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EXHIBIT 10.2
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LOAN AGREEMENT
among
UICI,
the banks named herein
NationsBank, N.A.,
doing business as
[BANK OF AMERICA LOGO]
as administrative agent
and
THE FIRST NATIONAL BANK OF CHICAGO,
as documentation agent
and
FLEET NATIONAL BANK
as co-agent
as of
17 May 1999
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NATIONSBANC XXXXXXXXXX SECURITIES LLC,
as sole lead arranger and
sole book manager
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TABLE OF CONTENTS
Page
ARTICLE 1
Definitions..............................................................................................1
Section 1.1 Definitions.................................................................................1
Section 1.2 Other Definitional Provisions..............................................................10
Section 1.3 Accounting Terms and Determinations........................................................10
ARTICLE 2
Loans...................................................................................................10
Section 2.1 Commitments................................................................................10
Section 2.2 Notes......................................................................................11
Section 2.3 Repayment of Loans.........................................................................11
Section 2.4 Interest...................................................................................11
Section 2.5 Borrowing Procedure........................................................................15
Section 2.6 Prepayments, Conversions, and Continuations of Loans.......................................15
Section 2.7 Minimum Amounts............................................................................16
Section 2.8 Certain Notices............................................................................16
Section 2.9 Use of Proceeds............................................................................17
Section 2.10 Facility Fee..............................................................................17
Section 2.11 Computations..............................................................................17
Section 2.12 Reduction, Termination or Increase of Commitments.........................................17
ARTICLE 3
Payments................................................................................................18
Section 3.1 Method of Payment..........................................................................18
Section 3.2 Pro Rata Treatment.........................................................................18
Section 3.3 Sharing of Payments, Etc...................................................................19
Section 3.4 Non-Receipt of Funds by the Agent..........................................................19
ARTICLE 4
Yield Protection and Illegality.........................................................................19
Section 4.1 Increased Cost and Reduced Return..........................................................19
Section 4.2 Limitation on Types of Loans...............................................................20
Section 4.3 Illegality.................................................................................21
Section 4.4 Treatment of Affected Loans................................................................21
Section 4.5 Compensation...............................................................................21
Section 4.6 Taxes......................................................................................22
ARTICLE 5
Conditions Precedent....................................................................................23
Section 5.1 Initial Loan...............................................................................23
Section 5.2 All Loans..................................................................................24
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ARTICLE 6
Representations and Warranties..........................................................................25
Section 6.1 Corporate Existence........................................................................25
Section 6.2 Financial Statements.......................................................................25
Section 6.3 Corporate Action; No Breach................................................................25
Section 6.4 Operation of Business......................................................................26
Section 6.5 Litigation and Judgments...................................................................26
Section 6.6 Rights in Properties; Liens................................................................26
Section 6.7 Enforceability.............................................................................26
Section 6.8 Approvals..................................................................................26
Section 6.9 Debt.......................................................................................26
Section 6.10 Taxes.....................................................................................26
Section 6.11 Margin Securities.........................................................................27
Section 6.12 ERISA.....................................................................................27
Section 6.13 Disclosure................................................................................27
Section 6.14 Subsidiaries..............................................................................27
Section 6.15 Agreements................................................................................27
Section 6.16 Compliance with Laws......................................................................27
Section 6.17 Investment Company Act....................................................................28
Section 6.18 Public Utility Holding Company Act........................................................28
Section 6.19 Environmental Matters.....................................................................28
Section 6.20 Labor Disputes and Acts of God............................................................28
Section 6.21 Year 2000 Compliance......................................................................28
ARTICLE 7
Positive Covenants......................................................................................28
Section 7.1 Reporting Requirements.....................................................................29
Section 7.2 Maintenance of Existence; Conduct of Business..............................................30
Section 7.3 Maintenance of Properties..................................................................30
Section 7.4 Taxes and Claims...........................................................................30
Section 7.5 Insurance..................................................................................31
Section 7.6 Inspection Rights..........................................................................31
Section 7.7 Keeping Books and Records..................................................................31
Section 7.8 Compliance with Laws.......................................................................31
Section 7.9 Compliance with Agreements.................................................................31
Section 7.10 Further Assurances........................................................................31
Section 7.11 ERISA.....................................................................................31
Section 7.12 Year 2000 Compliance......................................................................31
ARTICLE 8
Negative Covenants......................................................................................32
Section 8.1 Debt.......................................................................................32
Section 8.2 Limitation on Liens........................................................................33
Section 8.3 Mergers, Etc...............................................................................35
Section 8.4 Restricted Payments........................................................................36
Section 8.5 Investments................................................................................36
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Section 8.6 Transactions With Affiliates. ............................................................38
Section 8.7 Disposition of Property....................................................................38
Section 8.8 Prepayment of Debt.........................................................................39
Section 8.9 Lines of Business..........................................................................39
Section 8.10 Environmental Protection..................................................................39
ARTICLE 9
Financial Covenants.....................................................................................40
Section 9.1 Consolidated Net Worth.....................................................................40
Section 9.2 Consolidated Debt to Total Capitalization Ratio............................................40
Section 9.3 Interest Coverage..........................................................................40
Section 9.4 Risk-Based Capital.........................................................................41
ARTICLE 10
Default.................................................................................................42
Section 10.1 Events of Default.........................................................................42
Section 10.2 Remedies..................................................................................44
Section 10.3 Performance by the Agent..................................................................44
Section 10.4 Continuance of Default. ..................................................................44
Section 10.5 Setoff....................................................................................44
ARTICLE 11
The Agent...............................................................................................45
Section 11.1 Appointment, Powers and Immunities........................................................45
Section 11.2 Reliance by Agent.........................................................................45
Section 11.3 Defaults..................................................................................46
Section 11.4 Rights as Bank............................................................................46
Section 11.5 INDEMNIFICATION...........................................................................46
Section 11.6 Non-Reliance on Agent and Other Banks.....................................................46
Section 11.7 Resignation of Agent......................................................................47
Section 11.8 Several Commitments.......................................................................47
Section 11.9 Agent Fee.................................................................................47
Section 11.10 Documentation Agent and Co-Agent.........................................................47
ARTICLE 12
Miscellaneous...........................................................................................47
Section 12.1 Expenses..................................................................................47
Section 12.2 INDEMNIFICATION...........................................................................48
Section 12.3 Limitation of Liability...................................................................48
Section 12.4 No Duty...................................................................................48
Section 12.5 No Fiduciary Relationship.................................................................49
Section 12.6 Equitable Relief..........................................................................49
Section 12.7 No Waiver; Cumulative Remedies............................................................49
Section 12.8 Successors and Assigns....................................................................49
Section 12.9 Survival..................................................................................50
Section 12.10 ENTIRE AGREEMENT.........................................................................51
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Section 12.11 Amendments...............................................................................51
Section 12.12 Maximum Interest Rate....................................................................51
Section 12.13 Notices..................................................................................52
Section 12.14 Governing Law; Submission to Jurisdiction................................................52
Section 12.15 Counterparts.............................................................................52
Section 12.16 Severability.............................................................................52
Section 12.17 Headings.................................................................................53
Section 12.18 Construction.............................................................................53
Section 12.19 Independence of Covenants................................................................53
Section 12.20 WAIVER OF JURY TRIAL.....................................................................53
Section 12.21 Confidentiality..........................................................................53
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INDEX TO EXHIBITS
Exhibit Description of Exhibit Section
------- ---------------------- -------
"A" Form of Note 2.2
"B" Matters to be Addressed by Opinion of Counsel 5.1(r)
"C" Form of Assignment and Acceptance 12.8
"D" Borrowing Request 2.5
"E" Compliance Certificate 7.1(c)
"F" Increase Commitment Supplement 2.12(b)
INDEX TO SCHEDULES
Schedule Description of Schedule
6.9 Existing Debt
6.14 Subsidiaries
6.14A Organizational Chart
8.1 Summary of Proposed Terms for $60,000,000 Senior Notes
8.2 Existing Liens; Restrictions on Subsidiaries
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LOAN AGREEMENT
THIS LOAN AGREEMENT (the "Agreement"), dated as of May 17, 1999, is
among UICI, a corporation duly organized and validly existing under the laws of
the State of Delaware ("Borrower"), each of the banks or other lending
institutions which is or which may from time to time become a signatory hereto
or any successor or assignee thereof (individually, a "Bank" and, collectively,
the "Banks"), THE FIRST NATIONAL BANK OF CHICAGO, as documentation agent, FLEET
NATIONAL BANK, as co-agent and NationsBank, N.A., doing business as BANK OF
AMERICA, NATIONAL ASSOCIATION, a national banking association, as administrative
agent for itself and the other Banks (in such capacity, together with its
successors in such capacity, the "Agent").
R E C I T A L S:
The Borrower has requested that the Banks make a revolving credit loan
to the Borrower. The Banks are willing to make such loan to the Borrower upon
the terms and conditions hereinafter set forth.
NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE 1
Definitions
Section 1.1 Definitions. As used in this Agreement, the following terms
have the following meanings:
"1999 Senior Note Agreement" means the Note Purchase Agreement dated in
1999 pursuant to which up to Seventy-Five Million Dollars ($75,000,000) of the
Borrower's senior notes have been or will be issued, as the same may be amended
or otherwise modified from time to time.
"8.75% Senior Note Agreement" means that certain Note Purchase
Agreement dated as of June 1, 1994 among the Borrower and the purchasers party
thereto relating to the Borrower's 8.75% Senior Notes due 2004, as the same may
be amended or otherwise modified from time to time.
"Adjusted Libor Rate" means, for any Libor Loan for any Interest Period
therefor, the rate per annum (rounded upwards, if necessary, to the nearest
1/100 of 1%) determined by the Agent to be equal to the quotient obtained by
dividing (a) the Libor Rate for such Libor Loan for such Interest Period by (b)
1 minus the Reserve Requirement for such Libor Loan for such Interest Period.
"Affected Loan" has the meaning specified in Section 4.4.
"Affected Type" has the meaning specified in Section 4.4.
"Affiliate" means, as to any Person, any other Person (a) that directly
or indirectly, through one or more intermediaries, controls or is controlled by,
or is under common control with, such Person; (b) that directly or indirectly
beneficially owns or holds ten percent (10%) or more of the voting stock of such
Person; or (c) ten percent (10%) or more of the voting stock of which is
directly or indirectly beneficially owned or held by the Person in question. The
term "control" means the possession, directly or indirectly, of the power to
direct or cause
LOAN AGREEMENT - PAGE 1
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direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract, or otherwise; provided, however, in
no event shall the Agent or any Bank be deemed an Affiliate of the Borrower or
any of the Subsidiaries.
"Aegon Facility" means the revolving credit arrangement provided to the
Borrower by Money Services, Inc.
"Applicable Lending Office" means for each Bank and each Type of Loan,
the Lending Office of such Bank (or of an Affiliate of such Bank) designated for
such Type of Loan below its name on the signature pages hereof or such other
office of such Bank (or of an Affiliate of such Bank) as such Bank may from time
to time specify to the Borrower and the Agent as the office by which its Loans
of such Type are to be made and maintained.
"Assignment and Acceptance" means an assignment and acceptance entered
into by a Bank and its Assignee and accepted by the Agent pursuant to Section
12.8, in substantially the form of Exhibit "C" hereto.
"Assignee" has the meaning specified in Section 12.8.
"Assigning Bank" has the meaning specified in Section 12.8.
"Attributable Net Income" has the meaning specified in Section 9.3.
"Available Domestic Insurance Subsidiary Earnings" has the meaning
specified in Section 9.3.
"Base Margin" has the meaning specified in Section 2.4 (b).
"Base Rate" means, for any day, the rate per annum equal to the higher
of (a) the Federal Funds Rate for such day plus one-half of one percent (0.50%)
and (b) the Prime Rate for such day. Any change in the Base Rate due to a change
in the Prime Rate or the Federal Funds Rate shall be effective on the effective
date of such change in the Prime Rate or Federal Funds Rate.
"Base Rate Loans" means the portions of the principal amounts
outstanding hereunder that bear interest at rates based upon the Base Rate.
"Borrowing Request" means a request for a Loan in substantially the
form of Exhibit "D" properly completed and duly executed by a financial officer
of the Borrower authorized to deliver such request under certified resolutions
of Borrower delivered to the Agent.
"Business Day" means (a) any day on which commercial banks are not
authorized or required to close in Dallas, Texas; (b) with respect to all
borrowings, payments, Conversions, Continuations, Interest Periods, and notices
in connection with Libor Loans, any day which is a Business Day described in
clause (a) above and which is also a day on which dealings in Dollar deposits
are carried out in the London interbank market; and (c) with respect to the
determination of the Federal Funds Rate, any day which is a Business Day
described in clause (a) above and which is also a day on which such rate is
published by the Federal Reserve Bank of New York.
"Capital Lease Obligations" means, as to any Person, the obligations of
such Person to pay rent or other amounts under a lease of (or other agreement
conveying the right to use) real and/or personal property, which obligations are
required to be classified and accounted for as a capital lease on a balance
sheet of such Person
LOAN AGREEMENT - PAGE 2
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under GAAP. For purposes of this Agreement, the amount of such Capital Lease
Obligations shall be the capitalized amount thereof, determined in accordance
with GAAP.
"Capital Stock" means any capital stock or other ownership interests of
any Person and any interests therein or relating thereto, including without
limitation, any options, warrants or other rights to acquire any interest
therein or thereto.
"Cash Flow" has the meaning specified in Section 9.3.
"Closing Date" means May 17, 1999.
"CMO Derivative Investment" has the meaning specified in Section 8.5.
"Code" means the Internal Revenue Code of 1986, as amended, and the
regulations promulgated and rulings issued thereunder.
"Commitment" means, as to each Bank, the obligation of such Bank to
make Loans hereunder in an aggregate principal amount at any one time
outstanding up to but not exceeding the amount set forth opposite the name of
such Bank on the signature pages hereto under the heading "Commitment" or if
such Bank is a party to an Assignment and Acceptance, the amount set forth in
the most recent Assignment and Acceptance of such Bank, as the same may be
reduced or terminated pursuant to Section 2.12(a) or 10.2 or increased pursuant
to Section 2.12(b). The aggregate amount of all Commitments on the Closing Date
equals One Hundred Million Dollars ($100,000,000)
"Compliance Certificate" means a certificate in substantially the form
of Exhibit "E" properly completed and duly executed by a financial officer of
the Borrower authorized to deliver such certificate under certified resolutions
of Borrower delivered to Agent.
"Consolidated Debt" means, at any particular time, the sum of the
following calculated for the Borrower and the Subsidiaries on a consolidated
basis and without duplication: (a) all obligations for borrowed money (excluding
time deposits); plus (b) all obligations evidenced by bonds, notes, debentures
or other similar instruments; plus (c) all obligations to pay the deferred
purchase price of property or services, except trade accounts payable arising in
the ordinary course of business; plus (d) all Capital Lease Obligations; minus
(e) to the extent included in clauses (a) through (d) above, the sum of (i)
unfunded commitments to make student loans and credit card loans plus (ii) any
other outstanding Debt incurred in the ordinary course of the Borrower's and the
Subsidiaries' credit card and student loan businesses if such Debt is secured by
credit card receivables or student loans.
"Consolidated Net Worth" means the consolidated stockholders' equity of
the Borrower determined in accordance with GAAP.
"Continue", "Continuation", and "Continued" shall refer to the
continuation pursuant to Section 2.6 of a Libor Loan from one Interest Period to
the next Interest Period.
"Convert", "Conversion", and "Converted" shall refer to a conversion
pursuant to Section 2.6 or Article 4 of one Type of Loan into another Type of
Loan.
"Credit Subsidiaries" means any Subsidiary engaged in the credit card
or student loan businesses or any Subsidiary owning such a Subsidiary.
LOAN AGREEMENT - PAGE 3
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"Debt" means as to any Person at any time (without duplication): (a)
all obligations of such Person for borrowed money; (b) all obligations of such
Person evidenced by bonds, notes, debentures, or other similar instruments; (c)
all obligations of such Person to pay the deferred purchase price of property or
services, except trade accounts payable of such Person arising in the ordinary
course of business that are not past due by more than ninety (90) days; (d) all
Capital Lease Obligations of such Person; (e) all Debt or other obligations of
others Guaranteed by such Person; (f) all obligations secured by a Lien existing
on property owned by such Person, whether or not the obligations secured thereby
have been assumed by such Person or are non-recourse to the credit of such
Person; (g) all reimbursement obligations of such Person (whether contingent or
otherwise) in respect of letters of credit, bankers' acceptances, surety or
other bonds and similar instruments; (h) all obligations of such Person to
redeem or retire shares of Capital Stock of such Person except any obligations
to repurchase common Capital Stock of the Borrower issued to officers, employees
and agents of the Borrower or the Subsidiaries pursuant to a stock option plan,
stock purchase plan, other compensation plan or other compensation arrangement
authorized by the Board of Directors of Borrower; (i) all obligations and
liabilities of such Person under Interest Rate Protection Agreements; (j) all
liabilities of such Person in respect of unfunded vested benefits under any
Plan; (k) all obligations of such Person, contingent or otherwise, for the
payment of money under any noncompete, consulting or similar agreement or any
other similar arrangements providing for the deferred payment of the purchase
price for an acquisition; and (l) all other amounts required to be reflected as
a liability on a consolidated balance sheet of such Person in accordance with
GAAP other than accruals, taxes, time deposits, policy liabilities and unfunded
commitment to make student loans and credit card loans.
"Default" means an Event of Default or the occurrence of an event or
condition which with notice or lapse of time or both would become an Event of
Default.
"Default Rate" means a rate per annum during the period commencing on
the due date until such amount is paid in full equal to the sum of two percent
(2.0%) plus the Base Rate as in effect from time to time plus the Base Margin
(provided, that if such amount in default is principal of a Libor Loan and the
due date is a day other than the last day of an Interest Period therefor, the
"Default Rate" for such principal shall be, for the period from and including
the due date and to but excluding the last day of the Interest Period therefor,
two percent (2.0%) plus the Libor Rate applicable to such Interest Period plus
the Libor Margin, and, thereafter, the rate provided for above in this
definition).
"Dollars" and "$" mean lawful money of the United States of America.
"Domestic Insurance Subsidiary" means an Insurance Subsidiary organized
under the laws of a jurisdiction located within the United States of America.
"D&P" has the meaning specified in Section 2.4 (b).
"Eligible Assignee" means (i) a Bank; (ii) an Affiliate of a Bank; and
(iii) any other Person approved by the Agent and, if no Default exists, the
Borrower, which approval, in either case, shall not be unreasonably withheld;
provided, however, that neither the Borrower nor an Affiliate of the Borrower
shall qualify as an Eligible Assignee.
"Environmental Laws" means any and all federal, state, and local laws,
regulations, and requirements pertaining to health, safety, or the environment,
as such laws, regulations, and requirements may be amended or otherwise modified
from time to time.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations and published interpretations
thereunder.
LOAN AGREEMENT - PAGE 4
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"ERISA Affiliate" means any corporation or trade or business which is a
member of the same controlled group of corporations (within the meaning of
Section 414(b) of the Code) as the Borrower or is under common control (within
the meaning of Section 414(c) of the Code) with the Borrower.
"Event of Default" has the meaning specified in Section 10.1.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighted average
of the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers on such day, as published by
the Federal Reserve Bank of New York on the Business Day next succeeding such
day; provided that (a) if such day is not a Business Day, the Federal Funds Rate
for such day shall be such rate on such transactions on the next preceding
Business Day as so published on the next succeeding Business Day, and (b) if no
such rate is so published on such next succeeding Business Day, the Federal
Funds Rate for such day shall be the average rate charged to the Agent (in its
individual capacity) on such day on such transactions as determined by the
Agent.
"GAAP" means generally accepted accounting principles, applied on a
consistent basis, as set forth in Opinions of the Accounting Principles Board of
the American Institute of Certified Public Accountants and/or in statements of
the Financial Accounting Standards Board and/or their respective successors and
which are applicable in the circumstances as of the date in question. Accounting
principles are applied on a "consistent basis" when the accounting principles
applied in a current period are comparable in all material respects to those
accounting principles applied in a preceding period.
"Governmental Authority" means any nation or government, any state or
political subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory, or administrative functions of or pertaining to
government.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing the payment or
performance of any Debt or other obligation of any other Person and, without
limiting the generality of the foregoing, any obligation, direct or indirect,
contingent or otherwise, of such Person (a) to purchase or pay (or advance or
supply funds for the purchase or payment of) such Debt or other obligation
(whether arising by virtue of partnership arrangements, by agreement to
keep-well, to purchase assets, goods, securities or services, to take-or-pay, or
to maintain financial statement conditions or otherwise) or (b) entered into for
the purpose of assuring in any other manner the obligee of such Debt or other
obligation of the payment thereof or to protect the obligee against loss in
respect thereof (in whole or in part), provided that the term Guarantee shall
not include endorsements for collection or deposit in the ordinary course of
business. The term "Guarantee" used as a verb has a corresponding meaning.
"Increased Commitment Supplement" means a supplement to this Loan
Agreement substantially in the form attached hereto as Exhibit "F", executed and
delivered by the Borrower, the Agent and one or more of the Banks and/or any New
Banks (as defined in Section 2.12(b)), which sets forth the increase in the
Commitment of each Bank party thereto, and to the extent that there are New
Banks, the agreement of each such New Bank to become a Bank party to and bound
by this Agreement and the other Loan Documents.
"Interest Expense" has the meaning specified in Section 9.3.
"Hazardous Material" means any material which is or becomes listed,
regulated, or addressed under any Environmental Law.
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"Insurance Regulatory Authority" shall mean, with respect to any
Domestic Insurance Subsidiary, the Governmental Authority of such Domestic
Insurance Subsidiary's state of domicile with whom such Domestic Insurance
Subsidiary is required to file its annual financial statement prepared in
accordance with SAP.
"Insurance Subsidiary" shall mean any Subsidiary that is authorized or
admitted to carry on or transact one or more aspects of the business of selling,
issuing or underwriting insurance or reinsurance.
"Interest Period" means, with respect to a Libor Loan, each period
commencing on the date such Libor Loan is made or Converted from a Base Rate
Loan or the last day of the next preceding Interest Period with respect to such
Libor Loan, and ending on the numerically corresponding day in the first,
second, third, sixth or twelfth calendar month thereafter, as the Borrower may
select as provided in Section 2.8 hereof or ending on any other day offered by
the Banks, except that each such Interest Period which commences on the last
Business Day of a calendar month (or on any day for which there is no
numerically corresponding day in the appropriate subsequent calendar month)
shall end on the last Business Day of the appropriate subsequent calendar month.
Notwithstanding the foregoing: (a) each Interest Period which would otherwise
end on a day which is not a Business Day shall end on the next succeeding
Business Day (or if such succeeding Business Day falls in the next succeeding
calendar month, on the next preceding Business Day); (b) any Interest Period
which would otherwise extend beyond the Termination Date shall end on the
Termination Date; (c) no more than three (3) Interest Periods shall be in effect
at the same time; and (d) unless offered by the Banks, no Interest Period shall
have a duration of less than one (1) month and, if the Interest Period would
otherwise be a shorter period, such Libor Loans shall not be available
hereunder.
"Interest Rate Protection Agreements" means, with respect to any
Person, an interest rate swap, cap or collar agreement or similar arrangement
between such Person and one or more financial institutions providing for the
transfer or mitigation of interest risks either generally or under specified
contingencies.
"Investments" has the meaning specified in Section 8.5.
"Xxxxxx Family" has the meaning specified in Section 10.1(l).
"Leverage Ratio" has the meaning specified in Section 2.4 (b).
"Libor Loans" means the portions of the principal amounts outstanding
hereunder that bear interest at rates based upon the Adjusted Libor Rate.
"Libor Rate" means, for any Libor Loan for any Interest Period
therefor, the rate per annum (rounded upwards, if necessary, to the nearest
1/100 of 1%) appearing on Telerate Page 3750 (or any successor page) as the
London interbank offered rate for deposits in Dollars at approximately 11:00
a.m. (London time) two Business Days prior to the first day of such Interest
Period for a term comparable to such Interest Period. If for any reason such
rate is not available, the term "Libor Rate" shall mean, for any Libor Loan for
any Interest Period therefor, the rate per annum (rounded upwards, if necessary,
to the nearest 1/100 of 1%) appearing on Reuters Screen LIBO Page as the London
interbank offered rate for deposits in Dollars at approximately 11:00 a.m.
(London time) two Business Days prior to the first day of such Interest Period
for a term comparable to such Interest Period; provided, however, if more than
one rate is specified on Reuters Screen LIBO Page, the applicable rate shall be
the arithmetic mean of all such rates (rounded upwards, if necessary, to the
nearest 1/100 of 1%).
