Exhibit 10(u)
Execution
Copy
CREDIT AGREEMENT
Dated as of August 30, 1995
between
PIONEER FINANCIAL SERVICES, INC.
and
AMERICAN NATIONAL BANK AND TRUST
COMPANY OF CHICAGO,
FIRSTAR BANK MILWAUKEE, N.A.,
BANK ONE, ROCKFORD, NA
and
LASALLE NATIONAL BANK
(Term Loan B Credit Agreement)
TABLE OF CONTENTS
Page
SECTION 1
CERTAIN DEFINITIONS . . . . . . . . . . . . 1
SECTION 1.1 Terms Defined in this Agreement . . . . . . . . . . . . 1
SECTION 2
TERM LOAN; BORROWING PROCEDURES . . . . . . . . . 10
SECTION 2.1 Term Loan . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 2.2 Disbursement. . . . . . . . . . . . . . . . . . . . . . 10
SECTION 2.3 Repayment of Principal of the Loans . . . . . . . . . . 10
SECTION 2.4 Optional Prepayments. . . . . . . . . . . . . . . . . . 10
SECTION 2.5 Termination of the Loans; Termination Date. . . . . . . 11
SECTION 3
NOTES EVIDENCING THE LOANS . . . . . . . . . . . 11
SECTION 3.1 Notes . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 4
INTEREST, FEES AND COSTS . . . . . . . . . . . 11
SECTION 4.1 Interest . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 4.2 Conversion Elections. . . . . . . . . . . . . . . . . . 12
SECTION 4.3 Closing Fees. . . . . . . . . . . . . . . . . . . . . . 13
SECTION 4.4 Computation of Interest. . . . . . . . . . . . . . . . 13
SECTION 4.5 Increased Costs; Capital Adequacy . . . . . . . . . . . 13
SECTION 4.6 Funding Losses. . . . . . . . . . . . . . . . . . . . . 14
SECTION 5
MAKING OF PAYMENTS . . . . . . . . . . . . . 15
SECTION 5.1 Payments by the Company . . . . . . . . . . . . . . . . 15
SECTION 5.2 Payments by each Bank. . . . . . . . . . . . . . . . . 15
SECTION 5.3 Setoff . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 5.4 Sharing of Payments. . . . . . . . . . . . . . . . . . 16
SECTION 6
REPRESENTATIONS AND WARRANTIES . . . . . . . . . . 16
SECTION 6.1 Corporate Organization . . . . . . . . . . . . . . . . 16
SECTION 6.2 Authorization; No Conflict . . . . . . . . . . . . . . 16
SECTION 6.3 Validity and Binding Nature . . . . . . . . . . . . . . 17
SECTION 6.4 Financial Statements . . . . . . . . . . . . . . . . . 17
SECTION 6.5 Litigation and Contingent Liabilities . . . . . . . . . 17
SECTION 6.6 Employee Benefit Plans . . . . . . . . . . . . . . . . 18
SECTION 6.7 Investment Company Act . . . . . . . . . . . . . . . . 18
SECTION 6.8 Regulation U . . . . . . . . . . . . . . . . . . . . . 18
SECTION 6.9 Accuracy of Information . . . . . . . . . . . . . . . . 18
SECTION 6.10 Labor Controversies . . . . . . . . . . . . . . . . . . 18
SECTION 6.11 Tax Status . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 6.12 No Default . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 6.13 Compliance with Applicable Laws . . . . . . . . . . . . 19
SECTION 6.14 Insurance . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 6.15 Solvency. . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 6.16 Use of Proceeds. . . . . . . . . . . . . . . . . . . . 20
SECTION 6.17 Subsidiaries. . . . . . . . . . . . . . . . . . . . . . 20
SECTION 7
COVENANTS . . . . . . . . . . . . . . . 20
SECTION 7.1 Reports, Certificates and Other Information . . . . . . 20
(a) Annual Report. . . . . . . . . . . . . . . . . . . . . 20
(b) Interim Reports. . . . . . . . . . . . . . . . . . . . 21
(c) Statutory Statements. . . . . . . . . . . . . . . . . . 21
(d) Reports to SEC. . . . . . . . . . . . . . . . . . . . . 21
(e) Certificates . . . . . . . . . . . . . . . . . . . . . 21
(f) Notice of Default, Litigation and ERISA Matters . . . . 21
(g) Other Information . . . . . . . . . . . . . . . . . . . 22
SECTION 7.2 Corporate Existence and Franchises . . . . . . . . . . 22
SECTION 7.3 Books, Records and Inspections . . . . . . . . . . . . 22
SECTION 7.4 Insurance . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 7.5 Taxes and Liabilities . . . . . . . . . . . . . . . . . 22
SECTION 7.6 Cash Flow Coverage . . . . . . . . . . . . . . . . . . 22
SECTION 7.7 Net Worth. . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 7.8 Intentionally Omitted. . . . . . . . . . . . . . . . . 23
SECTION 7.9 Indebtedness. . . . . . . . . . . . . . . . . . . . . . 23
SECTION 7.10 Risk-Based Capital . . . . . . . . . . . . . . . . . . 23
SECTION 7.11 Real Estate Concentration. . . . . . . . . . . . . . . 23
SECTION 7.12 Investment Quality. . . . . . . . . . . . . . . . . . . 23
SECTION 7.13 Intentionally Omitted. . . . . . . . . . . . . . . . . 23
SECTION 7.14 Insurance Company Leverage Ratio. . . . . . . . . . . 23
SECTION 7.15 Insurance Ratings. . . . . . . . . . . . . . . . . . . 23
SECTION 7.16 Intentionally Omitted. . . . . . . . . . . . . . . . . 24
SECTION 7.17 Change in Nature of Business . . . . . . . . . . . . . 24
SECTION 7.18 Depository Relationship . . . . . . . . . . . . . . . . 24
SECTION 7.19 Employee Benefit Plans . . . . . . . . . . . . . . . . 24
SECTION 7.20 Use of Proceeds . . . . . . . . . . . . . . . . . . . . 24
SECTION 7.21 Other Agreements . . . . . . . . . . . . . . . . . . . 24
SECTION 7.22 Compliance with Applicable Laws . . . . . . . . . . . . 25
SECTION 7A
UNRESTRICTED SUBSIDIARIES . . . . . . . . . . . 25
SECTION 7A.1 Unrestricted Subsidiaries. . . . . . . . . . . . . . . 25
SECTION 7A.2 Additional Unrestricted Subsidiaries. . . . . . . . . . 26
SECTION 7A.3 Effectiveness of Designation. . . . . . . . . . . . . . 26
SECTION 8
CONDITIONS TO MAKING THE LOANS . . . . . . . . . . 26
SECTION 8.1 Conditions Precedent. . . . . . . . . . . . . . . . . . 26
(a) Fees and Expenses . . . . . . . . . . . . . . . . . . . 26
(b) Documents . . . . . . . . . . . . . . . . . . . . . . . 26
(c) No Default. . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 9
EVENTS OF DEFAULT AND THEIR EFFECT . . . . . . . . . 27
SECTION 9.1 Events of Default . . . . . . . . . . . . . . . . . . . 27
(a) Nonpayment of the Loans . . . . . . . . . . . . . . . . 27
(b) Nonpayment of Other Indebtedness . . . . . . . . . . . 28
(c) Bankruptcy or Insolvency . . . . . . . . . . . . . . . 28
(d) Specified Noncompliance with this Agreement . . . . . . 28
(e) Other Noncompliance with this Agreement . . . . . . . . 29
(f) Representations and Warranties . . . . . . . . . . . . 29
(g) Employee Benefit Plans . . . . . . . . . . . . . . . . 29
(h) Judgments . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 9.2 Effect of Event of Default . . . . . . . . . . . . . . 29
SECTION 10
GENERAL . . . . . . . . . . . . . . . 29
SECTION 10.1 Amendments and Waivers . . . . . . . . . . . . . . . . 30
SECTION 10.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 10.3 Accounting Terms; Computations . . . . . . . . . . . . 30
SECTION 10.4 Costs, Expenses and Taxes . . . . . . . . . . . . . . . 31
SECTION 10.5 Indemnification . . . . . . . . . . . . . . . . . . . . 31
SECTION 10.6 Captions and References . . . . . . . . . . . . . . . . 32
SECTION 10.7 No Waiver; Cumulative Remedies. . . . . . . . . . . . . 32
SECTION 10.8 Governing Law; Jury Trial; Severability . . . . . . . . 32
SECTION 10.9 Counterparts . . . . . . . . . . . . . . . . . . . . . 33
SECTION 10.10 Successors and Assigns . . . . . . . . . . . . . . . . 33
SECTION 10.11 Prior Agreements . . . . . . . . . . . . . . . . . . . 33
SECTION 10.12 Assignments; Participations . . . . . . . . . . . . . . 33
SECTION 10.13 Confidentiality. . . . . . . . . . . . . . . . . . . . 34
SECTION 10.14 Credit Decision . . . . . . . . . . . . . . . . . . . . 35
SCHEDULES AND EXHIBITS
SCHEDULE 5.1 Wire Transfer/Account Information
SCHEDULE 6.11 Tax Liabilities
SCHEDULE 6.17 Subsidiaries
EXHIBIT A Form of Note
EXHIBIT B Form of Notice of Conversion
CREDIT AGREEMENT
This Credit Agreement dated as of August 30, 1995 (this "Agreement"), is
between (i) PIONEER FINANCIAL SERVICES, INC., a Delaware corporation (herein,
together with its successors and assigns, called the "Company") and (ii)
AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO, a national banking
association (herein, together with its successors and assigns, called "ANB"),
FIRSTAR BANK MILWAUKEE, N.A., a national banking association (herein, together
with its successors and assigns, called "Firstar"), BANK ONE, ROCKFORD, NA, a
national banking association (herein, together with its successors and assigns,
called "Bank One") and LASALLE NATIONAL BANK, a national banking association
(herein, together with its successors and assigns, called "LaSalle") (ANB,
Firstar, Bank One and LaSalle collectively referred to as the "Banks" and
individually as a "Bank").
W I T N E S S E T H:
WHEREAS, the Company has requested the Banks severally to make available to
the Company a term loan facility for the purposes as set forth herein; and
WHEREAS, the Banks are willing to make available to the Company a term loan
facility in the aggregate amount of $11,100,000, under which each Bank severally
shall lend funds to the Company subject to the terms and conditions set forth in
this Agreement;
NOW, THEREFORE, in consideration of the mutual agreements contained herein,
the parties hereto agree as follows:
SECTION 1
CERTAIN DEFINITIONS
SECTION 1.1 Terms Defined in this Agreement. When used herein the
following terms shall have the following respective meanings:
"Adjusted Capital and Surplus" means, with respect to each Principal
Insurance Subsidiary as of any date, the sum of (i) Capital and Surplus for such
Principal Insurance Subsidiary and (ii) the asset valuation reserve of such
Principal Insurance Subsidiary as of such date determined in accordance with
Statutory Accounting Principles.
"Affiliate" means, with respect to any Person, any other Person directly or
indirectly controlling, controlled by, or under direct or indirect common
control with, such Person. A Person shall be deemed to control another Person
if such first Person possesses, directly or indirectly, the power to direct or
cause the direction of the management and policies of such other Person, whether
through ownership of voting securities, by contract or otherwise.
"Aggregate Commitment" means the combined Commitments of the Banks in the
amount of Eleven Million One Hundred Thousand Dollars ($11,100,000).
"Agreement" means this Credit Agreement as it may be amended, supplemented
or otherwise modified from time to time in accordance with the terms hereof.
"A.M. Best" means A.M. Best Company, and its successors and assigns.
"ANB" - see Preamble.
"Applicable Margin" means (a) with respect to Base Rate Loans, -0-, (b)
with respect to CD Rate Loans, two percent (2.00%) per annum, and (c) with
respect to Eurodollar Rate Loans, two percent (2.00%) per annum.
"Authorized Control Level RBC" shall have the same meaning as the term
"Authorized Control Level RBC" as defined in the NAIC Risk-Based Capital (RBC)
for Life and/or Health Insurers Model Act, as such term may be amended by the
NAIC from time to time.
