Exhibit 10(q)
FIVE YEAR $300,000,000 CREDIT AGREEMENT
DATED AS OF NOVEMBER 30, 2001
AMONG
TORCHMARK CORPORATION,
TMK RE, LTD.,
THE LENDERS,
BANK ONE, NA,
AS ADMINISTRATIVE AGENT,
BANK OF AMERICA, N.A.,
AS SYNDICATION AGENT,
FLEET NATIONAL BANK,
AS DOCUMENTATION AGENT
AND
AMSOUTH BANK,
AS DOCUMENTATION AGENT
BANC ONE CAPITAL MARKETS, INC.
JOINT LEAD ARRANGER AND SOLE BOOK MANAGER
BANC OF AMERICA SECURITIES LLC
JOINT LEAD ARRANGER
================================================================================
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITIONS........................................................................ 1
ARTICLE II THE CREDITS........................................................................ 14
2.1 Commitment................................................................................ 14
2.2 Required Payments; Termination............................................................ 14
2.3 Ratable Loans............................................................................. 14
2.4 Types of Advances......................................................................... 14
2.5 Facility Fee; Utilization Fee; Reductions in Aggregate Commitment......................... 14
2.6 Minimum Amount of Each Advance............................................................ 15
2.7 Optional Principal Payments............................................................... 15
2.8 Method of Selecting Types and Interest Periods for New Advances........................... 15
2.9 Conversion and Continuation of Outstanding Advances....................................... 16
2.10 Changes in Interest Rate, etc............................................................. 16
2.11 Rates Applicable After Default............................................................ 17
2.12 Method of Payment......................................................................... 17
2.13 Noteless Agreement; Evidence of Indebtedness.............................................. 17
2.14 Telephonic Notices........................................................................ 18
2.15 Interest Payment Dates; Interest and Fee Basis............................................ 18
2.16 Notification of Advances, Interest Rates, Prepayments and Commitment Reductions........... 19
2.17 Lending Installations..................................................................... 19
2.18 Non-Receipt of Funds by the Agent......................................................... 19
2.19 Facility LCs.............................................................................. 20
2.20 Replacement of Lender..................................................................... 24
ARTICLE III YIELD PROTECTION; TAXES............................................................ 25
3.1 Yield Protection.......................................................................... 25
3.2 Changes in Capital Adequacy Regulations................................................... 25
3.3 Availability of Types of Advances......................................................... 26
3.4 Funding Indemnification................................................................... 26
3.5 Taxes..................................................................................... 26
3.6 Lender Statements; Survival of Indemnity.................................................. 28
ARTICLE IV CONDITIONS PRECEDENT............................................................... 29
4.1 Initial Credit Extension.................................................................. 29
4.2 Each Credit Extension..................................................................... 30
ARTICLE V REPRESENTATIONS AND WARRANTIES..................................................... 30
5.1 Corporate Existence and Standing.......................................................... 31
-i-
TABLE OF CONTENTS
Page
----
5.2 Authorization and Validity................................................................ 31
5.3 No Conflict; Government Consent........................................................... 31
5.4 Financial Statements...................................................................... 31
5.5 Material Adverse Change................................................................... 31
5.6 Taxes..................................................................................... 32
5.7 Litigation and Contingent Obligations..................................................... 32
5.8 Subsidiaries.............................................................................. 32
5.9 ERISA..................................................................................... 32
5.10 Accuracy of Information................................................................... 32
5.11 Regulation U.............................................................................. 33
5.12 Material Agreements....................................................................... 33
5.13 Compliance With Laws...................................................................... 33
5.14 Ownership of Properties................................................................... 33
5.15 Investment Company Act.................................................................... 33
5.16 Public Utility Holding Company Act........................................................ 33
5.17 Insurance Licenses........................................................................ 34
5.18 Indebtedness.............................................................................. 34
5.19 Reserves.................................................................................. 34
5.20 Defaults.................................................................................. 34
ARTICLE VI COVENANTS.......................................................................... 34
6.1 Financial Reporting....................................................................... 34
6.2 Use of Proceeds........................................................................... 36
6.3 Certain Notices........................................................................... 36
6.4 Conduct of Business....................................................................... 37
6.5 Taxes..................................................................................... 37
6.6 Insurance................................................................................. 37
6.7 Compliance with Laws...................................................................... 37
6.8 Maintenance of Properties................................................................. 37
6.9 Inspection................................................................................ 38
6.10 Merger.................................................................................... 38
6.11 Sale of Assets............................................................................ 38
6.12 Sale and Leaseback........................................................................ 38
6.13 Investments and Acquisitions.............................................................. 38
6.14 Liens..................................................................................... 38
6.15 Consolidated Net Worth.................................................................... 38
6.16 Ratio of Consolidated Indebtedness to Consolidated Capitalization......................... 38
6.17 Ratio of Consolidated Adjusted Net Income to Consolidated Interest Expense................ 38
6.18 Affiliates................................................................................ 38
6.19 Contingent Obligations.................................................................... 39
6.20 Series A Preferred Securities............................................................. 39
-ii-
TABLE OF CONTENTS
Page
----
ARTICLE VII DEFAULTS......................................................................... 39
7.1 Representations......................................................................... 39
7.2 Non-Payment............................................................................. 39
7.3 Specific Defaults....................................................................... 39
7.4 Other Defaults.......................................................................... 39
7.5 Cross-Default........................................................................... 40
7.6 Insolvency; Voluntary Proceedings....................................................... 40
7.7 Involuntary Proceedings................................................................. 40
7.8 Condemnation............................................................................ 40
7.9 Judgment................................................................................ 40
7.10 Unfunded Liabilities.................................................................... 41
7.11 Withdrawal Liability.................................................................... 41
7.12 Environmental........................................................................... 41
7.13 Change in Control....................................................................... 41
7.14 Default................................................................................. 41
7.15 Guaranty................................................................................ 41
7.16 Solvency................................................................................ 41
7.17 Licenses................................................................................ 41
ARTICLE VIII ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES................................... 42
8.1 Acceleration; Facility LC Collateral Account............................................ 42
8.2 Amendments.............................................................................. 43
8.3 Preservation of Rights.................................................................. 43
ARTICLE IX GENERAL PROVISIONS............................................................... 44
9.1 Survival of Representations............................................................. 44
9.2 Governmental Regulation................................................................. 44
9.3 Headings................................................................................ 44
9.4 Entire Agreement........................................................................ 44
9.5 Several Obligations; Benefits of this Agreement......................................... 44
9.6 Expenses; Indemnification............................................................... 44
9.7 Numbers of Documents.................................................................... 45
9.8 Accounting.............................................................................. 45
9.9 Severability of Provisions.............................................................. 45
9.10 Nonliability of Lenders................................................................. 45
9.11 Confidentiality......................................................................... 46
9.12 Nonreliance............................................................................. 46
9.13 Disclosure.............................................................................. 46
-iii-
TABLE OF CONTENTS
Page
----
ARTICLE X THE AGENT............................................................................. 46
10.1 Appointment; Nature of Relationship....................................................... 46
10.2 Powers.................................................................................... 46
10.3 General Immunity.......................................................................... 47
10.4 No Responsibility for Loans, Recitals, etc................................................ 47
10.5 Action on Instructions of Lenders......................................................... 47
10.6 Employment of Agents and Counsel.......................................................... 47
10.7 Reliance on Documents; Counsel............................................................ 48
10.8 Agent's Reimbursement and Indemnification................................................. 48
10.9 Notice of Default......................................................................... 48
10.10 Rights as a Lender........................................................................ 48
10.11 Lender Credit Decision.................................................................... 49
10.12 Successor Agent........................................................................... 49
10.13 Agent and Arranger Fees................................................................... 50
10.14 Delegation to Affiliates.................................................................. 50
10.15 Documentation Agents, Syndication Agent, etc.............................................. 50
ARTICLE XI SETOFF; RATABLE PAYMENTS.............................................................. 50
11.1 Setoff.................................................................................... 50
11.2 Ratable Payments.......................................................................... 50
ARTICLE XII BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS..................................... 51
12.1 Successors and Assigns.................................................................... 51
12.2 Participations............................................................................ 51
12.2.1 Permitted Participants; Effect......................................................... 51
12.2.2 Voting Rights.......................................................................... 52
12.2.3 Benefit of Setoff...................................................................... 52
12.3 Assignments............................................................................... 52
12.3.1 Permitted Assignments.................................................................. 52
12.3.2 Effect; Effective Date................................................................. 52
12.4 Dissemination of Information.............................................................. 53
12.5 Tax Treatment............................................................................. 53
ARTICLE XIII GUARANTY.............................................................................. 53
13.1 Guaranty of Payment........................................................................ 53
13.2 Acceptance of Guaranty; No Setoffs......................................................... 53
13.3 Nature of Guaranty; Continuing, Absolute and Unconditional................................. 54
13.4 Dealings with TMK Re....................................................................... 55
13.5 Subrogation................................................................................ 55
-iv-
TABLE OF CONTENTS
Page
----
13.6 Collateral................................................................................. 55
13.7 Rights to Payments, Etc.................................................................... 56
13.8 No Waiver.................................................................................. 56
13.9 Setoff..................................................................................... 56
13.10 Severability............................................................................... 57
13.11 Miscellaneous.............................................................................. 57
ARTICLE XIV NOTICES................................................................................ 57
14.1 Notices.................................................................................... 57
14.2 Change of Address.......................................................................... 57
ARTICLE XV COUNTERPARTS........................................................................... 58
ARTICLE XVI CHOICE OF LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL........................... 58
16.1 CHOICE OF LAW.............................................................................. 58
16.2 CONSENT TO JURISDICTION.................................................................... 58
16.3 WAIVER OF JURY TRIAL....................................................................... 58
__________________________________________________................................................... 1
-v-
TABLE OF CONTENTS
Page
----
Schedules
---------
Pricing Schedule
Schedule 1 Significant Subsidiaries
Schedule 2 Insurance Licenses
Schedule 3 Existing Letters of Credit
Exhibits
--------
Exhibit A Note
Exhibit B Compliance Certificate
Exhibit C Assignment
Exhibit D Money Transfer Instructions
-i-
FIVE YEAR CREDIT AGREEMENT
This Agreement, dated as of November 30, 2001, is among Torchmark
Corporation, TMK Re, Ltd., the Lenders and Bank One, NA, a national banking
association having its principal office in Chicago, Illinois, as LC Issuer and
as Agent. The parties hereto agree as follows:
RECITALS
--------
A. The Credit Parties have requested the Lenders to make financial
accommodations to them in the aggregate principal amount of up to $300,000,000,
the proceeds of which will be used (i) for the general corporate purposes of the
Borrower and its Subsidiaries (including repayment of maturing commercial paper
Indebtedness) and (ii) for the issuance of standby letters of credit for the
Credit Parties and their subsidiaries;
B. The Borrower owns all of the outstanding capital stock of TMK Re and
will receive substantial and direct benefits from the extensions of credit to
TMK Re contemplated by this Agreement and is entering into this Agreement to,
among other things, induce the Agent, the LC Issuer and the Lenders to enter
into this Agreement and provide Facility LCs to TMK Re hereunder; and
C. The Lenders are willing to extend such financial accommodations on the
terms and conditions set forth herein.
ARTICLE I
DEFINITIONS
-----------
As used in this Agreement:
"Acquisition" means any transaction, or any series of related transactions,
consummated on or after the date of this Agreement, by which any Credit Party or
any of its Subsidiaries (i) acquires any going business or all or substantially
all of the assets of any firm, corporation or division thereof, whether through
purchase of assets, merger or otherwise or (ii) directly or indirectly acquires
(in one transaction or as the most recent transaction in a series of
transactions) at least a majority (in number of votes) of the securities of a
corporation which have ordinary voting power for the election of directors
(other than securities having such power only by reason of the happening of a
contingency) or a majority (by percentage or voting power) of the outstanding
partnership interests of a partnership.
"Advance" means a borrowing hereunder, (i) made by the Lenders on the same
Borrowing Date, or (ii) converted or continued by the Lenders on the same date
of conversion or continuation, consisting, in either case, of the aggregate
amount of the several Loans of the same Type and, in the case of Eurodollar
Loans, for the same Interest Period.
"Affiliate" of any Person means any other Person directly or indirectly
controlling, controlled by or under common control with such Person. A Person
shall be deemed to control another Person if the controlling Person owns 10% or
more of any class of voting securities (or other ownership interests) of the
controlled Person or possesses, directly or indirectly, the power to direct or
cause the direction of the management or policies of the controlled Person,
whether through ownership of stock, by contract or otherwise.
"Agent" means Bank One in its capacity as contractual representative of the
Lenders pursuant to Article X, and not in its individual capacity as a Lender,
and any successor Agent appointed pursuant to Article X.
"Agent Balance Transaction" means one or more receivables sales
transactions with respect to receivables arising out of advances made by AIL to
insurance agents in connection with life insurance policies underwritten by AIL.
"Aggregate Commitment" means the aggregate of the Commitments of all the
Lenders, as reduced from time to time pursuant to the terms hereof.
"Aggregate Outstanding Credit Exposure" means, at any time, the aggregate
of the Outstanding Credit Exposure of all the Lenders.
"Agreement" means this credit agreement, as it may be amended or modified
and in effect from time to time.
"Agreement Accounting Principles" means generally accepted accounting
principles as in effect from time to time, applied in a manner consistent with
that used in preparing the financial statements referred to in Section 5.4.
"AIL" means American Income Life Insurance Company, an Indiana insurance
company.
"Alternate Base Rate" means, for any day, a rate of interest per annum
equal to the higher of (i) the Prime Rate for such day and (ii) the sum of the
Federal Funds Effective Rate for such day plus 1/2% per annum.
"Annual Statement" means the annual statutory financial statement of any
Insurance Subsidiary required to be filed with the insurance commissioner (or
similar authority) of its jurisdiction of incorporation, which statement shall
be in the form required by such Insurance Subsidiary's jurisdiction of
incorporation or, if no specific form is so required, in the form of financial
statements recommended by the NAIC to be used for filing annual statutory
financial statements and shall contain the type of information recommended by
the NAIC to be disclosed therein, together with all exhibits or schedules filed
therewith.
"Applicable Facility Fee Rate" means, at any time, the percentage
determined in accordance with the Pricing Schedule at such time. The Applicable
Facility Fee Rate shall change as and when the Borrower Debt Rating changes.
The initial Applicable Facility Fee Rate shall be .11%.
-2-
"Applicable Facility LC Rate" means, at any time, the percentage determined
in accordance with the Pricing Schedule at such time. The Applicable Facility
LC Rate shall change as and when the Borrower Debt Rating changes. The initial
Applicable Facility LC Rate shall be .29%.
"Applicable Margin" means, with respect to Advances of any Type at any
time, the percentage rate per annum which is applicable at such time with
respect to Advances of such Type as set forth in the Pricing Schedule.
"Applicable Utilization Fee Rate" means, at any time, the percentage
determined in accordance with the Pricing Schedule at such time. The Applicable
Utilization Fee Rate shall change as and when the Borrower Debt Rating changes.
"Arrangers" means (i) Banc One Capital Markets, Inc., a Delaware
corporation, and its successors, in its capacity as Joint Lead Arranger and Sole
Book Runner and (ii) Banc of America Securities LLC, a Delaware corporation, and
its successors, in its capacity as Joint Lead Arranger.
"Article" means an article of this Agreement unless another document is
specifically referenced.
"Authorized Officer" means any of the Chairman, Vice Chairman, President,
Chief Financial Officer, Chief Accounting Officer, Treasurer, any Vice President
or any Assistant Treasurer of any Credit Party, acting singly.
"Available Aggregate Commitment" means, at any time, the Aggregate
Commitment then in effect minus the Aggregate Outstanding Credit Exposure at
such time.
"Bank One" means Bank One, NA, a national banking association having its
principal office in Chicago, Illinois, in its individual capacity, and its
successors.
"Borrower" means Torchmark Corporation, a Delaware corporation, and its
successors and assigns.
"Borrower Debt Rating" means the senior unsecured long term debt (without
third party credit enhancement) rating of the Borrower as determined by a rating
agency identified on the Pricing Schedule.
"Borrowing Date" means a date on which an Advance is made hereunder.
"Borrowing Notice" is defined in Section 2.8.
"Business Day" means (i) with respect to any borrowing, payment or rate
selection of Eurodollar Advances, a day (other than a Saturday or Sunday) on
which banks generally are open in Chicago and New York for the conduct of
substantially all of their commercial lending activities, interbank wire
transfers can be made on the Fedwire system and dealings in United
-3-
States dollars are carried on in the London interbank market and (ii) for all
other purposes, a day (other than a Saturday or Sunday) on which banks generally
are open in Chicago for the conduct of substantially all of their commercial
lending activities and interbank wire transfers can be made on the Fedwire
system.
"Capitalized Lease" of a Person means any lease of Property by such Person
as lessee which would be capitalized on a balance sheet of such Person prepared
in accordance with Agreement Accounting Principles.
"Capitalized Lease Obligations" of a Person means the amount of the
obligations of such Person under Capitalized Leases which would be shown as a
liability on a balance sheet of such Person prepared in accordance with
Agreement Accounting Principles.
"Ceding Company" means an insurance or reinsurance Wholly-Owned Subsidiary
of the Borrower that has, pursuant to an Insurance Contract or a Reinsurance
Contract with TMK Re, agreed with TMK Re that TMK Re, as reinsurer, shall assume
certain liabilities of such insurance or reinsurance company under an Insurance
Contract.
"Change in Control" means the acquisition by any Person, or two or more
Persons acting in concert, of beneficial ownership (within the meaning of Rule
13d-3 of the Securities and Exchange Commission under the Securities Exchange
Act of 1934) of 20% or more of the outstanding shares of voting stock of the
Borrower.
"Code" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.
"Collateral Shortfall Amount" is defined in Section 8.1(i).
"Commitment" means, for each Lender, the obligation of such Lender to make
Loans to the Borrower, and participate in Facility LCs issued upon the
application of any Credit Party, in an aggregate amount not exceeding the amount
set forth opposite its name on the signature pages hereto, as it may be modified
as a result of any assignment that has become effective pursuant to Section
12.3.2 or as otherwise modified from time to time pursuant to the terms hereof.
"Condemnation" is defined in Section 7.8.
"Consolidated Adjusted Net Income" means, for any period of calculation,
Consolidated Net Income plus (to the extent deducted in determining Consolidated
Net Income) (i) the provision for taxes in respect of, or measured by, income or
excess profits and (ii) Consolidated Interest Expense, in each case calculated
for such period for the Borrower and its Subsidiaries on a consolidated basis in
accordance with Agreement Accounting Principles.
"Consolidated Capitalization" means, at any date of determination, the sum
of (i) Consolidated Net Worth as at such date plus (ii) Consolidated
Indebtedness as at such date.
-4-
"Consolidated Indebtedness" means the Indebtedness of the Borrower and its
Subsidiaries determined on a consolidated basis in accordance with Agreement
Accounting Principles.
"Consolidated Interest Expense" means, for any period of calculation,
interest expense, whether paid or accrued, of the Borrower and its Subsidiaries
calculated on a consolidated basis in accordance with Agreement Accounting
Principles.
"Consolidated Net Income" means, for any period of calculation, the net
income of the Borrower and its Subsidiaries calculated on a consolidated basis
in accordance with Agreement Accounting Principles consistently applied.
"Consolidated Net Worth" means, at any date of determination, the amount of
consolidated common and preferred shareholders' equity of the Borrower and its
Subsidiaries (including, without limitation, the Preferred Securities),
determined as at such date in accordance with Agreement Accounting Principles;
provided, however, that the effect of the application of FAS 115 shall be
excluded when computing Consolidated Net Worth.
"Contingent Obligation" of a Person means any agreement, undertaking or
arrangement by which such Person assumes, guarantees, endorses, contingently
agrees to purchase or provide funds for the payment of, or otherwise becomes or
is contingently liable upon, the obligation or liability of any other Person, or
agrees to maintain the net worth or working capital or other financial condition
of any other Person, or otherwise assures any creditor of such other Person
against loss, including, without limitation, any comfort letter, operating
agreement, take-or-pay contract or application for a Letter of Credit, but
excluding (i) the endorsement of instruments for deposit or collection in the
ordinary course of business, (ii) the Payment and Guarantee Agreements and (iii)
obligations arising in connection with the Agent Balance Transaction.
"Controlled Group" means all members of a controlled group of corporations
and all trades or businesses (whether or not incorporated) under common control
which, together with any Credit Party or any of its Subsidiaries, are treated as
a single employer under Section 414 of the Code.
"Conversion/Continuation Notice" is defined in Section 2.9.
"Credit Extension" means the making of an Advance or the issuance of a
Facility LC hereunder."
"Credit Extension Date" means the Borrowing Date for an Advance or the
issuance date for a Facility LC.
"Credit Party" means each and either of the Borrower or TMK Re,
individually, and "LC Parties" means, collectively, the Borrower and TMK Re.
"Default" means an event described in Article VII.
-5-
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any rule or regulation issued thereunder.
"Eurodollar Advance" means an Advance which, except as otherwise provided
in Section 2.11, bears interest at the applicable Eurodollar Rate.
"Eurodollar Base Rate" means, with respect to a Eurodollar Advance for the
relevant Interest Period, the applicable British Bankers' Association Interest
Settlement Rate for deposits in U.S. dollars appearing on Reuters Screen FRBD as
of 11:00 a.m. (London time) two (2) Business Days prior to the first day of such
Interest Period, and having a maturity equal to such Interest Period, provided
that, (i) if Reuters Screen FRBD is not available to the Agent for any reason,
the applicable Eurodollar Base Rate for the relevant Interest Period shall
instead be the applicable British Bankers' Association Interest Settlement Rate
for deposits in U.S. dollars as reported by any other generally recognized
financial information service as of 11:00 a.m. (London time) two (2) Business
Days prior to the first day of such Interest Period, and having a maturity equal
to such Interest Period, and (ii) if no such British Bankers' Association
Interest Settlement Rate is available to the Agent, the applicable Eurodollar
Base Rate for the relevant Interest Period shall instead be the rate determined
by the Agent to be the rate at which Bank One or one of its Affiliate banks
offers to place deposits in U.S. dollars with first-class banks in the London
interbank market at approximately 11:00 a.m. (London time) two (2) Business Days
prior to the first day of such Interest Period, in the approximate amount of
Bank One's relevant Eurodollar Loan and having a maturity equal to such Interest
Period.
"Eurodollar Loan" means a Loan which, except as otherwise provided in
Section 2.11, bears interest at the applicable Eurodollar Rate.
"Eurodollar Rate" means, with respect to a Eurodollar Advance for the
relevant Interest Period, the sum of (i) the quotient of (a) the Eurodollar Base
Rate applicable to such Interest Period, divided by (b) one minus the Reserve
Requirement (expressed as a decimal) applicable to such Interest Period, plus
(ii) the Applicable Margin.
"Excluded Taxes" means, in the case of each Lender or applicable Lending
Installation and the Agent, taxes imposed on its overall net income, and
franchise taxes imposed on it, by (i) the jurisdiction under the laws of which
such Lender or the Agent is incorporated or organized or (ii) the jurisdiction
in which the Agent's or such Lender's principal executive office or such
Lender's applicable Lending Installation is located.
"Exhibit" refers to an exhibit to this Agreement, unless another document
is specifically referenced.
"Existing Credit Agreements" means that certain Credit Agreement dated as
of October 22, 1997 among the Borrower, Bank One, as agent, and the lenders
named therein, and that certain Letter of Credit Agreement dated as of October
24, 2000 among the Borrower, TMK Re and Bank One, as agent and issuer, and the
participants named therein, in each case as amended, restated, supplemented or
otherwise modified from time to time.
-6-
"Existing Letters of Credit" means the currently outstanding letters of
credit identified on Schedule "3" hereto.
"Facility LC" is defined in Section 2.19.1.
"Facility LC Application" is defined in Section 2.19.3.
"Facility LC Collateral Account" is defined in Section 2.19.11.
"Facility Termination Date" means November 30, 2006 or any earlier date on
which the Aggregate Commitment is reduced to zero or otherwise terminated
pursuant to the terms hereof.
