SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: December 17, 1996
CONSECO, INC.
State of Incorporation:
Indiana
Commission File Number IRS Employer Id. Number
No. 1-9250 No. 35-1468632
Address of Principal Executive Offices:
11825 North Pennsylvania Street
Carmel, Indiana 46032
Telephone No.
(317) 817-6100
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CONSECO, INC. AND SUBSIDIARIES
INDEX
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Page
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Item 2. Acquisition or Disposition of Assets......................................................... 3
Item 7. Financial Statements and Exhibits
(a) American Travelers Corporation and Subsidiaries Unaudited
Consolidated Financial Statements as of September 30, 1996,
and for the nine months ended September 30, 1996 and 1995
Consolidated Balance Sheets........................................................... 5
Consolidated Statements of Income..................................................... 6
Consolidated Statements of Cash Flows................................................. 8
Consolidated Statements of Shareholders' Equity....................................... 9
Notes to Consolidated Financial Statements............................................ 10
American Travelers Corporation and Subsidiaries Audited
Consolidated Financial Statements as of December 31,
1995 and 1994, and for each of the three years ended
December 31, 1995
Report of Independent Public Accountants ............................................ 13
Consolidated Balance Sheets.......................................................... 14
Consolidated Statements of Income.................................................... 15
Consolidated Statements of Shareholders' Equity...................................... 16
Consolidated Statements of Cash Flows................................................ 17
Notes to Consolidated Financial Statements........................................... 18
(b) Pro Forma Consolidated Financial Information of Conseco, Inc. and Subsidiaries.......... 30
Pro forma Consolidated Statement of Operations for the nine months
ended September 30, 1996 ......................................................... 31
Pro forma Consolidated Statement of Operations for the year ended
December 31, 1995 ................................................................ 33
Pro Forma Consolidated Balance Sheet as of September 30, 1996........................ 35
Notes to Pro Forma Consolidated Financial Statements................................. 38
(c) Exhibits
2.6 Agreement and Plan of Merger dated as of August 25, 1996, by and between Conseco, Inc.
and American Travellers Corporation*
4.17 Credit Agreement dated November 22, 1996
* Previously filed with Form 8-K dated August 25, 1996.
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2
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CONSECO, INC. AND SUBSIDIARIES
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On December 17, 1996, Conseco, Inc. ("Conseco") completed its merger with
American Travellers Corporation ("ATC"), in a transaction pursuant to which ATC
was merged with and into Conseco, with Conseco being the surviving corporation
(the "ATC Merger"). The ATC Merger was consummated pursuant to an Agreement and
Plan of Merger dated as of August 25, 1996. In the ATC Merger, each outstanding
share of ATC common stock was exchanged for .5836 of a share of Conseco's common
stock determined based on the average of the closing price of Conseco common
stock on the NYSE Composite Transactions Reporting System for the 10 trading
days immediately preceding the second trading day prior to the ATC Merger.
Conseco issued approximately 10.4 million shares of Conseco common stock or
common stock equivalents with a value of $629 million to acquire ATC's common
stock. In addition, Conseco assumed ATC's convertible subordinated debentures,
which are convertible into approximately 4.0 million shares of Conseco common
stock with a value of $239 million.
The acquisition of ATC will be accounted for under the purchase method of
accounting in the fourth quarter of 1996. Under this method, the cost to acquire
ATC will be allocated to the assets and liabilities acquired based on fair
values as of the date of the ATC Merger, with the excess of the total purchase
cost over the fair value of the assets acquired less the fair values of the
liabilities assumed recorded as goodwill.
3
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CONSECO, INC. AND SUBSIDIARIES
ITEM 7(a). Financial Statements and Exhibits
(a) American Travellers Corporation and Subsidiaries
Unaudited Consolidated Financial Statements as of September
30, 1996, and for the nine months ended September 30, 1996
and 1995.
4
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AMERICAN TRAVELLERS COPRORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands) (Unaudited)
September 30, December 31,
1996 1995
---- ----
<S> <C> <C>
ASSETS
Investments-
Bonds, available for sale, at fair value (cost $689,646 $582,621
$705,541 and $566,859)
Mortgage loan 435 447
------- -------
Total investments 690,081 583,068
Cash and cash equivalents 12,205 70,214
Accrued investment income 7,732 6,781
Premiums due and unpaid 7,431 7,027
Deferred acquisition costs 168,691 144,767
Value of business acquired (accumulated
amortization $14,759 and $12,619) 10,861 12,846
Property and equipment, at cost ( accumulated
depreciation $4,289 and $3,682) 3,850 4,176
Other assets 6,761 7,262
-------- --------
Total assets $907,612 $836,141
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Policy liabilities-
Future policy benefit reserves $283,145 $247,562
Claim reserves 240,582 210,073
Unearned premium reserves 62,613 60,477
-------- --------
Total policy liabilities 586,340 518,112
Other liabilities 10,892 7,785
Current and deferred income taxes 26,148 35,939
6.5% convertible subordinated debentures 102,900 103,500
- --- ------- -------
Total liabilities 726,280 665,336
Shareholders' equity-
Preferred stock, $.01 par value; 5,000,000 shares
authorized; no shares issued -- --
Common stock, $.01 par value; 50,000,000 shares
authorized; 16,322,986 and
16,053,105 shares issued, respectively 163 161
Capital in excess of par value 64,282 59,961
Net unrealized (loss)/gain on investments (10,332) 10,245
Retained earnings 127,219 101,187
Less: Shares of common stock held in treasury
cost $200) -- (749)
------- -------
Total shareholders' equity 181,332 170,805
------- -------
Total liabilities and shareholders' equity $907,612 $836,141
======== ========
All share amounts have been adjusted to reflect a three-for-two
stock split paid on April 10, 1996.
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5
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<CAPTION>
AMERICAN TRAVELLERS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(In thousands, except per share data)(Unaudited)
For the three months ended
September 30,
1996 1995
---- ----
<S> <C> <C>
Revenues-
Accident and health premiums $94,394 $61,435
Life premiums 2,057 2,101
Net investment income 11,834 4,587
Realized investment (30) 155
(losses)/gains ------ ------
Total revenues 108,255 68,278
Benefits and expenses-
Benefits to policyholders
Paid claims 41,809 25,939
Change in claim reserves 11,374 7,765
Change in future policy
benefit reserves 11,713 5,230
------ ------
Total benefits to
policyholders 64,896 38,934
Commissions 24,351 17,531
General and administrative 8,409 5,653
Premium taxes 2,224 1,610
Amortization of value of
business acquired 375 676
Amortization of deferred
acquisition costs 5,053 5,440
Less: policy acquisition costs
deferred (12,984) (10,496)
Interest expense 1,787 614
------ ------
Total expenses 29,215 21,028
------ ------
Total benefits and expenses 94,111 59,962
Income before provision for income
taxes 14,144 8,316
Provision for income taxes 4,936 2,589
------ -----
Net income $9,208 $5,727
====== ======
Primary number of shares
outstanding 17,040 16,266
====== ======
Primary earnings per common share $0.54 $0.35
===== =====
Net income $9,208 $5,727
Add: interest on convertible
debentures (net of tax) 1,144 109
------ ------
Net income for fully diluted
earnings per common share $10,352 $5,836
======= ======
Primary number of shares
outstanding 17,040 16,266
Add: incremental shares
representing-
Stock option plans 147 --
Shares issuable on convertible
debentures 6,822 683
------ ------
Fully diluted number of shares
outstanding 24,009 16,949
====== ======
Fully diluted earnings per common
share $0.43 $0.34
===== =====
All share and per share amounts have been adjusted to reflect a
three-for-two stock split paid on April 10, 1996.
</TABLE>
6
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<CAPTION>
AMERICAN TRAVELLERS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(In thousands, except per share data)(Unaudited)
For the nine months ended
September 30,
1996 1995
---- ----
<S> <C> <C>
Revenues-
Accident and health premiums $277,187 $179,898
Life premiums 6,138 6,294
Net investment income 33,134 12,697
Realized investment gains 1,329 179
------- ------
Total revenues 317,788 199,068
Benefits and expenses-
Benefits to policyholders
Paid claims 126,028 74,184
Change in claim reserves 30,515 20,150
Change in future policy
benefit reserves 35,657 17,390
------- -------
Total benefits to
policyholders 192,200 111,724
Commissions 71,909 54,011
General and administrative 23,887 17,532
Premium taxes 6,772 4,700
Amortization of value of
business acquired 2,139 1,557
Amortization of deferred
acquisition costs 14,240 16,394
Less: policy acquisition costs
deferred (38,163) (32,269)
Interest expense 5,762 1,477
------- -------
Total expenses 86,546 63,402
------- -------
Total benefits and expenses 278,746 175,126
------- -------
Income before provision for income
taxes 39,042 23,942
Provision for income taxes 13,010 7,483
------- -------
Net income $26,032 $16,459
======= =======
Primary number of shares
outstanding 16,820 16,254
====== ======
Primary earnings per common share $1.55 $1.01
===== =====
Net income $26,032 $16,459
Add: interest on convertible
debentures (net of tax) 3,415 109
------- -------
Net income for fully diluted
earnings per common share $29,447 $16,568
======= =======
Primary number of shares
outstanding 16,820 16,254
Add: incremental shares
representing-
Stock option plans 189 --
Shares issuable on convertible
debentures 6,824 226
------ ------
Fully diluted number of shares
outstanding 23,833 16,480
====== ======
Fully diluted earnings per common
share $1.24 $1.01
===== =====
All share and per share amounts have been adjusted to reflect a three-for-two
stock split paid on April 10, 1996.
</TABLE>
7
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AMERICAN TRAVELLERS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
For the nine months ended September 30,
1996 1995
---- ----
<S> <C> <C>
Cash flows-operating activities
Net income $26,032 $16,459
------- -------
Adjustments to reconcile net income to cash
provided by operating activities-
Amortization of deferred policy acquisition
costs 14,240 16,394
Amortization of discount and premium (1,146) 550
Depreciation and amortization 967 1,619
Realized securities (gains) (1,329) (153)
Increase/(Decrease) in current and deferred
income taxes 3,474 (5,317)
Increase in reserves 68,228 40,980
Increase in other liabilities 3,107 1,488
Deferred policy acquisition costs (38,163) (32,269)
Decrease in other assets and value of
business acquired 750 424
------ ------
Total adjustments 50,128 23,716
Net cash provided by operating activities 76,160 40,175
------ ------
Cash flows-investing activities
Proceeds from sales of investments 156,657 --
Proceeds from calls and maturities on 260,911 29,045
investments
Purchase of investments (553,763)(105,396)
Purchase of fixed assets (282) (439)
------- -------
Net cash used in investing activities (136,477) (76,790)
-------- -------
Cash flows-financing activities
Proceeds from issuance of Subordinated
Debentures -- 103,500
Debentures issue costs -- (3,905)
Repayments on notes payable -- (20,000)
Exercise of stock options 2,308 404
-------- -------
Net cash provided by financing activities 2,308 79,999
-------- -------
Net (decrease)/ increase in cash and cash
equivalents (58,009) 43,384
Cash and cash equivalents, beginning of period 70,214 9,133
------ -----
Cash and cash equivalents, end of period $12,205 $52,517
======= =======
Supplemental disclosure of cash flow
information:
Cash paid during the period for:
Interest $ 3,583 $ 1,262
Income Taxes $ 9,962 $12,800
</TABLE>
8
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AMERICAN TRAVELLERS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(In thousands)
(Unaudited)
Net
Common Capital in Unrealized Re- Treas- Share-
Common Stock Excess of gain/(loss) tained ury holders'
Shares Amount Par Value on Invest. Earn. Stock Equity
------ ------ --------- ---------- ----- ----- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance,
12/31/95 16,053 $161 $59,961 $10,245 $101,187 ($749) $170,805
Net income -- -- -- -- 26,032 -- $ 26,032
Exercise of
stock options 430 4 2,306 -- -- -- $ 2,310
Tax benefit from
exercise of
stock options -- -- 2,184 -- -- -- $ 2,184
Conversion of
debentures 40 -- 578 -- -- -- $ 578
Change in
unrealized gain/
(loss) on
investments -- -- -- (20,577) -- -- ($20,577)
Retirement of
treasury stock (200) (2) (747) -- 749 $ 0
------ --- ------ -------- -------- --- -------
Balance, 9/30/96 16,323 $163 $64,282 ($10,332) $127,219 $0 $181,332
====== ==== ======= ======== ======== == ========
All share amounts have been adjusted to reflect a three-for-two
stock split paid on April 10, 1996.
</TABLE>
9
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AMERICAN TRAVELLERS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
(In thousands, except share data)
(Unaudited)
(1) Basis of Presentation:
The accompanying unaudited consolidated financial statements have
been prepared in accordance with generally accepted accounting
principles ("GAAP") for interim financial information and the
instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles
for annual financial statements. In the opinion of management,
all adjustments considered necessary for a fair presentation have
been included. All adjustments were of a normal recurring
nature, unless otherwise noted in the Management's Discussion and
Analysis of Financial Condition and Results of Operations and the
Notes to Consolidated Financial Statements. Operating results
for the quarter or the nine months ended September 30, 1996, are
not necessarily indicative of the results that may be expected
for the year ending December 31, 1996. For further information,
refer to the Consolidated Financial Statements and the Notes
thereto included in the Company's Annual Report on Form 10-K for
the year then ended December 31, 1995.
Certain amounts in the 1995 financial statements have been
reclassified to conform to the 1996 financial statement
presentation.
(2) Summary of significant accounting policies:
Principles of consolidation-
The accompanying consolidated financial statements include the
accounts of American Travellers Corporation ("ATC") and its
wholly owned subsidiaries, American Travellers Life Insurance
Company ("ATL"), United General Life Insurance Company ("UGL"),
American Travellers Insurance Company of New York ("ATICNY") and
American Travellers Insurance Services Company, Inc. ("ATIS").
ATC, ATL, UGL, ATICNY and ATIS are collectively referred to as
the "Company." All material intercompany accounts and
transactions have been eliminated in consolidation.
General-
The Company's operations consist of the underwriting and sale of
life and accident and health insurance. The Company is
principally a marketer and underwriter of long term care
insurance. The Company's long term care products consist of both
nursing home and home health care policies which provide limited
benefit payments primarily to senior citizens. The Company also
markets and underwrites other supplemental accident and health
insurance policies, as well as life insurance.
The preparation of financial statements in conformity with GAAP
requires the use of estimates which requires management to make
estimates and assumptions that affect the reported amounts of
assets and liabilities, the disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Investments-
The Company adopted the provisions of Statement of Financial
Accounting Standards No. 115, Accounting for Certain investments
in Debt and Equity Securities ("SFAS 115"), as of January 1,
1994. Under SFAS 115, investments in equity and debt securities
are classified in three categories and accounted for based upon
the classification. In December 1995, the Company transferred
its investments from the "held to maturity" classification to the
"available for sale" classification pursuant to SFAS 115 and has
recorded such investments at fair value with unrealized gains and
losses reported as a component of shareholders' equity, net of
tax.
10
Earnings per share-
Primary earnings per common share are based on the weighted
average number of shares outstanding during the period and the
dilutive effect of stock options and other common stock
equivalents. Fully diluted earnings per common share are based
on the weighted average number of shares outstanding, the
dilutive effect of common stock equivalents, and the assumed
conversion of the 6.5% convertible subordinated debentures (the
"Debentures"). Net income is increased by the interest on the
Debentures, net of related income taxes.
Stock split-
On March 4, 1996, the board of directors declared a three-for-two
stock split for security holders of record on March 20, 1996,
which was paid on April 10, 1996. Share and per share amounts
have been retroactively adjusted to reflect this split for all
periods presented.
Accounting Pronouncements-
SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed of," was adopted in 1996
with no impact on the Company's financial condition. This
accounting pronouncement establishes accounting standards for the
impairment of long lived assets, certain identifiable intangibles
and goodwill related to (i) those assets to be held and used in
the business, and (ii) assets to be disposed of.
SFAS No. 123, "Accounting for Stock-Based Compensation," will be
adopted by the Company in 1996. This statement provides
alternative methods for accounting for employee stock
compensation plans. A company can elect to use the new fair-
value based method of accounting for employee stock compensation
plans, under which compensation cost is measured and recognized
in results of operations, or continue to account for these plans
under the current accounting standards. Entities electing to
remain with the present accounting method must make disclosures
of what net income and earnings per share would have been if the
fair-value-based method of accounting had been applied. The
Company plans to continue to account for employee stock options
using the present accounting method and include the required
disclosures in its financial statements.
(3) Investments:
As of December 31, 1994 the Company classified all of its
investments as "held to maturity" pursuant to the provisions of
SFAS 115. As a result of changes in the investment portfolio and
strategy and as a result of the acquisition discussed in Note 15
to the Consolidated Financial Statements included in the
Company's Annual Report on Form 10-K for the years ended December
31, 1995 and other factors, the Company changed the
classification of its investments to "available for sale,"
effective December 1995.
(4) Pending Merger:
On August 25, 1996, the Company and Conseco, Inc. ("Conseco")
jointly entered into a definitive agreement providing for all
shareholders of the Company to receive an amount of Conseco
Common Stock for each of their shares through a share exchange
based upon the following exchange ratio: (I) if the average
closing prices of Conseco Common Stock for the ten trading days
immediately preceding the second trading day prior to the
consummation of the Merger ("the Conseco Share Price") is greater
than or equal to $42.25 per share and less than or equal to
$46.25 per share, 0.7574 of a share of Conseco Common Stock, (II)
if the Conseco Share Price is less than $42.25 per share, the
fraction of a share of Conseco Common Stock determined by
dividing $32.00 by the Conseco Share Price, or (III) if the
Conseco Share Price is greater than $46.25 per share, the
fraction of a share of Conseco Common Stock determined by
dividing $35.03 by the Conseco Share Price. Accordingly, the
Company's shareholders will receive Conseco Common Stock with a
value of not less than $32.00 and up to $35.03 per share. The
Company's Debentures will become convertible into shares of
Conseco Common Stock on an equivalent basis.
11
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CONSECO, INC. AND SUBSIDIARIES
ITEM 7(a). Financial Statements and Exhibits, continued
(a), continued
American Travellers Corporation and Subsidiaries Audited
Consolidated Financial Statements as of December 31, 1995
and 1994, and for each of the three years ended December 31,
1995.
12
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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To The Board of Directors of American Travellers Corporation:
We have audited the accompanying consolidated balance sheets of American
Travellers Corporation (a Pennsylvania corporation) and subsidiaries as of
December 31, 1995 and 1994, and the related consolidated statements of income,
shareholders' equity and cash flows for each of the three years in the period
ended December 31, 1995. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements and schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of American Travellers Corporation
and subsidiaries as of December 31, 1995 and 1994, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1995 in conformity with generally accepted accounting principles.
/s/ARTHUR ANDERSEN LLP
- ----------------------
ARTHUR ANDERSEN LLP
Philadelphia, Pa.
March 4, 1996
13
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<TABLE>
<CAPTION>
AMERICAN TRAVELLERS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
ASSETS
December 31,
---------------
1995 1994
---- ----
<S> <C> <C>
Investments:
Bonds, available for sale, at fair value
(cost $566,859) $ 582,621 $ -
Bonds, held to maturity, at amortized cost
(market $228,971) - 238,198
Mortgage loan 447 -
-------- ---------
Total investments 583,068 238,198
Cash and cash equivalents 70,214 9,133
Accrued investment income 6,781 4,192
Premiums due and deferred 7,027 5,518
Deferred policy acquisition costs 144,767 122,070
Value of business acquired (net of accumulated
amortization $12,619 and $10,603) 12,846 14,316
Property and equipment, at cost (net of
accumulated depreciation of $3,682 and $4,192) 4,176 5,168
Other assets 7,262 2,209
-------- --------
Total assets $836,141 $400,804
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Policy liabilities:
Future policy benefits $247,562 $83,995
Claim reserves 210,073 85,290
Unearned premium reserve 60,477 35,133
-------- --------
Total policy liabilities 518,112 204,418
Other liabilities 7,785 5,185
Bank borrowings - 20,000
Current and deferred income taxes 35,939 34,862
6.5% convertible subordinated debentures 103,500 -
-------- --------
Total liabilities 665,336 264,465
Shareholders' equity:
Preferred stock, $.0l par value; 5,000,000
shares authorized; no shares issued - -
Common stock, $.01 par value; 37,500,000
shares authorized; 16,053,105 and
15,962,268 shares issued 107 106
Capital in excess of par value 60,015 59,480
Net unrealized gain on investments 10,245 -
Retained earnings 101,187 77,502
Less-Shares of common stock held in treasury,
at cost (200,159 shares) (749) (749)
-------- --------
Total shareholders' equity 170,805 136,339
-------- --------
Total liabilities and shareholders' equity $836,141 $400,804
======== ========
All share and per share amounts have been adjusted to reflect a 3-for-2 stock
split payable on April 10, 1996.
The accompanying notes are an integral part of these statements.
</TABLE>
14
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<TABLE>
<CAPTION>
AMERICAN TRAVELLERS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
Year ended December 31,
-----------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Revenues:
Accident and health premiums $265,732 $195,024 $162,322
Life premiums 8,235 6,864 4,052
Investment income 23,190 11,023 9,395
Securities gains (losses) 175 (10) 227
-------- -------- --------
Total revenues 297,332 212,901 175,996
-------- -------- --------
Benefits and expenses:
Benefits to policyholders 172,903 114,200 88,347
Commissions 76,080 63,819 56,728
General and administrative 25,071 22,831 22,086
Premium taxes 6,007 4,187 4,231
Amortization of deferred policy
acquisition costs 20,687 19,815 18,298
Amortization of value of business acquired 2,014 2,122 2,987
Less-policy acquisition costs deferred (43,384) (42,045) (40,036)
Interest expense 3,260 990 32
-------- -------- --------
Total benefits and expenses 262,638 185,919 152,673
-------- -------- --------
Income before provision for income taxes 34,694 26,982 23,323
Provision for income taxes 11,009 8,554 8,715
-------- -------- -------
Net income $23,685 $18,428 $14,608
======== ======== =======
Net income per share:
Primary $1.45 $1.14 $.92
===== ===== ====
Fully diluted $1.36 $1.14 $.92
===== ===== ====
Weighted average common shares
and common equivalents:
Primary 16,316 16,133 15,804
====== ====== ======
Fully diluted 18,362 16,133 15,804
====== ====== ======
Share and per-share amounts have been adjusted to reflect the three-for-two
stock split payable on April 10, 1996.
The accompanying notes are an integral part of these statements.
</TABLE>
15
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<TABLE>
<CAPTION>
AMERICAN TRAVELLERS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(In thousands)
Net
Common Stock Capital in Unrealized Total
------------------- excess of gain on Retained Treasury shareholders'
Shares Amounts par value investment earnings stock equity
------ ------- --------- ---------- -------- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, 12/31/92 15,438 $103 $57,342 $ -- $ 44,466 $ (749) $ 101,162
Net income -- -- -- 14,608 -- 14,608
Exercise of stock options 226 1 404 -- -- 405
------- ---- ------- ------ -------- -------- ---------
Balance, 12/31/93 15,664 104 57,746 -- 59,074 (749) 116,175
Net income -- -- -- 18,428 -- 18,428
Exercise of stock options 299 2 939 -- -- 941
Tax benefit from exercise of stock options -- -- 795 -- -- 795
------- ---- ------- ------ -------- -------- ---------
Balance, 12/31/94 15,963 106 59,480 -- 77,502 (749) 136,339
Net income 23,685 23,685
Exercise of stock option 90 1 400 401
Tax benefit from exercise of stock options 135 135
Unrealized gain investments 10,245 10,245
------- ---- ------- ------- --------- -------- --------
Balance 12/31/95 16,053 $107 $60,015 $10,245 $ 101,187 $(749) $170,805
======= ==== ======= ======= ========= ======== ========
Share and per-share amounts have been adjusted to reflect the three-for-two
stock split payable on April 10, 1996.
The accompanying notes are an integral part of these statements.
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
AMERICAN TRAVELLERS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Year ended December 31,
------------------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Cash flows-operating activities
Net income $23,685 $18,428 $14,608
------- ------- -------
Adjustments to reconcile net income to net
cash provided by operating activities
Amortization of deferred policy
acquisition costs 20,687 19,815 18,298
Depreciation and amortization 5,381 5,774 6,015
Realized securities (gains) losses (174) 10 (227)
(Decrease) increase current and
deferred income taxes (4,437) 5,207 8,316
Increase in reserves 61,981 39,519 23,982
Increase (decrease) in other liabilities 2,600 533 (1,225)
Deferred policy acquisition costs (43,384) (42,045) (40,036)
(Increase) decrease in all other assets (4,651) (1,793) 600
------- ------- -------
Total adjustments 38,003 27,020 15,723
------- ------- -------
Net cash provided by operating
activities 61,688 45,448 30,331
------- ------- -------
Cash flows-investing activities
Proceeds from sales of investments 16,615 156 3,910
Proceeds from calls and maturities
of investments 33,037 15,295 24,275
Purchase of investments (380,116) (99,551) (63,282)
Purchase of fixed assets (352) (626) (693)
Proceeds from acquisitions 249,969 29,186 -
------- ------- -------
Net cash used in investing activities (80,847) (55,540) (35,790)
------- ------- -------
Cash flows-financing activities
Debenture issue costs (3,796) - -
Proceeds from issuance
of Subordinated Debentures 103,500 - -
Bank borrowings - 8,000 12,000
Exercise of options 536 939 405
Repayment of Bank borrowings (20,000) - -
------- ------- -------
Net cash provided by financing
activities 80,240 8,939 12,405
------- ------- -------
Net increase (decrease) in
cash and cash equivalents 61,081 (1,153) 6,946
Cash and cash equivalents,
beginning of year 9,133 10,286 3,340
------- ------- -------
Cash and cash equivalents,
end of year $70,214 $9,133 $10,286
======= ======= =======
Supplemental disclosure of cash
flow information Cash paid during
the year for:
Interest $ 1,319 $ 990 $ -
======= ====== =======
Income taxes $15,300 $3,465 $ 970
======= ====== =======
The accompanying notes are an integral part of these statements.
</TABLE>
17
<PAGE>
AMERICAN TRAVELLERS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995
(In Thousands, except share data)
(l) Summary of significant accounting policies:
Principles of consolidation-
The accompanying consolidated financial statements include the accounts of
American Travellers Corporation ("ATC") and its wholly owned subsidiaries,
American Travellers Life Insurance Company ("ATL"), United General Life
Insurance Company ("UGL"), American Travellers Insurance Company of New York
("ATICNY") and American Travellers Insurance Services Company, Inc. ("ATIS").
ATC, ATL, UGL, ATICNY and ATIS are collectively referred to as the "Company."
All material intercompany accounts and transactions have been eliminated in
consolidation.
General-
The Company's operations consist of the underwriting and sale of life and
accident and health insurance. The accompanying consolidated financial
statements have been prepared in accordance with generally accepted accounting
principles (GAAP). The Company is a marketer and underwriter of long term care
insurance. The Company's long term care products consist of both nursing home
and home health care policies which provide limited benefit payments primarily
to senior citizens. The Company also markets and underwrites other supplemental
accident and health insurance policies, as well as life insurance. The Company's
long term care products accounted for 89.3%, 82.4%, and 74.5% of its annualized
premiums in force at December 31, 1995, 1994, and 1993, respectively.
The preparation of financial statements in conformity with GAAP requires the
use of estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Management does not
anticipate that actual results will differ significantly from these estimates.
Revenue recognition-
Premiums are reflected as revenues primarily on a pro-rata basis as the
premiums are earned. Expenses are associated with earned premiums, resulting in
a recognition of profits over the lives of the contracts. This association is
accomplished by providing liabilities for future policy benefits and by
deferring, and then amortizing, policy acquisition costs.
Investments-
The Company adopted the provisions of Statement of Financial Accounting
Standards ("SFAS"), Accounting for Certain investments in Debt and Equity
Securities (SFAS 115), as of January 1, 1994. Under SFAS 115, investments in
equity and debt securities are classified in three categories and accounted for
based upon the classification. In December 1995, the Company transferred its
investments from the "held to maturity" classification to the "available for
sale" classification pursuant to SFAS 115 and has recorded such investments at
fair value with unrealized gains and losses reported as a component of
shareholders' equity, net of tax. See Note 3.
Deferred policy acquisition costs-
Policy acquisition costs, which vary with and are directly related to the
production of new business, are deferred. The costs deferred, consisting
principally of commissions and policy issuance costs, are being amortized with
interest in accordance with actuarial assumptions which consider the anticipated
period the policy will be in force in relation to the premiums expected to be
earned. These assumptions are consistent with those used in developing policy
reserves.
18
<PAGE>
Property and equipment-
Property and equipment are stated at cost. Improvements which materially
increase the estimated useful life of the asset are capitalized. Expenditures
for repairs and maintenance are charged to operations as incurred. Depreciation
is provided principally on the straight-line method over the related estimated
lives of the assets which range from 3 to 40 years. Upon sale or retirement, the
cost of the asset and the related accumulated depreciation are removed from the
accounts and the resulting gain or loss, if any, is included in income.
Policy benefits-
Future policy benefits and claim reserves are determined based upon generally
accepted actuarial methods. Unpaid claim reserves are based upon the aggregate
of claim estimates for reported and unreported losses based upon experience.
While the ultimate amount of claims incurred and the related expenses are
dependent on future developments, in management's opinion, the reserves for
future policy benefits and claims are adequate to cover anticipated losses and
expenses.
Income taxes-
Deferred income taxes are recorded for temporary differences in reporting
certain transactions for financial statement and income tax purposes,
principally deferred policy acquisition costs and policy benefits. Income taxes
are accounted for using the asset and liability method in accordance with SFAS
109. This method requires that deferred tax assets and liabilities at the end of
the year be determined using the tax rates and limitations expected to be in
effect at such time as the taxes are projected to be paid or recovered.
Consequently, income tax expense will increase or decrease in the period in
which a change in tax law or rates is enacted.
Earnings per share-
Primary earnings per common share are based on the weighted average number of
shares outstanding during the period and the dilutive effect of stock options
and other common stock equivalents. Fully diluted earnings per share are based
on the weighted average number of shares outstanding, dilutive effect of common
stock equivalents, and the assumed conversion of the 6.5% convertible
subordinated debenture. Net income is increased by the interest on the
debenture, net of related income taxes.
Stock split-
On March 4, 1996, the board of directors declared a three-for-two stock split
for securityholders of record as of March 20, 1996, payable on April 10, 1996.
Share and per share amounts have been retroactively adjusted to reflect this
split for all years presented.
Statements of cash flows-
For purposes of reporting cash flows, cash and cash equivalents include all
cash and short-term deposits available on demand.
Accounting Pronouncements
The Company adopted the provisions of Statement of Financial Accounting
Standards No.115, "Accounting for Certain Investments in Debt & Equity
Securities" (SFAS 115) as of at January 1, 1994. Under SFAS 115 investments in
debt and equity securities are accounted as follows:
"Held to maturity" securities are securities that the Company has the positive
intent and ability to hold to maturity and are reported at amortized cost.
Securities that are brought and held principally for the purpose of selling in
the near term are classified as "trading securities" and reported at fair value,
with unrealized gains and losses included in earnings. Securities not classified
in these two categories are classified as "available for sale" and reported at
fair value, with unrealized gains and losses reported net of tax in a separate
component of shareholders' equity.
As further discussed in Note 3 to the financial statements, the Company has
classified all of its investments as "available for sale" at December 31, 1995
and as "Held to maturity" at December 31, 1994.
19
<PAGE>
The Company holds no derivative financial instruments subject to the
provisions of SFAS No. 119, "Disclosure About Derivative Financial Instruments
and Fair Value of Financial Instruments."
In March 1995, the FASB issued SFAS 121, Accounting for the Impairment of
Long-Lived Assets and for Long Lived Assets to be Disposed of. This statement,
which must be adopted by March 31, 1996 establishes accounting standards for the
impairment of long lived assets, certain identifiable intangibles and goodwill
related to (1) those assets to be held and used in the business, and (2) for
assets to be disposed of. The Company does not anticipate a material effect on
the financial statements from this new accounting standard.
SFAS 123, Accounting for Stock-Based Compensation, will be adopted by the
Company in 1996. This statement provides alternative methods for accounting for
employee stock compensation plans. A company can elect to use the new
fair-value-based method of accounting for employee stock compensation plans,
under which compensation cost is measured and recognized in results of
operations, or continue to account for these plans under the current accounting
standards. Entities electing to remain with the present accounting method must
make disclosures of what net income and earnings per share would have been if
the fair-value- based method of accounting had been applied. The Company plans
to continue to account for employee stock options using the present accounting
method and include the required disclosures in the financial statements.
Reclassifications-
Financial statements for 1993 and 1994 have been reclassified to conform with
the 1995 presentation.
(2) Basis of presentation:
The consolidated financial statements have been prepared in accordance with
GAAP; these principles differ from practices prescribed or permitted by
insurance regulatory authorities (statutory accounting practices) in the
following material respects-
(a) Costs which vary with and are directly related to the writing of new
insurance policies are deferred and then amortized over the anticipated period
the policies will be in force in relation to the premiums expected to be earned
on the policies. Under statutory accounting practices such costs are charged to
expense as incurred.
(b) The accounts of wholly-owned subsidiaries are consolidated. Under
statutory accounting practices such subsidiaries are carried at cost adjusted
for subsequent operating results as determined under statutory accounting
practices.
(c) The value of business acquired resulting from purchases of blocks of
accident and health business is being amortized over the life of the acquired
policies. Under statutory accounting practices, any ceding allowances paid are
expensed in the year incurred.
(d) Policy liabilities-
(l) GAAP basis-Future policy benefits are provided on the net level premium
method which provides for anticipated rates of morbidity, mortality, interest
and the Company's termination experience. Accident and health insurance future
policy benefits are primarily calculated using morbidity based on the Company's
experience. The future policy benefits on ordinary life insurance are calculated
using the 1965-70 Intercompany male mortality rates. Unearned premium reserve is
the gross unearned premium reserve less the portion of the premium for expenses,
overhead and profit. Investment income is assumed at rates between 6.25% and
8.00%. Termination rates, exclusive of mortality, have been assumed to be
between 17.5% and 33.0% in the first year decreasing to between 5.0% and 10.0%
of the renewing policies after the fifteenth year. These assumptions vary by
plan, year of issue and duration.
(2) Statutory basis-Future policy benefits on accident and health insurance
consist primarily of unearned premium reserves. Future policy benefits on
ordinary life insurance have been computed using the l958 and 1980
Commissioners' Standard Ordinary Mortality Table with interest assumed at rates
between 3% and 5% applied on the Commissioners' Reserve Valuation Method basis
with grading to the net level premium method.
20
<PAGE>
(3) Claim reserves (both on a GAAP and Statutory basis) include provisions for
reported claims in process of settlement as well as claims incurred but not
reported based on prior experience of the Company. Interest is assumed at rates
between 5.0% and 7.5%.
(e) Deferred income taxes, which for statutory purposes are not recognized,
are provided as appropriate for temporary differences.
(3) Investments:
As of December 31, 1994 the Company classified all of its investments as "held
to maturity" pursuant to the provisions of SFAS 115. As a result of the changes
in the investment portfolio and strategy and as a result of the acquisition
discussed in Note 15 and other factors, the Company changed the classification
of its investments to "available for sale" effective December 1995.
Pursuant to the requirements of SFAS 115, "available for sale" securities are
reported at fair value with unrealized gains and losses reported net of tax as a
separate component of shareholders' equity. As a result of this change the
reported value of the investment portfolio, at December 31,1995, increased
$15,762 with corresponding increases in shareholders' equity of $10,245 and
deferred income taxes of $5,517.
The components of investment income are as follows-
<TABLE>
<CAPTION>
Year ended December 3l,
----------------------------
1995 1994 1993
----- ---- ----
<S> <C> <C> <C>
Fixed maturity investments $15,308 $10,185 $8,926
Mortgage-backed securities 3,076 223 28
Cash and short-term investments 1,613 437 342
Mortgage loan and other 3,193 178 99
------- ------- ------
Investment Income $23,190 $11,023 $9,395
======= ======= ======
</TABLE>
The amortized cost and market values of investments in debt securities are as
follows:
<TABLE>
<CAPTION>
Gross Gross
Amortized unrealized unrealized Market
cost gains losses value
---- ----- ------ -----
<S> <C> <C> <C> <C>
December 31, 1995
- -----------------
U.S. Government Obligations $133,703 $ 2,836 $ (83) $136,456
Mortgage-backed Securities 180,926 2,995 (4) 183,917
States and Political Subdivisions 78,915 1,497 (62) 80,350
Corporate Securities 173,315 8,695 (112) 181,898
-------- ------- ----- --------
Total $566,859 $16,023 $(261) $582,621
======== ======= ===== ========
December 31, 1994
- -----------------
U.S. Government Obligations $52,190 $134 $(2,582) $49,742
Mortgage-backed securities 9,975 16 (52) 9,939
States and Political Subdivisions 95,194 6 (3,822) 91,378
Corporate Securities 80,839 135 (3,062) 77,912
-------- ------ ------- --------
Total $238,198 $ 291 $(9,518) $228,971
======== ====== ======= ========
</TABLE>
21
<PAGE>
The amortized cost and market value of debt securities at December 31, 1995
and 1994, by contractual maturity, are shown below. Expected maturities will
differ from contractual maturities because borrowers may have the right to call
or prepay obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
Amortized Market
------------------
Cost Value
---- -----
<S> <C> <C>
December 31, 1995
- -----------------
Due in one year or less $ 46,383 $ 46,425
Due after one year through five years 103,326 104,890
Due after five years through ten years 138,634 145,181
Due after ten years 97,590 102,208
Mortgage-backed securities 180,926 183,917
-------- --------
Totals $566,859 $582,621
======== ========
</TABLE>
<TABLE>
<CAPTION>
Amortized Market
------------------
Cost Value
---- -----
<S> <C> <C>
December 31, 1994
- ------------------
Due in one year or less $ 26,840 $ 26,693
Due after one year through five years 123,997 118,809
Due after five years through ten years 70,134 66,378
Due after ten years 7,252 7,152
Mortgage-backed securities 9,975 9,939
-------- --------
Totals $238,198 $228,971
======== ========
</TABLE>
Proceeds from sales of investments were $16,615 in 1995, $156 in 1994 and
$3,910 in 1993. Proceeds from maturities and security calls were $33,037 in
1995, $15,295 in 1994 and $24,275 in 1993. Gross gains of $194, $10 and $266 and
gross losses of $19, $20 and $39 in 1995, 1994 and 1993, respectively, were
realized on sales and calls.
As of December 31, 1995 and 1994, the company did not have any individual
investments in corporate securities which exceeded 10% of shareholders' equity.
There were no non-income producing investments during the year ended December
31, 1995 and 1994.
At December 31, 1995 and 1994, bonds with an amortized cost of $7,669 and
$9,153, respectively, are on deposit with various regulatory departments
pursuant to statutory requirements.
(4) Restrictions on shareholders' equity:
The statutory financial statements of ATL, the Company's principal subsidiary,
as filed, reflect the following-
<TABLE>
Year ended December 3l,
------------------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Statutory net income (loss) $(43,287) $ 2,232 $ 4,065
-------- ------- -------
Statutory capital and surplus $ 72,137 $57,013 $46,143
======== ======= =======
</TABLE>
In 1995, ATL acquired the long term care business of an unrelated insurer, for
which it paid a $40,000 ceding allowance. See Note 15. The cost of this
acquisition, and its related tax consequences, are primarily responsible for the
1995 statutory loss.
ATL is required by insurance laws and regulations to maintain minimum capital
and surplus, determined in accordance with statutory accounting regulations.
Under Pennsylvania insurance law, dividends may be paid by ATL only from
statutory profits or surplus and require Pennsylvania Insurance Department
approval if the dividend is in excess of the greater of l0% of surplus or net
statutory income of the prior year. The Department must be notified of any
dividend in excess of one-half of l% of admitted assets of ATL.
22
<PAGE>
(5) Federal income taxes:
ATC and its direct subsidiaries file a consolidated Federal income tax return.
UGL files a separate Federal income tax return. ATL and UGL are taxed as life
insurance companies under the Tax Reform Act of 1986 and Revenue Reconciliation
Act of 1990. The 1990 Act requires life insurance companies to capitalize costs
of acquiring certain insurance contracts and to amortize such costs over
specified periods. The 1986 Act taxes life insurance companies at general
corporate rates.
The Company adopted the accounting and disclosure rules of SFAS 109,
"Accounting for Income Taxes," effective January 1, 1993, under which the tax
benefit of the small life insurance company deduction cannot be anticipated for
purposes of offsetting a deferred tax liability for taxable temporary
differences at the end of the current year. As a result, the adoption of SFAS
109 resulted in an increase in the deferred tax liability of $5,500 based on
taxable temporary differences and the net deferred tax liability at January 1,
1993. The Company has restated as permitted under SFAS 109, prior years'
financial statements to record the effect of the adoption of this pronouncement.
The components of deferred tax assets and liabilities, measured under SFAS 109
as of December 31, 1995 and 1994 are as follows:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Deferred tax liabilities
Deferred policy acquisition cost and other intangibles $34,934 $37,288
Unrealized gain on investments available for sale 5,517 -
Other 1,106 1,532
------- -------
Deferred tax liabilities 41,557 38,820
------- -------
Deferred tax assets
Policy liabilities 6,031 5,869
Net operating loss carry forward 575 670
Capital loss carryforward 47 185
Alternative minimum tax credit carry forward - 6
Other 503 551
------- -------
Deferred tax assets 7,156 7,281
------- -------
Net deferred tax liability 34,401 31,539
Current tax liability 1,538 3,323
------- -------
Current and deferred income taxes $35,939 $34,862
======= =======
</TABLE>
The provision for Federal income taxes are comprised of the following:
<TABLE>
<CAPTION>
Year ended December 31,
-------------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Current taxes $12,061 $7,882 $1,090
------- ------ ------
Deferred taxes relating to:
Deferred policy acquisition costs (2,597) 4,848 7,622
Future policy benefits, claims and unearned
premium reserves 2,154 (1,619) (323)
Amortization of intangibles (705) (643) (884)
Net operating loss for tax purposes (518) 118 199
Tax rate increase on prior year temporary
differences - - 702
Other, net 614 (2,032) 309
------- ------ ------
Total deferred taxes (1,052) 672 7,625
------- ------ ------
Total provision for income taxes $11,009 $8,554 $8,715
======= ====== ======
</TABLE>
23
<PAGE>
A reconciliation between the Federal statutory tax rate and the Company's
effective tax rate is as follows:
<TABLE>
<CAPTION>
Year ended December 31,
-------------------------
1995 1994 1993
---- ---- -----
<S> <C> <C> <C>
Statutory tax rate 35.0% 35.0% 35.0%
Increase in taxes resulting from:
Effect of tax rate increase on temporary
differences as of January 1, 1993 - - 3.0%
Decrease in taxes resulting from:
Tax free investment income (3.3)% (3.3)% (0.6)%
---- ---- ----
Effective tax rate 31.7% 31.7% 37.4%
==== ==== ====
</TABLE>
Pursuant to the requirements of SFAS 109, the Company recorded an additional
deferred tax provision of $702 during 1993 to reflect the impact on deferred tax
assets and liabilities resulting from the increase in U.S. statutory maximum
corporate tax rates from 34% to 35%.
