EXHIBIT 10.8
CREDIT AGREEMENT
THIS CREDIT AGREEMENT is dated as of December 22, 1998, and is by and between
LTCAMERICA HOLDING, INC., a Minnesota corporation (the 'Borrower") and NORWEST
BANK MINNESOTA, NATIONAL ASSOCIATION, a national banking association with
offices in Minneapolis, Minnesota (the "Bank").
RECITALS:
WHEREAS, the Borrower has requested the Bank to lend it up to the sum of FIFTEEN
MILLION AND NO/100 DOLLARS ($15,000,000.00), on a committed, revolving basis
(the "Revolving Line"); and
WHEREAS, the Bank is willing to extend such credit to Borrower upon the terms
and conditions herein set forth;
NOW, THEREFORE, in consideration of the premises herein contained, and each
intending to be legally bound hereby, the parties agree as follows:
SECTION 1 Definitions
In addition to the terms used in the above Recitals, as used herein:
"Advance" means a borrowing hereunder consisting of the aggregate amount
outstanding under the Revolving Line of the same Interest Period.
"Agreement" shall mean this Credit Agreement and all amendments and supplements
hereto which may from time to time become effective hereafter in accordance with
the terms of this Agreement.
"Base Rate" shall mean the "base" or "prime" rate of interest as announced by
the Bank from time to time.
"Banking Day" shall mean any day other than a Saturday or Sunday on which banks
in Minneapolis are generally open for the conduct of substantially all of their
commercial lending activities and, with respect to LIBOR Advances, shall be a
day on which dealings in U.S. dollars are carried on in the London interbank
market.
"Borrowed Money" shall mean funds obtained by incurring contractual indebtedness
and shall not include trade accounts payable.
"Borrowing Date" means a date on which an Advance is made hereunder.
"Contingent Obligation" of a person means any agreement, undertaking or
arrangement by which such person assumes, guarantees, endorses, contingently
agrees to purchase or provide funds for the payment of, or otherwise becomes or
is contingently liable upon, the obligation or liability of any other person.
"Default" shall mean an Event of Default as referred to in Section 6 hereof, or
an event which with notice or lapse of time or both would become an Event of
Default,
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Generally Accepted Accounting Principles" or "GAAP" shall mean generally
accepted accounting principles applied on a basis consistent with those
reflected in the financial statements referred to in Section 4 hereof.
"Guarantor" shall mean Allianz Life Insurance Company of North America, Inc.
"Guaranty" shall mean the guaranty of the Guarantor in the form of Exhibit B.
"Indebtedness" of a person means such person's (i) obligations for borrowed
money, (ii) obligations representing the deferred purchase price of property or
services (other than accounts payable arising in the ordinary course of such
person's business payable on terms customary in the trade), (iii) obligations,
whether or not assumed, secured by Liens or payable out of the proceeds or
production from property now or hereafter owned or acquired by such person, (iv)
obligations which are evidenced by notes, acceptances, or other instruments, (v)
capitalized lease obligations, (vi) net liabilities under interest rate swap,
exchange or cap agreements, (vii) contingent obligations and (viii) obligations
for which such person is obligated pursuant to a letter of credit.
"Interest Period" means a LIBOR Interest Period.
"LIBOR Advance" means an Advance which bears interest at a LIBOR Rate.
"LIBOR Base Rate" means the rate determined by the Bank to be the rate at which
dollar deposits are offered to major banks in the London interbank market two
Banking Days prior to the first day of such LIBOR Interest Period, having a
maturity approximately equal to such LIBOR Interest Period.
"LIBOR Interest Period" means, with respect to a LIBOR Advance, a period of one,
two, or three months commencing on a Banking Day selected by the Borrower
pursuant to this Agreement. Such LIBOR Interest Period shall end on (but
exclude) the day which corresponds numerically to such date one, two or three
months thereafter, provided, however, that if there is no such numerically
corresponding day in such next, second or third succeeding month, such LIBOR
Interest Period shall end on the last Banking, Day of such next, second or third
succeeding month. If a LIBOR Interest Period would otherwise end on a day which
is not a Banking Day, such LIBOR Interest Period shall end on the next
succeeding Banking Day, provided, however, that if said next succeeding Banking
Day falls in a new calendar month, such LIBOR Interest Period shall end on the
immediately preceding Banking Day.