"Lien" means any lien, mortgage, security interest, tax lien, financing
statement, pledge, charge, hypothecation, assignment, preference, priority, or
other encumbrance of any kind or nature whatsoever
LOAN AGREEMENT - PAGE 6
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(including, without limitation, any conditional sale or title retention
agreement), whether arising by contract, operation of law, or otherwise.
"Loans" has the meaning specified in Section 2.1.
"Loan Documents" means this Agreement and all promissory notes,
assignments, guaranties, and other agreements executed and delivered pursuant to
or in connection with this Agreement and all Interest Rate Protection Agreements
entered into by the Borrower or any Subsidiary with any Bank, as such agreements
may be amended or otherwise modified from time to time.
"Material Adverse Effect" means the occurrence of any event or the
existence of any condition that reasonably could be expected to have a material
adverse effect on (a) the properties, prospects, business, operations, condition
(financial or otherwise), liabilities, or capitalization of the Borrower and the
Subsidiaries, taken as a whole, (b) the ability of the Borrower to pay and
perform the Obligations when due, or (c) the validity or enforceability of any
of the Loan Documents or the rights and remedies of the Banks or the Agent
thereunder. In determining whether any individual event could reasonably be
expected to result in a Material Adverse Effect, notwithstanding that such event
does not itself have such effect, a Material Adverse Effect shall be deemed to
have occurred if the cumulative effect of such event and all other then existing
events could reasonably be expected to result in a Material Adverse Effect.
"Maximum Rate" with respect to any Bank, the maximum non-usurious
interest rate, if any, that any time or from time to time may be contracted for,
taken, reserved, charged, or received with respect to the Notes or on other
amounts, if any, payable to such Bank pursuant to this Agreement or any other
Loan Document, under laws applicable to such Bank which are presently in effect,
or, to the extent allowed by law, under such applicable laws which may hereafter
be in effect and which allow a higher maximum non-usurious interest rate than
applicable laws now allow. The Maximum Rate shall be calculated in a manner that
takes into account any and all fees, payments, and other charges in respect of
the Loan Documents that constitute interest under applicable law. Each change in
any interest rate provided for herein based upon the Maximum Rate resulting from
a change in the Maximum Rate shall take effect without notice to the Borrower at
the time of such change in the Maximum Rate. For purposes of determining the
Maximum Rate under Texas law, the applicable rate ceiling shall be the weekly
ceiling described in, and computed in accordance with the Texas Finance Code;
provided, however, that to the extent permitted by applicable law, the Agent
shall have the right to change the applicable rate ceiling from time to time in
accordance with applicable law.
"Moody's" has the meaning specified in Section 2.4 (b).
"Multiemployer Plan" means a multiemployer plan defined as such in
Section 3(37) of ERISA to which contributions have been made by the Borrower or
any ERISA Affiliate and which is covered by Title IV of ERISA.
"NAIC" shall mean the National Association of Insurance Commissioners,
or any successor organization.
"NationsBank" means NationsBank, N.A., doing business as Bank of
America, National Association.
"New Bank" has the meaning specified in Section 2.12(b).
"Net Income" has the meaning specified in Section 9.3.
LOAN AGREEMENT - PAGE 7
14
"Notes" means the promissory notes provided for by Section 2.2 hereof,
and all extensions, renewals, and modifications thereof and all substitutions
therefor (including promissory notes issued by the Borrower pursuant to Section
12.8 and Section 2.12 (b)).
"Obligated Party" means any Person (exclusive of the Borrower) who is
or hereafter becomes party to any agreement that guarantees or secures payment
and performance of the Obligations or any part thereof.
"Obligations" means all obligations, indebtedness, and liabilities of
the Borrower to the Agent and the Banks, or any of them, arising pursuant to any
of the Loan Documents, now existing or hereafter arising, whether direct,
indirect, related, unrelated, fixed, contingent, liquidated, unliquidated,
joint, several, or joint and several, including, without limitation, the
obligation of the Borrower to repay the Loans, interest on the Loans, and all
fees, costs, and expenses (including reasonable attorney's fees) provided for in
the Loan Documents.
"Other Taxes" has the meaning specified in Section 4.6.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to all or any of its functions under ERISA.
"Person" means any individual, corporation, business trust,
association, company, partnership, joint venture, Governmental Authority, or
other entity.
"Plan" means any employee benefit or other plan established or
maintained by the Borrower or any ERISA Affiliate and which is covered by Title
IV of ERISA.
"Pricing Level" has the meaning specified in Section 2.4 (b).
"Prime Rate" means the per annum rate of interest established from time
to time by NationsBank as its prime rate, which rate may not be the lowest rate
of interest charged by NationsBank to its customers.
"Principal Office" means the principal office of the Agent, presently
located at 000 Xxxx Xxxxxx, 00xx Xxxxx, Xxxxxx, Xxxxx 00000.
"Prohibited Transaction" means any transaction set forth in Section 406
of ERISA or Section 4975 of the Code.
"Quarterly Payment Date" means the last day of each March, June,
September, and December of each year, the first of which shall be June 30, 1999.
"Rating Date" has the meaning specified in Section 2.4(b).
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System as the same may be amended or supplemented from time to
time.
"Regulatory Change" means, with respect to any Bank, any change after
the date of this Agreement in United States federal, state, or foreign laws or
regulations (including Regulation D) or the adoption or making after such date
of any interpretations, directives, or requests applying to a class of banks
including such Bank of or under any United States federal or state, or any
foreign, laws or regulations (whether or not having the force of law) by any
court or governmental or monetary authority charged with the interpretation or
administration thereof.
LOAN AGREEMENT - PAGE 8
15
"Required Banks" means at any time while no Loans are outstanding,
Banks having at least fifty-one percent (51%) of the aggregate amount of the
Commitments and, at any time while Loans are outstanding, Banks holding at least
fifty-one percent (51%) of the outstanding aggregate principal amount of the
Loans.
"Reportable Event" means any of the events set forth in Section 4043 of
ERISA.
"Reserve Requirement" means, at any time, the maximum rate at which
reserves (including, without limitation, any marginal, special, supplemental, or
emergency reserves) are required to be maintained under regulations issued from
time to time by the Board of Governors of the Federal Reserve System (or any
successor) by member banks of the Federal Reserve System against "Eurocurrency
liabilities" (as such term is used in Regulation D). Without limiting the effect
of the foregoing, the Reserve Requirement shall reflect any other reserves
required to be maintained by such member banks with respect to (i) any category
of liabilities which includes deposits by reference to which the Adjusted Libor
Rate is to be determined, or (ii) any category of extensions of credit or other
assets which include Libor Loans. The Adjusted Libor Rate shall be adjusted
automatically on and as of the effective date of any change in the Reserve
Requirement.
"Risk-Based Capital" has the meaning specified in Section 9.4.
"SAP" means, with respect to any Domestic Insurance Subsidiary,
statutory accounting practices prescribed or permitted by the insurance laws or
regulations or the Insurance Regulatory Authority in the jurisdiction of the
domicile of such Domestic Insurance Subsidiary for the preparation of financial
statements and other financial reports by insurance companies of the same type
as such Domestic Insurance Subsidiary. Statutory accounting practices are
applied on a "consistent basis" when the practices applied in a current period
are comparable in all material respects to those practices applied in a
preceding period.
"Senior Note Agreements" means the 8.75% Senior Note Agreement and the
1999 Senior Note Agreement.
"Significant Subsidiary" means The MEGA Life and Health Insurance
Company, Mid-West National Life Insurance Company of Tennessee, The Chesapeake
Life Insurance Company, United Credit National Bank, Specialized Card Services,
Inc., United Membership Marketing Group, L.L.C., Educational Finance Group,
Inc., National Motor Club of America, Inc., Insurdata Incorporated, UICI
Insurance Administrators, Incorporated, AMLI Realty Co. and any other Subsidiary
whose consolidated stockholder's equity (determined in accordance with GAAP)
equals or exceeds ten percent (10%) of the Consolidated Net Worth.
"S&P" has the meaning specified in Section 2.4(b).
"Subsidiary" means any corporation or other entity of which at least a
majority of the outstanding shares of stock or other ownership interests having
by the terms thereof ordinary voting power to elect a majority of the board of
directors (or Persons performing similar functions) of such corporation or
entity (irrespective of whether or not at the time, in the case of a
corporation, stock of any other class or classes of such corporation shall have
or might have voting power by reason of the happening of any contingency) is at
the time directly or indirectly owned or controlled by the Borrower or one or
more of the Subsidiaries or by the Borrower and one or more of the Subsidiaries.
"Taxes" has the meaning specified in Section 4.6.
"Termination Date" means May 17, 2002 or such earlier date on which the
Commitments terminate as provided in this Agreement.
LOAN AGREEMENT - PAGE 9
16
"Total Capitalization" means the sum of (i) Consolidated Debt plus (ii)
Consolidated Net Worth.
"Transaction Documents" means the Loan Documents, the 1999 Senior Note
Agreement and all notes and other documentation executed and delivered pursuant
to or in connection with the 1999 Senior Note Agreement as the same may be
amended or otherwise modified from time to time.
"Type" means any type of Loan (i.e., Base Rate Loan or Libor Loans).
"Unlock Date" has the meaning specified in Section 2.4(b).
"Year 2000 Ready" has the meaning specified in Section 6.21.
"Year 2000 Problem" has the meaning specified in Section 6.21.
"UCC" means the Uniform Commercial Code as in effect in the State of
Texas.
Section 1.2 Other Definitional Provisions. All definitions contained in
this Agreement are equally applicable to the singular and plural forms of the
terms defined. The words "hereof", "herein", and "hereunder" and words of
similar import referring to this Agreement refer to this Agreement as a whole
and not to any particular provision of this Agreement. Unless otherwise
specified, all Article and Section references pertain to this Agreement. Terms
used herein that are defined in the UCC, unless otherwise defined herein, shall
have the meanings specified in the UCC.
Section 1.3 Accounting Terms and Determinations. Except as otherwise
expressly provided herein with respect to clause (l) of Section 8.5, Section 9.3
(to the extent applicable to the Domestic Insurance Subsidiaries), Section 9.4
and the separate financial statements of the Domestic Insurance Subsidiaries,
all accounting terms used herein shall be interpreted, and all financial
statements and certificates and reports as to financial matters required to be
delivered to the Agent and the Banks hereunder shall be prepared, in accordance
with GAAP, on a basis consistent with those used in the preparation of the
financial statements referred to in Section 6.2 hereof. All calculations made
for the purposes of determining compliance with the provisions of this Agreement
(except the provisions of clause (l) of Section 8.5, Section 9.3 (to the extent
applicable to the Domestic Insurance Subsidiaries) and Section 9.4) shall be
made by application of GAAP, on a basis consistent with those used in the
preparation of the financial statements referred to in Section 6.2 hereof. The
calculations made for the purposes of determining compliance with clause (l) of
Section 8.5, Section 9.3 (to the extent applicable to the Domestic Insurance
Subsidiaries) and Section 9.4 shall be made by application of SAP, on a basis
consistent with those used in the preparation of the Domestic Insurance
Subsidiary financial statements referred to in Section 6.2. All separate
financial statements of the Domestic Insurance Subsidiaries delivered under
Section 7.1 shall be prepared in accordance with SAP, on a basis consistent with
those used in the preparation of the Domestic Insurance Subsidiary financial
statements referred to in Section 6.2. To enable the ready and consistent
determination of compliance by the Borrower with its obligations under this
Agreement, the Borrower will not change the last day of its fiscal year from
December 31, or the last days of the first three fiscal quarters of the Borrower
in each of its fiscal years from March 31, June 30, and September 30,
respectively.
ARTICLE 2
Loans
Section 2.1 Commitments. Subject to the terms and conditions of this
Agreement, each Bank severally agrees to make one or more loans ("Loans") to the
Borrower from time to time from and including the date hereof
LOAN AGREEMENT - PAGE 10
17
to but excluding the Termination Date in an aggregate principal amount at any
time outstanding up to but not exceeding the amount of such Bank's Commitment as
then in effect. Subject to the foregoing limitations, and the other terms and
provisions of this Agreement, the Borrower may borrow, prepay, and reborrow
hereunder the amount of the Commitments by means of Base Rate Loans and Libor
Loans and, until the Termination Date, the Borrower may Continue Libor Loans or
Convert Loans of one Type into Loans of another Type. Loans of each Type made by
each Bank shall be made and maintained at such Bank's Applicable Lending Office
for Loans of such Type.
Section 2.2 Notes. The Loans made by each Bank shall be evidenced by a
single promissory note of the Borrower in substantially the form of Exhibit "A"
hereto, payable to the order of such Bank in a principal amount equal to its
Commitment as originally in effect and otherwise duly completed.
Section 2.3 Repayment of Loans. The Borrower agrees to pay to the order
of the Agent for the account of the Banks the outstanding principal amount of
all of the Loans on the Termination Date.
Section 2.4 Interest.
(a) Interest Rate. The Borrower shall pay to the Agent for the account
of each Bank interest on the unpaid principal amount outstanding hereunder, at
the following rates per annum:
(i) with respect to each Base Rate Loan, the Base Rate plus
the Base Margin; and
(ii) with respect to each Libor Loan, the Adjusted Libor Rate
plus the Libor Margin.
(b) Applicable Margins and Facility Fee. The margins identified in
Section 2.4 (a) and the fees payable under Section 2.10 hereof shall be defined
and determined as follows:
(i) "Base Margin" shall mean:
(A) zero percent (0%) per annum during the period
commencing on and including the Closing Date and ending on but
excluding the earlier of (1) May 17, 2000 or (2) the first
Business Day after the Borrower has notified the Agent that
the Borrower's senior unsecured long-term debt securities have
been rated for the first time by two of the following: Duff &
Xxxxxx Credit Rating Agency (herein "D&P"), Xxxxx'x Investors
Service, Inc. (herein "Moody's") or Standard & Poor's Ratings
Group (herein "S&P" and the Business Day referred to in this
clause (2) herein the "Rating Date" and the earlier of the
Rating Date or May 17, 2000, herein the "Unlock Date") and
(B) at all times on and after the Unlock Date:
(1) if the Rating Date has not occurred
prior to the start of the applicable Calculation
Period (as defined below) or if the Borrower's senior
unsecured long-term debt securities are not rated by
any two of D&P, Moody's or S&P at the start of the
applicable Calculation Period, then during each
applicable Calculation Period, the percent per annum
set forth in the Leverage Table below in this Section
2.4 (b) under the heading "Base Margin" and opposite
the Leverage Ratio which
LOAN AGREEMENT - PAGE 11
18
corresponds with the actual Leverage Ratio calculated
as of the end of the most recently completed fiscal
quarter prior to the start of the applicable
Calculation Period or
(2) if the Rating Date has occurred and as
long as the Borrower's senior unsecured long-term
debt securities are rated by any two of D&P, Moody's
or S&P, then during each applicable Calculation
Period, the percent per annum set forth in the Rating
Table below in this Section 2.4 (b) under the heading
"Base Margin" and opposite the "Pricing Level" in
existence as of the first day of the applicable
Calculation Period.
(ii) "Facility Fee Rate" shall mean (A) during the period
commencing on and including the Closing Date and ending on but
excluding the Unlock Date, one quarter of one percent (.25%) per annum
and, (B) at all times on and after the Unlock Date (1) if the Rating
Date has not occurred prior to the start of the applicable Calculation
Period or if the Borrower's senior unsecured long-term debt securities
are not rated by any two of D&P, Moody's or S&P at the start of the
applicable Calculation Period, then during each applicable Calculation
Period, the percent per annum set forth in the Leverage Table below in
this Section 2.4 (b) under the heading "Facility Fee Rate" and opposite
the Leverage Ratio which corresponds with the actual Leverage Ratio
calculated as of the end of the most recently completed fiscal quarter
prior to the start of the applicable Calculation Period or (2) if the
Rating Date has occurred and as long as the Borrower's senior unsecured
long-term debt securities are rated by any two of D&P, Moody's or S&P,
then during each Calculation Period, the percent per annum set forth in
the Rating Table below in this Section 2.4 (b) under the heading
"Facility Fee Rate" and opposite the "Pricing Level" in existence as of
the first day of the applicable Calculation Period.
(iii) "Libor Margin" shall mean (A) during the period
commencing on and including the Closing Date and ending on but
excluding the Unlock Date, three quarters of one percent (.75%) per
annum and, (B) at all times on and after the Unlock Date (1) if the
Rating Date has not occurred prior to the start of the applicable
Calculation Period or if the Borrower's senior unsecured long-term debt
securities are not rated by any two of D&P, Moody's or S&P at the start
of the applicable Calculation Period, then during each applicable
Calculation Period, the percent per annum set forth in the Leverage
Table below in this Section 2.4 (b) under the heading "Libor Margin"
and opposite the Leverage Ratio which corresponds with the actual
Leverage Ratio calculated as of the end of the most recently completed
fiscal quarter prior to the start of the applicable Calculation Period
or (2) if the Rating Date has occurred and as long as the Borrower's
senior unsecured long-term debt securities are rated by any two of D&P,
Moody's or S&P, then during each applicable Calculation Period, the
percent per annum set forth in the Rating Table below in this Section
2.4 (b) under the heading "Libor Margin" and opposite the "Pricing
Level" in existence as of the first day of the applicable Calculation
Period.
LOAN AGREEMENT - PAGE 12
19
The following is the Leverage Table referred to in clauses (i), (ii)
and (iii) of this Section 2.4:
LEVERAGE TABLE
=======================================================================
Facility
Leverage Ratio Base Margin Libor Margin Fee Rate
-------------- ----------- ------------ --------
<=1.00:1 0.000% 0.550% 0.200%
>1.00:1 <= 1.50:1 0.000% 0.750% 0.250%
>1.50:1 <= 2.00:1 0.000% 0.875% 0.375%
>2.00:1 <= 2.75:1 0.125% 1.125% 0.375%
>2.75:1 0.475% 1.475% 0.400%
=======================================================================
The Leverage Table is the applicable table to determine the margins and
fees hereunder on and after the Unlock Date when the Borrower's senior unsecured
long-term debt securities are not rated by any two of D&P, Moody's or S&P and
the Agent shall not have provided written notice to Borrower that the rates to
be in existence when an Event of Default has occurred are in effect. When the
Leverage Table is the applicable table to determine the margins and fees
hereunder as determined above and upon delivery of the Compliance Certificate
pursuant to subsection 7.1(c) hereof in connection with the financial statements
of Borrower and the Subsidiaries required to be delivered pursuant to subsection
7.1(b) hereof (commencing, if applicable, with such Compliance Certificate
delivered at the end of the fiscal quarter ending on March 31, 2000), the Base
Margin, the Libor Margin (for Interest Periods commencing after the applicable
Adjustment Date, as defined below) and the Facility Fee Rate shall automatically
be adjusted in accordance with the Leverage Ratio set forth therein and the
Leverage Table set forth above, such automatic adjustment to take effect as of
the first Business Day after the receipt by the Agent of the related Compliance
Certificate pursuant to subsection 7.1(c) hereof or, with respect to the
Compliance Certificate delivered at the end of the fiscal quarter ending on
March 31, 2000, such automatic adjustment to take effect on the earlier of May
17, 2000 or the first Business Day after the receipt by the Agent of the related
Compliance Certificate pursuant to subsection 7.1(c) hereof. If the Borrower
fails to deliver a Compliance Certificate which sets forth the Leverage Ratio
within the period of time required by subsection 7.1(c) hereof when the Leverage
Table is the applicable table to determine the margins and fees hereunder or if
any Event of Default occurs and the Agent provides Borrower written notice: (i)
the Base Margin shall automatically be adjusted to one and one quarter percent
(1.25%) per annum; (ii) the Libor Margin (for Interest Periods commencing after
the applicable Adjustment Date) shall automatically be adjusted to one and one
hundred twenty-five hundredths percent (1.125%) per annum; and (iii) the
Facility Fee Rate shall automatically be adjusted to three hundred seventy-five
hundredths percent (0.375%), such automatic adjustments (a) to take effect as of
the first Business Day after the last day on which Borrower was required to
deliver the applicable Compliance Certificate in accordance with subsection
7.1(c) hereof or in the case of an Event of Default, on the date the written
notice is given to Borrower and (b) to remain in effect until subsequently
adjusted in accordance herewith upon the delivery of such Compliance Certificate
or, in the case of an Event of Default, when such Event of Default has been
cured to the satisfaction of the Agent or waived by the Required Banks.
LOAN AGREEMENT - PAGE 13
20
The following is the Rating Table referred to in clauses (i), (ii) and
(iii) of this Section 2.4:
RATING TABLE
===================================================================================
Facility
Pricing Level Base Margin Libor Margin Fee Rate
------------- ----------- ------------ --------
A- or higher by S&P or D&P
A3 or higher by Xxxxx'x 0.000% 0.350% 0.125%
BBB+ by S&P or D&P
Baa1 by Xxxxx'x 0.000% 0.475% 0.150%
BBB by S&P or D&P
Baa2 by Xxxxx'x 0.000% 0.550% 0.200%
BBB- by S&P or D&P
Baa3 by Xxxxx'x 0.000% 0.750% 0.250%
less than BBB- by S&P or D&P less
than Baa3 by Xxxxx'x. 0.125% 1.125% 0.375%
===================================================================================
The Rating Table is the applicable table to determine the margins and
fees hereunder on and after the Unlock Date when the Borrower's senior unsecured
long-term debt securities are rated by any two of D&P, Xxxxx'x or S&P and the
Agent shall not have provided written notice to Borrower that the rates to be in
existence when an Event of Default has occurred are in effect. When the Rating
Table is the applicable table to determine the margins and fees hereunder as
determined above, the Base Margin, the Libor Margin (for Interest Periods
commencing after the applicable Adjustment Date, as defined below) and the
Facility Fee Rate shall automatically be adjusted in accordance with the Pricing
Level then established and the Rating Table set forth above, such automatic
adjustment (a) to take effect as of the first Business Day after the Borrower
has notified the Agent of the effective date of the establishment of, or an
upgrade in the rating of the Borrower's senior unsecured long-term debt
securities or (b) in the case of a downgrade in the applicable ratings,
effective as of the first Business Day after the effective date of the
downgrade. The rating in effect at any date is that in effect at the close of
business on such date. The applicable "Pricing Level" for purposes of this
Section 2.4 (b) shall be the Pricing Level set forth above which corresponds
with the credit ratings assigned to the senior unsecured long-term debt
securities of the Borrower without third-party credit enhancement by S&P,
Xxxxx'x and D&P, and any rating assigned to any other debt security of the
Borrower shall be disregarded. In the event the ratings assigned by any of S&P,
Xxxxx'x or D&P fall in different Pricing Levels, the Pricing Level to be used
shall be the Pricing Level containing the lowest rating; provided that if the
difference is more than one full rating category (with changes in the +, - or
numerical modifiers associated with the ratings being considered one full rating
category for purposes of this proviso), the Pricing Level to be used shall be
the Pricing Level containing the rating which is one above the lowest rating
assigned. If the rating system of S&P, Xxxxx'x or D&P shall change, the parties
hereto shall negotiate in good faith to amend the references to specific ratings
in this definition (including by way of substituting another rating agency
mutually acceptable to the Borrower and the Agent for the rating agency with
respect to which the rating system has changed) to reflect such changed rating
system, and pending agreement on such amendment, the rating in effect
immediately prior to such change will be used in determining the Pricing Level
hereunder. If on any date after the Rating Date the Borrower's senior unsecured
long-term debt securities are no longer rated by any two of D&P, S&P or Moodys,
then on the effective date of the withdrawal of the rating which causes such
securities to be rated by less then two of such rating agencies, the Base
Margin, Libor Margin and Facility Fee Rate shall be determined by use of the
Leverage Table set forth above with the initial margins and fees determined
based on the most recent Compliance Certificate delivered as of such effective
date and the Leverage Ratio set forth, or required to be set forth therein.
LOAN AGREEMENT - PAGE 14
21
As used in this Section 2.4 (b), the following terms have the following
meanings:
"Adjustment Date" shall mean each Business Day when the
margins or fees hereunder change pursuant to this Section 2.4 (b). For
purposes of the definition of the term Adjustment Date, the margin and
fees are subject to change as provided above in this Section 2.4(b): on
the Unlock Date; when a Compliance Certificate is delivered under
Section 7.1 (c) and the Leverage Table is the applicable table to
determine the margins and fees; upon the occurrence of an Event of
Default; on the Rating Date; and when the ratings for Borrower's senior
unsecured long-term debt securities are changed or withdrawn.
"Calculation Period" means the period from and including one
Adjustment Date to but excluding the next Adjustment Date.
"Leverage Ratio" means, as of the last day of each fiscal
quarter, the ratio of Consolidated Debt outstanding as of such day to
Cash Flow calculated for the completed four (4) fiscal quarters then
ended.