ATC has $1,569 in non-life net operating loss carryforwards available for tax
purposes, and has capital loss carryforwards of approximately $375 expiring in
1997.
Prior to 1984, ATL had accumulated $170 in a special policyholders' surplus
account which has been excluded from taxation. These amounts will become taxable
only when distributed to shareholders. No provision for deferred income taxes
has been made for these amounts since the Company does not anticipate any
transactions that would cause any part of the account to become taxable.
The Internal Revenue Service is conducting a review of the Company's federal
income tax returns for the years ended December 31, 1993, 1992, 1991, and 1990.
Management believes that the ultimate outcome of the review will not have any
material adverse effect on the financial condition or results of operation of
the Company.
(6) Stock option plans:
ATC has adopted several stock option plans (the "Plans"). The Plans permit
grants of options covering a maximum of 3,495,000 shares of common stock. Under
the Plans, options may be issued as incentive stock options in the case of key
employees and/or as non-qualified stock options in the case of persons with
managerial, professional or supervisory responsibilities, including but not
limited to, directors, officers and consultants to ATC, who, in the opinion of
the Committee administering the Plans, have a capacity to make a substantial
contribution to ATC. One of the Plans also provides for the issuance of up to
50,000 shares of the Company's common stock upon the exercise of stock options
granted as formula awards pursuant to the plan.
The per share exercise price may not be less than 100% of the fair market
value of the common stock on the date of grant, or 1l0% of the fair market value
in the case of incentive stock options issued to an employee owning, at the time
the option is granted, more than 10% of the outstanding common stock of ATC.
Options cannot be exercised more than ten years after the date of grant.
Incentive stock options held by shareholders owning more than 10% of the
outstanding common stock of ATC cannot be exercised more than five years after
the date of grant.
Stock Options
(The following table summarizes data relating to the stock options, as restated
for the stock split.)
<TABLE>
<CAPTION>
Number of Shares
------------------------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Outstanding at beginning of year 1,234,788 1,390,788 1,341,774
Granted 564,375 142,500 276,000
Exercised (90,837) (298,500) (226,266)
Canceled - - (720)
--------- --------- ---------
Outstanding at end of year 1,708,326 1,234,788 1,390,788
========= ========= =========
</TABLE>
24
<PAGE>
At December 31, 1995, the number of shares exercisable and options available for
additional granting for all plans was 1,444,503 and 259,698, respectively. The
exercise price of options outstanding at December 31, 1995, ranged from $1.46 to
$15.75 per share. The average exercise price at December 31, 1995, is $8.44 per
share. During 1995, options for 90,837 shares were exercised at a range of $1.58
to $8.66 per share.
(7) Shareholders' rights agreement:
On April 25, 1990, the Company declared a dividend distribution in the form of
preferred stock purchase rights (the "rights"). The rights become exercisable if
a person or group acquires or announces a tender offer to acquire 20% or more of
the Company's common stock. The rights also become exercisable if the Board of
Directors declares a person to be an "adverse person" and that person has
obtained more than 10% of the outstanding shares of the Company's common stock.
Each right, when exercisable, entitles the registered holder to purchase one
one-hundredth of a share of Series A preferred stock at an exercise price of $50
subject to certain adjustments. In addition, if a person or group acquires 20%
or more of the outstanding shares of the Company's common stock, subject to
certain exceptions, or a person is declared an adverse person, each right will
then entitle its holder (other than such persons or members of any such group)
to purchase, at the right's then current exercise price, a number of shares of
the Company's common stock having a total market value of twice the right's
exercise price.
In the event that the Company merges with or transfers 50% or more of its
assets or earnings to any entity after the rights become exercisable, holders of
rights may purchase, at the right's then current exercise price, common stock of
the acquiring entity having a value equal to twice the right's exercise price.
In addition, at any time after a person acquires 20% of the outstanding shares
of common stock and prior to the acquisition by such person of 50% or more of
the outstanding shares of common stock, the Company may change the rights (other
than the rights which have become null and void), in whole or in part, at an
exchange ratio of one share of common stock or equivalent share of preferred
stock, per right.
The Board of Directors can redeem the rights for $.01 per right at any time
prior to the acquisition by a person or group of beneficial ownership of 20% or
more of the Company's common stock or a person being declared an adverse person.
Until a right is exercised, the holder thereof will have no rights as a
shareholder of the Company, including without limitation, the right to vote or
to receive dividends. Unless earlier redeemed or exchanged, the rights will
expire on May 14, 2000.
(8) Claim Reserves:
Activity in the liability for policy claim reserves is summarized as follows
for the years ended December 31:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Claim reserves-beginning of year: $ 85,290 $ 55,958 $ 43,315
Add claims incurred during the year related to-
Current year: 133,221 91,831 73,398
Prior years: 6,327 3,131 5,213
-------- ------- -------
Total incurred: 139,548 94,962 78,611
-------- ------- -------
Less claims paid during the year related to-
Current year: 49,794 35,200 30,049
Prior years: 57,141 42,703 35,919
-------- ------- -------
Total paid: 106,935 77,903 65,968
-------- ------- -------
Plus-reinsurance assumed (See Note 15): 92,170 12,273 0
-------- ------- -------
Claim reserves-end of year: $210,073 $ 85,290 $ 55,958
======== ======== ========
</TABLE>
25
<PAGE>
The development of prior year claims reserves reflects normal changes in
actuarial estimates. The Company utilizes case reserves that are considered
fixed and determinable and discounts such reserves using an interest rate of
6.25% for financial statements prepared in accordance with GAAP and 5.0%
discount rate for statutory purposes.
(9) Employee benefits:
Effective January 1, 1984, ATC initiated a defined benefit pension plan (the
"Plan") for all employees over the age of 2l years who have worked for ATC for a
period of one year. ATC makes annual contributions to the Plan based upon
amounts required to fund such plan as determined by a consulting actuary.
Pension expense was $203, $181 and $154, for the years ended December 31, 1995,
1994 and 1993, respectively. The following table sets forth the plan's funded
status at December 31, 1995 and 1994.
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested benefits $ 733 $ 593
Non-vested benefits 124 99
------ ------
$ 857 $ 692
====== ======
Projected benefit obligation $1,270 $1,052
Plan assets at fair value (750) (614)
------ ------
Projected benefit obligation in excess of plan assets 520 438
Unrecognized net loss (276) (292)
Unrecognized transition obligation (89) (92)
Unrecognized prior service cost (64) (70)
------ -----
Accrued (prepaid) pension expense $ 91 $ (16)
====== =====
Net pension cost includes the following components:
Service cost $ 162 $ 137
Interest cost on projected benefit obligation 72 60
Actual return on plan assets (47) (16)
Net amortization 16 0
----- -----
Net periodic pension cost $ 203 $ 181
===== =====
</TABLE>
The assumed rate of increase in future compensation levels used in determining
the actuarial present value of the projected benefit obligation is 5% in 1995
and 1994. The expected rate of return on assets is 8% in 1995 and 1994. The
discount rate used is 7% in 1995 and 1994.
The Company does not have any other obligations to provide post-retirement
benefits to employees.
(10) Commitments and contingencies:
The Company is a defendant in various legal proceedings and litigation arising
in the ordinary course of business. In management's opinion, based on
discussions with counsel, the resolution of such proceedings will not have a
material adverse effect on the Company's consolidated financial condition and
results of operations.
A civil shareholders' class action suit filed against the Company and certain
of its officers in March 1992 was settled during the second quarter of 1993.
Under the terms of the settlement, class members were paid $1,500, of which
$1,000 was paid by the Company's liability carrier. While the Company believed
the suit was without merit, a settlement was reached to avoid internal
distraction, ongoing professional fees and other potential costs and
uncertainties of continued litigation.
26
<PAGE>
(11) Transactions with related parties:
Commissions paid to agencies controlled by certain directors amounted to $136
in 1995, $140 in 1994 and $104 in 1993.
The Company has employment contracts with certain key employees. These
contracts provide for, among other things, certain severance payments in the
case of termination.
(12) 6.5% convertible subordinated debentures due 2005
In September 1995 the Company issued $103,500 of 6.5% Convertible Subordinated
Debentures (the "Debentures") due October 1, 2005. The proceeds were used to
finance an additional surplus contribution to ATL, prepay $20 million in
outstanding borrowings under the Company's Revolving Credit Facility and for
general corporate purposes.
Interest on the debentures is payable semi-annually on April 1 and October 1,
commencing on April 1, 1996. The Debentures are redeemable at the Company's
option at a price equal to 103.25% after October 1998, declining to 100% if
redeemed after October 2001.
The Debentures are convertible into ATC common stock anytime prior to maturity
at a conversion price equal to $15.17 per share (equivalent to a conversion rate
of 65.94 shares per $1,000 principal amount of debentures). The conversion price
has been adjusted to reflect the 3- for-2 stock split discussed in Note 1, and
is subject to further adjustment under certain events including dividends
distributions and common stock issuances, among others.
Debt issue costs incurred in connection with the Debentures totaling $3,796
are included in other assets and are being amortized over the term of the
Debentures. Accumulated amortization is $74 at December 31, 1995.
(13) Bank borrowings
ATC currently is party to a $20,000 Revolving Credit Agreement (the
"Agreement"). The revolving credit availability will be reduced by $1,667 each
quarter beginning no later than March 31, 2002. No borrowings are outstanding at
December 31, 1995.
At December 31, 1994, $20,000 in borrowings were outstanding. Proceeds from
these borrowings were used to fund surplus contributions to ATL during 1994 and
1993. Such borrowings were repaid with the proceeds from the Debentures
discussed in Note 12.
Borrowings are secured by the common stock of ATL and ATIS. Interest is
payable at 0.25% over the bank's base rate, at 1.625% over the London interbank
Eurodollar rate or 1.75% over the bank's certificate of deposit rate, at the
Company's option. The average interest rate for amounts borrowed was 8.35% and
8.44% for 1995 and 1994, respectively. A commitment fee is payable to the bank
based on the average daily unused portion of the credit.
The Agreement contains restricted covenants. The more significant covenants
require the company maintain a specified amount of net worth and statutory
surplus and meet certain financial ratios, and restricts mergers and
acquisitions, future indebtedness and commitments, and types of investments. The
Company was in compliance with all of the covenants as amended as of December
31, 1995.
(14) Leases:
Future minimum lease rentals on operating leases which consist principally of
the Company's Home Office facility and computers are as follows:
1996 $1,935
1997 1,796
1998 1,411
1999 1,185
Thereafter 938
------
Total $7,265
======
Operating lease expenses for the years ended December 31, 1995, 1994, and 1993
were $1,670, $1,607 and $1,734, respectively.
27
<PAGE>
(15) Acquisitions:
In December 1995, the Company closed on an reinsurance agreement to acquire
the long term care insurance business of an unrelated insurance company which
consisted of approximately $96,000 of annualized premium. The transaction was
effective as of October 1, 1995. Under the terms of the reinsurance agreement,
the Company assumed all existing liabilities associated with the long term care
insurance business on a coinsurance basis. Cash and marketable securities of
approximately $249,969 were transferred to the Company. In October 1994, the
Company acquired the long term insurance business of an unrelated insurance
company which consisted of approximately $25,000 of annualized premiums.
Approximately $29,400 in cash was transferred to the Company. These acquisitions
have been accounted for using the purchase accounting method. Total cash and
marketable securities received in connection with these acquisitions
approximates reserve liabilities assumed.
Value of business acquired consists of the excess of the purchase price over
the estimated fair value of net assets acquired in connection with the purchase
of common stock and the present value of expected future profits associated with
blocks of business purchased prior to 1992. Value of business acquired related
to the purchased blocks of business is being amortized over the respective lives
of the blocks, which are estimated at approximately 5 to 7 years.
(16) Consolidated quarterly financial data (unaudited).
Quarterly financial data for the years ended December 31, 1995 and 1994 are as
follows:
<TABLE>
<CAPTION>
First Second Third Fourth
----- ------ ----- ------
<S> <C> <C> <C> <C>
1995
- ----
Total Revenues $ 65,314 $ 65,476 $ 68,278 $ 98,264
Total Benefits and Expenses 57,740 57,424 59,962 87,512
-------- --------- -------- ---------
Income before Provision
for Income Tax 7,574 8,052 8,316 10,752
Provision for Income Taxes 2,350 2,544 2,589 3,526
-------- --------- -------- --------
Net Income $ 5,224 $ 5,508 $ 5,727 $ 7,226
======== ========= ======== ========
Net Income Per Share
Primary $ .32 $ .34 $ .35 $ .44
======== ========= ======== ========
Fully Diluted $ .32 $ .34 $ .34 $ .36
======== ========= ======== ========
</TABLE>
<TABLE>
<CAPTION>
First Second Third Fourth
----- ------ ----- ------
<S> <C> <C> <C> <C>
1994
- ----
Total Revenues $ 49,610 $ 50,605 $ 52,043 $ 60,643
Total Benefits and Expenses 43,439 44,205 45,149 53,126
-------- -------- -------- ---------
Income before provision for
income tax 6,171 6,400 6,894 7,517
Provision for Income Taxes 1,929 2,010 2,178 2,437
-------- -------- --------- ---------
Net Income $ 4,242 $ 4,390 $ 4,716 $ 5,080
======== ======== ========= =========
Net Income Per Share
Primary $ .27 $ .27 $ .29 $ .31
======= ======== ========= =========
Fully Diluted $ .27 $ .27 $ .29 $ .31
======= ======== ========= =========
Per share amounts have been adjusted to reflect the three-for-two stock split
payable on April 10, 1996.
</TABLE>
28
<PAGE>
CONSECO, INC. AND SUBSIDIARIES
_________________
ITEM 7(b). Financial Statements and Exhibits, continued
(b) Pro forma financial statements of Conseco, Inc. and
subsidiaries.
29
<PAGE>
CONSECO, INC. AND SUBSIDIARIES PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
The unaudited pro forma consolidated statement of operations of Conseco,
Inc. ("Conseco") for the nine months ended September 30, 1996, and for the year
ended December 31, 1995, presents the consolidated operating results for Conseco
as if the following transactions, which have already occurred, had occurred on
January 1, 1995: (1) the issuance of $275.0 million of Trust Originated
Preferred Securities ("TOPrS") having a distribution rate of 9.16 percent (the
"TOPrS Offering"); (2) the issuance of $325.0 million of Capital Trust
Pass-through Securities ("TruPS") having a distribution rate of 8.70 percent
(the "TruPS Offering"); and (3) the merger (the "ATC Merger") of American
Travellers Corporation ("ATC") with and into Conseco.
The pro forma consolidated statement of operations data for Conseco for the
year ended December 31, 1995, set forth in the unaudited pro forma consolidated
statement of operations under the column "Pro forma Conseco before the Merger"
reflect the prior application of certain pro forma adjustments for the following
transactions, all of which have already occurred, as if such transactions had
occurred on January 1, 1995: (i) the call for redemption of Conseco's Series D
Convertible Preferred Stock (the "Series D Call") completed on September 26,
1996; (ii) the acquisition of all of the outstanding common stock of American
Life Holdings, Inc. ("ALH"), not previously owned by Conseco, and related
transactions (the "ALH Transaction") completed on September 30, 1996; (iii) the
acquisition of Life Partners Group, Inc. (the "LPG Merger"); (iv) the
acquisition of all of the outstanding common stock of CCP not previously owned
by Conseco and related transactions (including the repayment of the borrowings
under Conseco's existing $250.0 million revolving credit agreement); (v) the
increase of Conseco's ownership in Bankers Life Holding Corporation ("BLH") to
90.4 percent, as a result of purchases of common shares of BLH by Conseco and
BLH during 1995 and the first three months of 1996; (vi) the issuance of 4.37
million shares of Preferred Redeemable Increased Dividend Equity Securities
Convertible Preferred Stock ("PRIDES") of Conseco in January 1996; (vii) the BLH
tender offer for and repurchase of its 13 percent senior subordinated notes due
2002 and related financing transactions completed in March 1996 (the "BLH Tender
Offer"); and (viii) the debt restructuring of ALH in the fourth quarter of 1995.
Such pro forma adjustments are set forth in: (i) Exhibit 99.2 included in
Conseco's Current Report on Form 8-K dated September 25, 1996; (ii) Conseco's
Current Report on Form 8-K dated August 2, 1996; and (iii) Exhibit 99.1 included
in Conseco's Current Report on Form 8-K dated April 10, 1996.
The pro forma consolidated statement of operations data for Conseco for the
nine months ended September 30, 1996, set forth in the unaudited pro forma
consolidated statement of operations under the column "Pro forma Conseco before
the TOPrS Offering" reflect the prior application of certain pro forma
adjustments for the following transactions, all of which have already occurred,
as if such transactions had occurred on January 1, 1995: (1) the Series D Call;
(2) the ALH Transaction; (3) the LPG Merger; (4) the issuance of 4.37 million
shares of Conseco PRIDES in January 1996; and (5) the BLH Tender Offer. Such pro
forma adjustments are set forth in Exhibit 99.1 included in Conseco's Form 10-Q
for the quarterly period ended September 30, 1996.
The unaudited pro forma consolidated balance sheet of Conseco as of
September 30, 1996, gives effect to the following transactions, which have
already occurred, as if each had occurred on September 30, 1996: (1) the TOPrS
Offering; (2) the TruPS Offering; and (3) the ATC Merger.
The pro forma consolidated financial statements are based on the historical
financial statements of Conseco, LPG and ATC and are qualified in their
entirety by, and should be read in conjunction with, these financial statements
and the notes thereto. The pro forma data are not necessarily indicative of the
results of operations or financial condition of Conseco had these transactions
occurred on January 1, 1995, nor the results of future operations. Conseco
anticipates cost savings and additional benefits as a result of certain of the
transactions contemplated in the pro forma financial statements. Such benefits
and any other changes that might have resulted from management of the combined
companies have not been included as adjustments to the pro forma consolidated
financial statements. Certain amounts from the prior periods have been
reclassified to conform to the current presentation.
The unaudited pro forma consolidated financial statements reflect cost
allocations for the LPG Merger, the ALH Transaction and the ATC Merger using
estimated values of the assets and liabilities of LPG, ALH and ATC as of the
assumed merger dates based on appraisals and other studies, which are not yet
complete. Accordingly, the final allocations will be different than the amounts
included in the accompanying pro forma consolidated financial statements.
Although the final allocations will differ, the pro forma consolidated financial
statements reflect management's best estimate based on currently available
information as if the LPG Merger, the ALH Transaction and the ATC Merger had
occurred on the assumed merger dates.
30
<PAGE>
<TABLE>
<CAPTION>
CONSECO, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
for the nine months ended September 30, 1996
(Amounts in millions, except per share amounts)
(unaudited)
Pro forma
Pro forma adjustments Pro forma
Conseco relating Pro forma adjustments
before the to the for the relating to Pro forma
TOPrS TOPrS TOPrS the TruPS Conseco
Offering Offering Offering Offering subtotal(a)
-------- -------- -------- --------- ---------
<S> <C> <C> <C> <C> <C>
Revenues:
Insurance policy income $1,349.0 $ - $1,349.0 $ - $1,349.0
Investment activity:
Net investment income 1,084.4 1,084.4 1,084.4
Net trading losses (6.5) (6.5) (6.5)
Net realized gains 23.0 23.0 23.0
Fee revenue 29.7 29.7 29.7
Restructuring income 30.4 30.4 30.4
Other income 11.4 11.4 11.4
-------- ------- -------- -------- --------
Total revenues 2,521.4 2,521.4 2,521.4
-------- ------- -------- -------- --------
Benefits and expenses:
Insurance policy benefits and change in future
policy benefits 957.2 957.2 957.2
Interest expense on annuities and financial
products 549.5 549.5 549.5
Interest expense on notes payable 100.7 (12.9)(1) 87.8 (15.6)(6) 72.2
Interest expense on investment borrowings 17.2 17.2 17.2
Amortization related to operations 242.9 242.9 242.9
Amortization related to realized gains 22.3 22.3 22.3
Other operating costs and expenses 243.5 243.5 243.5
-------- ------- -------- -------- --------
Total benefits and expenses 2,133.3 (12.9) 2,120.4 (15.6) 2,104.8
-------- ------- -------- -------- --------
Income before income taxes, minority
interest and extraordinary charge 388.1 12.9 401.0 15.6 416.6
Income tax expense 147.9 4.5 (2) 152.4 5.4 (7) 157.8
-------- ------- -------- ------- --------
Income before minority interest
and extraordinary charge 240.2 8.4 248.6 10.2 258.8
Minority interest in consolidated subsidiaries:
Dividends on Company - obligated mandatorily
redeemable preferred securities of subsidiary
trusts - 12.3 (3) 12.3 13.8 (8) 26.1
Dividends on preferred stock 6.4 6.4 6.4
Equity in earnings 13.9 13.9 13.9
-------- ------- -------- -------- --------
Income before extraordinary charge $ 219.9 $ (3.9) $ 216.0 $ (3.6) $ 212.4
======== ======= ======== ======== ========
Earnings per common share and common equivalent share:
Primary:
Weighted average shares outstanding 77.2 77.2 77.2
======== ======== =====
Income before extraordinary charge $2.85 $2.80 $2.75
======== ======== =====
Fully diluted:
Weighted average shares outstanding 78.7 78.7 78.7
======== ======= =====
Income before extraordinary charge $2.79 $2.74 $2.70
======== ======= =====
<FN>
(a) Amounts are carried forward to page 32.
</FN>
The accompanying notes are an integral part of the pro forma consolidated financial statements.
31
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CONSECO, INC AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
for the nine months ended September 30, 1996
(Amounts in millions, except per share amounts)
(unaudited)
Pro forma
adjustments
Pro forma relating Pro forma
Conseco ATC to the Conseco
subtotal(a) historical ATC Merger totals
--------- ------------ ---------- ---------
<S> <C> <C> <C> <C>
Revenues:
Insurance policy income $1,349.0 $ 283.3 $ - $1,632.3
Net investment income 1,084.4 33.2 1.1 (11) 1,118.7
Net trading losses (6.5) (6.5)
Net realized gains 23.0 1.3 2.3 (11) 26.6
Fee revenue 29.7 29.7
Restructuring income 30.4 30.4
Other income 11.4 11.4
--------- -------- -------- --------
Total revenues 2,521.4 317.8 3.4 2,842.6
--------- -------- -------- --------
Benefits and expenses:
Insurance policy benefits
and change in future
policy benefits 957.2 192.2 1,149.4
Interest expense
on annuities and
financial products 549.5 549.5
Interest expense on
notes payable 72.2 5.8 1.5 (12) 75.8
(3.7)(13)
Interest expense on
investment borrowings 17.2 17.2
Amortization related
to operations 242.9 16.4 (16.4)(14) 273.6
19.9 (14)
10.8 (15)
Amortization related
to realized gains 22.3 22.3
Other operating
costs and expenses 243.5 64.4 307.9
--------- -------- -------- -------
Total benefits
and expenses 2,104.8 278.8 12.1 2,395.7
--------- -------- -------- -------
Income before income
taxes, minority interest
and extraordinary
charge 416.6 39.0 (8.7) 446.9
Income tax expense 157.8 13.0 .7 (16) 171.5
--------- --------- -------- -------
Income before
minority interest
and extraordinary
charge 258.8 26.0 (9.4) 275.4
Minority interest in consolidated
subsidiaries:
Dividends on Company - obligated
mandatorily redeemable
preferred securities of
subsidiary trusts 26.1 26.1
Dividends on preferred stock 6.4 6.4
Equity in earnings 13.9 13.9
-------- --------- -------- -------
Income before
extraordinary
charge $ 212.4 $ 26.0 $ (9.4) $ 229.0
======== ======== ======== =======
Earnings per common share and
common equivalent share:
Primary:
Weighted average
shares outstanding 77.2 10.4 (17) 87.6
==== ====== ====
Income before
extraordinary charge $2.75 $2.61
===== =====
Fully diluted:
Weighted average shares
outstanding 78.7 14.4 (17) 93.1
==== ====== ====
Income before
extraordinary charge $2.70 $2.47
===== =====
<FN>
(a) Amounts have been carried forward from page 31.
</FN>
The accompanying notes are an integral part of the pro forma consolidated financial statements.
32
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CONSECO, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
for the year ended December 31, 1995
(Amounts in millions, except per share amounts)
(unaudited)
Pro forma
Pro forma adjustments Pro forma
Conseco relating Pro forma adjustments
before the to the for the relating to Pro forma
TOPrS TOPrS TOPrS the TruPS Conseco
Offering Offering Offering Offering subtotal(a)
-------- -------- -------- --------- ---------
<S> <C> <C> <C> <C> <C>
Revenues:
Insurance policy income $1,752.8 $ - $1,752.8 $ - $1,752.8
Investment activity:
Net investment income 1,461.1 1,461.1 1,461.1
Net trading income 2.5 2.5 2.5
Net realized gains 220.3 220.3 220.3
Fee revenue 33.9 33.9 33.9
Restructuring income 15.2 15.2 15.2
Other income 12.6 12.6 12.6
-------- ------- -------- -------- --------
Total revenues 3,498.4 3,498.4 3,498.4
-------- ------- -------- -------- --------
Benefits and expenses:
Insurance policy benefits and change in future
policy benefits 1,261.4 1,261.4 1,261.4
Interest expense on annuities and financial
products 758.5 758.5 758.5
Interest expense on notes payable 143.5 (17.3)(1) 126.2 (20.9)(6) 105.3
Interest expense on investment borrowings 30.2 30.2 30.2
Amortization related to operations 307.3 307.3 307.3
Amortization related to realized gains 144.4 144.4 144.4
Other operating costs and expenses 356.4 356.4 356.4
-------- ------- -------- -------- --------
Total benefits and expenses 3,001.7 (17.3) 2,984.4 (20.9) 2,963.5
-------- ------- -------- -------- --------
Income before income taxes, minority
interest and extraordinary charge 496.7 17.3 514.0 20.9 534.9
Income tax expense 192.3 6.1 (2) 198.4 7.3 (7) 205.7
-------- ------- -------- ------- --------
Income before minority interest
and extraordinary charge 304.4 11.2 315.6 13.6 329.2
Minority interest in consolidated subsidiaries:
Dividends on Company - obligated mandatorily
redeemable preferred securities of subsidiary
trusts - 16.4 (3) 16.4 18.4 (8) 34.8
Dividends on preferred stock 8.7 8.7 8.7
Equity in earnings 12.6 12.6 12.6
-------- ------- -------- -------- --------
Income before extraordinary charge $ 283.1 $ (5.2) $ 277.9 $ (4.8) $ 273.1
======== ======= ======== ======== ========
Earnings per common share and common equivalent share:
Primary:
Weighted average shares outstanding 75.7 75.7 75.7
======== ======== =====
Income before extraordinary charge $3.74 $3.67 $3.61
======== ======== =====
Fully diluted:
Weighted average shares outstanding 76.0 76.0 76.0
======== ======= =====
Income before extraordinary charge $3.72 $3.66 $3.59
======== ======= =====
<FN>
(a) Amounts are carried forward to page 34.
</FN>
The accompanying notes are an integral part of the pro forma consolidated financial statements.
33
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CONSECO, INC AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
for the year ended December 31, 1995
(Amounts in millions, except per share amounts)
(unaudited)
Pro forma
adjustments
Pro forma relating Pro forma
Conseco ATC to the Conseco
subtotal(a) historical ATC Merger totals
--------- ------------ ---------- ---------
<S> <C> <C> <C> <C>
Revenues:
Insurance policy income $1,752.8 $ 273.9 $ - $2,026.7
Net investment income 1,461.1 23.2 1.8 (11) 1,486.1
Net trading income 2.5 2.5
Net realized gains 220.3 .2 2.0 (11) 222.5
Fee revenue 33.9 33.9
Restructuring income 15.2 15.2
Other income 12.6 12.6
--------- -------- -------- --------
Total revenues 3,498.4 297.3 3.8 3,799.5
--------- -------- -------- --------
Benefits and expenses:
Insurance policy benefits
and change in future
policy benefits 1,261.4 172.9 1,434.3
Interest expense
on annuities and
financial products 758.5 758.5
Interest expense on
notes payable 105.3 3.3 1.9 (12) 107.3
(3.2)(13)
Interest expense on
investment borrowings 30.2 30.2
Amortization related
to operations 307.3 22.7 (22.7)(14) 345.2
23.5 (14)
14.4 (15)
Amortization related
to realized gains 144.4 144.4
Other operating
costs and expenses 356.4 63.7 420.1
--------- -------- -------- -------
Total benefits
and expenses 2,963.5 262.6 13.9 3,240.0
--------- -------- -------- -------
Income before income
taxes, minority interest
and extraordinary
charge 534.9 34.7 (10.1) 559.5
Income tax expense 205.7 11.0 1.5 (16) 218.2
--------- --------- -------- -------
Income before
minority interest
and extraordinary
charge 329.2 23.7 (11.6) 341.3
Minority interest in consolidated
subsidiaries:
Dividends on Company - obligated
mandatorily redeemable
preferred securities of
subsidiary trusts 34.8 34.8
Dividends on preferred stock 8.7 8.7
Equity in earnings 12.6 12.6
-------- --------- -------- -------
Income before
extraordinary
charge $ 273.1 $ 23.7 $ (11.6) $ 285.2
======== ======== ======== =======
Earnings per common share and
common equivalent share:
Primary:
Weighted average
shares outstanding 75.7 10.4 (17) 86.1
==== ====== ====
Income before
extraordinary charge $3.61 $3.31
===== =====
Fully diluted:
Weighted average shares
outstanding 76.0 14.4 (17) 90.4
==== ====== ====
Income before
extraordinary charge $3.59 $3.15
===== =====
<FN>
(a) Amounts have been carried forward from page 33.
</FN>
The accompanying notes are an integral part of the pro forma consolidated financial statements.
34
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CONSECO, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEET
September 30, 1996
(Dollars in millions)
(unaudited)
Pro forma Pro forma
adjustments Pro forma adjustments
relating to for the relating to Pro forma
Conseco the TOPrS TOPrS the TruPS Conseco
as reported Offering Offering Offering subtotal(a)
------------ ----------- ---------- --------- --------
<S> <C> <C> <C> <C> <C>
Assets
Investments:
Actively managed fixed maturity
securities at fair value $15,959.8 $ - $15,959.8 $ - $15,959.8
Held-to-maturity fixed maturity
securities - - -
Equity securities at fair value 104.2 104.2 104.2
Mortgage loans 372.5 372.5 372.5
Credit-tenant loans 393.8 393.8 393.8
Policy loans 526.0 526.0 526.0
Other invested assets 211.0 211.0 211.0
Short-term investments 212.3 265.5 (4) 212.3 321.3 (9) 212.3
(265.5)(4) (321.3)(9)
Assets held in separate accounts 300.4 300.4 300.4
--------- ------ --------- --------- ---------
Total investments 18,080.0 - 18,080.0 - 18,080.0
Accrued investment income 276.7 276.7 276.7
Cost of policies purchased 1,847.1 1,847.1 1,847.1
Cost of policies produced 541.0 541.0 541.0
Reinsurance receivables 400.6 400.6 400.6
Income taxes 138.9 138.9 138.9
Goodwill 1,524.7 1,524.7 1,524.7
Property and equipment 105.9 105.9 105.9
Securities segregated for future redemption
of redeemable preferred stock of a
subsidiary 45.0 45.0 45.0
Other assets 216.1 216.1 216.1
--------- ------ --------- --------- ---------
Total assets $23,176.0 $ - $23,176.0 $ - $23,176.0
========= ====== ========= ========= =========
<FN>
(a) Amounts are carried forward to page 36.
</FN>
The accompanying notes are an integral part of the pro forma consolidated financial statements.
35
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CONSECO, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEET
September 30, 1996
(Dollars in millions)
(unaudited)
Pro forma
adjustments
Pro forma relating Pro forma
Conseco ATC to the Conseco
subtotal(a) historical ATC Merger totals
--------- ------------ ----------- -----------
<S> <C> <C> <C> <C>
Assets
Investments:
Actively managed fixed
maturity securities
at fair value $15,959.8 $ 689.7 $ - $16,649.5
Held-to-maturity
fixed maturity
securities -
Equity securities at
fair value 104.2 104.2
Mortgage loans 372.5 .4 372.9
Credit-tenant loans 393.8 393.8
Policy loans 526.0 526.0
Other invested assets 211.0 211.0
Short-term investments 212.3 12.2 (30.4)(18) 224.5
30.4 (19)
Assets held in separate
accounts 300.4 300.4
-------- -------- --------- ---------
Total investments 18,080.0 702.3 - 18,782.3
Accrued investment income 276.7 7.7 284.4
Cost of policies purchased 1,847.1 10.9 268.8 (20) 2,115.9
(10.9)(20)
Cost of policies produced 541.0 168.7 (168.7)(21) 541.0
Reinsurance receivables 400.6 400.6
Income taxes 138.9 (27.1)(22) 85.6
(26.2)(22)
Goodwill 1,524.7 562.8 (23) 2,087.5
Property and equipment 105.9 3.9 109.8
Securities segregated for
future redemption of
redeemable preferred
stock of a
subsidiary 45.0 45.0
Other assets 216.1 14.1 230.2
--------- -------- --------- ---------
Total assets $23,176.0 $ 907.6 $ 598.7 $24,682.3
========= ======== ========= =========
<FN>
(a) Amounts have been carried forward from page 35.
</FN>
The accompanying notes are an integral part of the pro forma consolidated financial statements.
36
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CONSECO, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEET
September 30, 1996
(Dollars in millions)
(unaudited)
Pro forma
adjustments Pro forma Pro forma
relating Pro forma adjustments adjustments
to the for the relating to Pro forma relating Pro forma
Conseco TOPrS TOPrS the TruPS Conseco ATC to the Conseco
as reported Offering Offering Offering subtotal Historical ATC Merger totals
--------- ---------- -------- --------- --------- ---------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Liabilities:
Insurance liabilities $18,150.7 $ - $18,150.7 $ - $18,150.7 $ 586.3 $ - $18,737.0
Income tax liabilities - - - 26.2 (26.2)(22) -
Investment borrowings 539.4 539.4 539.4 539.4
Other liabilities 482.0 482.0 482.0 10.9 11.3 (24) 504.2
Liabilities related
to separate accounts 300.1 300.1 300.1 300.1
Notes payable of Conseco 1,169.0 (265.5)(4) 903.5 (321.3)(9) 582.2 102.9 30.4 (19) 851.2
135.7 (24)
Notes payable of
Bankers Life Holding
Corporation, not
direct obligations
of Conseco 418.1 418.1 418.1 418.1
Notes payable of American
Life Holdings, Inc., not
direct obligations of
Conseco 13.0 13.0 13.0 13.0
-------- ------ --------- ------- --------- ------ ------- --------
Total liabilities 21,072.3 (265.5) 20,806.8 (321.3) 20,485.5 726.3 151.2 21,363.0
-------- ------ --------- ------- --------- ------ ------- --------
Minority interest in consolidated
subsidiaries:
Company - obligated mandatorily
redeemable preferred securities
of subsidiary trusts - 275.0 (5) 275.0 325.0 (10) 600.0 600.0
Preferred stock 92.5 92.5 92.5 92.5
Common stock 55.3 55.3 55.3 55.3
-------- ------ --------- ------- --------- ------ ------- ---------
Shareholders' equity:
Preferred stock 267.1 267.1 267.1 267.1
Common stock and additional
paid-in capital 1,054.5 (9.5)(5) 1,045.0 (3.7)(10) 1,041.3 64.4 (64.4)(25) 1,670.1
628.8 (25)
Unrealized appreciation
(depreciation) of securities (47.0) (47.0) (47.0) (10.3) 10.3 (25) (47.0)
Retained earnings 681.3 681.3 681.3 127.2 (127.2)(25) 681.3
------- ------ --------- ------- --------- ------ ------- ---------
Total shareholders' equity 1,955.9 (9.5) 1,946.4 (3.7) 1,942.7 181.3 447.5 2,571.5
------- ------ --------- ------- --------- ------ ------- ---------
Total liabilities and
shareholders' equity $23,176.0 $ - $23,176.0 $ - $23,176.0 $907.6 $ 598.7 $24,682.3
========= ====== ========= ====== ========= ====== ======= =========
The accompanying notes are an integral part of the pro forma consolidated financial statements.
37
</TABLE>
<PAGE>
CONSECO AND SUBSIDIARIES
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
PRO FORMA ADJUSTMENTS
TRANSACTIONS RELATING TO THE TOPrS OFFERING
On November 19, 1996, a subsidiary trust of Conseco issued TOPrS having an
aggregate liquidation amount of $275 million and a distribution rate of 9.16
percent. The subsidiary used the proceeds from the sale of such securities to
purchase subordinated deferrable interest debentures of Conseco in an aggregate
principal amount equivalent to the aggregate liquidation amount of the TOPrS
that were issued. The subordinated deferrable interest debentures bear interest
at a rate of 9.16 percent. Conseco used the proceeds from the sale of the
subordinated deferrable interest debentures to reduce its notes payable.
(1) Interest expense is reduced to reflect the repayment of $265.5 million
aggregate principal amount of Conseco's notes payable.
(2) The pro forma adjustment is tax affected, based on Conseco's
effective tax rate of 35 percent.
(3) Minority interest is adjusted to reflect the distribution (net of
the related tax benefit) on the TOPrS.
(4) Notes payable are reduced to reflect the repayment of $265.5 million
aggregate principal amount of Conseco's notes payable using the net
proceeds from the TOPrS Offering.
(5) The Company's minority interest in consolidated subsidiaries is
increased by the aggregate liquidation amount of the TOPrS. Issuance
and other transaction costs related to the TOPrS Offering are charged
to paid-in capital.
TRANSACTIONS RELATING TO THE TruPS OFFERING
On November 27, 1996, another subsidiary trust of Conseco issued TruPS
having an aggregate liquidation amount of $325 million and a distribution rate
of 8.70 percent. The subsidiary used the proceeds from the sale of such
securities to purchase Conseco subordinated deferrable interest debentures with
an aggregate principal amount equivalent to the aggregate liquidation amount of
the TruPS that were issued. The subordinated deferrable interest debentures of
Conseco bear interest at a rate of 8.70 percent. Conseco used the proceeds from
the sale of the subordinated deferrable interest debentures to reduce its notes
payable.
(6) Interest expense is reduced to reflect the repayment of $321.3
million aggregate principal amount of Conseco's notes payable.
(7) The pro forma adjustment is tax affected, based on Conseco's
effective tax rate of 35 percent.
(8) Minority interest is adjusted to reflect the distribution (net of the
related tax benefit) on the TruPS.
(9) Notes payable are reduced to reflect the repayment of $321.3 million
aggregate principal amount of Conseco's notes payable using the
net proceeds from the TruPS Offering.
(10) The Company's minority interest in consolidated subsidiaries is
increased by the aggregate liquidation amount of the TruPS. Issuance
and other transaction costs related to the TruPS Offering are charged
to paid-in capital.
38
<PAGE>
CONSECO AND SUBSIDIARIES
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Transactions relating to the ATC Merger
The ATC Merger, completed on December 17, 1996, is accounted for under the
purchase method of accounting. Under this method, the total cost to acquire ATC
is allocated to the assets and liabilities acquired based on their fair values
as of the date of the ATC Merger, with any excess of the total purchase cost
over the fair value of the assets acquired less the fair value of the
liabilities assumed recorded as goodwill. The ATC Merger did not qualify to be
accounted for under the pooling of interests method in accordance with APB No.
16 because an affiliate of ATC sold a portion of the Conseco common stock it
received in the ATC Merger shortly after the consummation of the ATC Merger. In
the ATC Merger, each outstanding share of ATC common stock was exchanged for
.5836 of a share of Conseco's common stock. Conseco issued approximately 10.4
million shares of Conseco common stock or common stock equivalents with a value
of $628.8 million to acquire ATC's common stock. In addition, Conseco assumed
the ATC convertible subordinated debentures, which are convertible into
approximately 4.0 million shares of Conseco common stock with a value of $238.6
million. In addition, Conseco accrued estimated costs related to the ATC Merger
(including contract termination, relocation, legal, accounting and other costs)
of approximately $30.4 million.
The cost to acquire ATC is allocated as follows (dollars in millions):
<TABLE>
<CAPTION>
<S> <C>
Book value of assets acquired based on the assumed date of the
ATC Merger (September 30, 1996) ................................................... $181.3
Convertible subordinated debentures assumed by Conseco at the
assumed date of the ATC Merger..................................................... 102.9
Increase (decrease) in ATC's net asset value to reflect estimated fair value and
asset reclassifications at the assumed date of the ATC Merger:
Cost of policies purchased (related to the ATC Merger).......................... 268.8
Cost of policies produced and cost of policies purchased (historical)........... (179.6)
Goodwill (related to the ATC Merger)............................................ 562.8
Income taxes.................................................................... (27.1)
Other liabilities............................................................... (11.3)
------
Total estimated fair value adjustments..................................... 613.6
-------
Total cost to acquire ATC.......................................................... $897.8
======
</TABLE>
Adjustments to the pro forma consolidated statement of operations to give
effect to the ATC Merger as of January 1, 1995, are summarized below.
(11) Net investment income and net realized gains of ATC are adjusted to
include the effect of adjustments to restate the amortized cost basis
of fixed maturity securities to their estimated fair value.
(12) Interest expense is increased to reflect the increase in borrowings
under Conseco's bank credit facilities used to complete the ATC
Merger.
A change in interest rates of .5 percent on the additional borrowings
under Conseco's bank credit facilities used to complete the ATC Merger
would result in: (1) an increase (or decrease) in pro forma interest
expense of $.2 million and $.1 million for the year ended December 31,
1995, and the nine months ended September 30, 1996, respectively; and
(2) a decrease (or increase) in pro forma net income of $.1 million
and $.1 million for the same respective periods.
(13) Interest expense is reduced to reflect the amortization of the
liability established at the date of the ATC Merger representing the
present value of the interest payable on ATC's convertible
subordinated debentures to October 1, 1998 (the earliest call date),
less the present value of the dividends that would be paid on
Conseco's common stock that such debentures would be convertible into
during the same period.
