or not material information (although it may be sensitive and proprietary) with respect to the Company or its securities for purposes of United 52 States Federal and state securities laws; (v) all Company Materials marked "PUBLIC" are permitted to be made available through a portion of the Platform designated "Public Investor"; and (z) the Agent shall treat any Company Materials that are not marked "PUBLIC" as being suitable for posting only on a portion of the Platform not designated "Public Investor." Section 6.03. Notices. The Company shall promptly notify the Agent: (a) of the occurrence of any Default; (b) of any matter that has resulted in, or could reasonably be expected to result in, a Material Adverse Effect, including any of the following that could reasonably be expected to have a Material Adverse Effect: (i) any breach or non-performance of, or any default under, a Contractual Obligation of the Company or any Subsidiary; (ii) any dispute, litigation, investigation, proceeding or suspension between the Company or any Subsidiary and any Governmental Authority; or (iii) the commencement of, or any material development in, any litigation (including any governmental proceeding or arbitration proceeding), tax audit or investigative proceeding, claim, lawsuit, and/or investigation against or involving the Company or any of its Subsidiaries or any of its or their businesses or operations, including pursuant to any applicable Environmental Laws; (c) of the filing or commencement of, or the occurrence of any development in, any litigation or proceeding that seeks to enjoin, prohibit, discontinue or otherwise impacts (i) the validity or enforceability of this Agreement or any of the other Loan Documents or (ii) the transactions contemplated hereby or thereby and, in the case of clause (ii), that could reasonably be expected to have a Material Adverse Effect; (d) of the occurrence of any of the following events affecting the Company or any ERISA Affiliate (but in no event more than 10 days after such event) and deliver to the Agent and each Lender a copy of any notice with respect to such event that is filed with a Governmental Authority and any notice delivered by a Governmental Authority to the Company or any ERISA Affiliate with respect to such event: (i) an ERISA Event; or (ii) a material increase in the Unfunded Pension Liabilities of any Pension Plan; (iii) the adoption of or the commencement of contributions to any Plan subject to Section 412 of the Code by the Company or any ERISA Affiliate; or (iv) the adoption of any amendment to a Plan subject to Section 412 of the Code, if such amendment results in a material increase in contributions or Unfunded Pension Liability; provided that no such notice will be required under this Section 6.03(d) with respect to the occurrence of any such event if such occurrence does not result in, and is not reasonably expected to result in, any liability to the Company or any ERISA Affiliate of more than $30,000,000 in the aggregate; 53 (e) of any material change in accounting policies or financial reporting practices by the Company or any of its Subsidiaries; (f) of the receipt of any notice from any Governmental Authority of the expiration without renewal, revocation, suspension or restriction of, or the institution of any proceedings to revoke, suspend or restrict, any License now or hereafter held by any Insurance Subsidiary that is required to conduct insurance business in compliance with all applicable laws and regulations; provided that the Company shall be required to deliver a notice under this paragraph (f) only if such event, together with all other such events, could reasonably be expected to have a Material Adverse Effect; (g) of the receipt of any notice from any Governmental Authority of the institution of any disciplinary proceedings against or in respect of any Insurance Subsidiary, or the issuance of any order, the taking of any action or any request for an extraordinary audit for cause by any Governmental Authority; provided that the Company shall be required to deliver a notice under this paragraph (g) only if such event, together with all other such events, could reasonably be expected to have a Material Adverse Effect; or (h) of any judicial or administrative order limiting or controlling the insurance business of any Insurance Subsidiary (and not the insurance industry generally) that has been issued or adopted; provided that the Company shall be required to deliver a notice under this paragraph (h) only if such event, together with all other such events, has had or could reasonably be expected to have a Material Adverse Effect. Each notice under this Section shall be accompanied by a written statement by a Responsible Officer setting forth details of the occurrence referred to therein, and stating what action the Company or any affected Subsidiary proposes to take with respect thereto and at what time. Each notice under Section 6.03(a) shall describe with particularity any and all clauses or provisions of this Agreement or other Loan Document that have been (or reasonably foreseeably will be) breached or violated. Section 6.04. Preservation of Corporate Existence, Etc. The Company shall, and shall cause each Subsidiary (other than any Immaterial Subsidiary) to (except as permitted by Section 7.03 or Section 7.07): (a) preserve and maintain in full force and effect its existence and good standing under the laws of its state or jurisdiction of incorporation or organization, as applicable; (b) preserve and maintain in full force and effect all governmental rights, privileges, qualifications, permits, licenses and franchises necessary in the normal conduct of its business, except where such failure to preserve and maintain could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect; and (c) use reasonable efforts, in the ordinary course of business, to preserve its business organization and goodwill. Section 6.05. Insurance. The Company shall, and shall cause each Subsidiary to, maintain with financially sound and reputable independent insurers insurance against losses or 54 damage of the kinds customarily insured against by Persons engaged in the same or similar business, of such types and in such amounts as are customarily carried under similar circumstances by such other Persons. Section 6.06. Payment of Obligations. The Company shall, and shall cause each Subsidiary to, pay and discharge as the same shall become due and payable, all of the following: all material Tax liabilities imposed upon it or its material properties or assets, unless the same (a) are not overdue for a period of more than 90 days or (b) are being contested in good faith by appropriate proceedings and adequate reserves in accordance with GAAP are being maintained by the Company or such Subsidiary and such contest effectively suspends collection of the same and the enforcement of any Lien securing the same. Section 6.07. Compliance with Laws. The Company shall, and shall cause each Subsidiary to, comply with all Requirements of Law of any Governmental Authority having jurisdiction over it or its business (including the Federal Fair Labor Standards Act, the Patriot Act and all applicable Environmental Laws), except (i) for such noncompliance that could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect or (ii) as may be contested in good faith and by appropriate proceedings and with respect to which adequate reserves are being maintained in accordance with GAAP. Section 6.08. Compliance with ERISA. The Company shall, and shall cause each of its ERISA Affiliates to: (a) maintain each Plan in compliance in all material respects with the applicable provisions of ERISA, the Code and other federal or state law; (b) cause each Plan that is qualified under Section 401(a) of the Code to maintain such qualification, and (c) make all required contributions to any Plan subject to Section 412 of the Code, except where such failure to maintain as set forth in (a) or (b) or to make contributions as set forth in (c) could not, individually or in the aggregate, be reasonably expected to have a Material Adverse Effect. Section 6.09. Inspection of Property and Books and Records; Expense Reimbursement. The Company shall, and shall cause each Subsidiary to, maintain proper books of record and account, in which full, true and correct entries in all material respects in conformity with GAAP or SAP, as applicable, consistently applied (except as stated therein) shall be made of all financial transactions and matters involving the assets and business of the Company and such Subsidiary. Unless an Event of Default has occurred and is continuing, not more than once per fiscal year, the Company shall permit, and shall cause each Subsidiary to permit, representatives and independent contractors of the Agent or its designees to visit and inspect any of their respective properties, to examine their respective corporate, financial and operating records, and make copies thereof or abstracts therefrom, and to discuss their respective affairs, finances and accounts with their respective directors, officers, and independent public accountants, all at such reasonable times during normal business hours and as often as may be reasonably desired, upon reasonable advance notice to the Company; provided that members of senior management will be notified and permitted to be present during any such meetings; and provided further that when an Event of Default exists the Agent or any Lender may do any of the foregoing at any time during normal business hours and without advance notice. Section 6.10. Information Regarding Collateral. The Company will furnish to the Agent prompt written notice of any change in (i) any Obligor's legal name or any Obligor's location 55 (determined as provided in Section 9-307 of the Uniform Commercial Code), (ii) any Obligor's identity or corporate structure or (iii) any Obligor's Federal Taxpayer Identification Number or organization identification number. The Company will not effect or permit any change referred to in the preceding sentence unless all filings have been made under the Uniform Commercial Code (which filings may be made by the Company if the Agent has failed to act after 30 days following notice of any such changes) and all other actions have been taken that are required so that such change will not at any time adversely affect the validity, perfection or priority of any Transaction Lien on any of the Collateral. Section 6.11. Casualty and Condemnation. The Company (a) will furnish to the Agent and the Lenders prompt written notice of any casualty or other insured damage to any material portion of the Collateral or the commencement of any action or proceeding for the taking of any material portion of the Collateral under power of eminent domain or by condemnation or similar proceeding and (b) will ensure that the Net Proceeds of any such event (whether in the form of insurance proceeds, condemnation awards or otherwise) are collected and applied in accordance with this Section and Section 2.08. Section 6.12. Additional Subsidiaries; Immaterial Subsidiaries. (a) If any additional Subsidiary is formed or acquired after the Effective Date, the Company will, within five Business Days after such Subsidiary is formed or acquired, notify the Agent and the Lenders thereof and cause any Capital Stock in or Indebtedness of such Subsidiary owned by or on behalf of any Obligor to be added to the Collateral (except that the Obligors shall not be required to pledge more than 65% of the outstanding voting Capital Stock in any Foreign Subsidiary that is not an Obligor). If such Subsidiary is or subsequently becomes a Domestic Subsidiary and is not an Insurance Subsidiary or a Subsidiary of an Insurance Subsidiary or an Immaterial Subsidiary, the Company shall promptly cause the Collateral and Guarantee Requirement to be satisfied with respect to such Subsidiary, whereupon such Subsidiary will become an "Obligor," a "Subsidiary Guarantor" and "Lien Grantor" for purposes of the Loan Documents. Without limiting the preceding sentence, if any Domestic Immaterial Subsidiary that is not an Insurance Subsidiary or a Subsidiary of an Insurance Subsidiary loses its status as an Immaterial Subsidiary, the Company shall promptly cause the Collateral and Guarantee Requirement to be satisfied with respect to such Subsidiary, whereupon such Subsidiary will become an "Obligor," a "Subsidiary Guarantor" and "Lien Grantor" for purposes of the Loan Documents. (b) If at any time (i) the aggregate fair market value of the assets of all Immaterial Subsidiaries exceeds $40,000,000 or (ii) the aggregate revenues of all Immaterial Subsidiaries for the period of four consecutive Fiscal Quarters most recently ended exceeds $30,000,000, the Company shall promptly cause the Collateral and Guarantee Requirement to be satisfied with respect to one or more of the Immaterial Subsidiaries to the extent necessary to ensure that immediately after giving effect thereto (x) the aggregate fair market value of the assets of all Immaterial Subsidiaries shall not exceed $40,000,000 and (y) the aggregate revenues of all Immaterial Subsidiaries for the period of four consecutive Fiscal Quarters most recently ended shall not exceed $30,000,000, whereupon each such Subsidiary will become an "Obligor," a "Subsidiary Guarantor" and "Lien Grantor" for purposes of the Loan Documents. Section 6.13. Further Assurances. (a) The Company will, and will cause each other Obligor to, execute and deliver any and all further documents, financing statements, agreements 56 and instruments, and take all such further actions (including the filing and recording of financing statements, fixture filings, mortgages, deeds of trust and other documents), that may be required under any applicable law to cause the Collateral and Guarantee Requirement to be and remain satisfied, all at the Company's expense. The Company will provide to the Agent, from time to time upon request, evidence reasonably satisfactory to the Agent as to the perfection and priority of the Transaction Liens created or intended to be created by the Security Documents. (b) The Company will maintain main concentration accounts solely with depositaries that have entered into an Account Control Agreement with the Agent and the Company on the terms, and subject to the exceptions, set forth in the Security Agreement. (c) If any material assets (including any real property or improvements thereto or any interest therein) are acquired by the Company or any Subsidiary Guarantor, or cease to be subject to Liens permitted pursuant to Section 7.02 after the Effective Date (other than assets constituting Collateral that become subject to Transaction Liens upon acquisition thereof), the Company will notify the Agent and the Lenders thereof, and, if requested by the Agent or the Required Lenders, will cause such assets to be subjected to a Transaction Lien securing the Secured Obligations and will take, or cause the relevant Subsidiary Guarantor to take, such actions as may be necessary to grant and perfect or record such Transaction Lien, including actions described in Section 6.13(a), all at the Company's expense. Section 6.14. Use of Proceeds(a) . The Term Loans shall be used solely to (a) effect the Refinancing, (b) pay fees and expenses incurred in connection with the Refinancing, (c) advance funds to CDOC to enable it to repurchase CDOC Preferred Stock from the Insurance Subsidiaries and (d) provide for general corporate purposes. ARTICLE 7 NEGATIVE COVENANTS Until all principal of and interest on each Loan and all fees and other amounts payable hereunder have been paid in full (other than contingent indemnification obligations not yet due and payable), the Company covenants and agrees with the Lenders that: Section 7.01. Limitation on Indebtedness; Certain Capital Stock. (a) The Company shall not, and shall not permit any of its Subsidiaries to, incur or at any time be liable with respect to any Indebtedness, except: (i) Indebtedness under the Loan Documents; (ii) any Surplus Debentures issued by any Insurance Subsidiary to the Company or any of its Subsidiaries that remain outstanding on the Effective Date, and extensions, renewals or replacements thereof; (iii) Permitted Refinancing Indebtedness; (iv) Permitted Transactions entered into by Insurance Subsidiaries; (v) Permitted Swap Obligations; 57 (vi) Indebtedness existing on the date hereof and listed in Schedule 7.01, and extensions, renewals or replacements thereof, provided that no such extension, renewal or replacement shall increase the principal amount thereof, except to the extent the increase would otherwise be permitted under this Section, or result in an earlier maturity date or decreased average weighted life; (vii) non-recourse Indebtedness of Insurance Subsidiaries incurred in the ordinary course of business resulting from the sale or securitization of non-admitted assets, policy loans, CBOs and CMOs; (viii) (A) Capitalized Lease Liabilities and Purchase Money Debt in an aggregate principal amount not to exceed $40,000,000 at any time outstanding and (B) Capitalized Lease Liabilities arising from the sale and leaseback of the Company's headquarters pursuant to Section 7.03(m); (ix) intercompany Indebtedness (including Surplus Debentures) among the Company and its Subsidiaries (other than Excluded Subsidiaries) and among the Subsidiaries (other than Excluded Subsidiaries); (x) intercompany Indebtedness of Excluded Subsidiaries in an aggregate principal amount not to exceed $30,000,000 at any time outstanding; (xi) Indebtedness in respect of letters of credit issued in connection with reinsurance transactions entered into in the ordinary course of business; (xii) Indebtedness in respect of surety and other similar bonds in the ordinary course of business and consistent with past practice; (xiii) other secured Indebtedness in an aggregate principal amount not to exceed $50,000,000 at any time outstanding; (xiv) other unsecured Indebtedness in an aggregate principal amount not to exceed $100,000,000 at any time outstanding; (xv) Contingent Obligations in respect of Indebtedness permitted under Section 7.01(a)(vi), Section 7.01(a)(viii), Section 7.01(a)(xiii) or Section 7.01(a)(xiv); (xvi) Indebtedness consisting of the deferred purchase price of equity interests (or option or warrants or similar instruments) of departing officers, directors and employees of any Obligor or any Subsidiary issued (whether in the form of notes or otherwise) for the purchase or redemption thereof pursuant to the terms of an existing compensation plan or employment contract; and (xvii) Indebtedness in respect of netting services, overdraft protections and similar arrangements entered into in respect of deposit accounts, in each case in the ordinary course of business consistent with the Company's past practices. 58 (b) The Company shall not permit any of its Subsidiaries to issue any Capital Stock other than to the Company or another Subsidiary. The Company shall not issue any preferred stock other than Permitted Preferred Stock and Permitted Refinancing Preferred Stock. (c) The Company shall not at any time permit any Person, other than an Insurance Subsidiary, to own any CDOC Preferred Stock. Section 7.02. Liens. The Company shall not, and shall not permit any of its Subsidiaries to, create, assume or suffer to exist any Lien on any property now owned or hereafter acquired by it, except for the following: (a) Transaction Liens; (b) Liens in connection with Permitted Transactions; (c) cash collateral securing Permitted Swap Obligations in an aggregate amount not to exceed, at any time, $35,000,000; (d) Liens for Taxes that are not overdue for more than 90 days or for Taxes being contested in good faith and by appropriate proceedings and with respect to which adequate reserves are being maintained in accordance with GAAP; (e) Liens existing on the date hereof and listed in Schedule 7.02, including extensions, renewals and replacements of such Liens; provided that (i) such Lien shall not apply to any additional property (other than after acquired title in or on such property and proceeds of the existing collateral in accordance with the document creating such Lien) and (ii) the Indebtedness secured thereby is not increased except as otherwise permitted under Section 7.01 (in which case the portion representing any additional increase must be permitted by another paragraph of this Section 7.02); (f) (i) Liens incurred in the ordinary course of business in connection with worker's compensation, unemployment insurance or other forms of governmental insurance or benefits or to secure performance of tenders, statutory obligations, leases and contracts (other than for borrowed money) entered into in the ordinary course of business or to secure obligations on surety or appeal bonds and (ii) cash collateral securing letters of credit issued in respect of obligations to insurers in an aggregate amount not to exceed $15 million at any time outstanding; (g) (i) Liens of attorneys retained by the Company on a contingency fee basis and (ii) Liens of mechanics, carriers, and materialmen and other like Liens imposed by law and arising in the ordinary course of business in respect of obligations that in the case of clause (ii) hereof are not overdue for more than 60 days or that are being contested in good faith and by appropriate proceedings and with respect to which adequate reserves are being maintained in accordance with GAAP; (h) Liens arising in the ordinary course of business for sums being contested in good faith and by appropriate proceedings and with respect to which adequate reserves are being maintained in accordance with GAAP, or for sums not due, and in either case not involving any deposits or advances for borrowed money or the deferred purchase price of property or services; 59 (i) Liens securing Indebtedness permitted by Section 7.01(a)(viii); provided that such Liens are limited to the assets subject to the relevant capital lease or purchase money transaction; (j) easements, rights-of-way, zoning restrictions, restrictions and other similar encumbrances incurred in the ordinary course of business that do not secure any monetary obligation and which do not materially interfere with the ordinary course of business of the Company and its Subsidiaries; (k) Liens on property of the Company and its Subsidiaries in favor of landlords securing licenses, subleases or leases of property not otherwise prohibited hereunder; (l) licenses, leases or subleases permitted hereunder granted to others not materially interfering in any material respect in the business of the Company and its Subsidiaries; (m) attachment or judgment Liens not constituting an Event of Default under Section 8.01(i); (n) Liens arising from precautionary Uniform Commercial Code financing statement filings with respect to operating leases or consignment arrangements entered into by the Company and its Subsidiaries in the ordinary course of business; (o) customary set-off rights in favor of depositary banks; (p) other Liens securing Indebtedness or other obligations in an aggregate amount not exceeding $50,000,000 at any time outstanding; (q) any Lien on any asset of any Person existing at the time such Person becomes a Subsidiary of the Company, is merged or consolidated with or into the Company or a Subsidiary of the Company, or prior to the Acquisition thereof by the Company or a Subsidiary of the Company, and not created in contemplation of such event; and (r) Liens attaching solely to cash earnest money deposits required to be made under the terms of any letter of intent or purchase agreement for a permitted Acquisition. Section 7.03. Disposition of Assets. The Company shall not, and shall not permit any of its Subsidiaries to, sell, assign, lease, transfer or otherwise Dispose of (whether in one or a series of transactions) any property (including accounts and notes receivable with or without recourse and Capital Stock of any Subsidiary whether newly issued or otherwise) or enter into any agreement to do any of the foregoing, except: (a) Dispositions of inventory, equipment and Cash Equivalents, all in the ordinary course of business consistent with past practices; (b) the sale of equipment to the extent that such equipment is exchanged for credit against the purchase price of similar replacement equipment or the proceeds of such sale are reasonably promptly applied to the purchase price of such replacement equipment; 60 (c) Dispositions of Investments by any Insurance Subsidiary (other than any of its Investments in Subsidiaries engaged in insurance lines of business) in the ordinary course of business consistent with past practices and the investment policy approved by the board of directors of such Insurance Subsidiary; (d) intercompany Dispositions in the ordinary course of business (i) among the Company and its Subsidiaries (other than Dispositions to Excluded Subsidiaries) and among the Subsidiaries (other than Dispositions to Excluded Subsidiaries) and (ii) to Excluded Subsidiaries in an aggregate amount not to exceed $30,000,000; (e) (i) any Dispositions pursuant to a Reinsurance Agreement so long as such Disposition is entered into in the ordinary course of business for the purpose of managing insurance risk consistent with industry practice and (ii) any other Dispositions pursuant to a Reinsurance Agreement so long as the aggregate statutory profit and/or gains on insurance policy sales or other portfolio transfers resulting from all Dispositions described in this clause (ii) consummated after the Effective Date do not exceed $400,000,000 in the aggregate during the term of this Agreement or $150,000,000 in any Fiscal Year; provided that (x) the Net Proceeds therefrom are, unless required to be retained by any Insurance Subsidiary pursuant to regulatory restrictions, applied to prepay the Term Loans as provided in Section 2.08 and (y) any Net Proceeds therefrom that are required to be retained by any Insurance Subsidiary pursuant to regulatory restrictions are so retained by such Insurance Subsidiary; (f) obsolete or worn out property disposed of by the Company or any of its Subsidiaries in the ordinary course of business and consistent with past practices of the Company and its Subsidiaries; (g) transfers resulting from any casualty or condemnation of property or assets; (h) licenses or sublicenses of intellectual property and general intangibles and licenses, leases or subleases of other property in the ordinary course of business and consistent with the past practices of the Company and its Subsidiaries and which do not materially interfere with the business of the Company and its Subsidiaries; (i) Dispositions consisting of intercompany mergers and consolidations among the Company and its Subsidiaries, or of any liquidation, winding up or dissolution of any Immaterial Subsidiary, in each case to the extent permitted by Section 7.07(b); (j) Dispositions of shares of Capital Stock in order to qualify members of the board of directors or equivalent governing body of an Obligor or such other nominal shares required to be held other than by the Company or such Obligor, as required by applicable law; (k) the sale, discount, forgiveness or other compromise of notes or other accounts in the ordinary course of business or in connection with collection thereof; (l) issuances of Capital Stock by the Company; 61 (m) the sale and leaseback of the Company's headquarters located in Carmel, Indiana, on fair and reasonable terms (as certified to the Agent in writing by a Responsible Officer of the Company); and (n) Dispositions not otherwise permitted hereunder (other than pursuant to Reinsurance Agreements, which shall be subject to the limitations in clause (e) above); provided that (w) such Dispositions shall be for fair market value (which determination must be supported by a fairness opinion in form and substance reasonably satisfactory to the Agent from a nationally-recognized investment banking firm in connection with any Disposition or series of Dispositions the aggregate consideration for which exceeds $80,000,000) and at least 75% of the consideration received in connection therewith at closing shall consist of cash, (x) on a Pro Forma Basis after giving effect to such Disposition, the Company and its Subsidiaries would be in compliance with all of the covenants contained in the Loan Documents (including all financial and ratings covenants), (y) no such Disposition shall include the sale of any capital stock of any Subsidiary unless 100% of the capital stock of such Subsidiary owned by the Obligors is sold and (z) the Net Proceeds thereof shall be applied to prepay the Term Loans in accordance with Section 2.08. Upon consummation of a sale, transfer or other Disposition permitted