"Federal Funds Effective Rate" means, for any day, an interest rate per
annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published for such day (or, if such day is not a
Business Day, for the immediately preceding Business Day) by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations at approximately 10:00 a.m. (Chicago
time) on such day on such transactions received by the Agent from three Federal
funds brokers of recognized standing selected by the Agent in its sole
discretion.
"Floating Rate" means, for any day, a rate per annum equal to (i) the
Alternate Base Rate for such day plus (ii) the Applicable Margin, in each case
changing when and as the Alternate Base Rate changes.
"Floating Rate Advance" means an Advance which, except as otherwise
provided in Section 2.11, bears interest at the Floating Rate.
"Floating Rate Loan" means a Loan which, except as otherwise provided in
Section 2.11, bears interest at the Floating Rate.
"Governmental Authority" means the federal government, any state or other
political subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government
including, without limitation, any board of insurance, insurance department or
insurance commissioner.
"Guaranty" means the provisions of Article XIII hereof and the rights and
obligations of the Borrower thereunder.
"Indebtedness" of a Person means, without duplication, such Person's (i)
obligations for borrowed money, (ii) obligations representing the deferred
purchase price of Property or services (excluding accounts payable arising in
the ordinary course of such Person's business payable on terms customary in the
trade and obligations of Insurance Subsidiaries arising under insurance or
annuity products), (iii) obligations, whether or not assumed, secured by Liens
or payable out of the proceeds or production from property now or hereafter
owned or acquired by such Person, (iv) obligations which are evidenced by notes,
acceptances, or similar instruments, (v)
-7-
Capitalized Lease Obligations, (vi) net liabilities under interest rate swap,
exchange or cap agreements, (vii) obligations for which such Person is
obligated, contingently or otherwise, pursuant to or in respect of any Letter of
Credit (including any unreimbursed amount in respect thereof) and (viii)
Contingent Obligations, but excluding any indebtedness of the Borrower arising
under or in connection with the Series A Preferred Securities Loan Agreement or
the Junior Subordinated Debenture Purchase Agreement.
"Insurance Contract" means an insurance contract or reinsurance contract
entered into by a Ceding Company.
"Insurance Subsidiary" means any Subsidiary of the Borrower which is
engaged in the life, health or accident insurance business, including TMK Re.
"Interest Period" means, with respect to a Eurodollar Advance, a period of
one, two, three or six months commencing on a Business Day selected by the
Borrower pursuant to this Agreement. Such Interest Period shall end on the day
which corresponds numerically to such date one, two, three or six months
thereafter, provided, however, that if there is no such numerically
corresponding day in such next, second, third or sixth succeeding month, such
Interest Period shall end on the last Business Day of such next, second, third
or sixth succeeding month. If an Interest Period would otherwise end on a day
which is not a Business Day, such Interest Period shall end on the next
succeeding Business Day, provided, however, that if said next succeeding
Business Day falls in a new calendar month, such Interest Period shall end on
the immediately preceding Business Day.
"Investment" of a Person means any loan, advance (other than commission,
travel and similar advances to officers and employees made in the ordinary
course of business), extension of credit (other than accounts receivable arising
in the ordinary course of business on terms customary in the trade), deposit
account or contribution of capital by such Person to any other Person or any
investment in, or purchase or other acquisition of, the stock, partnership
interests, notes, debentures or other securities of any other Person made by
such Person.
"Junior Subordinated Debenture Purchase Agreement" means the Junior
Subordinated Debenture Purchase Agreement dated as of November 2, 2001 between
the Borrower and Torchmark Capital Trust I entered into in connection with the
Trust Preferred Securities, as in effect on November 2, 2001.
"LC Fee" is defined in Section 2.19.4.
"LC Issuer" means Bank One (or any subsidiary or affiliate of Bank One
designated by Bank One) in its capacity as issuer of Facility LCs hereunder.
"LC Obligations" means, at any time, the sum, without duplication, of (i)
the aggregate undrawn stated amount under all Facility LCs outstanding at such
time plus (ii) the aggregate unpaid amount at such time of all Reimbursement
Obligations.
-8-
"LC Payment Date" is defined in Section 2.19.5.
"Lenders" means the lending institutions listed on the signature pages of
this Agreement and their respective successors and assigns.
"Lending Installation" means, with respect to a Lender or the Agent, the
office, branch, subsidiary or affiliate of such Lender or the Agent listed on
the signature pages hereof or on a Schedule or otherwise selected by such Lender
or the Agent pursuant to Section 2.17.
"Letter of Credit" of a Person means a letter of credit or similar
instrument which is issued upon the application of such Person or upon which
such Person is an account party or for which such Person is in any way liable.
"License" means any license, certificate of authority, permit or other
authorization which is required to be obtained from a Governmental Authority in
connection with the operation, ownership or transaction of insurance business.
"Lien" means any lien (statutory or other), security interest, mortgage,
pledge, hypothecation, assignment, deposit arrangement, encumbrance or
preference, priority or other security agreement or preferential arrangement of
any kind or nature whatsoever (including, without limitation, the interest of a
vendor or lessor under any conditional sale, Capitalized Lease or other title
retention agreement but excluding rights in agent balances which are sold in an
Agent Balance Transaction).
"Loan" means, with respect to a Lender, such Lender's loan made pursuant to
Article II (or any conversion or continuation thereof).
"Loan Documents" means this Agreement, the Facility LC Applications, any
Notes issued hereunder and the other documents, certificates and agreements
contemplated hereby and executed by the Borrower in favor of the Agent or any
Lender.
"Material Adverse Effect" means a material adverse effect on (i) the
business, Property, condition (financial or otherwise), results of operations,
or prospects of TMK Re or of the Borrower and its Subsidiaries taken as a whole,
(ii) the ability of any Credit Party to perform its obligations under the Loan
Documents, or (iii) the validity or enforceability of any of the Loan Documents
or the rights or remedies of the Agent, the LC Issuer or the Lenders thereunder.
"Modified Required Lenders" means Lenders in the aggregate having at least
75% of the Aggregate Commitment or, if the Aggregate Commitment has been
terminated, Lenders in the aggregate holding at least 75% of the Aggregate
Outstanding Credit Exposure.
"Modify" and "Modification" are defined in Section 2.19.1.
"Moody's" means Xxxxx'x Investors Service, Inc., a Delaware corporation,
together with any Person succeeding thereto by merger, consolidation or
acquisition of all or substantially all of its assets, including substantially
all of its business of rating securities.
-9-
"Multiemployer Plan" means a Plan maintained pursuant to a collective
bargaining agreement or any other arrangement to which the Borrower or any
member of the Controlled Group is a party to which more than one employer is
obligated to make contributions.
"NAIC" means the National Association of Insurance Commissioners or any
successor thereto, or in lieu thereof, any other association, agency or other
organization performing advisory, coordination or other like functions among
insurance departments, insurance commissions and similar Governmental
Authorities of the various states of the United States of America toward the
promotion of uniformity in the practices of such Governmental Authorities.
"Non-U.S. Lender" is defined in Section 3.5(iv).
"Note" is defined in Section 2.13(iv).
"Obligations" means all unpaid principal of and accrued and unpaid interest
on the Loans, all Reimbursement Obligations, all accrued and unpaid fees and all
expenses, reimbursements, indemnities and other obligations of any Credit Party
to the Lenders or to any Lender, the Agent, the LC Issuer or any indemnified
party arising under the Loan Documents.
"Other Taxes" is defined in Section 3.5(ii).
"Outstanding Credit Exposure" means, as to any Lender at any time, the sum
of (i) the aggregate principal amount of its Loans outstanding at such time,
plus (ii) an amount equal to its ratable (determined pursuant to Section 2.19.2)
share of the LC Obligations at such time.
"Participants" is defined in Section 12.2.1.
"Payment and Guarantee Agreements" means, to the extent outstanding,
collectively, (i) the Payment and Guarantee Agreement dated October 11, 1994,
issued by the Borrower for the benefit of the holders of the Series A Preferred
Securities, without giving effect to any amendments thereto and (ii) the
Preferred Securities Guarantee Agreement dated November 2, 2001, issued by the
Borrower for the benefit of the holders of the Trust Preferred Securities,
without giving effect to any amendments thereto.
"Payment Date" means the last day of each March, June, September and
December.
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
thereto.
"Permitted Acquisition" means the Acquisition of any Person which has been
approved and recommended by the board of directors (or the functional equivalent
thereof) of the Person being acquired.
"Person" means any natural person, corporation, firm, joint venture,
partnership, limited liability company, association, enterprise, trust or other
entity or organization, or any government or political subdivision or any
agency, department or instrumentality thereof.
-10-
"Plan" means an employee pension benefit plan which is covered by Title IV
of ERISA or subject to the minimum funding standards under Section 412 of the
Code as to which any Credit Party or any member of the Controlled Group may have
any liability.
"Preferred Securities" means, to the extent outstanding, collectively, the
Series A Preferred Securities and the Trust Preferred Securities.
"Pricing Schedule" means the Schedule attached hereto identified as such.
"Prime Rate" means a rate per annum equal to the prime rate of interest
announced from time to time by Bank One or its parent (which is not necessarily
the lowest rate charged to any customer), changing when and as said prime rate
changes.
"Property" of a Person means any and all property, whether real, personal,
tangible, intangible, or mixed, of such Person, or other assets owned, leased or
operated by such Person.
"Pro Rata Share" means, with respect to a Lender, a portion equal to a
fraction the numerator of which is such Lender's Commitment (or, after the
Aggregate Commitment has been terminated, such Lender's Outstanding Credit
Exposure) and the denominator of which is the Aggregate Commitment (or, after
the Aggregate Commitment has been terminated, the Aggregate Outstanding Credit
Exposure).
"Purchasers" is defined in Section 12.3.1.
"Regulation D" means Regulation D of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor thereto or other
regulation or official interpretation of said Board of Governors relating to
reserve requirements applicable to member banks of the Federal Reserve System.
"Regulation U" means Regulation U of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor or other
regulation or official interpretation of said Board of Governors relating to the
extension of credit by banks for the purpose of purchasing or carrying margin
stocks applicable to member banks of the Federal Reserve System.
"Reimbursement Obligations" means, at any time, the aggregate of all
obligations of any Credit Party then outstanding under Section 2.19 to reimburse
the LC Issuer for amounts paid by the LC Issuer in respect of any one or more
drawings under Facility LCs.
"Reinsurance Contract" means a reinsurance contract between TMK Re, as
reinsurer, and a Ceding Company pursuant to which TMK Re, as reinsurer, assumes
certain liabilities of the Ceding Company with respect to one or more Insurance
Contracts.
"Reportable Event" means a reportable event as defined in Section 4043 of
ERISA and the regulations issued under such section, with respect to a Plan,
excluding, however, such events as to which the PBGC has by regulation waived
the requirement of Section 4043(a) of ERISA
-11-
that it be notified within thirty (30) days of the occurrence of such event;
provided, however, that a failure to meet the minimum funding standard of
-------- -------
Section 412 of the Code and of Section 302 of ERISA shall be a Reportable Event
regardless of the issuance of any such waiver of the notice requirement in
accordance with either Section 4043(a) of ERISA or Section 412(d) of the Code.
"Required Lenders" means Lenders in the aggregate having at least 51% of
the Aggregate Commitment or, if the Aggregate Commitment has been terminated,
Lenders in the aggregate holding at least 51% of the Aggregate Outstanding
Credit Exposure.
"Reserve Requirement" means, with respect to an Interest Period, the
maximum aggregate reserve requirement (including all basic, supplemental,
marginal and other reserves) which is imposed under Regulation D on Eurocurrency
liabilities.
"SAP" means, with respect to any Insurance Subsidiary, the statutory
accounting practices prescribed or permitted by the insurance commissioner (or
other similar authority) as of the date hereof in the jurisdiction of
incorporation of such Insurance Subsidiary for the preparation of annual
statements and other financial reports by insurance companies of the same type
as such Insurance Subsidiary.
"Schedule" refers to a specific schedule to this Agreement, unless another
document is specifically referenced.
"Section" means a numbered section of this Agreement, unless another
document is specifically referenced.
"Series A Preferred Securities" means the 9.18% Preferred Securities,
Series A, issued by Torchmark Capital L.L.C. on October 11, 1994.
"Series A Preferred Securities Loan Agreement" means the Loan Agreement
dated as of October 11, 1994 between the Borrower and Torchmark Capital L.L.C.
entered into in connection with the Series A Preferred Securities, as in effect
on October 11, 1994.
"Significant Insurance Subsidiary" means any Significant Subsidiary which
is an Insurance Subsidiary.
"Significant Subsidiary" of a Person means a "significant subsidiary" as
defined in Rule 1-02(v) of Regulation S-X of the Securities and Exchange
Commission (17 CFR Part 210). Unless otherwise expressly provided, all
references herein to a "Significant Subsidiary" shall mean a Significant
Subsidiary of the Borrower.
"Single Employer Plan" means a Plan maintained by any Credit Party or any
member of the Controlled Group for employees such Credit Party or any member of
the Controlled Group.
"Solvent" means, when used with respect to a Person, that (a) the fair
saleable value of the assets of such Person is in excess of the total amount of
the present value of its liabilities (including for purposes of this definition
all liabilities (including loss reserves as determined by
-12-
such Person), whether or not reflected on a balance sheet prepared in accordance
with Agreement Accounting Principles and whether direct or indirect, fixed or
contingent, secured or unsecured, disputed or undisputed), (b) such Person is
able to pay its debts or obligations in the ordinary course as they mature and
(c) such Person does not have unreasonably small capital to carry out its
business as conducted and as proposed to be conducted.
"Subsidiary" of a Person means (i) any corporation more than 50% of the
outstanding securities having ordinary voting power of which shall at the time
be owned or controlled, directly or indirectly, by such Person or by one or more
of its Subsidiaries or by such Person and one or more of its Subsidiaries, or
(ii) any partnership, association, joint venture, limited liability company or
similar business organization more than 50% of the ownership interests having
ordinary voting power of which shall at the time be so owned or controlled.
Unless otherwise expressly provided, all references herein to a "Subsidiary"
shall mean a Subsidiary of the Borrower.
"Substantial Portion" means, with respect to the Property of any Credit
Party and its Subsidiaries, Property which (i) represents more than 10% of the
consolidated assets of such Credit Party and its Subsidiaries as would be shown
in the consolidated financial statements of the Borrower and its Subsidiaries as
at the beginning of the twelve-month period ending with the month in which such
determination is made, or (ii) is responsible for more than 10% of the
consolidated net sales or of the consolidated net income of such Credit Party
and its Subsidiaries as reflected in the financial statements referred to in
clause (i) above.
"Taxes" means any and all present or future taxes, duties, levies, imposts,
deductions, charges or withholdings, and any and all liabilities with respect to
the foregoing, but excluding Excluded Taxes and Other Taxes.
"364-Day Agreement" means that certain 364-Day Credit Agreement dated as of
the date hereof among the Borrower, Bank One, as agent, and the lenders party
thereto, as from time to time amended, restated or modified.
"TMK Re" means TMK Re, Ltd., a Bermuda reinsurance corporation, and its
successors and assigns.
"Transferee" is defined in Section 12.4.
"Trust Preferred Securities" means the 7 3/4% Trust Preferred Securities
issued by Torchmark Capital Trust I on November 2, 2001.
"Type" means, with respect to any Advance, its nature as a Floating Rate
Advance or a Eurodollar Advance.
"Unfunded Liabilities" means the amount (if any) by which the present value
of all vested nonforfeitable benefits under all Single Employer Plans exceeds
the fair market value of all such Plan assets allocable to such benefits, all
determined as of the then most recent valuation date for such Plans.
-13-
"Unmatured Default" means an event which but for the lapse of time or the
giving of notice, or both, would constitute a Default.
"Wholly-Owned Subsidiary" of a Person means (i) any Subsidiary all of the
outstanding voting securities of which shall at the time be owned or controlled,
directly or indirectly, by such Person or one or more Wholly-Owned Subsidiaries
of such Person, or by such Person and one or more Wholly-Owned Subsidiaries of
such Person, or (ii) any partnership, association, joint venture, limited
liability company or similar business organization 100% of the ownership
interests having ordinary voting power of which shall at the time be so owned or
controlled. Unless otherwise expressly provided, all references herein to a
"Wholly-Owned Subsidiary" shall mean a Wholly-Owned Subsidiary of the Borrower.
The foregoing definitions shall be equally applicable to both the singular
and plural forms of the defined terms.
ARTICLE II
THE CREDITS
-----------
2.1 Commitment. From and including the date of this Agreement and prior
----------
to the Facility Termination Date, each Lender severally agrees, on the terms and
conditions set forth in this Agreement, to (i) make Loans to the Borrower from
time to time and (ii) participate in Facility LCs issued upon the request of any
Credit Party from time to time, provided that, after giving effect to the making
of each such Loan and the issuance of each such Facility LC, such Lender's
Outstanding Credit Exposure shall not exceed in the aggregate at any one time
outstanding the amount of its Commitment. Subject to the terms of this
Agreement, the Borrower may borrow, repay and reborrow at any time prior to the
Facility Termination Date. The Commitments to extend credit hereunder shall
expire on the Facility Termination Date. The LC Issuer will issue Facility LCs
hereunder on the terms and conditions set forth in Section 2.19.
2.2 Required Payments; Termination. The Aggregate Outstanding Credit
------------------------------
Exposure and all other unpaid Obligations shall be paid in full by the
applicable Credit Party on the Facility Termination Date.
2.3 Ratable Loans. Each Advance hereunder shall consist of Loans made
-------------
from the several Lenders ratably according to their Pro Rata Shares.
2.4 Types of Advances. The Advances may be Floating Rate Advances or
-----------------
Eurodollar Advances, or a combination thereof, selected by the Borrower in
accordance with Sections 2.8 and 2.9.
2.5 Facility Fee; Utilization Fee; Reductions in Aggregate Commitment.
-----------------------------------------------------------------
The Borrower agrees to pay to the Agent for the account of each Lender according
to its Pro Rata Share a facility fee at a per annum rate equal to the Applicable
Facility Fee Rate on such Lender's Commitment from the date hereof to and
including the Facility Termination Date, payable on each Payment Date hereafter
and on the Facility Termination Date. The Borrower
-14-
also agrees to pay to the Agent for the account of each Lender according to its
Pro Rata Share a utilization fee for each day from the date hereof to and
including the later of the Facility Termination Date and the date all Credit
Extensions are paid in full and all Commitments are terminated, such utilization
fee to be equal to the Applicable Utilization Fee Rate for such day multiplied
by the Aggregate Outstanding Credit Exposure on such day, payable on each
Payment Date and on the Facility Termination Date. The Borrower may permanently
reduce the Aggregate Commitment in whole, or in part ratably among the Lenders
in integral multiples of $10,000,000, upon at least three (3) Business Days'
written notice to the Agent, which notice shall specify the amount of any such
reduction, provided, however, that the amount of the Aggregate Commitment may
not be reduced below the Aggregate Outstanding Credit Exposure. All accrued
facility and utilization fees shall be payable on the effective date of any
termination of the obligations of the Lenders to make Credit Extensions
hereunder.
2.6 Minimum Amount of Each Advance. Each Advance shall be in the minimum
------------------------------
amount of $5,000,000 (and in multiples of $1,000,000 if in excess thereof);
provided, however, that any Floating Rate Advance may be in the amount of the
Available Aggregate Commitment.
2.7 Optional Principal Payments. The Borrower may from time to time pay,
---------------------------
without penalty or premium, all outstanding Floating Rate Advances, or, in a
minimum aggregate amount of $5,000,000 or any integral multiple of $1,000,000 in
excess thereof, any portion of the outstanding Floating Rate Advances upon one
(1) Business Day's prior notice to the Agent. The Borrower may from time to
time pay, subject to the payment of any funding indemnification amounts required
by Section 3.4 but without penalty or premium, all outstanding Eurodollar
Advances, or, in a minimum aggregate amount of $5,000,000 or any integral
multiple of $1,000,000 in excess thereof, any portion of the outstanding
Eurodollar Advances upon three (3) Business Days' prior notice to the Agent.
2.8 Method of Selecting Types and Interest Periods for New Advances. The
---------------------------------------------------------------
Borrower shall select the Type of Advance and, in the case of each Eurodollar
Advance, the Interest Period applicable thereto from time to time. The Borrower
shall give the Agent irrevocable notice (a "Borrowing Notice") not later than
10:00 a.m. (Chicago time) at least one (1) Business Day before the Borrowing
Date of each Floating Rate Advance and three (3) Business Days before the
Borrowing Date for each Eurodollar Advance, specifying:
(i) the Borrowing Date, which shall be a Business Day, of such
Advance,
(ii) the aggregate amount of such Advance,
(iii) the Type of Advance selected, and
(iv) in the case of each Eurodollar Advance, the Interest Period
applicable thereto.
Not later than noon (Chicago time) on each Borrowing Date, each Lender
shall make available its Loan or Loans in funds immediately available in Chicago
to the Agent at its address
-15-
specified pursuant to Article XIV. The Agent will make the funds so received
from the Lenders available to the Borrower at the Agent's aforesaid address.
2.9 Conversion and Continuation of Outstanding Advances. Floating Rate
---------------------------------------------------
Advances shall continue as Floating Rate Advances unless and until such Floating
Rate Advances are converted into Eurodollar Advances pursuant to this Section
2.9 or are repaid in accordance with Section 2.7. Each Eurodollar Advance shall
continue as a Eurodollar Advance until the end of the then applicable Interest
Period therefor, at which time such Eurodollar Advance shall be automatically
converted into a Floating Rate Advance unless (x) such Eurodollar Advance is or
was repaid in accordance with Section 2.7 or (y) the Borrower shall have given
the Agent a Conversion/Continuation Notice (as defined below) requesting that,
at the end of such Interest Period, such Eurodollar Advance continue as a
Eurodollar Advance for the same or another Interest Period. Subject to the
terms of Section 2.6, the Borrower may elect from time to time to convert all or
any part of a Floating Rate Advance into a Eurodollar Advance. The Borrower
shall give the Agent irrevocable notice (a "Conversion/Continuation Notice") of
each conversion of a Floating Rate Advance into a Eurodollar Advance or
continuation of a Eurodollar Advance not later than 10:00 a.m. (Chicago time) at
least three (3) Business Days prior to the date of the requested conversion or
continuation, specifying:
(i) the requested date, which shall be a Business Day, of such
conversion or continuation,
(ii) the aggregate amount and Type of the Advance which is to be
converted or continued, and
(iii) the amount of such Advance which is to be converted into or
continued as a Eurodollar Advance and the duration of the Interest Period
applicable thereto.
2.10 Changes in Interest Rate, etc. Each Floating Rate Advance shall bear
------------------------------
interest on the outstanding principal amount thereof, for each day from and
including the date such Advance is made or is automatically converted from a
Eurodollar Advance into a Floating Rate Advance pursuant to Section 2.9, to but
excluding the date it is paid or is converted into a Eurodollar Advance pursuant
to Section 2.9 hereof, at a rate per annum equal to the Floating Rate for such
day. Changes in the rate of interest on that portion of any Advance maintained
as a Floating Rate Advance will take effect simultaneously with each change in
the Alternate Base Rate. Each Eurodollar Advance shall bear interest on the
outstanding principal amount thereof from and including the first day of the
Interest Period applicable thereto to (but not including) the last day of such
Interest Period at the Eurodollar Rate determined by the Agent as applicable to
such Eurodollar Advance based upon the Borrower's selections under Sections 2.8
and 2.9 and otherwise in accordance with the terms hereof. No Interest Period
may end after the Facility Termination Date. The Borrower shall select Interest
Periods so that it is not necessary to repay any portion of a Eurodollar Advance
prior to the last day of the applicable Interest Period in order to make a
mandatory repayment required pursuant to Section 2.2.