39
<PAGE>
CONSECO AND SUBSIDIARIES
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
(14) Amortization of the cost of policies produced and the cost of
policies purchased prior to the ATC Merger is replaced with the
amortization of the cost of policies purchased (amortized in relation
to estimated premiums on the policies purchased with interest equal
to the liability rate which averages 5.5 percent).
(15) Amortization of goodwill acquired in the ATC Merger is recognized over
a 40-year period on a straight-line basis.
(16) Reflects the tax adjustment for the pro forma adjustments at the
appropriate rate for the specific item.
(17) Common shares outstanding are increased to reflect the Conseco shares
issued in the ATC Merger. Fully diluted shares also include Conseco
shares which will be issued when ATC's convertible subordinated
debentures are converted.
Adjustments to the pro forma consolidated balance sheet to give effect to
the ATC Merger as of September 30, 1996, are summarized below.
(18) Cash is reduced for payments made to complete the ATC Merger.
(19) Short-term investments and notes payable of Conseco are increased for
additional borrowings by Conseco to complete the ATC Merger.
(20) ATC's historical cost of policies purchased is eliminated and
replaced with the cost of policies purchased recognized in the ATC
Merger. Cost of policies purchased reflects the estimated fair value
of ATC's business in force and represents the portion of the cost to
acquire ATC that is allocated to the value of the right to receive
future cash flows from the acquired policies.
The 18 percent discount rate used to determine such value is the rate
of return required by Conseco to invest in the business being
acquired. In determining such rate of return, the following factors
are considered:
- The magnitude of the risks associated with each of the actuarial
assumptions used in determining the expected cash flows.
- Cost of capital available to fund the acquisition.
- The perceived likelihood of changes in insurance regulations and
tax laws.
- Complexity of the acquired company.
- Prices paid (i.e., discount rates used in determining
valuations) on similar blocks of business sold recently.
The value allocated to the cost of policies purchased is based on a
preliminary valuation; accordingly, this allocation may be adjusted
upon final determination of such value. Expected gross amortization
of such value using current assumptions and accretion of interest
based on an interest rate equal to the liability rate (such rate
averages 5.5 percent) for each of the years in the five-year period
ending September 30, 2001, are as follows (dollars in millions):
<TABLE>
<CAPTION>
Year ending Beginning Gross Accretion Net Ending
September 30, balance amortization of interest amortization balance
------------- ------- ------------ ----------- ------------- -------
<S> <C> <C> <C> <C> <C>
1997 $268.8 $35.4 $14.2 $21.2 $247.6
1998 247.6 32.3 12.9 19.4 228.2
1999 228.2 29.6 12.0 17.6 210.6
2000 210.6 27.3 10.9 16.4 194.2
2001 194.2 25.2 10.1 15.1 179.1
</TABLE>
(21) ATC's cost of policies produced is eliminated since such amounts are
reflected in the determination of the cost of policies purchased.
40
<PAGE>
CONSECO AND SUBSIDIARIES
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
(22) All of the applicable pro forma balance sheet adjustments are tax
affected at the appropriate rate. Deferred tax liabilities of ATC are
netted against deferred tax assets of Conseco.
(23) Goodwill acquired in the ATC Merger is recognized.
(24) Notes payable are increased to reflect the fair value of ATC's
convertible subordinated debentures at the date of the ATC Merger.
Such fair value represents the value of the Conseco common stock
which ATC's convertible subordinated debentures will be convertible
into after the ATC Merger. It is assumed that the holders of such
debentures do not convert into Conseco common stock at the time of
the ATC Merger.
In addition, a liability is established representing the present
value of the interest payable on such debentures to October 1, 1998
(the earliest call date), less the present value of the dividends
that would be paid on the Conseco common stock that such debentures
would be convertible into during the same period.
(25) The prior shareholders' equity of ATC is eliminated in conjunction
with the ATC Merger. Common stock and additional paid-in capital is
increased by the value of the Conseco common stock issued in the ATC
Merger.
41
<PAGE>
CONSECO, INC. AND SUBSIDIARIES
_________________
ITEM 7(c). EXHIBITS.
(c) Exhibits
2.6 Agreement and Plan of Merger dated as of August 25,
1996, by and between Conseco, Inc. and American
Travellers Corporation*
4.17 Credit Agreement dated November 22, 1996 among
Conseco, Inc. as Borrower; the several banks listed
on the signature pages thereto; the managing agents
listed on the signature page thereto; Bank of
America National Trust and Savings Association, as
Syndication Agent for the Banks; First Union
National Bank of North Carolina, as Documentation
Agent for the Banks; and NationsBank, N.A. (South),
as Administrative Agent for the Banks.
* Previously filed with Form 8-K dated August 25, 1996.
42
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: December 19, 1996
CONSECO, INC.
By: /s/ ROLLIN M. DICK
-----------------------------
Rollin M. Dick
Executive Vice President
and Chief Financial Officer
43
CREDIT AGREEMENT
among
CONSECO, INC., as Borrower,
The several Banks
listed on the signature pages hereto,
The Managing Agents
listed on the signature pages hereto,
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Syndication Agent for the Banks,
FIRST UNION NATIONAL BANK OF NORTH CAROLINA,
as Documentation Agent for the Banks,
and
NATIONSBANK, N.A. (SOUTH),
as Administrative Agent for the Banks
Dated as of November 22, 1996
CHAR_1\F:\DOCS\KAM\BANKING\218148_8
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
<S> <C> <C>
SECTION 1. DEFINITIONS AND ACCOUNTING TERMS.......................................................1
SECTION 1.1 Certain Defined Terms..................................................................1
SECTION 1.2 Other Definitional Provisions........................................................ 27
SECTION 1.3 Accounting and Financial Determinations.............................................. 28
SECTION 2. THE COMMITMENTS AND THE LOANS........................................................ 28
SECTION 2.1 Revolving Commitment................................................................. 28
SECTION 2.2 Procedure for Committed Borrowings................................................... 29
SECTION 2.3 Bid Borrowings....................................................................... 30
SECTION 2.4 Procedure for Bid Borrowings......................................................... 30
SECTION 2.5 Types of Loans....................................................................... 35
SECTION 2.6 Funding Reliance for Committed
Borrowings........................................................................... 35
SECTION 2.7 Conversion and Continuation Elections
for Committed Borrowings............................................................. 35
SECTION 2.8 Repayment of Loans................................................................... 37
SECTION 2.9 Loan Accounts; Record Keeping........................................................ 37
SECTION 2.10 Swingline Loans...................................................................... 38
SECTION 3. INTEREST AND FEES, ETC............................................................... 40
SECTION 3.1 Interest Rates....................................................................... 40
SECTION 3.2 Default Interest Rate................................................................ 42
SECTION 3.3 Interest Payment Dates............................................................... 42
SECTION 3.4 Setting and Notice of Rates.......................................................... 42
SECTION 3.5 Computation of Fees and Interest..................................................... 42
SECTION 3.6 Fees................................................................................. 43
SECTION 4. PAYMENTS AND PREPAYMENTS............................................................. 44
SECTION 4.1 Voluntary Termination or Reduction of
Revolving Commitments................................................................ 44
SECTION 4.2 Optional Prepayments................................................................. 44
SECTION 4.3 Mandatory Prepayments................................................................ 44
SECTION 4.4 Payments by the Borrower............................................................. 45
SECTION 4.5 [intentionally left blank]. .................................................. 46
SECTION 4.6 Sharing of Payments.................................................................. 46
SECTION 4.7 Setoff............................................................................... 47
SECTION 4.8 Net Payments......................................................................... 47
SECTION 4.9 Mandatory Reduction in the Revolving
Commitments.......................................................................... 48
SECTION 5. CHANGES IN CIRCUMSTANCES............................................................. 48
SECTION 5.1 Increased Costs...................................................................... 48
SECTION 5.2 Change in Rate of Return............................................................. 49
SECTION 5.3 Basis for Determining Interest Rate
Inadequate or Unfair................................................................. 50
SECTION 5.4 Changes in Law Rendering Certain Loans
Unlawful............................................................................. 51
SECTION 5.5 Funding Losses....................................................................... 51
SECTION 5.6 Right of Banks to Fund Through Other
Offices.............................................................................. 52
SECTION 5.7 Discretion of Banks as to Manner of
Funding.............................................................................. 52
CHAR_1\F:\DOCS\KAM\BANKING\218148_8
i
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
SECTION 5.8 Replacement of Banks................................................................. 52
SECTION 5.9 Conclusiveness of Statements; Survival
of Provisions........................................................................ 53
SECTION 6. [intentionally left blank]........................................................... 53
SECTION 7. REPRESENTATIONS AND WARRANTIES....................................................... 53
SECTION 7.1 Organization, etc.................................................................... 53
SECTION 7.2 Authorization........................................................................ 53
SECTION 7.3 No Conflict.......................................................................... 53
SECTION 7.4 Governmental Consents................................................................ 54
SECTION 7.5 Validity............................................................................. 54
SECTION 7.6 Financial Statements................................................................. 54
SECTION 7.7 Material Adverse Change.............................................................. 54
SECTION 7.8 Litigation and Contingent Obligations................................................ 54
SECTION 7.9 Liens................................................................................ 55
SECTION 7.10 Pension and Welfare Plans............................................................ 55
SECTION 7.11 Investment Company Act............................................................... 56
SECTION 7.12 Public Utility Holding Company Act................................................... 56
SECTION 7.13 Taxes................................................................................ 56
SECTION 7.14 Accuracy of Information.............................................................. 57
SECTION 7.15 Environmental Warranties............................................................. 57
SECTION 7.16 Proceeds............................................................................. 58
SECTION 7.17 Insurance............................................................................ 58
SECTION 7.18 Securities Laws...................................................................... 58
SECTION 7.19 Governmental Authorizations.......................................................... 59
SECTION 7.20 Business Locations; Trade-Names...................................................... 59
SECTION 7.21 Solvency............................................................................. 59
SECTION 7.22 Insurance Licenses................................................................... 59
SECTION 7.23 Compliance with Laws................................................................. 59
SECTION 7.24 No Default........................................................................... 60
SECTION 7.25 Margin Regulations................................................................... 60
SECTION 7.26 Conseco Corporate Structure.......................................................... 60
SECTION 7.27 Significant Subsidiaries............................................................. 60
SECTION 8. AFFIRMATIVE COVENANTS................................................................ 60
SECTION 8.1 Reports, Certificates and Other
Information.......................................................................... 61
SECTION 8.2 Corporate Existence; Foreign
Qualification........................................................................ 67
SECTION 8.3 Books, Records and Inspections....................................................... 67
SECTION 8.4 Insurance............................................................................ 67
SECTION 8.5 Taxes and Liabilities................................................................ 67
SECTION 8.6 Pension Plans and Welfare Plans...................................................... 68
SECTION 8.7 Compliance with Laws................................................................. 68
SECTION 8.8 Maintenance of Permits............................................................... 68
SECTION 8.9 Environmental Compliance............................................................. 68
SECTION 9. NEGATIVE COVENANTS................................................................... 68
SECTION 9.1 Limitation on Indebtedness........................................................... 68
SECTION 9.2 Liens................................................................................ 71
SECTION 9.3 Consolidation, Merger, etc........................................................... 72
SECTION 9.4 Asset Disposition, etc............................................................... 73
SECTION 9.5 Other Agreements..................................................................... 73
SECTION 9.6 Business Activities.................................................................. 74
CHAR_1\F:\DOCS\KAM\BANKING\218148_8
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
SECTION 9.7 Change of Location or Name........................................................... 74
SECTION 9.8 Transactions with Affiliates......................................................... 74
SECTION 9.9 [intentionally left blank]........................................................... 74
SECTION 9.10 Investments.......................................................................... 74
SECTION 9.11 Certain Indebtedness................................................................. 76
SECTION 10. FINANCIAL COVENANTS.................................................................. 76
SECTION 10.1 Shareholders' Equity................................................................. 76
SECTION 10.2 Debt to Total Capitalization Ratio................................................... 76
SECTION 10.3 Interest Coverage Ratio.............................................................. 76
SECTION 11. CONDITIONS........................................................................... 76
SECTION 11.1 Initial Loans........................................................................ 77
SECTION 11.2 All Loans to Acquire Initial Acquired
Companies............................................................................ 79
SECTION 11.3 All Loans............................................................................ 81
SECTION 11.4 Loans for the Repayment of the BLHC
Debt................................................................................. 81
SECTION 12. EVENTS OF DEFAULT AND THEIR EFFECT................................................... 81
SECTION 12.1 Events of Default.................................................................... 81
SECTION 12.2 Effect of Event of Default........................................................... 84
SECTION 13. THE AGENT............................................................................ 84
SECTION 13.1 Authorization and Action............................................................. 84
SECTION 13.2 Liability of the Administrative Agent................................................ 84
SECTION 13.3 Administrative Agent and Affiliates.................................................. 85
SECTION 13.4 Bank Credit Decision................................................................. 85
SECTION 13.5 Indemnification...................................................................... 86
SECTION 13.6 Successor Agent...................................................................... 86
SECTION 13.7 Duties of Syndication Agent,
Documentation Agent and Managing Agents.............................................. 87
SECTION 14. ASSIGNMENTS AND PARTICIPATIONS....................................................... 87
SECTION 14.1 Assignments.......................................................................... 87
SECTION 14.2 Participations....................................................................... 88
SECTION 14.3 Disclosure of Information............................................................ 89
SECTION 14.4 Foreign Transferees.................................................................. 89
SECTION 15. MISCELLANEOUS........................................................................ 90
SECTION 15.1 Waivers and Amendments............................................................... 90
SECTION 15.2 Failure to Consent................................................................... 91
SECTION 15.3 Notices.............................................................................. 91
SECTION 15.4 Payment of Costs and Expenses........................................................ 92
SECTION 15.5 Indemnity............................................................................ 92
SECTION 15.6 Subsidiary References................................................................ 93
SECTION 15.7 Captions............................................................................. 93
SECTION 15.8 GOVERNING LAW........................................................................ 93
SECTION 15.9 Counterparts......................................................................... 93
SECTION 15.10 SUBMISSION TO JURISDICTION; WAIVER OF
VENUE................................................................................ 93
SECTION 15.11 Service of Process................................................................... 94
SECTION 15.12 Successors and Assigns............................................................... 94
SECTION 15.13 WAIVER OF JURY TRIAL................................................................. 95
CHAR_1\F:\DOCS\KAM\BANKING\218148_8
</TABLE>
iii
<PAGE>
EXHIBITS
Exhibit A - Form of Bid Note
Exhibit B - Form of Committed Note
Exhibit C - Form of Competitive Bid
Exhibit D - Form of Competitive Bid Request
Exhibit E - Form of Invitation for Competitive Bids
Exhibit F - Form of Notice of Borrowing
Exhibit G - Form of Notice of Conversion/Continuation
Exhibit H - Form of Swingline Note
Exhibit I - Eurodollar Funding Loss Determination Methodology
Exhibit J - Conseco Corporate Structure
Exhibit K - Form of Compliance Certificate
Exhibit L - Form of Opinion of Lawrence Inlow
Exhibit M - Form of Officer's Certificate
Exhibit N - Form of Assignment Agreement
Exhibit O - Form of Confidentiality Agreement
SCHEDULES
Schedule 1.1-A - Schedule of Lenders and Commitments
Schedule 1.1-B - Servicing Agreements
Schedule 7.4 - Required Governmental Consents
Schedule 7.8 - Material Litigation
Schedule 7.10 - ERISA
Schedule 7.13 - Taxes
Schedule 7.17 - Insurance
Schedule 7.20 - Business Office Locations
Schedule 7.22 - Jurisdictions of Insurance Licenses
Schedule 7.27 - Significant Subsidiaries
Schedule 9.1 - Permitted Indebtedness
Schedule 9.2 - Permitted Liens
Schedule 9.6 - Permitted Business Activities
Schedule 9.8 - Permitted Reinsurance Agreements
Schedule 9.10 - Permitted Investments
CHAR_1\F:\DOCS\KAM\BANKING\218148_8
iv
<PAGE>
CREDIT AGREEMENT
THIS CREDIT AGREEMENT is entered into as of November 22, 1996 (the
"Effective Date"), among CONSECO, INC., an Indiana corporation (the "Borrower"),
the several financial institutions from time to time party to this Agreement
(herein, together with any Eligible Assignees thereof, collectively called the
"Banks" and each individually, a "Bank"), the Managing Agents listed on the
signature pages hereto, BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
as syndication agent for the Banks (herein in such capacity, together with any
successors thereto in such capacity, called the "Syndication Agent"), FIRST
UNION NATIONAL BANK OF NORTH CAROLINA, as documentation agent for the Banks
(herein in such capacity, together with any successors thereto in such capacity,
called the "Documentation Agent"), and NATIONSBANK, N.A. (SOUTH)
("NationsBank"), as administrative agent for the Banks (herein in such capacity,
together with any successors thereto in such capacity, called the
"Administrative Agent").
Background
WHEREAS, the Borrower has requested that the Banks provide a
$1,400,000,000 credit facility for the purposes hereinafter set forth; and
WHEREAS, the Banks have agreed to make the requested credit facility
available to the Borrower on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual promises herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1 Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"Absolute Rate" shall have the meaning set forth in Section
2.4(c)(ii)(D).
"Absolute Rate Auction" shall mean a solicitation of Competitive Bids
setting forth Absolute Rates pursuant to Section 2.4.
"Absolute Rate Loan" shall mean a Bid Loan that bears interest at a
rate determined with reference to the Absolute Rate.
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"Acquisition" shall mean any transaction or series of transactions for
the purpose of or resulting, directly or indirectly, in (a) the acquisition of
all or substantially all of the assets of a Person, or of any business or
division of a Person, (b) the acquisition of in excess of 50% of the capital
stock, partnership interests, membership interests or equity securities (or
warrants, options, or other rights to acquire any of the foregoing) of any
Person, or otherwise causing any Person to become a Subsidiary of the Borrower,
or (c) a merger or consolidation or any other combination of the Borrower or one
of its Subsidiaries with another Person (other than a Person that is a
Subsidiary of the Borrower immediately prior to such merger or consolidation);
provided that, in the case of any merger, consolidation or other combination of
the Borrower, the Borrower shall be the surviving entity, in each case subject
to and to the extent permitted by this Agreement.
"Adjusted CD Rate" shall mean the sum of (a) the product of (i) the
Three-Month Secondary CD Rate and (ii) a fraction, the numerator of which is one
and the denominator of which is one minus the CD Reserve Percentage and (b) the
CD Assessment Rate, plus the Eurodollar Rate Committed Margin. For purposes of
this definition, the following terms shall have the following meanings:
"Three-Month Secondary CD Rate" means, for any day, the secondary market rate
for three-month certificates of deposit reported as being in effect on such day
(or if such day is not a Business Day, the next following Business Day) by the
FRB through the public information telephone line of the Federal Reserve Bank of
New York (which rate will, under current practices of the FRB, be published in
Federal Reserve Statistical Release H.15(519) during the week following such
day), or, if such rate is not so reported, the average (rounded upwards to the
nearest 1/100th of 1%) of the secondary market quotations for three-month
certificates of deposit of major money center banks in New York City received at
approximately 10:00 A.M., New York City time, on such day or next preceding
Business Day by the Administrative Agent from three New York City negotiable
certificate of deposit dealers of recognized standing selected by it; "CD
Reserve Percentage" means for any day as applied to any calculation of the
Adjusted CD Rate, that percentage (expressed as a decimal) which is in effect on
such day, as prescribed by the FRB for determining the maximum reserve
requirement for a Depositary Institution (as defined in Regulation D of the FRB)
in respect of new non-personal time deposits in Dollars having a maturity of 30
days or more; and "CD Assessment Rate" means for any day the net annual
assessment rate (rounded upwards, if necessary, to the next 1/100 of 1%)
determined by the Administrative Agent to be payable on such day to the Federal
Deposit Insurance Corporation or any successor ("FDIC") for FDIC's insuring time
deposits made in Dollars at offices of the Administrative Agent in the United
States.
"Adjusted CD Rate Loan" shall mean a Swingline Loan that bears interest
based on the Adjusted CD Rate.
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"Administrative Agent" shall have the meaning set forth in the Preamble
hereof.
"Administrative Agent's Office" shall mean 101 North Tryon Street, 15th
Floor, Independence Center, Charlotte, North Carolina 28255, or such other
address designated by the Administrative Agent (or any successor agent) to the
Borrower and the Banks from time to time.
"Affected Bank" shall have the meaning set forth in Section 5.4.
"Affiliate" shall mean, as to any Person, any other Person which,
directly or indirectly, owns, holds, controls, is controlled by or is under
common control with such Person (including all beneficial control as a trustee,
guardian or other fiduciary). A Person shall be deemed to be "controlled by" any
other Person if such other Person possesses, directly or indirectly, power (a)
to vote 10% or more of the securities (on a fully diluted basis) having ordinary
voting power for the election of directors or managing general partners; or (b)
to direct or cause the direction of the management and policies of such Person
whether through the ownership of voting securities, membership interests, by
contract or otherwise.
"Agents" shall mean, collectively, the Administrative Agent, the
Syndication Agent, the Documentation Agent, and the Managing Agents.
"Agreement" shall mean this Credit Agreement, as amended or modified.
"ALH" shall mean American Life Holdings, Inc., a Delaware corporation.
"ALHC" shall mean American Life Holding Company, a Delaware
corporation.
"ALHC Preferred Stock" shall mean ALHC's $2.16 Redeemable Cumulative
Preferred Stock, par value $.01 and its $2.32 Redeemable Cumulative Preferred
Stock, par value $.01.
"Amounts Available for Dividends" shall mean, without duplication, the
maximum amount of dividends the Insurance Subsidiaries are permitted to pay
under the Applicable Insurance Code of their respective state of domicile
without necessitating approval of the applicable Department.
"Annual Statement" shall mean, as to any Insurance Subsidiary, the
annual financial statement of such Insurance Subsidiary as required to be filed
with the applicable Department, together with all exhibits or schedules filed
therewith, prepared in conformity with SAP. References to amounts on particular
exhibits, schedules, lines, pages and columns of the Annual Statement are based
on the format
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promulgated by the NAIC for 1995 Life, Accident and Health Insurance Company
Annual Statements. If such format is changed in future years so that different
information is contained in such items or they no longer exist, it is understood
that the reference is to information consistent with that reported in the
referenced item in the 1995 Annual Statement of such Insurance Subsidiary.
"Applicable Insurance Code" shall mean, as to any Insurance Subsidiary,
the insurance code of any state where such Insurance Subsidiary is domiciled or
doing insurance business and any successor statute of similar import, together
with the regulations thereunder, as amended or otherwise modified and in effect
from time to time. References to sections of the Applicable Insurance Code shall
be construed to also refer to successor sections.
"Arranger" shall mean NationsBanc Capital Markets, Inc.
"Assignment Agreement" shall have the meaning set forth in Section
14.1.
"ATC" shall mean American Travellers Corp., a Pennsylvania corporation.
"Average Life" shall mean, as of the date of determination, with
respect to any Indebtedness, the quotient obtained by dividing (a) the sum of
the products of the numbers of years from the date of determination to the dates
of each successive scheduled principal payment of such Indebtedness multiplied
by the amount of such scheduled principal payment by (b) the sum of all such
scheduled principal payments.
"B-Share Financings" shall mean the financing of fees or commissions
related to B-Shares.
"B-Shares" shall mean those shares of ownership representing a mutual
interest in a pool of assets on which 12b-1 fees or contingent deferred sales
commissions (CDSC), as defined under the Investment Company Act of 1940, are
applicable.
"Banks" or "Bank" shall have the meaning set forth in the Preamble
hereof.
"Bank Default" shall mean (a) the refusal (which has not been
retracted) of a Bank to make available its Percentage of any Committed Loans
when required hereunder or (b) a Bank having notified the Administrative Agent
and/or the Borrower that it does not intend to comply with its obligations under
Section 2.1 to the extent required thereunder.
"Base Rate" shall mean, for any day, the higher of (a) 0.50% per annum
above the latest Federal Funds Effective Rate and (b) the rate of interest in
effect for such day as publicly announced from time to time by NationsBank in
Charlotte, North Carolina, as
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its "prime rate." The "prime rate" is a rate set by NationsBank based upon
various factors including NationsBank's costs and desired return, general
economic conditions and other factors, and is used as a reference point for
pricing some loans, which may be priced at, above, or below such announced rate.
Any change in the prime rate announced by NationsBank shall take effect at the
opening of business on the date specified in the public announcement of such
change.
"Base Rate Loan" shall mean a Committed Loan or Swingline Loan that
bears interest based on the Base Rate.
"Bid Borrowing" shall mean a Borrowing hereunder consisting of one or
more Bid Loans made to the Borrower on the same day by one or more Banks.
"Bid Loan(s)" shall mean a Loan(s) by a Bank(s) to the Borrower under
Section 2.3, which may be an Absolute Rate Loan or a Eurodollar Rate Bid Loan.
"Bid Loan Bank(s)" shall mean, in respect of any Bid Loan, the Bank(s)
making such Bid Loan to the Borrower.
"Bid Note" shall mean a promissory note, substantially in the form of
Exhibit A with blanks appropriately completed in conformity herewith, evidencing
Bid Loans, or any promissory note or promissory notes issued in substitution or
replacement therefor.
"BLC" shall mean Bankers Life & Casualty Company, an Illinois insurance
corporation.
"BLHC" shall mean Bankers Life Holding Corp., a Delaware corporation.
"BLHC Credit Agreement" shall mean the Credit Agreement, dated as of
February 16, 1996, by and among BLHC, the lenders named therein, the managing
agents named therein and First Union National Bank of North Carolina, as
administrative agent.
"BLHC Debt" shall mean the outstanding obligations of BLHC under the
BLHC Credit Agreement.
"BNL" shall mean Bankers National Life Insurance Company, a Texas stock
insurance corporation.
"Borrower" shall have the meaning set forth in the Preamble hereof.
"Borrowing" shall mean a borrowing hereunder consisting of Loans of the
same Type made to the Borrower on the same day by the Banks under Section 2, and
may be a Committed Borrowing or a Bid Borrowing and, other than in the case of
Base Rate Loans, having the same Interest Period.
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"Borrowing Date" shall mean any date on which a Borrowing occurs under
Section 2.
"BSL" shall mean Beneficial Standard Life Insurance Company, a
California corporation.
"Business Day" shall mean any day other than a Saturday, Sunday or
other day on which commercial banks in New York, New York or Charlotte, North
Carolina are authorized or required by law to close and, if the applicable
Business Day relates to any Eurodollar Rate Loan, shall mean such a day on which
dealings in Dollar deposits are also carried on in the London interbank market.
"CAF" shall mean Capitol American Financial Corp., an Ohio corporation.
"Calculation Period" shall mean, with respect to any ratio or
calculation, the period for which such ratio or calculation is being calculated.
"Capital and Surplus" shall mean, as to any Insurance Subsidiary, as of
any date, the total amount shown on line 38, page 3, column 1 of the Annual
Statement of such Insurance Subsidiary, or an amount determined in a consistent
manner for any date other than one as of which an Annual Statement is prepared.
"Capitalized Lease Liabilities" shall mean, with respect to any Person,
all monetary obligations of such Person under any leasing or similar arrangement
which, in accordance with GAAP, would be classified as a capitalized lease, and,
for purposes of this Agreement, the amount of such obligations shall be the
capitalized amount thereof, determined in accordance with GAAP, and the stated
maturity thereof shall be the date of the last payment of rent or any other
amount due under such lease prior to the first date upon which such lease may be
terminated by the lessee without payment of a penalty.
"Cash Collateral Account" shall mean the deposit account, account
number 3750790683 or any replacement thereof, maintained in the name of, and
subject to the sole dominion and control of, the Administrative Agent for the
benefit of the Banks for the purpose of holding Net Proceeds from a Disposition
that the Borrower elects, in accordance with Section 4.4(a), not to immediately
apply to the Liabilities or, to the extent required under the Indentures, the
Conseco Senior Note Obligations and the CCPI Senior Note Obligations.
"Cash Equivalents" shall mean (a) securities with maturities of one (1)
year or less from the date of determination issued or fully guaranteed or
insured by the United States Government, or any instrumentality or agency
thereof, (b) certificates of deposit, eurodollar time deposits, overnight bank
deposits, bankers' acceptances and repurchase agreements of any Bank or any
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other commercial bank whose unsecured long-term debt obligations are rated at
least "BBB-" by Standard & Poor's, "Baa-3" by Moody's, "BBB-" by Duff & Phelps,
"BBB-" by Fitch Investors Services, Inc. or "NAIC 2" by the NAIC having
maturities of six (6) months or less from the date of determination and (c)
commercial paper having maturities of six (6) months or less from the date of
determination rated at least "A-2" by Standard Poor's, "P-2" by Moody's, "D-2"
by Duff & Phelps, "F-2" by Fitch Investors Services, Inc. or "NAIC 2" by the
NAIC, or carrying an equivalent rating by a nationally recognized rating agency,
if all of the named rating agencies cease publishing ratings of investments.
"CBOs" shall mean notes or other instruments (other than CMOs) secured
by collateral consisting primarily of debt securities and/or other types of debt
obligations, including loans.
"CCPI" shall mean CCP Insurance, Inc., an Indiana corporation, which
merged into the Borrower.
"CCPI Indenture" shall mean the Indenture, dated as of December 15,
1994, between CCPI and LTCB Trust Company, as trustee, as the same may be
amended or modified in accordance with the terms of this Agreement. The
obligations of CCPI were assumed by the Borrower on account of the merger of
CCPI into the Borrower.
"CCPI Senior Note Obligations" shall mean the Obligations (as defined
in the CCPI Indenture) of CCPI with respect to the Securities (as defined in the
CCPI Indenture), such Obligations having been assumed by the Borrower on account
of the merger of CCPI into the Borrower.
"CCPI Senior Notes" shall mean the 10-1/2% Senior Notes due 2004 of
CCPI assumed by the Borrower pursuant to the merger of CCPI into the Borrower,
as the same may be amended or modified in accordance with the terms of this
Agreement.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended.
"CERCLIS" shall mean the Comprehensive Environmental Response,
Compensation and Liability Information System List.
"Change in Control" shall be deemed to have occurred at such times as:
(a) any Person, or two or more Persons, acting in concert, directly or
indirectly acquire after the Closing Date beneficial ownership (within the
meaning of Rule 13d-3 of the Securities Exchange Act of 1934, as amended) of 30%
or more of the outstanding shares of voting stock of the Borrower (other than
the officers and directors of the Borrower in place as of the Effective Date) or
(b) individuals who as of the Closing Date constituted the Borrower's Board of
Directors (together with any new director whose election by the Borrower's Board
of Directors
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or whose nomination for election by the Borrower's stockholders was approved by
a vote of at least two-thirds of the directors then still in office who either
were directors at the beginning of such period or whose election or nomination
for election was previously so approved), for any reason, cease to constitute a
majority of the directors at any time then in office.
"Charges" shall have the meaning set forth in Section 4.8.
"Closing Date" shall mean the date on which all conditions precedent
set forth in Section 11 are satisfied or waived by all Banks or, with respect to
the payment of any fee payable hereunder, waived by the Person entitled to
receive such payment.
"Closing Date Subsidiaries" shall mean the Wholly-Owned Subsidiaries of
the Borrower as of the Closing Date and the Initial Acquired Companies.
"CMOs" shall mean notes or other instruments secured by collateral
consisting primarily of mortgages, mortgage-backed securities and/or other types
of mortgage-related obligations.
"CMO Derivative Investments" shall mean Z bonds, floaters/inverse
floaters, PAC II, PAC III, Ioettes, support bonds, interest-only investments,
principal-only investments, residuals, inverse IO's and super floaters.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
regulations promulgated thereunder, or, as the context requires, applicable
provisions of prior laws.
"Commitments" shall mean, collectively, the Revolving Commitments and
the Swingline Commitment.
"Committed Borrowing" shall mean a Borrowing hereunder consisting of
Committed Loans made on the same day by the Banks ratably according to their
respective Percentages and, in the case of Eurodollar Rate Committed Loans,
having the same Interest Periods.
"Committed Loan" shall mean a Loan by a Bank to the Borrower under
Section 2.1, which may be a Base Rate Loan or a Eurodollar Rate Committed Loan.
"Committed Loan(s)" shall have the meaning set forth in Section 2.1.
"Committed Notes" shall mean promissory notes, substantially in the
form of Exhibit B with blanks appropriately completed in conformity herewith,
evidencing Committed Loans, or any promissory note or promissory notes issued in
substitution or replacement therefor.
"Competitive Bid" shall mean an offer by a Bank to make a Bid Loan in
substantially the form of Exhibit C.
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"Competitive Bid Request" shall mean a competitive bid request in
substantially the form of Exhibit D.
"Compliance Certificate" shall have the meaning set forth in Section
8.1.5.
"Conseco Indenture" shall mean the Indenture, dated as of February 18,
1993, between Conseco, Inc. and Shawmut Bank Connecticut, National Association,
as trustee, as the same may be amended or modified in accordance with the terms
of this Agreement.
"Conseco Series E Preferred Stock" shall mean $900,000,000 stated value
of the Borrower's Series E Preferred Stock, par value $.001 per share.
"Conseco Senior Note Obligations" shall mean the Obligations (as
defined in the Conseco Indenture) of the Borrower with respect to the Securities
(as defined in the Conseco Indenture).
"Conseco Senior Notes" shall mean the 8-1/8% Senior Notes due 2003 of
the Borrower, as the same may be amended or modified in accordance with the
terms of this Agreement.
"Contingent Obligation" shall mean any agreement, undertaking or
arrangement by which any Person guarantees, endorses or otherwise becomes or is
contingently liable upon (by direct or indirect agreement, contingent or
otherwise, to provide funds for payment, to supply funds to, or otherwise to
invest in, a debtor, or otherwise to assure a creditor against loss) the debt,
obligation or other liability of any other Person (other than by endorsements of
instruments in the course of collection), or guarantees the payment of dividends
or other distributions upon the shares of any other Person; provided, that (i)
the obligations of any Person under Reinsurance Agreements and Surplus Relief
Reinsurance Agreements or in connection with Investments of Insurance
Subsidiaries permitted by Section 9.10 and (ii) the obligations of the Borrower
in connection with its guaranty of the TOPrS shall not be deemed Contingent
Obligations of any such Person or the Borrower, as applicable. The amount of any
Person's liability with respect to any Contingent Obligation shall (subject to
any limitation set forth therein) be deemed to be the outstanding principal
amount (or maximum outstanding principal amount, if larger) of the debt,
obligation or other liability outstanding thereunder.
"Contingent Payment Note" shall mean that certain promissory note,
dated September 29, 1994, in the original principal amount of $46,000,000 made
by ALH in favor of Boatmen's Trust Company, as trustee.
"Contractual Obligation" shall mean, as to any Person, any provision of
any security issued by such Person or of any agreement, undertaking, contract,
indenture, mortgage, deed of
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trust or other instrument, document or agreement to which such Person is a party
or by which it or any of its property is bound.
"Controlled Group" shall mean all members of a controlled group of
corporations and all members of a controlled group of trades or businesses
(whether or not incorporated) under common control which, together with the
Borrower, are treated as a single employer under section 414(b) or section
414(c) of the Code or section 4001 of ERISA. For purposes of this definition,
the term "the Borrower" shall be deemed to include any and all Subsidiaries of
the Borrower.
"Conversion/Continuation Date" shall mean any date on which, under
Section 2.7, the Borrower (a) converts Committed Loans of one Type to Committed
Loans of another Type, or (b) continues as Eurodollar Rate Committed Loans of
the same Type, but with a new Interest Period, Eurodollar Rate Committed Loans
having Interest Periods expiring on such date.
"Credit Tenant Loans" shall mean mortgage loans which are made
primarily in reliance on the credit standing of a major tenant, structured with
an assignment of the rental payments to the lender with real estate property
pledged as collateral in the form of a first lien.
"Debt to Total Capitalization Ratio" shall mean, for any Calculation
Period, the ratio of (a) the principal of and accrued but unpaid interest on all
Indebtedness for borrowed money of the Borrower or any Closing Date Subsidiary
for which the Borrower or any such Closing Date Subsidiary, respectively, is
directly liable and which is not a Contingent Obligation (calculated excluding
Permitted Transactions) to (b) Total Capitalization (calculated excluding
Permitted Transactions).
"Default" shall mean any condition or event which constitutes an Event
of Default or which with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.
"Defaulting Bank(s)" shall mean any Bank(s) with respect to which a
Bank Default is in effect.
"Department" shall mean, with respect to any Insurance Subsidiary, the
Governmental Authority of such Insurance Subsidiary's state of domicile with
whom such Insurance Subsidiary is required to file its Annual Statement.
"Disposition" shall have the meaning set forth in Section 4.3.
"Documentation Agent" shall have the meaning set forth in the Preamble
hereof.
"Dollars" and the sign "$" shall mean lawful money of the United States
of America.
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"Duff & Phelps" shall mean Duff & Phelps Credit Rating Co., Inc.
"Effective Date" shall have the meaning set forth in the Preamble
hereof.
"Eligible Assignee" shall mean any bank, pension fund, mutual fund,
investment fund or other financial institution (other than an insurance company
or any Affiliate of an insurance company except those to which the Borrower
consents).
"Environmental Claims" shall mean all claims, complaints, notices or
inquiries, however asserted or made, by any Governmental Authority or other
Person alleging potential liability or responsibility for violation of any
Environmental Law, or for release or injury to the environment or threat to
public health, personal injury (including sickness, disease or death), property
damage, natural resources damage, or otherwise alleging liability or
responsibility for damages (punitive or otherwise), cleanup, removal, remedial
or response costs, restitution, civil or criminal penalties, injunctive relief,
or other type of relief, resulting from or based upon the presence, placement,
discharge, emission or release (including intentional or unintentional,
negligent or non-negligent, sudden or non- sudden, accidental or non-accidental,
placement, spills, leaks, discharges, emissions or releases) of any Hazardous
Material at, in, or from property, whether or not owned by the Borrower.
"Environmental Laws" shall mean all federal, state or local laws,
statutes, common law duties, rules, regulations, ordinances, codes and
guidelines (including common law, consent decrees and administrative orders),
together with all administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental
Authorities, in each case relating to environmental, health, safety and land use
matters; including CERCLA, the Clean Air Act, the Federal Water Pollution
Control Act of 1972, the Solid Waste Disposal Act, the Federal Resource
Conservation and Recovery Act, the Toxic Substances Control Act, the Emergency
Planning and Community Right-to-Know Act and any other applicable laws of any
jurisdiction.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"Eurodollar Rate" shall mean, for the Interest Period for each
Eurodollar Loan comprising part of the same Borrowing (including conversions,
extensions and renewals), a per annum interest rate determined pursuant to the
following formula:
Eurodollar Rate = London Interbank Offered Rate
____________________________________
1 - Eurodollar Reserve Percentage
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"Eurodollar Rate Auction" shall mean a solicitation of Competitive Bids
setting forth a Eurodollar Rate Bid Margin pursuant to Section 2.4.
"Eurodollar Rate Bid Loan" shall mean any Bid Loan that bears interest
at a rate determined by reference to the Eurodollar Rate.
"Eurodollar Rate Bid Margin" shall have the meaning set forth in
Section 2.4(c)(ii)(C).
"Eurodollar Rate Committed Loan" shall mean any Committed Loan that
bears interest at a rate determined by reference to the Eurodollar Rate.
"Eurodollar Rate Committed Margin" shall have the meaning set forth in
Section 3.1(a)(iii).
"Eurodollar Rate Loans" shall mean, collectively, Eurodollar Rate
Committed Loans and Eurodollar Rate Bid Loans.
"Eurodollar Reserve Percentage" shall mean for any day, that percentage
(expressed as a decimal) which is in effect from time to time under Regulation D
as the maximum reserve requirement (including, without limitation, any basic,
supplemental, emergency, special, or marginal reserves) applicable with respect
to Eurocurrency liabilities as that term is defined in Regulation D (or against
any other category of liabilities that includes deposits by reference to which
the interest rate on Eurodollar Loans is determined), whether or not a Bank has
any Eurocurrency liabilities subject to such reserve requirement at that time.
Eurodollar Loans shall be deemed to constitute Eurocurrency liabilities and as
such shall be deemed subject to reserve requirements without benefits of credits
for proration, exceptions or offsets that may be available from time to time to
a Bank. The Eurodollar Rate shall be adjusted automatically on and as of the
effective date of any change in the Eurodollar Reserve Percentage.
"Event of Default" shall have the meaning set forth in Section 12.1.
"Existing Credit Agreement" shall mean the Credit Agreement, dated as
of August 31, 1995, as amended and restated as of April 12, 1996, and as amended
by Amendment No.1 to the Credit Agreement dated as of October 4, 1996, among the
Borrower, the lenders party thereto and the agents party thereto including Bank
of America National Trust and Savings Association, as administrative agent.
"Federal Funds Effective Rate" shall mean, for any day, the rate set
forth in the weekly statistical release designated as H.15(519), or any
successor publication, published by the Federal Reserve Bank of New York
(including any such successor, "H.15(519)") on the preceding Business Day
opposite the caption
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"Federal Funds (Effective)"; or, if for any relevant day such rate is not so
published on any such preceding Business Day, the rate for such day will be the
arithmetic mean as determined by the Administrative Agent of the rates for the
last transaction in overnight Federal funds arranged prior to 9:00 A.M. (New
York City time) on that day by each of three leading brokers of Federal funds
transactions in New York City selected by the Administrative Agent.
"Fee Letter" shall mean that certain letter, dated as of September 16,
1996 between NationsBank and the Borrower.
"Fiscal Quarter" or "FQ" shall mean any fiscal quarter of a Fiscal
Year.
"Fiscal Year" or "FY" shall mean any period of twelve consecutive
calendar months ending on December 31; references to a Fiscal Year with a number
corresponding to any calendar year (e.g., the "1995 Fiscal Year") refer to the
Fiscal Year ending on the December 31 occurring during such calendar year.
"Fixed Interest Charges" shall mean, for any Calculation Period, (a)
interest paid or, without duplication, accrued but unpaid on the Loans with
respect to such Calculation Period, plus (b) interest paid or, without
duplication, accrued but unpaid on the Senior Notes during such Calculation
Period, plus (c) interest paid or, without duplication, accrued but unpaid on
any Indebtedness set forth in clauses (a) and (b) of the definition thereof
during such Calculation Period, minus (d) interest paid or, without duplication,
accrued but unpaid on any Indebtedness which has been eliminated from the
balance sheet liabilities of the Borrower on a consolidated basis in accordance
with GAAP.
"FRB" shall mean the Board of Governors of the Federal Reserve System,
and any Governmental Authority succeeding to any of its principal functions.
"GAAP" shall mean generally accepted accounting principles in the
United States of America as from time to time in effect.
"Governmental Authority" shall mean any nation or government, any state
or other political subdivision thereof, and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, and any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing.