"Authorized Officer" means the Chairman, the President, any Executive Vice
President, the Treasurer, any Vice President or any other officer of the Company
that are designated as authorized officers pursuant to a resolution of the Board
of Directors or the Executive Committee of the Board of Directors of the Company
(each Bank shall be entitled to rely on such resolution until revoked or amended
in writing by the Company).
"Available Cash Flow" means, with respect to the Company, for any period,
the net income of all Subsidiaries of the Company other than Insurance
Subsidiaries for such period, and shall include, without limitation, the net
income of Network Air Medical Systems, Inc., Association Management Corporation,
Design Benefit Plans, Inc., Administrators Service Corporation, and National
Health Services, Inc. for such period.
"Bank" or "Banks" - see Preamble.
"Bank One" - see Preamble.
"Bank Parties" - see Section 10.5.
"Base Rate" means, with respect to each Bank, at any time and from time to
time the rate of interest per annum which such Bank most recently announced as
its base rate in the city where such Bank's main office is located, which rate
shall not necessarily be the lowest rate of interest which such Bank charges its
customers.
"Base Rate Loans" means the Loans when such Loans bear interest based on
the Base Rate and the Applicable Margin with respect thereto.
"Business Day" means any day of the year on which each Bank is open for
business in the city where such Bank's main office is located.
"Capital and Surplus" means, with respect to each Principal Insurance
Subsidiary, such Principal Insurance Subsidiary's capital and surplus as
reported on such Principal Insurance Subsidiary's Statutory Statements most
recently filed with the department of insurance of such Principal Insurance
Subsidiary's state of incorporation.
"CD Rate" means, for each Bank, with respect to each Interest Period to be
applicable to CD Rate Loans, the rate of interest per annum payable on a
certificate or certificates of deposit purchased by the Company from such Bank
concurrently in connection with the Loans when the Loans are CD Rate Loans.
"CD Rate Loans" means the Loans when such Loans bear interest based on the
CD Rate and the Applicable Margin with respect thereto.
"Closing Date" means the date on which all conditions precedent set forth
in Section 8.1 are satisfied or waived by all the Banks.
"Commitment", with respect to each Bank, has the meaning specified in
Section 2.1.
"Commitment Percentage" means, as to any Bank, the percentage equivalent at
the time of determination of the outstanding principal amount of such Bank's
Loan divided by the aggregate outstanding principal amount of all Loans.
"Company" - see Preamble.
"Conversion Date" means any date on which the Company converts Loans that
are then Base Rate Loans to Eurodollar Rate Loans or CD Rate Loans; or Loans
that are then CD Rate Loans to Eurodollar Rate Loans or Base Rate Loans; or
Loans that are then Eurodollar Rate Loans to CD Rate Loans or Base Rate Loans.
"Debt Service Requirements" means, for any period, all expenses of the
Company on an unconsolidated basis, including, without limitation, the aggregate
of the principal, interest and other payments, dividends or distributions made
or required to be made (i) to each Bank under this Agreement, (ii) with respect
to other Indebtedness, (iii) with respect to all preferred stock and common
stock of the Company, and (iv) with respect to taxes paid or required to be paid
by the Company (minus any cash payments made by Subsidiaries of the Company to
the Company as reimbursement or otherwise as repayment for taxes paid by the
Company on behalf of such Subsidiaries).
"Dollar(s)" and the sign "$" means lawful money of the United States of
America.
"Earnings" means, for any period, as to any Insurance Subsidiary, the
earnings of such Insurance Subsidiary calculated in accordance with Statutory
Accounting Principles.
"Environmental Laws" means any and all federal, state or local
environmental or health and safety-related laws, regulations, rules, ordinances,
orders or directives.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute of similar import, together with the
regulations thereunder and under the Internal Revenue Code of 1986, as amended,
in each case as in effect from time to time. References to sections of ERISA
shall be construed to also refer to any successor sections.
"ERISA Affiliate" means any corporation, trade or business that is, along
with the Company, a member of a controlled group of corporations or a controlled
group of trades or businesses, as described in Sections 414(b) and 414(c),
respectively, of the Internal Revenue Code of 1986, as amended, or Section 4001
of ERISA.
"Eurodollar Rate Loans" means the Loans when such Loans bear interest based
on LIBOR and the Applicable Margin with respect thereto.
"Event of Default" means any of the events described in Section 9.1.
"Federal Reserve Board" means the Board of Governors of the Federal Reserve
System, or any entity succeeding to any of its principal functions.
"Firstar" - see Preamble.
GAAP means the generally accepted accounting principles in the United
States of America with such changes thereto as (i) shall be consistent with the
then-effective principles promulgated or adopted by the Financial Accounting
Standards Board and its predecessors and successors and (ii) shall be concurred
in by the independent certified public accountants of recognized standing
certifying any financial statements of the Company and its Subsidiaries.
"Indebtedness" means, as of any date, all indebtedness, obligations or
other liabilities of the Company and its Subsidiaries as of such date (i) for
borrowed money, (ii) evidenced by bonds, debentures, notes or other similar
instruments for borrowed money, or (iii) pursuant to any guarantee of any
indebtedness, obligations or other liabilities of any other Person of the type
described in clauses (i) or (ii); provided, however, that (a) the amounts set
forth in clauses (i), (ii) and (iii) shall not be double counted and shall
relate only to amounts actually owed or otherwise outstanding as of such date
and (b) Indebtedness shall not include indebtedness, obligations or other
liabilities of the Company to any Subsidiary or indebtedness, obligations or
other liabilities of any Subsidiary to the Company or another Subsidiary.
"Indemnified Liabilities" - see Section 10.5.
"Insurance Company Leverage Ratio" means, for each Principal Insurance
Subsidiary on an individual basis as of any date and for all Principal Insurance
Subsidiaries on a combined basis as of any date, the ratio of (x) Adjusted
Capital and Surplus to (y) Total Assets.
"Insurance Laws" means any and all federal or state laws, regulations,
rules, ordinances, orders or directives that pertain to the regulation of
insurance companies, as such.
"Insurance Subsidiaries" means, as of any date, all Subsidiaries of the
Company that are engaged in the insurance business and are subject to regulation
by the insurance commission or department of any state or other jurisdiction.
The Insurance Subsidiaries of the Company as of the date of this Agreement are
set forth in Schedule 6.17 attached hereto.
"Interest Payment Date" means each Principal Repayment Date and each date
upon which the Loans are prepaid or converted to Eurodollar Rate Loans, CD Rate
Loans, or Base Rate Loans, as the case may be.
"Interest Period" means, (a) if the Loans are then Eurodollar Rate Loans,
the period commencing on the Business Day the Loans are disbursed or continued
or on the Conversion Date on which the Loans are converted to Eurodollar Rate
Loans, as the case may be, and ending on the date three months thereafter; and
(b) if the Loans are then CD Rate Loans, the period commencing on the Business
Day the Loans are disbursed or continued or on the Conversion Date on which the
Loans are converted to CD Rate Loans, as the case may be, and ending 90 days
thereafter;
provided that:
(i) if any Interest Period pertaining to Loans that are then
Eurodollar Rate Loans or CD Rate Loans would otherwise end on a day which
is not a Business Day, that Interest Period shall be extended to the next
succeeding Business Day unless, if the Loans are then Eurodollar Rate
Loans, the result of such extension would be to carry such Interest Period
into another calendar month, in which event such Interest Period shall end
on the immediately preceding Business Day;
(ii) any Interest Period pertaining to Loans that are then Eurodollar
Rate Loans that begins on the last Business Day of a calendar month (or on
a day for which there is no numerically corresponding day in the calendar
month at the end of such Interest Period) shall end on the last Business
Day of the calendar month at the end of such Interest Period; and
(iii) no Interest Period for the Loans shall extend beyond a
Principal Repayment Date or the Termination Date.
"Investment Grade Obligations" means, as of any date for each Principal
Insurance Subsidiary, investments having an NAIC investment rating of 1 or 2; or
a Standard & Poor's rating within the range of ratings from AAA to BBB-; or a
Xxxxx'x rating within the range of ratings from Aaa to Baa3.
"LaSalle" - see Preamble.
"Liabilities" means any and all of the Company's obligations to the Banks,
howsoever created, arising or evidenced, whether direct or indirect, absolute or
contingent, now or hereafter existing, or due or to become due, which arise out
of or in connection with this Agreement or the Related Documents.
"LIBOR" means, with respect to each Interest Period to be applicable to
Eurodollar Rate Loans, the rate of interest per annum determined by ANB obtained
by dividing (a) the Telerate Screen Rate for such Interest Period or (b) if the
Telerate Screen Rate is unavailable at the time the LIBOR rate is to be
determined, a rate determined on the basis of the offered rates for deposits in
U.S. dollars for a period approximately equal to such Interest Period which
appear on the Reuters Screen LIBO Page, as of 11:00 a.m., London time, on the
day that is two London banking days preceding the beginning of such Interest
Period by (c) a percentage equal to 100% minus the stated maximum rate
(expressed as a percentage) as prescribed by the Federal Reserve Board of all
reserve requirements (including, without limitation, any marginal, emergency,
supplemental, special or other reserves) applicable on the first day of such
Interest Period to any member bank of the Federal Reserve System in respect of
Eurodollar funding or liabilities.
"Lien" means any mortgage, pledge, lien, security interest or other charge
or encumbrance, including the retained security title of a conditional vendor or
lessor.
"Loan" means the extension of credit by a Bank to the Company pursuant to
Section 2, and which shall be a Base Rate Loan, a CD Rate Loan or a Eurodollar
Rate Loan.
"Majority Banks" means at any time a group of Banks then holding at least
51% of the then aggregate unpaid principal amount of the Notes.
"Margin Stock" has the meaning given to such term in Regulation U.
"Material Subsidiary" means any Subsidiary of the Company, the financial
condition of which, when consolidated with the financial condition of the
Company, has a material effect on such financial condition of the Company, and
shall include, without limitation, each Principal Insurance Subsidiary.
"Mortgage" means, as of any date, as to each Principal Insurance
Subsidiary, the amount of such Principal Insurance Subsidiary's mortgage loans
on real estate calculated in accordance with Statutory Accounting Principles.
"Multiemployer Plan" means a "multiemployer plan" as defined in ERISA.
"NAIC" means the National Association of Insurance Commissioners and any
successor thereto.
"Net Worth" means, with respect to the Company, as at the time any
determination thereof is made, the consolidated shareholders' equity, including
common stock, additional paid-in capital, retained earnings, and net unrealized
gains and losses, but excluding any increase or decrease in the Company's
"available for sale investment portfolio" (as calculated in accordance with
GAAP) since June 30, 1995.
"Non-Investment Grade Obligations" means, as of any date, for each
Principal Insurance Subsidiary, any fixed maturity debt instrument investment
that is not an Investment Grade Obligation.
"Note" or "Notes" - see Section 3 and Exhibit A.
"Notice of Conversion" means a notice given by the Company to each Bank
pursuant to Section 4.2, in substantially the form of Exhibit B.
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"Permitted Liens" means (i) purchase money security interests hereinafter
incurred in connection with the acquisition of assets or property; (ii) Liens
for taxes, assessments or governmental charges or levies on property of the
Company if the same shall not at the time be delinquent or thereafter can be
paid without penalty, or are being contested in good faith and by appropriate
proceedings and as to which the Company shall have set aside on its books such
reserves as are required by GAAP with respect to any such taxes, assessments or
other governmental charges; (iii) Liens imposed by law, such as carriers',
warehousemen's and mechanics' liens and other similar liens, which arise in the
ordinary course of business with respect to obligations not yet due or being
contested in good faith by appropriate proceedings and as to which the Company
shall have set aside on its books such reserves as are required by GAAP with
respect to any such Liens; (iv) Liens arising out of pledges or deposits under
insurance laws, worker's compensation laws, unemployment insurance, old age
pensions, or other Social Security or retirement benefits, or similar
legislation; (v) Liens consisting of mortgages, deeds of trust, liens or
security interests on any interest of the Company as sublessor under any
sublease of property which solely secure obligations of the Company as the
lessee of such property and extensions or renewals thereof; and (vi) Liens
consisting of mortgages, deeds of trust or similar encumbrances that may be
incurred by the Company or an Insurance Subsidiary of the Company in connection
with the Company's or such Insurance Subsidiary's purchase or refinancing of the
building and property located at 0000 Xxxx Xxxx, Xxxxxxxxxx, Xxxxxxxx; provided,
however, that promptly after the creation of any Lien of the type referred to in
this subsection (vi), the Company shall provide to the Banks written notice of
the creation of such Lien, describing the amount of the obligation secured
thereby and the properties and assets subject to such Lien.