under this Section 7.03, liens created under the Security Documents in respect of the assets Disposed of shall be automatically released and the Agent shall (to the extent applicable) deliver to the Company, upon the Company's request and at the Company's expense, such documentation as necessary to evidence the release of the Agent's security interests, if any, in the assets being Disposed of, including amendments or terminations of Uniform Commercial Code financing statements, if any, the return of stock certificates, if any, and the release of any Subsidiary being Disposed of in its entirety from all of its obligations, if any, under the Loan Documents. Section 7.04. Other Agreements. The Company shall not, and shall not permit any of its Subsidiaries to, enter into any agreement (other than any agreement with any Department to the extent required by such Department) containing any provision that (a) would be violated or breached in any material respect by the performance of its obligations hereunder or under any other Loan Document or under any instrument or document delivered or to be delivered by it hereunder or thereunder in connection herewith or therewith or (b) prohibits or restricts the ability of the Company or such Subsidiary to amend or otherwise modify this Agreement, any other Loan Document or any other document executed in connection herewith or therewith, and such breach, violation, prohibition or restriction, individually or in the aggregate, could reasonably be expected to adversely affect the rights and remedies of the Agent and the Lenders under the Loan Documents. Section 7.05. Transactions with Affiliates. The Company shall not, and shall not suffer or permit any Subsidiary to, enter into any transaction with any Affiliate of the Company, except (a) upon fair and reasonable terms no less favorable to the Company or such Subsidiary than would be obtained in a comparable arm's-length transaction with a Person not an Affiliate of the Company or such Subsidiary and that, (b) for insurance transactions, intercompany pooling and other reinsurance transactions entered into in the ordinary course of business and consistent with past practice, (c) intercompany transactions in the ordinary course and consistent with past practices between or among the Company and its Subsidiaries (other than Excluded Subsidiaries) and between or among Subsidiaries (other than Excluded Subsidiaries), 62 (d) any Restricted Payment permitted by Section 7.08 and (e) arrangements for indemnification payments for directors and officers of the Company and its Subsidiaries. Section 7.06. Change in Business. The Company shall not, and shall not suffer or permit any Subsidiary (other than any Immaterial Subsidiary) to, fundamentally change the type of business in which it is engaged as of the Effective Date; provided that any Subsidiary may cease to engage in any type of business in which such Subsidiary is engaged as of the Effective Date if the board of directors of the Company or such Subsidiary shall determine that ceasing to engage in such type of business is in the best interests of the Company and its Subsidiaries, taken as a whole, or such Subsidiary. Section 7.07. Fundamental Changes. Unless the Obligations shall be paid in full concurrently therewith, the Company shall not, and shall not suffer or permit any of its Subsidiaries to, enter into any merger, consolidation, amalgamation, or sale of all or substantially all of the assets of the Company and its Subsidiaries taken as a whole, or liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution), except (a) in connection with a Disposition of a Subsidiary otherwise permitted by Section 7.03) and (b) if at the time thereof and immediately after giving effect thereto no Event of Default shall have occurred and be continuing, (i) any Subsidiary Guarantor (other than CDOC) may merge, consolidate or amalgamate into the Company in a transaction in which the Company is the surviving corporation, (ii) any Subsidiary Guarantor may merge, consolidate or amalgamate into any Subsidiary in a transaction in which the surviving entity is a Subsidiary Guarantor (and if CDOC is a party to such transaction, CDOC is the surviving entity), (iii) any two Subsidiaries that are not Subsidiary Guarantors may merge, consolidate or amalgamate; provided that if either such Subsidiary is a direct Subsidiary of an Obligor, the surviving entity shall be a direct Subsidiary of an Obligor. Section 7.08. Restricted Payments. The Company shall not, and shall not suffer or permit any Subsidiary to, declare or pay any dividend on (or make any payment to a related trust for the purpose of paying a dividend), or make any payment on account of, or set apart assets for a sinking or other analogous fund for, the purchase, redemption, defeasance, retirement or other acquisition of, any Capital Stock of the Company or such Subsidiary (or any related trust), whether now or hereafter outstanding, or make any other distribution in respect thereof, either directly or indirectly, whether in cash or property or in obligations of the Company or such Subsidiary (collectively, "Restricted Payments"), except that: (a) (i) any Subsidiary may declare or pay dividends with respect to its Capital Stock to the Company and to any Wholly-Owned Subsidiary (and in the case of a non-Wholly-Owned Subsidiary, to the Company and any Subsidiary and to each other owner of Capital Stock or other equity interests of such Subsidiary on a pro rata basis based on their relative ownership interests) and (ii) the Company may from time to time redeem the CDOC Preferred Stock; (b) the Company may pay dividends solely in the form of shares of common stock or additional shares of Permitted Preferred Stock to the holders of the Permitted Preferred Stock; 63 (c) the Company may pay dividends solely in the form of shares of common stock or additional shares of Permitted Refinancing Preferred Stock to the holders of the Permitted Refinancing Preferred Stock; (d) so long as no Event of Default is continuing (both before and immediately after giving effect to the payment thereto), the Company may pay cash dividends on the Permitted Refinancing Preferred Stock to the extent the terms thereof (as in effect on the date of initial issuance) require cash dividend payments; (e) the Company may pay dividends to the holders of Class B Preferred Stock on the terms in effect on the Effective Date; and (f) the Company may purchase shares of common stock held by employees of the Company pursuant to the Company's 2003 Long-Term Equity Incentive Plan, as in effect on the Effective Date to allow employees to meet their tax obligations (with such amendments or modifications as may be reasonably acceptable to the Agent). Section 7.09. Investments and Acquisitions. The Company shall not, and shall not suffer or permit any Subsidiary to, directly or indirectly, make any Acquisition or hold or make any other Investment in any Person, except: (a) Investments in existence on the Effective Date and commitments to make Investments existing on the Effective Date and listed on Schedule 7.09; (b) Investments consisting of non-cash consideration received in connection with a permitted asset sale; (c) Investments received in connection with the bankruptcy or reorganization of customers and suppliers in the ordinary course of business; (d) Investments consisting of Contingent Obligations permitted by Section 7.01 of Indebtedness permitted by Section 7.01; (e) Investments in Cash Equivalents; (f) Investments by any Insurance Subsidiary (including by any Subsidiary of such Insurance Subsidiary that is not itself an Insurance Subsidiary) in the ordinary course of business in compliance with Section 7.16 and consistent with the investment policy approved by the board of directors of such Insurance Subsidiary; (g) intercompany Investments other than in Excluded Subsidiaries in the ordinary course of business; (h) intercompany Investments in Excluded Subsidiaries in the ordinary course of business in an aggregate amount expended not to exceed $30,000,000; (i) security deposits or pledges held or made in the ordinary course of business; 64 (j) loans and advances in the ordinary course of business to employees for moving, relocation or travel purposes, in each case subject to compliance with the Requirements of Law; (k) Permitted Swap Obligations; (l) Acquisitions (other than Acquisitions that constitute Investments permitted by Section 7.09(f) above or Section 7.09(m) below) for aggregate consideration in an amount not to exceed $300,000,000 during the term of this Agreement or $100,000,000 in any Fiscal Year, which consideration will include all cash expended and the value of any Capital Stock of the Company (other than Capital Stock prohibited under Section 7.01(b) and not permitted to be used for such purpose) used to consummate such Acquisition; provided that at the time of such Acquisition no Event of Default shall be continuing and immediately after giving effect to such Acquisition no Default (including any failure to be in compliance with the financial covenants calculated on a Pro Forma Basis) would occur; and (m) Investments not otherwise permitted hereby in an aggregate amount expended not to exceed $25,000,000 in any Fiscal Year. Section 7.10. Prepayments of Indebtedness; Modifications of Certain Agreements; Synthetic Purchase Agreements. (a) The Company shall not, and shall not permit any of its Subsidiaries to, make or agree to pay or make, directly or indirectly, any payment or other distribution (whether in cash, securities or other property, and including optional prepayments and open market purchases) of or in respect of principal of or interest on any Permitted Refinancing Indebtedness, or any payment or other distribution (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, defeasance or termination of any Permitted Refinancing Indebtedness, other than payment of regularly scheduled interest and principal payments as and when due in respect thereof, except payments in respect thereof prohibited by the subordination provisions thereof. (b) The Company shall not, and shall not permit any of its Subsidiaries to, amend, modify, waive or otherwise change, or consent or agree to any amendment, modification, waiver or other change to, any of the material terms of any Indebtedness of the Company or any of its Subsidiaries specified on Schedule 7.10 hereto or any Permitted Refinancing Indebtedness (other than any such amendment, modification, waiver or other change that (i) would extend the maturity or reduce the amount of any payment of principal thereof or reduce the rate or extend any date for payment of interest thereon and (ii) does not involve the payment of a consent fee that is not customary under the circumstances). (c) The Company shall not, and shall not permit any of its Subsidiaries to, amend, modify, waive or otherwise change, or consent or agree to any amendment, modification, waiver or other change to, any of the material terms of any preferred stock issued by the Company or any of its Subsidiaries (including the Class B Preferred Stock, Permitted Preferred Stock and the Permitted Refinancing Preferred Stock) or any related trust in a manner that adversely affects the interests of the Lenders, it being understood that the following shall be permitted: any such amendment, modification, waiver or other change that (i) would extend the scheduled redemption date or reduce the amount of any scheduled redemption payment or reduce the rate 65 or extend any date for payment of dividends thereon and (ii) does not involve the payment of a consent fee that is not customary under the circumstances. (d) The Company shall not, and shall not permit any of its Subsidiaries to, amend or modify its respective Organization Documents, other than any amendments or modifications that do not, individually or in the aggregate, adversely affect the interests of the Lenders. (e) The Company shall not, and shall not permit any of its Subsidiaries to, enter into or be party to, or make any payment under, any Synthetic Purchase Agreement. Section 7.11. Debt to Total Capitalization Ratio. The Company shall maintain at all times a Debt to Total Capitalization Ratio of not more than 25%. Section 7.12. Interest Coverage Ratio. The Company shall not permit the Interest Coverage Ratio as of the end of any Fiscal Quarter ending during each period set forth below for the four Fiscal Quarters then ended (or, if less, the number of full Fiscal Quarters commencing after the Effective Date) to be less than the ratio set forth below for such Fiscal Quarter:
============================================================================ Period Ratio - ---------------------------------------------------------------------------- - ---------------------------------------------------------------------------- From Effective Date through June 30, 2004 N/A - ---------------------------------------------------------------------------- - ---------------------------------------------------------------------------- From July 1, 2004 through September 30, 2004 1.85 to 1 - ---------------------------------------------------------------------------- - ---------------------------------------------------------------------------- From October 1, 2004 through June 30, 2007 2.00 to 1 - ---------------------------------------------------------------------------- - ---------------------------------------------------------------------------- From July 1, 2007 and at all times thereafter 2.50 to 1 ============================================================================
Section 7.13. Conseco EBITDA. Until such time as the Term Loan shall have received debt ratings of not less than Ba3 from Moody's and BB- from S&P, in each case with stable outlook, the Company shall not permit the Conseco EBITDA as of the end of any Fiscal Quarter ending during each period set forth below for the four Fiscal Quarters then ended (or, in the case of the Fiscal Quarter ending June 30, 2004, the three Fiscal Quarters then ending) to be less than the amount set forth below for such Fiscal Quarter.
============================================================================ Period Ratio - ---------------------------------------------------------------------------- - ---------------------------------------------------------------------------- For the three Fiscal Quarters ended June 30, $600,000,000 2004 - ---------------------------------------------------------------------------- - ---------------------------------------------------------------------------- From July 1, 2004 through December 31, 2005 $725,000,000 - ----------------------------------------------------------------------------
66 - ---------------------------------------------------------------------------- From January 1, 2006 through December 31, 2006 $775,000,000 - ---------------------------------------------------------------------------- - ---------------------------------------------------------------------------- From January 1, 2007 and for each Fiscal $825,000,000 Quarter thereafter ============================================================================
Section 7.14. Aggregate RBC Ratio. The Company shall not permit the Aggregate RBC Ratio as of the end of any Fiscal Quarter ending during each period set forth below to be less than the ratio set forth below for such Fiscal Quarter:
============================================================================ Period Ratio - ---------------------------------------------------------------------------- - ---------------------------------------------------------------------------- From Effective Date through March 31, 2005 240% - ---------------------------------------------------------------------------- - ---------------------------------------------------------------------------- From April 1, 2005 through March 31, 2006 245% - ---------------------------------------------------------------------------- - ---------------------------------------------------------------------------- From April 1, 2006 and for each Fiscal Quarter 250% thereafter ============================================================================
Section 7.15. 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 less than $1,270,000,000. Section 7.16. Investment Portfolio Requirement. The Company shall not permit any Insurance Subsidiary to purchase, make or otherwise acquire: (a) any Investment that is not an Investment Grade Asset, unless, after giving effect thereto, the aggregate fair market value of all Investments of the Insurance Subsidiaries that are not Investment Grade Assets (exclusive of the Investments referred to in paragraphs (b),(c), and (d) below and policy loans as specified on page 2, line 6 of the Company's Annual Statements) will not exceed 10% of the aggregate fair market value of all Investments held by the Insurance Subsidiaries; (b) any Investment that is non-NAIC rated, unless, after giving effect thereto, the aggregate fair market value of all Investments of the Insurance Subsidiaries that are non-NAIC rated (exclusive of the Investments referred to in paragraphs (a),(c) and (d) hereof and policy loans as specified on page 2, line 6 of the Company's Annual Statement) will not exceed 4% of the aggregate fair market value of all Investments held by the Insurance Subsidiaries; (c) any Investment in real property mortgage loans classified on Schedule B-Part 1 of the Annual Statement, unless, after giving effect thereto, the aggregate fair market value of all Investments of the Insurance Subsidiaries in such loans (exclusive of Investments referred to in 67 paragraphs (a), (b) and (d) hereof) will not exceed 10% of the aggregate fair market value of all Investments held by the Insurance Subsidiaries; and (d) any Investment involving Capital Stock, unless, after giving effect thereto, the aggregate fair market value of all Investments of the Insurance Subsidiaries in Capital Stock (exclusive of Investments referred to in paragraphs (a), (b) and (c) hereof) will not exceed 1% of the aggregate fair market value of all Investments held by the Insurance Subsidiaries; provided that (x) any Insurance Subsidiary shall be permitted to make any Investment that it is committed to make as of the Prior Effective Date and listed on Schedule 7.09 (it being understood, however, that each such Investment shall be taken into account for purposes of determining whether any additional Investments may be purchased, made or otherwise acquired hereunder). If one or more of the percentage thresholds referred in clauses (a), (b), (c) or (d) above is exceeded solely as a result of the making of any Investment permitted to be made pursuant to the foregoing proviso (after giving effect to any Investments made prior thereto), such event shall not constitute a Default for purposes hereof. Section 7.17. Restrictive Agreements. The Company shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, enter into or permit to exist any agreement or other arrangement that prohibits, restricts or imposes any condition on (a) the ability of the Company or any Subsidiary to create or permit to exist any Lien on any of its property or (b) the ability of any Subsidiary to pay dividends or other distributions with respect to any shares of its Capital Stock or to make, repay or prepay loans or advances to the Company or any other Subsidiary or to Dispose of assets to the Company or any other Subsidiary; provided that (i) the foregoing shall not apply to restrictions and conditions imposed by applicable law (including pursuant to regulatory restrictions), (ii) the foregoing shall not apply to restrictions and conditions existing on the date hereof and identified on Schedule 7.17 (but shall apply to any amendment or modification expanding the scope of, or any extension or renewal of, any such restriction or condition), (iii) the foregoing shall not apply to customary restrictions and conditions contained in agreements relating to the sale of a Subsidiary or assets or property of the Company or any Subsidiary pending such sale, provided that such restrictions and conditions apply only to the Subsidiary or assets or property that is to be sold and such sale is permitted hereunder, (iv) the foregoing shall not apply to restrictions that are not more restrictive than those contained in this Agreement contained in any documents governing any Indebtedness incurred after the Effective Date in accordance with the provisions of this Agreement, (v) clause (a) of this Section shall not apply to restrictions or conditions imposed by any agreement relating to secured Indebtedness (including Capitalized Lease Liabilities and Purchase Money Debt) permitted by this Agreement if such restrictions or conditions apply only to the collateral securing such Indebtedness and (vi) clause (a) of this Section shall not apply to customary provisions in leases or licenses or other contracts and agreements restricting the assignment, subletting or sublicensing thereof. Section 7.18. Holding Company Activities. The Company shall not, and shall not permit CDOC to, engage in any business or activity except owning all the outstanding shares of Capital Stock of their respective Subsidiaries and activities related or incidental thereto. The Company shall not permit CDOC to own or acquire any assets (except shares of Capital Stock of its Subsidiaries and cash and Cash Equivalents and other assets owned by it on the Effective Date) or incur any liabilities (except liabilities under the Loan Documents, liabilities imposed by law, 68 including tax liabilities, liabilities in existence on the Effective Date and other liabilities incidental to its existence and permitted business and activities). Section 7.19. Changes in Accounting Policies; Fiscal Year. The Company shall not, and shall not permit any of its Subsidiaries to, (a) make any change to its accounting policies or reporting practices, except as required or permitted by GAAP or (b) change the last day of its fiscal year from December 31 of each year. ARTICLE 8 EVENTS OF DEFAULT Section 8.01. Events of Default. Each of the following shall constitute an "Event of Default": (a) Non Payment. The Company fails to pay (i) when and as required to be paid herein, whether at the due date thereof or at a date fixed for prepayment thereof or otherwise, any amount of principal of any Term Loan, or (ii) within five days after the same becomes due, any interest, fee or any other amount payable hereunder or under any other Loan Document; or (b) Representation or Warranty. Any representation or warranty by the Company or any of its Subsidiaries made or deemed made herein or in connection with any other Loan Document or any amendment or modification hereof or thereof or waiver hereunder or thereunder, or contained in any certificate, document or financial or other statement by the Company, any Subsidiary or any Responsible Officer, furnished at any time in connection with this Agreement or in connection with any other Loan Document or any amendment or modification hereof or thereof or waiver hereunder or thereunder, is incorrect in any material respect on or as of the date made or deemed made; or (c) Specific Defaults. The Company fails to perform or observe any term, covenant or agreement contained in any of (i) Section 6.03(a), Section 6.04(a) (with respect to the Company's corporate existence) or Article 7 (other than Section 7.16) or (ii) Section 7.16 and, in the case of clause (ii), such default shall continue unremedied for a period of 30 days (it being understood that if the Company takes any action during such 30 day period which action, if it had been taken on or prior to the relevant date on which compliance with Section 7.16, as applicable, was tested, would have resulted in the Company being in compliance with such Section on such test date, such default shall be deemed to have been remedied on the date on which such action was taken); or (d) Other Defaults. The Company or any of its Subsidiaries fails to perform or observe any other term or covenant contained in this Agreement or any other Loan Document, and such default shall continue unremedied for a period of 30 days after the date upon which written notice thereof is given to the Company by the Agent or any Lender; or (e) Cross-Default. (i) The Company or any Subsidiary (A) fails to make any payment in respect of any Indebtedness or Contingent Obligation (other than in respect of Swap Contracts), having an aggregate principal amount of more than $40,000,000, when due (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise); or (B) fails to perform or observe any other condition or covenant, or any other event shall occur or condition 69 exist, under any agreement or instrument relating to any such Indebtedness (and, solely in the case of a failure to comply with any financial statement or other information delivery or reporting requirement or in the case of the entry of any judgment or decree, so long as such judgment or decree constitutes a Default but not an Event of Default under Section 8.01(i), such failure or event continues after the applicable grace or notice period, if any, specified in the relevant document on the date of such failure or event) if the effect of such failure, event or condition is to cause, or to permit (or, with the giving of notice or lapse of time or both, would permit) the holder or holders of such Indebtedness or beneficiary or beneficiaries of such Indebtedness (or a trustee or agent on behalf of such holder or holders or beneficiary or beneficiaries) to cause, such Indebtedness to be declared to be due and payable prior to its stated maturity, or, in the case of any such Indebtedness consisting of Contingent Obligations, to become payable or cash collateral in respect thereof to be demanded; or (ii) there occurs under any Swap Contract an Early Termination Date (as defined in such Swap Contract) resulting from (x) any event of default under such Swap Contract as to which the Company or any Subsidiary is the Defaulting Party (as defined in such Swap Contract) or (y) any Termination Event (as so defined) as to which the Company or any Subsidiary is an Affected Party (as so defined), and, in either event, the Swap Termination Value owed by the Company or such Subsidiary as a result thereof is greater than $40,000,000; or (f) Insolvency; Voluntary Proceedings. The Company or any Subsidiary (other than an Immaterial Subsidiary) (i) ceases or fails to be solvent, or generally fails to pay, or admits in writing its inability to pay, its debts as they become due, subject to applicable grace periods, if any, whether at stated maturity or otherwise; (ii) voluntarily ceases to conduct its business in the ordinary course; (iii) commences any Insolvency Proceeding with respect to itself; (iv) applies for or consents to the appointment of a receiver, trustee, custodian, conservator, liquidator, mortgagee in possession (or agent therefor), or other similar Person for itself or for a substantial part of its assets, or (v) takes any action to effectuate or authorize any of the foregoing; or (g) Involuntary Proceedings. (i) Any involuntary Insolvency Proceeding is commenced or filed against the Company or any Subsidiary (other than an Immaterial Subsidiary), or any writ, judgment, warrant of attachment, execution or similar process, is issued or levied against a substantial part of the Company's or any Subsidiary's (other than an Immaterial Subsidiary's) properties, and any such proceeding or petition shall not be dismissed, or such writ, judgment, warrant of attachment, execution or similar process shall not be released, vacated or fully bonded within 60 days after commencement, filing or levy; (ii) the Company or any Subsidiary (other than an Immaterial Subsidiary) admits the material allegations of a petition against it in any Insolvency Proceeding, or an order for relief (or similar order under non-U.S. law) is ordered in any Insolvency Proceeding; (iii) the Company or any Subsidiary (other than an Immaterial Subsidiary) acquiesces in the appointment of a receiver, trustee, custodian, conservator, liquidator, mortgagee in possession (or agent therefor), or other similar Person for itself or a substantial portion of its property or business; or (iv) any Subsidiary (other than an Immaterial Subsidiary) shall become subject to any conservation, rehabilitation or liquidation order, directive or mandate issued by any Governmental Authority; or (h) Pension Plans and Welfare Plans. With respect to any Single Employer Pension Plan as to which the Company or any other ERISA Affiliate may have any liability, there shall exist an Unfunded Pension Liability of more than $30,000,000 in the aggregate as to the 70 Company or any ERISA Affiliate, and steps are undertaken to terminate