-16-
2.11 Rates Applicable After Default. Notwithstanding anything to the
------------------------------
contrary contained in Section 2.8 or 2.9, during the continuance of a Default or
Unmatured Default no Advance may be made as, converted into or continued as a
Eurodollar Advance. During the continuance of a Default the Required Lenders
may, at their option, by notice to the Borrower (which notice may be revoked at
the option of the Required Lenders notwithstanding any provision of Section 8.2
requiring unanimous consent of the Lenders to changes in interest rates),
declare that (i) each Eurodollar Advance shall bear interest for the remainder
of the applicable Interest Period at the Eurodollar Rate otherwise applicable to
such Interest Period plus 2% per annum, (ii) each Floating Rate Advance shall
bear interest at a rate per annum equal to the Floating Rate in effect from time
to time plus 2% per annum and (iii) the LC Fee shall be increased by 2% per
annum, provided that, during the continuance of a Default under Section 7.6 or
7.7, the interest rates set forth in clauses (i) and (ii) above and the increase
in the LC Fee set forth in clause (iii) above shall be applicable to all Credit
Extensions without any election or action on the part of the Agent or any
Lender.
2.12 Method of Payment. All payments of the Obligations hereunder shall be
------------------
made, without setoff, deduction, or counterclaim, in immediately available funds
to the Agent at the Agent's address specified pursuant to Article XIV, or at any
other Lending Installation of the Agent specified in writing by the Agent to the
Borrower, by noon (local time) on the date when due and shall (except in the
case of Reimbursement Obligations for which the LC Issuer has not been fully
indemnified by the Lenders, or as otherwise specifically required hereunder) be
applied ratably by the Agent among the Lenders. Each payment delivered to the
Agent for the account of any Lender shall be delivered promptly by the Agent to
such Lender in the same type of funds that the Agent received at its address
specified pursuant to Article XIV or at any Lending Installation specified in a
notice received by the Agent from such Lender. The Agent is hereby authorized
to charge the account of the Borrower maintained with Bank One for each payment
of principal, interest, Reimbursement Obligations and fees as it becomes due
hereunder. Each reference to the Agent in this Section 2.12 shall also be
deemed to refer, and shall apply equally, to the LC Issuer, in the case of
payments required to be made by the Borrower to the LC Issuer pursuant to
Section 2.19.6.
2.13 Noteless Agreement; Evidence of Indebtedness. (i) Each Lender shall
--------------------------------------------
maintain in accordance with its usual practice an account or accounts evidencing
the indebtedness of the Borrower to such Lender resulting from each Loan made by
such Lender from time to time, including the amounts of principal and interest
payable and paid to such Lender from time to time hereunder.
(ii) The Agent shall also maintain accounts in which it will record
(a) the amount of each Loan made hereunder, the Type thereof and the
Interest Period with respect thereto, (b) the amount of any principal or
interest due and payable or to become due and payable from the Borrower to
each Lender hereunder, (c) the original stated amount of each Facility LC
and the amount of LC Obligations outstanding at any time, and (d) the
amount of any sum received by the Agent hereunder from the Borrower and
each Lender's share thereof.
-17-
(iii) The entries maintained in the accounts maintained pursuant to
paragraphs (i) and (ii) above shall be prima facie evidence of the
existence and amounts of the Obligations therein recorded; provided,
however, that the failure of the Agent or any Lender to maintain such
accounts or any error therein shall not in any manner affect the obligation
of the Borrower to repay the Obligations in accordance with their terms.
(iv) Any Lender may request that its Loans be evidenced by a
promissory note in substantially the form of Exhibit A (including any
amendment, modification, renewal or replacement thereof, a "Note"). In
such event, the Borrower shall prepare, execute and deliver to such Lender
such Note payable to the order of such Lender. Thereafter, the Loans
evidenced by such Note and interest thereon shall at all times (including
after any assignment pursuant to Section 12.3) be represented by one or
more Notes payable to the order of the payee named therein or any assignee
pursuant to Section 12.3, except to the extent that any such Lender or
assignee subsequently returns any such Note for cancellation and requests
that such Loans once again be evidenced as described in paragraphs (i) and
(ii) above. Upon receipt of an affidavit of an officer of any Lender as to
the loss, theft, destruction or mutilation of such Lender's Note, and, in
the case of any such loss, theft destruction or mutilation, upon
cancellation of such Note, the Borrower will issue, in lieu thereof, a
replacement Note in the same principal amount thereof and otherwise of like
tenor.
2.14 Telephonic Notices. The Borrower hereby authorizes the Lenders and
------------------
the Agent to extend, convert or continue Advances, effect selections of Types of
Advances and to transfer funds based on telephonic notices made by any person or
persons the Agent or any Lender in good faith believes to be acting on behalf of
the Borrower, it being understood that the foregoing authorization is
specifically intended to allow Borrowing Notices and Conversion/Continuation
Notices to be given telephonically. The Borrower agrees to deliver promptly to
the Agent a written confirmation, if such confirmation is requested by the Agent
or any Lender, of each telephonic notice signed by an Authorized Officer. If
the written confirmation differs in any material respect from the action taken
by the Agent and the Lenders, the records of the Agent and the Lenders shall
govern absent manifest error.
2.15 Interest Payment Dates; Interest and Fee Basis. Interest accrued on
----------------------------------------------
each Floating Rate Advance shall be payable on each Payment Date, commencing
with the first such date to occur after the date hereof, on any date on which
the Floating Rate Advance is prepaid, whether due to acceleration or otherwise,
and at maturity. Interest accrued on that portion of the outstanding principal
amount of any Floating Rate Advance converted into a Eurodollar Advance on a day
other than a Payment Date shall be payable on the date of conversion. Interest
accrued on each Eurodollar Advance shall be payable on the last day of its
applicable Interest Period, on any date on which the Eurodollar Advance is
prepaid, whether by acceleration or otherwise, and at maturity. Interest
accrued on each Eurodollar Advance having an Interest Period longer than three
months shall also be payable on the last day of each three-month interval during
such Interest Period. Interest, facility fees, utilization fees and LC Fees
shall be calculated for actual days elapsed on the basis of a 360-day year.
Interest shall be payable for the day an Advance is made but not for the day of
any payment on the amount paid if payment is received prior to noon
-18-
(local time) at the place of payment. If any payment of principal of or interest
on an Advance shall become due on a day which is not a Business Day, such
payment shall be made on the next succeeding Business Day and, in the case of a
principal payment, such extension of time shall be included in computing
interest in connection with such payment.
2.16 Notification of Advances, Interest Rates, Prepayments and Commitment
--------------------------------------------------------------------
Reductions. Promptly after receipt thereof, the Agent will notify each Lender
----------
of the contents of each Aggregate Commitment reduction notice, Borrowing Notice,
Conversion/Continuation Notice, and repayment notice received by it hereunder.
Promptly after notice from the LC Issuer, the Agent will notify each Lender of
the contents of each request for issuance of a Facility LC hereunder. The Agent
will notify each Lender of the Eurodollar Rate applicable to each Eurodollar
Advance promptly upon determination of such interest rate and will give each
Lender prompt notice of each change in the Alternate Base Rate.
2.17 Lending Installations. Each Lender may book its Loans and its
---------------------
participation in any LC Obligations and the LC Issuer may book the Facility LCs
at any Lending Installation selected by such Lender or the LC Issuer, as the
case may be, and may change its Lending Installation from time to time. All
terms of this Agreement shall apply to any such Lending Installation and the
Loans, Facility LCs, participations in LC Obligations and any Notes issued
hereunder shall be deemed held by each Lender or the LC Issuer, as the case may
be, for the benefit of any such Lending Installation. Each Lender and the LC
Issuer may, by written notice to the Agent and the Borrower in accordance with
Article XIV, designate replacement or additional Lending Installations through
which Loans will be made by it or Facility LCs will be issued by it and for
whose account Loan payments or payments with respect to Facility LCs are to be
made.
2.18 Non-Receipt of Funds by the Agent. Unless any Credit Party or a
---------------------------------
Lender, as the case may be, notifies the Agent prior to the date on which it is
scheduled to make payment to the Agent of (i) in the case of a Lender, the
proceeds of a Loan or (ii) in the case of any Credit Party, a payment of
principal, interest or fees to the Agent for the account of the Lenders, that it
does not intend to make such payment, the Agent may assume that such payment has
been made. The Agent may, but shall not be obligated to, make the amount of
such payment available to the intended recipient in reliance upon such
assumption. If such Lender or any Credit Party, as the case may be, has not in
fact made such payment to the Agent, the recipient of such payment shall, on
demand by the Agent, repay to the Agent the amount so made available together
with interest thereon in respect of each day during the period commencing on the
date such amount was so made available by the Agent until the date the Agent
recovers such amount at a rate per annum equal to (x) in the case of payment by
a Lender, the Federal Funds Effective Rate for such day for the first three days
and, thereafter, the interest rate applicable to the relevant Loan or (y) in the
case of payment by the Borrower, the interest rate applicable to the relevant
Loan.
-19-
2.19 Facility LCs.
------------
2.19.1. Issuance. The LC Issuer hereby agrees, on the terms and
--------
conditions set forth in this Agreement, to issue standby letters of credit (each
a "Facility LC") and to renew, extend, increase, decrease or otherwise modify
each Facility LC ("Modify," and each such action a "Modification"), from time to
time from and including the date of this Agreement and prior to the Facility
Termination Date upon the request of and for the account of any Credit Party;
provided that immediately after each such Facility LC is issued or Modified, (i)
the aggregate amount of the outstanding LC Obligations shall not exceed
$200,000,000, (ii) the Aggregate Outstanding Credit Exposure shall not exceed
the Aggregate Commitment, (iii) the initial face amount of any Facility LC shall
not be less than $5,000,000 and (iv) there shall be no more than eight (8)
Facility LCs outstanding at any one time. No Facility LC shall have an expiry
date later than the earlier of (x) the fifth Business Day prior to the Facility
Termination Date and (y) one year after its issuance.
2.19.2. Participations. Upon the issuance or Modification by the LC
--------------
Issuer of a Facility LC in accordance with this Section 2.19, the LC Issuer
shall be deemed, without further action by any party hereto, to have
unconditionally and irrevocably sold to each Lender, and each Lender shall be
deemed, without further action by any party hereto, to have unconditionally and
irrevocably purchased from the LC Issuer, a participation in such Facility LC
(and each Modification thereof) and the related LC Obligations in proportion to
its Pro Rata Share.
2.19.3. Notice. Subject to Section 2.19.1, a requesting Credit Party
------
shall give the LC Issuer notice prior to 10:00 a.m. (Chicago time) at least five
(5) Business Days prior to the proposed date of issuance or Modification of each
Facility LC, specifying the beneficiary, the proposed date of issuance (or
Modification) and the expiry date of such Facility LC, and describing the
proposed terms of such Facility LC and the nature of the transactions proposed
to be supported thereby. Upon receipt of such notice, the LC Issuer shall
promptly notify the Agent, and the Agent shall promptly notify each Lender, of
the contents thereof and of the amount of such Lender's participation in such
proposed Facility LC. The issuance or Modification by the LC Issuer of any
Facility LC shall, in addition to the conditions precedent set forth in Article
IV (the satisfaction of which the LC Issuer shall have no duty to ascertain), be
subject to the conditions precedent that such Facility LC shall be satisfactory
to the LC Issuer and that a Credit Party shall have executed and delivered such
application agreement and/or such other instruments and agreements relating to
such Facility LC as the LC Issuer shall have reasonably requested (each, a
"Facility LC Application"). In the event of any conflict between the terms of
this Agreement and the terms of any Facility LC Application, the terms of this
Agreement shall control.
2.19.4. LC Fees. The requesting Credit Party shall pay to the Agent,
-------
for the account of the Lenders ratably in accordance with their respective Pro
Rata Shares, with respect to each standby Facility LC, a letter of credit fee at
a per annum rate equal to the Applicable Facility LC Rate in effect from time to
time on the average daily undrawn stated amount under such standby Facility LC,
such fee to be payable in arrears on each Payment Date (such fee described in
this sentence an "LC Fee"). The requesting Credit Party shall also pay to the
LC
-20-
Issuer for its own account (x) at the time of issuance of each Facility LC, a
fronting fee in an amount to be agreed upon between the LC Issuer and the Credit
Parties, and (y) documentary and processing charges in connection with the
issuance or Modification of and draws under Facility LCs in accordance with the
LC Issuer's standard schedule for such charges as in effect from time to time.
2.19.5. Administration; Reimbursement by Lenders. Upon receipt from
----------------------------------------
the beneficiary of any Facility LC of any demand for payment under such Facility
LC, the LC Issuer shall notify the Agent and the Agent shall promptly notify
each Credit Party and each other Lender as to the amount to be paid by the LC
Issuer as a result of such demand and the proposed payment date (the "LC Payment
Date"). The responsibility of the LC Issuer to the Credit Parties and each
Lender shall be only to determine that the documents (including each demand for
payment) delivered under each Facility LC in connection with such presentment
shall be in conformity in all material respects with such Facility LC. The LC
Issuer shall endeavor to exercise the same care in the issuance and
administration of the Facility LCs as it does with respect to letters of credit
in which no participations are granted, it being understood that in the absence
of any gross negligence or willful misconduct by the LC Issuer, each Lender
shall be unconditionally and irrevocably liable without regard to the occurrence
of any Default or any condition precedent whatsoever, to reimburse the LC Issuer
on demand for (i) such Lender's Pro Rata Share of the amount of each payment
made by the LC Issuer under each Facility LC to the extent such amount is not
reimbursed by the applicable Credit Party pursuant to Section 2.19.6 below, plus
(ii) interest on the foregoing amount to be reimbursed by such Lender, for each
day from the date of the LC Issuer's demand for such reimbursement (or, if such
demand is made after 11:00 a.m. (Chicago time) on such date, from the next
succeeding Business Day) to the date on which such Lender pays the amount to be
reimbursed by it, at a rate of interest per annum equal to the Federal Funds
Effective Rate for the first three days and, thereafter, at a rate of interest
equal to the rate applicable to Floating Rate Advances.
2.19.6. Reimbursement by the applicable Credit Party. The applicable
--------------------------------------------
Credit Party shall be irrevocably and unconditionally obligated to reimburse the
LC Issuer on or before the applicable LC Payment Date for any amounts to be paid
by the LC Issuer upon any drawing under any Facility LC, without presentment,
demand, protest or other formalities of any kind; provided that neither the
applicable Credit Party nor any Lender shall hereby be precluded from asserting
any claim for direct (but not consequential) damages suffered by such Credit
Party or such Lender to the extent, but only to the extent, caused by (i) the
willful misconduct or gross negligence of the LC Issuer in determining whether a
request presented under any Facility LC issued by it complied with the terms of
such Facility LC or (ii) the LC Issuer's failure to pay under any Facility LC
issued by it after the presentation to it of a request strictly complying with
the terms and conditions of such Facility LC. All such amounts paid by the LC
Issuer and remaining unpaid by the applicable Credit Party shall bear interest,
payable on demand, for each day until paid at a rate per annum equal to (x) the
rate applicable to Floating Rate Advances for such day if such day falls on or
before the applicable LC Payment Date and (y) the sum of 2% plus the rate
applicable to Floating Rate Advances for such day if such day falls after such
LC Payment Date. The LC Issuer will pay to each Lender ratably in accordance
with its Pro Rata
-21-
Share all amounts received by it from the applicable Credit Party for
application in payment, in whole or in part, of the Reimbursement Obligation in
respect of any Facility LC issued by the LC Issuer, but only to the extent such
Lender has made payment to the LC Issuer in respect of such Facility LC pursuant
to Section 2.19.5. Subject to the terms and conditions of this Agreement
(including without limitation the submission of a Borrowing Notice in compliance
with Section 2.8 and the satisfaction of the applicable conditions precedent set
forth in Article IV), the Borrower may request an Advance hereunder for the
purpose of satisfying any Reimbursement Obligation.
2.19.7. Obligations Absolute. Each Credit Party's obligations
--------------------
under this Section 2.19 shall be absolute and unconditional under any and all
circumstances and irrespective of any setoff, counterclaim or defense to payment
which any Credit Party may have or have had against the LC Issuer, any Lender or
any beneficiary of a Facility LC. Each Credit Party further agrees with the LC
Issuer and the Lenders that the LC Issuer and the Lenders shall not be
responsible for, and any Credit Party's Reimbursement Obligation in respect of
any Facility LC shall not be affected by, among other things, the validity or
genuineness of documents or of any endorsements thereon, even if such documents
should in fact prove to be in any or all respects invalid, fraudulent or forged,
or any dispute between or among any Credit Party, any of its Affiliates, the
beneficiary of any Facility LC or any financing institution or other party to
whom any Facility LC may be transferred or any claims or defenses whatsoever of
any Credit Party or of any of its Affiliates against the beneficiary of any
Facility LC or any such transferee. The LC Issuer shall not be liable for any
error, omission, interruption or delay in transmission, dispatch or delivery of
any message or advice, however transmitted, in connection with any Facility LC.
Each Credit Party agrees that any action taken or omitted by the LC Issuer or
any Lender under or in connection with each Facility LC and the related drafts
and documents, if done without gross negligence or willful misconduct, shall be
binding upon each Credit Party and shall not put the LC Issuer or any Lender
under any liability to any Credit Party. Nothing in this Section 2.19.7 is
intended to limit the right of any Credit Party to make a claim against the LC
Issuer for damages as contemplated by the proviso to the first sentence of
Section 2.19.6.
2.19.8. Actions of LC Issuer. The LC Issuer shall be entitled to
--------------------
rely, and shall be fully protected in relying, upon any Facility LC, draft,
writing, resolution, notice, consent, certificate, affidavit, letter, cablegram,
telegram, telecopy, telex or teletype message, statement, order or other
document believed by it to be genuine and correct and to have been signed, sent
or made by the proper Person or Persons, and upon advice and statements of legal
counsel, independent accountants and other experts selected by the LC Issuer.
The LC Issuer shall be fully justified in failing or refusing to take any action
under this Agreement unless it shall first have received such advice or
concurrence of the Required Lenders as it reasonably deems appropriate or it
shall first be indemnified to its reasonable satisfaction by the Lenders against
any and all liability and expense which may be incurred by it by reason of
taking or continuing to take any such action. Notwithstanding any other
provision of this Section 2.19, the LC Issuer shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement in
accordance with a request of the Required Lenders, and such request and any
action taken or
-22-
failure to act pursuant thereto shall be binding upon the Lenders and any future
holders of a participation in any Facility LC.
2.19.9. Indemnification. Each Credit Party hereby agrees to
---------------
indemnify and hold harmless each Lender, the LC Issuer and the Agent, and their
respective directors, officers, agents and employees from and against any and
all claims and damages, losses, liabilities, costs or expenses which such
Lender, the LC Issuer or the Agent may incur (or which may be claimed against
such Lender, the LC Issuer or the Agent by any Person whatsoever) by reason of
or in connection with the issuance, execution and delivery or transfer of or
payment or failure to pay under any Facility LC or any actual or proposed use of
any Facility LC, including, without limitation, any claims, damages, losses,
liabilities, costs or expenses which the LC Issuer may incur by reason of or in
connection with (i) the failure of any other Lender to fulfill or comply with
its obligations to the LC Issuer hereunder (but nothing herein contained shall
affect any rights any Credit Party may have against any defaulting Lender) or
(ii) by reason of or on account of the LC Issuer issuing any Facility LC which
specifies that the term "Beneficiary" included therein includes any successor by
operation of law of the named Beneficiary, but which Facility LC does not
require that any drawing by any such successor Beneficiary be accompanied by a
copy of a legal document, satisfactory to the LC Issuer, evidencing the
appointment of such successor Beneficiary; provided that the Credit Parties
shall not be required to indemnify any Lender, the LC Issuer or the Agent for
any claims, damages, losses, liabilities, costs or expenses to the extent, but
only to the extent, caused by (x) the willful misconduct or gross negligence of
the LC Issuer in determining whether a request presented under any Facility LC
complied with the terms of such Facility LC or (y) the LC Issuer's failure to
pay under any Facility LC after the presentation to it of a request strictly
complying with the terms and conditions of such Facility LC. Nothing in this
Section 2.19.9 is intended to limit the obligations of any Credit Party under
any other provision of this Agreement.
2.19.10. Lenders' Indemnification. Each Lender shall, ratably in
------------------------
accordance with its Pro Rata Share, indemnify the LC Issuer, its affiliates and
their respective directors, officers, agents and employees (to the extent not
reimbursed by the Credit Parties) against any cost, expense (including
reasonable counsel fees and disbursements), claim, demand, action, loss or
liability (except such as result from such indemnitees' gross negligence or
willful misconduct or the LC Issuer's failure to pay under any Facility LC after
the presentation to it of a request strictly complying with the terms and
conditions of the Facility LC) that such indemnitees may suffer or incur in
connection with this Section 2.19 or any action taken or omitted by such
indemnitees hereunder.
2.19.11. Facility LC Collateral Account. Each Credit Party agrees
------------------------------
that it will, upon the request of the Agent or the Required Lenders and until
the final expiration date of any Facility LC and thereafter as long as any
amount is payable to the LC Issuer or the Lenders in respect of any Facility LC,
maintain a special collateral account pursuant to arrangements satisfactory to
the Agent (the "Facility LC Collateral Account") at the Agent's office at the
address specified pursuant to Article XIV, in the name of such Credit Party but
under the sole dominion and control of the Agent, for the benefit of the Lenders
and in which
-23-
such Credit Party shall have no interest other than as set forth in Section 8.1.
Each Credit Party hereby pledges, assigns and grants to the Agent, on behalf of
and for the ratable benefit of the Lenders and the LC Issuer, a security
interest in all of such Credit Party's right, title and interest in and to all
funds which may from time to time be on deposit in the Facility LC Collateral
Account to secure the prompt and complete payment and performance of the
Obligations. The Agent will invest any funds on deposit from time to time in the
Facility LC Collateral Account in certificates of deposit of Bank One having a
maturity not exceeding thirty (30) days. Nothing in this Section 2.19.11 shall
either obligate the Agent to require any Credit Party to deposit any funds in
the Facility LC Collateral Account or limit the right of the Agent to release
any funds held in the Facility LC Collateral Account in each case other than as
required by Section 8.1.
2.19.12. Rights as a Lender. In its capacity as a Lender, the LC
------------------
Issuer shall have the same rights and obligations as any other Lender.
2.19.13 Existing Letters of Credit. Upon the satisfaction of each
--------------------------
of the conditions precedent set forth in Section 4.1, (a) each Existing Letter
of Credit shall be deemed to be a Facility LC issued hereunder and (b) the LC
Issuer shall be deemed to have unconditionally and irrevocably sold to each
Lender, and each Lender shall be deemed to have unconditionally and irrevocably
purchased from the LC Issuer, a participation in such Facility LC and the
related LC Obligations in proportion to its Pro Rata Share.
2.20 Replacement of Lender. If the Borrower is required pursuant to
---------------------
Section 3.1, 3.2 or 3.5 to make any additional payment to any Lender or if any
Lender's obligation to make or continue, or to convert Floating Rate Advances
into, Eurodollar Advances shall be suspended pursuant to Section 3.3 (any Lender
so affected an "Affected Lender"), the Borrower may elect, if such amounts
continue to be charged or such suspension is still effective, to replace such
Affected Lender as a Lender party to this Agreement, provided that no Default or
Unmatured Default shall have occurred and be continuing at the time of such
replacement, and provided further that, concurrently with such replacement, (i)
another bank or other entity which is reasonably satisfactory to the Borrower
and the Agent shall agree, as of such date, to purchase for cash the Advances
and other Obligations due to the Affected Lender pursuant to an assignment
substantially in the form of Exhibit C and to become a Lender for all purposes
under this Agreement and to assume all obligations of the Affected Lender to be
terminated as of such date and to comply with the requirements of Section 12.3
applicable to assignments, and (ii) the Borrower shall pay to such Affected
Lender in same day funds on the day of such replacement (A) all interest, fees
and other amounts then accrued but unpaid to such Affected Lender by the
Borrower hereunder to and including the date of termination, including without
limitation payments due to such Affected Lender under Sections 3.1, 3.2 and 3.5,
and (B) an amount, if any, equal to the payment which would have been due to
such Lender on the day of such replacement under Section 3.4 had the Loans of
such Affected Lender been prepaid on such date rather than sold to the
replacement Lender.
