SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended March 31, 1995
[ ] Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 [No Fee Required]
For the transition period from ________________ to ________________
Commission file number 1-10522
PIONEER FINANCIAL SERVICES, INC.
(Exact name of registrant as specified in its charter)
Delaware 36-2479273
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1750 East Golf Road, Schaumburg, Illinois 60173
(Address of principal executive, offices) (Zip Code)
Registrant's telephone number, including area code (708) 995-0400
Indicate by a check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO ____
The number of shares of the registrant's common stock, $1.00 par value per
share, outstanding as of April 28, 1995 was 5,907,873.
This document consists of 16 sequentially numbered pages.
The exhibit index appears on page 13.
PIONEER FINANCIAL SERVICES, INC. AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share
amounts)
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
<S> <C> <C>
(Unaudited)
ASSETS
Investments-Note 3
Securities available for sale
Fixed maturities, at fair value
(cost: 1995-$452,011; 1994-$232,769) $ 452,722 $ 218,748
Equity securities, at fair value
(cost: 1995-$16,135; 1994-$12,484) 19,572 15,440
Fixed maturities held to maturity, at amortized cost
(fair value: 1995-$348,549; 1994-$338,540) 373,980 378,650
Mortgage loans--at unpaid balance 9,969 1,806
Real estate--at cost, less accumulated depreciation 16,875 16,959
Policy loans--at unpaid balance 78,046 23,082
Short-term investments--at cost,
which approximates fair value 42,695 69,152
Total Investments 993,859 723,837
Cash 21,148 8,612
Premiums and other receivables, less
allowance for doubtful accounts 24,124 20,102
Amounts on deposit and due from reinsurers 149,400 41,426
Deferred policy acquisition costs 225,056 225,618
Land, building and equipment-at cost, less
accumulated depreciation 21,323 20,314
Accrued investment income 13,327 8,873
Deferred federal income taxes 3,065 7,262
Other 21,394 19,656
$1,472,696 $1,075,700
March 31, December 31,
1995 1994
(Unaudited)
LIABILITIES, REDEEMABLE PREFERRED STOCK,
AND STOCKHOLDERS' EQUITY
Policy liabilities:
Future policy benefits $ 971,510 $ 620,562
Policy and contract claims 151,471 155,373
Unearned premiums 74,309 76,266
Other 19,462 16,407
1,216,752 868,608
General expenses and other liabilities 37,514 31,793
Amounts due to reinsurers 39,506 5,249
Short-term notes payable 4,324 20,093
Long-term notes payable 17,857 2,520
Convertible subordinated debentures 57,427 57,427
1,373,380 985,690
Redeemable Preferred Stock, no par value:
$2.125 cumulative convertible exchangeable
preferred stock
Authorized: 5,000,000 shares
Issued and outstanding:
(1995: 851,400 shares; 1994: 867,300 shares) 21,285 21,682
Stockholders' Equity
Common Stock, $1 par value:
Authorized: 20,000,000 shares
Issued, including shares in treasury
(1995-7,035,173; 1994-6,996,157) 7,035 6,996
Additional paid-in capital 29,607 29,299
Unrealized depreciation of
available-for-sale securities-Note 3 (1,576) (7,193)
Retained earnings 53,185 48,960
Less treasury stock at cost
(1995-1,132,300 shares; 1994-1,078,400 shares) (10,220) (9,734)
Total Stockholders' Equity 78,031 68,328
$1,472,696 $1,075,700
See notes to condensed consolidated financial statements.
</TABLE>
PIONEER FINANCIAL SERVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1995 1994
<S> <C> <C>
Income:
Premiums and policy charges $169,575 $172,898
Net investment income 17,497 11,104
Other income and realized gains
and losses from investments 6,947 7,263
194,019 191,265
Benefits and expenses:
Benefits 116,961 121,069
Insurance and general expenses 50,665 42,146
Interest expense 1,710 1,147
Amortization of deferred policy
acquisition costs 17,174 19,980
186,510 184,342
INCOME BEFORE INCOME TAXES 7,509 6,923
Federal income taxes 2,554 2,423
NET INCOME 4,955 4,500
PREFERRED STOCK DIVIDENDS 498 493
INCOME APPLICABLE TO
COMMON STOCKHOLDERS $ 4,457 $ 4,007
NET INCOME PER COMMON SHARE
Primary $ .73 $ .60
Fully Diluted $ .47 $ .40
DIVIDENDS DECLARED
PER COMMON SHARE $ .045 $ .0375
AVERAGE COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING
Primary 6,111 6,731
Fully Diluted 12,408 13,107
See notes to condensed consolidated financial statements.
</TABLE>
PIONEER FINANCIAL SERVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1995 1994
<S> <S> <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 10,301 $ 7,953
INVESTING ACTIVITIES
Net decrease in 26,457 21,468
short-term investments
Purchases of investments (46,741) (78,254)
Sale of investments 31,208 16,381
Maturities of investments 1,109 27,018
Net sale (purchase) of property and equipment 313 (521)
Purchase of subsidiary net
of cash acquired (7,629) -
NET CASH PROVIDED (USED) BY
INVESTING ACTIVITIES 4,717 (13,908)
FINANCING ACTIVITIES
Increase in note payable 20,610 -
Repayments of notes payable (21,042) (1,041)
Proceeds from sale of agent receivables 4,415 6,784
Transfer of collections on previously
sold agent receivables (5,199) (6,920)
Dividends paid - preferred (457) (503)
Dividends paid - common (273) -
Stock options exercised 335 294
Purchase of treasury stock (485) (50)
Retirement of preferred stock (398) (493)
Other 12 37
NET CASH USED BY
FINANCING ACTIVITIES (2,482) (1,892)
INCREASE (DECREASE) IN CASH 12,536 (7,847)
CASH AT BEGINNING OF PERIOD 8,612 23,379
CASH AT END OF PERIOD $ 21,148 $ 15,532
See notes to condensed consolidated financial statements.
</TABLE>
PIONEER FINANCIAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
March 31, 1995<PAGE>
NOTE 1 -- ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles (GAAP) for
interim financial information and with 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 complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three month period ended March 31,
1995 are not necessarily indicative of the results that may be expected for the
year ended December 31, 1995. For further information, refer to the
consolidated financial statements and footnotes thereto included in the Pioneer
Financial Services, Inc. ("Pioneer" or "the Company") Annual Report on Form 10-K
for the year ended December 31, 1994.
EARNINGS PER SHARE
Primary earnings per share of Common Stock are determined by dividing net income
for the period, less dividends on Preferred Stock, by the weighted average
number of common stock and common stock equivalents (dilutive stock options)
outstanding. Fully diluted earnings per share assumes conversion of the
Preferred Stock outstanding and conversion of the Subordinated Debentures with
related tax-effected interest added back to net income. (See discussion in
Exhibit 11 on page 16).
NOTE 2 -- STOCKHOLDERS' EQUITY
The statutory accounting practices prescribed for Pioneer's insurance
subsidiaries by regulatory authorities differ from GAAP. The combined
statutory-basis capital and surplus of Pioneer's direct insurance subsidiaries
was $118,539,000 and $124,284,000 at March 31, 1995 and December 31, 1994,
respectively. Statutory net income of the insurance subsidiaries amounted to
$1,825,000 and $692,000 for the three month period ended March 31, 1995 and
1994, respectively.
NOTE 3 -- INVESTMENTS
Realized investment gains for the three month periods ended March 31, 1995 and
1994 were $317,000 and $253,000, respectively.
Unrealized depreciation of available-for-sale securities at March 31, 1995 of
$1,576,000 included unrealized gains of $4,148,000 less unrealized gains of
$6,573,000 on investments in trust accounts that are guaranteed as to principal
value by reinsurers and tax benefits of $849,000. Unrealized depreciation at
December 31, 1994 of $7,193,000 included unrealized losses of $11,066,000 net of
tax benefits of $3,873,000.