"Person" means an individual or a corporation, partnership, limited
liability company, trust, incorporated or unincorporated association, joint
venture, joint stock company, government (or any agency or political subdivision
thereof) or other entity of any kind.
"Plan" means an "employee pension benefit plan", as such term is defined in
Section 3(2) of ERISA, an "employee welfare benefit plan," as such term is
defined in Section 3(1) of ERISA, or any bonus, deferred compensation, stock
purchase, stock option, severance, salary continuation, vacation, sick leave,
fringe benefit, incentive, insurance, welfare or similar arrangement.
"Principal Insurance Subsidiaries" means, as of any date, any Insurance
Subsidiary that is or becomes engaged in a material amount of insurance business
and has been designated in writing by all of the Banks and the Company as a
Principal Insurance Subsidiary. The following Insurance Subsidiaries shall be
deemed to be Principal Insurance Subsidiaries as of the date of this Agreement
and until designated otherwise by all of the Banks and the Company : Pioneer
Life Insurance Company of Illinois, an Illinois corporation; National Group Life
Insurance Company, an Illinois corporation; and Manhattan National Life
Insurance Company, an Illinois corporation.
"Principal Repayment Date" - see Section 2.3.
"Real Estate Concentration Ratio" means, as of any date, as to each
Principal Insurance Subsidiary, the ratio of (a) the sum of (i) Real Estate
Investments plus (ii) Mortgages to (b) Capital and Surplus.
"Real Estate Investments" means, as of any date, as to each Principal
Insurance Subsidiary, the sum of (a) the book value of properties acquired in
satisfaction of debt calculated in accordance with Statutory Accounting
Principles plus (b) the investment in investment real estate calculated in
accordance with Statutory Accounting Principles; provided, that the properties
occupied by the Company or any Subsidiary shall be excluded from the calculation
of Real Estate Investments for purposes of this Agreement.
"Regulation U" means Regulation U of the Board of Governors of the Federal
Reserve System and any successor rule or regulation of similar import as in
effect from time to time.
"Related Documents" means, collectively, this Agreement, each Note issued
by the Company to each Bank, and all other documents, instruments and agreements
executed by the Company and delivered to the Banks pursuant to or in connection
with this Agreement or any of the foregoing.
"Reportable Event" means a reportable event (as defined in Section 4043(b)
of ERISA) for which notice has not been waived pursuant to applicable
regulations.
"Reuters Screen LIBO Page" means the display page designated "LIBO" on the
Reuters Monitor Money Rates Service (or such other page that may replace that
page on such service for the purpose of displaying comparable rates).
"Revolving Credit Agreement" means that certain Amended and Restated Credit
Agreement dated as of March 22, 1995 between the Company and ANB, Firstar and
Bank One, as amended, supplemented or otherwise modified from time to time.
"Statutory Accounting Principles" means the accounting principles used in
the preparation of Statutory Statements in accordance with the rules and
regulations prescribed by the insurance commission or department of each
Insurance Subsidiary's respective state of domicile in effect as of the date of
this Agreement. In the event that there is a material change in such accounting
principles subsequent to the date hereof, the covenants contained herein and
affected by such change shall be adjusted as necessary to preserve the force and
effect of such covenants by the Company (provided that prior to any such
adjustment the Company shall consult with the Banks with respect to any such
adjustment) subject to the reasonable objection of the Majority Banks.
"Statutory Statements" means, with respect to an Insurance Subsidiary, the
annual or quarterly accounting statement for such Insurance Subsidiary prepared
in accordance with Statutory Accounting Principles, as filed with the insurance
commissioner or department of each jurisdiction in which such Insurance
Subsidiary is subject to regulation.
"Subsidiary" means a corporation, association or business entity of which
the Company and/or its other Subsidiaries own, directly or indirectly, such
number of outstanding shares as have more than 50% of the ordinary voting power
for the election of such entity's directors.
"Telerate Screen Rate" means, for any Interest Period to be applicable to
Eurodollar Rate Loans, the rate for deposits in U.S. dollars for a period
approximately equal to such Interest Period which appears on Page 3750 of the
Dow Xxxxx Telerate Service (or such other page that may replace that page on
such service for the purpose of displaying comparable rates) as of 11:00 a.m.,
London time, on the day that is two London banking days preceding the beginning
of such Interest Period.
"Termination Date" - see Section 2.5.
"Term Loan A Credit Agreement" means that certain Credit Agreement dated as
of March 22, 1995 between the Company and the Banks, as amended, supplemented or
otherwise modified from time to time.
"Total Adjusted Capital" shall have the same meaning as the term "Total
Adjusted Capital" as defined in the NAIC Risk-Based Capital (RBC) for Life
and/or Health Insurers Model Act, as such term may be amended by the NAIC from
time to time.
"Total Assets" means, as of any date, as to each Principal Insurance
Subsidiary, the total net admitted assets calculated as of such date in
accordance with Statutory Accounting Principles.
"Total Invested Assets" means, as of any date, as to each Principal
Insurance Subsidiary, the amount of such Principal Insurance Subsidiary's cash
and invested assets calculated in accordance with Statutory Accounting
Principles.
"Unrestricted Subsidiary" - see Section 7A.1.
"Unrestricted Subsidiary Indebtedness" means, as of any date, for any
Unrestricted Subsidiary, all indebtedness, obligations or other liabilities of
such Unrestricted Subsidiary and its Subsidiaries as of such date (i) for
borrowed money, (ii) evidenced by bonds, debentures, notes or other similar
instruments for borrowed money, or (iii) pursuant to any guarantee of any
indebtedness, obligations or other liabilities of any other Person of the type
described in clauses (i) or (ii); provided, however, that the amounts set forth
in clauses (i), (ii) and (iii) shall not be double counted and shall relate only
to amounts actually owed or otherwise outstanding as of such date.
SECTION 2
TERM LOAN; BORROWING PROCEDURES
SECTION 2.1 Term Loan. (a) On the terms and subject to the conditions
set forth in this Agreement, each Bank severally agrees to make available to the
Company on the Closing Date of this Agreement a term loan (each such loan called
a "Loan" and collectively called the "Loans") in an aggregate amount not to
exceed at any time outstanding the amount set forth opposite such Bank's name on
the signature page hereof under the heading "Commitment" (such amount referred
to as such Bank's "Commitment").
(b) The Company agrees that, if the Loans are CD Rate Loans, the
Company shall purchase from each Bank a certificate or certificates of deposit
in an amount equal to the outstanding principal amount of such Bank's Loan and
which shall have a term equal to the Interest Period applicable to such Loan.
SECTION 2.2 Disbursement. Each Bank shall disburse the proceeds of its
Loan in immediately available funds to an account of the Company designated in
writing by the Company.
SECTION 2.3 Repayment of Principal of the Loans. The Company shall
repay the principal amount of the Loans in installments as follows: Nine Hundred
Twenty-Five Thousand Dollars ($925,000) in aggregate principal amount on the
last Business Day of November 1995 and on the last Business Day of each
February, May, August and November thereafter (each such day being a "Principal
Repayment Date") until the Loans are fully paid, provided, however, that the
final payment, if not sooner paid, shall be due on the Termination Date and
shall be equal to the aggregate principal amount of the Loans then outstanding.
The Company shall ratably repay to each Bank such Bank's Commitment Percentage
of the aggregate principal amount set forth in the preceding sentence.
SECTION 2.4 Optional Prepayments. Subject to Section 4.6, the Company
may, at any time or from time to time, ratably prepay the Loans in whole (in
which case the Loans shall terminate) or in part in any amount; provided that
the Company's written notice of such prepayment shall be delivered to each Bank
in accordance with Section 10.2 prior to 11:00 a.m. (Chicago time) (i) two
Business Days prior to the requested date of prepayment, if the Loans are then
Eurodollar Rate Loans; (ii) one Business Day prior to the requested date of
prepayment, if the Loans are then CD Rate Loans, and (iii) on the requested date
of prepayment, if the Loans are then Base Rate Loans. Such notice of prepayment
shall specify the date of prepayment, the aggregate amount of such prepayment,
and each Bank's Commitment Percentage of such prepayment. Such notice shall not
thereafter be revocable by the Company. If such notice is given by the Company,
the Company shall make such prepayment and the payment amount specified in such
notice shall be due and payable on the date specified therein, together with
accrued interest to each such date on the amount prepaid and any amounts
required pursuant to Section 4.6. Any amounts so prepaid may not be reborrowed.
SECTION 2.5 Termination of the Loans; Termination Date. The Loans shall
terminate without further action on the part of any Bank on the earlier of (i)
August 31, 1998 or (ii) the date of termination of the Loans pursuant to Section
2.4 or Section 9.2 hereof (the "Termination Date").
SECTION 3
NOTES EVIDENCING THE LOANS
SECTION 3.1 Notes. Each Bank's Loan shall be evidenced by a promissory
note (herein, as the same may be amended, modified or supplemented from time to
time, and together with any renewals thereof or exchanges or substitutions
therefor, individually called a "Note" and collectively called the "Notes"),
substantially in the form set forth in Exhibit A, with appropriate insertions,
dated the Closing Date, payable to the order of such Bank in the principal
amount equal to such Bank's Commitment or the aggregate principal amount of the
Loan outstanding to such Bank, whichever is less. The date and amount of the
Loan made by each Bank and of each repayment of principal thereon received by
such Bank shall be recorded by such Bank in its records or, at its option, on
the schedule attached to its Note. The aggregate unpaid principal amount so
recorded shall be rebuttable presumptive evidence of the principal amount owing
and unpaid on such Note to such Bank. The failure so to record any such amount
or any error in so recording any such amount, however, shall not limit or
otherwise affect the Company's obligations hereunder or under such Note to repay
the principal amount of the Loan evidenced by such Note together with all
interest accruing thereon. Each Note shall provide for the payment of interest
as provided in Section 4.
SECTION 4
INTEREST, FEES AND COSTS
SECTION 4.1 Interest.
(a) Subject to Section 4.1(c), the Loans shall bear interest on the
outstanding principal amount thereof for the period commencing on the date when
the Loans were made until the Loans are paid in full at a rate per annum equal
to the CD Rate, LIBOR or the Base Rate, as the case may be, plus the Applicable
Margin.
(b) Interest on the Loans shall be paid in arrears on each Interest
Payment Date. Interest shall also be paid on the date of any prepayment of the
Loans pursuant to Section 2.4 for the portion of the Loans so prepaid and upon
payment (including prepayment) in full thereof, and, during the existence of any
Event of Default, interest shall be paid on demand.
(c) If any amount of principal of or interest on the Loans, or any
other amount payable hereunder or under any Related Document is not paid in full
when due (whether at stated maturity, by acceleration, demand or otherwise), the
Company agrees to pay interest on such unpaid principal or other amount, from
the date such amount becomes due until the date such amount is paid in full,
payable on demand, at a fluctuating rate per annum equal to the Base Rate plus
two percent (2.00%) per annum.
SECTION 4.2 Conversion Elections.
