1
SUBORDINATED TERM LOAN AGREEMENT
Dated as of November 21, 1996
among
WELLPOINT HEALTH NETWORKS INC.,
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Administrative Agent
and
THE FINANCIAL INSTITUTIONS
PARTY HERETO
Arranged By
BA SECURITIES, INC.
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TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS
1.01 Defined Terms . . . . . . . . . . . . . . . . . . . . 1
1.02 Other Interpretive Provisions . . . . . . . . . . . . 24
(a) Defined Terms. . . . . . . . . . . . . . . . . . 24
(b) The Agreement. . . . . . . . . . . . . . . . . . 24
(c) Certain Common Terms . . . . . . . . . . . . . . 24
(d) Performance; Time. . . . . . . . . . . . . . . . 25
(e) Contracts. . . . . . . . . . . . . . . . . . . . 25
(f) Laws . . . . . . . . . . . . . . . . . . . . . . 25
(g) Captions . . . . . . . . . . . . . . . . . . . . 25
(h) Independence of Provisions . . . . . . . . . . . 25
(i) Construction . . . . . . . . . . . . . . . . . . 25
1.03 Accounting Principles . . . . . . . . . . . . . . . . 25
ARTICLE II
THE LOANS
2.01 The Commitment; Subordination . . . . . . . . . . . . 26
2.02 Loan Accounts . . . . . . . . . . . . . . . . . . . . 26
2.03 Procedure for Borrowings. . . . . . . . . . . . . . . 27
2.04 Conversion and Continuation Elections . . . . . . . . 28
2.05 Voluntary and Involuntary Reduction or Termination
of Commitments. . . . . . . . . . . . . . . . . . . . 29
2.06 Optional and Mandatory Prepayments. . . . . . . . . . 29
2.07 Repayment . . . . . . . . . . . . . . . . . . . . . . 30
2.08 Interest on Loans . . . . . . . . . . . . . . . . . . 31
2.09 Fees. . . . . . . . . . . . . . . . . . . . . . . . . 31
2.10 Computation of Fees and Interest. . . . . . . . . . . 31
ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY
3.01 Taxes.. . . . . . . . . . . . . . . . . . . . . . . . 32
3.02 Illegality. . . . . . . . . . . . . . . . . . . . . . 35
3.03 Increased Costs and Reduction of Return . . . . . . . 36
3.04 Funding Losses. . . . . . . . . . . . . . . . . . . . 37
3.05 Inability to Determine Rates. . . . . . . . . . . . . 38
3.06 Reserves on LIBOR Rate Loans. . . . . . . . . . . . . 38
3.07 Certificates of Banks . . . . . . . . . . . . . . . . 38
3.08 Substitution of Banks . . . . . . . . . . . . . . . . 38
(a) Replacement of Affected Banks. . . . . . . . . . 38
(b) Replacement Procedure. . . . . . . . . . . . . . 39
3.09 Sharing of Payments, Pro Rata Treatment, Etc. . . . . 40
3.10 Payments by the Company . . . . . . . . . . . . . . . 41
3.11 Payments by the Banks to the Administrative Agent . . 43
3.12 Survival. . . . . . . . . . . . . . . . . . . . . . . 44
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ARTICLE IV
CONDITIONS
4.01 Conditions Precedent to Initial Borrowing . . . . . . 44
(a) Loan Agreement and Notes . . . . . . . . . . . . 44
(b) Resolutions; Incumbency. . . . . . . . . . . . . 45
(c) Articles of Incorporation; By-laws and Good
Standing . . . . . . . . . . . . . . . . . . . . 45
(d) Legal Opinions . . . . . . . . . . . . . . . . . 45
(e) Certificate. . . . . . . . . . . . . . . . . . . 46
(f) Regulatory Compliance. . . . . . . . . . . . . . 46
(g) No Litigation Challenging. . . . . . . . . . . . 46
(h) Amendments to Material Agreements. . . . . . . . 47
(i) Other Documents. . . . . . . . . . . . . . . . . 47
4.02 Conditions Precedent to All Borrowings. . . . . . . . 47
(a) No Default . . . . . . . . . . . . . . . . . . . 47
(b) Notice of Borrowing or
Continuation/Conversion. . . . . . . . . . . . . 47
(c) Continuation of Representations and
Warranties . . . . . . . . . . . . . . . . . . . 47
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.01 Corporate Existence and Power . . . . . . . . . . . . 48
5.02 Corporate Authorization; No Contravention . . . . . . 48
5.03 Governmental Authorization. . . . . . . . . . . . . . 48
5.04 Binding Effect. . . . . . . . . . . . . . . . . . . . 49
5.05 Litigation. . . . . . . . . . . . . . . . . . . . . . 49
5.06 No Default. . . . . . . . . . . . . . . . . . . . . . 49
5.07 ERISA . . . . . . . . . . . . . . . . . . . . . . . . 49
5.08 Use of Proceeds; Margin Regulations . . . . . . . . . 50
5.09 Title to Properties . . . . . . . . . . . . . . . . . 50
5.10 Taxes . . . . . . . . . . . . . . . . . . . . . . . . 50
5.11 Financial Condition . . . . . . . . . . . . . . . . . 50
5.12 Environmental Matters . . . . . . . . . . . . . . . . 51
5.13 Regulated Entities. . . . . . . . . . . . . . . . . . 51
5.14 No Burdensome Restrictions. . . . . . . . . . . . . . 51
5.15 Copyrights, Patents, Trademarks and Licenses, Etc . . 51
5.16 Insurance . . . . . . . . . . . . . . . . . . . . . . 52
5.17 Swap Obligations. . . . . . . . . . . . . . . . . . . 52
5.18 Solvency. . . . . . . . . . . . . . . . . . . . . . . 52
5.19 Full Disclosure . . . . . . . . . . . . . . . . . . . 52
5.20 Material Agreements . . . . . . . . . . . . . . . . . 52
5.21 Subsidiaries, Etc.. . . . . . . . . . . . . . . . . . 53
5.22 Accreditation, Etc. . . . . . . . . . . . . . . . . . 54
5.23 No Impairment of Subsidiaries' Ability to Pay
Dividends . . . . . . . . . . . . . . . . . . . . . . 54
5.24 Recapitalization. . . . . . . . . . . . . . . . . . . 54
5.25 Xxxx Xxxxxxx Acquisition. . . . . . . . . . . . . . . 54
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PAGE
ARTICLE VI
AFFIRMATIVE COVENANTS
6.01 Financial Statements. . . . . . . . . . . . . . . . . 55
6.02 Certificates; Other Information . . . . . . . . . . . 56
6.03 Notices . . . . . . . . . . . . . . . . . . . . . . . 57
6.04 Preservation of Corporate Existence, Etc. . . . . . . 58
6.05 Insurance . . . . . . . . . . . . . . . . . . . . . . 59
6.06 Payment of Obligations. . . . . . . . . . . . . . . . 59
6.07 Compliance with Laws. . . . . . . . . . . . . . . . . 60
6.08 Inspection of Property and Books and Records. . . . . 60
6.09 Environmental Laws. . . . . . . . . . . . . . . . . . 60
6.10 Use of Proceeds . . . . . . . . . . . . . . . . . . . 60
6.11 Regulatory Tangible Net Equity. . . . . . . . . . . . 61
6.12 Accreditation, Etc. . . . . . . . . . . . . . . . . . 61
ARTICLE VII
NEGATIVE COVENANTS
7.01 Limitation on Liens . . . . . . . . . . . . . . . . . 61
7.02 Limitation on Indebtedness. . . . . . . . . . . . . . 63
7.03 Fundamental Changes . . . . . . . . . . . . . . . . . 64
7.04 Disposition of Assets . . . . . . . . . . . . . . . . 65
7.05 No More Restrictive Agreements. . . . . . . . . . . . 66
7.06 Transactions with Affiliates. . . . . . . . . . . . . 66
7.07 Margin Stock. . . . . . . . . . . . . . . . . . . . . 67
7.08 Leverage Ratio. . . . . . . . . . . . . . . . . . . . 67
7.09 Fixed Charge Coverage Ratio . . . . . . . . . . . . . 67
7.10 Minimum Net Worth . . . . . . . . . . . . . . . . . . 67
7.11 Accounting Changes. . . . . . . . . . . . . . . . . . 67
7.12 Limitations on Investments. . . . . . . . . . . . . . 67
7.13 Restricted Payments . . . . . . . . . . . . . . . . . 68
7.14 Lines of Business . . . . . . . . . . . . . . . . . . 68
7.15 No Impairment of Subsidiaries' Ability to Pay
Dividends . . . . . . . . . . . . . . . . . . . . . . 68
ARTICLE VIII
EVENTS OF DEFAULT
8.01 Events of Default . . . . . . . . . . . . . . . . . . 69
(a) Non-Payment. . . . . . . . . . . . . . . . . . . 69
(b) Representation or Warranty . . . . . . . . . . . 69
(c) Financial Ratios . . . . . . . . . . . . . . . . 69
(d) Specific Defaults. . . . . . . . . . . . . . . . 70
(e) Other Defaults . . . . . . . . . . . . . . . . . 70
(f) Cross-Default. . . . . . . . . . . . . . . . . . 70
(g) Insolvency; Voluntary Proceedings. . . . . . . . 70
(h) Involuntary Proceedings. . . . . . . . . . . . . 70
(i) ERISA. . . . . . . . . . . . . . . . . . . . . . 71
(j) Monetary Judgments . . . . . . . . . . . . . . . 71
(k) Non-Monetary Judgments . . . . . . . . . . . . . 71
(l) Change in Control. . . . . . . . . . . . . . . . 72
(m) HMO Event. . . . . . . . . . . . . . . . . . . . 72
(n) Adverse Change . . . . . . . . . . . . . . . . . 72
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PAGE
(o) Senior Bank Agreement Default. . . . . . . . . . 72
8.02 Remedies. . . . . . . . . . . . . . . . . . . . . . . 72
8.03 Rights Not Exclusive. . . . . . . . . . . . . . . . . 73
ARTICLE IX
THE ADMINISTRATIVE AGENT
9.01 Appointment and Authorization . . . . . . . . . . . . 73
9.02 Delegation of Duties. . . . . . . . . . . . . . . . . 73
9.03 Liability of Administrative Agent . . . . . . . . . . 73
9.04 Reliance by Administrative Agent. . . . . . . . . . . 74
9.05 Notice of Default . . . . . . . . . . . . . . . . . . 75
9.06 Credit Decision . . . . . . . . . . . . . . . . . . . 75
9.07 Indemnification . . . . . . . . . . . . . . . . . . . 76
9.08 Administrative Agent in Individual Capacity . . . . . 76
9.09 Successor Administrative Agent. . . . . . . . . . . . 77
9.10 Delivery of Agreements and Preparation of
Amendments, Modifications and Waivers . . . . . . . . 77
ARTICLE X
MISCELLANEOUS
10.01 Amendments and Waivers. . . . . . . . . . . . . . . . 78
10.02 Notices . . . . . . . . . . . . . . . . . . . . . . . 79
10.03 No Waiver; Cumulative Remedies. . . . . . . . . . . . 79
10.04 Costs and Expenses. . . . . . . . . . . . . . . . . . 79
10.05 Indemnity . . . . . . . . . . . . . . . . . . . . . . 80
10.06 Payments Set Aside. . . . . . . . . . . . . . . . . . 81
10.07 Successors and Assigns. . . . . . . . . . . . . . . . 81
10.08 Assignments, Participations, Etc. . . . . . . . . . . 81
10.09 Set-off . . . . . . . . . . . . . . . . . . . . . . . 84
10.10 Automatic Debits of Fees. . . . . . . . . . . . . . . 85
10.11 Notification of Addresses, Lending Offices, Etc . . . 85
10.12 Counterparts. . . . . . . . . . . . . . . . . . . . . 85
10.13 Severability. . . . . . . . . . . . . . . . . . . . . 86
10.14 No Third Parties Benefitted . . . . . . . . . . . . . 86
10.15 Time. . . . . . . . . . . . . . . . . . . . . . . . . 86
10.16 GOVERNING LAW AND JURISDICTION. . . . . . . . . . . . 86
10.17 WAIVER OF JURY TRIAL. . . . . . . . . . . . . . . . . 86
10.18 Entire Agreement. . . . . . . . . . . . . . . . . . . 87
10.19 Survival of Representations . . . . . . . . . . . . . 87
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PAGE
ANNEXES
Annex I Applicable Amount
SCHEDULES
2.01 Commitment of each Bank
5.21 (A) Subsidiaries of the Company
5.21 (B) Investments of the Company and its Subsidiaries
5.20 (A) Material Agreements
5.20 (B) Recapitalization Agreements
7.02 Indebtedness
10.02 Address for Notices
EXHIBITS
A Form of Note
B Form of Notice of Borrowing
C Form of Notice of Conversion/Continuation
D Subordination Provisions
E Form of Confidentiality Agreement
F Form of Compliance Certificate
G-1 Form of Assignment and Acceptance
G-2 Form of Notice of Assignment and Acceptance
H-1 Form of Opinion of Xxxxxxx, Phleger & Xxxxxxxx LLP
H-2 Form of Opinion of Xxxxxx X. Xxxxxx
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SUBORDINATED TERM LOAN AGREEMENT
This SUBORDINATED TERM LOAN AGREEMENT is entered into as of November
21, 1996, among WELLPOINT HEALTH NETWORKS INC., a California corporation
(together with its permitted successors, the "Company"), each of the financial
institutions that is a signatory to this Agreement identified under the caption
"BANKS" on the signature pages of this Agreement or that, pursuant to Section
10.08(a), shall become a "Bank" under this Agreement (individually, a "Bank"
and, collectively, the "Banks"), and BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, a national banking association, as administrative agent for the
Banks (in such capacity, and together with any successor administrative agent,
the "Administrative Agent").
RECITAL
The Banks have agreed to make available to the Company, upon the
terms and conditions set forth in this Agreement, a multiple-draw subordinated
credit facility to enable the Company to meet capital requirements, for
acquisitions and for other general corporate purposes.
NOW, THEREFORE, in consideration of the mutual agreements, provisions
and covenants contained in this Agreement, the parties to this Agreement agree
as follows:
ARTICLE I
DEFINITIONS
1.01 Defined Terms. In addition to the terms defined elsewhere in
this Agreement, the following terms have the following meanings:
"Acquired EBITDAR" means, with respect to any acquisition permitted
under this Agreement, for any period, for the Company and its Subsidiaries
(determined in accordance with GAAP), the sum of consolidated pre-tax net
income (exclusive of extraordinary gains and losses); plus (to the extent
deducted in determining consolidated net income) (i) Interest Expense;
(ii) amortization (iii) depreciation and (iv) expenses in respect of any
Operating Lease, all for such period, as each of the items specified above
are reasonably allocable to the assets, capital stock, division or
business group acquired in such acquisition.
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"Administrative Agent" has the meaning specified in the preamble to
this Agreement.
"Affected Bank" has the meaning specified in Section 3.08.
"Affiliate" means, as to any Person, any other Person which, 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 to direct or cause the direction of the management and policies of
the other Person, whether through the ownership of voting securities, by
contract or otherwise. Without limitation, any director, executive
officer or beneficial owner of 10% or more of the equity of a Person
shall, for the purposes of this Agreement, be deemed to control the other
Person. Notwithstanding the foregoing, no Bank shall be deemed an
"Affiliate" of the Company or of any Subsidiary of the Company.
"Agent-Related Persons" means (i) BofA and any successor
Administrative Agent appointed under Section 9.09, together with their
respective Affiliates (including, in the case of BofA, BA Securities,
Inc.), officers, directors, employees, agents and attorneys-in-fact of
such Persons and Affiliates.
"Agent's Payment Office" means the address for payments set forth on
Schedule 10.02 in relation to the Administrative Agent or such other
address as the Administrative Agent may from time to time specify in
accordance with Section 10.02.
"Aggregate Commitment" means the combined Commitments of the Banks,
in the initial amount of $200,000,000, as such amount may be reduced from
time to time pursuant to this Agreement.
"Agreement" means this Subordinated Term Loan Agreement.
"Applicable Amount" means, the amount set forth opposite the
indicated Level in the applicable chart set forth on Annex I in accordance
with the parameters for calculations of such amounts also set forth on
Annex I. The Applicable Amount is determined as provided in Annex I, on
the basis of either the Debt Rating or the Leverage Ratio, as selected, if
applicable, by the Company in its quarterly Compliance Certificates. The
chart on the first page of Annex I is effective from the Effective Date
through and
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including June 30, 1997, and the chart on the second page of Annex I is
effective thereafter.
"Arranger" means BA Securities, Inc.
"Arranger's Fee Letter" means the letter agreement dated October 23,
1996 between the Company and the Arranger regarding the Arranger's fees.
"Assignee" has the meaning specified in Section 10.08(a).
"Assignment and Acceptance" has the meaning specified in Section
10.08(a).
"Attorney Costs" means and includes all reasonable fees and
disbursements of any law firm or other external counsel, the allocated
cost of the Administrative Agent's and the Arranger's internal legal
services and all disbursements of internal counsel.
"Authorized Company Employee" means employees of the Company
designated in writing to the Administrative Agent as such from time to
time by a Responsible Officer, and as to whom the Company has provided to
the Administrative Agent a certificate of the Secretary or Assistant
Secretary of the Company certifying each of their names and true
signatures and certifying that the Board of Directors of the Company has
delegated such authority to such Responsible Officer.
"Availability Period" means the period commencing on the Effective
Date and ending on the earlier to occur of (a) February 15, 1997 and (b)
the date on which the Aggregate Commitment is terminated in accordance
with the provisions of this Agreement.
"Bank" has the meaning specified in the introductory clause to this
Agreement.
"Bankruptcy Code" means the Federal Bankruptcy Reform Act of 1978 (11
U.S.C. Section U101, et seq.).
"Base Rate" means, for any day, the higher of: (a) the rate of
interest in effect for such day as publicly announced from time to time by
BofA in San Francisco, California, as its "reference rate" and (b) 0.50%
per annum above the most recent Federal Funds Rate. BofA's reference 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 the reference
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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 Loan that bears interest based on the Base
Rate.
"BofA" means Bank of America National Trust and Savings Association,
a national banking association.
"Board of Directors" means either the board of directors of the
Company or any duly authorized committee of that board.
"Borrowing" means a borrowing under this Agreement consisting of
Loans made to the Company on the same day by the Banks pursuant to Section
2.03.
"Business Day" means any day other than a Saturday, Sunday or other
day on which commercial banks in San Francisco, California are authorized
or required by law to close and, if the applicable Business Day relates to
any LIBOR Rate Loan, any such day on which dealings are carried on in the
London offshore dollar interbank market.
"Capital Adequacy Regulation" means any guideline, request or
directive of any central bank or other Governmental Authority, or any
other Governmental Rule, whether or not having the force of law, regarding
capital adequacy of any bank or of any corporation controlling a bank.
"Capital Expenditures" means, for any period, expenditures (including
the aggregate amount of Capital Lease Obligations incurred during such
period) made by the Company or any of its Subsidiaries to acquire or to
construct fixed assets, plant and equipment (including renewals,
improvements and replacements, but excluding (i) repairs in the Ordinary
Course of Business and (ii) expenditures of proceeds of insurance
settlements in respect of loss, destroyed or damaged assets, equipment or
other property to repair or replace such property to a like condition or
with property of equivalent ability and value) during such period computed
in accordance with GAAP.
"Capital Lease" has the meaning specified in the definition of
"Capital Lease Obligations."
"Capital Lease Obligations" means all material monetary obligations
of the Company or any of its Subsidiaries under any leasing or similar
arrangement which is classified as a capital lease ("Capital Lease") in
accordance with GAAP
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(including Statement of Financial Accounting Standards No. 13 of the
Financial Accounting Standards Board) and, for purposes of this Agreement,
the amount of such obligations shall be the capitalized amount of such
obligation, determined in accordance with GAAP (including such Statement
No. 13).
"Cash Flow" means, for the Company and its Subsidiaries (determined
on a consolidated basis without duplication in accordance with GAAP), the
result of the following: sum of (a) consolidated after-tax net income
(exclusive of extraordinary gains and losses) of the Company and its
Subsidiaries for the four-quarter period ending on the date of
determination plus (to the extent deducted in determining net income) (i)
Interest Expense for such period, (ii) amortization for such period, (iii)
depreciation for such period, (iv) expenses in respect of any Operating
Lease for such period, (v) up to $40,000,000 of restructuring charges or
expenses incurred in connection with the Recapitalization and the Mirus
Acquisition (determined on an after-tax basis) and (vi) up to $35,000,000
of non-cash restructuring charges or expenses (with any reserve
constituting a cash charge) incurred in such period in connection with
acquisitions permitted by the terms and conditions of this Agreement
(determined on an after-tax basis) less (b) dividends (exclusive of the
one-time dividend paid as part of the Recapitalization) and unfinanced
Capital Expenditures (exclusive of acquisitions) for such period.
"CERCLA" has the meaning specified in the definition of
"Environmental Laws."
"Closing Date" means the date this Agreement is signed.
"Code" means the Internal Revenue Code of 1986 and regulations
promulgated under the Code.
"Commitment" means, with respect to each Bank, the commitment of such
Bank to make Loans pursuant to Section 2.01(a) in an aggregate amount at
any one time outstanding up to but not exceeding the amount set forth
opposite such Bank's name in Schedule 2.01 under the heading "Commitment"
(as such amount may be reduced pursuant to Section 2.05 or Section 3.09 or
as a result of one or more assignments pursuant to Section 10.08).
"Confidentiality Agreement" means the Confidentiality Agreement,
substantially in the form of Exhibit E, to be executed by each Transferee
or prospective Transferee pursuant to Section 10.08(e).
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"Contingent Obligation" means, as applied to any Person, any direct
or indirect liability of that Person with respect to any Indebtedness,
lease, dividend, Surety Instrument or other obligation (the "primary
obligations") of another Person (the "primary obligor"), including any
obligation of that Person, whether or not contingent, (a) to purchase,
repurchase or otherwise acquire such primary obligations or any property
constituting direct or indirect security for such primary obligations, or
(b) to advance or provide funds (i) for the payment or discharge of any
such primary obligation, or (ii) to maintain working capital or equity
capital of the primary obligor or otherwise to maintain the net worth or
solvency or any balance sheet item, level of income or financial condition
of the primary obligor, or (c) to purchase property, securities or
services primarily for the purpose of assuring the owner of any such
primary obligation of the ability of the primary obligor to make payment
of such primary obligation, or (d) to guarantee or otherwise to assure or
hold harmless the holder of any such primary obligation against loss in
respect thereof; in each case (a), (b), (c) or (d), including arrangements
in which the rights and remedies of the holder of the primary obligation
are limited to repossession or sale of certain property of such Person.
The amount of any Contingent Obligation shall be deemed equal to the
stated or determinable amount of the primary obligation in respect of
which such Contingent Obligation is made or, if not stated or if
indeterminable, the maximum reasonably anticipated liability in respect of
such primary obligation, and in the case of other Contingent Obligations
other than in respect of Swap Contracts, shall be equal to the maximum
reasonably anticipated liability in respect of such Contingent Obligations
and, in the case of Contingent Obligations in respect of Swap Contracts,
shall be equal to the Swap Termination Value.
"Contractual Obligations" 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 and which is material to such Person.
"Controlled Group" means any corporation or trade or business that is
a member of any group of organizations described in Section 414(m) of the
Code of which the Company is a member.
"Conversion Date" means any date on which the Company elects to
convert a Base Rate Loan into a LIBOR Rate Loan; continue a LIBOR Rate
Loan as a LIBOR Rate Loan; or convert a LIBOR Rate Loan into a Base Rate
Loan.
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"Debt Rating" means the rating (or "implied" rating) of the Company's
senior unsecured long-term debt by each of S&P and Xxxxx'x.
"Default" means any event or circumstance which, 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.
"Dollars", "dollars" and "$" each mean lawful money of the United
States of America.
"Domestic Lending Office" means, with respect to each Bank, the
office of that Bank designated as such on Schedule 10.02 or such other
office of the Bank as it may from time to time specify to the Company and
the Administrative Agent.
"EBITDAR" means, for the Company and its Subsidiaries (determined on
a consolidated basis without duplication in accordance with GAAP), the sum
of consolidated pre-tax net income (exclusive of extraordinary gains and
losses) of the Company and its Subsidiaries for the four-quarter period
ending on the date of determination plus (to the extent deducted in
determining consolidated pre-tax net income) (i) Interest Expense for such
period, (ii) amortization for such period, (iii) depreciation for such
period, (iv) expenses in respect of any Operating Lease for such period,
(v) up to $65,000,000 of restructuring charges or expenses incurred in
connection with the Recapitalization and the Mirus Acquisition (determined
on a pre-tax basis) and (vi) up to $50,000,000 of non-cash restructuring
charges or expenses (with any reserve constituting a cash charge) incurred
in such period in connection with acquisitions permitted by the terms and
conditions of this Agreement (determined on a pre-tax basis).
"Effective Date" means December 16, 1996.
"Eligible Assignee" means (i) a commercial bank organized under the
laws of the United States or any state thereof, and having a combined
capital and surplus of at least $100,000,000; (ii) a commercial bank
organized under the laws of any other country which is a member of the
Organization for Economic Cooperation and Development (the "OECD"), or a
political subdivision of any such country, and having a combined capital
and surplus of at least $100,000,000; provided that such bank is acting
through a branch or agency located in the United States; or (iii) a Person
that is primarily engaged in the business of commercial banking and that
is (A) a Subsidiary of a Bank, (B) a Subsidiary of a Person of which a
Bank is a Subsidiary, or (C) a Person of which a Bank is a Subsidiary.
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14
"Environmental Claims" means all claims, however asserted, 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 and unintentional,
negligent and non-negligent, sudden or non-sudden, 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.
"Environmental Laws" means all present and future Governmental Rules
and common law duties, together with all administrative orders, directed
duties, requests, licenses, authorizations and permits of, and agreements
with, any Governmental Authorities, in each case relating to
environmental, health, safety and land use matters; including the
Comprehensive Environmental Response, Compensation and Liability Act of
1980 ("CERCLA"), the Clean Air Act, the Federal Water Pollution Control
Act of 1972, the Solid Waste Disposal Act, the Federal Resource
Conservation and Recovery Act, the Toxic Substances Control Act and the
Emergency Planning and Community Right-to-Know Act.
"ERISA" means the Employee Retirement Income Security Act of 1974 and
regulations promulgated under ERISA.
"ERISA Affiliate" means any corporation or trade or business that is
a member of any group of organizations described in Section 414(b) or (c)
of the Code, of which the Company is a member.
"ERISA Event" means (a) a Reportable Event with respect to a
Qualified Plan or a Multiemployer Plan; (b) a withdrawal by the Company or
any ERISA Affiliate from a Qualified 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); (c) a complete or partial withdrawal by the
Company or any ERISA Affiliate from a Multiemployer Plan; (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 Qualified Plan or Multiemployer
Plan subject to Title IV of
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ERISA; (e) a failure by the Company or any member of the Controlled Group
to make required contributions to a Qualified Plan or Multiemployer Plan;
(f) an event or condition which might reasonably be expected to constitute
grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Qualified Plan or
Multiemployer Plan; (g) 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; or (h) an application
for a funding waiver or an extension of any amortization period pursuant
to Section 412 of the Code with respect to any Plan.
"Event of Default" has the meaning specified in Section 8.01.
"Exchange Act" means the Securities and Exchange Act of 1934, and
regulations promulgated under the Exchange Act.
"FDIC" means the Federal Deposit Insurance Corporation, or any entity
succeeding to any of its principal functions.
"Federal Funds Rate" means, for any period, the rate set forth in the
weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Board (including any such
successor, "H.15(519)") for such day opposite the caption "Federal Funds
(Effective)". If on any relevant day such rate is not yet published in
H.15(519), the rate for such day will be the rate set forth in the daily
statistical release designated as the Composite 3:30 p.m. Quotations for
U.S. Government Securities, or any successor publication, published by
the Federal Reserve Bank of New York (including any such successor, the
"Composite 3:30 p.m. Quotation") for such day under the caption "Federal
Funds Effective Rate". If on any relevant day the appropriate rate for
such previous day is not yet published in either H.15(519) or the
Composite 3:30 p.m. Quotations, the rate for such day will be the
arithmetic mean as determined by the Administrative Agent of the rates for
the last transaction in overnight Federal funds arranged prior to 9:00
a.m. (New York time) on that day by each of three leading brokers of
Federal funds transactions in New York City selected by the Administrative
Agent.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System, or any entity succeeding to any of its principal
functions.
"Fixed Charges" means, for any period, for the Company and its
Subsidiaries on a consolidated basis in accordance
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with GAAP, an amount equal to the sum of, without duplication, (a)
Interest Expense during the preceding four- quarter period ending on the
date of determination plus (b) scheduled principal payments of
Indebtedness for the succeeding four-quarter period commencing on the date
of determination, other than payments in connection with the Mass Mutual
Note (unless renewable or extendible at the option of the obligor beyond
such period) plus (c) expenses in respect of any Operating Lease for such
succeeding four- quarter period.
"Fixed Charge Coverage Ratio" means the ratio of (a) Cash Flow to (b)
Fixed Charges.
"Form 1001" has the meaning specified in Section 3.01(f).
"Form 4224" has the meaning specified in Section 3.01(f).
"Funded Debt" means, as of any date of determination, for the Company
and its Subsidiaries on a consolidated basis in accordance with GAAP, an
amount equal to the sum of, without duplication, (a) all Indebtedness of
such Person plus (b) an amount equal to eight times the annual expense of
such Person in respect of any Operating Lease for the four-quarter period
commencing on the date of determination plus (c) all Contingent
Obligations of such Person with respect to Funded Debt of others.
"Further Taxes" means any and all present or future taxes, levies,
assessments, imposts, duties, deductions, fees, withholdings or similar
charges (including, without limitation, 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 accounting profession), or in such other
statements by such other entity as may be in general use by significant
segments of the U.S. accounting profession, which are applicable to the
circumstances as of the date of determination.
"Governmental Approval" means any authorization, consent, approval,
license, lease, ruling, permit, waiver,
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17
exemption, filing, registration or notice by or with any Governmental
Authority.
"Governmental Authority" means any nation, any state, any form of
political subdivision, any central bank (or similar monetary or regulatory
authority), any entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to national
(Federal or foreign), state or local government, and any corporation or
other entity owned or controlled, through stock or capital ownership or
otherwise, by any of the foregoing, including any HMO Regulator.
"Governmental Rules" shall mean any treaty, law, rule, regulation,
ordinance, order, code, judgment, decree, directive, guideline, policy,
including any HMO Regulation, or any similar form of decision of, or any
interpretation or administration of any of the foregoing by, any
Governmental Authority.