NOTE 4 -- CONTINGENCIES
Pioneer and its subsidiaries are named as defendants in various legal actions,
some claiming significant damages, arising primarily from claims under insurance
policies, disputes with agents, reinsurance arbitrations, and other items.
Pioneer's management and its legal counsel are of the opinion that the
disposition of these actions will not have a material adverse effect on
Pioneer's financial position.
NOTE 5 -- BUSINESS COMBINATION
On January 31, 1995, Pioneer acquired for a cost of $23,700,000 the outstanding
common shares of Connecticut National Life Insurance Company (CNL). The
acquisition was accounted for by the purchase method and, accordingly, the
purchase price was allocated to assets and liabilities acquired based on
estimates of their fair values.
The following unaudited pro-forma consolidated results of operations have been
prepared as if the acquisition had been completed as of January 1, 1994:
(In thousands except per share amounts)
Year-Ended
December 31, 1994
Revenues $ 809,500
Net income 18,700
Net income per share
Primary 2.60
Fully Diluted 1.70
CNL did not prepare quarterly financial statements in accordance with generally
accepted accounting principles prior to the acquisition by Pioneer. The
foregoing pro-forma information is not necessarily indicative of either the
results of operations that would have occurred had the acquisition been
effective January 1, 1994 or of the future results of operations of the
consolidated companies.
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations - First Three Months of 1995 Compared to First Three
Months of 1994.
Division Overview
The income (loss) before income taxes by division for the first quarter of 1995
and 1994 respectively, are as follows (in thousands):
Three Months Ended
March 31,
1995 1994
Group Medical $ 4,876 $ 1,907
Senior Health 3,498 4,786
Life Insurance 586 2,442
Medical Utilization
Management 536 101
Corporate Expenses (1,987) (2,313)
Total $ 7,509 $ 6,923
Group Medical
The increase in pre-tax income for the three month period was due to improvement
in major medical experience. The accident and health loss ratio decreased to
62% from 71% for the three month period of 1995 as compared to 1994. The
improvement in the loss ratio was due to continued increases in PPO penetration
and higher claim costs in the comparative quarter of last year. The significant
reduction in loss ratios was partially offset by a 5% reduction in earned
premium and an increase in general expense ratios.
Senior Health
The decrease in pre-tax income for the three month period was due to slightly
higher than projected claims on the Company's medicare supplement products as
well as increased expenses related to several new marketing programs. The
accident and health loss ratio increased to 67% from 64% for the three month
period in 1995 as compared to 1994. The first quarter 1995 results on an
annualized basis are up 4% over 1994.<PAGE>
Life Insurance
The decrease in pre-tax income for the three month period was primarily due to
higher mortality on an old block of interest sensitive life business and
expenses incurred subsequent to the January 1995 purchase of Connecticut
National Life Insurance Company (CNL).
Medical Utilization Management
The medical utilization management division showed continued improvement in
profit for the three month period. The division expanded sales to unaffiliated
clients with a $917,000 or 45% increase in the three month period in 1995
compared to 1994. In addition, the consolidation of the Milwaukee office in the
second quarter of 1994 resulted in reduced levels of expenses in the first
quarter of 1995 compared to the same period last year.
Corporate Expenses and Interest
Interest expense increased in 1995 compared to 1994 due to the utilization of a
portion of the line of credit by the Company beginning in the fourth quarter of
1994 and continuing through the first quarter of 1995. The increase in interest
expense was offset by a reduction in corporate overhead.
CONSOLIDATED FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Company reported consolidated net income of $4,955,000 for the quarter ended
March 31, 1995 as compared to $4,500,000 for the same period in 1994.
Total premiums and policy charges decreased $3,323,000 or 2% for the three month
period in 1995 as compared to 1994. Accident and health premiums decreased
$8,160,000 or 5% for the period. Of this amount, premiums from major medical
products decreased $5,723,000 or 5% and premiums attributable to the remaining
mix of Medicare supplement and long term care products decreased $1,548,000 or
3% for the three month period in 1995 as compared to 1994. The decrease in
premiums was primarily due to lower average premiums per policy sold, which
resulted from the Company initiating sales of new managed care products, and
lower levels of new business sales. Life insurance premiums increased
$4,837,000 or 48% primarily due to the acquisition of CNL.
Net investment income increased $6,393,000 or 58% for the three month period in
1995 as compared to 1994. Annualized investment yields increased to 7.0% in
1995 as compared to 6.6% in 1994. The increases are primarily due to the
acquisition of CNL and the general increase in interest rates.
Other income and realized investment gains decreased $316,000 or 4% for the
three month period in 1995 as compared to 1994. A decrease in other income from
the marketing subsidiaries due to the decline in premium writings was offset by
increased sales to unaffiliated clients by the medical utilization management
division. The remaining other income generated by the Company's non-insurance
subsidiaries as well as realized investment gains remained relatively unchanged.
Total benefits decreased $4,108,000 or 3% for the three month period in 1995 as
compared to 1994. Accident and health benefits, which include the change in
unearned premiums, decreased $12,619,000 or 11% for the three month period in
1995 as compared to 1994. The decrease was primarily due to improved loss
ratios on major medical products and the decrease in collected premium. The
accident and health loss ratios decreased to 64% from 68% in the three month
period in 1995 as compared to the comparable period in 1994. Improved loss
ratios on the major medical products were partially offset by higher claim
levels on the medicare supplement products. Life and annuity benefits increased
$8,511,000 or 81% for the three month period in 1995 as compared to 1994
primarily due to the acquisition of CNL and higher than projected mortality.
Insurance and general expenses (which includes commission compensation to
agents) increased $8,519,000 or 20% for the three month period in 1995 as
compared to 1994. Expenses for the medical utilization management division
increased due to the increase in sales. Expenses in the insurance divisions
increased due to the development of new marketing and sales incentive programs,
system development costs, and the acquisition of CNL.
Amortization of deferred policy acquisition costs decreased $2,806,000 for the
three month period in 1995 as compared to 1994.
The effective federal income tax rate decreased in the first quarter of 1995 due
to the increased investment in tax-exempt securities included in the Company's
portfolio and utilization of net operating loss carryforwards of subsidiaries.
Investments, premiums and other receivables, amounts on deposit and due from
reinsurers, accrued investment income and other assets increased principally due
to the acquisition of CNL. The decrease in short-term notes payable and the
increase in long-term notes payable resulted from the conversion of the
Company's line of credit agreement at December 31, 1994 to a term loan during
the first quarter of 1995. General expenses and other liabilities and amounts
due to reinsurers increased due primarily to the acquisition of CNL. The
remaining balance sheet amounts remained relatively consistent with the amounts
at December 31, 1994.
LIQUIDITY AND CAPITAL RESOURCES
The Company's consolidated liquidity requirements are created and met primarily
by operations of its insurance subsidiaries. The insurance subsidiaries'
primary sources of cash are premiums, investment income, and investment sales
and maturities. The primary uses of cash are operating costs, policy
acquisition costs, payments to policyholders and investment purchases.
In addition, liquidity requirements of the Company are created by the dividend
requirements of the $2.125 Preferred Stock, common stock dividends, interest
payments on the Convertible Subordinated Debentures and other debt service
requirements. The Company's liquidity requirements are met primarily by
dividends declared by its subsidiaries. Payments of dividends by the insurance
subsidiaries to the Company is subject to certain regulatory restrictions.
The Company's life and health insurance subsidiaries require capital to fund
acquisition costs incurred in the initial year of policy issuance and to
maintain adequate surplus levels for regulatory purposes. These capital
requirements have been met principally from internally generated funds,
including premiums and investment income, and capital provided from reinsurance
and the financing or sale of agent debit balances.