"Hazardous Material" shall mean: (a) any "hazardous substance," as
defined by CERCLA; (b) any "hazardous waste," as defined by the Resource
Conservation and Recovery Act, as amended; (c) any petroleum product; or (d) any
pollutant or contaminant or hazardous, dangerous or toxic chemical, material or
substance within the meaning of any other applicable federal, state or local
law, regulation, ordinance or requirement
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(including consent decrees and administrative orders) relating or imposing
liability or standards of conduct concerning any hazardous, toxic or dangerous
waste, substance or material, all as amended or hereafter amended.
"Hedging Obligations" shall mean, with respect to the Borrower, all
liabilities of the Borrower under interest rate swap agreements, interest rate
cap agreements and interest rate collar agreements or agreements designed to
protect the Borrower against fluctuations in interest rates or currency exchange
rates.
"IMR/AVR" shall mean, as to any of the Insurance Subsidiaries at a
particular date, the interest maintenance reserve of such Insurance
Subsidiaries, computed in accordance with SAP as reported on line 11.4, page 3,
column 1 of the Annual Statement plus the asset valuation reserve of such
insurance Subsidiary, computed in accordance with SAP as reported on line 24.1,
page 3, column 1 of the Annual Statement.
"Income Taxes" shall mean any Taxes in which the base is measured by
net income.
"Indebtedness" shall mean, with respect to any Person at any date,
without duplication: (a) all obligations of such Person for borrowed money or in
respect of loans or advances; (b) all obligations of such Person evidenced by
bonds, debentures, notes or other similar instruments; (c) all obligations in
respect of letters of credit, whether or not drawn, and bankers' acceptances
issued for the account or upon the application or request of such Person; (d)
all Capitalized Lease Liabilities of such Person; (e) all Hedging Obligations of
such Person; (f) all obligations of such Person to pay the deferred purchase
price of property or services which are included as liabilities in accordance
with GAAP, and Indebtedness secured by a Lien on property owned or being
purchased by such Person (including Indebtedness arising under conditional sales
or other title retention agreements); (g) any Indebtedness of a partnership in
which such Person is a general partner; and (h) all Contingent Obligations of
such Person in connection with the foregoing.
"Indemnified Parties" shall have the meaning set forth in Section 15.5.
"Indentures" shall mean, collectively, the Conseco Indenture, the CCPI
Indenture and the Subordinated Indentures.
"Initial Acquired Companies" shall mean ATC, CAF, TH and BLHC.
"Initial Indebtedness to be Refinanced" shall mean the Indebtedness of
the Borrower under (i) the Existing Credit Agreement in an aggregate amount not
to exceed $500,000,000, plus accrued interest thereon, and (ii) the promissory
note dated
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September 30, 1996 in favor of NationsBank in an aggregate amount not to exceed
$100,000,000, plus accrued interest thereon.
"Insurance Subsidiary" shall mean any Subsidiary of the Borrower 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 Coverage Ratio" shall mean, for any Calculation Period, the
ratio of (a) the sum of (i) Amounts Available for Dividends directly to the
Borrower from the Insurance Subsidiaries, plus (ii) interest paid with respect
to the Surplus Debentures, plus (iii) Net Cash Available from the Non-Insurance
Subsidiaries, plus (iv) the amount of Taxes paid or, without duplication,
accrued but unpaid to the Borrower under the Tax Sharing Agreement, plus (v)
management and other fees received by the Borrower under the Servicing
Agreements or otherwise, plus (vi) the Borrower's Investment Income received in
cash, minus (vii) the amount of Taxes paid or, without duplication, accrued but
unpaid by the Borrower, minus (viii) cash operating expenses of the Borrower,
minus (ix) capital expenditures of the Borrower, minus (x) principal and
interest payments made or, without duplication, interest accrued but unpaid on
intercompany loans by the Borrower and its Subsidiaries, minus (xi) dividends
paid, in cash, to BNL by the Borrower on the Conseco Series E Preferred Stock to
the extent permitted by this Agreement to (b) Fixed Interest Charges. The
Interest Coverage Ratio and the component amounts referenced herein shall be
calculated on the last day of each Fiscal Quarter for the immediately preceding
four (4) consecutive Fiscal Quarters; provided that for the Fiscal Quarter
ending December 31, 1996, the foregoing shall be calculated for the immediately
preceding Fiscal Quarter; for the Fiscal Quarter ending March 31, 1997, the
foregoing shall be calculated for the immediately preceding Fiscal Quarter; for
the Fiscal Quarter ending June 30, 1997, the foregoing shall be calculated for
the immediately preceding two (2) consecutive Fiscal Quarters; and for the
Fiscal Quarter ending September 30, 1997, the foregoing shall be calculated for
the immediately preceding three (3) consecutive Fiscal Quarters.
"Interest Payment Date" shall mean, as to any Loan other than a Base
Rate Loan, the last day of each Interest Period applicable to such Loan and, as
to any Base Rate Loan, the last Business Day of each calendar month for all or
any portion of any such Base Rate Loan outstanding during such calendar month;
provided, however, that (a) if any Interest Period for a Eurodollar Rate
Committed Loan exceeds three months, the date that falls three months after the
beginning of such Interest Period and after each Interest Payment Date
thereafter is also an Interest Payment Date, (b) as to any Bid Loan, such
intervening dates prior to the maturity thereof as may be specified by the
Borrower and agreed to by the applicable Bid Loan Bank in the applicable
Competitive Bid shall also be Interest Payment Dates and (c) as to any Swingline
Loan, all interest shall be due and payable on the last Business Day of each
calendar month for all
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or any portion of any such Swingline Loan outstanding during such calendar
month.
"Interest Period" shall mean (a) as to any Eurodollar Rate Committed
Loan, the period commencing on the Borrowing Date of such Loan or on the
Conversion/Continuation Date on which such Loan is converted into or continued
as a Eurodollar Rate Committed Loan, and ending on the date one, two, three or
six months thereafter as selected by the Borrower in its Notice of Borrowing or
Notice of Conversion/Continuation, (b) as to any Eurodollar Rate Bid Loan, the
period commencing on the Borrowing Date of such Loan and ending on the date one,
two or three months thereafter as selected by the Borrower in the applicable
Competitive Bid Request, (c) as to any Absolute Rate Loan, a period of not less
than fourteen (14) days and not more than ninety (90) days as selected by the
Borrower in the applicable Competitive Bid Request and (d) as to any Swingline
Loan, a period commencing in each case on the date of the borrowing and ending
on the date agreed to by the Borrower and the Swingline Lender in accordance
with the provisions of Section 2.10 (such ending date in any event to be not
more than seven (7) Business Days from the date of borrowing); provided that:
(a) if any Interest Period would otherwise end on a day that
is not a Business Day, such Interest Period shall be extended to the
following Business Day unless, with respect to any Eurodollar Rate
Loan, the result of such extension would be to carry such Interest
Period into another calendar month, in which event such Interest Period
shall end on the preceding Business Day;
(b) with respect to any Eurodollar Rate Loan, any Interest
Period that begins on the last Business Day of a calendar month (or on
a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period) shall end on the
last Business Day of the calendar month at the end of such Interest
Period; and
(c) no Interest Period for any Loan shall extend beyond the
maturity date of such Loan.
"Investment" shall mean any investment in any Person, whether by means
of share purchase, capital contribution, loan, time deposit, or otherwise.
"Investment Grade Securities" shall mean (a) (i) non-equity securities
which are rated "BBB-" or better by Standard & Poor's, "Baa-3" or better by
Moody's, "BBB-" or better by Duff & Phelps, or "NAIC 2" or better by the NAIC
and (ii) municipal bonds which are rated "SP-2" or better by Standard & Poor's,
"Baa-3" or "MIG4" or better by Moody's, "BBB-" or better by Duff & Phelps or
"NAIC 2" or better by the NAIC, or, in each case, carrying an equivalent rating
by a nationally recognized rating agency, if all of the named rating agencies
cease publishing ratings of
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investments, and (b) direct mortgage loans which are secured by leases with
lessees which have outstanding securities described in clause (a) of this
definition.
"Investment Income" shall mean, (a) as to any Person which is an
Insurance Subsidiary as of any date, the amount reported on line 4, page 4,
column 1 of the Annual Statement, or an amount determined in a consistent manner
for any date other than one as of which an Annual Statement is prepared but
exclusive of earnings of any Insurance Subsidiaries of such Person and, (b) as
to any Person which is not an Insurance Subsidiary, the amount of earnings of
such Person on Investments, net of expenses actually incurred in connection with
such Investments and taking into account realized gains and losses on such
Investments.
"Invitation for Competitive Bids" shall mean a solicitation for
Competitive Bids in substantially the form of Exhibit E.
"Lending Office" shall mean, with respect to any Bank, any office
designated by such Bank in its sole discretion beneath its signature hereto (or
in an Assignment Agreement) or otherwise from time to time by written notice to
the Borrower and the Administrative Agent, as a Lending Office for purposes
hereunder. A Bank may designate separate Lending Offices for the purposes of
making, maintaining or continuing Base Rate Loans or Eurodollar Rate Committed
Loans and maintaining Eurodollar Rate Bid Loans and, with respect to Eurodollar
Rate Loans, such Lending Office may be a foreign branch or an Affiliate of such
Bank or such Bank's holding company.
"Liabilities" shall mean all obligations of the Borrower to the Banks,
the Administrative Agent, the Syndication Agent, the Documentation Agent, the
Managing Agents or the Arranger, howsoever created, arising or evidenced,
whether direct or indirect, joint or several, absolute or contingent, or now or
hereafter existing, or due or to become due, which arise out of or in connection
with this Agreement, the Notes, if any, or the other Loan Documents.
"Licenses" shall have the meaning set forth in Section 7.22.
"Lien" shall mean any security interest, mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or
other), claim or other priority or preferential arrangement of any kind or
nature whatsoever.
"Litigation" shall mean any litigation (including, without limitation,
any governmental proceeding or arbitration proceeding), tax audit or
investigative proceeding, claim, lawsuit, and/or investigation pending or
threatened against or involving the Borrower or any of its Subsidiaries or any
of its or their businesses or operations.
"Loans" shall mean, collectively, the Committed Loans, the Bid Loans
and the Swingline Loans.
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"Loan Documents" shall mean, collectively, this Agreement, the Notes
and any and all other documents or instruments furnished or required to be
furnished in connection with any of the foregoing, as the same may be amended or
modified in accordance with this Agreement.
"London Interbank Offered Rate" shall mean, with respect to any
Eurodollar Loan for the Interest Period applicable thereto, the rate of interest
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 and for an amount comparable to such
Eurodollar Loan; provided, however, if more than one rate is specified on
Telerate Page 3750, the applicable rate shall be the arithmetic mean of all such
rates. If, for any reason, such rate is not available, the term "London
Interbank Offered Rate" shall mean, with respect to any Eurodollar Loan for the
Interest Period applicable thereto, the rate of interest 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 and for an
amount comparable to such Eurodollar Loan; 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.
"Managing Agents" shall mean the Banks listed on the signature pages
hereto having the title of Managing Agent in their signature block.
"Material Adverse Change" or "Material Adverse Effect" shall mean any
change, event, action, condition or effect which individually or in the
aggregate (a) impairs the validity or enforceability of this Agreement or any
other Loan Document, or (b) materially and adversely affects the consolidated
business, operations, financial prospects or condition of the Borrower and its
Subsidiaries taken as a whole, or (c) materially impairs the ability of the
Borrower to perform its obligations under this Agreement or any of the other
Loan Documents.
"Material Litigation" or "Material Litigation Development" shall mean
any Litigation, or development in any Litigation, as the case may be, (a) which
seeks to enjoin, prohibit, discontinue or otherwise impacts the validity or
enforceability of this Agreement or any of the other Loan Documents or other
transactions contemplated hereby or thereby, or (b) which could be reasonably
expected to have a Material Adverse Effect.
"Moody's" shall mean Moody's Investors Service, Inc. and any successor
thereto.
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"Multiemployer Pension Plan" shall mean a multiemployer plan as defined
in section 4001(a)(3) of ERISA to which the Borrower or any other Controlled
Group member may have liability.
"NAIC" shall mean the National Association of Insurance Commissioners,
or any successor organization.
"Net Cash Available" shall mean, without duplication, for any direct
Non-Insurance Subsidiary of the Borrower (a) Net Income of such Subsidiary plus
(b) any non-cash expenses of such Subsidiary deducted in determining Net Income
less (c) any non-cash income of such Subsidiary included in determining such Net
Income.
"Net Income" shall mean, for any Person for any Calculation Period, the
net income (or loss) of such Person for such period as determined in accordance
with GAAP.
"Net Proceeds" shall mean, with respect to any Disposition by any
Person, the aggregate amount of cash and readily marketable Cash Equivalents
received by such Person in respect of such Disposition minus the sum of (a)
reasonable costs and expenses (including costs of discontinuance and Taxes other
than Income Taxes) incurred in connection with such Disposition and required to
be paid in cash, (b) the estimated Income Tax to be paid by such Person in
connection with such Disposition and (c) for an Insurance Subsidiary, the
Statutory Carrying Value of the assets which were the subject of such
Disposition plus any amounts which the Department will not permit such Insurance
Subsidiary to pay out as a result of such Disposition. Upon calculation of Net
Proceeds, the Borrower shall deliver to the Administrative Agent an accounting
of the items deducted from the cash or Cash Equivalents related to such
Disposition pursuant to clauses (a), (b) and (c). For purposes of this
definition, the Net Proceeds received by any Person in respect of any
Disposition shall include such cash or Cash Equivalents as may be received
("subsequent cash proceeds") by such Person at any time or from time to time in
connection with the sale, transfer, lease or other disposition, or otherwise in
respect of, any consideration other than cash or readily marketable Cash
Equivalents received by such Person in respect of such Disposition, less the
estimated Income Tax to be paid in connection with the receipt of such
subsequent cash proceeds that were not theretofore deducted in computing Net
Proceeds.
"Nonconsenting Bank" shall have the meaning set forth in Section 15.2.
"Non-Insurance Subsidiary" shall mean any Subsidiary which is not an
Insurance Subsidiary.
"Notes" shall mean, collectively, the Committed Notes, the Bid Notes
and the Swingline Note.
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"Notice of Borrowing" shall mean a notice in substantially the form of
Exhibit F.
"Notice of Conversion/Continuation" shall mean a notice in
substantially the form of Exhibit G.
"Participation Interest" shall mean, the extension of credit by a Bank
by way of a purchase of a participation in Swingline Loans as provided in
Section 2.10(b)(iii).
"Pension Plan" shall mean a Single Employer Pension Plan, or a
Multiemployer Pension Plan to which the Borrower or any other Controlled Group
member may have liability.
"Percentage" shall mean, relative to any Bank, the percentage set forth
opposite such Bank's name on Schedule 1.1-A (or set forth in an Assignment
Agreement), as such Percentage may be adjusted from time to time pursuant to
Assignment Agreement(s) executed by such Bank and its Eligible Assignee and
delivered pursuant to Section 14.1.
"Permitted Liens" shall have the meaning set forth in Section 9.2.
"Permitted Transactions" shall mean (a) mortgage-backed security
transactions in which an investor sells mortgage collateral, such as securities
issued by the Government National Mortgage Association and the Federal Home Loan
Mortgage Corporation for delivery in the current month while simultaneously
contracting to repurchase "substantially the same" (as determined by the Public
Securities Association and GAAP) collateral for a later settlement, (b)
transactions in which an investor lends cash to a primary dealer and the primary
dealer collateralizes the borrowing of the cash with certain securities, (c)
transactions in which an investor lends securities to a primary dealer and the
primary dealer collateralizes the borrowing of the securities with cash
collateral, (d) transactions in which an investor makes loans of securities to a
broker-dealer under an agreement requiring such loans to be continuously secured
by cash collateral or United States government securities and (e) transactions
in which the Federal Home Loan Mortgage Bank of Pittsburgh ("FHLMBP") makes
loans to the Borrower, which are sufficiently secured by appropriate assets of
the Borrower consisting of government agency mortgage-backed securities, in
accordance with the rules, regulations and guidelines of the FHLMBP for its loan
programs.
"Person" shall mean any individual, sole proprietorship, partnership,
limited liability company, limited liability partnership, joint venture, trust,
unincorporated organization, association, corporation, institution, public
benefit corporation, entity or government (whether federal, state, county, city,
municipal or otherwise, including, without limitation, any instrumentality,
division, agency, body or department thereof).
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"Process Agent" shall have the meaning set forth in Section 15.11.
"Purchase Agreements" shall mean (i) the Agreement and Plan of Merger
dated as of August 25, 1996 by and between Conseco, Inc. and American Travellers
Corporation, (ii) Agreement and Plan of Merger by and among Conseco, Inc., CAF
Acquisition Company and Capitol American Financial Corporation dated as of
August 25, 1996, (iii) Agreement and Plan of Merger dated as of September 25,
1996 by and between Conseco, Inc. and Transport Holdings Inc. and (iv) the
purchase agreement(s) between Conseco, Inc. and one or more sellers relating to
the purchase of BLHC Stock.
"Purchase Money Debt" shall mean Indebtedness incurred by a Person in
connection with the purchase of fixed or capital assets by such Person, in which
such assets the seller or financier thereof has taken or retained a Lien
therein, provided that any such Lien attaches to such assets concurrently with
or within sixty (60) days after the purchase thereof by such Person.
"Qualification" shall mean, with respect to any certificate covering
financial statements or any financial statements, a qualification to such
certificate or financial statements (such as a "subject to" or "except for"
statement therein) (a) resulting from a limitation on the scope of examination
of such financial statements or the underlying data, (b) as to the capability of
the Person whose financial statements are certified to continue operations as a
going concern, or (c) which could be eliminated by changes in financial
statements or notes thereto covered by such certificate (such as by the creation
of or increase in a reserve or a decrease in the carrying value of assets) and
which if so eliminated by the making of any such change and after giving effect
thereto would result in the occurrence of a Default, provided, that neither of
the following shall constitute a Qualification: (i) a consistency exception
relating to a change in accounting principles with which the independent public
accountants for the Person whose financial statements are being certified have
concurred; or (ii) a qualification relating to the outcome or disposition of
threatened Litigation, pending Litigation being contested in good faith, pending
or threatened claims or contingencies which cannot be determined with sufficient
certainty to permit such financial statements to not be qualified.
"Reference Departments" shall mean, collectively, the Department of the
State of California, the State of Illinois, the State of Missouri, the State of
Tennessee, the State of Texas, the State of Ohio, the State of Arizona, the
State of Indiana, the Commonwealth of Kentucky, the Commonwealth of
Massachusetts, the State of Mississippi, the State of Iowa, the State of Alabama
and the Commonwealth of Pennsylvania.
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"Regulation D" shall mean Regulation D (or any successor regulation)
promulgated by the FRB as from time to time in effect.
"Regulation G" shall mean Regulation G (or any successor regulation)
promulgated by the FRB as from time to time in effect.
"Regulation U" shall mean Regulation U (or any successor regulation)
promulgated by the FRB as from time to time in effect.
"Reinsurance Agreements" shall mean any agreement, contract, treaty,
certificate or other arrangement (other than a Surplus Relief Reinsurance
Agreement) by which any Insurance Subsidiary agrees to transfer or cede to
another insurer all or part of the liability assumed or assets held by it under
a policy or policies of insurance or under a reinsurance agreement assumed by
it. Reinsurance Agreements shall include, but not be limited to, any agreement,
contract, treaty, certificate or other arrangement (other than a Surplus Relief
Reinsurance Agreement) which is treated as such by the applicable Department or
Reference Department.
"Replaced Bank" shall have the meaning set forth in Section 5.8.
"Replacement Bank" shall have the meaning set forth in Section 5.8.
"Reportable Event" shall have the meaning assigned to such term in
ERISA.
"Required Banks" shall mean (a) Banks (other than a Defaulting Bank)
having at least 51% of the Revolving Commitments (excluding the Revolving
Commitment of any Defaulting Bank) or, if the Revolving Commitments have
terminated or expired, 51% of the aggregate principal amount of the Loans and
Participation Interests outstanding at such time (excluding the Loans and
Participation Interests of any Defaulting Bank) or (b) for purposes of amending
or modifying the provisions of or waiving or curing a Default pursuant to
Section 12.1.5 as a result of Section 9.8 or Section 12.1.9, Banks (other than a
Defaulting Bank) having at least 66-2/3% of the Revolving Commitments (excluding
the Revolving Commitment of any Defaulting Bank) or, if the Revolving
Commitments have terminated or expired, 66-2/3% of the aggregate principal
amount of the Loans outstanding and Participation Interests at such time
(excluding the Loans and Participation Interests of any Defaulting Bank).
"Responsible Officer" shall mean, in the case of any Person, any of the
following officers of such Person: the chief executive officer; the president;
the chief financial officer; the chief operating officer; the chief investment
officer; the general counsel; the secretary; the treasurer; any executive vice
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<PAGE>
president; or any vice president with responsibility for or substantive
knowledge of financial matters. If any of the titles of the preceding officers
of such corporate Person are changed after the date hereof, the term
"Responsible Officer" shall thereafter mean any officer performing substantially
the same functions as are presently performed by one or more of the officers
listed in the first sentence of this definition.
"Revolving Commitment" shall have the meaning set forth in Section 2.1.
"SAP" shall mean, as to any Insurance Subsidiary, the statutory
accounting practices prescribed or permitted by the Department.
"Senior Note Documents" shall mean the Conseco Indenture, the CCPI
Indenture, the Senior Notes and the other agreements and instruments pursuant to
which the Senior Notes were issued, as the same may be amended or modified or
supplemented in accordance with this Agreement.
"Senior Notes" shall mean, collectively, the Conseco Senior Notes and
the CCPI Senior Notes.
"Servicing Agreements" shall mean, collectively, those agreements set
forth on Schedule 1.1-B.
"Significant Subsidiary" shall mean any Subsidiary of the Borrower
with, after the elimination of intercompany accounts, (a) assets which
constituted at least 10% of the Borrower's consolidated total assets, or (b)
revenues which constituted at least 10% of the Borrower's consolidated total
revenues, or (c) net earnings which constituted at least 10% of the Borrower's
consolidated total net earnings, all as determined as of the date of the
Borrower's most recently prepared quarterly financial statements for the
12-month period then ended.
"Single Employer Pension Plan" shall mean a pension plan as such term
is defined in section 3(2) of ERISA, other than a multiemployer plan as defined
in section 4001(a)(3) of ERISA, to which the Borrower or any other Controlled
Group member may have liability, including any liability by reason of having
been a substantial employer within the meaning of section 4063 of ERISA at any
time during the preceding five years, or by reason of being deemed to be a
contributing sponsor under section 4069 of ERISA.
"Solvent", as to any Person on a particular date, shall mean that on
such date (a) the fair value of the property of such Person is greater than the
total amount of liabilities, including, without limitation, Contingent
Obligations, of such Person, (b) the present fair salable value of the assets of
such Person is not less than the amount that will be required to pay the
probable liabilities of such Person on its debts as they become absolute and
matured, (c) such Person is able to realize
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upon its assets and pay its debts and other liabilities, Contingent Obligations
and other commitments as they mature in the normal course of business, (d) such
Person does not intend to, and does not believe that it will, incur debts or
liabilities beyond such Person's ability to pay as such debts and liabilities
mature, and (e) such Person is not engaged in business or a transaction, and is
not about to engage in business or a transaction, for which such Person's
property would constitute unreasonably small capital after giving due
consideration to the prevailing practice in the industry in which such Person is
engaged. For the purposes of this definition, in computing the amount of any
Contingent Obligation at any time, it is intended that such Contingent
Obligation will be computed at the amount which, in light of all the facts and
circumstances existing at such time, represents the amount that can reasonably
be expected to become an actual or matured liability.
"Standard & Poor's" shall mean Standard & Poor's Ratings Group and any
successor thereto.
"Statutory Carrying Value" shall mean, as to an asset of any Insurance
Subsidiary, the value of such asset to be reflected in line 24, page 2, column 1
of the Annual Statement, or an amount determined in a consistent manner for any
date other than one as of which an Annual Statement is prepared.
"Statutory Liabilities" shall mean, with respect to any Insurance
Subsidiary as of any date, the amount reported on line 28, page 3, column 1 of
the Annual Statement of such Insurance Subsidiary, less IMR/AVR and less amounts
under the Surplus Debenture constituting Statutory Liabilities on the Annual
Statement, or an amount determined in a consistent manner for any date other
than one as of which an Annual Statement is prepared.
"Subordinated Debenture Indenture" shall mean the Indenture, dated on
or about November 20, 1996, between Conseco, Inc. and Fleet National Bank, as
trustee, as the same may be amended or modified in accordance with the terms of
this Agreement.
"Subordinated Debentures" shall mean the subordinated debt instruments
issued by the Borrower pursuant to the Subordinated Debenture Indenture.
"Subordinated Indentures" shall mean, collectively, the Indenture,
dated as of September 29, 1994, between ALHC Merger Corporation and LTCB Trust
Company and First Supplemental Indenture thereto, dated as of September 29,
1994, between ALHC and LTCB Trust Company for the 11 1/4% Senior Subordinated
Notes due 2004; the Indenture, dated as of April 21, 1993, between ALH and
Boatmen's Trust Company and the Supplemental Indenture thereto, dated as of
September 29, 1994, between ALH and Boatmen's Trust Company of the 6 1/4%
Convertible Subordinated Debentures due 2003; the Indenture, dated as of
November 1, 1992, between BLHC and The Connecticut National Bank for the Senior
Subordinated Notes Due 2002; the Indenture, dated as of July 15,
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1992, between Life Partners Group, Inc. and NationsBank of Texas, N.A. for the
12 3/4% Senior Subordinated Notes Due 2002; and the Indenture, dated September
15, 1995, between ATC and American Bank, National Association for the 6.5%
Convertible Subordinated Debentures due October 1, 2005, to be amended by the
First Supplemental Indenture between the Borrower and Firstar Bank of Minnesota.
"Subsidiary" shall mean, as to any Person, any corporation,
partnership, limited liability company, limited liability partnership, joint
venture, trust, association or other unincorporated organization of which or in
which such Person and such Person's Subsidiaries own directly or indirectly 50%
or more of (a) the combined voting power of all classes of stock having general
voting power under ordinary circumstances to elect a majority of the board of
directors, if it is a corporation, (b) the capital interest or partnership
interest, if it is a partnership, joint venture or similar entity, or (c) the
beneficial interest, if it is a trust, association or other unincorporated
organization; provided that, with respect to any Investment made by the Borrower
in any Person in the ordinary course of business solely for investment purposes,
such Person shall not be considered a Subsidiary of the Borrower for purposes of
this Agreement if such Person is not integral to the business or operations of
the Borrower or any Significant Subsidiary and such Investment is otherwise
permitted by Section 9.10.
"Substitute Bank" shall have the meaning set forth in Section 15.2.
"Surplus Debentures" shall mean, as to any Insurance Subsidiary, debt
securities of such Insurance Subsidiary the proceeds of which are permitted to
be included, in whole or in part, as Capital and Surplus of such Insurance
Subsidiary as approved and permitted by the applicable Department.
"Surplus Relief Reinsurance Agreements" shall mean any agreement
whereby any insurance company assumes or cedes business under a reinsurance
agreement that would be considered a "financing-type" reinsurance agreement as
determined in accordance with the Statement of Financial Accounting Standards
113 or any successor thereto.
"Swingline Commitment" shall mean the commitment of the Swingline
Lender to make Swingline Loans in an aggregate principal amount at any time
outstanding of up to the Swingline Committed Amount.
"Swingline Committed Amount" shall have the meaning set forth in
Section 2.10(a).
"Swingline Lender" shall mean NationsBank.
"Swingline Loan" shall have the meaning set forth in Section 2.10(a).
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"Swingline Note" shall mean the promissory note of the Borrower in
favor of the Swingline Lender in the original principal amount of $50,000,000,
as such promissory note may be amended, modified, restated or replaced from time
to time.
"Tax Returns and Reports" shall mean all returns, reports and
information required to be filed with any Governmental Authority with regard to
Taxes.
"Tax Sharing Agreement" shall mean the tax sharing agreement dated
February 29, 1989 among the Borrower and certain of its Subsidiaries.
"Taxes" or "Tax" shall mean all taxes of any nature whatsoever and
however denominated, including, without limitation, retaliatory, income,
premium, withholding, guaranty fund and similar assessments, excise, import,
governmental fees, duties and all other charges, as well as additions to tax,
penalties and interest thereon, imposed by any Governmental Authority.
"Termination Date" shall mean the earlier of (a) November 22, 2001 or
(b) the date of termination in whole of the Commitments pursuant to Section 4.1,
4.3 or 12.2.
"TH" shall mean Transport Holdings, Inc., a Delaware corporation.
"TOPrS" shall mean (a) the Trust Originated Preferred Securities in an
aggregate face amount of up to $1,000,000,000 (i) to be issued by one or more
Delaware business trusts to be formed by the Borrower and (ii) guaranteed by the
Borrower or (b) other similar securities with substantially similar terms,
including specifically "TruPS", provided that the aggregate face amount thereof,
together with the aggregate face amount of the securities described in clause
(a) of this definition, do not exceed $1,000,000,000. Upon their issuance, the
TOPrS will be sold in a public offering and the proceeds thereof shall be used
to purchase the Borrower's Subordinated Debentures issued under the Subordinated
Debenture Indenture.
"Total Capitalization" shall mean (a) principal and accrued and unpaid
interest on all Indebtedness for borrowed money of the Borrower or any Closing
Date Subsidiary for which the Borrower or any such Closing Date Subsidiary,
respectively, is directly liable and which is not a Contingent Obligation
(calculated excluding Permitted Transactions) plus (b) the Total Shareholders'
Equity of the Borrower plus (c) the redemption value or liquidation preference
(or if less, the purchase price), as applicable, of the ALHC Preferred Stock and
the TOPrS (but only to the extent such values or an equivalent amount are not
included in the calculation of amounts specified in clause (a) or (b)
immediately above) plus (d) the minority interests in Subsidiaries recorded on
the balance sheet of the Borrower, determined in accordance with GAAP (but only
to the extent such
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interests are not included in the calculation of amounts specified in clause
(a), (b) or (c) immediately above), provided that (i) the Borrower or a
Wholly-Owned Subsidiary of the Borrower owns 100% of the Voting Shares of any
such Subsidiary or (ii) in the event that less than 100% of the Voting Shares of
any such Subsidiary are owned by the Borrower or one of its Wholly- Owned
Subsidiaries, the Borrower or such Wholly-Owned Subsidiary has guaranteed the
Indebtedness of such Subsidiary.
"Total Shareholders' Equity" shall mean the total shareholders' equity
of a Person as determined in accordance with GAAP (calculated excluding
unrealized gains (losses) of securities as determined in accordance with FAS
115).
"Transferee" shall have the meaning set forth in Section 14.3.
"Type of Loan" or "Type" shall have the meaning set forth in Section
2.2. The Types of Loans under this Agreement are as follows: Base Rate Loans,
Eurodollar Rate Loans and Absolute Rate Loans.
"U.S. Government Securities" shall mean obligations of, or obligations
guaranteed as to principal and interest by, the United States Government or
agency or instrumentality thereof.
"Voting Shares" shall mean, with respect to any Person, capital stock
issued by such Person, the holders of which are ordinarily, in the absence of
contingencies, entitled to vote for the election of directors (or persons
performing similar functions) of such Person, even though the right so to vote
has been suspended by the happening of any such contingency.
"Welfare Plan" shall mean a "welfare plan," as such term is defined in
section 3(l) of ERISA to which the Borrower or any other Controlled Group member
may have liability.
"Wholly-Owned Subsidiary" shall mean (i) any Person in which (other
than directors' qualifying shares required by law) 100% of the capital stock or
other ownership interests is owned, beneficially and of record, by such Person,
or by one or more other Wholly-Owned Subsidiaries of such Person, or both, (ii)
ALH and (iii) BLHC.
SECTION 1.2 Other Definitional Provisions.
(a) All terms defined in this Agreement shall have the
above-defined meanings when used in any Loan Document, or any
certificate, report or other document made or delivered pursuant to
this Agreement, unless the context therein shall clearly otherwise
require.
(b) The words "hereof," "herein," "hereunder" and similar
terms when used in this Agreement shall refer to this Agreement as a
whole and not to any particular
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provision of this Agreement. All references to sections and subsections
in this Agreement shall be to sections and subsections of this
Agreement unless otherwise specified or as the context shall clearly
otherwise require.
(c) The words "amended or modified" when used in any Loan
Document shall mean with respect to such Loan Document as from time to
time, in whole or in part, amended, modified, supplemented, restated,
refinanced, refunded or renewed.
(d) In the computation of periods of time in this Agreement
from a specified date to a later specified date, the word "from" means
"from and including" and the words "to" and "until" each means "to but
excluding."
SECTION 1.3 Accounting and Financial Determinations. Except as
otherwise expressly provided herein, 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 Banks hereunder shall be
prepared, in accordance with GAAP applied on a consistent basis. All
calculations made for the purposes of determining compliance with this Agreement
shall (except as otherwise expressly provided herein) be made by application of
GAAP applied on a consistent basis with the most recent annual or quarterly
financial statements delivered pursuant to Section 8.1 (or, prior to the
delivery of the first financial statements pursuant to Section 8.1 , consistent
with the financial statements as at September 30, 1996); provided, however, if
(a) the Borrower shall object to determining such compliance on such basis at
the time of delivery of such financial statements due to any change in GAAP or
the rules promulgated with respect thereto or (b) the Administrative Agent or
the Required Banks shall so object in writing within 30 days after delivery of
such financial statements, then such calculations shall be made on a basis
consistent with the most recent financial statements delivered by the Borrower
to the Banks as to which no such objection shall have been made.
SECTION 2. THE COMMITMENTS AND THE LOANS
Subject to the terms and conditions of this Agreement and relying on
the representations and warranties herein set forth:
SECTION 2.1 Revolving Commitment. Each of the Banks, severally and for
itself alone, agrees, on the terms and conditions set forth herein, to make
loans (herein collectively called the "Committed Loans" and individually called
a "Committed Loan") to the Borrower on a revolving basis from time to time from
the Closing Date until the Termination Date in such Bank's Percentage of the
aggregate amount of such Committed Loans as the Borrower may request from all
Banks. The aggregate principal amount of the Committed Loans which any Bank
shall be committed to have outstanding to the Borrower shall not at any one time
exceed the amount set opposite such Bank's name on Schedule
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1.1-A. The foregoing commitment of each Bank is herein called its "Revolving
Commitment" and for all Banks the "Revolving Commitments." The aggregate
principal amount of the Committed Loans which all Banks shall be committed to
have outstanding hereunder to the Borrower, together with the aggregate
principal amount of all Bid Loans outstanding under Section 2.3, Swingline Loans
outstanding under Section 2.10, and the Borrower's aggregate outstanding
commercial paper shall not at any one time exceed $1,400,000,000 (or such
reduced amount as may be fixed pursuant to Sections 4.1, 4.9 and 12.2).
Notwithstanding any terms or provisions of this Section 2.1 or any other Section
of this Agreement to the contrary, until the BLHC Debt has been repaid in full
and the commitments of the lenders under the BLHC Credit Agreement have been
irrevocably terminated, $400,000,000 of the aggregate Revolving Commitments
shall be unavailable to the Borrower for any purpose other than for the
repayment in full of the BLHC Debt.
SECTION 2.2 Procedure for Committed Borrowings.
(a) Each Committed Borrowing shall be made upon the Borrower's
irrevocable written notice (or by telephone promptly confirmed in
writing) delivered to the Administrative Agent in the form of a Notice
of Borrowing (which notice must be received by the Administrative Agent
prior to 11:00 A.M. (Charlotte, North Carolina time) (i) three Business
Days prior to the requested Borrowing Date, in the case of Eurodollar
Rate Committed Loans, and (ii) on the requested Borrowing Date, in the
case of Base Rate Loans, specifying:
(A) the amount of such Committed Borrowing, which
shall be in an aggregate minimum amount of $3,000,000 or any
integral multiple of $1,000,000 in excess thereof;
(B) the requested Borrowing Date, which shall be a
Business Day;
(C) the Type of Loans comprising such Committed
Borrowing; and
(D) with respect to any Committed Borrowing comprised
of Eurodollar Rate Committed Loans, the duration of the
Interest Period applicable to such Committed Loans included in
such notice. If the Notice of Borrowing fails to specify the
duration of the Interest Period for any Borrowing comprised of
Eurodollar Rate Committed Loans, such Interest Period shall be
three (3) months.
(b) The Administrative Agent will promptly notify each Bank of
its receipt of any Notice of Borrowing and of the amount of such Bank's
Percentage of the related Committed Borrowing.
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(c) Each Bank will make the amount of its Percentage of each
Committed Borrowing available to the Administrative Agent for the
account of the Borrower at the Administrative Agent's Office by 2:00
P.M. (Charlotte, North Carolina time) on the Borrowing Date requested
by the Borrower in funds immediately available to the Administrative
Agent. The proceeds of all such Committed Loans will then be made
available to the Borrower by the Administrative Agent by wire transfer
in accordance with written instructions provided to the Administrative
Agent by the Borrower of like funds as received by the Administrative
Agent.
(d) After giving effect to any Committed Borrowing, there may
not be more than fifteen (15) different Interest Periods in effect for
all Committed Loans and Bid Loans then outstanding.
SECTION 2.3 Bid Borrowings. In addition to Committed Borrowings
pursuant to Section 2.1, each Bank severally agrees that the Borrower may, as
set forth in Section 2.4, from time to time from the Closing Date to the
Termination Date, request the Banks to submit offers to make Bid Loans ("Bid
Loans") to the Borrower; provided, however, that the Banks may, but shall have
no obligation to, submit such offers and the Borrower may, but shall have no
obligation to, accept any such offers; and provided, further, that at no time
shall (a) the outstanding aggregate principal amount of all Bid Loans, plus the
outstanding aggregate principal amount of all Committed Loans, plus the
outstanding aggregate principal amount of all Swingline Loans made by the
Swingline Lender, plus the Borrower's aggregate outstanding commercial paper
exceed the aggregate Revolving Commitments, or (b) the number of Interest
Periods for Bid Loans then outstanding plus the number of Interest Periods for
Committed Loans then outstanding exceed fifteen (15).
SECTION 2.4 Procedure for Bid Borrowings. (a) When the Borrower
wishes to request the Banks to submit offers to make Bid Loans hereunder, it
shall transmit to the Administrative Agent by telephone call followed promptly
by facsimile transmission of a Competitive Bid Request so as to be received no
later than 11:00 A.M. (Charlotte, North Carolina time) (x) five Business Days
prior to the date of a proposed Bid Borrowing in the case of a Eurodollar Rate
Auction, or (y) three Business Days prior to the date of a proposed Bid
Borrowing in the case of an Absolute Rate Auction, specifying:
(i) the date of such Bid Borrowing, which
shall be a Business Day;
(ii) the aggregate amount of such Borrowing,
which shall be a minimum amount of $10,000,000 or in integral
multiples of $1,000,000 in excess thereof;
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(iii) whether the Competitive Bids requested
are to be for Eurodollar Rate Bid Loans or Absolute Rate Loans
or both; and
(iv) the duration of the Interest Period
applicable thereto, subject to the provisions of the
definition of "Interest Period" herein.
Subject to Section 2.4(c), the Borrower may not request Competitive Bids for
more than four Interest Periods in a single Competitive Bid Request and may not
request Competitive Bids more than once in any period of five Business Days.
(b) Upon receipt of a Competitive Bid Request, the
Administrative Agent will promptly send to the Banks by facsimile
transmission an Invitation for Competitive Bids, which shall constitute
an invitation by the Borrower to each Bank to submit Competitive Bids
offering to make the Bid Loans to which such Competitive Bid Request
relates in accordance with this Section 2.4.
(c)(i) Each Bank may at its discretion submit a
Competitive Bid containing an offer or offers to make Bid
Loans in response to any Invitation for Competitive Bids. Each
Competitive Bid must comply with the requirements of this
Section 2.4(c) and must be submitted to the Administrative
Agent by facsimile transmission at the Administrative Agent's
office for notices set forth on the signature pages hereto not
later than (1) 9:45 A.M. (Charlotte, North Carolina time)
three Business Days prior to the proposed date of Borrowing,
in the case of an Eurodollar Rate Auction or (2) 9:45 A.M.
(Charlotte, North Carolina time) on the proposed date of
Borrowing, in the case of an Absolute Rate Auction; provided
that Competitive Bids submitted by the Administrative Agent
(or any Affiliate of the Administrative Agent) in the capacity
of a Bank may be submitted, and may only be submitted, if the
Administrative Agent or such Affiliate notifies the Borrower
of the terms of the offer or offers contained therein not
later than (A) 9:30 A.M. (Charlotte, North Carolina time)
three Business Days prior to the proposed date of Borrowing,
in the case of a Eurodollar Rate Auction or (B) 9:30 A.M.
(Charlotte, North Carolina time) on the proposed date of
Borrowing, in the case of an Absolute Rate Auction.
(ii) Each Competitive Bid shall specify
therein:
(A) the proposed date of Bid Borrowing;
(B) the principal amount of each Bid Loan for which
such Competitive Bid is being made, which principal amount (1)
may be equal to, greater than or
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less than the Revolving Commitment of the quoting Bank, (2)
must be $10,000,000 or in integral multiples of $1,000,000 in
excess thereof, and (3) may not exceed the principal amount of
Bid Loans for which Competitive Bids were requested;
(C) in case the Borrower elects a Eurodollar Rate
Auction, the margin above or below the Eurodollar Rate (the
"Eurodollar Rate Bid Margin") offered for each such Bid Loan,
expressed in multiples of 1/1000th of one basis point to be
added to or subtracted from the applicable Eurodollar Rate and
the Interest Period applicable thereto;
(D) in case the Borrower elects an Absolute Rate
Auction, the rate of interest per annum expressed in multiples
of 1/1000th of one basis point (the "Absolute Rate") offered
for each such Bid Loan; and
(E) the identity of the quoting Bank.
A Competitive Bid may contain up to three separate offers by the quoting Bank
with respect to each Interest Period specified in the related Invitation for
Competitive Bids.
(iii) Any Competitive Bid shall be disregarded
if it:
(A) is not substantially in conformity with Exhibit C
or does not specify all of the information required by Section
2.4(c)(ii);
(B) contains qualifying, conditional or similar
language;
(C) proposes terms other than or in addition to those
set forth in the applicable Invitation for Competitive Bids;
or
(D) arrives after the time set forth in Section
2.4(c)(i).
(d) Promptly on receipt and not later than 10:00 A.M.