"Hazardous Materials" means all those substances which are regulated
by, or which may form the basis of liability under, any Environmental Law,
including all substances identified under any Environmental Law as a
pollutant, contaminant, hazardous waste, hazardous constituent, special
waste, hazardous substance, hazardous material, or toxic substance, or
petroleum or petroleum derived substance or waste.
"Health Foundation" means California HealthCare Foundation, a
California nonprofit public benefit corporation.
"HMO" shall mean any Person which operates as a health maintenance
organization.
"HMO Event" shall mean the failure by the Company or any of its
Subsidiaries to comply in any material respect with any of the terms and
provisions of any applicable HMO Regulation pertaining to the fiscal
soundness, solvency or financial condition of the Company or any of its
Subsidiaries if such failure is reasonably likely to have a Material
Adverse Effect; or the assertion in writing, after the Closing Date, by an
HMO Regulator that it intends to take administrative action against the
Company or any of its Subsidiaries to revoke or modify any Governmental
Approval of, or to enforce the fiscal soundness, solvency or financial
provisions or requirements of such HMO Regulations against, the Company or
any of its Subsidiaries, if such action, modification or enforcement is
reasonably likely to have a Material Adverse Effect.
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18
"HMO Regulations" shall mean (i) all Governmental Rules applicable
under Federal or state law to HMOs, providers of life, health care or
disability insurance or the provision of health care services or such
insurance or the management of health care services and (ii) the Blue
Cross/Blue Shield Risk-Based Capital Guidelines.
"HMO Regulator" shall mean any Person charged with the
administration, oversight or enforcement of an HMO Regulation, whether
primarily, secondarily, or jointly.
"HMO Subsidiary" shall mean any direct or indirect Subsidiary of the
Company which is actively engaged and operating as an HMO or as a provider
of life, health care or disability insurance and shall not include any
entity in a development or start-up phase or an inactive phase or which
functions solely as a holding company for an operating HMO or provider of
life, health care or disability insurance.
"Indebtedness" of any Person means, without duplication, (a) all
indebtedness for borrowed money; (b) all obligations issued, undertaken or
assumed as the deferred purchase price of property or services (other than
trade payables entered into in the Ordinary Course of Business pursuant to
ordinary terms); (c) all non-contingent reimbursement or payment
obligations with respect to Surety Instruments; (d) all obligations
evidenced by notes, bonds, debentures or similar instruments, including
obligations so evidenced that have been or are incurred in connection with
the acquisition of property, assets or businesses; (e) all indebtedness
created or arising under any conditional sale or other title retention
agreement, or incurred as financing, in either case with respect to
Property acquired by the Person (even though the rights and remedies of
the seller or bank under such agreement in the event of default are
limited to repossession or sale of such property); (f) all Capital Lease
Obligations; (g) all indebtedness referred to in clauses (a) through (f)
above secured by (or for which the holder of such Indebtedness has an
existing right, contingent or otherwise, to be secured by) any Lien upon
or in property (including accounts and contracts rights) owned by such
Person, even though such Person has not assumed or become liable for the
payment of such Indebtedness; and (h) all Contingent Obligations in
respect of indebtedness or obligations of others of the kinds referred to
in clauses (a) through (g) above.
"Indemnified Person" has the meaning specified in Section 10.05.
"Indemnified Liabilities" has the meaning specified in Section 10.05.
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"Insolvency Proceeding" means (a) any case, action or proceeding
before any court or other Governmental Authority relating to bankruptcy,
reorganization, insolvency, liquidation, 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 either case undertaken under U.S.
Federal, state or foreign law, including the Bankruptcy Code.
"Interest Differential" means, with respect to any prepayment of a
LIBOR Rate Loan on a day other than the last day of the applicable
Interest Period and with respect to any failure to borrow, continue or
convert a LIBOR Rate Loan on the date or in the amount specified in any
Notice of Borrowing or Notice of Continuation/Conversion, as applicable,
(a) the per annum interest rate payable (or, with respect to a failure to
borrow, the interest rate which would have been payable) pursuant to
Section 2.08(a) minus (b) the LIBOR Rate on, or as near as practicable to,
the date of the prepayment or failure to borrow with respect to a LIBOR
Rate Loan with an Interest Period commencing on such date and ending on
the last day of the Interest Period of the LIBOR Rate Loan so prepaid or
which would have been borrowed on such date.
"Interest Expense" shall mean, for any period, the sum, for the
Company and its Subsidiaries (determined on a consolidated basis without
duplication in accordance with GAAP), of the following: (a) all interest
in respect of Indebtedness accrued or capitalized during such period
(whether or not actually paid during such period) plus (b) the net amounts
payable (or minus the net amounts receivable) under Swap Contracts accrued
during such period (whether or not actually paid or received during such
period).
"Interest Payment Date" means, with respect to any LIBOR Rate Loan,
the last Business Day of each Interest Period applicable to such Loan;
with respect to any Base Rate Loan, the last Business Day of each calendar
quarter and each date a Base Rate Loan is converted into a LIBOR Rate
Loan; with respect to all Loans, the Maturity Date; provided, however,
that if any Interest Period for a LIBOR Rate Loan exceeds three months,
interest shall also be paid on the date which falls three months after the
beginning of such Interest Period.
"Interest Period" means: with respect to any LIBOR Rate Loan, the
period commencing on the Business Day such LIBOR Rate Loan is made or
continued or on the date on which a
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Loan is converted into a LIBOR Rate Loan and ending on the date one, two,
three or six months thereafter (and, if approved by all Banks, nine or
twelve months thereafter) as selected by the Company in its Notice of
Borrowing or Notice of Conversion/Continuation; provided that:
(i) if any Interest Period pertaining to a LIBOR Rate Loan
would otherwise end on a day which is not a Business Day, that
Interest Period shall be extended to the next succeeding 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 immediately preceding Business Day;
(ii) no Interest Period for any Loan shall extend beyond the
Maturity Date; and
(iii) no Interest Period applicable to a Loan or portion
thereof shall extend beyond any date upon which is due any scheduled
principal payment in respect of the Loans unless the aggregate
principal amount of Loans represented by Base Rate Loans or LIBOR
Rate Loans having Interest Periods that will expire on or before such
date, equals or exceeds the amount of such principal payment.
"Investment" means, for any Person: (a) the acquisition (whether for
cash, Property, services, securities or otherwise) of capital stock,
bonds, notes, debentures, partnership or other ownership interests or
other securities of any other Person or any agreement to make any such
acquisition (including any "short sale" or any sale of any securities at a
time when such securities are not owned by the Person entering into such
short sale); (b) the making of any deposit with, or advance, loan or other
extension of credit to, any other Person (including the purchase of
Property from another Person subject to an understanding or agreement,
contingent or otherwise, to resell such Property to such Person, but
excluding any such advance, loan or extension of credit having a term not
exceeding 90 days representing the purchase price of inventory or supplies
sold by such Person in the Ordinary Course of Business); (c) the entering
into of any Contingent Obligation with respect to, Indebtedness or other
liability of any other Person and (without duplication) any amount
committed to be advanced, lent or extended to such Person; or (d) the
entering into of any Swap Contract.
"Xxxx Xxxxxxx Acquisition" means the proposed acquisition of the
group benefit operations and certain other assets from Xxxx Xxxxxxx Mutual
Life Insurance Company
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by the Company (or certain of its Affiliates) pursuant to the Purchase
and Sale Agreement dated as of October 10, 1996.
"Lending Office" means, with respect to any Bank, the office or
offices of such Bank specified as its "Lending Office" or "Domestic
Lending Office" or "LIBOR Lending Office", as the case may be, opposite
its name on Schedule 10.02, or such other office or offices of such Bank
as it may from time to time notify the Company and the Administrative
Agent.
"Leverage Ratio" means the ratio of Funded Debt to the sum of (a)
EBITDAR plus (b) with respect to each acquisition permitted by this
Agreement made during the four consecutive fiscal quarters immediately
preceding any date of determination, the aggregate amount of Acquired
EBITDAR for the period commencing on the first day of such four fiscal
quarter period and ending on the date each such acquisition was made;
provided, however, that solely for purposes of Section 4.01(e)(iv), the
Leverage Ratio shall be calculated based on a consolidated pro forma
basis, with the assumption that the Recapitalization had been consummated.
"LIBOR Lending Office" means with respect to each Bank, the office of
such Bank designated as such on Schedule 10.02 or such other office of
such Bank as such Bank may from time to time specify by written notice to
the Company and the Administrative Agent.
"LIBOR Rate" means, for any Interest Period with respect to any LIBOR
Rate Loan, the rate of interest per annum notified by the Reference Bank
to the Administrative Agent as being the rate of interest at which Dollar
deposits in an amount comparable to the principal amount of the LIBOR Rate
Loan to be made, converted or continued under this Agreement for such
Interest Period and having a term comparable to such Interest Period,
would be offered by the Reference Bank to major banks in the London
interbank market at their request at approximately 11:00 a.m. (London
time) two Business Days prior to the commencement of such Interest Period.
"LIBOR Rate Loan" means a Loan that bears interest based on the LIBOR
Rate.
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
assignment, charge or deposit arrangement, encumbrance, lien (statutory or
other) or preference, priority or other security interest or preferential
arrangement of any kind or nature whatsoever (including those created by,
arising under or evidenced by any
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conditional sale or other title retention agreement, the interest of a
lessor under a Capital Lease Obligation, any financing lease having
substantially the same economic effect as any of the foregoing, or the
filing of any financing statement naming the owner of the asset to which
such lien relates as debtor, under the Uniform Commercial Code as in
effect in the State of California or any comparable law) and any
contingent or other agreement to provide any of the foregoing, but not
including the interest of a lessor under an Operating Lease; provided,
however, that a Lien shall not be deemed to arise from reverse repurchase
agreements where the Borrower is the seller or from programs where the
Company lends securities.
"Loan" means an extension of credit by a Bank to the Company pursuant
to Article II, and may be a Base Rate Loan or a LIBOR Rate Loan.
"Loan Documents" means this Agreement, the Notes and the Arranger's
Fee Letter.
"Majority Banks" means, subject to the last paragraph of Section
10.01, Banks then having at least 51% of the Aggregate Commitment or if
the Commitments shall have terminated, Banks holding at least 51% of the
aggregate unpaid principal amount of the Loans.
"Margin Stock" means "margin stock" as such term is defined in
Regulation G, T, U or X of the Federal Reserve Board.
"Mass Mutual Note" means the Series A Promissory Note in the amount
of $62,000,000, issued by the Company to Massachusetts Mutual Life
Insurance Company in connection with the Mirus Acquisition.
"Material Adverse Effect" means any circumstance or event that
constitutes a material adverse change in, or a material adverse effect
upon, any of (a) the operations, 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
the Company to perform under any Loan Document and avoid any Event of
Default; or (c) a material adverse effect upon the legality, validity,
binding effect or enforceability of any Loan Document.
"Maturity Date" means the earlier to occur of (a) December 31, 1998
and (b) the date on which the Aggregate Commitment is terminated in
accordance with the provisions of this Agreement.
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"Mirus Acquisition" means the acquisition of Mirus Insurance Company
by the Company from Massachusetts Mutual Life Insurance Company pursuant
to the Purchase Agreement dated as of January 5, 1996.
"Moody's" means Xxxxx'x Investors Service, Inc.
"Multiemployer Plan" means a "multiemployer plan" (within the meaning
of Section 4001(a)(3) of ERISA) and to which any member of the Controlled
Group makes, is making, or is obligated to make contributions or, during
the preceding three calendar years, has made, or been obligated to make,
contributions.
"Net Proceeds" means, with respect to issuances of any stock or other
equity or issuances of any subordinated indebtedness, the gross cash
proceeds of such issuance, less the reasonable costs and expenses actually
incurred by the Borrower or its Subsidiaries in connection therewith.
"Net Worth" means, at any date for any Person, the sum for such
Person and its Subsidiaries (determined on a consolidated basis without
duplication in accordance with GAAP), of the following:
(a) the amount of capital stock (less the cost of treasury shares),
plus
(b) the amount of additional-paid-in-capital, surplus and retained
earnings (or, in the case of a surplus or retained earnings deficit, minus
the amount of such deficit).
"Notes" means those promissory notes by the Company to the order of
each of the Banks, substantially in the form of Exhibit A, evidencing the
Loans (individually, a "Note").
"Notice of Borrowing" means a notice given by the Company to the
Administrative Agent pursuant to Section 2.03, in substantially the form
of Exhibit B.
"Notice of Conversion/Continuation" means a notice given by the
Company to the Administrative Agent pursuant to Section 2.04, in
substantially the form of Exhibit C.
"Notice of Lien" means any "notice of lien" or similar document
intended to be filed or recorded with any court, registry, recorder's
office, central filing office or other Governmental Authority for the
purpose of evidencing, creating, perfecting or preserving the priority of
a Lien securing obligations owing to a Governmental Authority.
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"Obligations" means all Loans, Indebtedness, advances, debts,
liabilities, indemnifications, reimbursements, obligations, covenants and
duties owing by the Company to any Bank or the Administrative Agent, or
any indemnification owed to any other Person required to be indemnified,
that arises under any Loan Document, whether or not for the payment of
money, whether arising by reason of an extension of credit, loan,
guaranty, indemnification or in any other manner, whether direct or
indirect (including those acquired by assignment), absolute or contingent,
due or to become due, now existing or hereafter arising and however
acquired.
"Old WellPoint" means WellPoint Health Networks Inc., a Delaware
corporation, the predecessor in interest to the Company prior to the
consummation of the transactions contemplated by the Recapitalization
Agreements.
"Operating Lease" means, as applied to any Person, any lease of
Property which is not a Capital Lease.
"Ordinary Course of Business" means, in respect of any transaction
involving the Company or any Subsidiary of the Company, the ordinary
course of such Person's business, as conducted by any such Person in
accordance with past practice and undertaken by such Person in good faith
and not for purposes of evading any covenant or restriction in any Loan
Document.
"Organization Documents" means, for any corporation, the certificate
or articles of incorporation or charter, the bylaws, any certificate of
determination 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.
"Other Taxes" has the meaning specified in Section 3.01(b).
"Participant" has the meaning specified in Section 10.08(d).
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any of its principal functions under ERISA.
"Permitted Investments" means: (a) direct obligations of the United
States of America or of any of its agencies or obligations guaranteed as
to principal and interest by the United States of America or by any of its
agencies, in any case maturing not more than 90 days from the date of
acquisition of such obligation; (b) certificates of deposit
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issued by any bank or trust company organized under the laws of the United
States of America or any state and having capital, surplus and undivided
profits of at least $500,000,000, maturing not more than 90 days from the
date of acquisition; (c) commercial paper rated A-2 or better or P-2 or
better by S&P or Moody's, respectively, maturing not more than 180 days
from the date of acquisition; (d) any repurchase agreement with any
financial institution the short-term obligations of which are rated "P-2"
or better by Moody's or "A-2" or better by S&P, which agreement is secured
by any one or more securities of the type described in clause (a) above;
and (e) other readily marketable securities acquired in conformance with
the Company's revised "investment policy" dated May 1996 (a copy of which
has been delivered to the Administrative Agent and the Banks) and any
amendments to such investment policy so long as such amendments do not
substantially modify such investment policy; provided, however that (i)
the amount invested in equity securities (other than such securities of
Subsidiaries of the Company) at any one time shall not exceed 20% of the
amount invested in all securities (other than securities of Subsidiaries
of the Company) and (ii) the amount invested in repurchase agreements at
any one time shall not exceed 20% of the amount invested in all securities
(other than securities of Subsidiaries of the Company).
"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 (commonly known as a "walk-away"
provision) exonerating the non-defaulting party from its obligation to
make payments on outstanding transactions to the defaulting party.
"Person" means an individual, partnership, corporation, business
trust, joint stock company, limited liability company, trust,
unincorporated association, joint venture or Governmental Authority.
"Plan" means a Multiemployer Plan or a Qualified Plan.
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"Pro Rata Share" means, as to any Bank, the percentage equivalent of
such Bank's Commitment divided by the Aggregate Commitment.
"Property" means any estate or interest in any kind of property or
asset, whether real, personal or mixed, and whether tangible or
intangible.
"Prospectus" means the Preliminary Prospectus dated October 30, 1996
relating to the sale of 13,000,000 shares of the Company's Common Stock by
the Health Foundation.
"Qualified Plan" means a pension plan intended to be tax-qualified
under Section 401(a) of the Code, which is subject to Title IV of ERISA
and which any member of the Controlled Group sponsors, 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
period covering at least five plan years, but excluding any Multiemployer
Plan.
"Recapitalization" means the recapitalization, merger and other
transactions effected pursuant to the terms and conditions of the
Recapitalization Agreements, including (a) Old WellPoint's payment of a
special cash dividend to the holders of Old WellPoint's common stock, (b)
the conversion of Blue Cross of California from a nonprofit public benefit
corporation to a for profit corporation and (c) the merger of Old
WellPoint with and into such new corporation.
"Recapitalization Agreement" means the Amended and Restated
Recapitalization Agreement dated as of March 31, 1995 as executed on
February 20, 1996 among Blue Cross of California, Old WellPoint, the
Health Foundation, and the Western Foundation for Health Improvement, a
California nonprofit public benefit corporation, as in effect on the date
of the execution and delivery of the Senior Bank Agreement.
"Recapitalization Agreements" means (a) the Recapitalization
Agreement and (b) the other material documents executed in connection with
the transactions contemplated by the Recapitalization Agreement as listed
in Part B of Schedule 6.20 to the Senior Bank Agreement.
"Reference Bank" means BofA (or its Lending Offices, as the case may
be).
"Regulatory Tangible Net Equity" shall mean, for any HMO, "tangible
net equity," "tangible equity" or any similar
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term, as defined by any HMO Regulation promulgated by any HMO Regulator as
shall be applicable to such HMO.
"Regulatory Tangible Net Equity Requirement" shall mean, as to any
HMO, the minimum level at which an HMO is required by any applicable HMO
Regulation or HMO Regulator to maintain its Regulatory Tangible Net
Equity.
"Replacement Bank" means a financial institution that (a) has agreed
to acquire and assume all or part of a Bank's Loans and Obligations
pursuant to Section 3.08 and (b) is reasonably satisfactory to the
Administrative Agent, the Majority Banks (determined without counting the
interest of the replaced Bank) and the Company.
"Reportable Event" means, as to any Plan, (a) any of the events set
forth in Section 4043(b) of ERISA or the regulations under ERISA, other
than any such event for which the 30-day notice requirement under ERISA
has been waived in regulations issued by the PBGC, (b) a withdrawal from a
Plan described in Section 4063 of ERISA, or (c) a cessation of operations
described in Section 4062(e) of ERISA.
"Responsible Officer" means the chief executive officer or the
president of the Company, the Executive Vice President, Finance and
Information Services, the Chief Financial Officer, the Executive Vice
President and General Counsel of the Company, or any other officer having
substantially the same authority and responsibility; or, with respect to
compliance with financial covenants, the chief financial officer or the
treasurer of the Company, or any other officer having substantially the
same authority and responsibility.
"Restricted Payment" shall mean dividends (in cash, Property or
obligations) on, or other payments or distributions on account of, or the
setting apart of money for a sinking or other analogous fund for, or the
purchase, redemption, retirement or other acquisition of, any shares of
any class of stock of the Company (including common and preferred) or any
of the Company's Subsidiaries or of any warrants, options or other rights
to acquire the same (or to make any payments to any Person, such as
"phantom stock" payments, where the amount is calculated with reference to
the fair market or equity value of the Company or any of its
Subsidiaries), but excluding dividends payable solely in shares of common
stock of the Company or any of the Company's Subsidiaries.
"SEC" means the Securities and Exchange Commission, or any entity
succeeding to any of its principal functions.
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"Senior Bank Agreement" means that certain Credit Agreement dated as
of May 15, 1996 by and among the Company, the banks party thereto, Bank of
America National Trust and Savings Association, as administrative agent,
NationsBank of Texas, N.A., as syndication agent, and Chemical Bank, as
documentation agent, as amended by that certain Amendment No. 1 dated as
of June 28, 1996 and as such agreement may be further amended,
supplemented, restated or otherwise modified from time to time.
"S&P" means Standard & Poor's Ratings Group.
"Solvent" means, as to any Person at any time, that (a) the fair
value of the property of such Person is greater than the amount of such
Person's liabilities (including disputed, contingent and unliquidated
liabilities) as such value is established and liabilities evaluated for
purposes of Section 101(31) of the Bankruptcy Code and, in the
alternative, for purposes of the California Uniform Fraudulent Transfer
Act; (b) the present fair saleable value of the property of such Person is
not less than the amount that will be required to pay the probable
liability of such Person on its debts as they become absolute and matured;
(c) such Person is able to realize upon its property and pay its debts and
other liabilities (including disputed, contingent and unliquidated
liabilities) as they mature in the Ordinary Course of Business; (d) such
Person has not incurred and does not intend to, and does not believe that
it will, incur debts or liabilities beyond such Person's ability to pay as
such debts and liabilities mature; and (e) such Person is not engaged in
business or a transaction, and is not about to engage in business or a
transaction, for which such Person's property would constitute
unreasonably small capital.
"Subsidiary" of a Person means any corporation, association,
partnership, joint venture or other business entity of which more than 51%
of the Voting Stock or other equity interests (in the case of Persons
other than corporations), is owned or controlled directly or indirectly by
the Person, or one or more of the Subsidiaries of the Person, or a
combination thereof.
"Surety Instruments" means all letters of credit (including standby
and commercial), banker's acceptances, bank guaranties, shipside bonds,
surety bonds and similar instruments.
"Swap Contract" means any agreement, whether or not in writing,
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,
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bond, note or xxxx 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, unless the context otherwise
clearly requires, 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 the
termination value or values determined in accordance therewith, such
termination values, and (b) for any date prior to the date referenced in
clause (a) the amounts determined as the xxxx- to-market value or values
for such Swap Contracts.
"Subordination Provisions" means the terms and conditions set forth
in Exhibit D.
"Taxes" has the meaning specified in Section 3.01(a).
"Total Assets" means, at any date of determination, all property,
whether real, personal, tangible, intangible or otherwise, that, in
accordance with GAAP, should be included in determining total assets as
shown on the assets portion of a balance sheet.
"Transferee" has the meaning specified in Section 10.08(e).
"Type" means, as to any Loan, its nature as a Base Rate Loan or a
LIBOR Rate Loan.
"Undertakings" means the Amended and Restated Undertakings dated as
of March 5, 1996 among Blue Cross of California, Old WellPoint,
CaliforniaCare Health Plans, Wellpoint Dental Plan, Wellpoint Pharmacy
Plan, Wellpoint Life Insurance Company, Unicare Life Insurance Company and
Comprehensive Integrated Marketing Services, Inc.
"Unfunded Pension Liabilities" means the excess of a Plan's benefit
liabilities under Section 4001(a)(16) of ERISA, over the current value of
that Plan's assets, determined in accordance with the assumptions used by
the Plan's actuaries for funding the Plan pursuant to Section 412 of the
Code for the applicable plan year.
"United States" and "U.S." each mean the United States of America.
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"Voting Stock" means shares of stock of a corporation of any class or
classes (however designated) having ordinary voting power for the election
of a majority of the members of the board of directors (or other governing
body) of such corporation, other than stock having such power only by
reason of the happening of a contingency.
"Voting Trust Agreement" means the Voting Trust Agreement dated as of
May 20, 1996 by and between Western Health Partnerships and Wilmington
Trust Company.
"Wholly-Owned Subsidiary" means any corporation in which (other than
directors' qualifying shares 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, 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.
"Withdrawal Liabilities" means, as of any determination date, the
aggregate amount of the liabilities, if any, pursuant to Section 4201 of
ERISA if the Controlled Group made a complete withdrawal from all
Multiemployer Plans and any increase in contributions pursuant to Section
4243 of ERISA.
1.02 Other Interpretive Provisions.
(a) Defined Terms. Unless otherwise specified, all terms defined in
this Agreement shall have the defined meanings when used in any certificate or
other document made or delivered pursuant to this Agreement. The meaning of
defined terms shall be equally applicable to the singular and plural forms of
the defined terms.
(b) The Agreement. The words "hereof", "herein", "hereunder" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement; and
section, schedule and exhibit references are to this Agreement unless otherwise
specified.
(c) Certain Common Terms.
(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."
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(d) Performance; Time. Whenever any performance Obligation shall be
stated to be due or required to be satisfied on a day other than a Business
Day, such performance shall be made or satisfied on the next succeeding
Business Day. 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." If any provision of this Agreement refers to any action taken
or to be taken by any Person, or which such Person is prohibited from taking,
such provision shall be interpreted to encompass any and all means, direct or
indirect, of taking, or not taking, such action.
(e) Contracts. Unless otherwise expressly provided, references to
agreements 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.
(f) Laws. 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.
(g) Captions. The captions and headings of this Agreement are for
convenience of reference only and shall not affect the interpretation of this
Agreement.
(h) Independence of Provisions. The parties acknowledge that this
Agreement and other Loan Documents may use several different limitations, tests
or measurements to regulate the same or similar matters, and that such
limitations, tests and measurements are cumulative and must each be performed,
except as expressly stated to the contrary in this Agreement.
(i) Construction. This Agreement and the other Loan Documents are
the result of negotiations between the Company and the Administrative Agent and
the Banks and have been reviewed by counsel to all parties. Accordingly, they
shall not be construed against the Banks or the Administrative Agent merely
because of the Administrative Agent's or Banks' involvement in their
preparation.
1.03 Accounting Principles.
(a) Unless the context otherwise clearly requires, all accounting
terms not expressly defined herein shall be construed, all financial
computations required under this Agreement shall be made and all financial
statements and certificates and reports as to financial matters required to be
delivered under this Agreement shall be prepared, in accordance with GAAP,
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consistently applied; provided, however, that, if GAAP shall have been modified
after the Closing Date and the application of such modified GAAP shall have a
material effect on such financial computations (including the computations
required for the purpose of determining compliance with the covenants set forth
in Article VII), then such computations shall be made and such financial
statements, certificates and reports shall be prepared, and all accounting
terms not otherwise defined herein shall be construed, in accordance with GAAP
as in effect prior to such modification, unless and until the Majority Banks
and the Company shall have agreed upon the terms of the application of such
modified GAAP.
(b) References herein to "fiscal year" of the Company, refer to the
fiscal period of the Company the last day of which is December 31 of each year
and references to "fiscal quarter" refer to each of the fiscal periods of the
Company, the last day of which is March 31, June 30 and September 30 of each
year, respectively.
ARTICLE II
THE LOANS
2.01 The Commitment; Subordination. (a) Each Bank severally agrees,
on the terms and conditions of this Agreement, to make term loans in Dollars to
the Company in one or more Borrowings pursuant to its Commitment (each such
loan, a "Loan") from time to time on any Business Day during the Availability
Period, in an aggregate amount outstanding up to but not exceeding the amount
of the Commitment of such Bank as in effect from time to time; provided,
however, that, after giving effect to any Borrowing of Loans, the aggregate
principal amount of all outstanding Loans shall not in any event exceed the
Aggregate Commitment. This is not a revolving commitment, and amounts borrowed
hereunder which are repaid or prepaid may not be reborrowed. No more than four
separate Interest Periods in respect of LIBOR Rate Loans from the Banks may be
outstanding at any one time.
(b) The parties hereto agree to the terms and conditions of the
Subordination Provisions.
2.02 Loan Accounts. (a) The Loans made by each Bank shall be
evidenced by one or more loan accounts maintained by the Administrative Agent
and such Bank in the Ordinary Course of Business. The loan accounts or records
maintained by the Administrative Agent and each Bank shall be conclusive absent
manifest error of the amount of the Loans made by the Banks to the Company and
the interest and payments thereon. Any failure so to record or any error in
doing so shall
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not, however, limit or otherwise affect the obligation of the Company hereunder
to pay any amount owing with respect to the Loans.
(b) Upon the request of any Bank made through the Administrative
Agent, the Loans made by such Bank may be evidenced by one or more Notes,
instead of loan accounts. Each such Bank shall endorse on the schedules
annexed to its Note(s) the date, amount and maturity of each Loan made by it
and the amount of each payment of principal made by the Company with respect
thereto. Each such Bank is irrevocably authorized by the Company to endorse
its Note(s) and each Bank's record shall be conclusive absent manifest error;
provided, however, that the failure of a Bank to make, or an error in making, a
notation thereon with respect to any Loan shall not limit or otherwise affect
the obligations of the Company hereunder or under any such Note to such Bank.
2.03 Procedure for Borrowings.
(a) Each Borrowing shall be made upon the Company's irrevocable
written notice delivered to the Administrative Agent in accordance with Section
10.02 in the form of a Notice of Borrowing, which notice must be received by
the Administrative Agent prior to 9:00 a.m. (San Francisco time) (i) three
Business Days prior to the requested Borrowing date, in the case of LIBOR Rate
Loans, and (ii) on the requested Borrowing date, in the case of Base Rate
Loans, specifying in each case: (A) the amount of the Borrowing, which shall
be in an aggregate minimum principal amount of $10,000,000 and any multiple of
$1,000,000 in excess thereof for each Type of Loan; (B) the requested Borrowing
date, which shall be a Business Day; (C) whether the Borrowing is to consist of
LIBOR Rate Loans or Base Rate Loans; and (D) the duration of the Interest
Period applicable to LIBOR Rate Loans included in such notice. If the Notice
of Borrowing shall fail to specify the duration of the Interest Period for any
Borrowing comprising LIBOR Rate Loans, such Interest Period shall be one month.
(b) Upon receipt of a Notice of Borrowing, the Administrative Agent
will promptly notify each Bank thereof and of the amount of such Bank's Pro
Rata Share of the Borrowing.
(c) Each Bank will make the amount of its Pro Rata Share of the
Borrowing available to the Administrative Agent for the account of the Company
at the Agent's Payment Office by 11:00 a.m. (San Francisco time) on the
Borrowing date requested by the Company in funds immediately available to the
Administrative Agent. Any such amount which is received by the Administrative
Agent later than 11:00 a.m. (San Francisco time) shall be deemed to have been
received on the immediately succeeding Business Day. The proceeds of all such
Loans will
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then be made available to the Company by the Administrative Agent by wire
transfer in accordance with written instructions provided to the Administrative
Agent by the Company of like funds as received by the Administrative Agent.
(d) Unless the Majority Banks shall otherwise agree, during the
existence of a Default or Event of Default, the Company may not elect to have a
Loan be made as, or converted into or continued as, a LIBOR Rate Loan.