(a) The Company may upon irrevocable written notice to each Bank in
accordance with Section 4.2(b):
(i) if the Loans are then Base Rate Loans, elect to convert on
the last Business Day of each February, May, August or November all of such
Loans into Eurodollar Rate Loans or CD Rate Loans; or
(ii) if the Loans are then Eurodollar Rate Loans, elect to
convert on the last Business Day of each February, May, August or November
all of such Loans into Base Rate Loans or CD Rate Loans; or
(iii) if the Loans are then CD Rate Loans, elect to convert on the
last Business Day of each February, May, August or November all of such
Loans into Base Rate Loans or Eurodollar Rate Loans;
provided, that if the Loans are then either Eurodollar Rate Loans or CD Rate
Loans and the aggregate amount of the Loans shall have been reduced, by payment,
prepayment, or conversion thereof, to be less than $100,000, then such Loans
shall automatically convert into Base Rate Loans.
(b) The Company shall deliver a Notice of Conversion in accordance
with Section 10.2 to be received by each Bank not later than 11:00 a.m. (Chicago
time) at least two Business Days in advance of the Conversion Date specifying:
(A) the proposed Conversion Date, which date may only be the
last Business Day of each February, May, August or November;
(B) that the aggregate amount of all of the Loans shall be
converted on such proposed Conversion Date; and
(C) the nature of the proposed conversion.
(c) If the Company fails to deliver to each Bank a Notice of
Conversion in accordance with the terms of Section 4.2(b), the Company shall be
deemed to have elected to continue the Loans as, and the Loans shall thereupon
continue as, Eurodollar Rate Loans, CD Rate Loans or Base Rate Loans, as the
case may be. Notwithstanding the foregoing, if any Event of Default shall then
exist, the Company shall be deemed to have elected to convert such Loans into
Base Rate Loans effective as of the expiration date of such current Interest
Period.
(d) Unless the Majority Banks shall otherwise agree, during the
existence of an Event of Default, the Company may not elect to have the Loans
converted into or continued as Eurodollar Rate Loans or CD Rate Loans.
SECTION 4.3 Closing Fees. On the Closing Date the Company shall pay to
each Bank a one-time closing fee equal to 0.25% of such Bank's Commitment.
SECTION 4.4 Computation of Interest. All computations of interest in
respect of the Base Rate, LIBOR and the CD Rate shall be made on the basis of a
year of 365 or 366 days, as the case may be, and actual days elapsed. Interest
shall accrue during each period during which interest is computed from and
including the first day thereof to but excluding the last day thereof.
SECTION 4.5 Increased Costs; Capital Adequacy.
(a) If (i) Regulation D of the Federal Reserve Board, or (ii)
after the date hereof, the adoption of any applicable law, rule or regulation,
or any change therein, 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 a Bank with
any request or directive (whether or not having the force of law) of any such
authority, central bank or comparable agency issued after the date hereof,
(A) shall subject such Bank to any tax, duty or other charge with
respect to Loans that are then Eurodollar Rate Loans or CD Rate Loans, the
Note issued to such Bank, such Bank's obligation to maintain any such Loan,
or shall change the basis of taxation of payments to such Bank of the
principal of or interest on any such Loan or any other amounts due under
this Agreement in respect of any such Loan or such Bank's obligation to
maintain any such Loan (except for changes in the rate of tax on the
overall income of such Bank imposed by any governmental authority); or
(B) shall impose, modify or deem applicable any reserve (including,
without limitation, any reserve imposed by the Federal Reserve Board but
excluding, if the Loans are then Eurodollar Rate Loans, any reserve
prescribed by the Federal Reserve Board included in the determination of
LIBOR), special deposit or similar requirement against assets of, deposits
with or for the account of, or credit extended by, such Bank;
and the result of any of the foregoing is to increase the cost to such Bank of
maintaining its Loan, or to reduce the amount of any sum received or receivable
by such Bank under this Agreement or under its Note with respect thereto, then
within 30 days after demand by such Bank (which demand shall be accompanied by a
statement setting forth in reasonable detail the basis of such demand), the
Company shall pay directly to such Bank such additional amount or amounts as
will compensate such Bank for such increased costs or such reduction, provided,
however, that any such amount or amounts payable by the Company shall not exceed
the increased costs or amount of reduction of such Bank in direct proportion to
its Loan.
(b) If either (i) the introduction of or any change in or in the
interpretation of any law or regulation or (ii) compliance by a Bank with any
new guideline or request from any central bank or other governmental authority
affects or would affect the amount of capital required or expected to be
maintained by such Bank or any corporation controlling such Bank and the amount
of such capital is increased by or based upon the existence of such Bank's
commitment to maintain its Loan hereunder, then, within 30 days after demand by
such Bank (which demand shall set forth in reasonable detail the basis of such
demand), the Company shall pay directly to such Bank, from time to time as
reasonably specified by such Bank, additional amounts sufficient to compensate
such Bank in the light of such circumstances, to the extent that such Bank
reasonably determines such increase in capital to be allocable to the existence
of such Bank's commitment to maintain its Loan hereunder, provided, however,
that any such amount or amounts payable by the Company shall not exceed the
increased amount of capital required to be maintained by such Bank and allocable
to its Loan in direct proportion to its Loan.
SECTION 4.6 Funding Losses. The Company agrees to reimburse each Bank
and to hold each Bank harmless from any loss or expense which such Bank may
sustain or incur as a consequence of:
(a) if the Loans are then Eurodollar Rate Loans or CD Rate Loans, the
failure of the Company to make when due any payment of principal of the Loans
(including payments made after any acceleration thereof) not resulting from such
Bank's failure to act;
(b) the failure of the Company to convert the Loans after the Company
has given (or is deemed to have given) a Notice of Conversion;
(c) the failure of the Company to make any prepayment after the
Company has given a notice in accordance with Section 2.4;
(d) if the Loans are then Eurodollar Rate Loans or CD Rate Loans, the
prepayment of the Loans on a day which is not the last day of the Interest
Period with respect thereto; or
(e) the conversion pursuant to Section 4.2 of Loans that are then
Eurodollar Rate Loans or CD Rate Loans to Loans of another type on a day that is
not the last day of the Interest Period with respect thereto;
including, in each case, (i) if the Loans are then Eurodollar Rate Loans or CD
Rate Loans, any such loss or expense arising from the liquidation or
reemployment of funds obtained by such Bank to maintain its Loan hereunder or
from fees payable to terminate the deposits from which such funds were obtained
and (ii) if the Loans are then CD Rate Loans, with respect to any certificate of
deposit purchased by the Company from each Bank in connection therewith, any
penalty assessed by such Bank for the early withdrawal of the funds deposited
under any such certificate of deposit in accordance with such Bank's usual and
customary practices that are not otherwise waived by such Bank, it being
understood that for purposes of this Section 4.6 any such penalty assessed by
such Bank for the early withdrawal of funds deposited under any such certificate
of deposit shall constitute the only losses and expenses of such Bank that may
be recovered by such Bank pursuant to this Section 4.6.
SECTION 5
MAKING OF PAYMENTS
SECTION 5.1 Payments by the Company.
(a) All payments (including prepayments) to be made by the Company on
account of principal, interest, fees and other amounts required hereunder shall
be made directly to each Bank without condition or reservation of right in
immediately available funds, no later than 12:00 noon (Chicago time) on the date
specified herein. The Company shall make such payments by wire transfer to such
account of each Bank as set forth in Schedule 5.1 hereof (or pursuant to such
other instructions or to such other account as such Bank may from time to time
notify the Company). Any payment which is received by a Bank later than 12:00
noon (Chicago time) shall be deemed to have been received on the immediately
succeeding Business Day and any applicable interest shall continue to accrue.
(b) Subject to the provisions set forth in the definition of
"Interest Period" herein, whenever any payment hereunder shall be stated to be
due on a day other than a Business Day, such payment shall be made on the next
succeeding Business Day, and such extension of time shall in such case be
included in the computation of interest.
SECTION 5.2 Payments by each Bank. The failure of any Bank to make its
Loan pursuant to Section 2.1 shall not relieve any other Bank of its obligation
hereunder to make its Loan, but no Bank shall be responsible for the failure of
any other Bank to make the Loan to be made by such other Bank.
SECTION 5.3 Setoff.
(a) The Company agrees that, if at any time (i) any amount owing by
it under this Agreement or any Related Document is then due and payable to a
Bank or (ii) any Event of Default shall have occurred and be continuing, then
such Bank, in its sole discretion, may apply to the payment of the Liabilities
any and all balances, credits, deposits, accounts or moneys of the Company then
or thereafter with such Bank.
(b) Without limitation of Section 5.3(a), the Company agrees that,
upon and during the continuance of any Event of Default, such Bank is hereby
authorized, at any time and from time to time, without notice to the Company,
(i) to set off against and to appropriate and apply to the payment of the
Liabilities any and all amounts which such Bank is obligated to pay over to the
Company (whether matured or unmatured, and, in the case of deposits, whether
general or special, time or demand and however evidenced) and (ii) pending any
such action, to the extent necessary, to hold such amounts as collateral to
secure such Liabilities.
(c) Notwithstanding any other provision of this Agreement, the Notes
or any other Related Document, the Banks shall not set off against, or
appropriate or apply to the payment of any Liabilities, any of the deposits,
accounts or other assets of any Insurance Subsidiary.
SECTION 5.4 Sharing of Payments. If, other than as expressly provided
elsewhere herein, any Bank shall obtain on account of the Liabilities held by
such Bank any payment (whether voluntary, involuntary, through the exercise of
any right of set-off, or otherwise) in excess of its Commitment Percentage of
payments on account of the Liabilities obtained by all the Banks, such Bank
shall promptly upon demand purchase from the other Banks a portion of the
Liabilities held by such other Banks as shall be necessary to cause such
purchasing Bank to share the excess payment ratably with each of them based upon
each Bank's Commitment Percentage; provided, however, that if all or any portion
of such excess payment is thereafter recovered from the purchasing Bank, such
purchase shall to that extent be rescinded and each other Bank shall repay to
the purchasing Bank the purchase price paid therefor, together with an amount
equal to such paying Bank's Commitment Percentage of any interest or other
amount paid or payable by the purchasing Bank in respect of the total amount so
recovered. The Company agrees that any Bank so purchasing a portion of another
Bank's Liabilities pursuant to this Section 5.4 may, to the fullest extent
permitted by law, exercise all of its rights of payment (including the right of
setoff) with respect to such purchased Liabilities as fully as if such Bank were
the direct creditor of the Company in the amount of such purchased Liabilities.
SECTION 6
REPRESENTATIONS AND WARRANTIES
To induce each Bank to enter into this Agreement and to make its Loan
hereunder, the Company represents and warrants to each Bank that:
SECTION 6.1 Corporate Organization. The Company is a corporation duly
existing and in good standing under the laws of the State of Delaware and is
duly qualified and in good standing as a foreign corporation authorized to do
business in Illinois, which is the only other jurisdiction in which the Company
is required to be duly qualified and in good standing as a foreign corporation.
The Company's failure to be so qualified in any other jurisdiction does not
materially and adversely affect the Company's business, operations or financial
condition or its ability to perform its obligations hereunder and under the
Related Documents to which it is a party.
SECTION 6.2 Authorization; No Conflict. The Company's execution,
delivery and performance of this Agreement and each of the Related Documents to
which it is a party and the consummation of the transactions contemplated by
this Agreement and each of the Related Documents are within the Company's
corporate powers, have been duly authorized by all necessary corporate action,
require no governmental, regulatory or other approval, and (a) do not and will
not contravene or conflict with any provision of (i) any law the failure of the
Company to comply with in the Company's determination materially and adversely
affects the Company's business, operations or financial condition or its ability
to perform its obligations hereunder and under the Related Documents to which it
is a party, (ii) any judgment, decree or order applicable to the Company, or
(iii) the Company's articles of incorporation or by-laws, and (b) do not and
will not contravene or conflict with any provision of any agreement or
instrument binding upon the Company or upon any property of the Company that in
the Company's determination materially and adversely affects the Company's
business, operations or financial condition or its ability to perform its
obligations hereunder or under the Related Documents to which it is a party.
SECTION 6.3 Validity and Binding Nature. This Agreement and the
Related Documents to which the Company is a party are (or, when duly executed
and delivered, will be) the legal, valid and binding obligations of the Company
enforceable against the Company in accordance with their respective terms except
as limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditor's rights generally and by general principles of
equity (regardless of whether enforcement is sought in equity or at law).