The Company has offered agent commission financing to certain of its agents and
marketing organizations which consists primarily of annualization of first year
commissions. This means that when the first year premium is paid in
installments, the Company will advance a percentage of the commissions that the
agent would otherwise receive over the course of the first policy year. The
Company through a subsidiary has entered into agreements with an unaffiliated
corporation to provide financing for its agent commission financing program
through the sale of agent receivables. Proceeds from such sales for the three
month period ended March 31, 1995 and 1994 were $4,415,000 and $6,784,000,
respectively. The termination date of the current program is December 31, 1997,
subject to extension or termination as provided therein.
In July 1993 the Company issued $57,477,000 of 8% convertible subordinated
debentures due 2000. Net proceeds from the offering totaled approximately
$54,000,000. The debentures are convertible into the Company's common stock at
any time prior to maturity, unless previously redeemed, at a conversion price of
$11.75 per share.
In August 1993 a subsidiary of the Company borrowed $1,500,000 to finance the
acquisition of Healthcare Review Corporation. Interest on the note is payable
quarterly at six percent. The note requires principal repayments of $75,000 per
quarter through July 31, 1998.
In January 1995, a subsidiary of the Company issued a note in the amount of
$1,660,000 as a portion of the acquisition price of CNL. The principal balance
of the note may be reduced by the former parent of CNL for capital losses
incurred on mortgage loan and real estate holdings until January 31, 1997.
Interest is payable at the average earnings rate of the investments, currently
eight percent.
In March 1995, the Company borrowed $15,000,000 to replace the line of credit
utilized at December 31, 1994. Interest on the note is payable quarterly
currently at five percent. The note requires principal repayments of $535,700
per quarter with a final payment on December 31, 1999. The Company holds
matching certificate of deposits at the bank in an amount equal to the
outstanding principal balance.
At March 31, 1995 a subsidiary of the Company had an unsecured loan of $380,000.
The note bears interest at prime and is payable quarterly with the final payment
due December 1999.
The Company has a line of credit arrangement for short-term borrowings with
three banks amounting to $17,000,000 through April 1996, of which $3,950,000 was
used at March 31, 1995. The line of credit arrangement can be terminated, in
accordance with the agreement, at the Company's option. Outstanding amounts
under the line of credit bear interest at prime and must be repaid on April 30
of each year.
In March 1995, the Company's Board of Directors announced a quarterly Common
Stock dividend of 4.5 cents per share, with an expectation of a total of 18
cents per share to be paid for 1995.
Management believes that the diversity of the Company's investment portfolio and
the liquidity attributable to the large concentration of investments in highly
liquid United States government agency securities provide sufficient liquidity
to meet foreseeable cash requirements. Because the Company's insurance
subsidiaries experience strong positive cash flows, including monthly cash flows
from mortgage-backed securities, the Company does not expect its insurance
subsidiaries to be forced to sell the held to maturity investments prior to
their maturities and realize material losses or gains. Although the Company has
the ability and intent to hold those securities to maturity, there could occur
infrequent and unusual conditions under which it would sell certain of those
securities. Those conditions would include unforeseen changes in asset quality,
significant changes in tax law affecting the taxation of securities, a
significant business acquisition or disposition, and changes in regulatory
capital requirements or permissible investments.
Life insurance and annuity liabilities are generally long term in nature
although subject to earlier surrender as a result of the policyholder's ability
to withdraw funds or surrender the policy, subject to surrender and withdrawal
penalties. The Company believes its policyholder liabilities should be backed
by an investment portfolio that generates predictable investment returns. The
Company seeks to limit exposure to risks associated with interest rate
fluctuations by concentrating its invested assets principally in high quality,
readily marketable debt securities of intermediate duration and by attempting to
balance the duration of its invested assets with the estimated duration of
benefit payments arising from contract liabilities.
The Company currently has no material commitments for capital expenditures at
the present time.
The Company has hired an investment banker to review the group major medical
division to determine how it best fits into the Company's long term corporate
strategy. The Company is evaluating several alternatives including an outright
sale of the division or joint venture/partnership arrangements with another
insurance company or a national managed care provider organization.
PIONEER FINANCIAL SERVICES, INC. AND SUBSIDIARIES<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 10(a) - Credit Agreement dated as
of March 22, 1995 by and
among the Company and
American National Bank and
Trust Company of Chicago,
Firstar Bank Milwaukee, N.A.
and Bank One, Rockford N.A.
Exhibit 10(b) - Amended and Restated Credit
Agreement dated as of March
22, 1995 by and among the
Company and American National
Bank and Trust Company of Chicago
as Agent and American National
Bank and Trust Company of Chicago,
Firstar Bank Milwaukee, N.A.
and Bank One, Rockford, N.A. as Banks
Exhibit 11 - Statement of Computation
of Per Share Earnings
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K
A Current Report on Form 8-K was filed by the Company on February 8,
1995. The Form 8-K was dated January 31, 1995 and reported information
under Items 2 and 5. On April 17, 1995, the Company filed Amendment No. 1
to the Current Report on Form 8-K/A. The Amendment No. 1 was dated January
31, 1995, reported information under Item 7 and included the following
financial statements:
(a) The balance sheets of Connecticut National Life Insurance Company
("Connecticut") at December 31, 1993 and 1994, and the related
statements of income and statements of stockholder's equity and
statements of cash flows for the years ended December 31, 1993
and 1994, including the notes thereto, together with the related
Accountants' Report.
(b) The unaudited pro forma combined condensed balance sheet of the
Company and Connecticut as of December 31, 1994, and the
unaudited pro forma combined condensed income statement of the
Company and Connecticut for the year ended December 31, 1994.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Pioneer Financial Services, Inc.
May 10, 1995 /s/ Peter W. Nauert
Date Peter W. Nauert
Chairman and Chief Executive Officer
May 10, 1995 /s/ David I. Vickers
Date David I. Vickers
Treasurer and Chief Financial Officer
Execution
Copy
CREDIT AGREEMENT
Dated as of March 22, 1995
between
PIONEER FINANCIAL SERVICES, INC.
and
AMERICAN NATIONAL BANK AND TRUST
COMPANY OF CHICAGO,
FIRSTAR BANK MILWAUKEE, N.A.