2.04 Conversion and Continuation Elections.
(a) The Company may (i) elect to convert on any Business Day, any
Base Rate Loans (or any part thereof in an amount not less than $10,000,000 or
an integral multiple of $1,000,000 in excess thereof) into LIBOR Rate Loans;
(ii) elect to convert on the last day of the Interest Period therefor, any
LIBOR Rate Loans (or any part thereof in an amount not less than $10,000,000 or
an integral multiple of $1,000,000 in excess thereof) into Base Rate Loans; or
(iii) elect to continue, on the last day of the Interest Period therefor, any
LIBOR Rate Loans (or any part thereof in an amount not less than $10,000,000 or
an integral multiple of $1,000,000 in excess thereof); provided, that if the
aggregate amount of LIBOR Rate Loans shall have been reduced, by payment,
prepayment, or conversion of part thereof to be less than $10,000,000, LIBOR
Rate Loans shall automatically convert into Base Rate Loans, and on and after
such date the right of the Company to continue such Loans as, and convert such
Loans into, LIBOR Rate Loans shall terminate.
(b) Each conversion or continuation shall be made upon irrevocable
written notice in the form of a Notice of Conversion/Continuation, which notice
must be received by the Administrative Agent prior to 9:00 a.m. (San Francisco
time) (i) three Business Days in advance of the Conversion Date, if the Loans
are to be converted into or continued as LIBOR Rate Loans; and (ii) on the
Conversion Date, if the Loans are to be converted into Base Rate Loans,
specifying: (A) the proposed Conversion Date; (B) the aggregate amount of
Loans to be converted or continued; (C) the nature of the proposed conversion
or continuation; and (D) the duration of the requested Interest Period, if
applicable.
(c) If upon the expiration of any Interest Period applicable to
LIBOR Rate Loans, the Company has failed to select a new Interest Period to be
applicable thereto, or if any Default or Event of Default shall then exist, the
Company shall be deemed to have elected to convert such LIBOR Rate Loans into
Base Rate Loans effective as of the expiration date of such current Interest
Period.
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(d) Upon receipt of a Notice of Conversion/Continua- tion, the
Administrative Agent will promptly notify each Bank thereof, or, if no timely
notice is provided by the Company, the Administrative Agent will promptly
notify each Bank of the details of any automatic conversion. All conversions
and continuations shall be made pro rata according to the respective
outstanding principal amounts of the Loans held by each Bank with respect to
which the notice was given.
2.05 Voluntary and Involuntary Reduction or Termination of
Commitments.
(a) The Company may, upon not less than five Business Days' prior
notice to the Administrative Agent, (i) so long as no Loans are outstanding,
terminate the Aggregate Commitment or (ii) permanently reduce the unused
portion of the Aggregate Commitment by an aggregate minimum amount of
$10,000,000 or any multiple of $10,000,000 in excess thereof; provided that no
such reduction or termination shall be permitted if, after giving effect
thereto and to any prepayments of the Loans made on the effective date thereof,
the then outstanding principal amount of all Loans would exceed the amount of
the Aggregate Commitment then in effect and, provided, further, that once
reduced in accordance with this Section 2.05, the Aggregate Commitment may not
be increased. Any reduction of the Aggregate Commitment shall be applied to
each Bank's Commitment in accordance with such Bank's Pro Rata Share; and
(b) The Aggregate Commitment shall be automatically reduced to zero
on the Maturity Date.
2.06 Optional and Mandatory Prepayments. (a) Subject to Section
3.04, the Company may, at any time or from time to time, upon at least three
Business Days' written notice to the Administrative Agent, which notice must be
received prior to 9:00 a.m. (San Francisco time), ratably prepay Loans in whole
or in part, in amounts of $5,000,000 or any larger multiple of $1,000,000.
Such notice of prepayment shall specify the date and amount of such prepayment
and whether such prepayment is of Base Rate Loans or LIBOR Rate Loans, or any
combination thereof; provided that LIBOR Rate Loans prepaid other than on the
last day of an Interest Period for such Loans shall be subject to the terms of
Section 3.04. Such notice shall not thereafter be revocable by the Company and
the Administrative Agent will promptly notify each Bank thereof and of such
Bank's Pro Rata Share of such prepayment. If such notice is given by the
Company, the Company shall make such prepayment and the payment amount
specified in such notice shall be due and payable on the date specified
therein.
(b) If the Company or any Affiliate of the Company shall at any time
or from time to time raise additional capital
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by issuing any stock or other equity in such Person in a public or private
offering (excluding capital stock or other equity issued in the Ordinary Course
of Business upon the exercise of employee or similar stock options or issuances
of stock pursuant to any employee stock purchase plan) or issue any
subordinated indebtedness, then the Company shall promptly notify the Agent
after such issuance (including a calculation of the amount of the Net Proceeds
received in respect thereof) and shall cause an amount equal to the Net
Proceeds of such issuance to be used to prepay the Loans within five Business
Days of receipt thereof; provided, however, if a prepayment within such time
period would require the prepayment of LIBOR Rate Loans on other than on the
last day of an Interest Period for such Loans, and, as a result of such
prepayment, the Company would incur costs under the terms of Section 3.04, the
Company may, instead of making such prepayment, and provided no Default or
Event of Default has occurred and is continuing, deposit an amount equal to
such Net Proceeds in a blocked interest-bearing account at BofA within such
time period. Upon the expiration of sufficient Interest Period(s) of LIBOR
Rate Loans (or, if sooner, upon the occurrence of a Default or Event of Default
hereunder), the funds in such account shall be applied to prepay the Loans.
Any interest earned in such account shall be applied as a credit against
amounts due hereunder.
(c) Any voluntary or mandatory prepayment of LIBOR Rate Loans shall
be accompanied by payment of accrued interest to the date of such prepayment on
the amount prepaid and any amounts required pursuant to Section 3.04. Accrued
interest on prepaid Base Rate Loans shall remain payable in arrears on the next
Interest Payment Date. Prepayments of Loans shall be applied in inverse order
of maturity.
2.07 Repayment. The Company shall repay the Loans in the following
principal amounts on each date as follows:
Date Due Principal Amount Due
March 31, 1998 $15,000,000 or such lesser
aggregate principal amount
then outstanding
June 30, 1998 $25,000,000 or such lesser
aggregate principal amount
then outstanding
September 30, 1998 $35,000,000 or such lesser
aggregate principal amount
then outstanding
December 31, 1998 Remaining Loans Outstanding
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2.08 Interest on Loans.
(a) Subject to Section 2.08(c), each LIBOR Rate Loan shall bear
interest on the outstanding principal amount thereof from the date when made
until it becomes due at a rate per annum equal to the LIBOR Rate plus the
Applicable Amount in effect in accordance with Annex I for LIBOR Rate Loans,
and each Base Rate Loan shall bear interest on the outstanding principal amount
thereof from the date when made until it becomes due at a rate per annum equal
to the Base Rate plus the Applicable Amount in effect in accordance with Annex
I for Base Rate Loans.
(b) Interest on each Loan shall be paid in arrears on each Interest
Payment Date. Interest shall also be paid on the date of any prepayment of
LIBOR Rate Loans pursuant to Section 2.06 for the portion of the LIBOR Rate
Loans so prepaid and upon payment (including prepayment) in full thereof and,
during the existence of any Event of Default, interest shall be paid on demand
of the Administrative Agent at the request of the Majority Banks.
(c) While any Event of Default exists pursuant to Section 8.01(a),
8.01(c), 8.01(g), 8.01(h) or 8.01(o), the Company shall pay interest (after as
well as before entry of judgment thereon to the extent permitted by law) on the
principal amount of all Loans, fees, and other payment Obligations due and
unpaid as follows: (i) in the case of Loans, at a rate per annum which is
determined by adding two percent (2%) per annum to the interest rate otherwise
applicable for such Loans and (ii) in the case of all other payment
Obligations, at a rate per annum equal to the Base Rate plus two percent (2%);
provided, however, that, on and after the expiration of any Interest Period
applicable to any LIBOR Rate Loan outstanding on the date of occurrence of such
Event of Default or acceleration, the principal amount of such Loan shall,
during the continuation of such Event of Default or after acceleration, bear
interest at a rate per annum equal to the Base Rate plus two percent (2%).
2.09 Fees. On the earlier of (a) the date of the initial Borrowing
hereunder and (b) December 31, 1996, the Company shall pay to the
Administrative Agent (a) for the account of the Arranger a structuring and
arrangement fee and (b) such other fees and sums in the amounts set forth in
the Arranger's Fee Letter.
2.10 Computation of Fees and Interest.
(a) All computations of interest payable in respect of Base Rate
Loans shall be made on the basis of a year of 365 or 366 days (unless the Base
Rate is calculated by reference to the Federal Funds Rate, in which case the
Base Rate shall be based on a year of 360 days), as the case may be, and actual
days elapsed.
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All other computations of interest under this Agreement 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 shall
accrue during each period during which interest is computed from the first day
thereof to the last day thereof.
(b) The Administrative Agent will, with reasonable promptness,
notify the Company and the Banks of each determination of a LIBOR Rate and any
other change in interest rates hereunder; provided that any failure to do so
shall not relieve the Company of any liability hereunder or provide the basis
for any claim against the Administrative Agent.
(c) Each determination of an interest rate by the Administrative
Agent shall be conclusive and binding on the Company and the Banks in the
absence of manifest error. The Administrative Agent will deliver to the Company
and, at the request of any Bank, deliver to such Bank, a statement showing the
quotations used by the Administrative Agent in determining any interest rate.
ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY
3.01 Taxes.
(a) Subject to Section 3.01(g), any and all payments by the Company
to each Bank or the Administrative Agent under this Agreement shall be made
free and clear of, and without deduction or withholding for, any and all
present or future taxes, levies, imposts, deductions, charges or withholdings,
and all liabilities with respect thereto, excluding, in the case of each Bank
and the Administrative Agent, such taxes (including income taxes or franchise
taxes and levies with respect thereto) as are imposed on or measured by each
Bank's net income by the jurisdiction under the laws of which such Bank or the
Administrative Agent, as the case may be, is organized or maintains a Lending
Office or any political subdivision thereof (all such non-excluded taxes,
levies, imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as "Taxes").
(b) In addition, the Company shall pay any present or future stamp
or documentary taxes or any other excise or property taxes, charges or similar
levies which arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement or
any other Loan Documents (hereinafter referred to as "Other Taxes").
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(c) 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 Bank or the Administrative Agent, then, subject to Section
3.01(g): (i) the sum payable shall be increased as necessary so that, after
making all required deductions (including deductions applicable to additional
sums payable under this Section 3.01), such Bank or the Administrative 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 been made; (ii) the Company
shall make such deductions; and (iii) the Company shall pay the full amount
deducted to the relevant taxation authority or other authority in accordance
with applicable law.
(d) The Company agrees to indemnify and hold harmless each Bank and
the Administrative Agent for the full amount of (i) Taxes, (ii) Other Taxes,
and (iii) Further Taxes in the amount that the respective Bank specifies as
necessary to preserve the after-tax yield the Bank 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 a Bank or the
Administrative Agent makes written demand therefor.
(e) Within 30 days after the date of any payment by the Company of
Taxes, Other Taxes or Further Taxes, the Company shall furnish to each Bank and
the Administrative Agent evidence of payment satisfactory to such Bank and the
Administrative Agent.
(f) Each Bank which is a foreign person (i.e., a person other than a
United States person for United States Federal income tax purposes) agrees
that: (i) it shall, no later than the Closing Date (or, in the case of a Bank
which becomes a party hereto pursuant to Section 10.08 after the Closing Date,
the date upon which the Bank becomes a party hereto) deliver to the Company
through the Administrative Agent two accurate and complete signed originals of
Internal Revenue Service Form 4224 or any successor thereto ("Form 4224"), or
two accurate and complete signed originals of Internal Revenue Service Form
1001 or any successor thereto ("Form 1001"), as appropriate, in each case
indicating that the Bank is on the date of delivery thereof entitled to receive
payments of principal, interest and fees under this Agreement free from
withholding of United States Federal income tax; (ii) if at any time the Bank
makes any changes necessitating a new Form 4224 or Form 1001, it shall with
reasonable promptness deliver to the Company through the Administrative Agent
in replacement for, or in addition to, the forms previously delivered by it
hereunder, two accurate and complete signed originals of Form 4224; or two
accurate and
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complete signed originals of Form 1001, as appropriate, in each case indicating
that the Bank is on the date of delivery thereof entitled to receive payments
of principal, interest and fees under this Agreement free from withholding of
United States Federal income tax; (iii) it shall, before or promptly after the
occurrence of any event (including the passing of time but excluding any event
mentioned in (ii) above) requiring a change in or renewal of the most recent
Form 4224 or Form 1001 previously delivered by such Bank and deliver to the
Company through the Administrative Agent two accurate and complete original
signed copies of Form 4224 or Form 1001 in replacement for the forms previously
delivered by the Bank; and (iv) it shall, promptly upon the Company's or the
Administrative Agent's reasonable request to that effect, deliver to the
Company or the Administrative Agent (as the case may be) such other forms or
similar documentation as may be required from time to time by any applicable
Governmental Rules in order to establish such Bank's tax status for withholding
purposes.
(g) The Company will not be required to pay any additional amounts
in respect of United States Federal income tax pursuant to Section 3.01(d) to
any Bank for the account of any Lending Office of such Bank: (i) if the
obligation to pay such additional amounts would not have arisen but for a
failure by such Bank to comply with its obligations under Section 3.01(f) in
respect of such Lending Office; (ii) if such Bank shall have delivered to the
Company a Form 4224 in respect of such Lending Office pursuant to Section
3.01(f), and such Bank shall not at any time be entitled to exemption from
deduction or withholding of United States Federal income tax in respect of
payments by the Company hereunder for the account of such Lending Office as a
result of the status of such Bank for any reason other than a change in United
States law or regulations or in the official interpretation of such law or
regulations by any governmental authority charged with the interpretation or
administration thereof (whether or not having the force of law) after the date
of delivery of such Form 4224; or (iii) if the Bank shall have delivered to the
Company a Form 1001 in respect of such Lending Office pursuant to Section
3.01(f), and such Bank shall not at any time be entitled to exemption from
deduction or withholding of United States Federal income tax in respect of
payments by the Company hereunder for the account of such Lending Office for
any reason other than a change in United States law or regulations or any
applicable tax treaty or regulations or in the official interpretation of any
such law, treaty or regulations by any governmental authority charged with the
interpretation or administration thereof (whether or not having the force of
law) after the date of delivery of such Form 1001.
(h) If the Company is required to pay any amount to any Bank or the
Administrative Agent pursuant to Section 3.01(d),
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then such Bank shall use its 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 judgment of such Bank is not otherwise
disadvantageous to such Bank.
3.02 Illegality.
(a) If any Bank shall reasonably determine, based upon the advice of
its counsel, that the introduction of any Governmental Rule, or any change in
any Governmental Rule or in the interpretation or administration thereof, has
made it unlawful, or that any central bank or other Governmental Authority has
asserted that it is unlawful, for any Bank or its Lending Office to make LIBOR
Rate Loans, then, on notice thereof by the Bank to the Company through the
Administrative Agent, the obligation of that Bank to make LIBOR Rate Loans
shall be suspended until the Bank shall have notified the Administrative Agent
and the Company that the circumstances giving rise to such determination no
longer exist.
(b) If a Bank shall reasonably determine, based upon the advice of
its counsel, that it is unlawful to maintain any LIBOR Rate Loan, the Company
shall prepay in full all LIBOR Rate Loans of that Bank then outstanding,
together with interest accrued thereon, either on the last day of the Interest
Period thereof if the Bank may lawfully continue to maintain such LIBOR Rate
Loans to such day, or immediately, if the Bank may not lawfully continue to
maintain such LIBOR Rate Loans, together with any amounts required to be paid
in connection therewith pursuant to Section 3.04.
(c) If the Company is required to prepay any LIBOR Rate Loan
immediately as provided in Section 3.02(b), then concurrently with such
prepayment, the Company shall borrow from the affected Bank, in the amount of
such repayment, a Base Rate Loan.
(d) If the obligation of any Bank to make or maintain LIBOR Rate
Loans has been suspended as provided in Section 3.02(a), the Company may elect,
by giving notice to the Bank through the Administrative Agent that all Loans
which would otherwise be made by the Bank as LIBOR Rate Loans shall be instead
Base Rate Loans.
(e) Before giving any notice to the Administrative Agent pursuant to
this Section 3.02, the affected Bank shall designate a different Lending Office
with respect to its LIBOR Rate Loans if such designation will avoid the need
for giving such notice or making such demand and will not, in the judgment
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of such Bank, be illegal or otherwise disadvantageous to such Bank.
3.03 Increased Costs and Reduction of Return.
(a) If any Bank shall determine that, due to and as a result of
either (i) the introduction of or any change (other than any change by way of
imposition of or increase in reserve requirements included in the calculation
of the LIBOR Rate) in or in the interpretation of any law or regulation or (ii)
the compliance with any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law), in each case
occurring after the Closing Date, there shall be any increase in the cost to
such Bank of agreeing to make or making, funding or maintaining its Commitment
hereunder or any LIBOR Rate Loans, then the Company shall be liable for, and
shall from time to time, within 15 days following a written demand therefor by
such Bank (with a copy of such demand to the Administrative Agent), pay to the
Administrative Agent for the account of such Bank, additional amounts as are
sufficient to compensate such Bank for such increased costs.
(b) If any Bank 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 such Bank (or its Lending Office) or any corporation controlling such Bank,
with any Capital Adequacy Regulation resulting from any change in the
interpretation or administration thereof (in each case occurring after the
Closing Date), affects or would affect the amount of capital required or
expected to be maintained by such Bank or any corporation controlling such Bank
and (taking into consideration such Bank's or such corporation's policies with
respect to capital adequacy and such Bank'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, upon
demand of such Bank (with a copy to the Administrative Agent), the Company
shall, within 15 days following demand, pay to such Bank, from time to time as
specified by such Bank, additional amounts sufficient to compensate such Bank
for such increase.
(c) If the Company is required to pay additional amounts to any Bank
pursuant to Section 3.03(a), then such Bank shall use its reasonable efforts
(consistent with legal and regulatory restrictions) to designate a different
Lending Office with respect to its LIBOR Rate Loans so as to eliminate any such
additional payment by the Company which may thereafter accrue if such change in
the judgment of such Bank is not otherwise
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disadvantageous to such Bank. Notwithstanding the foregoing, the Company shall
not be obligated to compensate such Bank for the amount of such increased cost
or reduction incurred with respect to a period of time prior to the date which
is 180 days before the date on which such Bank first notifies the Company that
it intends to claim such compensation or that an event has occurred which will
entitle it to such compensation; it being understood that the calculation of
the actual amounts may not be possible within such period and that such Bank
may provide such calculation as soon as reasonably practicable thereafter
without affecting or limiting the Company's repayment obligation under this
Agreement. In determining such amount, such Bank may use reasonable averaging
and attributing methods.
3.04 Funding Losses. Upon (a) the failure of the Company to make any
payment of principal of any LIBOR Rate Loan (including payments made after any
acceleration thereof); (b) the failure of the Company to borrow, continue or
convert a Loan after the Company has given (or is deemed to have given) a
Notice of Borrowing or a Notice of Conversion/Continuation; (c) the failure of
the Company to make any prepayment of any Loan after the Company has given a
notice in accordance with Section 2.06; (d) any principal payment in respect of
a LIBOR Rate Loan on a day which is not the last day of the Interest Period
with respect thereto; or (e) the conversion pursuant to Section 2.04 of any
LIBOR Rate Loan to a Base Rate Loan on a day that is not the last day of the
respective Interest Period, the Company shall pay to the appropriate Bank
within 15 days of demand an amount equal to the sum of:
(1) the principal amount of the LIBOR Rate Loan, times the number of
days between the date of prepayment or failure to borrow, continue or
convert, as applicable (not counting such date), and the last day in the
applicable Interest Period (counting such last date), divided by 360, times
the applicable Interest Differential, if positive; plus
(2) all out-of-pocket expenses incurred by the Bank and reasonably
attributable to such payment or prepayment.
Each Bank's determination of the amount of any prepayment fee payable under
this Section 3.04 shall be conclusive in the absence of manifest error. Solely
for purposes of calculating amounts payable by the Company to the Banks under
this Section 3.04, each LIBOR Rate Loan made by a Bank (and each related
reserve, special deposit or similar requirement) shall be conclusively deemed
to have been funded at the LIBOR Rate for such LIBOR 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 LIBOR Rate Loan is in
fact so funded.
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3.05 Inability to Determine Rates. If the Administrative Agent or
the Majority Banks shall have determined (i) that for any reason adequate and
reasonable means do not exist for ascertaining the LIBOR Rate for any requested
Interest Period with respect to a proposed LIBOR Rate Loan, or (ii) that the
LIBOR Rate applicable pursuant to Section 2.08(a) or 3.10 for any requested
Interest Period with respect to a proposed LIBOR Rate Loan does not adequately
and fairly reflect the cost to such Bank of funding such Loan, the
Administrative Agent will forthwith give notice of such determination to the
Company and each Bank. Thereafter, the obligation of the Banks to make or
maintain LIBOR Rate Loans hereunder shall be suspended until the Administrative
Agent revokes such notice in writing. Upon receipt of such notice, the Company
may revoke any Notice of Borrowing or Notice of Conversion/Continuation then
submitted by it. If the Company does not revoke such notice with respect to
Loans, the Banks shall make, convert or continue the 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 LIBOR Rate Loans.
3.06 Reserves on LIBOR Rate Loans. The Company shall pay to each
Bank, as long as such Bank shall be required under regulations of the Federal
Reserve Board to maintain reserves with respect to liabilities or assets
consisting of or including Eurocurrency funds or deposits (currently known as
"Eurocurrency liabilities"), additional costs on the unpaid principal amount of
each LIBOR Rate Loan equal to the actual costs of such reserves allocated to
such Loan by the Bank (as determined by the Bank in good faith, which
determination shall be conclusive), payable on each date on which interest is
payable on such Loan, provided the Company shall have received at least 15
days' prior written notice (with a copy to the Administrative Agent) of such
additional interest from such Bank. If a Bank fails to give notice 15 days
prior to the relevant Interest Payment Date, such additional interest shall be
payable 15 days from receipt of such notice.
3.07 Certificates of Banks. Any Bank claiming reimbursement or
compensation pursuant to this Article III shall deliver to the Company (with a
copy to the Administrative Agent) a certificate setting forth in reasonable
detail the basis for and the computation of the amount payable to the Bank
hereunder and such certificate shall be conclusive absent manifest error.
3.08 Substitution of Banks.
(a) Replacement of Affected Banks. Upon the receipt of notice from
a Bank requesting compensation pursuant to Section 3.01, 3.02, 3.03, or 3.06,
or the receipt of notice from the Administrative Agent that a Bank has failed
to make Loans
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pursuant to Article II (in either case, an "Affected Bank"), the Company may
designate one or more Replacement Banks (which may be one of the other Banks)
to replace such Affected Bank pursuant to an Assignment and Acceptance
substantially in the form of Exhibit G-1, assigning of all such Affected Banks'
Loans, Notes, Commitment and all related rights, remedies, powers and
privileges under this Agreement and any other Loan Document to such Replacement
Bank or Replacement Banks. Each Bank hereby consents to such an assignment in
the event it becomes an Affected Bank and agrees to execute an Assignment and
Acceptance and other related documents as required by this Section 3.08.
Neither the Administrative Agent nor any Bank shall under any circumstance have
any obligation to act as a Replacement Bank.
(b) Replacement Procedure. Any assignment made by an Affected Bank
pursuant to this Section 3.08 shall be subject to the provisions of Section
10.08 and shall satisfy the following additional conditions:
(i) the purchase price payable to the Affected Bank shall be an
amount in Dollars equal to the outstanding principal amount of such Bank's
Loans and shall be payable at such place and in such funds as such Bank may
reasonably specify, and the assignment shall be made without recourse to
such Bank;
(ii) all interest and other amounts, including costs incurred under
Article III, payable on Loans being assigned by any Affected Bank accrued
as of the date of such assignment shall be paid by the Company to such
Affected Bank on the date of such assignment;
(iii) all reasonable fees and expenses of the Affected Bank incurred
or to be incurred in connection with such assignment shall promptly be paid
by the Company to such Affected Bank when due;
(iv) any assignment of such Affected Bank's Loans, Notes, Commitment
and all of its related rights, remedies, powers and privileges under this
Agreement and any other Loan Document shall be made without representation
or warranty (other than the representation and warranty that the Affected
Bank is the legal and beneficial owner of the interest being assigned, free
and clear of any adverse claim); and
(v) the Replacement Bank shall pay the Administrative Agent for the
account of the Affected Bank in immediately available funds all amounts
outstanding or payable by such Affected Bank under this Agreement or any
other Loan Document.
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Upon satisfaction of the conditions set forth above and the execution
of the Assignment and Acceptance and any other related documents as required by
this Section 3.08, each Replacement Bank shall become a Bank under this
Agreement with outstanding Loans and Commitment in the amounts acquired and
assumed from the Affected Bank. Upon accomplishment of the foregoing, the
Affected Bank (as to the portion assigned as provided above) shall no longer
have any obligations under this Agreement and (subject to Section 10.08) shall
no longer constitute a Bank for the purposes of this Agreement; provided that
if the Replacement Bank or Banks shall be only willing to acquire less than all
of an Affected Bank's outstanding Loans and Commitment, the Commitment of the
Affected Bank shall not terminate as provided above, but shall be reduced
proportionately, and the Affected Bank shall continue to be a Bank under this
Agreement with a reduced Commitment. The Company shall provide (x) if
applicable, a replacement Note to each Replacement Bank to reflect the identity
of such Replacement Bank and (y) if applicable, a replacement Note to any
Replacement Bank that is already a Bank to reflect the increased Commitment of
such Bank. Notwithstanding the foregoing, the agreements set forth in Sections
10.04 and 10.05 shall survive the termination of any Affected Bank's Commitment
as provided above.
3.09 Sharing of Payments, Pro Rata Treatment, Etc.
(a) If, other than as expressly provided elsewhere herein, any Bank
shall obtain on account of the Loans made by it any payment (whether voluntary,
involuntary, through the exercise of any right of set-off, or otherwise) in
excess of its Pro Rata Share of payments in respect of the Loans obtained by
all the Banks , such Bank shall forthwith notify the Administrative Agent of
such fact, and purchase from the other Banks such participations (or, if and to
the extent specified by such Bank, direct interests) in the Loans, as
applicable, made by the other Banks as shall be necessary to cause such
purchasing Bank to share the excess payment ratably with each of the other
Banks; provided, however, that if all or any portion of such excess payment is
thereafter recovered from the purchasing Bank, such purchase shall to that
extent be rescinded and each other Bank shall repay to the purchasing Bank the
purchase price paid therefor, together with an amount equal to such paying
Bank's Pro Rata Share (according to the ratio of (y) the amount of such paying
Bank's required repayment to (z) the total amount so recovered from the
purchasing Bank) of any interest or other amount paid or payable by the
purchasing Bank in respect of the total amount so recovered. The Company
agrees that any Bank so purchasing a participation from another Bank pursuant
to this Section 3.09 may, to the fullest extent permitted by law, exercise all
its rights of payment (including the right of set-off, banker's lien or
counterclaim, but subject to Section 10.09) with respect to such participation
as fully as if such
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Bank were the direct creditor of the Company in the amount of such
participation. If, under any applicable bankruptcy, insolvency or other
similar law, any Bank receives a secured claim in lieu of a set-off to which
this Section 3.09 applies, such Bank shall, to the extent practicable, exercise
its rights in respect of such secured claim in a manner consistent with the
rights of the Banks entitled under this Section 3.09 to share in the benefits
of any recovery on such secured claim. The Administrative Agent will keep
records (which shall be conclusive and binding in the absence of manifest
error) of participations purchased pursuant to this Section 3.09 and will in
each case notify the Banks following any such purchases or repayments.
(b) Except to the extent otherwise provided in this Agreement: (i)
each borrowing of Loans shall be made from the Banks, each termination or
reduction of the amount of the Commitments under Section 2.05 shall be applied
to the Commitments of the Banks, pro rata according to their respective Pro
Rata Shares, (ii) the making, conversion and continuation of Loans of a
particular Type (other than conversions required or permitted under Article
III) shall be made pro rata among the relevant Banks according to their
respective Pro Rata Shares and the applicable Interest Period for each Loan of
such Type shall be coterminous, and (iii) each payment on account of any
Obligations to or for the account of one or more of the Banks in respect of any
Obligations due on a particular day (or, if such day is not a Business Day, the
next succeeding Business Day) shall be entitled to priority over payments in
respect of Obligations not then due and shall be allocated among the Banks
entitled to such payments pro rata in accordance with the respective amounts
due and payable to such Banks on such day (or Business Day) and shall be
distributed accordingly; provided, that if immediately prior to giving effect
to any such payment in respect of any Loans the outstanding principal amount of
the Loans shall not be held by the Banks pro rata in accordance with their
respective Pro Rata Shares in effect at the time such Loans were made (by
reason of a failure of a Bank to make a Loan under this Agreement in the
circumstances described in the last paragraph of Section 10.01), then such
payment shall be applied to the Loans in such manner as shall result, as nearly
as is practicable, in the outstanding principal amount of the Loans being held
by the Banks pro rata in accordance with their respective Pro Rata Shares.
Nothing in this Section 3.09(b) shall be deemed to prevent, except in the case
of shortfall, the differential indemnity and other amounts owing to or for the
account of a particular Bank or Banks pursuant to any provisions of any Loan
Document which, by their terms, require differential payments.
3.10 Payments by the Company.
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(a) Except to the extent otherwise provided in this Agreement or
another Loan Document, all payments (including prepayments) to be made by the
Company in respect of principal, interest, fees or any other amounts payable
under this Agreement or under any other Loan Document shall be made (i) in
dollars and in immediately available funds, (ii) without set-off, recoupment or
counterclaim, and (iii) to the Administrative Agent at the Agent's Payment
Office (except as otherwise expressly provided herein) no later than 11:00 a.m.
(San Francisco time) on the date specified herein. The Administrative Agent
will promptly distribute on such date to each Bank, for the account of such
Bank's applicable Lending Office for the Loan or other Obligation in respect of
which such payment is made, its Pro Rata Share (or other applicable share as
expressly provided herein) of principal, interest, fees or any other amounts,
in like funds as received. Any payment which is received by the Administrative
Agent later than 11:00 a.m. (San Francisco time) shall be deemed to have been
received on the immediately succeeding Business Day and any applicable interest
or fee shall continue to accrue. The Company shall, at the time of making any
payment under this Agreement for the account of any Bank, specify to the
Administrative Agent (which shall so notify each intended recipient) to which
Loan principal, Loan interest, fee or any other Obligation such payment is to
be applied (and in the event that the Company fails so to specify, or if an
Event of Default has occurred and is continuing, the Administrative Agent shall
distribute such payment to the Banks for application in such manner as the
Majority Banks, subject to Section 3.09(b), may determine to be appropriate).