SECTION 6.4 Financial Statements. The annual and quarterly balance
sheets and statements of operations that have been or shall hereafter be
furnished to each Bank by or at the direction of the Company for the purposes of
or in connection with this Agreement do and will present fairly the financial
condition of the Persons involved as of the dates thereof and the results of
their operations for the period(s) covered thereby, all in accordance with GAAP,
consistently applied, unless otherwise noted therein.
SECTION 6.5 Litigation and Contingent Liabilities.
(a) No litigation (including, without limitation, derivative
actions), arbitration proceedings, governmental proceedings or investigations or
regulatory proceedings are pending or, to the best of its knowledge, threatened
against the Company or any Material Subsidiary which in the Company's
determination materially and adversely affects the Company's or such Material
Subsidiary's business, operations or financial condition or the Company's
ability to perform its obligations hereunder and under the Related Documents to
which it is a party. In addition, to the best of the Company's knowledge, there
are no inquiries, formal or informal, which give rise to such actions,
proceedings or investigations.
(b) The Company and, to the best of the Company's knowledge, each
Material Subsidiary have obtained all licenses, permits, franchises and other
governmental authorizations necessary to the ownership of its properties or to
the conduct of its businesses, including without limitation all licenses,
permits, franchises and other governmental authorizations required under all
applicable Environmental Laws, a failure to obtain or violation of which in the
Company's determination materially and adversely affects the Company's or such
Material Subsidiary's business, operations or financial condition or the
Company's ability to perform its obligations hereunder and under the Related
Documents to which it is a party.
(c) The Company does not have any material contingent liabilities
required to be disclosed pursuant to GAAP that are not provided for or disclosed
in the financial statements referred to in Section 6.4 hereof.
SECTION 6.6 Employee Benefit Plans. To the best of the Company's
knowledge, each Plan complies in all material respects with all applicable
statutes and governmental rules and regulations (including, without limitation,
the requirements of Section 401(a) of the Internal Revenue Code of 1986, as
amended, to the extent that such Plan is intended to conform to that section)
and during the 12-consecutive-month period prior to the Closing Date, (i) no
Reportable Event has occurred and is continuing with respect to any Plan subject
to Title IV of ERISA, (ii) neither the Company nor any ERISA Affiliate has
withdrawn from any Plan subject to Title IV of ERISA or instituted steps to do
so, (iii) no steps have been instituted to terminate any Plan subject to Title
IV of ERISA, (iv) no contribution failure has occurred with respect to any Plan
sufficient to give rise to a lien under Section 302(f) of ERISA, or (v) each
Plan which is intended to be qualified pursuant to Section 401(a) of the
Internal Revenue Code of 1986, as amended, has received a favorable
determination letter. To the best of the Company's knowledge, no condition
exists or event or transaction has occurred in connection with any Plan which
would result in the incurrence by the Company or any ERISA Affiliate of any
liability, fine or penalty, which in the Company's determination materially and
adversely affects the Company's business, operations or financial condition, or
the ability of the Company to perform its obligations hereunder and under the
Related Documents to which it is a party. Neither the Company nor any ERISA
Affiliate presently maintains, contributes to or, to the best of the Company's
knowledge, has any liability (including current or potential withdrawal
liability) with respect to any Multiemployer Plan. To the best of the Company's
knowledge, neither the Company nor any ERISA Affiliate has any liability with
respect to any funded or unfunded postretirement benefit for employees or former
employees (including medical, health or life insurance) other than liability for
continuation coverage described in Part 6 of Title I of ERISA.
SECTION 6.7 Investment Company Act. The Company is not an "investment
company" or a company "controlled" by an "investment company", within the
meaning of the Investment Company Act of 1940, as amended.
SECTION 6.8 Regulation U. The Company is not engaged principally, or as
one of its important activities, in the business of extending credit for the
purpose of purchasing or carrying Margin Stock.
SECTION 6.9 Accuracy of Information. To the best of the Company's
knowledge, all factual information heretofore or contemporaneously furnished by
the Company to any Bank for purposes of or in connection with this Agreement or
any transaction contemplated hereby is, and all other factual information
hereafter furnished by the Company to any Bank will be, true and accurate in
every material respect on the date as of which such information is dated or
certified, and the Company has not knowingly omitted and will not knowingly omit
any material fact it deems necessary to prevent such information from being
false or misleading.
SECTION 6.10 Labor Controversies. There are no labor controversies
pending or threatened against the Company or any Material Subsidiary which in
the Company's determination materially and adversely affect the Company's or
such Material Subsidiary's business, operations or financial condition or the
Company's ability to perform its obligations hereunder and under the Related
Documents to which it is a party.
SECTION 6.11 Tax Status. Except as set forth in Schedule 6.11 hereto,
the Company and, to the best of the Company's knowledge, each Material
Subsidiary have made or filed all income and other tax returns, reports and
declarations required by any jurisdiction to which it is subject, have paid all
taxes, assessments and other charges shown or determined to be due on
such returns, reports and declarations (other than those being diligently
contested in good faith by appropriate proceedings), and have set aside adequate
reserves against liability for taxes, assessments and charges applicable to
periods subsequent to those covered by such returns, reports and declarations, a
failure of which to file, to pay or to set aside in the Company's determination
materially and adversely affects the Company's or such Material Subsidiary's
business, operations or financial condition or the Company's ability to perform
its obligations hereunder and under the Related Documents to which it is a
party.
SECTION 6.12 No Default. No event has occurred and no condition exists
which, upon the execution and delivery of, or consummation of any transaction
contemplated by, this Agreement or any Related Document, or upon the funding of
the Loans, will constitute an Event of Default. The Company and each Material
Subsidiary have not received notice of default with respect to any other
material agreement, security or contract, except those for which a default
exists that is not capable of being cured with the payment of money or as to
which a good faith dispute exists.
SECTION 6.13 Compliance with Applicable Laws. The Company and, to the
best of the Company's knowledge, each Material Subsidiary are in compliance with
the requirements of all applicable laws, rules, regulations, and orders of all
governmental authorities (federal, state, local or foreign, and including,
without limitation, Environmental Laws and Insurance Laws), a breach of which
would in the Company's determination materially and adversely affect the
Company's or such Material Subsidiary's business, operations or financial
condition, or the ability of the Company to perform its obligations hereunder
and under the Related Documents to which it is a party.
SECTION 6.14 Insurance. The Company, in its sole determination,
maintains adequate general liability, property and casualty insurance for its
benefit under policies issued by insurers of recognized responsibility.
SECTION 6.15 Solvency. After giving effect to the transactions
contemplated hereby and by the Related Documents, the Company is not
"insolvent", nor will the Company's incurrence of obligations to repay the Loans
render the Company "insolvent." For the purposes of this Section 6.15, a
corporation is "insolvent" if (i) the "present fair salable value" (as defined
below) of its assets is less than the amount that will be required to pay its
probable liability on its existing debts and other liabilities (including
contingent liabilities) as they become absolute and matured; (ii) the property
of the Company constitutes unreasonably small capital for the Company to carry
out its business as now conducted and as proposed to be conducted including the
capital needs of the Company; (iii) the Company intends to, or believes that it
will, incur debts beyond its ability to pay such debts as they mature (taking
into account the timing and amounts of cash to be received by the Company and
amounts to be payable on or in respect of debt of the Company), or the cash
available to the Company after taking into account all other anticipated uses of
the cash of the Company is anticipated to be insufficient to pay all such
amounts on or in respect of debt of the Company when such amounts are required
to be paid; or (iv) the Company believes that final judgments against the
Company in actions for money damages will be rendered at a time when, or in an
amount such that, the Company will be unable to satisfy any such judgments
promptly in accordance with their terms (taking into account the maximum
reasonable amount of such judgments in any such actions and the earliest
reasonable time (as determined in the Company's best judgment) at which such
judgments might be rendered), or the cash available to the Company after taking
into account all other anticipated uses of the cash of the Company (including
the payments on or in respect of debt referred to in clause (iii) of this
Section 6.15), is anticipated to be insufficient to pay all such judgments
promptly in accordance with their terms. For purposes of this Section 6.15, the
following terms have the following meanings: (x) the term "debts" includes any
legal liability, whether matured or unmatured, liquidated, absolute, fixed or
contingent, (y) the term "present fair salable value" of the Company's assets
means the amount which may be realized, within a reasonable time (as determined
in the Company's best judgment), either through collection or sale of such
assets at their regular market value and (z) the term "regular market value"
means the amount which a capable and diligent businessman (as determined in the
Company's best judgment) could obtain for the property in question within a
reasonable time (as determined in the Company's best judgment) from an
interested buyer who is willing to purchase under ordinary selling conditions
(as determined in the Company's best judgment).
SECTION 6.16 Use of Proceeds. The Company will use the proceeds of the
Loans to repay loans and other obligations incurred by the Company under the
Revolving Credit Agreement, the proceeds of which loans and other obligations
were used by the Company primarily for internal sales investment and for the
conversion of the Company's 8% Subordinated Convertible Debentures (due 2000)
into common stock of the Company.
SECTION 6.17 Subsidiaries. The Company has no Subsidiaries except as
listed on Schedule 6.17 hereto.
SECTION 7
COVENANTS
Until all Liabilities of the Company are paid in full, the Company agrees
that, unless at any time the Majority Banks (except with respect to such
sections that expressly require the written consent of all of the Banks) shall
otherwise expressly consent in writing, it will:
SECTION 7.1 Reports, Certificates and Other Information. Furnish to each
of the Banks:
(a) Annual Report. On or before the ninetieth (90th) day after each
of the Company's fiscal years, a copy of the consolidated and consolidating
financial statements of the Company and its Subsidiaries (i) in the case of such
consolidated statements, prepared in conformity with GAAP and audited and
certified by independent certified public accountants of recognized standing
selected by the Company and (ii) in the case of such consolidating statements,
prepared based upon unadjusted per book entries in the Company's and its
Subsidiaries' records, certified by an Authorized Officer.
(b) Interim Reports. On or before the forty-fifth (45th) day after
the end of each of the first three quarters of each fiscal year of the Company,
a copy of the unaudited consolidated and consolidating financial statements of
the Company prepared in a manner consistent with the financial statements
referred to in Section 7.1(a) hereof, certified by an Authorized Officer and
consisting of, at least, balance sheets as at the close of such quarter and
statements of earnings for such quarter and for the period from the beginning of
such fiscal year to the close of such quarter.
(c) Statutory Statements. Promptly upon the filing thereof, copies of
all Statutory Statements required to be filed by the Company and each Principal
Insurance Subsidiary with or to the insurance commission or department of such
Person's respective state of domicile.
(d) Reports to SEC. Promptly upon the filing or making thereof,
copies of each Form 10-K and Form 10-Q made by the Company with or to the
Securities and Exchange Commission.
(e) Certificates. Simultaneously with the furnishing of each annual
statement and each quarterly statement provided for in this Section 7.1, a
certificate of the Chief Financial Officer or another Authorized Officer stating
that no Event of Default has occurred and is continuing, or, if there is any
such event, setting forth the details thereof and the action that the Company is
taking or proposes to take with respect thereto and setting forth computations
in reasonable detail demonstrating compliance with each of the financial ratios
and restrictions set forth in this Section 7.
(f) Notice of Default, Litigation and ERISA Matters. Promptly upon
learning of the occurrence of any of the following, written notice thereof which
describes the same and the steps being taken by the Company with respect
thereto: (i) the occurrence of an Event of Default, (ii) the institution of, or
any adverse determination in, any litigation, arbitration proceeding or
governmental proceeding in which any injunctive relief is sought or in which
money damages in excess of $5,000,000 are sought, (iii) the occurrence of a
material Reportable Event with respect to any Plan subject to Title IV of ERISA,
(iv) the institution of any material steps by the Company, the PBGC or any other
Person to terminate any Plan subject to Title IV of ERISA, (v) the institution
of any material steps by the Company or any ERISA Affiliate to withdraw from any
Plan subject to Title IV of ERISA which would result in material liability to
the Company, (vi) the failure to make a material required contribution to any
Plan if such failure is sufficient to give rise to a lien under Section 302(f)
of ERISA, (vii) the taking of any material action with respect to a Plan which
could result in the requirement that the Company furnish a bond or other
security to the PBGC or such Plan, (viii) the occurrence of any event with
respect to any Plan which could result in the incurrence by the Company of any
liability, fine or penalty, which would in the Company's determination
materially and adversely affect the Company's business, operations or financial
condition or the ability of the Company to perform its obligations hereunder and
under the Related Documents to which it is a party, or (ix) promptly after the
incurrence thereof, notice of any material increase in the contingent liability
of the Company with respect to any postretirement Plan benefits.