(Charlotte, North Carolina time) three Business Days prior to the
proposed date of Borrowing in the case of a Eurodollar Rate Auction, or
10:00 A.M. (Charlotte, North Carolina time) on the proposed date of
Borrowing, in the case of an Absolute Rate Auction, the Administrative
Agent will notify the Borrower of the terms (i) of any Competitive Bid
submitted by a Bank that is in accordance with Section 2.4(c), and (ii)
of any Competitive Bid that amends, modifies or is otherwise
inconsistent with a previous Competitive Bid submitted by such Bank
with respect to the same Competitive Bid Request. Any such subsequent
Competitive Bid shall be disregarded by the Administrative
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Agent unless such subsequent Competitive Bid is submitted solely to
correct a manifest error in such former Competitive Bid and only if
received within the times set forth in Section 2.4(c). The
Administrative Agent's notice to the Borrower shall specify (x) the
aggregate principal amount of Bid Loans for which Competitive Bids have
been received for each Interest Period specified in the related
Competitive Bid Request and (y) the respective principal amounts and
Eurodollar Rate Bid Margins or Absolute Rates, as the case may be, so
offered. Subject only to the provisions of Sections 5.3, 5.4 and 11 and
the provisions of this Section 2.4(d), any Competitive Bid shall be
irrevocable except with the written consent of the Administrative Agent
given on the written instructions of the Borrower.
(e) Not later than 10:30 A.M. (Charlotte, North Carolina time)
three Business Days prior to the proposed date of Borrowing, in the
case of a Eurodollar Rate Auction, or 10:30 A.M. (Charlotte, North
Carolina time) on the proposed date of Borrowing, in the case of an
Absolute Rate Auction, the Borrower shall notify the Administrative
Agent of its acceptance or non-acceptance of the Competitive Bids so
notified to it pursuant to Section 2.4(d). The Borrower shall be under
no obligation to accept any Competitive Bid and may choose to reject
all Competitive Bids. In the case of acceptance, such notice shall
specify the aggregate principal amount of Competitive Bids for each
Interest Period that is accepted. The Borrower may accept any
Competitive Bid in whole or in part; provided that:
(i) the aggregate principal amount of each Bid
Borrowing may n ot exceed the applicable amount set forth in
the related Competitive Bid Request;
(ii) the principal amount of each Bid Borrowing must
be at least $10,000,000 or in any integral multiple of
$1,000,000 in excess thereof;
(iii) acceptance of Competitive Bids may only be made
on the basis of ascending Eurodollar Rate Bid Margins or
Absolute Rates within each Interest Period, as the case may
be; and
(iv) the Borrower may not accept any Competitive Bid
that is described in Section 2.4(c)(iii) or that otherwise
fails to comply with the requirements of this Agreement.
(f) If Competitive Bids are made by two or more Banks with the
same Eurodollar Rate Bid Margins or Absolute Rates, as the case may be,
for a greater aggregate principal amount than the amount in respect of
which such Competitive Bids are permitted to be accepted for the
related Interest Period, the principal amount of Bid Loans in respect
of
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which such Competitive Bids are accepted shall be allocated by the
Administrative Agent among such Banks as nearly as possible (in such
integral multiples, not less than $1,000,000, as the Administrative
Agent may deem appropriate) in proportion to the aggregate principal
amounts of such Competitive Bids. Determination by the Administrative
Agent of the amounts of Bid Loans shall be conclusive in the absence of
manifest error.
(g)(i) The Administrative Agent will promptly notify
each Bank having submitted a Competitive Bid if its
Competitive Bid has been accepted and, if its Competitive Bid
has been accepted, of the amount of the Bid Loan or Bid Loans
to be made by it on the date of the related Bid Borrowing.
(ii) Each Bank, which has received notice pursuant to
Section 2.4(g)(i) that its Competitive Bid has been accepted,
shall make the amounts of such Bid Loans available to the
Administrative Agent for the account of the Borrower at the
Administrative Agent's Office, by 2:00 P.M. (Charlotte, North
Carolina time), on such date of Bid Borrowing, in funds
immediately available to the Administrative Agent for the
account of the Borrower at the Administrative Agent's Office.
(iii) Promptly following each Bid Borrowing, the
Administrative Agent shall notify each Bank of ranges of
Competitive Bids submitted and the highest and lowest
Competitive Bids accepted for each Interest Period requested
by the Borrower and the aggregate amount borrowed pursuant to
such Bid Borrowing.
(iv) From time to time, the Borrower and Banks shall
furnish such information to the Administrative Agent as the
Administrative Agent may request relating to the making of Bid
Loans, including the amounts, interest rates, dates of
borrowings and maturities thereof, for purposes of the
allocation of amounts received from the Borrower for payment
of all amounts owing hereunder.
(h) If, on or prior to the proposed date of Borrowing the
Revolving Commitments have not been terminated and if, on such proposed
date of Borrowing all applicable conditions to funding referenced in
Sections 5.3, 5.4 and 11 are satisfied, the Banks whose Competitive
Bids the Borrower has accepted will fund each Bid Loan so accepted.
Nothing in this Section 2.4 shall be construed as a right of first
offer in favor of the Banks or to otherwise limit the ability of the
Borrower to request and accept credit facilities from any Person
(including any of the Banks); provided that no Default would otherwise
arise or exist as a result of the Borrower executing, delivering or
performing under such credit facilities. If requested by a Bank making
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a Bid Loan, the Borrower shall furnish to such Bank an appropriately
completed Bid Note, payable to the order of such Bank evidencing such
Bank's Bid Loan(s).
SECTION 2.5 Types of Loans. The Loans shall be denominated as Base Rate
Loans, Eurodollar Rate Loans and Absolute Rate Loans (each being herein called a
"Type" of Loan), as the Borrower shall specify in the related Notice of
Borrowing, Notice of Continuation/Conversion or Competitive Bid Request.
Committed Loans and Bid Loans may be outstanding at the same time, provided that
(a) in the case of Committed Loans and Bid Loans outstanding, not more than
fifteen (15) different Interest Periods shall be outstanding at any one time for
all such Loans, and (b) the Borrower shall specify Types of Loans and Interest
Periods such that no payment or prepayment of any principal on any Loan shall
result in an interruption of any Interest Period.
SECTION 2.6 Funding Reliance for Committed Borrowings. Unless the
Administrative Agent shall have been notified in writing by any Bank prior to a
Borrowing that such Bank will not make available to the Administrative Agent the
amount which would constitute its Percentage of the related Committed Borrowing,
the Administrative Agent may assume that such Bank is making such amount
available to the Administrative Agent and the Administrative Agent may, in
reliance upon such assumption, make available to the Borrower a corresponding
amount. If such corresponding amount is not in fact made available to the
Administrative Agent, the Administrative Agent shall be able to recover such
corresponding amount from such Bank. If such Bank does not pay such
corresponding amount forthwith upon the Administrative Agent's demand therefor,
the Administrative Agent will promptly notify the Borrower, and the Borrower
shall immediately pay such corresponding amount to the Administrative Agent. The
Administrative Agent shall also be entitled to recover from the Bank or the
Borrower, as the case may be, interest on such corresponding amount in respect
of each day from the date such corresponding amount was made available by the
Administrative Agent to the Borrower to the date such corresponding amount is
recovered by the Administrative Agent at a per annum rate equal to (i) from the
Borrower at the applicable rate for such Committed Loan pursuant to the Notice
of Borrowing and (ii) from a Bank at the Federal Funds Effective Rate.
SECTION 2.7 Conversion and Continuation Elections for Committed
Borrowings.
(a) As to any Loans comprising a Committed Borrowing, the
Borrower may, upon irrevocable written notice to the Administrative
Agent in accordance with Section 2.7(b):
(i) elect, as of any Business Day, in the case of
Base Rate Loans, or as of the last day of the applicable
Interest Period, in the case of Eurodollar Rate Committed
Loans, to convert any such Loans (or any part thereof in an
amount not less than $3,000,000, or
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that is in an integral multiple of $1,000,000 in excess
thereof) into any other Type of Committed Loans; or
(ii) elect, as of the last day of the applicable
Interest Period, to continue any Eurodollar Rate Committed
Loans having Interest Periods expiring on such day (or any
part thereof in an amount not less than $3,000,000, or that is
in an integral multiple of $1,000,000 in excess thereof);
provided, that if at any time the aggregate amount of Eurodollar Rate
Committed Loans in respect of any Borrowing is reduced, by payment,
prepayment, or conversion of part thereof to be less than $3,000,000,
such Eurodollar Rate Committed Loans shall automatically convert into
Base Rate Loans, and on and after such date the right of the Borrower
to continue such Loans as, and convert such Loans into, Eurodollar Rate
Committed Loans, as the case may be, shall terminate.
(b) The Borrower shall deliver a Notice of
Conversion/Continuation to be received by the Administrative Agent not
later than 11:00 A.M. (Charlotte, North Carolina time) at least (i)
three Business Days in advance of the Conversion/Continuation Date, if
the Committed Loans are to be converted into or continued as Eurodollar
Rate Committed Loans; and (ii) one Business Day in advance of the
Conversion/Continuation Date, if the Committed Loans are to be
converted into Base Rate Loans, specifying:
(A) the proposed Conversion/Continuation Date;
(B) the aggregate amount of Committed Loans to be
converted or continued;
(C) the Type of Committed Loans resulting from the
proposed conversion or continuation; and
(D) in the case of conversions into or continuations
of Eurodollar Rate Committed Loans, the duration of the
requested Interest Period.
(c) If upon the expiration of any Interest Period applicable
to Eurodollar Rate Committed Loans, the Borrower has failed to select
timely a new Interest Period to be applicable to such Eurodollar Rate
Committed Loans or if any Default then exists, the Borrower shall be
deemed to have elected to convert such Eurodollar Rate Committed Loans
into Base Rate Loans effective as of the expiration date of such
Interest Period.
(d) The Administrative Agent will promptly notify each Bank of
its receipt of a Notice of Conversion/Continuation, or, if no timely
notice is provided by the Borrower, the Administrative Agent will
promptly notify each Bank of the
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details of any automatic conversion. All conversions and continuations
shall be made ratably according to the respective outstanding principal
amounts of the Committed Loans with respect to which the notice was
given held by each Bank.
(e) Unless the Required Banks otherwise agree, during the
existence of a Default, the Borrower may not elect to have a Committed
Loan converted into or continued as a Eurodollar Rate Committed Loan.
(f) After giving effect to any conversion or continuation of
Committed Loans, there may not be more than fifteen (15) different
Interest Periods in effect for all Loans (including Bid Loans then
outstanding) hereunder.
SECTION 2.8 Repayment of Loans.
(a) Committed Loans. Subject to the provisions of Sections
4.1 and 4.3, the Committed Loans of each Bank shall be payable in full
(and the Borrower agrees to pay such Committed Loans) on the
Termination Date.
(b) Bid Loans. Subject to the provisions of Sections 4.1 and
4.3, each Bid Loan shall be payable in full (and the Borrower agrees to
pay such Bid Loan) on the last day of the relevant Interest Period for
such Bid Loan.
SECTION 2.9 Loan Accounts; Record Keeping.
(a) The Loans made by each Bank shall be evidenced by one or
more loan accounts or records maintained by such Bank in the ordinary
course of business and the Administrative Agent. The loan accounts or
records maintained by the Administrative Agent and each Bank shall be
conclusive absent manifest error of the amount of the Loans made by the
Banks to the Borrower and the interest and payments thereon; provided,
that in the event of a conflict between information recorded by the
Administrative Agent and any Bank as to such Bank's Loans, the records
of the Administrative Agent absent manifest error shall control. Any
failure to so record or any error in doing so shall not, however, limit
or otherwise affect the obligations of the Borrower hereunder or to pay
any amount owing with respect to the Loans.
(b) Upon the request of any Bank made through the
Administrative Agent, the Committed Loans made by such Bank may be
evidenced by one or more Committed Notes and the Bid Loans made by such
Bank may be evidenced by one or more Bid Notes, instead of or in
addition to loan accounts. Each such Bank shall endorse on the
schedules annexed to its Note(s) the date, amount and maturity of each
Loan made by it and the amount of each payment of principal made by the
Borrower with respect thereto. Each such Bank is
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irrevocably authorized by the Borrower to endorse its Note(s) and each
Bank's record shall be conclusive absent manifest error; provided,
however, that the failure of a Bank to make, or an error in making, a
notation thereon with respect to any Loan shall not limit or otherwise
affect the obligations of the Borrower hereunder or under any such Note
to such Bank.
SECTION 2.10 Swingline Loans.
(a) Swingline Commitment. Subject to the terms and conditions
hereof and in reliance upon the representations and warranties herein
set forth, the Swingline Lender, in its individual capacity, agrees to
make certain revolving credit loans requested by the Borrower in
Dollars to the Borrower (each a "Swingline Loan" and, collectively, the
"Swingline Loans") from time to time from the Closing Date until the
Termination Date for the purposes hereinafter set forth; provided,
however, (i) the aggregate principal amount of Swingline Loans
outstanding at any time shall not exceed $50,000,000 (the "Swingline
Committed Amount"), and (ii) the aggregate principal amount of
outstanding Committed Loans plus the aggregate principal amount of
outstanding Bid Loans plus the aggregate principal amount of
outstanding Swingline Loans plus the Borrower's aggregate outstanding
commercial paper shall not exceed the aggregate Revolving Commitments.
Swingline Loans hereunder shall be made as Base Rate Loans or Adjusted
CD Rate Loans as the Borrower may request in accordance with the
provisions of this Section 2.10, and may be repaid and reborrowed in
accordance with the provisions hereof.
(b) Swingline Loan Advances.
(i) Notices; Disbursement. Whenever the Borrower
desires a Swingline Loan advance hereunder it shall give
written notice (or telephonic notice promptly confirmed in
writing) to the Swingline Lender not later than 12:00 Noon
(Charlotte, North Carolina time) on the Business Day of the
requested Swingline Loan advance. Each such notice shall be
irrevocable and shall specify (A) that a Swingline Loan
advance is requested, (B) the date of the requested Swingline
Loan advance (which shall be a Business Day) and (C) the
principal amount of the Swingline Loan advance requested. Each
Swingline Loan shall be made as a Base Rate Loan or an
Adjusted CD Rate Loan and shall have such maturity date as the
Swingline Lender and the Borrower shall agree upon receipt by
the Swingline Lender of any such notice from the Borrower,
such maturity date not to exceed seven (7) Business Days from
the making of such Swingline Loan. The Swingline Lender shall
initiate the transfer of funds representing the Swingline Loan
advance to the Borrower by 3:00 P.M. (Charlotte, North
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Carolina time) on the Business Day of the requested borrowing.
(ii) Minimum Amounts. Each Swingline Loan advance shall
be in a minimum principal amount of $1,000,000 and in integral
multiples of $500,000 in excess thereof (or the remaining
amount of the Swingline Committed Amount, if less).
(iii) Repayment of Swingline Loans. The principal amount
of all Swingline Loans shall be due and payable on the earlier
of (A) the maturity date agreed to by the Swingline Lender and
the Borrower with respect to such Loan (which maturity date
shall not be a date more than seven (7) Business Days from the
date of advance thereof) or (B) the Termination Date. The
Swingline Lender may, at any time, in its sole discretion, by
written notice to the Borrower and the Banks, demand repayment
of its Swingline Loans by way of a Committed Loan advance, in
which case the Borrower shall be deemed to have requested a
Committed Loan advance comprised solely of Base Rate Loans in
the amount of such Swingline Loans; provided, however, that
any such demand shall be deemed to have been given one
Business Day prior to the Termination Date and on the date of
the occurrence of any Event of Default described in Section
12.1 and upon acceleration of the indebtedness hereunder and
the exercise of remedies in accordance with the provisions of
Section 12.2. Each Bank hereby irrevocably agrees to make its
Percentage share of each such Committed Loan in the amount, in
the manner and on the date specified in the preceding sentence
notwithstanding (I) the amount of such borrowing may not
comply with the minimum amount for advances of Committed Loans
otherwise required hereunder, (II) whether any conditions
specified in Section 11.3 are then satisfied, (III) whether a
Default then exists, (IV) failure of any such request or
deemed request for a Committed Loan to be made by the time
otherwise required hereunder, (V) whether the date of such
borrowing is a date on which Committed Loans are otherwise
permitted to be made hereunder or (VI) any termination of the
Revolving Commitments relating thereto immediately prior to or
contemporaneously with such borrowing. In the event that any
Committed Loan cannot for any reason be made on the date
otherwise required above (including, without limitation, as a
result of the commencement of a proceeding under the
Bankruptcy Code with respect to the Borrower), then each Bank
hereby agrees that it shall forthwith purchase (as of the date
such borrowing would otherwise have occurred, but adjusted for
any payments received from the Borrower on or after such date
and prior to such purchase) from the Swingline Lender such
participations in the outstanding Swingline Loans as
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shall be necessary to cause each such Bank to share in such
Swingline Loans ratably based upon its Percentage of the
Commitments (determined before giving effect to any
termination of the Commitments pursuant to Section 4.1),
provided that (A) all interest payable on the Swingline Loans
shall be for the account of the Swingline Lender until the
date as of which the respective Participation Interest is
purchased and (B) at the time any purchase of Participation
Interests pursuant to this sentence is actually made, the
purchasing Bank shall be required to pay to the Swingline
Lender, to the extent not paid to the Swingline Lender by the
Borrower in accordance with the terms of this clause (iii),
interest on the principal amount of the Participation Interest
purchased for each day from and including the day upon which
such borrowing would otherwise have occurred to but excluding
the date of payment for such Participation Interest, at the
rate equal to the Federal Funds Effective Rate.
(c) Swingline Note. The Swingline Loans shall be evidenced by
a duly executed promissory note of the Borrower to the Swingline Lender
in an original principal amount equal to the Swingline Committed Amount
substantially in the form of Exhibit H.
SECTION 3. INTEREST AND FEES, ETC.
SECTION 3.1 Interest Rates. (a) With respect to each Committed Loan,
the Borrower hereby promises to pay interest on the unpaid principal amount
thereof for the period commencing on the Borrowing Date of such Loan until such
Loan is paid in full, as follows:
(i) At all times while such Loan or any portion
thereof is a Base Rate Loan, at a rate per annum equal to the
Base Rate from time to time in effect.
(ii) At all times while such Loan or any portion
thereof is a Eurodollar Rate Committed Loan, at a rate per
annum equal to the Eurodollar Rate from time to time in effect
plus the Eurodollar Rate Committed Margin (as hereinafter
defined).
(iii) For purposes hereof, the Eurodollar Rate
Committed Margin (the "Eurodollar Rate Committed Margin")
shall be determined based on the higher of the then current
rating of the Borrower's Senior Notes by Standard & Poor's and
Duff & Phelps as follows:
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Eurodollar Rate
Committed Margin
----------------
Standard & Poor's: A
Duff & Phelps: A
or above .225%
Standard & Poor's: A-
Duff & Phelps: A- .275%
Standard & Poor's: BBB+
Duff & Phelps: BBB+ .350%
Standard & Poor's: BBB
Duff & Phelps: BBB .375%
Standard & Poor's: BBB-
Duff & Phelps: BBB- .475%
Standard & Poor's: BB+
Duff & Phelps: BB+
or below .75%
provided, however, in the event of a split by Standard & Poor's and Duff &
Phelps of more than one rating level, the Eurodollar Rate Committed Margin will
be based on the level one rating below the highest level of the two split
levels. If the Debt to Total Capitalization Ratio shall, as of the end of any
Fiscal Quarter occurring on or after December 31, 1997, be greater than or equal
to 35% for the applicable Calculation Period, then each of the foregoing
percentages will be increased by 0.125% effective on such date; provided,
however, if subsequent to any such increase, the Debt to Total Capitalization
Ratio shall, as of the end of any Fiscal Quarter, be less than 35% for the
applicable Calculation Period, such 0.125% increase shall be eliminated. Any
adjustment in the Eurodollar Rate Committed Margin as a result of a change in
the rating of the Borrower's Senior Notes by Standard & Poor's and/or Duff &
Phelps shall be effective as of the effective date of the change in such rating;
provided that, in no event will the Eurodollar Rate Committed Margin be reduced
at any time when a Default has occurred and is continuing.
(b) With respect to each Bid Loan, the Borrower hereby
promises to pay interest on the unpaid principal amount thereof for the
period commencing on the Borrowing Date of such Loan until such Loan is
paid in full at a rate per annum equal to the Eurodollar Rate plus the
Eurodollar Rate Bid Margin, or the Absolute Rate, as the case may be.
(c) With respect to each Swingline Loan, the Borrower hereby
promises to pay interest on the unpaid principal amount thereof for the
period commencing on the Borrowing Date of such Loan until such Loan is
paid in full at a rate
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per annum equal to the Base Rate or the Adjusted CD Rate, as the case
may be.
Notwithstanding any other provision to the contrary set forth in this Credit
Agreement, in the event that the principal amount of any Adjusted CD Rate Loan
is not repaid on the last day of the Interest Period for such Loan, then such
Loan shall be automatically converted into a Base Rate Loan at the end of such
Interest Period.
SECTION 3.2 Default Interest Rate. Notwithstanding the provisions of
Section 3.1, in the event that any Default under Section 12.1.3 or any Event of
Default shall occur, the Borrower hereby promises to pay, automatically in the
case of a Default under Section 12.1.3 or upon demand therefor by the
Administrative Agent for any Event of Default, interest on the unpaid principal
amount of the Loans (and interest thereon to the extent permitted by law) for
the period commencing on the date of such Default or demand until such Loans are
paid in full or such Default or Event of Default is cured or waived in
accordance with Sections 12.2 and 15.1 at a rate per annum equal to the Base
Rate from time to time in effect (but not less than the Base Rate as at such
date of demand), plus the Eurodollar Rate Committed Margin then in effect, plus
two percent (2%) per annum.
SECTION 3.3 Interest Payment Dates. Interest on each Loan shall be paid
in arrears on each Interest Payment Date. Interest shall also be paid on the
date of any prepayment of Loans under Section 4.1 or Section 4.3 for the portion
of the Loans so prepaid and upon payment (including prepayment) in full thereof
and during the existence of any Event of Default, interest shall be paid on
demand of the Administrative Agent at the request or with the consent of the
Required Banks. After maturity, accrued interest on the Loans shall be payable
on demand.
SECTION 3.4 Setting and Notice of Rates. The applicable Eurodollar Rate
shall be determined by the Administrative Agent. Each determination of the
applicable Eurodollar Rate shall be conclusive and binding upon the parties
hereto, in the absence of demonstrable error. If the Administrative Agent is
unable to determine such a rate, the provisions of Section 5.3 shall apply. The
Administrative Agent shall, upon written request of the Borrower or any Bank,
deliver to the Borrower or such Bank a statement showing the computations used
by the Administrative Agent in determining any applicable Eurodollar Rate
hereunder.
SECTION 3.5 Computation of Fees and Interest. Fees and interest on
Eurodollar Rate Loans and Absolute Rate Loans shall be computed for the actual
number of days elapsed on the basis of a 360-day year, and interest on Base Rate
Loans and Adjusted CD Rate Loans shall be computed for the actual number of days
elapsed on the basis of a 365-day year. Each determination of an interest rate
by the Administrative Agent shall be conclusive and
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binding on the Borrower and the Banks in the absence of manifest error.
SECTION 3.6 Fees. The Borrower agrees to pay the following fees (all
such fees being nonrefundable):
(a) The Borrower agrees to pay the fees set forth in the Fee Letter for
the sole benefit of the Arranger and the Administrative Agent; and
(b) Without duplication, the Borrower agrees to pay to the
Administrative Agent, for the benefit of the Banks (other than a
Defaulting Bank) ratably according to their respective Percentage, a
non-use fee on the average daily unused Revolving Commitments (without
regard to any Bid Loans or Swingline Loans then outstanding), payable
quarterly in arrears on the last Business Day of each Fiscal Quarter
(commencing with the first such date occurring after the Closing Date for
the period from the Closing Date through and including such date) and on
the Termination Date at a rate per annum equal to an amount determined
based on the higher of the then current rating of the Senior Notes by
Standard & Poor's and Duff & Phelps as follows:
Non-Use Fee Rate
----------------
Standard & Poor's: A
Duff & Phelps: A
or above .08%
Standard & Poor's: A-
Duff & Phelps: A- .10%
Standard & Poor's: BBB+
Duff & Phelps: BBB+ .125%
Standard & Poor's: BBB
Duff & Phelps: BBB .125%
Standard & Poor's: BBB-
Duff & Phelps: BBB- .175%
Standard & Poor's: BB+
Duff & Phelps: BB+
or below .25%
provided, however, in the event of a split by Standard & Poor's and Duff &
Phelps of more than one rating level, the applicable non-use rate will be based
on the level one rating below the highest level of the two split levels. Any
adjustment in the non-use fee set forth in this clause (b) as a result of a
change in the rating of the Borrower's Senior Notes by Standard & Poor's and/or
Duff & Phelps shall be effective as of the effective date of the change in such
rating.
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SECTION 4. PAYMENTS AND PREPAYMENTS
SECTION 4.1 Voluntary Termination or Reduction of Revolving
Commitments. Subject to Section 5.5, the Borrower may, upon not less than five
(5) Business Days' irrevocable prior written notice to the Administrative Agent
(which shall promptly advise each Bank thereof), terminate the Revolving
Commitments or permanently reduce the Revolving Commitments by an aggregate
minimum amount of $5,000,000 or any integral multiple of $1,000,000 in excess
thereof; unless, after giving effect thereto and to any prepayments of Committed
Loans made on the effective date thereof, the then outstanding principal amount
of the Loans would exceed the amount of the aggregate Revolving Commitments then
in effect (less the Borrower's aggregate outstanding commercial paper). Once
reduced in accordance with this Section, the Revolving Commitments, to the
extent terminated or permanently reduced, may not be increased. Any reduction of
the Revolving Commitments shall be applied to each Bank's Revolving Commitment,
pro rata, according to its Percentage.
SECTION 4.2 Optional Prepayments. Subject to Section 5.5, the Borrower
may, at any time or from time to time, upon not less than (a) three (3) Business
Days', irrevocable written notice with respect to Eurodollar Rate Loans and (b)
one (1) Business Day's irrevocable written notice with respect to Base Rate
Loans, Adjusted CD Rate Loans or Absolute Rate Loans, to the Administrative
Agent by 11:00 A.M. (Charlotte, North Carolina time), ratably prepay such Loans
in whole or in part, in minimum amounts of $3,000,000 or any integral multiple
of $1,000,000 in excess thereof. Such notice of prepayment shall specify the
date and amount of such prepayment and the Type(s) of Loans to be prepaid. The
Administrative Agent will, in the case of Committed Loans, promptly notify each
Bank of its receipt of any such notice, and of such Bank's Percentage of such
prepayment, and, in the case of Bid Loans, promptly notify the applicable Bid
Loan Bank of its receipt of such notice. If such notice is given by the
Borrower, the Borrower shall make such prepayment and the payment amount
specified in such notice shall be due and payable on the date specified therein,
together with accrued interest to each such date on the amount prepaid and any
amounts required pursuant to Section 5.5.
SECTION 4.3 Mandatory Prepayments. If, on any date, the Borrower or any
of its Subsidiaries shall sell, assign, lease, transfer, contribute, convey,
issue or otherwise dispose of, or grant options, warrants or other rights with
respect to, any of its assets (any of the foregoing being a "Disposition")
consisting of any Significant Subsidiary of the Borrower or a substantial
portion of the assets of such Significant Subsidiary (other than a Disposition
permitted under Section 9.4), the Borrower shall promptly notify the
Administrative Agent of such Disposition, including the amount of Net Proceeds
received by the Borrower or any of its Subsidiaries in respect of such
Disposition (and the amount and other type of consideration so received) and an
amount equal to such Net Proceeds shall be
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promptly applied after the receipt from time to time of such Net Proceeds to
repay the principal amount of the Committed Loans then outstanding (together
with any interest accrued thereon). To the extent the Net Proceeds of any such
Disposition exceed the amount of the Committed Loans then outstanding (together
with any interest accrued thereon), or, at the time of such Disposition, the
Committed Loans shall have been paid in full, such Net Proceeds shall be applied
to repay first, the principal amount of the Bid Loans then outstanding (together
with any interest accrued thereon), second, the principal amount of the
Swingline Loans then outstanding (together with any interest accrued thereon)
and third, to repay any remaining Liabilities.
SECTION 4.4 Payments by the Borrower.
(a) All payments to be made by the Borrower hereunder shall be
made without set-off, recoupment or counterclaim. Except as otherwise
expressly provided herein, all payments by the Borrower shall be made
to the Administrative Agent for the account of the Banks at the
Administrative Agent's Office, and shall be made in Dollars and in
immediately available funds, no later than 1:30 P.M. (Charlotte, North
Carolina time) on the date specified herein. Notwithstanding the
foregoing, in connection with a prepayment required by Section 4.3, the
Borrower may elect to deposit all of the Net Proceeds from a
Disposition into the Cash Collateral Account which funds, together with
any interest accrued thereon, shall be applied to the Committed Loans,
the Bid Loans and the Swingline Loans, as the case may be, by the
Administrative Agent on the first day when such funds may be applied
without the Borrower incurring costs under Section 5.5; provided that
any Net Proceeds held in the Cash Collateral Account shall continue to
accrue interest hereunder (and the Borrower agrees to pay such
interest) at the then applicable interest rate until applied to the
Committed Loans, the Bid Loans and the Swingline Loans, as the case may
be, by the Administrative Agent. The Administrative Agent will promptly
distribute to each Bank its Percentage (or other applicable share as
expressly provided herein) of such payment in like funds as received.
Any payment received by the Administrative Agent later than 1:30 P.M.
(Charlotte, North Carolina time) shall be deemed to have been received
on the following Business Day and any applicable interest or fee shall
continue to accrue.
(b) Subject to the provisions set forth in the definition of
"Interest Period" herein, whenever any payment is due on a day other
than a Business Day, such payment shall be made on the following
Business Day, and such extension of time shall in such case be included
in the computation of interest or fees, as the case may be.
(c) Unless the Administrative Agent receives notice from the
Borrower prior to the date on which any payment is due to the Banks
that the Borrower will not make such
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payment in full as and when required, the Administrative Agent may
assume that the Borrower has made such payment in full to the
Administrative Agent on such date in immediately available funds and
the Administrative Agent may (but shall not be so required), in
reliance upon such assumption, distribute to each Bank on such due date
an amount equal to the amount then due such Bank. If and to the extent
the Borrower has not made such payment in full to the Administrative
Agent, each Bank shall repay to the Administrative Agent on demand such
amount distributed to such Bank, together with interest thereon at the
Federal Funds Effective Rate for each day from the date such amount is
distributed to such Bank until the date repaid.
SECTION 4.5 [intentionally left blank].
SECTION 4.6 Sharing of Payments.
(a) If any Bank shall obtain any payment or other recovery
(whether voluntary, involuntary, by application of offset or otherwise
(other than pursuant to Sections 5.8, 14.1 and 15.2)) on account of the
Committed Loans (other than pursuant to the terms of Section 5) in
excess of its pro rata share (based on its Percentage) of payments and
other recoveries obtained by all Banks of the Committed Loans on
account of principal of and interest on the Committed Loans, such Bank
shall purchase from the other Banks such participation in the Committed
Loans as shall be necessary to cause such purchasing Bank to share the
excess payment or other recovery ratably with each of them; provided,
however, that if all or any portion of the excess payment or other
recovery is thereafter recovered from such purchasing Bank, the
purchase shall be rescinded and each Bank which has sold a
participation to the purchasing Bank shall repay to the purchasing Bank
the purchase price to the ratable extent of such recovery together with
an amount equal to such selling Bank's ratable share (according to the
proportion of (i) the amount of such selling Bank's required repayment
to the purchasing Bank to (ii) the total amount so recovered from the
purchasing Bank) of any interest or other amount paid or payable by the
purchasing Bank in respect of the total amount so recovered.
(b) The Borrower agrees that any Bank so purchasing a
participation from another Bank pursuant to Section 4.6(a) may, to the
fullest extent permitted by law, exercise all its rights of payment
(including pursuant to Section 4.7) with respect to such participation
as fully as if such Bank were the direct creditor of the Borrower in
the amount of such participation. If under any applicable bankruptcy,
insolvency or other similar law, any Bank receives a secured claim in
lieu of a setoff to which this Section applies, such Bank shall, to the
extent practicable, exercise its rights in respect of such secured
claim in a manner consistent with the rights of the Banks entitled
under this
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Section 4.6(b) to share in the benefits of any recovery of such secured
claim.
SECTION 4.7 Setoff. Each Bank shall, upon the occurrence of any Event
of Default under Section 12.1.1, the occurrence of a Default under Section
12.1.3, or, with the consent of the Required Banks, upon the occurrence of any
other Event of Default, have the right to appropriate and apply to the payment
of the Liabilities owing to it (whether or not then due), and (as security for
such Liabilities) the Borrower hereby grants to each Bank a continuing security
interest in, any and all balances, credits, deposits, accounts or moneys of the
Borrower then or thereafter maintained with such Bank. Any such appropriation
and application shall be subject to the provisions of Section 4.6.
Each Bank agrees promptly to notify the Borrower and the Administrative Agent
after any such setoff and application made by such Bank; provided, however, that
the failure to give such notice shall not affect the validity of such setoff and
application. The rights of each Bank under this Section 4.7 are in addition to
other rights and remedies (including other rights of setoff under applicable law
or otherwise) which such Bank may have.
SECTION 4.8 Net Payments. All payments by the Borrower of principal of,
and interest on, the Loans and all other amounts payable hereunder shall be made
free and clear of and without deduction for any present or future income, stamp
or other Taxes, fees, duties, withholdings or other charges of any nature
whatsoever imposed by any taxing authority, other than Taxes imposed on or
measured by any Bank's net income or receipts with respect to payments received
hereunder (such non-excluded items being called "Charges"). In the event that
any withholding or deduction from any payment to be made by the Borrower
hereunder is required in respect of any Charges pursuant to any applicable law,
rule or regulation, then the Borrower will:
(a) pay directly to the relevant authority the full amount required to
be so withheld or deducted;
(b) promptly forward to the Administrative Agent an official receipt or
other documentation satisfactory to the Administrative Agent evidencing such
payment to such authority; and
(c) pay to the Administrative Agent for the account of the Banks such
additional amount or amounts as are necessary to ensure that the net amount
actually received by each Bank will equal the full amount such Bank would have
received had no such withholding or deduction been required.
If any Bank receives a refund in respect of any Taxes as to which it has been
indemnified by the Borrower or with respect to which the Borrower (or any Person
acting on behalf of the Borrower) has paid additional amounts pursuant to this
Section 4.8, it shall promptly repay such refund to the Borrower (but only to
the
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extent of indemnity payments made, or additional amounts paid, by the Borrower
(or such Person acting on behalf of the Borrower) under this Section 4.8 with
respect to the Taxes giving rise to such refund), net of all out-of-pocket
expenses of such Bank or the Administrative Agent, as the case may be; provided,
that the Borrower, upon the request of such Bank or the Administrative Agent,
agrees to return such refund (together with any penalties, interest or other
charges due in connection therewith to the appropriate taxing authority or other
Governmental Authority) to such Bank or the Administrative Agent in the event
such Bank or the Administrative Agent is required to pay or to return such
refund to the relevant taxing authority or other Governmental Authority.
Each Bank that is organized under the laws of a jurisdiction other than the
United States or any state thereof shall, prior to the due date of any payments
under the Loans, execute and deliver to the Borrower, on or about the first
scheduled payment date in each calendar year, a United States Internal Revenue
Service Form 4224 or Form 1001, as may be applicable (or any successor form),
appropriately completed. Without prejudice to the survival of any other
agreement of the Borrower hereunder or any other document, the agreements of the
Borrower contained in this Section shall survive satisfaction of the Liabilities
and termination of this Agreement.
SECTION 4.9 Mandatory Reduction in the Revolving Commitments. Each
repayment or prepayment of the Committed Loans required pursuant to Section 4.1
or 4.3 shall concurrently, permanently and automatically ratably reduce the
Revolving Commitments by the amount of such repayment or prepayment. If on any
date the aggregate principal amount of the Committed Loans, plus the Bid Loans,
plus the Swingline Loans, plus the Borrower's aggregate outstanding commercial
paper exceeds the Revolving Commitments the Borrower shall repay on such date
first, any such Swingline Loans, second, any such Committed Loans and last, any
such Bid Loans (including interest accrued thereon) in an amount equal to such
excess.
SECTION 5. CHANGES IN CIRCUMSTANCES
SECTION 5.1 Increased Costs. If (a) Regulation D, or (b) after the
Closing Date, the adoption of any applicable law, rule or regulation, or any
change therein, or any change in the interpretation or administration thereof by
any governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Bank (or any
Lending Office of such Bank) with any request or directive (whether or not
having the force of law) of any such authority, central bank or comparable
agency,
(i) shall subject any Bank (other than a Defaulting Bank) (or
any Lending Office of such Bank) to any tax, duty or other charge with
respect to its Eurodollar Rate Loans, or its obligation to make
Eurodollar Rate Loans or shall
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change the basis of taxation of payments to any Bank (other than a
Defaulting Bank) of the principal of, or interest on, its Eurodollar
Rate Loans or any other amounts due under this Agreement in respect of
its Eurodollar Rate Loans or its obligation to make Eurodollar Rate
Loans (except for changes in the rate of Tax, other than Taxes covered
by Section 4.8, on the overall gross or net income of such Bank or its
Lending Office); or
(ii) shall impose, modify or deem applicable any reserve
(including, without limitation, any reserve imposed by the FRB, but
excluding any reserve included in the determination of interest rates
pursuant to Section 3), special deposit or similar requirement against
assets of, deposits with or for the account of, or credit extended by,
any Bank (other than a Defaulting Bank) (or any Lending Office of such
Bank); or
(iii) shall impose on any Bank (other than a Defaulting Bank)
(or its Lending Office) any other condition affecting its Eurodollar
Rate Loans;
and the result of any of the foregoing is to increase the cost to (or in the
case of Regulation D referred to above, to impose a cost on) such Bank (or any
Lending Office of such Bank) of making or maintaining any Eurodollar Rate Loan
or to reduce the amount of any sum received or receivable by such Bank (or the
Lending Office of such Bank) under this Agreement or under its Loans with
respect thereto, then within thirty (30) days after demand by such Bank (which
demand shall be accompanied by a statement setting forth in reasonable detail
the basis of such demand and the calculation of such additional amount), the
Borrower shall pay directly to such Bank such additional amount or amounts as
will compensate such Bank for such increased cost or such reduction. Each Bank
shall promptly, but in no event more than ninety (90) days after it has
knowledge thereof, notify the Borrower of any event occurring after the date
hereof, which will entitle such Bank to compensation pursuant to this Section
5.1.
SECTION 5.2 Change in Rate of Return. If any change in, or the
introduction, adoption, effectiveness, interpretation, reinterpretation or
phase-in of, any law or regulation, directive, guideline, decision or request
(whether or not having the force of law) of any court, central bank, regulator
or other Governmental Authority affects or would affect the amount of capital
required or expected to be maintained by any Bank (other than a Defaulting Bank)
or any Person controlling such Bank, and such Bank reasonably determines that
the rate of return on its or such controlling Person's capital as a consequence
of the Loans made by such Bank (or any participating interest therein held by
such Bank) is reduced to a level below that which such Bank or such controlling
Person could have achieved but for the occurrence of any such circumstance,
then, in any such case the Borrower shall, within thirty (30) days after written
demand by such Bank to the Borrower, pay directly to such Bank additional
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amounts sufficient to compensate such Bank or such controlling Person for such
reduction in rate of return. A statement of such Bank as to any such additional
amount or amounts (including calculations thereof in reasonable detail) shall,
in the absence of manifest error, be conclusive and binding on the Borrower. In
determining such amount, such Bank may use any method of averaging and
attribution that it shall deem reasonably applicable. Each Bank shall promptly,
but in no event more than ninety (90) days after it has knowledge thereof,
notify the Borrower of any event occurring after the Closing Date, which will
entitle such Bank to compensation pursuant to this Section 5.2.
SECTION 5.3 Basis for Determining Interest Rate Inadequate or
Unfair. If with respect to any Interest Period:
(a) deposits in Dollars (in the applicable amounts) are not
being offered to the Administrative Agent in the interbank eurodollar
market for such Interest Period, or the Administrative Agent otherwise
determines (which determination shall be conclusive and binding on all
parties) that by reason of circumstances affecting the interbank
eurodollar market adequate and reasonable means do not exist for
ascertaining the applicable Eurodollar Rate; or
(b) any Bank advises the Administrative Agent that the
Eurodollar Rate as determined by the Administrative Agent, will not
adequately and fairly reflect the cost to such Bank of maintaining or
funding any Eurodollar Rate Loan for such Interest Period, or that the
making or funding of Eurodollar Rate Loans has become impracticable as
a result of an event occurring after the Closing Date which in the
opinion of such Bank materially changes such Loans;
then, so long as such circumstances shall continue:
(i) the Administrative Agent shall promptly notify the
Borrower and the Banks thereof,
(ii) no Bank shall be under any obligation to make or continue
or convert into Eurodollar Rate Committed Loans or make Eurodollar Rate
Bid Loans so affected, and
(iii) on the last day of the then current Interest Period for
Eurodollar Rate Committed Loans so affected, such Eurodollar Rate
Committed Loans shall, unless then repaid in full, automatically
convert to Base Rate Loans.
Notwithstanding the foregoing, the Administrative Agent and each Bank shall take
any reasonable actions available to it (including designation of a different
Lending Office), consistent with legal and regulatory restrictions, that will
avoid the need to take the steps described in this Section 5.3, which will not,
in the reasonable judgment of the Administrative Agent or such Bank, be
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materially disadvantageous to the Administrative Agent, such Bank, or the
Borrower as compared to the steps described in this Section 5.3.
SECTION 5.4 Changes in Law Rendering Certain Loans Unlawful. In the
event that any change in (including the adoption of any new) applicable laws or
regulations, or any change in the interpretation of applicable laws or
regulations by any governmental or other regulatory body charged with the
administration thereof, should make it unlawful for a Bank or the Lending Office
of such Bank ("Affected Bank") to make, maintain or fund Eurodollar Rate Loans,
then (a) the Affected Bank shall promptly notify each of the other parties
hereto, (b) the obligation of all Banks to make or continue or convert into
Eurodollar Rate Committed Loans or make Eurodollar Rate Bid Loans made unlawful
for the Affected Bank shall, upon the effectiveness of such event, be suspended
for the duration of such unlawfulness, and (c) on the last day of the current
Interest Period for Eurodollar Rate Loans (or, in any event, if the Affected
Bank so requests, on such earlier date as may be required by the relevant law,
regulation or interpretation), the Eurodollar Rate Committed Loans shall, unless
then repaid in full, automatically convert to Base Rate Loans and the Eurodollar
Rate Bid Loans shall be prepaid. Notwithstanding the foregoing, the
Administrative Agent and each Bank shall take any reasonable actions available
to it (including designation of a different Lending Office), consistent with
legal and regulatory restrictions, that will avoid the need to take the steps
described in this Section 5.4, which will not, in the reasonable judgment of the
Administrative Agent or such Bank, be materially disadvantageous to the
Administrative Agent or the Affected Bank, or the Borrower as compared to the
steps described in this Section 5.4.