and
BANK ONE, ROCKFORD, NA
TABLE OF CONTENTS
Page
SECTION 1
CERTAIN DEFINITIONS . . . . . . . . . 1
SECTION 1.1 Terms Defined in this Agreement . . . . . 1
SECTION 2
TERM LOAN; BORROWING PROCEDURES . . . . . . 9
SECTION 2.1 Term Loan . . . . . . . . . . . . . . . . 9
SECTION 2.2 Disbursement. . . . . . . . . . . . . . . 9
SECTION 2.3 Repayment of Principal of the Loans . . . 9
SECTION 2.4 Optional Prepayments. . . . . . . . . . . 10
SECTION 2.5 Termination of the Loans; Termination
Date. . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 3
NOTES EVIDENCING THE LOANS . . . . . . . 10
SECTION 3.1 Notes . . . . . . . . . . . . . . . . . . 10
SECTION 4
INTEREST, FEES AND COSTS . . . . . . . . 11
SECTION 4.1 Interest . . . . . . . . . . . . . . . . 11
SECTION 4.2 Conversion Elections. . . . . . . . . . . 11
SECTION 4.3 Closing Fees. . . . . . . . . . . . . . . 12
SECTION 4.4 Computation of Interest. . . . . . . . . 12
SECTION 4.5 Increased Costs; Capital Adequacy . . . . 12
SECTION 4.6 Funding Losses. . . . . . . . . . . . . . 13
SECTION 5
MAKING OF PAYMENTS . . . . . . . . . 14
SECTION 5.1 Payments by the Company . . . . . . . . . 14
SECTION 5.2 Payments by each Bank. . . . . . . . . . 14
SECTION 5.3 Setoff . . . . . . . . . . . . . . . . . 15
SECTION 5.4 Sharing of Payments. . . . . . . . . . . 15
SECTION 6
REPRESENTATIONS AND WARRANTIES . . . . . . 16
SECTION 6.1 Corporate Organization . . . . . . . . . 16
SECTION 6.2 Authorization; No Conflict . . . . . . . 16
SECTION 6.3 Validity and Binding Nature . . . . . . . 16
SECTION 6.4 Financial Statements . . . . . . . . . . 16
SECTION 6.5 Litigation and Contingent Liabilities . . 17
SECTION 6.6 Employee Benefit Plans . . . . . . . . . 17
SECTION 6.7 Investment Company Act . . . . . . . . . 18
SECTION 6.8 Regulation U . . . . . . . . . . . . . . 18
SECTION 6.9 Accuracy of Information . . . . . . . . . 18
SECTION 6.10 Labor Controversies . . . . . . . . . . . 18
SECTION 6.11 Tax Status . . . . . . . . . . . . . . . 18
SECTION 6.12 No Default . . . . . . . . . . . . . . . 18
SECTION 6.13 Compliance with Applicable Laws . . . . . 19
SECTION 6.14 Insurance . . . . . . . . . . . . . . . . 19
SECTION 6.15 Solvency. . . . . . . . . . . . . . . . . 19
SECTION 6.16 Use of Proceeds. . . . . . . . . . . . . 20
SECTION 6.17 Subsidiaries. . . . . . . . . . . . . . . 20
SECTION 7
COVENANTS . . . . . . . . . . . . 20
SECTION 7.1 Reports, Certificates and Other
Information . . . . . . . . . . . . . . . . . . . . 20
(a) Annual Report. . . . . . . . . . . . . . 20
(b) Interim Reports. . . . . . . . . . . . . 20
(c) Statutory Statements. . . . . . . . . . . 20
(d) Reports to SEC. . . . . . . . . . . . . . 20
(e) Certificates . . . . . . . . . . . . . . 20
(f) Notice of Default, Litigation and ERISA
Matters . . . . . . . . . . . . . . . . . 21
(g) Other Information . . . . . . . . . . . . 21
SECTION 7.2 Corporate Existence and Franchises . . . 21
SECTION 7.3 Books, Records and Inspections . . . . . 21
SECTION 7.4 Insurance . . . . . . . . . . . . . . . . 21
SECTION 7.5 Taxes and Liabilities . . . . . . . . . . 22
SECTION 7.6 Cash Flow Coverage . . . . . . . . . . . 22
SECTION 7.7 Net Worth. . . . . . . . . . . . . . . . 22
SECTION 7.8 Intentionally Omitted. . . . . . . . . . 22
SECTION 7.9 Indebtedness. . . . . . . . . . . . . . . 22
SECTION 7.10 Risk-Based Capital . . . . . . . . . . . 22
SECTION 7.11 Real Estate Concentration. . . . . . . . 22
SECTION 7.12 Investment Quality. . . . . . . . . . . . 23
SECTION 7.13 Intentionally Omitted. . . . . . . . . . 23
SECTION 7.14 Insurance Company Leverage Ratio. . . . 23
SECTION 7.15 Insurance Ratings. . . . . . . . . . . . 23
SECTION 7.16 Intentionally Omitted. . . . . . . . . . 23
SECTION 7.17 Change in Nature of Business . . . . . . 23
SECTION 7.18 Depository Relationship . . . . . . . . . 23
SECTION 7.19 Employee Benefit Plans . . . . . . . . . 24
SECTION 7.20 Use of Proceeds . . . . . . . . . . . . . 24
SECTION 7.21 Other Agreements . . . . . . . . . . . . 24
SECTION 7.22 Compliance with Applicable Laws . . . . . 24
SECTION 7A
UNRESTRICTED SUBSIDIARIES . . . . . . . . 24
SECTION 7A.1 Unrestricted Subsidiaries. . . . . . . . 24
SECTION 7A.2 Additional Unrestricted Subsidiaries. . . 25
SECTION 7A.3 Effectiveness of Designation. . . . . . . 25
SECTION 8
CONDITIONS TO MAKING THE LOANS . . . . . . 26
SECTION 8.1 Conditions Precedent. . . . . . . . . . . 26
(a) Fees and Expenses . . . . . . . . . . . . 26
(b) Documents . . . . . . . . . . . . . . . . 26
(c) No Default. . . . . . . . . . . . . . . . 27
SECTION 9
EVENTS OF DEFAULT AND THEIR EFFECT . . . . . 27
SECTION 9.1 Events of Default . . . . . . . . . . . . 27
(a) Nonpayment of the Loans . . . . . . . . . 27
(b) Nonpayment of Other Indebtedness . . . . 27
(c) Bankruptcy or Insolvency . . . . . . . . 28
(d) Specified Noncompliance with this
Agreement . . . . . . . . . . . . . . . . 28
(e) Other Noncompliance with this Agreement . 28
(f) Representations and Warranties . . . . . 28
(g) Employee Benefit Plans . . . . . . . . . 28
(h) Judgments . . . . . . . . . . . . . . . . 29
SECTION 9.2 Effect of Event of Default . . . . . . . 29
SECTION 10
GENERAL . . . . . . . . . . . . 29
SECTION 10.1 Amendments and Waivers . . . . . . . . . 29
SECTION 10.2 Notices . . . . . . . . . . . . . . . . . 30
SECTION 10.3 Accounting Terms; Computations . . . . . 30
SECTION 10.4 Costs, Expenses and Taxes . . . . . . . . 30
SECTION 10.5 Indemnification . . . . . . . . . . . . . 31
SECTION 10.6 Captions and References . . . . . . . . . 31
SECTION 10.7 No Waiver; Cumulative Remedies. . . . . . 31
SECTION 10.8 Governing Law; Jury Trial; Severability . 32
SECTION 10.9 Counterparts . . . . . . . . . . . . . . 32
SECTION 10.10 Successors and Assigns . . . . . . . . . 33
SECTION 10.11 Prior Agreements . . . . . . . . . . . . 33
SECTION 10.12 Assignments; Participations . . . . . . . 33
SECTION 10.13 Confidentiality. . . . . . . . . . . . . 34
SECTION 10.14 Credit Decision . . . . . . . . . . . . . 34
SCHEDULES AND EXHIBITS
SCHEDULE 5.1 Wire Transfer/Account Information
SCHEDULE 6.11 Tax Liabilities
SCHEDULE 6.17 Subsidiaries
EXHIBIT A Form of Note
EXHIBIT B Form of Notice of Conversion
CREDIT AGREEMENT
This Credit Agreement dated as of March 22, 1995 (this
"Agreement"), is between (i) PIONEER FINANCIAL SERVICES, INC., a
Delaware corporation (herein, together with its successors and
assigns, called the "Company") and (ii) AMERICAN NATIONAL BANK
AND TRUST COMPANY OF CHICAGO, a national banking association
(herein, together with its successors and assigns, called "ANB"),
FIRSTAR BANK MILWAUKEE, N.A., a national banking association
(herein, together with its successors and assigns, called
"Firstar") and BANK ONE, ROCKFORD, NA, a national banking
association (herein, together with its successors and assigns,
called "Bank One") (ANB, Firstar and Bank One collectively
referred to as the "Banks" and individually as a "Bank").
W I T N E S S E T H:
WHEREAS, the Company has requested the Banks severally to
make available to the Company a term loan facility for the
purposes as set forth herein; and
WHEREAS, the Banks are willing to make available to the
Company a term loan facility in the aggregate amount of
$15,000,000, under which each Bank severally shall lend funds to
the Company subject to the terms and conditions set forth in this
Agreement;
NOW, THEREFORE, in consideration of the mutual agreements
contained herein, the parties hereto agree as follows:
SECTION 1
CERTAIN DEFINITIONS
SECTION 1.1 Terms Defined in this Agreement. When used
herein the following terms shall have the following respective
meanings:
"Adjusted Capital and Surplus" means, with respect to each
Principal Insurance Subsidiary as of any date, the sum of (i)
Capital and Surplus for such Principal Insurance Subsidiary and
(ii) the asset valuation reserve of such Principal Insurance
Subsidiary as of such date determined in accordance with
Statutory Accounting Principles.