such plan or such Pension Plan is terminated or the Company or any other ERISA Affiliate withdraws from or institutes steps to withdraw from such Pension Plan, or the Company has knowledge that steps have been taken to terminate any Multiemployer Plan and such termination may result in liability to the Company or any ERISA Affiliate in excess of $30,000,000 in the aggregate or any Reportable Event with respect to such Pension Plan has occurred that could result in the incurrence of liability by the Company or any ERISA Affiliate in excess of $30,000,000 in the aggregate or steps are taken to terminate any Multiemployer Plan and such termination may result in any liability of the Company or any ERISA Affiliate in excess of $30,000,000 in the aggregate; or (i) Material Judgments. One or more judgments or decrees shall be entered against the Company or any of its Subsidiaries involving in the aggregate a liability (not paid or fully covered by insurance as to which the relevant insurance company has not denied coverage) of $35,000,000 or more, and all such judgments or decrees shall not have been vacated, discharged, stayed or bonded pending appeal within 30 days from the entry thereof, or any action shall be taken by a judgment creditor to attach or levy upon any asset of the Company or any of its Subsidiaries to enforce any such judgment or decree; or (j) Material Regulatory Matters. (i) Any Insurance Subsidiary shall not make a scheduled payment of interest or principal on any surplus note or similar form of indebtedness (due to actions of any Governmental Authority or otherwise), (ii) any Insurance Subsidiary's ability to pay fees to its Affiliates under existing agreements (or extensions of existing agreements) shall be restricted (due to actions of any Governmental Authority or otherwise) or (iii) in any Fiscal Year, an Insurance Subsidiary's ability to pay dividends to its stockholders is restricted in any manner (due to actions of any Governmental Authority or otherwise), other than by restrictions relating to dividends that apply generally to other insurance companies domiciled in the Insurance Subsidiary's state of domicile under the insurance law of the state, and (x) in the cases of clauses (i) through (iii) above, such event or condition, together with all other such events or conditions, could reasonably be expected to have a Material Adverse Effect and (y) in each case, such event or condition was not in effect as of the date hereof; or (k) Change of Control. There occurs any Change of Control; or (l) Subsidiary Guarantee. Any Subsidiary Guarantor's Secured Guarantee shall cease, for any reason, to constitute a valid and binding agreement of such Subsidiary Guarantor or to be in full force and effect (other than in accordance with the terms thereof or if released by the Agent at the direction of the Required Lenders) or the Company or any Subsidiary of the Company shall so assert; or (m) Liens. Any Lien purported to be created under any Security Document shall cease to be, or shall be asserted by the Company or any Subsidiary of the Company not to be, a valid and perfected Lien on any Collateral covered thereby, with the priority required by the applicable Security Document (except as a result of a sale or other disposition of the applicable Collateral in a transaction permitted under the Loan Documents or as a result of the Agent's failure to maintain possession of any stock certificates, promissory notes or other documents or possessory collateral delivered to it under the Security Agreement or if released by the Agent), except to the 71 extent that such cessation would not, together with all other such cessations, be with respect to Collateral having a fair market value in excess of $25,000,000; or (n) Subordination Provisions. Any subordination provisions applicable to any Permitted Refinancing Indebtedness shall cease to be, or shall be asserted by the Company or any Subsidiary or by holders of 25% or more of the aggregate principal amount of such Indebtedness then outstanding not to be, valid and enforceable in accordance with the terms thereof; or the Obligations shall cease to constitute "Senior Debt" (howsoever defined) for purposes of any Permitted Refinancing Indebtedness. Section 8.02. Remedies. If any Event of Default shall have occurred and be continuing, the Agent shall, at the request of, or may, with the consent of, the Required Lenders, (a) declare the obligation of each Lender to make extensions or conversions of the Term Loans to be terminated; (b) declare the unpaid principal amount of all outstanding Term Loans, all interest accrued and unpaid thereon and all other amounts owing or payable hereunder or under any other Loan Document to be immediately due and payable, whereupon such Term Loans, all interest accrued and unpaid thereon and all other amounts owing or payable hereunder or under any other Loan Document shall become immediately due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by the Company; and (c) exercise on behalf of itself and the Lenders all rights and remedies available to it and the Lenders under the Loan Documents or applicable law; provided that upon the occurrence of any event specified in Section 8.01(f) or Section 8.01(g) upon the expiration of the 60-day period mentioned therein, the obligation of each Lender to make Term Loans shall automatically terminate and the unpaid principal amount of all outstanding Term Loans and all interest and other amounts as aforesaid shall automatically become due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by the Company. Section 8.03. Rights Not Exclusive. The rights provided for in this Agreement and the other Loan Documents are cumulative and are not exclusive of any other rights, powers, privileges or remedies provided by law or in equity, or under any other instrument, document or agreement now existing or hereafter arising. ARTICLE 9 THE AGENT Section 9.01. Appointment and Authority. Each of the Lenders hereby irrevocably appoints BofA to act on its behalf as the Agent hereunder and under the other Loan Documents and authorizes the Agent to take such actions on its behalf and to exercise such powers as are delegated to the Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto. The provisions of this Article are solely for the benefit of the 72 Agent and the Lenders, and neither the Company nor any other Obligor shall have rights as a third party beneficiary of any of such provisions. Section 9.02. Rights as a Lender. The Person serving as the Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Agent and the term "Lender" or "Lenders" shall, unless otherwise expressly indicated or unless the context otherwise requires, include the Person serving as the Agent hereunder in its individual capacity. Such Person and its Affiliates may accept deposits from, lend money to, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of business with the Company or any Subsidiary or other Affiliate thereof as if such Person were not the Agent hereunder and without any duty to account therefor to the Lenders. Section 9.03. Exculpatory Provisions. The Agent shall not have any duties or obligations except those expressly set forth herein and in the other Loan Documents. Without limiting the generality of the foregoing, the Agent: (a) shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing; (b) shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that the Agent is required to exercise as directed in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein or in the other Loan Documents), provided that the Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose the Agent to liability or that is contrary to any Loan Document or applicable law; and (c) shall not, except as expressly set forth herein and in the other Loan Documents, have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Company or any of its Affiliates that is communicated to or obtained by the Person serving as the Agent or any of its Affiliates in any capacity. The Agent shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as the Agent shall believe in good faith shall be necessary, under the circumstances as provided in Sections 8.02 and 10.01) or (ii) in the absence of its own gross negligence or willful misconduct. The Agent shall be deemed not to have knowledge of any Default unless and until notice describing such Default is given to the Agent by the Company or a Lender. The Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the 73 occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or document or (v) the satisfaction of any condition set forth in Article 4 or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Agent. Section 9.04. Reliance by Agent. The Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person. The Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon. In determining compliance with any condition hereunder to the making of a Term Loan that by its terms must be fulfilled to the satisfaction of a Lender, the Agent may presume that such condition is satisfactory to such Lender unless the Agent shall have received notice to the contrary from such Lender prior to the making of such Term Loan. The Agent may consult with legal counsel (who may be counsel for the Company), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts. Section 9.05. Delegation of Duties. The Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Loan Document by or through any one or more sub-agents appointed by the Agent. The Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective Related Parties. The exculpatory provisions of this Article shall apply to any such sub-agent and to the Related Parties of the Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Agent. Section 9.06. Resignation of Agent. The Agent may at any time give notice of its resignation to the Lenders and the Company. Upon receipt of any such notice of resignation, the Required Lenders shall have the right, in consultation with the Company, to appoint a successor, which shall be a bank with an office in the United States, or an Affiliate of any such bank with an office in the United States. If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Agent gives notice of its resignation, then the retiring Agent may on behalf of the Lenders, appoint a successor Agent meeting the qualifications set forth above; provided that if the Agent shall notify the Company and the Lenders that no qualifying Person has accepted such appointment, then such resignation shall nonetheless become effective in accordance with such notice and (1) the retiring Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents (except that in the case of any collateral security held by the Agent on behalf of the Lenders under any of the Loan Documents, the retiring Agent shall continue to hold such collateral security until such time as a successor Agent is appointed) and (2) all payments, communications and determinations provided to be made by, to or through the Agent shall instead be made by or to each Lender directly, until such time as the Required Lenders appoint a successor Agent as provided for above in this Section. Upon the acceptance of a successor's appointment as Agent hereunder, such successor shall succeed to and become vested with all of 74 the rights, powers, privileges and duties of the retiring (or retired) Agent, and the retiring Agent shall be discharged from all of its duties and obligations hereunder or under the other Loan Documents (if not already discharged therefrom as provided above in this Section). The fees payable by the Company to a successor Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Company and such successor. After the retiring Agent's resignation hereunder and under the other Loan Documents, the provisions of this Article and Sections 10.04 and 10.05 shall continue in effect for the benefit of such retiring Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring Agent was acting as Agent. Section 9.07. Non-Reliance on Agent and Other Lenders. Each Lender acknowledges that it has, independently and without reliance upon the Agent or any other Lender or any of their Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon the Agent or any other Lender or any of their Related Parties and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder. Section 9.08. No Other Duties, Etc.. Anything herein to the contrary notwithstanding, none of the joint lead arrangers or joint bookrunners listed on the cover page hereof shall have any powers, duties or responsibilities under this Agreement or any of the other Loan Documents, except in its capacity, as applicable, as the Agent or a Lender hereunder. Section 9.09. Agent May File Proofs of Claim. In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to any Obligor, the Agent (irrespective of whether the principal of any Term Loan shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Agent shall have made any demand on the Company) shall be entitled and empowered, by intervention in such proceeding or otherwise (a) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Term Loans and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders and the Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders and the Agent and their respective agents and counsel and all other amounts due the Lenders and the Agent under Sections 2.10, 10.04 and 10.05) allowed in such judicial proceeding; and (b) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender to make such payments to the Agent and, in the event that the Agent shall consent to the making of such payments directly to the Lenders, to pay to the Agent any amount due for the reasonable compensation, expenses, 75 disbursements and advances of the Agent and its agents and counsel, and any other amounts due the Agent under Sections 2.10, 10.04 and 10.05. Nothing contained herein shall be deemed to authorize the Agent to authorize or consent to or accept or adopt on behalf of any Lender any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any Lender or to authorize the Agent to vote in respect of the claim of any Lender in any such proceeding. Section 9.10. Collateral and Guaranty Matters The Lenders irrevocably authorize the Agent, at its option and in its discretion, (a) to release any Lien on any property granted to or held by the Agent under any Loan Document (i) upon payment in full of all Obligations (other than contingent indemnification obligations), (ii) that is sold or otherwise disposed of or to be sold or otherwise disposed of as part of or in connection with any sale permitted hereunder or under any other Loan Document or (iii) subject to Section 10.01, if approved, authorized or ratified in writing by the Required Lenders; (b) to subordinate any Lien on any property granted to or held by the Agent under any Loan Document to the holder of any Lien on such property that is permitted by Section 7.02(i); and (c) to release any Subsidiary Guarantor from its obligations under the Secured Guarantee if such Person ceases to be a Subsidiary as a result of a transaction permitted hereunder. Upon request by the Agent at any time, the Required Lenders will confirm in writing the Agent's authority to release or subordinate its interest in particular types or items of property, or to release any Subsidiary Guarantor from its obligations under the Secured Guarantee pursuant to this Section 9.10. Section 9.11. Indemnification of Agent. Whether or not the transactions contemplated hereby are consummated, the Lenders shall indemnify upon demand each Agent-Related Person (to the extent not reimbursed by or on behalf of the Company and without limiting the obligation of the Company to do so), pro rata, and hold harmless each Agent-Related Person from and against any and all Indemnified Liabilities incurred by it; provided that no Lender shall be liable for the payment to any Agent-Related Person of any portion of such Indemnified Liabilities to the extent determined in a final, nonappealable judgment by a court of competent jurisdiction to have resulted from such Agent-Related Person's own gross negligence or willful misconduct; and provided further that no action taken in accordance with the directions of the Required Lenders shall be deemed to constitute gross negligence or willful misconduct for purposes of this Section. Without limitation of the foregoing, each Lender shall reimburse the Agent upon demand for its ratable share of any costs or out-of-pocket expenses (including Attorney Costs) incurred by the Agent in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement, any other Loan Document or any document contemplated by or referred to herein, to the extent that 76 the Agent is not reimbursed for such expenses by or on behalf of the Company. The undertaking in this Section shall survive the payment of all other Obligations and the resignation of the Agent. Section 9.12. Withholding Tax. (a) If any Lender (including a Lender that becomes a party to this Agreement by assignment in accordance with Section 10.07) is not a "United Stated Person" for U.S. federal income tax purposes as defined in Section 7701(a)(30) of the Code and such Lender claims exemption from, or a reduction of, U.S. withholding tax under Sections 1441 or 1442 of the Code, such Lender agrees with and in favor of the Agent and the Company to deliver to the Agent and the Company: (i) if such Lender claims an exemption from, or a reduction of, withholding tax under a United States tax treaty, two properly completed and executed copies of IRS Form W-8BEN (or any successor form) before the payment of any interest in the first calendar year and before the payment of any interest in each third succeeding calendar year during which interest may be paid under this Agreement; (ii) if such Lender claims that interest paid under this Agreement is exempt from United States withholding tax because it is effectively connected with a United States trade or business of such Lender, two properly completed and executed copies of IRS Form W-8ECI (or any successor form) before the payment of any interest is due in the first taxable year of such Lender and in each third succeeding taxable year of such Lender during which interest may be paid under this Agreement; and (iii) such other form or forms as may be required under the Code or other laws of the United States as a condition to exemption from, or reduction of, United States withholding tax. Such Lender agrees to promptly notify the Agent and the Company of any change in circumstances which would modify or render invalid any claimed exemption or reduction. (b) If any Lender claims exemption from, or reduction of, withholding tax under a United States tax treaty by providing an IRS Form W-8BEN, W-8ECI or other required form and such Lender sells, assigns, grants a participation in, or otherwise transfers all or part of the Obligations of the Company to such Lender, such Lender agrees to notify the Agent and the Company of the percentage amount in which it is no longer the beneficial owner of Obligations of the Company to such Lender. To the extent of such percentage amount, the Agent and the Company will treat such Lender's IRS Form W-8BEN, W-8ECI or other required form as no longer valid. (c) If any Lender claiming exemption from United States withholding tax by filing IRS Form W-8ECI with the Agent sells, assigns, grants a participation in or otherwise transfers all or part of the Obligations of the Company to such Lender, such Lender agrees to undertake sole responsibility for complying with the withholding tax requirements imposed by Sections 1441 and 1442 of the Code. (d) If any Lender is entitled to a reduction in the applicable withholding tax, the Company may withhold from any interest payment to such Lender (or the Agent) an amount 77 equivalent to the applicable withholding tax after taking into account such reduction. However, if the forms or other documentation required by subsection (a) of this Section are not delivered to the Company and the Agent, or if any Lender is not entitled to submit such forms or other documentation, then the Company may withhold from any interest payment to such Lender (or the Agent) an amount equivalent to the applicable withholding tax imposed by Sections 1441 and 1442 of the Code, without reduction. If the Company withholds tax from any interest payment, it shall deliver to the Agent on the Interest Payment Date a written notice setting forth in reasonable detail the amount of withholding made and the reason for said calculation of such amount. (e) If the IRS or any other Governmental Authority of the United States or other jurisdiction asserts a claim that the Company or the Agent did not properly withhold tax from amounts paid to or for the account of any Lender (because the appropriate form was not delivered or was not properly executed, because such Lender failed to notify the Company or the Agent of a change in circumstances which rendered the exemption from, or reduction of, withholding tax ineffective or for any other reason) such Lender shall indemnify the Company or the Agent, as the case may be, fully for all amounts paid, directly or indirectly, by the Company or the Agent as tax or otherwise, including penalties and interest and including any taxes imposed by any jurisdiction on the amounts payable to the Company or the Agent under this Section, together with all costs and expenses (including Attorney Costs). The obligation of the Lenders under this subsection shall survive the payment of all Obligations and the resignation or replacement of the Agent. (f) Any amounts withheld from a Lender as a result of the failure of such Lender to claim an exemption from withholding available to it or otherwise to comply with this Section 9.12 shall not be subject to indemnification under Section 3.01, Section 10.05 or otherwise. ARTICLE 10 MISCELLANEOUS Section 10.01. Amendments and Waivers. No amendment or waiver of any provision of this Agreement or any other Loan Document, and no consent to any departure by the Company or any other Obligor therefrom, shall be effective unless in writing signed by the Required Lenders and the Company or the applicable Obligor, as the case may be, and acknowledged by the Agent, and each such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided that no such amendment, waiver or consent shall: (a) extend or increase the Commitment of any Lender (or reinstate any Commitment terminated pursuant to Section 8.02) without the written consent of such Lender; (b) postpone or delay the maturity of the Term Loans, or any scheduled date of payment of the principal amount of the Term Loans under Section 2.07, or any date for the payment of any interest or fees due to the Lenders (or any of them) hereunder or under any other Loan Document, or reduce the amount of, waive or excuse any such payment, without the written consent of each Lender affected thereby; 78 (c) change the percentage of the Commitments or of the aggregate unpaid principal amount of the Term Loans that is required for the Lenders or any of them to take any action hereunder without the written consent of each Lender; (d) amend the definition of "Interest Period" to permit Interest Periods with a duration of longer than six months without the written consent of each Lender; (e) release all or any substantial part of the Collateral from the Transaction Liens (except as expressly permitted hereunder or in the Security Agreement) without the written consent of each Lender; or (f) amend this Section 10.01 or Section 2.13 without the written consent of each Lender; and provided further that (i) no such agreement shall, unless in writing and signed by the Agent in addition to the Required Lenders or all the Lenders, as the case may be, affect the rights or duties of the Agent under this Agreement or any other Loan Document (except with respect to the removal of the Agent) and (ii) any fee agreement referred to in Section 2.10 may be amended, or rights or privileges thereunder waived, in a writing executed by the parties thereto. Section 10.02. Notices. (a) Unless otherwise expressly provided herein, all notices and other communications provided for hereunder shall be in writing (including by facsimile transmission). All such written notices shall be mailed, faxed or delivered to the applicable address, facsimile number (provided that any matter transmitted by the Company by facsimile (1) shall be immediately confirmed by a telephone call to the recipient at the number specified on Schedule 10.02, and (2) shall be followed promptly by delivery of a hard copy original thereof) or (subject to subsection (c) below) electronic mail address, and all notices and other communications expressly permitted hereunder to be given by telephone shall be made to the applicable telephone number, as follows: (i) if to the Company or the Agent, to the address, facsimile number, electronic mail address or telephone number specified for such Person on Schedule 10.02 or to such other address, facsimile number, electronic mail address or telephone number as shall be designated by such party in a notice to the other parties; and (ii) if to any other Lender, to the address, facsimile number, electronic mail address or telephone number specified in its administrative questionnaire or to such other address, facsimile number, electronic mail address or telephone number as shall be designated by such party in a notice to the Company and the Agent. All such notices and other communications shall be deemed to be given or made upon the earlier to occur of (i) actual receipt by the relevant party hereto and (ii) (A) if delivered by hand or by courier, when signed for by or on behalf of the relevant party hereto; (B) if delivered by mail, four Business Days after deposit in the mails, postage prepaid; (C) if delivered by facsimile, when sent and receipt has been confirmed by telephone; and (D) if delivered by electronic mail (which form of delivery is subject to the provisions of subsection (c) below), when delivered; provided that notices and other communications to the Agent pursuant to Article 79 2 shall not be effective until actually received by such Person. In no event shall a voicemail message be effective as a notice, communication or confirmation hereunder. (b) Loan Documents may be transmitted and/or signed by facsimile or Adobe PDF delivered by electronic mail. The effectiveness of any such documents and signatures shall, subject to applicable law, have the same force and effect as manually-signed originals and shall be binding on all Obligors, the Agent and the Lenders. The Agent may also require that any such documents and signatures be confirmed by a manually-signed original thereof; provided that the failure to request or deliver the same shall not limit the effectiveness of any facsimile document or signature. (c) Electronic mail and Internet and intranet websites may be used only to distribute routine communications, such as financial statements and other information as provided in Section 6.02, and to distribute Loan Documents for execution by the parties thereto and may not be used for any other purpose. (d) The Agent and the Lenders shall be entitled to rely and act upon any notices purportedly given by or on behalf of the Company even if (i) such notices were not made in a manner specified herein, were incomplete or were not preceded or followed by any other form of notice specified herein or (ii) the terms thereof, as understood by the recipient, varied from any confirmation thereof. The Company shall indemnify each Agent-Related Person and each Lender from all losses, costs, out-of-pocket expenses and liabilities resulting from the reliance by such Person on each notice purportedly given by or on behalf of the Company; provided that such indemnity shall not, as to any such Person, be available to the extent that such losses, costs, expenses or liabilities are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Person. All telephonic notices to and other communications with the Agent may be recorded by the Agent, and each of the parties hereto hereby consents to such recording. Section 10.03. No Waiver; Cumulative Remedies. No failure to exercise and no delay in exercising, on the part of the Agent or any Lender, any right, remedy, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. Section 10.04. Costs and Expenses. The Company agrees (a) to pay or reimburse the Agent for all reasonable costs and out-of-pocket expenses incurred in connection with the development, preparation, negotiation and execution of this Agreement and the other Loan Documents and any amendment, waiver, consent or other modification of the provisions hereof and thereof (whether or not the transactions contemplated hereby or thereby are consummated) and the consummation and administration of