-24-
ARTICLE III
YIELD PROTECTION; TAXES
-----------------------
3.1 Yield Protection. If, on or after the date of this Agreement, the
----------------
adoption of any law or any governmental or quasi-governmental rule, regulation,
policy, guideline or directive (whether or not having the force of law), or any
change in the interpretation or administration thereof by any governmental or
quasi-governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Lender or
applicable Lending Installation or the LC Issuer with any request or directive
(whether or not having the force of law) of any such authority, central bank or
comparable agency:
(i) subjects any Lender or any applicable Lending Installation or
the LC Issuer to any Taxes, or changes the basis of taxation of payments
(other than with respect to Excluded Taxes) to any Lender or the LC Issuer
in respect of its Eurodollar Loans, Facility LCs or participations therein,
or
(ii) imposes or increases or deems applicable any reserve,
assessment, insurance charge, special deposit or similar requirement
against assets of, deposits with or for the account of, or credit extended
by, any Lender or any applicable Lending Installation or the LC Issuer
(other than reserves and assessments taken into account in determining the
interest rate applicable to Eurodollar Advances), or
(iii) imposes any other condition the result of which is to increase
the cost to any Lender or any applicable Lending Installation or the LC
Issuer of making, funding or maintaining its Eurodollar Loans, or of
issuing or participating in Facility LCs, or reduces any amount receivable
by any Lender or any applicable Lending Installation or the LC Issuer in
connection with its Eurodollar Loans, Facility LCs or participations
therein, or requires any Lender or any applicable Lending Installation or
the LC Issuer to make any payment calculated by reference to the amount of
Eurodollar Loans, Facility LCs or participations therein held or interest
or LC Fees received by it, by an amount deemed material by such Lender or
the LC Issuer, as the case may be,
and the result of any of the foregoing is to increase the cost to such Lender or
applicable Lending Installation or the LC Issuer, as the case may be, of making
or maintaining its Eurodollar Loans or Commitment or of issuing or participating
in Facility LCs or to reduce the return received by such Lender or applicable
Lending Installation or the LC Issuer, as the case may be, in connection with
such Eurodollar Loans, Commitment, Facility LCs or participations therein, then,
within fifteen (15) days of demand by such Lender or the LC Issuer, as the case
may be, the Credit Parties shall pay such Lender or the LC Issuer, as the case
may be, such additional amount or amounts as will compensate such Lender or the
LC Issuer, as the case may be, for such increased cost or reduction in amount
received.
3.2 Changes in Capital Adequacy Regulations. If a Lender or the LC Issuer
---------------------------------------
determines the amount of capital required or expected to be maintained by such
Lender or the LC Issuer, any Lending Installation of such Lender or the LC
Issuer or any corporation controlling
-25-
such Lender or the LC Issuer is increased as a result of a Change, then, within
fifteen (15) days of demand by such Lender or the LC Issuer, the Credit Parties
shall pay such Lender or the LC Issuer the amount necessary to compensate for
any shortfall in the rate of return on the portion of such increased capital
which such Lender or the LC Issuer determines is attributable to this Agreement,
its Outstanding Credit Exposure or its Commitment to make Loans and issue or
participate in Facility LCs, as the case may be, hereunder (after taking into
account such Lender's or the LC Issuer's policies as to capital adequacy).
"Change" means (i) any change after the date of this Agreement in the Risk-Based
Capital Guidelines or (ii) any adoption of or change in any other law,
governmental or quasi-governmental rule, regulation, policy, guideline,
interpretation, or directive (whether or not having the force of law) after the
date of this Agreement which affects the amount of capital required or expected
to be maintained by any Lender or the LC Issuer or any Lending Installation or
any corporation controlling any Lender or the LC Issuer. "Risk-Based Capital
Guidelines" means (i) the risk-based capital guidelines in effect in the United
States on the date of this Agreement, including transition rules, and (ii) the
corresponding capital regulations promulgated by regulatory authorities outside
the United States implementing the July 1988 report of the Basle Committee on
Banking Regulation and Supervisory Practices Entitled "International Convergence
of Capital Measurements and Capital Standards," including transition rules, and
any amendments to such regulations adopted prior to the date of this Agreement.
3.3 Availability of Types of Advances. If any Lender determines that
---------------------------------
maintenance of its Eurodollar Loans at a suitable Lending Installation would
violate any applicable law, rule, regulation, or directive, whether or not
having the force of law, or if the Required Lenders determine that (i) deposits
of a type and maturity appropriate to match fund Eurodollar Advances are not
available or (ii) the interest rate applicable to Eurodollar Advances does not
accurately reflect the cost of making or maintaining Eurodollar Advances, then
the Agent shall suspend the availability of Eurodollar Advances and require any
affected Eurodollar Advances to be repaid or converted to Floating Rate
Advances, subject to the payment of any funding indemnification amounts required
by Section 3.4.
3.4 Funding Indemnification. If any payment of a Eurodollar Advance
-----------------------
occurs on a date which is not the last day of the applicable Interest Period,
whether because of acceleration, prepayment or otherwise, or a Eurodollar
Advance is not made on the date specified by the Borrower for any reason other
than default by the Lenders, the Borrower will indemnify each Lender for any
loss or cost incurred by it resulting therefrom, including, without limitation,
any loss or cost in liquidating or employing deposits acquired to fund or
maintain such Eurodollar Advance.
3.5 Taxes. 3.5.1 (i) All payments by any Credit Party to or for the
-----
account of any Lender, or the LC Issuer or the Agent hereunder or under any Note
or Facility LC Application shall be made free and clear of and without deduction
for any and all Taxes. If any Credit Party shall be required by law to deduct
any Taxes from or in respect of any sum payable hereunder to any Lender, or the
LC Issuer or the Agent, (a) the sum payable shall be increased as necessary so
that after making all required deductions (including deductions applicable to
additional sums payable under this Section 3.5) such Lender, or the LC Issuer or
the Agent (as the case may be)
-26-
receives an amount equal to the sum it would have received had no such
deductions been made, (b) such Credit Party shall make such deductions, (c) such
Credit Party shall pay the full amount deducted to the relevant authority in
accordance with applicable law and (d) such Credit Party shall furnish to the
Agent the original copy of a receipt evidencing payment thereof within thirty
(30) days after such payment is made.
(ii) In addition, each Credit Party hereby agrees to pay any present
or future stamp or documentary taxes and any other excise or property
taxes, charges or similar levies which arise from any payment made
hereunder or under any Note or Facility LC Application or from the
execution or delivery of, or otherwise with respect to, this Agreement or
any Note or Facility LC Application ("Other Taxes").
(iii) Each Credit Party hereby agrees to indemnify the Agent, or the
LC Issuer and each Lender for the full amount of Taxes or Other Taxes
(including, without limitation, any Taxes or Other Taxes imposed on amounts
payable under this Section 3.5) paid by the Agent, or the LC Issuer or such
Lender and any liability (including penalties, interest and expenses)
arising therefrom or with respect thereto. Payments due under this
indemnification shall be made within thirty (30) days of the date the
Agent, or the LC Issuer or such Lender makes demand therefor pursuant to
Section 3.6.
(iv) Each Lender that is not incorporated under the laws of the
United States of America or a state thereof (each a "Non-U.S. Lender")
agrees that it will, not more than ten (10) Business Days after the date of
this Agreement, (i) deliver to each of the Credit Parties and the Agent two
duly completed copies of United States Internal Revenue Service Form W-8BEN
or W-8ECI, certifying in either case that such Lender is entitled to
receive payments under this Agreement without deduction or withholding of
any United States federal income taxes, and (ii) deliver to each of the
Credit Parties and the Agent a United States Internal Revenue Form W-8 or
W-9, as the case may be, and certify that it is entitled to an exemption
from United States backup withholding tax. Each Non-U.S. Lender further
undertakes to deliver to each of the Credit Parties and the Agent (x)
renewals or additional copies of such form (or any successor form) on or
before the date that such form expires or becomes obsolete, and (y) after
the occurrence of any event requiring a change in the most recent forms so
delivered by it, such additional forms or amendments thereto as may be
reasonably requested by any Credit Party or the Agent. All forms or
amendments described in the preceding sentence shall certify that such
Lender is entitled to receive payments under this Agreement without
deduction or withholding of any United States federal income taxes, unless
an event (including without limitation any change in treaty, law or
regulation) has occurred prior to the date on which any such delivery would
otherwise be required which renders all such forms inapplicable or which
would prevent such Lender from duly completing and delivering any such form
or amendment with respect to it and such Lender advises the Credit Parties
and the Agent that it is not capable of receiving payments without any
deduction or withholding of United States federal income tax.
-27-
(v) For any period during which a Non-U.S. Lender has failed to
provide the Credit Parties with an appropriate form pursuant to clause
(iv), above (unless such failure is due to a change in treaty, law or
regulation, or any change in the interpretation or administration thereof
by any governmental authority, occurring subsequent to the date on which a
form originally was required to be provided), such Non-U.S. Lender shall
not be entitled to indemnification under this Section 3.5 with respect to
Taxes imposed by the United States; provided that, should a Non-U.S. Lender
which is otherwise exempt from or subject to a reduced rate of withholding
tax become subject to Taxes because of its failure to deliver a form
required under clause (iv), above, each Credit Party shall take such steps
as such Non-U.S. Lender shall reasonably request to assist such Non-U.S.
Lender to recover such Taxes.
(vi) Any Lender that is entitled to an exemption from or reduction of
withholding tax with respect to payments under this Agreement or any Note
pursuant to the law of any relevant jurisdiction or any treaty shall
deliver to the Credit Parties (with a copy to the Agent), at the time or
times prescribed by applicable law, such properly completed and executed
documentation prescribed by applicable law as will permit such payments to
be made without withholding or at a reduced rate.
(vii) If the U.S. Internal Revenue Service or any other governmental
authority of the United States or any other country or any political
subdivision thereof asserts a claim that the Agent did not properly
withhold tax from amounts paid to or for the account of any Lender (because
the appropriate form was not delivered or properly completed, because such
Lender failed to notify the Agent of a change in circumstances which
rendered its exemption from withholding ineffective, or for any other
reason), such Lender shall indemnify the Agent fully for all amounts paid,
directly or indirectly, by the Agent as tax, withholding therefor, or
otherwise, including penalties and interest, and including taxes imposed by
any jurisdiction on amounts payable to the Agent under this subsection,
together with all reasonable costs and expenses related thereto (including
reasonable attorneys fees and reasonable time charges of attorneys for the
Agent, which attorneys may be employees of the Agent). The obligations of
the Lenders under this Section 3.5(vii) shall survive the payment of the
Obligations and termination of this Agreement.
3.6 Lender Statements; Survival of Indemnity. To the extent reasonably
----------------------------------------
possible, each Lender shall designate an alternate Lending Installation with
respect to its Eurodollar Loans to reduce any liability of the Borrower to such
Lender under Sections 3.1, 3.2 and 3.5 or to avoid the unavailability of
Eurodollar Advances under Section 3.3, so long as such designation is not, in
the judgment of such Lender, disadvantageous to such Lender. Each Lender shall
deliver a written statement of such Lender to the Credit Parties (with a copy to
the Agent) as to the amount due, if any, under Section 3.1, 3.2, 3.4 or 3.5.
Such written statement shall set forth in reasonable detail the calculations
upon which such Lender determined such amount and shall be final, conclusive and
binding on each Credit Party in the absence of manifest error. Determination of
amounts payable under such Sections in connection with a Eurodollar Loan shall
be calculated as though each Lender funded its Eurodollar Loan through the
purchase of a
-28-
deposit of the type and maturity corresponding to the deposit used as a
reference in determining the Eurodollar Rate applicable to such Loan, whether in
fact that is the case or not. Unless otherwise provided herein, the amount
specified in the written statement of any Lender shall be payable on demand
after receipt by the Credit Parties of such written statement. The obligations
of each Credit Party under Sections 3.1, 3.2, 3.4 and 3.5 shall survive payment
of the Obligations and termination of this Agreement.
ARTICLE IV
CONDITIONS PRECEDENT
--------------------
4.1 Initial Credit Extension. The Lenders shall not be required to make
------------------------
the initial Credit Extension hereunder unless the Credit Parties have furnished
to the Agent with sufficient copies for the Lenders:
(i) Copies of (a) the restated certificate of incorporation of the
Borrower certified by the Secretary or an Assistant Secretary of the
Borrower, together with good standing certificates issued as of a recent
date by the Secretaries of State of Delaware and Alabama and (b) the
articles or certificate of incorporation of TMK Re, together with all
amendments thereto, certified by the Registrar of Companies of Bermuda,
together with a good standing certificate (or its equivalent) issued by the
Registrar of Companies of Bermuda.
(ii) Copies, certified by the Secretary or an Assistant Secretary of
each Credit Party, of its by-laws and Board of Directors' resolutions
authorizing the execution of the Loan Documents.
(iii) An incumbency certificate, executed by the Secretary or an
Assistant Secretary of each Credit Party, which shall identify by name and
title and bear the signature of the officers of each Credit Party
authorized to sign the Loan Documents and to make borrowings hereunder,
upon which certificate the Agent, the LC Issuer and the Lenders shall be
entitled to rely until informed of any change in writing by such Credit
Party.
(iv) A certificate, signed by the Chief Financial Officer or the
Treasurer of each Credit Party, stating that on the date hereof (a) no
Default or Unmatured Default has occurred and is continuing and (b) each of
the representations and warranties set forth in Article V of this Agreement
is true and correct as of such date.
(v) (a) A written opinion of Xxxxx X. Xxxxxxxxx, Executive Vice
President and General Counsel of the Borrower, and (b) a written opinion of
Appelby, Xxxxxxxx & Kempe, special Bermuda counsel to the Credit Parties,
addressed to the Agent, the LC Issuer and the Lenders in form and substance
reasonably satisfactory to the Agent and its counsel.
(vi) Any Notes requested by a Lender pursuant to Section 2.13
payable to the order of each such requesting Lender.
-29-
(vii) Written money transfer instructions, in substantially the form
of Exhibit "D" hereto, addressed to the Agent and signed by an Authorized
Officer, together with such other related money transfer authorizations as
the Agent may have reasonably requested.
(viii) The Existing Credit Agreements shall have been terminated and
all amounts owing thereunder (including principal, interest and accrued
fees) shall have been paid (or shall contemporaneously be paid) in full,
and all reimbursement obligations in respect of letter of credit issued
thereunder shall have been terminated.
(ix) A copy of TMK Re's license under The Insurance Xxx 0000,
certified by an Authorized Officer of TMK Re.
(x) Receipt of any required regulatory approvals from any
Governmental Authority with respect to the transactions contemplated by the
Loan Documents, including all hearing orders issued by insurance regulatory
authorities.
(xi) Such other documents as any Lender, the LC Issuer or its
counsel may have reasonably requested.
4.2 Each Credit Extension. The Lenders shall not be required to make any
---------------------
Credit Extension unless on the applicable Credit Extension Date:
(i) There exists no Default or Unmatured Default.
(ii) The representations and warranties contained in Article V are
true and correct as of such Credit Extension Date (excluding the
representation in Section 5.5 solely with respect to a request for an
Advance) except to the extent any such representation or warranty is stated
to relate solely to an earlier date, in which case such representation or
warranty shall have been true and correct on and as of such earlier date.
(iii) All legal matters incident to the making of such Credit
Extension shall be satisfactory to the Lenders and their counsel.
Each Borrowing Notice or request for issuance of a Facility LC with respect
to each such Credit Extension shall constitute a representation and warranty by
the Borrower that the conditions contained in Sections 4.2(i) and (ii) have been
satisfied. Any Lender may require a duly completed compliance certificate in
substantially the form of Exhibit B as a condition to making a Credit Extension.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
------------------------------
The Borrower represents and warrants to the Lenders that:
-30-
5.1 Corporate Existence and Standing. Each Credit Party and each of its
--------------------------------
Significant Subsidiaries is a corporation duly incorporated, validly existing
and in good standing under the laws of its jurisdiction of incorporation and has
all requisite authority to conduct its business in each jurisdiction in which
its business is conducted.
5.2 Authorization and Validity. Each Credit Party has the corporate power
--------------------------
and authority and legal right to execute and deliver the Loan Documents and to
perform its obligations thereunder. The execution and delivery by each Credit
Party of the Loan Documents and the performance of its obligations thereunder
have been duly authorized by proper corporate proceedings, and the Loan
Documents constitute legal, valid and binding obligations of each Credit Party
enforceable against such Credit Party in accordance with their terms, except as
enforceability may be limited by bankruptcy, insolvency or similar laws
affecting the enforcement of creditors' rights generally.
5.3 No Conflict; Government Consent. Neither the execution and delivery
-------------------------------
by any Credit Party of the Loan Documents, nor the consummation of the
transactions therein contemplated, nor compliance with the provisions thereof
will violate any law, rule, regulation, order, writ, judgment, injunction,
decree or award binding on such Credit Party or any of its Subsidiaries or any
Credit Party's or any of its Subsidiaries' articles of incorporation or by-laws
or the provisions of any indenture, instrument or agreement to which any Credit
Party or any of its Subsidiaries is a party or is subject, or by which it, or
its Property, is bound, or conflict with or constitute a default thereunder, or
result in the creation or imposition of any Lien in, of or on the Property of
any Credit Party or any of its Subsidiaries pursuant to the terms of any such
indenture, instrument or agreement, other than such violations, conflicts or
defaults which, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect. No order, consent, approval,
license, authorization, or validation of, or filing, recording or registration
with, or exemption by, any governmental or public body or authority, or any
subdivision thereof, is required to authorize, or is required in connection with
the execution, delivery and performance of, or the legality, validity, binding
effect or enforceability of, any of the Loan Documents.
5.4 Financial Statements. The December 31, 2000 audited consolidated
--------------------
financial statements of the Borrower and its Subsidiaries and the September 30,
2001 unaudited consolidated financial statements of the Borrower and its
Subsidiaries heretofore delivered to the Lenders (the "Financial Statements")
were prepared in accordance with generally accepted accounting principles in
effect on the date such statements were prepared and fairly present the
consolidated financial condition and operations of the Borrower and its
Subsidiaries at such dates and the consolidated results of their operations for
the periods then ended.
5.5 Material Adverse Change. Since December 31, 2000, there has been no
-----------------------
change in the business, Property, prospects, condition (financial or otherwise)
or results of operations of the Borrower and its Subsidiaries which could
reasonably be expected to have a Material Adverse Effect.
-31-
5.6 Taxes. Each Credit Party and its respective Subsidiaries have filed
-----
all United States federal tax returns and all other tax returns (foreign and
domestic) which are required to be filed and have paid all taxes due pursuant to
said returns or pursuant to any assessment received by any Credit Party or any
of its Subsidiaries, except such taxes, if any, as are being contested in good
faith and as to which, in the good faith judgment of such Credit Party, adequate
reserves have been provided. The United States income tax returns of the
Borrower and its Subsidiaries have been audited by the Internal Revenue Service
through the fiscal year ended December 31, 1995. No tax liens have been filed
and no claims against the Borrower or its Subsidiaries are being asserted with
respect to any such taxes except claims being contested in good faith and as to
which, in the good faith judgment of the Borrower, adequate reserves have been
provided. The charges, accruals and reserves on the books of each Credit Party
and its Subsidiaries in respect of any taxes or other governmental charges are
adequate in the good faith judgment of such Credit Party.
5.7 Litigation and Contingent Obligations. There is no litigation,
-------------------------------------
arbitration, governmental investigation, proceeding or inquiry pending or, to
the knowledge of any of their officers, threatened against or affecting any
Credit Party or any of its Subsidiaries which could reasonably be expected to
have a Material Adverse Effect (after giving effect to reserves which have been
provided with respect thereto on the books of such Credit Party and its
Subsidiaries). As of the date hereof, the Borrower has no material Contingent
Obligations not provided for or disclosed in the Financial Statements. Solely
for purposes of any reaffirmation of the foregoing representations pursuant to
Section 4.2(ii) in connection with any Loans (but not in connection with any
issuance of a Facility LC) the proceeds of which are used to repay maturing
commercial paper Indebtedness, such representations shall not extend to any
proceeding in which a punitive damages judgment has been entered against the
Borrower or any Subsidiary, such judgment has been stayed on appeal or the time
for appeal from such judgment has not expired and such judgment could not
reasonably be expected to have a material adverse effect on the ability of the
Borrower to perform its obligations under the Loan Documents.
5.8 Subsidiaries. Schedule "1" hereto contains an accurate list of all of
------------
the Significant Subsidiaries of the Borrower in existence on the date of this
Agreement, setting forth their respective jurisdictions of incorporation and the
percentage of their respective capital stock owned by the Borrower or other
Subsidiaries. All of the issued and outstanding shares of capital stock of such
Subsidiaries have been duly authorized and issued and are fully paid and non-
assessable. As of the date hereof, TMK Re does not have any Subsidiaries.
5.9 ERISA. The Unfunded Liabilities of all Single Employer Plans do not
-----
in the aggregate exceed $10,000,000. Each Plan complies in all material respects
with all applicable requirements of law and regulations. No Reportable Event has
occurred with respect to any Plan and no Credit Party nor any other members of
the Controlled Group has withdrawn from any Plan or initiated steps to do so,
which occurrence or withdrawal could result in a Material Adverse Effect. No
steps have been taken to terminate any Plan which has Unfunded Liabilities.
5.10 Accuracy of Information. No information, exhibit or report furnished
-----------------------
by any Credit Party or any of its Subsidiaries to the Agent, the LC Issuer or to
any Lender in connection
-32-
with the negotiation of, or compliance with, the Loan Documents contained any
material misstatement of fact, omitted to state a material fact or omitted to
state any fact necessary to make the statements contained therein not misleading
in any material respect.
5.11 Regulation U. Margin stock (as defined in Regulation U) constitutes
------------
less than 25% of those assets of each Credit Party and its Subsidiaries which
are subject to any limitation on sale, pledge or other restriction hereunder.
5.12 Material Agreements. No Credit Party nor any Subsidiary is a party to
-------------------
any agreement or instrument or subject to any charter or other corporate
restriction which could reasonably be expected to have a Material Adverse
Effect. No Credit Party nor any Subsidiary is in default in the performance,
observance or fulfillment of any of the obligations, covenants or conditions
contained in any agreement to which it is a party, which default could
reasonably be expected to have a Material Adverse Effect. No Credit Party nor
any Significant Subsidiary is in default in the performance, observance or
fulfillment of any of the obligations, covenants or conditions contained in any
agreement or instrument evidencing or governing Indebtedness.
5.13 Compliance With Laws. Each Credit Party and each of its Subsidiaries
--------------------
have complied with all applicable statutes, rules, regulations, orders and
restrictions of any domestic or foreign government or any instrumentality or
agency thereof, having jurisdiction over the conduct of their respective
businesses or the ownership of their respective Property, except where the
failure to so comply could not reasonably be expected to have a Material Adverse
Effect. No Credit Party nor any Subsidiary has received any notice to the effect
that its operations are not in material compliance with any of the requirements
of applicable federal, state and local environmental, health and safety statutes
and regulations or the subject of any federal or state investigation evaluating
whether any remedial action is needed to respond to a release of any toxic or
hazardous waste or substance into the environment, which non-compliance or
remedial action could reasonably be expected to have a Material Adverse Effect.
5.14 Ownership of Properties. Except for Liens permitted by Section 6.14,
-----------------------
on the date of this Agreement each Credit Party and each of its Subsidiaries
have good title to all of the Property and assets reflected in the Financial
Statements as owned by it, free of all Liens other than those permitted by this
Agreement, except for assets sold, transferred or otherwise disposed of in the
ordinary course of business since the date of such Financial Statements.
5.15 Investment Company Act. No Credit Party nor any of its Subsidiaries
----------------------
is an "investment company" or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended.
5.16 Public Utility Holding Company Act. No Credit Party nor any of its
----------------------------------
Subsidiaries is a "holding company" or a "subsidiary company" of a "holding
company", or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company", within the meaning of the Public Utility Holding Company
Act of 1935, as amended.