"Affiliate" means, with respect to any Person, any other
Person directly or indirectly controlling, controlled by, or
under direct or indirect common control with, such Person. A
Person shall be deemed to control another Person if such first
Person possesses, directly or indirectly, the power to direct or
cause the direction of the management and policies of such other
Person, whether through ownership of voting securities, by
contract or otherwise.
"Aggregate Commitment" means the combined Commitments of the
Banks in the amount of fifteen million dollars ($15,000,000).
"Agreement" means this Credit Agreement as it may be
amended, supplemented or otherwise modified from time to time in
accordance with the terms hereof.
"A.M. Best" means A.M. Best Company, and its successors and
assigns.
"ANB" - see Preamble.
"Applicable Margin" means (a) with respect to Base Rate
Loans, -0-, (b) with respect to CD Rate Loans, two percent
(2.00%) per annum, and (c) with respect to Eurodollar Rate Loans,
two and one-half percent (2.50%) per annum.
"Authorized Control Level RBC" shall have the same meaning
as the term "Authorized Control Level RBC" as defined in the NAIC
Risk-Based Capital (RBC) for Life and/or Health Insurers Model
Act, as such term may be amended by the NAIC from time to time.
"Authorized Officer" means the Chairman, the President, any
Executive Vice President, the Treasurer or any Vice President of
the Company that are designated as authorized officers pursuant
to a resolution of the Board of Directors of the Company (each
Bank shall be entitled to rely on such resolution until revoked
or amended in writing by the Company).
"Available Cash Flow" means, with respect to the Company,
for any period, the aggregate amount of all dividends, payments
or distributions from Network Air Medical Systems, Inc.,
Association Management Corporation, Design Benefit Plans, Inc.,
Administrators Service Corporation, and National Health Services,
Inc. for such period.
"Bank" or "Banks" - see Preamble.
"Bank One" - see Preamble.
"Bank Parties" - see Section 10.5.
"Base Rate" means, with respect to each Bank, at any time
and from time to time the rate of interest per annum which such
Bank most recently announced as its base rate in the city where
such Bank's main office is located, which rate shall not
necessarily be the lowest rate of interest which such Bank
charges its customers.
"Base Rate Loans" means the Loans when such Loans bear
interest based on the Base Rate and the Applicable Margin with
respect thereto.
"Business Day" means any day of the year on which each Bank
is open for business in the city where such Bank's main office is
located.
"Capital and Surplus" means, with respect to each Principal
Insurance Subsidiary, such Principal Insurance Subsidiary's
capital and surplus as reported on such Principal Insurance
Subsidiary's Statutory Statements most recently filed with the
department of insurance of such Principal Insurance Subsidiary's
state of incorporation.
"CD Rate" means, for each Bank, with respect to each
Interest Period to be applicable to CD Rate Loans, the rate of
interest per annum payable on a certificate or certificates of
deposit purchased by the Company from such Bank concurrently in
connection with the Loans when the Loans are CD Rate Loans.
"CD Rate Loans" means the Loans when such Loans bear
interest based on the CD Rate and the Applicable Margin with
respect thereto.
"Closing Date" means the date on which all conditions
precedent set forth in Section 8.1 are satisfied or waived by
all the Banks.
"Commitment", with respect to each Bank, has the meaning
specified in Section 2.1.
"Commitment Percentage" means, as to any Bank, the
percentage equivalent at the time of determination of such Bank's
Commitment divided by the Aggregate Commitment.
"Company" - see Preamble.
"Conversion Date" means any date on which the Company
converts Loans that are then Base Rate Loans to Eurodollar Rate
Loans or CD Rate Loans; or Loans that are then CD Rate Loans to
Eurodollar Rate Loans or Base Rate Loans; or Loans that are then
Eurodollar Rate Loans to CD Rate Loans or Base Rate Loans.
"Debt Service Requirements" means, for any period, all
expenses of the Company on an unconsolidated basis, including,
without limitation, the aggregate of the principal, interest and
other payments, dividends or distributions made or required to be
made (i) to each Bank under this Agreement, (ii) with respect to
other Indebtedness, (iii) with respect to all preferred stock and
common stock of the Company, and (iv) with respect to taxes paid
or required to be paid by the Company (minus any cash payments
made by Subsidiaries of the Company to the Company as
reimbursement or otherwise as repayment for taxes paid by the
Company on behalf of such Subsidiaries).
"Dollar(s)" and the sign "$" means lawful money of the
United States of America.
"Earnings" means, for any period, as to any Insurance
Subsidiary, the earnings of such Insurance Subsidiary calculated
in accordance with Statutory Accounting Principles.
"Environmental Laws" means any and all federal, state or
local environmental or health and safety-related laws,
regulations, rules, ordinances, orders or directives.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and any successor statute of similar import,
together with the regulations thereunder and under the Internal
Revenue Code of 1986, as amended, in each case as in effect from
time to time. References to sections of ERISA shall be construed
to also refer to any successor sections.
"ERISA Affiliate" means any corporation, trade or business
that is, along with the Company, a member of a controlled group
of corporations or a controlled group of trades or businesses, as
described in Sections 414(b) and 414(c), respectively, of the
Internal Revenue Code of 1986, as amended, or Section 4001 of
ERISA.
"Eurodollar Rate Loans" means the Loans when such Loans bear
interest based on LIBOR and the Applicable Margin with respect
thereto.
"Event of Default" means any of the events described in
Section 9.1.
"Federal Reserve Board" means the Board of Governors of the
Federal Reserve System, or any entity succeeding to any of its
principal functions.
"Firstar" - see Preamble.
GAAP means the generally accepted accounting principles in
the United States of America with such changes thereto as
(i) shall be consistent with the then-effective principles
promulgated or adopted by the Financial Accounting Standards
Board and its predecessors and successors and (ii) shall be
concurred in by the independent certified public accountants of
recognized standing certifying any financial statements of the
Company and its Subsidiaries.
"Indebtedness" means, as of any date, all indebtedness,
obligations or other liabilities of the Company and its
Subsidiaries as of such date (i) for borrowed money, (ii)
evidenced by bonds, debentures, notes or other similar
instruments for borrowed money, or (iii) pursuant to any
guarantee of any indebtedness, obligations or other liabilities
of any other Person of the type described in clauses (i) or (ii);
provided, however, that (a) the amounts set forth in clauses (i),
(ii) and (iii) shall not be double counted and (b) Indebtedness
shall not include indebtedness, obligations or other liabilities
of the Company to any Subsidiary or indebtedness, obligations or
other liabilities of any Subsidiary to the Company or another
Subsidiary.
"Indemnified Liabilities" - see Section 10.5.
"Insurance Company Leverage Ratio" means, for each Principal
Insurance Subsidiary on an individual basis as of any date and
for all Principal Insurance Subsidiaries on a combined basis as
of any date, the ratio of (x) Adjusted Capital and Surplus to (y)
Total Assets.
"Insurance Laws" means any and all federal or state laws,
regulations, rules, ordinances, orders or directives that pertain
to the regulation of insurance companies, as such.
"Insurance Subsidiaries" means, as of any date, all
Subsidiaries of the Company that are engaged in the insurance
business and are subject to regulation by the insurance
commission or department of any state or other jurisdiction. The
Insurance Subsidiaries of the Company as of the date of this
Agreement are set forth in Schedule 6.17 attached hereto.