(c) Payment Dates. Accrued interest on the Loans shall be due and
payable as follows:
(i) in the case of accrued interest on Base Rate Loans, on
each Quarterly Payment Date;
(ii) in the case of accrued interest on each Libor Loan, on
the last day of the Interest Period with respect thereto and, in the
case of an Interest Period greater than three months, at three-month
intervals after the first day of such Interest Period;
(iii) in the case of the accrued interest on the principal
amount of any Libor Loan being prepaid, upon such prepayment of
principal; and
(iv) on the Termination Date.
(d) Default Interest. Notwithstanding the foregoing, the Borrower will
pay to the Agent for the account of each Bank interest at the applicable Default
Rate on any principal of any Loan made by such Bank, and (to the fullest extent
permitted by law) on any other amount payable by the Borrower under this
Agreement or any other Loan Document to or for the account of Agent or any such
Bank which is not paid in full when due (whether at stated maturity, by
acceleration, or otherwise), for the period from and including the due date
thereof to but excluding the date the same is paid in full. Interest payable at
the Default Rate shall be payable from time to time on demand.
Section 2.5 Borrowing Procedure. The Borrower shall give the Agent
notice of each borrowing hereunder in accordance with Section 2.8 pursuant to
the delivery of a Borrowing Request. Not later than 11:00 a.m. Dallas, Texas
time on the date specified for each borrowing hereunder, each Bank will make
available the amount of the Loan to be made by it on such date to the Agent, at
the Principal Office, in immediately available funds, for the account of the
Borrower. The amount so received by the Agent shall, subject to the terms and
conditions of this Agreement, be made available to the Borrower by depositing
the same, in immediately available funds, in an account of the Borrower
(designated by the Borrower) maintained with the Agent at the Principal Office.
Section 2.6 Prepayments, Conversions, and Continuations of Loans.
(a) Mandatory Prepayments. If at any time the outstanding Loans exceed
the aggregate Commitments, the Borrower shall, within one (1) Business Day after
the occurrence thereof, prepay the
LOAN AGREEMENT - PAGE 15
22
outstanding Loans by the amount of the excess or immediately pledge to the Agent
cash or cash equivalents in an amount equal to the excess as security for the
Obligations.
(b) Optional Prepayments; Conversions and Continuations. Subject to
Section 2.7, the Borrower shall have the right from time to time to prepay the
Loans, or to Convert all or part of a Loan of one Type into a Loan of another
Type or to Continue Libor Loans as Libor Loans, provided that: (a) the Borrower
shall give the Agent notice of each such prepayment, Conversion, or Continuation
as provided in Section 2.8, (b) Libor Loans may only be Converted on the last
day of the Interest Period, and (c) except for Conversions into Base Rate Loans,
no Conversions or Continuations shall be made while a Default exists.
Section 2.7 Minimum Amounts. Except for Conversions and prepayments
pursuant to Article 4 and Conversions into Libor Loans, each borrowing, each
Conversion and each optional prepayment of principal of the Loans shall be in an
amount at least equal to One Million Dollars ($1,000,000) (borrowings,
prepayments or Conversions of or into Loans of different Types or, in the case
of Libor Loans, having different Interest Periods at the same time hereunder to
be deemed separate borrowings, Conversions and prepayments for purposes of the
foregoing, one for each Type or Interest Period). Anything in this Agreement to
the contrary notwithstanding, the aggregate principal amount of Libor Loans
having the same Interest Period shall be at least equal to Five Million Dollars
($5,000,000) .
Section 2.8 Certain Notices. Notices by the Borrower to the Agent of
terminations or reductions of Commitments, of borrowings, Conversions,
Continuations and prepayments of Loans and of the duration of Interest Periods
shall be irrevocable and shall be effective only if received by the Agent not
later than 11:00 a.m. Dallas, Texas, time on the Business Day of the borrowing,
Conversion to or prepayment of a Base Rate Loan and on the Business Day prior to
the date of the relevant other termination, reduction, borrowing, Conversion,
Continuation or prepayment specified below:
================================================================================
Notice Number of Business Days Prior
------------------------------------------ ------------------------------------
Termination or reduction of 1
Commitments
Borrowing or Prepayment of,
Conversions into, Continuations as, 3
Libor Loans
================================================================================
Each such notice of termination or reduction shall specify the amount of the
Commitments to be terminated or reduced. Each such notice of borrowing,
Conversion, Continuation, or prepayment shall specify the Loans to be borrowed,
Converted, Continued, or prepaid and the amount (subject to Section 2.7 hereof)
and Type of the Loans to be borrowed, Converted, Continued or prepaid (and, in
the case of a Conversion, the Type of Loans to result from such Conversion) and
the date of borrowing, Conversion, Continuation, or prepayment (which shall be a
Business Day). Each such notice of the duration of an Interest Period shall
specify the Loans to which such Interest Period is to relate. The Agent shall
promptly notify the Banks of the contents of each such notice. In the event the
Borrower fails to select the Type of Loan, or the duration of any Interest
Period for any Libor Loan, within the time period and otherwise as provided in
this Section 2.8, such Loan (if outstanding as a Libor Loan) will be
automatically Converted into a Base Rate Loan on the last day of the preceding
Interest Period for such Loan or (if outstanding as a Base Rate Loan) will
remain as, or (if not then outstanding) will be made as, a Base Rate Loan. The
Borrower may not borrow any Libor Loans, Convert any Loans into Libor Loans, or
Continue any Loans as Libor Loans if the interest rate for such Libor Loan would
exceed the Maximum Rate or if a Default exists.
LOAN AGREEMENT - PAGE 16
23
Section 2.9 Use of Proceeds. The proceeds of Loans shall be used by the
Borrower (i) to repay the Debt outstanding in connection with the Aegon Facility
and that certain Loan Agreement dated December 17, 1998 among Borrower, the
lenders named therein and NationsBank, as agent and (ii) for other general
corporate purposes, including acquisitions and general working capital; provided
that no proceeds of any Loan shall be used to make any advance, loan, extension
of credit or capital contribution to, or investment in: (i) United Credit
National Bank in excess of Twenty Million Dollars ($20,000,000.00) in the
aggregate or (ii) Educational Finance Group, Inc. or the Subsidiaries owned by
Educational Finance Group, Inc. in excess of an aggregate amount equal to Twenty
Million Dollars ($20,000,000.00).
Section 2.10 Facility Fee. The Borrower agrees to pay to the Agent for
the account of each Bank a facility fee on the daily average amount of such
Bank's Commitment for the period from and including the date of this Agreement
to and including the Termination Date, at the Facility Fee Rate per annum.
Accrued facility fee shall be payable in arrears on each Quarterly Payment Date
and on the Termination Date.
Section 2.11 Computations. Interest and fees payable by the Borrower
hereunder and under the other Loan Documents shall be computed as follows: (i)
with respect to Libor Loans on the basis of a year of 360 days and the actual
number of days elapsed (including the first day but excluding the last day)
occurring in the period for which payable unless such calculation would result
in a usurious rate, in which case interest shall be calculated on the basis of a
year of 365 or 366 days, as the case may be; (ii) with respect to Base Rate
Loans and Loans accruing interest at the Default Rate, on the basis of a year of
365 or 366 days and the actual number of days elapsed (including the first day
but excluding the last day) occurring in the period for which payable; and (iii)
with respect to the facility fees payable hereunder and any other interest
payable hereunder, on the basis of a year of 360 days and the actual number of
days elapsed (including the first day but excluding the last day) occurring in
the period for which payable unless such calculation would result in a usurious
rate, in which case such fees shall be calculated on the basis of a year of 365
or 366 days, as the case may be.
Section 2.12 Reduction, Termination or Increase of Commitments.
(a) Reduction or Termination in Commitment. The Borrower shall
have the right to terminate or reduce in part the unused portion of the
Commitments at any time and from time to time, provided that: (a) the
Borrower shall give notice of each such termination or reduction as
provided in Section 2.8 and (b) each partial reduction shall be in an
aggregate amount at least equal to Five Million Dollars ($5,000,000).
The Commitments may not be reinstated after they have been terminated
or reduced.
(b) Increase in Commitment. By written notice sent to the
Banks, the Borrower may request an increase of the aggregate amount of
the Commitments by an aggregate amount: (i) equal to any integral
multiple of One Million Dollars ($1,000,000) and not less than Ten
Million Dollars ($10,000,000) and (ii) not to exceed Fifty Million
Dollars ($50,000,000); provided, that (i) no Default shall have
occurred and be continuing, (ii) the aggregate amount of the
Commitments shall not have been reduced, nor shall the Borrower have
given notice of any such reduction, under Section 2.12(a), except with
the prior written consent of the Required Banks; and (iii) the
aggregate amount of the Commitments shall not previously have been
increased pursuant to this Section 2.12(b) on more than one occasion.
Within thirty (30) days after such request has been given (as
determined in accordance with Section 12.13), each Bank shall notify
the Agent, whether or not, in the exercise of its sole discretion, it
is willing to increase its Commitment by an amount equal to its pro
rata share (calculated based on its Commitment then in existence) of
the requested increase (each Bank having no obligation to do so). The
Agent shall promptly notify the Borrower and each other Bank of each
Bank's decision. Any Bank that does not so notify the Agent within such
period shall be deemed to have decided not to be willing to increase
its Commitment. If one or more of the Banks is not willing to so
increase its Commitment, then
LOAN AGREEMENT - PAGE 17
24
within sixty (60) days after the Borrower's original request has been
given (as determined in accordance with Section 12.13), with notice
thereof to the other Banks, another one or more financial institutions
meeting the definition of an Eligible Assignee (each a "New Bank") may
commit to provide an amount equal to the aggregate amount of the
requested increase that will not be provided by the existing Banks;
provided, that the Commitment of each New Bank shall be at least Five
Million ($5,000,000) and the maximum number of New Banks shall be two.
Upon receipt of notice from the Agent to the Banks and the Borrower
that the Banks, or sufficient Banks and New Banks, have agreed to
commit to an aggregate amount equal to the increase requested by the
Borrower (or such lesser amount as the Borrower shall agree, which
shall be at least Ten Million Dollars ($10,000,000) and an integral
multiple of One Million Dollars ($1,000,000) in excess thereof), then:
provided that no Default exists at such time or after giving effect to
the requested increase, (i) the Borrower the Agent and the Banks
willing to increase their respective Commitments and the New Banks (if
any) shall execute and deliver an Increased Commitment Supplement, and
the Borrower shall execute and deliver a new Note, as provided in the
Increased Commitment Supplement, to each Bank. Upon the effective date
of the Increased Commitment Supplement, if all existing Banks shall not
have provided their pro rata portion of the requested increase, the
Borrower shall request a borrowing hereunder which shall be made only
by the Banks who have increased their Commitment and, if applicable,
the New Banks, the proceeds of such borrowing shall be utilized by
Borrower to repay the Banks who did not agree to increase their
Commitments, such borrowing and repayments to be in amounts sufficient
so that after giving effect thereto, the Loans shall be held by the
Banks pro rata according to the respective Commitments.
ARTICLE 3
Payments
Section 3.1 Method of Payment. All payments of principal, interest, and
other amounts to be made by the Borrower under this Agreement and the other Loan
Documents shall be made to the Agent at the Principal Office for the account of
each Bank's Applicable Lending Office in Dollars and in immediately available
funds, without setoff, deduction, or counterclaim, not later than 11:00 a.m.,
Dallas, Texas time on the date on which such payment shall become due (each such
payment made after such time on such due date to be deemed to have been made on
the next succeeding Business Day). The Borrower shall, at the time of making
each such payment, specify to the Agent the sums payable by the Borrower under
this Agreement and the other Loan Documents to which such payment is to be
applied (and in the event that the Borrower fails to so specify, or if an Event
of Default exists, the Agent may apply such payment to the Obligations in such
order and manner as it may elect in its sole discretion, subject to Section 3.2
hereof). Each payment received by the Agent under this Agreement or any other
Loan Document for the account of a Bank shall be paid promptly to such Bank, in
immediately available funds, for the account of such Bank's Applicable Lending
Office. Whenever any payment under this Agreement or any other Loan Document
shall be stated to be due on a day that is not a Business Day, such payment may
be made on the next succeeding Business Day, and such extension of time shall in
such case be included in the computation of the payment of interest and
commitment fee, as the case may be.
Section 3.2 Pro Rata Treatment. Except to the extent otherwise provided
herein: (a) each Loan shall be made by the Banks under Section 2.1, each payment
of the facility fee under Section 2.10 shall be made for the account of the
Banks, and each termination or reduction of the Commitments under Section 2.12
shall be applied to the Commitments of the Banks, pro rata according to the
respective unused Commitments; (b) the making, Conversion, and Continuation of
Loans of a particular Type (other than Conversions provided for by Section 4.4)
shall be made pro rata among the Banks holding Loans of such Type according to
the amounts of their respective Commitments; (c) each payment and prepayment of
principal of or interest on Loans by the Borrower of a particular Type shall be
made to the Agent for the account of the Banks holding Loans of such
LOAN AGREEMENT - PAGE 18
25
Type pro rata in accordance with the respective unpaid principal amounts of such
Loans held by such Banks; and (d) Interest Periods for Loans of a particular
Type shall be allocated among the Banks holding Loans of such Type pro rata
according to the respective principal amounts held by such Banks.
Section 3.3 Sharing of Payments, Etc. If a Bank shall obtain payment of
any principal of or interest on any of the Obligations due to such Bank
hereunder through the exercise of any right of set-off, banker's lien,
counterclaim or similar right, or otherwise, it shall promptly purchase from the
other Banks participations in the Obligations held by the other Banks in such
amounts, and make such adjustments from time to time as shall be equitable to
the end that all the Banks shall share pro rata in accordance with the unpaid
principal of the Obligations then due to each of them. To such end, all of the
Banks shall make appropriate adjustments among themselves (by the resale of
participations sold or otherwise) if all or any portion of such excess payment
is thereafter rescinded or must otherwise be restored. The Borrower agrees, to
the fullest extent it may effectively do so under applicable law, that any Bank
so purchasing a participation in the Obligations by the other Banks may exercise
all rights of set-off, banker's lien, counterclaim, or similar rights with
respect to such participation as fully as if such Bank were a direct holder of
Obligations to the Borrower in the amount of such participation. Nothing
contained herein shall require any Bank to exercise any such right or shall
affect the right of any Bank to exercise, and retain the benefits of exercising,
any such right with respect to any other indebtedness or obligation of the
Borrower.
Section 3.4 Non-Receipt of Funds by the Agent. Unless the Agent shall
have been notified by a Bank or the Borrower (the "Payor") prior to the date on
which such Bank is to make payment to the Agent of the proceeds of a Loan to be
made by it hereunder or the Borrower is to make a payment to the Agent for the
account of one or more of the Banks, as the case may be (such payment being
herein called the "Required Payment"), which notice shall be effective upon
receipt, that the Payor does not intend to make the Required Payment to the
Agent, the Agent may assume that the Required Payment has been made and may, in
reliance upon such assumption (but shall not be required to), make the amount
thereof available to the intended recipient on such date and, if the Payor has
not in fact made the Required Payment to the Agent, the recipient of such
payment shall, on demand, pay to the Agent the amount made available to it
together with interest thereon in respect of 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 the Federal Funds Rate for such period.
ARTICLE 4
Yield Protection and Illegality
Section 4.1 Increased Cost and Reduced Return.
(a) If, after the date hereof, the adoption of any applicable law,
rule, or regulation, or any change in any applicable law, rule, or regulation,
or any change in the interpretation or administration thereof by any
Governmental Authority, central bank, or comparable agency charged with the
interpretation or administration thereof, or compliance by any Bank (or its
Applicable Lending Office) with any request or directive (whether or not having
the force of law) of any such Governmental Authority, central bank, or
comparable agency:
(i) shall subject such Bank (or its Applicable Lending Office)
to any tax, duty, or other charge with respect to any Libor Loans, its
Note, or its obligation to make Libor Loans, or change the basis of
taxation of any amounts payable to such Bank (or its Applicable Lending
Office) under this Agreement or its Note in respect of any Libor Loans
(other than taxes imposed on the overall net income of such Bank by the
jurisdiction in which such Bank has its principal office or such
Applicable Lending Office);
LOAN AGREEMENT - PAGE 19
26
(ii) shall impose, modify, or deem applicable any reserve,
special deposit, assessment, compulsory loan, or similar requirement
(other than the Reserve Requirement utilized in the determination of
the Adjusted Libor Rate) relating to any extensions of credit or other
assets of, or any deposits with or other liabilities or commitments of,
such Bank (or its Applicable Lending Office), including the Commitment
of such Bank hereunder; or
(iii) shall impose on such Bank (or its Applicable Lending
Office) or on the London interbank market any other condition affecting
this Agreement or its Note or any of such extensions of credit or
liabilities or commitments;
and the result of any of the foregoing is to increase the cost to such Bank (or
its Applicable Lending Office) of making, Converting into, Continuing, or
maintaining any Libor Loans or its commitment to make Libor Loans or to reduce
any sum received or receivable by such Bank (or its Applicable Lending Office)
under this Agreement or its Note with respect to any Libor Loans or its
commitment to make Libor Loans, then the Borrower shall pay to such Bank on
demand such amount or amounts as will compensate such Bank for such increased
cost or reduction. If any Bank requests compensation by the Borrower under this
Section 4.1(a), the Borrower may, by notice to such Bank (with a copy to the
Agent), suspend the obligation of such Bank to make or Continue Libor Loans or
to Convert Base Rate Loans into Libor Loans, until the event or condition giving
rise to such request ceases to be in effect (in which case the provisions of
Section 4.4 shall be applicable); provided that such suspension shall not affect
the right of such Bank to receive the compensation so requested as to any Libor
Loans that remain outstanding as the date of such request.
(b) If, after the date hereof, any Bank shall have determined that the
adoption of any applicable law, rule, or regulation regarding capital adequacy
or any change therein or in the interpretation or administration thereof by any
Governmental Authority, central bank, or comparable agency charged with the
interpretation or administration thereof, or any request or directive regarding
capital adequacy (whether or not having the force of law) of any such
Governmental Authority, central bank, or comparable agency, has or would have
the effect of reducing the rate of return on the capital of such Bank or any
corporation controlling such Bank as a consequence of such Bank's obligations
hereunder to a level below that which such Bank or such corporation could have
achieved but for such adoption, change, request, or directive (taking into
consideration its policies with respect to capital adequacy), then from time to
time upon demand the Borrower shall pay to such Bank such additional amount or
amounts as will compensate such Bank for such reduction.
(c) Each Bank shall promptly notify the Borrower and the Agent of any
event of which it has knowledge, occurring after the date hereof, which will
entitle such Bank to compensation pursuant to this Section and will designate a
different Applicable Lending Office if such designation will avoid the need for,
or reduce the amount of, such compensation and will not, in the judgment of such
Bank, be otherwise disadvantageous to it. Any Bank claiming compensation under
this Section shall furnish to the Borrower and the Agent a statement setting
forth the additional amount or amounts to be paid to it hereunder which shall be
conclusive in the absence of manifest error. In determining such amount, such
Bank shall use reasonable averaging and attribution methods.
Section 4.2 Limitation on Types of Loans. If on or prior to the first
day of any Interest Period for any Libor Loan:
(a) the Agent determines (which determination shall be
conclusive) that by reason of circumstances affecting the relevant
market, adequate and reasonable means do not exist for ascertaining the
Libor Rate for such Interest Period; or
LOAN AGREEMENT - PAGE 20
27
(b) the Required Banks determine (which determination shall be
conclusive) and notify the Agent that the Adjusted Libor Rate will not
adequately and fairly reflect the cost to the Banks of funding Libor
Loans for such Interest Period;
then the Agent shall give the Borrower prompt notice thereof and so long as such
condition remains in effect, the Banks shall be under no obligation to make
additional Libor Loans, Continue Libor Loans, or to Convert Loans of any other
Type into Libor Loans and the Borrower shall, on the last day(s) of the then
current Interest Period(s) for the outstanding Libor Loans, either prepay such
Loans or Convert such Loans into another Type of Loan in accordance with the
terms of this Agreement.
Section 4.3 Illegality. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Bank or its Applicable
Lending Office to make, maintain, or fund Libor Loans hereunder, then such Bank
shall promptly notify the Borrower thereof and such Bank's obligation to make or
Continue Libor Loans and to Convert other Types of Loans into Libor Loans shall
be suspended until such time as such Bank may again make, maintain, and fund
Libor Loans (in which case the provisions of Section 4.4 shall be applicable).
Section 4.4 Treatment of Affected Loans. If the obligation of any Bank
to make a Libor Loan or to Continue, or to Convert Loans of any other Type into,
Libor Loans shall be suspended pursuant to Section 4.1 or 4.3 hereof (Loans of
such Type being herein called "Affected Loans" and such Type being herein called
the "Affected Type"), such Bank's Affected Loans shall be automatically
Converted into Base Rate Loans on the last day(s) of the then current Interest
Period(s) for Affected Loans (or, in the case of a Conversion required by
Section 4.3 hereof, on such earlier date as such Bank may be required to effect
a Conversion and specifies to the Borrower with a copy to the Agent) and, unless
and until such Bank gives notice as provided below that the circumstances
specified in Section 4.1 or 4.3 hereof that gave rise to such Conversion no
longer exist:
(a) to the extent that such Bank's Affected Loans have been so
Converted, all payments and prepayments of principal that would otherwise be
applied to such Bank's Affected Loans shall be applied instead to its Base Rate
Loans; and
(b) all Loans that would otherwise be made or Continued by such Bank as
Libor Loans shall be made or Continued instead as Base Rate Loans, and all Loans
of such Bank that would otherwise be Converted into Libor Loans shall be
Converted instead into (or shall remain as) Base Rate Loans.
If such Bank gives notice to the Borrower (with a copy to the Agent) that the
circumstances specified in Section 4.1 or 4.3 hereof that gave rise to the
Conversion of such Bank's Affected Loans pursuant to this Section 4.4 no longer
exist (which such Bank agrees to do promptly upon such circumstances ceasing to
exist) at a time when Libor Loans made by other Banks are outstanding, such
Bank's Base Rate Loans shall be automatically Converted, on the first day(s) of
the next succeeding Interest Period(s) for such outstanding Libor Loans, to the
extent necessary so that, after giving effect thereto, all Loans held by the
Banks holding Libor Loans and by such Bank are held pro rata (as to principal
amounts, Types, and Interest Periods) in accordance with their respective
Commitments.
Section 4.5 Compensation. Upon the request of any Bank, the Borrower
shall pay to such Bank such amount or amounts as shall be sufficient (in the
reasonable opinion of such Bank) to compensate it for any loss, cost, or expense
(including loss of anticipated profits) incurred by it as a result of:
LOAN AGREEMENT - PAGE 21
28
(a) any payment, prepayment, or Conversion of a Libor Loan for any
reason (including, without limitation, the acceleration of the Loans pursuant to
Section 10.2 or the repayment of Loans pursuant to Section 2.12(b)) on a date
other than the last day of the Interest Period for such Loan; or
(b) any failure by the Borrower for any reason (including, without
limitation, the failure of any condition precedent specified in Article 5 to be
satisfied) to borrow, Convert, Continue, or prepay a Libor Loan on the date for
such borrowing, Conversion, Continuation, or prepayment specified in the
relevant notice of borrowing, prepayment, Continuation, or Conversion under this
Agreement.
Section 4.6 Taxes. (a) Any and all payments by the Borrower to or for
the account of any Bank or the Agent hereunder or under any other Loan Document
shall be made free and clear of and without deduction for any and all present or
future taxes, duties, levies, imposts, deductions, charges or withholdings, and
all liabilities with respect thereto, excluding, in the case of each Bank and
the Agent, taxes imposed on its overall income, gross receipts, capital or gains
and franchise or similar taxes, in each case, imposed on it by the jurisdiction
under the laws of which such Bank (or its Applicable Lending Office) or the
Agent (as the case may be) is organized or any political subdivision thereof
(all such non-excluded taxes, duties, levies, imposts, deductions, charges,
withholdings, and liabilities being hereinafter referred to as "Taxes"). If the
Borrower shall be required by law to deduct any Taxes from or in respect of any
sum payable under this Agreement or any other Loan Document to any Bank or the
Agent, (i) the sum payable shall be increased as necessary so that after making
all required deductions (including deductions applicable to additional sums
payable under this Section 4.6) such Bank or the Agent receives an amount equal
to the sum it would have received had no such deductions been made, (ii) the
Borrower shall make such deductions, (iii) the Borrower shall pay the full
amount deducted to the relevant taxation authority or other authority in
accordance with applicable law, and (iv) the Borrower shall furnish to the Agent
the original or a certified copy of a receipt evidencing payment thereof.