the transactions contemplated hereby and thereby, including all Attorney Costs, and (b) to pay or reimburse the Agent and each Lender for all costs and expenses incurred in connection with the enforcement, attempted enforcement or preservation of any rights or remedies under this Agreement or the other Loan Documents (including all such costs and expenses incurred during any "workout" or restructuring in respect of the Obligations and during any legal proceeding, including in any Insolvency Proceeding or appellate proceeding), including all fees, expenses and disbursements of any law firm or other 80 external legal counsel and, without duplication, the allocated cost of internal legal services and all expenses and disbursements of internal counsel. The foregoing costs and expenses shall include all search, filing, recording, title insurance and appraisal charges and fees and taxes related thereto and other out-of-pocket expenses incurred by the Agent and the cost of independent public accountants and other outside experts retained by the Agent or any Lender. All amounts due under this Section shall be payable within ten Business Days after written demand therefor together with, if requested by the Company, backup documentation supporting such payment or reimbursement request. The agreements in this Section shall survive the repayment of the Term Loans and the other Obligations. Section 10.05. Company Indemnification; Damage Waiver. (a) Whether or not the transactions contemplated hereby are consummated, the Company shall indemnify and hold harmless each Agent-Related Person, each Lender and their respective Affiliates, directors, officers, employees, counsel, agents and attorneys-in-fact involved with the refinancing or the Transactions (collectively the "Indemnified Persons") from and against any and all liabilities, obligations, losses, damages, penalties, claims, demands, actions, judgments, suits, charges and reasonable costs, expenses and disbursements (including Attorney Costs) of any kind or nature whatsoever (including those arising from or relating to any environmental matters) that may at any time be imposed on, incurred by or asserted against any such Indemnified Person in any way relating to or arising out of or in connection with (a) the execution, delivery, enforcement, performance or administration of any Loan Document or any other agreement, letter or instrument delivered in connection with the transactions contemplated thereby or the consummation of the transactions contemplated thereby, (b) any Commitment or Loan or the use or proposed use of the proceeds therefrom or (c) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory (including any investigation of, preparation for or defense of any pending or threatened claim, investigation, litigation or proceeding) and regardless of whether any Indemnified Person is a party thereto (all the foregoing, collectively, the "Indemnified Liabilities"), in all cases, whether or not caused by or arising, in whole or in part, out of the negligence of the Indemnified Person; provided that such indemnity shall not, as to any Indemnified Person, be available to the extent that such liabilities, obligations, losses, damages, penalties, claims, demands, actions, judgments, suits, costs, expenses or disbursements are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnified Person. No Indemnified Person shall be liable for any damages arising from the use by others of any information or other materials obtained through IntraLinks or other similar information transmission systems in connection with this Agreement, nor shall any Indemnified Person have any liability for any indirect or consequential damages relating to this Agreement or any other Loan Document or arising out of its activities in connection herewith or therewith (whether before or after the Effective Date). All amounts due under this Section shall be payable within thirty days after written demand therefor together with, if requested by the Company, backup documentation supporting such indemnification request. The agreements in this Section shall survive the resignation of the Agent, the replacement of any Lender and the repayment, satisfaction or discharge of all the other Obligations. (b) To the extent permitted by applicable law, the Company shall not assert, and hereby waives, any claim against any Indemnified Person, on any theory of liability, for special, 81 indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with or as a result of this Agreement or any agreement or instrument contemplated hereby, the Transactions, any Term Loan or the use of the proceeds thereof. Section 10.06. Payments Set Aside. To the extent that the Company makes a payment to the Agent or the Lenders, or the Agent or the Lenders exercise their right of set-off, and such payment or the proceeds of such set-off or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by the Agent or such Lender in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any Insolvency Proceeding or otherwise, then (a) to the extent of such recovery the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such set-off had not occurred and (b) each Lender severally agrees to pay to the Agent upon demand its pro rata share of any amount so recovered from or repaid by the Agent. Section 10.07. Assignments, Participations, Etc. (a) The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that the Company may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of each Lender and no Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an Eligible Assignee in accordance with the provisions of subsection (b) of this Section, (ii) by way of participation in accordance with the provisions of subsection (d) of this Section or (iii) by way of pledge or assignment of a security interest subject to the restrictions of subsection (f) or (h) of this Section (and any other attempted assignment or transfer by any party hereto shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in subsection (d) of this Section and, to the extent expressly contemplated hereby, the Indemnified Persons and their permitted successors and assigns) any legal or equitable right, remedy or claim under or by reason of this Agreement. (b) Any Lender may at any time assign to one or more Eligible Assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Loans at the time owing to it); provided that (i) except in the case of an assignment of the entire remaining amount of the assigning Lender's Loans at the time owing to it or in the case of an assignment to a Lender or an Affiliate of a Lender or an Approved Fund (as defined in subsection (g) of this Section) with respect to a Lender, the aggregate amount of the Term Loans subject to each such assignment, determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Agent or, if "Trade Date" is specified in the Assignment and Assumption, as of the Trade Date, shall not be less than $1,000,000 unless each of the Agent and, so long as no Event of Default has occurred and is continuing, the Company otherwise consents (each such consent not to be unreasonably withheld or delayed); (ii) each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender's rights and obligations under this Agreement with respect to the Term Loans assigned; and (iii) the parties to each assignment shall execute and deliver to the Agent an Assignment and Assumption, together with a processing and recordation fee of $3,500 (which fee shall not, except in the case of an assignment pursuant to Section 3.07 (if such fee is not paid by the assignee), be payable by the Company); provided that no such fee shall be payable in the case of 82 any assignment by a Lender to an Affiliate or Approved Fund of such Lender. Subject to acceptance and recording thereof by the Agent pursuant to subsection (c) of this Section (but without prejudice to any right of the assigning Lender otherwise specified herein to make assignments hereunder without the consent of the Agent), from and after the effective date specified in each Assignment and Assumption, the Eligible Assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement (provided that, with respect to circumstances in effect on the effective date of such Assignment and Assumption, an Eligible Assignee shall not be entitled to receive any greater payment under Section 3.01 than the applicable Lender would have been entitled to receive had the assignment not taken place), and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender's rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Section 3.01, Section 3.03, Section 3.04, Section 10.04 and Section 10.05 with respect to facts and circumstances occurring prior to the effective date of such assignment). Upon request, the Company (at its expense) shall execute and deliver a Note to the assignee Lender. Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this subsection shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with subsection (d) of this Section. (c) The Agent, acting solely for this purpose as an agent of the Company, shall maintain at the Agent's Office a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the principal amounts of the Term Loans owing to each Lender pursuant to the terms hereof from time to time (the "Register"). The entries in the Register shall be conclusive, and the Company, the Agent and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Company and any Lender at any reasonable time and from time to time upon reasonable prior notice. (d) Any Lender may at any time, without the consent of, or notice to, the Company or the Agent, sell participations to any Person (other than a natural person or the Company or any of the Company's Subsidiaries) (each, a "Participant") in all or a portion of such Lender's rights and/or obligations under this Agreement (including all or a portion of the Term Loans owing to it); provided that (i) such Lender's obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Company, the Agent and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, waiver or other modification described in the first proviso to Section 10.01 that directly affects such Participant. Subject to subsection (e) of this Section, the Company agrees that each Participant shall be entitled to the benefits of 83 Section 3.01, Section 3.03, and Section 3.04 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to subsection (b) of this Section. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 10.09 as though it were a Lender, provided such Participant agrees to be subject to Section 2.13 as though it were a Lender. (e) A Participant shall not be entitled to receive any greater payment under Section 3.01 or Section 3.03 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Company's prior written consent. A Participant that is not a "United States person" within the meaning of Section 7701(a)(30) of the Code shall not be entitled to the benefits of Section 3.01 unless the Company is notified of the participation sold to such Participant and such Participant agrees, for the benefit of the Company, to comply with Section 9.12 as though it were a Lender. (f) Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement (including under its Note, if any) to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Lender; provided that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto. (g) As used herein, the following terms have the following meanings: "Eligible Assignee" means (a) a Lender; (b) an Affiliate of a Lender; (c) an Approved Fund; and (d) any other Person (other than a natural person) approved by (i) the Agent and (ii) unless an Event of Default has occurred and is continuing, the Company (each such approval not to be unreasonably withheld or delayed); provided that notwithstanding the foregoing, "Eligible Assignee" shall not include the Company or any of the Company's Subsidiaries. "Fund" means any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its business. "Approved Fund" means any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender. (h) Notwithstanding anything to the contrary contained herein, any Lender that is a Fund may create a security interest in all or any portion of the Term Loans owing to it and the Note, if any, held by it to the trustee for holders of obligations owed, or securities issued, by such Fund as security for such obligations or securities, provided that unless and until such trustee actually becomes a Lender in compliance with the other provisions of this Section, (i) no such pledge shall release the pledging Lender from any of its obligations under the Loan Documents and (ii) such trustee shall not be entitled to exercise any of the rights of a Lender under the Loan 84 Documents even though such trustee may have acquired ownership rights with respect to the pledged interest through foreclosure or otherwise. Section 10.08. Confidentiality. Each Lender agrees to take and to cause its Affiliates to take normal and reasonable precautions and exercise due care to maintain the confidentiality of all information provided to it by the Company or any Subsidiary, or by the Agent on the Company's or such Subsidiary's behalf, under this Agreement or any other Loan Document, and neither it nor any of its Affiliates shall use any such information (x) other than in connection with or in enforcement of this Agreement and the other Loan Documents or in connection with other business now or hereafter existing or contemplated with the Company or any Subsidiary or (y) in any manner that would constitute a violation of applicable laws, except, in either case, to the extent such information (i) was or becomes generally available to the public other than as a result of disclosure by the Lender, or (ii) was or becomes available on a non-confidential basis from a source other than the Company, provided that such source is not bound by a confidentiality agreement with the Company known to the Lender; provided further that any Lender may disclose such information (a) at the request or pursuant to any requirement of any Governmental Authority to which the Lender is subject or in connection with an examination of such Lender by any such authority; (b) pursuant to subpoena or other court process; (c) when required to do so in accordance with the provisions of any applicable Requirement of Law; (d) to the extent reasonably required in connection with any litigation or proceeding to which the Agent or any Lender or their respective Affiliates may be party; (e) to the extent reasonably required in connection with the exercise of any remedy hereunder or under any other Loan Document; (f) to such Lender's independent auditors and other professional advisors; (g) to any Participant or Eligible Assignee, actual or potential, provided that such Person agrees in writing to keep such information confidential to the same extent required of the Lenders hereunder; (h) as to any Lender or its Affiliate, as expressly permitted under the terms of any other document or agreement regarding confidentiality to which the Company or any Subsidiary is party with such Lender or such Affiliate; (i) to its Affiliates, provided that such Affiliates are not insurance companies; (j) to any other party to this Agreement; and (k) to any direct contractual counterparty or prospective counterparty (or such counterparty's or prospective counterparty's professional advisor) to any credit derivative transaction relating to obligations of the Obligors (so long as all parties, including all counterparties and advisors agree to be bound by the provisions of this Section 10.08). Section 10.09. Set-off. In addition to any rights and remedies of the Lenders provided by law, if an Event of Default shall have occurred and be continuing, each Lender and each of its Affiliates is authorized at any time and from time to time, without prior notice to the Company, any such notice being waived by the Company, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held by, and other indebtedness at any time owing by, such Lender or Affiliate to or for the credit or the account of the Company against any and all Obligations owing to such Lender, now or hereafter existing, irrespective of whether or not the Agent or such Lender shall have made demand under this Agreement or any Loan Document and although such Obligations may be contingent or unmatured; provided that neither any Lender nor any of its Affiliates shall be entitled to exercise any such set off with respect to any trust or payroll account. Each Lender agrees to promptly notify the Company and the Agent after any such set-off and application 85 made by such Lender; provided that the failure to give such notice shall not affect the validity of such set-off and application. Section 10.10. Notification of Addresses, Lending Offices, Etc. Each Lender shall notify the Agent in writing of any changes in the address to which notices to the Lender should be directed, of addresses of any Lending Office, of payment instructions in respect of all payments to be made to it hereunder and of such other administrative information as the Agent shall reasonably request. Section 10.11. Counterparts. This Agreement may be executed in any number of separate counterparts, each of which, when so executed, shall be deemed an original, and all of said counterparts taken together shall be deemed to constitute but one and the same instrument. Section 10.12. Survival of Representations and Warranties. All representations and warranties made hereunder and in any other Loan Document or other document delivered pursuant hereto or thereto or in connection herewith or therewith shall survive the execution and delivery hereof and thereof. Such representations and warranties have been or will be relied upon by the Agent and each Lender, regardless of any investigation made by the Agent or any Lender or on their behalf, and shall continue in full force and effect as long as any Term Loan or any other Obligation hereunder shall remain unpaid or unsatisfied. Section 10.13. Severability. If any provision of any Loan Document is invalid, illegal or unenforceable in any jurisdiction then, to the fullest extent permitted by law, (i) such provision shall, as to such jurisdiction, be ineffective to the extent (but only to the extent) of such invalidity, illegality or unenforceability, (ii) the other provisions of the Loan Documents shall remain in full force and effect in such jurisdiction and shall be liberally construed in favor of the Lenders in order to carry out the intentions of the parties thereto as nearly as may be possible and (iii) the invalidity, illegality or unenforceability of any such provision in any jurisdiction shall not affect the validity, legality or enforceability of such provision in any other jurisdiction. Section 10.14. Governing Law; Jurisdiction; Consent to Service of Process. (a) This Agreement shall be construed in accordance with and governed by the law of the State of New York. (b) The Company irrevocably and unconditionally submits, for itself and its property, 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 of the Southern District of New York, and any relevant appellate court, in any action or proceeding arising out of or relating to any Loan Document, or for recognition or enforcement of any judgment, and each party hereto irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State court or, to the extent permitted by law, in such Federal court. Each party hereto 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. Nothing in any Loan Document shall affect any right that any Lender or the Agent may otherwise have to bring any action or proceeding relating to any Loan Document against any Obligor or its properties in the courts of any jurisdiction. 86 (c) The Company irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to any Loan Document in any court referred to in subsection (b) of this Section. Each party hereto irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of any such suit, action or proceeding in any such court. (d) Each party hereto irrevocably consents to service of process in the manner provided for notices in Section 10.02. Nothing in any Loan Document will affect the right of any party hereto to serve process in any other manner permitted by law. Section 10.15. Waiver of Jury Trial. EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER ANY LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO ANY LOAN DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING AND WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS. Section 10.16. USA PATRIOT Act Notice. Each Lender and the Agent (for itself and not on behalf of any Lender) hereby notifies the Company that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the "Patriot Act"), it is required to obtain, verify and record information that identifies the Company, which information includes the name and address of the Company and other information that will allow such Lender or the Agent, as applicable, to identify the Company in accordance with the Patriot Act. Section 10.17. Entire Agreement. This Agreement, together with the other Loan Documents and any separate agreements with respect to fees payable to the Agent, embodies the entire agreement and understanding among the Company, the Lenders and the Agent and supersedes all prior or contemporaneous agreements and understandings of such Persons, verbal or written, relating to the subject matter hereof and thereof. [signature pages to follow] 87 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their proper and duly authorized officers as of the day and year first above written. CONSECO, INC. By:/s/Daniel J. Murphy -------------------------------- Name: Daniel J. Murphy Title: Senior Vice President and Treasurer BANK OF AMERICA, N.A., as Agent By:/s/Molly J. Oxford --------------------------------- Name: Molly J. Oxford Title: Vice President BANK OF AMERICA, N.A., as a Lender By:/s/Leslie Nannen -------------------------------- Name: Leslie Nannen Title: Principal [OTHER SIGNATURE BLOCKS] 88 EX-10 3 guarantee.txt EXHIBIT 10.4 Exhibit 10.4 GUARANTEE AND SECURITY AGREEMENT dated as of June 22, 2004 among CONSECO, INC. THE SUBSIDIARY GUARANTORS PARTY HERETO and BANK OF AMERICA, N.A. as Agent TABLE OF CONTENTS
PAGE Section 1. Definitions.....................................................................................1 Section 2. Guarantees by Subsidiary Guarantors.............................................................9 Section 3. Grant of Transaction Liens.....................................................................12 Section 4. General Representations and Warranties.........................................................14 Section 5. Further Assurances; General Covenants..........................................................16 Section 6. Accounts.......................................................................................18 Section 7. Chattel Paper and Instruments..................................................................18 Section 8. Commercial Tort Claims.........................................................................19 Section 9. Recordable Intellectual Property...............................................................19 Section 10. Proceeds of Letters of Credit..................................................................20 Section 11. Investment Property............................................................................21 Section 12. Controlled Deposit Accounts....................................................................24 Section 13. Operation of Collateral Accounts...............................................................25 Section 14. Transfer of Record Ownership...................................................................26 Section 15. Right to Vote Securities.......................................................................27 Section 16. Remedies upon Event of Default.................................................................27 Section 17. Application of Proceeds........................................................................28 Section 18. Fees and Expenses; Indemnification.............................................................29 Section 19. Authority to Administer Collateral.............................................................30 Section 20. Limitation on Duty in Respect of Collateral....................................................31 Section 21. General Provisions Concerning the Agent........................................................31 Section 22. Termination of Transaction Liens; Release of Collateral........................................33 Section 23. Additional Subsidiary Guarantors and Lien Grantors.............................................34 Section 24. Notices........................................................................................34 Section 25. No Implied Waivers; Remedies Not Exclusive.....................................................36 Section 26. Successors and Assigns.........................................................................36 Section 27. Amendments and Waivers.........................................................................36 Section 28. Choice of Law..................................................................................36 Section 29. Waiver of Jury Trial...........................................................................36 Section 30. Severability...................................................................................36
SCHEDULES: Schedule 1 Equity Interests in Subsidiaries and Affiliates Owned by Original Lien Grantors Schedule 2 Other Investment Property Owned by Original Lien Grantors Schedule 3 Securities Accounts, Commodity Accounts and Deposit Accounts Schedule 4 Material Commercial Tort Claims Schedule 5 Pledged Instruments Schedule 6 Account Collateral EXHIBITS: Exhibit A Security Agreement Supplement Exhibit B Copyright Security Agreement Exhibit C Patent Security Agreement Exhibit D Trademark Security Agreement Exhibit E Perfection Certificate Exhibit F Issuer Control Agreement Exhibit G Securities Account Control Agreement
ii GUARANTEE AND SECURITY AGREEMENT AGREEMENT dated as of June 22, 2004 among CONSECO, INC., a Delaware corporation (the "Company"), the SUBSIDIARY GUARANTORS party hereto and BANK OF AMERICA, N.A., as Agent. WHEREAS, the Company is entering into the Credit Agreement described in Section 1 hereof in order to (i) refinance (the "Refinancing") in full all indebtedness outstanding under the Credit Agreement dated as of September 10, 2003, as amended, among the Company, the lenders named therein, and Bank of America, N.A., as agent for such lenders, (ii) pay fees and expenses incurred in connection with the Refinancing, (iii) repurchase the CDOC Preferred Stock and (iv) finance other general corporate purposes; WHEREAS, the Company is willing to secure its obligations under the Credit Agreement by granting Liens on substantially all of its assets to the Agent as provided in the Security Documents; WHEREAS, the Company is willing to cause each of its current and future Domestic Subsidiaries (other than Insurance Subsidiaries, Subsidiaries of Insurance Subsidiaries and Immaterial Subsidiaries) to (i) guarantee the foregoing obligations of the Company and (ii) secure such guarantee thereof by granting Liens on substantially all of the assets of such Subsidiaries to the Agent as provided in the Security Documents; WHEREAS, the Lenders are not willing to enter into the Credit Agreement unless (i) the foregoing obligations of the Company are secured and guaranteed as described above and (ii) each guarantee thereof is secured by Liens on substantially all of the assets of the relevant Subsidiary Guarantor as provided in the Security Documents; and WHEREAS, upon any foreclosure or other enforcement of the Security Documents, the net proceeds of, or other collections on, the relevant Collateral are to be received by or paid over to the Agent and applied as provided in Section 22 hereof; NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: Section 1. Definitions. (a) Terms Defined in Credit Agreement. Terms defined in the Credit Agreement and not otherwise defined in subsection (b) or (c) of this Section have, as used herein, the respective meanings provided for therein. (b) Terms Defined in UCC. As used herein, each of the following terms has the meaning specified in the UCC:
Term UCC - ---- --- Account 9-102 Authenticate 9-102 Certificated Security 8-102 Chattel Paper 9-102 Commercial Tort Claim 9-102 Commodity Account 9-102 Commodity Contract 9-102 Commodity Customer 9-102 Commodity Intermediary 9-102 Deposit Account 9-102 Document 9-102 Electronic Chattel Paper 9-102 Entitlement Holder 8-102 Entitlement Order 8-102 Equipment 9-102 Financial Asset 8-102 & 103 General Intangibles 9-102 Instrument 9-102 Inventory 9-102 Investment Property 9-102 Letter-of-Credit Right 9-102 Payment Intangible 9-102 Record 9-102 Securities Account 8-501 Securities Intermediary 8-102 Security 8-102 & 103 Security Entitlement 8-102 Supporting Obligations 9-102 Tangible Chattel Paper 9-102 Uncertificated Security 8-102
