SIXTH AMENDMENT TO GUARANTY AGREEMENT
AND WAIVER OF CERTAIN EVENTS OF DEFAULT
UNDER CREDIT AGREEMENT
This Sixth Amendment to Guaranty Agreement and Waiver of Certain Events of
Default under Credit Agreement (the "Amendment") is made as of this 17th day of
April, 2001 by and among ASCENT ASSURANCE, INC. (the "Guarantor"), and LASALLE
BANK NATIONAL ASSOCIATION (the "Bank").
W I T N E S S E T H
WHEREAS, the Guarantor delivered a Guaranty Agreement in favor of the Bank,
dated as of June 6, 1997, as amended by that certain First Amendment to Guaranty
Agreement, dated as of March 24, 1999, as further amended by that certain Second
Amendment to Guaranty Agreement, dated as of July 21, 1999, as further amended
by that certain Third Amendment to Guaranty Agreement, dated as of April 17,
2000, as further amended by that certain Fourth Amendment to Guaranty Agreement
dated as of August 10, 2000, as further amended by that certain Fifth Amendment
to Guaranty Agreement made as of November 30, 2000, to be effective as of
September 30, 2000 (collectively, the "Guaranty Agreement");
WHEREAS, the Guarantor delivered the Guaranty pursuant to that certain
Credit Agreement, dated as of June 6, 1997 between Ascent Funding, Inc.
(formerly Westbridge Funding Corporation) and the Bank (the "Credit Agreement");
WHEREAS, simultaneously with the execution hereof, the Guarantor will be
entering into a Credit Agreement (the "CSFB Financing") dated of even date with
Credit Suisse First Boston Management Corporation ("CSFB") and, in connection
therewith, will be pledging shares of stock of certain subsidiaries of the
Guarantor which requires the consent of the Bank; and
WHEREAS, the Bank is willing to provide its consent thereto and to further
amend the Guaranty Agreement and waive certain covenant defaults and events of
default under the Guaranty and Credit Agreement, subject to the terms and
conditions contained herein.
NOW, THEREFORE, in consideration of the mutual agreements herein contained
and other good and valuable consideration, the adequacy of which is hereby
acknowledged, and subject to the terms and conditions hereof, the parties hereto
agree as follows:
SECTION 1. DEFINITIONS.
Unless otherwise defined herein, all capitalized terms shall have the
meaning given to them in the Guaranty.
SECTION 2. WAIVER OF CERTAIN COVENANT DEFAULTS UNDER GUARANTY AND
EVENTS OF DEFAULT UNDER CREDIT AGREEMENT.
2.1 As of December 31, 2000 the Guarantor is in Default of Negative
Covenants Section 6.3 Minimum Consolidated GAAP Net Worth of the
Guaranty. Such covenant default under the Guaranty, unless waived,
constitutes an Event of Default under Section 8.1(e) of the Credit
Agreement. The Bank hereby waives (i) such default under the Guaranty
and (ii) such Event of Default under the Credit Agreement or the
Installment Note, dated July 21, 1999 from Ascent Management, Inc. in
favor of the Bank and any and all documents executed in connection
therewith (collectively, the "AMI Agreements"); provided, however,
that such waiver shall not constitute a future waiver of any Default
or Event of Default under the Guaranty or under such Event of Default
section of the Credit Agreement or the AMI Agreements or of any other
covenant under the Guaranty, the Credit Agreement or the AMI
Agreements.
2.2 In connection with the CSFB Financing, the Guarantor requires the
consent of the Bank to the pledge by the Guarantor and
NationalCare(R)Marketing, Inc. of the stock, certain membership
interests and other similar interests in Foundation Financial
Services, Inc., Westbridge Printing Services, Inc., Pacific Casualty
Company, Inc., LifeStyles Marketing Group, Inc., Precision Dialing
Services, Inc. and Senior Benefits, L.L.C. or any other Subsidiary of
the Guarantor. The Bank hereby provides its consent to such pledge in
accordance with Section 6.2 of the Guaranty, subject to the terms and
conditions of this Amendment; provided, however,
that such consent shall not constitute any future consent of the Bank
under the Guaranty, the Credit Agreement or the AMI Agreements where
written consent of the Bank is required in writing.