(b) In addition, the Borrower agrees to pay any and all present or
future stamp or documentary taxes and any other excise or property taxes or
charges or similar levies which arise from any payment made under this Agreement
or any other Loan Document or from the execution or delivery of, or otherwise
with respect to, this Agreement or any other Loan Document (hereinafter referred
to as "Other Taxes").
(c) The Borrower agrees to indemnify each Bank and the Agent for the
full amount of Taxes and Other Taxes (including, without limitation, any Taxes
or Other Taxes imposed or asserted by any jurisdiction on amounts payable under
this Section 4.6) paid by such Bank or the Agent (as the case may be) and any
liability (including penalties, interest, and expenses) arising therefrom or
with respect thereto.
(d) Each Bank organized under the laws of a jurisdiction outside the
United States, on or prior to the date of its execution and delivery of this
Agreement in the case of each Bank listed on the signature pages hereof and on
or prior to the date on which it becomes a Bank in the case of each other Bank,
and from time to time thereafter if requested in writing by the Borrower or the
Agent (but only so long as such Bank remains lawfully able to do so), shall
provide the Borrower and the Agent with (i) Internal Revenue Service Form 1001
or 4224, as appropriate, or any successor form prescribed by the Internal
Revenue Service, certifying that such Bank is entitled to benefits under an
income tax treaty to which the United States is a party which reduces the rate
of withholding tax on payments of interest or certifying that the income
receivable pursuant to this Agreement is effectively connected with the conduct
of a trade or business in the United States, (ii) Internal Revenue Service Form
W-8 or W-9, as appropriate, or any successor form prescribed by the Internal
Revenue Service, and (iii) any other form or certificate required by any taxing
authority (including any certificate required by Sections 871(h) and 881(c) of
the Internal Revenue Code), certifying that such Bank is entitled to an
exemption from or a reduced rate of tax on payments pursuant to this Agreement
or any of the other Loan Documents.
LOAN AGREEMENT - PAGE 22
29
(e) For any period with respect to which a Bank has failed to provide
the Borrower and the Agent with the appropriate form pursuant to this Section
4.6 (unless such failure is due to a change in applicable treaty, law, or
regulation occurring subsequent to the date on which a form originally was
required to be provided in which case such Bank will comply with Section 4.6 (d)
promptly after such change), such Bank shall not be entitled to indemnification
under Section 4.6(a) or 4.6(b) with respect to Taxes imposed by the United
States; provided, however, that should a Bank, 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 hereunder, the Borrower shall take such
steps as such Bank shall reasonably request to assist such Bank to recover such
Taxes and such Bank shall pay all of the Borrower's reasonable fees and expenses
incurred in connection therewith.
(f) If the Borrower is required to pay additional amounts to or for the
account of any Bank pursuant to this Section 4.6, then such Bank will agree to
use reasonable efforts to change the jurisdiction of its Applicable Lending
Office so as to eliminate or reduce any such additional payment which may
thereafter accrue if such change, in the judgment of such Bank, is not otherwise
disadvantageous to such Bank.
(g) Within thirty (30) days after the date of any payment of Taxes, the
Borrower shall furnish to the Agent the original or a certified copy of a
receipt evidencing such payment.
(h) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained in
this Section 4.6 shall survive the termination of the Commitments and the
payment in full of the Notes.
(i) If a Bank shall become aware that it is entitled to claim a refund
from, or to a tax credit on any tax return filed by such Bank with, a
Governmental Authority in respect of Taxes or Other Taxes as to which it has
been indemnified by Borrower, or with respect to which Borrower has paid
additional amounts, pursuant to this Section 4.6, it shall promptly notify
Borrower of the availability of such refund claim or right to a tax credit and
shall, within thirty (30) days after receipt of a request by Borrower, make a
claim to such Governmental Authority for such refund, or claim such credit on
the next such tax return filed by it, in each case, at Borrower's expense. If a
Bank receives a refund (including pursuant to a claim for refund made pursuant
to the preceding sentence) in respect of any Taxes or Other Taxes as to which it
has been indemnified by Borrower or with respect to which Borrower had paid
additional amounts pursuant to this Section 4.6 or receives benefit from such
tax credit, it shall within thirty (30) days from the date of the receipt of
such refund or such benefit pay over such refund or an amount equal to such
benefit to Borrower (but only to the extent of indemnity payments made, or
additional amounts paid, by Borrower under this Section 4.6 with respect to the
Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket
expenses of the Bank and without interest (other than interest paid by the
relevant Governmental Authority with respect to such refund); provided, however,
that Borrower, upon the request of such Bank, agrees to repay the amount paid
over to Borrower (plus penalties, interest or other charges) to such Bank in the
event such Bank is required to repay such refund to such Governmental Authority.
ARTICLE 5
Conditions Precedent
Section 5.1 Initial Loan. The obligation of each Bank to make its
initial Loan is subject to the condition precedent that the Agent shall have
received on or before the day of such Loan all of the following, each dated
(unless otherwise indicated) the date hereof, in form and substance satisfactory
to the Agent:
LOAN AGREEMENT - PAGE 23
30
(a) Resolutions. Resolutions of the Board of Directors of the Borrower
certified by its Secretary or an Assistant Secretary which authorize the
execution, delivery, and performance by the Borrower of this Agreement and the
other Loan Documents to which the Borrower is or is to be a party;
(b) Incumbency Certificate. A certificate of incumbency certified by
the Secretary or an Assistant Secretary of the Borrower certifying the name of
each officer of the Borrower (i) who is authorized to sign this Agreement and
each of the other Loan Documents to which the Borrower is or is to be a party
(including the certificates contemplated herein) together with specimen
signatures of each such officer and (ii) who will, until replaced by other
officers duly authorized for that purpose, act as its representative for the
purposes of signing documents and giving notices and other communications in
connection with this Agreement and the transactions contemplated hereby;
(c) Certificate of Incorporation. The certificate of incorporation of
the Borrower certified by the Secretary of State of the state of incorporation
of the Borrower and dated a current date;
(d) Bylaws. The bylaws of the Borrower certified by the Secretary or an
Assistant Secretary of the Borrower;
(e) Governmental Certificates. Certificates of the appropriate
government officials of the state of incorporation of the Borrower as to the
existence and good standing of the Borrower, each dated a current date;
(f) Notes. The Notes executed by the Borrower;
(g) Fees. Evidence that all fees payable to the Agent, the Banks and
NationsBanc Xxxxxxxxxx Securities LLC on the Closing Date have been paid in
full;
(h) Termination of Commitments. Evidence that the commitments arising
in connection with the Aegon Facility and that certain Loan Agreement dated
December 17, 1998 among Borrower, the lenders named therein and NationsBank, as
agent shall have been terminated (Borrower and NationsBank hereby agreeing that
on the Closing Date the commitments of NationsBank set forth in such Loan
Agreement are terminated);
(i) Opinion of Counsel. A favorable opinion of legal counsel to the
Borrower, as to the matters set forth in Exhibit "B" hereto, and such other
matters as the Agent may reasonably request; and
(j) Attorneys' Fees and Expenses. Evidence that the costs and expenses
(including reasonable attorney's fees) referred to in Section 12.1, to the
extent incurred, shall have been paid in full by the Borrower.
Section 5.2 All Loans. The obligation of each Bank to make any Loan
(including the initial Loan) is subject to the following additional conditions
precedent:
(a) No Default. No Default shall have occurred and be continuing or
would result from such Loan;
(b) Representations and Warranties. All of the representations and
warranties contained in Article 6 hereof and in the other Loan Documents shall
be true, correct and complete in all material respects on and as of the date of
such Loan with the same force and effect as if such representations and
warranties had been made on and as of such date except for any representation or
warranty limited by its terms to a specific date;
(c) No Material Adverse Effect. No event has occurred that has a
Material Adverse Effect; and
LOAN AGREEMENT - PAGE 24
31
(d) Additional Documentation. The Agent shall have received such
additional approvals, opinions, or documents as the Agent or its legal counsel,
Jenkens & Xxxxxxxxx, a Professional Corporation, may reasonably request.
Each notice of borrowing by the Borrower hereunder shall constitute a
representation and warranty by the Borrower that the conditions precedent set
forth in Sections 5.2(a) and (b) have been satisfied (both as of the date of
such notice and, unless the Borrower otherwise notifies the Agent prior to the
date of such borrowing, as of the date of such borrowing).
ARTICLE 6
Representations and Warranties
To induce the Agent and the Banks to enter into this Agreement, the
Borrower represents and warrants to the Agent and the Banks that:
Section 6.1 Corporate Existence. The Borrower and each Subsidiary (a)
is a corporation (or other entity as specified on Schedule 6.14) duly organized,
validly existing, and in good standing under the laws of the jurisdiction of its
incorporation or organization; (b) has all requisite power and authority to own
its assets and carry on its business as now being or as proposed to be
conducted; and (c) is qualified to do business in all jurisdictions in which the
nature of its business makes such qualification necessary and where failure to
so qualify would have a Material Adverse Effect. The Borrower has the corporate
power and authority and legal right to execute, deliver, and perform its
obligations under this Agreement and the other Loan Documents to which it is or
may become a party.
Section 6.2 Financial Statements.
(a) GAAP. The Borrower has delivered to the Agent and the Banks audited
consolidated financial statements of the Borrower and the Subsidiaries as at and
for the fiscal year ended December 31, 1998. Such financial statements are
complete and correct, have been prepared in accordance with GAAP, and fairly and
accurately present, on a consolidated basis, the financial condition of the
Borrower and the Subsidiaries as of the respective dates indicated therein and
the results of operations for the respective periods indicated therein. Neither
the Borrower nor any of the Subsidiaries has any material contingent
liabilities, liabilities for taxes, unusual forward or long-term commitments, or
unrealized or anticipated losses from any unfavorable commitments except as
referred to or reflected in such financial statements. There has been no
material adverse change in the business, condition (financial or otherwise),
operations, prospects, or properties of the Borrower or any of the Subsidiaries
since the effective date of the financial statements referred to in this clause
(a).
(b) SAP. The Borrower has delivered to the Agent and the Banks
financial statements for each Domestic Insurance Subsidiary as at and for the
fiscal year ended December 31, 1998. Such financial statements are complete and
correct, have been prepared in accordance with SAP, and fairly and accurately
present the financial condition of the applicable Domestic Insurance Subsidiary
as of the respective dates indicated therein and the results of operations for
the respective periods indicated therein subject to normal year end audit
adjustments.
Section 6.3 Corporate Action; No Breach. The execution, delivery, and
performance by the Borrower of this Agreement and the other Transaction
Documents to which the Borrower is or may become a party and compliance with the
terms and provisions hereof and thereof have been duly authorized by all
requisite corporate action on the part of the Borrower and do not and will not
(a) violate or conflict with, or result in a breach of, or
LOAN AGREEMENT - PAGE 25
32
require any consent under (i) the certificate of incorporation or bylaws of the
Borrower or any of the Subsidiaries, (ii) any applicable law, rule, or
regulation or any order, writ, injunction, or decree of any Governmental
Authority or arbitrator, or (iii) any agreement or instrument to which the
Borrower or any of the Subsidiaries is a party or by which any of them or any of
their property is bound or subject (except for such agreements and instruments
which if so violated or breached could not reasonably be expected to have a
Material Adverse Effect and such consents thereunder which if not obtained could
not reasonably be expected to have a Material Adverse Effect), or (b) constitute
a default under any such agreement or instrument, or result in the creation or
imposition of any Lien upon any of the property of the Borrower or any
Subsidiary. Without limiting the generality of the foregoing, all Debt
outstanding hereunder, after giving effect to any request for a borrowing
hereunder, is permitted to be incurred by the Borrower pursuant to Section 8.4
of the 8.75% Senior Note Agreement and pursuant to the 1999 Senior Note
Agreement.
Section 6.4 Operation of Business. The Borrower and each of the
Subsidiaries possess all licenses, permits, franchises, patents, copyrights,
trademarks, and tradenames, or rights thereto, necessary to conduct their
respective businesses substantially as now conducted and as currently proposed
to be conducted without Material Adverse Effect and the Borrower and each of the
Subsidiaries are not in violation in any material respect of any valid rights of
others with respect to any of the foregoing.
Section 6.5 Litigation and Judgments. As of the date hereof, there is
no action, suit, investigation, or proceeding before or by any Governmental
Authority or arbitrator pending, or to the knowledge of the Borrower, threatened
against or affecting the Borrower or any Subsidiary which, if adversely
determined, could reasonably be expected to have a Material Adverse Effect.
There are no unstayed or undischarged judgments against the Borrower or any
Subsidiary which would constitute an Event of Default under Section 10.1 (h).
Section 6.6 Rights in Properties; Liens. The Borrower and each
Subsidiary have good and indefeasible title to or valid leasehold interests in
their respective properties, real and personal, including the properties and
leasehold interests reflected in the financial statements described in Section
6.2, and none of the properties or leasehold interests of the Borrower or any
Subsidiary is subject to any Lien, except as permitted by Section 8.2.
Section 6.7 Enforceability. This Agreement constitutes, and the other
Transaction Documents to which the Borrower is party, when executed and
delivered, shall constitute the legal, valid, and binding obligations of the
Borrower, enforceable against the Borrower in accordance with their respective
terms, except as limited by bankruptcy, insolvency, or other laws of general
application relating to the enforcement of creditors' rights and general
principles of equity.
Section 6.8 Approvals. No authorization, approval, or consent of, and
no filing or registration with, any Governmental Authority or third party is or
will be necessary for the execution, delivery, or performance by the Borrower of
this Agreement and the other Transaction Documents to which the Borrower is or
may become a party or for the validity or enforceability thereof.
Section 6.9 Debt. The Borrower and the Subsidiaries have no Debt,
except as permitted by Section 8.1 and except, as of and prior to the Closing
Date only, Debt required to be repaid on the Closing Date.
Section 6.10 Taxes. The Borrower and each Subsidiary have filed all tax
returns (federal, state, and local) required to be filed, including all income,
franchise, employment, property, and sales tax returns, and have paid all of
their respective liabilities for taxes, assessments, governmental charges, and
other levies that are due and payable except for those liabilities whose amount,
applicability, or validity is being contested in good faith by appropriate
proceedings being diligently pursued, and for which adequate reserves have been
established.. The Borrower knows of no pending investigation of the Borrower or
any Subsidiary by any taxing authority or
LOAN AGREEMENT - PAGE 26
33
of any pending but unassessed material tax liability of the Borrower or any
Subsidiary. The federal income tax liability of certain of the Subsidiaries has
been reviewed and/or examined by the Internal Revenue Service from time to time.
The federal income tax liability of Borrower and the Subsidiaries for all
taxable years up to and including the taxable year ended December 31, 1994 has
been finally determined and satisfied.
Section 6.11 Margin Securities. Neither the Borrower nor any Subsidiary
is engaged principally, or as one of its important activities, in the business
of extending credit for the purpose of purchasing or carrying margin stock
(within the meaning of Regulations T, U, or X of the Board of Governors of the
Federal Reserve System), and no part of the proceeds of any Loan will be used to
purchase or carry any margin stock or to extend credit to others for the purpose
of purchasing or carrying margin stock.
Section 6.12 ERISA. The Borrower and each Subsidiary are in compliance
in all material respects with all applicable provisions of ERISA. Neither a
Reportable Event nor a Prohibited Transaction has occurred and is continuing
with respect to any Plan. No notice of intent to terminate a Plan has been
filed, nor has any Plan been terminated. No circumstances exist which constitute
grounds entitling the PBGC to institute proceedings to terminate, or appoint a
trustee to administer, a Plan, nor has the PBGC instituted any such proceedings.
Neither the Borrower nor any ERISA Affiliate has completely or partially
withdrawn from a Multiemployer Plan. The Borrower and each ERISA Affiliate have
met their minimum funding requirements under ERISA with respect to all of their
Plans, and the present value of all vested benefits under each Plan do not
exceed the fair market value of all Plan assets allocable to such benefits, as
determined on the most recent valuation date of the Plan and in accordance with
ERISA. Neither the Borrower nor any ERISA Affiliate has incurred any liability
to the PBGC under ERISA.
Section 6.13 Disclosure. No statement, information, report,
representation, or warranty made by the Borrower in this Agreement or in any
other Transaction Document or furnished to the Agent or any Bank in connection
with this Agreement or any transaction contemplated hereby contains any untrue
statement of a material fact or omits to state any material fact necessary to
make the statements herein or therein not misleading in light of the
circumstances under which such statement, information, report, representation or
warranty was provided. There is no fact known to the Borrower which has had a
Material Adverse Effect, or which could reasonably be expected to have a
Material Adverse Effect in the future that has not been disclosed to the Agent
and the Banks.
Section 6.14 Subsidiaries. As of the date hereof, the Borrower has no
Subsidiaries other than those listed on Schedule 6.14, and Schedule 6.14 sets
forth the type of entity and the jurisdiction of incorporation or organization
of each Subsidiary and the Borrower's or the Subsidiaries' percentage interest
of the ownership of each Subsidiary listed thereon.
Section 6.15 Agreements. Neither the Borrower nor any Subsidiary is a
party to any indenture, loan, or credit agreement, or to any lease or other
agreement or instrument, or subject to any charter or corporate restriction that
could reasonably be expected to have a Material Adverse Effect in absence of a
default thereunder. Neither the Borrower nor any Subsidiary is in default in any
material respect in the performance, observance, or fulfillment of any of the
obligations, covenants, or conditions contained in any agreement or instrument
material to its business to which it is a party.
Section 6.16 Compliance with Laws. Neither the Borrower nor any
Subsidiary is in violation in any material respect of any applicable law, rule,
regulation, order, or decree of any Governmental Authority or arbitrator,
including, without limitation, any Environmental Law.
LOAN AGREEMENT - PAGE 27
34
Section 6.17 Investment Company Act. Neither the Borrower nor any
Subsidiary is an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
Section 6.18 Public Utility Holding Company Act. Neither the Borrower
nor any Subsidiary is a "holding company" or a "subsidiary company" of a
"holding company" or an "affiliate" of a "holding company" or a "public utility"
within the meaning of the Public Utility Holding Company Act of 1935, as
amended.
Section 6.19 Environmental Matters. Except for instances of
noncompliance with or exceptions to the following that should not have,
individually or in the aggregate, a Material Adverse Effect: (i) no Hazardous
Materials exist on, about, or within or have been used, generated, stored,
transported, disposed of on, or released from any of the properties of the
Borrower or any Subsidiary except in compliance with applicable Environmental
Laws and (ii) the use which the Borrower and the Subsidiaries make and intend to
make of their respective properties will not result in the use, generation,
storage, transportation, accumulation, disposal, or release of any Hazardous
Material on, in, or from any of their properties except in compliance with
applicable Environmental Laws.
Section 6.20 Labor Disputes and Acts of God. Neither the business nor
the properties of the Borrower or any Subsidiary are affected by any fire,
explosion, accident, strike, lockout, or other labor dispute, drought, storm,
hail, earthquake, embargo, act of God or of the public enemy, or other casualty
(whether or not covered by insurance) that is having or could have a Material
Adverse Effect.
Section 6.21 Year 2000 Compliance.
(a) The Borrower has (i) undertaken a detailed review and assessment of
all areas within the business and operations of it and the Subsidiaries that
could be adversely affected by the "Year 2000 Problem" (that is, the risk that
computer applications used by the Borrower or the Subsidiaries may be unable to
recognize and perform properly date-sensitive functions involving certain dates
prior to and any date after December 31, 1999), (ii) developed a detailed plan
and time line for addressing the Year 2000 Problem on a timely basis, and (iii)
to date, implemented that plan in accordance with that timetable in all material
respects. The Borrower reasonably anticipates that all computer applications
that are material to the business and operations of it and the Subsidiaries will
on a timely basis be able to perform properly date-sensitive functions for all
dates before and after January 1, 2000 (that is, be "Year 2000 Ready").
(b) The Borrower is in the process of making inquiry of each of its and
the Subsidiaries' key suppliers, vendors and customers as to whether such
Persons will on a timely basis be Year 2000 Ready in all material respects. The
Borrower has not received any indication that leads it to believe that any such
key supplier, vendor or customer will fail to be Year 2000 Ready in a manner
that will result in a Material Adverse Effect. For purposes hereof, "key
suppliers, vendors and customers" refers to those suppliers, vendors and
customers of the Borrower and the Subsidiaries the business failure of which
would with reasonable probability be expected to have a Material Adverse Effect.
ARTICLE 7
Positive Covenants
The Borrower covenants and agrees that, as long as the Obligations or
any part thereof are outstanding or any Bank has any Commitment hereunder, the
Borrower will perform and observe the following positive covenants unless the
Required Banks otherwise agree:
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35
Section 7.1 Reporting Requirements. The Borrower will furnish to the
Agent and each Bank:
(a) Annual Financial Statements. As soon as available, and in any
event:
(i) within one hundred fifteen (115) days after the end of
each fiscal year of the Borrower, beginning with the fiscal year ending
December 31, 1998, a copy of the annual audit report of the Borrower
and the Subsidiaries for such fiscal year containing, on a consolidated
basis, balance sheets and statements of income, stockholders' equity,
and cash flow as at the end of such fiscal year and for the twelve
(12)-month period then ended, in each case setting forth in comparative
form the figures for the preceding fiscal year, all in reasonable
detail and audited and certified by Ernst & Young, LLP or other
independent certified public accountants of recognized standing
acceptable to the Agent, to the effect that such report has been
prepared in accordance with GAAP;
(ii) within ninety (90) days after the end of each year,
beginning with the year ending December 31, 1998, a copy of the annual
financial statements of each Domestic Insurance Subsidiary for such
year prepared in accordance with SAP as filed with the applicable
Insurance Regulatory Authority;
(b) Quarterly Financial Statements. As soon as available, and in any
event within fifty-five (55) days after the end of each of the quarters of each
fiscal year of the Borrower, (i) a copy of an unaudited financial report of the
Borrower and the Subsidiaries as of the end of such fiscal quarter and for the
portion of the fiscal year then ended containing, on a consolidated,
consolidating and business segment basis, balance sheets and statements of
income, stockholders' equity, and cash flow, in each case setting forth in
comparative form the figures for the corresponding period of the preceding
fiscal year, all in reasonable detail certified by the chief financial officer
of the Borrower to have been prepared in accordance with GAAP and to fairly and
accurately present (subject to year-end audit adjustments) the financial
condition and results of operations of the Borrower and the Subsidiaries, on a
consolidated, consolidating and business segment basis, at the date and for the
periods indicated therein and (ii) a copy of an unaudited financial report of
each Domestic Insurance Subsidiary as of the end of such fiscal quarter and for
the portion of the fiscal year then ended in the same form as the financial
statements delivered under clause (ii) of Section 7.1(a) and certified by the
chief financial officer of the Borrower to have been prepared in accordance with
SAP and to fairly and accurately present (subject to year-end audit adjustments)
the financial condition and results of operations of the Domestic Insurance
Subsidiary the subject thereof, at the date and for the periods indicated
therein;
(c) Compliance Certificate. Concurrently with the delivery of each of
the financial statements referred to in subsections 7.1(a) and 7.1(b), a
Compliance Certificate;
(d) Annual Management Discussion. Promptly after the preparation
thereof, copies of all management discussions and analyses or similar reports
(howsoever designated or described) which are prepared by or for any Insurance
Subsidiary and filed with any Insurance Regulatory Authority;
(e) Management Letters. Promptly upon receipt thereof, a copy of any
management letter or written report submitted to the Borrower or any Subsidiary
by independent certified public accountants with respect to the business,
condition (financial or otherwise), operations, prospects, or properties of the
Borrower or any Subsidiary;
LOAN AGREEMENT - PAGE 29
36
(f) Notice of Litigation. Promptly after the commencement thereof,
notice of all actions, suits, and proceedings before any Governmental Authority
or arbitrator affecting the Borrower or any Subsidiary which, if determined
adversely to the Borrower or such Subsidiary, could have a Material Adverse
Effect;
(g) Notice of Default. As soon as possible and in any event within five
(5) days after the Borrower becomes aware of any Default, a written notice
setting forth the details of such Default and the action that the Borrower has
taken and proposes to take with respect thereto;
(h) ERISA Reports. Promptly after the filing or receipt thereof, copies
of all reports, including annual reports, and notices which the Borrower or any
Subsidiary files with or receives from the PBGC or the U.S. Department of Labor
under ERISA; and as soon as possible and in any event within five (5) days after
the Borrower has determined that any Reportable Event or Prohibited Transaction
has occurred with respect to any Plan or that the PBGC or within five (5) days
after the Borrower or any Subsidiary has instituted or will institute
proceedings under Title IV of ERISA to terminate any Plan, a certificate of the
chief financial officer of the Borrower setting forth the details as to such
Reportable Event or Prohibited Transaction or Plan termination and the action
that the Borrower proposes to take with respect thereto;
(i) Reports to Other Creditors. Promptly after the furnishing thereof,
copies of any statement or report furnished by the Borrower or any Subsidiary to
any other party pursuant to the terms of any indenture, loan, or credit or
similar agreement and not otherwise required to be furnished to the Agent and
the Banks pursuant to any other clause of this Section;
(j) Notice of Material Adverse Change. As soon as possible and in any
event within five (5) days after the Borrower becomes aware of occurrence
thereof, written notice of any matter that could have a Material Adverse Effect;
(k) Proxy Statements, Etc. As soon as available, one copy of each
financial statement, report, notice or proxy statement sent by the Borrower or
any Subsidiary to its security holders generally and one copy of each regular,
periodic or special report, registration statement, or prospectus filed by the
Borrower or any Subsidiary with any securities exchange or the Securities and
Exchange Commission or any successor agency; and
(l) General Information. Promptly, such other information concerning
the Borrower or any Subsidiary as the Agent or any Bank may from time to time
reasonably request.
