EXHIBIT 10.14
$300,000,000
CREDIT AGREEMENT
dated as of
February 12, 1997
among
Trigon Healthcare, Inc.,
The Banks Party Hereto
and
Xxxxxx Guaranty Trust Company of New York,
as Agent
TABLE OF CONTENTS
Page
ARTICLE 1
DEFINITIONS
1.1. Definitions.................................................................... 1
1.2. Accounting Terms and Determinations............................................ 15
1.3. Types of Borrowings............................................................ 16
ARTICLE 2
THE CREDITS
2.1. Commitments to Lend............................................................ 16
2.2. Notice of Committed Borrowing.................................................. 16
2.3. Money Market Borrowings........................................................ 17
2.4. Notice to Banks; Funding of Loans.............................................. 21
2.5. Maturity of Loans.............................................................. 22
2.6. Interest Rates................................................................. 22
2.7. Method of Electing Interest Rates.............................................. 25
2.8. Facility Fee................................................................... 27
2.9. Termination or Reduction of Commitments........................................ 28
2.10. Optional Prepayments........................................................... 28
2.11. General Provisions as to Payments.............................................. 28
2.12. Funding Losses................................................................. 29
2.13. Computation of Interest and Fees............................................... 30
2.14. Notes.......................................................................... 30
2.15. Regulation D Compensation...................................................... 31
2.16. Increased Commitments; Additional Banks ...................................... 32
ARTICLE 3
CONDITIONS
3.1. Closing........................................................................ 31
3.2. Borrowings..................................................................... 32
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
4.1. Corporate Existence and Power.................................................. 33
4.2. Corporate and Governmental Authorization; No
Contravention.................................................................. 33
4.3. Binding Effect................................................................. 34
4.4. Financial Information.......................................................... 34
4.5. Litigation..................................................................... 35
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Page
4.6. Compliance with Laws; ERISA.................................................... 35
4.7. Environmental Matters.......................................................... 36
4.8. Taxes.......................................................................... 36
4.9. Subsidiaries................................................................... 36
4.10. Regulatory Restrictions on Borrowing........................................... 36
4.11. Full Disclosure................................................................ 36
ARTICLE 5
COVENANTS
5.1. Information.................................................................... 37
5.2. Payment of Obligations......................................................... 40
5.3. Maintenance of Property; Insurance............................................. 40
5.4. Conduct of Business and Maintenance of
Existence...................................................................... 40
5.5. Compliance with Laws........................................................... 41
5.6. Inspection of Property, Books and Records...................................... 41
5.7. Company Action Level Ratio.................................................... 41
5.8. Mergers and Sales of Assets................................................... 42
5.9. Use of Proceeds................................................................ 42
5.10. Negative Pledge................................................................ 42
5.11. Consolidated Debt to Consolidated Total
Capitalization................................................................. 43
5.12. Minimum Adjusted Consolidated Tangible Net
Worth.......................................................................... 43
5.13. Subsidiary Debt ............................................................... 44
5.14. Restricted Payments............................................................ 44
5.15. Investments.................................................................... 44
5.16. Transactions with Affiliates................................................... 45
ARTICLE 6
DEFAULTS
6.1. Events of Default.............................................................. 45
6.2. Notice of Default.............................................................. 48
ARTICLE 7
THE AGENT
7.1. Appointment and Authorization.................................................. 48
7.2. Agent and Affiliates........................................................... 48
7.3. Action by Agent................................................................ 48
7.4. Consultation with Experts...................................................... 48
7.5. Liability of Agent............................................................. 49
7.6. Indemnification................................................................ 49
7.7. Credit Decision................................................................ 50
7.8. Successor Agent................................................................ 50
7.9. Agent's Fee.................................................................... 50
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Page
ARTICLE 8
CHANGE IN CIRCUMSTANCES
8.1. Basis for Determining Interest Rate
Inadequate or Unfair........................................................... 50
8.2. Illegality..................................................................... 51
8.3. Increased Cost and Reduced Return.............................................. 52
8.4. Taxes.......................................................................... 53
8.5. Base Rate Loans Substituted for Affected
Fixed Rate Loans............................................................... 55
8.6. Substitution of Bank........................................................... 56
ARTICLE 9
MISCELLANEOUS
9.1. Notices........................................................................ 57
9.2. No Waivers..................................................................... 57
9.3. Expenses; Indemnification...................................................... 58
9.4. Sharing of Set-Offs............................................................ 58
9.5. Amendments and Waivers ........................................................ 59
9.6. Successors and Assigns......................................................... 59
9.7. No Reliance on Margin Stock.................................................... 61
9.8. Governing Law; Submission to Jurisdiction...................................... 61
9.9. Counterparts; Integration; Effectiveness....................................... 61
9.10. WAIVER OF JURY TRIAL........................................................... 62
COMMITMENT SCHEDULE.................................................................................... 64
PRICING SCHEDULE....................................................................................... 65
EXHIBIT A - Note..................................................................... 1
EXHIBIT B - Money Market Quote Request............................................... 1
EXHIBIT C - Invitation for Money Market Quotes....................................... 1
EXHIBIT D - Money Market Quote....................................................... 1
EXHIBIT E - Opinion of Counsel for the Borrower...................................... 1
EXHIBIT F - Opinion of Special Counsel for the
Agent.................................................................... 1
EXHIBIT G - Assignment and Assumption Agreement...................................... 1
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AGREEMENT dated as of February 12, 1997 among TRIGON
HEALTHCARE, INC., the BANKS party hereto and XXXXXX GUARANTY TRUST COMPANY OF
NEW YORK, as Agent.
The parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.1. Definitions. The following terms,
as used herein, have the following meanings:
"Absolute Rate Auction" means a solicitation of
Money Market Quotes setting forth Money Market Absolute
Rates pursuant to Section 2.3.
"Additional Bank" has the meaning set forth in
Section 2.16(b).
"Adjusted CD Rate" has the meaning set forth in
Section 2.6(b).
"Adjusted Consolidated Tangible Net Worth" means at any date
the consolidated stockholders' equity of the Borrower and its Consolidated
Subsidiaries (I) plus the amount of any unrealized losses (or less the amount of
any unrealized gains) related, directly or indirectly, to securities, as
determined in accordance with Statement of Financial Accounting Standards No.
115 (or any successor statements or amendments thereto) (in each case as
affected by any subsequent relevant pronouncements of the Financial Accounting
Standards Board), to the extent reflected in the determination of such
consolidated stockholders' equity (II) less their consolidated Intangible
Assets, all determined as of such date. For purposes of this definition,
"Intangible Assets" of the Borrower and its Consolidated Subsidiaries means the
amount (to the extent reflected in determining the consolidated stockholders'
equity of the Borrower and its Consolidated Subsidiaries) of (i) all write-ups
(other than write-ups resulting from foreign currency translations and write-ups
of assets of a going concern business made on the date of or within twelve
months after the acquisition of such business) subsequent to September 30, 1996
in the book value of any asset owned by the Borrower or a Consolidated
Subsidiary and (ii) all unamortized debt discount and
expense, unamortized deferred charges, goodwill, patents, trademarks, service
marks, trade names, copyrights, organization or developmental expenses and other
intangible assets.
"Administrative Questionnaire" means, with respect to each
Bank, an administrative questionnaire in the form prepared by the Agent,
completed by such Bank and returned to the Agent (with a copy to the Borrower).
"Admitted Assets" means, with respect to any Regulated Entity,
assets which are "admitted assets" (or a substantially similar concept) under
the relevant state insurance laws and rules and regulations promulgated
thereunder applicable to such Regulated Entity.
"Affiliate" means (i) any Person that directly, or indirectly
through one or more intermediaries, controls the Borrower (a "Controlling
Person") or (ii) any Person (other than the Borrower or a Subsidiary) which is
controlled by or is under common control with a Controlling Person. As used
herein, the term "control" means possession, directly or indirectly, of the
power to vote 20% or more of any class of voting securities of a Person or to
direct or cause the direction of the management or policies of a Person, whether
through the ownership of voting securities, by contract or otherwise.
"Agent" means Xxxxxx Guaranty Trust Company of New York in its
capacity as agent for the Banks hereunder, and its successors in such capacity.
"Annual Statement" means Trigon Insurance's duly completed
annual report to the insurance department or other comparable regulatory
authority of the Commonwealth of Virginia, prepared and filed in conformity with
the Commonwealth of Virginia's applicable regulations.
"Applicable Lending Office" means, with respect to any Bank,
(i) in the case of its Domestic Loans, its Domestic Lending Office, (ii) in the
case of its Euro-Dollar Loans, its Euro-Dollar Lending Office and (iii) in the
case of its Money Market Loans, its Money Market Lending Office.
"Assessment Rate" has the meaning set forth in Section 2.6(b).
"Assignee" has the meaning set forth in Section 9.6(c).
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"Bank" means each bank listed on the signature pages hereof,
each Additional Bank which becomes a Bank pursuant to Section 2.16, each
Assignee which becomes a Bank pursuant to Section 9.6(c), and their respective
successors.
"Base Rate" means, for any day, a rate per annum equal to the
higher of (i) the Prime Rate for such day and (ii) the sum of 1/2 of 1% plus the
Federal Funds Rate for such day.
"Base Rate Loan" means a Committed Loan which bears interest
at the Base Rate pursuant to the applicable Notice of Committed Borrowing or
Notice of Interest Rate Election or the provisions of Section 2.7(a) or Article
8.
"Borrower" means Trigon Healthcare, Inc., a Virginia
corporation, and its successors.
"Borrower's Registration Statement" means the Borrower's
Registration Statement as filed with the SEC on November 12, 1996 pursuant to
the Securities Act of 1933, as amended as of the date hereof.
"Borrowing" has the meaning set forth in Section 1.3.
"CD Base Rate" has the meaning set forth in Section 2.6(b).
"CD Loan" means a Committed Loan which bears interest at a CD
Rate pursuant to the applicable Notice of Committed Borrowing or Notice of
Interest Rate Election.
"CD Margin" means a rate per annum determined in accordance
with the Pricing Schedule.
"CD Rate" means a rate of interest determined pursuant to
Section 2.6(b) on the basis of an Adjusted CD Rate.
"CD Reference Banks" means The Bank of New York,
The First National Bank of Chicago and Xxxxxx Guaranty Trust
Company of New York.
"Closing Date" means the date on or after the Effective Date
on which each of the conditions specified in Section 3.1 have been satisfied.
"Commitment" means (i) with respect to each Bank
listed on the Commitment Schedule, the amount set forth
3
opposite the name of such Bank on the Commitment Schedule and (ii) with respect
to each Additional Bank or Assignee which becomes a Bank pursuant to Section
2.16 or 9.6(c), the amount of the Commitment thereby assumed by it, in each case
as such amount may be changed from time to time pursuant to Section 2.9, 2.16 or
9.6(c).
"Commitment Schedule" means the Commitment
Schedule attached hereto.
"Committed Loan" means a loan made by a Bank pursuant to
Section 2.1; provided that, if any such loan or loans (or portions thereof) are
combined or subdivided pursuant to a Notice of Interest Rate Election, the term
Committed Loan shall refer to the combined principal amount resulting from such
combination or to each of the separate principal amounts resulting from such
subdivision, as the case may be.
"Commonwealth Payment" has the meaning set forth
in the Plan of Demutualization.
"Consolidated Debt" means, at any date, the Debt of the
Borrower and its Consolidated Subsidiaries, determined on a consolidated basis
as of such date.
"Consolidated Net Income" means, for any period, the net
income of the Borrower and its Consolidated Subsidiaries, determined on a
consolidated basis for such period.
"Consolidated Net Worth" means, at any date, the Consolidated
stockholders' equity of the Borrower and its Consolidated Subsidiaries as of
such date.
"Consolidated Subsidiary" means, at any date, any Subsidiary
or other entity the accounts of which would be consolidated with those of the
Borrower in its consolidated financial statements if such statements were
prepared as of such date.
"Consolidated Total Capitalization" means, at any date, the
sum of Consolidated Debt and Consolidated Net Worth, each determined as of such
date.
"Debt" of any Person means, at any date, without duplication,
(i) all obligations of such Person for borrowed money, (ii) all obligations of
such Person evidenced by bonds, debentures, notes or other similar instruments,
(iii) all obligations of such Person to pay the deferred purchase price of
property or services, except trade accounts payable
4
arising in the ordinary course of business, (iv) all obligations of such Person
as lessee which are capitalized in accordance with GAAP, (v) all non-contingent
obligations (and, for purposes of Section 5.10 and the definitions of Material
Debt and Material Financial Obligations, all contingent obligations) of such
Person to reimburse any bank or other Person in respect of amounts paid under a
letter of credit or similar instrument, (vi) all Debt secured by a Lien on any
asset of such Person, whether or not such Debt is otherwise an obligation of
such Person, (vii) all Guarantees by such Person of Debt of another Person (each
such Guarantee to constitute Debt in an amount equal to the amount of such other
Person's Debt Guaranteed thereby) and (viii) in the case of the Borrower, (x)
any unpaid amount of the Commonwealth Payment and (y) with respect to any
capital stock of the Borrower which is redeemable other than at the sole option
of the Borrower, the redemption price thereof, provided that any such capital
stock evidencing, or delivered in payment of, the Commonwealth Payment shall be
excluded from this clause (y).
"Default" means any condition or event which constitutes an
Event of Default or which with the giving of notice or lapse of time or both
would, unless cured or waived, become an Event of Default.
"Demutualization" has the meaning set forth in the
Plan of Demutualization.
"Derivatives Obligations" of any Person means all obligations
of such Person in respect of any rate swap transaction, basis swap, forward rate
transaction, commodity swap, commodity option, equity or equity index swap,
equity or equity index option, bond option, interest rate option, foreign
exchange transaction, cap transaction, floor transaction, collar transaction,
currency swap transaction, cross-currency rate swap transaction, currency option
or any other similar transaction (including any option with respect to any of
the foregoing transactions) or any combination of the foregoing transactions.
"Domestic Business Day" means any day except a Saturday,
Sunday or other day on which commercial banks in New York City are authorized or
required by law to close.
"Domestic Lending Office" means, as to each Bank, its office
located at its address set forth in its Administrative Questionnaire (or
identified in its Administrative Questionnaire as its Domestic Lending Office)
or such other office as such Bank may hereafter designate as its Domestic
Lending Office by notice to the Borrower and
5
the Agent; provided that any Bank may so designate separate Domestic Lending
Offices for its Base Rate Loans, on the one hand, and its CD Loans, on the other
hand, in which case all references herein to the Domestic Lending Office of such
Bank shall be deemed to refer to either or both of such offices, as the context
may require.
"Domestic Loans" means CD Loans or Base Rate Loans
or both.
"Domestic Reserve Percentage" has the meaning set
forth in Section 2.6(b).
"Effective Date" means the date this Agreement becomes
effective in accordance with Section 9.9.
"Environmental Laws" means any and all federal, state, local
and foreign statutes, laws, judicial decisions, regulations, ordinances, rules,
judgments, orders, decrees, plans, injunctions, permits, concessions, grants,
franchises, licenses, agreements and other governmental restrictions relating to
the environment, the effect of the environment on human health or to emissions,
discharges or releases of pollutants, contaminants, Hazardous Substances or
wastes into the environment, including (without limitation) ambient air, surface
water, ground water or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants, Hazardous Substances or wastes or the
clean-up or other remediation thereof.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, or any successor statute.
"ERISA Group" means the Borrower, any Subsidiary and all
members of a controlled group of corporations and all trades or businesses
(whether or not incorporated) under common control which, together with the
Borrower or any Subsidiary, are treated as a single employer under Section 414
of the Internal Revenue Code.
"Euro-Dollar Business Day" means any Domestic Business Day on
which commercial banks are open for international business (including dealings
in dollar deposits) in London.
"Euro-Dollar Lending Office" means, as to each Bank, its
office, branch or affiliate located at its address set forth in its
Administrative Questionnaire (or identified in its Administrative Questionnaire
as its Euro-Dollar
6
Lending Office) or such other office, branch or affiliate of such Bank as it may
hereafter designate as its Euro-Dollar Lending Office by notice to the Borrower
and the Agent.
"Euro-Dollar Loan" means a Committed Loan which bears interest
at a Euro-Dollar Rate pursuant to the applicable Notice of Committed Borrowing
or Notice of Interest Rate Election.
"Euro-Dollar Margin" means a rate per annum determined in
accordance with the Pricing Schedule.
"Euro-Dollar Rate" means a rate of interest determined
pursuant to Section 2.6(c) on the basis of a London Interbank Offered Rate.
"Euro-Dollar Reference Banks" means the principal
London offices of The Bank of New York, The First National
Bank of Chicago and Xxxxxx Guaranty Trust Company of New
York.
"Euro-Dollar Reserve Percentage" means, for any day, that
percentage (expressed as a decimal) which is in effect on such day, as
prescribed by the Board of Governors of the Federal Reserve System (or any
successor) for determining the maximum reserve requirement for a member bank of
the Federal Reserve System in New York City with deposits exceeding five billion
dollars in respect of "Eurocurrency liabilities" (or in respect of any other
category of liabilities which includes deposits by reference to which the
interest rate on Euro-Dollar Loans is determined or any category of extensions
of credit or other assets which includes loans by a non-United States office of
any Bank to United States residents).
"Event of Default" has the meaning set forth in
Section 6.1.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time.
"Federal Funds Rate" means, for any day, the rate per annum
(rounded upward, if necessary, to the nearest 1/100 of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Domestic Business Day
next succeeding such day, provided that (i) if such day is not a Domestic
Business Day, the Federal Funds Rate for such day shall be such rate on such
transactions on the next preceding Domestic Business
7
Day as so published on the next succeeding Domestic Business Day and (ii) if no
such rate is so published on such next succeeding Domestic Business Day, the
Federal Funds Rate for such day shall be the average rate quoted to Xxxxxx
Guaranty Trust Company of New York on such day on such transactions
as determined by the Agent.
"Fiscal Quarter" means a fiscal quarter of the
Borrower.
"Fiscal Year" means a fiscal year of the Borrower.