SECTION 5.5 Funding Losses. The Borrower hereby agrees that upon demand
by any Bank to the Administrative Agent (which demand shall be made within three
(3) Business Days after receipt of notice of any payment or proposed payment by
the Borrower under this Agreement giving rise to indemnification under this
Section 5.5 and shall be accompanied by a statement setting forth in reasonable
detail using the methodology set forth in Exhibit I with respect to Eurodollar
Rate Loans and by a methodology reasonably determined by such Bank with respect
to Absolute Rate Loans), the Borrower will indemnify such Bank against any loss
or expense which such Bank may sustain or incur (including, without limitation,
any loss incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by such Bank to fund or maintain Eurodollar Rate Loans, but
excluding specifically any administrative fee or other amount chargeable by such
Bank for the calculation of such loss), as reasonably determined by such Bank,
as a result of (a) any payment or prepayment or conversion of any Eurodollar
Rate Loans or Absolute Rate Loans of such Bank on a date other than the last day
of an Interest Period for such Eurodollar Rate Loan or Absolute Rate Loan, or
(b) any failure of the Borrower to borrow on the date of
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any Borrowing set forth in any Notice of Borrowing or Competitive Bid Request
(after acceptance of Competitive Bids by the Borrower) or (c) any failure of the
Borrower to convert or continue any portion of the Committed Loans on a date
specified therefor in the Notice of Continuation/Conversion delivered pursuant
to this Agreement. For this purpose, all notices to the Administrative Agent
pursuant to this Agreement shall be deemed to be irrevocable.
SECTION 5.6 Right of Banks to Fund Through Other Offices. Each Bank
may, if it so elects, fulfill its commitment as to any Eurodollar Rate Loans by
causing any of its Lending Offices to make such Eurodollar Rate Loans; provided,
that in such event for the purposes of this Agreement, such Loan shall be deemed
to have been made by such Bank and the obligation of the Borrower to repay such
Eurodollar Rate Loan shall nevertheless be to such Bank and shall be deemed held
by it, to the extent of such Eurodollar Rate Loan, for the account of such
branch or affiliate.
SECTION 5.7 Discretion of Banks as to Manner of Funding.
Notwithstanding any provision of this Agreement to the contrary, each Bank shall
be entitled to fund and maintain its funding of all or any part of its Loans in
any manner it sees fit, it being understood, however, that for the purposes of
this Agreement all determinations hereunder shall be made as if such Bank had
actually funded and maintained each Eurodollar Rate Loan during each Interest
Period for such Loan through the purchase of deposits having a maturity
corresponding to such Interest Period and bearing an interest rate equal to the
Eurodollar Rate, as the case may be, for such Interest Period.
SECTION 5.8 Replacement of Banks. If any Bank shall become affected by
any of the changes or events described in Section 5.1, 5.2 or 5.4 (any such Bank
being hereinafter referred to as a "Replaced Bank") and shall petition the
Borrower for any increased cost or amounts thereunder, then in such case, the
Borrower may, upon at least five (5) Business Days' notice to the Administrative
Agent and such Replaced Bank, designate a replacement lender (a "Replacement
Bank") acceptable to the Administrative Agent in its reasonable discretion, to
which such Replaced Bank shall, subject to its receipt (unless a later date for
the remittance thereof shall be agreed upon by the Borrower and the Replaced
Bank) of all amounts owed to such Replaced Bank under Section 5.1 or 5.2, assign
all (but not less than all) of its rights, obligations, Loans and Revolving
Commitment hereunder; provided, that all Liabilities (except Liabilities which
by the terms hereof survive the payment in full of the Loans and termination of
this Agreement) due and payable to the Replaced Bank shall be paid in full as of
the date of such assignment. Upon any assignment by any Bank pursuant to this
Section 5.8 becoming effective, the Replacement Bank shall thereupon be deemed
to be a "Bank" for all purposes of this Agreement and such Replaced Bank shall
thereupon cease to be a "Bank" for all purposes of this Agreement and shall have
no
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further rights or obligations hereunder (other than pursuant to Sections 5.1,
5.2, 15.4 and 15.5 while such Replaced Bank was a Bank).
Notwithstanding any Replaced Bank's failure or refusal to assign its rights,
obligations, Loans and Revolving Commitment under this Section 5.8, the Replaced
Bank shall cease to be a "Bank" for all purposes of this Agreement and the
Replacement Bank substituted therefor upon payment to the Replaced Bank by the
Replacement Bank of all amounts set forth in this Section 5.8 without any
further action of the Replaced Bank.
SECTION 5.9 Conclusiveness of Statements; Survival of Provisions.
Determinations and statements of the Administrative Agent or any Bank pursuant
to Section 5.1 through Section 5.5 shall be conclusive absent demonstrable
error. The provisions of Sections 5.1, 5.2, 5.4, 5.5 and this Section 5.9 shall
survive termination of this Agreement.
SECTION 6. [intentionally left blank].
SECTION 7. REPRESENTATIONS AND WARRANTIES
To induce the Administrative Agent and the Banks to enter into this
Agreement and to make the Loans hereunder, the Borrower represents and warrants
to the Administrative Agent and to each of the Banks that:
SECTION 7.1 Organization, etc. The Borrower and each of its
Subsidiaries is a corporation or partnership duly organized, validly existing
and in good standing under the laws of the state of its incorporation or
formation, each of the Borrower and its Subsidiaries is duly qualified to
transact business and in good standing as a foreign corporation or partnership
authorized to do business in each jurisdiction where the nature of its business
makes such qualification necessary and failure to so qualify could reasonably be
expected to have a Material Adverse Effect, and each of the Borrower and its
Subsidiaries has the power and authority to own or lease its property and
conduct its business as presently conducted.
SECTION 7.2 Authorization. The Borrower (a) has the power to execute,
deliver and perform this Agreement and the other Loan Documents to which it is a
party, and (b) has taken all necessary action to authorize the execution,
delivery and performance by it of this Agreement and the other Loan Documents to
which it is a party.
SECTION 7.3 No Conflict. The execution, delivery and performance by the
Borrower of this Agreement and the other Loan Documents to which it is a party
did not, does not and will not (a) contravene or conflict with any provision of
any law, statute, rule or regulation, the contravention of which could
reasonably be expected to have a Material Adverse Effect, (b) contravene or
conflict with, result in any breach of, or
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constitute a default under, any agreement or instrument binding on the Borrower
or any of its Subsidiaries (including, without limitation, any writ, judgment,
injunction or other similar court order), the contravention of which could
reasonably be expected to have a Material Adverse Effect, (c) result in the
creation or imposition of or the obligation to create or impose any Lien (except
for Permitted Liens) upon any of the property or assets of the Borrower or any
of its Subsidiaries or (d) contravene or conflict with any provision of the
articles of incorporation or by-laws of the Borrower.
SECTION 7.4 Governmental Consents. Except as have been obtained and as
set forth on Schedule 7.4, no material order, consent, approval, hearing or
filing, license, authorization or validation of, or filing, recording or
registration with or exemption by, any governmental or public body or authority,
or any subdivision thereof, is (or, at the time of execution and delivery
thereof, was) required in connection with the execution, delivery and
performance by the Borrower of this Agreement or the other Loan Documents.
SECTION 7.5 Validity. The Borrower has duly executed and delivered this
Agreement and the other Loan Documents, and each of such documents constitutes
or upon execution and delivery will constitute the legal, valid and binding
obligation of the Borrower enforceable in accordance with its terms subject to
(a) applicable bankruptcy, insolvency, reorganization, moratorium, or similar
laws affecting creditors' rights generally and (b) general equitable principles,
including without limitation, concepts of good faith and fair dealing,
materiality, fraudulent transfer and reasonableness (regardless of whether
considered in a proceeding in equity or at law).
SECTION 7.6 Financial Statements. The Borrower's audited consolidated
financial statements for the Fiscal Year ended December 31, 1995 and its
unaudited consolidated financial statements for the Fiscal Quarters ended March
31, 1996, June 30, 1996 and September 30, 1996, copies of which have been
furnished to each Bank, have been prepared in conformity with GAAP applied on a
basis consistent with that of the preceding Fiscal Year, and accurately present
the financial condition of the Borrower and its Subsidiaries at such dates and
the results of operations for the periods then ended.
SECTION 7.7 Material Adverse Change. No Material Adverse Change has
occurred since September 30, 1996.
SECTION 7.8 Litigation and Contingent Obligations. No Material
Litigation is pending or, to the best of Borrower's knowledge, threatened except
as set forth (including estimates of the Dollar amounts involved) in Schedule
7.8. The Borrower and its Subsidiaries have no material Contingent Obligations
other than as provided for or disclosed on Schedule 7.8.
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SECTION 7.9 Liens. None of the assets of the Borrower or any of its
Subsidiaries is subject to any Lien, except for Permitted Liens.
SECTION 7.10 Pension and Welfare Plans.
(a) Except as set forth on Schedule 7.10, during the
twelve-consecutive-month period prior to the Closing Date, no steps
have been taken by the Borrower or any other Controlled Group member
(i) to terminate or completely or partially withdraw from any Pension
Plan or (ii) terminate any Welfare Plan, which termination could be
reasonably expected to give rise to a liability of the Borrower or any
other Controlled Group member in excess of $20,000,000 for any
Controlled Group member (other than the Borrower) or in excess of
$65,000,000 for the Borrower, and no contribution failure has occurred
with respect to any Pension Plan sufficient to give rise to a Lien
exceeding $20,000,000 on behalf of any Controlled Group member (other
than the Borrower) or $65,000,000 on behalf of the Borrower under
section 302(f) of ERISA and no contribution failure in excess of
$20,000,000 has occurred on behalf of any Controlled Group member
(other than the Borrower) or in excess of $65,000,000 on behalf of the
Borrower;
(b) except as set forth on Schedule 7.10, to the best of the
Borrower's knowledge, no condition exists, or event or transaction has
occurred, with respect to any Pension Plan which might result in the
incurrence by the Borrower or any other member of the Controlled Group
of any liability, fine, Tax or penalty which could be reasonably
expected to have a Material Adverse Effect;
(c) except as set forth on Schedule 7.10, neither the Borrower
nor any other member of the Controlled Group has any vested or
contingent liability with respect to any post-retirement benefit under
a Welfare Plan, other than liability for continuation coverage
described in Part 6 of Title I of ERISA;
(d) except as set forth on Schedule 7.10, with respect to each
Pension Plan maintained or contributed to by the Borrower or any other
Controlled Group member which is intended to qualify under section 401
of the Code, a favorable determination letter has been received from
the Internal Revenue Service stating that such Pension Plan so
qualifies and nothing has occurred since the date of issuance of such
determination letter which would cause any such Pension Plan to cease
to qualify under section 401 of the Code;
(e) no Pension Plan maintained by the Borrower or any other
member of the Controlled Group is a "multiemployer plan" as defined in
section 4001 of ERISA; and
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(f) except as disclosed in Schedule 7.10, no Pension Plan
maintained by or contributed to by the Borrower or any other member of
the Controlled Group and subject to section 302 of ERISA or section 412
of the Code has incurred an accumulated funding deficiency as defined
in section 302(a)(2) of ERISA and section 412(a) of the Code in excess
of $20,000,000 on behalf of any Controlled Group member (other than the
Borrower) or in excess of $65,000,000 on behalf of the Borrower,
whether or not waived.
SECTION 7.11 Investment Company Act. Neither the Borrower nor any of
its Subsidiaries is an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of 1940,
as amended.
SECTION 7.12 Public Utility Holding Company Act. Neither the Borrower
nor any of its Subsidiaries is a "holding company," or a "subsidiary company" of
a "holding company," or an "affiliate" of a "holding company" or of a
"subsidiary company" of a "holding company," within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
SECTION 7.13 Taxes.
(a) Except as set forth on Schedule 7.13, the Borrower and
each of its Significant Subsidiaries have filed all material Tax
Returns and Reports required by law to have been filed by them and have
paid or provided adequate reserves for all Taxes thereby shown to be
owing, except any such Taxes which are being diligently contested in
good faith by appropriate proceedings and for which adequate reserves
have been established and are being maintained in accordance with GAAP.
Except as set forth on Schedule 7.13, there is no ongoing audit or, to
the Borrower's knowledge, other governmental investigation of the tax
liability of the Borrower or any of its Significant Subsidiaries and
there is no unresolved claim by a taxing authority concerning the
Borrower's or any of the Significant Subsidiaries' tax liability, for
any period for which returns have been filed or were due. The liability
stated for Taxes as of December 31, 1995 in the financial statements
described in Section 7.6 is sufficient in all material respects for all
Taxes as of such date.
(b) All life insurance reserves shown as such on federal tax
returns (other than individual annuity contracts) of each of the
Insurance Subsidiaries qualify as life insurance reserves under section
816(b) of the Code or under former section 801(b) of the Code.
(c) All current Reinsurance Agreements among the Insurance
Subsidiaries and their respective Affiliates have, at all times, been
conducted on an arm's-length basis.
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(d) Each of the Insurance Subsidiaries is a life insurance
company as defined in section 816 of the Code.
SECTION 7.14 Accuracy of Information. All factual information
heretofore or contemporaneously furnished by or on behalf of the Borrower or any
of its Subsidiaries in writing to the Administrative Agent or any Bank for
purposes of or in connection with this Agreement or any transaction contemplated
hereby is, and all other such factual information hereafter furnished by or on
behalf of the Borrower or its Subsidiaries to the Administrative Agent or any
Bank will be, true and accurate in every material respect on the date as of
which such information is dated or certified and, except as such information
speaks solely as of a particular date, such information is not, or shall not be,
as the case may be, incomplete by omitting to state any material fact necessary
to make such information not misleading.
SECTION 7.15 Environmental Warranties.
(a) All facilities and property (including underlying
groundwater) owned or leased by the Borrower or any of its Subsidiaries
have been, and continue to be, owned or leased by the Borrower and its
Subsidiaries in material compliance with all Environmental Laws, except
where failure to so comply could not be reasonably expected to have a
Material Adverse Effect;
(b) there have been no past, and there are no pending or
threatened, Environmental Claims, except where such Environmental
Claims could not reasonably be expected to have a Material Adverse
Effect;
(c) there have been no releases of Hazardous Materials at, on
or under any property now or previously owned or leased by the Borrower
or any of its Subsidiaries that, individually or in the aggregate, have
had, or could reasonably be expected to have, a Material Adverse
Effect;
(d) the Borrower and each of its Subsidiaries have been issued
and are in material compliance with all permits, certificates,
approvals, licenses and other authorizations relating to environmental
matters and necessary or desirable for their businesses except where
failure to comply could not be reasonably expected to have a Material
Adverse Effect;
(e) no property now or previously owned or leased by the
Borrower or any of its Subsidiaries is listed or, to the Borrower's
knowledge, proposed for listing (with respect to owned property only)
on the National Priorities List pursuant to CERCLA, on the CERCLIS or
on any similar state list of sites requiring investigation or clean-up;
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(f) there are no underground storage tanks, active or
abandoned, including petroleum storage tanks, on or under any property
now or previously owned or leased by the Borrower or any of its
Subsidiaries that, individually or in the aggregate, could reasonably
be expected to have a Material Adverse Effect;
(g) neither the Borrower nor any of its Subsidiaries has
directly transported or directly arranged for the transportation of any
Hazardous Material to any location which is listed or, to Borrower's
knowledge, proposed for listing on the National Priorities List
pursuant to CERCLA, on the CERCLIS or on any similar state list or
which is the subject of federal, Governmental Authority or local
enforcement actions or other investigations which may lead to material
claims against the Borrower or any of its Subsidiaries for any remedial
work, damage to natural resources or personal injury, including claims
under CERCLA;
(h) there are no polychlorinated biphenyls or friable asbestos
present at any property now or previously owned or leased by the
Borrower or any of its Subsidiaries that, individually or in the
aggregate, could be reasonably expected to have a Material Adverse
Effect; and
(i) no conditions exist at, on or under any property now or
previously owned or leased by the Borrower or any of its Subsidiaries
which, with the passage of time, or the giving of notice or both, would
give rise to liability under any Environmental Law, except where such
liability could not be reasonably expected to have a Material Adverse
Effect.
SECTION 7.16 Proceeds. The proceeds of the Loans will be used to repay
Initial Indebtedness to be Refinanced, to redeem the ALHC Preferred Stock, to
support the issuance of the Borrower's commercial paper, to acquire the Initial
Acquired Companies, to repurchase the Borrower's capital stock and its
Subsidiaries' capital stock, to refinance the BLHC Debt and the Contingent
Payment Note, and for general corporate purposes.
SECTION 7.17 Insurance. Schedule 7.17 sets forth a true and correct
summary of all insurance carried by the Borrower. The properties and business of
the Borrower and its Subsidiaries are insured against casualties and
contingencies (other than normal life insurance risk) for its benefit under
policies issued by insurers of recognized responsibility in such amounts as is
customary in the case of similar businesses. No notice of any pending or
threatened cancellation or material premium increase has been received by the
Borrower with respect to any of such insurance policies. The Borrower is in
substantial compliance with all conditions contained in such insurance policies.
SECTION 7.18 Securities Laws. Neither the Borrower nor, to the best of
Borrower's knowledge, any of its Affiliates, nor anyone acting on behalf of any
such Person, has directly or
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indirectly offered any interest in the Loans or any other Liabilities for sale
to, or solicited any offer to acquire any such interest from, or has sold any
such interest to, any Person that would subject the making of the Loans or any
other Liabilities to registration under the Securities Act of 1933, as amended.
SECTION 7.19 Governmental Authorizations. The Borrower and each of its
Subsidiaries have all licenses, franchises, permits and other governmental
authorizations necessary for all businesses presently carried on by them
(including ownership and leasing of the real and personal property owned and
leased by them), except where failure to obtain such licenses, franchises,
permits and other governmental authorizations could not reasonably be expected
to have a Material Adverse Effect.
SECTION 7.20 Business Locations; Trade-Names. Schedule 7.20 lists each
of the locations where the Borrower and each of its Significant Subsidiaries
maintains an office, a place of business or any records together with each
partnership, corporate, fictitious or trade name under or by which the Borrower
or any of its Significant Subsidiaries conducts its business.
SECTION 7.21 Solvency. On a consolidated basis, the Borrower is and,
after consummation of this Agreement and after giving effect to all Indebtedness
incurred by the Borrower in connection herewith, will be, Solvent.
SECTION 7.22 Insurance Licenses. Schedule 7.22 lists all of the
jurisdictions in which each of the Insurance Subsidiaries hold licenses
(including, without limitation, licenses or certificates of authority from
applicable insurance departments), permits or authorizations to transact
insurance and reinsurance business (collectively, the "Licenses"). Except as set
forth on Schedule 7.22, to the best of Borrower's knowledge after due inquiry of
the Responsible Officers of the respective Insurance Subsidiaries, no such
License is the subject of a proceeding for suspension or revocation or any
similar proceedings, there is no sustainable basis for such a suspension or
revocation, and no such suspension or revocation is threatened by any Department
which, in either case could reasonably be expected to have a Material Adverse
Effect. Schedule 7.22 indicates that line or lines of insurance which the
Insurance Subsidiaries are permitted to be engaged in with respect to each
License therein listed. The Insurance Subsidiaries do not transact any insurance
business, directly or indirectly, in any state or jurisdiction other than those
enumerated on Schedule 7.22, where such business requires any license, permit,
governmental approval, consent or other authorization.
SECTION 7.23 Compliance with Laws. None of the Borrower or its
Subsidiaries is in violation of any law, ordinance, rule, regulation, order,
policy, guideline or other requirement of any Governmental Authority, if the
effect of such violation could
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reasonably be expected to have a Material Adverse Effect and, to the best of the
Borrower's knowledge, no such violation has been alleged and each of the
Borrower and each of its Subsidiaries (a) has filed in a timely manner all
reports, documents and other materials required to be filed by it with any
Governmental Authority, if such failure to so file could reasonably be expected
to have a Material Adverse Effect; and the information contained in each of such
filings is true, correct and complete in all material respects and (b) has
retained all records and documents required to be retained by it pursuant to any
law, ordinance, rule, regulation, order, policy, guideline or other requirement
of any Governmental Authority, if the failure to so retain such records and
documents could reasonably be expected to have a Material Adverse Effect.
SECTION 7.24 No Default. None of the Borrower or its Subsidiaries is in
default under any agreement or instrument to which the Borrower or such
Subsidiary is a party or by which any of their respective properties or assets
is bound or affected, which default might reasonably be expected to have a
Material Adverse Effect, and no Default has occurred and is continuing under the
Existing Credit Agreement.
SECTION 7.25 Margin Regulations. Neither the Borrower nor any
Subsidiary of the Borrower 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 Regulation G or Regulation U).
"Margin stock" within the meaning of Regulation U does not constitute more than
25% of the value of the consolidated assets of the Borrower and its
Subsidiaries. None of the transactions contemplated by this Agreement
(including, without limitation, the direct or indirect use of the proceeds of
the Loans) will violate or result in a violation of the Securities Act of 1933,
as amended, or the Securities Exchange Act of 1934, as amended, or regulations
issued pursuant thereto, or Regulation G, T, U or X.
SECTION 7.26 Conseco Corporate Structure. On the Effective Date, the
corporate structure of the Borrower and its Subsidiaries is as set forth in
Exhibit J.
SECTION 7.27 Significant Subsidiaries. Set forth on Schedule 7.27 is a
complete and accurate list of each Significant Subsidiary of the Borrower as of
the Effective Date.
SECTION 8. AFFIRMATIVE COVENANTS
The Borrower agrees that, on and after the Closing Date until the
termination or expiration of the Commitments and for so long thereafter as any
of the Liabilities remain unpaid or outstanding (except Liabilities which by the
terms hereof survive the payment in full of the Loans and termination of this
Agreement), the Borrower will:
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SECTION 8.1 Reports, Certificates and Other Information. Unless
otherwise provided herein, furnish or cause to be furnished to the
Administrative Agent and each Bank:
8.1.1 Audit Report. As soon as available, but in any event
within one hundred and twenty (120) days after the end
of each Fiscal Year of the Borrower:
(a) copies of the audited consolidated balance sheet
of the Borrower and an unaudited consolidating balance sheet of the
Borrower as at the end of such Fiscal Year and the related statements
of earnings, stockholders' equity and cash flows for such Fiscal Year,
in each case setting forth the figures as of the end of the year and,
in the case of the audited consolidated statements, for the previous
year, prepared in reasonable detail and in accordance with GAAP applied
consistently throughout the periods reflected therein (except as set
forth therein) certified, in the case of the audited financial
statements, without Qualification by Coopers & Lybrand (or such other
independent certified public accountants of recognized standing
acceptable to the Required Banks), and
(b) a letter or letters addressed to the Borrower
from such accountants stating in substance that such accountants have
been informed that such audited financial statements and audited
reports are being delivered to the Administrative Agent and the Banks,
and acknowledging that such financial statements and audit reports will
be part of the information that the Administrative Agent and the Banks
will use to make credit decisions with regard to this Agreement;
8.1.2 Quarterly Reports. As soon as available, but in any
event within sixty (60) days after the end of each of the first three
Fiscal Quarters of each Fiscal Year of the Borrower, copies of the
condensed unaudited consolidated and consolidating balance sheet of the
Borrower at the end of such Fiscal Quarter and the related condensed
unaudited statements of earnings, stockholders' equity and cash flows
for such Fiscal Quarter and the portion of the Fiscal Year through such
Fiscal Quarter, in the case of the consolidated statements setting
forth in comparative form the figures as of the end of and for the
corresponding periods of the previous Fiscal Year, prepared in
reasonable detail and in accordance with GAAP applied consistently
throughout the periods reflected therein (except as set forth therein)
and certified by the chief financial officer or a vice-president with
responsibility for or knowledge of financial matters of the Borrower on
behalf of the Borrower as presenting fairly the financial condition and
results of operations of the Borrower (subject to normal year-end and
audit adjustments);
8.1.3 Tax Returns and Reports. If requested by the
Administrative Agent or the Required Banks, copies of all
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federal, state, local and foreign Tax Returns and Reports filed by any
of the Borrower and any of its Subsidiaries;
8.1.4 SAP Financial Statements.
(a) As soon as possible, but in any event within
seventy-five (75) days after the end of each Fiscal Year of each of the
Insurance Subsidiaries, a copy of the Annual Statement of such
Insurance Subsidiary for such Fiscal Year prepared in accordance with
SAP and accompanied by the certification of the chief financial officer
or a vice-president with responsibility for or knowledge of financial
matters of such Insurance Subsidiary that such financial statement
presents fairly, in accordance with SAP, the financial position of such
Insurance Subsidiary for the period then ended;
(b) As soon as possible, but in any event within
sixty (60) days after the end of each of the first three Fiscal
Quarters of each Fiscal Year of each of the Insurance Subsidiaries, a
copy of the quarterly statement of such Insurance Subsidiary for such
Fiscal Quarter, all prepared in accordance with SAP and accompanied by
the certification of the chief financial officer or a vice-president
with responsibility for or knowledge of financial matters of such
Insurance Subsidiary that all such financial statements present fairly
in accordance with SAP the financial position of such Insurance
Subsidiary for the periods then ended;
(c) Within fifteen (15) days after being delivered to
any of the Insurance Subsidiaries constituting a Significant
Subsidiary, any draft or final Triennial Examination Report issued by
the applicable Department or the NAIC;
(d) Within ninety (90) days after the close of each
Fiscal Year of each of the Insurance Subsidiaries, a copy of the
"Statement of Actuarial Opinion" and "Management Discussion and
Analysis" for each of the Insurance Subsidiaries which is provided to
the applicable Department (or equivalent information should such
Department no longer require such a statement) as to the adequacy of
loss reserves of such Insurance Subsidiary. Such opinion shall be in
the format prescribed by the Applicable Insurance Code of the state of
domicile of such Insurance Subsidiary;
8.1.5 Compliance Certificate. Contemporaneously with the
furnishing of a copy of each set of the statements and reports provided
for in Sections 8.1.1 through 8.1.2, a duly completed certificate,
substantially in the form of Exhibit K (the "Compliance Certificate"),
signed by the chief financial officer or a vice-president with
responsibility for or knowledge of financial matters of the Borrower,
containing, among other things, a computation of, and showing
compliance with, each of the applicable
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financial ratios and restrictions contained in Section 10 and to the
effect that as of such date no Default has occurred and is continuing;
8.1.6 Commercial Paper. Promptly upon request of the
Administrative Agent and on each date of borrowing under this
Agreement, a certificate of a Responsible Officer as to the aggregate
outstanding amount of the Borrower's commercial paper;
8.1.7 Auditors' Materials. Promptly upon receipt thereof by
the Borrower, copies of all material financial and management reports
regarding the Borrower or any of the Significant Subsidiaries submitted
to the Borrower or any of the Significant Subsidiaries by independent
public accountants in connection with each annual or interim audit
report made by such accountants of the books of the Borrower or any of
its Significant Subsidiaries;
8.1.8 Reports to SEC and to Stockholders. Promptly upon the
filing or making thereof, copies of each filing and report made by the
Borrower or any of its Subsidiaries with or to any securities exchange
or the Securities and Exchange Commission and of each communication
from the Borrower or any of its Subsidiaries to stockholders generally;
8.1.9 Notice of Default and Litigation. Promptly upon learning
of the occurrence of any of the following, written notice thereof,
describing the same and the steps being taken by the Borrower with
respect thereto:
(a) the occurrence of a Default;
(b) the institution of any Material Litigation or
the occurrence of any Material Litigation Development;
(c) the commencement of any dispute which might
reasonably be expected to lead to the material modification, transfer,
revocation, suspension or termination of any Loan Document; or
(d) any Material Adverse Change;
8.1.10 Insurance Reports. Written notification ten (10) days
prior to any cancellation or material change of any insurance policy by
the Borrower or any Significant Subsidiary, and written notification
within five (5) days after receipt of any notice (whether formal or
informal) of cancellation or any material change by any of its
insurers;
8.1.11 ERISA Liability. Promptly upon learning of the
occurrence of the following, written notice thereof describing the same
and the steps being taken by Borrower with respect thereto:
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(a) the failure of any member of the Controlled Group
to make a required contribution to any Pension Plan if such failure is
sufficient to give rise to a Lien under section 302(f)(1) or
accumulated funding deficiency under section 302 of ERISA of at least
$20,000,000, but with respect to the Borrower only if such failure or
deficiency totals $65,000,000,
(b) the institution of any steps by any member of the
Controlled Group to withdraw from, or the institution of any steps by
the Borrower to terminate, any Pension Plan,
(c) the taking of any action with respect to a
Pension Plan which could result in the requirement that the Borrower or
any member of the Controlled Group furnish a bond or other security in
excess of $20,000,000 by any Controlled Group member (other than the
Borrower) or in excess of $65,000,000 by the Borrower to the Pension
Benefit Guaranty Corporation (or any successor thereto) or such Pension
Plan, or
(d) the occurrence of any event with respect to any
Pension Plan which could result in the incurrence by any member of the
Controlled Group (other than the Borrower) of any liability, fine, Tax
or penalty in excess of $20,000,000 or $65,000,000 with respect to the
Borrower or any event or requirement that would require the Borrower or
any member of the Controlled Group to pay more than $30,000,000 in
benefits in any one year with respect to any post-retirement Welfare
Plan other than benefits which are required to be provided under
section 601 of ERISA;
8.1.12 Pension Plan Withdrawals. With respect to each Pension
Plan, if any, which is a "multi-employer plan," as defined in section
4001 of ERISA as to which any member of the Controlled Group may incur
any liability,
(a) no less frequently than annually, a written estimate
(which shall be based on information received from each such plan, it
being expressly understood that the Borrower shall take all reasonable
steps to obtain such information) of the withdrawal liability that
would be incurred by the Controlled Group in the event that all members
of the Controlled Group were to completely withdraw from such plan, and
(b) written notice thereof, as soon as it has reason to
believe (on the basis of the most recent information available to it)
that the sum of (i) the withdrawal liability that would be incurred by
the Controlled Group if all members of the Controlled Group completely
withdrew from all multi-employer plans as to which any member of the
Controlled Group has an obligation to contribute, and (ii) the
aggregate amount of the outstanding withdrawal liability
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(without unaccrued interest) incurred by the Controlled Group to multi-
employer plans, would exceed $20,000,000;
8.1.13 Environmental Liabilities. Promptly upon learning
thereof, written notice (together with copies, if available) of all
material written claims, complaints, notices or inquiries relating to
the Borrower's or any Subsidiary's (a) properties or facilities, or (b)
compliance with Environmental Laws, together with a description of the
steps being taken by the Borrower or such Subsidiary with respect
thereto;
8.1.14 Insurance Holding Company Filings. Copies of all
material Insurance Holding Company System Act filings with Governmental
Authorities by the Borrower or any of its Subsidiaries not later than
five (5) Business Days after such filings are made, including, without
limitation, filings which seek approval of Governmental Authorities
with respect to transactions between the Borrower and its Affiliates;
8.1.15 Insurance Licenses. Within five (5) Business Days of
notice, notice of actual suspension, termination or revocation of any
License or restriction thereon (material to the Insurance Subsidiaries
taken as a whole) of any of the Insurance Subsidiaries by any
Governmental Authority or of receipt of notice from any Governmental
Authority notifying any of the Insurance Subsidiaries of a hearing
(which is not withdrawn within ten (10) days) relating to such a
suspension, termination, revocation or restriction, including any
request by a Governmental Authority which commits any of the Insurance
Subsidiaries to take, or refrain from taking, any action or which
otherwise materially and adversely affects the authority of any of the
Insurance Subsidiaries to conduct its business;
8.1.16 Insurance Proceedings. Within three (3) Business Days
of such notice, notice of any pending or threatened investigation or
regulatory proceeding (other than routine periodic investigations or
reviews) by any Governmental Authority concerning the business,
practices or operations of any of the Insurance Subsidiaries, including
any agent or managing general agent thereof, which could have a
Material Adverse Effect;
8.1.17 Changes in Applicable Insurance Code. Promptly, upon
knowledge of the Borrower, to the Administrative Agent (which shall
promptly deliver such reports to the Banks), notice of any actual or
proposed changes in any Applicable Insurance Code which could have a
Material Adverse Effect;
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8.1.18 Reinsurance Agreements.
(a) Promptly, notice of any material change or modification to
any Reinsurance Agreements or Surplus Relief Reinsurance Agreements
whether entered into before or after the Closing Date including
Reinsurance Agreements, if any, which are in a runoff mode on the
Closing Date, which change or modification could reasonably be expected
to have a Material Adverse Effect;
(b) promptly, notice of any written notice received by any of
the Insurance Subsidiaries of any material denial of coverage,
litigation or arbitration arising out of any material Surplus Relief
Reinsurance Agreement or any material Reinsurance Agreement to which
any of the Insurance Subsidiaries is a party; and
(c) promptly, such other financial, actuarial and other
information with respect to Surplus Relief Reinsurance Agreements and
Reinsurance Agreements as the Administrative Agent may reasonably
request;
8.1.19 Investments. To the extent not provided with the
financial statements provided in Section 8.1.4, within sixty (60) days
of the end of each of the first three Fiscal Quarters in any Fiscal
Year and within one hundred twenty (120) days of the end of each Fiscal
Year, a list of the Investments of the Borrower and its Subsidiaries
including a valuation thereof prepared from sources reasonably
acceptable to the Administrative Agent;
8.1.20 Revenue Agent Notices. Promptly, and in any event
within ten (10) days of receipt, any revenue agent's reports or
statutory notices of any deficiency related to the Borrower or any of
its Subsidiaries which deficiency is material to the Borrower and its
Subsidiaries taken as a whole;
8.1.21 Other Tax Information. Upon request, promptly furnish
to the Administrative Agent copies of all correspondence (including,
without limitation, notices, requests, explanations, determinations,
schedules, charts and lists) delivered to any Governmental Authority in
connection with any Tax claim or Taxes and any protest, petition or
refund suit filed on behalf of the Borrower or any of its Subsidiaries
in connection with any Tax claim or Taxes;
8.1.22 Rating Agency Notice. Promptly, but in any event
within three (3) Business Days of its knowledge thereof, written notice
of any change in the rating of the Borrower's Senior Notes by Duff &
Phelps and/or Standard & Poor's; and
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8.1.23 Other Information. From time to time, such other
information concerning the Borrower and any of its Subsidiaries as the
Administrative Agent or a Bank may reasonably request.
SECTION 8.2 Corporate Existence; Foreign Qualification. Except as
permitted by Sections 9.3 and 9.4, do and cause to be done at all times all
things necessary to (a) maintain and preserve the corporate existence of the
Borrower and each of its Wholly-Owned Subsidiaries and/or Significant
Subsidiaries, (b) be, and ensure that the Borrower and each of its Subsidiaries
are, duly qualified to do business and in good standing as foreign corporations
or partnerships, as applicable, in each jurisdiction where the nature of their
business makes such qualification necessary and failure to so qualify could have
a Material Adverse Effect, and (c) comply, and cause each of its Wholly-Owned
Subsidiaries and/or Significant Subsidiaries to comply, with all material
Contractual Obligations and requirements of law binding upon such entity.
SECTION 8.3 Books, Records and Inspections.
(a) Maintain, and cause each of its Wholly-Owned Subsidiaries
and/or Significant Subsidiaries to maintain, books and records which
are complete and correct in all material respects;
(b) permit, and cause each of its Wholly-owned Subsidiaries
and/or Significant Subsidiaries to permit, access at reasonable times
by the Administrative Agent and each Bank to its books and records;
(c) permit, and cause each of its Wholly-Owned Subsidiaries
and/or Significant Subsidiaries to permit, the Administrative Agent and
each Bank to inspect at reasonable times its properties and operations;
and
(d) permit, and cause each of its Wholly-Owned Subsidiaries
and/or Significant Subsidiaries to permit, the Administrative Agent and
each Bank to discuss its business, operations and financial condition
with its officers.
SECTION 8.4 Insurance. Maintain with responsible insurance companies,
insurance with respect to its properties and business against such casualties
and contingencies and of such types and in such amounts as is customary in the
case of similar businesses.
SECTION 8.5 Taxes and Liabilities.
(a) Pay, and cause each of its Subsidiaries to pay, when due
all of their respective Taxes and other material liabilities, except as
contested in good faith and by appropriate proceedings with respect to
which reserves have
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been established, and are being maintained, in accordance with GAAP;
and
(b) except as permitted by Sections 9.3 and 9.4, cause each of
the Insurance Subsidiaries to continue to qualify as life insurance
companies under Section 816 of the Code.
SECTION 8.6 Pension Plans and Welfare Plans. Maintain, and cause each
of its Subsidiaries to maintain, each Pension Plan and Welfare Plan sponsored by
it or its Subsidiaries as to which it may have any liability, in compliance in
all material respects with all applicable requirements of law.
SECTION 8.7 Compliance with Laws. Comply, and cause each of its
Subsidiaries to comply, with all federal, state and local laws, rules and
regulations related to its businesses including, without limitation, the various
Applicable Insurance Codes, except where such failure to comply could not
reasonably be expected to have a Material Adverse Effect.
SECTION 8.8 Maintenance of Permits. Maintain, and cause each of its
Subsidiaries to maintain, all permits, licenses and consents as may be required
for the conduct of its business by any state, federal or local government agency
or instrumentality including, without limitation, the Licenses, except where
such failure to maintain could not reasonably be expected to have a Material
Adverse Effect.
SECTION 8.9 Environmental Compliance. Maintain, and cause each of its
Subsidiaries to maintain, (a) all necessary permits, approvals, certificates,
licenses and other authorizations relating to environmental matters in effect
and use and operate all of its facilities and properties in material compliance
with all Environmental Laws, and (b) appropriate procedures for the handling of
all Hazardous Materials in material compliance with all applicable Environmental
Laws, and comply with such procedures at all times, except where such failure to
maintain could not reasonably be expected to have a Material Adverse Effect.
SECTION 9. NEGATIVE COVENANTS
The Borrower agrees that, on and after the Closing Date until the
termination or expiration of the Commitments and for so long thereafter as any
of the Liabilities remain unpaid or outstanding (except Liabilities which by the
terms hereof survive the payment in full of the Loans and the termination of
this Agreement), the Borrower will:
SECTION 9.1 Limitation on Indebtedness. (I) Subject to the provisions
set forth in subsection (II) below in this Section 9.1, not, and not permit any
of its Subsidiaries to, incur or at any time be liable with respect to, any
Indebtedness which is or constitutes:
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(a) a Hedge Obligation not entered into in the
ordinary course of business;
(b) Indebtedness incurred in connection with the
issuance of commercial paper by the Borrower to the extent
that Indebtedness of this type exceeds the unutilized portion
of the Commitments at any time;
(c) Indebtedness with respect to Contingent
Obligations to the extent the principal amount of Indebtedness
of this type exceeds eight percent (8%) of Total Shareholders'
Equity of the Borrower in the aggregate;
(d) (i) recourse Indebtedness of Significant
Subsidiaries or (ii) nonrecourse Indebtedness of Significant
Subsidiaries resulting from the sale or securitization of
assets other than non-admitted assets, policy loans, B-Share
Financings, CBOs and CMOs; or
(e) any secured Indebtedness (excluding secured
Indebtedness not prohibited by clause (d)(ii) immediately
above), including, without limitation, Capitalized Lease
Liabilities and Purchase Money Debt, to the extent
Indebtedness of this type exceeds ten percent (10%) of Total
Shareholders' Equity of the Borrower in the aggregate or is in
violation of Section 9.2(l).
(II) In the event that the long-term unsecured debt ratings of the Borrower by
each of Standard & Poor's and Duff & Phelps shall fall below investment grade
(as of the Closing Date, "BBB-" for each such rating agency), the following
covenant shall replace the restrictions on the incurrence of Indebtedness set
forth above in subsection (I) of this Section 9.1 and shall become applicable
automatically upon such event, without further act:
Not, and not permit any of its Subsidiaries to, incur or at any time be liable
with respect to any Indebtedness except:
(a) Indebtedness outstanding under this Agreement in respect
of the Loans and other Liabilities;
(b) Indebtedness outstanding on the Closing Date described on
Schedule 9.1; provided, that Indebtedness permitted by this clause (b)
does not include any extension, renewal or refunding of any such
outstanding Indebtedness unless such extension, renewal or refunding of
such Indebtedness does not (A) increase the principal amount of or rate
of interest on such Indebtedness, (B) shorten the Average Life of such
Indebtedness, or (C) make the terms of such Indebtedness less favorable
to the Borrower or any Subsidiary of the Borrower;
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(c) Indebtedness secured by a Permitted Lien;
(d) Hedging Obligations entered into in the ordinary
course of business;
(e) Other Indebtedness the proceeds of which are used solely
to pay the Liabilities; provided that a permanent ratable reduction is
made with respect to the Revolving Commitments in an amount equal to
such proceeds;
(f) Indebtedness in connection with Permitted Transactions;
(g) Indebtedness, or refinancings thereof, under reimbursement
obligations in respect of letters of credit incurred in the ordinary
course of business;
(h) Indebtedness of the Borrower or its Subsidiaries
consisting of deferred payment obligations resulting from the
adjudication or settlement of any claim or Litigation of the Borrower
or its Subsidiaries;
(i) Indebtedness resulting from reserves for outstanding
checks;
(j) Indebtedness of the Significant Subsidiaries resulting
from the sale or securitization of receivables so long as such
receivables constitute non-admitted assets of such Significant
Subsidiaries; provided, that Indebtedness related to any sale or
securitization will be nonrecourse to the Significant Subsidiaries;
(k) Indebtedness with respect to Contingent Obligations in an
aggregate principal amount not exceeding five percent (5%) of Total
Shareholders' Equity of the Borrower in the aggregate;
(l) Indebtedness of Wholly-Owned Subsidiaries of the Borrower
owing to the Borrower or another Wholly-Owned Subsidiary of the
Borrower, and Indebtedness of the Borrower owing to any of its Wholly-
Owned Subsidiaries;
(m) Indebtedness in respect of deferred Taxes reserved on the
financial statements of the Borrower in accordance with GAAP;
(n) Indebtedness arising from deferral by employees of their
right to receive a portion of their salary or wages pursuant to any
Pension Plan;
(o) Indebtedness of a Person existing at the time such Person
is first acquired and becomes a Subsidiary of the Borrower or is merged
or consolidated with the Borrower or any other Subsidiary of the
Borrower so long as immediately
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after giving effect to such acquisition or merger no Default then
exists; and
(p) Indebtedness, including, without limitation, Capitalized
Lease Liabilities and Purchase Money Debt, in addition to the
Indebtedness permitted by clauses (a) through (o), in a principal
amount not exceeding three percent (3%) of Total Shareholders' Equity
of the Borrower in the aggregate;
provided, however, that legally binding actions taken or commitments made in
compliance with subsection (I) while subsection (I) of this Section 9.1 was
still in effect shall be exempted from the application of this subsection (II)
to the extent such obligations cause the Borrower and its Subsidiaries to not be
in compliance with this subsection (II). Notwithstanding the foregoing to the
contrary, any renewals or extensions of any such actions or commitments shall be
subject to the application of this subsection (II).