-33-
5.17 Insurance Licenses. Schedule "2" attached hereto (as said Schedule
------------------
"2" shall be revised or supplemented from time to time to reflect withdrawals or
changes in jurisdictions permitted by Section 6.4 or additional jurisdictions
set forth in the Annual Statements furnished pursuant to Section 6.1(vii)) lists
all of the jurisdictions in which any Significant Insurance Subsidiary holds
active Licenses and is authorized to transact insurance business. No such
License is the subject of a proceeding for suspension or revocation, there is no
sustainable basis for such suspension or revocation, and to each Credit Party's
best knowledge, no such suspension or revocation has been threatened by any
Governmental Authority. Schedule "2" also indicates the type or types of
insurance in which each such Insurance Subsidiary is permitted to engage with
respect to each License therein listed. None of the Insurance Subsidiaries
transacts any insurance business, directly or indirectly, in any state other
than those enumerated in Schedule "2".
5.18 Indebtedness. TMK Re has no Indebtedness outstanding on the date
------------
hereof other than the Obligations.
5.19 Reserves. TMK Re owns assets that qualify as admitted assets under
--------
applicable law in an amount at least equal to the sum of all such reserves and
liability amounts and its minimum statutory capital and surplus as required by
the insurance laws, rules and regulations of its jurisdiction of domicile.
5.20 Defaults. No Default or Unmatured Default has occurred and is
--------
continuing.
ARTICLE VI
COVENANTS
---------
During the term of this Agreement, unless the Required Lenders shall
otherwise consent in writing:
6.1 Financial Reporting. Each Credit Party will maintain, for itself and
-------------------
each of its Subsidiaries, a system of accounting established and administered
in accordance with generally accepted accounting principles, and furnish to the
Lenders:
(i) Within 90 days after the close of each of its fiscal years, an
unqualified audit report certified by independent certified public
accountants, acceptable to the Lenders, prepared in accordance with
Agreement Accounting Principles on a consolidated and consolidating basis
(consolidating statements need not be certified by such accountants) for
itself and its Subsidiaries, including balance sheets as of the end of such
period, related profit and loss and reconciliation of surplus statements,
and a statement of cash flows, accompanied by a certificate of said
accountants that, in the course of their examination necessary for their
certification of the foregoing, they have obtained no knowledge of any
Default or Unmatured Default, or if, in the opinion of such accountants,
any Default or Unmatured Default shall exist, stating the nature and status
thereof.
-34-
(ii) Within 45 days after the close of the first three quarterly
periods of each of its fiscal years, for itself and its Subsidiaries,
consolidated and consolidating unaudited balance sheets as at the close of
each such period and consolidated and consolidating profit and loss
statements and a statement of cash flows for the period from the beginning
of such fiscal year to the end of such quarter, all certified by its Chief
Financial Officer, Chief Accounting Officer or Treasurer.
(iii) Together with the financial statements required hereunder, a
compliance certificate in substantially the form of Exhibit "B" hereto
signed by the Chief Financial Officer, Chief Accounting Officer or
Treasurer of the Borrower showing the calculations necessary to determine
compliance with this Agreement and stating that no Default or Unmatured
Default exists, or if any Default or Unmatured Default exists, stating the
nature and status thereof.
(iv) Within 330 days after the close of each fiscal year, a
statement of the Unfunded Liabilities of each Single Employer Plan,
certified as correct by an actuary enrolled under ERISA.
(v) As soon as possible and in any event within 10 days after any
Credit Party knows that any Reportable Event has occurred with respect to
any Plan, a statement, signed by the Chief Financial Officer, Chief
Accounting Officer, Treasurer or Vice President of such Credit Party,
describing said Reportable Event and the action which such Credit Party
proposes to take with respect thereto.
(vi) As soon as possible and in any event within 10 days after
receipt by any Credit Party, a copy of (a) any notice or claim to the
effect that such Credit Party or any of its Subsidiaries is or may be
liable to any Person as a result of the release by such Credit Party, any
of its Subsidiaries, or any other Person of any toxic or hazardous waste or
substance into the environment, and (b) any notice alleging any violation
of any federal, state or local environmental, health or safety law or
regulation by any Credit Party or any of its Subsidiaries, which, in the
case of either (a) or (b) above, could reasonably be expected to have a
Material Adverse Effect.
(vii) Within 75 days after the close of each fiscal year of each
Insurance Subsidiary, copies of the Annual Statement of each of the
Insurance Subsidiaries, as certified by the president, secretary and
treasurer of and the actuary for each such Insurance Subsidiary and
prepared on the NAIC annual statement blanks (or such other form as shall
be required by the jurisdiction of incorporation of each such Insurance
Subsidiary), all such statements to be prepared in accordance with SAP
consistently applied throughout the periods reflected therein and to be
certified by independent certified public accountants reasonably acceptable
to the Agent if so required by any Governmental Authority.
(viii) Promptly upon the filing thereof, copies of all Forms 10-Q,
10-K and 8-K which any Credit Party or any of its Subsidiaries files with
the Securities and Exchange
-35-
Commission and, together with copies of each Form 10-K so furnished, a list
of such revisions to Schedule "1", if any, as shall be necessary to cause
Schedule "1" to accurately set forth all then existing Significant
Subsidiaries of the Borrower, their respective jurisdictions of
incorporation and the percentage of their respective capital stock owned by
the Borrower or other Subsidiaries.
(ix) Promptly upon any Credit Party's receipt thereof, copies of
reports or valuations prepared by any Governmental Authority or actuary in
respect of any action or event which has resulted in the reduction by 5% or
more in the capital and surplus of any Insurance Subsidiary.
(x) Promptly and in any event within ten (10) days after learning
thereof, notification of any decrease after the date hereof in the rating
given by A.M. Best & Co. in respect of any Insurance Subsidiary.
(xi) Such other information (including, without limitation, non-
financial information) as the Agent, the LC Issuer or any Lender may from
time to time reasonably request.
6.2 Use of Proceeds. The Borrower will, and will cause each Subsidiary
---------------
to, use the proceeds of the Advances (i) for general corporate purposes,
including, without limitation, the repayment of maturing commercial paper
Indebtedness and (ii) to finance Permitted Acquisitions. Each Credit Party will
use the issuance of Facility LCs to secure its obligations to Ceding Companies.
Neither Credit Party will, nor will it permit any of its Subsidiaries to, use
any of the proceeds of the Credit Extensions to purchase or carry any "margin
stock" (as defined in Regulation U).
6.3 Certain Notices. Each Credit Party will give prompt notice in writing
---------------
to the Agent and the Lenders of (i) the occurrence of any Default or Unmatured
Default and of any other development, financial or otherwise, relating
specifically to any Credit Party which could reasonably be expected to have a
Material Adverse Effect, (ii) the receipt of any notice from any Governmental
Authority of the expiration without renewal, revocation or suspension of, or the
institution of any proceedings to revoke or suspend, any License now or
hereafter held by any Insurance Subsidiary which is required to conduct
insurance business in compliance with all applicable laws and regulations, other
than such expiration, revocation or suspension which, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect,
(iii) the receipt of any notice from any Governmental Authority of the
institution of any disciplinary proceedings against or in respect of any
Insurance Subsidiary, or the issuance of any order, the taking of any action or
any request for an extraordinary audit for cause by any Governmental Authority
which, if adversely determined, could reasonably be expected to have a Material
Adverse Effect or (iv) any judicial or administrative order limiting or
controlling the insurance business of any Insurance Subsidiary (and not the
insurance industry generally) which has been issued or adopted and which could
reasonably be expected to have a Material Adverse Effect. Any such notice shall
state that it is given pursuant to this Section 6.3.
-36-
6.4 Conduct of Business. The Borrower will, and will cause each
-------------------
Significant Subsidiary to, do all things necessary to remain duly incorporated,
validly existing and in good standing as a domestic corporation in its
jurisdiction of incorporation and maintain all requisite authority to conduct
its business in each jurisdiction in which its business is conducted. The
Borrower will cause each Significant Insurance Subsidiary to (i) carry on or
otherwise be associated with the business of a licensed insurance carrier and
(ii) do all things necessary to renew, extend and continue in effect all
Licenses which may at any time and from time to time be necessary for such
Significant Insurance Subsidiary to operate its insurance business in compliance
with all applicable laws and regulations; provided, however, that any such
Significant Insurance Subsidiary may withdraw from one or more states as an
admitted insurer or change the state of its domicile, if such withdrawal or
change is in the best interests of the Borrower and such Significant Insurance
Subsidiary and could not reasonably be expected to have a Material Adverse
Effect. TMK Re will (a) only provide reinsurance to Ceding Companies, (b) only
engage in the insurance business in which it is engaged or licensed as of the
date hereof, (c) do all things necessary to remain duly incorporated, validly
existing and in good standing in its jurisdiction of formation, and (d) do all
things necessary to renew, extend and continue in effect all Licenses which may
at any time and from time to time be necessary for it to operate its insurance
business in compliance with all applicable laws and regulations. TMK Re will not
change its jurisdiction of domicile without the prior written consent of the
Required Lenders. The Borrower will cause TMK Re to be and remain a Wholly-
Owned Subsidiary and to be at all times Solvent.
6.5 Taxes. Each Credit Party will, and will cause each of its
-----
Subsidiaries to, pay when due all taxes, assessments and governmental charges
and levies upon it or its income, profits or Property, except those which are
being contested in good faith by appropriate proceedings and with respect to
which adequate reserves have been set aside.
6.6 Insurance. Each Credit Party will, and will cause each of its
---------
Subsidiaries to, maintain with financially sound and reputable insurance
companies insurance on all or substantially all of its Property, or shall
maintain self-insurance, in such amounts and covering such risks as is
consistent with sound business practice for Persons in substantially the same
industry as such Credit Party or such Subsidiary, and each Credit Party will
furnish to any Lender upon request full information as to the insurance carried.
6.7 Compliance with Laws. Each Credit Party will, and will cause each of
--------------------
its Subsidiaries to, comply with all laws, rules, regulations, orders, writs,
judgments, injunctions, decrees or awards to which it may be subject, except
where the failure to so comply could not reasonably be expected to have a
Material Adverse Effect.
6.8 Maintenance of Properties. Each Credit Party will, and will cause
-------------------------
each of its Subsidiaries to, do all things necessary to maintain, preserve,
protect and keep its Property in good repair, working order and condition, and
make all necessary and proper repairs, renewals and replacements so that its
business carried on in connection therewith may be properly conducted at all
times, except where the failure to so maintain, preserve, protect and repair
could not reasonably be expected to have a Material Adverse Effect.
-37-
6.9 Inspection. Each Credit Party will, and will cause each of its
----------
Subsidiaries to, permit the Agent and the Lenders, by their respective
representatives and agents, to inspect any of the Property, corporate books and
financial records of the Borrower and each Subsidiary, to examine and make
copies of the books of accounts and other financial records of the Borrower and
each Subsidiary, and to discuss the affairs, finances and accounts of the
Borrower and each Subsidiary with, and to be advised as to the same by, their
respective officers upon reasonable notice and at such reasonable times and
intervals as the Lenders may designate
6.10 Merger. TMK Re will not merge or consolidate with or into any other
------
Person. The Borrower will not, nor will it permit any Subsidiary to, merge or
consolidate with or into any other Person, except that (i) a Subsidiary may
merge with the Borrower or a Wholly-Owned Subsidiary and (ii) the Borrower and
any Subsidiary may merge or consolidate with or into any other Person, provided
that the Borrower or such Subsidiary shall be the continuing or surviving
corporation and, after giving effect to such merger or consolidation, no Default
or Unmatured Default shall exist.
6.11 Sale of Assets. No Credit Party will, nor will it permit any of its
--------------
Subsidiaries to, lease, sell or otherwise dispose of all or a Substantial
Portion of its Property (exclusive of Investments sold in the ordinary course of
business) to any other Person(s) in any calendar year.
6.12 Sale and Leaseback. No Credit Party will, nor will it permit any of
------------------
its Subsidiaries to, sell or transfer a Substantial Portion of its Property in
order to concurrently or subsequently lease as lessee such or similar Property.
6.13 Investments and Acquisitions. No Credit Party will make, nor will it
----------------------------
permit any of its Subsidiaries to make, any Acquisitions except Permitted
Acquisitions.
6.14 Liens. No Credit Party will, nor will it permit any of its
-----
Subsidiaries to, create, incur, or suffer to exist any Lien in, of or on its
Property other than Liens securing in the aggregate not more than $100,000,000
of Indebtedness.
6.15 Consolidated Net Worth. The Borrower will maintain at all times
----------------------
Consolidated Net Worth equal to not less than the sum of (i) $2,216,253,000 plus
(ii) 25% of the Borrower's Consolidated Net Income, if positive, for each fiscal
quarter ending after September 30, 2001.
6.16 Ratio of Consolidated Indebtedness to Consolidated Capitalization.
-----------------------------------------------------------------
The Borrower will maintain at all times a ratio of Consolidated Indebtedness to
Consolidated Capitalization of not greater than 0.4 to 1.0.
6.17 Ratio of Consolidated Adjusted Net Income to Consolidated Interest
------------------------------------------------------------------
Expense. The Borrower will maintain, as at the last day of each fiscal quarter,
-------
a ratio of (i) Consolidated Adjusted Net Income to (ii) Consolidated Interest
Expense, in each case calculated for the four fiscal quarters then ending, of
not less than 3.0 to 1.0.
6.18 Affiliates. No Credit Party will, nor will it permit any of its
----------
Subsidiaries to, enter into any transaction (including, without limitation, the
purchase or sale of any Property or
-38-
service) with, or make any payment or transfer to, any Affiliate (other than a
Wholly-Owned Subsidiary of such Credit Party) except (i) any such transactions,
payments or transfers with or to such Affiliates as are made in the ordinary
course of business and pursuant to the reasonable requirements of such Credit
Party's or such Subsidiary's business and upon fair and reasonable terms no less
favorable to such Credit Party or such Subsidiary than such Credit Party or such
Subsidiary would obtain in a comparable arms-length transaction and (ii) any
such other transactions, payments or transfers with or to such Affiliates as
could not reasonably be expected to have a Material Adverse Effect.
6.19 Contingent Obligations. TMK Re will not make or suffer to exist any
----------------------
Contingent Obligation, except (a) Contingent Obligations in respect of Insurance
Contracts and Reinsurance Contracts issued in the ordinary course of business,
(b) Contingent Obligations in respect of the extension of guaranties in the
ordinary course of business to insureds of the obligations of insurers under
Insurance Contracts and Reinsurance Contracts and (c) Contingent Obligations in
respect of the endorsement of instruments for deposit or collection in the
ordinary course of business.
6.20 Preferred Securities. The Borrower will not, and will not permit
--------------------
Torchmark Capital L.L.C. or Torchmark Capital Trust I to, declare or pay
dividends or distributions on, or redeem, purchase or otherwise acquire, any
Preferred Securities or any portion thereof if, after giving effect thereto, a
Default or Unmatured Default would exist.
ARTICLE VII
DEFAULTS
--------
The occurrence of any one or more of the following events shall constitute
a Default:
7.1 Representations. Any representation or warranty made or deemed made
---------------
by or on behalf of any Credit Party or any of its Subsidiaries to the Lenders,
the LC Issuer or the Agent under or in connection with this Agreement, any
Credit Extension, or any certificate or information delivered in connection with
this Agreement or any other Loan Document shall be materially false or
misleading on the date as of which made.
7.2 Non-Payment. Nonpayment of any principal of any Loan when due,
-----------
nonpayment of any Reimbursement Obligation within one (1) Business Day after the
same becomes due, or nonpayment of any interest upon any Loan or of any facility
fee, utilization fee, LC Fee or other obligations under any of the Loan
Documents within five days after the same becomes due.
7.3 Specific Defaults. The breach by any Credit Party of any of the terms
-----------------
or provisions of Section 6.2, 6.3, 6.10, 6.11, 6.12, 6.13, 6.15, 6.16, 6.17,
6.19 or 6.20; or the breach by the Borrower of any of the terms or provisions of
Section 6.14 or 6.18 which is not remedied within ten (10) days after any Credit
Party learns thereof.
7.4 Other Defaults. The breach by any Credit Party (other than a breach
--------------
which constitutes a Default under Section 7.1, 7.2 or 7.3) of any of the terms
or provisions of this
-39-
Agreement which is not remedied within twenty (20) days after written notice
from the Agent or any Lender.
7.5 Cross-Default. Failure of any Credit Party or any of its Subsidiaries
-------------
to pay when due any Indebtedness in excess of, singly or in the aggregate for
all such Subsidiaries, $10,000,000; or the default by any Credit Party or any of
its Subsidiaries in the performance of any term, provision or condition
contained in any agreement under which any such Indebtedness was created or is
governed, or any other event shall occur or condition exist, the effect of which
is to cause, or to permit the holder or holders of such Indebtedness to cause,
such Indebtedness to become due prior to its stated maturity; or any such
Indebtedness of any Credit Party or any of its Subsidiaries shall be declared to
be due and payable or required to be prepaid (other than by a regularly
scheduled payment) prior to the stated maturity thereof.
7.6 Insolvency; Voluntary Proceedings. Any Credit Party or any of its
---------------------------------
Subsidiaries shall (i) have an order for relief entered with respect to it under
the Federal bankruptcy laws as now or hereafter in effect, (ii) make an
assignment for the benefit of creditors, (iii) apply for, seek, consent to, or
acquiesce in, the appointment of a receiver, custodian, trustee, examiner,
liquidator or similar official for it or any Substantial Portion of its
Property, (iv) institute any proceeding seeking an order for relief under the
Federal bankruptcy laws as now or hereafter in effect or seeking to adjudicate
it a bankrupt or insolvent, or seeking dissolution, winding up, liquidation,
reorganization, arrangement, adjustment or composition of it or its debts under
any law relating to bankruptcy, insolvency or reorganization or relief of
debtors or fail to file an answer or other pleading denying the material
allegations of any such proceeding filed against it, (v) take any corporate
action to authorize or effect any of the foregoing actions set forth in this
Section 7.6, (vi) fail to contest in good faith any appointment or proceeding
described in Section 7.7 or not pay, or admit in writing its inability to pay,
its debts generally as they become due.
7.7 Involuntary Proceedings. Without the application, approval or consent
-----------------------
of any Credit Party or any of its Subsidiaries, a receiver, trustee, examiner,
liquidator or similar official shall be appointed for such Credit Party or any
of its Subsidiaries or any Substantial Portion of its Property, or a proceeding
described in Section 7.6(iv) shall be instituted against any Credit Party or any
of its Subsidiaries and such appointment continues undischarged or such
proceeding continues undismissed or unstayed for a period of thirty (30)
consecutive days.
7.8 Condemnation. Any court, government or governmental agency shall
------------
condemn, seize or otherwise appropriate, or take custody or control of (each a
"Condemnation"), all or any portion of the Property of any Credit Party or any
of its Subsidiaries which, when taken together with all other Property of such
Credit Party and its Subsidiaries so condemned, seized, appropriated, or taken
custody or control of, during the twelve-month period ending with the month in
which any such Condemnation occurs, constitutes a Substantial Portion of its
Property.
7.9 Judgment. Any Credit Party or any of its Subsidiaries shall fail
--------
within 45 days to pay, bond or otherwise discharge any judgment or order for the
payment of money, either singly or in the aggregate, in excess of $10,000,000,
which is not stayed on appeal or otherwise being appropriately contested in good
faith.
-40-
7.10 Unfunded Liabilities. The Unfunded Liabilities of all Single Employer
--------------------
Plans shall exceed in the aggregate $10,000,000 or any Reportable Event shall
occur in connection with any Plan.
7.11 Withdrawal Liability. Any Credit Party or any other member of the
--------------------
Controlled Group shall have been notified by the sponsor of a Multiemployer Plan
that it has incurred withdrawal liability to such Multiemployer Plan in an
amount which, when aggregated with all other amounts required to be paid to
Multiemployer Plans by such Credit Party or any other member of the Controlled
Group as withdrawal liability (determined as of the date of such notification),
exceeds $5,000,000 or requires payments exceeding $500,000 per annum.
7.12 Environmental. Any Credit Party or any of its Subsidiaries shall be
-------------
the subject of any proceeding or investigation pertaining to the release by such
Credit Party or any of its Subsidiaries or any other person of any toxic or
hazardous waste or substance into the environment, or any violation of any
federal, state or local environmental, health or safety law or regulation,
which, in either case, could reasonably be expected to have a Material Adverse
Effect.
7.13 Change in Control. Any Change in Control shall occur or the Borrower
-----------------
shall cease to own 100% of the outstanding shares of capital stock of TMK Re.
7.14 Default. The occurrence of any "default", as defined in any Loan
-------
Document (other than this Agreement), which default or breach continues beyond
any period of grace therein provided.
7.15 Guaranty. The Guaranty shall fail to remain in full force or effect
--------
or any action shall be taken by the Borrower, any of its Subsidiaries or any
Governmental Authority to discontinue or to assert the invalidity or
unenforceability thereof, or the Borrower denies that it has any further
liability hereunder, or gives notice to such effect.
7.16 Solvency. TMK Re shall fail at any time to remain Solvent.
--------
7.17 Licenses. Any License of any Insurance Subsidiary held by such
--------
Insurance Subsidiary on the date hereof or acquired by such Insurance Subsidiary
thereafter, the loss of which would have, in the reasonable judgment of the
Lenders, a Material Adverse Effect, (i) shall be revoked by a final non-
appealable order by the state which shall have issued such License, or any
action (whether administrative or judicial) to revoke such License shall have
been commenced against such Insurance Subsidiary which shall not have been
dismissed or contested in good faith within thirty (30) days of the commencement
thereof, (ii) shall be suspended by such state for a period in excess of thirty
(30) days or (iii) shall not be reissued or renewed by such state upon the
expiration thereof following application for such reissuance or renewal by such
Insurance Subsidiary. TMK Re shall cease to be duly licensed as an insurance
company under Bermuda law.
-41-
ARTICLE VIII
ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES
----------------------------------------------
8.1 Acceleration; Facility LC Collateral Account. (i) If any Default
--------------------------------------------
described in Section 7.6 or 7.7 occurs with respect to any Credit Party,
the obligations of the Lenders to make Loans hereunder and the obligation
and power of the LC Issuer to issue Facility LCs shall automatically
terminate and the Obligations shall immediately become due and payable
without any election or action on the part of the Agent, the LC Issuer or
any Lender and the Credit Parties will be and become thereby
unconditionally obligated, without any further notice, act or demand, to
pay to the Agent an amount in immediately available funds, which funds
shall be held in the Facility LC Collateral Account, equal to the
difference of (x) the amount of LC Obligations at such time, less (y) the
amount on deposit in the Facility LC Collateral Account at such time which
is free and clear of all rights and claims of third parties and has not
been applied against the Obligations (such difference, the "Collateral
Shortfall Amount"). If any other Default occurs, the Required Lenders (or
the Agent with the consent of the Required Lenders) may (a) terminate or
suspend the obligations of the Lenders to make Loans hereunder and the
obligation and power of the LC Issuer to issue Facility LCs, or declare the
Obligations to be due and payable, or both, whereupon the Obligations shall
become immediately due and payable, without presentment, demand, protest or
notice of any kind, all of which the Borrower hereby expressly waives, and
(b) upon notice to the Credit Parties and in addition to the continuing
right to demand payment of all amounts payable under this Agreement, make
demand on the Credit Parties to pay, and the Credit Parties will, forthwith
upon such demand and without any further notice or act, pay to the Agent
the Collateral Shortfall Amount, which funds shall be deposited in the
Facility LC Collateral Account.
(ii) If at any time while any Default is continuing, the Agent
determines that the Collateral Shortfall Amount at such time is greater
than zero, the Agent may make demand on the Credit Parties to pay, and the
Credit Parties will, forthwith upon such demand and without any further
notice or act, pay to the Agent the Collateral Shortfall Amount, which
funds shall be deposited in the Facility LC Collateral Account.
(iii) The Agent may at any time or from time to time after funds are
deposited in the Facility LC Collateral Account, apply such funds to the
payment of the Obligations and any other amounts as shall from time to time
have become due and payable by the Credit Parties to the Lenders or the LC
Issuer under the Loan Documents.
(iv) At any time while any Default is continuing, neither any Credit
Party nor any Person claiming on behalf of or through any Credit Party
shall have any right to withdraw any of the funds held in the Facility LC
Collateral Account. After all of the Obligations have been indefeasibly
paid in full and the Aggregate Commitment has been terminated, any funds
remaining in the Facility LC Collateral Account shall be returned by the
Agent to applicable Credit Party or paid to whomever may be legally
entitled thereto at such time.