"LIBOR Rate" means, with respect to a LIBOR Advance for the relevant LIBOR
Interest Period, the sum of (i) the quotient of (a) the LIBOR Base Rate
applicable to such LIBOR Interest Period, divided by (b) one minus the Reserve
Requirement (expressed as a decimal) applicable to such LIBOR Interest Period,
plus (ii) 0.75% per annum.
"Material Adverse Effect" means a material adverse effect on (i) the business,
Property, condition (financial or otherwise), results of operations, or
prospects of the Borrower and its Subsidiaries taken as a whole, (ii) the
ability of the Borrower to perform its obligations under the Loan Documents, or
(iii) the validity or enforceability of any of the Loan Documents or the rights
or remedies of the Bank thereunder.
"NAIC" shall mean the National Association Of Insurance Commissioners or any
successor thereto, or in lieu thereof, any other association, agency or other
organization performing advisory, coordination or other like functions among
insurance departments, insurance commissions and similar governmental
authorities of the various states of the United States of America toward the
promotion of uniformity in the practices of such governmental authorities.
"Net Worth" shall mean, as of the date of any determination thereof, the sum of
the stockholders equity of the Borrower (including paid-in-capital and any
preferred stock to the extent included in stockholders equity in accordance with
GAAP, but net of treasury shares) plus (or minus in the case of a deficit) the
retained earnings of the Borrower determined in accordance with GAAP.
"Note" shall mean the Revolving Note.
"Reserve Requirement" means, with respect to a LIBOR Interest Period, the
maximum aggregate reserve requirement (including all basic, supplemental,
marginal and other reserves) which is imposed under Regulation D on new
non-personal time deposits of $100,000 or more with a maturity equal to that of
such Eurocurrency liabilities (in the case of LIBOR Advances).
"Revolving Line Commitment" shall mean $15,000,000.00, subject to reduction
pursuant to Section 2.7 hereof.
"Revolving Line Termination Date" shall mean five years from the date of this
Agreement.
"Revolving Note" shall mean the promissory note of the Borrower in the form of
Exhibit A, evidencing borrowings under Section 2.1 hereof.
"Subordinated Indebtedness" of a Person means any Indebtedness of such Person
the payment of which is subordinated to payment of the indebtedness hereunder to
the written satisfaction of the Bank.
SECTION 2 Borrowings and Conditions of Lending
2.1 Revolving Line Commitment. The Bank agrees to lend to the Borrower from time
to time from the effective date hereof until the Revolving Line Termination
Date, sums not to exceed in the aggregate principal amount at any one time
outstanding the amount of the Revolving Line Commitment. Within the limits of
the Revolving Line Commitment and subject to the terms and conditions hereof,
prior to the Revolving Line Termination Date the Borrower may borrow, prepay and
reborrow pursuant to this Section 2. 1.
2.2 Advances and Selection of Interest Periods. Prior to each Advance, which
shall be in minimum amounts of $100,000.00, the Borrower shall select the
Interest Period applicable to such Advance, by giving irrevocable notice not
later than 2:00 p.m., Minneapolis time, at least three Banking Days before the
Borrowing Date. Such notice shall specify:
(i) the Borrowing Date, which shall be a Banking Day,
(ii) the amount of such Advance, and
(iii) the applicable Interest Period.
2.3 Continuation of Outstanding Advances. Advances for a particular LIBOR
Interest Period shall continue as such until the end of the then applicable
Interest Period, at which time such LIBOR Advance
shall automatically renew for the same length of Interest Period unless the
Borrower has given the Bank notice otherwise. The Borrower may elect from time
to time to convert all or any part of an Advance of any Interest Period to a
different Interest Period, provided that such conversion shall be made only on
the last day of the applicable Interest Period. The Borrower shall give the Bank
irrevocable notice of such conversion not later than 2:00 p.m., Minneapolis
time, at least three Banking Days before the end of the applicable Interest
Period. Such notice shall specify:
(i) the date of such conversion, which shall be a Banking Day,
(ii) the amount to be converted, and
(iii) the applicable Interest Period.
2.4 Termination of Interest Periods. No Interest Period with respect to amounts
outstanding under the Revolving Line may end after the Revolving Line
Termination Date.