(b) Whenever any payment hereunder shall be stated to be due on a
day other than a Business Day, such payment shall be made on the next
succeeding 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, subject to
the provisions set forth in the definition of "Interest Period" herein.
(c) Unless the Administrative Agent shall have received notice from
the Company prior to the date on which any payment is due to the Banks
hereunder that the Company will not make such payment in full as, when and to
the extent required hereunder, the Administrative Agent may assume that the
Company has made such payment in full to the Administrative Agent on such date
in immediately available funds and the Administrative Agent may (but shall not
be required to), in reliance upon such assumption, cause to be distributed to
each Bank on such due date an amount equal to the amount then due such Bank.
If and to the extent the Company shall not have made such payment in full to
the Administrative Agent, each Bank shall repay to the Administrative Agent on
demand such amount distributed to such Bank, together with interest thereon for
each day from the date such amount is distributed to such Bank until the date
such Bank
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repays such amount to the Administrative Agent, at the Federal Funds Rate as in
effect for each such day. If neither the Company nor such Bank or Banks return
such payment or amount to the Administrative Agent within three Business Days
of the date such payment or amount was made available by the Administrative
Agent, then, retroactively to such date, the Company and such Bank or Banks
shall each be obligated to pay interest in respect of such payment or amount as
follows: (i) if such payment or amount represents a payment to be made by the
Company to the Banks, at a rate of interest equal to two percent (2%) plus the
otherwise applicable rate (and, in case the recipient or recipients shall
return such payment or amount to the Administrative Agent, without limiting the
obligation of the Company under Section 2.08 or 3.10 to pay interest to such
Bank or Banks at the rate set forth in Section 2.08(c) or 3.10(c) (as and to
the extent applicable) in respect of such payment or amount) and (ii) if such
payment or amount represents proceeds of a Loan to be made by the Banks to the
Company, at a rate of interest equal to the rate provided for such amount or
payment in Section 2.08(c) or 3.10(c), as applicable (and, in case the Company
shall return such amount to the Administrative Agent, without limiting any
claim the Company may have against such Bank or Banks in respect of such
amount).
3.11 Payments by the Banks to the Administrative Agent.
(a) Unless the Administrative Agent shall have received notice from
a Bank on the Effective Date or, with respect to each Borrowing after the
Effective Date, prior to 11:00 a.m. (San Francisco time) on the date of any
proposed Borrowing, that such Bank will not make available to the
Administrative Agent as, when and to the extent required hereunder for the
account of the Company the amount of that Bank's Loan, the Administrative Agent
may assume that each Bank has made such amount available to the Administrative
Agent in immediately available funds on the Borrowing date and the
Administrative Agent may (but shall not be required to), in reliance upon such
assumption, make such amount available to the Company on such date. If and to
the extent any Bank shall not have made its full amount available to the
Administrative Agent in immediately available funds and the Administrative
Agent in such circumstances has made available to the Company such amount, that
Bank shall on the next Business Day following the date of such Borrowing make
such amount available to the Administrative Agent, together with interest at
the Federal Funds Rate for and determined as of each day during such period. A
notice given by the Administrative Agent submitted to any Bank with respect to
amounts owing under this Section 3.11(a) shall be conclusive, absent manifest
error. If such amount is so made available, such payment to the Administrative
Agent shall constitute such Bank's Loan on the date of Borrowing for all
purposes of this Agreement. If such amount is not made available to the
Administrative Agent
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on the next Business Day following the date of such Borrowing, the
Administrative Agent shall notify the Company of such failure to fund and, upon
demand by the Administrative Agent, the Company shall pay such amount to the
Administrative Agent for the Administrative Agent's account, together with
interest thereon for each day elapsed since the date of such Borrowing, at a
rate per annum equal to the interest rate then applicable to the Loans
comprising such Borrowing.
(b) The failure of any Bank to make any Loan on any date of
Borrowing shall not relieve any other Bank of any obligation hereunder to make
a Loan on the date of such Borrowing, but no Bank shall be responsible for the
failure of any other Bank to make the Loan to be made by such other Bank on the
date of any Borrowing.
3.12 Survival. The agreements and obligations of the Company in this
Article III shall survive the payment of all other Obligations and termination
of this Agreement.
ARTICLE IV
CONDITIONS
4.01 Conditions Precedent to Initial Borrowing. The obligation of
each Bank to make its initial Loan is subject to the condition that (i) the
Company shall have paid all fees due pursuant to the Arranger's Fee Letter on
the applicable date set forth in Section 2.09, (ii) the Company shall have paid
all accrued and unpaid fees, costs and expenses to the extent then due and
payable on the Effective Date, together with the Administrative Agent's
Attorney Costs, together with such additional amounts of Attorney Costs as
shall constitute the Administrative Agent's reasonable estimate of Attorney
Costs incurred or to be incurred through the closing proceedings (which,
together with all Administrative Agent's Attorney's costs then accrued shall
not exceed $50,000); provided that (A) such estimating shall not thereafter
preclude final settling of accounts between the Company and the Administrative
Agent, and (B) the Company will not be obligated to pay or reimburse attorney
costs in excess of $50,000; including any such costs, fees and expenses arising
under or referenced in Sections 3.01 and 10.04; and (iii) the Administrative
Agent shall have received all of the following, in form and substance
satisfactory to the Administrative Agent and each Bank and in sufficient copies
for the Administrative Agent and each Bank:
(a) Loan Agreement and Notes. This Agreement executed by the
Company, the Administrative Agent and each of the Banks and, if requested by
any Bank, a Note for such Bank, duly completed and executed by the Company;
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(b) Resolutions; Incumbency.
(i) True and complete copies of the resolutions of the board
of directors of the Company approving and authorizing the execution,
delivery and performance by the Company of this Agreement and the other
Loan Documents to be delivered hereunder, and authorizing the borrowing of
the Loans, certified by the Secretary or an Assistant Secretary of the
Company as of the Closing Date as being in full force and effect without
amendment or modification;
(ii) A certificate of the Secretary or Assistant Secretary of
the Company, certifying the names and true signatures of the officers of
the Company authorized to execute, deliver and perform, as applicable, this
Agreement, and all other Loan Documents; and
(iii) A certificate of another officer of the Company as to
the incumbency and specimen signature of the Secretary or Assistant
Secretary, as the case may be, of the Company.
(c) Articles of Incorporation; By-laws and Good Standing. Each of
the following documents:
(i) a true and complete copy of the articles or certificate
of incorporation of the Company as in effect on the Closing Date, certified
by the Secretary of State (or similar applicable Governmental Authority) of
the state of incorporation of the Company as of a recent date and by the
Secretary or Assistant Secretary of the Company as of the Closing Date as
being in full force and effect without amendment or modification, and the
bylaws of the Company as in effect on the Closing Date, certified by the
Secretary or Assistant Secretary of the Company as of the Closing Date as
being in full force and effect without amendment or modification; and
(ii) a good standing certificate for the Company from the
Secretary of State (or similar applicable Governmental Authority) of its
state of incorporation as of a recent date;
(d) Legal Opinions.
(i) An opinion, dated the Closing Date, of Xxxxxxx, Xxxxxxx
& Xxxxxxxx LLP, counsel to the Company, addressed to the Administrative
Agent and the Banks in substantially the form of Exhibit H-1 and covering
such other matters as the Administrative Agent and the Banks may reasonably
request (and the Company hereby instructs such
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counsel to deliver such opinion to the Banks and the Administrative Agent);
and
(ii) An opinion, dated the Closing Date, of Xxxxxx X. Xxxxxx,
Esq., Senior Vice President, General Counsel and Secretary of the Company
and addressed to the Administrative Agent and the Banks substantially in
the form of Exhibit H-2 and covering such other matters as the
Administrative Agent and the Banks may reasonably request, including as to
compliance with the requirements of all applicable HMO Regulations
(including applicable Regulatory Tangible Net Equity Requirements) (and the
Company hereby instructs such counsel to deliver such opinion to the Banks
and the Administrative Agent);
(e) Certificate. A certificate signed by a Responsible Officer,
dated as of the Closing Date, stating:
(i) that the representations and warranties contained in
Article V are true and correct on and as of such date, as though made on
and as of such date; and
(ii) that no Default or Event of Default exists or would
result from the consummation of the transactions contemplated by this
Agreement; and
(iii) that since December 31, 1995 no event or circumstance
has occurred that has resulted or could reasonably be expected to result in
a Material Adverse Effect except for the Recapitalization; and
(iv) the Leverage Ratio as of September 30, 1996; and
(v) the Debt Ratings, as of such date.
(f) Regulatory Compliance. A certificate of a Responsible Officer
to the effect that the Company and each HMO Subsidiary is in compliance in all
material respects with the requirements of all applicable HMO Regulations (on a
proforma basis after the incurrence of the initial Loan(s)), including the
applicable Regulatory Tangible Net Equity Requirements, and with all other
applicable Governmental Rules except where the failure to be in compliance
would not reasonably be expected to result in a Material Adverse Effect.
(g) No Litigation Challenging. A certificate of a Responsible
Officer to the effect that no legal or arbitral proceedings shall be pending
or, to the knowledge of the Company, threatened by or before any Governmental
Person with respect to the making of a Loan that seeks to enjoin, restrict or
prevent the making of any Loan or otherwise to impose materially adverse
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conditions upon the making of any Loan or on the operations of the Company and
its Subsidiaries that, if adversely determined, could reasonably be expected to
have a Material Adverse Effect.
(h) Amendments to Material Agreements. Copies of all new or amended
Recapitalization Agreements, credit agreements, loan agreements, indentures,
purchase agreements, guarantees, letters of credit or other arrangements of the
type listed on Schedule 5.20 that have been entered into since the
Recapitalization.
(i) Other Documents. Such other approvals, opinions, documents or
materials as the Administrative Agent or any Bank may reasonably request.
4.02 Conditions Precedent to All Borrowings. In addition to the
conditions set forth in Section 4.01, the obligation of each Bank to make any
Loan to be made by it hereunder (including its initial Loan) or to continue or
convert any Loan pursuant to Section 2.04 is subject to the satisfaction of the
following conditions precedent on the relevant borrowing, continuation or
conversion date:
(a) No Default. No Default or Event of Default shall have occurred
and be continuing;
(b) Notice of Borrowing or Continuation/Conversion. Except as
provided in Section 2.04(c), the Administrative Agent shall have received with
respect to any Borrowing or continuation or conversion of Loans, a Notice of
Borrowing or a Notice of Continuation/Conversion, as applicable; and
(c) Continuation of Representations and Warranties. The
representations and warranties made by the Company contained in Article V shall
be true and correct on and as of the date of such Borrowing, continuation or
conversion with the same effect as if made on and as of the date of such
Borrowing, continuation or conversion (except to the extent such
representations and warranties expressly refer to an earlier date, in which
case they shall be true and correct as of such earlier date).
Each Notice of Borrowing and Notice of Continuation/Conversion submitted by the
Company hereunder (or the deemed continuation/conversion of any Loan pursuant
to Section 2.04(c)) shall constitute a representation and warranty by the
Company, as of the date of each such notice or application and as of the date
of each Borrowing, continuation or conversion, as applicable, that the
conditions in this Section 4.02 are satisfied in all respects.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to the Administrative Agent and each
Bank that:
5.01 Corporate Existence and Power. The Company and each of its
Subsidiaries: (a) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation; (b) has (i)
the power and authority and (ii) all governmental licenses, authorizations,
consents and approvals, to own its assets, carry on its business and, as to the
Company, to execute, deliver, and perform its obligations under, the Loan
Documents; (c) is duly qualified as a foreign corporation, and 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; and (d) is in compliance with all Governmental Rules;
except, in each case referred to in clause (b)(ii), clause (c) or clause (d),
to the extent that the failure to have such licenses, authorizations, consents
and approvals in the case of clause (b)(ii), to be so qualified or licensed in
the case of clause (c), or so in compliance in the case of clause (d), would
not reasonably be expected to have a Material Adverse Effect.
5.02 Corporate Authorization; No Contravention. The execution,
delivery and performance by the Company of this Agreement and any other Loan
Document to which the Company is party have been duly authorized by all
necessary corporate action, and have been duly and validly executed and
delivered by the Company, and in each case do not and will not: (a) contravene
the terms of any of the Company's organization documents; (b) upon satisfaction
of the requirements of Section 7.02(f) of the Senior Bank Agreement, conflict
with or result in any breach or contravention of, or the creation of any Lien
under, any document evidencing any Contractual Obligation to which the Company
is a party or any order, injunction, writ or decree of any Governmental
Authority to which the Company or its Property is subject; or (c) violate any
Governmental Rule where such violation would reasonably be expected to have a
Material Adverse Effect.
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
execution, delivery or performance by, or enforcement against, the Company of
this Agreement, or any other Loan Document, other than (a) the filing of this
Agreement with the California Department of Corporations, (b) as required under
Section 8.02(f) of the Senior Bank Agreement and (c) such
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approvals, consents, exemptions, authorizations, notices or filings which have
been obtained or taken.
5.04 Binding Effect. This Agreement and each other Loan Document to
which the Company is a party constitute the legal, valid and binding
obligations of the Company, enforceable against the Company in accordance with
their respective 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.
5.05 Litigation. Except as set forth in the Prospectus, there are no
actions, suits, proceedings, claims or disputes pending, or, to the best
knowledge of the Company, expressly 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 which: (a)
purport to affect or pertain to this Agreement or any other Loan Document or
any of the transactions contemplated hereby or thereby; (b) purport to affect
or pertain to the Recapitalization or any other transaction contemplated in
connection with the Recapitalization Agreements and related documents; or (c)
if determined adversely to the Company or its Subsidiaries, would reasonably be
expected to have a Material Adverse Effect.
5.06 No Default. No Default or Event of Default exists or would
result from the incurring of any Obligations by the Company. Neither the
Company nor any of its Subsidiaries is in default under or with respect to any
Contractual Obligation in any respect which, individually or together with all
such defaults, could reasonably be expected to have a Material Adverse Effect
or that would, if such default had occurred after the Closing Date, create an
Event of Default under Section 8.01(g).
5.07 ERISA. There is (a) no outstanding liability under Title IV of
ERISA with respect to any Qualified Plan maintained or sponsored by the Company
or any ERISA Affiliate, nor with respect to any Qualified Plan to which the
Company or any ERISA Affiliate contributes or is obligated to contribute; (b)
no Qualified Plan subject to Title IV of ERISA has any Unfunded Pension
Liability in excess of $25,000,000 in the aggregate; and (c) no ERISA Event
which has occurred or is reasonably expected to occur with respect to any Plan
which, in the case of clause (a), clause (b) or clause (c) above, could
reasonably be expected to have a Material Adverse Effect. Neither the Company
nor any ERISA Affiliate has incurred nor reasonably expects to incur (i) any
liability (and no event has occurred which, with the giving of notice under
Section 4219 of ERISA, would result in such liability) under Section 4201 or
4243 of ERISA with respect to a Multiemployer Plan or (ii) any
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liability under Title IV of ERISA (other than premiums due and not delinquent
under Section 4007 of ERISA) with respect to a Plan and which, in either case,
could reasonably be expected to have a Material Adverse Effect. Neither the
Company nor any ERISA Affiliate has transferred any Unfunded Pension Liability
to a Person other than the Company or an ERISA Affiliate or otherwise engaged
in a transaction that could be subject to Section 4069 or 4212(c) of ERISA and
which could reasonably be expected to have a Material Adverse Effect.
5.08 Use of Proceeds; Margin Regulations. The proceeds of the Loans
are intended to be and shall be used solely for the purposes set forth in and
permitted by Section 6.10, and are intended to be and shall be used in
compliance with Section 7.07. Neither the Company nor any of its Subsidiaries
is generally engaged in the business of purchasing or selling Margin Stock or
extending credit for the purpose of purchasing or carrying Margin Stock.
5.09 Title to Properties. The Company and each of its Subsidiaries
have good record and marketable title in fee simple to, 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 as could not,
individually or in the aggregate, have a Material Adverse Effect.
5.10 Taxes. The Company and its Subsidiaries have filed all Federal
and other material tax returns and reports required to be filed, and have paid
all Federal and other material taxes, assessments, fees and other governmental
charges levied or imposed upon them or their Properties, income or assets
otherwise due and payable, except those which are being contested in good faith
by appropriate proceedings and for which adequate reserves have been provided
in accordance with GAAP and no Notice of Lien has been filed or recorded. To
the knowledge of the Company, after due inquiry, there is no proposed tax
assessment against the Company or any of its Subsidiaries which would, if the
assessment were made, have a Material Adverse Effect.
5.11 Financial Condition.
(a) The audited consolidated financial statements of the Company and
its Subsidiaries dated December 31, 1995, and the related consolidated
statements of income or operations, shareholders' equity and cash flows for the
fiscal year ended on that date: (i) were prepared in accordance with GAAP
consistently applied throughout the period covered thereby, except as otherwise
expressly noted therein; (ii) are complete and correct and fairly present the
financial condition of the Company and its Subsidiaries as of the date thereof
and results of operations for the period covered thereby; and (iii) show all
material indebtedness and other liabilities, direct or
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contingent, of the Company and its consolidated Subsidiaries as of the date
thereof, including liabilities for taxes, material commitments and Contingent
Obligations.
(b) Since December 31, 1995, there has been no Material Adverse
Effect except for the Recapitalization.
5.12 Environmental Matters. The Company is in compliance with all
Environmental Laws, if any, affecting the business, operations and properties
of the Company and its Subsidiaries, except those which are unlikely to have a
Material Adverse Effect.
5.13 Regulated Entities. None of the Company, any Person controlling
the Company or any Subsidiary of the Company, is (a) an "Investment Company"
within the meaning of the Investment Company Act of 1940; (b) a "holding
company," or an "affiliate" of a "holding company" or a "subsidiary company" of
a "holding company," within the meaning of, or otherwise subject to regulation
under, the Public Utility Holding Company Act of 1935; or (c) subject to any
other Governmental Rule restricting its ability to incur debt or to grant
Liens, other than (i) restrictions contained in the Undertakings, (ii)
restrictions imposed by the California Department of Corporations (in the case
of the Company), (iii) restrictions imposed by the Blue Cross Blue Shield
Association Risk-Based Capital Guidelines, and (iv) restrictions imposed in
connection with the HMO and insurance activities and businesses of the
Subsidiaries in accordance with Governmental Rules applicable generally to
them, with respect to all of which the Company and its Subsidiaries, as
applicable, are in compliance except where the failure to be in compliance
would not reasonably be expected to have a Material Adverse Effect.
5.14 No Burdensome Restrictions. Neither the Company nor any
Subsidiary of the Company is a party to, or bound by, any Contractual
Obligation, or subject to any restriction in any Organization Document or any
Governmental Rule, which could reasonably be expected to have a Material
Adverse Effect.
5.15 Copyrights, Patents, Trademarks and Licenses, Etc. The Company
or its Subsidiaries own or are licensed or otherwise have the right to use all
of the material patents, trademarks, service marks, trade names, copyrights,
contractual franchises, authorizations and other rights that are reasonably
necessary for the operation of their respective businesses. No claim or
litigation regarding any of the foregoing is pending or threatened, and no
patent, invention, device, application, principle or any Governmental Rule is
pending or, to the knowledge of the Company, proposed, which, in either case,
could reasonably be expected to have a Material Adverse Effect.
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5.16 Insurance. The properties of the Company and its Subsidiaries
are insured with financially sound and reputable insurance companies which are
not Affiliates of the Company, in such amounts, with such deductibles and
covering such risks as are customarily carried by companies engaged in similar
businesses and owning similar properties in localities where the Company or
such Subsidiary operates; or the Company and its Subsidiaries maintain a system
or systems or self-insurance or assumption of risk which accords with the
practices of similar businesses.
5.17 Swap Obligations. Neither the Company nor any of its
Subsidiaries has incurred any outstanding obligations under any Swap Contracts,
other than Permitted Swap Obligations. The Company has undertaken its own
independent assessment of its consolidated assets, liabilities and commitments
and has considered appropriate means of mitigating and managing risks
associated with such matters and has not relied on any swap counterparty or any
Affiliate of any swap counterparty in determining whether to enter into any
Swap Contract.
5.18 Solvency. The Company and each of its Subsidiaries that are
currently operational are Solvent.
5.19 Full Disclosure. None of the representations or warranties made
by the Company or any Subsidiary of the Company in the Loan Documents as of the
date such representations and warranties are made or deemed made, and none of
the statements contained in any exhibit, report, statement or certificate
furnished by or on behalf of the Company or any Subsidiary in connection with
the Loan Documents 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 and, if disclosed,
would reasonably be expected to have a Material Adverse Effect.
5.20 Material Agreements. (a) Part A of Schedule 5.20 is a complete
and correct list, as of the Closing Date, of each credit agreement, loan
agreement, indenture, purchase agreement, guarantee, letter of credit or other
arrangement providing for or otherwise relating to any Indebtedness or any
extension of credit (or commitment for any extension of credit) to, or
guarantee by, the Company or any of its Subsidiaries, the aggregate principal
or face amount of which equals or exceeds (or may equal or exceed) $5,000,000,
and the aggregate principal or face amount outstanding or that may become
outstanding under each such arrangement is correctly described in such Part A
of Schedule 5.20.
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(b) Part B of Schedule 5.20 is a complete and correct list, as of
the Closing Date, of the Recapitalization Agreements. The Recapitalization
Agreement is in full force and effect as of the Closing Date and has not been
rescinded or amended, supplemented or otherwise modified since the date of its
execution and delivery.
(c) Schedule 5.20 is complete and correct in all respects as of the
Closing Date, except for such new or amended Recapitalization Agreements,
credit agreements, loan agreements, indentures, purchase agreements,
guarantees, letters of credit or other arrangements of the type listed on
Schedule 5.20 that have been entered into since the Recapitalization, copies of
which have been provided to the Administrative Agent pursuant to Section
4.01(h). Except as disclosed to the Administrative Agent pursuant to Section
4.01(h), all Recapitalization Agreements are in full force and effect as of the
Closing Date and have not been rescinded or amended, supplemented or otherwise
modified since the date of their execution and delivery.
5.21 Subsidiaries, Etc.
(a) Set forth in Part A of Schedule 5.21 is a complete and correct
list, as of the Closing Date, of all of the Subsidiaries of the Company,
together with, for each such Subsidiary, (i) the jurisdiction of organization
of such Subsidiary, (ii) each Person holding ownership interests in such
Subsidiary and (iii) the nature of the ownership interests held by each such
Person and the percentage of ownership of such Subsidiary represented by such
ownership interests. Except as disclosed in Part A of Schedule 5.21, (x) each
of the Company and its Subsidiaries owns, free and clear of Liens, and has the
unencumbered right to vote, all outstanding ownership interests in each Person
shown to be held by it in Part A of Schedule 5.21, (y) all of the issued and
outstanding capital stock of each such Person organized as a corporation is
validly issued, fully paid and nonassessable and (z) there are no outstanding
subscriptions, options, warrants, commitments, preemptive rights or agreements
of any kind (including any stockholders' or voting trust agreements) for the
issuance, sale, registration or voting of, or outstanding securities
convertible into, any additional shares of capital stock of any class, or
partnership or other ownership interests of any type in, such Person (except
any such rights arising with respect to the Recapitalization).
(b) Set forth in Part B of Schedule 5.21 is a summary, as of the
Closing Date, of all Investments (other than Investments disclosed in Part A of
Schedule 5.21 and Permitted Investments) held by the Company or any of its
Subsidiaries in any Person. Except as disclosed in Part B of Schedule 5.21
each of the Company and its Subsidiaries owns, free and clear of all Liens, all
such Investments.
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5.22 Accreditation, Etc. The Company and each of its Subsidiaries
are in compliance with (i) all licenses and certifications required pursuant to
any HMO Regulation; (ii) all certifications and authorizations necessary to
ensure that the Company and each of its Subsidiaries is eligible for all
reimbursements available under the HMO Regulations to the extent applicable to
HMOs and providers of life, health care and disability insurance of their type;
and (iii) all licenses, permits, authorizations and qualifications required
under the HMO Regulations in connection with the ownership or operation of HMOs
and providers of life, health care and disability insurance and the conduct of
the health care, managed care and health insurance businesses and businesses
incidental thereto; except where the failure to be in compliance with the items
described in any of the preceding three clauses would not reasonably be
expected to have a Material Adverse Effect.
5.23 No Impairment of Subsidiaries' Ability to Pay Dividends. Except
as set forth in the Undertakings and in the letter dated April 29, 1996 from
the California Department of Insurance, as of the Closing Date, no Subsidiary
of the Company is a party to or is bound by the terms of any agreement or
instrument (other than pursuant to any Loan Document, the Senior Bank Agreement
or any document executed in connection therewith) that, directly or indirectly,
prohibits or restrains, or has the effect of prohibiting or restraining, or
imposes materially adverse conditions on, (a) the declaration, making or
payment of dividends (in cash, Property or obligations) on, or other payments
or distributions on account of, or the setting apart of money for a sinking or
other analogous fund for, or the purchase, redemption, retirement or other
acquisition of, any shares of any class of stock of the Company or any of the
other Subsidiaries of the Company or of any warrants, options or other rights
to acquire the same or (b) the making of loans or other advances to, or the
transfer of property to, the Company.
5.24 Recapitalization. The Recapitalization has been consummated in
all material respects as contemplated by the Recapitalization Agreements.
5.25 Xxxx Xxxxxxx Acquisition. Prior to and after giving effect to
the consummation of the Xxxx Xxxxxxx Acquisition, the Company shall be in
compliance in all material respects with all terms and conditions of the Senior
Bank Agreement and this Agreement (after giving effect to Loans made or to be
made pursuant to this Agreement). The representations and warranties made by
the Company contained in Article V shall be true and correct on and as of the
date of the consummation of the Xxxx Xxxxxxx Acquisition with the same effect
as if made on and as of such date, and after giving effect thereto.
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ARTICLE VI
AFFIRMATIVE COVENANTS
The Company covenants and agrees that, so long as any Bank shall have any
Commitment hereunder, or any Loan or other Obligation shall remain unpaid or
unsatisfied, unless the Majority Banks waive compliance in writing:
6.01 Financial Statements. The Company shall deliver to the
Administrative Agent in form and detail satisfactory to the Administrative
Agent and the Banks, with sufficient copies for each Bank:
(a) as soon as available, but not later than 90 days after the end
of each fiscal year, a copy of the audited consolidated balance sheet of the
Company as at the end of such year and the related consolidated statements of
income, shareholders' equity and cash flows for such fiscal year, setting forth
in each case in comparative form the figures for the previous year, and
accompanied by the opinion of Coopers and Xxxxxxx or another
nationally-recognized independent public accounting firm which report shall
state that such consolidated financial statements present fairly the financial
position for the periods indicated in conformity with GAAP applied on a basis
consistent with prior years. Such opinion shall not be qualified or limited
because of a restricted or limited examination by such accountant of any
material portion of the Company's or any Subsidiary's records and shall be
delivered to the Administrative Agent pursuant to a reliance agreement between
the Administrative Agent and Banks and such accounting firm in form and
substance satisfactory to the Administrative Agent and such accounting firm;
(b) as soon as available, but not later than 100 days after the end
of each fiscal year, a copy of an unaudited consolidating balance sheet of the
Company and each of its Subsidiaries as at the end of such fiscal year and the
related consolidating statements of income, all in reasonable detail certified
by an appropriate Responsible Officer as having been used in connection with
the preparation of the financial statements referred to in Section 6.01(a); and
(c) as soon as available, but not later than 60 days after the end
of each of the first three fiscal quarters of each year, a copy of the
unaudited consolidated balance sheet of the Company and its consolidated
Subsidiaries as of the end of such quarter and the related consolidated
statements of income, shareholders' equity and cash flows for the period
commencing on the first day and ending on the last day of such quarter, and
certified by an appropriate Responsible Officer as being complete and correct
and fairly presenting, in accordance with GAAP, the financial position and the
results of operations of the Company
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and the Subsidiaries, subject to changes resulting from year-end audit
adjustments and except for the absence of notes;
provided that the Company shall be in compliance with the requirements of this
Section 6.01 with respect to its obligation to furnish financial statements
upon delivery of its annual and quarterly reports as filed by it with the SEC.
6.02 Certificates; Other Information. The Company shall furnish to
the Administrative Agent, with sufficient copies for each Bank:
(a) concurrently with the delivery of the financial statements
referred to in Sections 6.01(a) and 6.01(c) above, a compliance certificate
signed by a Responsible Officer substantially in the form of Exhibit F;
(b) concurrently with the delivery of the financial statements
referred to in Sections 6.01(a) and 6.01(c) above, a summary of the Company's
investment portfolio as of the date of such financial statements substantially
in the form of Schedule 5.21(b) or in such other form and detail as is
reasonably satisfactory to the Administrative Agent;
(c) within ten days after the same are sent, copies of all financial
statements and reports which the Company sends to its shareholders; and
promptly after the same are filed, copies of all financial statements and
regular, periodical or special reports which the Company may make to, or file
with, the Securities and Exchange Commission or any successor or similar
Governmental Authority, including any Form 10-Qs, Form 10-Ks and, except as set
forth below, Form 8-Ks (other than Form S-8s, pricing supplements to Form S-3s,
Form 8-Ks filing only exhibits to Form S-3s, Form 11-Ks, and Forms 3, 4 and 5
and other than exhibits to any of the foregoing unless specifically requested);
(d) from time to time upon receipt of a request by any Bank through
the Administrative Agent specifying in reasonable detail the types of documents
to be provided, copies of any and all statements, audits, studies or reports
submitted by or on behalf of the Company or any Subsidiary to any HMO
Regulator;
(e) promptly following the receipt of the same, a copy of each
notice relating to the loss or threatened loss by the Company or any Subsidiary
of any material operating permit, license or certification by any HMO
Regulator;
(f) promptly following the receipt of the same, all correspondence
received by the Company or any Subsidiary from an HMO Regulator which asserts
that the Company or any Subsidiary is not in substantial compliance with any
material HMO Regulation or which threatens the taking of any action against the
Company or
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any Subsidiary under any HMO Regulation or sets forth circumstances that if
adversely determined would result in an HMO Event and any correspondence of the
Company or any Subsidiary responding to such correspondence;
(g) promptly following any release of the same, a copy of each press
release issued by the Company; and
(h) promptly following any request, such additional business,
financial, corporate affairs and other information as the Administrative Agent,
at the request of any Bank, may from time to time reasonably request.