SECTION 9.2 Liens. Not, and not permit any of its Subsidiaries to,
create, assume or suffer to exist any Lien on any asset now owned or hereafter
acquired by it, except for the following (collectively called "Permitted
Liens"):
(a) Liens in connection with Permitted Transactions;
(b) Liens for current Taxes not delinquent or for Taxes being
contested in good faith and by appropriate proceedings and with respect
to which adequate reserves are being maintained in accordance with
GAAP;
(c) Liens shown on Schedule 9.2;
(d) Liens incurred in the ordinary course of business in
connection with worker's compensation, unemployment insurance or other
forms of governmental insurance or benefits or to secure performance of
tenders, statutory obligations, leases and contracts (other than for
borrowed money) entered into in the ordinary course of business or to
secure obligations on surety or appeal bonds;
(e) Liens of mechanics, carriers, and materialmen and other
like Liens arising in the ordinary course of business in respect of
obligations which are not delinquent or which are being contested in
good faith and by appropriate proceedings and with respect to which
adequate reserves are being maintained in accordance with GAAP;
(f) Liens arising in the ordinary course of business for sums
being contested in good faith and by appropriate proceedings and with
respect to which adequate reserves are being maintained in accordance
with GAAP, or for sums not due, and in either case not involving any
deposits or
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advances for borrowed money or the deferred purchase price of property
or services;
(g) Liens on real estate to the extent real estate Investments
are permitted by Section 9.10(e)(iii);
(h) Liens in favor of the trustee on sums required to be
deposited with the trustee under the Indentures;
(i) If Section 9.1(II) is then in effect, Liens on Indebted-
ness permitted by Section 9.1(II)(o);
(j) If Section 9.1(II) is then in effect, Liens on assets of
the Borrower or any of its Subsidiaries and which are not otherwise
permitted to be incurred pursuant to the foregoing clauses (a) - (i)
securing Indebtedness permitted by Section 9.1(II)(p); provided,
however, that the aggregate fair market value of the property and other
assets subject to any such Liens, calculated at the time such Liens are
incurred, shall not exceed three and six-tenths percent (3.6%) of Total
Shareholders' Equity of the Borrower; and
(l) If Section 9.1(I) is then in effect, Liens on assets of
the Borrower or any of its Subsidiaries and which are not otherwise
permitted to be incurred pursuant to the foregoing clauses (a) - (h)
securing Indebtedness not prohibited by Section 9.1(I); provided,
however, that the aggregate fair market value of the property and other
assets subject to any such Liens, calculated at the time such Liens are
incurred, shall not exceed twelve percent (12%) of Total Shareholders'
Equity of the Borrower.
SECTION 9.3 Consolidation, Merger, etc. Not, and not permit any of its
Wholly-Owned Subsidiaries and/or Significant Subsidiaries to, liquidate or
dissolve, consolidate with, or merge into or with, any other Person, or
consummate any Acquisition, except
(a) any Wholly-Owned Subsidiary of the Borrower may liquidate
or dissolve voluntarily into, and may merge or consolidate with and
into, or sell all or substantially all of its capital stock or assets
to, the Borrower or any other Wholly-Owned Subsidiary of the Borrower,
and
(b) Acquisitions; provided the Debt to Total Capitalization
Ratio does not exceed 0.35:1 immediately after giving pro forma effect
to such Acquisition; and provided, further, that no Default exists at
the time of such Acquisition or will result therefrom and the
Administrative Agent shall have received a certificate of the chief
financial officer or a vice president with responsibility for or
knowledge of financial affairs of the Borrower to such effect.
Notwithstanding the foregoing if the Debt to Total Capitalization Ratio
exceeds 0.35:1, but in any event is less than 0.45:1, immediately after
giving
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pro forma effect to such Acquisition, the Borrower shall be permitted
to make such Acquisition without being in violation of this Section 9.3
so long as the Debt to Total Capitalization Ratio is equal to or less
than 0.35:1 ninety (90) days after the consummation of such
Acquisition.
SECTION 9.4 Asset Disposition, etc. Not, and not permit any of its
Wholly-Owned Subsidiaries and/or Significant Subsidiaries to, sell, assign,
lease, transfer, contribute, reinsure, cede, convey or otherwise dispose of, or
grant options, warrants or other rights with respect to, any of its assets
(including, without limitation, any books of business), unless a prepayment is
made pursuant to Section 4.3 or:
(a) such sale, assignment, transfer, lease, contribution,
reinsurance, cession, conveyance or other disposition is in the
ordinary course of its business including, without limitation, sales of
assets in connection with the management of the investment portfolio of
the Borrower and its Subsidiaries or as related to the sale or
securitization of receivables constituting non-admitted assets of an
Insurance Subsidiary;
(b) such sale, assignment, transfer, contribution, conveyance
or other disposition is of Credit Tenant Loans, CBOs, CMOs or other
mortgages held by such Person in connection with the securitization of
such mortgages;
(c) such sale, assignment, transfer, contribution, conveyance
or other disposition is made pursuant to a sale-leaseback of an asset
of such Person in connection with a Capital Lease Liability permitted
under Section 9.1; or
(d) such sale, assignment, transfer, lease, contribution,
reinsurance, cession, conveyance or other disposition does not
constitute a Disposition the Net Proceeds of which would otherwise be
required to be applied as a mandatory prepayment pursuant to Section
4.3 and is not of all or substantially all of the assets of the
Borrower or any Significant Subsidiary of the Borrower.
SECTION 9.5 Other Agreements. Not, and not permit any of its
Subsidiaries to, enter into any agreement (other than agreements with insurance
regulators) containing any provision which (a) would be violated or breached by
the performance of its obligations hereunder or under any instrument or document
delivered or to be delivered by it hereunder or in connection herewith, (b)
prohibits or restricts the ability of any Subsidiary of the Borrower to make
dividends or advances or payments to the Borrower, (c) prohibits or restricts
the ability of the Borrower or any of its Subsidiaries to amend or otherwise
modify this Agreement or any other document executed in connection herewith or
(d) constitutes an agreement to a limitation or restriction of the type
described in clauses (a) through (c) with respect to any other Indebtedness.
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SECTION 9.6 Business Activities. Not, and not permit any of its
Significant Subsidiaries to fundamentally change the type of business in which
it is presently engaged as listed on Schedule 9.6.
SECTION 9.7 Change of Location or Name. Not, and not permit its
Significant Subsidiaries to, change (a) the location of its principal place of
business, chief executive office, major executive office, chief place of
business or its records concerning its business and financial affairs, or (b)
its name or the name under or by which it conducts its business, in each case
without first giving the Administrative Agent at least ten (10) days' advance
written notice thereof; provided, however, that notwithstanding the foregoing,
neither the Borrower nor any of its Significant Subsidiaries shall change the
location of its principal place of business, chief executive office, major
executive office, chief place of business or its records concerning its business
and financial affairs to any place outside the contiguous continental United
States of America.
SECTION 9.8 Transactions with Affiliates. Except as set forth on
Schedule 9.8, not, and not permit any of the Insurance Subsidiaries to, enter
into, or cause, suffer or permit to exist any arrangement, Reinsurance
Agreement, Surplus Relief Reinsurance Agreement or contract with any of its
other Affiliates (other than the Borrower, another Insurance Subsidiary or a
Wholly-Owned Subsidiary of any of them) unless, in the case of any arrangement,
contract or instrument which is material to the Borrower and its Subsidiaries
taken as a whole, written notice is given to the Administrative Agent (which
shall promptly deliver copies of such notice to the Banks) subsequent to such
arrangement and, in any case, such arrangement, contract or instrument (a) is
fair and equitable to the Borrower or such Subsidiary and (b) is of a sort which
would be entered into by a prudent Person in the position of the Borrower or
such Subsidiary with a Person which is not one of its Affiliates.
SECTION 9.9 [intentionally left blank].
SECTION 9.10 Investments. Not, and not permit any of its Subsidiaries
to, make, incur, assume or suffer to exist any Investment in any other Person,
except:
(a) Investments existing on the Closing Date and
identified in Schedule 9.10;
(b) Cash Equivalents;
(c) without duplication, Investments permitted as
Indebtedness pursuant to Section 9.1;
(d) Investments by the Borrower in any of its Wholly-
Owned Subsidiaries or by any such Wholly-Owned Subsidiary in
the Borrower or any other Wholly-Owned Subsidiary of the
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Borrower, by way of contributions to capital or loans or advances;
(e) other Investments by the Borrower and its Subsidiaries
which are in compliance with all of the following guidelines:
(i) All Investments made by any Insurance
Subsidiary shall be in compliance with the applicable Department of
such Insurance Subsidiary;
(ii) No Investments in mortgage loans, except
(A) for existing direct mortgage loans listed on Schedule 9.10 and
refinancings thereof and (B) other Investments in direct mortgage
loans; provided, that such Investments, when aggregated with
Investments in real estate permitted by clause (iii) below, shall not
exceed 8% of the aggregate Investments of the Borrower and its
Subsidiaries on a consolidated basis;
(iii) No Investments in real estate, except
for existing Investments in real estate listed on Schedule 9.10 and
additional Investments in real estate; provided, that such Investments,
when aggregated with Investments in mortgage loans permitted by clause
(ii) above, shall not exceed 8% of the aggregate Investments of the
Borrower and its Subsidiaries on a consolidated basis;
(iv) Investments by the Borrower and its
Subsidiaries, on a consolidated basis, in equity securities (excluding
Investments in any Subsidiary of the Borrower) and non-Investment Grade
Securities shall not exceed in the aggregate 15% of the Investments of
the Borrower and its Subsidiaries on a consolidated basis;
(v) Investments by the Borrower and its
Subsidiaries, on a consolidated basis, in Investments relating to a
single issuer (other than U.S. Government Securities) shall not exceed
in the aggregate 4% of the Investments of the Borrower and its
Subsidiaries on a consolidated basis;
(vi) Investments in connection with Permitted
Transactions;
(vii) Investments in CMO Derivative Investments
in an amount not to exceed in the aggregate 4% of the Investments of
the Borrower and its Subsidiaries on a consolidated basis;
(f) Credit Tenant Loans, CMOs and CBOs; and
(g) Investments, in addition to the Investments permitted
by clauses (a) - (f) above, which do not exceed in
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the aggregate 4% of the Investments of the Borrower and its
Subsidiaries on a consolidated basis.
SECTION 9.11 Certain Indebtedness. Not, and not permit
any of its Subsidiaries to:
(a) make any payment (whether of principal, interest or
otherwise) on any Senior Notes on any day other than the stated
scheduled date for such payment set forth in the Senior Note Documents
as of the Closing Date;
(b) prepay, redeem, purchase, defease or transfer its
obligations under any Senior Notes, or make any deposit for
any of the foregoing; or
(c) amend or modify any Senior Note Documents if such
amendment or modification could have an adverse effect on the Banks or
any material provision of the Loan Documents.
SECTION 10. FINANCIAL COVENANTS
The Borrower agrees that, on and after the Closing Date until the
termination or expiration of the Commitments and for so long thereafter as any
of the Liabilities remain unpaid or outstanding, it will comply with the
following:
SECTION 10.1 Shareholders' Equity. Not permit Total Shareholders'
Equity of the Borrower to be less than (a) $1,750,000,000 at any time from the
Closing Date to and including December 31, 1996, (b) $2,400,000,000 at any time
from January 1, 1997 to and including December 31, 1998 and (c) $3,500,000,000
at any time thereafter.
SECTION 10.2 Debt to Total Capitalization Ratio. Not permit the Debt to
Total Capitalization Ratio to exceed 0.45:1 at any time after the Closing Date.
This ratio shall be measured at the end of each Fiscal Quarter for the Fiscal
Quarter then ended.
SECTION 10.3 Interest Coverage Ratio. Not permit the Interest Coverage
Ratio to be less than (a) 2.0:1 from the Closing Date to and including March 31,
1997, (b) 2.25:1 from April 1, 1997 to and including September 30, 1997, (c)
2.5:1 from October 1, 1997 to and including December 31, 1997, (d) 2.75:1 from
January 1, 1998 to and including December 31, 1999 and (e) 3.0:1 at any time
after December 31, 1999. This ratio shall be measured at the end of each Fiscal
Quarter for the periods provided in the definition thereof.
SECTION 11. CONDITIONS
The obligation of the Banks to make the Loans is subject to the
performance by the Borrower of all of its obligations under this Agreement and
to the satisfaction of the following conditions precedent:
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SECTION 11.1 Initial Loans. Prior to or concurrent with the making of
the initial Loans, the Administrative Agent shall have received all of the
following, each, except to the extent otherwise specified below, duly executed
by a Responsible Officer, dated the date of the initial Loans (or such earlier
date as shall be satisfactory to the Administrative Agent), in form and
substance satisfactory to the Administrative Agent, and each in sufficient
number of signed counterparts or copies to provide one for each Bank and the
Administrative Agent:
11.1.1 If requested by a Bank, an appropriately completed
Committed Note, payable to the order of such Bank evidencing such
Bank's Revolving Commitment;
11.1.2 A favorable opinion of Lawrence Inlow, general counsel
of the Borrower and its Significant Subsidiaries, substantially in the
form of Exhibit L hereto, and addressing such other legal matters as
the Administrative Agent may require;
11.1.3 An officer's certificate of the Borrower, substantially
in the form of Exhibit M hereto, and dated as of the Closing Date,
signed by a Responsible Officer of the Borrower and attested to by the
secretary thereof, together with certified copies of the Borrower's
articles of incorporation, by-laws and directors resolutions;
11.1.4 Evidence of the good standing or certificates of
compliance of the Borrower in the jurisdiction in which such entity
was incorporated as of the Closing Date;
11.1.5 Evidence that the Borrower paid to the Administrative
Agent the fees and expenses provided for in the Fee Letter which are
payable as of the Closing Date;
11.1.6 A letter from the Process Agent agreeing to receive
service of process on behalf of the Borrower pursuant to Section 15.11
hereof;
11.1.7 Certified copies of each material consent, license and
approval (including, without limitation, any insurance commission
approvals) required in connection with the execution, delivery,
performance, validity and enforceability of this Agreement and the
other Loan Documents; such consents, licenses and approvals shall be in
full force and effect, shall be satisfactory in form and substance to
the Administrative Agent and shall be all of the material consents
required to be obtained or made on or before the consummation of the
financing contemplated by this Agreement;
11.1.8 A certificate of a Responsible Officer of the Borrower
that there are no material insurance regulatory proceedings pending or
threatened against any of the Insurance Subsidiaries;
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11.1.9 A certificate of a Responsible Officer of the
Borrower, dated the Closing Date, as to the matters set forth in
Sections 11.3.2 through 11.3.5 hereof;
11.1.10 An officer's certificate signed by a Responsible
Officer of the Borrower, certifying that to such officer's best
knowledge, since September 30, 1996, no event has occurred which
individually or in the aggregate could reasonably be expected to have a
Material Adverse Effect;
11.1.11 Evidence that the Cash Collateral Account has been
established;
11.1.12 A payoff letter from the agent under the Existing
Credit Agreement and from NationsBank satisfactory to the
Administrative Agent relating to the payment of the Initial
Indebtedness to be Refinanced including evidence that all commitments
have been terminated and all loans have been paid thereunder;
11.1.13 Schedules and Exhibits satisfactory to the
Administrative Agent and the Banks;
11.1.14 A Federal Reserve Form U-1 for each Bank, duly
executed by a Responsible Officer of the Borrower, the statements made
in which shall be such, in the opinion of the Administrative Agent, as
to permit the transactions contemplated by this Agreement in accordance
with Regulation U;
11.1.15 Evidence satisfactory to the Administrative Agent that
each of the Loan Documents has been duly executed and delivered and is
in full force and effect without modification;
11.1.16 Receipt by the Agents and the Lenders of (i) the
consolidated financial statements of the Borrower and its Subsidiaries
and of the Initial Acquired Companies for each of fiscal years 1994 and
1995, including balance sheets and income and cash flow statements, in
each case audited by independent public accountants of recognized
national standing and containing an unqualified opinion of such firm
that such statements present fairly, in all material respects, the
consolidated financial position and results of operations of the
Borrower and its Subsidiaries and the Initial Acquired Companies,
respectively, and are prepared in conformity with GAAP, (ii) a
satisfactory pro forma consolidated balance sheet of the Borrower as of
September 30, 1996 giving effect to the acquisition of the Initial
Acquired Companies and the transactions contemplated by the Purchase
Agreements and reflecting estimated purchase price accounting
adjustments, prepared by the Borrower and certified by the Borrower's
chief financial officer, and (iii) such other information relating to
the Initial Acquired Companies as the Agents may reasonably require in
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connection with the structuring and syndication of credit facilities of
the type described herein;
11.1.17 The corporate capital and ownership structure of the
Borrower and its Subsidiaries (after giving effect to the contemplated
purchase of the Initial Acquired Companies) shall be satisfactory to
the Agents;
11.1.18 There shall not exist any pending or threatened
action, suit, investigation or proceeding against the Borrower or any
of its Subsidiaries that would have or would reasonably be expected to
have a Material Adverse Effect;
11.1.19 Receipt by the Agents of evidence demonstrating that
the Borrower and its Subsidiaries are in compliance with all financial
obligations as of the Closing Date; and
11.1.20 Such ther information and documents as may easonably
be required by the Administrative Agent and the Administrative Agent's
counsel.
SECTION 11.2 All Loans to Acquire Initial Acquired Companies. The
obligation of the Banks to make Loans hereunder for the purpose of acquiring
(whether by stock or asset purchase, merger or consolidation) each Initial
Acquired Company is subject to the following further conditions precedent:
11.2.1 The corporate capital and ownership structure of the
Borrower and its Subsidiaries, if different from that delivered on the
Closing Date (after giving effect to the contemplated acquisition of
the applicable Initial Acquired Company) shall be satisfactory to the
Agents;
11.2.2 Receipt by the Agents of evidence that (a) all
governmental, shareholder and material third party consents (including
Hart-Scott-Rodino clearance) and approvals necessary or desirable in
connection with the acquisition of the applicable Initial Acquired
Company and the related financings and other transactions contemplated
hereby to occur in connection with such acquisition have been obtained,
(b) the expiration of all applicable waiting periods without any action
being taken by any authority that could reasonably be likely to
restrain, prevent or impose any material adverse conditions on the
acquisition of such Initial Acquired Company or such other transactions
contemplated hereby to occur in connection with such acquisition or
that could reasonably be likely to seek or threaten any of the
foregoing, has occurred, and (c) no law or regulation is or shall be
applicable which in the judgment of the Agents could reasonably be
likely to have the effect of any of the foregoing;
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11.2.3 There shall not have occurred a change since the
Closing Date that has had or could reasonably be expected to have a
Material Adverse Effect, or a material adverse effect on the business,
financial condition or prospects of the applicable Initial Acquired
Company, including specifically, without limitation, any such change
resulting from any matter not disclosed in the applicable Purchase
Agreement or resulting from a change in status of any matter disclosed
in such Purchase Agreement (including matters related to litigation,
tax, accounting, labor, insurance and pension liabilities);
11.2.4 There shall not exist any order, decree, judgment,
ruling or injunction which restrains the consummation of the
acquisition of the applicable Initial Acquired Company in the manner
contemplated by the applicable Purchase Agreement;
11.2.5 There shall not have been any material modification,
amendment, supplement or waiver to the applicable Purchase Agreement
without the prior written consent of the Agents, including, but not
limited to, any modification, amendment, supplement or waiver relating
to the amount or type of consideration to be paid in connection with
the acquisition of the applicable Initial Acquired Company and the
contents of all disclosure schedules and exhibits, and the acquisition
of such Initial Acquired Company shall have been consummated in
accordance with the terms of the applicable Purchase Agreement for an
aggregate cash purchase price, that when added to the aggregate cash
purchase price paid or to be paid to acquire the other Initial Acquired
Companies, is not in excess of $1,800,000,000 (inclusive of payments of
preferred stock, repayment of indebtedness and payment of expenses);
11.2.6 Receipt by the Agents of the final applicable Purchase
Agreement, together with all exhibits and schedules thereto, certified
by an officer of the Borrower;
11.2.7 Receipt by the Agents of evidence demonstrating that
the Borrower and its Subsidiaries (including the applicable Initial
Acquired Company) are in compliance with all financial obligations and
covenants after giving effect to the acquisition of such Initial
Acquired Company;
11.2.8 An officer's certificate signed by a Responsible
Officer of the Borrower, certifying that all of the foregoing
conditions precedent have been satisfied in full; and
11.2.9 Such other information and documents as may reasonably
be required by the Administrative Agent and the Administrative Agent's
counsel in connection with the acquisition of the applicable Initial
Acquired Company.
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SECTION 11.3 All Loans. The obligation of the Banks to make Loans
hereunder is subject to the following further conditions precedent:
11.3.1 The Administrative Agent shall have received a duly
executed Notice of Borrowing or Competitive Bid Request;
11.3.2 No Default exists or will result from the making of
the Loans;
11.3.3 The representations and warranties of the Borrower
contained in Section 7 and by the Borrower in the other Loan Documents
are true and correct with the same effect as though made on the
Borrowing Date;
11.3.4 No Material Litigation exists except as disclosed
on Schedule 7.8; and
11.3.5 No Material Adverse Change has occurred since
September 30, 1996.
SECTION 11.4 Loans for the Repayment of the BLHC Debt. In addition to
the satisfaction of the conditions precedent set forth in Sections 11.1 and 11.3
hereof, the obligation of the Banks to make Loans hereunder for the repayment of
the BLHC Debt is subject to the commitments of the lenders under the BLHC Credit
Agreement being irrevocably terminated.
SECTION 12. EVENTS OF DEFAULT AND THEIR EFFECT
SECTION 12.1 Events of Default. An "Event of Default" shall exist if
any one or more of the following events (herein collectively called "Events of
Default") shall occur and be continuing:
12.1.1 Non-Payment of Loans, etc.
(a) Default in the payment or prepayment when due of
any principal on the Loans, or
(b) Default in the payment within five (5) days of when due of
any interest on the Loans or any other amount owing by the Borrower
pursuant to this Agreement.
12.1.2 Non-Payment of Other Indebtedness. Default in the payment when
due (subject to any applicable grace period), whether by acceleration
or otherwise, of any Indebtedness of the Borrower or any of its
Significant Subsidiaries (other than Indebtedness in respect of this
Agreement) in an amount in excess of $50,000,000; or default in the
performance or observance of any obligation or condition with respect
to any such Indebtedness if the effect of such default is to accelerate
or could result in the acceleration of the maturity of any such
Indebtedness or
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to permit the holder or holders thereof, or any trustee or agent for
such holders, to cause such Indebtedness to become due and payable
prior to its expressed maturity. For purposes of this Section 12.1.2,
Indebtedness shall refer only to Indebtedness included in clauses (a)
through (d) and clause (h) of the definition of Indebtedness.
12.1.3 Bankruptcy, Insolvency, etc. The Borrower or any of its
Significant Subsidiaries and/or any of its Insurance Subsidiaries
becomes insolvent or generally fails to pay, or admits in writing its
inability to pay, debts as they become due; or the applicable
Department places the Borrower or any of its Significant Subsidiaries
and/or any of its Insurance Subsidiaries under supervision or
conservation; or the Borrower or any of its Significant Subsidiaries
and/or Insurance Subsidiaries applies for, consents to, or acquiesces
in, the appointment of a trustee, receiver or other custodian for the
Borrower or such Significant Subsidiary and/or Insurance Subsidiary or
any property thereof, or makes a general assignment for the benefit of
creditors; or, in the absence of such application, consent or
acquiescence, a trustee, receiver or other custodian is appointed for
the Borrower or any of its Significant Subsidiaries and/or Insurance
Subsidiaries or for a substantial part of the property of any thereof
and is not discharged within sixty (60) days; or any bankruptcy,
reorganization, debt arrangement, or other case or proceeding under any
bankruptcy or insolvency law, or any dissolution or liquidation
proceeding (except the voluntary dissolution, not under any bankruptcy
or insolvency law, of a Subsidiary), is commenced in respect of the
Borrower or any of its Significant Subsidiaries and/or Insurance
Subsidiaries and if such case or proceeding is not commenced by the
Borrower or such Significant Subsidiary and/or Insurance Subsidiary, it
is consented to or acquiesced in by the Borrower or such Significant
Subsidiary and/or Insurance Subsidiary or remains for sixty (60) days
undismissed; or the Borrower or any of its Significant Subsidiaries
and/or Insurance Subsidiaries takes any corporate action to authorize,
or in furtherance of, any of the foregoing.
12.1.4 Defaults Under this Agreement. Failure by the Borrower
to comply with or perform any of the covenants or agreements of the
Borrower set forth in Sections 9.1, 9.2, 9.3, 9.4 and 10.
12.1.5 Other Noncompliance with this Agreement. Failure by the
Borrower or any of its Subsidiaries to comply with or perform any other
provision of this Agreement or the other Loan Documents applicable to
it (other than those listed in Section 12.1.4 or those constituting an
Event of Default under any of the other provisions of this Section 12)
and continuance of such failure for thirty (30) days after notice
thereof to the Borrower from the Administrative Agent.
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12.1.6 Representations and Warranties. Any representation or
warranty made by the Borrower in any of the Loan Documents is false or
misleading in any material respect as of the date hereof or as of the
date hereafter certified, or any schedule, certificate, financial
statement, report, notice, or other writing furnished by the Borrower
to the Administrative Agent or any Bank is false or misleading in any
material respect on the date as of which the facts therein set forth
are stated or certified.
12.1.7 Pension Plans and Welfare Plans. With respect to any
Single Employer Pension Plan as to which the Borrower or any other
Controlled Group member may have any liability, there shall exist a
deficiency of more than $20,000,000 as to any Controlled Group member
(other than the Borrower) or $65,000,000 as to the Borrower in the
Pension Plan assets available to satisfy the benefits guaranteeable
under ERISA with respect to such Pension Plan, and steps are undertaken
to terminate such plan or such Pension Plan is terminated or the
Borrower or any other Controlled Group member withdraws from or
institutes steps to withdraw from such Pension Plan, or the Borrower
has knowledge that steps have been taken to terminate any Multiemployer
Pension Plan and such termination may result in liability to any
Controlled Group member (other than the Borrower) in excess of
$20,000,000 or $65,000,000 as to the Borrower or any Reportable Event
with respect to such Pension Plan has occurred which could result in
the incurrence of liability by any Controlled Group member (other than
the Borrower) in excess of $20,000,000 or $65,000,000 as to the
Borrower or steps are taken to terminate any Multiemployer Pension Plan
and such termination may result in any liability of any Controlled
Group member (other than the Borrower) in excess of $20,000,000 or
$65,000,000 as to the Borrower shall occur.
12.1.8 Adverse Judgment. One or more final judgments or
decrees shall be entered against the Borrower or any of its
Wholly-Owned Subsidiaries and/or Significant Subsidiaries involving,
individually or in the aggregate, a liability (other than a liability
of an Insurance Subsidiary in the ordinary course of business) (not
covered by collectible insurance) of $30,000,000 or more, and all such
judgments or decrees shall not have been vacated, satisfied, discharged
or stayed or bonded, if required by law, pending appeal within thirty
(30) consecutive days from the entry thereof.
12.1.9 Change in Control. The occurrence of a Change in
Control.
12.1.10 Material Adverse Change. The occurrence of any event
which, in the reasonable judgment of the Required Banks, constitutes a
Material Adverse Change.
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SECTION 12.2 Effect of Event of Default. If any Event of Default
described in Section 12.1.3 shall occur and be continuing, the Commitments (if
they have not theretofore terminated) shall immediately terminate and all
Liabilities shall become immediately due and payable, all without presentment,
demand, protest or notice of any kind; and, in the case of any other Event of
Default, the Administrative Agent may (or shall, upon the written request of the
Required Banks) declare the Commitments (if they have not theretofore
terminated) to be terminated and all Liabilities to be due and payable,
whereupon the Commitments (if they have not theretofore terminated) shall
immediately terminate and all Liabilities shall become immediately due and
payable, all without presentment, demand, protest or notice of any kind. The
Administrative Agent shall promptly advise the Borrower and each Bank of any
such declaration, but failure to do so shall not impair the effect of such
declaration. Notwithstanding the foregoing or any provision of Section 15.1, the
effect as an Event of Default of any event described in Section 12.1.3 may be
waived by the written concurrence of the Banks holding 100% of the aggregate
unpaid principal amount of the Loans, and the effect as an Event of Default of
any other event described in this Section 12 may be waived as provided in
Section 15.1.
SECTION 13. THE AGENT
SECTION 13.1 Authorization and Action. Each Bank hereby appoints and
authorizes the Administrative Agent to take such action as administrative agent
on its behalf and to exercise such powers to the extent provided herein or in
any document or instrument delivered hereunder or in connection herewith,
together with such other action as may be reasonably incidental thereto. As to
matters not expressly provided for by this Agreement (including, without
limitation, enforcement or collection of this Agreement or any other Loan
Document) the Administrative Agent shall not be required to exercise any
discretion, 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 upon all Banks. Under
no circumstances shall the Administrative Agent have any fiduciary duties to any
Bank or be required to take any action which exposes the Administrative Agent to
personal liability or which is contrary to this Agreement or to the other Loan
Documents or applicable law.
SECTION 13.2 Liability of the Administrative Agent. None of the
Administrative Agent or any of its directors, officers, agents or employees
shall be liable for any action taken or omitted to be taken by it or them under
or in connection with this Agreement and the other Loan Documents, except for
its own gross negligence or willful misconduct. Without limiting the generality
of the foregoing, the Administrative Agent: (a) may treat a Bank as such until
the Administrative Agent receives an executed Assignment Agreement entered into
between a Bank and an
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Eligible Assignee pursuant to Section 14.1; (b) may consult with legal counsel
(including counsel for the Borrower), independent public accountants and other
experts or consultants selected by it; (c) shall not be liable for any action
taken or omitted to be taken in good faith by the Administrative Agent in
accordance with the advice of counsel, accountants, consultants or experts; (d)
shall make no warranty or representation to any Bank and shall not be
responsible to any Bank for any recitals, statements, warranties or
representations, whether written or oral, made in or in connection with this
Agreement or the other Loan Documents; (e) shall not have any duty to ascertain
or to inquire as to the performance or observance of any of the terms,
obligations, covenants or conditions of this Agreement on the part of the
Borrower or to inspect the property (including, without limitation, any books
and records) of the Borrower; (f) shall not be responsible to any Bank for the
due execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or any other Loan Document or other support or security
(including the validity, priority or perfection of any Lien), or any other
document furnished in connection with any of the foregoing; and (g) shall incur
no liability under or in respect of this Agreement or any other Loan Document by
action upon any written notice, statement, certificate, order, telephone
message, facsimile or other document which the Administrative Agent believes in
good faith to be genuine and correct and to have been signed, sent or made by
the proper Person.
SECTION 13.3 administrative Agent and Affiliates. With respect to the
Loans made by it, NationsBank shall have the same rights and powers under
this Agreement and the other Loan Documents as any other Bank and may exercise
the same as though it were not the Administrative Agent; and the term "Bank" or
"Banks" shall, unless otherwise expressly indicated, include NationsBank in its
individual capacity. NationsBank and its Affiliates may accept deposits from,
lend money to, act as trustee under indentures of, and generally engage in any
kind of business with, the Borrower and any of its Subsidiaries and any Person
who may do business with or own securities of the Borrower or any such
Subsidiary, all as if NationsBank were not the Administrative Agent and without
any duty to account therefor to the Banks.
SECTION 13.4 Bank Credit Decision. Each Bank acknowledges that it has,
independently and without reliance upon the Administrative Agent or any other
Bank and based on the financial statements referred to in Section 7.6 and such
other documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement. Each Bank also
acknowledges that it will, independently and without reliance upon the
Administrative Agent or any other Bank and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement.
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SECTION 13.5 Indemnification. The Banks agree to indemnify the
Administrative Agent (to the extent not reimbursed by the Borrower), ratably
according to their Percentages, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may be imposed
on, incurred by, or assessed against the Administrative Agent in any way
relating to or arising out of this Agreement or the other Loan Documents, or any
action taken or omitted by the Administrative Agent under this Agreement or the
other Loan Documents; provided, that no Bank shall be liable for any portion of
such liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from the Administrative
Agent's gross negligence or willful misconduct. Without limiting any of the
foregoing, each Bank agrees to reimburse the Administrative Agent promptly upon
demand for its Percentage of any expenses (including reasonable counsel fees)
incurred by the Administrative Agent (in its individual capacity as agent or in
its capacity as representative of the Banks) in connection with the preparation,
execution, delivery, administration, modification, amendment, waiver or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under this Agreement or
the other Loan Documents to the extent that the Administrative Agent is not
reimbursed for such expenses by the Borrower. All obligations provided for in
this Section 13.5 shall survive termination of this Agreement.
SECTION 13.6 Successor Agent. The Administrative Agent may, and at the
request of the Required Banks shall, resign as Administrative Agent upon 30
days' notice to the Banks. If the Administrative Agent resigns under this
Agreement, the Required Banks shall appoint from among the Banks a successor
agent for the Banks which successor agent shall be approved by the Borrower
(which consent shall not be unreasonably withheld). If no successor agent is
appointed prior to the effective date of the resignation of the Administrative
Agent, the Administrative Agent may appoint, after consulting with the Banks and
the Borrower, a successor agent from among the Banks. Upon the acceptance of its
appointment as successor agent hereunder, such successor agent shall succeed to
all the rights, powers and duties of the retiring Administrative Agent and the
term "Administrative Agent" shall mean such successor agent and the retiring
Administrative Agent's appointment, powers and duties as Administrative Agent
shall be terminated. After any retiring Administrative Agent's resignation
hereunder as Administrative Agent, the provisions of this Section 13 shall inure
to its benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent under this Agreement. If no successor agent has accepted
appointment as Administrative Agent by the date which is 30 days following a
retiring Administrative Agent's notice of resignation, the retiring
Administrative Agent's resignation shall nevertheless thereupon become effective
and the Banks shall perform all of the duties of the Administrative Agent
hereunder
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until such time, if any, as the Required Banks appoint a successor agent as
provided for above.
SECTION 13.7 Duties of Syndication Agent, Documentation Agent and
Managing Agents. Notwithstanding any other provision contained in this Agreement
to the contrary, the Syndication Agent, the Documentation Agent and the Managing
Agents shall have no duties or obligations with respect to this Agreement or the
other Loan Documents.
SECTION 14. ASSIGNMENTS AND PARTICIPATIONS
SECTION 14.1 Assignments.
(a) Each Bank shall have the right at any time to assign with
the consent of the Borrower and the Administrative Agent (which
consent, in each case, will not unreasonably be withheld), to any
Eligible Assignee, all or any part of such Bank's rights and
obligations under this Agreement and each other Loan Document including
its rights in respect of its Loans and Notes. Any such assignment shall
be pursuant to an assignment agreement, substantially in the form of
Exhibit N (an "Assignment Agreement"), duly executed by such Bank and
the Eligible Assignee, and acknowledged by the Administrative Agent and
the Borrower. Notwithstanding the foregoing, each Bank may make
assignments to its Affiliates or to any Federal Reserve Bank without
obtaining consent of the Borrower or the Administrative Agent.
(b) Each assignment shall be pro rata with respect to all
rights and obligations of the assigning Bank including its Revolving
Commitment, the Loans and the Notes, if any. Each assignment shall be
in an amount equal to or in excess of $10,000,000 (except for
assignments of the entire unpaid balance, if less than $10,000,000, of
the Loans of a Bank or assignments to existing Banks). In the case of
any such assignment, upon the fulfillment of the conditions in Section
14.1(c), this Agreement shall be deemed to be amended to the extent,
and only to the extent, necessary to reflect the addition of such
Eligible Assignee, and such Eligible Assignee shall for all purposes be
a Bank party hereto and shall have, to the extent of such assignment,
the same rights and obligations as a Bank hereunder.
(c) An assignment shall become effective hereunder when all of
the following shall have occurred:
(i) the Assignment Agreement shall have been executed
by the parties thereto,
(ii) the Assignment Agreement shall have been
acknowledged by the Administrative Agent and by the Borrower,
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(iii) either the assigning Bank or the Eligible
Assignee shall have paid a processing fee of $3,000 to the
Administrative Agent for its own account; provided that the Eligible
Assignee shall be solely responsible for such processing fee with
respect to any assignment pursuant to Sections 5.8 and 15.2, and
(iv) the assigning Bank and the Administrative Agent
shall have agreed upon a date upon which such assignment shall become
effective. Upon such assignment becoming effective, the Administrative
Agent shall forward all payments of interest, principal, fees and other
amounts that would have been made to the assigning Bank, in proportion
to the percentage of the assigning Bank's rights transferred, to the
Eligible Assignee.
(d) Upon the effectiveness of any assignment, the assigning
Bank shall be relieved from its obligations hereunder to the extent of
the obligations so assigned (except to the extent, if any, that the
Borrower, any other Bank or the Administrative Agent have rights
against such assigning Bank as a result of any default by such Bank
under this Agreement). Promptly following the effectiveness of each
assignment, the Administrative Agent shall furnish to the Borrower and
each Bank a revised Schedule 1.1-A, revised to reflect such assignment.
SECTION 14.2 Participations.
(a) Each Bank may grant participations in all or any part of
its Loans, Commitments and, if applicable, the Notes to any Eligible
Assignee. A participant shall not have any rights under this Agreement
or any other document delivered in connection herewith (the
participant's rights against such Bank in respect of such participation
to be those set forth in the agreement executed by such Bank in favor
of the participant relating thereto, which agreement with respect to
such participation shall not restrict such Bank's ability to make any
modification, amendment or waiver to this Agreement without the consent
of the participant except that the consent of such participant may be
required in connection with matters requiring the consent of all of the
Banks under Section 15.1). Notwithstanding the foregoing, each
participant shall have the rights of a Bank pursuant to Section 4.7.
All amounts payable by the Borrower under this Agreement shall be
determined as if the Bank had not sold such participation. In the event
of any such sale by a Bank of participating interests to a participant,
such Bank's obligations under this Agreement shall remain unchanged,
such Bank shall remain solely responsible for the performance thereof,
such Bank shall remain the holder of any obligation for all purposes
under this Agreement, and the Borrower and the Administrative Agent
shall continue to deal solely and directly with such Bank in connection
with such Bank's rights and obligations under this Agreement.
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(b) Limitation of Rights of any Participant. Notwithstanding
anything in the foregoing to the contrary,
(i) no participant shall have any direct rights
hereunder,
(ii) the Borrower, the Administrative Agent and the
Banks, other than the selling Bank, shall deal solely with the selling
Bank and shall not be obligated to extend any rights or make any
payment to, or seek any consent of, the participant,
(iii) no participation shall relieve the selling Bank
of any of its other obligations hereunder and such Bank shall remain
solely responsible for the performance thereof, and
(iv) no participant, other than an affiliate of the
selling Bank, shall be entitled to require such Bank to take or omit to
take any action hereunder, except that such Bank may agree with such
participant that such Bank will not, without such participant's
consent, take any action which requires the consent of all of the Banks
under Section 15.1.
SECTION 14.3 Disclosure of Information. The Borrower authorizes each
Bank to disclose to any participant, assignee or Eligible Assignee (each, a
"Transferee") and any prospective Transferee any and all financial and other
information in such Bank's possession concerning the Borrower and its
Subsidiaries which has been delivered to such Bank by the Borrower in connection
with such Bank's credit evaluation of the Borrower prior to entering into this
Agreement or which has been delivered to such Bank by the Borrower pursuant to
this Agreement; provided, however, that each Bank, participant, assignee and
Eligible Assignee shall execute a confidentiality agreement substantially in the
form of Exhibit O in which it agrees that it shall hold all non-public,
confidential and proprietary information obtained pursuant to the requirements
of this Agreement in accordance with safe and sound banking and business
practices and may make disclosure reasonably required by any bona fide
participant, assignee or Eligible Assignee in connection with the contemplated
transfer of any portion of the Loans or as required or requested by any
Governmental Authority or representative thereof or pursuant to legal process.
For the purposes of this Section 14.3, by execution of this Agreement each of
the Banks shall be deemed to have agreed to and executed the confidentiality
agreement contained in Exhibit O.
SECTION 14.4 Foreign Transferees. If, pursuant to this Section 14, any
interest in this Agreement or any Loans or any Note is transferred to any
Transferee which is organized under the laws of any jurisdiction other than the
United States or any state thereof or upon the request of the Administrative
Agent, the transferor Bank shall cause such Transferee (other than any
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participant), and may cause any participant, concurrently with the effectiveness
of such transfer,
(a) to represent to the transferor Bank (for the benefit of
the transferor Bank, the Administrative Agent and the Borrower) that
under applicable law and treaties no Taxes will be required to be
withheld by the Administrative Agent,
(b) to represent to the Borrower or the transferor Bank that
under applicable law and treaties no Taxes will be required to be
withheld with respect to any payments to be made to such Transferee in
respect of the Loans or, if applicable, the Notes,
(c) to furnish to the transferor Bank, the Administrative Agent
and the Borrower either U.S. Internal Revenue Service Form 4224 or U.S.
Internal Revenue Service Form 1001 (wherein such Transferee claims
entitlement to complete exemption from U.S. federal withholding tax on
all interest payments hereunder), and
(d) to agree (for the benefit of the transferor Bank, the
Administrative Agent and the Borrower) to provide the transferor Bank,
the Administrative Agent and the Borrower a new Form 4224 or Form 1001
upon the obsolescence of any previously delivered form and comparable
statements in accordance with applicable U.S. laws and regulations and
amendments duly executed and completed by such Transferee, and to
comply from time to time with all applicable U.S. laws and regulations
with regard to such withholding tax exemption.