-42-
(v) If, before any judgment or decree for the payment of the
Obligations due shall have been obtained or entered, the Modified Required
Lenders (or, in the case of an automatic termination upon the occurrence of
a Default under Section 7.6 or 7.7, all the Lenders), in their sole
discretion, shall so direct, the Agent shall, by notice to the Credit
Parties, rescind and annul such acceleration and/or termination.
8.2 Amendments. Subject to the provisions of this Article VIII, the
----------
Required Lenders (or the Agent with the consent in writing of the Required
Lenders) and the Credit Parties may enter into agreements supplemental hereto
for the purpose of adding or modifying any provisions to the Loan Documents or
changing in any manner the rights of the Lenders or any Credit Party hereunder
or thereunder or waiving any Default hereunder or thereunder; provided, however,
that no such supplemental agreement shall, without the consent of each Lender:
(i) Extend the Facility Termination Date or extend the expiry date
of any Facility LC to a date after the Facility Termination Date,
compromise or forgive the principal amount of any Credit Extension or any
Reimbursement Obligation related thereto, or reduce the rate of interest or
compromise or forgive payment of interest on any Credit Extension or any
Reimbursement Obligation related thereto, or reduce the amount of any fee
payable hereunder.
(ii) Reduce the percentage specified in the definition of Required
Lenders or Modified Required Lenders.
(iii) Increase the amount of the Commitment of any Lender hereunder
or the commitment to issue Facility LCs, or permit any Credit Party to
assign its rights under this Agreement.
(iv) Amend this Section 8.2.
No amendment of any provision of this Agreement relating to the Agent shall
be effective without the written consent of the Agent and no amendment of any
provision relating to the LC Issuer shall be effective without the written
consent of the LC Issuer. The Agent may waive payment of the fee required under
Section 12.3.2 without obtaining the consent of any other party to this
Agreement.
8.3 Preservation of Rights. No delay or omission of the Lenders, the LC
----------------------
Issuer or the Agent to exercise any right under the Loan Documents shall impair
such right or be construed to be a waiver of any Default or an acquiescence
therein, and the making of a Credit Extension notwithstanding the existence of a
Default or the inability of any Credit Party to satisfy the conditions precedent
to such Credit Extension shall not constitute any waiver or acquiescence. Any
single or partial exercise of any such right shall not preclude other or further
exercise thereof or the exercise of any other right, and no waiver, amendment or
other variation of the terms, conditions or provisions of the Loan Documents
whatsoever shall be valid unless in writing signed by the Lenders required
pursuant to Section 8.2, and then only to the extent in such writing
specifically set forth. All remedies contained in the Loan Documents or by law
-43-
afforded shall be cumulative and all shall be available to the Agent, the LC
Issuer and the Lenders until the Obligations have been paid in full.
ARTICLE IX
GENERAL PROVISIONS
------------------
9.1 Survival of Representations. All representations and warranties of
---------------------------
any Credit Party contained in this Agreement shall survive the making of the
Credit Extensions herein contemplated.
9.2 Governmental Regulation. Anything contained in this Agreement to the
-----------------------
contrary notwithstanding, neither the LC Issuer nor any Lender shall be
obligated to extend credit to any Credit Party in violation of any limitation or
prohibition provided by any applicable statute or regulation.
9.3 Headings. Section headings in the Loan Documents are for convenience
--------
of reference only, and shall not govern the interpretation of any of the
provisions of the Loan Documents.
9.4 Entire Agreement. The Loan Documents embody the entire agreement and
----------------
understanding among the Credit Parties, the Agent, the LC Issuer and the Lenders
and supersede all prior agreements and understandings among the Credit Parties,
the Agent, the LC Issuer and the Lenders relating to the subject matter thereof
other than the fee letter described in Section 10.13.
9.5 Several Obligations; Benefits of this Agreement. The respective
-----------------------------------------------
obligations of the Lenders hereunder are several and not joint and no Lender
shall be the partner or agent of any other (except to the extent to which the
Agent is authorized to act as such). The failure of any Lender to perform any of
its obligations hereunder shall not relieve any other Lender from any of its
obligations hereunder. This Agreement shall not be construed so as to confer any
right or benefit upon any Person other than the parties to this Agreement and
their respective successors and assigns, provided, however, that the parties
hereto expressly agree that the Arrangers shall enjoy the benefits of the
provisions of Sections 9.6, 9.10 and 10.11 to the extent specifically set forth
therein and shall have the right to enforce such provisions on its own behalf
and in its own name to the same extent as if it were a party to this Agreement.
9.6 Expenses; Indemnification. Each Credit Party shall reimburse the
-------------------------
Agent for any costs, internal charges and out-of-pocket expenses (including
reasonable attorneys' fees and time charges of attorneys for the Agent, which
attorneys may be employees of the Agent) paid or incurred by the Agent in
connection with the preparation, negotiation, execution, delivery, review,
amendment, modification, and administration of the Loan Documents. Each Credit
Party also agrees to reimburse the Agent, the LC Issuer, the Arrangers and the
Lenders for any costs, internal charges and out-of-pocket expenses (including
attorneys' fees and time charges of attorneys for the Agent, the LC Issuer, the
Arrangers and the Lenders, which attorneys may be employees of the Agent, the LC
Issuer, the Arrangers or the Lenders) paid or incurred by the
-44-
Agent, the LC Issuer, any Arranger or any Lender in connection with the
collection of the Obligations or the enforcement of the Loan Documents. Each
Credit Party further agrees to indemnify the Agent the LC Issuer, the Arrangers
and each Lender, its directors, officers and employees against all losses,
claims, damages, penalties, judgments, liabilities and expenses (collectively,
the "indemnified obligations") (including, without limitation, all expenses of
litigation or preparation therefor whether or not the Agent, the LC Issuer, any
Arranger or any Lender is a party thereto, but excluding those indemnified
obligations arising solely from any Lender's failure to perform its obligations
under this Agreement) which any of them may pay or incur arising out of or
relating to this Agreement, the other Loan Documents, the transactions
contemplated hereby or the direct or indirect application or proposed
application of the proceeds of any Credit Extension hereunder, except that no
indemnified party shall be indemnified for any indemnified obligations arising
from its own gross negligence or willful misconduct as finally determined by a
court of competent jurisdiction. The obligations of each Credit Party under this
Section 9.6 shall survive the termination of this Agreement.
9.7 Numbers of Documents. All statements, notices, closing documents, and
--------------------
requests hereunder shall be furnished to the Agent with sufficient counterparts
so that the Agent may furnish one to the LC Issuer and each of the Lenders.
9.8 Accounting. Except as provided to the contrary herein, all accounting
----------
terms used herein shall be interpreted and all accounting determinations
hereunder shall be made in accordance with Agreement Accounting Principles.
9.9 Severability of Provisions. Any provision in any Loan Document that
--------------------------
is held to be inoperative, unenforceable, or invalid in any jurisdiction shall,
as to that jurisdiction, be inoperative, unenforceable, or invalid without
affecting the remaining provisions in that jurisdiction or the operation,
enforceability, or validity of that provision in any other jurisdiction, and to
this end the provisions of all Loan Documents are declared to be severable.
9.10 Nonliability of Lenders. The relationship between the Credit Parties
-----------------------
on the one hand and the Lenders, the LC Issuer and the Agent on the other hand
shall be solely that of borrower and lender. Neither the Agent, any Arranger,
the LC Issuer nor any Lender shall have any fiduciary responsibilities to any
Credit Party. Neither the Agent, any Arranger, the LC Issuer nor any Lender
undertakes any responsibility to any Credit Party to review or inform any Credit
Party of any matter in connection with any phase of any Credit Party's business
or operations. Each Credit Party agrees that neither the Agent, any Arranger,
the LC Issuer nor any Lender shall have liability to such Credit Party (whether
sounding in tort, contract or otherwise) for losses suffered by such Credit
Party in connection with, arising out of, or in any way related to, the
transactions contemplated and the relationship established by the Loan
Documents, or any act, omission or event occurring in connection therewith,
unless it is determined in a final non-appealable judgment by a court of
competent jurisdiction that such losses resulted from the gross negligence or
willful misconduct of the party from which recovery is sought. Neither the
Agent, any Arranger, the LC Issuer nor any Lender shall have any liability with
respect to, and each Credit Party hereby waives, releases and agrees not to xxx
for, any special, indirect,
-45-
consequential or punitive damages suffered by such Credit Party in connection
with, arising out of, or in any way related to the Loan Documents or the
transactions contemplated thereby.
9.11 Confidentiality. Each Lender agrees to hold any confidential
---------------
information which it may receive from any Credit Party pursuant to this
Agreement in confidence, except for disclosure (i) to its Affiliates and to
other Lenders and their respective Affiliates, (ii) to legal counsel,
accountants, and other professional advisors to such Lender or to a Transferee,
(iii) to regulatory officials, (iv) to any Person as requested pursuant to or as
required by law, regulation, or legal process, (v) to any Person in connection
with any legal proceeding to which such Lender is a party, (vi) to such Lender's
direct or indirect contractual counterparties in swap agreements or to legal
counsel, accountants and other professional advisors to such counterparties, and
(vii) permitted by Section 12.4.
9.12 Nonreliance. Each Lender hereby represents that it is not relying on
-----------
or looking to any margin stock (as defined in Regulation U) for the repayment of
the Credit Extensions provided for herein.
9.13 Disclosure. Each Credit Party and each Lender hereby acknowledge and
----------
agree that Bank One and/or its Affiliates from time to time may hold investments
in, make other loans to or have other relationships with any Credit Party and
its Affiliates.
ARTICLE X
THE AGENT
---------
10.1 Appointment; Nature of Relationship. Bank One, NA is hereby appointed
-----------------------------------
by each of the Lenders as its contractual representative (herein referred to as
the "Agent") hereunder and under each other Loan Document, and each of the
Lenders irrevocably authorizes the Agent to act as the contractual
representative of such Lender with the rights and duties expressly set forth
herein and in the other Loan Documents. The Agent agrees to act as such
contractual representative upon the express conditions contained in this Article
X. Notwithstanding the use of the defined term "Agent," it is expressly
understood and agreed that the Agent shall not have any fiduciary
responsibilities to any Lender by reason of this Agreement or any other Loan
Document and that the Agent is merely acting as the contractual representative
of the Lenders with only those duties as are expressly set forth in this
Agreement and the other Loan Documents. In its capacity as the Lenders'
contractual representative, the Agent (i) does not hereby assume any fiduciary
duties to any of the Lenders, (ii) is a "representative" of the Lenders within
the meaning of Section 1-201 of the Uniform Commercial Code and (iii) is acting
as an independent contractor, the rights and duties of which are limited to
those expressly set forth in this Agreement and the other Loan Documents. Each
of the Lenders hereby agrees to assert no claim against the Agent on any agency
theory or any other theory of liability for breach of fiduciary duty, all of
which claims each Lender hereby waives.
10.2 Powers. The Agent shall have and may exercise such powers under the
------
Loan Documents as are specifically delegated to the Agent by the terms of each
thereof, together with such powers as are reasonably incidental thereto. The
Agent shall have no implied duties to the
-46-
Lenders, or any obligation to the Lenders to take any action thereunder except
any action specifically provided by the Loan Documents to be taken by the Agent.
10.3 General Immunity. Neither the Agent nor any of its directors,
----------------
officers, agents or employees shall be liable to any Credit Party, the Lenders
or any Lender for any action taken or omitted to be taken by it or them
hereunder or under any other Loan Document or in connection herewith or
therewith except to the extent such action or inaction is determined in a final
non-appealable judgment by a court of competent jurisdiction to have arisen from
the gross negligence or willful misconduct of such Person.
10.4 No Responsibility for Loans, Recitals, etc. Neither the Agent nor any
-------------------------------------------
of its directors, officers, agents or employees shall be responsible for or have
any duty to ascertain, inquire into, or verify (a) any statement, warranty or
representation made in connection with any Loan Document or any borrowing
hereunder; (b) the performance or observance of any of the covenants or
agreements of any obligor under any Loan Document, including, without
limitation, any agreement by an obligor to furnish information directly to each
Lender; (c) the satisfaction of any condition specified in Article IV, except
receipt of items required to be delivered solely to the Agent; (d) the existence
or possible existence of any Default or Unmatured Default; (e) the validity,
enforceability, effectiveness, sufficiency or genuineness of any Loan Document
or any other instrument or writing furnished in connection therewith; (f) the
value, sufficiency, creation, perfection or priority of any Lien in any
collateral security; or (g) the financial condition of any Credit Party or any
guarantor of any of the Obligations or of any of the Credit Parties' or any such
guarantor's respective Subsidiaries. The Agent shall have no duty to disclose to
the Lenders information that is not required to be furnished by any Credit Party
to the Agent at such time, but is voluntarily furnished by any Credit Party to
the Agent (either in its capacity as Agent or in its individual capacity).
10.5 Action on Instructions of Lenders. The Agent shall in all cases be
---------------------------------
fully protected in acting, or in refraining from acting, hereunder and under any
other Loan Document in accordance with written instructions signed by the
Required Lenders, and such instructions and any action taken or failure to act
pursuant thereto shall be binding on all of the Lenders. The Lenders hereby
acknowledge that the Agent shall be under no duty to take any discretionary
action permitted to be taken by it pursuant to the provisions of this Agreement
or any other Loan Document unless it shall be requested in writing to do so by
the Required Lenders. The Agent shall be fully justified in failing or refusing
to take any action hereunder and under any other Loan Document unless it shall
first be indemnified to its satisfaction by the Lenders pro rata against any and
all liability, cost and expense that it may incur by reason of taking or
continuing to take any such action.
10.6 Employment of Agents and Counsel. The Agent may execute any of its
--------------------------------
duties as Agent hereunder and under any other Loan Document by or through
employees, agents, and attorneys-in-fact and shall not be answerable to the
Lenders, except as to money or securities received by it or its authorized
agents, for the default or misconduct of any such agents or attorneys-in-fact
selected by it with reasonable care. The Agent shall be entitled to advice of
-47-
counsel concerning the contractual arrangement between the Agent and the Lenders
and all matters pertaining to the Agent's duties hereunder and under any other
Loan Document.
10.7 Reliance on Documents; Counsel. The Agent shall be entitled to rely
------------------------------
upon any Note, notice, consent, certificate, affidavit, letter, telegram,
statement, paper or document believed by it to be genuine and correct and to
have been signed or sent by the proper person or persons, and, in respect to
legal matters, upon the opinion of counsel selected by the Agent, which counsel
may be employees of the Agent.
10.8 Agent's Reimbursement and Indemnification. The Lenders agree to
-----------------------------------------
reimburse and indemnify the Agent ratably in proportion to their respective
Commitments (or, if the Commitments have been terminated, in proportion to their
Commitments immediately prior to such termination) (i) for any amounts not
reimbursed by any Credit Party for which the Agent is entitled to reimbursement
by any Credit Party under the Loan Documents, (ii) for any other expenses
incurred by the Agent on behalf of the Lenders, in connection with the
preparation, execution, delivery, administration and enforcement of the Loan
Documents (including, without limitation, for any expenses incurred by the Agent
in connection with any dispute between the Agent and any Lender or between two
or more of the Lenders) and (iii) for any liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind and nature whatsoever which may be imposed on, incurred by or
asserted against the Agent in any way relating to or arising out of the Loan
Documents or any other document delivered in connection therewith or the
transactions contemplated thereby (including, without limitation, for any such
amounts incurred by or asserted against the Agent in connection with any dispute
between the Agent and any Lender or between two or more of the Lenders), or the
enforcement of any of the terms of the Loan Documents or of any such other
documents, provided that (i) no Lender shall be liable for any of the foregoing
to the extent any of the foregoing is found in a final non-appealable judgment
by a court of competent jurisdiction to have resulted from the gross negligence
or willful misconduct of the Agent and (ii) any indemnification required
pursuant to Section 3.5(vii) shall, notwithstanding the provisions of this
Section 10.8, be paid by the relevant Lender in accordance with the provisions
thereof. The obligations of the Lenders under this Section 10.8 shall survive
payment of the Obligations and termination of this Agreement.
10.9 Notice of Default. The Agent shall not be deemed to have
-----------------
knowledge or notice of the occurrence of any Default or Unmatured Default
hereunder unless the Agent has received written notice from a Lender or any
Credit Party referring to this Agreement describing such Default or Unmatured
Default and stating that such notice is a "notice of default". In the event that
the Agent receives such a notice, the Agent shall give prompt notice thereof to
the Lenders.
10.10 Rights as a Lender. In the event the Agent is a Lender, the Agent
------------------
shall have the same rights and powers hereunder and under any other Loan
Document with respect to its Commitment and its Loans as any Lender and may
exercise the same as though it were not the Agent, and the term "Lender" or
"Lenders" shall, at any time when the Agent is a Lender, unless the context
otherwise indicates, include the Agent in its individual capacity. The Agent
and its Affiliates may accept deposits from, lend money to, and generally engage
in any kind of trust,
-48-
debt, equity or other transaction, in addition to those contemplated by this
Agreement or any other Loan Document, with any Credit Party or any of its
Subsidiaries in which such Credit Party or such Subsidiary is not restricted
hereby from engaging with any other Person. The Agent, in its individual
capacity, is not obligated to remain a Lender.
10.11 Lender Credit Decision. Each Lender acknowledges that it has,
----------------------
independently and without reliance upon the Agent, the Arrangers or any other
Lender and based on the financial statements prepared by any Credit Party and
such other documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement and the other Loan
Documents. Each Lender also acknowledges that it will, independently and
without reliance upon the Agent, the Arrangers or any other Lender and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement and the other Loan Documents.
10.12 Successor Agent. The Agent may resign at any time by giving written
---------------
notice thereof to the Lenders and the Credit Parties, such resignation to be
effective upon the appointment of a successor Agent or, if no successor Agent
has been appointed, forty-five days after the retiring Agent gives notice of its
intention to resign. The Agent may be removed at any time with or without cause
by written notice received by the Agent from the Required Lenders, such removal
to be effective on the date specified by the Required Lenders. Upon any such
resignation or removal, the Required Lenders shall have the right to appoint, on
behalf of each Credit Party and the Lenders, a successor Agent. If no successor
Agent shall have been so appointed by the Required Lenders within thirty days
after the resigning Agent's giving notice of its intention to resign, then the
resigning Agent may appoint, on behalf of each Credit Party and the Lenders, a
successor Agent. Notwithstanding the previous sentence, the Agent may at any
time without the consent of any Credit Party or any Lender, appoint any of its
Affiliates which is a commercial bank as a successor Agent hereunder. If the
Agent has resigned or been removed and no successor Agent has been appointed,
the Lenders may perform all the duties of the Agent hereunder and each Credit
Party shall make all payments in respect of the Obligations to the applicable
Lender and for all other purposes shall deal directly with the Lenders. No
successor Agent shall be deemed to be appointed hereunder until such successor
Agent has accepted the appointment. Any such successor Agent shall be a
commercial bank having capital and retained earnings of at least $100,000,000.
Upon the acceptance of any appointment as Agent hereunder by a successor Agent,
such successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the resigning or removed Agent. Upon
the effectiveness of the resignation or removal of the Agent, the resigning or
removed Agent shall be discharged from its duties and obligations hereunder and
under the Loan Documents. After the effectiveness of the resignation or removal
of an Agent, the provisions of this Article X shall continue in effect for the
benefit of such Agent in respect of any actions taken or omitted to be taken by
it while it was acting as the Agent hereunder and under the other Loan
Documents. In the event that there is a successor to the Agent by merger, or the
Agent assigns its duties and obligations to an Affiliate pursuant to this
Section 10.12, then the term "Prime Rate" as used in this Agreement shall mean
the prime rate, base rate or other analogous rate of the new Agent.
-49-
10.13 Agent and Arranger Fees. Each Credit Party agrees to pay to the
-----------------------
Agent and Banc One Capital Markets, Inc., for their respective accounts, the
fees agreed to by the Borrower, the Agent and Banc One Capital Markets, Inc.
pursuant to that certain letter agreement dated October 16, 2001, or as
otherwise agreed from time to time.
10.14 Delegation to Affiliates. Each Credit Party and the Lenders agree
------------------------
that the Agent may delegate any of its duties under this Agreement to any of its
Affiliates. Any such Affiliate (and such Affiliate's directors, officers,
agents and employees) which performs duties in connection with this Agreement
shall be entitled to the same benefits of the indemnification, waiver and other
protective provisions to which the Agent is entitled under Articles IX and X.
10.15 Documentation Agents, Syndication Agent, etc. None of the Lenders
---------------------------------------------
identified in this Agreement as the "Documentation Agents" or the "Syndication
Agent" shall have any right, power, obligation, liability, responsibility or
duty under this Agreement other than those applicable to all Lenders as such.
Without limiting the foregoing, none of such Lenders shall have or be deemed to
have a fiduciary relationship with any Lender. Each Lender hereby makes the
same acknowledgments with respect to such Lenders as it makes with respect to
the Agent in Section 10.11.
ARTICLE XI
SETOFF; RATABLE PAYMENTS
------------------------
11.1 Setoff. In addition to, and without limitation of, any rights of the
-------
Lenders under applicable law, if any Credit Party becomes insolvent, however
evidenced, or any Default occurs, any and all deposits (including all account
balances, whether provisional or final and whether or not collected or
available) and any other Indebtedness at any time held or owing by any Lender or
any Affiliate of any Lender to or for the credit or account of any Credit Party
may be offset and applied toward the payment of the Obligations owing to such
Lender, whether or not the Obligations, or any part thereof, shall then be due.
11.2 Ratable Payments. If any Lender, whether by setoff or otherwise, has
----------------
payment made to it upon its Outstanding Credit Exposure (other than payments
received pursuant to Section 3.1, 3.2, 3.4 or 3.5) in a greater proportion than
that received by any other Lender, such Lender agrees, promptly upon demand, to
purchase a portion of the Aggregate Outstanding Credit Exposure held by the
other Lenders so that after such purchase each Lender will hold its Pro Rata
Share of the Aggregate Outstanding Credit Exposure. If any Lender, whether in
connection with setoff or amounts which might be subject to setoff or otherwise,
receives collateral or other protection for its Obligations or such amounts
which may be subject to setoff, such Lender agrees, promptly upon demand, to
take such action necessary such that all Lenders share in the benefits of such
collateral ratably in proportion to their respective Pro Rata Shares of the
Aggregate Outstanding Credit Exposure. In case any such payment is disturbed by
legal process, or otherwise, appropriate further adjustments shall be made.
-50-
ARTICLE XII
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
-------------------------------------------------
12.1 Successors and Assigns. The terms and provisions of the Loan
----------------------
Documents shall be binding upon and inure to the benefit of each Credit Party
and the Lenders and their respective successors and assigns, except that (i) no
Credit Party shall have the right to assign its rights or obligations under the
Loan Documents and (ii) any assignment by any Lender must be made in compliance
with Section 12.3. The parties to this Agreement acknowledge that clause (ii)
of this Section 12.1 relates only to absolute assignments and does not prohibit
assignments creating security interests, including, without limitation, (x) any
pledge or assignment by any Lender of all or any portion of its rights under
this Agreement and any Note to a Federal Reserve Bank or (y) in the case of a
Lender which is a fund, any pledge or assignment of all or any portion of its
rights under this Agreement and any Note to its trustee in support of its
obligations to its trustee; provided, however, that no such pledge or assignment
creating a security interest shall release the transferor Lender from its
obligations hereunder unless and until the parties thereto have complied with
the provisions of Section 12.3. The Agent may treat the Person which made any
Loan or which holds any Note as the owner thereof for all purposes hereof unless
and until such Person complies with Section 12.3; provided, however, that the
Agent may in its discretion (but shall not be required to) follow instructions
from the Person which made any Loan or which holds any Note to direct payments
relating to such Loan or Note to another Person. Any assignee of the rights to
any Loan or any Note agrees by acceptance of such assignment to be bound by all
the terms and provisions of the Loan Documents. Any request, authority or
consent of any Person, who at the time of making such request or giving such
authority or consent is the owner of the rights to any Loan (whether or not a
Note has been issued in evidence thereof), shall be conclusive and binding on
any subsequent holder or assignee of the rights to such Loan.