2.5 Interest Rates. All advances shall bear interest at the LIBOR Rate, except
that upon the occurrence of any Default, all Advances shall bear interest at a
rate 2.0% in excess of the otherwise applicable LIBOR Rate until the end of the
then current Interest Period and then at the Base Rate until such Default is
cured.
2.6 Interest Payment Dates. Interest accrued on each Advance shall be payable on
the last day of the applicable Interest Period, on any date on which the Advance
is prepaid, and at maturity. All interest and fees under this Agreement shall be
calculated on the basis of actual days elapsed in a year of 360 days.
2.7 Principal Reduction and Pavments. Notwithstanding any other provisions of
this Agreement, if the Revolving Line Commitment is not fully funded as of
December 31, 2000, the Revolving Line Commitment shall be reduced to such funded
amount effective January 1, 2001. Thereafter, the Revolving Line Commitment
shall reduce by $500,000 on the last day of each calendar quarter commencing
March 31, 2001 through December 31, 2001 and by $1,625,000 on the last day of
each calendar quarter commencing March 31, 2002. On each such reduction date the
Borrower shall repay such principal amount as may be necessary to reduce the
principal outstanding to the new maximum.
2.8 Optional Principal Payments. The Borrower may at any time, prepay the Note
in whole or in part on the last day of the applicable Interest Period without
premium or penalty. If any amount is prepaid on a date other than at the end of
an Interest Period, then such prepayment shall be accompanied by a premium equal
to the interest that would have been recoverable by the Bank by reinvesting the
amount of principal prepaid from the prepayment date to the last day of the
applicable Interest Period in U.S. Government Securities having a maturity date
on or about that date.
2.9 Method of Payment. All sums payable to the Bank hereunder shall be paid
directly to the Bank in immediately available funds. The Bank shall send the
Borrower statements of all amounts due hereunder, which statements shall be
considered correct and conclusively binding on the Borrower unless the Borrower
notifies the Bank to the contrary within thirty days of its receipt of any
statement which it deems to be incorrect. Alternatively, at its sole discretion,
the Bank may charge against any deposit account of the Borrower all or any part
of any amount due hereunder.
2.10 Fees. The Borrower shall pay to the Bank a one-time origination fee with
respect to the Revolving Line equal to 0. 10 % per annum of the Revolving Line
Commitment, payable on the date of this Agreement. In addition, the Borrower
shall pay to the Bank an annual facility fee with respect to the
Revolving Line equal to 0.10% per annum of the unused portion of the Revolving
Line Commitment, payable in arrears on the last day of each quarter commencing
March 31, 1999.
2.11 Unavailabilitv of LIBOR Rate. If prior to commencement of any LIBOR
Interest Period the Bank shall determine that (i) deposits in the amount of the
Advance scheduled to be outstanding are not available to the Bank in the London
interbank market, or (ii) by reason of circumstances affecting the London
interbank market, adequate and reasonable means do not exist for ascertaining
the LIBOR Rate, or (iii) the LIBOR Rate does not accurately reflect the cost to
the Bank of making or continuing such loan, or (iv) that any applicable law or
regulation makes it unlawful to make or maintain the loan if bearing interest
based on the LIBOR Rate, then the Bank shall promptly give notice thereof to the
Borrower, and the obligation of the Bank to make, or continue the Advance based
on the LIBOR Rate shall terminate until deposits in such account shall again be
readily available in the London interbank market, adequate and reasonable means
shall exist for ascertaining the LIBOR Rate, the LIBOR Rate shall adequately
reflect the cost to the Bank of making or continuing any such Loan and such
illegality shall no longer exist. In such case all Advances shall bear interest
at a rate based on the Base Rate plus or minus such margin as will result in an
overall rate equivalent to the LIBOR Rate.