Section 7.2 Maintenance of Existence; Conduct of Business. Except as
permitted by Section 8.3, the Borrower will, and will cause each Subsidiary to,
preserve and maintain its corporate existence and all of its leases, privileges,
licenses, permits, franchises, qualifications, and rights that are necessary or
desirable in the ordinary conduct of its business. The Borrower will, and will
cause each Subsidiary to, conduct its business in an orderly and efficient
manner in accordance with good business practices.
Section 7.3 Maintenance of Properties. The Borrower will, and will
cause each Subsidiary to, maintain, keep, and preserve all of its properties
necessary or useful in the proper conduct of its business in good repair,
working order, and condition and make all necessary repairs, renewals,
replacements, betterments, and improvements thereof.
Section 7.4 Taxes and Claims. The Borrower will, and will cause each
Subsidiary to, pay or discharge at or before maturity or before becoming
delinquent (a) all taxes, levies, assessments, and governmental charges imposed
on it or its income or profits or any of its property, and (b) all lawful claims
for labor, material, and supplies, which, if unpaid, might become a Lien upon
any of its property; provided, however, that neither the
LOAN AGREEMENT - PAGE 30
37
Borrower nor any Subsidiary shall be required to pay or discharge any tax, levy,
assessment, or governmental charge or claim for labor, material, or supplies
whose amount, applicability, or validity is being contested in good faith by
appropriate proceedings being diligently pursued and for which adequate reserves
have been established.
Section 7.5 Insurance. The Borrower will, and will cause each
Subsidiary to, keep insured by financially sound and reputable insurers all
property of a character usually insured by Persons engaged in the same or
similar business similarly situated against loss or damage of the kinds and in
the amounts customarily insured against by such Persons and carry such other
insurance as is usually carried by such Persons.
Section 7.6 Inspection Rights. When no Event of Default exists and
subject to all confidentiality agreements entered into by the Borrower or any
Subsidiary in the ordinary course of its business (including those entered into
in connection with equity and asset acquisitions and the acquisition and use of
intellectual property) and the limitations on disclosure imposed therein, the
Borrower will, and will cause each Subsidiary to, permit representatives of the
Agent and each Bank, during normal business hours and upon no less than two (2)
Business Days prior notice, to examine, copy, and make extracts from its books
and records, to visit and inspect its properties, and to discuss its business,
operations, and financial condition with its officers, employees, and
independent certified public accountants. If an Event of Default exists, the
Borrower will, and will cause each Subsidiary to, permit representatives of the
Agent and each Bank, during normal business hours but without prior notice, to
examine, copy, and make extracts from its books and records, to visit and
inspect its properties, and to discuss its business, operations, and financial
condition with its officers, employees, and independent certified public
accountants.
Section 7.7 Keeping Books and Records. The Borrower will, and will
cause each Subsidiary to, maintain proper books of record and account in which
full, true, and correct entries in conformity with GAAP (and with respect to the
Domestic Insurance Subsidiaries, SAP) shall be made of all dealings and
transactions in relation to its business and activities.
Section 7.8 Compliance with Laws. The Borrower will, and will cause
each Subsidiary to, comply in all material respects with all applicable laws,
rules, regulations, orders, and decrees of any Governmental Authority or
arbitrator.
Section 7.9 Compliance with Agreements. The Borrower will, and will
cause each Subsidiary to, comply in all material respects with all agreements,
contracts, and instruments binding on it or affecting its properties or
business.
Section 7.10 Further Assurances. The Borrower will, and will cause each
Subsidiary to, execute and deliver such further documents and take such further
action as may be requested by the Agent to carry out the provisions and purposes
of this Agreement and the other Transaction Documents.
Section 7.11 ERISA. The Borrower will, and will cause each Subsidiary
to, comply with all minimum funding requirements and all other material
requirements of ERISA, if applicable, so as not to give rise to any liability
under ERISA or any Plan.
Section 7.12 Year 2000 Compliance. The Borrower will promptly notify
the Agent in the event the Borrower discovers or determines that any computer
application (including those of its key suppliers, vendors and customers) will
not be Year 2000 Ready on a timely basis and a Material Adverse Effect will
occur as a result thereof.
LOAN AGREEMENT - PAGE 31
38
ARTICLE 8
Negative Covenants
The Borrower covenants and agrees that, as long as the Obligations or
any part thereof are outstanding or any Bank has any Commitment hereunder, the
Borrower will perform and observe the following negative covenants unless the
Required Banks otherwise agree:
Section 8.1 Debt. The Borrower will not, and will not permit any
Subsidiary to, incur, create, assume, or permit to exist any Debt, except:
(a) Debt to the Banks pursuant to the Loan Documents and Debt arising
under the 1999 Senior Note Agreement, provided that the 1999 Senior Note
Agreement is entered into on terms which, taken as a whole, are not materially
less favorable to the Borrower than the terms set forth in the draft Summary of
Proposed Terms attached as Schedule 8.1 hereto;
(b) Debt in the amount disclosed on Schedule 6.9 (including any
advances made on or after the Closing Date pursuant to the commitments to lend
disclosed on Schedule 6.9) hereto and any extensions, renewals or refinancings
of such existing Debt so long as (i) the principal amount of such Debt after
such renewal, extension or refinancing shall not exceed the principal amount of
such Debt which was outstanding immediately prior to such renewal, extension or
refinancing, and (ii) such Debt shall not be secured by any assets other than
assets securing such Debt, if any, prior to such renewal, extension or
refinancing;
(c) Debt of the Borrower to any Subsidiary or of any Subsidiary to the
Borrower or another Subsidiary; provided a Credit Subsidiary may not incur,
create, assume, or permit to exist any Debt owed by that Credit Subsidiary to an
Insurance Subsidiary except any such Debt existing on the Closing Date which is
disclosed on Schedule 6.9 hereto and other Debt of the type permitted by Section
8.5(l)(i);
(d) Debt (i) under Interest Rate Protection Agreements having an
aggregate notional amount at any one time outstanding not to exceed Sixty-Five
Million Dollars ($65,000,000.00) or (ii) under Interest Rate Protection
Agreements entered into to mitigate the interest rate risk of Debt incurred by
the Credit Subsidiaries and otherwise permitted by clause (e) below; provided
that, in each case, each counterparty shall be rated in one of the three highest
rating categories of S&P or Xxxxx'x;
(e) Debt of a Credit Subsidiary incurred in the ordinary course of its
credit card or student loan operations, provided that such Debt (i) is secured
by credit card receivables and/or student loans or (ii) represents unfunded
commitments to provide credit card or student loans;
(f) Guaranties given in the ordinary course of business with respect to
surety and appeal bonds, performance and return-of-money bonds and other similar
obligations;
(g) Debt constituting obligations to reimburse worker's compensation
insurance companies for claims paid by such companies on the Borrower's or a
Subsidiary's behalf in accordance with the policies issued to the Borrower and
the Subsidiaries;
(h) Debt (i) assumed by the Borrower or a Subsidiary in connection with
an acquisition permitted hereby; and (ii) Debt of a Person which becomes a
Subsidiary after the date hereof in an acquisition permitted hereby which Debt
was in existence at the time such Person became a Subsidiary; provided that no
Default exists or would result therefrom and no such Debt shall have been
created or incurred in connection with or in
LOAN AGREEMENT - PAGE 32
39
anticipation of the acquisition in question (provided that this clause (h) shall
not prohibit Debt otherwise permitted to be incurred, created or assumed under
the other provisions of this Section 8.1);
(i) Guarantees by the Borrower or any Subsidiary of Debt of a
Subsidiary permitted hereby or of operating leases of a Subsidiary entered into
in the ordinary course of business; provided that no Insurance Subsidiary may
guarantee Debts or any operating lease of a Credit Subsidiary;
(j) In addition to the Debt described in clauses (a) through (i) above,
the following:
(i) Unsecured Debt of the Borrower and the Subsidiaries;
and
(ii) Debt secured by purchase money Liens permitted by
Section 8.2 (g);
provided that (x) the aggregate principal amount of all Debt at any time
outstanding under the permissions of items (i) and (ii) of this clause (j) shall
never exceed Twenty-Five Million Dollars ($25,000,000); (y) at the time of the
incurrence, creation, or assumption of any of such Debt, no Default shall have
occurred and be continuing; and (z) such Debt shall be permitted by the Senior
Note Agreements; provided that a Credit Subsidiary may not rely on the
permissions given by this clause (j) to incur, create, assume or permit to exist
any Debt owing by it to any Insurance Subsidiary; and
(k) In addition to the Debt described in clauses (a) through (j) above,
unsecured Debt of the Borrower or a Subsidiary which is subordinated to the
Obligations on terms acceptable to the Required Banks and which is otherwise
provided on terms acceptable to the Required Banks; provided that at the time of
the incurrence, creation, or assumption of any of such Debt, no Default shall
have occurred and be continuing; such Debt shall be permitted by the Senior Note
Agreements; and such Debt, if owed by a Credit Subsidiary, shall not be owed to
an Insurance Subsidiary unless such Debt is of the type permitted by Section 8.5
(l)(i).
Section 8.2 Limitation on Liens. The Borrower will not, and will not
permit any Subsidiary to, incur, create, assume, or permit to exist any Lien
upon any of its property, whether now owned or hereafter acquired, except the
following, none of which (other than as disclosed on Schedule 8.2) shall attach
to or otherwise encumber the Capital Stock of any Subsidiary:
(a) Liens disclosed on Schedule 8.2 hereto, and Liens created
and existing in connection with any extensions, renewals or
refinancings of the Debt secured by such Liens as permitted under
Section 8.1(b) provided that (i) no such Lien is expanded to cover any
additional property (other than after acquired title in or on such
property and proceeds of the existing collateral and other than
property having no greater fair market value than the existing
collateral for which such property is being substituted as new
collateral) after the date hereof; and (ii) no such Lien is spread to
secure any additional Debt after the date hereof;
(b) Liens in favor of the Agent for the benefit of itself and
the Banks pursuant to the Loan Documents;
(c) Encumbrances consisting of easements, zoning restrictions,
or other restrictions on the use of real property that do not
(individually or in the aggregate) materially affect the value of the
property encumbered thereby or materially impair the ability of the
Borrower or the Subsidiaries to use such property in their respective
businesses, and none of which is violated in any material respect by
existing or proposed structures or land use;
LOAN AGREEMENT - PAGE 33
40
(d) Liens (other than Liens relating to liabilities resulting
from the violation of Environmental Laws or ERISA) for taxes,
assessments, or other governmental charges that are not delinquent or
which are being contested in good faith and for which adequate reserves
have been established;
(e) Liens of mechanics, materialmen, warehousemen, carriers,
or other similar statutory Liens securing obligations that are not yet
due and are incurred in the ordinary course of business or which are
being contested in good faith and for which adequate reserves have been
established;
(f) Liens resulting from good faith deposits to (i) secure
payments of workmen's compensation or other social security programs,
(ii) secure the performance of tenders, statutory obligations, surety
and appeal bonds, bids, contracts (other than for payment of Debt), or
leases made in the ordinary course of business, (iii) satisfy escrow
obligations under reinsurance agreements and (iv) satisfy statutory
obligations imposed by applicable Insurance Regulatory Authorities;
(g) Purchase-money Liens on any property hereafter acquired or
a Lien incurred in connection with any conditional sale or other title
retention agreement or Capital Lease Obligation; provided that:
(i) any property subject to the foregoing is acquired
by the Borrower or any Subsidiary in the ordinary course of
its business and the Lien on the property attaches
concurrently or within sixty (60) days after the acquisition
thereof;
(ii) the Debt secured by any Lien so created, assumed,
or existing shall not exceed the lesser of the cost or fair
market value at the time of acquisition of the property
covered thereby;
(iii) each such Lien shall attach only to the
property so acquired; and
(iv) the Debt incurred is permitted by Section
8.1(j);
(h) Any extension, renewal or replacement of any of the Liens
described in clauses (c) through (g), provided that Liens permitted
thereby shall not be spread to cover any additional Debt or property
(other than after acquired title in or on such property and proceeds of
the existing collateral and other than property having no greater fair
market value than the existing collateral for which such property is
being substituted as collateral);
(i) Any attachment or judgment Lien not constituting an Event
of Default;
(j) Any interest or title of a licensor, lessor or sublessor
under any license or lease incurred in the ordinary course of business;
(k) Liens on assets of a Subsidiary existing prior to the time
such assets were acquired by the Subsidiary or prior to the time such
Person became a Subsidiary and not incurred as a result of, in
connection with or in anticipation of such acquisition or such Person
becoming a Subsidiary; provided (i) such Liens do not extend to or
cover any assets other than the assets encumbered prior to any such
acquisition or prior to such Person becoming a Subsidiary (other than
after acquired title in or on such property and proceeds of the
existing collateral and other than property having no greater fair
market value than the existing collateral for which such property is
being substituted as new collateral) and (ii) such Liens only secure
Debt permitted by Section 8.1(h);
LOAN AGREEMENT - PAGE 34
41
(l) Liens against equipment arising from precautionary UCC
financing statement filings regarding operating leases entered into by
the Borrower and the Subsidiaries in the ordinary course of business;
(m) Liens on credit card receivables and student loans
securing Debt permitted by clause (e) of Section 8.1;
(n) Liens granted in favor of Borrower or a Subsidiary
securing Debt permitted by clause (c) of Section 8.1; and
(o) Liens other than those listed in clauses (a) through (n)
of this Section 8.2 if at the time such Lien attaches, such Lien is
permitted by the Senior Note Agreements and no Default exists; provided
that the principal amount of the Debt or other obligations secured by
the Liens permitted by this clause (o) shall never exceed Twenty
Million Dollars ($20,000,000) at any time in the aggregate and any such
Debt shall otherwise be permitted by Section 8.1 and the Senior Note
Agreements.
Neither the Borrower nor any Subsidiary shall enter into or assume any agreement
(other than the Loan Documents and the Senior Note Agreements) prohibiting the
creation or assumption of any Lien upon its properties, whether now owned or
hereafter acquired unless such agreement permits the granting of Liens to secure
the Obligations; provided that, in connection with any Debt permitted to be
incurred under Section 8.1 which is used to finance the acquisition of an asset
and any Lien securing the payment thereof permitted by this Section 8.2, the
Borrower or the Subsidiary may agree that it will not permit any other Liens to
encumber the asset so acquired. Except as provided herein, as disclosed in
Schedule 8.2 and as may be imposed by any applicable laws and regulations, the
Borrower will not and will not permit any Subsidiaries directly or indirectly to
create or otherwise cause or suffer to exist or become effective any consensual
encumbrance or restriction of any kind on the ability of any Subsidiary to: (1)
pay dividends or make any other distribution on any of such Subsidiary's Capital
Stock owned by the Borrower or any other Subsidiary; (2) subject to
subordination provisions, pay any Debt owed to the Borrower or any other
Subsidiary; (3) make loans or advances to any Subsidiary; or (4) transfer any of
its property or assets to any Subsidiary.
Section 8.3 Mergers, Etc. The Borrower will not, and will not permit
any Subsidiary to, become a party to a merger or consolidation, or purchase or
otherwise acquire all of the properties of any Person or purchase or acquire
properties of a Person with a book value in excess of ten percent (10%) of the
book value of all properties of such Person (as determined as of the date of
acquisition) or any shares or other evidence of beneficial ownership of any
Person, or wind-up, dissolve, or liquidate itself; provided that as long as no
Default exists or would result therefrom and provided the Borrower gives the
Agent and the Banks prior written notice:
(i) The Subsidiaries may acquire shares, equity securities or
other evidence of beneficial ownership of a Person (including a
Subsidiary) or property of a Person (including a Subsidiary) in
accordance with the restrictions set forth in Section 8.5 and, with
respect to a Subsidiary, Section 8.7(f); provided no Insurance
Subsidiary may acquire shares, equity securities or other evidence of
beneficial ownership in any Credit Subsidiary or any property of any
Credit Subsidiary except for the shares, equity securities or other
evidence of beneficial ownership permitted by Section 8.5(l)(i) and
(ii);
(ii) In connection with acquisitions permitted by Section 8.5,
the Borrower may merge or consolidate with any other Person provided
the Borrower is the surviving Person;
(iii) A Subsidiary may wind-up, dissolve or liquidate if its
assets are transferred to the Borrower or a Subsidiary or disposed of
pursuant to Section 8.7; and
LOAN AGREEMENT - PAGE 35
42
(iv) Any Subsidiary may merge or consolidate with the Borrower
(provided the Borrower is the surviving entity) or with any other
Subsidiary or, in connection with acquisitions permitted hereby, any
other Person that, in each case, is or becomes a Subsidiary; provided
no Insurance Subsidiary may merge or consolidate with any Credit
Subsidiary.
Section 8.4 Restricted Payments. The Borrower will not declare or pay
any dividends or make any other payment or distribution (whether in cash,
property, or obligations) on account of its Capital Stock, or redeem, purchase,
retire, or otherwise acquire any of its Capital Stock, or permit any of the
Subsidiaries to purchase or otherwise acquire any Capital Stock of the Borrower,
or set apart any money for a sinking or other analogous fund for any dividend or
other distribution on its Capital Stock or for any redemption, purchase,
retirement, or other acquisition of any of its Capital Stock; provided, however,
that if no Default exists or would result therefrom, the Borrower may (i)
purchase common Capital Stock of the Borrower from directors, officers,
employees or agents of Borrower and the Subsidiaries no longer employed by or
associated with the Borrower or a Subsidiary, provided that the Capital Stock so
purchased was acquired by such directors, officers, employees or agents pursuant
to a stock ownership or purchase plan or compensation plan of the Borrower
approved by the Board of Directors of the Borrower; (ii) purchase its common
Capital Stock in the open market in accordance with past practices to fulfill
the requirements of the stock ownership or purchase plans or compensation plans
provided to directors, officers, employees and agents of the Borrower and the
Subsidiaries which plans are approved by the Board of Directors of the Borrower;
and (iii) declare or pay dividends or other distributions on account of its
Capital Stock, or redeem, purchase, retire or otherwise acquire its Capital
Stock (in addition to the purchases permitted by clauses (i) and (ii) of this
Section 8.4) so long as the aggregate amount paid, distributed or otherwise
given under the permissions of this clause (iii) does not exceed Thirty-Five
Million Dollars ($35,000,000) in the aggregate for the entire term of this
Agreement.
Section 8.5 Investments. The Borrower will not, and will not permit any
Subsidiary to, make or permit to remain outstanding any advance, loan, extension
of credit, or capital contribution to or investment in any Person, or purchase
or own any stock, bonds, notes, debentures, or other securities of any Person,
or be or become a joint venturer with or partner of any Person or purchase all
the properties of a Person or purchase properties of a Person with a book value
in excess of ten percent (10%) of the book value of all properties of such
Person determined as of the date of acquisition (all such transactions being
herein called "Investments"), except:
(a) The Borrower and any Subsidiary may make Investments in readily
marketable direct obligations of the United States of America or any agency
thereof or readily marketable direct obligations guaranteed or insured as to
principal and interest by the United States of America or any agency thereof;
(b) The Borrower and any Subsidiary may make Investments in (i) fully
insured certificates of deposit; and (ii) other certificates of deposit issued
by any commercial bank operating in the United States of America having capital
and surplus in excess of $500,000,000 and rated in one of the four highest
unsecured long-term debt ratings of S&P or Xxxxx'x;
(c) The Borrower and any Subsidiary may make Investments in commercial
paper of a domestic issuer if at the time of purchase such paper is rated in one
of the two highest ratings of S&P or Xxxxx'x;
(d) The Borrower and any Subsidiary may acquire and own:
(i) all the shares, other equity securities or other
evidence of beneficial ownership of a Person;
LOAN AGREEMENT - PAGE 36
43
(ii) a majority of the shares, other equity
securities or other evidence of beneficial ownership of a
Person; or
(iii) such number of such shares, securities or
beneficial ownership that represents a controlling interest in
such Person;
if, with respect to each such acquisition, no Default exists or would result
therefrom, the Borrower shall provide prompt notice to Agent of such acquisition
and, with respect to any Insurance Subsidiary, any such Investment is made in
accordance with applicable insurance laws and regulations; provided that
Borrower's or a Subsidiary's acquisition and ownership of shares, other equity
securities or other evidence of beneficial ownership of existing and newly
created Subsidiaries is not governed by this clause (d) but is governed by
clause (f) of this Section 8.5;
(e) The Borrower and any Subsidiary may acquire and own:
(i) all of a Person's (including a Subsidiary's)
property; or
(ii) properties of a Person (including a Subsidiary)
with a book value in excess of ten percent (10%) of the book
value of all properties of such Person determined as of the
date of acquisition
if, with respect to each such acquisition, no Default exists or would result
therefrom; the Borrower shall provide prompt notice to Agent of such
acquisition; with respect to any Insurance Subsidiary, any such Investment is
made in accordance with applicable insurance laws and regulations; no Insurance
Subsidiary may acquire properties of any Credit Subsidiary; and if the
acquisition is made from a Subsidiary, the assets disposition is consummated in
compliance with Section 8.7;
(f) The Borrower and any Subsidiary may own stock of the Subsidiaries
existing on the date hereof, the Borrower and any Subsidiary may make loans to
the Borrower or other Subsidiaries and enter into Guarantees, in each case, as
permitted by Section 8.1 and, if no Default exists, the Borrower and any
Subsidiary may make capital contributions to or investments in, or purchase any
stocks or other equity securities of a Subsidiary or a newly created Person
organized by the Borrower or a Subsidiary that, immediately after such
investment or purchase, will be a Subsidiary; provided no Insurance Subsidiary
shall make any capital contributions to or investments in, or purchase any stock
or other equity securities of a Credit Subsidiary except for the Investments
permitted by clauses (l)(i) and (l)(ii) of this Section 8.5;
(g) The Borrower and any Subsidiaries may in the ordinary course of
business (i) make advances to agents, officers, directors and employees for
business expenses incurred in the ordinary course of business; (ii) make
advances to agents against future commissions in accordance with past practices
or standard industry practice; and (iii) make loans to officers, directors,
agents and employees the proceeds of which are used to purchase common stock of
the Borrower provided that the aggregate amount of the loans made pursuant to
this clause (iii) shall never exceed Fifteen Million Dollars ($15,000,000) in
the aggregate at any time and each such loan shall be secured by the common
stock so purchased;
(h) The Borrower and any Subsidiary may hold Investments received in
connection with the bankruptcy or reorganization of vendors, suppliers and
customers and in connection with the settlement of delinquent obligations of,
and disputes with, vendors, customers and suppliers arising in the ordinary
course of business;
LOAN AGREEMENT - PAGE 37
44
(i) The Borrower and any Subsidiary may make extensions of trade credit
in the ordinary course of business;
(j) The Borrower and any Subsidiary involved in the credit card
business may make extensions of credit to its customers under credit card
agreements in the ordinary course of business;
(k) The Borrower and any Subsidiary involved in the student loan
business may extend credit in the form of student loans; and
(l) Any Insurance Subsidiary may make Investments in the following:
(i) Debt securities (excluding CMO Derivative Investments, as
defined below) rated BBB- or better by S& P, Baa3 or better by Xxxxx'x
or NAIC-2 or better by the NAIC; provided that any such Investment
which, at any time after which it is made ceases to meet such rating
requirements, shall not be prohibited until a period of ninety (90)
days after the date on which such rating requirement is no longer met;
(ii) preferred stock by issuers whose debt instruments meet
the rating requirements specified in clause (l)(i) above; provided that
the aggregate book value of the Investments made pursuant to the
permissions of this clause (l)(ii) by an Insurance Subsidiary shall not
exceed twenty percent (20%) of the statutory surplus of such Subsidiary
determined in accordance with SAP;
(iii) insurance policy loans made to insureds in the ordinary
course of business;
(iv) Investments other than those identified in this Section
8.5 of an Insurance Subsidiary which are of a type and quality
acceptable to the Insurance Regulatory Authority regulating such
Insurance Subsidiary; provided that (x) the aggregate book value of
such other Investments, when aggregated with the book value of all
Investments of such Subsidiary outstanding pursuant to clause (l)(ii)
above do not exceed, at any one time twenty percent (20%) of the
aggregate book value of the Investments of such Insurance Subsidiary;
(y) no Insurance Subsidiary may make investments under the permissions
of this clause (iv) in any Credit Subsidiary; and (z) CMO Derivative
Investments of an Insurance Subsidiary shall not exceed, in the
aggregate five percent (5%) of the statutory surplus of such Subsidiary
determined in accordance with SAP.