(c) Additional Definitions. The following additional terms, as used herein, have the following meanings: "Account Control Agreement" means a Commodity Account Control Agreement, a Deposit Account Control Agreement or a Securities Account Control Agreement, as the context requires. "Agent" means Bank of America, N.A., in its capacity as Agent under the Loan Documents, and its successors and assigns in such capacity. "Article 9" means Article 9 of the UCC. "CIHC Notes" means (i) the Surplus Debenture No. 4 dated December 31, 1998 issued by Jefferson National Life Insurance Company of Texas (now known as Conseco Life Insurance Company of Texas) to the benefit of CIHC, Incorporated in the amount of $336,000,000, (ii) the Surplus Debenture No. 5 dated December 31, 1998 issued by Jefferson National Life Insurance Company of Texas (now known as Conseco Life Insurance Company of Texas) to the benefit of 2 CIHC, Incorporated in the amount of $305,000,000, (iii) the Surplus Debenture No. 6 dated April 30, 1999 issued by Jefferson National Life Insurance Company of Texas (now known as Conseco Life Insurance Company of Texas) to the benefit of CIHC, Incorporated in the amount of $58,250,000 and (iv) the Surplus Debenture No. 2 dated September 29, 1995 issued by TLIC Life Insurance Company (now known as Conseco Life Insurance Company of Texas) to the benefit of CIHC, Incorporated in the amount of $50,000,000. "Collateral" means all property, whether now owned or hereafter acquired, on which a Lien is granted or purports to be granted to the Agent pursuant to the Security Documents. When used with respect to a specific Lien Grantor, the term "Collateral" means all its property on which such a Lien is granted, or purports to be granted, pursuant to the Security Documents. "Collateral Accounts" means the Controlled Commodity Accounts, the Controlled Deposit Accounts and the Controlled Securities Accounts. "Commodity Account Control Agreement" means, with respect to any Commodity Account as to which a Lien Grantor is the Commodity Customer, an agreement by such Lien Grantor, the Agent and the relevant Commodity Intermediary that, upon the occurrence and during the continuance of an Event of Default, the Commodity Intermediary will comply only with instructions originating from the Agent without further consent by such Lien Grantor. Each such agreement must be reasonably satisfactory in form and substance to the Agent. "Company" has the meaning specified in the recitals hereto. "Control" has the following meanings: (a) when used with respect to any Security or Security Entitlement, the meaning specified in UCC Section 8-106; (b) when used with respect to any Deposit Account, the meaning specified in UCC Section 9-104; (c) when used with respect to any Electronic Chattel Paper, the meaning specified in UCC Section 9-105; (d) when used with respect to any Commodity Account or Commodity Contract, the meaning specified in UCC Section 9-106(b); and (e) when used with respect to any right to payment or performance by the issuer or a Nominated Person in respect of a letter of credit, the meaning specified in UCC Section 9-107. "Controlled Commodity Account" means a Commodity Account as to which (i) a Lien Grantor is the Commodity Customer and (ii) a Commodity Account Control Agreement is in effect. 3 "Controlled Deposit Account" means a Deposit Account (i) that is subject to a Deposit Account Control Agreement, (ii) as to which the Agent is the Depositary Bank's "customer" (as defined in UCC Section 4-104) or (iii) as to which the Agent is the Depositary Bank. "Controlled Securities Account" means a Securities Account that (i) is maintained in the name of a Lien Grantor at an office of a Securities Intermediary located in the United States and (ii) together with all Financial Assets credited thereto and all related Security Entitlements, is subject to a Securities Account Control Agreement among such Lien Grantor, the Agent and such Securities Intermediary. "Copyright License" means any agreement now or hereafter in existence granting to any Lien Grantor, or pursuant to which any Lien Grantor grants to any other Person, any right to use, copy, reproduce, distribute, prepare derivative works, display or publish any records or other materials on which a Copyright is in existence or may come into existence, including any agreement identified in Schedule 1 to any Copyright Security Agreement. "Copyright Security Agreement" means a Copyright Security Agreement, substantially in the form of Exhibit B, executed and delivered by a Lien Grantor in favor of the Agent for the benefit of the Secured Parties. "Copyrights" means all the following: (i) all copyrights under the laws of the United States (whether or not the underlying works of authorship have been published), all registrations and recordings thereof, all copyrightable works of authorship (whether or not published), and all applications for copyrights under the laws of the United States, including registrations, recordings and applications in the United States Copyright Office or in any similar office or agency of the United States or any State thereof, including those described in Schedule 1 to any Copyright Security Agreement, (ii) all renewals of any of the foregoing, (iii) all claims for, and rights to sue for, past or future infringements of any of the foregoing and (iv) all income, royalties, damages and payments now or hereafter due or payable with respect to any of the foregoing, including damages and payments for past or future infringements thereof. "Credit Agreement" means the Credit Agreement dated as of the date hereof among Conseco, Inc., the Lenders party thereto, and Bank of America, N.A., as Agent. "Deposit Account Control Agreement" means, with respect to any Deposit Account of any Lien Grantor, an agreement among such Lien Grantor, the Agent and the relevant Depositary Bank, set forth in an authenticated Record, (i) that upon the occurrence and during the continuance of an Event of Default, such Depositary Bank will comply only with instructions originated by the Agent directing disposition of the funds in such Deposit Account without further consent by such Lien Grantor and (ii) subordinating to the relevant Transaction Lien all claims of the Depositary Bank to such Deposit Account (except its right to deduct its customary operating charges and fees and any uncollected funds previously credited thereto). "Depositary Bank" means a bank at which a Controlled Deposit Account is maintained. "Equity Interest" means (i) in the case of a corporation, any shares of its capital stock, (ii) in the case of a limited liability company, any membership interest therein, (iii) in the case of a partnership, any partnership interest (whether general or limited) therein, (iv) in the case of any 4 other business entity, any participation or other interest in the equity or profits thereof, (v) any warrant, option or other right to acquire any Equity Interest described in this definition or (vi) any Security Entitlement in respect of any Equity Interest described in this definition. "Federal Government" means the federal government of the United States or any agency or instrumentality thereof. "Intellectual Property" means all rights, priorities and privileges relating to intellectual property, including Copyrights, Patents, Patent Licenses, Trademarks and Trademark Licenses, arising under the laws of the United States, which intellectual property is owned by the Lien Grantors. "Intellectual Property Filing" means (i) with respect to any Patent, Patent License, Trademark or Trademark License, the filing of the applicable Patent Security Agreement or Trademark Security Agreement with the United States Patent and Trademark Office, together with an appropriately completed recordation form and (ii) with respect to any Copyright or Copyright License, the filing of the applicable Copyright Security Agreement with the United States Copyright Office, together with an appropriately completed recordation form, in each case sufficient to record the Transaction Lien granted to the Agent in such Recordable Intellectual Property. "Intellectual Property Security Agreement" means a Copyright Security Agreement, a Patent Security Agreement or a Trademark Security Agreement. "Issuer Control Agreement" means an Issuer Control Agreement substantially in the form of Exhibit F (with any changes that the Agent shall have approved, such approval to be evidenced by the Agent's execution and delivery of such Issuer Control Agreement). "Lien Grantors" means the Company and the Subsidiary Guarantors. "Liquid Investment" means a Cash Equivalent (other than commercial paper) that matures within 30 days after it is first included in the Collateral. "LLC Interest" means a membership interest or similar interest in a limited liability company. "Material Commercial Tort Claim" means a Commercial Tort Claim involving a claim for more than $5,000,000. "Nominated Person" means a Person whom the issuer of a letter of credit (i) designates or authorizes to pay, accept, negotiate or otherwise give value under such letter of credit and (ii) undertakes by agreement or custom and practice to reimburse. "Original Lien Grantor" means any Lien Grantor that grants a Lien on any of its assets hereunder on the Effective Date. 5 "own" refers to the possession of sufficient rights in property to grant a security interest therein as contemplated by UCC Section 9-203, and "acquire" refers to the acquisition of any such rights. "Partnership Interest" means a partnership interest, whether general or limited. "Patent License" means any agreement now or hereafter in existence granting to any Lien Grantor, or pursuant to which any Lien Grantor grants to any other Person, any right with respect to any Patent or any invention now or hereafter in existence, whether patentable or not, whether a patent or application for patent is in existence on such invention or not, and whether a patent or application for patent on such invention may come into existence or not, including any agreement identified in Schedule 1 to any Patent Security Agreement. "Patent Security Agreement" means a Patent Security Agreement, substantially in the form of Exhibit C, executed and delivered by a Lien Grantor in favor of the Agent for the benefit of the Secured Parties. "Patents" means (i) all letters patent and design letters patent of the United States and all applications for letters patent or design letters patent of the United States, including applications in the United States Patent and Trademark Office or in any similar office or agency of the United States or any State thereof, including those described in Schedule 1 to any Patent Security Agreement, (ii) all reissues, divisions, continuations, continuations in part, revisions and extensions of any of the foregoing, (iii) all claims for, and rights to sue for, past or future infringements of any of the foregoing and (iv) all income, royalties, damages and payments now or hereafter due or payable with respect to any of the foregoing, including damages and payments for past or future infringements thereof. "Perfection Certificate" means, with respect to any Lien Grantor, a certificate substantially in the form of Exhibit E, completed and supplemented with the schedules contemplated thereby to the satisfaction of the Agent, and signed by an officer of such Lien Grantor. "Permitted Liens" means Liens (other than the Transaction Liens) on the Collateral permitted to be created or assumed or to exist pursuant to Section 7.02 of the Credit Agreement. "Permitted Priority Liens" means inchoate tax Liens arising by operation of law. "Pledged", when used in conjunction with any type of asset, means at any time an asset of such type that is included (or that creates rights that are included) in the Collateral at such time. For example, "Pledged Equity Interest" means an Equity Interest that is included in the Collateral at such time and "Pledged letter of credit" means a letter of credit that creates rights to payment or performance that are included in the Collateral at such time. "Post-Petition Interest" means any interest that accrues after the commencement of any case, proceeding or other action relating to the bankruptcy, insolvency or reorganization of the Company (or would accrue but for the operation of applicable bankruptcy or insolvency laws), whether or not such interest is allowed or allowable as a claim in any such proceeding. 6 "Proceeds" means all proceeds of, and all other profits, products, rents or receipts, in whatever form, arising from the collection, sale, lease, exchange, assignment, licensing or other disposition of, or other realization upon, any Collateral, including all claims of the relevant Lien Grantor against third parties for loss of, damage to or destruction of, or for proceeds payable under, or unearned premiums with respect to, policies of insurance in respect of, any Collateral, and any condemnation or requisition payments with respect to any Collateral. "Recordable Intellectual Property" means (i) Patents, (ii) Patent Licenses, (iii) Trademarks, (iv) Trademark Licenses, (v) Copyrights and (vi) Copyright Licenses, and all rights in or under any of the foregoing. "Regulated Subsidiary" means a Subsidiary as to which the consent of a governmental body or official is required for any acquisition of control or change of control thereof. "Release Conditions" means the following conditions for releasing all the Secured Guarantees and terminating all the Transaction Liens: (i) all Commitments under the Credit Agreement shall have expired or been terminated; and (ii) all Secured Obligations (other than contingent indemnification obligations not yet due and payable) shall have been paid in full. "Secured Agreement", when used with respect to any Secured Obligation, refers collectively to each instrument, agreement or other document that sets forth obligations of the Company, obligations of a Subsidiary Guarantor and/or rights of the holder with respect to such Secured Obligation. "Secured Guarantee" means, with respect to each Subsidiary Guarantor, its guarantee of the Secured Obligations under Section 2 hereof or Section 1 of a Security Agreement Supplement. "Secured Obligations" means all obligations of the Company or any Obligor now or hereafter existing under the Loan Documents, in each case whether direct or indirect (including those acquired by assignment), absolute or contingent, due or to become due, now existing or hereafter arising. "Secured Parties" means the holders from time to time of the Secured Obligations. "Secured Party Requesting Notice" means, at any time, a Secured Party that has, at least five Business Days prior thereto, delivered to the Agent a written notice (i) stating that it holds one or more Secured Obligations and wishes to receive copies of the notices referred to in Section 21(h) and (ii) setting forth its address, facsimile number and electronic mail address to which copies of such notices should be sent. "Securities Account Control Agreement" means, when used with respect to a Securities Account, a Securities Account Control Agreement substantially in the form of Exhibit G (with any changes that the Agent shall have approved, such approval to be evidenced by the Agent's 7 execution and delivery of such Securities Account Control Agreement) or in any other form reasonably satisfactory to the Agent among the relevant Securities Intermediary, the relevant Lien Grantor and the Agent to the effect that, upon the occurrence and during the continuance of an Event of Default, such Securities Intermediary will comply only with Entitlement Orders originated by the Agent with respect to such Securities Account without further consent by the relevant Lien Grantor. "Security Agreement Supplement" means a Security Agreement Supplement, substantially in the form of Exhibit A, signed and delivered to the Agent for the purpose of adding a Subsidiary as a party hereto pursuant to Section 23 and/or adding additional property to the Collateral. "Security Documents" means this Agreement, the Security Agreement Supplements, the Commodity Account Control Agreements, the Deposit Account Control Agreements, the Issuer Control Agreements, the Securities Account Control Agreements, the Intellectual Property Security Agreements and all other supplemental or additional security agreements, control agreements, mortgages or similar instruments delivered pursuant to the Loan Documents. "Subsidiary Guarantor" means each Subsidiary listed on the signature pages hereof under the caption "Subsidiary Guarantors" and each Subsidiary that shall, at any time after the date hereof, become a "Subsidiary Guarantor" pursuant to Section 23. "Supporting Letter of Credit" means a letter of credit that supports the payment or performance of one or more items included in the Collateral. "Trademark License" means any agreement now or hereafter in existence granting to any Lien Grantor, or pursuant to which any Lien Grantor grants to any other Person, any right to use any Trademark, including any agreement identified in Schedule l to any Trademark Security Agreement. "Trademark Security Agreement" means a Trademark Security Agreement, substantially in the form of Exhibit D, executed and delivered by a Lien Grantor in favor of the Agent for the benefit of the Secured Parties. "Trademarks" means: (i) all trademarks, trade names, corporate names, company names, business names, fictitious business names, trade styles, service marks, logos, brand names, trade dress, prints and labels on which any of the foregoing have appeared or appear, package and other designs, and all other source or business identifiers, and all general intangibles of like nature, and the rights in any of the foregoing which arise under applicable law, (ii) the goodwill of the business symbolized thereby or associated with each of them, (iii) all registrations and applications in connection therewith, including registrations and applications in the United States Patent and Trademark Office or in any similar office or agency of the United States or any State thereof, including those described in Schedule 1 to any Trademark Security Agreement, (iv) all renewals of any of the foregoing, (v) all claims for, and rights to sue for, past or future infringements of any of the foregoing and (vi) all income, royalties, damages and payments now or hereafter due or payable with respect to any of the foregoing, including damages and payments for past or future infringements thereof. 8 "Transaction Liens" means the Liens granted by the Lien Grantors under the Security Documents. "UCC" means the Uniform Commercial Code as in effect from time to time in the State of New York; provided that, if perfection or the effect of perfection or non-perfection or the priority of any Transaction Lien on any Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than New York, "UCC" means the Uniform Commercial Code as in effect from time to time in such other jurisdiction for purposes of the provisions hereof relating to such perfection, effect of perfection or non-perfection or priority. (d) Terms Generally. The definitions of terms herein (including those incorporated by reference to the UCC or to another document) apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun includes the corresponding masculine, feminine and neuter forms. The words "include", "includes" and "including" shall be deemed to be followed by the phrase "without limitation". The word "will" shall be construed to have the same meaning and effect as the word "shall". Unless the context requires otherwise, (i) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (ii) any reference herein to any Person shall be construed to include such Person's successors and assigns, (iii) the words "herein", "hereof" and "hereunder", and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (iv) all references herein to Sections, Exhibits and Schedules shall be construed to refer to Sections of, and Exhibits and Schedules to, this Agreement and (v) the word "property" shall be construed to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights. Section 2. Guarantees by Subsidiary Guarantors. (a) Secured Guarantees. Each Subsidiary Guarantor unconditionally and irrevocably guarantees the full and punctual payment of each Secured Obligation when due (whether at stated maturity, upon acceleration or otherwise). If the Company fails to pay any Secured Obligation punctually when due, each Subsidiary Guarantor agrees that it will forthwith on demand pay the amount not so paid at the place and in the manner specified in the relevant Secured Agreement. (b) Secured Guarantees Unconditional. The obligations of each Subsidiary Guarantor under its Secured Guarantee shall be unconditional and absolute and, without limiting the generality of the foregoing, shall not be released, discharged or otherwise affected by: (i) any extension, renewal, settlement, compromise, waiver or release in respect of any obligation of the Company, any other Subsidiary Guarantor or any other Person under any Secured Agreement, by operation of law or otherwise; (ii) any modification or amendment of or supplement to any Secured Agreement; 9 (iii) any release, impairment, non-perfection or invalidity of any direct or indirect security for any obligation of the Company, any other Subsidiary Guarantor or any other Person under any Secured Agreement; (iv) any change in the corporate existence, structure or ownership of the Company, any other Subsidiary Guarantor or any other Person or any of their respective subsidiaries, or any insolvency, bankruptcy, reorganization or other similar proceeding affecting the Company, any other Subsidiary Guarantor or any other Person or any of their assets or any resulting release or discharge of any obligation of the Company, any other Subsidiary Guarantor or any other Person under any Secured Agreement; (v) the existence of any claim, set-off or other right whatsoever (in any case, whether based on contract, tort or any other theory) that such Subsidiary Guarantor may have at any time against the Company, any other Subsidiary Guarantor, any Secured Party or any other Person, whether in connection with the Loan Documents or any unrelated transactions, provided that nothing herein shall prevent the assertion of any such claim by separate suit or compulsory counterclaim; (vi) any invalidity or unenforceability relating to or against the Company, any other Subsidiary Guarantor or any other Person for any reason of any Secured Agreement, or any provision of applicable law or regulation purporting to prohibit the payment of any Secured Obligation by the Company, any other Subsidiary Guarantor or any other Person; (vii) any manner of application of Collateral or any other collateral, or proceeds thereof, to all or any of the Secured Obligations, or any manner of sale or other disposition of any Collateral or any other collateral for all or any of the Secured Obligations or any other Obligations of any Obligor under the Loan Documents or any other assets of any Obligor or any of its Subsidiaries; (viii) any failure of any Secured Party to disclose to any Subsidiary Guarantor any information relating to the business, condition (financial or otherwise), operations, performance, properties or prospects of any other Obligor now or hereafter known to such Secured Party (each Subsidiary Guarantor waiving any duty on the part of the Secured Parties to disclose such information); or (ix) other than satisfaction in full of the Release Conditions, any other act or omission to act or delay of any kind by the Company, any other Subsidiary Guarantor, any other party to any Secured Agreement, any Secured Party or any other Person, or any other circumstance whatsoever (other than payment in full of the Secured Obligations) that might, but for the provisions of this clause (vii), constitute a legal or equitable discharge of or defense to any obligation of any Subsidiary Guarantor hereunder. (c) Release of Secured Guarantees. (i) All the Secured Guarantees will be released when all the Release Conditions are satisfied. If at any time any payment of a Secured Obligation is rescinded or must be otherwise restored or returned upon the insolvency or 10 receivership of the Company or otherwise, the Secured Guarantees shall be reinstated with respect thereto as though such payment had been due but not made at such time. (ii) If all the capital stock of a Subsidiary Guarantor or all the assets of a Subsidiary Guarantor are sold to a Person other than the Company or one of its Subsidiaries in a transaction permitted by the Credit Agreement (any such sale, a "Sale of Subsidiary Guarantor"), the Secured Guarantee of such Subsidiary Guarantor shall automatically be discharged and released without any further action by the Agent or any other Secured Party effective as of the time of such Sale of Subsidiary Guarantor; provided that, if such sale is an Asset Sale, arrangements reasonably satisfactory to the Agent have been made to apply the Net Proceeds thereof as required by the Credit Agreement. Such release shall not require the consent of any Secured Party, and the Agent shall be fully protected in relying on a certificate of the Company as to whether any particular sale constitutes a Sale of Subsidiary Guarantor. (iii) In addition to any release permitted by subsection (ii), the Agent may release any Secured Guarantee with the prior written consent of the Required Lenders; provided that any release of all or substantially all the Secured Guarantees shall require the consent of all the Lenders. (d) Waiver by Subsidiary Guarantors. Each Subsidiary Guarantor irrevocably waives acceptance hereof, presentment, demand, protest and any notice not provided for herein, as well as any requirement that at any time any action be taken by any Person against the Company, any other Subsidiary Guarantor or any other Person. (e) Subrogation. A Subsidiary Guarantor that makes a payment with respect to a Secured Obligation hereunder shall be subrogated to the rights of the payee against the Company with respect to such payment; provided that no Subsidiary Guarantor shall enforce any payment by way of subrogation against the Company, or by reason of contribution against any other Subsidiary Guarantor of such Secured Obligation, until all of the Release Conditions have been satisfied in full. If any amount shall be paid to any Subsidiary Guarantor in violation of the immediately preceding sentence at any time prior to the satisfaction in full of the Release Conditions, such amount shall be received and held in trust for the benefit of the Secured Parties, shall be segregated from other property and funds of such Subsidiary Guarantor and shall forthwith be paid or delivered to the Agent in the same form as so received (with any necessary endorsement or assignment) to be credited and applied to the Secured Obligations and all other amounts payable under this Agreement in accordance with the terms of the Loan Documents, or to be held as Collateral for any Secured Obligations or other amounts payable under this Agreement thereafter arising; provided that the obligations of such Subsidiary Guarantor under this Section 2(e) shall be subject to the limitation contained in Section 2(i). (f) Stay of Acceleration. If acceleration of the time for payment of any Secured Obligation by the Company is stayed by reason of the insolvency or receivership of the Company or otherwise, all Secured Obligations otherwise subject to acceleration under the terms of any Secured Agreement shall nonetheless be payable by the Subsidiary Guarantors hereunder forthwith on demand by the Agent. 