2.12 Yield Protection. If any law or any governmental or quasi-governmental
rule, regulation, policy, guideline or directive (whether or not having the
force of law), or any interpretation thereof, or the compliance of any Lender
therewith,
(i) subjects the Bank to any tax, duty, charge or withholding on or
from payments due from the Borrower (excluding federal taxation of the overall
net income of the Bank), or changes the basis of taxation of payments to the
Bank in respect of its Loans or other amounts due it hereunder, or
(ii) imposes or increases or deems applicable any reserve, assessment,
insurance charge, special deposit or similar requirement against assets of,
deposits with or for the account of, or credit extended by, the Bank (other than
reserves and assessments taken into account in determining the interest rate
applicable to LIBOR Advances), or
(iii) imposes any other condition the result of which is to increase
the cost to the Bank of making, funding or maintaining loans or reduces any
amount receivable by the Bank in connection with loans, or requires the Bank to
make any payment calculated by reference to the amount of loans held or interest
received by it, by an amount deemed material by the Bank,
then, within 15 days of demand by the Bank, the Borrower shall pay the Bank that
portion of such increased expense incurred or reduction in an amount received
which the Bank determines is attributable to making, funding and maintaining its
Loans and its Commitment.
SECTION 3 Conditions Precedent
The obligation of the Bank to make any advance hereunder is subject to the
following conditions precedent:
3.1 The Borrower shall have delivered to the Bank, prior to the disbursement of
the Loan (the "Closing") the following:
A. The Revolving Note in the form of Exhibit A;
B. A certified copy of resolutions of the Borrower's board of directors
authorizing the execution, delivery and performance of this Agreement, the Note,
and each other document to be delivered pursuant hereto and certifying as to the
incumbency and signatures of the officers of the Borrower signing this
Agreement, the Note, and each other document to be delivered pursuant hereto;
C. A copy, certified as of the most recent date practicable, by the Secretary of
State of Minnesota, of the Borrower's certificate of incorporation;
D. The Guaranty of the Guarantor in the form of Exhibit B;
E. A certified copy of resolutions of the Guarantor's board of directors
authorizing the execution, delivery and performance of the Guaranty and
certifying as to the incumbency and signatures of the officers of the Borrower
signing the Guaranty;
F. A copy, certified as of the most recent date practicable, by the Secretary of
State of Minnesota, of the Guarantor's Articles of Incorporation;
G. Payment of all fees required under Sections 2. 1 0 and 8.4 hereof.
3.2 At the time of the Closing and of any subsequent request for an advance:
A. No Event of Default shall have occurred and be continuing, and no event shall
have occurred and be continuing that, with the giving of notice or passage of
time or both, would be an Event of Default; and
B. No change shall have occurred which has a Material Adverse Effect since the
date of this Agreement.
3.3 At the time of the Closing and each subsequent disbursement, all legal
matters incidental thereto shall be satisfactory to the Bank's legal counsel.
SECTION 4 Representations and Warranties
To induce the Bank to enter into this Agreement, the Borrower represents and
warrants to the Bank as follows:
4.1 The Borrower is a corporation duly organized, existing and in good standing
under the laws of the State of Minnesota.
4.2 The Borrower is duly qualified to do business and is in good standing in any
additional jurisdictions where, on advice of legal counsel, registration was
deemed necessary.
4.3 The execution, delivery and performance of this Agreement, and the issuance
of the Note by the Borrower are within its corporate powers, have been duly
authorized, and are not in contravention of law, or the terms of Borrower's
Articles of Incorporation or By-Laws or of any undertaking to which the Borrower
is a party or by which it is bound.
4.4 This Agreement is, and the Note when issued will be, valid and binding in
accordance with their terms.
4.5 No consent, approval or authorization of or declaration or filing with any
governmental authority on the part of the Borrower is required in connection
with the execution and delivery of this Agreement or the borrowings by the
Borrower hereunder or on the part of the Borrower in connection with the
consummation of any transaction contemplated herebv.
4.6 No litigation or governmental proceeding is pending, or, to the knowledge of
the officers of the Borrower, threatened against the Borrower which could have a
material adverse effect on the Borrower's financial condition or business.
4.7 The Borrower is in compliance in all material respects with ERISA and has
received no notice to the contrary from any governmental body.
4.8 The Borrower is not in default with respect to any of its existing
Indebtedness.