12.2 Participations.
--------------
12.2.1 Permitted Participants; Effect. Any Lender may, in the
------------------------------
ordinary course of its business and in accordance with applicable law, at
any time sell to one or more banks or other entities ("Participants")
participating interests in any Outstanding Credit Exposure of such Lender,
any Note held by such Lender, any Commitment of such Lender or any other
interest of such Lender under the Loan Documents. In the event of any such
sale by a Lender of participating interests to a Participant, such Lender's
obligations under the Loan Documents shall remain unchanged, such Lender
shall remain solely responsible to the other parties hereto for the
performance of such obligations, such Lender shall remain the owner of its
Outstanding Credit Exposure and the holder of any Note issued to it in
evidence thereof for all purposes under the Loan Documents, all amounts
payable by any Credit Party under this Agreement shall be determined as if
such Lender had not sold such participating interests, and each Credit
Party and the Agent shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under the
Loan Documents.
-51-
12.2.2 Voting Rights. Each Lender shall retain the sole right to
-------------
approve, without the consent of any Participant, any amendment,
modification or waiver of any provision of the Loan Documents other than
any amendment, modification or waiver with respect to any Credit Extension
or Commitment in which such Participant has an interest which would require
consent of all of the Lenders pursuant to the terms of Section 8.2 or of
any other Loan Document.
12.2.3 Benefit of Setoff. Each Credit Party agrees that each
-----------------
Participant shall be deemed to have the right of setoff provided in Section
11.1 in respect of its participating interest in amounts owing under the
Loan Documents to the same extent as if the amount of its participating
interest were owing directly to it as a Lender under the Loan Documents,
provided that each Lender shall retain the right of setoff provided in
Section 11.1 with respect to the amount of participating interests sold to
each Participant. The Lenders agree to share with each Participant, and
each Participant, by exercising the right of setoff provided in Section
11.1, agrees to share with each Lender, any amount received pursuant to the
exercise of its right of setoff, such amounts to be shared in accordance
with Section 11.2 as if each Participant were a Lender.
12.3 Assignments.
-----------
12.3.1 Permitted Assignments. Any Lender may, in the ordinary course
---------------------
of its business and in accordance with applicable law, at any time assign
to one or more banks or other entities ("Purchasers") all or any part of
its rights and obligations under the Loan Documents. Such assignment shall
be substantially in the form of Exhibit C or in such other form as may be
agreed to by the parties thereto. The consent of each Credit Party, the
Agent and the LC Issuer shall be required prior to an assignment becoming
effective with respect to a Purchaser which is not a Lender or an Affiliate
thereof; provided, however, that if a Default has occurred and is
continuing, the consent of any Credit Party shall not be required. Such
consent shall not be unreasonably withheld or delayed. Each such
assignment with respect to a Purchaser which is not a Lender or an
Affiliate thereof shall (unless each of the Credit Parties and the Agent
otherwise consents) be in an amount not less than the lesser of (i)
$5,000,000 or (ii) the remaining amount of the assigning Lender's
Commitment (calculated as at the date of such assignment) or outstanding
Loans (if the applicable Commitment has been terminated).
12.3.2 Effect; Effective Date. Upon (i) delivery to the Agent of an
----------------------
assignment, together with any consents required by Section 12.3.1, and (ii)
payment of a $4,000 fee to the Agent for processing such assignment, such
assignment shall become effective on the effective date specified in such
assignment. The assignment shall contain a representation by the Purchaser
to the effect that none of the consideration used to make the purchase of
the Commitment and Outstanding Credit Exposure under the applicable
assignment agreement constitutes "plan assets" as defined under ERISA and
that the rights and interests of the Purchaser in and under the Loan
Documents will not be "plan assets" under ERISA. On and after the
effective date of such assignment, such Purchaser shall for all purposes be
a Lender party to this Agreement and any other Loan Document
-52-
executed by or on behalf of the Lenders and shall have all the rights and
obligations of a Lender under the Loan Documents, to the same extent as if
it were an original party hereto, and no further consent or action by any
Credit Party, the Lenders or the Agent shall be required to release the
transferor Lender with respect to the percentage of the Aggregate
Commitment and Outstanding Credit Exposure assigned to such Purchaser. Upon
the consummation of any assignment to a Purchaser pursuant to this Section
12.3.2, the transferor Lender, the Agent and the Borrower shall, if the
transferor Lender or the Purchaser desires that its Loans be evidenced by
Notes, make appropriate arrangements so that new Notes or, as appropriate,
replacement Notes are issued to such transferor Lender and new Notes or, as
appropriate, replacement Notes, are issued to such Purchaser, in each case
in principal amounts reflecting their respective Commitments, as adjusted
pursuant to such assignment.
12.4 Dissemination of Information. Each Credit Party authorizes each
----------------------------
Lender to disclose to any Participant or Purchaser or any other Person acquiring
an interest in the Loan Documents by operation of law (each a "Transferee") and
any prospective Transferee any and all information in such Lender's possession
concerning the creditworthiness of any Credit Party and its Subsidiaries,
including without limitation any information contained in any Reports; provided
that each Transferee and prospective Transferee agrees to be bound by Section
9.11 of this Agreement.
12.5 Tax Treatment. If any interest in any Loan Document is transferred to
-------------
any Transferee which is organized under the laws of any jurisdiction other than
the United States or any State thereof, the transferor Lender shall cause such
Transferee, concurrently with the effectiveness of such transfer, to comply with
the provisions of Section 3.5(iv).
ARTICLE XIII
GUARANTY
--------
13.1 Guaranty of Payment. The Borrower hereby absolutely, irrevocably and
-------------------
unconditionally guarantees prompt, full and complete payment when due, whether
at stated maturity, upon acceleration or otherwise, and at all times thereafter,
of all Obligations (the "Guaranteed Debt"). The Borrower agrees that if TMK Re
---------------
shall fail to pay when due any Guaranteed Debt, the Borrower will promptly pay
the same without notice or demand whatsoever. This is a guaranty of payment,
not a guaranty of collection.
13.2 Acceptance of Guaranty; No Setoffs. The Borrower waives notice of the
----------------------------------
acceptance of this Guaranty and of the extension or incurrence of the Guaranteed
Debt or any part thereof. The Borrower further waives all setoffs and
counterclaims and presentment, protest, notice, filing of claims with a court in
the event of receivership, bankruptcy or reorganization of TMK Re, demand or
action on delinquency in respect of the Guaranteed Debt or any part thereof,
including any right to require the Agent, the LC Issuer or the Lenders to xxx
TMK Re, any other guarantor or any other Person obligated with respect to the
Guaranteed Debt
-53-
or any part thereof, or otherwise to enforce payment thereof against any
collateral securing the Guaranteed Debt or any part thereof.
13.3 Nature of Guaranty; Continuing, Absolute and Unconditional. The
----------------------------------------------------------
Borrower hereby agrees that, to the fullest extent permitted by law, its
obligations hereunder shall be continuing, absolute and unconditional under any
and all circumstances and not subject to any reduction, limitation, impairment,
termination, defense (other than indefeasible payment in full), setoff,
counterclaim or recoupment whatsoever (all of which are hereby expressly waived
by it to the fullest extent permitted by law), whether by reason of any claim of
any character whatsoever, including, without limitation, any claim of waiver,
release, surrender, alteration or compromise. The validity and enforceability
of this Guaranty shall not be impaired or affected by any of the following: (a)
any extension, modification or renewal of, or indulgence with respect to, or
substitution for, the Guaranteed Debt or any part thereof or any agreement
relating thereto at any time; (b) any failure or omission to perfect or maintain
any lien on, or preserve rights to, any security or collateral or to enforce any
right, power or remedy with respect to the Guaranteed Debt or any part thereof
or any agreement relating thereto, or any collateral securing the Guaranteed
Debt or any part thereof; (c) any waiver of any right, power or remedy or of any
default with respect to the Guaranteed Debt or any part thereof or any agreement
relating thereto or with respect to any collateral securing the Guaranteed Debt
or any part thereof; (d) any release, surrender, compromise, settlement, waiver,
subordination or modification, with or without consideration, of any collateral
securing the Guaranteed Debt or any part thereof, any other guaranties with
respect to the Guaranteed Debt or any part thereof, or any other obligations of
any person or entity with respect to the Guaranteed Debt or any part thereof;
(e) the enforceability or validity of the Guaranteed Debt or any part thereof or
the genuineness, enforceability or validity of any agreement relating thereto or
with respect to any collateral securing the Guaranteed Debt or any part thereof;
(f) the application of payments received from any source to the payment of
indebtedness other than the Guaranteed Debt, any part thereof or amounts which
are not covered by this Guaranty even though the LC Issuer and the Lenders might
lawfully have elected to apply such payments to any part or all of the
Guaranteed Debt or to amounts which are not covered by this Guaranty; (g) any
change of ownership of TMK Re or the insolvency, bankruptcy or any other change
in the legal status of TMK Re; (h) any change in, or the imposition of, any law,
decree, regulation or other governmental act which does or might impair, delay
or in any way affect the validity, enforceability or the payment when due of the
Guaranteed Debt; (i) the failure of TMK Re to maintain in full force, validity
or effect or to obtain or renew when required all governmental, insurance and
other approvals, licenses or consents required in connection with the Guaranteed
Debt or this Guaranty, or to take any other action required in connection with
the performance of all obligations pursuant to the Guaranteed Debt or this
Guaranty; (j) the existence of any claim, setoff or other rights which the
Borrower may have at any time against TMK Re or any other guarantor or any other
Person in connection herewith or with any unrelated transaction; (k) the LC
Issuer and the Lenders' election, in any case or proceeding instituted under
chapter 11 of the United States Bankruptcy Code or any applicable federal, state
or foreign bankruptcy or other similar law, of the application of Section
1111(b)(2) of the United States Bankruptcy Code or other similar provision under
any applicable federal, state or foreign bankruptcy or other similar law; (l)
any borrowing, use of cash collateral, or grant of a security interest by TMK
Re, as debtor in possession, under Section 363 or 000 xx
-00-
xxx Xxxxxx Xxxxxx Bankruptcy Code or any applicable federal, state or foreign
bankruptcy or other similar law; (m) the disallowance of all or any portion of
any of the LC Issuer and the Lenders' claims for repayment of the Guaranteed
Debt under Section 502 or 506 of the United States Bankruptcy Code or any
applicable federal, state or foreign bankruptcy or other similar law; or (n) any
other fact or circumstance which might otherwise constitute grounds at law or
equity for the discharge or release of the Borrower from its obligations
hereunder, all whether or not the Borrower shall have had notice or knowledge of
any act or omission referred to in the foregoing clauses (a) through (n) of this
paragraph. It is agreed that the Borrower's liability hereunder is independent
of any other guaranties or other obligations at any time in effect with respect
to the Guaranteed Debt or any part thereof, and that the Borrower's liability
hereunder may be enforced regardless of the existence, validity, enforcement or
non-enforcement of any such other guaranties or other obligations or any
provision of any applicable law or regulation purporting to prohibit payment by
TMK Re of the Guaranteed Debt in the manner agreed upon among the Agent, the LC
Issuer, the Lenders and TMK Re.
13.4 Dealings with TMK Re. Credit may be granted or continued from time to
--------------------
time by the LC Issuer or the Lenders to TMK Re without notice to or
authorization from the Borrower regardless of TMK Re's financial or other
condition at the time of any such grant or continuation. Neither the Agent, the
LC Issuer nor any Participant shall have an obligation to disclose or discuss
with the Borrower its assessment of the financial condition of TMK Re.
13.5 Subrogation. Until the irrevocable payment in full of the Obligations
-----------
and termination of all commitments which could give rise to any Obligation, the
Borrower shall have no right of subrogation with respect to the Guaranteed Debt
and hereby waives any right to enforce any remedy which the Agent, the LC Issuer
or the Lenders now have or may hereafter have against TMK Re, any endorser or
any other guarantor of all or any part of the Guaranteed Debt, and the Borrower
hereby waives any benefit of, and any right to participate in, any security or
collateral given to the Agent, the LC Issuer or the Lenders to secure payment of
the Guaranteed Debt or any part thereof or any other liability of TMK Re to the
Agent, the LC Issuer or the Lenders. Upon such irrevocable payment and
termination, TMK Re shall indemnify the Borrower for the full amount of any
payment made by the Borrower under this Guaranty and the Borrower shall be
subrogated to the rights of the Person to whom such payment shall have been made
to the extent of such payment.
13.6 Collateral. The Borrower authorizes the Agent, the LC Issuer and the
----------
Lenders to take any action or exercise any remedy with respect to any non-cash
collateral from time to time securing the Guaranteed Debt, which the Agent, the
LC Issuer and the Lenders in their sole discretion shall determine, without
notice to the Borrower. In the event the Agent, the LC Issuer and the Lenders
in their sole discretion elect to give notice of any action with respect to any
non-cash collateral securing the Guaranteed Debt or any part thereof, ten (10)
days' written notice mailed to the Borrower by ordinary mail at the address set
forth on the signature pages hereto shall be deemed reasonable notice of any
matters contained in such notice. The Borrower consents and agrees that neither
the Agent, the LC Issuer nor the Lenders shall be under any obligation to
xxxxxxxx any assets in favor of the Borrower or against or in payment of any or
all of the Guaranteed Debt.
-55-
13.7 Rights to Payments, Etc. In the event that acceleration of the time
-----------------------
for payment of any of the Guaranteed Debt is stayed upon the insolvency,
bankruptcy or reorganization of TMK Re, or otherwise, all such amounts shall
nonetheless be payable by the Borrower forthwith upon demand by the Agent, the
LC Issuer or the Lenders. The Borrower further agrees that, to the extent that
TMK Re makes a payment or payments to any of the LC Issuer or the Lenders on the
Guaranteed Debt, or the Agent, the LC Issuer or the Lenders receive any proceeds
of collateral securing the Guaranteed Debt, which payment or receipt of proceeds
or any part thereof is subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be returned or repaid to TMK Re, its
estate, trustee, receiver, debtor in possession or any other party, including,
without limitation, the Borrower, under any insolvency or bankruptcy law, state
or federal law, common law or equitable cause, then to the extent of such
payment, return or repayment, the obligation or part thereof which has been
paid, reduced or satisfied by such amount shall be reinstated and continued in
full force and effect as of the date when such initial payment, reduction or
satisfaction occurred.
13.8 No Waiver. No delay on the part of the Agent, the LC Issuer or the
---------
Lenders in the exercise of any right, power or remedy shall operate as a waiver
thereof, and no single or partial exercise by the Agent, the LC Issuer or the
Lenders of any right, power or remedy shall preclude any further exercise
thereof; nor shall any amendment, supplement, modification or waiver of any of
the terms or provisions of this Guaranty be binding upon the Agent, the LC
Issuer or the Lenders, except as expressly set forth in a writing duly signed
and delivered on the LC Issuer and the Lenders' behalf by the Agent. The
failure by the Agent, the LC Issuer or the Lenders at any time or times
hereafter to require strict performance by TMK Re or the Borrower of any of the
provisions, warranties, terms and conditions contained in any promissory note,
security agreement, agreement, guaranty, instrument or document now or at any
time or times hereafter executed pursuant to the terms of, or in connection
with, this Agreement by TMK Re or the Borrower and delivered to the Agent, the
LC Issuer or the Lenders shall not waive, affect or diminish any right of the
Agent, the LC Issuer or the Lenders at any time or times hereafter to demand
strict performance thereof, and such right shall not be deemed to have been
waived by any act or knowledge of the Agent, the LC Issuer or the Lenders, their
agents, officers or employees, unless such waiver is contained in an instrument
in writing duly signed and delivered on the LC Issuer and the Lenders' behalf by
the Agent. No waiver by the Agent, the LC Issuer or the Lenders of any default
shall operate as a waiver of any other default or the same default on a future
occasion, and no action by the Agent, the LC Issuer or the Lenders permitted
hereunder shall in any way affect or impair the Agent's, the LC Issuer's or the
Lenders' rights or powers, or the obligations of the Borrower under this
Guaranty. Any determination by a court of competent jurisdiction of the amount
of any Guaranteed Debt owing by TMK Re to the LC Issuer and the Lenders shall be
conclusive and binding on the Borrower irrespective of whether the Borrower was
a party to the suit or action in which such determination was made.
13.9 Setoff. In addition to and without limitation of any rights, powers
------
or remedies of the Agent, the LC Issuer or the Lenders under applicable law, any
time after maturity of the Guaranteed Debt, whether by acceleration or
otherwise, the Agent, the LC Issuer or the Lenders may, in their sole
discretion, with notice after the fact to the Borrower and regardless of the
acceptance of any security or collateral for the payment hereof, appropriate and
apply toward the
-56-
payment of the Guaranteed Debt (a) any indebtedness due or to become due from
any of the LC Issuer or the Lenders to the Borrower, and (b) any moneys, credits
or other property belonging to the Borrower (including all account balances,
whether provisional or final and whether or not collected or available) at any
time held by or coming into the possession of any of the Agent, the LC Issuer or
any Participant whether for deposit or otherwise.
13.10 Severability. Wherever possible, each provision of this Article
------------
XIII shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Article XIII shall be prohibited by
or invalid under such law, such provision shall be ineffective to the extent of
such prohibition or invalidity without invalidating the remainder of such
provision or the remaining provisions of this Article XIII.
13.11 Miscellaneous. It is understood that while the amount of the
-------------
Guaranteed Debt guaranteed hereby is not limited, if in any action or proceeding
involving any state, federal or foreign bankruptcy, insolvency or other law
affecting the rights of creditors generally, this Guaranty would be held or
determined to be void, invalid or unenforceable on account of the amount of the
aggregate liability under this Guaranty with respect to the Borrower, then,
notwithstanding any other provision of this Guaranty to the contrary, the
aggregate amount of such liability shall, with respect to the Borrower, without
any further action of the Agent, the LC Issuer, the Lenders or any other Person,
be automatically limited and reduced with respect to the Borrower to the highest
amount which is valid and enforceable as determined in such action or
proceeding. The obligations of the Borrower under this Article XIII shall
survive the termination of this Agreement.
ARTICLE XIV
NOTICES
-------
14.1 Notices. Except as otherwise permitted by Section 2.14 with respect
-------
to borrowing notices, all notices, requests and other communications to any
party hereunder shall be in writing (including electronic transmission,
facsimile transmission or similar writing) and shall be given to such party: (x)
in the case of any Credit Party or the Agent, at its address or facsimile number
set forth on the signature pages hereof, (y) in the case of any Lender, at its
address or facsimile number set forth below its signature hereto or (z) in the
case of any party, at such other address or facsimile number as such party may
hereafter specify for the purpose by notice to the Agent and any Credit Party in
accordance with the provisions of this Section 14.1. Each such notice, request
or other communication shall be effective (i) if given by facsimile
transmission, when transmitted to the facsimile number specified in this Section
and confirmation of receipt is received, (ii) if given by mail, 72 hours after
such communication is deposited in the mails with first class postage prepaid,
addressed as aforesaid, or (iii) if given by any other means, when delivered
(or, in the case of electronic transmission, received) at the address specified
in this Section; provided that notices to the Agent under Article II shall not
be effective until received.
14.2 Change of Address. Each Credit Party, the Agent and any Lender may
-----------------
each change the address for service of notice upon it by a notice in writing to
the other parties hereto.
-57-
ARTICLE XV
COUNTERPARTS
------------
This Agreement may be executed in any number of counterparts, all of which
taken together shall constitute one agreement, and any of the parties hereto may
execute this Agreement by signing any such counterpart. This Agreement shall be
effective when it has been executed by each Credit Party, the Agent, the LC
Issuer and the Lenders and each party has notified the Agent by facsimile
transmission or telephone that it has taken such action.
ARTICLE XVI
CHOICE OF LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL
------------------------------------------------------------
16.1 CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING A
-------------
CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS (INCLUDING, WITHOUT LIMITATION, 735 ILCS SECTION 105/5-1 ET
SEQ, BUT OTHERWISE WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS) OF THE
STATE OF ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL
BANKS.
16.2 CONSENT TO JURISDICTION. EACH CREDIT PARTY HEREBY IRREVOCABLY SUBMITS
-----------------------
TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR ILLINOIS STATE
COURT SITTING IN CHICAGO, ILLINOIS IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO ANY LOAN DOCUMENTS AND EACH CREDIT PARTY HEREBY IRREVOCABLY AGREES
THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR
HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN
SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL
LIMIT THE RIGHT OF THE AGENT, THE LC ISSUER OR ANY LENDER TO BRING PROCEEDINGS
AGAINST ANY CREDIT PARTY IN THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL
PROCEEDING BY ANY CREDIT PARTY AGAINST THE AGENT, THE LC ISSUER OR ANY LENDER OR
ANY AFFILIATE OF THE AGENT, THE LC ISSUER OR ANY LENDER INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH
ANY LOAN DOCUMENT SHALL BE BROUGHT ONLY IN A COURT IN CHICAGO, ILLINOIS.
16.3 WAIVER OF JURY TRIAL. EACH CREDIT PARTY, THE AGENT, THE LC ISSUER AND
--------------------
EACH LENDER HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING,
DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR
OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN
DOCUMENT OR THE RELATIONSHIP ESTABLISHED THEREUNDER.
-58-
[signature pages follow]
-59-
IN WITNESS WHEREOF, each Credit Party, the Lenders, the LC Issuer and the
Agent have executed this Agreement as of the date first above written.
TORCHMARK CORPORATION
By: /s/ Xxxxxxx X. Xxxxx
------------------------------------
Title: Vice President and Treasurer
---------------------------------
0000 Xxxxx Xxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xx. Xxxxxxx X. Xxxxx
Vice President and Treasurer
Telephone: (000) 000-0000
FAX: (000) 000-0000
TMK RE, LTD.
By: /s/ Xxxx X. Xxxxxxx
------------------------------------
Title: Vice President
---------------------------------
0000 Xxxxx Xxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xx. Xxxxxxx X. Xxxxx
Assistant Treasurer
Telephone: (000) 000-0000
FAX: (000) 000-0000
-60-
Commitments
-----------
$48,000,000 BANK ONE, NA,
Individually, as LC Issuer and as Agent
By: /s/ Xxxxx X. Xxxxxxxxx
------------------------------------
Title: Associate
---------------------------------
0 Xxxx Xxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxxx
Telephone: (000) 000-0000
FAX: (000) 000-0000
-61-
Commitments
-----------
$48,000,000 BANK OF AMERICA, N.A.,
By: /s/ Xxxxxxx X. Xxxx
------------------------------------
Title: Vice President
---------------------------------
000 Xxxx Xxxxxx, 00/xx/ Xxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxx Xxxx
Telephone: (000) 000-0000
FAX: (000) 000-0000
-62-
Commitments
-----------
$36,000,000 FLEET NATIONAL BANK,
By: /s/ Xxxxx X. Xxxxxxxxx
------------------------------------
Title: Director
---------------------------------
000 Xxxxxxx Xxxxxx
XX XX 00000X
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxxx
Telephone: (000) 000-0000
FAX: (000) 000-0000
-63-
Commitments
-----------
$36,000,000 AMSOUTH BANK,
By: /s/ Xxxxx X. Xxxxxxx
-----------------------------
Title: Senior Vice President
--------------------------
0000 Xxxxx Xxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx
Telephone: (000) 000-0000
FAX: (000) 000-0000
-64-
Commitments
-----------
$24,000,000 THE BANK OF NEW YORK
By: /s/ Xxxxx Xxxxx
----------------------------
Title: Vice President
-------------------------
0 Xxxx Xxxxxx, 00/xx/ Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxx
Telephone: (000) 000-0000
FAX: (000) 000-0000
-65-
Commitments
-----------
$24,000,000 COMERICA BANK
By: /s/ Xxxxxx X. Xxxxxx, Xx.