SECTION 3. AMENDMENTS TO GUARANTY AGREEMENT.
3.1 Section 6.3 of the Guaranty is hereby amended by deleting the
reference to "$45,000,0000" contained therein and inserting
$31,000,000 in its stead.
3.2 Schedule 6.8 of the Guaranty is hereby amended by deleting the
reference to "5.0" Minimum Statutory Surplus Requirement corresponding
to FLICA and inserting "$7.5" in its stead.
SECTION 4. CONDITIONS PRECEDENT.
The effectiveness of this Amendment is expressly conditioned upon
satisfaction of the following conditions precedent:
4.1 The Bank shall have received copies of this Amendment duly executed by
the Guarantor.
4.2 The Bank shall have received copies of the Fourth Amendment to Credit
Agreement, duly executed by Ascent Funding, Inc.
4.3 The Bank shall have received a Side Agreement with respect to the
contribution by the Guarantor of proceeds from the CSFB Financing in
an amount not less than $11,000,0000 to Freedom Life Insurance Company
of America ("FLICA") duly executed by the Guarantor and CSFB, together
with evidence satisfactory to the Bank in its sole and absolute
discretion that CSFB has loaned an amount not less than $11,000,000 to
the Guarantor and the Guarantor has contributed an amount not less
than $11,000,000 to FLICA.
4.4 The Bank shall have received a Subordination Agreement, duly executed
by CSFB.
4.5 The Bank shall have received a $25,000 waiver and amendment fee due
and payable and deemed fully earned on the date hereof.
4.6 The Bank shall have received copies of all loan and related documents
in connection with the CSFB Financing in form and content acceptable
to the Bank in its reasonable sole discretion.
4.7 The Bank acknowledges satisfaction of each of the foregoing, and this
Amendment shall be effective upon receipt by FLICA of the $11,000,000.
SECTION 5. REAFFIRMATION OF THE GUARANTOR.
The Guarantor hereby ratifies and reaffirms that certain Guaranty Agreement
and each of the terms and provisions contained therein, including, without
limitation, Section 7.2 thereof, and agrees that the Guaranty Agreement
continues in full force and effect following the execution and delivery of this
Amendment. The Guarantor represents and warrants to the Bank that the Guaranty
Agreement was, on the date of the execution and delivery thereof, and continues
to be, the valid and binding obligation of the Guarantor enforceable in
accordance with its terms and that the Guarantor has no claims or defenses to
the enforcement of the rights and remedies of the Bank under the Guaranty
Agreement.
SECTION 6. COUNTERPARTS.
This Amendment may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same document.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment on the
day and year specified above.
ASCENT ASSURANCE, INC.
By: /s/Xxxxxxx X. Xxxxxxxx
Name: Xxxxxxx X. Xxxxxxxx
Title: President and CEO
LASALLE BANK NATIONAL ASSOCIATION
By: /s/Xxxxx Xxxxxxxxx
Name: Xxxxx Xxxxxxxxx
Title: Assistant Vice President
ACKNOWLEDGMENT AND AGREEMENT OF BORROWER
The undersigned, ASCENT FUNDING, INC. hereby represents and warrants to
the Bank that (i) the warranties set forth in Article 5 of the Credit Agreement
are true and correct on and as of the date hereof, except to the extent (a) that
any such warranties relate to a specific date, or (b) changes thereto are a
result of transactions for which the Bank has granted its consent; (ii) the
Borrower is on the date hereof in compliance with all the terms and provisions
set forth in the Credit Agreement; and (iii) upon execution hereof no Event of
Default has occurred and is continuing or has not previously or simultaneously
with the execution hereof been waived.
IN WITNESS WHEREOF, this Acknowledgment and Agreement of Borrower has
been duly authorized as of this 17th day of April, 2001.
ASCENT FUNDING, INC.
By: /s/Xxxxxxx X. Xxxxxxxx
Name: Xxxxxxx X. Xxxxxxxx
Title: President & CEO