SECTION 5 Covenants
During the term of this Agreement, unless the Bank shall otherwise consent in
writing:
5.1 Financial Reporting. The Borrower will maintain a system of accounting
established and administered in accordance with generally accepted accounting
principles, and furnish to the Bank:
(i) Within 90 days after the close of each of its fiscal years, an unqualified
(except for qualifications relating to changes in accounting principles or
practices reflecting changes in generally accepted principles of accounting and
required or approved by the Borrower's independent certified public accountants)
audit report of the Borrower certified by independent certified public
accountants, acceptable to the Bank, prepared in accordance with GAAP, including
balance sheets as of the end of such period, related profit and loss and
reconciliation of surplus statements, and a statement of cash flows, accompanied
by any management letter prepared by said accountants.
(ii) Within 90 days after the close of each of its fiscal years, an unqualified
(except for qualifications relating to changes in accounting principles or
practices reflecting changes in generally accepted principles of accounting and
required or approved by the Borrower's independent certified public accountants)
audit report of the Guarantor certified by independent certified public
accountants, acceptable to the Bank, prepared in accordance with GAAP, including
balance sheets as of the end of such period, related profit and loss and
reconciliation of surplus statements, and a statement of cash flows, accompanied
by any management letter prepared by said accountants.
(iii) Within 45 days after the close of the first three quarterly periods of
each of its fiscal years, unaudited balance sheets of the Borrower as at the
close of each such period and profit and loss and reconciliation of surplus
statements and a statement of cash flows for the period from the beginning of
such fiscal year to the end of such quarter, all certified by its chief
financial officer.
(iv) Within 45 days after the close of the first three quarterly periods of each
of its fiscal years, unaudited balance sheets of the Guarantor as at the close
of each such period and profit and loss and reconciliation of surplus statements
and a statement of cash flows for the period from the beginning of such fiscal
year to the end of such quarter, all certified by its chief financial officer.
(v) Together with the quarterly financial statements required hereunder, a
compliance certificate in substantially the form of Exhibit "C" hereto signed by
the chief financial officer of the Borrower
showing the calculations necessary to determine compliance with this Agreement
and stating that no Default exists, or if any Default exists, stating the nature
and status thereof.
(vi) Such other information (including non-financial information) as the Bank
may from time to time reasonably request.
5.2 Use of Proceeds. Proceeds of the Revolving Line shall be used for working
capital purposes and refinancing thereof, including acquisitions.
5.3 Notice of Default. The Borrower will give prompt notice in writing to the
Bank of the occurrence of any Default and of any other development, financial or
otherwise, which could have a Material Adverse Effect.
5.4 Conduct of Business. The Borrower will carry on and conduct its business in
substantially the same manner and in substantially the same fields of enterprise
as it is presently conducted and to do all things necessary to remain duly
incorporated, validly existing and in good standing as a domestic corporation in
its jurisdiction of incorporation and maintain all requisite authority to
conduct its business in each jurisdiction in which its business is conducted.
5.5 Taxes. The Borrower will pay when due all taxes, assessments and
governmental charges and levies upon it or its income, profits or property,
except those which are being contested in good faith by appropriate proceedings
and with respect to which adequate reserves have been set aside.
5.6 Insurance. The Borrower will maintain with financially sound and reputable
insurance companies insurance on all of its property in such amounts and
covering such risks as is consistent with sound business practice, and the
Borrower will furnish to the Bank upon request full information as to the
insurance carried.
5.7 CompIiance with Laws. The Borrower will comply with all laws, rules,
regulations, orders, writs, judgments, injunctions, decrees or awards to which
it may be subject.
5.8 Inspection. The Borrower will permit the Bank, and its representatives and
agents, to inspect any of the Property, corporate books and financial records of
the Borrower and each Subsidiary, to examine and make, copies of the books of
accounts and other financial records of the Borrower and each subsidiary, and to
discuss the affairs, finances and accounts of the Borrower and each Subsidiary
with, and to be advised as to the same by, their respective officers at such
reasonable times and intervals as the Bank may designate.
5.9 Indebtedness. The Borrower will not create, incur, or suffer to exist any
Indebtedness other than Indebtedness outstanding as of the date of this
agreement and listed on Schedule 1 hereto.
5.10 Merger. The Borrower will not merge or consolidate with or into any other
person, except that a subsidiary may merge with the Borrower or a wholly-owned
subsidiary.
5.11 Invested Assets. The Borrower will maintain 100% of its invested assets in
instruments having a rating from Xxxxx'x Investors Service or Standard & Poors
Ratings Group of investment grade or higher.