As used herein, the term "CMO Derivative Investments" means any interest in a
volatile tranche of a collateralized mortgage obligation, including without
limitation, such interests typically classified as z bonds, inverse floaters,
PAC II, PAC III, Ioettes, support bonds, interest-only investments,
principal-only investments, residuals, inverse IO's and super floaters.
Section 8.6 Transactions With Affiliates. The Borrower will not, and
will not permit any Subsidiary to, enter into any transaction, including,
without limitation, the purchase, sale, or exchange of property or the rendering
of any service, with any Affiliate of the Borrower or such Subsidiary, except in
the ordinary course of and pursuant to the reasonable requirements of the
Borrower's or such Subsidiary's business and upon fair and reasonable terms no
less favorable to the Borrower or such Subsidiary than would be obtained in a
comparable arms-length transaction with a Person not an Affiliate of the
Borrower or such Subsidiary.
Section 8.7 Disposition of Property. The Borrower will not, and will
not permit any Subsidiary to, sell, lease, assign, transfer, or otherwise
dispose of any of its property, except (a) dispositions of inventory, credit
card receivables and student loans in the ordinary course of business, including
any sale or other transfer pursuant to
LOAN AGREEMENT - PAGE 38
45
a securitization; (b) dispositions of assets reasonably and in good faith
determined by the Borrower or such Subsidiary to be obsolete or no longer
necessary to its business if no Default exists or would result therefrom; (c)
any sale, lease, assignment, transfer or other disposition of assets of a
Subsidiary as a result of a transaction permitted by Section 8.3, (d) licenses,
sublicenses, leases and subleases of intellectual property, general intangibles,
or other property (other than Capital Stock), in each case in the ordinary
course of business, that do not materially interfere with the business of the
Borrower and the Subsidiaries; (e) the sale of overdue accounts receivable
arising in the ordinary course of business, but only in connection with the
compromise or settlement thereof; (f) the sale, lease, assignment, transfer or
other disposition of assets of a Subsidiary to the Borrower or any Subsidiary;
provided that no Credit Subsidiary may sell, lease, assign, transfer or
otherwise convey any of its assets to an Insurance Subsidiary and no Insurance
Subsidiary may sell, lease, assign, transfer or otherwise convey any of its
assets to a Credit Subsidiary (other than the sale, redemption or other
disposition of a Debt instrument of, or an Investment in, a Credit Subsidiary in
accordance with its specific terms to that Credit Subsidiary); (g) the
disposition of property by an Insurance Subsidiary in connection with
reinsurance treaties or agreements entered into in the ordinary course of
business; (h) the disposition of Investments by an Insurance Subsidiary in the
ordinary course of business in connection with the management of its investment
portfolio provided the proceeds thereof are utilized to satisfy policy
liabilities and expenses incurred in the ordinary course of business, are
reinvested in accordance with Section 8.5 or are held as cash; (i) the
assignment, transfer or other disposition by Borrower of its direct interests in
the Credit Subsidiaries to a wholly-owned Subsidiary of Borrower which is not an
Insurance Subsidiary; and (j) the disposition of assets, in addition to those
set forth in clauses (a) through (i) above, provided that (i) no Default exists
or would result therefrom, (ii) the consideration received is at least equal to
the fair market value of such assets; (iii) the aggregate net book value of the
assets disposed of during any fiscal year of the Borrower does not exceed
fifteen percent (15%) of the Total Capitalization in effect as of the date of
determination; and (iv) no Credit Subsidiary may sell, lease, assign, transfer
or otherwise convey any of its assets to an Insurance Subsidiary under the
permissions of this clause (j) and no Insurance Subsidiary may sell, lease,
assign, transfer or otherwise convey any of its assets to a Credit Subsidiary
under the permissions of this clause (j) .
Section 8.8 Prepayment of Debt. The Borrower will not prepay the Debt
outstanding pursuant to the Senior Note Agreements except (i) for prepayments
resulting from a refinancing permitted pursuant to Section 8.1(b); (ii)
Borrower may prepay such Debt if the Consolidated Net Worth immediately prior to
such prepayment is Six Hundred Fifty Million Dollars ($650,000,000) or more; and
(iii) Borrower may make mandatory prepayments pursuant to Section 5.1 of the
8.75% Senior Note Agreement.
Section 8.9 Lines of Business. The Borrower will not, and will not
permit any Subsidiary to, engage in any line or lines of business activity other
than the insurance, financial services and information technology businesses,
other businesses in which they are engaged on the date hereof, any businesses
reasonably related thereto and the sale of products or services utilizing the
existing channels of distribution currently utilized by the Borrower and the
Subsidiaries.
Section 8.10 Environmental Protection. The Borrower will not, and will
not permit any Subsidiary to, (a) use (or permit any tenant to use) any of its
properties for the handling, processing, storage, transportation, or disposal of
any Hazardous Material except in compliance with applicable Environmental Laws,
(b) generate any Hazardous Material except in compliance with applicable
Environmental Laws, (c) conduct any activity that is likely to cause a release
or threatened release of any Hazardous Material in violation of any
Environmental Law, or (d) otherwise conduct any activity or use any of its
properties in any manner that is likely to violate any Environmental Law or
create any liabilities with respect thereto for which the Borrower or any of the
Subsidiaries would be responsible, except for circumstances or events described
in clauses (a) through (d) of this Section that could not have a Material
Adverse Effect.
LOAN AGREEMENT - PAGE 39
46
Section 8.11 Modifications to Senior Note Agreements. Borrower will not
change or amend the terms of the Senior Note Agreements, if the effect of such
amendment is to: (a) shorten the time of payments of principal or interest due
under either Senior Note Agreement; (b) change any event of default or any
covenant to a materially more onerous or restrictive provision; or (c) change or
amend any other term of either Senior Note Agreement in a manner materially
adverse to Agent or any Bank as creditors or the interests of the Banks under
this Agreement or any other Loan Document in any respect.
ARTICLE 9
Financial Covenants
The Borrower covenants and agrees that, as long as the Obligations or
any part thereof are outstanding or any Bank has any Commitment hereunder, the
Borrower will perform and observe the following financial covenants unless the
Required Banks otherwise agree:
Section 9.1 Consolidated Net Worth. The Borrower will at all times
maintain Consolidated Net Worth in an amount not less than the sum of (a) Five
Hundred Million Dollars ($500,000,000) plus (b) twenty-five percent (25%) of the
positive Consolidated Net Income for each completed fiscal year ending after
December 31, 1998. The term "Consolidated Net Income" means, for any period, the
sum of the following, calculated without duplication: (a) Net Income (as defined
in Section 9.3) plus (b) the income (or loss) of all Insurance Subsidiaries and
Credit Subsidiaries.
Section 9.2 Consolidated Debt to Total Capitalization Ratio. The
Borrower will not at any time permit the ratio of Consolidated Debt to Total
Capitalization to be greater than 0.30 to 1.0.
Section 9.3 Interest Coverage. Borrower shall not permit the ratio of
Cash Flow to Interest Expense, all as calculated for the four (4) fiscal quarter
period ending on the last day of each fiscal quarter of Borrower to be less than
(i) 3.10 to 1.00 as of each fiscal quarter end prior to the date when all Debt
outstanding under the 8.75% Senior Note Agreement is paid and satisfied in full;
and (ii) 2.50 to 1.00 as of each fiscal quarter end thereafter. As used in this
Section 9.3, the following terms have the following meanings:
"Cash Flow" means, for any period, the total of the following
each calculated without duplication:
(i) the total of the following for Borrower and all
Subsidiaries (other than the Insurance Subsidiaries, United
Credit National Bank, Educational Finance Group, Inc. and the
Subsidiaries owned by Educational Finance Group, Inc. but
otherwise on a consolidated basis in accordance with GAAP) for
such period: (a) Net Income; plus (b) any provision for (or
less any benefit from) income or franchise taxes included in
determining Net Income; plus (c) interest expense deducted in
determining Net Income; plus (d) amortization and depreciation
expense deducted in determining Net Income; plus (e) other
noncash charges deducted in determining Net Income and not
already deducted in accordance with clauses (b), (c) and (d)
of the definition of Net Income; plus
(ii) the sum of:
(a) the total of the Available Domestic Insurance
Subsidiary Earnings of all Domestic Insurance Subsidiaries for
LOAN AGREEMENT - PAGE 40
47
such period, with the "Available Domestic Insurance
Subsidiary Earnings" determined separately for each
Domestic Insurance Subsidiary and equal for each
Domestic Insurance Subsidiary to the product of the
following (1) lesser of (A) the total of the ordinary
dividend capacity of such Domestic Insurance
Subsidiary for such period determined in accordance
with SAP or (B) the net income of such Domestic
Insurance Subsidiary for such period determined in
accordance with SAP multiplied by (2) the percentage
equal to the percentage of Borrower's direct or
indirect ownership of all the Capital Stock of such
Subsidiary entitled to share in the receipt of
ordinary dividends or other ordinary distributions of
earnings; plus
(b) the total of the Attributable Net Income
of all Insurance Subsidiaries organized under the
laws of a jurisdiction located outside the United
States of America for such period, with the
"Attributable Net Income" determined separately for
each such Insurance Subsidiary and equal for each
such Insurance Subsidiary to the product of (1) the
net income of such Insurance Subsidiaries for such
period determined in accordance with GAAP multiplied
by (2) the percentage equal to the percentage of
Borrower's direct or indirect ownership of all the
Capital Stock of such Insurance Subsidiary entitled
to share in the receipt of ordinary distributions of
earnings.
"Interest Expense"means, for any period, the sum of (i) the
consolidated cash interest expense of Borrower and all Subsidiaries;
minus (ii) the cash interest expense of the Insurance Subsidiaries;
minus (iii) the cash interest expense attributable to any Debt incurred
in the ordinary course of the Borrower's and the Subsidiaries' credit
card and student loan businesses if such Debt is secured by credit card
receivables or student loans.
"Net Income" means, for any period, the Borrower's
consolidated net income (or loss) from operations, but excluding, to
the extent not already excluded: (a) the income of any other Person
(other than a Subsidiaries) in which Borrower or any of the
Subsidiaries has an ownership interest, unless received by Borrower or
a Subsidiary in a cash distribution; (b) any after-tax gains or losses
attributable to asset disposition; (c) to the extent not included in
clauses (a) and (b) above, any after-tax extraordinary, non-cash or
nonrecurring gains or losses; (d) non-cash or nonrecurring charges due
to changes in accounting principles required by GAAP; and (e) the
income (or loss) of all Insurance Subsidiaries and Credit Subsidiaries.
Section 9.4 Risk-Based Capital. As of the end of each calendar year,
the Borrower will not permit the Risk-Based Capital of any Domestic Insurance
Subsidiary to fall below 200% of the company action level (as defined by the
NAIC or by the applicable Insurance Regulatory Authority of the state of such
Insurance Subsidiaries' domicile) for such Subsidiary. The term "Risk-Based
Capital" means the risk-based capital of a Domestic Insurance Subsidiary
calculated in accordance with the formula adopted from time to time by the NAIC
or by the applicable Insurance Regulatory Authority of the state of such
Insurance Subsidiaries' domicile. In the event that there is a conflict between
the risk-based capital formulas or company action levels by the NAIC and the
applicable Insurance Regulatory Authority of the State of such Insurance
Subsidiaries' domicile, the calculations adopted by the applicable Insurance
Regulatory Authority shall control.
LOAN AGREEMENT - PAGE 41
48
ARTICLE 10
Default
Section 10.1 Events of Default. Each of the following shall be deemed
an "Event of Default":
(a) The Borrower shall fail to pay (i) when due any principal payable
under any Loan Document or any part thereof; (ii) within three (3) Business Days
of the date due any interest or fees payable under the Loan Documents or any
part thereof; and (iii) within five (5) Business Days after the date the
Borrower receives written notice of the failure to pay when due any other
Obligation or any part thereof.
(b) Any representation, warranty or certification made or deemed made
by the Borrower or any Obligated Party (or any of their respective officers) in
any Loan Document or in any certificate, report, notice, or financial statement
furnished at any time in connection with this Agreement shall be false,
misleading, or erroneous in any material respect when made or deemed to have
been made.
(c) The Borrower shall fail to perform, observe, or comply with any
covenant, agreement, or term contained in clauses (a), (b), (c), (f), (g) and
(j) of Section 7.1, Article 8, or Article 9 of this Agreement. The Borrower or
any Obligated Party shall fail to perform, observe, or comply with any other
covenant, agreement, or term contained in this Agreement or any other Loan
Document (other than covenants to pay the Obligations) and such failure shall
continue for a period of ten (10) days after the earlier of (i) the date the
Agent or any Bank provides the Borrower with notice thereof or (ii) the date the
Borrower should have notified the Agent thereof in accordance with Section
7.1(g) hereof.
(d) The Borrower, any Significant Subsidiary, or any Obligated Party
shall admit in writing its inability to, or be generally unable to, pay its
debts as such debts become due.
(e) The Borrower, any Significant Subsidiary, or any Obligated Party
shall (i) apply for or consent to the appointment of, or the taking of
possession by, a receiver, rehabilitator, conservator, custodian, trustee,
liquidator or the like of itself or of all or a substantial part of its
property, (ii) make a general assignment for the benefit of its creditors, (iii)
commence a voluntary case under the United States Bankruptcy Code (as now or
hereafter in effect, the "Bankruptcy Code"), (iv) institute any proceeding or
file a petition seeking to take advantage of any other law relating to
bankruptcy, insolvency, reorganization, liquidation, dissolution, winding-up, or
composition or readjustment of debts, (v) fail to controvert in a timely and
appropriate manner, or acquiesce in writing to, any petition filed against it in
an involuntary case under the Bankruptcy Code or under any other such law, or
(vi) take any corporate or other action for the purpose of effecting any of the
foregoing.
(f) A proceeding or case shall be commenced, without the application,
approval or consent of the Borrower, any Significant Subsidiary, or any
Obligated Party, in any court of competent jurisdiction, seeking (i) its
reorganization, liquidation, dissolution, arrangement or winding-up, or the
composition or readjustment of its debts, (ii) the appointment of a receiver,
rehabilitator, conservator, custodian, trustee, liquidator or the like of the
Borrower or such Significant Subsidiary or Obligated Party or of all or any
substantial part of its property, or (iii) similar relief in respect of the
Borrower or such Significant Subsidiary or Obligated Party under any law
relating to bankruptcy, insolvency, reorganization, winding-up, or composition
or adjustment of debts, and such proceeding or case shall continue undismissed,
or an order, judgment or decree approving or ordering any of the foregoing shall
be entered and continue unstayed and in effect, for a period of sixty (60) or
more days; or an order for relief against the Borrower, any Significant
Subsidiary, or any Obligated Party shall be entered in an involuntary case under
the Bankruptcy Code.
LOAN AGREEMENT - PAGE 42
49
(g) The Borrower, any Significant Subsidiary, or any Obligated Party
shall fail to discharge within a period of thirty (30) days after the
commencement thereof any unstayed attachment, sequestration, forfeiture, or
similar proceeding or proceedings involving an aggregate amount in excess of Ten
Million Dollars ($10,000,000) against any of its properties.
(h) A final judgment or judgments for the payment of money in excess of
Ten Million Dollars ($10,000,000) in the aggregate shall be rendered by a court
or courts against the Borrower, any of the Significant Subsidiaries, or any
Obligated Party and the same shall not be discharged (or provision shall not be
made for such discharge), or a stay of execution thereof shall not be procured,
within thirty (30) days from the date of entry thereof and the Borrower or the
relevant Significant Subsidiary or Obligated Party shall not, within said period
of thirty (30) days, or such longer period during which execution of the same
shall have been stayed, appeal therefrom and cause the execution thereof to be
stayed during such appeal.
(i) The Borrower, any Significant Subsidiary, or any Obligated Party
shall fail to pay when due any principal of or interest on any Debt (other than
the Obligations) in excess of Five Million Dollars ($5,000,000), or the maturity
of any such Debt shall have been accelerated, or any such Debt shall have been
required to be prepaid in full prior to the stated maturity thereof, or any
event shall have occurred that permits (or, with the giving of notice or lapse
of time or both, would permit) any holder or holders of such Debt or any Person
acting on behalf of such holder or holders to accelerate the maturity thereof or
require any such prepayment.
(j) This Agreement or any other Loan Document shall cease to be in full
force and effect or shall be declared null and void or the validity or
enforceability thereof shall be contested or challenged by the Borrower, any
Subsidiary, any Obligated Party or any of their respective shareholders, or the
Borrower or any Obligated Party shall deny that it has any further liability or
obligation under any of the Loan Documents.
(k) Any of the following events shall occur or exist with respect to
the Borrower or any ERISA Affiliate: (i) any Prohibited Transaction involving
any Plan; (ii) any Reportable Event with respect to any Plan; (iii) the filing
under Section 4041 of ERISA of a notice of intent to terminate any Plan or the
termination of any Plan; (iv) any event or circumstance that might constitute
grounds entitling the PBGC to institute proceedings under Section 4042 of ERISA
for the termination of, or for the appointment of a trustee to administer, any
Plan, or the institution by the PBGC of any such proceedings; or (v) complete or
partial withdrawal under Section 4201 or 4204 of ERISA from a Multiemployer Plan
or the reorganization, insolvency, or termination of any Multiemployer Plan; and
in each case above, such event or condition, together with all other events or
conditions, if any, have subjected or could in the reasonable opinion of
Required Banks subject the Borrower to any tax, penalty, or other liability to a
Plan, a Multiemployer Plan, the PBGC, or otherwise (or any combination thereof)
which in the aggregate exceed or could reasonably be expected to exceed Ten
Million Dollars ($10,000,000).
(l) Any Person or group (as defined in Section 13(d)(3) or 14(d)(2) of
the Securities Exchange Act of 1934, as amended) other than the Xxxxxx Family or
the employees and agents of the Borrower and the Subsidiaries shall become the
direct or indirect beneficial owner (as defined in Rule 13(d)(3) under the
Securities Exchange Act of 1934, as amended) of more than ten percent (10%) of
the total voting power of all the classes of Capital Stock then outstanding of
the Borrower entitled (without regard to the occurrence of any contingency) to
vote in the election of directors of the Borrower. The term "Xxxxxx Family"
means Xx. Xxxxxx X. Xxxxxx, his spouse, his adult children, any trusts
controlled by any such persons or of which such persons (individually or
together with any persons) are beneficiaries and any foundations controlled by
any such persons. Harvard Management Company, Inc. shall become the direct or
indirect beneficial owner (as defined in the first sentence of this clause (l))
of more than fifteen percent (15%) of the total voting power of all the classes
of Capital Stock
LOAN AGREEMENT - PAGE 43
50
then outstanding of the Borrower entitled (without regard to the occurrence of
any contingency) to vote in the election of directors of the Borrower.
Section 10.2 Remedies. If any Event of Default exists, the Agent may
(and if directed by Required Banks, shall) do any one or more of the following:
(a) Acceleration. By notice to the Borrower, declare all outstanding
principal of and accrued and unpaid interest on the Notes and all other amounts
payable by the Borrower under the Loan Documents immediately due and payable,
and the same shall thereupon become immediately due and payable, without any
other notice, demand, presentment, notice of dishonor, notice of acceleration,
notice of intent to accelerate, protest, or other formalities of any kind, all
of which are hereby expressly waived by the Borrower.
(b) Termination of Commitments. Terminate the Commitments without
notice to the Borrower.
(c) Judgment. Reduce any claim to judgment.
(d) Foreclosure. Foreclose or otherwise enforce any Lien granted to the
Agent for the benefit of itself and the Banks to secure payment and performance
of the Obligations in accordance with the terms of the Loan Documents.
(e) Rights. Exercise any and all rights and remedies afforded by the
laws of the State of Texas or any other jurisdiction, by any of the Loan
Documents, by equity, or otherwise.
Provided, however, that upon the occurrence of an Event of Default under Section
10.1(d), (e) or (f), the Commitments of all of the Banks shall automatically
terminate, and the outstanding principal of and accrued and unpaid interest on
the Notes and all other amounts payable by the Borrower under the Loan Documents
shall thereupon become immediately due and payable without notice, demand,
presentment, notice of dishonor, notice of acceleration, notice of intent to
accelerate, protest, or other formalities of any kind, all of which are hereby
expressly waived by the Borrower.
Section 10.3 Performance by the Agent. If the Borrower shall fail to
perform any covenant or agreement in accordance with the terms of the Loan
Documents, the Agent may, at the direction of Required Banks, perform or attempt
to perform such covenant or agreement on behalf of the Borrower. In such event,
the Borrower shall, at the request of the Agent, promptly pay any amount
expended by the Agent or the Banks in connection with such performance or
attempted performance to the Agent at the Principal Office, together with
interest thereon at the applicable Default Rate from and including the date of
such expenditure to but excluding the date such expenditure is paid in full.
Notwithstanding the foregoing, it is expressly agreed that neither the Agent nor
any Bank shall have any liability or responsibility for the performance of any
obligation of the Borrower under this Agreement or any of the other Loan
Documents.
Section 10.4 Continuance of Default. For purposes of all Loan
Documents, (a) a Default which is capable of being remedied shall be deemed to
exist until the Agent shall have actually received evidence reasonably
satisfactory to Agent that such Default shall have been remedied and (b) a
Default not capable of being remedied shall be deemed to exist until waived in
accordance with the Loan Document.
Section 10.5 Setoff. If an Event of Default shall have occurred and be
continuing, each Bank is hereby authorized at any time and from time to time,
without notice to the Borrower (any such notice being hereby expressly waived by
the Borrower), to set off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held and other indebtedness at
any time owing by such Bank to or for the credit
LOAN AGREEMENT - PAGE 44
51
or the account of the Borrower against any and all of the Obligations,
irrespective of whether or not the Agent or such Bank shall have made any demand
under any Loan Document and although such Obligations may be unmatured. Each
Bank agrees promptly to notify the Borrower (with a copy to the Agent) after any
such setoff and application, provided that the failure to give such notice shall
not affect the validity of such setoff and application. The rights and remedies
of each Bank hereunder are in addition to other rights and remedies (including,
without limitation, other rights of setoff) which such Bank may have.
ARTICLE 11
The Agent
Section 11.1 Appointment, Powers and Immunities. Each Bank hereby
irrevocably appoints and authorizes the Agent to act as its agent under this
Agreement and the other Loan Documents with such powers and discretion as are
specifically delegated to the Agent by the terms of this Agreement and the other
Loan Documents, together with such other powers as are reasonably incidental
thereto. The Agent (which term as used in this sentence and in Section 11.5 and
the first sentence of Section 11.6 hereof shall include its Affiliates and its
own and its Affiliates' officers, directors, employees, and agents): (a) shall
not have any duties or responsibilities except those expressly set forth in this
Agreement and shall not be a trustee or fiduciary for any Bank; (b) shall not be
responsible to the Banks for any recital, statement, representation, or warranty
(whether written or oral) made in or in connection with any Loan Document or any
certificate or other document referred to or provided for in, or received by any
of them under, any Loan Document, or for the value, validity, effectiveness,
genuineness, enforceability, or sufficiency of any Loan Document, or any other
document referred to or provided for therein or for any failure by Borrower or
any Obligated Party or any other Person to perform any of its obligations
thereunder; (c) shall not be responsible for or have any duty to ascertain,
inquire into, or verify the performance or observance of any covenants or
agreements by Borrower or any Obligated Party or the satisfaction of any
condition or to inspect the property (including the books and records) of
Borrower or any Obligated Party or any of the Subsidiaries or Affiliates of
Borrower; (d) shall not be required to initiate or conduct any litigation or
collection proceedings under any Loan Document; and (e) shall not be responsible
for any action taken or omitted to be taken by it under or in connection with
any Loan Document, except for its own gross negligence or willful misconduct.
The Agent may employ agents and attorneys-in-fact and shall not be responsible
for the negligence or misconduct of any such agents or attorneys-in-fact
selected by it with reasonable care.