6.03 Notices. The Company shall promptly notify the Administrative
Agent and each Bank:
(a) (i) of the occurrence of any Default or Event of Default and
(ii) of the occurrence or existence of any event or circumstance that would
cause the condition to Borrowing set forth in Section 4.02(c) not to be
satisfied if a Borrowing were requested on or after the date of such event or
circumstance;
(b) (i) of any breach or non-performance of, or any default under,
any Contractual Obligation of the Company or any of its Subsidiaries that would
reasonably be expected to have a Material Adverse Effect; and (ii) of any
dispute, litigation, investigation, proceeding or suspension which may exist at
any time between the Company or any of its Subsidiaries and any Governmental
Authority which could reasonably be expected to result in a Material Adverse
Effect;
(c) of the commencement of, or any material development in, any
litigation or proceeding affecting the Company or any Subsidiary (i) in which
the amount of damages claimed is $25,000,000 (or its equivalent in another
currency or currencies) or more, (ii) in which injunctive or similar relief is
sought and which, if adversely determined, would reasonably be expected to have
a Material Adverse Effect, or (iii) in which the relief sought is an injunction
or other stay of the performance of this Agreement or any Loan Document;
(d) upon becoming aware thereof (i) any and all enforcement,
cleanup, removal or other governmental or regulatory actions instituted,
completed or threatened against the Company or any of its Subsidiaries or any
of their respective Properties pursuant to any applicable Environmental Laws
that would reasonably be expected to result in liability in excess of
$25,000,000, (ii) any other Environmental Claim which would reasonably be
expected to result in liability in excess of $25,000,000, and (iii) any
environmental or similar condition on any real property adjoining or in the
vicinity of the property of the Company or any Subsidiary that would reasonably
be expected
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to cause such property or any part thereof to be subject to any restrictions on
the ownership, occupancy, transferability or use of such property under any
Environmental Laws and which restrictions would reasonably be expected to have
a Material Adverse Effect;
(e) of any of the following events affecting the Company or any
member of its Controlled Group (but in no event more than ten days after such
event), together with a copy of any notice with respect to such event that may
be required to be filed with a Governmental Authority and any notice delivered
by a Governmental Authority to the Company or any member of its Controlled
Group with respect to such event:
(i) an ERISA Event which could reasonably be expected to
result in a Default or Event of Default or which would reasonably be
expected to have a Material Adverse Effect; or
(ii) the adoption of any new Plan that is subject to Title IV
of ERISA or section 412 of the Code by any member of the Controlled Group,
the adoption of any amendment to a Plan that is subject to Title IV of
ERISA or section 412 of the Code, or the commencement of contributions by
any member of the Controlled Group to any Plan if any such adoption or
commencement results in an increase in unfunded liabilities of $25,000,000
or more, or would reasonably be expected to have a Material Adverse Effect;
(f) of any change in either of the Company's Debt Ratings; and
(g) upon the request from time to time of the Administrative Agent,
of the Swap Termination Values relating to any then-outstanding Swap Contracts
to which the Company or any of its Subsidiaries is party.
Each notice pursuant to this Section 6.03 shall be accompanied by a written
statement by a Responsible Officer of the Company setting forth details of the
occurrence referred to therein, and stating in general what action the Company
proposes to take with respect thereto. 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 breached or violated.
6.04 Preservation of Corporate Existence, Etc. Subject to Section
7.03, the Company shall, and shall cause each of its Subsidiaries in operation
to:
(a) preserve and maintain in full force and effect its corporate
existence and good standing under the laws of its state
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or jurisdiction of incorporation, except where the failure to do so would not
reasonably be expected to have a Material Adverse Effect;
(b) preserve and maintain in full force and effect all rights,
privileges, qualifications, permits, licenses and franchises (including all
licenses and certifications required pursuant to any HMO Regulation in
connection with the ownership or operation of HMOs and the conduct of the
health care, managed care and health insurance businesses and businesses
incidental thereto) necessary or desirable in the normal conduct of its
business (including all certification and authorization necessary to ensure
that each of the Subsidiaries is eligible for all reimbursements available
under the HMO Regulations to the extent applicable to HMOs of their type),
except where the failure to do so would not reasonably be expected to have a
Material Adverse Effect;
(c) remain in, and continue to operate directly or indirectly
substantially in, the health care, managed care, health insurance business and
businesses substantially similar thereto; and
(d) preserve or renew all of its registered trademarks, trade names
and service marks, the non-preservation and non-renewal of which would
reasonably be expected to have a Material Adverse Effect.
6.05 Insurance. The Company shall, and shall cause its Subsidiaries
to: (a) insure and maintain insurance with responsible insurance companies in
such amounts and against such risks as is customarily carried by owners of
similar businesses and property; or (b) maintain a system or systems of self-
insurance or assumption of risk which accords with the practices of similar
businesses.
6.06 Payment of Obligations. The Company shall, and shall cause its
Subsidiaries to, pay and discharge as the same shall become due and payable,
all their respective obligations and liabilities, including: (a) all tax
liabilities, assessments and governmental charges or levies upon it or its
properties or assets, unless the same 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; (b) all lawful claims which, if
unpaid, would by law become a Lien upon its Property not constituting a Lien
permitted pursuant to Section 7.01 of this Agreement, unless the same 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 (c) all Indebtedness, as and when due and payable, but subject to any
subordination provisions contained in any instrument or agreement evidencing
such
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Indebtedness, where the failure to pay such Indebtedness would constitute an
Event of Default pursuant to Section 8.01(g).
6.07 Compliance with Laws.
(a) The Company shall comply, and shall cause each of its
Subsidiaries to comply, in all material respects with all Requirements of Law
of any Governmental Authority having jurisdiction over it or its business,
except such as may be contested in good faith or as to which a bona fide
dispute may exist and where non-compliance could not be expected to result in a
Material Adverse Effect.
(b) Upon the written request of the Administrative Agent or any
Bank, the Company shall submit and cause each of its Subsidiaries to submit, to
the Administrative Agent and with sufficient copies for each Bank, at
reasonable intervals, a general report providing an update of the status of any
environmental, health or safety compliance, hazard or liability issue
identified in any notice or report required pursuant to Section 6.03(d), that
may reasonably, individually or in the aggregate, result in liability in excess
of $25,000,000.
6.08 Inspection of Property and Books and Records. The Company shall
maintain and shall cause each of its Subsidiaries to maintain books of record
and account in conformity with GAAP consistently applied. Subject to such
confidentiality restrictions as the Company may reasonably impose, the Company
shall permit, and shall cause each of its Subsidiaries to permit,
representatives and independent contractors of the Administrative Agent or any
Bank to visit and inspect any of their respective Properties, to examine their
respective financial 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, upon reasonable advance notice
to the Company (and, after the occurrence and during the continuance of an
Event of Default, all at the expense of the Company).
6.09 Environmental Laws. The Company shall, and shall cause each
Subsidiary to, conduct its operations and keep and maintain its property in
compliance with all Environmental Laws, except where the failure to do so could
not reasonably be expected to have a Material Adverse Effect.
6.10 Use of Proceeds. The Company shall use the proceeds of the Loans
solely to enable the Company to meet capital requirements, for acquisitions and
for other general corporate purposes. The Company shall not in any event use
the proceeds of any Loans in contravention of any Governmental Rule.
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6.11 Regulatory Tangible Net Equity. The Company and each Subsidiary
shall maintain Regulatory Tangible Net Equity in an amount at least equal to
its Regulatory Tangible Net Equity Requirement, and shall substantially comply
in all other respects with any HMO Regulation relevant to such Regulatory
Tangible Net Equity Requirement, except where the failure to do so could not
reasonably be expected to have a Material Adverse Effect.
6.12 Accreditation, Etc. The Company and each of its Subsidiaries
shall maintain (i) all licenses and certifications required pursuant to any HMO
Regulation; (ii) all certifications and authorizations necessary to ensure that
the Company and each of its Subsidiaries is eligible for all reimbursements
available under the HMO Regulations to the extent applicable to HMOs and
providers of life, health care and disability insurance of their type; and
(iii) all licenses, permits, authorizations and qualifications required under
the HMO Regulations in connection with the ownership or operation of HMOs and
providers of life, health care and disability insurance and the conduct of the
health care, managed care and health insurance businesses and businesses
incidental thereto; except where the failure to maintain the items described in
any of the preceding three clauses would not reasonably be expected to have a
Material Adverse Effect.
ARTICLE VII
NEGATIVE COVENANTS
The Company hereby covenants and agrees that, so long as any Bank shall
have any Commitment hereunder, or any Loan or other Obligation shall remain
unpaid or unsatisfied, unless the Majority Banks waive compliance in writing:
7.01 Limitation on Liens. The Company shall not, and shall not
suffer or permit any of its Subsidiaries to, directly or indirectly, make,
create, incur, assume or suffer to exist any Lien upon or with respect to any
part of its Property, whether now owned or hereafter acquired, other than the
following:
(a) any Lien created under any Loan Document, the Senior Bank
Agreement or any document entered into in connection therewith;
(b) Liens for taxes, fees, assessments or other governmental charges
which are not delinquent or remain payable without penalty, or to the extent
that non-payment thereof is permitted by Section 6.06; provided that no Notice
of Lien has been filed or recorded under the Code;
(c) carriers', warehousemen's, mechanics', landlords',
materialmen's, repairmen's or other similar Liens arising in the
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Ordinary Course of Business which are not delinquent or remain payable without
penalty or which are being contested in good faith and by appropriate
proceedings, which proceedings have the effect of preventing the forfeiture or
sale of the Property subject thereto;
(d) Liens (other than any Lien imposed by ERISA) consisting of
pledges or deposits required in the Ordinary Course of Business in connection
with workers' compensation, unemployment insurance and other social security
legislation;
(e) Liens on the Property of the Company or any of its Subsidiaries
securing (i) the non-delinquent performance of bids, trade contracts (other
than for borrowed money), leases (other than Capital Leases), statutory
obligations, (ii) Contingent Obligations on surety and appeal bonds, or (iii)
other non- delinquent obligations of a like nature; in each case, incurred in
the Ordinary Course of Business; provided all such Liens in the aggregate would
not (even if enforced) cause a Material Adverse Effect;
(f) Liens consisting of judgment or judicial attachment liens;
provided that the enforcement of such Liens is effectively stayed and all such
Liens in the aggregate at any time outstanding for the Company and its
Subsidiaries do not exceed $20,000,000;
(g) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the Ordinary Course of Business which, in the
aggregate, are not substantial in amount, and which do not in any case
materially detract from the value of the Property subject thereto or interfere
with the ordinary conduct of the businesses of the Company and its
Subsidiaries;
(h) Liens on assets of Persons which become Subsidiaries after the
date of this Agreement; provided, however, that such Liens existed at the time
the respective Persons became Subsidiaries and were not created in anticipation
thereof, and provided, further that to the extent such Liens secure
Indebtedness, such Indebtedness is permitted by clause (d) of Section 7.02;
(i) purchase money security interests on any Property acquired or
held by the Company or its Subsidiaries in the Ordinary Course of Business
securing Indebtedness incurred or assumed for the purpose of financing all or
any part of the cost of acquiring such Property; provided that (i) any such
Lien attaches to such Property concurrently with or within 20 days after the
acquisition thereof, (ii) such Lien attaches solely to the Property so acquired
in such transaction, (iii) the principal amount of the debt secured thereby
does not exceed 100% of the cost of such Property, and (iv) the aggregate
principal amount of
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the Indebtedness secured by any and all such purchase money security interests,
together with Indebtedness secured by Liens permitted under Sections 7.01(j)
and 7.01(k), shall not at any time exceed $75,000,000;
(j) Liens securing Indebtedness in respect of Capital Leases on the
Property subject to such Capital Leases; provided that the aggregate
Indebtedness secured by such Liens, together with Indebtedness secured by Liens
permitted under Sections 7.01(i) and 7.01(k), shall not at any time exceed
$75,000,000;
(k) other consensual Liens on Property (other than the stock of any
Subsidiary of the Company); provided that the aggregate principal amount of the
Indebtedness secured by any and all such Liens shall not at any time exceed (i)
$10,000,000 and (ii), when aggregated with Indebtedness secured by Liens
permitted under Sections 7.01(i) and 7.01(j), $75,000,000.
(l) Liens arising solely by virtue of any statutory or common law
provision relating to bankers' liens, rights of set- off or similar rights and
remedies as to deposit accounts or other funds maintained with a creditor
depository institution; provided that (i) such deposit account is not a
dedicated cash collateral account and is not subject to restrictions against
access by the Company in excess of those set forth by regulations promulgated
by the Federal Reserve Board and (ii) such deposit account is not intended by
the Company or any of its Subsidiaries to provide collateral to the depository
institution in respect of specifically identified or contemplated obligations;
(m) deposits, reserves or contingent payment arrangements required
under or pursuant to HMO Regulations or other provisions of Governmental Rules
regulating HMOs, providers of life, health care or disability insurance or the
provision of health care services or such insurance or the management of health
care services or securing regulatory capital or other financial responsibility
requirements; and
(n) Liens arising by reason of arrangements constituting Permitted
Investments of the type specified in clause (d) of the definition of "Permitted
Investments".
7.02 Limitation on Indebtedness. The Company shall not suffer or
permit any of its Subsidiaries to, directly or indirectly, make, create, incur
or suffer to exist any Indebtedness except:
(a) Indebtedness under the Loan Documents and the Senior Bank
Agreement;
(b) Indebtedness existing on the Closing Date and set forth on
Schedule 7.02 and any extensions, modifications or
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renewals of any such Indebtedness; provided that any extension, modification or
renewal of any Lien securing such Indebtedness shall be limited to the property
encumbered by the existing Lien and the principal amount of the Indebtedness
being extended, renewed or refinanced does not increase;
(c) Indebtedness secured by Liens permitted under Section 7.01(i)
and any extensions, modifications or renewals of any such Indebtedness;
provided that any extension, modification or renewal of any Lien securing such
Indebtedness shall be limited to the property encumbered by the existing Lien
and the principal amount of the Indebtedness being extended, renewed or
refinanced does not increase;
(d) Indebtedness of Subsidiaries of the Company up to but not
exceeding $50,000,000 in the aggregate at any one time outstanding, exclusive
of Indebtedness permitted under Section 7.02(e), and Contingent Obligations of
the Company and Subsidiaries of the Company in respect of such Indebtedness;
provided that at the time any such Indebtedness is incurred, no Default or
Event of Default has occurred and is continuing or would result from the
incurrence of such Indebtedness;
(e) Indebtedness of Subsidiaries of the Company to the Company or to
other Wholly-Owned Subsidiaries of the Company; and
(f) additional Indebtedness of the Company incurred subsequent to
the Closing Date; provided that (i) at the time any such Indebtedness is
incurred, no Default or Event of Default has occurred and is continuing or
would result from the incurrence of such Indebtedness and (ii) prior to the
incurrence of any such Indebtedness in excess of $50,000,000 in the aggregate,
in any single transaction or series of related transactions, (x) the Company
shall have provided to the Administrative Agent, at least 20 days prior to the
incurrence of such Indebtedness, (1) the documents that are to evidence such
Indebtedness, (2) a certificate signed by a Responsible Officer certifying that
no Default or Event of Default has occurred and is continuing or would result
from the incurrence of such Indebtedness and (3) such other information as the
Banks may reasonably request and (y) the Administrative Agent shall have
determined that the incurrence of such Indebtedness is in compliance with the
terms of this Agreement.
7.03 Fundamental Changes. Except as set forth below, the Company
shall not, and shall not permit any of its Subsidiaries to, enter into any
transaction of merger or consolidation or amalgamation, or liquidate, wind up
or dissolve itself (or suffer any liquidation or dissolution). Except as set
forth below, the Company will not, nor will it permit any of its Subsidiaries
to, acquire any business or Property from, or capital stock of, or be a party
to any acquisition of, any Person
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except for purchases of inventory and other Property to be sold or used in the
Ordinary Course of Business, and Investments permitted under Section 7.12.
Notwithstanding the foregoing provisions of this Section 7.03:
(a) the Company or any Subsidiary may acquire by purchase or
otherwise a division, business unit or all or substantially all of the
business, property or fixed assets of, or acquire stock or other evidence of
beneficial ownership of, any Person; provided that: (i) no Event of Default or
Default has occurred and is continuing, or would occur as a result of such
acquisition including under Section 7.08 (Leverage Ratio) and Section 7.09
(Fixed Charge Coverage Ratio), (ii) the acquisition is of a Person engaged in,
or assets utilized directly or indirectly in, the health care, managed care and
health insurance business and businesses substantially similar thereto, (iii)
such acquisition is approved by the board of directors of the Person to be
acquired or the Person owning the assets to be acquired and (iv) if the
aggregate consideration for such acquisition is equal to or in excess of
$250,000,000, the Company shall have provided to the Administrative Agent, at
least 20 days prior to such acquisition, (x) the documents that are to evidence
such acquisition, (y) a certificate from a Responsible Officer certifying that
no Default or Event of Default has occurred and is continuing or would result
from such acquisition and (z) such other information as the Banks may
reasonably request;
(b) any Subsidiary of the Company may merge with any one or more
Subsidiaries of the Company or with the Company; provided that the Company
shall be the continuing or surviving corporation; provided, further that if any
transaction shall be between a Subsidiary and a Wholly-Owned Subsidiary, the
Wholly-Owned Subsidiary shall be the continuing or surviving corporation;
(c) any Subsidiary may merge with any other Person in connection
with an acquisition of 100% of the capital stock, partnership interests or
equity of such Person in connection with an acquisition permitted hereunder;
(d) the Company may dissolve any inactive Subsidiaries; and
(e) any Subsidiary may enter into any transaction of merger,
consolidation or amalgamation, if such action would constitute a disposition
otherwise permitted pursuant to Section 7.04(h).
7.04 Disposition of Assets. The Company shall not, and shall not
suffer or permit any of its Subsidiaries to, directly or indirectly, sell,
assign, lease, convey, transfer or otherwise dispose of (whether in one or a
series of transactions) any
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Property (including accounts and notes receivable, with or without recourse) or
enter into any agreement to do any of the foregoing, except:
(a) sales or dispositions of services, inventory, materials and
equipment and similar such items in the Ordinary Course of Business or which
are obsolete, worn out, surplus or otherwise no longer useful in the operation
of the Company or its Subsidiaries;
(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;
(c) the sale of assets representing a part of any Person or entity,
or any assets, acquired after the Closing Date; provided that such sale occurs
within 180 days subsequent to such acquisition and such sale is made in good
faith to a Person that is not an Affiliate of the Company or any of its
Subsidiaries pursuant to an arms' length transaction;
(d) the sale or other disposition of any shares of capital stock of
any Subsidiary to the Company or any of its other Wholly-Owned Subsidiaries;
(e) the sale or other disposition of any assets of the Company or
any Subsidiary to any other Wholly-Owned Subsidiary of the Company or to the
Company;
(f) the Company or any Subsidiary may lease and sublease assets in
the Ordinary Course of Business;
(g) deposits of cash and marketable securities or the sale of
marketable securities and other Permitted Investments in the Ordinary Course of
Business; and
(h) other dispositions of Property in any fiscal year of the Company
whose net book value in the aggregate shall not exceed ten percent (10%) of the
Company's Total Assets as shown on its consolidated balance sheet for its
previous fiscal year.
7.05 No More Restrictive Agreements. The Company shall not, and
shall not permit any of its Subsidiaries to, enter into any agreement providing
for the creation, incurrence or assumption of Indebtedness, the terms and
conditions of which are more restrictive in any material respect than the terms
and conditions of the Loan Documents.
7.06 Transactions with Affiliates. The Company shall not, and shall
not suffer or permit any of its Subsidiaries to,
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enter into any transaction with any Affiliate of the Company or of any such
Subsidiary, except (a) as expressly permitted by this Agreement, or (b) in the
Ordinary Course of Business and pursuant to the reasonable requirements of the
business of the Company or such Subsidiary.
7.07 Margin Stock. The Company shall not and shall not suffer or
permit any of its Subsidiaries to use any portion of the Loan proceeds,
directly or indirectly, (i) to purchase or carry Margin Stock, (ii) to repay or
otherwise refinance indebtedness of the Company or others incurred to purchase
or carry Margin Stock, (iii) to extend credit for the purpose of purchasing or
carrying any Margin Stock, (iv) to acquire any security in any transaction that
is subject to Section 13 or 14 of the Exchange Act or (v) to finance
acquisitions not approved by the Board of Directors of the entity to be
acquired.
7.08 Leverage Ratio. The Company shall not permit its Leverage Ratio
to exceed (i) 2.75 to 1 during the period from the Closing Date through
December 31, 1996, (ii) 2.25 to 1 during the period from January 1, 1997
through December 31, 1997 and (iii) 2.00 to 1 thereafter.
7.09 Fixed Charge Coverage Ratio. The Company shall not permit as of
the end of each fiscal quarter commencing with the fiscal quarter ending on
December 31, 1995, its Fixed Charge Coverage Ratio to be less than (i) 3.00 to
1.00 during the period from the Closing Date through December 31, 1996 and (ii)
3.50 to 1.00 thereafter.
7.10 Minimum Net Worth. The Company shall not at any time permit its
Net Worth to be less than an amount equal to the sum of (a) $570,000,000 plus
(b) fifty percent (50%) of the Company's positive net income for each fiscal
quarter ending after March 31, 1996.
7.11 Accounting Changes. Without limiting the provisions of Section
1.03(a), the Company shall not, and shall not suffer or permit any Subsidiary
to, make any significant change in accounting treatment or reporting practices,
except as allowed by GAAP, or change the fiscal year of the Company or of any
Subsidiary, except to change the fiscal year of a Subsidiary acquired in an
acquisition to conform its fiscal year to the Company's.
7.12 Limitations on Investments. The Company shall not, nor shall it
permit any of its Subsidiaries to, make or permit to remain outstanding any
Investments except:
(a) Investments outstanding on the Closing Date and identified in
Schedule 5.21;
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(b) operating deposit accounts with banks;
(c) Permitted Investments;
(d) Investments by the Company and its Subsidiaries in capital stock
of Wholly-Owned Subsidiaries of the Company and advances by the Company and its
Subsidiaries to the Company or Wholly-Owned Subsidiaries of the Company in the
Ordinary Course of Business;
(e) Permitted Swap Obligations;
(f) Investments made in connection with the transactions permitted
under Section 7.03(a) and 7.03(b) with respect to Persons other than
Subsidiaries;
(g) employee loans and guarantees in accordance with the Company's
usual and customary practices with respect to such loans and guarantees;
(h) extensions of credit in the nature of accounts receivable, lease
receivable or notes receivable arising from the sale or lease of goods or
services in the Ordinary Course of Business;
(i) Investments constituting Indebtedness permitted pursuant to
Section 7.02; and
(j) other Investments not exceeding $50,000,000 in the aggregate at
any time outstanding.
7.13 Restricted Payments. The Company will not, nor will it permit
any of its Subsidiaries to, declare or make any Restricted Payment; other than
dividends paid by Subsidiaries of the Company directly or indirectly to the
Company, (a) at any time after the occurrence and during the continuance of a
Default or (b) if a Default would result from such action. In addition, prior
to declaring or making any Restricted Payment in excess of $50,000,000, (in any
single transaction or related series of transactions), the Company shall
provide to the Agent a compliance certificate substantially in the form of
Exhibit F and certifying that prior to and after giving effect to any such
action, no Default will exist or be continuing.
7.14 Lines of Business. Neither the Company nor any of its
Subsidiaries shall engage directly or indirectly to any substantial extent in
any line or lines of business activity other than the provision of health care,
managed care, health insurance and businesses substantially similar thereto.
7.15 No Impairment of Subsidiaries' Ability to Pay Dividends. The
Company shall not permit any of its Subsidiaries
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to enter into, after the Closing Date, any agreement or instrument (other than
pursuant to any Loan Document or the Senior Bank Agreement) that, directly or
indirectly, prohibits or restrains, or has the effect of prohibiting or
restraining, or imposes materially adverse conditions on, (a) the declaration,
making or payment of dividends (in cash, Property or obligations) on, or other
payments or distributions on account of, or the setting apart of money for a
sinking or other analogous fund for, or the purchase, redemption, retirement or
other acquisition of, any shares of any class of stock of any such Subsidiary
or of any warrants, options or other rights to acquire the same or (b) the
making of loans or other advances to, or the transfer of property to, the
Company; except for (i) encumbrances or restrictions existing under, or by
reason of, any Governmental Rules applicable to the operation of the businesses
of the Company and its Subsidiaries, (ii) customary provisions of any leases,
mortgages or deeds of trust prohibiting the assignment of the property subject
to any such instrument or the instrument itself, (iii) any agreement or other
instrument of a Person acquired by the Company or any Subsidiary at the time of
such acquisition, which encumbrance or restriction is not applicable to any
Person, or the properties or assets of any Person, other than the Person so
acquired or the property or assets of the Person so acquired and was not
entered into in contemplation of such acquisition, and (iv) the restrictions
contained in the Undertakings, of which Undertakings the Banks hereby
acknowledge notice.
ARTICLE VIII
EVENTS OF DEFAULT
8.01 Events of Default. The occurrence and continuation of any one
or more of the following shall constitute an "Event of Default" hereunder:
(a) Non-Payment. The Company fails to pay, when and as required to
be paid herein or in any other Loan Document, (i) any amount of principal of
any Loan, or (ii) within three Business Days after the same shall become due,
any interest, fee or any other amount payable hereunder or pursuant to any
other Loan Document; or
(b) Representation or Warranty. Any representation or warranty by
the Company made or deemed made herein, or in any other Loan Document, or which
is contained in any certificate, document or financial or other statement by
the Company, or its Responsible Officers, furnished at any time under this
Agreement or any other Loan Document, shall prove to have been incorrect in any
material respect on or as of the date made or deemed made; or
(c) Financial Ratios. The Company fails to perform or observe its
obligations with respect to its Leverage Ratio set
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forth in Section 7.08, its Fixed Charge Coverage Ratio set forth in Section
7.09 or its minimum Net Worth test set forth in Section 7.10; or
(d) Specific Defaults. The Company fails to perform or observe any
term, covenant or agreement contained in Section 6.03, 6.11, 6.12 or Article
VII; or
(e) Other Defaults. The Company 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 (i) 20 days, in the
case such default arises under Section 6.01 or 6.02, or (ii) 30 days, in the
case of any other such default, after the date upon which written notice of
such other default is given to the Company by the Administrative Agent or any
Bank; or
(f) Cross-Default. The Company or any of its Subsidiaries
(collectively, the "Relevant Parties") shall default in the payment when due of
any principal of or interest on any of its other Indebtedness having an
aggregate principal amount or commitment equal to or in excess of $30,000,000;
or in the payment when due of any amount under any Swap Contract providing for,
upon such default, payments in excess of $30,000,000; or any event specified in
any note, agreement, indenture or other document evidencing or relating to any
such Indebtedness or any event specified in any Swap Contract shall occur if
the effect of such event is to cause, or (with the giving of any notice or the
lapse of time or both) to permit the holder or holders of such Indebtedness (or
a trustee or agent on behalf of such holder or holders) to cause, such
Indebtedness to become due, or to be prepaid in full (whether by redemption,
purchase, offer to purchase or otherwise), prior to its stated maturity or to
have the interest rate on such Indebtedness reset to a level so that securities
evidencing such Indebtedness trade at a level specified in relation to its par
value or, in the case of any Swap Contract, to permit payments owing under any
such Swap Contract in excess of $30,000,000 in the aggregate, to be liquidated;
or
(g) Insolvency; Voluntary Proceedings. The Company or any of its
Subsidiaries (i) 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; or (iv) takes any action to effectuate or authorize any of
the foregoing; or
(h) Involuntary Proceedings. (i) Any involuntary Insolvency
Proceeding is commenced or filed against the Company or any Subsidiary of the
Company, or any writ, judgment, warrant
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of attachment, execution or similar process, is issued or levied against a
substantial part of the Company's or any of its Subsidiaries' 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 of its Subsidiaries 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; or
(iii) the Company or any of its Subsidiaries 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
(i) ERISA. (i) The Company or an ERISA Affiliate shall fail to
satisfy its contribution requirements under Section 412(c)(11) of the Code,
whether or not it has sought a waiver under Section 412(d) of the Code, and
such failure could reasonably be expected to result in liability of more than
$25,000,000; (ii) in the case of an ERISA Event involving the withdrawal from a
Plan of a "substantial employer" (as defined in Section 4001(a)(2) or Section
4062(e) of ERISA), the withdrawing employer's proportionate share of that
Plan's Unfunded Pension Liabilities is more than $25,000,000; (iii) in the case
of an ERISA Event involving the complete or partial withdrawal from a
Multiemployer Plan, the withdrawing employer has incurred a withdrawal
liability in an aggregate amount exceeding $25,000,000; (iv) in the case of an
ERISA Event not described in clause (ii) or clause (iii), the Unfunded Pension
Liabilities of the relevant Plan or Plans exceed $25,000,00; or (v) the
commencement or increase of contributions to, or the adoption of or the
amendment of a Plan by, a member of the Controlled Group shall result in a net
increase in unfunded liabilities to the Controlled Group in excess of
$25,000,000; or
(j) Monetary Judgments. There shall be entered against the Company
or any Subsidiary one or more judgments or decrees the aggregate amount of
which not paid, not fully covered by insurance or for which no adequate reserve
has been established exceeds $20,000,000 and such judgments or decrees shall
not have been vacated, discharged, stayed or appealed within the applicable
period for appeal from the date of entry thereof; or
(k) Non-Monetary Judgments. Any non-monetary judgment, order or
decree is entered against the Company or any Subsidiary which does or would
reasonably be expected to have a Material Adverse Effect, and there shall be
any period of ten consecutive days during which a stay of enforcement of such
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judgment or order, by reason of a pending appeal or otherwise, shall not be in
effect; or
(l) Change in Control. (i) Any transaction or series of related
transactions occur in which any Person or Persons (other than the Health
Foundation or the trust established pursuant to the terms of the Voting Trust
Agreement) acting in concert (A) acquire, directly or indirectly, beneficial
ownership (within the meaning of Rule 13d-3 under the Securities Exchange Act
of 1934, as amended) of 20% or more of the Voting Stock of the Company or (B)
acquire or contract to or arrange and acquire a percentage that would, unless
consented to by the Blue Cross Blue Shield Association ("BCBSA"), cause
termination of the BCBSA license; or (ii) individuals who constitute the Board
of Directors on the date of the Closing Date (the "Incumbent Board") cease for
any reason to constitute at least 80% thereof; provided that any Person
becoming a director subsequent to such date whose election, or nomination for
election by the Company's shareholders, was approved by a vote of at least
three quarters (3/4) of the directors composing the Incumbent Board (either by
a specific vote or by approval of the proxy statement of the Company in which
such Person is named as a nominee for director, without objection to such
nomination) shall be, for purposes of this clause (ii), considered as though
such Person were a member of the Incumbent Board; or
(m) HMO Event. There occurs and continues an HMO Event; or
(n) Adverse Change. There occurs a Material Adverse Effect or an
event resulting in a Material Adverse Effect; or
(o) Senior Bank Agreement Default. The occurrence and continuation
of an "Event of Default" under and as defined in the Senior Bank Agreement.