"Fixed Rate Loans" means CD Loans or Euro-Dollar Loans or
Money Market Loans (excluding Money Market LIBOR Loans bearing interest at the
Base Rate pursuant to Section 8.1) or any combination of the foregoing.
"GAAP" means generally accepted accounting principles as in
effect from time to time, applied on a basis consistent (except for changes
concurred in by the Borrower's independent public accountants) with the initial
audited consolidated financial statements of the Borrower and its Consolidated
Subsidiaries to be delivered to the Banks pursuant to Section 5.1(a).
"Group of Loans" means, at any time, a group of Loans
consisting of (i) all Committed Loans which are Base Rate Loans at such time,
(ii) all Euro-Dollar Loans having the same Interest Period at such time or (iii)
all CD Loans having the same Interest Period at such time, provided that, if a
Committed Loan of any particular Bank is converted to or made as a Base Rate
Loan pursuant to Article 8, such Loan shall be included in the same Group or
Groups of Loans from time to time as it would have been in if it had not been so
converted or made.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt of any
other Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such Person (i) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Debt (whether arising by virtue of partnership arrangements, by agreement to
keep-well, to purchase assets, goods, securities or services, to take-or-pay, or
to maintain financial statement conditions or otherwise), (ii) to reimburse a
bank for amounts drawn under a letter of credit for the purpose of paying such
Debt or (iii) entered into for the purpose of assuring in any other manner the
holder of such Debt of the payment thereof or to protect such holder against
loss in
8
respect thereof (in whole or in part), provided that the term Guarantee shall
not include endorsements for collection or deposit in the ordinary course of
business. The term Guarantee used as a verb has a corresponding meaning.
"Hazardous Substances" means any toxic, radioactive, caustic
or otherwise hazardous substance, including petroleum, its derivatives,
by-products and other hydrocarbons, or any substance having any constituent
elements displaying any of the foregoing characteristics.
"Increased Commitments" has the meaning set forth
in Section 2.16(a).
"Indemnitee" has the meaning set forth in Section 9.3(b).
"Initial Public Offering" has the meaning set
forth in the Plan of Demutualization.
"Interest Period" means: (1) with respect to each Euro-Dollar
Loan, the period commencing on the date of borrowing specified in the applicable
Notice of Borrowing or on the date specified in an applicable Notice of Interest
Rate Election and ending one, two, three or six months thereafter, as the
Borrower may elect in such notice; provided that:
(a) any Interest Period which would otherwise end on a day
which is not a Euro-Dollar Business Day shall be extended to the next
succeeding Euro-Dollar Business Day unless such Euro-Dollar Business
Day falls in another calendar month, in which case such Interest Period
shall end on the next preceding Euro-Dollar Business Day;
(b) any Interest Period which begins on the last Euro-Dollar
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period) shall, subject to clause (c) below, end on the last
Euro-Dollar Business Day of a calendar month; and
(c) any Interest Period which would otherwise end
after the Termination Date shall end on the Termination
Date;
(2) with respect to each CD Loan, the period commencing on the
date of borrowing specified in the applicable Notice of Borrowing or on the date
specified in an applicable Notice of Interest Rate Election and ending
9
30, 60, 90 or 180 days thereafter, as the Borrower may elect in such notice;
provided that:
(a) any Interest Period which would otherwise end on a day
which is not a Euro-Dollar Business Day shall be extended to the next
succeeding Euro-Dollar Business Day; and
(b) any Interest Period which would otherwise end
after the Termination Date shall end on the Termination
Date;
(3) with respect to each Money Market LIBOR Loan, the period
commencing on the date of borrowing specified in the applicable Notice of
Borrowing and ending such whole number of months thereafter as the Borrower may
elect in accordance with Section 2.3; provided that:
(a) any Interest Period which would otherwise end on a day
which is not a Euro-Dollar Business Day shall be extended to the next
succeeding Euro-Dollar Business Day unless such Euro-Dollar Business
Day falls in another calendar month, in which case such Interest Period
shall end on the next preceding Euro-Dollar Business Day;
(b) any Interest Period which begins on the last Euro-Dollar
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period) shall, subject to clause (c) below, end on the last
Euro-Dollar Business Day of a calendar month; and
(c) any Interest Period which would otherwise end
after the Termination Date shall end on the Termination
Date; and
(4) with respect to each Money Market Absolute Rate Loan, the
period commencing on the date of borrowing specified in the applicable Notice of
Borrowing and ending such number of days thereafter (but not less than seven
days) as the Borrower may elect in accordance with Section 2.3; provided that:
(a) any Interest Period which would otherwise end on a day
which is not a Euro-Dollar Business Day shall be extended to the next
succeeding Euro-Dollar Business Day; and
10
(b) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date.
"Internal Revenue Code" means the Internal Revenue Code of
1986, as amended, or any successor statute.
"Investment" means any investment in any Person, whether by
means of share purchase, capital contribution, loan, Guarantee, time deposit or
otherwise (but not including any demand deposit).
"LIBOR Auction" means a solicitation of Money Market Quotes
setting forth Money Market Margins based on the London Interbank Offered Rate
pursuant to Section 2.3.
"Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind, or any other type
of preferential arrangement that has substantially the same practical effect as
a security interest, in respect of such asset. For purposes hereof, the Borrower
or any Subsidiary shall be deemed to own subject to a Lien any asset which it
has acquired or holds subject to the interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title retention agreement
relating to such asset.
"Loan" means a Committed Loan or a Money Market
Loan and "Loans" means Committed Loans or Money Market Loans
or any combination of the foregoing.
"London Interbank Offered Rate" has the meaning
set forth in Section 2.6(c).
"Material Adverse Effect" means a material adverse effect upon
(i) the business, results of operations, financial condition or prospects of the
Borrower and its Consolidated Subsidiaries taken as a whole, (ii) the ability of
the Borrower to perform its obligations under this Agreement or (iii) the
ability of any of the Banks to enforce their rights and remedies against the
Borrower under this Agreement.
"Material Debt" means Debt (except Debt outstanding hereunder)
of the Borrower and/or one or more of its Subsidiaries, arising in one or more
related or unrelated transactions, in an aggregate principal or face amount
exceeding $25,000,000.
"Material Financial Obligations" means a principal
or face amount of Debt and/or payment or collateralization
11
obligations in respect of Derivatives Obligations of the Borrower and/or one or
more of its Subsidiaries, arising in one or more related or unrelated
transactions, exceeding in the aggregate $25,000,000.
"Material Plan" means, at any time, a Plan or Plans having
aggregate Unfunded Liabilities in excess of $10,000,000.
"Money Market Absolute Rate" has the meaning set
forth in Section 2.3(d).
"Money Market Absolute Rate Loan" means a loan to be made by a
Bank pursuant to an Absolute Rate Auction.
"Money Market Lending Office" means, as to each Bank, its
Domestic Lending Office or such other office, branch or affiliate of such Bank
as it may hereafter designate as its Money Market Lending Office by notice to
the Borrower and the Agent; provided that any Bank may from time to time by
notice to the Borrower and the Agent designate separate Money Market Lending
Offices for its Money Market LIBOR Loans, on the one hand, and its Money Market
Absolute Rate Loans, on the other hand, in which case all references herein to
the Money Market Lending Office of such Bank shall be deemed to refer to either
or both of such offices, as the context may require.
"Money Market LIBOR Loan" means a loan to be made by a Bank
pursuant to a LIBOR Auction (including such a loan bearing interest at the Base
Rate pursuant to Section 8.1.
"Money Market Loan" means a Money Market LIBOR
Loan or a Money Market Absolute Rate Loan.
"Money Market Margin" has the meaning set forth in
Section 2.3(d)(ii)(c).
"Money Market Quote" means an offer by a Bank to make a Money
Market Loan in accordance with Section 2.3.
"Multiemployer Plan" means, at any time, an employee pension
benefit plan within the meaning of Section 4001(a)(3) of ERISA to which any
member of the ERISA Group is then making or accruing an obligation to make
contributions or has within the preceding five plan years made contributions,
including for these purposes any Person which ceased to be a member of the ERISA
Group during such five year period.
12
"NAIC" means the National Association of Insurance
Commissioners and any successor Person thereto.
"Net Proceeds", with respect to the Initial Public Offering,
means the actual proceeds to the Borrower therefrom (after deducting, inter
alia, all underwriting discount and offering expenses) less all mandatory cash
payments to be made pursuant to Section 7.2(d) of the Plan of Demutualization.
"Non-Admitted Assets" means, with respect to any Regulated
Entity, assets which are not Admitted Assets.
"Notes" means promissory notes of the Borrower, substantially
in the form of Exhibit A hereto, evidencing the Borrower's obligation to repay
the Loans, and "Note" means any one of such promissory notes issued hereunder.
"Notice of Borrowing" means a Notice of Committed
Borrowing (as defined in Section 2.2) or a Notice of Money
Market Borrowing (as defined in Section 2.3(f)).
"Notice of Interest Rate Election" has the meaning set forth
in Section 2.7.
"Parent" means, with respect to any Bank, any Person
controlling such Bank.
"Participant" has the meaning set forth in Section 9.6(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Person" means an individual, a corporation, a limited
liability company, a partnership, an association, a trust or any other entity or
organization, including a government or political subdivision or an agency or
instrumentality thereof.
"Plan" means, at any time, an employee pension benefit plan
(other than a Multiemployer Plan) which is covered by Title IV of ERISA or
subject to the minimum funding standards under Section 412 of the Internal
Revenue Code and either (i) is maintained, or contributed to, by any member of
the ERISA Group for employees of any member of the ERISA Group or (ii) has at
any time within the preceding five years been maintained, or contributed to, by
any Person which was at such time a member of the ERISA Group for
13
employees of any Person which was at such time a member of
the ERISA Group.
"Plan of Demutualization" means the Amended and Restated Plan
of Demutualization of Blue Cross and Blue Shield of Virginia, dated as of May
31, 1996 and as amended as of October 31, 1996.
"Pricing Schedule" means the Pricing Schedule
attached hereto.
"Prime Rate" means the rate of interest publicly announced by
Xxxxxx Guaranty Trust Company of New York in New York City from time to time as
its Prime Rate.
"Quarterly Payment Dates" means each March 31, June 30,
September 30 and December 31.
"Reference Banks" means the CD Reference Banks or the
Euro-Dollar Reference Banks, as the context may require, and "Reference Bank"
means any one of such Reference Banks.
"Regulated Entity" means a Subsidiary subject to regulation
under the insurance laws of any state of the United States.
"Regulation U" means Regulation U of the Board of Governors of
the Federal Reserve System, as in effect from time to time.
"Required Banks" means, at any time, Banks having at least a
majority of the aggregate amount of the Commitments or, if the Commitments shall
have terminated, holding at least a majority of the aggregate unpaid principal
amount of the Loans.
"Restricted Payment" means (i) any dividend or other
distribution on any shares of the Borrower's capital stock (except dividends
payable solely in shares of its capital stock other than mandatorily redeemable
preferred stock) or (ii) any payment on account of the purchase, redemption,
retirement or acquisition of (a) any shares of the Borrower's capital stock or
(b) any option, warrant or other right to acquire shares of the Borrower's
capital stock (but not including payments of principal, premium (if any) or
interest made pursuant to the terms of convertible debt securities prior to
conversion); provided that the Commonwealth Payment shall not be deemed a
Restricted Payment.
14
"Revolving Credit Period" means the period from and including
the Effective Date to but not including the Termination Date.
"Risk-Based Capital Act" means the Risk-Based Capital (RBC)
For Insurers Model Act in the form attached as Annex I hereto and as modified
from time to time by the NAIC.
"SEC" means the Securities and Exchange
Commission.
"Subsidiary" means, as to any Person, any corporation or other
entity of which securities or other ownership interests having ordinary voting
power to elect a majority of the board of directors or other persons performing
similar functions are at the time directly or indirectly owned by such Person.
Unless otherwise specified, "Subsidiary" means a Subsidiary of the Borrower.
"Termination Date" means February 12, 2002, or, if such day
is not a Euro-Dollar Business Day, the next succeeding Euro-Dollar Business Day
unless such Euro-Dollar Business Day falls in another calendar month, in which
case the Termination Date shall be the next preceding Euro-Dollar
Business Day.
"Trigon Insurance" means Trigon Insurance Company,
a wholly owned Subsidiary of the Borrower.
"Unfunded Liabilities" means, with respect to any Plan at any
time, the amount (if any) by which (i) the value of all benefit liabilities
under such Plan, determined on a plan termination basis using the assumptions
prescribed by the PBGC for purposes of Section 4044 of ERISA, exceeds (ii) the
fair market value of all Plan assets allocable to such liabilities under Title
IV of ERISA (excluding any accrued but unpaid contributions), all determined as
of the then most recent valuation date for such Plan, but only to the extent
that such excess represents a potential liability of a member of the ERISA Group
to the PBGC or any other Person under Title IV of ERISA.
"United States" means the United States of
America.
SECTION 1.2. Accounting Terms and Determinations.
Unless otherwise specified herein, all accounting terms used
herein shall be interpreted, all accounting determinations
hereunder shall be made, and all financial statements
required to be delivered hereunder shall be prepared in
15
accordance with GAAP; provided that, if the Borrower notifies the Agent that the
Borrower wishes to amend any covenant in Article 5 or the definition of any term
used therein to eliminate the effect of any change in GAAP on the operation of
such covenant (or if the Agent notifies the Borrower that the Required Banks
wish to amend Article 5 or any such definition for such purpose), then the
Borrower's compliance with such covenant shall be determined on the basis of
GAAP in effect immediately before the relevant change in GAAP became effective,
either until such notice is withdrawn by the Person delivering such notice or
such covenant or definition is amended in a manner satisfactory to the Borrower
and the Required Banks.
SECTION 1.3. Types of Borrowings. The term "Borrowing" denotes
the aggregation of Loans to be made to the Borrower by one or more Banks
pursuant to Article 2 on the same day, all of which Loans are of the same type
(subject to Article 8) and, except in the case of Base Rate Loans, have the same
initial Interest Period. Borrowings are classified for purposes hereof either
(i) by reference to the pricing of Loans comprising such Borrowing (e.g., a
"Euro-Dollar Borrowing" is a Borrowing comprised of Euro-Dollar Loans) or (ii)
by reference to the provisions of Article 2 under which participation therein is
determined (i.e., a "Committed Borrowing" is a Borrowing under Section 2.1 in
which all Banks participate in proportion to their Commitments, while a "Money
Market Borrowing" is a Borrowing under Section 2.3 in which one or more Banks
participate on the basis of their bids).
ARTICLE 2
THE CREDITS
SECTION 2.1. Commitments to Lend. Each Bank severally agrees,
on the terms and conditions set forth in this Agreement, to make loans to the
Borrower pursuant to this Section from time to time during the Revolving Credit
Period; provided that, immediately after each such loan is made, the aggregate
outstanding principal amount of all Committed Loans by such Bank shall not
exceed its Commitment. Each Borrowing under this Section shall be in an
aggregate principal amount of $10,000,000 or any larger multiple of $1,000,000
(except that any such Borrowing may be in the aggregate amount available in
accordance with Section 3.2) and shall be made from the several Banks ratably in
proportion to their respective Commitments. Within the foregoing limits, the
Borrower may borrow under
16
this Section, prepay Loans to the extent permitted by Section 2.10 and reborrow
at any time during the Revolving Credit Period under this Section.
SECTION 2.2. Notice of Committed Borrowing. The Borrower shall
give the Agent notice (a "Notice of Committed Borrowing") not later than 10:30
A.M. (New York City time) on (x) the date of each Base Rate Borrowing, (y) the
second Domestic Business Day before each CD Borrowing and (z) the third
Euro-Dollar Business Day before each Euro-Dollar Borrowing, specifying:
(i) the date of such Borrowing, which shall be a Domestic
Business Day in the case of a Domestic Borrowing or a Euro-Dollar
Business Day in the case of a Euro-Dollar Borrowing;
(ii) the aggregate amount of such Borrowing;
(iii) whether the Loans comprising such Borrowing are to bear
interest initially at the Base Rate, a CD Rate or a Euro-Dollar Rate;
and
(iv) in the case of a CD Borrowing or a EuroDollar Borrowing,
the duration of the initial Interest Period applicable thereto, subject
to the provisions of the definition of Interest Period.
SECTION 2.3. Money Market Borrowings. (a) The Money Market
Option. In addition to Committed Borrowings pursuant to Section 2.1, the
Borrower may, as set forth in this Section, request the Banks to make offers to
make Money Market Loans to the Borrower from time to time during the Revolving
Credit Period. The Banks may, but shall have no obligation to, make such offers
and the Borrower may, but shall have no obligation to, accept any such offers in
the manner set forth in this Section.
(b) Money Market Quote Request. When the Borrower wishes to
request offers to make Money Market Loans under this Section, it shall transmit
to the Agent by telex or facsimile a Money Market Quote Request substantially in
the form of Exhibit B hereto so as to be received not later than 10:30 A.M. (New
York City time) on (x) the fifth Euro-Dollar Business Day before the date of
Borrowing proposed therein, in the case of a LIBOR Auction or (y) the Domestic
Business Day next preceding the date of Borrowing proposed therein, in the case
of an Absolute Rate Auction (or, in either case, such other time or date as the
Borrower and the Agent shall have mutually agreed and shall have notified to the
Banks not later than the date of the Money
17
Market Quote Request for the first LIBOR Auction or Absolute Rate Auction for
which such change is to be effective) specifying:
(i) the proposed date of Borrowing, which shall be a
Euro-Dollar Business Day in the case of a LIBOR Auction or a Domestic
Business Day in the case of an Absolute Rate Auction,
(ii) the aggregate amount of such Borrowing,
which shall be $10,000,000 or a larger multiple of
$1,000,000,
(iii) the duration of the Interest Period
applicable thereto, subject to the provisions of the
definition of Interest Period, and
(iv) whether the Money Market Quotes requested are to set
forth a Money Market Margin or a Money Market Absolute Rate.
The Borrower may request offers to make Money Market Loans for more than one
Interest Period in a single Money Market Quote Request. No Money Market Quote
Request shall be given within five Euro-Dollar Business Days (or such other
number of days as the Borrower and the Agent may agree) of any other Money
Market Quote Request.