11 (g) Right of Set-Off. In addition to any rights and remedies of the Secured Parties provided by applicable law, if any Secured Obligation is not paid promptly when due (after the passage of any applicable cure period as set forth in the Loan Documents), each of the Secured Parties and their respective Affiliates is authorized at any time and from time to time, without prior notice to any Subsidiary Guarantor, any such notice being waived by each Subsidiary Guarantor, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held by, and other indebtedness at any time owing by, such Secured Party or Affiliate to or for the credit or the account of any Subsidiary Guarantor against the obligations of such Subsidiary Guarantor under its Secured Guarantee, irrespective of whether or not such Secured Party shall have made any demand thereunder and although such obligations may be contingent or unmatured; provided that neither any Secured Party nor any of its Affiliates shall be entitled to exercise any such set off with respect to any trust or payroll account. Each Secured Party agrees to promptly notify the Company and the Agent after any such set off and application made by such Secured Party; provided that the failure to give such notice shall not affect the validity of such set off and application. (h) Continuing Guarantee. Each Secured Guarantee is a continuing guarantee, shall be binding on the relevant Subsidiary Guarantor and its successors and assigns, and shall inure to the benefit of and be enforceable by the Agent or the Secured Parties and their successors, transferees and assigns. If all or part of any Secured Party's interest in any Secured Obligation is assigned or otherwise transferred, the transferor's rights under each Secured Guarantee, to the extent applicable to the obligation so transferred, shall automatically be transferred with such obligation. No Subsidiary Guarantor shall have the right to assign its rights hereunder or any interest herein without the prior written consent of the Secured Parties. (i) Limitation on Obligations of Subsidiary Guarantor. Notwithstanding anything to the contrary herein, it is the intention of the parties hereto that the Secured Guarantee of each Subsidiary Guarantor not constitute a fraudulent conveyance under applicable fraudulent conveyance provisions of the United States Bankruptcy Code or any comparable provision of applicable state law. To effectuate that intention, the parties hereto hereby agree that the obligations of each Subsidiary Guarantor under its Secured Guarantee are limited to the maximum amount that would not render the Subsidiary Guarantor's obligations subject to avoidance under applicable fraudulent conveyance provisions of the United States Bankruptcy Code or any comparable provision of applicable state law. Section 3. Grant of Transaction Liens. (a) The Company, in order to secure the Secured Obligations, and each Subsidiary Guarantor listed on the signature pages hereof, in order to secure its Secured Guarantee, grants to the Agent for the benefit of the Secured Parties a continuing security interest in all right, title and interest of the Company or such Subsidiary Guarantor, as the case may be, in, to and under the following property of the Company or such Subsidiary Guarantor, as the case may be, whether now owned or existing or hereafter acquired or arising and regardless of where located: (i) all Accounts; (ii) all Chattel Paper; 12 (iii) the Commercial Tort Claims described in Schedule 4; (iv) all Deposit Accounts; (v) all Documents; (vi) all Equipment; (vii) all General Intangibles (including any Equity Interests in other Persons that do not constitute Investment Property); (viii) all Instruments; (ix) all Inventory; (x) all Investment Property; (xi) all Letter-of-Credit Rights; (xii) all Intellectual Property; (xiii) all books and records (including customer lists, credit files, computer programs, printouts and other computer materials and records) of such Original Lien Grantor pertaining to any of its Collateral; (xiv) such Original Lien Grantor's ownership interest in (1) its Collateral Accounts, (2) all Financial Assets credited to its Collateral Accounts from time to time and all Security Entitlements in respect thereof, (3) all cash held in its Collateral Accounts from time to time and (4) all other money in the possession of the Agent; and (xv) all Proceeds of the Collateral described in the foregoing clauses (i) through (xiv); provided that the following property is excluded from the foregoing security interests: (A) motor vehicles the perfection of a security interest in which is excluded from the Uniform Commercial Code in the relevant jurisdiction, (B) voting Equity Interests in any first-tier Foreign Subsidiary, to the extent (but only to the extent) required to prevent the Collateral from including more than 65% of all voting Equity Interests in such first-tier Foreign Subsidiary, (C) Capital Stock of any Foreign Subsidiary that is not a first-tier Foreign Subsidiary, (D) Equipment leased by an Original Lien Grantor under a lease that prohibits the granting of a Lien on such Equipment, (E) cash and Cash Equivalents maintained in any trust or payroll account, so long as such account are maintained as a trust or payroll account respectively, (F) Cash and Cash Equivalents maintained in any account of any Lien Grantor that is an investment adviser registered under the Investment Advisers Act of 1940 so long as (x) such account is 13 maintained to satisfy qualified professional asset manager requirements under ERISA and (y) the aggregate amount of cash and Cash Equivalents in all such accounts does not exceed $2,000,000 at any time, (G) cash and Cash Equivalents maintained in any account of any Lien Grantor that is a broker-dealer registered under the Exchange Act and a member of NASD so long as (x) such account is maintained to satisfy minimum net regulatory capital requirements imposed by NASD regulations pursuant to the Exchange Act and (y) the aggregate amount of cash and Cash Equivalents in all such accounts does not exceed $10,000,000 at any time, (H) intent-to-use trademark applications to the extent that, and solely during the period in which, the grant of a security interest therein would impair the validity and enforceability of such intent to use trademark applications under applicable United States federal law and (I) any general intangibles or other rights arising under any contract, instrument, license or other document if (but only to the extent that) the grant of a security interest therein would constitute a violation of a valid and enforceable restriction in favor of a third party, unless and until all required consents shall have been obtained. Each Original Lien Grantor shall use commercially reasonable efforts to obtain any such required consent that is reasonably obtainable. (b) With respect to each right to payment or performance included in the Collateral from time to time, the Transaction Lien granted therein includes a continuing security interest in (i) any Supporting Obligation that supports such payment or performance and (ii) any Lien that (x) secures such right to payment or performance or (y) secures any such Supporting Obligation. (c) The Transaction Liens are granted as security only and shall not subject the Agent or any other Secured Party to, or transfer or in any way affect or modify, any obligation or liability of any Lien Grantor with respect to any of the Collateral or any transaction in connection therewith. (d) If the governmental body or official having jurisdiction over any Regulated Subsidiary determines that the pledge of the shares of capital stock of such Regulated Subsidiary hereunder constitutes the acquisition of or a change of control with respect to such Regulated Subsidiary as to which the prior approval of such governmental body or official was required, then, immediately upon the relevant Lien Grantor's (1) written memorialization of oral notice or (2) receipt of written notice from such governmental body or official of such determination and without any action on the part of the Agent or any other Person, such pledge shall be rendered void ab initio and of no effect. Upon any such occurrence, (i) the Agent shall, at such Lien Grantor's written request and expense, return all certificates representing such capital stock to such Lien Grantor and execute and deliver such documents as such Lien Grantor shall reasonably request to evidence such Lien Grantor's retention of all rights in such capital stock and (ii) such Lien Grantor shall, if requested by the Agent or the Required Lenders, promptly submit a request to the relevant governmental body or official for approval of the pledge of such shares to the Agent hereunder and, upon receipt of such approval, shall forthwith deliver to the Agent certificates representing all the outstanding shares of capital stock of such Regulated Subsidiary (subject to the limitation in Section 11(m) if such Regulated Subsidiary is a Foreign Subsidiary) to be held as Collateral hereunder. Section 4. General Representations and Warranties. Each Original Lien Grantor represents and warrants that: (a) Such Lien Grantor is duly organized, validly existing and in good standing under the laws of the jurisdiction identified as its jurisdiction of organization in its Perfection Certificate. 14 (b) Schedule 1 lists all Equity Interests in Subsidiaries and Affiliates directly owned by such Lien Grantor as of the Effective Date. Such Lien Grantor holds all such Equity Interests directly (i.e., not through a Subsidiary, a Securities Intermediary or any other Person). (c) Schedule 2 lists, as of the Effective Date, all Securities owned by such Lien Grantor (except Securities evidencing Equity Interests in Subsidiaries and Affiliates). (d) Schedule 3 lists, as of the Effective Date, (i) all Securities Accounts to which Financial Assets are credited in respect of which such Lien Grantor owns Security Entitlements, (ii) all Commodity Accounts in respect of which such Lien Grantor is the Commodity Customer and (iii) all Deposit Accounts in the name of such Lien Grantor. (e) All Pledged Equity Interests owned by such Lien Grantor are owned by it free and clear of any Lien other than Permitted Liens. All shares of capital stock included in such Pledged Equity Interests (including shares of capital stock in respect of which such Lien Grantor owns a Security Entitlement) have been duly authorized and validly issued and are fully paid and non-assessable. None of such Pledged Equity Interests is subject to any option to purchase or similar right of any Person. Such Lien Grantor is not and will not become a party to or otherwise bound by any agreement (except as permitted by the Credit Agreement) which restricts in any manner the rights of any present or future holder of any Pledged Equity Interest with respect thereto. (f) Such Lien Grantor has good legal title in fee simple to or rights in and power to transfer, or valid leasehold interests in, all its Collateral, except for such defects in title or interests as could not, individually or in the aggregate with respect to all Lien Grantors, reasonably be expected to have a Material Adverse Effect. The property of such Lien Grantor is subject to no Liens, other than Liens permitted under Section 7.02 of the Credit Agreement. (g) Such Lien Grantor has not performed any acts that could reasonably be expected to prevent the Agent from enforcing any of the provisions of the Security Documents or that would limit the Agent in any such enforcement. No authorized financing statement, security agreement, mortgage or similar or equivalent document or instrument covering all or part of the Collateral owned by such Lien Grantor is on file or of record in any jurisdiction in which such filing or recording would be effective to perfect or record a Lien on such Collateral, except financing statements, mortgages or other similar or equivalent documents with respect to Liens permitted under Section 7.02 of the Credit Agreement. After the Effective Date, no Collateral owned by such Lien Grantor will be in the possession or under the Control of any other Person having a claim thereto or security interest therein, other than a Lien permitted under Section 7.02 of the Credit Agreement. (h) The Transaction Liens on all Collateral owned by such Lien Grantor (i) have been validly created, (ii) will attach to each item of such Collateral on the Effective Date (or, if such Lien Grantor first obtains rights thereto on a later date, on such later date) and (iii) when so attached, will secure all the Secured Obligations or such Lien Grantor's Secured Guarantee, as the case may be. 15 (i) Such Lien Grantor has delivered a Perfection Certificate to the Agent. The information set forth therein is correct and complete as of the Effective Date. Within 60 days after the Effective Date, such Lien Grantor will furnish (or cause to be furnished) to the Agent a file search report from each UCC filing office listed in its Perfection Certificate, showing the filing made at such filing office to perfect the Transaction Liens on its Collateral. (j) When UCC financing statements describing the Collateral as set forth in Schedule 3 to such Lien Grantor's Perfection Certificate have been filed in the offices specified in such Perfection Certificate, the Transaction Liens will constitute perfected security interests in the Collateral owned by such Lien Grantor to the extent that a security interest therein may be perfected by filing pursuant to the UCC, prior to all Liens and rights of others therein except Permitted Liens that have priority over the Transaction Liens by operation of law. When, in addition to the filing of such UCC financing statements, the applicable Intellectual Property Filings have been made with respect to such Lien Grantor's Recordable Intellectual Property (including any future filings required pursuant to Sections 5(a) and 9(a)), the Transaction Liens will constitute perfected security interests in all right, title and interest of such Lien Grantor in its Recordable Intellectual Property to the extent that security interests therein may be perfected by such filings, prior to all Liens and rights of others therein except Permitted Liens. Except for (i) the filing of such UCC financing statements and (ii) such Intellectual Property Filings, no registration, recordation or filing with, and no authorization or approval or other action by, any governmental body, agency or official is required in connection with the execution or delivery of the Security Documents or is necessary for the validity or enforceability thereof or for the perfection or due recordation of the Transaction Liens or (except with respect to the capital stock of any Regulated Subsidiary) for the enforcement of the Transaction Liens. (k) Such Lien Grantor's Collateral is insured as required by the Credit Agreement. (l) If such Lien Grantor is also a Subsidiary Guarantor, in executing and delivering this Agreement (including providing its Secured Guarantee), such Lien Grantor has (i) without reliance on the Agent or any other Secured Party or any information received from the Agent or any other Secured Party and based upon such documents and information it deems appropriate, made an independent investigation of the transactions contemplated by the Loan Documents and the Company, the Company's business, assets, operations, prospects and condition, financial or otherwise, and any circumstances which may bear upon such transactions, the Company or the obligations and risks undertaken herein with respect to the Secured Obligations, (ii) adequate means to obtain from the Company on a continuing basis information concerning the Company, (iii) full and complete access to the Loan Documents and any other documents executed in connection with the Loan Documents and (iv) not relied and will not rely upon any representations or warranties of the Agent or any other Secured Party not embodied herein or any acts heretofore or hereafter taken by the Agent or any other Secured Party (including any review by the Agent or any other Secured Party of the affairs of the Company). Section 5. Further Assurances; General Covenants. Each Lien Grantor covenants as follows: (a) Such Lien Grantor will at the Company's expense, execute, deliver, file and record any statement, assignment, instrument, document, agreement or other paper and take any 16 other action (including any Intellectual Property Filing and any filing of financing or continuation statements under the UCC) that from time to time may be necessary, or that the Agent may reasonably request, in order to: (i) create, preserve, perfect or confirm the Transaction Liens on such Lien Grantor's Collateral; (ii) in the case of Pledged Deposit Accounts, Pledged Letter-of-Credit Rights, Pledged Electronic Chattel Paper and Pledged Investment Property, cause the Agent to have Control thereof; or (iii) enable the Agent to exercise and enforce any of its rights, powers and remedies with respect to any of such Lien Grantor's Collateral. To the extent permitted by applicable law, such Lien Grantor authorizes the Agent to execute and file such financing statements or continuation statements, and amendments thereto, including, without limitation, one or more financing statements indicating that such financing statements cover all assets or all personal property (or words of similar effect) of such Lien Grantor, in each case without such Lien Grantor's signature appearing thereon, and regardless of whether any particular asset described in such financing statement falls within the scope of the UCC or the granting clause of this Agreement. Such Lien Grantor agrees (but makes no representation that the applicable filing officer shall accept) that a carbon, photographic, photostatic or other reproduction of this Agreement or of a financing statement is sufficient as a financing statement. Such Lien Grantor constitutes the Agent its attorney-in-fact to execute and file, in the event such Lien Grantor fails to do so promptly, all Intellectual Property Filings and other filings required or so requested for the foregoing purposes, all such acts of such attorney being hereby ratified and confirmed; and such power, being coupled with an interest, shall be irrevocable until all the Transaction Liens granted by such Lien Grantor terminate pursuant to Section 22. The Company will pay the reasonable costs of, or incidental to, any Intellectual Property Filings and any recording or filing of any financing or continuation statements or other documents recorded or filed pursuant hereto. (b) Such Lien Grantor will not (i) change its name or corporate structure, (ii) change its location (determined as provided in UCC Section 9-307) or (iii) become bound, as provided in UCC Section 9-203(d) or otherwise, by a security agreement entered into by another Person, without first giving the Agent at least 20 days' prior written notice thereof and taking all actions required by the Agent for the purpose of perfecting or protecting the security interest granted by this Agreement. (c) If any of its Collateral is in the possession or control of a warehouseman, bailee or agent at any time, such Lien Grantor will (i) notify such warehouseman, bailee or agent of the relevant Transaction Liens, (ii) instruct such warehouseman, bailee or agent to hold all such Collateral for the Agent's account subject to the Agent's instructions (which shall permit such Collateral to be removed by such Lien Grantor in the ordinary course of business until the Agent notifies such warehouseman, bailee or agent that an Event of Default has occurred and is continuing), (iii) use commercially reasonable efforts to cause such warehouseman, bailee 17 or agent to Authenticate a Record acknowledging that it holds possession of such Collateral for the Agent's benefit and (iv) make any such authenticated Record available to the Agent. (d) Such Lien Grantor will not sell, lease, exchange, assign or otherwise dispose of, or grant any option with respect to, any of its Collateral, other than licenses of Intellectual Property granted in the ordinary course of business; provided that such Lien Grantor may do any of the foregoing unless (i) doing so would violate a covenant in the Credit Agreement or (ii) an Event of Default shall have occurred and be continuing and the Agent shall have notified such Lien Grantor that its right to do so is terminated, suspended or otherwise limited. (e) Such Lien Grantor will, promptly upon request, provide to the Agent all information and evidence concerning such Lien Grantor's Collateral that the Agent may reasonably request to enable it to enforce the provisions of the Security Documents. Section 6. Accounts. Each Lien Grantor represents, warrants and covenants that if an Event of Default shall have occurred and be continuing, such Lien Grantor will, if requested to do so by the Agent, promptly notify (and to the extent it fails to do so promptly, such Lien Grantor authorizes the Agent so to notify) each account debtor in respect of any of its Accounts that such Accounts have been assigned to the Agent hereunder, and that any payments due or to become due in respect of such Accounts are to be made directly to the Agent or its designee for the period during which such Event of Default is continuing. Section 7. Chattel Paper and Instruments. Except as to actions to be taken by the Agent, each Lien Grantor represents, warrants and covenants as follows: (a) On the Effective Date (in the case of an Original Lien Grantor) or the date on which it signs and delivers its first Security Agreement Supplement (in the case of any other Lien Grantor), such Lien Grantor will deliver to the Agent as Collateral hereunder (i) all Pledged Tangible Chattel Paper, provided that a delivery of the Pledged Tangible Chattel Paper shall be required pursuant to this paragraph only to the extent that the aggregate value of all Pledged Tangible Chattel Paper that has not been delivered would exceed $5,000,000 and (ii) each Pledged Instrument having a value in excess of $2,000,000 then owned by such Lien Grantor. Thereafter, whenever such Lien Grantor acquires any other Pledged Tangible Chattel Paper or Pledged Instrument having a value in excess of $2,000,000, such Lien Grantor will immediately deliver such Pledged Tangible Chattel Paper or Pledged Instrument to the Agent as Collateral hereunder. (b) So long as no Event of Default shall have occurred and be continuing, the Agent will, promptly upon request by the relevant Lien Grantor, make appropriate arrangements for making any Pledged Tangible Chattel Paper or Pledged Instrument available to it for purposes of presentation, collection or renewal (any such arrangement to be effected, to the extent deemed appropriate by the Agent, against trust receipt or like document). (c) Schedule 5 lists, as of the Effective Date, all Pledged Instruments. (d) All Pledged Tangible Chattel Paper and Pledged Instruments owned by such Lien Grantor, when delivered to the Agent (to the extent such delivery is required), will be indorsed to the order of the Agent, or accompanied by duly executed instruments of assignment, all in form 18 and substance reasonably satisfactory to the Agent. Within 45 days of the Effective Date, the Company shall cause each CIHC Note to be reissued by the relevant issuer (or the successor to such issuer) in favor of CDOC, Inc. and shall cause each such reissued note to be delivered to the Agent, with an indorsement to the order of the Agent or accompanied by duly executed instruments of assignment, all in form and substance reasonably satisfactory to the Agent. (e) Upon the delivery of any Pledged Tangible Chattel Paper or Pledged Instrument owned by such Lien Grantor to the Agent, the Transaction Lien on such Collateral will be perfected, subject to no prior Liens or rights of others. (f) Each Lien Grantor will take (or cause others to take) all actions required under UCC Section 9-105 to cause the Agent to obtain and maintain Control of any and all Electronic Chattel Paper owned by such Lien Grantor from time to time, provided that such Lien Grantor's actions to cause the Agent to obtain and maintain Control of such Electronic Chattel shall be required pursuant to this paragraph only to the extent that the aggregate value of all Electronic Chattel Paper then owned by such Lien Grantor and not subject to the Agent's Control would exceed $5,000,000. Section 8. Commercial Tort Claims. Each Lien Grantor represents, warrants and covenants as follows: (a) In the case of an Original Lien Grantor, Schedule 4 accurately describes, with the specificity required to satisfy Official Comment 5 to UCC Section 9-108, each Material Commercial Tort Claim with respect to which such Original Lien Grantor is the claimant as of the Effective Date. In the case of any other Lien Grantor, Schedule 4 to its first Security Agreement Supplement will accurately describe, with the specificity required to satisfy said Official Comment 5, each Material Commercial Tort Claim with respect to which such Lien Grantor is the claimant as of the date on which it signs and delivers such Security Agreement Supplement. (b) If any Lien Grantor acquires a Material Commercial Tort Claim after the Effective Date (in the case of an Original Lien Grantor) or the date on which it signs and delivers its first Security Agreement Supplement (in the case of any other Lien Grantor), such Lien Grantor will promptly sign and deliver to the Agent a Security Agreement Supplement granting a security interest in such Commercial Tort Claim (which shall be described therein with the specificity required to satisfy said Official Comment 5) to the Agent for the benefit of the Secured Parties. (c) Upon the filing of a UCC financing statement in the jurisdiction under the laws of which the relevant Lien Grantor is organized, the Transaction Lien on each Commercial Tort Claim described pursuant to subsection (a) or (b) above will be perfected, subject to no prior Liens or rights of others, except for Permitted Liens that have priority over the Transaction Liens by operation of law. Section 9. Recordable Intellectual Property. Each Lien Grantor covenants as follows: 19 (a) On the Effective Date (in the case of an Original Lien Grantor) or the date on which it signs and delivers its first Security Agreement Supplement (in the case of any other Lien Grantor), such Lien Grantor will sign and deliver to the Agent Intellectual Property Security Agreements with respect to all Recordable Intellectual Property then owned by it. Within 45 days after each March 31 thereafter, it will sign and deliver to the Agent any Intellectual Property Security Agreement necessary to grant Transaction Liens on all Recordable Intellectual Property owned by it on such March 31 that is not covered by any previous Intellectual Property Security Agreement so signed and delivered by it. In each case, it will promptly make all Intellectual Property Filings necessary to record the Transaction Liens on such Recordable Intellectual Property. (b) Such Lien Grantor will notify the Agent promptly if it knows that any application or registration relating to any Recordable Intellectual Property owned or licensed by it may become abandoned or dedicated to the public, or of any adverse determination or development (including the institution of, or any adverse determination or development in, any proceeding in the United States Copyright Office, the United States Patent and Trademark Office or any court) regarding such Lien Grantor's ownership of such Recordable Intellectual Property, its right to register or patent the same, or its right to keep and maintain the same; provided that the foregoing shall not apply to the extent that any such event, individually or together with all such events, could not reasonably be expected to have a Material Adverse Effect. Section 10. Proceeds of Letters of Credit. Except as to actions to be taken by the Agent, each Lien Grantor represents, warrants and covenants as follows: (a) On the Effective Date (in the case of an Original Lien Grantor) or the date on which it signs and delivers its first Security Agreement Supplement (in the case of any other Lien Grantor), such Lien Grantor will deliver to the Agent each letter of credit having a face amount in excess of $2,500,000 (the "Specified Letters of Credit"). (b) Notwithstanding the foregoing, so long as no Event of Default shall have occurred and be continuing, the Agent will, promptly upon request by any Lien Grantor, make appropriate arrangements for making any Specified Letter of Credit delivered to the Agent pursuant to subsection (a) above available to such Lien Grantor to facilitate the administration thereof or the exercise of its rights thereunder (any such arrangement to be effected, to the extent deemed appropriate by the Agent, against trust receipt or like document). (c) Such Lien Grantor, by granting a security interest in its Letter-of-Credit Rights to the Agent, intends to (and hereby does) assign to the Agent its rights (including its contingent rights) to the proceeds of all letters of credit of which it is or hereafter becomes a beneficiary. If any such letter of credit is not a Supporting Letter of Credit, such Lien Grantor will (i) use commercially reasonable efforts to cause the issuer of such letter of credit and each Nominated Person (if any) with respect thereto to consent to such assignment of the proceeds thereof and (ii) deliver written evidence of any such consent obtained to the Agent. (d) The Transaction