8.02 Remedies. Subject to the Subordination Provisions, if any Event
of Default occurs and is continuing, the Administrative Agent shall, at the
request of, or may, with the consent of, the Majority Banks, by notice to the
Company (a) declare the Commitment of each Bank to make Loans to be terminated,
whereupon such Commitments shall forthwith be terminated; (b) declare the
unpaid principal amount of all outstanding 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; 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 Banks all
rights and remedies available to it and the Banks under the Loan Documents or
applicable law; provided, however, that upon the occurrence of any event
specified in paragraph (g) or (h) of Section 8.01
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above, the obligation of each Bank to make Loans shall automatically terminate
and the unpaid principal amount of all outstanding Loans and all interest and
other amounts owing under this Agreement shall automatically become due and
payable without further act of the Administrative Agent or any Bank.
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 IX
THE ADMINISTRATIVE AGENT
9.01 Appointment and Authorization. Each Bank hereby irrevocably
appoints, designates and authorizes the Administrative Agent to take such
action on its behalf under the provisions of this Agreement and each other Loan
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 Loan Document,
together with such powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary contained elsewhere in this
Agreement or in any other Loan Document, the Administrative Agent shall not
have any duties or responsibilities, except those expressly set forth herein,
nor shall the Administrative Agent have or be deemed to have any fiduciary
relationship with any Bank, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the
Administrative Agent. Without limiting the generality of the foregoing
sentence, the use of the term "agent" in this Agreement with reference to the
Administrative 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.
9.02 Delegation of Duties. The Administrative Agent may execute any
of its duties under this Agreement or any other Loan Document by or through
agents, employees or attorneys-in-fact and shall be entitled to advice of
counsel concerning all matters pertaining to such duties. No Agent shall be
responsible for the negligence or misconduct of any agent or attorney-in-fact
that it selects in good faith.
9.03 Liability of Administrative Agent. None of the Agent-Related
Persons shall (a) be liable for any action taken or
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omitted to be taken by any of them under or in connection with this Agreement
or any other Loan Document or the transactions contemplated hereby (except for
its own gross negligence or willful misconduct), (b) be responsible in any
manner to any of the Banks for any recital, statement, representation or
warranty made by the Company or any Subsidiary or Affiliate of the Company, or
any officer thereof, contained in this Agreement or in any other Loan Document,
or in any certificate, report, statement or other document referred to or
provided for in, or received by the Administrative Agent under or in connection
with, this Agreement or any other Loan Document, or the validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
any other Loan Document, or for any failure of the Company or any other party
to any Loan Document to perform its obligations hereunder or thereunder, (c) be
required to initiate or conduct any litigation or collection proceedings under
any Loan Document or (d) be responsible for any action taken or omitted to be
taken by it under any Loan Document or under any other document or instrument
referred to or provided for in any Loan Document or in connection with any Loan
Document, except for its own gross negligence or willful misconduct. No
Agent-Related Person shall be under any obligation to any Bank 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 Loan Document, or
to inspect the properties, books or records of the Company or any of the
Company's Subsidiaries or Affiliates.
9.04 Reliance by Administrative Agent.
(a) The Administrative Agent shall be entitled to rely, and shall
be fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone
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), independent accountants and other experts selected by the
Administrative Agent. Except for action expressly required of the
Administrative Agent under the Loan Documents, the Administrative Agent shall
be fully justified in failing or refusing to take any action under this
Agreement or any other Loan Document unless it shall first receive such advice
or concurrence of the Majority Banks as it deems appropriate and, if it so
requests, it shall first be indemnified to its satisfaction by the Banks
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 Administrative Agent
shall in all cases be fully protected in acting, or in refraining from acting,
under this Agreement or any other Loan Document in accordance with a request or
consent of the Majority Banks and such request and any action taken or
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failure to act pursuant thereto shall be binding upon all of the Banks.
(b) For purposes of determining compliance with the conditions
specified in Section 4.01, each Bank that has executed this Agreement shall be
deemed to have consented to, approved or accepted or to be satisfied with, each
document or other matter either sent by the Administrative Agent to such Bank
for consent, approval, acceptance or satisfaction or of which such Bank has
knowledge.
9.05 Notice of Default. The Administrative Agent shall not be
deemed to have knowledge or notice of the occurrence of any Default or Event of
Default, except with respect to defaults in the payment of principal, interest
and fees required to be paid to the Administrative Agent for the account of the
Banks, unless the Administrative Agent shall have received written notice from
a Bank or the Company referring to this Agreement, describing such Default or
Event of Default and stating that such notice is a "notice of default." The
Administrative Agent will notify the Banks of its receipt of any such notice.
The Administrative Agent shall take such action with respect to such Default or
Event of Default as may be requested by the Majority Banks in accordance with
Article VIII; provided, however, that unless and until the Administrative Agent
has received any such request, the Administrative Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with
respect to such Default or Event of Default as it shall deem advisable or in
the best interest of the Banks.
9.06 Credit Decision. Each Bank acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that
no act by the Administrative Agent, including any review of the affairs of the
Company and its Subsidiaries, shall be deemed to constitute any representation
or warranty by any Agent-Related Person to any Bank. Each Bank represents to
the Administrative Agent that it has, independently and without reliance upon
any Agent-Related Person and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of the Company and its Subsidiaries, and all applicable bank
regulatory laws relating to the transactions contemplated hereby, and made its
own decision to enter into this Agreement and to extend credit to the Company
hereunder. Each Bank also represents that it will, independently and without
reliance upon any Agent-Related Person and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Agreement and the other Loan Documents, and to make such investigations as
it
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deems necessary to inform itself as to the business, prospects, operations,
property, financial and other condition and creditworthiness of the Company.
Except for notices, reports and other documents expressly herein required to be
furnished to the Banks by the Administrative Agent, the Administrative Agent
shall not have any duty or responsibility to provide any Bank with any credit
or other information concerning the business, prospects, operations, property,
financial and other condition or creditworthiness of the Company which may come
into the possession of any of the Agent-Related Persons.
9.07 Indemnification. Whether or not the transactions contemplated
hereby are consummated, the Banks shall indemnify upon demand the Agent-Related
Persons (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, from and
against any and all Indemnified Liabilities; provided, however, that no Bank
shall be liable for the payment to the Agent-Related Persons of any portion of
such Indemnified Liabilities resulting from such Person's gross negligence or
willful misconduct. Without limitation of the foregoing, each Bank shall
reimburse the Administrative Agent upon demand for its ratable share of any
costs or out-of-pocket expenses (including Attorney Costs) incurred by the
Administrative 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 the
Administrative Agent is not reimbursed for such expenses by or on behalf of the
Company. The undertaking in this Section 9.07 shall survive the payment of all
Obligations hereunder and the resignation or replacement of the Administrative
Agent.
9.08 Administrative Agent in Individual Capacity. BofA and its
Affiliates (and any successor acting as Administrative Agent), may, without
notice to or consent from the Banks, 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 and its Subsidiaries and Affiliates as though BofA
were not the Administrative Agent hereunder and may accept fees and other
consideration from the Company for services in connection with this Agreement
or otherwise without notice to or consent of the Banks. The Banks acknowledge
that, pursuant to such activities, BofA or its Affiliates may receive
information regarding the Company or its Affiliates (including information that
may be subject to confidentiality obligations in favor of the Company or such
Subsidiary) and acknowledge that the Administrative Agent shall be under no
obligation to provide such information to them.
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With respect to its Commitments and Loans, BofA shall have the same rights,
privileges and powers under this Agreement as any other Bank and may exercise
the same as though it were not the Administrative Agent, and the terms "Bank"
and "Banks" include BofA in its individual capacity.
9.09 Successor Administrative Agent. The Administrative Agent may,
and at the request of the Majority Banks shall, resign as the Administrative
Agent upon 30 days' notice to the Banks. If the Administrative Agent resigns
under this Agreement, the Majority Banks shall appoint from among the Banks a
successor agent for the Banks (which successor agent shall be subject to the
consent of the Company, which consent shall not unreasonably be withheld;
provided that during the existence of a Default or an Event of Default, such
consent shall not be required). If no successor agent is appointed prior to
the effective date of the resignation of the Administrative Agent, the
Administrative Agent may appoint, on behalf of the Banks and after consulting
with the Banks and the Company, a successor agent from among the Banks. Upon
the acceptance of its appointment as successor agent, such successor agent
shall succeed to and become vested with all the rights, powers, privileges,
duties and obligations of the retiring Agent (and the term "Administrative
Agent" shall mean such successor agent) and the retiring Agent's appointment,
powers, privileges, duties and obligations as the Administrative Agent shall be
terminated. After any retiring Agent's resignation hereunder as the
Administrative Agent, the provisions of this Article IX and Sections 10.04 and
10.05 shall inure to its benefit as to any actions taken or omitted to be taken
by it while it was the Administrative Agent under this Agreement. If no
successor agent has accepted appointment as the Administrative Agent by the
date which is 30 days following a retiring Agent's notice of resignation, the
retiring Agent's resignation shall nevertheless thereupon become effective and
the Banks shall perform all of the duties of the Administrative Agent until
such time, if any, as the Majority Banks appoint a successor agent as provided
for above.
9.10 Delivery of Agreements and Preparation of Amendments,
Modifications and Waivers. The Administrative Agent, the Banks and the Company
each acknowledge that the executed agreements (including this Agreement) and
certificates required to be delivered pursuant to this Agreement shall be
delivered to the Administrative Agent. In addition, the Administrative Agent
shall be responsible for managing the documentation and dissemination of any
amendments, modifications or waivers to such agreements.
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ARTICLE X
MISCELLANEOUS
10.01 Amendments and Waivers. No amendment or waiver of any
provision of this Agreement or any other Loan Document, and no consent with
respect to any departure by the Company therefrom, shall be effective unless
the same shall be in writing and signed by the Majority Banks, the Company and
acknowledged by the Administrative Agent, and then such waiver shall be
effective only in the specific instance and for the specific purpose for which
given; provided, however, that no such waiver, amendment, or consent shall,
unless in writing and signed by all the Banks, the Company and acknowledged by
the Administrative Agent, do any of the following: (a) increase or extend the
Commitment of any Bank (or reinstate any Commitment terminated pursuant to
Section 8.02(a)) or subject any Bank to any additional obligations; (b)
postpone or delay any date fixed for any payment of principal, interest, fees
or other amounts due to the Banks (or any of them) hereunder or under any Loan
Document; (c) reduce the principal of, or the rate of interest specified on any
Loan, or of any fees or other amounts payable hereunder or under any other Loan
Document; (d) change (i) the percentage of the Commitments or of the aggregate
unpaid principal amount of the Loans which shall be required for the Banks or
any of them to take any action hereunder or (ii) the definition of the term
"Majority Banks"; (e) amend Exhibit D hereto; (f) waive any of the conditions
precedent or subsequent set forth in Article IV; or (g) amend this Section
10.01 or any provision providing for consent or other action by all Banks;
provided, further, that no amendment, waiver or consent shall, unless in
writing and signed by the Administrative Agent in addition to the Majority
Banks or all the Banks, as the case may be, affect the rights or duties of the
Administrative Agent under this Agreement or any other Loan Document; provided,
further, that no provisions of Exhibit D may be amended without the consent of
the California Department of Corporations in addition to all of the Banks. Any
modification, supplement or waiver shall be for such period and subject to such
conditions as shall be specified in the instrument effecting the same and shall
be binding upon the Administrative Agent, the Banks and the Company, and any
such waiver shall be effective only in the specific instance and for the
purpose for which given.
Notwithstanding any other provision of this Agreement, if at a time
when the conditions precedent set forth in Article IV to any Loan are, in the
opinion of the Majority Banks, satisfied, any Bank shall fail to fulfill its
obligations to make such Loan, then, for so long as such failure shall
continue, such Bank shall (unless the Majority Banks, determined as if such
Bank were not a "Bank" under the Loan Documents, shall otherwise consent in
writing) be deemed for all purposes relating to amendments, modifications,
waivers or consents under any of the
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Loan Documents (including under this Section 10.01) to have no Loans or
Commitments, shall not be treated as a "Bank" under the Loan Documents when
performing the computation of Majority Banks, and shall have no rights under
the preceding paragraph of this Section 10.01; provided, that any action taken
by the other Banks with respect to the matters referred to in clauses (a)
through (f) of the preceding paragraph shall not be effective as against such
Bank.
10.02 Notices.
(a) All notices, requests and other communications provided for
hereunder shall be in writing and mailed, faxed or delivered (unless expressly
otherwise provided in the case of a facsimile transmission; provided that any
matter transmitted by the Company by facsimile (i) shall be immediately
confirmed by a telephone call to the recipient at the number specified on
Schedule 10.02, and (ii) a hard copy original shall be promptly mailed or
delivered), to the address or facsimile number specified for notices on
Schedule 10.02; or, as directed to the Company or the Administrative Agent, to
such other address as shall be designated by such party in a written notice to
the other parties, and as directed to each other party, at such other address
as shall be designated by such party in a written notice to the Company and the
Administrative Agent.
(b) All such notices, requests and communications shall, when
transmitted by overnight delivery, or faxed, be effective when delivered for
overnight (next-day) delivery, or transmitted by facsimile machine,
respectively, or if mailed, upon the third Business Day after the date
deposited into the U.S. mail, or if delivered, upon delivery; except that
notices pursuant to Article II or Article IX shall not be effective until
actually received by the Administrative Agent.
10.03 No Waiver; Cumulative Remedies. No failure on the part of the
Administrative Agent or any Bank to exercise and no delay in exercising, and no
course of dealing with respect to, any right, remedy, power or privilege under
this Agreement or any Note shall operate as a waiver of such right, remedy,
power or privilege, nor shall any single or partial exercise of any right,
power or privilege under this Agreement or any Note preclude any other or
further exercise of any such right, remedy, power or privilege or the exercise
of any other right, remedy, power or privilege. The rights, remedies, powers
and privileges provided in this Agreement and the Notes are cumulative and not
exclusive of any rights, remedies, powers and privileges provided by law.
10.04 Costs and Expenses. The Company shall, whether or not the
transactions contemplated hereby shall be consummated:
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(a) pay or reimburse the Administrative Agent and the Arranger
within 15 Business Days after demand (except that such 15-day period shall not
apply with respect to payments to be made on the Effective Date) for all
reasonable costs and expenses (including travel and printing costs) incurred by
the Administrative Agent and the Arranger in connection with the syndication,
development, preparation, delivery and execution of, this Agreement, any other
Loan Document and any other documents prepared in connection herewith or
therewith as well as any amendment, supplement, waiver or modification (in each
case, whether or not consummated) to this Agreement or any other Loan Document
and any other documents prepared in connection herewith or therewith, and the
consummation of the transactions contemplated hereby and thereby, including all
Attorney Costs incurred by the Administrative Agent and the Arranger with
respect to all of the above (provided that the Company shall have no obligation
to pay or reimburse Attorney Costs in excess of $50,000);
(b) pay or reimburse each Bank and the Administrative Agent within
15 Business Days after demand (except that such 15- day period shall not apply
with respect to payments to be made on the Effective Date) for all costs and
expenses incurred by them in connection with the enforcement, attempted
enforcement, or preservation of any rights or remedies (including in connection
with any "workout" or restructuring regarding the Loans, and including in any
Insolvency Proceeding or appellate proceeding) under this Agreement, any other
Loan Document, and any such other documents, including all Attorney Costs
incurred by the Administrative Agent and any Bank with respect to all of the
above; and
(c) pay or reimburse the Administrative Agent within 15 Business
Days after demand (except that such 15-day period shall not apply with respect
to payments to be made on the Effective Date) for all costs and expenses
incurred by them in connection with the ongoing administration of the Loans and
of this Agreement, any other Loan Document and any such other documents,
including all Attorney Costs incurred by the Administrative Agent with respect
to such administration.
The agreements in this Section 10.04 shall survive payment of all
other Obligations and termination of this Agreement.
10.05 Indemnity. The Company shall pay, indemnify, and hold each
Bank, the Administrative Agent, the Agent-Related Persons and each of their
respective officers, directors, employees, counsel, agents and
attorneys-in-fact (each, an "Indemnified Person") harmless from and against any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, charges, expenses or disbursements
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(including Attorney Costs) of any kind or nature whatsoever with respect to the
execution, delivery, enforcement, performance and administration of this
Agreement and any other Loan Documents, or the transactions contemplated hereby
and thereby, and with respect to any investigation, litigation or proceeding
(including any Insolvency Proceeding or appellate proceeding) related to this
Agreement or the Loans or the use of the proceeds thereof, whether or not any
Indemnified Person is a party thereto (all the foregoing, collectively, the
"Indemnified Liabilities"); provided that the Company shall have no obligation
hereunder to any Indemnified Person with respect to Indemnified Liabilities
arising from the gross negligence or willful misconduct of such Indemnified
Person. The agreements in this Section 10.05 shall survive payment of all
other Obligations and termination of this Agreement.
10.06 Payments Set Aside. To the extent that the Company makes a
payment or payments to the Administrative Agent or the Banks, or the
Administrative Agent or the Banks exercise their rights of set-off, and such
payment or payments 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
Administrative Agent with the consent of the Majority Banks) 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 enforcement or set-off had not occurred, and (b) each Bank severally
agrees to pay to the Administrative Agent upon demand its ratable share of the
total amount so recovered from or repaid by the Administrative Agent.
10.07 Successors and Assigns. The provisions of this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, except that the Company may not assign or
transfer any of its rights or obligations under this Agreement without the
prior written consent of the Administrative Agent and each Bank.
10.08 Assignments, Participations, Etc.
(a) Any Bank may, with the written consent of the Company (provided
that during the existence of a Default or an Event of Default or if such
assignment is to an existing Bank, the consent of the Company shall not be
required) and the Administrative Agent, which consents of the Company and the
Administrative Agent shall not be unreasonably withheld or delayed, at any time
assign and delegate to one or more Eligible Assignees pursuant to an assignment
and acceptance agreement substantially in the form of Exhibit G-1 ("Assignment
and
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Acceptance") (provided that no written consent of the Company or the
Administrative Agent shall be required in connection with any assignment and
delegation by a Bank to an Eligible Assignee that is an Affiliate of such Bank)
(each an "Assignee") all, or any ratable part of all, of the Loans, the
Commitment and the other rights and obligations of such Bank under each Loan
Document, in a minimum amount of $10,000,000; provided, however, that (i) the
Company and the Administrative Agent may continue to deal solely and directly
with such Bank in connection with the interest so assigned to an Assignee until
(A) written notice of such assignment, together with payment instructions,
addresses and related information with respect to the Assignee, shall have been
given to the Company and the Administrative Agent by such Bank and the
Assignee; (B) such Bank and its Assignee shall have delivered to the Company
and the Administrative Agent a Notice of Assignment and Acceptance in the form
of Exhibit G-2, together with any Note subject to such assignment and (C) the
assignor Bank or Assignee has paid to the Administrative Agent a processing fee
in the amount of $3,500. Notwithstanding the foregoing, BofA shall not assign
any of its Loans or Commitment hereunder prior to the 60th day after the
Closing Date.
(b) From and after the date that the Administrative Agent notifies
the assignor Bank that it has received (and provided its consent with respect
to) an executed Assignment and Acceptance and payment of the above-referenced
processing fee, (i) the Assignee shall be a party to, and, to the extent that
rights and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, shall have the rights and obligations of a Bank
under, the Loan Documents, and (ii) the assignor Bank shall, to the extent that
rights and obligations hereunder and under the other Loan Documents have been
assigned by it pursuant to such Assignment and Acceptance, relinquish its
rights and be released from its obligations under the Loan Documents; provided,
however, that the agreements set forth in Sections 10.04 and 10.05 shall
survive any relinquishment of rights and release of obligations as provided
above.
(c) Within five Business Days after its receipt of notice by the
Administrative Agent that it has received an executed Assignment and Acceptance
and payment of the processing fee, (and provided that it consents to such
assignment in accordance with Section 10.08(a)), the Company shall execute and
deliver to the Administrative Agent, any new Notes requested by the Assignee
evidencing such Assignee's assigned Loans and Commitment and, if the assignor
Bank has retained a portion of its Loans and its Commitment, replacement Notes
in the principal amount of the Loans retained by the assignor Bank (such Notes
to be in exchange for, but not in payment of, any Notes held by such Bank).
Immediately upon each Assignee's making its processing fee payment under the
Assignment and Acceptance, this Agreement shall be deemed to be amended to the
extent, but only to the
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extent, necessary to reflect the addition of the Assignee and the resulting
adjustment of the Commitments arising therefrom. The Commitment allocated to
each Assignee shall reduce such Commitments of the assigning Bank pro tanto.
(d) Any Bank may, upon written notice to the Company given by such
Bank, at any time sell to one or more commercial banks or other Persons that
are not Affiliates of the Company (each, a "Participant") participating
interests in any Loans, the Commitment of that Bank and the other interests of
that Bank (the "originating Bank") hereunder and under the other Loan
Documents; provided, however, that (i) the originating Bank's obligations under
this Agreement shall remain unchanged, (ii) the originating Bank shall remain
solely responsible for the performance of such obligations, (iii) the Company
and the Administrative Agent shall continue to deal solely and directly with
the originating Bank in connection with the originating Bank's rights and
obligations under this Agreement and the other Loan Documents, and (iv) no Bank
shall transfer or grant any participating interest under which the Participant
shall have rights to approve any amendment to, or any consent or waiver with
respect to, this Agreement or any other Loan Document, except to the extent
such amendment, consent or waiver would require unanimous consent of the Banks
as described in clauses (a), (b) or (c) of the first proviso to Section 10.01.
In the case of any such participation, the Participant shall not be entitled to
the benefit of Section 3.01, 3.03 or 10.05 unless the Bank which granted the
participation to such Participant is so entitled. If amounts outstanding under
this Agreement are due and unpaid, or shall have been declared or shall have
become due and payable upon the occurrence of an Event of Default, each
Participant shall be deemed to have the right of set-off in respect of its
participating interest in amounts owing under this Agreement to the same extent
as if the amount of its participating interest were owing directly to it as a
Bank under this Agreement.
(e) Each Bank and the Administrative Agent agrees to take normal
and reasonable precautions and exercise due care (in the same manner as it
exercises for its own affairs) to maintain the confidentiality of all
information identified as "confidential" by the Company or any Subsidiary of
the Company and provided to it by the Company or any Subsidiary of the Company,
or by the Administrative Agent on such Company's or Subsidiary's behalf, in
connection with this Agreement or any other Loan Document; except to the extent
such information (i) was or becomes generally available to the public other
than as a result of a disclosure in violation of this Section 10.08(e) by such
Bank or the Administrative Agent, 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
such Bank or the Administrative Agent as the case may be; provided, however,
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that any Bank or the Administrative Agent may disclose such information (A) at
the request or pursuant to any requirement of any Governmental Authority to
which such Bank or the Administrative Agent is subject or in connection with an
examination of such Bank or the Administrative Agent 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 Governmental Rule; (D) in
connection with any litigation or proceeding to which the Administrative Agent,
any Bank or their respective Affiliates may be party, (E) in connection with
the exercise of any remedy hereunder or under any other Loan Document, and (F)
to such Bank's, Agent's or Affiliate's independent auditors, counsel and other
professional advisors. Prior to any disclosure permitted under clause (B)
above, such Bank or the Administrative Agent shall, if permitted by applicable
Governmental Rules or judicial order, notify the Company of such pending
disclosure, unless litigation is pending between such Bank or the
Administrative Agent and the Company or any of its Subsidiaries.
Notwithstanding the foregoing, the Company authorizes each Bank to disclose
information to (a) any Affiliate of such Bank or (b) any Participant or
Assignee (each, a "Transferee") and to any prospective Transferee, such
financial and other information in such Bank's possession concerning the
Company or its Subsidiaries which has been delivered to the Administrative
Agent or the Banks pursuant to this Agreement or which has been delivered to
the Administrative Agent or the Banks by the Company in connection with the
Banks' credit evaluation of the Company prior to entering into this Agreement;
provided that such Transferee or prospective Transferee shall acknowledge and
agree in writing to be bound by the provisions of this Section 10.08(e) by
executing and delivering to such Bank a Confidentiality Agreement substantially
in the form of Exhibit E.
(f) Notwithstanding any other provision contained in this Agreement
or any other Loan Document to the contrary, any Bank may assign all or any
portion of the Loans held by it to any Federal Reserve Bank or the United
States Treasury as collateral security pursuant to Regulation A of the Federal
Reserve Board and any Operating Circular issued by such Federal Reserve Bank;
provided that any payment in respect of such assigned Loans made by the Company
to or for the account of the assigning or pledging Bank in accordance with the
terms of this Agreement shall satisfy the Company's obligations hereunder in
respect to such assigned Loans to the extent of such payment. No such
assignment shall release the assigning Bank from its obligations hereunder.
10.09 Set-off. In addition to (and without limitation of) any right
of set-off, banker's lien, counterclaim or any other right or remedy of the
Banks provided by law, in the event that any payment Obligation is not paid in
full when due, each Bank is authorized at any time and from time to time,
without prior notice to the Company (any such notice being waived by the
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91
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 to, such Bank or any of
its Affiliates, whether in Dollars or other currency, to or for the credit or
the account of the Company against any and all Obligations owing to such Bank
or Affiliate, now or hereafter existing, irrespective of whether or not the
Administrative Agent or such Bank shall have made demand under this Agreement
or any Loan Document and although such Obligations may be contingent or
unmatured. Each Bank agrees promptly to notify the Company and the
Administrative Agent after any such set-off and application made by such Bank
or Affiliate; provided, however, that the failure to give such notice shall not
affect the validity of such set-off and application. Nothing contained in this
Section 10.09 shall require any Bank to exercise any such right or shall affect
the right of any Bank to exercise, and retain the benefits of exercising, any
such right with respect to any other indebtedness or obligation of the Company.
10.10 Automatic Debits of Fees. With respect to any structuring and
arrangement fee, administration fee, any other fee, or any other cost or
expense (including Attorney Costs) due and payable to the Administrative Agent
or BofA under the Loan Documents which has been invoiced to the Company and not
paid within 30 days of the date of such invoice, the Company hereby irrevocably
authorizes BofA to debit any deposit account of the Company with BofA in an
amount so due and payable to the Administrative Agent, BofA or BA Securities,
Inc., such that the aggregate amount debited from all such deposit accounts
does not exceed the aggregate amount of such fees or other costs or expenses.
If there are insufficient funds in such deposit accounts to cover the amount of
the fee or other cost or expense then due, such debits will be reversed (in
whole or in part, in BofA's sole discretion, as applicable) and such amount not
debited shall be deemed to be unpaid. No such debit under this Section 10.10
shall be deemed a set-off, including for the purposes of Section 10.09.
10.11 Notification of Addresses, Lending Offices, Etc. Each Bank
shall notify the Administrative Agent in writing of any changes in the address
to which notices to the Bank 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 Administrative
Agent shall reasonably request.
10.12 Counterparts. This Agreement may be executed by one or more of
the parties to this Agreement 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. A
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92
set of the copies of this Agreement signed by all the parties shall be lodged
with the Company and the Administrative Agent.
10.13 Severability. Any provision of this Agreement or the Notes
that is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of this
Agreement or the Notes, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
10.14 No Third Parties Benefitted. This Agreement is made and
entered into for the sole protection and legal benefit of the Company, the
Banks and the Administrative Agent, and their permitted successors and assigns,
and no other Person shall be a direct or indirect legal beneficiary of, or have
any direct or indirect cause of action or claim in connection with, this
Agreement or any of the other Loan Documents. Neither the Administrative Agent
nor any Bank shall have any obligation to any Person not a party to this
Agreement or other Loan Documents.
10.15 Time. Time is of the essence as to each term or provision of
this Agreement and each of the other Loan Documents.
10.16 GOVERNING LAW AND JURISDICTION.
(a) THIS AGREEMENT AND ANY NOTES SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA PROVIDED THAT
THE ADMINISTRATIVE AGENT AND THE BANKS SHALL RETAIN ALL RIGHTS ARISING UNDER
FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT
AND ANY OTHER LOAN DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE STATE OF
CALIFORNIA OR OF THE UNITED STATES FOR THE CENTRAL DISTRICT OF CALIFORNIA, AND
BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE COMPANY CONSENTS, FOR ITSELF
AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE
COURTS. THE COMPANY IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION
TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH
IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN
SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT. THE
COMPANY WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS,
WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY CALIFORNIA LAW.
10.17 WAIVER OF JURY TRIAL. THE COMPANY, THE BANKS AND THE
Administrative Agent EACH WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF
ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS
AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY, IN
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ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE
PARTIES AGAINST ANY OTHER PARTY OR PARTIES, WHETHER WITH RESPECT TO CONTRACT
CLAIMS, TORT CLAIMS, OR OTHERWISE. THE COMPANY, THE BANKS AND THE
ADMINISTRATIVE AGENT EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE
TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE
PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED
BY OPERATION OF THIS SECTION 10.17 AS TO ANY ACTION, COUNTERCLAIM OR OTHER
PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR
ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION
HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS.
10.18 Entire Agreement. This Agreement (including Exhibit D hereto),
together with the other Loan Documents and the Arranger's Fee Letter, embodies
the entire agreement and understanding among the Company, the Banks and the
Administrative Agent and supersedes all prior or contemporaneous agreements and
understandings of such Persons, verbal or written, relating to the subject
matter hereof and thereof.
10.19 Survival of Representations. Each representation and warranty
made, or deemed to be made by a notice of any extension of credit, in or
pursuant to any Loan Document shall survive the making or deemed making of such
representation and warranty, and no Bank shall be deemed to have waived, by
reason of making any extension of credit, any Default which may arise by reason
of such representation or warranty proving to have been false or misleading,
notwithstanding that such Bank or the Administrative Agent may have had notice
or knowledge or reason to believe that such representation or warranty was
false or misleading at the time such extension of credit was made.
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94
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their proper and duly authorized officers as
of the day and year first above written.
"COMPANY"
WELLPOINT HEALTH NETWORKS INC.