(c) Invitation for Money Market Quotes. Promptly after
receiving a Money Market Quote Request, the Agent shall send to the Banks by
telex or facsimile an Invitation for Money Market Quotes substantially in the
form of Exhibit C hereto, which shall constitute an invitation by the Borrower
to each Bank to submit Money Market Quotes offering to make the Money Market
Loans to which such Money Market Quote Request relates in accordance with this
Section.
(d) Submission and Contents of Money Market Quotes. (i) Each
Bank may submit a Money Market Quote containing an offer or offers to make Money
Market Loans in response to any Invitation for Money Market Quotes. Each Money
Market Quote must comply with the requirements of this subsection (d) and must
be submitted to the Agent by telex or facsimile at its address specified in or
pursuant to Section 9.1 not later than (x) 2:00 P.M. (New York City time) on the
fourth Euro-Dollar Business Day before the proposed date of Borrowing, in the
case of a LIBOR Auction or (y) 9:30 A.M. (New York City time) on the proposed
date of Borrowing, in the case of an Absolute Rate Auction (or, in either case,
such other time or date as the Borrower and the Agent shall have mutually agreed
and shall have notified
18
to the Banks not later than the date of the Money Market Quote Request for the
first LIBOR Auction or Absolute Rate Auction for which such change is to be
effective); provided that Money Market Quotes submitted by the Agent (or any
affiliate of the Agent) in the capacity of a Bank may be submitted, and may only
be submitted, if the Agent or such affiliate notifies the Borrower of the terms
of the offer or offers contained therein not later than (x) one hour before the
deadline for the other Banks, in the case of a LIBOR Auction or (y) 15 minutes
before the deadline for the other Banks, in the case of an Absolute Rate
Auction. Subject to Articles 3 and 6, any Money Market Quote so made shall not
be revocable except with the written consent of the Agent given on the
instructions of the Borrower.
(ii) Each Money Market Quote shall be substantially in the
form of Exhibit D hereto and shall in any case specify:
(A) the proposed date of Borrowing,
(B) the principal amount of the Money Market Loan for which
each such offer is being made, which principal amount (w) may be
greater than or less than the Commitment of the quoting Bank, (x) must
be $5,000,000 or a larger multiple of $1,000,000, (y) may not exceed
the principal amount of Money Market Loans for which offers were
requested and (z) may be subject to an aggregate limitation as to the
principal amount of Money Market Loans for which offers being made by
such quoting Bank may be accepted,
(C) in the case of a LIBOR Auction, the margin above or below
the applicable London Interbank Offered Rate (the "Money Market
Margin") offered for each such Money Market Loan, expressed as a
percentage (specified to the nearest 1/10,000 of 1%) to be added to or
subtracted from such base rate,
(D) in the case of an Absolute Rate Auction, the rate of
interest per annum (specified to the nearest 1/10,000 of 1%) (the
"Money Market Absolute Rate") offered for each such Money Market Loan,
and
(E) the identity of the quoting Bank.
A Money Market Quote may set forth up to five separate offers by the quoting
Bank with respect to each Interest Period specified in the related Invitation
for Money Market Quotes.
19
(iii) Any Money Market Quote shall be disregarded
if it:
(A) is not substantially in conformity with Exhibit D hereto
or does not specify all of the information required by subsection
(d)(ii) above;
(B) contains qualifying, conditional or similar
language;
(C) proposes terms other than or in addition to those set
forth in the applicable Invitation for Money Market Quotes; or
(D) arrives after the time set forth in subsection (d)(i).
(e) Notice to Borrower. The Agent shall promptly notify the
Borrower of the terms of (i) any Money Market Quote submitted by a Bank that is
in accordance with subsection (d) and (ii) any Money Market Quote that amends,
modifies or is otherwise inconsistent with a previous Money Market Quote
submitted by such Bank with respect to the same Money Market Quote Request. Any
such subsequent Money Market Quote shall be disregarded by the Agent unless such
subsequent Money Market Quote is submitted solely to correct a manifest error in
such former Money Market Quote. The Agent's notice to the Borrower shall specify
(A) the aggregate principal amount of Money Market Loans for which offers have
been received for each Interest Period specified in the related Money Market
Quote Request, (B) the respective principal amounts and Money Market Margins or
Money Market Absolute Rates, as the case may be, so offered and (C) if
applicable, limitations on the aggregate principal amount of Money Market Loans
for which offers in any single Money Market Quote may be accepted.
(f) Acceptance and Notice by Borrower. Not later than 10:30
A.M. (New York City time) on (x) the third Euro-Dollar Business Day before the
proposed date of Borrowing, in the case of a LIBOR Auction or (y) the proposed
date of Borrowing, in the case of an Absolute Rate Auction (or, in either case,
such other time or date as the Borrower and the Agent shall have mutually agreed
and shall have notified to the Banks not later than the date of the Money Market
Quote Request for the first LIBOR Auction or Absolute Rate Auction for which
such change is to be effective), the Borrower shall notify the Agent of its
acceptance or non-acceptance of the offers so notified to it pursuant to
subsection (e). In the case of acceptance, such notice (a "Notice of Money
Market Borrowing") shall specify
20
the aggregate principal amount of offers for each Interest Period that are
accepted. The Borrower may accept any Money Market Quote in whole or in part;
provided that:
(i) the aggregate principal amount of each Money Market
Borrowing may not exceed the applicable amount set forth in the related
Money Market Quote Request;
(ii) the principal amount of each Money Market
Borrowing must be $10,000,000 or a larger multiple of
$1,000,000;
(iii) acceptance of offers may only be made on the basis of
ascending Money Market Margins or Money Market Absolute Rates, as the
case may be; and
(iv) the Borrower may not accept any offer that is described in
subsection (d)(iii) or that otherwise fails to comply with the
requirements of this Agreement.
(g) Allocation by Agent. If offers are made by two or more
Banks with the same Money Market Margins or Money Market Absolute Rates, as the
case may be, for a greater aggregate principal amount than the amount in respect
of which such offers are accepted for the related Interest Period, the principal
amount of Money Market Loans in respect of which such offers are accepted shall
be allocated by the Agent among such Banks as nearly as possible (in multiples
of $1,000,000, as the Agent may deem appropriate) in proportion to the aggregate
principal amounts of such offers. Determinations by the Agent of the amounts of
Money Market Loans shall be conclusive in the absence of manifest error.
SECTION 2.4. Notice to Banks; Funding of Loans. (a) Promptly
after receiving a Notice of Borrowing, the Agent shall notify each Bank of the
contents thereof and of such Bank's share (if any) of such Borrowing and such
Notice of Borrowing shall not thereafter be revocable by the Borrower.
(b) Not later than 12:00 Noon (New York City time) on the date
of each Borrowing, each Bank participating therein shall make available its
share of such Borrowing, in Federal or other funds immediately available in New
York City, to the Agent at its address specified in or pursuant to Section 9.1.
Unless the Agent determines that any applicable condition specified in Article
3 has not been satisfied, the Agent will make the funds so received from
21
the Banks available to the Borrower at the Agent's aforesaid
address.
(c) Unless the Agent shall have received notice from a Bank
before the date of any Borrowing that such Bank will not make available to the
Agent such Bank's share of such Borrowing, the Agent may assume that such Bank
has made such share available to the Agent on the date of such Borrowing in
accordance with subsection (b) of this Section and the Agent may, in reliance
upon such assumption, make available to the Borrower on such date a
corresponding amount. If and to the extent that such Bank shall not have so made
such share available to the Agent, such Bank and the Borrower severally agree to
repay to the Agent forthwith on demand such corresponding amount together with
interest thereon, for each day from the date such amount is made available to
the Borrower until the date such amount is repaid to the Agent, at (i) in the
case of the Borrower, a rate per annum equal to the interest rate applicable
thereto pursuant to Section and 2.6 (ii) in the case of such Bank, the Federal
Funds Rate. If such Bank shall repay to the Agent such corresponding amount,
such amount so repaid shall constitute such Bank's Loan included in such
Borrowing for purposes of this Agreement.
SECTION 2.5. Maturity of Loans. (a) Each
Committed Loan shall mature, and the principal amount
thereof shall be due and payable (together with interest
accrued thereon), on the Termination Date.
(b) Each Money Market Loan included in any Money Market
Borrowing shall mature, and the principal amount thereof shall be due and
payable (together with interest accrued thereon), on the last day of the
Interest Period applicable to such Borrowing.
SECTION 2.6. Interest Rates. (a) Each Base Rate Loan shall
bear interest on the outstanding principal amount thereof, for each day from the
date such Loan is made until it becomes due, at a rate per annum equal to the
Base Rate for such day. Such interest shall be payable in arrears on each
Quarterly Payment Date and, with respect to the principal amount of any Base
Rate Loan converted to a CD Loan or a Euro-Dollar Loan, on the date such amount
is so converted. Any overdue principal of or interest on any Base Rate Loan
shall bear interest, payable on demand, for each day until paid at a rate per
annum equal to the sum of 2% plus the Base Rate for such day.
(b) Each CD Loan shall bear interest on the
outstanding principal amount thereof, for each day during
22
each Interest Period applicable thereto, at a rate per annum equal to the sum of
the CD Margin for such day plus the Adjusted CD Rate applicable to such Interest
Period; provided that if any CD Loan shall, as a result of clause (2)(b) of the
definition of Interest Period, have an Interest Period of less than 30 days,
such CD Loan shall bear interest for each day during such Interest Period at the
Base Rate for such day. Such interest shall be payable for each Interest Period
on the last day thereof and, if such Interest Period is longer than 90 days, at
intervals of 90 days after the first day thereof. Any overdue principal of or
interest on any CD Loan shall bear interest, payable on demand, for each day
until paid at a rate per annum equal to the sum of 2% plus the higher of (i) the
Base Rate for such day and (ii) the sum of the CD Margin plus the Adjusted CD
Rate applicable to such Loan on the day before such payment was due.
The "Adjusted CD Rate" applicable to any Interest Period means
a rate per annum determined pursuant to the following formula:
[ CDBR ]*
ACDR = [ ------ ] + AR
[ 1.00 - DRP ]
ACDR = Adjusted CD Rate
CDBR = CD Base Rate
DRP = Domestic Reserve Percentage
AR = Assessment Rate
----------
* The amount in brackets being rounded upward, if
necessary, to the next higher 1/100 of 1%
The "CD Base Rate" applicable to any Interest Period is the
rate of interest determined by the Agent to be the average (rounded upward, if
necessary, to the next higher 1/100 of 1%) of the prevailing rates per annum bid
at 10:00 A.M. (New York City time) (or as soon thereafter as practicable) on the
first day of such Interest Period by two or more New York certificate of deposit
dealers of recognized standing for the purchase at face value from each CD
Reference Bank of its certificates of deposit in an amount comparable to the
principal amount of the CD Loan of such CD Reference Bank to which such Interest
Period applies and having a maturity comparable to such Interest Period.
"Domestic Reserve Percentage" means for any day
that percentage (expressed as a decimal) which is in effect
23
on such day, as prescribed by the Board of Governors of the Federal Reserve
System (or any successor) for determining the maximum reserve requirement
(including without limitation any basic, supplemental or emergency reserves) for
a member bank of the Federal Reserve System in New York City with deposits
exceeding five billion dollars in respect of new non-personal time deposits in
dollars in New York City having a maturity comparable to the related Interest
Period and in an amount of $100,000 or more. The Adjusted CD Rate shall be
adjusted automatically on and as of the effective date of any change in the
Domestic Reserve Percentage.
"Assessment Rate" means for any day the annual assessment rate
in effect on such day which is payable by a member of the Bank Insurance Fund
classified as adequately capitalized and within supervisory subgroup "A" (or a
comparable successor assessment risk classification) within the meaning of 12
C.F.R. ss. 327.4(a) (or any successor provision) to the Federal Deposit
Insurance Corporation (or any successor) for such Corporation's (or such
successor's) insuring time deposits at offices of such institution in the United
States. The Adjusted CD Rate shall be adjusted automatically on and as of the
effective date of any change in the Assessment Rate.
(c) Each Euro-Dollar Loan shall bear interest on the
outstanding principal amount thereof, for each day during each Interest Period
applicable thereto, at a rate per annum equal to the sum of the Euro-Dollar
Margin for such day plus the London Interbank Offered Rate applicable to such
Interest Period. Such interest shall be payable for each Interest Period on the
last day thereof and, if such Interest Period is longer than three months, at
intervals of three months after the first day thereof.
The "London Interbank Offered Rate" applicable to any Interest
Period means the average (rounded upward, if necessary, to the next higher 1/16
of 1%) of the respective rates per annum at which deposits in dollars are
offered to each of the Euro-Dollar Reference Banks in the London interbank
market at approximately 11:00 A.M. (London time) two Euro-Dollar Business Days
before the first day of such Interest Period in an amount approximately equal to
the principal amount of the Euro-Dollar Loan of such Euro-Dollar Reference Bank
to which such Interest Period is to apply and for a period of time comparable to
such Interest Period.
(d) Any overdue principal of or interest on any Euro-Dollar
Loan shall bear interest, payable on demand, for each day until paid at a rate
per annum equal to the higher
24
of (i) the sum of 2% plus the Euro-Dollar Margin for such day plus the London
Interbank Offered Rate applicable to such Loan on the day before such payment
was due and (ii) the sum of 2% plus the Euro-Dollar Margin for such day plus the
average (rounded upward, if necessary, to the next higher 1/16 of 1%) of the
respective rates per annum at which one day (or, if such amount due remains
unpaid more than three Euro-Dollar Business Days, then for such other period of
time not longer than three months as the Agent may select) deposits in dollars
in an amount approximately equal to such overdue payment due to each of the
Euro-Dollar Reference Banks are offered to such Euro-Dollar Reference Bank in
the London interbank market for the applicable period determined as provided
above (or, if the circumstances described in clause (a) or (b) of Section 8.1
shall exist, at a rate per annum equal to the sum of 2% plus the Base Rate for
such day).
(e) Subject to Section 8.1, each Money Market LIBOR Loan shall
bear interest on the outstanding principal amount thereof, for the Interest
Period applicable thereto, at a rate per annum equal to the sum of the London
Interbank Offered Rate for such Interest Period (determined in accordance with
Section 2.6(c) as if the related Money Market LIBOR Borrowing were a Committed
Euro-Dollar Borrowing) plus (or minus) the Money Market Margin quoted by the
Bank making such Loan. Each Money Market Absolute Rate Loan shall bear interest
on the outstanding principal amount thereof, for the Interest Period applicable
thereto, at a rate per annum equal to the Money Market Absolute Rate quoted by
the Bank making such Loan. Such interest shall be payable for each Interest
Period on the last day thereof and, if such Interest Period is longer than three
months, at intervals of three months after the first day thereof. Any overdue
principal of or interest on any Money Market Loan shall bear interest, payable
on demand, for each day until paid at a rate per annum equal to the sum of 2%
plus the Base Rate for such day.
(f) The Agent shall determine each interest rate applicable to
the Loans hereunder. The Agent shall promptly notify the Borrower and the
participating Banks of each rate of interest so determined, and its
determination thereof shall be conclusive in the absence of manifest error.
(g) Each Reference Bank agrees to use its best efforts to
furnish quotations to the Agent as contemplated by this Section. If any
Reference Bank does not furnish a timely quotation, the Agent shall determine
the relevant interest rate on the basis of the quotation or quotations furnished
by the remaining Reference Bank or Banks or, if
25
none of such quotations is available on a timely basis, the provisions of
Section 8.1 shall apply.
SECTION 2.7. Method of Electing Interest Rates. (a) The Loans
included in each Committed Borrowing shall bear interest initially at the type
of rate specified by the Borrower in the applicable Notice of Committed
Borrowing. Thereafter, the Borrower may from time to time elect to change or
continue the type of interest rate borne by each Group of Loans (subject to
subsection (d) of this Section and the provisions of Article 8), as follows:
(i) if such Loans are Base Rate Loans, the Borrower may elect
to convert such Loans to CD Loans as of any Domestic Business Day or to
Euro-Dollar Loans as of any Euro-Dollar Business Day;
(ii) if such Loans are CD Loans, the Borrower may elect to
convert such Loans to Base Rate Loans or Euro-Dollar Loans or elect to
continue such Loans as CD Loans for an additional Interest Period,
subject to Section 2.12 if any such conversion is effective on any day
other than the last day of an Interest Period applicable to such Loans;
and
(iii) if such Loans are Euro-Dollar Loans, the Borrower may
elect to convert such Loans to Base Rate Loans or CD Loans or elect to
continue such Loans as Euro-Dollar Loans for an additional Interest
Period, subject to Section 2.12 if any such conversion is effective on
any day other than the last day of an Interest Period applicable to
such Loans.
Each such election shall be made by delivering a notice (a "Notice of Interest
Rate Election") to the Agent not later than 10:30 A.M. (New York City time) on
the third Euro-Dollar Business Day before the conversion or continuation
selected in such notice is to be effective (unless the relevant Loans are to be
converted from Domestic Loans of one type to Domestic Loans of the other type or
are CD Loans to be continued as CD Loans for an additional Interest Period, in
which case such notice shall be delivered to the Agent not later than 10:30 A.M.
(New York City time) on the second Domestic Business Day before such conversion
or continuation is to be effective). A Notice of Interest Rate Election may, if
it so specifies, apply to only a portion of the aggregate principal amount of
the relevant Group of Loans; provided that (i) such portion is allocated ratably
among the Loans comprising such Group and (ii) the portion to which such Notice
applies, and the remaining portion to which it does not apply, are each at
26
least $10,000,000 (unless such portion is comprised of Base Rate Loans). If no
such notice is timely received before the end of an Interest Period for any
Group of CD Loans or Euro-Dollar Loans, the Borrower shall be deemed to have
elected that such Group of Loans be converted to Base Rate Loans at the end of
such Interest Period.