(g) Other Information. Such other material information concerning
the Company as any Bank may reasonably request from time to time.
SECTION 7.2 Corporate Existence and Franchises. Except as otherwise
expressly permitted in this Agreement, maintain and cause each Material
Subsidiary to maintain in full force and effect its separate existence and all
rights, licenses, leases and franchises reasonably necessary in the Company's
sole discretion to the conduct of its and each Material Subsidiary's business.
SECTION 7.3 Books, Records and Inspections. Maintain, and cause each
Material Subsidiary to maintain, books and records in accordance with GAAP in
all material respects, each Bank to have access to the Company's books and
records, and permit each Bank, upon seven (7) days notice to the Company, to
inspect the Company's properties and operations during normal business hours and
at reasonable intervals, but no more frequently than semi-annually if no Event
of Default has occurred.
SECTION 7.4 Insurance. Maintain, and cause each Material Subsidiary to
maintain, such insurance as is required by law.
SECTION 7.5 Taxes and Liabilities. Promptly pay, and cause each
Material Subsidiary to pay, when due all taxes, duties, assessments and other
liabilities (except such taxes, duties, assessments and other liabilities as the
Company or such Material Subsidiary is diligently contesting in good faith and
by appropriate proceedings; provided that the Company or such Material
Subsidiary has provided for and is maintaining adequate reserves with respect
thereto in accordance with GAAP), a failure of which to pay in the Company's
determination materially and adversely affects the Company's or such Material
Subsidiary's business, operations or financial condition or the Company's
ability to perform its obligations hereunder and under the Related Documents to
which it is a party.
SECTION 7.6 Cash Flow Coverage. Maintain either:
(A) a ratio of (x) the sum of (i) Available Cash Flow plus (ii) the
Earnings of Pioneer Life Insurance Company of Illinois, National Group Life
Insurance Company and Continental Life and Accident Company to (y) Debt
Service Requirements equal to or greater than 1.35 to 1 at the end of each
fiscal quarter, such ratio to be calculated for the period of the four
fiscal quarters ending on the most recent fiscal quarter end prior to the
date of computation, or
(B) a ratio of (x) Available Cash Flow to (y) Debt Service
Requirements equal to or greater than 1.00 to 1 at the end of each fiscal
quarter, such ratio to be calculated for the period of the four fiscal
quarters ending on the most recent fiscal quarter end prior to the date of
computation.
SECTION 7.7 Net Worth. Not permit the Net Worth of the Company to be
less than $112,000,000 at the end of each fiscal quarter of the Company.
SECTION 7.8 Intentionally Omitted.
SECTION 7.9 Indebtedness. Not, without the prior written consent of all
of the Banks, incur or permit to exist any Indebtedness that by its terms or
otherwise is senior in right of payment to the Liabilities, except (i)
Indebtedness incurred in connection with Permitted Liens and (ii) Indebtedness
hereinafter incurred that in the aggregate when added to all other senior
Indebtedness incurred after the Closing Date does not exceed $5,000,000.
SECTION 7.10 Risk-Based Capital. Shall cause each Principal Insurance
Subsidiary on an individual basis to maintain at all times Total Adjusted
Capital equal to or greater than 270% of Authorized Control Level RBC.
SECTION 7.11 Real Estate Concentration. Shall cause each Principal
Insurance Subsidiary on an individual basis to maintain at all times a Real
Estate Concentration Ratio equal to or less than 50%.
SECTION 7.12 Investment Quality. Shall cause each Principal Insurance
Subsidiary on an individual basis to maintain at all times a ratio of (x)
Non-Investment Grade Obligations to (y) Total Invested Assets to be equal to or
less that 15%.
SECTION 7.13 Intentionally Omitted.
SECTION 7.14 Insurance Company Leverage Ratio. Shall cause (a) all
Principal Insurance Subsidiaries on a combined basis to maintain at all times an
aggregate Insurance Company Leverage Ratio of greater than 8.33%, and (b) each
Principal Insurance Subsidiary on an individual basis to maintain at all times
an Insurance Coverage Leverage Ratio of greater than 7.50%.
SECTION 7.15 Insurance Ratings. Shall cause each of the following
Subsidiaries to maintain at all times an insurance rating from A.M. Best equal
to or better than the rating set forth opposite such Subsidiary's name:
Subsidiary Rating
Pioneer Life Insurance Company of Illinois B
Manhattan National Life Insurance Company A-
National Group Life Insurance Company B
If A.M. Best shall cease to issue ratings for the above-referenced Subsidiaries,
the Banks and the Company shall negotiate in good faith to agree upon a
substitute rating agency and after such substitute rating agency is agreed upon,
the foregoing minimum ratings will be amended to reflect the equivalent rating
by such substitute rating agency.
SECTION 7.16 Intentionally Omitted.
SECTION 7.17 Change in Nature of Business. Not, and not permit the
Company and its Material Subsidiaries as a whole to, make any material change in
the nature of its business carried on as of the date first stated above,
provided, however, the Company or any Material Subsidiary may make changes in
the nature of its business provided that any such change made is related in any
way to the medical or insurance businesses.
SECTION 7.18 Depository Relationship. The Company shall maintain its
primary depository and remittance relationship with the Banks. Pursuant to such
primary depository and remittance relationship, the Company shall maintain with
each Bank average available demand deposits equal to the amount needed to cover
non-credit services provided by such Bank to the Company and its Subsidiaries,
such amount to be determined according to the published fee schedules of such
Bank; provided, however, that the failure of the Company to maintain such amount
with each Bank shall not be an Event of Default under this Agreement. The
Company agrees that if the amount of available demand deposits maintained by the
Company with such Bank are insufficient to equal the amount needed to cover
non-credit services provided by such Bank, then such Bank may charge the Company
a deficiency fee sufficient to cover such non-credit services, such deficiency
fee to be determined according to the published fee schedules of such Bank or
the fees being charged to the Company at that time, whichever are less.
SECTION 7.19 Employee Benefit Plans. Not permit, and not permit any
ERISA Affiliate to permit, any condition to exist in connection with any Plan
which might constitute grounds for the PBGC to institute proceedings to have
such Plan terminated or a trustee appointed to administer such Plan; and not
engage in, or permit to exist or occur, or permit any ERISA Affiliate to engage
in, or permit to exist or occur, any other condition, event or transaction with
respect to any Plan which would result in the incurrence by the Company or any
ERISA Affiliate of any liability, fine or penalty, which in either case would in
the Company's determination materially and adversely affect the Company's
business, operations or financial condition, or the ability of the Company to
perform its obligations hereunder and under the Related Documents to which it is
a party.
SECTION 7.20 Use of Proceeds. Not, and not permit any Subsidiary to, use
or permit the direct or indirect use of any proceeds of or with respect to the
Loans for the purpose, whether immediate, incidental or ultimate, of "purchasing
or carrying" (within the meaning of Regulation U) Margin Stock.
SECTION 7.21 Other Agreements. Not, and not permit any Material
Subsidiary to, enter into any agreement containing any provision which would be
violated or breached by the performance of the Company's obligations hereunder,
under any Related Document or under any instrument or document delivered or to
be delivered by the Company hereunder or thereunder or in connection herewith or
therewith or which would violate or breach any provision hereof or thereof or of
any such instrument or document.
SECTION 7.22 Compliance with Applicable Laws. Comply, and cause each
Material Subsidiary to comply, with the requirements of all applicable laws,
rules, regulations, and orders of all governmental authorities (federal, state,
local or foreign, and including, without limitation, Environmental Laws and
Insurance Laws), a breach of which would in the Company's determination
materially and adversely affect the Company's or such Material Subsidiary's
business, operations or financial condition, or which would impair the Company's
ability to perform its obligations hereunder and under the Related Documents to
which it is a party.
SECTION 7A
UNRESTRICTED SUBSIDIARIES
SECTION 7A.1 Unrestricted Subsidiaries. The Company may, from time to
time, by written notice to each Bank, designate a Subsidiary as an Unrestricted
Subsidiary (referred to herein as an "Unrestricted Subsidiary") provided that
each of the following conditions is satisfied:
(a) the proposed Unrestricted Subsidiary shall not be a Material
Subsidiary existing on the Closing Date;
(b) the aggregate Unrestricted Subsidiary Indebtedness of all
Unrestricted Subsidiaries, including the Unrestricted Subsidiary Indebtedness of
the proposed Unrestricted Subsidiary, shall not exceed $40,000,000;
(c) the proposed Unrestricted Subsidiary shall have no financial
obligations, liabilities or dealings of any kind with the Company or any
Material Subsidiary of the Company, except for (i) ordinary overhead
allocations, (ii) marketing agreements, administration agreements and other
agreements which the Company customarily enters into with its Subsidiaries so
long as the terms of such agreements are no less favorable to the Company than
the terms of agreements the Company enters into with its other Subsidiaries, and
(iii) other customary inter-corporate dealings so long as the terms of such
dealings are no less favorable to the Company than the terms of dealings the
Company enters into with its other Subsidiaries; and
(d) the proposed Unrestricted Subsidiary shall not have, permit to
exist or incur any undertaking, indebtedness, obligation or other liability
pursuant to which recourse may be made to the Company or any Material Subsidiary
of the Company, and neither the Company nor any Material Subsidiary of the
Company shall be or become a guarantor or surety of, or otherwise be or become
responsible in any manner (whether by support agreement or agreement to purchase
any obligations, stock, assets, goods or services, or to supply or advance any
funds, assets, goods or services, or otherwise) with respect to any undertaking,
indebtedness, obligation or other liability of such proposed Unrestricted
Subsidiary; provided, however, that the proposed Unrestricted Subsidiary shall
be permitted to engage in the types of transactions prohibited by this Section
7A.1(d), and the Company shall be permitted to provide guarantees and sureties,
if the Company's obligations under such transactions, guaranties and sureties
(i) are expressly subordinated to the Company's obligations under this Agreement
and (ii) shall not exceed $2,000,000 in the aggregate for any one Unrestricted
Subsidiary.
SECTION 7A.2 Additional Unrestricted Subsidiaries. In addition to the
Unrestricted Subsidiaries designated pursuant to Section 7A.1 above, the Company
and the Majority Banks can agree to designate any Subsidiary as an Unrestricted
Subsidiary. Any Unrestricted Subsidiary Indebtedness of an Unrestricted
Subsidiary designated as such pursuant to this Section 7A.2 shall be excluded
from the calculation of the aggregate Unrestricted Subsidiary Indebtedness
permitted pursuant to Section 7A.1.
SECTION 7A.3 Effectiveness of Designation. The designation by the
Company of a Subsidiary as an Unrestricted Subsidiary shall become effective
five (5) Business Days after the Company delivers a written notice of such
designation to each Bank, which notice shall certify that all of the conditions
set forth in Section 7A.1 have been satisfied with respect to such Unrestricted
Subsidiary.
SECTION 7A.4 Effect of Designation. Other than for purposes of the
financial statements referenced in Section 7.1 hereof, the assets, liabilities,
Unrestricted Subsidiary Indebtedness, income, losses, cash flow, net worth,
liens and other relevant amounts and factors concerning any Unrestricted
Subsidiary shall be excluded from the computations referenced in Sections 7.6
and 7.9 of this Agreement and, to the extent applicable, the computations
referenced in Sections 7.10 through 7.16, inclusive, of this Agreement, and the
Unrestricted Subsidiaries shall not be subject to any of the other limitations
or restrictions contained herein.