SECTION 15. MISCELLANEOUS
SECTION 15.1 Waivers and Amendments. The provisions of this Agreement
and of each other Loan Document may from time to time be amended, modified or
waived, if such amendment, modification or waiver is in writing and consented to
by the Borrower and the Required Banks; provided, that no such amendment,
modification or waiver:
(a) which would modify any requirement hereunder that
any particular action be taken by all Banks or by the Required
Banks, shall be effective without the consent of each Bank;
(b) which would modify this Section 15.1, change the
definition of "Required Banks," change any Percentage for any
Bank (except pursuant to an Assignment Agreement), reduce any
fees, extend the Termination Date or the maturity date of any
Loan, reduce any rate of interest payable on the Loans or
subject any Bank to any additional obligations, shall be
effective without the consent of each Bank;
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(c) which would extend the due date for, or reduce
the amount of, any payment or prepayment of principal of or
interest on the Loans or any fees, shall be effective without
the consent of each Bank; or
(d) which would affect adversely the interests,
rights or obligations of the Administrative Agent (in such
capacity) other than removal in accordance with Section 13.6,
shall be effective without consent of the Administrative
Agent.
SECTION 15.2 Failure to Consent. If any Bank shall fail to consent to
any amendment, modification or waiver described in Section 15.1 (any such Bank
being hereinafter referred to as a "Nonconsenting Bank") then in such case, the
Borrower may, upon at least five (5) Business Days' written notice to the
Administrative Agent and such Nonconsenting Bank, designate a substitute lender
(a "Substitute Bank") acceptable to the Administrative Agent in its sole
discretion, to which such Nonconsenting Bank shall assign all (but not less than
all) of its rights and obligations under the Loans and Commitment hereunder.
Upon any assignment by any Bank pursuant to this Section 15.2 becoming
effective, the Substitute Bank shall thereupon be deemed to be a "Bank" for all
purposes of this Agreement and the assigning Bank shall thereupon cease to be a
"Bank" for all purposes of this Agreement and shall have no further rights or
obligations hereunder (other than pursuant to Sections 5.1, 5.2, 15.4 and 15.5
while such Non-Consenting Bank was a Bank); provided, that all Liabilities
(except Liabilities which by the terms hereof survive the payment in full of the
Loans and termination of this Agreement) due and payable to the Nonconsenting
Bank shall be paid in full as of the date of such assignment. Notwithstanding
the foregoing, in the event that in connection with any amendment, modification
or waiver more than one Bank is a Nonconsenting Bank, the Borrower may not
require one Bank to assign its rights and obligations to a Substitute Bank
unless all Nonconsenting Banks are required to make such an assignment.
Notwithstanding any Nonconsenting Bank's failure or refusal to assign its
rights, obligations, Loans and Commitment under this Section 15.2, the
Nonconsenting Bank shall cease to be a "Bank" for all purposes of this Agreement
and the Substitute Bank substituted therefor upon payment to the Nonconsenting
Bank by the Substitute Bank of all amounts set forth in this Section 15.2
without any further action of the Nonconsenting Bank.
SECTION 15.3 Notices. All notices, requests and other communications to
any party hereunder shall be in writing (including bank wire, telex, facsimile
or similar writing) and shall be given to such party at its address, facsimile
or telex number set forth on the signature or acknowledgement pages hereof or
such other address, facsimile or telex number as such party may hereafter
specify for the purpose by written notice to the Administrative Agent and the
Borrower. Each such notice, request or other communication shall be effective
(a) if given by facsimile or telex, when such facsimile or telex is transmitted
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to the facsimile or telex number specified in this Section and, in the case of
telex, the appropriate answerback is received, (b) if given by mail, seventy-two
(72) hours after such communication is deposited in the mails with first class
postage prepaid, addressed as aforesaid or (c) if given by any other means, when
delivered at the address specified in this Section, provided, that notices to
the Administrative Agent under Sections 3, 4 and 12 shall not be effective until
received by the Administrative Agent.
SECTION 15.4 Payment of Costs and Expenses. The Borrower agrees to pay
on demand all reasonable expenses of the Administrative Agent (including the
non-duplicative fees and reasonable expenses of counsel (including expenses of
in-house counsel) and of local counsel, if any, who may be retained by such
counsel) in connection with:
(a) the negotiation, preparation, execution, syndication and
delivery of this Agreement and the other Loan Documents, including
schedules and exhibits, and any amendments, waivers, consents,
supplements or other modifications to this Agreement or the other Loan
Documents as may from time to time hereafter be required, whether or
not the transactions contemplated hereby or thereby are consummated;
and
(b) the preparation and/or review of the form of any document
or instrument relevant to this Agreement or any other Loan Document.
The Borrower further agrees to pay, and to save the Administrative Agent and the
Banks harmless from all liability for, any stamp or other Taxes (other than
income taxes of the Administrative Agent or the Banks) which may be payable in
connection with the execution or delivery of this Agreement, the borrowing
hereunder, or the issuance of the Notes or any other Loan Document. The Borrower
also agrees to reimburse the Administrative Agent, the Agents and each Bank upon
demand for all reasonable expenses (including attorneys' fees and legal
expenses) incurred by the Administrative Agent or such Bank in connection with
the enforcement of any Liabilities and the consideration of legal issues
relevant hereto and thereto whether or not such expenses are incurred by the
Administrative Agent on its own behalf or on behalf of the Banks. All
obligations of the Borrower provided for in this Section 15.4 shall survive
termination of this Agreement. Notwithstanding the foregoing, the Administrative
Agent, the Agents or a Bank shall not have the right to reimbursement under this
Section 15.4 for amounts determined by a court of competent jurisdiction to have
arisen from the gross negligence or willful misconduct of the Administrative
Agent or a Bank.
SECTION 15.5 Indemnity. The Borrower agrees to indemnify each Bank and
each Bank's respective directors, officers, employees, persons controlling or
controlled by any of them or
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their respective agents, consultants, attorneys and advisors (the "Indemnified
Parties") and hold each Indemnified Party harmless from and against any and all
liabilities, losses, claims, damages, costs and expenses of any kind to which
any of the Indemnified Parties may become subject, whether directly or
indirectly (including, without limitation, the reasonable fees and disbursements
of counsel for any Indemnified Party), relating to or arising out of this
Agreement, the other Loan Documents or any actual or proposed use of the
proceeds of the Loans hereunder; provided, that no Indemnified Party shall have
the right to be indemnified hereunder for its own gross negligence or willful
misconduct as determined by a court of competent jurisdiction. All obligations
of the Borrower provided for in this Section 15.5 shall survive termination of
this Agreement.
SECTION 15.6 Subsidiary References. The provisions of this Agreement
relating to Subsidiaries shall apply only during such times as a Person
referenced in such a provision has one or more Subsidiaries.
SECTION 15.7 Captions. Section captions used in this Agreement are for
convenience only, and shall not affect the construction of this Agreement.
SECTION 15.8 GOVERNING LAW. THIS AGREEMENT, THE NOTES AND THE LOANS
SHALL BE A CONTRACT MADE UNDER AND GOVERNED BY THE LAWS OF THE STATE OF NEW
YORK, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES. ALL OBLIGATIONS OF THE
BORROWER AND RIGHTS OF THE ADMINISTRATIVE AGENT AND THE BANKS IN RESPECT OF THE
LIABILITIES EXPRESSED HEREIN OR IN THE OTHER LOAN DOCUMENTS SHALL BE IN ADDITION
TO AND NOT IN LIMITATION OF THOSE PROVIDED BY APPLICABLE LAW.
SECTION 15.9 Counterparts. This Agreement may be executed in any number
of counterparts and by the different parties on separate counterparts and each
such counterpart shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same agreement. When counterparts
executed by all the parties shall have been lodged with the Administrative Agent
(or, in the case of any Bank as to which an executed counterpart shall not have
been so lodged, the Administrative Agent shall have received telegraphic,
facsimile, telex or other written confirmation from such Bank of execution of a
counterpart hereof by such Bank), this Agreement shall become effective as of
the Closing Date, and at such time the Administrative Agent shall notify the
Borrower and each Bank.
SECTION 15.10 SUBMISSION TO JURISDICTION; WAIVER OF VENUE. THE
ADMINISTRATIVE AGENT, EACH AGENT, EACH BANK AND THE BORROWER HEREBY IRREVOCABLY
SUBMIT TO THE NONEXCLUSIVE JURISDICTION OF ANY NORTH CAROLINA STATE OR FEDERAL
COURT SITTING IN THE WESTERN DISTRICT OF NORTH CAROLINA OR ANY NEW YORK STATE OR
FEDERAL COURT SITTING IN THE SOUTHERN DISTRICT OF NEW YORK OVER ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER LOAN
DOCUMENTS, AND THE ADMINISTRATIVE AGENT, EACH AGENT,
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EACH BANK AND THE BORROWER HEREBY IRREVOCABLY AGREE THAT ALL CLAIMS IN RESPECT
OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH STATE OR
FEDERAL COURTS. THE ADMINISTRATIVE AGENT, EACH AGENT, EACH BANK AND THE BORROWER
HEREBY IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION
IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE IN ANY ACTION OR PROCEEDING
(WHETHER BROUGHT BY THE BORROWER, THE ADMINISTRATIVE AGENT, ANY AGENT, ANY BANK,
OR OTHERWISE) IN ANY COURT HEREINABOVE SPECIFIED IN THIS SECTION 15.10 AS WELL
AS ANY RIGHT IT MAY NOW OR HEREAFTER HAVE TO REMOVE ANY SUCH ACTION OR
PROCEEDING, ONCE COMMENCED, TO ANOTHER COURT ON THE GROUNDS OF FORUM NON
CONVENIENS OR OTHERWISE. THE ADMINISTRATIVE AGENT, EACH AGENT, EACH BANK AND THE
BORROWER AGREE THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE
CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR
IN ANY OTHER MANNER PROVIDED BY LAW.
SECTION 15.11 Service of Process. The Borrower hereby irrevocably
appoints C.T. Corporation (the "Process Agent"), with an office on the date
hereof at 225 Hillsborough Street, Raleigh, North Carolina 27603, as its agent
to receive on behalf of the Borrower and its Subsidiaries and their property
service of copies of the summons and complaint and any other process which may
be served in any such action or proceeding. A copy of such process shall also be
mailed by express two-day delivery, postage prepaid, to the Borrower at its
address specified pursuant to Section 15.3; provided, however, that failure to
give a copy of such notice to the Borrower will not affect the validity of
service on the Process Agent. Such service may be made by delivering by express
two-day delivery or hand delivering a copy of such process to the Borrower in
care of the Process Agent at the Process Agent's above address, and the Borrower
hereby irrevocably authorizes and directs the Process Agent to accept such
service on its behalf. The Borrower agrees to indemnify such Process Agent in
connection with all matters relating to its appointment as agent of the Borrower
for such purposes, to enter into any agreement relating to such appointment
which such Process Agent may customarily require, and to pay such Process
Agent's customary fees upon demand. As an alternative method of service, the
Borrower for itself and its Subsidiaries also irrevocably consents to the
service of any and all process in any such action or proceeding by the mailing
of copies of such process to the Borrower at its address specified pursuant to
Section 15.3. Nothing in this Section 15.11 shall affect the right of the
Administrative Agent or any Bank to serve legal process in any other manner
permitted by law.
SECTION 15.12 Successors and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that: the Borrower may not assign or
transfer its rights or obligations under this Agreement or any other Loan
Document without the prior written consent of all Banks, and the rights of the
Banks to make assignments or grant participations are subject to the provisions
of Section 14.
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SECTION 15.13 WAIVER OF JURY TRIAL. THE BORROWER, THE ADMINISTRATIVE
AGENT AND EACH BANK HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY
RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM CONCERNING
ANY RIGHTS UNDER THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR ANY OTHER DOCUMENT
OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION
HEREWITH OR THEREWITH, OR ARISING FROM ANY BANKING RELATIONSHIP EXISTING IN
CONNECTION WITH THIS AGREEMENT, AND AGREE THAT ANY SUCH ACTION, PROCEEDING OR
COUNTERCLAIM SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY; THIS PROVISION
IS A MATERIAL INDUCEMENT FOR THE PARTIES ENTERING INTO THIS AGREEMENT.
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Executed as of the day and year first above written.
CONSECO, INC.
By: /s/ Rollin M. Dick
-------------------
Name: Rollin M. Dick
Title: Chief Financial Officer and
Executive Vice President
Notice Address
Address: 11825 N. Pennsylvania St.
Carmel, Indiana 46032
Attention: Lawrence W. Inlow
Telephone: (317) 573-6163
Facsimile: (317) 573-6327
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NATIONSBANK, N.A. (SOUTH), as
Administrative Agent
By: /s/ Gregory A. Seib
-------------------
Name: Gregory A. Seib
Title: Officer
NATIONSBANK, N.A. (SOUTH)
By: /s/ Gregory A. Seib
-------------------
Name: Gregory A. Seib
Title: Officer
Lending Office (Base Rate Loans)
Address: 101 N. Tryon Street
Independence Center
15th Floor
Charlotte, NC 28255
Attention: Margaret Rhodes
Telephone: (704) 386-2881
Facsimile: (704) 386-9923
Lending Office (Eurodollar Rate
Loans)
Address: 101 N. Tryon Street
Independence Center
15th Floor
Charlotte, NC 28255
Attention: Margaret Rhodes
Telephone: (704) 386-2881
Facsimile: (704) 386-9923
Notice Address
Address: 101 N. Tryon Street
Independence Center
15th Floor
Charlotte, NC 28255
Attention: Margaret Rhodes
Telephone: (704) 386-2881
Facsimile: (704) 386-9923
CHAR_1\F:\DOCS\KAM\BANKING\222116_1
<PAGE>
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as
Syndication Agent
By: /s/ Ronald J. Drobny
--------------------
Name: Ronald J. Drobny
Title: Vice President
BANK OF AMERICA ILLINOIS
By: /s/ Ronald J. Drobny
--------------------
Name: Ronald J. Drobny
Title: Vice President
Lending Office (Base Rate Loans)
Address: 231 S. LaSalle Street
Chicago, IL 60697
Attention: Deborah Lacy
Telephone: (312) 828-1784
Facsimile: (312) 974-9624
Lending Office (Eurodollar Rate Loans)
Address: 231 S. LaSalle Street
Chicago, IL 60697
Attention: Deborah Lacy
Telephone: (312) 828-1784
Facsimile: (312) 974-9624
Notice Address:
Address: 231 S. LaSalle Street
Chicago, IL 60697
Attention: Ronald J. Drobny
Telephone: (312) 828-3014
Facsimile: (312) 987-0889
CHAR_1\F:\DOCS\KAM\BANKING\222116_1
<PAGE>
FIRST UNION NATIONAL BANK
OF NORTH CAROLINA, as
Documentation Agent
By: /s/ Gail M. Golightly
---------------------
Name: Gail M. Golightly
Title: Senior Vice President
FIRST UNION NATIONAL BANK
OF NORTH CAROLINA
By: /s/ Gail M. Golightly
---------------------
Name: Gail M. Golightly
Title: Senior Vice President
Lending office (Base Rate Loans)
Address: One First Union Center, DC-5
Charlotte, NC 28288-0735
Attention: Lisa Mowery
Telephone: (704) 383-0558
Facsimile: (704) 383-7611
Lending Office (Eurodollar Rate Loans)
Address: One First Union Center, DC-5
Charlotte, NC 28288-0735
Attention: Lisa Mowery
Telephone: (704) 383-0558
Facsimile: (704) 383-7611
Notice Address
Address: One First Union Center, DC-5
Charlotte, NC 28288-0735
Attention: Robert Mayer, Jr.
Telephone: (704) 374-6628
Facsimile: (704) 383-7611
CHAR_1\F:\DOCS\KAM\BANKING\222116_1
<PAGE>
THE BANK OF TOKYO - MITSUBISHI TRUST
COMPANY, as Managing Agent
By: /s/ Hiroaki Fuchida
-------------------
Name: Hiroaki Fuchida
Title: Senior Vice President and
Manager
THE BANK OF TOKYO - MITSUBISHI TRUST
COMPANY
By: /s/ Hiroaki Fuchida
-------------------
Name: Hiroaki Fuchida
Title: Senior Vice President and
Manager
Lending office (Base Rate Loans)
Address: 1251 Avenue of the Americas
New York, NY 10116-3138
Attention: Dane Holmes
Telephone: (212) 782-4354
Facsimile: (212) 782-6442
Lending office (Eurodollar Rate Loans)
Address: 1251 Avenue of the Americas
New York, NY 10116-3138
Attention: Dane Holmes
Telephone: (212) 782-4354
Facsimile: (212) 782-6442
Notice Address
Address: 1251 Avenue of the Americas
New York, NY 10116-3138
Attention: Dane Holmes
Telephone: (212) 782-4354
Facsimile: (212) 782-6442
CHAR_1\F:\DOCS\KAM\BANKING\222116_1
<PAGE>
BANK OF MONTREAL
By: /s/ J.D. Higgins
----------------
Name: J.D. Higgins
Title: Managing Director
Lending Office (Base Rate Loans)
Address: 115 South LaSalle Street
Chicago, IL 60603
Attention: Robert C. Meyer
Telephone: (312) 750-5909
Facsimile: (312) 750-4352
Lending Office (Eurodollar Rate Loans)
Address: 115 South LaSalle Street
Chicago, IL 60603
Attention: Robert C. Meyer
Telephone: (312) 750-5909
Facsimile: (312) 750-4352
Notice Address
Address: 115 South LaSalle Street
Chicago, IL 60603
Attention: Robert C. Meyer
Telephone: (312) 750-5909
Facsimile: (312) 750-4352
CHAR_1\F:\DOCS\KAM\BANKING\222116_1
<PAGE>
THE BANK OF NEW YORK, as Managing Agent
By: /s/ Michael Barry
-----------------
Name: Michael Barry
Title: Assistant Vice President
THE BANK OF NEW YORK
By: /s/ Michael Barry
-----------------
Name: Michael Barry
Title: Assistant Vice President
Lending office (Base Rate Loans)
Address: One Wall Street
New York, NY 10286
Attention: Annette A. Harewood
Telephone: (212) 635-6379
Facsimile: (212) 809-9520
Lending Office (Eurodollar Rate Loans)
Address: One Wall Street
New York, NY 10286
Attention: Annette A. Harewood
Telephone: (212) 635-6379
Facsimile: (212) 809-9520
Notice Address
Address: One Wall Street
New York, NY 10286
Attention: Michael Barry
Telephone: (212) 635-6460
Facsimile: (212) 809-9520
CHAR_1\F:\DOCS\KAM\BANKING\222116_1
<PAGE>
BANK ONE TEXAS, N.A., as Managing Agent
By: /s/ Jim V. Miller
-----------------
Name: Jim V. Miller
Title: Vice President
BANK ONE TEXAS, N.A.
By: /s/ Jim V. Miller
-----------------
Name: Jim V. Miller
Title: Vice President
Lending Office (Base Rate Loans)
Address: 1717 Main Street
4th Floor, BOC
Dallas, TX 75201
Attention: Greg McKinney
Telephone: (214) 290-3312
Facsimile: (214) 290-2332
Lending Office (Eurodollar Rate Loans)
Address: 1717 Main Street
4th Floor, BOC
Dallas, TX 75201
Attention: Jim V. Miller
Telephone: (214) 290-3312
Facsimile: (214) 290-2332
Notice Address
Address: 1717 Main Street
4th Floor, BOC
Dallas, TX 75201
Attention: Jim V. Miller
Telephone: (214) 290-2309
Facsimile: (214) 290-2332
CHAR_1\F:\DOCS\KAM\BANKING\222116_1
<PAGE>
CREDIT LYONNAIS NEW YORK BRANCH,
as Managing Agent
By: /s/ Sebastian Rocco
-------------------
Name: Sebastian Rocco
Title: First Vice President
CREDIT LYONNAIS NEW YORK BRANCH
By: /s/ Sebastian Rocco
-------------------
Name: Sebastian Rocco
Title: First Vice President
Lending Office (Base Rate Loans)
Address: 1301 Avenue of the Americas
New York, NY 10019
Attention: Peter Rasmussen
Telephone: (212) 261-7718
Facsimile: (212) 261-3401
Lending Office (Eurodollar Rate Loans)
Address: 1301 Avenue of the Americas
New York, New York 10019
Attention: Peter Rasmussen
Telephone: (212) 261-7718
Facsimile: (212) 261-3401
Notice Address
Address: 1301 Avenue of the Americas
New York, New York 10019
Attention: Peter Rasmussen
Telephone: (212) 261-7718
Facsimile: (212) 261-3401
CHAR_1\F:\DOCS\KAM\BANKING\222116_1
<PAGE>
DEUTSCHE BANK AG,
NEW YORK AND/OR
CAYMAN ISLANDS BRANCH, as Managing
Agent
By: /s/ Eckhard Osenberg
--------------------
Name: Eckhard Osenberg
Title: Assistant Vice President
DEUTSCHE BANK AG,
NEW YORK AND/OR
CAYMAN ISLANDS BRANCH
By: /s/ Eckhard Osenberg
--------------------
Name: Eckhard Osenberg
Title: Assistant Vice President
Lending Office (Base Rate Loans)
Address: 31 West 52nd Street
New York, NY 10019
Attention: Cheryl Mandelbaum
Telephone: (212) 469-8426
Facsimile: (212) 469-7880
Lending Office (Eurodollar Rate Loans)
Address: 31 West 52nd Street
New York, NY 10019
Attention: Cheryl Mandelbaum
Telephone: (212) 469-8426
Facsimile: (212) 469-7880
Notice Address
Address: 31 West 52nd Street
New York, NY 10019
Attention: Susan Maros
Telephone: (212) 474-8104
Facsimile: (212) 474-8366
CHAR_1\F:\DOCS\KAM\BANKING\222116_1
<PAGE>
THE LONG-TERM CREDIT BANK OF JAPAN,
LTD., CHICAGO BRANCH, as Managing Agent
By: /s/ Brady S. Sadek
------------------
Name: Brady S. Sadek
Title: Vice President and Deputy
General Manager
THE LONG-TERM CREDIT BANK OF JAPAN,
LTD., CHICAGO BRANCH
By: /s/ Brady S. Sadek
------------------
Name: Brady S. Sadek
Title: Vice President and Deputy
General Manager
Lending Office (Base Rate Loans)
Address: 190 South LaSalle Street
8th FL
Chicago, IL 60606
Attention: Sonia Lazaric
Telephone: (312) 704-1700
Facsimile: (312) 704-8505
Lending Office (Eurodollar Rate Loans)
Address: 190 South LaSalle Street
8th FL
Chicago, IL 60606
Attention: Sonia Lazaric
Telephone: (312) 704-1700
Facsimile: (312) 704-8505
Notice Address
Address: 190 South LaSalle Street
8th FL
Chicago, IL 60606
Attention: Brady Sadek
Telephone: (312) 704-5455
Facsimile: (312) 704-8505
CHAR_1\F:\DOCS\KAM\BANKING\222116_1
<PAGE>
CANADIAN IMPERIAL BANK OF COMMERCE,
as Managing Agent
By: /s/ Gerald J. Giradi
--------------------
Name: Gerald J. Giradi
Title: Director, CIBC Wood Grundy
Securities Corp., as Agent
CANADIAN IMPERIAL BANK OF COMMERCE
By: /s/ Gerald J. Giradi
--------------------
Name: Gerald J. Giradi
Title: Director, CIBC Wood Grundy
Securities Corp., as Agent
Lending Office (Base Rate Loans)
Address: Two Paces West
2727 Paces Ferry Road
Suite 1200
Atlanta, Georgia 30339
Attention: Kathryn McGovern
Telephone: (770) 319-4821
Facsimile: (770) 319-4950
Lending Office (Off shore Rate Loans)
Address: Two Paces West
2727 Paces Ferry Road
Suite 1200
Atlanta, Georgia 30339
Attention: Kathryn McGovern
Telephone: (770) 319-4821
Facsimile: (770) 319-4950
Notice Address
Address: 425 Lexington Avenue
New York, New York 10017
Attention: Stephen Reynolds
Telephone: (212) 856-3566
Facsimile: (212) 856-3613
CHAR_1\F:\DOCS\KAM\BANKING\222116_1
<PAGE>
CORESTATES BANK, NA, as Managing Agent
By: /s/ J. Linvill
--------------
Name: J. Linvill
Title: Senior Vice President
CORESTATES BANK, NA
By: /s/ J. Linvill
--------------
Name: J. Linvill
Title: Senior Vice President
Lending Office (Base Rate Loans)
Address: 1339 Chestnut Street
FC 1-8-8-4
Philadelphia, PA 19107
Attention: Mary Albanese
Telephone: (215) 973-8174
Facsimile: (215) 786-4114
Lending Office (Off shore Rate Loans)
Address: 1339 Chestnut Street
FC 1-8-8-4
Philadelphia, PA 19107
Attention: Mary Albanese
Telephone: (215) 973-8174
Facsimile: (215) 786-4114
Notice Address
Address: 1339 Chestnut Street
FC 1-8-8-4
Philadelphia, PA 19107
Attention: Kathleen M. Petrelli
Telephone: (215) 973-3632
Facsimile: (215) 786-4114
CHAR_1\F:\DOCS\KAM\BANKING\222116_1
<PAGE>
SANWA BANK, as Managing Agent
By: /s/ Richard H. Ault
-------------------
Name: Richard H. Ault
Title: Vice President
SANWA BANK
By: /s/ Richard H. Ault
-------------------
Name: Richard H. Ault
Title: Vice President
Lending Office (Base Rate Loans)
Address: 10 South Wacker Drive
31st Floor
Chicago, IL 60606
Attention: Richard Ault
Telephone: (312) 368-3011
Facsimile: (312) 346-6677
Lending Office (Eurodollar Rate Loans)
Address: 10 South Wacker Drive
31st Floor
Chicago, IL 60606
Attention: Richard Ault
Telephone (312) 368-3011
Facsimile: (312) 368-6677
Notice Address
Address: 10 South Wacker Drive
31st Floor
Chicago, IL 60606
Attention: Richard Ault
Telephone: (312) 368-3011
CHAR_1\F:\DOCS\KAM\BANKING\222116_1
<PAGE>
FLEET NATIONAL BANK, as Managing Agent
By: /s/ R. J. Kane
--------------
Name: R. J. Kane
Title: Senior Vice President
FLEET NATIONAL BANK
By: /s/ R. J. Kane
--------------
Name: R. J. Kane
Title: Senior Vice President
Lending Office (Base Rate Loans)
Address: 777 Main Street
Ins. Ind. Dept. CTMO250
Hartford, CT 06115
Attention: Icy Mounds
Telephone: (860) 986-4616
Facsimile: (806) 986-1094
Lending Office (Offshore Rate Loans)
Address: 777 Main Street
Ins. Ind. Dept CTMO250
Hartford, CT 06115
Attention: Icy Mounds
Telephone: (860) 986-4616
Facsimile: (806) 986-1094
Notice Address
Address: 777 Main Street
Ins. Ind. Dept. CTMO250
Hartford, CT 06115
Attention: R. Jay Kane
Telephone: (806) 986-2639
Facsimile: (806) 986-1264
CHAR_1\F:\DOCS\KAM\BANKING\222116_1
<PAGE>
SOCIETE GENERALE, as Managing Agent
By: /s/ Laura A. Hope
-----------------
Name: Laura A. Hope
Title: Vice President
SOCIETE GENERALE
By: /s/ Laura A. Hope
-----------------
Name: Laura A. Hope
Title: Vice President
Lending Office (Base Rate Loans)
Address: 1221 Avenue of the Americas
New York, NY 10020
Attention: Dorene Randall
Telephone: (212) 278-6241
Facsimile: (212) 278-7153
Lending Office (Eurodollar Rate Loans)
Address: 1221 Avenue of the Americas
New York, NY 10020
Attention: Dorene Randall
Telephone: (212) 278-6241
Facsimile: (212) 278-7153
Notice Address
Address: 1221 Avenue of the Americas
New York, NY 10020
Attention: Laura Hope
Telephone: (212) 278-7154
Facsimile: (212) 278-7153
CHAR_1\F:\DOCS\KAM\BANKING\222116_1
<PAGE>
COMERICA BANK, as Managing Agent
By: /s/ Phillip A. Coosaia
----------------------
Name: Phillip A. Coosaia
Title: Vice President
COMERICA BANK
By: /s/ Phillip A. Coosaia
----------------------
Name: Phillip A. Coosaia
Title: Vice President
Lending Office (Base Rate Loans)
Address: 500 Woodward Avenue
Detroit, MI 48226
Attention: Phil Coosaia
Telephone: (313) 222-7044
Facsimile: (313) 222-9516
Lending Office (Eurodollar Rate Loans)
Address: 500 Woodward Avenue
Detroit, MI 48226
Attention: Phil Coosaia
Telephone: (313) 222-7044
Facsimile: (313) 222-9516
Notice Address
Address: 500 Woodward Avenue
Detroit, MI 48226
Attention: Phil Coosaia
Telephone: (313) 222-7044
Facsimile: (313) 222-3351
CHAR_1\F:\DOCS\KAM\BANKING\222116_1
<PAGE>
THE FUJI BANK, LIMITED, as Managing
Agent
By: /s/ Peter L. Chinnici
---------------------
Name: Peter L. Chinnici
Title: Joint General Manager
THE FUJI BANK, LIMITED
By: /s/ Peter L. Chinnici
---------------------
Name: Peter L. Chinnici
Title: Joint General Manager
Lending Office (Base Rate Loans)
Address: 225 West Wacker Drive
Suite 2000
Chicago, IL 60606
Attention: James Fayen
Telephone: (312) 621-0397
Facsimile: (312) 621-0539
Lending Office (Eurodollar Rate Loans)
Address: 225 West Wacker Drive
Suite 2000
Chicago, IL 60606
Attention: James Fayen
Telephone: (312) 621-0397
Facsimile: (312) 621-0539
Notice Address
Address: 225 West Wacker Drive
Suite 2000
Chicago, IL 60606
Attention: James Fayen
Telephone: (312) 621-0397
Facsimile: (312) 621-0539
CHAR_1\F:\DOCS\KAM\BANKING\222116_1
<PAGE>
THE FIRST NATIONAL BANK OF CHICAGO
By: /s/ Frederick J. Crawford
-------------------------
Name: Frederick J. Crawford
Title: Vice President
Lending Office (Base Rate Loans)
Address: One First National Plaza
Mail Suite 0085
Chicago, IL 60670-0085
Attention: Fred Crawford
Insurance Division
Telephone: (312) 732-5664
Facsimile: (312) 732-4033
Lending Office (Eurodollar Rate Loans)
Address: One First National Plaza
Mail Suite 0085
Chicago, IL 60670-0085
Attention: Fred Crawford
Insurance Division
Telephone: (312) 732-5664
Facsimile: (312) 732-4033
Notice Address
Address: One First National Plaza
Mail Suite 0085
Chicago, IL 60670-0085
Attention: Fred Crawford
Insurance Division
Telephone: (312) 732-5664
Facsimile: (312) 732-4033
CHAR_1\F:\DOCS\KAM\BANKING\222116_1
<PAGE>
SUNTRUST BANK, as Managing Agent
By: /s/ Ronald K. Rueve
-------------------
Name: Ronald K. Rueve
Title: Vice President
SUNTRUST BANK
By: /s/ Ronald K. Rueve
-------------------
Name: Ronald K. Rueve
Title: Vice President
Lending Office (Base Rate Loans)
Address: 200 South Orange Avenue 0-1043
Orlando, FL 32802
Attention: Chris Black
Telephone: (407) 237-2467
Facsimile: (407) 237-6894
Lending Office (Eurodollar Rate Loans)
Address: 200 South Orange Avenue 0-1043
Orlando, FL 32802
Attention: Chris Black
Telephone: (407) 237-2467
Facsimile: (407) 237-6894
Notice Address
Address: 200 South Orange Avenue 0-1043
Orlando, FL 32802
Attention: Chris Black
Telephone: (407) 237-2467
Facsimile: (407) 237-6894
CHAR_1\F:\DOCS\KAM\BANKING\222116_1
<PAGE>
THE CHASE MANHATTAN BANK
By: /s/ Isolde G. O'Hanlon
----------------------
Name: Isolde G. O'Hanlon
Title: Managing Director
Lending Office (Base Rate Loans)
Address: One Chase Manhattan Plaza
8th Floor
New York, NY 10081
Attention: Rocky Chan
Telephone: (212) 552-7929
Facsimile: (212) 552-7490
Lending Office (Eurodollar Rate Loans)
Address: One Chase Manhattan Plaza
8th Floor
New York, NY 10081
Attention: Rocky Chan
Telephone: (212) 552-7929
Facsimile: (212) 552-7490
Notice Address
Address: One Chase Manhattan Plaza
4th Floor
New York, NY 10081
Attention: Rocky Chan
Telephone: (212) 552-7929
Facsimile: (212) 552-7490
CHAR_1\F:\DOCS\KAM\BANKING\222116_1
<PAGE>
THE ROYAL BANK OF SCOTLAND plc
By: /s/ D. Dougan
-------------
Name: D. Dougan
Title: Vice President
Lending office (Base Rate Loans)
Address: Wall Street Plaza
88 Pine Street, 26th FL
New York, NY 10005
Attention: Helaine Griffin
Telephone: (212) 269-1700
Facsimile: (212) 480-0791
Lending Office (Eurodollar Rate Loans)
Address: Wall Street Plaza
88 Pine Street, 26th FL
New York, NY 10005
Attention: Helaine Griffin
Telephone: (212) 269-1700
Facsimile: (212) 480-0791
Notice Address
Address: Wall Street Plaza
88 Pine Street, 26th FL
New York, NY 10005
Attention: David Dougan
Telephone: (212) 269-0938
Facsimile: (212) 480-0791
CHAR_1\F:\DOCS\KAM\BANKING\222116_1
<PAGE>
THE MITSUBISHI TRUST AND BANKING
CORPORATION - CHICAGO BRANCH
By: /s/ Masaaki Yamagishi
---------------------
Name: Masaaki Yamagishi
Title: Chief Manager
Lending Office (Base Rate Loans)
Address: 311 South Wacker Drive
Suite 6300
Chicago, IL 60606
Attention: Carmen Lopez
Telephone: (312) 408-6022
Facsimile: (312) 408-0170
Lending office (Eurodollar Rate Loans)
Address: 311 South Wacker Drive
Suite 6300
Chicago, IL 60606
Attention: Carmen Lopez
Telephone: (312) 408-6022
Facsimile: (312) 408-0170
Notice Address
Address: 311 South Wacker Drive
Suite 6300
Chicago, IL 60606
Attention: Vicki L. Kamm
Telephone: (312) 408-6014
Facsimile: (312) 663-0863
CHAR_1\F:\DOCS\KAM\BANKING\222116_1
<PAGE>
THE YASUDA TRUST & BANKING CO., LTD.,
CHICAGO BRANCH
By: /s/ Joseph C. Meek
------------------
Name: Joseph C. Meek
Title: Deputy General Manager
Lending Office (Base Rate Loans)
Address: 181 West Madison Street
Suite 4500
Chicago, IL 60602
Attention: Mary Blochberger
Telephone: (312) 683-3852
Facsimile: (312) 683-3899
Lending Office (Eurodollar Rate Loans)
Address: 181 West Madison Street
Suite 4500
Chicago, IL 60602
Attention: Mary Blochberger
Telephone: (312) 683-3852
Facsimile: (312) 683-3899
Notice Address
Address: 181 West Madison Street
Suite 4500
Chicago, IL 60602
Attention: Charles Hagel
Telephone: (312) 683-3844
Facsimile: (312) 683-3899
CHAR_1\F:\DOCS\KAM\BANKING\222116_1
<PAGE>
BANQUE NATIONALE DE PARIS
By: /s/ Phil Truesdale
------------------
Name: Phil Truesdale
Title: Vice President
By: /s/ Veronique Marcus
--------------------
Name: Veronique Marcus
Title: Assistant Vice President
Lending office (Base Rate Loans)
Address: 499 Park Avenue
New York, NY 10022
Attention: Jessie Griffiths
Telephone: (212) 415-9610
Facsimile: (212) 415-9695
Lending Office (Eurodollar Rate Loans)
Address: 499 Park Avenue
New York, NY 10022
Attention: Jessie Griffiths
Telephone: (212) 415-9610
Facsimile: (212) 415-9695
Notice Address
Address: 499 Park Avenue
New York, NY 10022
Attention: Phil Truesdale
Telephone: (212) 415-9719
Facsimile: (212) 415-9695
CHAR_1\F:\DOCS\KAM\BANKING\222116_1
<PAGE>
STAR BANK, NATIONAL ASSOCIATION
By: /s/ Rick W. Neltner
-------------------
Name: Rick W. Neltner
Title: Vice President
Lending Office (Eurodollar Rate Loans)
Address: 425 Walnut Street
Mail Location 9150
Cincinnati, OH 45202
Attention: Cathy Siegel
Telephone: (513) 632-4032
Facsimile: (513) 632-2536
Notice Address
Address: 425 Walnut Street
Mail Location 8160
Cincinnati, OH 45202
Attention: Douglas V. Wyatt
Telephone: (513) 632-2013
Facsimile: (513) 632-2068
CHAR_1\F:\DOCS\KAM\BANKING\222116_1
<PAGE>
CREDIT SUISSE
By: /s/ William P. Murray
---------------------
Name: William P. Murray
Title: Member of Senior Management
By: /s/ Kristinn R. Kristinsson
---------------------------
Name: Kristinn R. Kristinsson
Title: Associate
Lending Office (Base Rate Loans)
(until 11/22)
Address: 12 East 49th Street
New York, NY 10017
Attention: Hazel Leslie
Telephone: (212) 238-5218
Facsimilie: (212) 238-5246
(as of 11/25)
Address: 11 Madison Avenue
New York, NY 10010
Attention: Hazel Leslie
Telephone: (212) 238-5218
Facsimilie: (212) 238-5246
Lending Office (Eurodollar Rate Loans)
(until 11/22)
Address: 12 East 49th Street
New York, NY 10017
Attention: Hazel Leslie
Telephone: (212) 238-5218
Facsimilie: (212) 238-5246
(as of 11/25)
Address: 11 Madison Avenue
New York, NY 10010
Attention: Hazel Leslie
Telephone: (212) 238-5218
Facsimilie: (212) 238-5246
Notice Address
Address: 227 West Monroe Street
Suite 4000
Chicago, IL 60606
Attention: John Bordes III/Mark
Taylor
Telephone: (312) 630-0086
Facsimilie: (312) 630-0359
CHAR_1\F:\DOCS\KAM\BANKING\222116_1
<PAGE>
KEYBANK NATIONAL ASSOCIATION
By: /s/ Sharon F. Weinstein
-----------------------
Name: Sharon F. Weinstein
Title: Vice President
Lending Office (Base Rate Loans)
Address: MC OH-01-27-0606
127 Public Square
Cleveland, OH 44114-1306
Attention: Kathy Koenig
Telephone: (216) 689-4228
Facsimile: (216) 689-4981
Lending Office (Eurodollar Rate Loans)
Address: MC OH-01-27-0606
127 Public Square
Cleveland, OH 44114-1306
Attention: Kathy Koenig
Telephone: (216) 689-4228
Facsimile: (216) 689-4981
Notice Address
Address: MC OH-01-27-0606
127 Public Square
Cleveland, OH 44114-1306
Attention: Kathy Koenig
Telephone: (216) 689-4228
Facsimile: (216) 689-4981
CHAR_1\F:\DOCS\KAM\BANKING\222116_1
<PAGE>
NATIONAL CITY BANK
By: /s/ Terri L. Cable
------------------
Name: Terri L. Cable
Title: Vice President
Lending Office (Base Rate Loans)
Address: 1900 East 9th Street
10th Floor
Locator 2104
Cleveland, OH 44114
Attention: Connie Djukic
Telephone: (216) 575-2578
Facsimile: (216) 575-2481
Lending Office (Eurodollar Rate Loans)
Address: 1900 East 9th Street
10th Floor
Locator 2104
Cleveland, OH 44114
Attention: Connie Djukic
Telephone: (216) 575-2578
Facsimile: (216) 575-2481
Notice Address
Address: 1900 East 9th Street
10th Floor
Locator 2104
Cleveland, OH 44114
Attention: Terri L. Cable
Telephone: (216) 575-3354
Facsimile: (216) 575-9396
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<PAGE>
BAYERISCHE LANDESBANK GIROZENTRALE
By: /s/ Berthold Von Stuelpnagel
----------------------------
Name: Berthold Von Stuelpnagel
Title: Executive Vice President &
Manager
By: /s/ Peter Obermann
------------------
Name: Peter Obermann
Title: Senior Vice President and
Manager Lending Division
Lending Office (Base Rate Loans)
Address: 560 Lexington Avenue
17th Floor
New York, NY 10022
Attention: Sean O'Sullivan
Telephone: (212) 310-9913
Facsimile: (212) 310-9868
Lending Office (Eurodollar Rate Loans)
Address: 560 Lexington Avenue
17th Floor
New York, NY 10022
Attention: Sean O'Sullivan
Telephone: (212) 310-9913
Facsimile: (212) 310-9868
Notice Address
Address: 560 Lexington Avenue
17th Floor
New York, NY 10022
Attention: Sean O'Sullivan
Telephone: (212) 310-9913
Facsimile: (212) 310-9868
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COMMERZBANK AKTIENGESELLSCHAFT, CHICAGO
BRANCH
By: /s/ Mark Monson
---------------
Name: Mark Monson
Title: Vice President
By: /s/ Dr. Herbert R. Tollner
--------------------------
Name: Dr. Herbert R. Tollner
Title: Executive Vice President
Lending Office (Base Rate Loans)
Address: Chicago Branch
c/o 2 World Financial Center
34th Floor
New York, NY 10281-1050
Attention: Mark Marraffa
Telephone: (212) 266-7268
Facsimile: (212) 266-7593
Lending Office (Eurodollar Rate Loans)
Address: Chicago Branch
c/o 2 World Financial Center
34th Floor
New York, NY 10281-1050
Attention: Mark Marraffa
Telephone: (212) 266-7268
Facsimile: (212) 266-7593
Notice Address
Address: 311 South Wacker Drive
Suite 5800
Chicago, IL 60606
Attention: Mark Monson
Telephone: (312) 408-6910
Facsimile: (312) 485-1486
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<PAGE>
THE SAKURA BANK, LIMITED
By: /s/ Shunji Sakurai
------------------
Name: Shunji Sakurai
Title: Joint General Manager
Lending Office (Base Rate Loans)
Address: 227 West Monroe Street
Suite 4700
Chicago, IL 60606
Attention: Kristin Hays
Telephone: (312) 580-3276
Facsimile: (312) 332-5345
Lending Office (Eurodollar Rate Loans)
Address: 227 West Monroe Street
Suite 4700
Chicago, IL 60606
Attention: Kristin Hays
Telephone: (312) 580-3276
Facsimile: (312) 332-5345
Notice Address
Address: 227 West Monroe Street
Suite 4700
Chicago, IL 60606
Attention: David J. Wuertz
Telephone: (312) 580-3268
Facsimile: (312) 332-5345
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