(b) Each Notice of Interest Rate Election shall
specify:
(i) the Group of Loans (or portion thereof) to
which such notice applies;
(ii) the date on which the conversion or continuation selected in
such notice is to be effective, which shall comply with the applicable
clause of subsection (a) above;
(iii) if the Loans comprising such Group are to be converted, the
new type of Loans and, if the Loans resulting from such conversion are
to be CD Loans or Euro-Dollar Loans, the duration of the next
succeeding Interest Period applicable thereto; and
(iv) if such Loans are to be continued as CD Loans or Euro-Dollar
Loans for an additional Interest Period, the duration of such
additional Interest Period.
Each Interest Period specified in a Notice of Interest Rate Election shall
comply with the provisions of the definition of Interest Period.
(c) Promptly after receiving a Notice of Interest Rate
Election from the Borrower pursuant to subsection (a) above, the Agent shall
notify each Bank of the contents thereof and such notice shall not thereafter be
revocable by the Borrower.
(d) The Borrower shall not be entitled to elect to convert any
Committed Loans to, or continue any Committed Loans for an additional Interest
Period as, CD Loans or Euro-Dollar Loans if (i) the aggregate principal amounts
of any Group of CD Loans or Euro-Dollar Loans created or continued as a result
of such election would be less than $10,000,000 or (ii) a Default shall have
occurred and be continuing when the Borrower delivers notice of such election to
the Agent.
SECTION 2.8. Facility Fee. (a) The Borrower
shall pay to the Agent, for the account of the Banks, a
facility fee at the Facility Fee Rate (determined daily in
27
accordance with the Pricing Schedule). Such facility fee shall accrue (i) from
and including the Effective Date to but excluding the date on which the
Commitments terminate in their entirety, on the daily aggregate amount of the
Commitments (whether used or unused) and (ii) from and including such date of
termination to but excluding the date on which the Loans shall be repaid in
their entirety, on the daily aggregate outstanding principal amount of the
Loans. Such facility fee shall be allocated among the Banks ratably in
proportion to their Commitments; provided that any facility fee accruing after
the Commitments terminate in their entirety shall be allocated among the Banks
ratably in proportion to the unpaid principal amounts of their respective Loans.
(b) Fees accrued under subsection (a) of this Section shall be
payable quarterly in arrears on each Quarterly Payment Date and on the date on
which the Commitments terminate in their entirety (and, if later, the date on
which the Loans shall be repaid in their entirety).
SECTION 2.9. Termination or Reduction of Commitments. (a) The
Borrower may, upon at least three Domestic Business Days' notice to the Agent,
(i) terminate the Commitments at any time, if no Loans are outstanding at such
time, or (ii) ratably reduce from time to time by an aggregate amount of at
least $10,000,000, the aggregate amount of the Commitments in excess of the
aggregate outstanding principal amount of the Loans. Promptly after receiving a
notice pursuant to this subsection, the Agent shall notify each Bank of the
contents thereof.
(b) Unless previously terminated, the Commitments shall
terminate in their entirety on the Termination Date.
SECTION 2.10. Optional Prepayments. (a) Subject in the case of
any Money Market Borrowing to Section 2.12, the Borrower may, upon at least one
Domestic Business Day's notice to the Agent, prepay any Group of Domestic Loans
(or any Money Market Borrowing bearing interest at the Base Rate pursuant to
Section 8.1), in each case in whole at any time, or from time to time in part in
amounts aggregating $10,000,000 by paying the principal amount to be prepaid
together with interest accrued thereon to the date of prepayment. Each such
optional prepayment shall be applied to prepay ratably the Loans of the several
Banks included in such Group of Loans (or such Money Market Borrowing).
(b) Except as provided in subsection (a) above,
the Borrower may not prepay all or any portion of the
28
principal amount of any Money Market Loan before the
maturity thereof.
(c) Promptly after receiving a notice of prepayment pursuant
to this Section, the Agent shall notify each Bank of the contents thereof and of
such Bank's ratable share (if any) of such prepayment, and such notice shall not
thereafter be revocable by the Borrower.
SECTION 2.11. General Provisions as to Payments. (a) The
Borrower shall make each payment of principal of, and interest on, the Loans and
of fees hereunder not later than 12:00 Noon (New York City time) on the date
when due, in Federal or other funds immediately available in New York City, to
the Agent at its address specified in or pursuant to Section 9.1. The Agent will
promptly distribute to each Bank its ratable share of each such payment received
by the Agent for the account of the Banks. Whenever any payment of principal of,
or interest on, the Domestic Loans or of fees shall be due on a day which is not
a Domestic Business Day, the date for payment thereof shall be extended to the
next succeeding Domestic Business Day. Whenever any payment of principal of, or
interest on, the Euro-Dollar Loans shall be due on a day which is not a
Euro-Dollar Business Day, the date for payment thereof shall be extended to the
next succeeding Euro-Dollar Business Day unless such Euro-Dollar Business Day
falls in another calendar month, in which case the date for payment thereof
shall be the next preceding Euro-Dollar Business Day. Whenever any payment of
principal of, or interest on, the Money Market Loans shall be due on a day which
is not a Euro-Dollar Business Day, the date for payment thereof shall be
extended to the next succeeding Euro-Dollar Business Day. If the date for any
payment of principal is extended by operation of law or otherwise, interest
thereon shall be payable for such extended time.
(b) Unless the Borrower notifies the Agent before the date on
which any payment is due to the Banks hereunder that the Borrower will not make
such payment in full, the Agent may assume that the Borrower has made such
payment in full to the Agent on such date and the Agent may, in reliance on 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 that the Borrower
shall not have so made such payment, each Bank shall repay to the Agent
forthwith 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 repays such amount to the Agent, at the Federal Funds
Rate.
29
SECTION 2.12. Funding Losses. If the Borrower makes any
payment of principal with respect to any Fixed Rate Loan or any Fixed Rate Loan
is converted to a different type of Loan (whether such payment or conversion is
pursuant to Article 2,6 or 8 or otherwise, but excluding any prepayment required
pursuant to Section 2.4(c)) on any day other than the last day of an Interest
Period applicable thereto, or the last day of an applicable period fixed
pursuant to Section 2.6(d), or if the Borrower fails to borrow, prepay, convert
or continue any Fixed Rate Loans after notice has been given to any Bank in
accordance with Section 2.4(a), 2.7(c) or 2.10(c), the Borrower shall reimburse
each Bank within 15 days after demand for any resulting loss or expense incurred
by it (or by an existing or prospective Participant in the related Loan),
including (without limitation) any loss incurred in obtaining, liquidating or
employing deposits from third parties, but excluding loss of margin for the
period after such payment or conversion or failure to borrow, prepay, convert or
continue; provided that such Bank shall have delivered to the Borrower a
certificate as to the amount of such loss or expense, which certificate shall be
conclusive in the absence of manifest error.
SECTION 2.13. Computation of Interest and Fees. Interest based
on the Prime Rate hereunder shall be computed on the basis of a year of 365 days
(or 366 days in a leap year) and paid for the actual number of days elapsed
(including the first day but excluding the last day). All other interest and
fees shall be computed on the basis of a year of 360 days and paid for the
actual number of days elapsed (including the first day but excluding the last
day).
SECTION 2.14. Notes. (a) The Borrower's obligation to repay
the Loans of each Bank shall be evidenced by a single Note payable to the order
of such Bank for the account of its Applicable Lending Office.
(b) Each Bank may, by notice to the Borrower and the Agent,
request that the Borrower's obligation to repay such Bank's Loans of a
particular type be evidenced by a separate Note. Each such Note shall be in
substantially the form of Exhibit A hereto with appropriate modifications to
reflect the fact that it relates solely to Loans of the relevant type. Each
reference in this Agreement to the "Note" of such Bank shall be deemed to refer
to and include any or all of such Notes, as the context may require.
(c) Promptly after it receives each Bank's Note pursuant to
Section 3.1(a), the Agent shall forward such
30
Note to such Bank. Each Bank shall record the date, amount and type of each Loan
made by it and the date and amount of each payment of principal made by the
Borrower with respect thereto, and may, if such Bank so elects in connection
with any transfer or enforcement of its Note, endorse on the schedule forming a
part thereof appropriate notations to evidence the foregoing information with
respect to each such Loan then outstanding; provided that a Bank's failure to
make any such recordation or endorsement shall not affect the Borrower's
obligations hereunder or under the Notes. Each Bank is hereby irrevocably
authorized by the Borrower so to endorse its Note and to attach to and make a
part of its Note a continuation of any such schedule as and when required.
SECTION 2.15. Regulation D Compensation. Each Bank may require
the Borrower to pay, contemporaneously with each payment of interest on the
Euro-Dollar Loans, additional interest on the related Euro-Dollar Loan of such
Bank at a rate per annum determined by such Bank up to but not exceeding the
excess of (i) (A) the applicable London Interbank Offered Rate divided by (B)
one minus the Euro-Dollar Reserve Percentage over (ii) the applicable London
Interbank Offered Rate. Any Bank wishing to require payment of such additional
interest (x) shall so notify the Borrower and the Agent, in which case such
additional interest on the Euro-Dollar Loans of such Bank shall be payable to
such Bank at the place indicated in such notice with respect to each Interest
Period commencing at least three Euro-Dollar Business Days after such Bank gives
such notice and (y) shall notify the Borrower at least five Euro-Dollar Business
Days before each date on which interest
31
is payable on the Euro-Dollar Loans of the amount then due
it under this Section.
SECTION 2.16. Increased Commitments; Additional Banks. (a)
Subsequent to the Effective Date, the Borrower may, upon at least 30 days'
notice to the Agent (which shall promptly provide a copy of such notice to the
Banks), propose to increase the aggregate amount of the Commitments by an amount
not to exceed $50,000,000 (the amount of any such increase, the "Increased
Commitments"). Each Bank party to this Agreement at such time shall have the
right (but no obligation), for a period of 15 days following receipt of such
notice, to elect by notice to the Borrower and the Agent to increase its
Commitment by a principal amount which bears the same ratio to the Increased
Commitments as its then Commitment bears to the aggregate Commitments then
existing.
(b) If any Bank party to this Agreement shall not elect to
increase its Commitment pursuant to subsection (a) of this Section, the Borrower
may designate another bank or other banks (which may be, but need not be, one or
more of the existing Banks) which at the time agree to (i) in the case of any
such bank that is an existing Bank, increase its Commitment and (ii) in the case
of any other such bank (an "Additional Bank"), become a party to this Agreement.
The sum of the increases in the Commitments of the existing Banks pursuant to
this subsection (b) plus the Commitments of the Additional Banks shall not in
the aggregate exceed the unsubscribed amount of the Increased Commitments.
(c) An increase in the aggregate amount of the Commitments
pursuant to this Section 2.16 shall become effective upon the receipt by the
Agent of an agreement in form and substance satisfactory to the Agent signed by
the Borrower, by each Additional Bank and by each other Bank whose Commitment is
to be increased, setting forth the new Commitments of such Banks and setting
forth the agreement of each Additional Bank to become a party to this Agreement
and to be bound by all the terms and provisions hereof, together with such
evidence of appropriate corporate authorization on the part of the Borrower with
respect to the Increased Commitments and such opinions of counsel for the
Borrower with respect to the Increased Commitments as the Agent may reasonably
request.
ARTICLE 3
CONDITIONS
32
SECTION 3.1. Closing. The closing hereunder
shall occur on the date on which each of the following
conditions shall have been satisfied:
(a) receipt by the Agent of a duly executed Note for the
account of each Bank dated on or before the Closing Date and complying
with the provisions of Section 2.14;
(b) receipt by the Agent of an opinion of McGuire, Woods,
Battle & Xxxxxx, L.L.P., counsel for the Borrower, dated the Closing
Date and substantially in the form of Exhibit E hereto and covering
such additional matters relating to the transactions contemplated
hereby or by the Plan of Demutualization as the Required Banks may
reasonably request;
(c) receipt by the Agent of an opinion of Xxxxx Xxxx &
Xxxxxxxx, special counsel for the Agent, dated the Closing Date and
substantially in the form of Exhibit F hereto and covering such
additional matters relating to the transactions contemplated hereby or
by the Plan of Demutualization as the Required Banks may reasonably
request;
(d) receipt by the Agent of a letter, dated the Closing Date,
from each of McGuire, Woods, Battle & Xxxxxx, L.L.P. and Debevoise and
Xxxxxxxx stating that each opinion delivered by it in connection with
the Demutualization (including, without limitation, pursuant to the
underwriting agreement between the Borrower and Xxxxxxx Lynch, Pierce,
Xxxxxx & Xxxxx Incorporated, Alex. Xxxxx & Sons Incorporated, Xxxx
Xxxxxx Xxxxxxxx Inc., Xxxxxx Xxxxxxx & Co. Incorporated and Wheat,
First Securities, Inc., as underwriters, pursuant to which the Initial
Public Offering has been made) may be relied on by the Banks and the
Agent as if such opinion had been addressed to them;
(e) the Demutualization shall have been consummated in
accordance with the Plan of Demutualization and the Plan of
Demutualization shall not have been amended or otherwise modified since
October 31, 1996;
(f) the Initial Public Offering shall have been consummated in
accordance with the Plan of Demutualization and the Net Proceeds
therefrom shall be at least $100,000,000;
33
(g) receipt by the Agent of a certificate from
an authorized officer of the Borrower to the
effect set forth in clauses (e) and (f) above; and
(h) receipt by the Agent of all documents the Agent may
reasonably request relating to the existence of the Borrower and its
Subsidiaries, the authority for and the validity of this Agreement and
the Notes, and any other matters relevant hereto or to the
Demutualization, all in form and substance satisfactory to the Agent.
Promptly after the Closing Date occurs, the Agent shall notify the Borrower and
the Banks thereof, and such notice shall be conclusive and binding on all
parties hereto.
SECTION 3.2. Borrowings. The obligation of any
Bank to make a Loan on the occasion of any Borrowing is
subject to the satisfaction of the following conditions:
(a) the fact that the Closing Date shall have
occurred on or before March 31, 1997;
(b) receipt by the Agent of a Notice of Borrowing
as required by Section 2.2 or 2.3, as the case may be;
(c) the fact that, immediately after such Borrowing, the
aggregate outstanding principal amount of the Loans will not exceed the
aggregate amount of the Commitments;
(d) the fact that, immediately before and after
such Borrowing, no Default shall have occurred and be
continuing; and
(e) the fact that the representations and warranties of the
Borrower contained in this Agreement shall be true on and as of the
date of such Borrowing.
Each Borrowing hereunder shall be deemed to be a representation and warranty by
the Borrower on the date of such Borrowing as to the facts specified in clauses
(c), (d)
34
and (e) of this Section and clauses (e) and (f) of Section
3.1.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants that:
SECTION 4.1. Corporate Existence and Power. The Borrower is a
corporation duly incorporated, validly existing and in good standing under the
laws of the Commonwealth of Virginia, and has all powers and all governmental
licenses, consents, authorizations and approvals required to carry on its
business as now conducted.
SECTION 4.2. Corporate and Governmental Authorization; No
Contravention. The execution, delivery and performance by the Borrower of this
Agreement and the Notes are within the Borrower's powers, have been duly
authorized by all necessary action, require no action by or in respect of, or
filing with, any governmental body, agency or official (other than those set
forth in the Plan of Demutualization, each of which has been taken or made) and
do not contravene, or constitute a default under, any provision of applicable
law or regulation or of the Borrower's articles of incorporation or bylaws or of
any agreement, judgment, injunction, order, decree or other instrument binding
upon the Borrower or any Subsidiary or result in the creation or imposition of
any Lien on any asset of the Borrower or any Subsidiary.
SECTION 4.3. Binding Effect. This Agreement constitutes a
valid and binding agreement of the Borrower and each Note, when executed and
delivered in accordance with this Agreement, will constitute a valid and binding
obligation of the Borrower, in each case enforceable in accordance with its
terms, subject to applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally and general principles of equity.
SECTION 4.4. Financial Information. (a) The consolidated
balance sheet of Blue Cross and Blue Shield of Virginia and its Consolidated
Subsidiaries as of December 31, 1995 and September 30, 1996 and the related
consolidated statements of operations, changes in surplus and cash flows for the
year ended December 31, 1995 and the nine months ended September 30, 1996,
reported on by KPMG Peat Marwick,
35
LLP and set forth in the Borrower's Registration Statement, a copy of which has
been delivered to each of the Banks, fairly present, in conformity with GAAP,
the consolidated financial position of Blue Cross and Blue Shield of Virginia
and its Consolidated Subsidiaries as of such dates and their consolidated
results of operations, changes in surplus and cash flows for such year and
nine-month period.
(b) The unaudited pro forma consolidated balance sheet of the
Borrower and its Consolidated Subsidiaries as of September 30, 1996 and the
related unaudited pro forma consolidated statements of operations for the year
ended December 31, 1995 and the nine-month period ended September 30, 1996, set
forth in the Borrower's Registration Statement, are complete and correct in all
material respects and, subject to the footnotes thereto, have been prepared on
the basis described therein and otherwise in conformity with GAAP applied on a
basis consistent with the financial statements referred to in subsection (a) of
this Section and show the consolidated financial position and results of
operations of the Borrower and its Consolidated Subsidiaries as if the
Demutualization had occurred as of September 30, 1996 for purposes of the
unaudited pro forma consolidated balance sheet and as of January 1, 1995 for
purposes of the unaudited pro forma consolidated statements of operations for
the year ended December 31, 1995 and the nine months ended September 30, 1996.
(c) The Annual Statement (Life and Accident and Health Form)
of Blue Cross and Blue Shield of Virginia as of December 31, 1995, in the form
submitted to the insurance department or other comparable regulatory authority
of the Commonwealth of Virginia, copies of which have been delivered to each of
the Banks, is a full and true statement, in all material respects, of all the
assets and liabilities and of the condition and affairs of Trigon Insurance as
of the date thereof, and of its income and deductions therefrom for the year
ended on that date, all in conformity with statutory accounting principles in
effect on the date thereof.
(d) Since September 30, 1996 there has been no material
adverse change in the business, financial position, results of operations or
prospects of the Borrower and its Consolidated Subsidiaries, considered as a
whole.