5.12 Guaranties. The Borrower will not, nor will it permit any subsidiary to,
make or suffer to exist any Contingent Obligations, except in favor of the
Guarantor with respect to the Guarantor's payment of the Borrower's obligations
under this Agreement and the Note.
5.13 Liens. The Borrower will not create, incur, or suffer to exist any Lien in,
of or on the property of the Borrower, except:
(i) Liens for taxes, assessments or governmental charges or levies on its
property if the same shall not at the time be delinquent or thereafter can be
paid without penalty, or are being contested in good faith and by appropriate
proceedings.
(ii) Liens imposed by law and liens arising in the ordinary course of business
which secure payment of obligations which are being contested in good faith by
appropriate proceedings and for which adequate reserves shall have been set
aside on its books.
(iii) Liens arising out of pledges or deposits under worker's compensation laws,
unemployment insurance, old age pensions, or other social security or retirement
benefits, or similar legislation.
(iv) Utility easements, building restrictions and such other encumbrances or
charges against real property as are of a nature generally existing with respect
to properties of a similar character and which do not in any material way affect
the marketability of the same or interfere with the use thereof in the business
of the Borrower or its subsidiaries.
(v) Liens in favor of the Guarantor to secure the Contingent Obligations to the
Guarantor as described in Section 5.12.
(vi) Liens existing on the date hereof and disclosed to the Bank in writing
(vii) Liens evidenced by mortgages on real estate and improvements thereto given
to secure Indebtedness representing the price of acquisition of real property
and improvements thereto, and all Liens given upon the renewal, extension or
refunding of such Indebtedness.
5.14 Affiliates. The Borrower will not, and will not permit any subsidiary to,
enter into any transaction (including, without limitation, the purchase or sale
of any property or service) with, or make any payment or transfer to, any
affiliate except in the ordinary course of business and pursuant to the
reasonable requirements of the Borrower's or such subsidiary's business and upon
fair and reasonable terms no less favorable to the Borrower or such subsidiary
than the Borrower or such subsidiary would obtain in a comparable arms-length
transaction.
5.15 Reinsurance Agreement. The Borrower shall maintain a written commitment
from the Guarantor to reinsure not less than 25% of Borrower's insurance
subsidiary's annual written premiums each Year.
5.16 Marketing Agreement. The Borrower shall maintain a written agreement with
Life USA Insurance Company granting the Borrower access to the national
marketing organization and agent structure of Life USA Insurance Company for
distribution of the Borrower's and its subsidiary's insurance products.
5.17 Minimum Net Worth. The Borrower will maintain at the end of each fiscal
quarter a Net Worth of not less than $4,000,000 for each quarter through
December 31, 1999 and not less than $5,000,000 for each quarter thereafter.
5.18 Risk Adjusted Capital. The Borrower will not permit its ratio of its
insurance subsidiary's total adjusted capital to its authorized control level
risk-based capital, as at the end of any fiscal quarter, to be less than 200%.
The terms "total adjusted capital' and "authorized control level risk-based
capital" shall have the same meanings as in the Annual Statement of the Borrower
completed in accordance with the NAIC annual statement instructions and
accounting practices and procedures manuals.
SECTION 6 Events of Default
6.1 Upon the occurrence of any of the following events of default:
A. Default in any payment of principal on the Note when due, or default in the
payment of interest on the Note when due and continuance thereof for five days;
or
B. Default in the observance or performance of any other agreement of the
Borrower or any Subsidiary or Guarantor herein set forth or in any other
agreement between the Bank and the Borrower or such Subsidiary and continuance
thereof for 30 days following written notice from the Bank; or
C. Default by the Borrower or any Subsidiary in the payment of any other
Indebtedness or in the observance or performance of any term, covenant or
agreement of the Borrower or such Subsidiary in any agreement relating to any
Indebtedness of the Borrower or such Subsidiary, the effect of which default is
to permit the holder of such Indebtedness to declare the same due prior to the
date fixed for its payment under the terms thereof; or
D. Final judgment or judgments for the payment of money aggregating in excess of
$500,000 is or are outstanding against the Borrower or against any property or
assets of it and any one of such judgments has remained unpaid, unvacated,
unbonded or unstayed by appeal or otherwise for a period of 60 days from the
date of its entry; or
E. Any representation or warranty made by the Borrower herein, or by the
Guarantor under the Guaranty, or in any statement or certificate furnished by
the Borrower hereunder, is untrue in any material respect; or
F. The occurrence of a Material Adverse Change with respect to the Borrower; or
G. Guarantor's debt obligations are rated at "AA" or worse by Standard & Poors
Ratings Group or "A2" or worse by Xxxxx'x Investors Service, or Guarantor's
rating by A.M. Best is worse than "A" and Guarantor fails, within 10 Banking
Days after written notice from the Bank, to pledge investment grade marketable
securities to the Bank to secure Guarantor's obligations to the Bank under its
Guaranty, which pledge shall continue only until the earlier of (i) the date on
which the obligations of the Borrower under this Agreement and the Revolving
Note are paid in full, or (ii) the Guarantor's debt obligations rating by
Xxxxx'x Investors Service is "Al" or better.