------------------------------
Title: Vice President
---------------------------
Attention: Xxxxxx Xxxxxx
Telephone: (000) 000-0000
FAX: (000) 000-0000
-66-
Commitments
-----------
$24,000,000 REGIONS BANK
By: /s/ Xxxxxxx X. Xxx
------------------------------
Title: Vice President
---------------------------
000 00xx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. Xxx
Telephone: (000) 000-0000
FAX: (000) 000-0000
-67-
Commitments
-----------
$24,000,000 SOUTHTRUST BANK
By: /s/ W. Xxxxxxx Xxxxxxx
----------------------------
Title: Vice President
-------------------------
Attention: Xxxxxxx Xxxxxxx
Telephone: (000) 000-0000
FAX: (000) 000-0000
-68-
Commitments
-----------
$19,200,000 COMPASS BANK
By: /s/ Xxxx Xxxxxx
-------------------------------
Title: Vice President
----------------------------
00 Xxxxx 00/xx/ Xxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxx Xxxxxx
Telephone: (000) 000-0000
FAX: (000) 000-0000
-69-
Commitments
-----------
$12,000,000 SUNTRUST BANK
By: /s/ Xxxxxx Xxxxxxxx
-------------------------------
Title: Assistant Vice President
----------------------------
000 Xxxxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx Xxxxxxxx
Telephone: (000) 000-0000
FAX: (000) 000-0000
-70-
Commitments
-----------
$4,800,000 UMB BANK, NA
By: /s/ Xxxxx X. Xxxxxxxx
---------------------------
Title: Senior Vice President
-----------------------
Attention: Xxxxx X. Xxxxxxxx
Telephone: (000) 000-0000
FAX: (000) 000-0000
-71-
PRICING SCHEDULE
================================================================================
Level I Level II Level III Level IV Level V
Status Status Status Status Status
--------------------------------------------------------------------------------
Borrower Debt A+/A1 X/X0 X-/X0 BBB+/Baa1 less than
Rating **BBB+/Baa1
--------------------------------------------------------------------------------
Applicable .080% .100% .110% .125% .150%
Facility Fee
Rate
--------------------------------------------------------------------------------
Applicable
Margin
--------------------------------------------------------------------------------
Eurodollar Rate .220% .250% .290% .400% .575%
--------------------------------------------------------------------------------
Floating Rate 0.0 0.0 0.0 0.0 0.0
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Applicable .220% .250% .290% .400% .575%
Facility LC
Rate
--------------------------------------------------------------------------------
Applicable .050% .075% .100% .100% .150%
Utilization Fee
Rate * (***33%)
================================================================================
Subject to the following two sentences, a particular Level Status shall
exist on a particular day if on such day the Borrower does not qualify for a
Level Status with more advantageous pricing and either the Xxxxx'x Rating or
the S&P Rating is at least equal to the corresponding rating specified for such
Level Status in the table above. In the event of a differential in Ratings of
one level, Level Status shall be determined by reference to the higher of the
two Ratings. In the event of a differential in Ratings of more than one level,
the applicable
_________________
* The Utilization Fee shall be payable only with respect to outstanding
Advances on days when Utilization is greater than 33%. "Utilization" means,
for any day, a percentage equal to the aggregate principal amount of Loans
and Reimbursement Obligations hereunder and "Loans" (as defined in the 364-
Day Agreement) outstanding on such day (and at the close of business on
such day if a Business Day) divided by the sum on such day of the Aggregate
Commitment and the "Aggregate Commitment" under the 364-Day Agreement;
provided that for purposes of computing the Utilization Fee (a) the
Aggregate Commitment shall be deemed to in no event be less than the
aggregate outstanding principal amount of the Loans and the Reimbursement
Obligations and (b) the Aggregate Commitment (as defined in the 364-Day
Agreement) shall be deemed to in no event be less than the aggregate
outstanding principal amount of the "Loans" (as defined in the 364-Day
Agreement).
** Less than
*** Greater than
Level Status shall be that Level Status one below the Level Status which would
have been applicable had the lower Rating been the same as the higher Rating.
The above ratings are in the format of S&P Rating/Xxxxx'x Rating.
For the purposes of this Schedule, the following terms have the following
meanings, subject to the final paragraph of this Schedule:
"Level Status" means either Level I Status, Level II Status, Level III
Status, Level IV Status or Level V Status.
"Xxxxx'x Rating" means, at any time, the Borrower Debt Rating issued by
Moody's and then in effect.
"Rating" means Xxxxx'x Rating or S&P Rating.
"S&P Rating" means, at any time, the Borrower Debt Rating issued by S&P and
then in effect.
The Applicable Margin, Applicable Facility Fee Rate and Applicable Facility
LC Rate shall be determined in accordance with the foregoing table based on the
Borrower's Status as determined from its then-current Moody's and S&P Ratings.
The Rating in effect on any date for the purposes of this Schedule is that in
effect at the close of business on such date. If at any time the Borrower has
no Xxxxx'x Rating or no S&P Rating or the Borrower does not qualify for a Level
Status with more advantageous pricing, Level V Status shall exist.
2
SCHEDULE 1
SIGNIFICANT SUBSIDIARIES
Percentage of
Voting Stock
Name of Significant State of Owned by Borrower
Subsidiary Incorporation or Subsidiaries
---------- ------------- -----------------
Globe Life And Accident
Insurance Company Delaware 100%
Liberty National Life
Insurance Company Alabama 100%
United American
Insurance Company Delaware 100%
United Investors Life
Insurance Company Missouri 100%
American Income Life
Insurance Company Indiana 100%
SCHEDULE 2
INSURANCE LICENSES
Jurisdictions
Significant in which
Insurance company holds Type of
Subsidiary active Licenses Insurance
---------- --------------- ---------
Globe Life And Accident Insurance All states except New York plus Life and Accident
Company Guam and the District of Columbia and Health
Liberty National Life Insurance All states except New York plus Life and Accident
Company Guam and the District of Columbia and Health
United American Insurance Company All states except New York plus Life and Accident
the District of Columbia, Puerto and Health
Rico and Canada
United Investors Life Insurance All states except New York plus Life and Accident
Company the District of Columbia and Health
American Income Life Insurance All states except New York plus Life and Accident
Company New Zealand, Puerto Rico, the U.S. and Health
Virgin Islands, Canada, and the
District of Columbia
TMK Re, Ltd. Bermuda Reinsurance
SCHEDULE 3
EXISTING LETTERS OF CREDIT
---------------------------------------------------------------------------------------------------------
LOC Number Face Amount Date of Issue Expiry Date Beneficiary
---------- ----------- ------------- ----------- -----------
---------------------------------------------------------------------------------------------------------
1. 00323704 $80,800,000.00 02/20/01 12/31/01 Liberty National Life
Insurance Company,
Birmingham, Alabama
---------------------------------------------------------------------------------------------------------
2. 00323705 $87,600,000.00 02/20/01 12/31/01 Globe Life and Accident
Insurance Company, Oklahoma
City, Oklahoma
---------------------------------------------------------------------------------------------------------
EXHIBIT A
NOTE
[$________________] [Date]
Torchmark Corporation, a Delaware corporation (the "Borrower"), promises to
pay to the order of ____________________________________ (the "Lender") the
lesser of the principal sum of ___________________________ Dollars or the
aggregate unpaid principal amount of all Loans made by the Lender to the
Borrower pursuant to Article II of the Agreement (as hereinafter defined), in
immediately available funds at the main office of Bank One, NA in Chicago,
Illinois, as Agent, together with interest on the unpaid principal amount hereof
at the rates and on the dates set forth in the Agreement. The Borrower shall pay
the principal of and accrued and unpaid interest on the Loans in full on the
Facility Termination Date and shall make such mandatory payments as are required
to be made under the terms of Article II of the Agreement.
The Lender shall, and is hereby authorized to, record on the schedule
attached hereto, or to otherwise record in accordance with its usual practice,
the date and amount of each Loan and the date and amount of each principal
payment hereunder.
This Note is one of the Notes issued pursuant to, and is entitled to the
benefits of, the Five Year Credit Agreement dated as of November 30, 2001
(which, as it may be amended or modified and in effect from time to time, is
herein called the "Agreement"), among the Borrower, TMK Re, the lenders party
thereto, including the Lender, and Bank One, NA, as LC Issuer and as Agent, to
which Agreement reference is hereby made for a statement of the terms and
conditions governing this Note, including the terms and conditions under which
this Note may be prepaid or its maturity date accelerated. Capitalized terms
used herein and not otherwise defined herein are used with the meanings
attributed to them in the Agreement.
TORCHMARK CORPORATION
By: ________________________________________
Print Name: ________________________________
Title: _____________________________________
2
SCHEDULE OF LOANS AND PAYMENTS OF PRINCIPAL
TO
NOTE OF TORCHMARK CORPORATION,
DATED _________,
Principal Maturity Principal
Amount of of Interest Amount Unpaid
Date Loan Period Paid Balance
-------------------------------------------------------------------
3
EXHIBIT B
COMPLIANCE CERTIFICATE
To: The Lenders parties to the
Credit Agreement Described Below
This Compliance Certificate is furnished pursuant to that certain Five
Year Credit Agreement dated as of November 30, 2001 (as amended, modified,
renewed or extended from time to time, the "Agreement") among the Borrower, TMK
Re, the lenders party thereto and Bank One, NA, as LC Issuer and as Agent.
Unless otherwise defined herein, capitalized terms used in this Compliance
Certificate have the meanings ascribed thereto in the Agreement.
THE UNDERSIGNED HEREBY CERTIFIES THAT:
1. I am the duly elected _____________________ of the Borrower;
2. I have reviewed the terms of the Agreement and I have made, or
have caused to be made under my supervision, a detailed review of the
transactions and conditions of the Borrower and its Subsidiaries during the
accounting period covered by the attached financial statements;
3. The examinations described in paragraph 2 did not disclose, and I
have no knowledge of, the existence of any condition or event which constitutes
a Default or Unmatured Default during or at the end of the accounting period
covered by the attached financial statements or as of the date of this
Certificate, except as set forth below; and
4. Schedule I attached hereto sets forth financial data and
computations evidencing the Borrower's compliance with certain covenants of the
Agreement, all of which data and computations are true, complete and correct.
Described below are the exceptions, if any, to paragraph 3 by listing,
in detail, the nature of the condition or event, the period during which it has
existed and the action which the Borrower has taken, is taking, or proposes to
take with respect to each such condition or event:
___________________________________________________________
___________________________________________________________
The foregoing certifications, together with the computations set forth in
Schedule I hereto and the financial statements delivered with this Certificate
in support hereof, are made and delivered this ____ day of ____________, 200_.
SCHEDULE I TO COMPLIANCE CERTIFICATE
Schedule of Compliance as of ______________, 200_ with
Provisions of 6.15, 6.16 and 6.17 of
the Agreement
1. Section 6.15 - Consolidated Net Worth
-------------------------------------
A. Consolidated Net Worth (consolidated
shareholders' equity excluding the
effect of the application of FAS 115) $__
B. $2,216,253,000
C. Positive Consolidated Net Income for each fiscal
quarter ending after September 30, 2001 X .25 $__
D. B plus C $__
E. A minus D (must be greater than
or equal to 0) $__
Complies _____________ Does Not Comply_____
2. Section 6.16 - Ratio of Consolidated Total Indebtedness to Consolidated
---------------------------------------------------------- ------------
Total Capitalization
--------------------
A. Consolidated Total Indebtedness $__
B. Consolidated Capitalization
(i) Consolidated Net
Worth (1A) $__
(ii) Consolidated Total Indebtedness
(2A(v)) $__
(iii) Sum of (i) and (ii) $__
C. Ratio of A to B __:1.0
D. Permitted Ratio Less than 0.4 to 1.0
Complies _______ Does Not Comply ___
3. Section 6.17 - Ratio of Consolidated Adjusted Net Income to Consolidated
------------------------------------------------------------------------
Interest Expense
----------------
A. Consolidated Adjusted Net Income (for four fiscal
quarters ended________, 200__)
(i) Consolidated Net Income $___
(ii) Taxes $___
(iii) Consolidated Interest
Expense $___
(iv) Sum of (i), (ii) and (iii) $___
B. Consolidated Interest Expense
(3A(iii)) $___
C. Ratio of A to B ___to 1.0
D. Permitted Ratio Greater than 3.0 to 1.0
Complies ___ Does Not Comply ____
2
EXHIBIT C
ASSIGNMENT AGREEMENT
This Assignment Agreement (this "Assignment Agreement") between ___________
_________(the "Assignor") and _____________ (the "Assignee") is dated as of,
____________200_. The parties hereto agree as follows:
1. PRELIMINARY STATEMENT. The Assignor is a party to a Credit Agreement
---------------------
(which, as it may be amended, modified, renewed or extended from time to time is
herein called the "Credit Agreement") described in Item 1 of Schedule 1 attached
hereto ("Schedule 1"). Capitalized terms used herein and not otherwise defined
herein shall have the meanings attributed to them in the Credit Agreement.
2. ASSIGNMENT AND ASSUMPTION. The Assignor hereby sells and assigns to
-------------------------
the Assignee, and the Assignee hereby purchases and assumes from the Assignor,
an interest in and to the Assignor's rights and obligations under the Credit
Agreement and the other Loan Documents, such that after giving effect to such
assignment the Assignee shall have purchased pursuant to this Assignment
Agreement the percentage interest specified in Item 3 of Schedule 1 of all
outstanding rights and obligations under the Credit Agreement and the other Loan
Documents relating to the facilities listed in Item 3 of Schedule 1. The
aggregate Commitment (or Loans, if the applicable Commitment has been
terminated) purchased by the Assignee hereunder is set forth in Item 4 of
Schedule 1.
3. EFFECTIVE DATE. The effective date of this Assignment Agreement (the
--------------
"Effective Date") shall be the later of the date specified in Item 5 of Schedule
1 or two (2) Business Days (or such shorter period agreed to by the Agent) after
this Assignment Agreement, together with any consents required under the Credit
Agreement, are delivered to the Agent. In no event will the Effective Date occur
if the payments required to be made by the Assignee to the Assignor on the
Effective Date are not made on the proposed Effective Date.
4. PAYMENT OBLIGATIONS. In consideration for the sale and assignment of
-------------------
Loans hereunder, the Assignee shall pay the Assignor, on the Effective Date, the
amount agreed to by the Assignor and the Assignee. On and after the Effective
Date, the Assignee shall be entitled to receive from the Agent all payments of
principal, interest and fees with respect to the interest assigned hereby. The
Assignee will promptly remit to the Assignor any interest on Loans and fees
received from the Agent which relate to the portion of the Commitment or Loans
assigned to the Assignee hereunder for periods prior to the Effective Date and
not previously paid by the Assignee to the Assignor. In the event that either
party hereto receives any payment to which the other party hereto is entitled
under this Assignment Agreement, then the party receiving such amount shall
promptly remit it to the other party hereto.
5. RECORDATION FEE. The Assignor and Assignee each agree to pay one-half
---------------
of the recordation fee required to be paid to the Agent in connection with this
Assignment Agreement unless otherwise specified in Item 6 of Schedule 1.
6. REPRESENTATIONS OF THE ASSIGNOR; LIMITATIONS ON THE ASSIGNOR'S
--------------------------------------------------------------
LIABILITY. The Assignor represents and warrants that (i) it is the legal and
---------
beneficial owner of the interest being assigned by it hereunder, (ii) such
interest is free and clear of any adverse claim created by the Assignor and
(iii) the execution and delivery of this Assignment Agreement by the Assignor is
duly authorized. It is understood and agreed that the assignment and assumption
hereunder are made without recourse to the Assignor and that the Assignor makes
no other representation or warranty of any kind to the Assignee. Neither the
Assignor nor any of its officers, directors, employees, agents or attorneys
shall be responsible for (i) the due execution, legality, validity,
enforceability, genuineness, sufficiency or collectability of any Loan Document,
including without limitation, documents granting the Assignor and the other
Lenders a security interest in assets of the Borrower or any guarantor, (ii) any
representation, warranty or statement made in or in connection with any of the
Loan Documents, (iii) the financial condition or creditworthiness of the
Borrower or any guarantor, (iv) the performance of or compliance with any of the
terms or provisions of any of the Loan Documents, (v) inspecting any of the
property, books or records of the Borrower, (vi) the validity, enforceability,
perfection, priority, condition, value or sufficiency of any collateral securing
or purporting to secure the Loans or (vii) any mistake, error of judgment, or
action taken or omitted to be taken in connection with the Loans or the Loan
Documents.
7. REPRESENTATIONS AND UNDERTAKINGS OF THE ASSIGNEE. The Assignee (i)
------------------------------------------------
confirms that it has received a copy of the Credit Agreement, together with
copies of the financial statements requested by the Assignee and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Assignment Agreement, (ii) agrees that
it will, independently and without reliance upon the Agent, the Assignor or any
other Lender and based on such documents and information at it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Loan Documents, (iii) appoints and authorizes the
Agent to take such action as agent on its behalf and to exercise such powers
under the Loan Documents as are delegated to the Agent by the terms thereof,
together with such powers as are reasonably incidental thereto, (iv) confirms
that the execution and delivery of this Assignment Agreement by the Assignee is
duly authorized, (v) agrees that it will perform in accordance with their terms
all of the obligations which by the terms of the Loan Documents are required to
be performed by it as a Lender, (vi) agrees that its payment instructions and
notice instructions are as set forth in the attachment to Schedule 1, (vii)
confirms that none of the funds, monies, assets or other consideration being
used to make the purchase and assumption hereunder are "plan assets" as defined
under ERISA and that its rights, benefits and interests in and under the Loan
Documents will not be "plan assets" under ERISA, (viii) agrees to indemnify and
hold the Assignor harmless against all losses, costs and expenses (including,
without limitation, reasonable attorneys' fees) and liabilities incurred by the
Assignor in connection with or arising in any manner from the Assignee's non-
performance of the obligations assumed under this Assignment Agreement, and
2
(ix) if applicable, attaches the forms prescribed by the Internal Revenue
Service of the United States certifying that the Assignee is entitled to receive
payments under the Loan Documents without deduction or withholding of any United
States federal income taxes.
8. GOVERNING LAW. This Assignment Agreement shall be governed by the
-------------
internal law, and not the law of conflicts, of the State of Illinois.
9. NOTICES. Notices shall be given under this Assignment Agreement in the
-------
manner set forth in the Credit Agreement. For the purpose hereof, the addresses
of the parties hereto (until notice of a change is delivered) shall be the
address set forth in the attachment to Schedule 1.
10. COUNTERPARTS; DELIVERY BY FACSIMILE. This Assignment Agreement may be
-----------------------------------
executed in counterparts. Transmission by facsimile of an executed counterpart
of this Assignment Agreement shall be deemed to constitute due and sufficient
delivery of such counterpart and such facsimile shall be deemed to be an
original counterpart of this Assignment Agreement.
IN WITNESS WHEREOF, the duly authorized officers of the parties hereto have
executed this Assignment Agreement by executing Schedule 1 hereto as of the date
first above written.
3
SCHEDULE 1
to Assignment Agreement
1. Description and Date of Credit Agreement: Five Year Credit Agreement dated
as of November 30, 2001 among Torchmark Corporation, TMK Re, Ltd., Bank One, NA,
as LC issuer and as agent, and the lenders party thereto.
2. Date of Assignment Agreement: _____________, 200____
3. Amounts (As of Date of Item 2 above):
Facility
1*
--------
a. Assignee's percentage
of each Facility purchased
under the Assignment
Agreement ________%
b. Amount of
each Facility
purchased
under the Assignment
Agreement $_______
4. Assignee's Commitment (or Loans
with respect to terminated
Commitments) purchased
hereunder: $________
5. Proposed Effective Date: _______________
6. Non-standard Recordation Fee
Arrangement N/A
[Assignor/Assignee
to pay 100% of fee]
[Fee waived by Agent]
Accepted and Agreed:
[NAME OF ASSIGNOR] [NAME OF ASSIGNEE]
By: ______________________________ By:______________________
Title:____________________________ Title:___________________
ACCEPTED AND CONSENTED TO BY ACCEPTED AND CONSENTED TO BY
TORCHMARK CORPORATION BANK ONE, NA, AS AGENT
By: ____________________________ By: _____________________________
Title: _________________________ Title: __________________________
ACCEPTED AND CONSENTED TO BY
TMK RE, LTD.
By: ____________________________
Title: _________________________
* Insert specific facility names per Credit Agreement
** Percentage taken to 10 decimal places
*** If fee is split 50-50, pick N/A as option
**** Delete if not required by Credit Agreement
2
Attachment to SCHEDULE 1 to ASSIGNMENT AGREEMENT
ADMINISTRATIVE INFORMATION SHEET
--------------------------------
Attach Assignor's Administrative Information Sheet, which must
include notice addresses for the Assignor and the Assignee
(Sample form shown below)
ASSIGNOR INFORMATION
--------------------
Contact:
-------
Name: __________________________ Telephone No.: _____________________
Fax No.: _______________________ Telex No.: _________________________
Answerback: ________________________
Payment Information:
--------------------
Name & ABA # of Destination Bank: _______________________________________
_______ ___________________________________________
Account Name & Number for Wire Transfer: _____________________________
_____________________________
Other Instructions: ________________________________________________________
____________________________________________________________________________
Address for Notices for Assignor:
-------------------------------- ________________________________________
________________________________________
________________________________________
ASSIGNEE INFORMATION
--------------------
Credit Contact:
--------------
Name: __________________________ Telephone No.: _____________________
Fax No.: _______________________ Telex No.: _________________________
Answerback: ________________________
Key Operations Contacts:
-----------------------
Booking Installation: __________ Booking Installation: ______________
Name: __________________________ Name: ______________________________
Telephone No.: _________________ Telephone No.: _____________________
Fax No.: _______________________ Fax No.: ___________________________
Telex No.: _____________________ Telex No.: _________________________
Answerback: ____________________ Answerback: ________________________
Payment Information:
--------------------
Name & ABA # of Destination Bank: _________________________________________
___________________________________________
Account Name & Number for Wire Transfer: __________________________________
__________________________________
Other Instructions: ________________________________________________________
____________________________________________________________________________
Address for Notices for Assignee:
-------------------------------- _________________________________________
_________________________________________
_________________________________________
BANK ONE INFORMATION
--------------------
Assignee will be called promptly upon receipt of the signed agreement.
Initial Funding Contact: Subsequent Operations Contact:
----------------------- -----------------------------
Name: _______________ Name: __________________________________
Telephone No.: (312) Telephone No.: (312)
------------ --------------------------
Fax No.: (312) Fax No.: (312)
------------------ __-----------------------------
Bank One Telex No.: 190201 (Answerback: FNBC UT)
----------------------------
Initial Funding Standards:
-------------------------
Libor - Fund 2 days after rates are set.
Bank One Wire Instructions: Bank One, NA, ABA # 000000000
-------------------------- LS2 Incoming Account # 481152860000
Ref:________________
Address for Notices for Bank One: 0 Xxxx Xxx Xxxxx, Xxxxxxx, XX 00000
-------------------------------- Attn: Agency Compliance Division, Suite
IL1-0353
Fax No. (000) 000-0000 or (000) 000-0000
2
EXHIBIT D
LOAN/CREDIT RELATED MONEY TRANSFER INSTRUCTION
To Bank One, NA,
as LC Issuer and as Agent (the "Agent")
under the Credit Agreement described below.
Re: Five Year Credit Agreement, dated November 30, 2001 (as the same may be
amended or modified, the "Credit Agreement"), among Torchmark Corporation
(the "Borrower"), TMK Re, Ltd., the Lenders named therein and the Agent.
Capitalized terms used herein and not otherwise defined herein shall have
the meanings assigned thereto in the Credit Agreement.
The Agent is specifically authorized and directed to act upon the following
standing money transfer instructions with respect to the proceeds of Advances or
other extensions of credit from time to time until receipt by the Agent of a
specific written revocation of such instructions by the Borrower, provided,
however, that the Agent may otherwise transfer funds as hereafter directed in
writing by the Borrower in accordance with Section 14.1 of the Credit Agreement
or based on any telephonic notice made in accordance with Section 2.14 of the
Credit Agreement.
Facility Identification Number(s)_____________________________________________
Customer/Account Name_________________________________________________________
Transfer Funds To_____________________________________________________________
__________________________________________________________
For Account No._______________________________________________________________
Reference/Attention To________________________________________________________
Authorized Officer (Customer Representative) Date________________________
___________________________________________ ____________________________
(Please Print) Signature
Bank Officer Name Date________________________
___________________________________________ ____________________________
(Please Print) Signature
(Deliver Completed Form to Credit Support Staff For Immediate Processing)