SECTION 4.5. Litigation. Except as disclosed in
the Borrower's Registration Statement, there is no action,
suit or proceeding pending against, or to the Borrower's
knowledge threatened against or affecting, the Borrower or
any Subsidiary before any court or arbitrator or any
36
governmental body, agency or official in which there is a reasonable possibility
of an adverse decision which could reasonably be expected to materially
adversely affect the business, consolidated financial position or consolidated
results of operations of the Borrower and its Consolidated Subsidiaries,
considered as a whole, or which in any manner draws into question the validity
or enforceability of this Agreement or the Notes or the legality or consummation
of the Demutualization.
SECTION 4.6. Compliance with Laws; ERISA. (a) The Borrower and
each Subsidiary of the Borrower is in compliance, in all material respects, with
all applicable laws, ordinances, rules, regulations and requirements of
governmental bodies, agencies and officials.
(b) Each member of the ERISA Group has fulfilled its
obligations under the minimum funding standards of ERISA and the Internal
Revenue Code with respect to each Plan and is in compliance in all material
respects with the presently applicable provisions of ERISA and the Internal
Revenue Code with respect to each Plan. No member of the ERISA Group has (i)
sought a waiver of the minimum funding standard under Section 412 of the
Internal Revenue Code in respect of any Plan, (ii) failed to make any
contribution or payment to any Plan or Multiemployer Plan, or made any amendment
to any Plan, which has resulted or could result in the imposition of a Lien or
the posting of a bond or other security under ERISA or the Internal Revenue Code
or (iii) incurred any liability under Title IV of ERISA other than a liability
to the PBGC for premiums under Section 4007 of ERISA.
SECTION 4.7. Environmental Matters. The Borrower has
reasonably concluded that the liabilities and costs associated with the effect
of Environmental Laws on the business, operations and properties of the Borrower
and its Subsidiaries, including the costs of complying with Environmental Laws,
are unlikely to have a Material Adverse Effect.
SECTION 4.8. Taxes. The Borrower and its Subsidiaries have
filed all United States Federal income tax returns and all other material tax
returns which are required to be filed by them and have paid all taxes due
pursuant to such returns or pursuant to any assessment received by the Borrower
or any Subsidiary. The charges, accruals and reserves on the books of the
Borrower and its Subsidiaries in respect of taxes or other governmental charges
are, in the Borrower's opinion, adequate.
37
SECTION 4.9. Subsidiaries. Each of the Borrower's corporate
Subsidiaries is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation and has all powers
and all governmental licenses, authorizations, consents and approvals required
to carry on its business as now conducted except for such powers, licenses,
authorizations, consents or approvals the absence of which could not reasonably
be expected to have a Material Adverse Effect.
SECTION 4.10. Regulatory Restrictions on Borrowing. The
Borrower is not an "investment company" within the meaning of the Investment
Company Act of 1940, as amended, (ii) a "holding company" within the meaning of
the Public Utility Holding Company Act of 1935, as amended, or (iii) otherwise
subject to any regulatory scheme which restricts its ability to incur debt.
SECTION 4.11. Full Disclosure. All information (including,
without limitation, the Borrower's Registration Statement) heretofore furnished
by the Borrower to the Agent or any Bank for purposes of or in connection with
this Agreement or any transaction contemplated hereby is, and all such
information hereafter furnished by the Borrower to the Agent or any Bank will
be, true and accurate in all material respects on the date as of which such
information is stated or certified. The Borrower has disclosed to the Banks in
writing any and all facts which materially and adversely affect, or may affect
(to the extent the Borrower can now reasonably foresee), the business,
operations or financial condition of the Borrower and its Consolidated
Subsidiaries, taken as a whole, or the Borrower's ability to perform its
obligations under this Agreement. Information in the form of forecasts delivered
by the Borrower to the Agent or any Bank are based upon the best information
available to the Borrower at the time such forecasts were made and take into
consideration all information which, in the reasonable judgment of the Borrower
was believed to be material at the time, it being understood that such
statements and conclusions are necessarily based upon opinions, estimates and
projections, and the Borrower does not warrant that such opinions, estimates and
projections will ultimately prove to have been accurate.
ARTICLE 5
COVENANTS
38
The Borrower agrees that, so long as any Bank has any
Commitment hereunder or any principal of or interest on any Loan remains unpaid:
SECTION 5.1. Information. The Borrower will
deliver to each of the Banks:
(a) as soon as available and in any event within 90 days after
the end of each Fiscal Year, a consolidated balance sheet of the
Borrower and its Consolidated Subsidiaries as of the end of such Fiscal
Year and the related consolidated statements of income, cash flows and
changes in stockholders' equity for such Fiscal Year, setting forth in
each case (commencing with the Fiscal Year ending December 31, 1998) in
comparative form the figures for the previous Fiscal Year, all reported
on in a manner acceptable to the SEC by KPMG Peat Marwick or other
independent public accountants of nationally recognized standing;
(b) as soon as available and in any event within 45 days after
the end of each of the first three Fiscal Quarters of each Fiscal Year
(commencing with the Fiscal Quarter ending March 31, 1997), a
consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries as of the end of such Fiscal Quarter, the related
consolidated statements of income for such Fiscal Quarter and the
related consolidated statements of cash flows and changes in
stockholders' equity for the portion of the Fiscal Year ended at the
end of such Fiscal Quarter, setting forth (commencing with the Fiscal
Quarter ending March 31, 1998) in the case of each such statement of
income and cash flows in comparative form the figures for the
corresponding period in the previous Fiscal Year, all certified
(subject to normal year-end adjustments) as to fairness of presentation
and (except for the financial statements at, and as of, March 31, 1997)
consistency with GAAP by the Borrower's chief financial officer or
chief accounting officer;
(c) as soon as available and in any event within 120 days
after the end of each fiscal year of Trigon Insurance, a duly completed
Annual Statement (Life and Accident and Health Form) for Trigon
Insurance, in the form submitted to the insurance department or other
comparable regulatory authority of the Commonwealth of Virginia;
(d) as soon as available and in any event within
60 days after the end of each of the first three
39
quarters of each fiscal year of Trigon Insurance, a duly completed
Quarterly Statement (Life and Accident and Health Form) for Trigon
Insurance in the form submitted to the insurance department or other
comparable regulatory authority of the Commonwealth of
Virginia;
(e) simultaneously with the delivery of each set of financial
statements referred to in clauses (a) and (b) above, a certificate of
the Borrower's chief financial officer or chief accounting officer (i)
setting forth in reasonable detail the calculations required to
establish whether the Borrower was in compliance with the requirements
of Section 5.7 and Sections 5.10 through 5.15, inclusive, on the date
of such financial statements and (ii) stating whether any Default
exists on the date of such certificate and, if any Default then exists,
setting forth the details thereof and the action which the Borrower is
taking or proposes to take with respect thereto;
(f) simultaneously with the delivery of each set of financial
statements referred to in clause (a) above, a statement of the firm of
independent public accountants which reported on such statements (i)
stating whether anything has come to their attention to cause them to
believe that any Default existed on the date of such statements and
(ii) confirming the calculations set forth in the officer's certificate
delivered simultaneously therewith pursuant to clause (e) above;
(g) within five Domestic Business Days after any officer of
the Borrower obtains knowledge of any Default, if such Default is then
continuing, a certificate of the Borrower's chief financial officer or
chief accounting officer setting forth the details thereof and the
action which the Borrower is taking or proposes to take with respect
thereto;
(h) promptly after the mailing thereof to the Borrower's
shareholders generally, copies of all financial statements, reports and
proxy statements so mailed;
(i) promptly after the filing thereof, copies of all
registration statements (other than the exhibits thereto and any
registration statements on Form S-8 or its equivalent) and reports on
Forms 10-K, 10-Q and 8-K (or their equivalents) filed by the Borrower
with the SEC;
40
(j) if and when any member of the ERISA Group (i) gives or is
required to give notice to the PBGC of any "reportable event" (as
defined in Section 4043 of ERISA) with respect to any Plan which might
constitute grounds for a termination of such Plan under Title IV of
ERISA, or knows that the plan administrator of any Plan has given or is
required to give notice of any such reportable event, a copy of the
notice of such reportable event given or required to be given to the
PBGC; (ii) receives notice of complete or partial withdrawal liability
under Title IV of ERISA or notice that any Multiemployer Plan is in
reorganization, is insolvent or has been terminated, a copy of such
notice; (iii) receives notice from the PBGC under Title IV of ERISA of
an intent to terminate, impose liability (other than for premiums under
Section 4007 of ERISA) in respect of, or appoint a trustee to
administer any Plan, a copy of such notice; (iv) applies for a waiver
of the minimum funding standard under Section 412 of the Internal
Revenue Code, a copy of such application; (v) gives notice of intent to
terminate any Plan under Section 4041(c) of ERISA, a copy of such
notice and other information filed with the PBGC; (vi) gives notice of
withdrawal from any Plan pursuant to Section 4063 of ERISA, a copy of
such notice; or (vii) fails to make any payment or contribution to any
Plan or Multiemployer Plan or makes any amendment to any Plan which has
resulted or could result in the imposition of a Lien or the posting of
a bond or other security, a certificate of the Borrower's chief
financial officer or chief accounting officer setting forth details as
to such occurrence and the action, if any, which the Borrower or
applicable member of the ERISA Group is required or proposes to take;
and
(k) from time to time such additional information regarding
the financial position or business of the Borrower and its Subsidiaries
as the Agent, at the request of any Bank, may reasonably request.
SECTION 5.2. Payment of Obligations. The Borrower will pay and
discharge, and will cause each Subsidiary to pay and discharge, at or before
maturity, all their respective material obligations and liabilities (including,
without limitation, tax liabilities and claims which if unpaid might by law give
rise to a Lien), except where the same are contested in good faith by
appropriate proceedings, and will maintain, and will cause each Subsidiary to
maintain, in accordance with GAAP, appropriate reserves for the accrual thereof.
41
SECTION 5.3. Maintenance of Property; Insurance. (a) The
Borrower will keep, and will cause each Subsidiary to keep, all property useful
and necessary in its business in good working order and condition, ordinary wear
and tear excepted.
(b) The Borrower will, and will cause each Subsidiary to,
maintain (either in the Borrower's name or in such Subsidiary's own name) with
financially sound and responsible insurance companies, insurance on all their
respective properties in at least such amounts, against at least such risks and
with no greater risk retention as are usually maintained, insured against or
retained, as the case may be, in the same general area by companies of
established repute engaged in the same or a similar business. The Borrower will
furnish to the Banks, upon request from the Agent, information presented in
reasonable detail as to the insurance so carried.
SECTION 5.4. Conduct of Business and Maintenance of Existence.
The Borrower and its Subsidiaries will continue to engage in business of the
same general type as now conducted by the Borrower and its Subsidiaries, and
will preserve, renew and keep in full force and effect their respective
corporate existences and their respective rights, privileges and franchises
necessary or desirable in the normal conduct of business; provided that nothing
in this Section shall prohibit:
(i) the merger of a Subsidiary into the Borrower
if, after giving effect thereto, no Default shall have
occurred and be continuing;
(ii) the merger or consolidation of a Subsidiary with or into
a Person other than the Borrower if the corporation surviving such
consolidation or merger is a Subsidiary and, after giving effect
thereto, no Default shall have occurred and be continuing or
(iii) the termination of the corporate existence of a
Subsidiary if the Borrower in good faith determines that such
termination is in the best interest of the Borrower and is not
materially disadvantageous to the Banks.
SECTION 5.5. Compliance with Laws. The Borrower will comply,
and will cause each Subsidiary to comply with all applicable laws, ordinances,
rules, regulations and requirements of governmental authorities (including,
without limitation, Environmental Laws and ERISA and the rules and regulations
thereunder), except where the necessity of
42
compliance therewith is contested in good faith by appropriate proceedings or
where noncompliance could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
SECTION 5.6. Inspection of Property, Books and Records. The
Borrower will keep, and will cause each Subsidiary to keep, proper books of
record and account in which full and correct entries shall be made of all
dealings and transactions in relation to its business and activities; and will
permit, and will cause each Subsidiary to permit, representatives of any Bank at
such Bank's expense to visit and inspect any of their respective properties, to
examine and make abstracts from any of their respective books and records and to
discuss their respective affairs, finances and accounts with their respective
officers, employees and independent public accountants, all at such reasonable
times and as often as may reasonably be requested.
SECTION 5.7. Company Action Level Ratio. The ratio of (x)
Total Adjusted Capital (as defined in the RiskBased Capital Act or in the rules
and procedures prescribed from time to time by the NAIC with respect thereto) to
(y) the Company Action Level RBC (as defined in the Risk-Based Capital Act or in
the rules and procedures prescribed from time to time by the NAIC with respect
thereto) of Trigon Insurance will at no time be less than 150%; provided that,
if the Borrower notifies the Agent that the Borrower wishes to amend this
Section 5.7 to eliminate the effect of any change in the definition of Total
Adjusted Capital or Company Action Level RBC under the Risk-Based Capital Act
(or in the rules and procedures prescribed from time to time by the NAIC with
respect thereto) on the operation of the covenant in this Section 5.7 (or if the
Agent notifies the Borrower that the Required Banks wish to amend this Section
5.7 for such purpose), then the Borrower's compliance with such covenant shall
be determined on the basis of such definitions, rules and procedures in effect
immediately before the relevant change in such definitions, rules and procedures
became effective, either until such notice is withdrawn by the Person that
delivered such notice or until such covenant is amended in a manner satisfactory
to the Borrower and the Required Banks.
SECTION 5.8. Mergers and Sales of Assets. The Borrower will
not consolidate or merge with or into any other Person; provided that the
Borrower may merge with another Person if (i) the Borrower is the corporation
surviving such merger and (ii) after giving effect to such merger, no Default
shall have occurred and be continuing. The Borrower and its Subsidiaries will
not sell, lease or
43
otherwise transfer, directly or indirectly, all or any substantial part of the
assets of the Borrower and its Subsidiaries, taken as a whole, to any other
Person.
SECTION 5.9. Use of Proceeds. The proceeds of the Loans will
be used by the Borrower for general corporate purposes. None of such proceeds
will be used, directly or indirectly, for the purpose, whether immediate,
incidental or ultimate, of buying or carrying any "margin stock" within the
meaning of Regulation U.
SECTION 5.10. Negative Pledge. Neither the Borrower nor any
Subsidiary will create, assume or suffer to exist any Lien on any asset now
owned or hereafter acquired by it, except:
(a) Liens existing on the date of this Agreement (after taking
into account the Demutualization) securing Debt outstanding on the date
of this Agreement in an aggregate principal or face amount not
exceeding $2,000,000;
(b) any Lien existing on any asset of any Person
at the time such Person becomes a Subsidiary and not
created in contemplation of such event;
(c) any Lien on any asset securing Debt incurred or assumed
for the purpose of financing all or any part of the cost of acquiring
such asset, provided that such Lien attaches to such asset concurrently
with or within 90 days after the acquisition thereof;
(d) any Lien on any asset of any Person existing at the time
such Person is merged or consolidated with or into the Borrower or a
Subsidiary and not created in contemplation of such event;
(e) any Lien existing on any asset prior to the
acquisition thereof by the Borrower or a Subsidiary and
not created in contemplation of such acquisition;
(f) any Lien arising out of the refinancing, extension,
renewal or refunding of any Debt secured by any Lien permitted by any
of the foregoing clauses of this Section, provided that such Debt is
not increased and is not secured by any additional assets;
(g) Liens arising in the ordinary course of its
business which (i) do not secure Debt or Derivatives
Obligations and (ii) do not secure any single
44
obligation (or class of obligations having a common
cause) in an amount exceeding $10,000,000;
(h) Liens on cash and cash equivalents securing Derivatives
Obligations, provided that the aggregate amount of cash and cash
equivalents subject to such Liens may at no time exceed $50,000,000;
and
(i) Liens not otherwise permitted by the foregoing clauses of
this Section securing Debt in an aggregate principal or face amount not
at any time exceeding 5% of Adjusted Consolidated Tangible Net
Worth.
SECTION 5.11. Consolidated Debt to Consolidated
Total Capitalization. Consolidated Debt will at no time
exceed 40% of Consolidated Total Capitalization.
SECTION 5.12. Minimum Adjusted Consolidated Tangible Net
Worth. Adjusted Consolidated Tangible Net Worth will at no time be less than an
amount equal to the sum of (i) $600,000,000 and (ii) an amount equal to 50% of
Consolidated Net Income for each Fiscal Quarter ending after December 31, 1996
but before the date of determination, in each case, for which Consolidated Net
Income is positive (but with no deduction on account of negative Consolidated
Net Income for any Fiscal Quarter).
SECTION 5.13. Subsidiary Debt. The total Debt of all
Subsidiaries will at no time exceed $15,000,000; provided that (i) Debt owing to
the Borrower or another Subsidiary and (ii) Debt of a Regulated Entity which (x)
qualifies as capital under insurance regulations applicable to such Regulated
Entity and (y) has been funded pro rata by shareholders of such Regulated Entity
shall not be treated as Debt for purposes of this Section 5.13.
SECTION 5.14. Restricted Payments. Neither the Borrower nor
any Subsidiary will declare or make any Restricted Payment unless, after giving
effect thereto, the aggregate of all Restricted Payments does not exceed the sum
of (i) $10,000,000 plus (ii) 50% of Consolidated Net Income (or minus 100% of
consolidated net loss) of the Borrower and its Consolidated Subsidiaries for the
period from the Demutualization through the end of the then most recent Fiscal
Quarter (treated for this purpose as a single accounting period) plus (iii) an
amount (not to exceed $50,000,000) equal to 50% of the amount of Extraordinary
Dividends received by the Borrower after the date hereof and before December 31,
1997. For purposes of this Section 5.14 Extraordinary Dividends means cash
dividends paid by a
45
Regulated Entity (or by a Subsidiary which is not a Regulated Entity but which
at January 1, 1997 was a Subsidiary of a Regulated Entity) to the Borrower out
of income earned by such Regulated Entity (or Subsidiary) prior to January 1,
1997.