"Interest Payment Date" means each Principal Repayment Date
and each date upon which the Loans are prepaid or converted to
Eurodollar Rate Loans, CD Rate Loans, or Base Rate Loans, as the
case may be.
"Interest Period" means, (a) if the Loans are then
Eurodollar Rate Loans, the period commencing on the Business Day
the Loans are disbursed or continued or on the Conversion Date on
which the Loans are converted to Eurodollar Rate Loans, as the
case may be, and ending on the date three months thereafter; and
(b) if the Loans are then CD Rate Loans, the period commencing on
the Business Day the Loans are disbursed or continued or on the
Conversion Date on which the Loans are converted to CD Rate
Loans, as the case may be, and ending 90 days thereafter;
provided that:
(i) if any Interest Period pertaining to Loans that
are then Eurodollar Rate Loans or CD Rate Loans would
otherwise end on a day which is not a Business Day, that
Interest Period shall be extended to the next succeeding
Business Day unless, if the Loans are then Eurodollar Rate
Loans, the result of such extension would be to carry such
Interest Period into another calendar month, in which event
such Interest Period shall end on the immediately preceding
Business Day;
(ii) any Interest Period pertaining to Loans that are
then Eurodollar Rate Loans that begins on the last Business
Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the
end of such Interest Period) shall end on the last Business
Day of the calendar month at the end of such Interest
Period; and
(iii) no Interest Period for the Loans shall extend
beyond a Principal Repayment Date or the Termination Date.
"Investment Grade Obligations" means, as of any date for
each Principal Insurance Subsidiary, investments having an NAIC
investment rating of 1 or 2; or a Standard & Poor's rating within
the range of ratings from AAA to BBB-; or a Moody's rating within
the range of ratings from Aaa to Baa3.
"Liabilities" means any and all of the Company's obligations
to the Banks, howsoever created, arising or evidenced, whether
direct or indirect, absolute or contingent, now or hereafter
existing, or due or to become due, which arise out of or in
connection with this Agreement or the Related Documents.
"LIBOR" means, with respect to each Interest Period to be
applicable to Eurodollar Rate Loans, the rate of interest per
annum determined by ANB obtained by dividing (a) the Telerate
Screen Rate for such Interest Period or (b) if the Telerate
Screen Rate is unavailable at the time the LIBOR rate is to be
determined, a rate determined on the basis of the offered rates
for deposits in U.S. dollars for a period approximately equal to
such Interest Period which appear on the Reuters Screen LIBO
Page, as of 11:00 a.m., London time, on the day that is two
London banking days preceding the beginning of such Interest
Period by (c) a percentage equal to 100% minus the stated maximum
rate (expressed as a percentage) as prescribed by the Federal
Reserve Board of all reserve requirements (including, without
limitation, any marginal, emergency, supplemental, special or
other reserves) applicable on the first day of such Interest
Period to any member bank of the Federal Reserve System in
respect of Eurodollar funding or liabilities.
"Lien" means any mortgage, pledge, lien, security interest
or other charge or encumbrance, including the retained security
title of a conditional vendor or lessor.
"Loan" means the extension of credit by a Bank to the
Company pursuant to Section 2, and which shall be a Base Rate
Loan, a CD Rate Loan or a Eurodollar Rate Loan.
"Majority Banks" means at any time a group of Banks that
shall include ANB and at least one other Bank.
"Margin Stock" has the meaning given to such term in
Regulation U.
"Material Subsidiary" means any Subsidiary of the Company,
the financial condition of which, when consolidated with the
financial condition of the Company, has a material effect on such
financial condition of the Company, and shall include, without
limitation, each Principal Insurance Subsidiary.
"Mortgage" means, as of any date, as to each Principal
Insurance Subsidiary, the amount of such Principal Insurance
Subsidiary's mortgage loans on real estate calculated in
accordance with Statutory Accounting Principles.
"Multiemployer Plan" means a "multiemployer plan" as defined
in ERISA.
"NAIC" means the National Association of Insurance
Commissioners and any successor thereto.
"Net Worth" means, with respect to the Company, as at the
time any determination thereof is made, the consolidated
shareholders' equity, including common stock, additional paid-in
capital, retained earnings, and net unrealized gains and losses,
but excluding any increase or decrease in the Company's
"available for sale investment portfolio" (as calculated in
accordance with GAAP) since September 30, 1994.
"Non-Investment Grade Obligations" means, as of any date,
for each Principal Insurance Subsidiary, any fixed maturity debt
instrument investment that is not an Investment Grade Obligation.
"Note" or "Notes" - see Section 3 and Exhibit A.
"Notice of Conversion" means a notice given by the Company
to each Bank pursuant to Section 4.2, in substantially the form
of Exhibit B.
"PBGC" means the Pension Benefit Guaranty Corporation and
any entity succeeding to any or all of its functions under ERISA.
"Permitted Liens" - see Section 7.16.
"Person" means an individual or a corporation, partnership,
limited liability company, trust, incorporated or unincorporated
association, joint venture, joint stock company, government (or
any agency or political subdivision thereof) or other entity of
any kind.
"Plan" means an "employee pension benefit plan", as such
term is defined in Section 3(2) of ERISA, an "employee welfare
benefit plan," as such term is defined in Section 3(1) of ERISA,
or any bonus, deferred compensation, stock purchase, stock
option, severance, salary continuation, vacation, sick leave,
fringe benefit, incentive, insurance, welfare or similar
arrangement.
"Principal Insurance Subsidiaries" means, as of any date,
any Insurance Subsidiary that is or becomes engaged in a material
amount of insurance business and has been designated in writing
by all of the Banks and the Company as a Principal Insurance
Subsidiary. The following Insurance Subsidiaries shall be deemed
to be Principal Insurance Subsidiaries as of the date of this
Agreement and until designated otherwise by all of the Banks and
the Company : Pioneer Life Insurance Company of Illinois, an
Illinois corporation; National Group Life Insurance Company, an
Illinois corporation; and Manhattan National Life Insurance
Company, an Illinois corporation.
"Principal Repayment Date" - see Section 2.3.
"Real Estate Concentration Ratio" means, as of any date, as
to each Principal Insurance Subsidiary, the ratio of (a) the sum
of (i) Real Estate Investments plus (ii) Mortgages to (b) Capital
and Surplus.
"Real Estate Investments" means, as of any date, as to each
Principal Insurance Subsidiary, the sum of (a) the book value of
properties acquired in satisfaction of debt calculated in
accordance with Statutory Accounting Principles plus (b) the
investment in investment real estate calculated in accordance
with Statutory Accounting Principles; provided, that the
properties occupied by the Company or any Subsidiary shall be
excluded from the calculation of Real Estate Investments for
purposes of this Agreement.
"Regulation U" means Regulation U of the Board of Governors
of the Federal Reserve System and any successor rule or
regulation of similar import as in effect from time to time.
"Related Documents" means, collectively, this Agreement,
each Note issued by the Company to each Bank, and all other
documents, instruments and agreements executed by the Company and
delivered to the Banks pursuant to or in connection with this
Agreement or any of the foregoing.
"Reportable Event" means a reportable event (as defined in
Section 4043(b) of ERISA) for which notice has not been waived
pursuant to applicable regulations.
"Reuters Screen LIBO Page" means the display page designated
"LIBO" on the Reuters Monitor Money Rates Service (or such other
page that may replace that page on such service for the purpose
of displaying comparable rates).
"Revolving Credit Agreement" means that certain Amended and
Restated Credit Agreement dated as of March 22, 1995 between the
Company and the Banks, as amended, supplemented or otherwise
modified from time to time.
"Statutory Accounting Principles" means the accounting
principles used in the preparation of Statutory Statements in
accordance with the rules and regulations prescribed by the
insurance commission or department of each Insurance Subsidiary's
respective state of domicile in effect as of the date of this
Agreement. In the event that there is a material change in such
accounting principles subsequent to the date hereof, the
covenants contained herein and affected by such change shall be
adjusted as necessary to preserve the force and effect of such
covenants by the Company (provided that prior to any such
adjustment the Company shall consult with the Banks with respect
to any such adjustment) subject to the reasonable objection of
the Majority Banks.