then, or at any time thereafter, unless such event of default is remedied, the
Bank or the holder of the Note may, by notice in writing to the Borrower,
declare the Revolving Line to be terminated or the Note to be due and payable,
or both, whereupon the Revolving Line shall immediately terminate or the Note
shall immediately become due and payable, or both, as the case may be, subject
to the provisions of Section 6.3.
6.2 Upon the occurrence of any of the following events of default:
The Borrower or any subsidiary becomes insolvent or bankrupt, or makes an
appointment for the benefit of creditors or consents to the appointment of a
custodian, trustee or receiver for itself or for the greater part of its
properties; or a custodian, trustee or receiver is appointed for the Borrower or
any subsidiary, or for the greater part of its properties without its consent
and is not discharged within 60 days; or bankruptcy, reorganization or
liquidation proceedings are instituted by or against the Borrower or any
subsidiary and, if instituted against it, are consented to by it or remain
undismissed for 60 days;
then the Revolving Line shall immediately terminate and the Note shall
automatically become immediately due and payable, without notice, subject to the
provisions of Section 6.3 hereof.
6.3 Upon the occurrence and during the continuance of any Event of Default
hereunder, the Bank shall provide written notice thereof to the Guarantor.
Within 10 Banking Days after receipt of such notice, the Guarantor may, but
shall not be required to, notify the Bank of its intent to purchase the
obligations of the Borrower to the Bank under this Agreement and the Revolving
Note from the Bank, without recourse. Prior to the expiration of such 10 Banking
Days period, the Bank agrees that it will not exercise any other right or remedy
under this Agreement, the Revolving Note, the Guaranty or any related document.
The Guarantor's purchase of such obligations of the Borrower shall occur within
30 calendar days of the Guarantor's notice to the Bank of its intent to purchase
such obligations, and during such period, the Bank shall not be entitled to
exercise any other right or remedy under this Agreement, the Revolving Note, the
Guaranty or any related document. Upon receipt by the Bank of payment of all
amounts owed to it under this Agreement and the Revolving Note, the Bank shall
assign this Agreement, the Revolving Note, and each related document to the
Guarantor, pursuant to agreements and instruments reasonably requested by the
Guarantor, whereupon the Guaranty shall be terminated and of no @er force or
effect.
SECTION 7 Change in Control.
7.1 Change of Control. In the event the Borrower has knowledge of a Change of
Control or an impending Change of Control, the Borrower will give written notice
(a "Control Change Notice") of such fact to the Bank at least 60 days prior to
any proposed Change of Control Date; provided, however, that if the Borrower
shall not then have knowledge of such fact, such Control Change Notice shall be
delivered promptly upon receipt of such knowledge, but in no event later than
three business days after the Change of Control Date. The Control Change Notice
shall (i) describe the facts and circumstances of such Change of Control
(including the Change of Control Date or proposed Change of Control Date) in
reasonable detail and (ii) make reference to this Section 7.1 and the right of
the Bank- to reduce or terminate the Commitment on the terms and conditions
provided for herein.