SECTION 5.15. Investments. Neither the Borrower nor any
Consolidated Subsidiary will hold, make or acquire any Investment in any Person
other than:
(a) Investments in any Subsidiary whose principal business on
the date of making the such Investment or after giving effect to such
Investment is either (i) the same line or lines of business as the
Borrower or (ii) in the judgment of the Borrower reasonably related to
such line or lines of business;
(b) Investments in cash and marketable financial
instruments;
(c) Investments by a Regulated Entity in Admitted
Assets and, up to 15% of total investment assets of
such Regulated Entity, in Non-Admitted Assets; and
(d) any Investment not otherwise permitted by the foregoing
clauses of this Section if, immediately after such Investment is made
or acquired, the aggregate net book value of all Investments permitted
by this clause (d) does not exceed $50,000,000.
SECTION 5.16. Transactions with Affiliates. The Borrower will
not, and will not permit any Subsidiary to, directly or indirectly, engage in
any transaction with any Affiliate which could reasonably be expected to have a
Material Adverse Effect.
ARTICLE 6
DEFAULTS
SECTION 6.1. Events of Default. If one or more
of the following events ("Events of Default") shall have
occurred and be continuing:
(a) the Borrower shall fail to pay when due any principal of
any Loan, or shall fail to pay within five days of the due date thereof
any interest, fee or other amount payable hereunder;
46
(b) the Borrower shall fail to observe or perform any covenant
contained in Article 5, other than those contained in Sections through
5.6, inclusive;
(c) the Borrower shall fail to observe or perform any covenant
or agreement (other than those covered by clause (a) or (b) above)
contained in this Agreement or any amendment hereof for 10 days after
the Agent gives notice thereof to the Borrower at the request of any
Bank;
(d) any representation, warranty, certification or statement
made by the Borrower in this Agreement or any amendment hereof or in
any certificate, financial statement or other document delivered
pursuant to this Agreement shall prove to have been incorrect in any
material respect when made (or deemed made);
(e) the Borrower or any Subsidiary shall fail to make one or
more payments in respect of Material Financial Obligations when due or
within any applicable grace period;
(f) any event or condition shall occur which results in the
acceleration of the maturity of any Material Debt or enables (or, with
the giving of notice or lapse of time or both, would enable) the holder
of such Debt or any Person acting on such holder's behalf to accelerate
the maturity thereof;
(g) the Borrower or any Subsidiary shall commence a voluntary
case or other proceeding seeking liquidation, reorganization or other
relief with respect to itself or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect or seeking
the appointment of a trustee, receiver, liquidator, custodian or other
similar official of it or any substantial part of its property, or
shall consent to any such relief or to the appointment of or taking
possession by any such official in an involuntary case or other
proceeding commenced against it, or shall make a general assignment for
the benefit of creditors, or shall fail generally to pay its debts as
they become due, or shall take any corporate action to authorize any of
the foregoing;
(h) an involuntary case or other proceeding shall be commenced
against the Borrower or any Subsidiary seeking liquidation,
reorganization or other relief with respect to it or its debts under
any bankruptcy,
47
insolvency or other similar law now or hereafter in effect or seeking
the appointment of a trustee, receiver, liquidator, custodian or other
similar official of it or any substantial part of its property, and
such involuntary case or other proceeding shall remain undismissed and
unstayed for a period of 60 days; or an order for relief shall be
entered against the Borrower or any Subsidiary under the federal
bankruptcy laws as now or hereafter in effect;
(i) any member of the ERISA Group shall fail to pay when due
an amount or amounts aggregating in excess of $10,000,000 which it
shall have become liable to pay under Title IV of ERISA; or notice of
intent to terminate a Material Plan shall be filed under Title IV of
ERISA by any member of the ERISA Group, any plan administrator or any
combination of the foregoing; or the PBGC shall institute proceedings
under Title IV of ERISA to terminate, to impose liability (other than
for premiums under Section 4007 of ERISA) in respect of, or to cause a
trustee to be appointed to administer, any Material Plan; or a
condition shall exist by reason of which the PBGC would be entitled to
obtain a decree adjudicating that any Material Plan must be terminated;
or there shall occur a complete or partial withdrawal from, or a
default, within the meaning of Section 4219(c)(5) of ERISA, with
respect to, one or more Multiemployer Plans which could cause one or
more members of the ERISA Group to incur a current payment obligation
in excess of $25,000,000;
(j) judgments or orders for the payment of money exceeding
$25,000,000 in aggregate amount shall be rendered against the Borrower
or any Subsidiary and such judgments or orders shall continue
unsatisfied and unstayed for a period of 10 days; or
(k) any person or group of persons (within the meaning of
Section 13 or 14 of the Exchange Act) shall have acquired beneficial
ownership (within the meaning of Rule 13d-3 promulgated by the SEC
under said Act) of 30% or more of the outstanding shares of common
stock of the Borrower; or, during any period of 12 consecutive calendar
months, individuals who were directors of the Borrower on the first day
of such period shall cease to constitute a majority of the Borrower's
board of directors;
then, and in every such event, the Agent shall (i) if requested by Banks having
more than 50% in aggregate amount of the Commitments, by notice to the Borrower
terminate the
48
Commitments and they shall thereupon terminate, and (ii) if requested by Banks
holding more than 50% of the aggregate unpaid principal amount of the Loans, by
notice to the Borrower declare the Loans (together with accrued interest
thereon) to be, and the Loans (together with accrued interest thereon) shall
thereupon become, immediately due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by the
Borrower; provided that, if any Event of Default specified in clause or occurs
with respect to the Borrower, then without any notice to the Borrower or any
other act by the Agent or the Banks, the Commitments shall thereupon terminate
and the Loans (together with accrued interest thereon) shall become immediately
due and payable without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by the Borrower.
Notwithstanding anything contained in the foregoing paragraph,
if at any time within 60 days after the Notes have been declared due pursuant to
the preceding paragraph, the Borrower shall pay all arrears of interest and all
payments on account of principal which shall have become due otherwise than by
acceleration (with interest on overdue principal and interest at the rate
specified in this Agreement) and all Defaults (other than non-payment of the
principal of and accrued interest on the Loans due and payable solely by virtue
of acceleration) shall be remedied or waived pursuant to Section 9.5, then the
Banks holding at least 66-2/3% of the aggregate amount of Commitments by notice
to the Borrower may at their option rescind and annul the acceleration and its
consequences; but such action shall not affect any subsequent Default or impair
any right consequent thereon. The provisions of this paragraph are intended
merely to bind the Banks to a decision which may be made at the election of the
aforesaid percentage of the Banks and are not intended to benefit the Borrower
and do not grant the Borrower the right to require the Banks to rescind or annul
any acceleration hereunder, even if the conditions set forth herein are met.
SECTION 6.2. Notice of Default. The Agent shall give notice to
the Borrower under Section promptly upon being requested to do so by any Bank
and shall thereupon notify all the Banks thereof.
ARTICLE 7
THE AGENT
49
SECTION 7.1. Appointment and Authorization. Each Bank
irrevocably appoints and authorizes the Agent to take such action as agent on
its behalf and to exercise such powers under this Agreement as are delegated to
the Agent by the terms hereof or thereof, together with all such powers as are
reasonably incidental thereto.
SECTION 7.2. Agent and Affiliates. Xxxxxx Guaranty Trust
Company of New York shall have the same rights and powers under this Agreement
as any other Bank and may exercise or refrain from exercising the same as though
it were not the Agent, and Xxxxxx Guaranty Trust Company of New York and its
affiliates may accept deposits from, lend money to and generally engage in any
kind of business with the Borrower or any Subsidiary or affiliate of the
Borrower as if it were not the Agent.
SECTION 7.3. Action by Agent. The obligations of the Agent
hereunder are only those expressly set forth herein. Without limiting the
generality of the foregoing, the Agent shall not be required to take any action
with respect to any Default, except as expressly provided in Article 6.
SECTION 7.4. Consultation with Experts. The Agent may consult
with legal counsel (who may be counsel for the Borrower), independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken by it in good faith in accordance with the
advice of such counsel, accountants or experts.
SECTION 7.5. Liability of Agent. Neither the Agent nor any of
its affiliates or any of their respective directors, officers, agents or
employees shall be liable for any action taken or not taken by it in connection
herewith (i) with the consent or at the request of the Required Banks (or such
different number of Banks as any provision hereof expressly requires for such
consent or request) or (ii) in the absence of its own gross negligence or
willful misconduct. Neither the Agent nor any of its affiliates nor any of their
respective directors, officers, agents or employees shall be responsible for or
have any duty to ascertain, inquire into or verify (i) any statement, warranty
or representation made in connection with this Agreement or any borrowing
hereunder; (ii) the performance or observance of any of the covenants or
agreements of the Borrower; (iii) the satisfaction of any condition specified in
Article 3, except receipt of items required to be delivered to the Agent; or
(iv) the validity, effectiveness or genuineness of this Agreement, the Notes or
any other
50
instrument or writing furnished in connection herewith. The Agent shall not
incur any liability by acting in reliance upon any notice, consent, certificate,
statement or other writing (which may be a bank wire, telex, facsimile or
similar writing) believed by it to be genuine or to be signed by the proper
party or parties. Without limiting the generality of the foregoing, the use of
the term "agent" in this Agreement with reference to the Agent is not intended
to connote any fiduciary or other implied (or express) obligations arising under
agency doctrine of any applicable law. Instead, such term is used merely as a
matter of market custom and is intended to create or reflect only an
administrative relationship between independent contracting parties.
SECTION 7.6. Indemnification. The Banks shall, ratably in
proportion to their Commitments, indemnify the Agent, its affiliates and their
respective directors, officers, agents and employees (to the extent not
reimbursed by the Borrower) against any cost, expense (including counsel fees
and disbursements), claim, demand, action, loss or liability (except such as
result from such indemnitees' gross negligence or willful misconduct) that such
indemnitees may suffer or incur in connection with this Agreement or any action
taken or omitted by such indemnitees hereunder.
SECTION 7.7. Credit Decision. Each Bank acknowledges that it
has, independently and without reliance on the Agent or any other Bank, and
based on such documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement. Each Bank also
acknowledges that it will, independently and without reliance on the Agent 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 decisions in taking or
not taking any action under this Agreement.
SECTION 7.8. Successor Agent. The Agent may resign at any time
by giving notice thereof to the Banks and the Borrower. Upon any such
resignation, the Required Banks shall have the right to appoint a successor
Agent. If no successor Agent shall have been so appointed by the Required Banks,
and shall have accepted such appointment, within 30 days after the retiring
Agent gives notice of resignation, then the retiring Agent may, on behalf of the
Banks, appoint a successor Agent, which shall be a commercial bank organized or
licensed under the laws of the United States or of any State thereof and having
a combined capital and surplus of at least $100,000,000. Upon the acceptance of
51
its appointment as Agent hereunder by a successor Agent, such successor Agent
shall thereupon succeed to and become vested with all the rights and duties of
the retiring Agent, and the retiring Agent shall be discharged from its duties
and obligations hereunder. After any retiring Agent resigns as Agent hereunder,
the provisions of this Article shall inure to its benefit as to actions taken or
omitted to be taken by it while it was Agent.
SECTION 7.9. Agent's Fee. The Borrower shall pay
to the Agent for its own account fees in the amounts and at
the times previously agreed upon by the Borrower and the
Agent.
ARTICLE 8
CHANGE IN CIRCUMSTANCES
SECTION 8.1. Basis for Determining Interest Rate Inadequate or
Unfair. If on or before the first day of any Interest Period for any CD Loan,
Euro-Dollar Loan or Money Market LIBOR Loan:
(a) the Agent is advised by the Reference Banks that deposits
in dollars (in the applicable amounts) are not being offered to the
Reference Banks in the relevant market for such Interest Period, or
(b) in the case of CD Loans or Euro-Dollar Loans, Banks
holding 50% or more of the aggregate principal amount of the affected
Loans advise the Agent that the Adjusted CD Rate or the London
Interbank Offered Rate, as the case may be, as determined by the Agent
will not adequately and fairly reflect the cost to such Banks of
funding their CD Loans or Euro-Dollar Loans, as the case may be, for
such Interest Period,
the Agent shall forthwith give notice thereof to the Borrower and the Banks,
whereupon until the Agent notifies the Borrower that the circumstances giving
rise to such suspension no longer exist, (i) the obligations of the Banks to
make CD Loans or Euro-Dollar Loans, as the case may be, or to continue or
convert outstanding Loans as or into CD Loans or Euro-Dollar Loans, as the case
may be, shall be suspended and (ii) each outstanding CD Loan or Euro-Dollar
Loan, as the case may be, shall be converted into a Base Rate Loan on the last
day of the then current Interest Period applicable thereto. Unless the Borrower
notifies the Agent at least two Domestic Business Days before the date of
52
any affected Borrowing for which a Notice of Borrowing has previously been given
that it elects not to borrow on such date, (i) if such affected Borrowing is a
CD Borrowing or Euro-Dollar Borrowing, such Borrowing shall instead be made as a
Base Rate Borrowing and (ii) if such affected Borrowing is a Money Market LIBOR
Borrowing, the Money Market LIBOR Loans comprising such Borrowing shall bear
interest for each day from and including the first day to but excluding the last
day of the Interest Period applicable thereto at the Base Rate for such day.
SECTION 8.2. Illegality. If, on or after the date hereof, the
adoption of any applicable law, rule or regulation, or any change in any
applicable law, rule or regulation, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by any Bank (or its Euro-Dollar Lending Office) with any request or directive
(whether or not having the force of law) of any such authority, central bank or
comparable agency, shall make it unlawful or impossible for any Bank (or its
Euro-Dollar Lending Office) to make, maintain or fund its Euro-Dollar Loans and
such Bank shall so notify the Agent, the Agent shall forthwith give notice
thereof to the other Banks and the Borrower, whereupon until such Bank notifies
the Borrower and the Agent that the circumstances giving rise to such suspension
no longer exist, the obligation of such Bank to make Euro-Dollar Loans, or to
continue or convert outstanding Loans as or into Euro-Dollar Loans, shall be
suspended. Before giving any notice to the Agent pursuant to this Section, such
Bank shall designate a different Euro-Dollar Lending Office if such designation
will avoid the need for giving such notice and will not, in the judgment of such
Bank, be otherwise disadvantageous to such Bank. If such notice is given, each
Euro-Dollar Loan of such Bank then outstanding shall be converted to a Base Rate
Loan either (a) on the last day of the then current Interest Period applicable
to such Euro-Dollar Loan if such Bank may lawfully continue to maintain and fund
such Loan as a Euro-Dollar Loan to such day or (b) immediately if such Bank
shall determine that it may not lawfully continue to maintain and fund such Loan
as a Euro-Dollar Loan to such day.
SECTION 8.3. Increased Cost and Reduced Return. (a) If on or
after (x) the date hereof, in the case of any Committed Loan or any obligation
to make Committed Loans or (y) the date of the related Money Market Quote, in
the case of any Money Market Loan, the adoption of any applicable law, rule or
regulation, or any change in any applicable
53
law, rule or regulation, or any change in the interpretation or administration
thereof by any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by any Bank (or
its Applicable Lending Office) with any request or directive (whether or not
having the force of law) of any such authority, central bank or comparable
agency, shall impose, modify or deem applicable any reserve (including, without
limitation, any such requirement imposed by the Board of Governors of the
Federal Reserve System, but excluding (i) with respect to any CD Loan any such
requirement included in an applicable Domestic Reserve Percentage and (ii) with
respect to any Euro-Dollar Loan any such requirement with respect to which such
Bank is entitled to compensation during the relevant Interest Period under
Section 2.15), special deposit, insurance assessment (excluding, with respect to
any CD Loan, any such requirement reflected in an applicable Assessment Rate) or
similar requirement against assets of, deposits with or for the account of, or
credit extended by, any Bank (or its Applicable Lending Office) or shall impose
on any Bank (or its Applicable Lending Office) or on the United States market
for certificates of deposit or the London interbank market any other condition
affecting its Fixed Rate Loans, its Note or its obligation to make Fixed Rate
Loans and the result of any of the foregoing is to increase the cost to such
Bank (or its Applicable Lending Office) of making or maintaining any Fixed Rate
Loan, or to reduce the amount of any sum received or receivable by such Bank (or
its Applicable Lending Office) under this Agreement or under its Note with
respect thereto, by an amount deemed by such Bank to be material, then, within
15 days after demand by such Bank (with a copy to the Agent), the Borrower shall
pay to such Bank such additional amount or amounts as will compensate such Bank
for such increased cost or reduction.
(b) If any Bank shall have determined that, after the date
hereof, the adoption of any applicable law, rule or regulation regarding capital
adequacy, or any change in any such law, rule or regulation, or any change in
the interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or any request or directive regarding capital adequacy
(whether or not having the force of law) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return
on capital of such Bank (or its Parent) as a consequence of such Bank's
obligations hereunder to a level below that which such Bank (or its Parent)
could have achieved but for such adoption, change, request or directive (taking
into consideration its policies
54
with respect to capital adequacy) by an amount deemed by such Bank to be
material, then from time to time, within 15 days after demand by such Bank (with
a copy to the Agent), the Borrower shall pay to such Bank such additional amount
or amounts as will compensate such Bank (or its Parent) for such reduction.
(c) Each Bank will promptly notify the Borrower and the Agent
of any event of which it has knowledge, occurring after the date hereof, which
will entitle such Bank to compensation pursuant to this Section and will
designate a different Applicable Lending Office if such designation will avoid
the need for, or reduce the amount of, such compensation and will not, in the
judgment of such Bank, be otherwise disadvantageous to such Bank. A certificate
of any Bank claiming compensation under this Section and setting forth the
additional amount or amounts to be paid to it hereunder shall be conclusive in
the absence of manifest error. In determining such amount, such Bank may use any
reasonable averaging and attribution methods.
SECTION 8.4. Taxes. (a) For the purposes of this
Section, the following terms have the following meanings:
"Taxes" means any and all present or future taxes, duties,
levies, imposts, deductions, charges or withholdings of any nature on or with
respect to any payment by the Borrower pursuant to this Agreement or under any
Note, and all liabilities with respect thereto, excluding (i) in the case of
each Bank and the Agent, taxes imposed on its net income, and franchise or
similar taxes imposed on it, by a jurisdiction under the laws of which such Bank
or the Agent (as the case may be) is organized or in which its principal
executive office is located or, in the case of each Bank, in which its
Applicable Lending Office is located and (ii) in the case of each Bank, any
United States withholding tax imposed on such payment at any rate up to (but not
exceeding) the rate at which United States withholding tax would have been
imposed on such a payment to such Bank under the laws and treaties in effect
when such Bank first became a party to this Agreement.