SECTION 8
CONDITIONS TO MAKING THE LOANS
SECTION 8.1 Conditions Precedent. Each Bank's obligation to make its
Loan is subject to the satisfaction of each of the following conditions
precedent:
(a) Fees and Expenses. The Company shall have paid all fees owed to
each of the Banks and reimbursed each of the Banks for all expenses due and
payable hereunder on or before the Closing Date including, but not limited to,
ANB's counsel fees provided for in Section 10.4 to the extent such counsel shall
have requested payment of such fees.
(b) Documents. Each Bank shall have received all of the following,
each duly executed and delivered and dated the Closing Date, in form and
substance satisfactory to each Bank:
(i) Agreement. This Agreement, executed by the Company and each
Bank.
(ii) Note. A Promissory Note, substantially in the form of Exhibit A
hereto, with appropriate insertions, issued to such Bank and executed by
the Company.
(iii) Resolutions. Certified copies of resolutions of
the Company's Board of Directors or the Executive Committee of the
Company's Board of Directors authorizing the execution, delivery and
performance of this Agreement and the Related Documents to which the
Company is a party and any other documents provided for herein or therein
to be executed by the Company.
(iv) Consents. Certified copies of all documents evidencing any
necessary corporate action, consents and governmental approvals, if any,
with respect to this Agreement, the Related Documents, and any other
documents provided for herein or therein to be executed by the Company.
(v) Incumbency and Signatures. A certificate of the Secretary or an
Assistant Secretary of the Company certifying the names of the officer or
officers of the Company authorized to sign this Agreement and the Related
Documents to which the Company is a party and any other documents provided
for herein or therein to be executed by the Company, together with a sample
of the true signature of each such officer. Each Bank may conclusively
rely on each such certificate until formally advised by a like certificate
of any changes therein.
(vi) Opinion of Counsel. Opinion of the general counsel or the
assistant general counsel to the Company in form and substance reasonably
satisfactory to each Bank.
(vii) Constitutive Documents. Certified copies of the Company's
articles of incorporation and by-laws.
(viii) Good Standing Certificates. Certificates of good standing
for the Company in Delaware and Illinois and a certificate of the insurance
commissioner or similar official of the jurisdiction of incorporation of
each Principal Insurance Subsidiary as to the good standing of such
Principal Insurance Subsidiary.
(ix) Other. Such other documents as each Bank may reasonably request.
(c) No Default. No Event of Default shall have occurred and be
continuing or will result from the making of the Loans requested to be made on
the Closing Date.
SECTION 9
EVENTS OF DEFAULT AND THEIR EFFECT
SECTION 9.1 Events of Default. Each of the following shall constitute
an Event of Default under this Agreement following the expiration of any
applicable notice or cure period:
(a) Nonpayment of the Loans. Default in the payment when due of the
principal of or interest on the Loans, or the payment when due of any fees or
any other amounts payable by the Company hereunder and continuance of such
default for five (5) Business Days after the applicable due date, or default in
the payment when due of the principal of or interest on any loan made under the
Revolving Credit Agreement or the Term Loan A Credit Agreement, or the payment
when due of any fees or any other amounts payable by the Company under the
Revolving Credit Agreement or the Term Loan A Credit Agreement, and continuance
of such default beyond the applicable grace period as set forth in the Revolving
Credit Agreement or the Term Loan A Credit Agreement, as the case may be.
(b) Nonpayment of Other Indebtedness. Default in the payment when
due (subject to any applicable grace period), whether by acceleration or
otherwise, of any other Indebtedness of, or guaranteed by, the Company or any
Material Subsidiary if the aggregate amount of any such other Indebtedness that
is accelerated or due and payable, or that may be accelerated or otherwise
become due and payable, by reason of such default is $5,000,000 or more, or
default in the performance or observance of any obligation or condition with
respect to any such other Indebtedness if the effect of such default is to
accelerate the maturity of any such Indebtedness or cause any of such
Indebtedness of $5,000,000 or more to be prepaid, purchased or redeemed or to
permit the holder or holders thereof, or any trustee or agent for such holders,
to cause such Indebtedness of $5,000,000 or more to become due and payable prior
to its expressed maturity or to cause such Indebtedness of $5,000,000 or more to
be prepaid, purchased or redeemed.
(c) Bankruptcy or Insolvency. The Company becomes insolvent or
generally fails to pay, or admits in writing its general inability to pay, debts
as they become due; or the Company applies for, consents to, or acquiesces
in the appointment of, a trustee, receiver or other custodian for the Company,
or any property thereof, or makes a general assignment for the benefit of
creditors; or, in the absence of such application, consent or acquiescence, a
trustee, receiver or other custodian is appointed for the Company or for a
substantial part of the property thereof and is not discharged within 60 days;
or any bankruptcy, reorganization, debt arrangement, or other case or proceeding
under any bankruptcy or insolvency law, or any dissolution or liquidation
proceeding, is commenced in respect of the Company, and if such case or
proceeding is not commenced by the Company, it is consented to or acquiesced in
by the Company or remains for 60 days undismissed; or the Company takes any
corporate action to authorize, or in furtherance of, any of the foregoing or the
insurance commission or department of any Principal Insurance Subsidiary's state
of domicile takes any action against such Principal Insurance Subsidiary or the
Company in connection with any of the foregoing.
(d) Specified Noncompliance with this Agreement. Failure by the
Company to comply with or to perform under Section 7.2 (only with respect to the
maintenance of the existence of the Company), Sections 7.6 through 7.16,
inclusive, and Section 7.21 hereunder and continuance of such failure for five
(5) Business Days after (i) written notice thereof to the Company from the
Majority Banks or (ii) any Authorized Officer of the Company knew or should have
known of such failure to comply or perform; provided, however, that, with
respect to the failure by the Company to comply with or to perform under
Sections 7.10 through 7.14, inclusive, the continuance of such failure shall be
extended from five (5) Business Days to thirty (30) days if each Bank receives
written notice from the Company prior to the expiration of such five (5)
Business Day period that such failure is curable within such thirty (30) day
period.
(e) Other Noncompliance with this Agreement. Failure by the Company
to comply with or to perform any provision of this Agreement (and not
constituting an Event of Default under any of the other provisions of this
Section 9) and continuance of such failure for sixty (60) days after (i) written
notice thereof to the Company from the Majority Banks or (ii) any Authorized
Officer of the Company knew of such failure to comply or perform.
(f) Representations and Warranties. Any representation or warranty
made by the Company herein or in any Related Document is breached in any
material respect or is known by the Company to have been false or misleading in
any material respect when given, or any schedule, certificate, financial
statement, report, notice, or other writing furnished by the Company to any Bank
is known by the Company to have been false or misleading in any material respect
on the date as of which the facts therein set forth are stated or certified.
(g) Employee Benefit Plans. (i) Institution by the PBGC, the Company
or any ERISA Affiliate of steps to terminate a Plan subject to Title IV of ERISA
if as a result of such termination, the Company or any ERISA Affiliate would be
required to make a material contribution to such Plan, or would incur a material
liability or obligation to such Plan, (ii) occurrence of a contribution failure
with respect to any Plan sufficient to give rise to a lien under Section 302(f)
of ERISA, or (iii) incurrence of any material liability (including current or
potential withdrawal liability) by the Company or any ERISA Affiliate with
respect to any Multiemployer Plan.
(h) Judgments. There shall be entered against the Company one or
more final unappealable judgments or decrees in excess of $5,000,000 in the
aggregate at any one time outstanding for the Company, excluding those judgments
or decrees (i) that shall have been stayed, vacated or bonded, (ii) that shall
have been outstanding less than 30 days from the entry thereof, (iii) for and to
the extent to which the Company is insured and with respect to which the insurer
specifically has determined that it shall assume responsibility in writing or
(iv) for and to the extent to which the Company is otherwise indemnified if the
terms of such indemnification are satisfactory to the Majority Banks.
SECTION 9.2 Effect of Event of Default. If any Event of Default
described in Section 9.1(c) shall occur, the Loans, the Notes and all other
Liabilities shall become immediately due and payable, all without presentment,
demand or notice of any kind, all of which, except as expressly set forth
herein, are hereby expressly waived by the Company; and, in the case of any
other Event of Default, the Majority Banks may, by written notice to the
Company, declare the Loans, the Notes and all other Liabilities to be due and
payable, whereupon the Loans, the Notes and all other Liabilities shall become
immediately due and payable, all without presentment, demand or notice of any
kind, all of which, except as expressly set forth herein, are hereby expressly
waived by the Company.
SECTION 10
GENERAL
SECTION 10.1 Amendments and Waivers. No amendment or waiver of any
provision of this Agreement or any other Related Document, and no consent with
respect to any departure by the Company therefrom, shall be effective unless the
same shall be in writing and signed by the Majority Banks, and, in the case of
amendments, signed by the Company, and then any such waiver shall be effective
only in the specific instance and for the specific purpose for which given;
provided, however, that no such waiver, amendment, or consent shall, unless in
writing and signed by all the Banks, and, in the case of an amendment, signed by
the Company, do any of the following:
(a) subject any Bank to any additional obligations;
(b) postpone or delay any date fixed for any payment of principal,
interest, fees or other amounts due to the Banks (or any of them) hereunder or
under any other Related Document;
(c) reduce the principal of, or the rate of interest specified herein
on the Loans, or of any fees or other amounts payable hereunder or under any
other Related Document;
(d) change the percentage of the Commitments which shall be required
for the Banks or any of them to take action hereunder; or
(e) amend this Section 10.1 or any provision providing for consent or
other action by all Banks.
SECTION 10.2 Notices. All notices hereunder shall be in writing.
Notices given by mail shall be deemed to have been given (i) five (5) Business
Days after the date sent if sent by registered or certified mail, postage
prepaid, (ii) the next Business Day if sent by overnight delivery service, (iii)
the day sent if sent by telecopy or telex if sent prior to 5:00 p.m. local time
on a Business Day, otherwise the following day, or (iv) the day delivered if
sent by personal messenger, and:
(a) if to the Company, addressed to the Company at its address shown
below its signature hereto; or
(b) if to a Bank, addressed to such Bank at the address shown below
its signature hereto;
or in the case of any party, such other address as such party, by
written notice received by the other parties to this Agreement, may have
designated as its address for notices.
SECTION 10.3 Accounting Terms; Computations. Unless otherwise indicated,
all accounting terms used herein and not expressly defined in this Agreement
shall have the respective meanings given to them in accordance with GAAP as in
effect on the Closing Date. Where the character or amount of any asset or
liability or item of income or expense is required to be determined, or any
consolidation or other accounting computation is required to be made, for
purposes of this Agreement such determination or calculation shall, to the
extent applicable and except as otherwise specified in this Agreement or agreed
to in writing by the Majority Banks, be made in accordance with GAAP as then in
effect.
SECTION 10.4 Costs, Expenses and Taxes.
(a) The Company agrees to pay within thirty (30) days after demand by
each Bank all of such Bank's reasonable out-of-pocket costs and expenses
(including the reasonable fees and out-of-pocket expenses of such Bank's
counsel) in connection with the preparation, execution and delivery of this
Agreement, the Related Documents and all other instruments or documents provided
for herein or delivered or to be delivered hereunder or in connection herewith
(including, without limitation, all amendments, supplements and waivers executed
and delivered pursuant hereto or in connection herewith).
(b) The reasonable costs and expenses which any Bank incurs in any
manner or way with respect to the following shall be part of the Liabilities,
payable by the Company within thirty (30) days after demand if at any time after
the date of this Agreement such Bank: (i) reasonably employs counsel for advice
or other representation (A) to represent such Bank in any litigation, contest,
dispute, suit or proceeding or to commence, defend or intervene or to take
any other action in or with respect to any litigation, contest, dispute, suit or
proceeding (whether instituted by such Bank, any other Bank, the Company or any
other Person) in any way or respect relating to this Agreement or the Related
Documents or (B) to enforce any of such Bank's rights with respect to the
Company under this Agreement and the Related Documents; and/or (ii)
reasonably seeks to enforce or enforces any of such Bank's rights and remedies
with respect to the Company under this Agreement and the Related Documents.