Upon the receipt of such Control Change Notice or, if no Control Change Notice
is given, upon receipt of actual knowledge of a Change of Control, the Bank
shall have the right, upon written notice (the "Declaration Notice") delivered
to the Borrower by the Bank of reducing or terminating the Commitment, which
reduction or termination shall be effective five Business Days following the
delivery of such written notice. Such Declaration Notice shall be served, if at
all, prior to 90 days after receipt of such Control Change Notice. In the event
that no Control Change Notice shall be given, such Declaration Notice may be
served at any time after the occurrence of the Change of Control in question.
As used herein, the term "Change of Control" shall mean Life USA Holding, Inc.
or Allianz Life Insurance Company of North America, Inc. ceasing to beneficially
own, directly or indirectly, a majority
of the outstanding capital stock of the Borrower. As used herein, the term
"Change of Control Date' shall mean any date upon which a Change of Control
shall occur.
SECTION 8 Miscellaneous
8.1 The provisions of this Agreement shall be in addition to those of any note
or other evidence of liability held by the Bank, all of which shall be construed
as complementary to each other. Nothing herein contained shall prevent the Bank
from enforcing any or all other notes or other agreements in accordance with
their respective terms.
8.2 From time to time, the Borrower will execute and deliver to the Bank such
additional documents and will provide such additional information as the Bank
may reasonably require to carry out the terms of this Agreement and be informed
of the Borrower's status and affairs.
8.3 The Bank shall have the right at all times to enforce the provisions of this
Agreement in strict accordance with the terms hereof and thereof,
notwithstanding any conduct or custom on the part of the Bank in refraining from
so doing at any time or times. The failure of the Bank at any time or times to
enforce its rights under such provisions, strictly in accordance with the same,
shall not be construed as having created a custom in any way or manner contrary
to specific provisions of this Agreement or as having in any way or manner
modified or waived the same. All rights and remedies of the Bank are cumulative
and concurrent and the exercise of one right or remedy shall not be deemed a
waiver or release of any other right or remedy.
8.4 The Borrower will pay all expenses, including the reasonable fees and
expenses of legal counsel for the Bank, incurred in connection with the
preparation, administration, amendment, modification or enforcement of this
Agreement and the collection or attempted collection of the Note; provided that
the obligation to reimburse fees and expenses of legal counsel for the Bank
related to the preparation of this Agreement and related documents shall not
exceed $2,500.00.
8.5 Any notices or consents required or permitted by this Agreement shall be in
writing and shall be deemed delivered if delivered in person or if sent by
certified mail, postage prepaid, return receipt requested, or telegraph, as
follows. unless such address is changed by written notice hereunder:
A. If to the Borrower: LTCAmerica Holding, Inc.
000 Xxxxx Xxxxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxx Xxxxx
With a copy to: Allianz Life Insurance Company
of North America, Inc.
0000 Xxxxxxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxx
X. If to the Bank: Norwest Bank Minnesota, N.A.
Xxxxx Xxxxxx xxx Xxxxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Financial Institutions Division
8.6 The substantive laws of the State of Minnesota shall govern the construction
of this Agreement and the rights and remedies of the parties hereto.
8.7 This Agreement shall inure to the benefit of, and shall be binding upon, the
respective successors and permitted assigns of the parties hereto. The Borrower
has no right to assign any of its rights or obligations hereunder without the
prior written consent of the Bank. This Agreement, and the documents executed
and delivered pursuant hereto, constitute the entire agreement between the
parties, and may be amended only by a writing signed on behalf of each party.
8.8 If any provision of this Agreement shall be held invalid under any
applicable laws, such invalidity shall not affect any other provision of this
Agreement that can be given effect without the invalid provision, and, to this
end, the provisions hereof are severable.
8.9 All representations, warranties, covenants and agreements of the Borrower
hereunder shall survive the making of the Loan.
8.10 Whenever any installment of the interest on the Note becomes due and
payable on a day which is not a Banking Day, the maturity or due date thereof
shall be extended to the next succeeding Banking Day and, in the case of
principal of the Note, interest shall be payable thereon at the rate per annum
specified in the Note during such extension.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the day and year first above written.
LTCAMERICA HOLDING, INC.
By: /s/ Xxxxxxx X. Xxxxx
--------------------
Its CFO
NORWEST BANK MINNESOTA.
NATIONAL ASSOCIATION
By: /s/ Xxxxx X. Xxxxx
------------------
Its Vice President