Section 11.2 Reliance by Agent. The Agent shall be entitled to rely
upon any certification, notice, instrument, writing, or other communication
(including, without limitation, any thereof by telephone or telecopy) believed
by it to be genuine and correct and to have been signed, sent or made by or on
behalf of the proper Person or Persons, and upon advice and statements of legal
counsel (including counsel for the Borrower or any Obligated Party), independent
accountants, and other experts selected by the Agent. The Agent may deem and
treat the payee of any Note as the holder thereof for all purposes hereof unless
and until the Agent receives and accepts an Assignment and Acceptance executed
in accordance with Section 12.8 hereof. As to any matters not expressly provided
for by this Agreement, the Agent shall not be required to exercise any
discretion or take any action, but shall be required to act or to refrain from
acting (and shall be fully protected in so acting or refraining from acting)
upon the instructions of the Required Banks, and such instructions shall be
binding on all of the Banks; provided, however, that the Agent shall not be
required to take any action that exposes the Agent to personal liability or that
is contrary to any Loan Document or applicable law or unless it shall first be
indemnified to its satisfaction by the Banks against any and all liability and
expense which may be incurred by it by reason of taking any such action.
LOAN AGREEMENT - PAGE 45
52
Section 11.3 Defaults. The Agent shall not be deemed to have knowledge
or notice of the occurrence of a Default or Event of Default unless the Agent
has received written notice from a Bank or the Borrower specifying such Default
or Event of Default and stating that such notice is a "Notice of Default". In
the event that the Agent receives such a notice of the occurrence of a Default
or Event of Default, the Agent shall give prompt notice thereof to the Banks.
The Agent shall (subject to Section 11.2 hereof) take such action with respect
to such Default or Event of Default as shall reasonably be directed by the
Required Banks, provided that, unless and until the Agent shall have received
such directions, the Agent may (but shall not be obligated to) take such action,
or refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interest of the Banks.
Section 11.4 Rights as Bank. With respect to its Commitment and the
Loans made by it, NationsBank (and any successor acting as Agent) in its
capacity as a Bank hereunder shall have the same rights and powers hereunder as
any other Bank and may exercise the same as though it were not acting as the
Agent, and the term "Bank" or "Banks" shall, unless the context otherwise
indicates, include the Agent in its individual capacity. NationsBank (and any
successor acting as Agent) and its Affiliates may (without having to account
therefor to any Bank) accept deposits from, lend money to, make investments in,
provide services to, and generally engage in any kind of lending, trust, or
other business with Borrower or any Obligated Party or any of the Subsidiaries
or Affiliates of Borrower as if it were not acting as Agent, and NationsBank
(and any successor acting as Agent) and its Affiliates may accept fees and other
consideration from Borrower or any Obligated Party or any of the Subsidiaries or
Affiliates of Borrower for services in connection with this Agreement or
otherwise without having to account for the same to the Banks.
Section 11.5 INDEMNIFICATION. THE BANKS AGREE TO INDEMNIFY THE AGENT
(TO THE EXTENT NOT REIMBURSED UNDER SECTION 12.1 OR 12.2 HEREOF, BUT WITHOUT
LIMITING THE OBLIGATIONS OF THE BORROWER UNDER SUCH SECTIONS) RATABLY IN
ACCORDANCE WITH THEIR RESPECTIVE COMMITMENTS, FOR ANY AND ALL LIABILITIES,
OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS,
EXPENSES (INCLUDING REASONABLE ATTORNEYS' FEES), OR DISBURSEMENTS OF ANY KIND
AND NATURE WHATSOEVER THAT MAY BE IMPOSED ON, INCURRED BY OR ASSERTED AGAINST
THE AGENT (INCLUDING BY ANY BANK) IN ANY WAY RELATING TO OR ARISING OUT OF ANY
LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY OR ANY ACTION TAKEN OR
OMITTED BY THE AGENT UNDER ANY LOAN DOCUMENT; PROVIDED THAT NO BANK SHALL BE
LIABLE FOR ANY OF THE FOREGOING TO THE EXTENT THEY ARISE FROM THE GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT OF THE PERSON TO BE INDEMNIFIED. WITHOUT
LIMITING ANY PROVISION OF ANY LOAN DOCUMENT, IT IS THE EXPRESS INTENTION OF THE
PARTIES HERETO THAT EACH PERSON TO BE INDEMNIFIED UNDER THIS SECTION SHALL BE
INDEMNIFIED FROM AND HELD HARMLESS AGAINST ANY AND ALL LOSSES, LIABILITIES,
CLAIMS, DAMAGES, PENALTIES, JUDGMENTS, DISBURSEMENTS, COSTS, AND EXPENSES
(INCLUDING REASONABLE ATTORNEYS' FEES) ARISING OUT OF OR RESULTING FROM THE SOLE
OR CONTRIBUTORY NEGLIGENCE OF SUCH PERSON. WITHOUT LIMITATION OF THE FOREGOING,
EACH BANK AGREES TO REIMBURSE THE AGENT PROMPTLY UPON DEMAND FOR ITS RATABLE
SHARE OF ANY COSTS OR EXPENSES PAYABLE BY THE BORROWER UNDER SECTION 12.1, TO
THE EXTENT THAT THE AGENT IS NOT PROMPTLY REIMBURSED FOR SUCH COSTS AND EXPENSES
BY THE BORROWER. THE AGREEMENTS CONTAINED IN THIS SECTION SHALL SURVIVE PAYMENT
IN FULL OF THE LOANS AND ALL OTHER AMOUNTS PAYABLE UNDER THIS AGREEMENT.
Section 11.6 Non-Reliance on Agent and Other Banks. Each Bank agrees
that it has, independently and without reliance on the Agent or any other Bank,
and based on such documents and information as it has deemed
LOAN AGREEMENT - PAGE 46
53
appropriate, made its own credit analysis of the Borrower, the Obligated Parties
and the Subsidiaries and decision to enter into this Agreement and that it will,
independently and without reliance upon the Agent or any other Bank, and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own analysis and decisions in taking or not taking action
under the Loan Documents. Except for notices, reports, and other documents and
information expressly required to be furnished to the Banks by the Agent
hereunder, the Agent shall not have any duty or responsibility to provide any
Bank with any credit or other information concerning the affairs, financial
condition, or business of the Borrower or any Obligated Party or any of the
Subsidiaries or Affiliates of Borrower that may come into the possession of the
Agent or any of its Affiliates.
Section 11.7 Resignation of Agent. The Agent may resign at any time by
giving notice thereof to the Banks and the Borrower. Upon any such resignation,
the Required Banks shall have the right to appoint a successor Agent. If no
successor Agent shall have been so appointed by the Required Banks and shall
have accepted such appointment within thirty (30) days after the retiring
Agent's giving of notice of resignation, then the retiring Agent may, on behalf
of the Banks, appoint a successor Agent which shall be a commercial bank
organized under the laws of the United States of America having combined capital
and surplus of at least $500,000,000. Upon the acceptance of any appointment as
Agent hereunder by a successor, such successor shall thereupon succeed to and
become vested with all the rights, powers, discretion, privileges, and duties of
the retiring Agent, and the retiring Agent shall be discharged from its duties
and obligations hereunder. After any retiring Agent's resignation hereunder as
Agent, the provisions of this Article 11 shall continue in effect for its
benefit in respect of any actions taken or omitted to be taken by it while it
was acting as Agent.
Section 11.8 Several Commitments. The Commitments and other obligations
of the Banks under any Loan Document are several. The default by any Bank in
making a Loan in accordance with its Commitment shall not relieve the other
Banks of their obligations under any Loan Document. In the event of any default
by any Bank in making any Loan, each nondefaulting Bank shall be obligated to
make its Loan but shall not be obligated to advance the amount which the
defaulting Bank was required to advance hereunder. No Bank shall be responsible
for any act or omission of any other Bank.
Section 11.9 Agent Fee. Borrower agrees to pay to the Agent on the
Closing Date and on each anniversary of the Closing Date until the Commitments
are terminated and all Obligations paid and satisfied in full, the annual
administrative agency fee Borrower has agreed to pay the Agent pursuant to that
certain letter dated March 1, 1999 between Borrower, NationsBank and NationsBanc
Xxxxxxxxxx Securities LLC.
Section 11.10 Documentation Agent and Co-Agent. The First National Bank
of Chicago has been designated as documentation agent hereunder and Fleet
National Bank has been designated as co-agent hereunder for no reason other than
in recognition of the timing and level of their respective Commitments, neither
such Bank is therefore an agent for the Banks and neither such Bank shall have
any obligations under the Loan Documents other than those arising in its
capacity as a Bank.
ARTICLE 12
Miscellaneous
Section 12.1 Expenses. The Borrower hereby agrees to pay on demand: (a)
all out-of-pocket costs and expenses of the Agent in connection with the
preparation, negotiation, execution, and delivery of this Agreement and the
other Transaction Documents and any and all amendments, modifications, renewals,
extensions, and supplements thereof and thereto, including, without limitation,
the reasonable fees and expenses of legal counsel for the Agent, (b) all
out-of-pocket costs and expenses of the Agent and the Banks in connection with
any Default
LOAN AGREEMENT - PAGE 47
54
and the enforcement of this Agreement or any other Loan Document, including,
without limitation, the reasonable fees and expenses of legal counsel for the
Agent and the Banks, (c) all transfer, stamp, documentary, or other similar
taxes, assessments, or charges levied by any Governmental Authority in respect
of this Agreement or any of the other Transaction Documents, and (d) all other
out-of-pocket costs and expenses incurred by the Agent in connection with this
Agreement or any other Transaction Document.
Section 12.2 INDEMNIFICATION. THE BORROWER SHALL INDEMNIFY THE AGENT
AND EACH BANK AND EACH AFFILIATE THEREOF AND THEIR RESPECTIVE OFFICERS,
DIRECTORS, EMPLOYEES, ATTORNEYS, AND AGENTS FROM, AND HOLD EACH OF THEM HARMLESS
AGAINST, ANY AND ALL LOSSES, LIABILITIES, CLAIMS, DAMAGES, PENALTIES, JUDGMENTS,
DISBURSEMENTS, COSTS, AND EXPENSES (INCLUDING REASONABLE ATTORNEYS' FEES) TO
WHICH ANY OF THEM MAY BECOME SUBJECT WHICH DIRECTLY OR INDIRECTLY ARISE FROM OR
RELATE TO (A) THE NEGOTIATION, EXECUTION, DELIVERY, PERFORMANCE, ADMINISTRATION,
OR ENFORCEMENT OF ANY OF THE TRANSACTION DOCUMENTS, (B) ANY OF THE TRANSACTIONS
CONTEMPLATED BY THE TRANSACTION DOCUMENTS, (C) ANY BREACH BY THE BORROWER OF ANY
REPRESENTATION, WARRANTY, COVENANT, OR OTHER AGREEMENT CONTAINED IN ANY OF THE
LOAN DOCUMENTS, (D) THE PRESENCE, RELEASE, THREATENED RELEASE, DISPOSAL,
REMOVAL, OR CLEANUP OF ANY HAZARDOUS MATERIAL LOCATED ON, ABOUT, WITHIN, OR
AFFECTING ANY OF THE PROPERTIES OF THE BORROWER OR ANY SUBSIDIARY, OR (E) ANY
INVESTIGATION, LITIGATION, OR OTHER PROCEEDING, INCLUDING, WITHOUT LIMITATION,
ANY THREATENED INVESTIGATION, LITIGATION, OR OTHER PROCEEDING RELATING TO ANY OF
THE FOREGOING. WITHOUT LIMITING ANY PROVISION OF THIS AGREEMENT OR OF ANY OTHER
LOAN DOCUMENT, IT IS THE EXPRESS INTENTION OF THE PARTIES HERETO THAT EACH
PERSON TO BE INDEMNIFIED UNDER THIS SECTION SHALL (i) BE INDEMNIFIED FROM AND
HELD HARMLESS AGAINST ANY AND ALL LOSSES, LIABILITIES, CLAIMS, DAMAGES,
PENALTIES, JUDGMENTS, DISBURSEMENTS, COSTS, AND EXPENSES (INCLUDING REASONABLE
ATTORNEYS' FEES) ARISING OUT OF OR RESULTING FROM THE SOLE OR CONTRIBUTORY
NEGLIGENCE OF SUCH PERSON AND (ii) SHALL NOT BE INDEMNIFIED OR HELD HARMLESS
AGAINST ANY AND ALL LOSSES, LIABILITIES, CLAIMS, DAMAGES, PENALTIES, JUDGMENTS,
DISBURSEMENTS, COSTS, AND EXPENSES (INCLUDING REASONABLE ATTORNEY FEES) ARISING
OUT OF OR RESULTING FROM THE WILLFUL MISCONDUCT OR GROSS NEGLIGENCE OF SUCH
PERSON.
Section 12.3 Limitation of Liability. None of the Agent, any Bank, or
any Affiliate, officer, director, employee, attorney, or agent thereof shall
have any liability with respect to, and the Borrower hereby waives, releases,
and agrees not to xxx any of them upon, any claim for any special, indirect,
incidental, consequential, exemplary or punitive damages suffered or incurred by
the Borrower in connection with, arising out of, or in any way related to, this
Agreement or any of the other Transaction Documents, or any of the transactions
contemplated by this Agreement or any of the other Transaction Documents. None
of the Borrower, any Obligated Party nor any Affiliate, officer, director,
employee, attorney, or agent thereof shall have any liability with respect to,
and the Agent and each Bank hereby waives, releases, and agrees not to xxx any
of them upon, any claim for any special, indirect, incidental, consequential,
exemplary or punitive damages suffered or incurred by any of them in connection
with, arising out of, or in any way related to, this Agreement or any of the
other Transaction Documents, or any of the transactions contemplated by this
Agreement or any of the other Transaction Documents.
Section 12.4 No Duty. All attorneys, accountants, appraisers, and other
professional Persons and consultants retained by the Agent and the Banks shall
have the right to act exclusively in the interest of the Agent
LOAN AGREEMENT - PAGE 48
55
and the Banks and shall have no duty of disclosure, duty of loyalty, duty of
care, or other duty or obligation of any type or nature whatsoever to the
Borrower or any of the Borrower's shareholders or any other Person.
Section 12.5 No Fiduciary Relationship. The relationship between the
Borrower and each Bank is solely that of debtor and creditor, and neither the
Agent nor any Bank has any fiduciary or other special relationship with the
Borrower, and no term or condition of any of the Transaction Documents shall be
construed so as to deem the relationship between the Borrower and any Bank to be
other than that of debtor and creditor. No joint venture or partnership is
created by this Agreement among the Banks or among the Borrower and the Banks.
Section 12.6 Equitable Relief. The Borrower recognizes that in the
event the Borrower fails to pay, perform, observe, or discharge any or all of
the Obligations, any remedy at law may prove to be inadequate relief to the
Agent and the Banks. The Borrower therefore agrees that the Agent and the Banks,
if the Agent or the Banks so request, shall be entitled to temporary and
permanent injunctive relief in any such case without the necessity of proving
actual damages.
Section 12.7 No Waiver; Cumulative Remedies. No failure on the part of
the Agent or any Bank to exercise and no delay in exercising, and no course of
dealing with respect to, any right, power, or privilege under this Agreement or
any other Loan Document shall operate as a waiver thereof, nor shall any single
or partial exercise of any right, power, or privilege under this Agreement or
any other Loan Document preclude any other or further exercise thereof or the
exercise of any other right, power, or privilege. The rights and remedies
provided for in this Agreement and the other Loan Documents are cumulative and
not exclusive of any rights and remedies provided by law.
Section 12.8 Successors and Assigns.
(a) This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns. The Borrower may
not assign or transfer any of its rights or obligations hereunder without the
prior written consent of the Agent and the Banks. Each Bank may assign to one or
more Eligible Assignees all or a portion of its rights and obligations under
this Agreement (including, without limitation, all or a portion of its Loans,
its Note, and its Commitment); provided, however, that
(i) each such assignment shall be to an Eligible Assignee;
(ii) except in the case of an assignment to another Bank or an
assignment of all of a Bank's rights and obligations under this
Agreement, any such partial assignment shall be in an amount at least
equal to Five Million Dollars ($5,000,000);
(iii) each such assignment by a Bank shall be of a constant,
and not varying, percentage of all of its rights and obligations under
this Agreement and the Note held by it;
(iv) the parties to such assignment shall execute and deliver
to the Agent for its acceptance an Assignment and Acceptance in the
form of Exhibit "C" hereto, together with any Note subject to such
assignment and a processing fee of $3,500; and
(v) as long as no Default exists, NationsBank agrees to
maintain a Commitment hereunder in an amount no less than the
Commitment of any other Bank.
Upon execution, delivery, and acceptance of such Assignment and Acceptance, the
assignee thereunder shall be a party hereto and, to the extent of such
assignment, have the obligations, rights, and benefits of a Bank hereunder
LOAN AGREEMENT - PAGE 49
56
and the assigning Bank shall, to the extent of such assignment, relinquish its
rights and be released from its obligations under this Agreement. Upon the
consummation of any assignment pursuant to this Section, the assignor, the Agent
and the Borrower shall make appropriate arrangements so that, if required, new
Notes are issued to the assignor, if it does not assign all of its interests in
the Loans then outstanding and all of its Commitment, and the assignee. If the
assignee is not incorporated under the laws of the United States of America or a
state thereof, it shall deliver to the Borrower and the Agent certification as
to exemption from deduction or withholding of Taxes in accordance with Section
4.6.
(b) The Agent shall maintain at its address referred to in Section
12.13 a copy of each Assignment and Acceptance delivered to and accepted by it
and a register for the recordation of the names and addresses of the Banks and
the Commitment of, and principal amount of the Loans owing to, each Bank from
time to time (the "Register"). The entries in the Register shall be conclusive
and binding for all purposes, absent manifest error, and the Borrower, the Agent
and the Banks may treat each Person whose name is recorded in the Register as a
Bank hereunder for all purposes of this Agreement. The Register shall be
available for inspection by the Borrower or any Bank at any reasonable time and
from time to time upon reasonable prior notice.
(c) Upon its receipt of an Assignment and Acceptance executed by the
parties thereto and otherwise made in accordance herewith, together with any
Note subject to such assignment and payment of the processing fee, the Agent
shall, if such Assignment and Acceptance has been completed and is in
substantially the form of Exhibit "C" hereto, (i) accept such Assignment and
Acceptance, (ii) record the information contained therein in the Register and
(iii) give prompt notice thereof to the parties thereto.
(d) Each Bank may sell participations to one or more Persons in all or
a portion of its rights and obligations under this Agreement (including all or a
portion of its Commitment and its Loans); provided, however, that (i) such
Bank's obligations under this Agreement shall remain unchanged, (ii) such Bank
shall remain solely responsible to the other parties hereto for the performance
of such obligations, (iii) the participant shall be entitled to the benefit of
the yield protection provisions contained in Article 4 and the right of set-off
contained in Section 10.5, and (iv) the Borrower shall continue to deal solely
and directly with such Bank in connection with such Bank's rights and
obligations under this Agreement, and such Bank shall retain the sole right to
enforce the obligations of the Borrower relating to its Loans and its Note and
to approve any amendment, modification, or waiver of any provision of this
Agreement (other than amendments, modifications, or waivers decreasing the
amount of principal of or the rate at which interest is payable on such Loans or
Note, extending any scheduled principal payment date or date fixed for the
payment of interest on such Loans or Note, or extending its Commitment).
(e) Notwithstanding any other provision set forth in this Agreement,
any Bank may at any time assign and pledge all or any portion of its Loans and
its Note to any Federal Reserve Bank as collateral security. No such assignment
and pledge shall release the assigning Bank from its obligations hereunder.
(f) Any Bank may furnish any information concerning the Borrower, any
Obligated Party or any of the Subsidiaries in the possession of such Bank from
time to time to assignees and participants (including prospective assignees and
participants).
Section 12.9 Survival. All representations and warranties made or
deemed made in this Agreement or any other Loan Document or in any document,
statement, or certificate furnished in connection with this Agreement shall
survive the execution and delivery of this Agreement and the other Loan
Documents and the making of the Loans, and no investigation by the Agent or any
Bank or any closing shall affect the representations and warranties or the right
of the Agent or any Bank to rely upon them. Without prejudice to the survival of
any
LOAN AGREEMENT - PAGE 50
57
other obligation of the Borrower hereunder, the obligations of the Borrower
under Article 4 and Sections 12.1 and 12.2 shall survive repayment of the Notes
and termination of the Commitments.
Section 12.10 ENTIRE AGREEMENT. THIS AGREEMENT, THE NOTES, AND THE
OTHER LOAN DOCUMENTS REFERRED TO HEREIN EMBODY THE FINAL, ENTIRE AGREEMENT AMONG
THE PARTIES HERETO AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS,
REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE
SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE
PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES
THERETO.
Section 12.11 Amendments. No amendment or waiver of any provision of
this Agreement, the Notes, or any other Loan Document to which the Borrower is a
party, nor any consent to any departure by the Borrower therefrom, shall in any
event be effective unless the same shall be agreed or consented to by Required
Banks and the Borrower, and each such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given; provided,
that no amendment, waiver, or consent shall, unless in writing and signed by all
of the Banks and the Borrower, do any of the following: (a) increase Commitments
of the Banks or subject the Banks to any additional obligations; provided, that,
notwithstanding anything herein to the contrary, the aggregate amount of the
Commitments may be increased in accordance with Section 2.12(b) and pursuant to
an Increased Commitment Supplement agreed to by Borrower, Agent, the Banks party
thereto that have agreed to increase their Commitment and any New Banks party
thereto and without the consent or approval of the Required Banks or any other
Banks; (b) reduce the principal of, or interest on, the Notes or any fees or
other amounts payable hereunder; (c) postpone any date fixed for any payment of
principal of, or interest on, the Notes or any fees or other amounts payable
hereunder; (d) change the percentage of the Commitments or of the aggregate
unpaid principal amount of the Notes or the number of Banks which shall be
required for the Banks or any of them to take any action under this Agreement;
or (e) change any provision contained in this Section 12.11. Notwithstanding
anything to the contrary contained in this Section, no amendment, waiver, or
consent shall be made with respect to Article 11 hereof without the prior
written consent of the Agent.
Section 12.12 Maximum Interest Rate.
(a) No interest rate specified in this Agreement or any other Loan
Document shall at any time exceed the Maximum Rate. If at any time the interest
rate (the "Contract Rate") for any Obligation shall exceed the Maximum Rate,
thereby causing the interest accruing on such Obligation to be limited to the
Maximum Rate, then any subsequent reduction in the Contract Rate for such
Obligation shall not reduce the rate of interest on such Obligation below the
Maximum Rate until the aggregate amount of interest accrued on such Obligation
equals the aggregate amount of interest which would have accrued on such
Obligation if the Contract Rate for such Obligation had at all times been in
effect.
(b) Notwithstanding anything to the contrary contained in this
Agreement or the other Loan Documents, none of the terms and provisions of this
Agreement or the other Loan Documents shall ever be construed to create a
contract or obligation to pay interest at a rate in excess of the Maximum Rate;
and neither the Agent nor any Bank shall ever charge, receive, take, collect,
reserve or apply, as interest on the Obligations, any amount in excess of the
Maximum Rate. The parties hereto agree that any interest, charge, fee, expense
or other obligation provided for in this Agreement or in the other Loan
Documents which constitutes interest under applicable law shall be, ipso facto
and under any and all circumstances, limited or reduced to an amount equal to
the lesser of (i) the amount of such interest, charge, fee, expense or other
obligation that would be payable in the absence of this Section 12.12(b), or
(ii) an amount, which when added to all other interest payable under this
LOAN AGREEMENT - PAGE 51
58
Agreement or the other Loan Documents, equals the Maximum Rate. If,
notwithstanding the foregoing, the Agent or any Bank ever contracts for,
charges, receives, takes, collects, reserves or applies as interest any amount
in excess of the Maximum Rate, such amount which would be deemed excessive
interest shall be deemed a partial payment or prepayment of principal of the
Obligations and treated hereunder as such; and if the Obligations, or applicable
portions thereof, are paid in full, any remaining excess shall promptly be paid
to the Borrower. In determining whether the interest paid or payable, under any
specific contingency, exceeds the Maximum Rate, the Borrower, the Agent, and the
Banks shall, to the maximum extent permitted by applicable law, (i) characterize
any nonprincipal payment as an expense, fee or premium rather than as interest,
(ii) exclude voluntary prepayments and the effects thereof, and (iii) amortize,
prorate, allocate and spread in equivalent unequal parts the total amount of
interest throughout the entire contemplated term of the Obligations, or
applicable portions thereof, so that the interest rate does not exceed the
Maximum Rate at any time during the term of the Obligations; provided that, if
the unpaid principal balance is paid and performed in full prior to the end of
the full contemplated term thereof, and if the interest received for the actual
period of existence thereof exceeds the Maximum Rate, the Agent and/or the
Banks, as appropriate, shall refund to the Borrower the amount of such excess
and, in such event, the Agent and the Banks shall not be subject to any
penalties provided by any laws for contracting for, charging, receiving, taking,
collecting, reserving or applying interest in excess of the Maximum Rate.