"Other Taxes" means any present or future stamp or documentary
taxes and any other excise or property taxes, or similar charges or levies,
which arise from any payment made pursuant to this Agreement or under any Note
or from the execution, delivery, registration or enforcement of, or otherwise
with respect to, this Agreement or any Note.
55
(b) All payments by the Borrower to or for the account of any
Bank or the Agent hereunder or under any Note shall be made without deduction or
withholding for any Taxes or Other Taxes; provided that, if the Borrower shall
be required by law to deduct any Taxes or Other Taxes from any such payment, (i)
the sum payable shall be increased as necessary so that after making all
required deductions and withholdings (including deductions and withholdings
applicable to additional sums payable under this Section) such Bank or the Agent
(as the case may be) receives an amount equal to the sum it would have received
had no such deductions or withholdings been made, (ii) the Borrower shall make
such deductions or withholdings, (iii) the Borrower shall pay the full amount
deducted or withheld to the relevant taxation authority or other authority in
accordance with applicable law and (iv) the Borrower shall promptly furnish to
the Agent, at its address specified in Section 9.1, the original or a certified
copy of a receipt evidencing payment thereof.
(c) The Borrower agrees to indemnify each Bank and the Agent
for the full amount of Taxes and Other Taxes (including, without limitation, any
Taxes or Other Taxes imposed or asserted by any jurisdiction on amounts payable
under this Section), whether or not correctly or legally imposed, paid by such
Bank or the Agent (as the case may be) and any liability (including penalties,
interest and expenses) arising therefrom or with respect thereto. This
indemnification shall be paid within 15 days after such Bank or the Agent (as
the case may be) makes demand therefor.
(d) Each Bank organized under the laws of a jurisdiction
outside the United States, as of the date of this Agreement in the case of each
Bank listed on the signature pages hereof and as of the time it becomes a Bank
in the case of each other Bank, and from time to time thereafter if requested in
writing by the Borrower (but only so long as such Bank remains lawfully able to
do so), shall provide each of the Borrower and the Agent with Internal Revenue
Service form 1001 or 4224 in duplicate, as appropriate, or any successor form
prescribed by the Internal Revenue Service, certifying that such Bank is
entitled to benefits under an income tax treaty to which the United States is a
party which exempts the Bank from United States withholding tax or reduces the
rate of withholding tax on payments of interest for the account of such Bank or
certifying that the income receivable pursuant to this Agreement is effectively
connected with the conduct of a trade or business in the United States.
56
(e) For any period with respect to which a Bank has failed to
provide the Borrower or the Agent with the appropriate form referred to in
Section 8.4(d) (unless such failure is due to a change in treaty, law or
regulation occurring after the date on which such form originally was required
to be provided), such Bank shall not be entitled to indemnification under
Section 8.4(b) or (c) with respect to Taxes imposed by the United States;
provided that if a Bank, that is otherwise exempt from or subject to a reduced
rate of withholding tax, becomes subject to Taxes because of its failure to
deliver a form required hereunder, the Borrower shall take such steps as such
Bank shall reasonably request to assist such Bank to recover such Taxes.
(f) If the Borrower is required to pay additional amounts to
or for the account of any Bank pursuant to this Section as a result of a change
in law or treaty occurring after such Bank first became a party to this
Agreement, then such Bank will, at the Borrower's request, change the
jurisdiction of its Applicable Lending Office if, in the judgment of such Bank,
such change (i) will eliminate or reduce any such additional payment which may
thereafter accrue and (ii) is not otherwise disadvantageous to such Bank.
SECTION 8.5. Base Rate Loans Substituted for Affected Fixed
Rate Loans. If (i) the obligation of any Bank to make, or to continue or convert
outstanding Loans as or to, Euro-Dollar Loans has been suspended pursuant to
Section or (ii) any Bank has demanded compensation under Section or with respect
to its CD Loans or EuroDollar Loans, and in any such case the Borrower shall, by
at least five Euro-Dollar Business Days' prior notice to such Bank through the
Agent, have elected that the provisions of this Section shall apply to such
Bank, then, unless and until such Bank notifies the Borrower that the
circumstances giving rise to such suspension or demand for compensation no
longer exist, all Loans which would otherwise be made by such Bank as (or
continued as or converted to) CD Loans or Euro-Dollar Loans, as the case may be,
shall instead be Base Rate Loans (on which interest and principal shall be
payable contemporaneously with the related CD Loans or Euro-Dollar Loans of the
other Banks). If such Bank notifies the Borrower that the circumstances giving
rise to such suspension or demand for compensation no longer exist, the
principal amount of each such Base Rate Loan shall be converted into a CD Loan
or Euro-Dollar Loan, as the case may be, on the first day of the next succeeding
Interest Period applicable to the related CD Loans or Euro-Dollar Loans of the
other Banks.
57
SECTION 8.6. Substitution of Bank. If (i) the obligation of
any Bank to make or maintain Euro-Dollar Loans has been suspended pursuant to
Section 8.2 or (ii) any Bank has demanded compensation under Section 8.3 or 8.4,
the Borrower shall have the right, if no Default then exists, to replace such
Bank (the "Replaced Bank") with one or more other banks (collectively, the
"Replacement Bank") reasonably acceptable to the Agent, provided that (i) at the
time of any replacement pursuant to this Section 8.6, the Replacement Bank shall
enter into one or more Assignment and Assumption Agreements, substantially in
the form of Exhibit G hereto, pursuant to which the Replacement Bank shall
acquire the aggregate Commitment and outstanding Loans of the Replaced Bank and,
in connection therewith, shall pay to the Replaced Bank in respect thereof an
amount equal to the sum of (A) an amount equal to the principal of, and all
accrued interest on, all outstanding Loans of the Replaced Bank, (B) an amount
equal to all accrued, but theretofore unpaid, fees under Section 2.8 owing to
the Replaced Bank and (C) an amount equal to the amount which would be payable
by the Borrower to the Replaced Bank pursuant to Section 2.12 if the Borrower
prepaid at the time of such replacement all of the Loans of such Replaced Bank
outstanding at such time and (ii) all obligations of the Borrower owing to the
Replaced Bank (other than those specifically described in clause (i) above in
respect of which the assignment purchase price has been, or is concurrently
being, paid) shall be paid in full to such Replaced Bank concurrently with such
replacement. Upon the execution of the respective Assignment and Assumption
Agreements, the payment of amounts referred to in clauses (i) and (ii) above
and, if so requested by the Replacement Bank, delivery to the Replacement Bank
of the appropriate Note or Notes executed by the Borrower, the Replacement Bank
shall become a Bank hereunder and the Replaced Bank shall cease to constitute a
Bank hereunder. The provisions of this Agreement shall continue to govern the
rights and obligations of a Replaced Bank with respect to any Loans made or any
other actions taken by such Bank while it was a Bank.
ARTICLE 9
MISCELLANEOUS
SECTION 9.1. Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including bank wire,
telex, facsimile or similar writing) and shall be given to such party: (a) in
the case of the Borrower or the Agent, at its address, facsimile
58
number or telex number set forth on the signature pages hereof, (b) in the case
of any Bank, at its address, facsimile number or telex number set forth in its
Administrative Questionnaire or (c) in the case of any party, at such other
address, facsimile number or telex number as such party may hereafter specify
for the purpose by notice to the Agent and the Borrower. Each such notice,
request or other communication shall be effective (i) if given by telex, when
transmitted to the telex number referred to in this Section and the appropriate
answerback is received, (ii) if given by facsimile, when transmitted to the
facsimile number referred to in this Section and confirmation of receipt is
received, (iii) if given by mail, 72 hours after such communication is deposited
in the mails with first class postage prepaid, addressed as aforesaid or (iv) if
given by any other means, when delivered at the address referred to in this
Section; provided that notices to the Agent under Article 2 or Article 8 shall
not be effective until received.
SECTION 9.2. No Waivers. No failure or delay by the Agent or
any Bank in exercising any right, power or privilege hereunder or under any Note
shall operate as a waiver thereof nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or the exercise of any
other right, power or privilege. The rights and remedies herein provided shall
be cumulative and not exclusive of any rights or remedies provided by law.
SECTION 9.3. Expenses; Indemnification. (a) The Borrower
shall pay (i) all out-of-pocket expenses of the Agent, including fees and
disbursements of special counsel for the Agent, in connection with the
preparation and administration of this Agreement, any waiver or consent
hereunder or any amendment hereof or any Default or alleged Default hereunder
and (ii) if an Event of Default occurs, all out-of-pocket expenses incurred by
the Agent and each Bank, including (without duplication) the fees and
disbursements of outside counsel and the allocated cost of inside counsel, in
connection with such Event of Default and collection, bankruptcy, insolvency and
other enforcement proceedings resulting therefrom.
(b) The Borrower agrees to indemnify the Agent and each Bank,
their respective affiliates and the respective directors, officers, agents and
employees of the foregoing (each an "Indemnitee") and hold each Indemnitee
harmless from and against any and all liabilities, losses, damages, costs and
expenses of any kind, including, without limitation, the reasonable fees and
disbursements of counsel, which may be incurred by such Indemnitee in
59
connection with any investigative, administrative or judicial proceeding
(whether or not such Indemnitee shall be designated a party thereto) brought or
threatened relating to or arising out of this Agreement or any actual or
proposed use of proceeds of Loans hereunder; provided that no Indemnitee shall
have the right to be indemnified hereunder for such Indemnitee's own gross
negligence or willful misconduct as determined by a court of competent
jurisdiction.
SECTION 9.4. Sharing of Set-Offs. Each Bank agrees that if it
shall, by exercising any right of set-off or counterclaim or otherwise, receive
payment of a proportion of the aggregate amount of principal and interest then
due with respect to the Loans held by it which is greater than the proportion
received by any other Bank in respect of the aggregate amount of principal and
interest then due with respect to the Loans held by such other Bank, the Bank
receiving such proportionately greater payment shall purchase such
participations in the Loans held by the other Banks, and such other adjustments
shall be made, as may be required so that all such payments of principal and
interest with respect to the Loans held by the Banks shall be shared by the
Banks pro rata; provided that nothing in this Section shall impair the right of
any Bank to exercise any right of set-off or counterclaim it may have and to
apply the amount subject to such exercise to the payment of indebtedness of the
Borrower other than its indebtedness hereunder. The Borrower agrees, to the
fullest extent it may effectively do so under applicable law, that any holder of
a participation in a Loan, whether or not acquired pursuant to the foregoing
arrangements, may exercise rights of set-off or counterclaim and other rights
with respect to such participation as fully as if such holder of a participation
were a direct creditor of the Borrower in the amount of such participation.
SECTION 9.5. Amendments and Waivers. Any provision of this
Agreement or the Notes may be amended or waived if, but only if, such amendment
or waiver is in writing and is signed by the Borrower and the Required Banks
(and, if the rights or duties of the Agent are affected thereby, by the Agent);
provided that no such amendment or waiver shall, unless signed by all the Banks,
(i) except as contemplated in Section 2.16, increase or decrease the Commitment
of any Bank (except for a ratable decrease in the Commitments of all Banks) or
subject any Bank to any additional obligation, (ii) reduce the principal of or
rate of interest on any Loan or any fees hereunder, (iii) postpone the date
fixed for any payment of principal of or interest on any Loan or any fees
hereunder or for the
60
termination of any Commitment or (iv) change the percentage of the Commitments
or of the aggregate unpaid principal amount of the Loans, or the number of
Banks, which shall be required for the Banks or any of them to take any action
under this Section or any other provision of this Agreement.
SECTION 9.6. Successors and Assigns. (a) The provisions of
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns, except that the Borrower may
not assign or otherwise transfer any of its rights under this Agreement without
the prior written consent of all Banks.
(b) Any Bank may at any time grant to one or more banks or
other institutions (each a "Participant") participating interests in its
Commitment or any or all of its Loans. If a Bank grants any such participating
interest to a Participant, whether or not upon notice to the Borrower and the
Agent, such Bank shall remain responsible for the performance of its obligations
hereunder, and the Borrower and the Agent shall continue to deal solely and
directly with such Bank in connection with such Bank's rights and obligations
under this Agreement. Any agreement pursuant to which any Bank may grant such a
participating interest shall provide that such Bank shall retain the sole right
and responsibility to enforce the Borrower's obligations hereunder, including
(without limitation) the right to approve any amendment, modification or waiver
of any provision of this Agreement; provided that such participation agreement
may provide that such Bank will not agree to any modification, amendment or
waiver of this Agreement described in clause (i), (ii) or (iii) of Section
9.5 without the consent of the Participant. The Borrower agrees that each
Participant shall, to the extent provided in its participation agreement, be
entitled to the benefits of Section 2.15 and Article 8 with respect to its
participating interest. An assignment or other transfer which is not permitted
by subsection (c) or (d) below shall be given effect for purposes of this
Agreement only to the extent of a participating interest granted in accordance
with this subsection.
(c) Any Bank may at any time assign to one or more banks or
other institutions (each an "Assignee") all, or a proportionate part of all, of
its rights and obligations under this Agreement and the Notes, and such Assignee
shall assume such rights and obligations, pursuant to an Assignment and
Assumption Agreement substantially in the form of Exhibit G hereto signed by
such Assignee and such transferor Bank, with (and subject to) the subscribed
consent of the Borrower, which shall not be unreasonably
61
withheld, and the Agent; provided that if an Assignee is an affiliate of such
transferor Bank or was a Bank immediately before such assignment, no such
consent shall be required; and provided further that such assignment may, but
need not, include rights of the transferor Bank in respect of outstanding Money
Market Loans. When such instrument has been signed and delivered by the parties
thereto and such Assignee has paid to such transferor Bank the purchase price
agreed between such transferor Bank and such Assignee, such Assignee shall be a
Bank party to this Agreement and shall have all the rights and obligations of a
Bank with a Commitment as set forth in such instrument of assumption, and the
transferor Bank shall be released from its obligations hereunder to a
corresponding extent, and no further consent or action by any party shall be
required. Upon the consummation of any assignment pursuant to this subsection,
the transferor Bank, the Agent and the Borrower shall make appropriate
arrangements so that, if required, a new Note is issued to the Assignee. In
connection with any such assignment, the transferor Bank shall pay to the Agent
an administrative fee for processing such assignment in the amount of $2,500. If
the Assignee is not incorporated under the laws of the United States or a State
thereof, it shall deliver to the Borrower and the Agent certification as to
exemption from deduction or withholding of any United States federal income
taxes in accordance with Section 8.4.
(d) Any Bank may at any time assign all or any portion of its
rights under this Agreement and its Note to a Federal Reserve Bank. No such
assignment shall release the transferor Bank from its obligations hereunder.
(e) No Assignee, Participant or other transferee of any Bank's
rights shall be entitled to receive any greater payment under Section 8.3 or 8.4
than such Bank would have been entitled to receive with respect to the rights
transferred, unless such transfer is made with the Borrower's prior written
consent or by reason of the provisions of Section 8.2, 8.3, or 8.4 requiring
such Bank to designate a different Applicable Lending Office under certain
circumstances or at a time when the circumstances giving rise to such greater
payment did not exist.
SECTION 9.7. No Reliance on Margin Stock. Each of the Banks
represents to the Agent and each of the other Banks that it in good faith is not
relying upon any "margin stock" (as defined in Regulation U) as collateral in
the extension or maintenance of the credit provided for in this Agreement.
62
SECTION 9.8. Governing Law; Submission to Jurisdiction. This
Agreement and each Note shall be governed by and construed in accordance with
the laws of the State of New York. The Borrower hereby submits to the
nonexclusive jurisdiction of the United States District Court for the Southern
District of New York and of any New York State court sitting in New York City
for purposes of all legal proceedings arising out of or relating to this
Agreement or the transactions contemplated hereby. The Borrower irrevocably
waives, to the fullest extent permitted by law, any objection which it may now
or hereafter have to the laying of the venue of any such proceeding brought in
such a court and any claim that any such proceeding brought in such a court has
been brought in an inconvenient forum.
SECTION 9.9. Counterparts; Integration; Effectiveness. This
Agreement may be signed in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and hereto were upon
the same instrument. This Agreement constitutes the entire agreement and
understanding among the parties hereto and supersedes any and all prior
agreements and understandings, oral or written, relating to the subject matter
hereof. This Agreement shall become effective when the Agent has received from
each of the parties hereto a counterpart hereof signed by such party or
facsimile or other written confirmation satisfactory to the Agent confirming
that such party has signed a counterpart hereof.
SECTION 9.10. WAIVER OF JURY TRIAL. EACH OF THE
BORROWER, THE AGENT AND THE BANKS HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO
TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
63
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of the
day and year first above written.
TRIGON HEALTHCARE, INC.
By____________________
Name:
Title:
Address:
Facsimile:
XXXXXX GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
By____________________
Name:
Title:
Address: 00 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile:
[BANK SIGNATURES PAGES]
64
COMMITMENT SCHEDULE
Bank Commitment
Xxxxxx Guaranty Trust Company of New York $45,000,000
The Bank of New York $33,000,000
The First National Bank of Chicago $33,000,000
The Fuji Bank, Limited. $33,000,000
Wachovia Bank of North Carolina, N.A. $33,000,000
The Asahi Bank, Ltd. $22,600,000
Banque Nationale de Paris $22,600,000
Central Fidelity National Bank $22,600,000
Crestar Bank $22,600,000
Signet Bank $22,600,000
The Sanwa Bank, Limited $10,000,000
--------------
Total $300,000,000
65
PRICING SCHEDULE
Each of the "Facility Fee Rate", "Euro-Dollar Margin" and
"CD Margin" means, for any day, the rate set forth below in the row opposite
such term and in the column corresponding to the Pricing Level that applies on
such day:
-----------------------------------------------------------------------------------------------------------------
Pricing Level Level I Level II Level III Level IV
-----------------------------------------------------------------------------------------------------------------
Facility Fee .075% .10% .125% .175%
Rate
-----------------------------------------------------------------------------------------------------------------
Euro-Dollar .20% .20% .25% .375%
Margin
-----------------------------------------------------------------------------------------------------------------
CD Margin .325% .325% .375% .50%
-----------------------------------------------------------------------------------------------------------------
For purposes of this Schedule, the following terms have the
following meanings:
"Applicable Leverage Ratio" for purposes of determining what
Pricing Level exists at any date means (a) if at least three Domestic Business
Days prior to such date the Borrower has delivered all financial statements and
certificates required to be delivered on or before such date pursuant to
subsections (a), (b) and (e) of Section 5.1, the ratio of Consolidated Debt to
Consolidated Total Capitalization as of the last day of the period covered by
such financial statements and (b) in all other cases, a ratio greater than 0.35;
provided that Level I Pricing shall apply on any date after the Effective Date
and before the initial delivery by the Borrower of all financial statements and
certificates required to be delivered pursuant to subsections (a), (b) and (e)
of Section 5.1 or the date such financial statements are first required to be
delivered.