Lien on the relevant Lien Grantor's rights to the proceeds of each letter of credit under which such Lien Grantor is a beneficiary will be perfected, subject to no prior Liens or rights of others, if either (i) such letter of credit is a Supporting Letter of Credit 20 and the Transaction Lien on the item of Collateral supported thereby has been perfected or (ii) the relevant issuing bank and each relevant Nominated Person (if any) shall have consented to the assignment of the proceeds thereof set forth in subsection (c) above. (e) If an Event of Default shall have occurred and be continuing, such Lien Grantor will, promptly upon request by the Agent, notify (and in the event such Lien Grantor fails to do so promptly, such Lien Grantor authorizes the Agent to notify) the issuer and each Nominated Person with respect to each of its Pledged letters of credit that (i) the proceeds thereof have been assigned to the Agent hereunder and (ii) any payments due or to become due in respect thereof are to be made directly to the Agent or its designee for the period during which such Event of Default is continuing. Section 11. Investment Property. Each Lien Grantor represents, warrants and covenants as follows: (a) Certificated Securities. On the Effective Date (in the case of an Original Lien Grantor) or the date on which it signs and delivers its first Security Agreement Supplement (in the case of any other Lien Grantor), such Lien Grantor will deliver to the Agent as Collateral hereunder all certificates representing Pledged Certificated Securities then owned by such Lien Grantor. Thereafter, whenever such Lien Grantor acquires any other certificate representing a Pledged Certificated Security, such Lien Grantor will promptly deliver such certificate to the Agent as Collateral hereunder. The provisions of this subsection are subject to the limitation in Section 11(m) in the case of voting Equity Interests in a Foreign Subsidiary. (b) Uncertificated Securities. (i) On the Effective Date (in the case of an Original Lien Grantor) or the date on which it signs and delivers its first Security Agreement Supplement (in the case of any other Lien Grantor), such Lien Grantor will enter into (and, if the relevant issuer is a Subsidiary, cause, or if the relevant issuer is not a Subsidiary, use commercially reasonable efforts to cause, the relevant issuer to enter into) an Issuer Control Agreement in respect of each Pledged Uncertificated Security then owned by such Lien Grantor and deliver such Issuer Control Agreement to the Agent (which shall enter into the same). Thereafter, whenever such Lien Grantor acquires any other Pledged Uncertificated Security, such Lien Grantor will enter into (and, if the relevant issuer is a Subsidiary, cause, or if the relevant issuer is not a Subsidiary, use commercially reasonable efforts to cause, the relevant issuer to enter into) an Issuer Control Agreement in respect of such Pledged Uncertificated Security and deliver such Issuer Control Agreement, if any, to the Agent (which shall enter into the same). The provisions of this subsection are subject to (i) the limitation in Section 11(m) in the case of voting Equity Interests in a Foreign Subsidiary and (ii) Sections 11(n) and 14(c). (ii) If any Pledged Uncertificated Partnership Interest or any Pledged Uncertificated LLC Interest that was not considered a security under the UCC as of the Effective Date, becomes a security under the UCC thereafter, the Lien Grantor that originally pledged such interest shall promptly after the date on which such interest becomes an uncertificated security enter into (and, if the relevant issuer is a Subsidiary, 21 cause, or if the relevant issuer is not a Subsidiary, use commercially reasonable efforts to cause, the relevant issuer to enter into) an Issuer Control Agreement in respect of each such Pledged Uncertificated Security then owned by such Lien Grantor and deliver such Issuer Control Agreement to the Agent (which shall enter into the same). (c) Security Entitlements. (i) All Security Entitlements owned by the Company shall be held, upon or promptly after receipt thereof, in one or more Controlled Securities Accounts; provided, that this Section 11(c)(i) shall not apply to any Security Entitlements maintained in (i) any Securities Account to the extent that the aggregate value of the Security Entitlements held in such Securities Account does not exceed $5,000,000; and provided further that the aggregate value of all Securities Entitlements owned by the Company and held in all its Securities Accounts (other than Securities Accounts that satisfy the applicable conditions set forth in clauses (E), (F) and (G) of the proviso at the end of Section 3(a)) that are not Controlled Securities Accounts shall not at any time be in excess of $10,000,000 and (ii) any Securities Accounts that satisfy the applicable conditions set forth in clauses (E), (F) and (G) of the proviso at the end of Section 3(a). The provisions of this subsection are subject to Section 14(c). (ii) Each Lien Grantor agrees that it will provide the Agent with prompt written notice (and in any case within 20 days) of the opening of any new Securities Accounts and any such notice shall be deemed to be an automatic amendment to Schedule 3 hereto to include such account. (iii) The Company represents, warrants and covenants that (i) Schedule 6 lists, as of the Effective Date, all Controlled Securities Accounts and (ii) each Controlled Securities Account will be operated as provided in Section 13. (d) Commodity Accounts. (i) All Commodity Contracts owned by the Company shall be held, upon or promptly after receipt thereof, in one or more Controlled Commodity Accounts; provided, that this Section 11(d)(i) shall not apply to any Commodity Contracts maintained in (i) any Commodities Account to the extent that the aggregate value of the Commodity Contracts held in such Commodities Account, does not exceed $5,000,000; and provided further that the aggregate value of all Commodity Contracts held by the Company in all Commodity Accounts (other than Commodity Accounts that are trust accounts) that are not Controlled Commodity Accounts shall not at any time be in excess of $10,000,000 and (ii) any Commodities Account that is a trust account, so long as such Commodities Account is maintained as a trust account. (ii) Each Lien Grantor agrees that it will provide the Agent with prompt written notice (and in any case within 10 days) of the opening of any new Commodity Accounts and any such notice shall be deemed to be an automatic amendment to Schedule 3 hereto to include such account. 22 (iii) The Company represents, warrants and covenants that (i) Schedule 6 lists, as of the Effective Date, all Controlled Commodity Accounts and (ii) each Controlled Commodity Account will be operated as provided in Section 13. (e) Regulated Subsidiaries. If the Collateral includes any capital stock of a Regulated Subsidiary that is not represented by certificates, the relevant Lien Grantor shall exercise its commercially reasonable efforts to cause such capital stock to be represented by certificates and, promptly upon receipt thereof, comply with Section 11(a) with respect thereto. No Lien Grantor shall hold any capital stock of a Regulated Subsidiary in a Securities Account. (f) Perfection as to Certificated Securities. When such Lien Grantor delivers the certificate representing any Pledged Certificated Security owned by it to the Agent and complies with Section 11(k) in connection with such delivery, (i) the Transaction Lien on such Pledged Certificated Security will be perfected, subject to no prior Liens or rights of others, (ii) the Agent will have Control of such Pledged Certificated Security and (iii) the Agent will be a protected purchaser (within the meaning of UCC Section 8-303) thereof. (g) Perfection as to Uncertificated Securities. When such Lien Grantor, the Agent and the issuer of any Pledged Uncertificated Security owned by such Lien Grantor enter into an Issuer Control Agreement with respect thereto, (i) the Transaction Lien on such Pledged Uncertificated Security will be perfected, subject to no prior Liens or rights of others (except Permitted Priority Liens), (ii) the Agent will have Control of such Pledged Uncertificated Security and (iii) the Agent will be a protected purchaser (within the meaning of UCC Section 8-303) thereof. (h) Perfection as to Security Entitlements. So long as the Financial Asset underlying any Security Entitlement owned by such Lien Grantor is credited to a Controlled Securities Account, (i) the Transaction Lien on such Security Entitlement will be perfected, subject to no prior Liens or rights of others (except (x) Liens and rights of the relevant Securities Intermediary that are Permitted Liens and (y) Permitted Priority Liens), (ii) the Agent will have Control of such Security Entitlement and (iii) no action based on an adverse claim to such Security Entitlement or such Financial Asset, whether framed in conversion, replevin, constructive trust, equitable lien or other theory, may be asserted against the Agent or any other Secured Party. (i) Perfection as to Commodity Accounts. So long as any Commodity Account is subject to a Commodity Account Control Agreement, (i) the Transaction Liens on such Commodity Account and all Commodity Contracts carried therein will be perfected, subject to no prior Liens or rights of others (except (x) Liens and rights of the relevant Commodity Intermediary permitted by such Commodity Account Control Agreement and (y) Permitted Priority Liens) and (ii) the Agent will have Control of such Commodity Account and all Commodity Contracts carried therein from time to time. (j) Agreement as to Applicable Jurisdiction. In respect of all Security Entitlements owned by such Lien Grantor, and all Securities Accounts to which the related Financial Assets are credited, the Securities Intermediary's jurisdiction (determined as provided in UCC Section 8-110(e)) will at all times be located in the United States. In respect of all Commodity Contracts owned by such Lien Grantor and all Commodity Accounts in which such Commodity Contracts 23 are carried, the Commodity Intermediary's jurisdiction (determined as provided in UCC Section 9-305(b)) will at all times be located in the United States. (k) Delivery of Pledged Certificates. All Pledged Certificates, when delivered to the Agent, will be in suitable form for transfer by delivery, or accompanied by duly executed instruments of transfer or assignment in blank, all in form and substance reasonably satisfactory to the Agent. (l) Communications. Each Lien Grantor will promptly give to the Agent copies of any notices and other communications received by it with respect to (i) Pledged Securities registered in the name of such Lien Grantor or its nominee and (ii) Pledged Security Entitlements as to which such Lien Grantor is the Entitlement Holder relating to any matter that could reasonably be expected to have a Material Adverse Effect. (m) Foreign Subsidiaries. A Lien Grantor will not be obligated to comply with the provisions of this Section at any time with respect to any voting Equity Interest in a Foreign Subsidiary if and to the extent (but only to the extent) that such voting Equity Interest is excluded from the Transaction Liens at such time pursuant to clause (B) of the proviso at the end of Section 3(a) and/or the comparable provisions of one or more Security Agreement Supplements. (n) Compliance with Applicable Foreign Laws. If and so long as the Collateral includes (i) any Equity Interest in, or other Investment Property issued by, a Subsidiary (other than an Immaterial Subsidiary) organized under the laws of a jurisdiction outside the United States or (ii) any Security Entitlement in respect of a Financial Asset issued by such a Subsidiary (other than an Immaterial Subsidiary), the relevant Lien Grantor will take all such action as may be required under the laws of such foreign jurisdiction to ensure that the Transaction Lien on such Collateral ranks prior to all Liens and rights of others therein other than Permitted Liens that have priority over the Transaction Liens by operation of law. If and so long as the Collateral includes any Pledged Uncertificated Security issued by such a Subsidiary (other than an Immaterial Subsidiary), the relevant Lien Grantor will comply with this subsection, and will not be required to comply with Section 11(b), with respect thereto. Section 12. Controlled Deposit Accounts. The Company represents, warrants and covenants as follows: (a) All cash owned by the Company shall be deposited, upon or promptly after the receipt thereof, in one or more Controlled Deposit Accounts; provided that this Section 12(a) shall not apply to any cash maintained in (i) any Deposit Account to the extent that the average daily balance of cash held in such Deposit Account, as determined on a monthly basis, does not exceed $5,000,000; and provided further that the aggregate amount of cash maintained by the Company in all its Deposit Accounts (other than Deposit Accounts that satisfy the applicable conditions set forth in clauses (E), (F) and (G) of the proviso at the end of Section 3(a)) that are not Controlled Deposit Accounts shall not at any time be in excess of $10,000,000 and (ii) any Deposit Account that satisfies the applicable conditions set forth in clauses (E), (F) and (G) of the proviso at the end of Section 3(a). 24 (b) Schedule 6 lists, as of the Effective Date, all Controlled Deposit Accounts. (c) Each Controlled Deposit Account will be operated as provided in Section 13. (d) In respect of each Controlled Deposit Account, the Depositary Bank's jurisdiction (determined as provided in UCC Section 9-304) will at all times be a jurisdiction in which Article 9 is in effect. (e) So long as the Agent has Control of a Controlled Deposit Account, the Transaction Lien on such Controlled Deposit Account will be perfected, subject to no prior Liens or rights of others (except (i) the Depositary Bank's right to deduct its customary operating charges and any uncollected funds previously credited thereto and (ii) Permitted Priority Liens). (f) It will provide the Agent with prompt written notice (and in any case within 20 days) of the opening of any new Deposit Account and any such notice shall be deemed to be an automatic amendment to Schedule 3 hereto. Section 13. Operation of Collateral Accounts(a)(i) Funds held in any Controlled Deposit Account may, until withdrawn, be invested and reinvested in such Liquid Investments as the relevant Lien Grantor may select from time to time, (ii) Funds held in any Controlled Securities Account may, until withdrawn, be invested and reinvested in such Cash Equivalents as the relevant Lien Grantor may select from time to time, (iii) Funds held in any Controlled Commodity Account may, until withdrawn, be invested and reinvested in such Cash Equivalents as the relevant Lien Grantor may select from time to time; provided that upon the occurrence and during the continuance of an Event of Default, the Agent shall have the sole right to direct the disposition of funds with respect to each Collateral Account (including the withdrawal of such funds), and it shall be a term and condition of the Collateral Accounts, notwithstanding any term or condition to the contrary in any other agreement relating to the Collateral Accounts, that upon written notice by the Agent to such account holder, the holders of such accounts will comply with instructions with respect to such accounts originated only by the Agent, without notice to, consent from or other reference to any Lien Grantor. Upon the curing of such Event of Default, the Agent will instruct the relevant account holder that the relevant Lien Grantor may withdraw, or direct the disposition of, funds held therein unless and until the Agent rescinds such instruction. (b) Upon the occurrence and during the continuation of an Event of Default, each Lien Grantor will (i) immediately upon the written request of the Agent, instruct each Person obligated at any time to make any payment to such Lien Grantor for any reason to make such payment to a Collateral Account and (ii) deposit in the Collateral Accounts or pay to the Agent for deposit in the Collateral Accounts, at the end of each Business Day, all proceeds of Collateral and all other cash of each Lien Grantor. (c) Each Lien Grantor may from time to time provide the Agent with an Account Control Agreement or a supplement (in form and substance reasonably satisfactory to the Collateral Agent) to an existing Account Control Agreement with such then existing Depositary Bank, Commodity Intermediary or Securities Intermediary covering a new Collateral Account 25 (and, upon the receipt by the Collateral Agent of such Account Control Agreement or supplement, Schedule 6 shall be automatically amended to include such account). (d) Each Lien Grantor agrees that it will promptly provide the Agent with written notice of any termination (if such termination is permitted) of any Collateral Account (and, upon such notice, Schedule 6 shall be automatically amended to remove such account). Upon any termination by any Lien Grantor of any Collateral Account, the Company will immediately transfer all funds and property held in such terminated Collateral Account to another Collateral Account. (e) If immediately available cash on deposit in all Collateral Accounts is not sufficient to make any distribution or withdrawal to be made pursuant hereto, the Agent will cause to be liquidated, as promptly as practicable, such investments held in or credited to one or more such Collateral Account as shall be required to obtain sufficient cash to make such distribution or withdrawal and, notwithstanding any other provision hereof, such distribution or withdrawal shall not be made until such liquidation has taken place. Section 14. Transfer of Record Ownership. (a) At any time when an Event of Default shall have occurred and be continuing, the Agent may (and to the extent that action by it is required, the relevant Lien Grantor, if directed to do so by the Agent, will as promptly as practicable) cause each of the Pledged Securities (or any portion thereof specified in such direction) to be (x) transferred of record into the name of the Agent or its nominee or (y) credited to an appropriate Collateral Account; provided that no such action shall be taken with respect to any capital stock of any Regulated Subsidiary unless any and all regulatory approvals required under applicable law shall have been obtained; and provided further that (i) to the extent any of the Pledged Securities (or a portion thereof) have been transferred of record into the name of the Agent or its nominee and (ii) no Event of Default is continuing, the Agent will cooperate reasonably with the relevant Lien Grantor to cause such Pledged Security (or a portion thereof) to be re-registered in the name of such Lien Grantor. Each Lien Grantor will take any and all actions reasonably requested by the Agent to facilitate compliance with this subsection. (b) Perfection upon Transfer of Record Ownership. If and when any Pledged Security (whether certificated or uncertificated) owned by such Lien Grantor is transferred of record into the name of the Agent or its nominee pursuant to Section 14(a), (i) the Transaction Lien on such Pledged Security will be perfected, subject to no prior Liens or rights of others, (ii) the Agent will have Control of such Pledged Security and (iii) the Agent will be a protected purchaser (within the meaning of UCC Section 8-303) thereof. (c) Provisions Inapplicable after Transfer of Record Ownership. If the provisions of Section 14(a) are implemented, Sections 11(b) and 11(c) shall not thereafter apply to (i) any Pledged Security that is registered in the name of the Agent or its nominee or (ii) any Security Entitlement in respect of which the Agent or its nominee is the Entitlement Holder. (d) Communications after Transfer of Record Ownership. The Agent will promptly give to the relevant Lien Grantor copies of any notices and other communications received by the Agent with respect to (i) Pledged Securities registered in the name of the Agent or its 26 nominee and (ii) Pledged Security Entitlements as to which the Agent or its nominee is the Entitlement Holder. Section 15. Right to Vote Securities. (a) Unless an Event of Default shall have occurred and be continuing, each Lien Grantor will have the right, from time to time, to vote and to give consents, ratifications and waivers with respect to any Pledged Security owned by it and the Financial Asset underlying any Pledged Security Entitlement owned by it, and the Agent will, upon receiving a written request from such Lien Grantor, promptly deliver (or cause to be delivered) to such Lien Grantor or as specified in such request such proxies, powers of attorney, consents, ratifications and waivers in respect of any such Pledged Security that is registered in the name of the Agent or its nominee or any such Pledged Security Entitlement as to which the Agent or its nominee is the Entitlement Holder, in each case as shall be specified in such request and be in form and substance reasonably satisfactory to the Agent. Unless an Event of Default shall have occurred and be continuing, the Agent will have no right to take any action which the owner of a Pledged Partnership Interest or Pledged LLC Interest is entitled to take with respect thereto, except the right to receive payments and other distributions to the extent provided herein. (b) If an Event of Default shall have occurred and be continuing, and after written notice from the Agent to such Lien Grantor, the Agent will have the right to the extent permitted by law (and, in the case of a Pledged Partnership Interest or Pledged LLC Interest, by the relevant partnership agreement, limited liability company agreement, operating agreement or other governing document) to vote, to give consents, ratifications and waivers and to take any other action with respect to the Pledged Investment Property, the other Pledged Equity Interests (if any) and the Financial Assets underlying the Pledged Security Entitlements, with the same force and effect as if the Agent were the absolute and sole owner thereof, and each Lien Grantor will take all such action as the Agent may reasonably request from time to time to give effect to such right; provided that the Agent will not have the right to vote, to give consents, ratifications or waivers or to take any other action with respect to the capital stock of any Regulated Subsidiary, in each case to the extent that such action would require prior regulatory approval under applicable law, unless such approval shall have been granted. Section 16. Remedies upon Event of Default. (a) If an Event of Default shall have occurred and be continuing, the Agent may exercise (or cause its sub-agents to exercise) any or all of the remedies available to it (or to such sub-agents) under the Security Documents. (b) Without limiting the generality of the foregoing, if an Event of Default shall have occurred and be continuing, the Agent may exercise on behalf of the Secured Parties all the rights of a secured party under the UCC (whether or not in effect in the jurisdiction where such rights are exercised) with respect to any Collateral and, in addition, the Agent may, without being required to give any notice, except as herein provided or as may be required by mandatory provisions of law, withdraw all cash held in the Collateral Accounts and apply such cash as provided in Section 17 and, if there shall be no such cash or if such cash shall be insufficient to pay all the Secured Obligations in full, sell, lease, license or otherwise dispose of the Collateral or any part thereof; provided that the right of the Agent to sell or otherwise dispose of the capital stock of any Regulated Subsidiary shall be subject to the Agent or the relevant Lien Grantor obtaining, to the extent necessary under applicable law, the prior approval of such sale or other disposition by the governmental body or official having jurisdiction with respect to such 27 Regulated Subsidiary. Notice of any such sale or other disposition shall be given to the relevant Lien Grantor(s) as required by Section 19. (c) Without limiting the generality of the foregoing, if an Event of Default shall have occurred and be continuing: (i) the Agent may license or sublicense, whether general, special or otherwise, and whether on an exclusive or non-exclusive basis, any Pledged Intellectual Property (including any Pledged Recordable Intellectual Property) for such term or terms, on such conditions and in such manner as the Agent shall in its reasonable discretion determine; provided that such licenses or sublicenses do not conflict with any existing license of which the Agent shall have received a copy; (ii) the Agent may (without assuming any obligation or liability thereunder), at any time and from time to time, in its sole and reasonable discretion, enforce (and shall have the exclusive right to enforce) against any licensee or sublicensee all rights and remedies of any Lien Grantor in, to and under any of its Pledged Intellectual Property and take or refrain from taking any action under any thereof, and each Lien Grantor releases the Agent and each other Secured Party from liability for, and agrees to hold the Agent and each other Secured Party free and harmless from and against any claims and expenses arising out of, any lawful action so taken or omitted to be taken with respect thereto, except for claims and expenses arising from the Agent's or such Secured Party's gross negligence or willful misconduct; and (iii) upon request by the Agent (which shall not be construed as implying any limitation on its rights or powers), each Lien Grantor will execute and deliver to the Agent a power of attorney, in form and substance reasonably satisfactory to the Agent, for the implementation of any sale, lease, license or other disposition of any of such Lien Grantor's Pledged Intellectual Property or any action related thereto. In connection with any such disposition, but subject to any confidentiality restrictions imposed on such Lien Grantor in any license or similar agreement, such Lien Grantor will supply to the Agent its know-how and expertise relating to the relevant Intellectual Property or the products or services made or rendered in connection with such Intellectual Property, and its customer lists and other records relating to such Intellectual Property and to the distribution of said products or services. Section 17. Application of Proceeds. (a) If an Event of Default shall have occurred and be continuing, the Agent may apply (i) any cash held in the Collateral Accounts and (ii) the proceeds of any sale or other disposition of, or any collections (including in the form of interest, dividends, redemption payments and other distributions in respect of any Equity Interests) on, all or any part of the Collateral, in the following order of priorities: first, to pay the expenses of such sale or other disposition or collection, including reasonable compensation to agents of and counsel for the Agent, and all expenses, liabilities and advances incurred or made by the Agent in connection with the Security Documents, and any other amounts then due and payable to the 28 Agent pursuant to Section 18 or pursuant to Sections 10.04 or 10.05 of the Credit Agreement; second, to pay the unpaid principal of the Secured Obligations ratably, until payment in full of the principal of all Secured Obligations shall have been made; third, to pay ratably all interest (including Post-Petition Interest) on the Secured Obligations; fourth, to pay all other Secured Obligations then due and payable ratably, until payment in full of all such other Secured Obligations shall have been made; and finally, to pay to the relevant Lien Grantor, or as a court of competent jurisdiction may direct, any surplus then remaining from the proceeds of the Collateral owned by it; provided that Collateral owned by a Subsidiary Guarantor and any proceeds thereof shall be applied pursuant to the foregoing clauses first, second, third and fourth,only to the extent permitted by the limitation in Section 2(i). The Agent may make such distributions hereunder in cash or in kind or, on a ratable basis, in any combination thereof. (b) In making the payments and allocations required by this Section, the Agent may rely upon information supplied to it pursuant to Section 21(g). All distributions made by the Agent pursuant to this Section shall be final (except in the event of manifest error) and the Agent shall have no duty to inquire as to the application by any Secured Party of any amount distributed to it. Section 18. Fees and Expenses; Indemnification. (a) The