"Statutory Statements" means, with respect to an Insurance
Subsidiary, the annual or quarterly accounting statement for such
Insurance Subsidiary prepared in accordance with Statutory
Accounting Principles, as filed with the insurance commissioner
or department of each jurisdiction in which such Insurance
Subsidiary is subject to regulation.
"Subsidiary" means a corporation, association or business
entity of which the Company and/or its other Subsidiaries own,
directly or indirectly, such number of outstanding shares as have
more than 50% of the ordinary voting power for the election of
such entity's directors.
"Telerate Screen Rate" means, for any Interest Period to be
applicable to Eurodollar Rate Loans, the rate for deposits in
U.S. dollars for a period approximately equal to such Interest
Period which appears on Page 3750 of the Dow Jones Telerate
Service (or such other page that may replace that page on such
service for the purpose of displaying comparable rates) as of
11:00 a.m., London time, on the day that is two London banking
days preceding the beginning of such Interest Period.
"Termination Date" - see Section 2.5.
"Total Adjusted Capital" shall have the same meaning as the
term "Total Adjusted Capital" as defined in the NAIC Risk-Based
Capital (RBC) for Life and/or Health Insurers Model Act, as such
term may be amended by the NAIC from time to time.
"Total Assets" means, as of any date, as to each Principal
Insurance Subsidiary, the total net admitted assets calculated as
of such date in accordance with Statutory Accounting Principles.
"Total Invested Assets" means, as of any date, as to each
Principal Insurance Subsidiary, the amount of such Principal
Insurance Subsidiary's cash and invested assets calculated in
accordance with Statutory Accounting Principles.
"Unrestricted Subsidiary" - see Section 7A.1.
"Unrestricted Subsidiary Indebtedness" means, as of any
date, for any Unrestricted Subsidiary, all indebtedness,
obligations or other liabilities of such Unrestricted Subsidiary
and its Subsidiaries as of such date (i) for borrowed money,
(ii) evidenced by bonds, debentures, notes or other similar
instruments for borrowed money, or (iii) pursuant to any
guarantee of any indebtedness, obligations or other liabilities
of any other Person of the type described in clauses (i) or (ii);
provided, however, that the amounts set forth in clauses (i),
(ii) and (iii) shall not be double counted.
SECTION 2
TERM LOAN; BORROWING PROCEDURES
SECTION 2.1 Term Loan. (a) On the terms and subject to
the conditions set forth in this Agreement, each Bank severally
agrees to make available to the Company on the Closing Date of
this Agreement a term loan (each such loan called a "Loan" and
collectively called the "Loans") in an aggregate amount not to
exceed at any time outstanding the amount set forth opposite such
Bank's name on the signature page hereof under the heading
"Commitment" (such amount referred to as such Bank's
"Commitment").
(b) The Company agrees that, if the Loans are CD Rate
Loans, the Company shall purchase from each Bank a certificate or
certificates of deposit in an amount equal to the outstanding
principal amount of such Bank's Loan and which shall have a term
equal to the Interest Period applicable to such Loan.
SECTION 2.2 Disbursement. Each Bank shall disburse the
proceeds of its Loan in immediately available funds to an account
of the Company designated in writing by the Company.
SECTION 2.3 Repayment of Principal of the Loans. The
Company shall repay the principal amount of the Loans in
installments as follows: Five Hundred Thirty-Five Thousand Seven
Hundred Fourteen and 29/100 Dollars ($535,714.29) in aggregate
principal amount on the last Business Day of April 1995 and on
the last Business Day of each July, October, January and April
thereafter (each such day being a "Principal Repayment Date")
until the Loans are fully paid, provided, however, that the final
payment, if not sooner paid, shall be due on the Termination Date
and shall be equal to the aggregate principal amount of the Loans
then outstanding. The Company shall ratably repay to each Bank
such Bank's Commitment Percentage of the aggregate principal
amount set forth in the preceding sentence.
SECTION 2.4 Optional Prepayments. Subject to Section
4.6, the Company may, at any time or from time to time, ratably
prepay the Loans in whole (in which case the Loans shall
terminate) or in part in any amount; provided that the Company's
written notice of such prepayment shall be delivered to each Bank
in accordance with Section 10.2 prior to 11:00 a.m. (Chicago
time) (i) two Business Days prior to the requested date of
prepayment, if the Loans are then Eurodollar Rate Loans; (ii) one
Business Day prior to the requested date of prepayment, if the
Loans are then CD Rate Loans, and (iii) on the requested date of
prepayment, if the Loans are then Base Rate Loans. Such notice
of prepayment shall specify the date of prepayment, the aggregate
amount of such prepayment, and each Bank's Commitment Percentage
of such prepayment. Such notice shall not thereafter be
revocable by the Company. If such notice is given by the
Company, the Company shall make such prepayment and the payment
amount specified in such notice shall be due and payable on the
date specified therein, together with accrued interest to each
such date on the amount prepaid and any amounts required pursuant
to Section 4.6. Any amounts so prepaid may not be reborrowed.
SECTION 2.5 Termination of the Loans; Termination Date.
The Loans shall terminate without further action on the part of
any Bank on the earlier of (i) December 31, 1999 or (ii) the date
of termination of the Loans pursuant to Section 2.4 or Section
9.2 hereof (the "Termination Date").
SECTION 3
NOTES EVIDENCING THE LOANS
SECTION 3.1 Notes. Each Bank's Loan shall be evidenced
by a promissory note (herein, as the same may be amended,
modified or supplemented from time to time, and together with any
renewals thereof or exchanges or substitutions therefor,
individually called a "Note" and collectively called the
"Notes"), substantially in the form set forth in Exhibit A, with
appropriate insertions, dated the Closing Date, payable to the
order of such Bank in the principal amount equal to such Bank's
Commitment or the aggregate principal amount of the Loan
outstanding to such Bank, whichever is less. The date and amount
of the Loan made by each Bank and of each repayment of principal
thereon received by such Bank shall be recorded by such Bank in
its records or, at its option, on the schedule attached to its
Note. The aggregate unpaid principal amount so recorded shall be
rebuttable presumptive evidence of the principal amount owing and
unpaid on such Note to such Bank. The failure so to record any
such amount or any error in so recording any such amount,
however, shall not limit or otherwise affect the Company's
obligations hereunder or under such Note to repay the principal
amount of the Loan evidenced by such Note together with all
interest accruing thereon. Each Note shall provide for the
payment of interest as provided in Section 4.
SECTION 4
INTEREST, FEES AND COSTS
SECTION 4.1 Interest.
(a) Subject to Section 4.1(c), the Loans shall bear
interest on the outstanding principal amount thereof for the
period commencing on the date when the Loans were made until the
Loans are paid in full at a rate per annum equal to the CD Rate,
LIBOR or the Base Rate, as the case may be, plus the Applicable
Margin.
(b) Interest on the Loans shall be paid in arrears on
each Interest Payment Date. Interest shall also be paid on the
date of any prepayment of the Loans pursuant to Section 2.4 for
the portion of the Loans so prepaid and upon payment (including
prepayment) in full thereof, and, during the existence of any
Event of Default, interest shall be paid on demand.
(c) If any amount of principal of or interest on the
Loans, or any other amount payable hereunder or under any Related
Document is not paid in full when due (whether at stated
maturity, by acceleration, demand or otherwise), the Company
agrees to pay interest on such unpaid principal or other amount,
from the date such amount becomes due until the date such amount
is paid in full, payable on demand, at a fluctuating rate per
annum equal to the Base Rate plus two percent (2.00%) per annum.
SECTION 4.2 Conversion Elections.