"Level I Pricing" applies at any date if the Applicable
Leverage Ratio is less than or equal to 0.10.
"Level II Pricing" applies at any date if the Applicable
Leverage Ratio is greater than 0.10 and less than or equal to 0.25.
"Level III Pricing" applies at any date if the Applicable
Leverage Ratio is greater than 0.25 and less than or equal to 0.35.
"Level IV Pricing" applies at any date if no other Pricing
Level applies for such date.
66
67
EXHIBIT A - Note
Note
New York, New York
February 12, 1997
For value received, Trigon Healthcare, Inc., a Virginia
corporation (the "Borrower"), promises to pay to the order of
______________________ (the "Bank"), for the account of its Applicable Lending
Office, the unpaid principal amount of each Loan made by the Bank to the
Borrower pursuant to the Credit Agreement referred to below on the maturity date
provided for in the Credit Agreement. The Borrower promises to pay interest on
the unpaid principal amount of each such Loan on the dates and at the rate or
rates provided for in the Credit Agreement. All such payments of principal and
interest shall be made in lawful money of the United States in Federal or other
immediately available funds at the office of Xxxxxx Guaranty Trust Company of
New York, 00 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx.
All Loans made by the Bank, the respective types thereof and
all repayments of the principal thereof shall be recorded by the Bank and, if
the Bank so elects in connection with any transfer or enforcement hereof,
appropriate notations to evidence the foregoing information with respect to each
such Loan then outstanding may be endorsed by the Bank on the schedule attached
hereto, or on a continuation of such schedule attached to and made a part
hereof; provided that the failure of the Bank to make any such recordation or
endorsement shall not affect the Borrower's obligations hereunder or under the
Credit Agreement.
This note is one of the Notes referred to in the Credit
Agreement dated as of February 12, 1997 among Trigon Healthcare, Inc., the Banks
party thereto and Xxxxxx Guaranty Trust Company of New York, as Agent (as the
same
may be amended from time to time, the "Credit Agreement"). Terms defined in the
Credit Agreement are used herein with the same meanings. Reference is made to
the Credit Agreement for provisions for the prepayment hereof and the
acceleration of the maturity hereof.
TRIGON HEALTHCARE, INC.
By ____________________
Name:
Title:
2
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3
EXHIBIT B - Money Market Quote Request
Form of Money Market Quote Request
[Date]
To: Xxxxxx Guaranty Trust Company of New York
(the "Agent")
From: Trigon Healthcare, Inc. (the "Borrower")
Re: Credit Agreement (the "Credit Agreement") dated as
of February 12, 1997 among the Borrower, the Banks
party thereto and the Agent
We hereby give notice pursuant to Section 2.3 of the Credit
Agreement that we request Money Market Quotes for the following proposed Money
Market Borrowing(s):
Date of Borrowing: __________________
Principal Amount1 Interest Period2
$
Such Money Market Quotes should offer a Money Market
[Margin] [Absolute Rate]. [The applicable base rate is the London
Interbank Offered Rate.]
Terms used herein have the meanings assigned to them in the
Credit Agreement.
--------
1 Amount must be $10,000,000 or a larger multiple of $1,000,000. 2 Not less than
one month (LIBOR Auction) or not less than 7 days (Absolute Rate Auction),
subject to the provisions of the definition of Interest Period.
TRIGON HEALTHCARE, INC.
By________________________
Name:
Title:
2
EXHIBIT C - Invitation for Money Market Quotes
Form of Invitation for Money Market Quotes
To: [Name of Bank]
Re: Invitation for Money Market Quotes to Trigon
Healthcare, Inc. (the "Borrower")
Pursuant to Section 2.3 of the Credit Agreement dated as of
February 12, 1997 among the Borrower, the Banks party thereto and the
undersigned, as Agent, we are pleased on behalf of the Borrower to invite you to
submit Money Market Quotes to the Borrower for the following proposed Money
Market Borrowing(s):
Date of Borrowing: __________________
Principal Amount Interest Period
$
Such Money Market Quotes should offer a Money Market
[Margin] [Absolute Rate]. [The applicable base rate is the
London Interbank Offered Rate.]
Please respond to this invitation by no later than [2:00 P.M.]
[9:30 A.M.] (New York City time) on [date].
XXXXXX GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
By______________________
Authorized Officer
EXHIBIT D - Money Market Quote
Form of Money Market Quote
To: Xxxxxx Guaranty Trust Company of New York, as Agent
Re: Money Market Quote to Trigon Healthcare, Inc. (the
"Borrower")
In response to your invitation on behalf of the Borrower dated
_____________, 19__, we hereby make the following Money Market Quote on the
following terms:
1. Quoting Bank: ________________________________
2. Person to contact at Quoting Bank:
-----------------------------
3. Date of Borrowing: ____________________*
4. We hereby offer to make Money Market Loan(s) in the
following principal amounts, for the following
Interest Periods and at the following rates:
Principal Interest Money Market
Amount** Period*** [Margin****] [Absolute Rate*****]
$
$
[Provided, that the aggregate principal amount of Money Market Loans for
which the above offers may be accepted shall not exceed $____________.]**
We understand and agree that the offer(s) set forth
above, subject to the satisfaction of the applicable
----------
* As specified in the related Invitation.
** Principal amount bid for each Interest Period may not exceed principal amount
requested. Specify aggregate limitation if the sum of the individual offers
exceeds the amount the Bank is willing to lend. Each bid must be made for
$5,000,000 or a larger multiple of $1,000,000.
conditions set forth in the Credit Agreement dated as of February 12, 1997 among
the Borrower, the Banks party thereto and yourselves, as Agent, irrevocably
obligates us to make the Money Market Loan(s) for which any offer(s) are
accepted, in whole or in part.
Very truly yours,
[NAME OF BANK]
Dated:_______________ By:__________________________
Authorized Officer
----------
*** Not less than one month or not less than 7 days, as specified in the related
Invitation. No more than five bids are permitted for each Interest Period.
**** Margin over or under the London Interbank Offered Rate determined for the
applicable Interest Period. Specify percentage (to the nearest 1/10,000 of 1%)
and specify whether "PLUS" or "MINUS".
***** Specify rate of interest per annum (to the nearest
1/10,000 of 1%).
2
EXHIBIT E - Opinion of Counsel for the Borrower
Opinion of
McGuire, Woods, Battle & Xxxxxx, L.L.P.
[Dated the Closing Date]
To the Banks and the Agent
Referred to Below
c/x Xxxxxx Guaranty Trust Company
of New York, as Agent
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
We have acted as counsel for Trigon Healthcare, Inc. (the
"Borrower") in connection with the Credit Agreement dated as of February 12,
1997 (the "Credit Agreement") among the Borrower, the Banks party thereto and
Xxxxxx Guaranty Trust Company of New York, as Agent, and in connection with the
other matters relating to the Demutualization in which Virginia BCBS (as defined
in the Plan of Demutualization) has become a wholly owned Subsidiary of the
Borrower. This opinion is being rendered to you pursuant to Section 3.1(b) of
the Credit Agreement. Unless otherwise defined herein, terms defined in the
Credit Agreement are used herein as therein defined.
We have examined originals or copies, certified or otherwise
identified to our satisfaction, of such documents, corporate records,
certificates of public officials and other instruments and have conducted such
other investigations of fact and law as we have deemed necessary or advisable
for purposes of this opinion.
Upon the basis of the foregoing, we are of the opinion that:
1. The Borrower is a corporation duly incorporated
and validly existing under the laws of the Commonwealth of
Virginia and has all corporate powers and all material
governmental licenses, authorizations, consents and
approvals required to carry on its business as now
conducted.
2. The execution, delivery and performance by the Borrower of the
Credit Agreement and the Notes have been duly authorized by all necessary
corporate action, require no action by or in respect of, or filing with, any
governmental body, agency or official (other than those which have been taken or
made) and do not contravene, or constitute a default under any provision of
applicable law or regulation or of the articles of incorporation or by-laws of
the Borrower, or, to our knowledge after due inquiry, of any agreement,
judgment, injunction, order, decree or other instrument binding upon the
Borrower or result in the creation or imposition of any Lien on any revenues or
assets of the Borrower.
3. The Credit Agreement constitutes a valid and binding agreement
of the Borrower and each Note issued thereunder constitutes a valid and binding
obligation of the Borrower, in each case enforceable in accordance with its
terms, except as such enforceability may be limited by bankruptcy, insolvency,
receivership, conservatorship, reorganization, moratorium or similar laws
affecting the enforceability of creditors' rights generally and by equitable
principles of general applicability (regardless of whether such enforceability
is considered in a proceeding in equity or at law).
4. Except as disclosed in the Borrower's Registration Statement,
to the best of our knowledge, there is no action, suit or proceeding pending or
threatened against or affecting the Borrower or any Subsidiary before any court
or arbitrator or any governmental body, agency or official, in which there is a
reasonable possibility of an adverse decision which could materially adversely
affect the business, consolidated financial position or consolidated results of
operations of the Borrower and its Consolidated Subsidiaries, considered as a
whole, or which in any manner draws into question the validity of the Credit
Agreement or the Notes or the Demutualization.
In rendering our opinion in paragraph 3 above, we express no
opinion as to (i) the effectiveness of service of process in any suit, action or
proceeding solely by mailing a copy thereof, (ii) the binding effect of any
provision of the Credit Agreement which provides for the accrual of
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interest after judgment at a rate higher than the applicable judgment rate or
(iii) the effect (if any) of any law of any jurisdiction (except the State of
New York) in which any Bank is located which limits the rate of interest that
such Bank may charge or collect.
Our opinions are limited to matters governed by the laws of the
United States and the laws of the Commonwealth of Virginia and the State of New
York, and we express no opinion as to the laws of any other state or
jurisdiction.
This opinion is rendered solely to you in connection with the
above matters. This opinion may not be relied upon by you for any other purpose
or relied upon by any other Person without our prior written consent, except
that Xxxxx Xxxx & Xxxxxxxx may rely upon this opinion to the same extent as if
it were addressed to it for purposes of rendering its opinion to you on the date
hereof.
Very truly yours,
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EXHIBIT F - Opinion of Special Counsel for the Agent
Opinion of
Xxxxx Xxxx & Xxxxxxxx, Special Counsel
for the Agent
[Dated the Closing Date]
To the Banks and the Agent
Referred to Below
c/x Xxxxxx Guaranty Trust Company
of New York, as Agent
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
We have participated in the preparation of the Credit Agreement
dated as of February 12, 1997 (the "Credit Agreement") among Trigon Healthcare,
Inc., a Virginia corporation (the "Borrower"), the Banks party thereto and
Xxxxxx Guaranty Trust Company of New York, as Agent, and have acted as special
counsel for the Agent for the purpose of rendering this opinion pursuant to
Section of the Credit Agreement. Terms defined in the Credit Agreement are used
herein as therein defined.
We have examined originals or copies, certified or otherwise
identified to our satisfaction, of such documents, corporate records,
certificates of public officials and other instruments and have conducted such
other investigations of fact and law as we have deemed necessary or advisable
for purposes of this opinion.
Upon the basis of the foregoing, we are of the opinion that:
1. The execution, delivery and performance by the Borrower of the
Credit Agreement and the Notes are within the Borrower's corporate powers and
have been duly authorized by all necessary corporate action.
1
2. The Credit Agreement constitutes a valid and binding agreement
of the Borrower and each Note issued thereunder today constitutes a valid and
binding obligation of the Borrower, in each case enforceable in accordance with
its terms, subject to applicable bankruptcy, insolvency or similar laws
affecting creditors' rights generally and general principles of equity.
We are members of the Bar of the State of New York and the
foregoing opinion is limited to the laws of the State of New York and the
federal laws of the United States of America. To the extent that any portion of
the foregoing opinion depends on the law of the Commonwealth of Virginia, we
have, with your consent and without any independent investigation, relied on the
opinions of McGuire, Woods, Battle & Xxxxxx, L.L.P., referred to in clauses (b)
and (d) of Section 3.1 of the Credit Agreement, and this opinion is subject to
all assumptions, limitations and qualifications set forth therein. In giving the
foregoing opinion, we express no opinion as to the effect (if any) of any law of
any jurisdiction (except the State of New York) in which any Bank is located
which limits the rate of interest that such Bank may charge or collect.
This opinion is rendered solely to you in connection with the
above matter. This opinion may not be relied upon by you for any other purpose
or relied upon by any other Person without our prior written consent.
Very truly yours,
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EXHIBIT G - Assignment and Assumption Agreement
Assignment and Assumption Agreement
AGREEMENT dated as of _________, 19__ among
(the "Assignor"), (the "Assignee")[, Trigon Healthcare, Inc.
(the "Borrower") and XXXXXX GUARANTY TRUST COMPANY OF NEW YORK, as Agent (the
"Agent").]
WHEREAS, this Assignment and Assumption Agreement (the
"Agreement") relates to the Credit Agreement dated as of February 12, 1997 among
the Borrower, the Assignor and the other Banks party thereto and the Agent (as
amended from time to time, the "Credit Agreement");
WHEREAS, as provided under the Credit Agreement, the Assignor has
a Commitment to make Loans to the Borrower in an aggregate principal amount at
any time outstanding not to exceed $____________;
WHEREAS, Committed Loans made to the Borrower by the Assignor
under the Credit Agreement in the aggregate principal amount of $__________ are
outstanding at the date hereof; and
WHEREAS, the Assignor proposes to assign to the Assignee all of
the rights of the Assignor under the Credit Agreement in respect of a portion of
its Commitment thereunder in an amount equal to $__________ (the "Assigned
Amount"), together with a corresponding portion of each of its outstanding
Committed Loans, and the Assignee proposes to accept assignment of such rights
and assume the corresponding obligations from the Assignor on such terms;
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, the parties hereto agree as follows:
SECTION 1. Definitions. All capitalized terms not
otherwise defined herein have the respective meanings set
forth in the Credit Agreement.
SECTION 2. Assignment. The Assignor hereby assigns and sells to
the Assignee all of the rights of the Assignor under the Credit Agreement to the
extent of the Assigned Amount, and the Assignee hereby accepts such assignment
from the Assignor and assumes all of the obligations of the Assignor under the
Credit Agreement to the extent of the Assigned Amount, including the purchase
from the Assignor of the corresponding portion of the principal amount of each
of the Committed Loans made by the Assignor outstanding at the date hereof. Upon
the execution and delivery hereof by the Assignor, the Assignee, [the Borrower
and the Agent] and the payment of the amounts specified in Section 3 required to
be paid on the date hereof (i) the Assignee shall, as of the date hereof,
succeed to the rights and be obligated to perform the obligations of a Bank
under the Credit Agreement with a Commitment in an amount equal to the Assigned
Amount, and (ii) the Commitment of the Assignor shall, as of the date hereof, be
reduced by a like amount and the Assignor released from its obligations under
the Credit Agreement to the extent such obligations have been assumed by the
Assignee. The assignment provided for herein shall be without recourse to the
Assignor.
SECTION 3. Payments. As consideration for the assignment and sale
contemplated in Section 2 hereof, the Assignee shall pay to the Assignor on the
date hereof in Federal funds the amount heretofore agreed between them.1
Commitment and/or facility fees accrued before the date hereof are for the
account of the Assignor and such fees accruing on and after the date hereof are
for the account of the Assignee. Each of the Assignor and the Assignee agrees
that if it receives any amount under the Credit Agreement which is for the
account of the other party hereto, it shall receive the same for the account of
such other party to the extent of such other party's interest therein and
promptly pay the same to such other party.
[SECTION 4. Consent of the Borrower and the Agent.
This Agreement is conditioned upon the consent of the
--------
1 Amount should combine principal together with accrued interest and breakage
compensation, if any, to be paid by the Assignee, net of any portion of any
upfront fee to be paid by the Assignor to the Assignee. It may be preferable in
an appropriate case to specify these amounts generically or by formula rather
than as a fixed sum.
2
Borrower and the Agent pursuant to Section 9.6(c) of the Credit Agreement. The
execution of this Agreement by the Borrower and the Agent is evidence of their
consent. Pursuant to Section 9.6(c), the Borrower agrees to execute and deliver
a Note payable to the order of the Assignee to evidence the assignment and
assumption provided for herein.]
SECTION 5. Non-Reliance on Assignor. The Assignor makes no
representation or warranty in connection with, and shall have no responsibility
with respect to, the solvency, financial condition or statements of the
Borrower, or the validity and enforceability of the Borrower's obligations under
the Credit Agreement or any Note. The Assignee acknowledges that it has,
independently and without reliance on the Assignor, and based on such documents
and information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement and will continue to be responsible for
making its own independent appraisal of the business, affairs and financial
condition of the Borrower.
SECTION 6. Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of the
State of New York.
SECTION 7. Counterparts. This Agreement may be signed in any
number of counterparts, each of which shall be an original, with the same effect
as if the signatures thereto and hereto were upon the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed and delivered by their duly authorized officers as of the date
first above written.
By_________________________
Name:
Title:
By__________________________
Name:
Title:
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Trigon Healthcare, Inc.
By__________________________
Name:
Title:]
[XXXXXX GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
By__________________________
Name:
Title:]
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