By: /s/ Xxx X. Xxxxxx
-----------------------------
Name: Xxx X. Xxxxxx
-----------------------------
Title: Chief Financial Officer
-----------------------------
"ADMINISTRATIVE AGENT"
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as
Administrative Agent
By: /s/ Xxxxxxxxx Xxxxx
-----------------------------
Xxxxxxxxx Xxxxx
Vice President
"BANKS"
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By: /s/ Xxxx Xxxxxxx
-----------------------------
Xxxx Xxxxxxx
Vice President
95
ANNEX I
APPLICABLE AMOUNT
Applies from Effective Date through and including June 30, 1997
(In basis points per annum)
------------------------------------------------------------------------------------------
Level Leverage Ratio Debt Rating LIBOR Base
S&P and Xxxxx'x, Rate Rate
respectively Spread Spread
------------------------------------------------------------------------------------------
Level I Less than A- or above 62.50 0
1.0 to 1 or
A3 or above
------------------------------------------------------------------------------------------
Level II Less than 1.25 BBB+ 62.50 0
to 1 and greater or
than or equal to Baa1
1.0 to 1
------------------------------------------------------------------------------------------
Level III Less than 1.5 to BBB 62.50 0
1 and greater or
than or equal to Baa2
1.25 to 1
------------------------------------------------------------------------------------------
Level IV Less than 2.0 to BBB- 70.00 0
1 and greater or
than or equal to Baa3
1.5 to 1
------------------------------------------------------------------------------------------
Level V Less than 2.5 to BB+ 87.50 0
1 and greater or
than or equal to Ba1
2.0 to 1
------------------------------------------------------------------------------------------
Level VI Greater than or Less than BB+ or 112.50 0
equal to 2.5 to Less than Ba1
1
------------------------------------------------------------------------------------------
See text following table on page following.
96
APPLICABLE AMOUNT
Applies commencing July 1, 1997
(In basis points per annum)
------------------------------------------------------------------------------------------
Level Leverage Ratio Debt Rating LIBOR Base
S&P and Moody's, Rate Rate
respectively Spread Spread
------------------------------------------------------------------------------------------
Level I Less than A- or above 150.00 0
1.0 to 1 or
A3 or above
------------------------------------------------------------------------------------------
Level II Less than 1.25 BBB+ 155.00 0
to 1 and greater or
than or equal to Baa1
1.0 to 1
------------------------------------------------------------------------------------------
Level III Less than 1.5 to BBB 162.50 0
1 and greater or
than or equal to Baa2
1.25 to 1
------------------------------------------------------------------------------------------
Level IV Less than 2.0 to BBB- 170.00 0
1 and greater or
than or equal to Baa3
1.5 to 1
------------------------------------------------------------------------------------------
Level V Less than 2.5 to BB+ 187.50 25.00
1 and greater or
than or equal to Ba1
2.0 to 1
------------------------------------------------------------------------------------------
Level VI Greater than or Less than BB+ or 212.50 50.00
equal to 2.5 to Less than Ba1
1
------------------------------------------------------------------------------------------
The Applicable Amount shall be based, at the option of the Company,
on (i) the Leverage Ratio or (ii) the Debt Rating, subject to the following:
(a) If either or both of Moody's and S&P are not providing a Debt
Rating, the Applicable Amount shall be based on the Leverage Ratio; provided in
such case that the Applicable Amount cannot be lower than Level IV (with Level
I being the lowest Level and Level VI the highest Level), even though the
Leverage Ratio would otherwise indicate a lower Level. In addition, if either
of the Debt Ratings is less than Baa3, in the
I - 2
97
case of Moody's, or less than BBB-, in the case of S&P, the Applicable Amount,
if based on the Leverage Ratio, cannot be lower than Level IV even though the
Leverage Ratio would otherwise indicate a lower Level.
(b) If a difference exists in the Debt Ratings of Moody's and S&P,
the higher of such Debt Ratings will determine the relevant Level, unless (i)
either of such Debt Ratings is less than Baa3, in the case of Moody's, or less
than BBB-, in the case of S&P, in which case the lower of such Debt Ratings
will determine the relevant Level or (ii) other than in situations governed by
clause (b)(i), if the Debt Ratings differ by more than one Level, the
Applicable Amount, if based on the Debt Rating, shall not be based on a Level
that is lower than one Level below the higher Level of the two, with Level I
being the lowest Level and Level VI the highest Level (for example, if, as of
the date of determination, the Company's Debt Rating from S&P is A- (i.e.,
Level I) and its Debt Rating from Xxxxx'x is Baa3 (i.e., Level IV), the
Applicable Amount may be based on Level III but cannot be based on Level I or
II.)
For purposes of determining the Applicable Amount:
(i) the Leverage Ratio shall be that set forth in the most recent
compliance certificate received by the Administrative Agent pursuant to Section
6.02(a) and shall be effective from the date which is five Business Days after
the date on which the Administrative Agent receives such compliance certificate
until the date five Business Days after which the Administrative Agent receives
the next such compliance certificate; provided, however, that if the
Administrative Agent does not receive a compliance certificate by the date
required by Section 6.02(a), the Applicable Amount shall, effective as of the
date required by Section 6.02(a), be based on Level VI until the date five
Business Days after which the Administrative Agent receives such compliance
certificate; and
(ii) any change in any Debt Rating that would require a change in
the Applicable Amount shall become effective five Business Days after the
earlier of (i) any public announcement of such Debt Rating change and (ii) the
Company's or the Administrative Agent's receipt of written evidence of such
Debt Rating change; provided, however, that the Debt Rating may not continue to
be based upon an "implied" rating at a particular rating level unless such
rating at such level is reconfirmed or renewed by the applicable Rating Agency
in a public announcement or in a writing received by the Administrative Agent
within one year of the issuance of such rating or of the most recent
reconfirmation or renewal of such rating.
I - 3
98
EXHIBIT A
FORM OF SUBORDINATED NOTE
$ November 21, 1996
FOR VALUE RECEIVED, WELLPOINT HEALTH NETWORKS INC. (together with any
successors permitted under the Loan Agreement referred to below, the
"Company"), hereby promises to pay to the order of ______________
__________________ (the "Bank") the principal sum of ___________
_____________________________ Dollars ($___________) or, if less, the aggregate
unpaid principal amount of all Loans made by the Bank to the Company pursuant
to that certain Subordinated Term Loan Agreement dated as of November 21, 1996
(as from time to time amended, extended, restated, modified or supplemented,
the "Loan Agreement") among WellPoint Health Networks Inc., the Banks party
thereto and Bank of America National Trust and Savings Association, as
Administrative Agent, on the dates and in the amounts provided in the Loan
Agreement. The Company further promises to pay interest on the unpaid
principal amount of the Loans from time to time at the rates, on the dates, and
otherwise as provided in the Loan Agreement.
The Bank is authorized to endorse the amount and the date on which
each Loan is made, the maturity date for, and each payment of principal with
respect to, such Loan on the schedules annexed to, and made a part of, this
Promissory Note (this "Note"), or on continuations of such schedules which
shall be attached to, and made a part of this Note; provided that any failure
to endorse such information on such schedule or continuation of such schedule
shall not in any manner affect any obligation of the Company under the Loan
Agreement and this Note.
This Note is one of the Notes referred to in, and is entitled to the
benefits of, the Loan Agreement, which Loan Agreement, among other things,
contains provisions for acceleration of the maturity of obligations under this
Note upon the happening of certain stated events and also for prepayments on
account of principal of this Note prior to the maturity of this Note upon the
terms and conditions specified in the Loan Agreement.
THIS PROMISSORY NOTE IS SUBORDINATED AND MAY BE ENFORCED ONLY IN
ACCORDANCE WITH THE TERMS OF THE LOAN AGREEMENT.
A - 1
FORM OF NOTE
99
Terms defined in the Loan Agreement are used in this Note with their
defined meanings in the Loan Agreement unless otherwise defined in this Note.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF CALIFORNIA APPLICABLE TO CONTRACTS MADE AND TO
BE PERFORMED ENTIRELY WITHIN SUCH STATE.
WELLPOINT HEALTH NETWORKS INC.
By:
-----------------------
Title:
-----------------------
A - 2
FORM OF NOTE
100
Schedule A to Note
BASE RATE LOANS AND REPAYMENT OF BASE RATE LOANS
(2) (3)
Amount Amount of
of Base (4)
(1) Base Rate Loan Notation
Date Rate Loan Repaid Made By
----------- ----------- ------------- ----------
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A - 3
FORM OF NOTE
101
Schedule B to Note
LIBOR RATE LOANS AND REPAYMENT OF LIBOR RATE LOANS
(3)
(2) Interest (4)
Amount Period Amount of
of of LIBOR (5)
(1) LIBOR LIBOR Rate Notation
Date Rate Loan Rate Loan Loan Repaid Made By
----------- ----------- ------------- ---------- -------------
----------- ----------- ------------- ---------- -------------
----------- ----------- ------------- ---------- -------------
----------- ----------- ------------- ---------- -------------
----------- ----------- ------------- ---------- -------------
----------- ----------- ------------- ---------- -------------
----------- ----------- ------------- ---------- -------------
----------- ----------- ------------- ---------- -------------
----------- ----------- ------------- ---------- -------------
----------- ----------- ------------- ---------- -------------
----------- ----------- ------------- ---------- -------------
----------- ----------- ------------- ---------- -------------
----------- ----------- ------------- ---------- -------------
----------- ----------- ------------- ---------- -------------
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A - 4
FORM OF NOTE
102
EXHIBIT B
FORM OF NOTICE OF BORROWING
TO: Bank of America National Trust
and Savings Association, as Administrative Agent
0000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Agency Administrative Services #5596
Pursuant to Section 2.03 of that certain Subordinated Term Loan
Agreement dated as of November 21, 1996 (as from time to time amended,
extended, restated, modified or supplemented, the "Loan Agreement"; capitalized
terms used herein shall have the meanings assigned to them in the Loan
Agreement), among WellPoint Health Networks Inc. (together with any successors
permitted under the Loan Agreement, the "Company"), the Banks party thereto and
Bank of America National Trust and Savings Association, as Administrative Agent
(the "Administrative Agent"), this represents the Company's request to borrow
on from the Banks, according to their respective Pro Rata Shares, $ as
[Base Rate] [LIBOR Rate] Loans. [The initial Interest period for such LIBOR
Rate is requested to be a -month period]. The proceeds of such Loans are to be
deposited in the Company's account at the Administrative Agent.
I, the undersigned Authorized Company Employee, hereby certify on
behalf of the Company that to the best of my knowledge and belief:
(a) the representations and warranties of the Company contained in the
Loan Agreement are true and correct on and as of the date hereof to the same
extent as though made on and as of the date hereof (except to the extent said
representations and warranties expressly refer to an earlier date, in which
case they shall be true as of such earlier date);
(b) no Default or Event of Default has occurred and is continuing
under the Loan Agreement or will result from the proposed borrowing;
(c) the Company's Leverage Ratio as of the fiscal quarter most
recently ended is ____; and
B - 1
NOTICE OF BORROWING
103
(d) the Company's Debt Ratings as of the date hereof and as of the
date five Business Days prior to the date hereof are:
S&P: _____
Moody's: _____
DATED: __________________
WELLPOINT HEALTH NETWORKS INC.
By __________________________
Title ________________________
B - 2
NOTICE OF BORROWING
104
EXHIBIT C
FORM OF NOTICE OF CONVERSION/CONTINUATION
TO: Bank of America National Trust
and Savings Association, as Administrative Agent
0000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Agency Administrative Services #5596
1. Conversion Selection. Pursuant to Section 2.04 of that certain
Subordinated Term Loan Agreement dated as of November 21, 1996 (as from time to
time amended, extended, restated, modified or supplemented, the "Loan
Agreement"; unless otherwise defined herein, capitalized terms used herein
shall have the meanings assigned to them in the Loan Agreement), among
WellPoint Health Networks Inc. (together with any successors permitted under
the Loan Agreement, the "Company"), the Banks party thereto and Bank of America
National Trust and Savings Association, as Administrative Agent, this
represents the Company's request to convert on __________ __, ____, $________of
existing [Base Rate] [LIBOR Rate] Loans, the final day of the current Interest
Period (if applicable) of which is __________, ____, to [LIBOR Rate] [Base
Rate] Loans, as follows:
Interest Period
(LIBOR
Dollar Amount Rate loans)
------------- ---------------
$____________ ________months
2. Continuation Selection (LIBOR Rate Loans). Pursuant to Section
2.04 of the Agreement, please continue $_______of existing LIBOR Rate Loans,
the final day of the current Interest Period of which is __________, ____, as
follows:
Requested
Dollar Amount Interest Period
------------- ---------------
$___________ ______ months
C - 1
NOTICE OF CONVERSION/CONTINUATION
105
I, the undersigned Authorized Company Employee, hereby certify on
behalf of the Company that to the best of my knowledge and belief:
(a) the representations and warranties of the Company contained in the
Loan Agreement are true and correct on and as of the date hereof to the same
extent as though made on and as of the date hereof (except to the extent such
representations and warranties expressly refer to an earlier date, in which
case, they shall be true as of such earlier date);
(b) no Default or Event of Default has occurred and is continuing
under the Loan Agreement;
(c) the Company's Leverage Ratio as of the last day of the fiscal
quarter most recently ended is ____; and
(d) the Company's Debt Ratings as of the date hereof and as of the
date five Business Days prior to the Date hereof are:
S&P: _____
Moody's: _____
WELLPOINT HEALTH NETWORKS INC.
By __________________________
Title ________________________
C - 2
NOTICE OF CONVERSION/CONTINUATION
106
EXHIBIT D
SUBORDINATION PROVISIONS
1. Agreement to Subordinate. The Company and the Junior Lenders
agree that amounts due under the Subordinated Loan Agreement are hereby
irrevocably and expressly subordinated, to the extent and in the manner set
forth herein, to the prior payment of all Senior Debt.
2. Tangible Net Equity Requirement. Notwithstanding anything to the
contrary set forth in the Subordinated Loan Agreement (including these
Subordination Provisions), at any time, no payment of amounts owing under the
Subordinated Loan Agreement shall be made if, after giving effect to such
payment and the amount of any Senior Debt then due, the Company would not have
the required tangible net equity as defined and calculated under the Xxxx-Xxxxx
Health Care Service Plan Act of 1975, as amended, and the rules and regulations
promulgated thereunder.
3. Amendment to Subordination Provisions. These Subordination
Provisions may be amended or otherwise modified without the consent of any
Senior Lender; provided, however, that no termination, rescission, amendment or
other modification of these Subordination Provisions shall be effective without
the consent of the California Department of Corporations.
4. Liquidation, Dissolution etc. Subject to Section 2, in the event
of any dissolution, winding up, liquidation or reorganization of the Company,
all Senior Debt shall first be paid in full (or such payment shall be duly
provided for) before any payment is made on amounts owing under the
Subordinated Loan Agreement.
5. Senior Debt Defaults. If the Administrative Agent is notified of
any Actionable Default other than a payment default, no payment shall be made
under the Subordinated Loan Agreement until the earlier of (a) the date such
Actionable Default is cured or waived or ceases to exist, and (b) 60 days after
such notice was given. Any default other than a payment default (whether or
not described in such notice) which existed on the date such notice was given
may not be the basis of a subsequent default notice unless all such existing
defaults have been cured or waived for 360 consecutive days after the date of
such default notice. If the Administrative Agent is given notice of any
Actionable Default which is a payment default, all such Senior Debt then due
and payable shall first be paid in full, or
D - 1
SUBORDINATION PROVISIONS
107
such payment duly provided for, before any payments under the Subordinated Loan
Agreement are made.
6. Standstill. During any period when payments are prohibited under
the Subordinated Loan Agreement as provided in Section 5, the Company shall not
make any payments under the Subordinated Loan Agreement, and the Junior Lenders
shall not solicit, demand, xxx for, or otherwise exercise their remedies with
respect to the Subordinated Loan Agreement.
7. Amendments to Senior Debt and Junior Debt. (a) Each of the
Junior Lenders and Senior Lenders may (i) extend, refinance, renew, modify or
amend the terms of indebtedness owing to them, including increasing the
principal amount thereof or the interest rate thereon, or any security or
guarantee thereof or therefor, (ii) release, sell, exchange or enforce such
security or guarantee and elect any right or remedy, (iii) assign all or a part
of such indebtedness, (iv) delay in enforcing or release any right or remedy,
and (v) otherwise deal freely with the Company and any security for such
indebtedness, all without notice to any lender and all without affecting the
liabilities and obligations of such lenders.
8. Subrogation. The Junior Lenders shall be subro- gated to the
rights of the holders of Senior Debt (to the extent of payments or
distributions previously made to such holders of Senior Debt pursuant to the
provisions of Section 6) to receive payments or distributions from or in
respect of assets of the Company applicable to such Senior Debt until amounts
owing on the Subordinated Loan Agreement shall be indefeasibly paid in full.
9. Definitions. For the purposes of these Subordination Provisions,
(i) unless otherwise specified, "Section" references are to Sections of this
Exhibit, and (ii) the following terms have the meanings set forth after each
(capitalized terms not otherwise defined in this Exhibit shall have the
meanings assigned to them in the Subordinated Loan Agreement):
"Actionable Default" means a default (after the expiration of any
applicable grace period) which permits a Senior Lender to accelerate the
maturity of any Senior Debt.
"Junior Lenders" means the Banks and their respective successors and
assigns.
"Senior Debt" means all indebtedness of Company at any time owing to
any Senior Lender, including without limitation any interest which accrues
thereon after the commencement of any bankruptcy or insolvency proceeding
with respect to
D - 2
SUBORDINATION PROVISIONS
108
Company. Except when used in Section 2, the term "Senior Debt" shall
exclude any (a) indebtedness being contested in good faith by the Company,
(b) indebtedness for borrowed money having an aggregate principal amount
outstanding of less than $30,000,000, or (c) trade credit having an
aggregate principal amount outstanding of less than $30,000,000.
"Senior Lender" means any present or future creditor of the Company.
D - 3
SUBORDINATION PROVISIONS
109
EXHIBIT E
FORM OF CONFIDENTIALITY AGREEMENT
CONFIDENTIALITY AGREEMENT
[Date]
[Name and Address of
prospective Participant
or Assignee]
Re: Subordinated Term Loan Agreement dated November 21, 1996 ("Loan
Agreement"), among Wellpoint Health Networks Inc. (together with any
successors permitted under the Loan Agreement, the "Company"), each of the
financial institutions that is a signatory to the Loan Agreement identified
under the caption "BANKS" on the signature pages of the Loan Agreement (the
"Banks") and Bank of America National Trust and Savings Association, as
administrative agent for the Banks (the "Administrative Agent"). (All
capitalized terms used but not defined in this Confidentiality Agreement
shall have the meanings assigned to them in the Loan Agreement.)
Ladies and Gentlemen:
We have agreed with the Company pursuant to Section 10.08(e) of the
Loan Agreement to use normal and reasonable precautions and exercise due care
to keep confidential, except as otherwise provided in the Loan Agreement, all
nonpublic information identified by the Company as being confidential at the
time the same is delivered to us pursuant to the Loan Agreement.
As provided in that Section 10.08(e), we are permitted to provide you,
as a prospective [Participant] [Assignee], with certain of such nonpublic
information subject to the execution and delivery by you, prior to receiving
such nonpublic information, of a Confidentiality Agreement in this form. Such
information will not be made available to you until your execution and return
to us of this Confidentiality Agreement.
Accordingly, in consideration of the foregoing, you agree to take
normal and reasonable precautions and exercise due
E - 1
CONFIDENTIALITY AGREEMENT
110
care (in the same manner as you exercise for your own affairs) to maintain the
confidentiality of all information identified as "confidential" by the Company
or any Subsidiary of the Company and provided to you by the Company or any
Subsidiary of the Company, or by the Administrative Agent on such Company's or
Subsidiary's behalf, in connection with the proposed [participation]
[assignment] mentioned above; except to the extent such information (i) was or
becomes generally available to the public other than as a result of a
disclosure in violation of this Confidentiality Agreement by you, 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 you.
Notwithstanding the foregoing paragraph, you may disclose such
information (A) at the request or pursuant to any requirement of any
Governmental Authority to which you are subject or in connection with an
examination of you by any such Governmental Authority; (B) pursuant to subpoena
or other court process; (C) when required to do so in accordance with the
provisions of any applicable Governmental Rule; (D) in connection with any
litigation or proceeding to which you may be party, (E) to your Affiliates,
independent auditors, counsel and other professional advisors. Prior to any
disclosure permitted under clause (B) above, you shall, if permitted by
applicable Governmental Rules or judicial order, notify the Company of such
pending disclosure, unless litigation is pending between you and the Company or
any of its Subsidiaries.
Very truly yours,
[Name of Bank]
The foregoing is agreed to
as of the date of this letter.
[NAME OF PROSPECTIVE
PARTICIPANT OR ASSIGNEE]
By: _____________________________
Name:
Title:
E - 2
CONFIDENTIALITY AGREEMENT
111
EXHIBIT F
FORM OF COMPLIANCE CERTIFICATE
[DATE]
Bank of America National Trust
and Savings Association, as Administrative Agent
0000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Agency Management #10831
Re: Compliance Certificate
Ladies and Gentlemen:
This Certificate is given in accordance with Section 6.02(a) of that
certain Subordinated Term Loan Agreement dated as of November 21, 1996 (as from
time to time amended, extended, restated, modified or supplemented, the "Loan
Agreement"; capitalized terms used and not otherwise defined herein shall have
the meanings assigned to them in the Loan Agreement), among WellPoint Health
Networks Inc., the Banks party thereto and Bank of America National Trust and
Savings Association, as Administrative Agent. I the undersigned Responsible
Officer hereby certify that:
(a) I am the ________________ of the Company;
(b) The Company hereby selects the [Leverage Ratio] [Debt Rating] as
the method for determining the Applicable Amount;
(c) The enclosed consolidated balance sheet, related consolidated
statement of income, shareholders' equity and cash flows and the enclosed
consolidating balance sheets and the related statements of income are
complete and correct and fairly present, in accordance with GAAP, the
financial position and the results of operations of the Company and the
Subsidiaries for the periods indicated;
(d) We have reviewed the terms of the Loan Agreement and have made
or caused to be made under our supervision, a review in reasonable detail
of the transactions and financial condition of the Company during the
accounting period covered by the enclosed financial statements;
F - 1
COMPLIANCE CERTIFICATE
112
(e) No event or condition exists which constitutes an Event of
Default or Default as of the date of this certificate except as set forth
below;
(f) The representations and warranties set forth in Article V of the
Loan Agreement are true, correct and complete in all material respects on
and as of the date of this Certificate to the same extent as though made
on and as of the date hereof (except to the extent such representations
and warranties expressly refer to an earlier date, in which case, such
representations and warranties shall be true as of such earlier date); and
(g) The Company is in compliance with all of the terms and
conditions of the Loan Agreement except as set forth below.
(h) The calculations in Attachment No. 1 to this Certificate are
true, correct and complete.
(i) Pursuant to Section 6.03(f) of the Loan Agreement, the Company's
Debt Ratings as of the date of this certificate are ____, in the case of
Moody's, and ____, in the case of S&P.
(j) Pursuant to Section 7.01(i) of the Loan Agreement, the aggregate
principal amount of Indebtedness secured by any and all purchase money
security interests on any Property acquired or held by the Company or its
Subsidiaries in the Ordinary Course of Business is $________________.
(k) Pursuant to Section 7.01(j) of the Loan Agreement, the aggregate
amount of Indebtedness secured by Liens in respect of Capital Leases on
Property subject to such Capital Leases is $_______________.
(l) Pursuant to Section 7.02(d) of the Loan Agreement, the aggregate
amount of Indebtedness of Subsidiaries of the Company (exclusive of
Indebtedness permitted under Section 7.02(e) and Contingent Obligations of
the Company and Subsidiaries of the Company in respect of such
Indebtedness) is $_______________.
(m) Pursuant to Section 7.04(h) of the Loan Agreement, the net book
value in the aggregate of all dispositions of Property during the current
fiscal year is __% of the Company's Total Assets as shown on its
consolidated balance sheet for the previous fiscal year.
F - 2
COMPLIANCE CERTIFICATE
113
(n) Pursuant to Section 7.08 of the Loan Agreement, the Company's
Leverage Ratio is _________.
(o) Pursuant to Section 7.09 of the Loan Agreement, the Company's
Fixed Charge Ratio is __________.
(p) Pursuant to Section 7.10 of the Loan Agreement, the Company's
Net Worth is $____________.
(q) Pursuant to Section 7.12(j) of the Loan Agreement, the aggregate
outstanding amount of Investments is $_______________.
Described below (or in a separate attachment hereto) are the
exceptions, if any, to paragraphs (d) and (f), listing in detail, the
nature of the conditions or event, the period during which it has existed
and the action which the Company has taken, is taking or proposes to take
with respect to each such condition or event:
--------------------------------------------------------------------------
--------------------------------------------------------------------------
--------------------------------------------------------------------------
--------------------------------------------------------------------------
--------------------------------------------------------------------------
--------------------------------------------------------------------------
The foregoing certifications are made and delivered this ____ day of
_______________, ____.
WELLPOINT HEALTH NETWORKS INC.
By:
------------------------------
Title:
------------------------------
F - 3
COMPLIANCE CERTIFICATE
114
ATTACHMENT NO. 1
TO COMPLIANCE CERTIFICATE
(This attachment is as of [ ] and (in the case of the
Fixed Charge Coverage Ratio and the Leverage Ratio set forth below) pertains to
the four-quarter period from [ ] (the "Period"; the last day of the
Period is referred to herein as the "Period End Date"). Financial covenant
information is provided for only those covenants which are required to be tested
as of the Period End Date.) All amounts are as of the Period End Date except as
noted.
Capitalized terms used herein without definition shall have the
meanings set forth in the Subordinated Term Loan Agreement dated as of November
21, 1996 (such agreement, as it may be amended, supplemented, restated or
otherwise modified from time to time, the "Loan Agreement") by and among
WellPoint Health Networks Inc., the Banks party thereto and Bank of America
National Trust and Savings Association, as Administrative Agent. Section
references are to the sections of the Loan Agreement.
FIXED CHARGE COVERAGE RATIO
1. Consolidated after-tax net income
(exclusive of extraordinary gains
and losses) of the Company and its
Subsidiaries: $
--------------
2. Interest Expense:
Related to Indebtedness $--------------
Related to Swap Contracts $--------------
Total $
--------------
3. Depreciation: $
--------------
4. Amortization: $
--------------
5. After-tax non-cash Restructuring
charges (up to $35,000,000): $
--------------
6. After-tax Recapitalization,
and Mirus Acquisition Restructuring
charges (up to $40,000,000): $
--------------
7. Operating Lease expense: $
--------------
8. Dividends: $
--------------
F - 4
COMPLIANCE CERTIFICATE
115
9. Unfinanced Capital Expenditures: $
--------------
10. Cash Flow Total:
Lines 1 + 2 + 3 + 4 + 5 + 6 + 7 - 8 - 9 = $
--------------
11. Scheduled principal payments
of Indebtedness (other than
the Mass Mutual Note): $
--------------
12. Fixed Charges Total:
Lines 2 + 7 + 11 = $
--------------
13. Fixed Charge Coverage:
Ratio (Line 10 # Line 12) = to 1.00
-----
14. Minimum Fixed Charge Coverage:
For the period from Closing Date
through December 31, 1996 3:00 to 1.00
Thereafter 3.50 to 1.00
LEVERAGE RATIO
1. Indebtedness: $
--------------
2. Operating Lease expense,
multiplied by eight: $
--------------
3. Contingent Obligations re
Funded Debt of Others: $
--------------
4. Funded Debt Total:
Lines: 1 + 2 + 3 = $
--------------
5. Consolidated pre-tax net income
(exclusive of extraordinary gains
or losses) of the Company and its
Subsidiaries: $
--------------
6. Interest Expense: $
--------------
7. Amortization: $
--------------
8. Depreciation: $
--------------
9. Operating Lease expense: $
--------------
F - 5
COMPLIANCE CERTIFICATE
116
10. Pre-tax non-cash Restructuring
charges (up to $50,000,000): $
--------------
11. After-tax Recapitalization,
and Mirus Acquisition Restructuring
charges (up to $65,000,000): $
--------------
12. EBITDAR:
Lines 5 + 6 + 7 + 8 + 9 + 10 + 11 = $
--------------
13. Acquired EBITDAR: $
--------------
14. Leverage Ratio:
Line 4 # (Lines 12 + 13) = to 1.00
-----
15. Maximum Leverage Ratio:
For the period from Closing
Date through December 31, 1996: 2.75 to 1.00
For the period from January 1,
1997 through December 31, 1997: 2.25 to 1.00
Thereafter: 2.00 to 1.00
MINIMUM NET WORTH
1. Capital Stock: $
--------------
2. Treasury Shares: $
--------------
3. Additional Paid In Capital: $
--------------
4. Surplus and Retained Earnings: $
--------------
5. Net Worth:
Lines 1 - 2 + 3 +/- 4 = $
--------------
6. Fifty Percent of Net Income from
and after March 31, 1996: $
--------------
7. Total Required Minimum Net Worth:
Line 6 + $570,000,000 = $
--------------
F - 6
COMPLIANCE CERTIFICATE
117
DISPOSITIONS OF ASSETS
1. Total Assets for previous fiscal year: $
--------------
2. Permitted disposition amount Line 1 # 10 = $
--------------
3. Net book value of dispositions
of Property during current fiscal year: $
--------------
F - 7
COMPLIANCE CERTIFICATE
118
EXHIBIT G-1
[Form of Assignment and Acceptance Agreement]
ASSIGNMENT AND ACCEPTANCE AGREEMENT
This ASSIGNMENT AND ACCEPTANCE AGREEMENT (this "Agreement") dated as of
______________, _____ is made between (the "Assignor")
and (the "Assignee").
RECITALS
WHEREAS, the Assignor is party to that certain Subordinated Term Loan
Agreement dated as of November 21, 1996 among WELLPOINT HEALTH NETWORKS INC.
(together with any successors permitted under the Loan Agreement, the
"Company"), the banks parties thereto (including the Assignor, the "Banks") and
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Administrative Agent
(as from time to time amended, modified or supplemented, the "Loan Agreement").