(c) The provisions of Chapter 346 of the Finance Code of Texas are
specifically declared by the parties hereto not to be applicable to any Loan
Documents or to the transactions contemplated thereby.
Section 12.13 Notices. All notices and other communications provided
for in this Agreement and the other Loan Documents to which the Borrower is a
party shall be given or made in writing and telecopied, mailed by certified mail
return receipt requested, or delivered to the intended recipient at the "Address
for Notices" specified below its name on the signature pages hereof; or, as to
any party, at such other address as shall be designated by such party in a
notice to each other party given in accordance with this Section. Except as
otherwise provided in this Agreement, all such communications shall be deemed to
have been duly given when transmitted by telecopy, subject to telephone
confirmation of receipt, or personally delivered or, in the case of a mailed
notice, upon receipt, in each case given or addressed as aforesaid.
Section 12.14 Governing Law; Submission to Jurisdiction. This Agreement
and the Notes shall be governed by, and construed in accordance with, the laws
of the State of Texas and applicable laws of the United States of America. THE
BORROWER HEREBY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF THE UNITED STATES
DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS AND OF ANY TEXAS STATE COURT
SITTING IN DALLAS, TEXAS, FOR THE PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT
OF OR RELATING TO THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT, OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. THE BORROWER IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT
AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT
IN AN INCONVENIENT FORM.
Section 12.15 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement.
Section 12.16 Severability. Any provision of this Agreement held by a
court of competent jurisdiction to be invalid or unenforceable shall not impair
or invalidate the remainder of this Agreement and the effect thereof shall be
confined to the provision held to be invalid or illegal.
LOAN AGREEMENT - PAGE 52
59
Section 12.17 Headings. The headings, captions, and arrangements used
in this Agreement are for convenience only and shall not affect the
interpretation of this Agreement.
Section 12.18 Construction. The Borrower, the Agent, and each Bank
acknowledges that each of them has had the benefit of legal counsel of its own
choice and has been afforded an opportunity to review this Agreement and the
other Loan Documents with its legal counsel and that this Agreement and the
other Loan Documents shall be construed as if jointly drafted by the parties
hereto.
Section 12.19 Independence of Covenants. All covenants hereunder shall
be given independent effect so that if a particular action or condition is not
permitted by any of such covenants, the fact that it would be permitted by an
exception to, or be otherwise within the limitations of, another covenant shall
not avoid the occurrence of a Default if such action is taken or such condition
exists.
Section 12.20 WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND EXPRESSLY
WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM
(WHETHER BASED UPON CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF OR RELATING TO
ANY OF THE TRANSACTION DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY OR THE
ACTIONS OF THE AGENT OR ANY BANK IN THE NEGOTIATION, ADMINISTRATION, OR
ENFORCEMENT THEREOF.
Section 12.21 Confidentiality. The Agent and each Bank (each a "Lending
Party") agrees to keep any Designated Information (as defined below) delivered
or made available by the Borrower to it confidential from anyone other than
Persons employed or retained by such Lending Party who are, or are expected to
be, engaged in evaluating, approving, structuring or administering the credit
facility provided herein; provided that nothing herein shall prevent any Lending
Party from disclosing such Designated Information: (a) to any other Lending
Party, (b) upon the order of any court or administrative agency, (c) upon the
request or demand of any regulatory agency or authority with which the Lending
Party is required to comply, (d) which had been publicly disclosed other than as
a result of a disclosure by any Lending Party prohibited by this Agreement, (e)
in connection with any litigation to which such Lending Party or any of its
Affiliates may be a party, (f) to the extent necessary in connection with the
exercise of any remedy hereunder, (g) to such Lending Party's legal counsel and
independent auditors, (h) to any Affiliate of such Lending Party, solely in
connection with this Agreement, and (i) subject to provisions substantially
similar to those contained in this Section, to any actual or proposed
participant or assignee of any of its rights and obligations under the Loan
Documents in accordance with the terms hereof. The term "Designated Information"
means any information which has been designated by the Borrower in writing as
confidential. If a Lending Party or any Person to whom a Lending Party gives
Designated Information is to disclose any Designated Information pursuant to
clause (b) or (e), such Person shall notify the Borrower of the proposed
disclosure promptly after determining it must make such disclosure so that the
Borrower or a Subsidiary may seek a protective order as necessary to protect the
unnecessary disclosures of Designated Information.
LOAN AGREEMENT - PAGE 53
60
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
BORROWER:
UICI,
a Delaware Corporation
By:
---------------------------------------
Xxxxxx X. Idsal
Vice President of Strategic Planning
and Mergers and Acquisitions
Address for Notices:
0000 XxXxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Telephone No.: 000-000-0000
Telecopy No.: 000-000-0000
Attention: Chief Financial Officer
LOAN AGREEMENT - PAGE 54
61
NationsBank, N.A., doing business as BANK
OF AMERICA, NATIONAL ASSOCIATION,
as Agent and as a Bank
Commitment:
$40,000,000
By:
---------------------------------------
Xxx X. Xxxxxx
Senior Vice President
Address for Notices:
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxx 00000
Telephone No.: 000-000-0000
Telecopy No.: 000-000-0000
Attention: Xxx X. Xxxxxx
Lending Office for Base Rate Loans and
Libor Loans
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxx 00000
LOAN AGREEMENT - PAGE 55
62
Commitment: THE FIRST NATIONAL BANK OF CHICAGO
$35,000,000
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
Address for Notices:
Xxx Xxxxx Xxxxxxxx Xxxxx, Xxxxx XX0-0000
Xxxxxxx, Xxxxxxxx 00000
Telephone: 000-000-0000
Telecopy No.: 000-000-0000
Attention: Xxx Xxxxxxxxx
Lending Office for Base Rate Loans and
Libor Loans:
Xxx Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
LOAN AGREEMENT - PAGE 56
63
Commitment: FLEET NATIONAL BANK
$25,000,000
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
Address for Notices:
Insurance Industry Group
CT-MO-0250
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxx, XX 00000
Lending Office for Base Rate Loans and
Libor Loans:
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxx, XX
LOAN AGREEMENT - PAGE 57
64
FIRST AMENDMENT TO LOAN AGREEMENT
THIS FIRST AMENDMENT TO LOAN AGREEMENT (the "Amendment") dated as of
May 17, 1999 is among UICI, a corporation duly organized and validly existing
under the laws of the State of Delaware ("Borrower"), each of the banks or other
lending institutions which is a signatory hereto (individually, a "Bank" and,
collectively, the "Banks"), THE FIRST NATIONAL BANK OF CHICAGO, as documentation
agent, FLEET NATIONAL BANK, as co-agent and NationsBank, N.A., doing business as
BANK OF AMERICA, NATIONAL ASSOCIATION, a national banking association, as
administrative agent for itself and the other Banks (in such capacity, together
with its successors in such capacity, the "Agent").
RECITALS:
Borrower, the Agent, and the Banks have entered into that certain Loan
Agreement dated as of May 17, 1999 (as the same may hereafter be amended or
otherwise modified, the "Agreement"). Borrower, the Agent and the Banks desire
to amend the Agreement as herein set forth.
NOW, THEREFORE, in consideration of the premises herein contained and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows, effective as of the
date hereof unless otherwise indicated:
ARTICLE 1
Definitions
Section 1.1 Definitions. Capitalized terms used in this Amendment, to
the extent not otherwise defined herein, shall have the same meanings as in the
Agreement, as amended hereby.
ARTICLE 2
Amendments
Section 2.1 Amendment to Section 1.1. Section 1.1 of the Agreement is
amended as follows:
(i) The following terms are added to Section 1.1 in
alphabetical order to read in their respective entireties as follows:
"Assurance Agreement" means that certain Liquidity
and Capital Assurance Agreement dated effective as of the 15th
day of May 1998 between Borrower and UCNB without giving
effect to any amendment or other modification thereto unless
modified with the consent of the Required Banks provided that
such agreement may be terminated without the consent of any
Bank or the Agent.
"Bank Investment" means any of the following by
Borrower or Subsidiary consummated when Borrower is required
to comply with the Assurance Agreement after the date hereof
or consummated in order for Borrower to comply with the
requirements of the Assurance Agreement after the date hereof:
(a) any advance, loan, extension of credit, or capital
contribution to or investment in UCNB; or (b) the acquisition
of any stock, bonds, notes, debentures, or other securities of
UCNB; or (c) the acquisition of
FIRST AMENDMENT TO LOAN AGREEMENT - Page 1
65
any certificates of deposit issued by UCNB; or (d) the
purchase of all or substantially all the properties of UCNB.
"UCNB" means United Credit National Bank.
(ii) The term "Guarantee" in Section 1.1 is amended to read in
its entirety as follows:
"Guarantee" by any Person means any obligation,
contingent or otherwise, of such Person directly or indirectly
guaranteeing the payment or performance of any Debt or other
obligation of any other Person and, without limiting the
generality of the foregoing, any obligation, direct or
indirect, contingent or otherwise, of such Person (a) to
purchase or pay (or advance or supply funds for the purchase
or payment of) such Debt or other obligation (whether arising
by virtue of partnership arrangements, by agreement to
keep-well, to purchase assets, goods, securities or services,
to take-or-pay, or to maintain financial statement conditions
or otherwise); and (b) entered into for the purpose of
assuring in any other manner the obligee of such Debt or other
obligation of the payment thereof or to protect the obligee
against loss in respect thereof (in whole or in part and
including without limitation, any agreement binding a Person
to make Investments in or otherwise transfer funds to or for
the benefit of another Person for purposes of assuring such
other Person's financial liquidity, assuring such other
Person's compliance with the capital adequacy requirements
imposed by agreement or applicable law or otherwise assuring
such other Person's compliance with financial covenants or
other financial statement conditions); provided that the term
Guarantee shall not include endorsements for collection or
deposit in the ordinary course of business. The term
"Guarantee" used as a verb has a corresponding meaning.
Section 2.2 Amendment to Subsection 2.12(a) Subsection 2.12(a) of the
Agreement is amended to add the following sentences before the last sentence
thereto:
The aggregate amount of the Commitments shall also be automatically and
mandatorily reduced by the Dollar amount of each Bank Investment for
all purposes other than determining the amount of the Commitments under
Section 2.10; provided that when the principal or original amount of a
Bank Investment shall have been repaid or returned to, or recovered by
the Borrower or the applicable Subsidiary, the aggregate amount of the
Commitments shall be reinstated by an amount equal to the principal or
original amount so repaid, returned or recovered. However, the forgoing
reinstatement shall not have the effect of increasing the aggregate
amount of the Commitments to an amount in excess of the aggregate
amount of the Commitments in effect without giving effect to any
reductions occurring as a result of Bank Investments. The facility fee
paid under Section 2.10 shall be calculated without giving effect to
the reduction of the Commitments under this Section 2.12 (a) as a
result of a Bank Investment.
Section 2.3 Amendment to Section 9.3 The definition of the term "Cash
Flow" in Section 9.3 is amended to read in its entirety as follows:
"Cash Flow" means, for any period, the total of the following
each calculated without duplication:
FIRST AMENDMENT TO LOAN AGREEMENT - Page 2
66
(i) the total of the following for Borrower and all
Subsidiaries (other than the Insurance Subsidiaries, United
Credit National Bank, Educational Finance Group, Inc. and the
Subsidiaries owned by Educational Finance Group, Inc. but
otherwise on a consolidated basis in accordance with GAAP) for
such period: (a) Net Income; plus (b) any provision for (or
less any benefit from) income or franchise taxes included in
determining Net Income; plus (c) interest expense deducted in
determining Net Income; plus (d) amortization and depreciation
expense deducted in determining Net Income; plus (e) other
noncash charges deducted in determining Net Income and not
already deducted in accordance with clauses (b), (c) and (d)
of the definition of Net Income; plus
(ii) the sum of:
(a) the total of the Available Domestic
Insurance Subsidiary Earnings of all Domestic
Insurance Subsidiaries for such period, with the
"Available Domestic Insurance Subsidiary Earnings"
determined separately for each Domestic Insurance
Subsidiary and equal for each Domestic Insurance
Subsidiary to the product of the following (1) lesser
of (A) the total of the ordinary dividend capacity of
such Domestic Insurance Subsidiary for such period
determined in accordance with SAP or (B) the net
income of such Domestic Insurance Subsidiary for such
period determined in accordance with SAP multiplied
by (2) the percentage equal to the percentage of
Borrower's direct or indirect ownership of all the
Capital Stock of such Subsidiary entitled to share in
the receipt of ordinary dividends or other ordinary
distributions of earnings; plus
(b) the total of the Attributable Net Income
of all Insurance Subsidiaries organized under the
laws of a jurisdiction located outside the United
States of America for such period, with the
"Attributable Net Income" determined separately for
each such Insurance Subsidiary and equal for each
such Insurance Subsidiary to the product of (1) the
net income of such Insurance Subsidiaries for such
period determined in accordance with GAAP multiplied
by (2) the percentage equal to the percentage of
Borrower's direct or indirect ownership of all the
Capital Stock of such Insurance Subsidiary entitled
to share in the receipt of ordinary distributions of
earnings; minus
(iii) the sum of all Bank Investments made during
such period.
Section 2.4 Amendment to Section 10.1 Section 10.1 is amended to add a
new clause (m) thereto to read in its entirety as follows:
(m) The aggregate original or principal amount of the
Bank Investments which have not been repaid, returned or
otherwise recovered shall equal or exceed Ten Million Dollars
($10,000,000) for sixty (60) consecutive days.
FIRST AMENDMENT TO LOAN AGREEMENT - Page 3
67
Section 2.5 Amendment to Schedule 6.9. Schedule 6.9 to the Agreement is
amended to add the Assurance Agreement thereto.
ARTICLE 3
Miscellaneous
Section 3.1 Ratifications. The terms and provisions set forth in this
Amendment shall modify and supersede all inconsistent terms and provisions set
forth in the Agreement and except as expressly modified and superseded by this
Amendment, the terms and provisions of the Agreement and the other Loan
Documents are ratified and confirmed and shall continue in full force and
effect. Borrower, the Agent, and the Banks party hereto agree that the Agreement
as amended hereby and the other Loan Documents shall continue to be legal,
valid, binding and enforceable in accordance with their respective terms.
Section 3.2 Representations and Warranties. Borrower hereby represents
and warrants to Agent and the Banks as follows: (a) after giving effect to this
Amendment, no Default nor Event of Default has occurred and is continuing; (b)
the representations and warranties set forth in the Loan Documents are true and
correct in all material respects on and as of the date hereof with the same
effect as though made on and as of such date except with respect to any
representations and warranties are limited by their terms to a specific date;
and (c) in accordance with GAAP, the contingent liability arising under the
terms of the Assurance Agreement is not material.
Section 3.3 Survival of Representations and Warranties. All
representations and warranties made in this Amendment shall survive the
execution and delivery of this Amendment, and no investigation by Agent or any
Bank or any closing shall affect the representations and warranties or the right
of Agent and the Banks to rely upon them.
Section 3.4 Reference to Agreement. Each of the Loan Documents,
including the Agreement, are hereby amended so that any reference in such Loan
Documents to the Agreement shall mean a reference to the Agreement as amended
hereby.
Section 3.5 Expenses of Agent. Borrower agrees to pay on demand all
costs and expenses incurred by Agent in connection with the preparation,
negotiation, and execution of this Amendment, including without limitation, the
costs and fees of Agent's legal counsel.
Section 3.6 Severability. Any provision of this Amendment held by a
court of competent jurisdiction to be invalid or unenforceable shall not impair
or invalidate the remainder of this Amendment and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.
Section 3.7 Applicable Law. This Amendment shall be governed by and
construed in accordance with the laws of the State of Texas and the applicable
laws of the United States of America.
Section 3.8 Successors and Assigns. This Amendment is binding upon and
shall inure to the benefit of Agent, each Bank and Borrower and their respective
successors and assigns, except Borrower may not assign or transfer any of its
rights or obligations hereunder without the prior written consent of the Banks.
Section 3.9 Counterparts. This Amendment may be executed in one or more
counterparts and on telecopy counterparts, each of which when so executed shall
be deemed to be an original, but all of which when taken together shall
constitute one and the same agreement.
FIRST AMENDMENT TO LOAN AGREEMENT - Page 4
68
Section 3.10 Effect of Waiver. No consent or waiver, express or
implied, by Agent or any Bank to or for any breach of or deviation from any
covenant, condition or duty by Borrower shall be deemed a consent or waiver to
or of any other breach of the same or any other covenant, condition or duty.
Section 3.11 Headings. The headings, captions, and arrangements used in
this Amendment are for convenience only and shall not affect the interpretation
of this Amendment.
Section 3.12 ENTIRE AGREEMENT. THIS AMENDMENT EMBODIES THE FINAL,
ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND SUPERSEDE ANY AND ALL PRIOR
COMMITMENTS, AGREEMENTS, REPRESENTATIONS AND UNDERSTANDINGS, WHETHER WRITTEN OR
ORAL, RELATING TO THIS AMENDMENT, AND MAY NOT BE CONTRADICTED OR VARIED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS
OF THE PARTIES HERETO. THERE ARE NO ORAL AGREEMENTS AMONG THE PARTIES HERETO.
Executed as of the date first written above.
UICI,
a Delaware Corporation
By:
--------------------------------------
Xxxxxx X. Idsal
Vice President Strategic Planning
and Mergers and Acquisitions
NationsBank, N.A. doing business as BANK
OF AMERICA, NATIONAL ASSOCIATION,
as the Agent and as a Bank
By:
--------------------------------------
Xxx X. Xxxxxx
Senior Vice President
THE FIRST NATIONAL BANK OF CHICAGO
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
FLEET NATIONAL BANK
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
FIRST AMENDMENT TO LOAN AGREEMENT - Page 5
69
SECOND AMENDMENT TO LOAN AGREEMENT
THIS SECOND AMENDMENT TO LOAN AGREEMENT (the "Amendment") dated as of
July 19, 1999, is among UICI, a corporation duly organized and validly existing
under the laws of the State of Delaware ("Borrower"), each of the banks or other
lending institutions which is a signatory hereto (individually, a "Bank" and,
collectively, the "Banks"), THE FIRST NATIONAL BANK OF CHICAGO, as documentation
agent, FLEET NATIONAL BANK, as co-agent and BANK OF AMERICA, NATIONAL
ASSOCIATION, a national banking association formerly known as NationsBank, N.A.,
as administrative agent for itself and the other Banks (in such capacity,
together with its successors in such capacity, the "Agent").
RECITALS:
Borrower, the Agent and the Banks have entered into that certain Loan
Agreement, dated as of May 17, 1999 (as amended by that certain First Amendment
to Loan Agreement, dated as of May 17, 1999, among the Borrower, the Agent and
the Banks and as the same may hereafter be amended or otherwise modified, the
"Agreement"). Borrower, the Agent and the Banks desire to amend the Agreement as
herein set forth.
NOW, THEREFORE, in consideration of the premises herein contained and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows, effective on the date
hereof unless otherwise indicated:
ARTICLE 1
Definitions
Section 1.1 Definitions. Capitalized terms used in this Amendment, to
the extent not otherwise defined herein, shall have the same meanings as in the
Agreement, as amended hereby.
ARTICLE 2
Amendments
Section 2.1 Amendment to Section 8.1. Clause (j) of Section 8.1 of the
Agreement is amended in its entirety to read as follows:
(j) In addition to the Debt described in clauses (a) through
(i) above, the following:
(i) Unsecured Debt of the Borrower and the
Subsidiaries; and
SECOND AMENDMENT TO LOAN AGREEMENT, Page 1
70
(ii) Debt secured by purchase money Liens permitted
by Section 8.2 (g);
provided that (x) the aggregate principal amount of all Debt at any
time outstanding under the permissions of items (i) and (ii) of this
clause (j) shall never exceed Thirty-Five Million Dollars
($35,000,000); (y) at the time of the incurrence, creation, or
assumption of any of such Debt, no Default shall have occurred and be
continuing; and (z) such Debt shall be permitted by the Senior Note
Agreements; provided that a Credit Subsidiary may not rely on the
permissions given by this clause (j) to incur, create, assume or permit
to exist any Debt owing by it to any Insurance Subsidiary; and
Section 2.1 Amendment to Schedule 8.2. The text in the section of
Schedule 8.2 of the Agreement entitled "B. Restrictions on Subsidiaries" is
amended in its entirety to read as follows:
"1. That certain Loan Agreement between Educational Finance
Group, Inc., the banks named therein and Bank of America, N.A. as agent
dated July 19, 1999 imposes restrictions on the ability of Educational
Finance Group, Inc. and its subsidiaries to (a) pay dividends or make
other distributions on their Capital Stock, (b) make loans and advances
to any Subsidiary and (c) transfer any of their property or assets to
other subsidiaries.
ARTICLE 3
Miscellaneous
Section 3.1 Ratifications. The terms and provisions set forth in this
Amendment shall modify and supersede all inconsistent terms and provisions set
forth in the Agreement and except as expressly modified and superseded by this
amendment the terms and provisions of the Agreement and the other Loan Documents
are ratified and confirmed and shall continue in full force and effect.
Borrower, the Agent and the Banks party hereto agree that the Agreement as
amended hereby and the other Loan Documents shall continue to be legal, valid,
binding and enforceable in accordance with their respective terms.
Section 3.2. Representations and Warranties. Borrower hereby represents
and warrants to Agent and the Banks as follows: (a) after giving effect to this
Amendment, no Default nor Event of Default has occurred and is continuing; and
(b) the representations and warranties set forth in the Loan Documents are true
and correct in all material respects on and as of the date hereof with the same
affect as though made on and as of such date except with respect to any
representations and warranties that are limited by their terms to a specific
date.
Section 3.3. Survival of Representations and Warranties. All
representations and warranties made in this Amendment shall survive the
execution and delivery of this Amendment, and no investigation by Agent or any
Bank or any closing shall affect the representations and warranties or the right
of Agent and the Banks to rely upon them.
SECOND AMENDMENT TO LOAN AGREEMENT, Page 2
71
Section 3.4. Reference to Agreement. Each of the Loan Documents,
including the Agreement, are hereby amended so that any reference in such Loan
Documents to the Agreement shall mean a reference to the Agreement as amended
hereby.
Section 3.5. Expenses of Agent. Borrower agrees to pay on demand all
costs and expenses incurred by Agent in connection with the preparation,
negotiation and execution of this Amendment, including without limitation, the
costs and fees of Agent's legal counsel.
Section 3.6. Severability. Any provision of this Amendment held by a
court of competent jurisdiction to be invalid or unenforceable shall not impair
or invalidate the remainder of this Amendment and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.
Section 3.7. Applicable Law. This Amendment shall be governed by and
construed in accordance with the laws of the State of Texas and the applicable
laws of the United States of America.
Section 3.8. Successors and Assigns. This Amendment is binding upon and
shall inure to the benefit of Agent, each Bank and Borrower and their respective
successors and assigns, except Borrower may not assign or transfer any of its
rights or obligations hereunder without the prior written consent of the Banks.
Section 3.9. Counterparts. This Amendment may be executed in one or
more counterparts and on telecopy counterparts, each of which when so executed
shall be deemed to be an original, but all of which when taken together shall
constitute one and the same agreement.
Section 3.10. Headings. The headings, captions and arrangements used in
this Amendment are for convenience only and shall not affect the interpretation
of this Amendment.
Section 3.11. ENTIRE AGREEMENT. THIS AMENDMENT EMBODIES THE FINAL,
ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND SUPERSEDES ANY AND ALL PRIOR
COMMITMENTS, AGREEMENTS, REPRESENTATIONS AND UNDERSTANDINGS, WHETHER WRITTEN OR
ORAL, RELATING TO THIS AMENDMENT, AND MAY NOT BE CONTRADICTED OR VARIED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS
OF THE PARTIES HERETO. THERE ARE NO ORAL AGREEMENTS AMONG THE PARTIES HERETO.
SECOND AMENDMENT TO LOAN AGREEMENT, Page 3
72
Executed as of the date first written above.
UICI,
a Delaware Corporation
By:
--------------------------------------
Xxxxxx X. Idsal
Vice President Strategic Planning
and Mergers and Acquisitions
Bank of America, National Association,
formerly NationsBank, N.A., as the Agent
and as a Bank
By:
--------------------------------------
Xxx X. Xxxxxx, Managing Director
THE FIRST NATIONAL BANK OF CHICAGO
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
FLEET NATIONAL BANK
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
SECOND AMENDMENT TO LOAN AGREEMENT - Page 4