(c) All of the Company's obligations provided for in this Section
10.4 shall be Liabilities of the Company hereunder.
SECTION 10.5 Indemnification. In consideration of each Bank's execution
and delivery of this Agreement and each Bank's agreement to make and maintain
its Loan, the Company hereby agrees to indemnify, exonerate and hold such Bank
and each of its officers, directors, employees and agents (herein collectively
called the "Bank Parties" and individually called a "Bank Party") free and
harmless from and against any and all actions, causes of action, suits, losses,
costs (including, without limitation, all documentary or other stamp taxes or
duties), liabilities and damages, and expenses in connection therewith
(irrespective of whether such Bank Party is a party to the action for which
indemnification hereunder is sought) (the "Indemnified Liabilities"), including,
without limitation, reasonable attorneys' fees and disbursements, incurred by
such Bank Parties or any of them as a result of, or arising out of, or relating
to (except for such Indemnified Liabilities arising on account of such Bank
Party's gross negligence or willful misconduct):
(a) any transaction financed or to be financed in whole or in part,
directly or indirectly, with the proceeds of the Loans;
(b) the execution, delivery, performance, administration
or enforcement of this Agreement and the Related Documents in accordance with
their respective terms by any of such Bank Parties;
(c) any misrepresentation or breach of any representation or warranty
or covenant herein by the Company.
If and to the extent that the foregoing agreements described in this Section
10.5 may be unenforceable for any reason, the Company hereby agrees to make the
maximum contribution to the payment and satisfaction of each of the Indemnified
Liabilities which is permissible under applicable law.
SECTION 10.6 Captions and References. The recitals to this Agreement
(except for definitions) and the section captions used in this Agreement are for
convenience only, and shall not affect the construction of this Agreement.
SECTION 10.7 No Waiver; Cumulative Remedies. No failure to exercise and
no delay in exercising, on the part of the Banks or any Bank, any right, remedy,
power or privilege hereunder, shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, remedy, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege.
SECTION 10.8 Governing Law; Jury Trial; Severability. This Agreement and
each Note shall be a contract made under and governed by the laws of the State
of Illinois, without regard to conflict of laws principles. Wherever possible,
each provision of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this Agreement
shall be prohibited by or invalid under such law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement. All obligations of the Company and rights of each Bank, which
obligations and rights are described herein or in the Note issued to such Bank,
shall be in addition to and not in limitation of those provided by applicable
law.
THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY
ACTION OR PROCEEDING (i) TO ENFORCE OR DEFEND ANY RIGHTS UNDER OR IN CONNECTION
WITH THIS AGREEMENT, THE RELATED DOCUMENTS, THE LOANS, OR ANY AMENDMENT,
INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE
DELIVERED IN CONNECTION HEREWITH OR THEREWITH, OR (ii) ARISING FROM ANY DISPUTE
OR CONTROVERSY IN CONNECTION WITH OR RELATED TO THIS AGREEMENT, THE RELATED
DOCUMENTS, THE LOANS, OR ANY SUCH AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT,
AND AGREES THAT ANY SUCH ACTION OR COUNTERCLAIM SHALL BE TRIED BEFORE A COURT
AND NOT BEFORE A JURY.
____________________
Agreed and Acknowledged by the Company
THE COMPANY IRREVOCABLY AGREES THAT, SUBJECT TO EACH BANK'S SOLE AND
ABSOLUTE ELECTION, ANY ACTION OR PROCEEDING IN ANY WAY, MANNER OR RESPECT
ARISING OUT OF THIS AGREEMENT, THE RELATED DOCUMENTS, THE LOANS, OR ANY
AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE
FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH, OR ARISING FROM ANY
DISPUTE OR CONTROVERSY ARISING IN CONNECTION WITH OR RELATED TO THIS AGREEMENT,
THE RELATED DOCUMENTS, THE LOANS, OR ANY SUCH AMENDMENT, INSTRUMENT, DOCUMENT OR
AGREEMENT SHALL BE LITIGATED IN THE COURTS HAVING SITUS WITHIN THE CITY OF
CHICAGO, THE STATE OF ILLINOIS, AND THE COMPANY HEREBY CONSENTS AND SUBMITS TO
THE JURISDICTION OF ANY LOCAL, STATE OR FEDERAL COURT LOCATED WITHIN SUCH CITY
AND STATE. THE COMPANY HEREBY WAIVES ANY RIGHT IT MAY HAVE TO TRANSFER OR
CHANGE THE VENUE OF ANY LITIGATION BROUGHT AGAINST THE COMPANY BY ANY BANK IN
ACCORDANCE WITH THIS SECTION 10.8.
SECTION 10.9 Counterparts. This Agreement and any amendment or
supplement hereto or any waiver or consent granted in connection herewith may be
executed in any number of counterparts and by the different parties on separate
counterparts and each such counterpart shall be deemed to be an original, but
all such counterparts shall together constitute but one and the same Agreement.
SECTION 10.10 Successors and Assigns. Subject to Section 10.12, this
Agreement shall be binding upon the Company, each Bank and their respective
successors and assigns, and shall inure to the benefit of the Company, each Bank
and each Bank's successors and assigns. The Company shall have no right to
assign its rights or delegate its duties under this Agreement.
SECTION 10.11 Prior Agreements. The terms and conditions set forth in
this Agreement shall supersede all prior negotiations, agreements, discussions,
correspondence, memoranda and understandings (whether written or oral) of the
Company and the Banks concerning or relating to the subject matter of this
Agreement.
SECTION 10.12 Assignments; Participations. (a) Each Bank shall have the
right to assign, with the written consent of the Company, which shall not be
unreasonably withheld, to any Affiliate of such Bank and to one or more banks or
other financial institutions, all or a portion of its rights and obligations
under this Agreement (including, without limitation, all or a portion of its
Loan and the Note issued to such Bank) and the Related Documents. For purposes
of this Section, it shall not be unreasonable for the Company to withhold its
consent to a proposed assignee if, as a result of such proposed assignment, any
one Bank's Commitment Percentage would be in excess of fifty percent (50%) or
there would be more than six (6) banks or financial institutions party to this
Agreement. Upon any such assignment, (x) the assignee shall become a party
hereto and, to the extent of such assignment, have all rights and obligations of
such Bank hereunder and under the Related Documents and (y) such Bank shall, to
the extent of such assignment, relinquish its rights and be released from its
obligations hereunder and under the Related Documents. The Company hereby
agrees to execute and deliver such documents, and to take such other actions, as
such Bank may reasonably request to accomplish the foregoing. Upon such
assignment, this Agreement shall be deemed to be amended to the extent, but only
to the extent, necessary to reflect the addition of the assignee and the
resulting adjustment of the Commitment Percentages arising therefrom.
(b) In addition to the assignments permitted in clause (a) of this
Section 10.12, each Bank and any assignee pursuant to clause (a) above shall
have the right with the written consent of the Company to grant participations
to one or more banks or other financial institutions in or to its Loan, the
Related Documents, and the Note held by such Bank or such assignee, provided
that (i) each Bank's obligations under this Agreement shall remain unchanged and
(ii) the Company shall continue to deal solely and exclusively with such Bank.
No holder of a participation in all or any part of a Loan, the Related
Documents, or any Note shall have any rights under this Agreement; provided,
however, that, to the extent permitted by applicable law, each holder of a
participation shall have the same rights as each Bank under Section 5.3.
(c) The Company hereby consents to the disclosure of any information
obtained in connection herewith (i) by each Bank, to any bank or other financial
institution which is an assignee or potential assignee with respect to which the
Company has given its written consent pursuant to clause (a) above, and (ii) by
each Bank and any assignee pursuant to clause (a) above, to any bank or other
financial institution which is a participant or potential participant with
respect to which the Company has given its written consent pursuant to
clause (b) above, it being understood that each Bank and each assignee shall
advise any such bank or other financial institution of its obligation to keep
confidential any nonpublic information disclosed to it pursuant to this
Section 10.12 .
SECTION 10.13 Confidentiality. Each Bank agrees to take normal and
reasonable precautions and exercise due care to maintain the confidentiality of
all information provided to it by the Company in connection with this Agreement
or any other Related Document, and neither it nor any of its Affiliates shall
use any such information for any purpose or in any manner other than pursuant to
the terms contemplated by this Agreement, except to the extent such information
(i) was or becomes generally available to the public other than as a result of a
disclosure by such Bank, or (ii) was or becomes available on a non-confidential
basis from a source other than the Company, provided that such source is not
bound by a confidentiality agreement with the Company known to such Bank;
provided, further, however, that any Bank may disclose such information (A) at
the request or pursuant to any requirement of any governmental or regulatory
authority to which such Bank is subject or in connection with an examination of
such Bank by any such authority; (B) pursuant to subpoena or other court
process, provided that, if it is lawful to do so, such Bank shall give prompt
notice to the Company of service thereof so that the Company may seek a
protective order or other appropriate remedy or waive compliance with the
provisions of this Section 10.13; (C) when required to do so in accordance with
the provisions of any applicable requirement of law; (D) to the extent
reasonably required in connection with any litigation or proceeding to which any
Bank or their respective Affiliates may be party, (E) to the extent reasonably
required in connection with the exercise of any remedy hereunder or under any
other Related Document, and (F) to such Bank's independent auditors and other
professional advisors provided that each such entity agrees to maintain the
confidentiality of such information pursuant to the terms of this Section.
SECTION 10.14 Credit Decision. Each Bank expressly acknowledges that no
other Bank has made any representation or warranty to it and that no act by any
other Bank hereinafter taken, including any review of the affairs of the Company
and its Subsidiaries, shall be deemed to constitute any representation or
warranty by such other Bank to any Bank. Each Bank represents to the other
Banks that it has independently and without reliance upon such other Banks and
based on such documents and information as it has deemed appropriate, made its
own appraisal of and investigation into the business, prospects, operations,
property, financial and other condition and creditworthiness of the Company and
its Subsidiaries, and all applicable bank regulatory and other laws and
regulations relating to the transactions contemplated thereby, and made its own
decision to enter into this Agreement and extend credit to the Company
hereunder. Each Bank also represents that it will, independently and without
reliance upon the other Banks and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement and
the other Related Documents, and to make such investigations as it deems
necessary to inform itself as to the business, prospects, operations, property,
financial and other condition and creditworthiness of the Company and its
Subsidiaries. No Bank shall have any duty or responsibility to provide any
other Bank with any credit or other information concerning the business,
prospects, operations, property, financial and other condition or
creditworthiness of the Company which may come into the possession of such Bank.
IN WITNESS WHEREOF, the Company and each Bank have caused this Agreement
to be executed and delivered as of the day and year first above written.
THE COMPANY:
PIONEER FINANCIAL SERVICES, INC.
By:
Title:
0000 Xxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxxxx
Xxx Xxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
THE BANKS:
COMMITMENT: AMERICAN NATIONAL BANK AND TRUST
$1,930,435 COMPANY OF CHICAGO
By
Vice President
00 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
$965,217 FIRSTAR BANK MILWAUKEE, N.A.
By
Title:
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxx X. Xxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
$4,826,087 BANK ONE, ROCKFORD, NA
By
Title:
Xxxx Xxxxx xx Xxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxx Xxxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
$3,378,261 LASALLE NATIONAL BANK
By
Title:
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx
Telephone: (312) ___-____
Telecopy: (312) ___-____
Schedule 5.1
Wire Transfer/Account Information
American National Bank and
Trust Company of Chicago
ABA #: 000000000
Account No.: 0000000
Reference: Pioneer Term Loan B
Firstar Bank Milwaukee, N.A.
ABA #: 000000000
Reference: Pioneer Term Loan B
Bank One, Rockford, NA
ABA #: 000000000
Reference: Pioneer Term Loan B
LaSalle National Bank
ABA #: _______________
Reference: Pioneer Term Loan B
Schedule 6.11
Tax Liabilities
None
Schedule 6.17
Subsidiaries
Principal Insurance Subsidiaries
Insurance Subsidiaries
Other Subsidiaries