Company will within ten Business Days following written demand (together with, in the case of clauses (i), (ii) and (iv) below, if requested by the Company, backup documentation supporting such written demand) pay to the Agent: (i) the amount of any taxes that the Agent may have been required to pay by reason of the Transaction Liens or to free any Collateral from any other Lien thereon; (ii) the amount of any and all reasonable out-of-pocket expenses, including transfer taxes and reasonable fees and expenses of counsel and other outside experts, that the Agent may incur in connection with (x) the administration or enforcement of the Security Documents, including such expenses as are incurred to preserve the value of the Collateral or the validity, perfection, rank or value of any Transaction Lien, (y) the collection, sale or other disposition of any Collateral or (z) the exercise by the Agent of any of its rights or powers under the Security Documents; (iii) the amount of any fees that the Company shall have agreed in writing to pay to the Agent and that shall have become due and payable in accordance with such written agreement; and 29 (iv) without duplication of any other indemnity, the amount required to indemnify the Agent for, or hold it harmless and defend it against, any loss, liability or expense (including the reasonable fees and expenses of its counsel and any experts or sub-agents appointed by it hereunder) incurred or suffered by the Agent in connection with the Security Documents, except to the extent that such loss, liability or expense arises from the Agent's gross negligence or willful misconduct or a breach of any duty that the Agent has under this Agreement (after giving effect to Sections 20 and 21). Any such amount not paid to the Agent on demand will bear interest for each day thereafter until paid at a rate per annum equal to 2.0% plus the rate otherwise applicable to the Term Loans as provided in the Credit Agreement. (b) If any transfer tax, documentary stamp tax or other tax is payable in connection with any transfer or other transaction provided for in the Security Documents, the Company will pay such tax and provide any required tax stamps to the Agent or as otherwise required by law. (c) The Company shall indemnify each of the Secured Parties, their respective affiliates and the respective directors, officers, agents and employees of the foregoing (each an "Indemnitee") against, and hold each Indemnitee harmless from, any and all liabilities, losses, damages, costs and expenses of any kind (including reasonable expenses of investigation by engineers, environmental consultants and similar technical personnel and reasonable fees and disbursements of counsel) arising out of, or in connection with any and all Environmental Claims. Without limiting the generality of the foregoing, each Lien Grantor waives all rights for contribution and all other rights of recovery with respect to liabilities, losses, damages, costs and expenses arising under or related to Environmental Laws that it might have by statute or otherwise against any Indemnitee. Section 19. Authority to Administer Collateral. Each Lien Grantor irrevocably appoints the Agent its true and lawful attorney, with full power of substitution, in the name of such Lien Grantor, any Secured Party or otherwise, for the sole use and benefit of the Secured Parties, but at the Company's expense, to the extent permitted by law to exercise, at any time and from time to time while an Event of Default shall have occurred and be continuing, all or any of the following powers with respect to all or any of such Lien Grantor's Collateral: (a) to demand, sue for, collect, receive and give acquittance for any and all monies due or to become due upon or by virtue thereof, (b) to settle, compromise, compound, prosecute or defend any action or proceeding with respect thereto, (c) to sell, lease, license or otherwise dispose of the same or the proceeds or avails thereof, as fully and effectually as if the Agent were the absolute owner thereof, and (d) to extend the time of payment of any or all thereof and to make any allowance or other adjustment with reference thereto; 30 provided that, except in the case of Collateral that is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market, the Agent will give the relevant Lien Grantor at least ten days' prior written notice of the time and place of any public sale thereof or the time after which any private sale or other intended disposition thereof will be made. Any such notice shall (i) contain the information specified in UCC Section 9-613, (ii) be Authenticated and (iii) be sent to the parties required to be notified pursuant to UCC Section 9-611(c); provided that, if the Agent fails to comply with this sentence in any respect, its liability for such failure shall be limited to the liability (if any) imposed on it as a matter of law under the UCC. Section 20. Limitation on Duty in Respect of Collateral. Beyond the exercise of reasonable care in the custody and preservation thereof and accounting for monies received therefrom, the Agent will have no duty as to any Collateral in its possession or control or in the possession or control of any sub-agent or bailee or any income therefrom or as to the preservation of rights against prior parties or any other rights pertaining thereto. The Agent will be deemed to have exercised reasonable care in the custody and preservation of the Collateral in its possession or control if such Collateral is accorded treatment substantially equal to that which it accords its own property, and will not be liable or responsible for any loss or damage to any Collateral, or for any diminution in the value thereof, by reason of any act or omission of any sub-agent or bailee selected by the Agent in good faith, except to the extent that such liability arises from the Agent's gross negligence or willful misconduct. Section 21. General Provisions Concerning the Agent. (a) Appointment and Authorization; "Agent". The Agent is hereby irrevocably appointed, designated and authorized to take such actions under the provisions of this Agreement and each other Security Document and to exercise such powers and perform such duties as are expressly delegated to it by the terms of this Agreement or any other Security Document, together with such actions and powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary contained elsewhere herein or in any other Security Document, the Agent shall not have any duties or responsibilities, except those expressly set forth herein, nor shall the Agent have or be deemed to have any fiduciary relationship with any Secured Party, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Security Document or otherwise exist against the Agent. Without limiting the generality of the foregoing sentence, the use of the term "agent" herein and in the other Security Documents with reference to the Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable law. Instead, such term is used merely as a matter of market custom, and is intended to create or reflect only an administrative relationship between independent contracting parties. (b) Delegation of Duties. The Agent may execute any of its duties under this Agreement or any other Security Document by or through agents, employees or attorneys-in-fact and shall be entitled to advice of counsel and other consultants or experts concerning all matters pertaining to such duties. The Agent shall not be responsible for the negligence or misconduct of any agent or attorney-in-fact that it selects in the absence of gross negligence or willful misconduct. The exculpatory provisions of Section 20 and this Section shall apply to any such agent, employee or attorney-in-fact. 31 (c) Liability of Agent. No Agent-Related Person shall (i) be liable for any action taken or omitted to be taken by any of them under or in connection with this Agreement or any other Security Document or the transactions contemplated hereby (except for its own gross negligence or willful misconduct in connection with its duties expressly set forth herein or required by applicable law) or (ii) be responsible in any manner to any Secured Party for any recital, statement, representation or warranty made by the Company or any Subsidiary or Affiliate thereof, or any officer thereof, contained herein or in any other Security Document, or in any certificate, report, statement or other document referred to or provided for in, or received by the Agent under or in connection with, this Agreement or any other Security Document, or the validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Security Document, or for any failure of the Company or any Subsidiary or Affiliate thereof or any other party to any Security Document to perform its obligations hereunder or thereunder. No Agent-Related Person shall be under any obligation to any Secured Party to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Security Document, or to inspect the properties, books or records of the Company or any Subsidiary or Affiliate thereof. The Agent shall not be responsible for the existence, genuineness or value of any Collateral or for the validity, perfection, priority or enforceability of any Transaction Lien, whether impaired by operation of law or by reason of any action or omission to act on its part under the Security Documents. (d) Reliance by Agent. The Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, communication, signature, resolution, representation, notice, consent, certificate, affidavit, letter, telegram, facsimile, telex or telephone message, electronic mail message, statement or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons, and upon advice and statements of legal counsel (including counsel to the Company or any Subsidiary), independent accountants and other experts selected by the Agent. The Agent shall be fully justified in failing or refusing to take any action under any Security Document unless it shall first receive such advice or concurrence of the Required Lenders as it deems appropriate and, if it so requests, it shall first be indemnified to its satisfaction by the Secured Parties against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. The Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement or any other Security Document in accordance with a request or consent of the Required Lenders (or such other number of Lenders as may be expressly required hereby or by the Credit Agreement in any instance) and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Secured Parties. (e) Notice of Default. The Agent shall not be deemed to have knowledge or notice of the occurrence of any Default, except with respect to defaults in the payment of principal, interest and fees required to be paid to the Agent for the account of the Lenders, unless the Agent shall have received written notice from a Secured Party or the Company referring to the Credit Agreement, describing such Default and stating that such notice is a "notice of default." The Agent will notify the Secured Parties of its receipt of any such notice. The Agent shall take such action with respect to such Default as may be directed by the Required Lenders in accordance with Article 8 of the Credit Agreement; provided, however, that unless and until the Agent has received any such direction, the Agent may (but shall not be obligated to) take such action, or 32 refrain from taking such action, with respect to such Default as it shall deem advisable or in the best interest of the Secured Parties. (f) Agent in Individual Capacity. BofA and its Affiliates may make loans to, issue letters of credit for the account of, accept deposits from, acquire equity interests in and generally engage in any kind of banking, trust, financial advisory, underwriting or other business with the Company or any of its Subsidiaries and their respective Affiliates as though BofA were not the Agent hereunder and without notice to or consent of the Secured Parties. The Secured Parties acknowledge that, pursuant to such activities, BofA or its Affiliates may receive information regarding the Company or its Subsidiaries or Affiliates (including information that may be subject to confidentiality obligations in favor of the Company, such Subsidiary or such Affiliate) and acknowledge that the Agent shall be under no obligation to provide such information to them. With respect to its Term Loans, BofA shall have the same rights and powers under this Agreement as any other Secured Party and may exercise such rights and powers as though it were not the Agent, and the terms "Secured Party" and "Secured Parties" include BofA in its individual capacity. (g) Information as to Secured Obligations and Actions by Secured Parties. For all purposes of the Security Documents, including determining the amounts of the Secured Obligations or whether any action has been taken under any Secured Agreement, the Agent will be entitled to rely on information from (i) its own records for information as to the Lenders, their Secured Obligations and actions taken by them; (ii) any Secured Party for information as to its Secured Obligations and actions taken by it, to the extent that the Agent has not obtained such information from the foregoing sources; and (iii) the Company, to the extent that the Agent has not obtained information from the foregoing sources. (h) Within two Business Days after it receives or sends any notice referred to in this subsection, the Agent shall send to each Secured Party Requesting Notice, copies of any notice given by the Agent to any Lien Grantor, or received by it from any Lien Grantor, pursuant to Section 16, 17, 19 or 22. (i) The Agent may refuse to act on any notice, consent, direction or instruction from any Secured Parties or any agent, trustee or similar representative thereof that, in the Agent's opinion, (i) is contrary to law or the provisions of any Security Document, (ii) may expose the Agent to liability (unless the Agent shall have been indemnified, to its reasonable satisfaction, for such liability by the Secured Parties that gave such notice, consent, direction or instruction) or (iii) is unduly prejudicial to Secured Parties not joining in such notice, consent, direction or instruction. Section 22. Termination of Transaction Liens; Release of Collateral. (a) The Transaction Liens granted by each Subsidiary Guarantor shall terminate when its Secured Guarantee is released pursuant to Section 2(c). (b) The Transaction Liens granted by the Company shall terminate when all the Release Conditions are satisfied in full. 33 (c) Concurrently with any sale, lease or other disposition (except a sale or disposition to another Lien Grantor or a lease) permitted by the proviso to Section 5(d), the Transaction Liens on the assets sold or disposed of (but not in any Proceeds arising from such sale or disposition) will cease immediately without any action by the Agent or any other Secured Party. (d) Upon any termination of a Transaction Lien or release of Collateral, the Agent will, at the expense of the relevant Lien Grantor, execute and deliver to such Lien Grantor such documents as such Lien Grantor shall reasonably request to evidence the termination of such Transaction Lien or the release of such Collateral, as the case may be; provided that if the Agent does not file a UCC termination statement within 20 days after the Agent receives an authenticated demand for such termination from the relevant Lien Grantor, then such Lien Grantor may file such UCC termination statement in accordance with Section 9-509(d)(2) of the UCC. Section 23. Additional Subsidiary Guarantors and Lien Grantors. Any Subsidiary may become a party hereto by signing and delivering to the Agent a Security Agreement Supplement, whereupon such Subsidiary shall become a "Subsidiary Guarantor" and a "Lien Grantor" as defined herein. Section 24. Notices. (a) Unless otherwise expressly provided herein, all notices and other communications provided for hereunder shall be in writing (including by facsimile transmission). All such written notices shall be mailed, faxed or delivered to the applicable address, facsimile number (provided that any matter transmitted by the Company by facsimile (1) shall be immediately confirmed by a telephone call to the recipient at the number specified below and (2) shall be followed promptly by delivery of a hard copy original thereof) or (subject to subsection (c) below) electronic mail address, and all notices and other communications expressly permitted hereunder to be given by telephone shall be made to the applicable telephone number, as follows: (i) if to the Company or the Agent, to the address, facsimile number, electronic mail address or telephone number specified for such Person on Schedule 10.02 of the Credit Agreement or to such other address, facsimile number, electronic mail address or telephone number as shall be designated by such party in a notice to the other parties; (ii) if to any Lender, to the Agent to be forwarded to such Lender at its address, facsimile number, electronic mail address or telephone number specified in its administrative questionnaire or to such other address, facsimile number, electronic mail address or telephone number as shall be designated by such party in a notice to the Company and the Agent; (iii) if to any Subsidiary Guarantor listed on the signature pages hereof, to the Company as set forth above to be forwarded to such Subsidiary Guarantor at its address, facsimile number, electronic mail address or telephone number designated by such party in a notice to the Company; 34 (iv) if to any other Subsidiary Guarantor, to the address, facsimile number, electronic mail address or telephone number specified for such Person in its first Security Agreement Supplement or to such other address, facsimile number, electronic mail address or telephone number as shall be designated by such party in a notice to the other parties; and (v) if to any Secured Party Requesting Notice, to such address, facsimile number, electronic mail address or telephone number as such party may hereafter specify for the purpose by notice to the Agent. All such notices and other communications shall be deemed to be given or made upon the earlier to occur of (i) actual receipt by the relevant party hereto and (ii) (A) if delivered by hand or by courier, when signed for by or on behalf of the relevant party hereto; (B) if delivered by mail, four Business Days after deposit in the mails, postage prepaid; (C) if delivered by facsimile, when sent and receipt has been confirmed by telephone; and (D) if delivered by electronic mail (which form of delivery is subject to the provisions of subsection (c) below), when delivered. In no event shall a voicemail message be effective as a notice, communication or confirmation hereunder. (b) This Agreement and the other Security Documents may be transmitted and/or signed by facsimile or Adobe PDF delivered by electronic mail. The effectiveness of any such documents and signatures shall, subject to applicable law, have the same force and effect as manually-signed originals and shall be binding on the Company, all Subsidiary Guarantors, the Secured Parties and the Agent. The Agent may also require that any such documents and signatures be confirmed by a manually-signed original thereof; provided, that the failure to request or deliver the same shall not limit the effectiveness of any facsimile document or signature. (c) Electronic mail and Internet and intranet websites may be used only to distribute routine communications and to distribute this Agreement and other Security Documents for execution by the parties thereto, and may not be used for any other purpose. (d) The Agent and the Lenders shall be entitled to rely and act upon any notices purportedly given by or on behalf of the Company or any Subsidiary Guarantor even if (i) such notices were not made in a manner specified herein, were incomplete or were not preceded or followed by any other form of notice specified herein or (ii) the terms thereof, as understood by the recipient, varied from any confirmation thereof. The Company and the Subsidiary Guarantors shall jointly and severally indemnify each Agent-Related Person and each Secured Party and each Related Party thereto from all losses, costs, out-of-pocket expenses and liabilities resulting from the reliance by such Person on each notice purportedly given by or on behalf of the Company or any Subsidiary Guarantor; provided that such indemnity shall not, as to any Person, be available to the extent that such losses, costs, out-of-pocket expenses or liabilities are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Person. All telephonic notices to and other communications with the Agent may be recorded by the Agent, and each of the parties hereto hereby consents to such recording. 35 Section 25. No Implied Waivers; Remedies Not Exclusive. No failure by the Agent or any Secured Party to exercise, and no delay in exercising and no course of dealing with respect to, any right or remedy under any Security Document shall operate as a waiver thereof; nor shall any single or partial exercise by the Agent or any Secured Party of any right or remedy under any Loan Document preclude any other or further exercise thereof or the exercise of any other right or remedy. The rights and remedies specified in the Loan Documents are cumulative and are not exclusive of any other rights or remedies provided by law. Section 26. Successors and Assigns. This Agreement is for the benefit of the Agent and the Secured Parties. If all or any part of any Secured Party's interest in any Secured Obligation is assigned or otherwise transferred, the transferor's rights hereunder, to the extent applicable to the obligation so transferred, shall be automatically transferred with such obligation. This Agreement shall be binding on the Lien Grantors and their respective successors and assigns. Section 27. Amendments and Waivers. Neither this Agreement nor any provision hereof may be waived, amended, modified or terminated except pursuant to an agreement or agreements in writing entered into by the parties hereto, with the consent of such Lenders as are required to consent thereto under Section 10.01 of the Credit Agreement. Section 28. Choice of Law. This Agreement shall be construed in accordance with and governed by the laws of the State of New York. Section 29. Waiver of Jury Trial. EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER ANY SECURITY DOCUMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO ANY SECURITY DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE OTHER SECURITY DOCUMENTS. Section 30. Severability. If any provision of any Security Document is invalid or unenforceable in any jurisdiction, then, to the fullest extent permitted by law, (i) the other provisions of the Security Documents shall remain in full force and effect in such jurisdiction and shall be liberally construed in favor of the Agent and the Secured Parties in order to carry out the intentions of the parties thereto as nearly as may be possible and (ii) the invalidity or unenforceability of such provision in such jurisdiction shall not affect the validity or enforceability thereof in any other jurisdiction. 36 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written. CONSECO, INC. By: /s/ Daniel J. Murphy ------------------------------ Name: Daniel J. Murphy Title: Senior Vice President and Treasurer BANK OF AMERICA, N.A., as Agent By: /s/ Molly J. Oxford ------------------------------ Name: Molly J. Oxford Title: Vice President Subsidiary Guarantors: AMERICAN LIFE AND CASUALTY MARKETING DIVISION CO. CDOC, INC. CFIHC, INC. CONSECO MANAGEMENT SERVICES COMPANY By: /s/ Daniel J. Murphy ------------------------------ Name: Daniel J. Murphy Title: Senior Vice President and Treasurer CODELINKS, LLC By: CDOC, Inc., its Manager By: /s/ Daniel J. Murphy ------------------------------ Name: Daniel J. Murphy Title: Senior Vice President and Treasurer 40/86 ADVISORS, INC. 40/86 MORTGAGE CAPITAL, INC. By: /s/ John R. Kline ------------------------------ Name: John R. Kline Title: Vice President 40/86 Advisors, Inc. Senior Vice President 40/86 Mortgage Capital, Inc. PERFORMANCE MATTERS ASSOCIATES, INC. PERFORMANCE MATTERS ASSOCIATES OF TEXAS, INC. By: /s/ Daniel J. Murphy ------------------------------ Name: Daniel J. Murphy Title: Senior Vice President and Treasurer CONSECO SERVICES, LLC By: Conseco Management Services Company, its Manager By: /s/ Daniel J. Murphy ------------------------------ Name: Daniel J. Murphy Title: Senior Vice President and Treasurer EX-99 4 release.txt EXHIBIT 99.1 Exhibit 99.1 News For Release Immediate Contacts (News Media) Jim Rosensteele, SVP, Marketing Communications 317.817.4418 (Investors) Tammy Hill, SVP, Investor Relations 317.817.2893 Conseco Announces Completion of Bank Debt Refinancing and Recapitalization Carmel, Ind., June 22, 2004 - Conseco, Inc. (NYSE: CNO) today announced the completion of its $800 million bank debt refinancing. The new bank debt represents the final step in the company's previously announced recapitalization. In May, the company completed the offering (including over-allotments) of 50,600,000 shares of its common stock at $18.25 per share and 27,600,000 shares of its 5.50% class B mandatorily convertible preferred stock at $25 per share. The new bank debt is an $800 million senior secured facility with a floating interest rate equal to LIBOR plus a margin of 4.00%. The interest margin will decrease from 4.00% to 3.50% when the company receives a senior credit rating of B2 from Moody's Investors Service. Net proceeds from the new bank debt and common and mandatorily convertible preferred stock offerings, totaling approximately $2.343 billion, were used to: (1) redeem all of the issued and outstanding class A cumulative convertible exchangeable preferred stock; (2) repay all of the $1.3 billion existing senior bank debt; and (3) enhance risk-based capital ratios by redeeming certain inter-company preferred stock investments held by Conseco's insurance subsidiaries. Conseco's Chief Executive Officer, Bill Shea commented, "We are very pleased to complete our recapitalization. As a result of the recapitalization, our annual cost of debt and preferred stock has been reduced by approximately $90 million, after-tax. We can now focus even more on providing superior insurance products to senior and middle-income Americans. We appreciate the confidence which the investment community and capital markets have placed in us, and we intend to prove that their confidence is deserved." Banc of America Securities LLC and J.P. Morgan Securities Inc. were the lead arrangers for the new bank debt facility. The company will file a Form 8-K with the Securities and Exchange Commission containing the full text of the new bank debt agreement. Conseco, Inc.'s insurance companies help protect working American families and seniors from financial adversity: Medicare supplement, long-term care, cancer, heart/stroke and accident policies protect people against major unplanned expenses; annuities and life insurance products help people plan for their financial future. - # # # # - EX-99 5 release2.txt EXHIBIT 99.2 Exhibit 99.2 NEWS For Release Immediate Contacts (News Media) Jim Rosensteele, SVP, Marketing Communications 317.817.4418 (Investors) Tammy Hill, SVP, Investor Relations 317.817.2893 Conseco Declares Dividend on Class B Preferred Stock and Announces Annual Meeting Date Carmel, Ind., June 23, 2004 - Conseco, Inc. (NYSE:CNO) today announced that it has declared a dividend on the outstanding shares of its Class B 5.50% Mandatorily Convertible Preferred Stock (NYSE: CNO PrB) of $0.35521 per share. The dividend is payable on August 16, 2004 to the holders of record at the close of business on July 30, 2004. The initial dividend represents the amount accrued from the issue date (May 12, 2004) to the payment date. Conseco also announced that its annual meeting of shareholders will be held at 9:00 a.m. (local time) on August 24, 2004 at its offices in Carmel, Indiana. Holders of record at the close of business on July 7, 2004 will be entitled to vote at the annual meeting. The annual meeting will also be available via webcast, which will be accessible through the Investors section of the company's website as follows: http://www.conseco.com/conseco/selfservice/about/investors/ webcasts.jhtml?cat=invest&subcat=webcast Conseco, Inc.'s insurance companies help protect working American families and seniors from financial adversity: Medicare supplement, long-term care, cancer, heart/stroke and accident policies protect people against major unplanned expenses; annuities and life insurance products help people plan for their financial future. - # # # # - -----END PRIVACY-ENHANCED MESSAGE-----