Any terms defined in the Loan Agreement and not defined in this Agreement are
used herein as defined in the Loan Agreement;
WHEREAS, as provided under the Loan Agreement, the Assignor has committed
to make Loans to the Company in an aggregate amount not to exceed $
(the "Commitment");
WHEREAS, [the Assignor has made Loans in the aggregate principal amount of
$ to the Company] [no Loans are outstanding under
the Loan Agreement]; and
WHEREAS, the Assignor wishes to assign to the Assignee [part of the] [all]
rights and obligations of the Assignor under the Loan Agreement in respect of
its Commitment, [together with a corresponding portion of each of its
outstanding Loans,] in an amount equal to $ (the
"Assigned Amount") on the terms and subject to the conditions set forth herein,
and the Assignee wishes to accept assignment of such rights and to assume such
obligations from the Assignor on such terms and subject to such conditions;
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained in this Agreement, the parties to this Agreement agree as
follows:
X-0 - 0
XXXXXXXXXX XXX XXXXXXXXXX XXXXXXXXX
000
0. Assignment and Acceptance.
(a) Subject to the terms and conditions of this Agreement, (i) the
Assignor hereby sells, transfers and assigns to the Assignee, without
recourse, and (ii) the Assignee hereby purchases, assumes and undertakes
from the Assignor, without recourse and without representation or warranty
(except as provided in this Agreement) ___% (the "Assignee's Percentage
Share") of (A) the Commitment [and the Loans] of the Assignor and (B) all
related rights, benefits, obligations, liabilities and indemnities of the
Assignor under and in connection with the Loan Agreement and the Loan
Documents.
[If appropriate, add paragraph specifying payment to Assignor by
Assignee of outstanding principal of, accrued interest on, Loans
assigned.]
(b) With effect on and after the Effective Date (as defined in this
Agreement), the Assignee shall be a party to the Loan Agreement and
succeed to all of the rights and be obligated to perform all of the
obligations of a Bank under the Loan Agreement, including the requirements
concerning confidentiality, with a Commitment in an amount equal to the
Assigned Amount. The Assignee agrees that it will perform in accordance
with their terms all of the obligations which by the terms of the Loan
Agreement are required to be performed by it as a Bank. It is the intent
of the parties hereto that the Commitment of the Assignor shall, as of the
Effective Date, be reduced by an amount equal to the Assigned Amount and
the Assignor shall relinquish its rights and be released from its
obligations under the Loan Agreement to the extent such obligations have
been assumed by the Assignee.
(c) After giving effect to the assignment and assumption, on the
Effective Date the Assignee's Commitment will be $________.
2. Payments.
(a) As consideration for the sale, assignment and transfer
contemplated in Section 1, the Assignee shall pay to the Assignor on the
Effective Date in immediately available funds an amount equal to $
, representing the Assignee's Percentage Share of the principal
amount of all Loans previously made, and currently owed, by the Company to
the Assignor under the Loan Agreement and outstanding on the Effective
Date.
X-0 - 0
XXXXXXXXXX XXX XXXXXXXXXX XXXXXXXXX
000
(x) The [Assignor] [Assignee] further agrees to pay to the
Administrative Agent a processing fee in the amount specified in Section
10.08(a) of the Loan Agreement.
3. Reallocation of Payments.
Any interest and other payments accrued to the Effective Date with
respect to the Loans and the Commitment shall be for the account of the
Assignor. Any interest and other payments accrued on and after the Effective
Date with respect to the Assigned Amount shall be for the account of the
Assignee. Each of the Assignor and the Assignee agrees that it will hold in
trust for the other party any interest and other amounts which it may receive
to which the other party is entitled pursuant to the preceding sentence and pay
to the other party any such amounts which it may receive promptly upon receipt.
4. Independent Credit Decision.
The Assignee (a) acknowledges that it has received a copy of the Loan
Agreement and the Schedules and Exhibits to the Loan Agreement, together with
copies of the financial statements referred to in Section 4.01 of the Loan
Agreement, and such other documents and information as it has deemed
appropriate to make its own credit and legal analysis and decision to enter
into this Agreement; and (b) agrees that it will, independently and without
reliance upon the Assignor, the Administrative Agent, the Arranger or any other
Bank and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit and legal decisions in taking or
not taking action under the Loan Agreement.
5. Effective Date; Notices.
(a) As between the Assignor and the Assignee, the effective date for
this Agreement shall be _____________, ____ (the "Effective Date");
provided that the following conditions precedent have been satisfied on or
before the Effective Date:
(i) this Agreement shall be executed and delivered by the
Assignor and the Assignee;
(ii) the consent of the Company and the Administrative Agent
required for an effective assignment of the Assigned Amount by the
Assignor to the Assignee under Section 10.08 of the Loan Agreement
(if applicable) shall have been duly obtained and shall be in full
force and effect as of the Effective Date;
X-0 - 0
XXXXXXXXXX XXX XXXXXXXXXX XXXXXXXXX
000
(xxx) the Assignee shall pay to the Assignor all amounts due to
the Assignor under this Agreement;
(iv) the Assignee shall have complied with Section 10.08 of the
Loan Agreement (if applicable); and
(v) the processing fee referred to in Section 2(b) of this
Agreement and in Section 10.08 of the Loan Agreement shall have been
paid to the Administrative Agent.
(b) Promptly following the execution of this Agreement, the Assignor
shall deliver to the Company and the Administrative Agent for
acknowledgement by the Administrative Agent, a Notice of Assignment and
Acceptance substantially in the form attached to the Loan Agreement as
Exhibit G-2.
6. Administrative Agent.
(a) The Assignee hereby irrevocably appoints and authorizes the
Administrative Agent to take such action as agent on its behalf and to
exercise such powers under the Loan Agreement as are delegated to the
Administrative Agent by the Banks pursuant to the terms of the Loan
Agreement.
[INCLUDE ONLY IF ASSIGNOR IS ADMINISTRATIVE AGENT]
(b) The Assignee shall assume no duties or obligations held by the
Assignor in its capacity as Administrative Agent under the Loan Agreement.
7. Withholding Tax.
The Assignee agrees to comply with Section 3.01(f) of the Loan
Agreement (if applicable).
8. Representations and Warranties.
(a) The Assignor represents and warrants that (i) it is the legal
and beneficial owner of the interest being assigned by it hereunder and
that such interest is free and clear of any lien, security interest or
other adverse claim; (ii) it is duly organized and existing and it has the
full power and authority to take, and has taken, all action necessary to
execute and deliver this Agreement and any other documents required or
permitted to be executed or delivered by it in connection with this
Agreement and to fulfill its obligations hereunder; (iii) no notices to,
or consents, authorizations or approvals of, any person are required
(other than any already given or obtained) for its due execution, delivery
and
G-1 - 4
ASSIGNMENT AND ACCEPTANCE AGREEMENT
122
performance of this Agreement, and apart from any agreements or
undertaking or filings required by the Loan Agreement, no further action
by, or notice to, or filing with, any person is required of it for such
execution, delivery or performance; and (iv) this Agreement has been duly
executed and delivered by it and constitutes the legal, valid and binding
obligation of the Assignor, enforceable against the Assignor in accordance
with its terms, subject, as to enforcement, to bankruptcy, insolvency,
moratorium, reorganization and other laws of general application relating
to or affecting creditors' rights and to general equitable principles.
(b) The Assignor makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or
representations made in or in connection with the Loan Agreement or the
execution, legality, validity, enforceability, genuineness, sufficiency or
value of the Loan Agreement or any other instrument or document furnished
pursuant to the Loan Agreement. The Assignor makes no representation or
warranty in connection with, and assumes no responsibility with respect
to, the solvency, financial condition or statements of the Company, or the
performance or observance by the Company, of any of its respective
obligations under the Loan Agreement or any other instrument or document
furnished in connection with the Loan Agreement.
(c) The Assignee represents and warrants that (i) it is duly
organized and existing and it has full power and authority to take, and
has taken, all action necessary to execute and deliver this Agreement and
any other documents required or permitted to be executed or delivered by
it in connection with this Agreement, and to fulfill its obligations under
this Agreement; (ii) no notices to, or consents, authorizations or
approvals of, any person are required (other than any already given or
obtained) for its due execution, delivery and performance of this
Agreement; and apart from any agreements or undertaking or filings
required by the Loan Agreement, no further action by, or notice to, or
filing with, any person is required of it for such execution, delivery or
performance; (iii) this Agreement has been duly executed and delivered by
it and constitutes the legal, valid and binding obligation of the
Assignee, enforceable against the Assignee in accordance with its terms,
subject, as to enforcement, to bankruptcy, insolvency, moratorium,
reorganization and other laws of general application relating to or
affecting creditors' rights and to general equitable principles; and (iv)
it is an Eligible Assignee.
G-1 - 5
ASSIGNMENT AND ACCEPTANCE AGREEMENT
123
9. Further Assurances.
The Assignor and the Assignee each hereby agrees to execute and
deliver such other instruments, and take such other action, as either party may
reasonably request in connection with the transactions contemplated by this
Agreement, including the delivery of any notices or other documents or
instruments to the Company or the Administrative Agent, which may be required
in connection with the assignment and assumption contemplated by this
Agreement.
10. Miscellaneous.
(a) Any amendment or waiver of any provision of this Agreement shall
be in writing signed by the parties to this Agreement. No failure or
delay by either party to this Agreement in exercising any right, power or
privilege hereunder shall operate as a waiver of this Agreement and any
waiver of any breach of the provisions of this Agreement shall be without
prejudice to any rights with respect to any other or further breach of
this Agreement.
(b) All payments made under this Agreement shall be made without any
set-off or counterclaim.
(c) The Assignor and the Assignee shall each pay its own costs and
expenses incurred in connection with the negotiation, preparation,
execution and performance of this Agreement.
(d) This Agreement may be executed in any number of counterparts and
all of such counterparts taken together shall be deemed to constitute one
and the same instrument.
(e) THIS AGREEMENT AND ANY NOTES SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED IN THE STATE OF CALIFORNIA; PROVIDED
THAT THE ASSIGNOR AND THE ASSIGNEE SHALL RETAIN ALL RIGHTS ARISING UNDER
FEDERAL LAW.
(f) THE ASSIGNOR AND THE ASSIGNEE EACH WAIVE THEIR RESPECTIVE RIGHTS
TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING
OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR
OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY
OTHER PARTY OR PARTIES, WHETHER WITH RESPECT TO CONTRACT CLAIMS, OR
OTHERWISE. THE ASSIGNOR AND THE ASSIGNEE EACH AGREE THAT ANY SUCH CLAIM
OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY.
WITHOUT LIMITING THE
G-1 - 6
ASSIGNMENT AND ACCEPTANCE AGREEMENT
124
FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A
TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION 10(f) AS TO ANY
ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART,
TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER
LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL
APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS
TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
[Other provisions to be added as may be negotiated between the
Assignor and the Assignee, provided that such provisions are not
inconsistent with the Loan Agreement.]
IN WITNESS WHEREOF, the Assignor and the Assignee have caused this
Assignment and Acceptance Agreement to be executed and delivered by their duly
authorized officers as of the date first above written.
ASSIGNOR:
------------------------------------------
By:
--------------------------------------
Title:
Address:
ASSIGNEE:
------------------------------------------
By:
--------------------------------------
Title:
G-1 - 7
ASSIGNMENT AND ACCEPTANCE AGREEMENT
125
EXHIBIT G-2
FORM OF NOTICE OF ASSIGNMENT AND ACCEPTANCE
,
-------------- ------
TO: Bank of America National Trust
and Savings Association, as Administrative Agent
0000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Agency Management #10831
Reference is made to the Subordinated Term Loan Agreement dated as of
November 21, 1996 (as from time to time amended, extended, restated, modified
or supplemented, the "Loan Agreement"; capitalized terms used and not otherwise
defined herein shall have the meanings assigned to them in the Loan Agreement)
among WellPoint Health Networks Inc., the Banks party thereto and Bank of
America National Trust and Savings Association, as Administrative Agent,
1. We hereby give you notice of, and request your consent to, the
assignment by (the "Assignor") to (the "Assignee") of
% of the right, title and interest of the Assignor in and to the Loan
Agreement, including without limitation the right, title and interest of the
Assignor in and to the Commitment of the Assignor, and all outstanding Loans
made by the Assignor. Before giving effect to such assignment:
(a) the aggregate amount of the Assignor's Commitment is
$ ; and
(b) the aggregate principal amount of its outstanding Loans is
$ .
2. The Assignee hereby represents and warrants that it has complied
with the requirements of Section 10.08(a) of the Loan Agreement in connection
with this assignment.
3. The Assignee agrees that, upon receiving your consent to such
assignment and from and after , the Assignee will be bound by the
terms of the Loan Agreement, with respect to the interest in the Loan Agreement
assigned to it as specified above, as fully and to the same extent as if the
Assignee were the Bank originally holding such interest in the Loan Agreement.
5. The following administrative details apply to the Assignee:
G-2 - 1
NOTICE OF ASSIGNMENT AND ACCEPTANCE
126
(a) LIBOR Lending Office:
Assignee name:
----------------------------
Address:
----------------------------
Attention:
----------------------------
Telephone: ( )
----------------------------
Facsimile: ( )
----------------------------
Telex (Answerback):
-----------------------
(b) Domestic Lending Office:
Assignee name:
----------------------------
Address:
----------------------------
----------------------------
----------------------------
Attention:
----------------------------
Telephone: ( )
----------------------------
Facsimile: ( )
----------------------------
Telex (Answerback):
-----------------------
(c) Notice Address:
Assignee name:
----------------------------
Attention:
----------------------------
Telephone: ( )
----------------------------
Facsimile: ( )
----------------------------
Telex (Answerback):
-----------------------
(d) Payment Instructions:
Account No.:
----------------------------
At:
----------------------------
ABA No.:
----------------------------
Ref.:
Attention:
G-2 - 2
NOTICE OF ASSIGNMENT AND ACCEPTANCE
127
IN WITNESS WHEREOF, the Assignor and the Assignee have caused this Notice
of Assignment and Acceptance to be executed by their respective duly authorized
officials, officers or agents as of the date first above mentioned.
Very truly yours,
[Name of Assignor]
By:
-------------------------------------
Title:
[Name of Assignee]
By:
-------------------------------------
Title:
WE HEREBY CONSENT TO THE
FOREGOING ASSIGNMENT:
WELLPOINT HEALTH NETWORKS INC.
By:
--------------------------------
Title:
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Administrative Agent
By:
--------------------------------
Vice President
G-2 - 3
NOTICE OF ASSIGNMENT AND ACCEPTANCE
128
EXHIBIT H-1
November 21, 1996
To the Banks party to the
Loan Agreement referred to
below, and Bank of America National
Trust and Savings Association, as
Administrative Agent
Re: WellPoint Health Networks Inc.
Ladies and Gentlemen:
This opinion letter is furnished to you pursuant to Section
4.01(d)(i) of the Subordinated Term Loan Agreement dated as of November 21,
1996 (the "Loan Agreement") among WellPoint Health Networks Inc. as borrower
(the "Company"), each of the financial institutions party to the Loan
Agreement, and Bank of America National Trust and Savings Association, as
Administrative Agent. We have acted as counsel for the Company in connection
with the Loan Agreement. Unless otherwise defined herein, terms used herein
shall have the meanings assigned to them in the Loan Agreement.
In connection with this opinion letter, we have examined
originals, or copies certified or otherwise identified to our satisfaction, of
such documents, corporate records, certificates, including certificates of
public officials, and other instruments as we have deemed necessary or
advisable for purposes of this opinion letter, including those relating to the
authorization, execution and delivery of the Loan Agreement. In addition, we
have examined the following documents (the items referred to in subclauses (1)
and (2) below herein referred to as the "Transaction Documents"):
(1) an executed copy of the Loan Agreement;
(2) the form of the Notes to be delivered by the Company
pursuant to the Loan Agreement;
(3) the Articles of Incorporation and the Bylaws of the
Company, each as in effect on the date hereof;
(4) an executed copy of the certificate of the Secretary
of the Company dated November 21, 1996, certifying: (a) a true copy
of the resolutions of the Board of Directors of the Company, adopted
on October 9, 1996, authorizing,
129
November 21, 1996
Page 2.
among other things, the execution, delivery and performance of the
Transaction Documents, and (b) the incumbency, authority and true
signatures of the officers of the Company authorized to sign the
Transaction Documents, and any other documents and certificates
delivered in connection therewith;
(5) an executed copy of the certificate (the "Officer's
Certificate") of the Chief Financial Officer and the Senior Vice
President and General Counsel of the Company, dated November 21, 1996;
and
(6) such other documents as we have deemed necessary or
appropriate as a basis for the opinions hereinafter expressed.
We have also examined photostatic copies of the agreements
(the "Material Agreements") identified in Exhibit A attached to this opinion
letter. In our examination and review we have assumed the genuineness of all
signatures, the legal capacity of natural persons, the authenticity of the
documents submitted to us as originals, the conformity to the original
documents of all documents submitted to us as certified or photostatic copies,
and the authenticity of the originals of such copies. As to any facts material
to the opinions hereinafter expressed which we did not independently establish
or verify, we have relied without investigation upon certificates, statements
and representations of representatives of the Company. We have also assumed
that each Bank has filed any required California state franchise, income or
similar tax returns and has paid any such required state franchise, income or
similar taxes. Regarding documents executed by parties other than the Company,
we have assumed (i) that each such other party had the power to enter into and
perform all its obligations thereunder, (ii) the due authorization of, and the
due execution and delivery of, such documents by each such party, and (iii)
that such documents constitute the legal, valid and binding obligations of each
such party.
With respect to our opinion in paragraph 1 below, we are
relying solely on our review and examination of the certificates received from
the Secretary of State of California without further investigation of the
corporate records of the Company.
Based upon and subject to the foregoing, and subject to the
further assumptions, limitations, qualifications and exceptions set forth
herein, we are of the opinion that:
1. The Company is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of
California.
2. The Company has the corporate power and authority to
execute and deliver the Transaction Documents and perform its obligations
thereunder, and has
130
November 21, 1996
Page 3.
taken all necessary corporate action to authorize the execution, delivery and
performance of the Transaction Documents.
3. No consents, approvals or authorizations of, or
notices to or filings with, any governmental authority or agency under the laws
of the State of California or the laws of the United States, as presently in
effect and interpreted, are required or necessary on the part of the Company in
connection with the execution, delivery and performance by the Company of the
Transaction Documents, except for the approval of the Loan Agreement by the
California Department of Corporations (the "DOC Approval") and such other
consents, approvals and authorizations as have been obtained and are in effect.
4. The Loan Agreement is, and the Notes when duly
executed and delivered pursuant to the Loan Agreement will be, the legal, valid
and binding obligations of the Company, enforceable against the Company in
accordance with their respective terms.
5. The execution and delivery by the Company of the
Transaction Documents will not (i) violate or be in conflict with any provision
of the Articles of Incorporation or Bylaws of the Company, (ii) violate or be
in conflict with any federal or California law which, to our knowledge, is
applicable to the Company, as presently in effect and interpreted, (iii)
violate or contravene any judgment, decree, injunction or order of any federal
or California court, or any arbitrator or governmental agency or authority,
having jurisdiction over the Company or its properties or by which the Company
may be bound, of which we have knowledge, or (iv) constitute a material breach
of, or result in a material default under, any term or provision of any of the
Material Agreements.
6. To our knowledge, the Company is not an "investment
company" within the meaning of the Investment Company Act of 1940, as amended.
7. To our knowledge, there are no pending or threatened
actions, suits, proceedings or investigations against the Company or any
Subsidiary of the Company in any court or by or before any arbitrator or
Governmental Authority which, if determined adversely to the Company, would be
likely to have a material adverse effect on the Company, except for the matters
described in the Prospectus.
8. The extension of credit under the Loan Agreement does
not violate the provisions of Regulations U or X of the Board of Governors of
the Federal Reserve System.
Whenever a statement herein is qualified by the expressions
"known to us," "to our knowledge," "we are not aware" or a similar phrase with
respect to our knowledge
131
November 21, 1996
Page 4.
of matters of fact, it is intended to mean that our knowledge is based upon the
records, documents, instruments and certificates described above and the
current actual knowledge of the attorneys in this Firm who have devoted
substantive attention to the transactions contemplated by the Transaction
Documents who are presently involved in substantive legal representation of the
Company (but not including any constructive or imputed notice of any
information) and that we have not otherwise undertaken any independent
investigations for the purpose of rendering this opinion.
This opinion is limited to the laws of the State of California
and applicable federal laws of the United States, and we express no opinion
herein with respect to the effect or applicability of the laws of other
jurisdictions.
Our opinions in paragraph 3 above and in clause (ii) of
paragraph 5 above, in each case as they relate to the Transaction Documents,
are limited to laws and regulations normally applicable to transactions of the
type contemplated in the Transaction Documents and do not extend to licenses,
permits and approvals necessary for the conduct of the Company's business. In
addition and without limiting the previous sentence, we express no opinion
herein with respect to the DOC Approval or the effect of any land use,
environmental or similar law, any state or federal antitrust law, state or
federal securities laws, state or federal tax laws or any local law. Further,
we express no opinion as to compliance or noncompliance by any Bank with any
federal, state or other law (i) requiring such Bank to be licensed as a bank,
finance company or other type of financial institution, (ii) pertaining to
matters regulating the assets held by any Bank on the basis of portfolio
requirements or any Bank's capitalization, such as loan limits and capital
adequacy requirements, and (iii) otherwise applicable to any Bank and relating
to its legal or regulatory status or the nature of its business.
The opinions set forth above are subject to the following
qualifications, assumptions, limitations and exceptions:
(a) The validity, binding nature and enforceability of
the Company's obligations under the Transaction Documents may be subject to or
limited by (i) bankruptcy, insolvency, reorganization, arrangement, moratorium,
fraudulent transfer and other similar laws affecting the rights of creditors
generally; (ii) general principles of equity (whether relief is sought in a
proceeding at law or in equity), including, without limitation, concepts of
materiality, reasonableness, good faith and fair dealing, and the discretion of
any court of competent jurisdiction in awarding specific performance or
injunctive relief and other equitable remedies; and (iii), without limiting the
generality of the foregoing, the effect of California court decisions and
statutes which indicate that provisions of the Transaction Documents which
permit any Bank or any other Person to take action or make determinations may
be subject to a requirement that such action be taken or such determinations be
made on a reasonable basis in good faith or that it be
132
November 21, 1996
Page 5.
shown that such action is reasonably necessary for the protection of the Banks
or such other Person.
(b) We express no opinion as to:
(1) the enforceability of provisions of the
Transaction Documents pursuant to which the Company agrees to make payments
without set-off, defense or counterclaim;
(2) provisions purporting to require the award or
payment of attorneys' fees, expenses or costs in any action where the Banks are
not the prevailing party, or the impact of California Civil Code Section 1717
et seq. on any such provisions;
(3) under certain circumstances, provisions to
the effect that rights or remedies are not exclusive, that every right or
remedy is cumulative and may be exercised in addition to or with any other
right or remedy, that the election of some particular remedy or remedies does
not preclude recourse to one or another remedy or that failure to exercise or
delay in exercising rights or remedies will not operate as a waiver of any such
right or remedy;
(4) provisions prohibiting waivers of any terms
or provisions of any of the Transaction Documents other than in writing, or
prohibiting oral modifications thereof or modification by course of dealing to
the extent such provisions are inconsistent with applicable law;
(5) the enforceability under certain
circumstances of provisions indemnifying a party against, or requiring
contributions toward, that party's liability for its own wrongful or negligent
acts or where such indemnification or contribution is contrary to public policy
or prohibited by law;
(6) any provision providing for the exclusive
jurisdiction of a particular court or purporting to waive rights to trial by
jury, service of process or objections to the laying of venue or to forum on
the basis of forum non conveniens, in connection with any litigation arising
out of or pertaining to the Transaction Documents;
(7) provisions providing for an increase in the
rate of interest or imposing a late charge or penalty in the event of
delinquency or default;
(8) provisions purporting to waive statutory or
common law rights, including the right to receive notice or to be allowed to
cure, reinstate or redeem in the event of default, and provisions expressly or
by implication waiving broadly or vaguely stated rights, unknown future rights
and defenses to obligations, in each case to the extent such rights or defenses
are not waivable under applicable law; and
133
November 21, 1996
Page 6.
(9) provisions authorizing any Bank to set off
and apply any deposits at any time held, and any other indebtedness at any time
owing, by such Bank to or for the account of the Company.
(c) Our opinion expressed in Paragraph 8 above assumes
the accuracy of Section 5.08 of the Loan Agreement and that the proceeds of the
Loans will be used in compliance with Sections 6.10 and 7.07 of the Loan
Agreement.
(d) Our opinions are subject to the effect of judicial
decisions which may permit the introduction of extrinsic evidence to interpret
the terms of written contracts.
(e) Insofar as this opinion letter concerns the law of
the State of California limiting the rates of interest legally chargeable or
collectible, we have relied upon our understanding that the Lender is a
subsidiary of a bank holding company or is a bank organized under the laws of
the United States or any State thereof and, as a result thereof, is exempt from
the restrictions of Section 1 of Article XV of the Constitution of the State of
California relating to rates of interest upon the loan of money. We further
assume in this regard that all Loans have been and will be made by the Lender
for its own account and without intent to circumvent otherwise applicable
interest rate limitations under California law and that there is no present
express or implied agreement or plan to sell participations or any other
interest in the Loans or the Loan Agreement to any Person other than a Person
that also qualifies for an exemption from the interest rate limitations of
California law.
(f) We wish to point out that each Bank, as holder of a
Note, may be required to prove the outstanding amount thereof.
The opinions expressed herein are solely for your benefit and
for the benefit of your successors and assigns pursuant to the Loan Agreement,
and such opinions may not be relied on in any manner or for any purpose by any
other Person. In addition, this opinion is rendered as of the date hereof and
speaks only to the original Bank, and it shall not be deemed to have been
updated to any date upon which any such other Person may rely hereon. Further,
we do not undertake to advise you or such other Person of matters which occur
subsequent to the date hereof and which affect the opinions expressed herein.
Very truly yours,
XXXXXXX, XXXXXXX & XXXXXXXX LLP
134
EXHIBIT A
(Material Agreements)
1. Purchase and Sale Agreement dated as of January 5, 1996 by and between
the Company and Massachusetts Mutual Life Insurance Company ("MMLIC").
2. Series A Senior Term Note due March 31, 1999 in the principal amount
of $62,000,000 made by the Company in favor of MMLIC.
3. Guaranty by the Company of all financial obligations and liabilities
of American Managing Company related to administrative services
provided to Affiliated Health Plans, Inc. ("AHP").
4. Guaranty by the Company of all financial obligations and liabilities
of AHP up to and including 100% of the authorized reserves necessary
for AHP to comply with financial standard requirements of Texas
Insurance Code.
5. Credit Agreement dated as of May 15, 1996 among the Company and the
other parties named therein, as amended by that certain Amendment No.
1 dated as of June 28, 1996, providing a revolving credit facility in
the maximum amount of $1.25 billion.
6. Assumption Agreement dated as of May 20, 1996 made by the Company in
favor of Bank of America National Trust and Savings Association, as a
Bank and as administrative and bid agent, NationsBank of Texas, N.A.,
as syndication agent, Chemical Bank, as documentation agent, and the
other parties named therein.
135
EXHIBIT H-2
November 21, 1996
To the Banks party to the
Credit Agreement referred to
below and Bank of America National
Trust and Savings Association, as
Administrative Agent
Ladies and Gentlemen:
I am the General Counsel of WellPoint Health Networks, Inc., a California
corporation (the "Company"), and in such capacity I am delivering this opinion
letter in connection with the transactions contemplated by the Subordinated Term
Loan Agreement dated as of November 21, 1996 (the "Credit Agreement") between
each of the financial institutions that are a signatory to the Credit Agreement
identified under the caption "BANKS" on the signature pages of the Credit
Agreement or that pursuant to Section 10.08, shall become a "Bank" under the
Credit Agreement (the "Banks"), and Bank of America National Trust and Savings
Association, in its capacity as the Administrative Agent. All capitalized terms
used herein and not otherwise defined have the same meanings ascribed to such
terms in the Credit Agreement.
In rendering the opinion expressed below, I have examined (a) the Credit
Agreement and the Notes (collectively, the "Loan Documents") and (b) such
corporate records of the Company and such other documents as I have deemed
necessary as a basis for the opinions expressed below. In my examination, I have
assumed the genuineness of all signatures, the authenticity of documents
submitted to me as original and the conformity with authentic original documents
of all documents submitted to me as copies. In addition, I have made inquiry of
other attorneys in the legal department of the Company as to their knowledge of
the matters addressed below in this opinion letter.
Based upon and subject to the foregoing and having considered such
questions of law as I have deemed necessary as a basis for the opinion expressed
below, I am of the opinion that:
1. There are no pending or, to my knowledge, expressly threatened actions,
suits, proceedings or investigations against the Company or any of its
Subsidiaries in any court or by or before any arbitrator or Governmental
Authority, except for the matters set forth in the Prospectus or except as which
would not have a Material Adverse Effect.
136
Bank of America National Trust
and Savings Association, et al.
November 21, 1996
Page 2
2. To my knowledge, the Company has not received any written notice or
correspondence (i) relating to the loss or threatened loss by the Company or any
of its Subsidiaries of any material operating permit, license or certification
by any HMO Regulator or (ii) asserting that the Company or any of its
Subsidiaries is not in substantial compliance with any HMO Regulation or
threatening the taking of any action against the Company or any of its
Subsidiaries under any HMO Regulation, except where such noncompliance or the
taking of such action, if adversely determined, would not have a Material
Adverse Effect.
I am admitted to practice law in the State of California. This opinion is
limited to the effects on the matters covered herein of the present laws of the
State of California, the United States of America and, for the limited purpose
of the statements in Paragraph 1 regarding the existence of actions, suits,
proceedings or investigations and the statements in Paragraph 2 regarding the
receipt of written notice or correspondence, the relevant laws of the other
jurisdictions in which the Company or any of its Subsidiaries currently conducts
business. I assume no responsibility as to the applicability thereto, or the
effect thereon, of the laws of any other jurisdiction. I assume no obligation to
revise or supplement this opinion in the event of a future change in the law or
interpretations thereof and disclaim any undertaking or obligation to update
this opinion in respect of changes or circumstances or events that occur
subsequent to this date.
Whenever my opinion herein with respect to the existence or absence of
facts is stated to be based upon my knowledge, it is intended to signify that no
information has come to my attention that would give me actual knowledge of the
existence or absence of such facts. However, except to the extent expressly set
forth herein, I have not undertaken any independent investigation to determine
the existence or absence of such facts, and no inference as to my knowledge of
the existence or absence of such facts should be drawn from my participation in
the referenced transactions.
This opinion letter is provided to you by me in my capacity as the General
Counsel of the Company pursuant to Section 4.01(d)(ii) of the Credit Agreement
and may not be relied upon by any other person or for any purpose other than in
connection with the transactions contemplated by the Loan Documents without my
prior written consent in each instance.
Very truly yours,
Xxxxxx X. Xxxxxx
General Counsel