(a) The Company may upon irrevocable written notice to
each Bank in accordance with Section 4.2(b):
(i) if the Loans are then Base Rate Loans, elect
to convert on the last Business Day of each January, April,
July or October all of such Loans into Eurodollar Rate Loans
or CD Rate Loans; or
(ii) if the Loans are then Eurodollar Rate Loans,
elect to convert on the last Business Day of each January,
April, July or October all of such Loans into Base Rate
Loans or CD Rate Loans; or
(iii) if the Loans are then CD Rate Loans, elect to
convert on the last Business Day of each January, April,
July or October all of such Loans into Base Rate Loans or
Eurodollar Rate Loans;
provided, that if the Loans are then either Eurodollar Rate Loans
or CD Rate Loans and the aggregate amount of the Loans shall have
been reduced, by payment, prepayment, or conversion thereof, to
be less than $100,000, then such Loans shall automatically
convert into Base Rate Loans.
(b) The Company shall deliver a Notice of Conversion
in accordance with Section 10.2 to be received by each Bank not
later than 11:00 a.m. (Chicago time) at least two Business Days
in advance of the Conversion Date specifying:
(A) the proposed Conversion Date, which date may
only be the last Business Day of each January, April, July
or October;
(B) that the aggregate amount of all of the Loans
shall be converted on such proposed Conversion Date; and
(C) the nature of the proposed conversion.
(c) If the Company fails to deliver to each Bank a
Notice of Conversion in accordance with the terms of Section
4.2(b), the Company shall be deemed to have elected to continue
the Loans as, and the Loans shall thereupon continue as,
Eurodollar Rate Loans, CD Rate Loans or Base Rate Loans, as the
case may be. Notwithstanding the foregoing, if any Event of
Default shall then exist, the Company shall be deemed to have
elected to convert such Loans into Base Rate Loans effective as
of the expiration date of such current Interest Period.
(d) Unless the Majority Banks shall otherwise agree,
during the existence of an Event of Default, the Company may not
elect to have the Loans converted into or continued as Eurodollar
Rate Loans or CD Rate Loans.
SECTION 4.3 Closing Fees. On the Closing Date the
Company shall pay to each Bank a one-time closing fee equal to
0.50% of such Bank's Commitment.
SECTION 4.4 Computation of Interest. All computations of
interest in respect of the Base Rate and LIBOR shall be made on
the basis of a year of 365 or 366 days, as the case may be, and
actual days elapsed. All computations of interest in respect of
the CD Rate shall be made on the basis of a 360-day year and
actual days elapsed. Interest shall accrue during each period
during which interest is computed from and including the first
day thereof to but excluding the last day thereof.
SECTION 4.5 Increased Costs; Capital Adequacy.
(a) If (i) Regulation D of the Federal Reserve Board,
or (ii) after the date hereof, the adoption of any applicable
law, rule or regulation, or any change therein, or any change in
the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by a Bank
with any request or directive (whether or not having the force of
law) of any such authority, central bank or comparable agency
issued after the date hereof,
(A) shall subject such Bank to any tax, duty or
other charge with respect to Loans that are then Eurodollar
Rate Loans or CD Rate Loans, the Note issued to such Bank,
such Bank's obligation to maintain any such Loan, or shall
change the basis of taxation of payments to such Bank of the
principal of or interest on any such Loan or any other
amounts due under this Agreement in respect of any such Loan
or such Bank's obligation to maintain any such Loan (except
for changes in the rate of tax on the overall income of such
Bank imposed by any governmental authority); or
(B) shall impose, modify or deem applicable any
reserve (including, without limitation, any reserve imposed
by the Federal Reserve Board but excluding, if the Loans are
then Eurodollar Rate Loans, any reserve prescribed by the
Federal Reserve Board included in the determination of
LIBOR), special deposit or similar requirement against
assets of, deposits with or for the account of, or credit
extended by, such Bank;
and the result of any of the foregoing is to increase the cost to
such Bank of maintaining its Loan, or to reduce the amount of any
sum received or receivable by such Bank under this Agreement or
under its Note with respect thereto, then within 30 days after
demand by such Bank (which demand shall be accompanied by a
statement setting forth in reasonable detail the basis of such
demand), the Company shall pay directly to such Bank such
additional amount or amounts as will compensate such Bank for
such increased costs or such reduction, provided, however, that
any such amount or amounts payable by the Company shall not
exceed the increased costs or amount of reduction of such Bank in
direct proportion to its Loan.
(b) If either (i) the introduction of or any change in
or in the interpretation of any law or regulation or (ii)
compliance by a Bank with any new guideline or request from any
central bank or other governmental authority affects or would
affect the amount of capital required or expected to be
maintained by such Bank or any corporation controlling such Bank
and the amount of such capital is increased by or based upon the
existence of such Bank's commitment to maintain its Loan
hereunder, then, within 30 days after demand by such Bank (which
demand shall set forth in reasonable detail the basis of such
demand), the Company shall pay directly to such Bank, from time
to time as reasonably specified by such Bank, additional amounts
sufficient to compensate such Bank in the light of such
circumstances, to the extent that such Bank reasonably determines
such increase in capital to be allocable to the existence of such
Bank's commitment to maintain its Loan hereunder, provided,
however, that any such amount or amounts payable by the Company
shall not exceed the increased amount of capital required to be
maintained by such Bank and allocable to its Loan in direct
proportion to its Loan.
SECTION 4.6 Funding Losses. The Company agrees to
reimburse each Bank and to hold each Bank harmless from any loss
or expense which such Bank may sustain or incur as a consequence
of:
(a) if the Loans are then Eurodollar Rate Loans or CD
Rate Loans, the failure of the Company to make when due any
payment of principal of the Loans (including payments made after
any acceleration thereof) not resulting from such Bank's failure
to act;
(b) the failure of the Company to convert the Loans
after the Company has given (or is deemed to have given) a Notice
of Conversion;
(c) the failure of the Company to make any prepayment
after the Company has given a notice in accordance with Section
2.4;
(d) if the Loans are then Eurodollar Rate Loans or CD
Rate Loans, the prepayment of the Loans on a day which is not the
last day of the Interest Period with respect thereto; or
(e) the conversion pursuant to Section 4.2 of Loans
that are then Eurodollar Rate Loans or CD Rate Loans to Loans of
another type on a day that is not the last day of the Interest
Period with respect thereto;
including, in each case, (i) if the Loans are then Eurodollar
Rate Loans or CD Rate Loans, any such loss or expense arising
from the liquidation or reemployment of funds obtained by such
Bank to maintain its Loan hereunder or from fees payable to
terminate the deposits from which such funds were obtained and
(ii) if the Loans are then CD Rate Loans, with respect to any
certificate of deposit purchased by the Company from each Bank in
connection therewith, any penalty assessed by such Bank for the
early withdrawal of the funds deposited under any such
certificate of deposit in accordance with such Bank's usual and
customary practices that are not otherwise waived by such Bank,
it being understood that for purposes of this Section 4.6 any
such penalty assessed by such Bank for the early withdrawal of
funds deposited under any such certificate of deposit shall
constitute the only losses and expenses of such Bank that may be
recovered by such Bank pursuant to this Section 4.6.
SECTION 5
MAKING OF PAYMENTS
SECTION 5.1 Payments by the Company.
(a) All payments (including prepayments) to be made by
the Company on account of principal, interest, fees and other
amounts required hereunder shall be made directly to each Bank
without condition or reservation of right in immediately
available funds, no later than 12:00 noon (Chicago time) on the
date specified herein. The Company shall make such payments by
wire transfer to such account of each Bank as set forth in
Schedule 5.1 hereof (or pursuant to such other instructions or to
such other account as such Bank may from time to time notify the
Company). Any payment which is received by a Bank later than
12:00 noon (Chicago time) shall be deemed to have been received
on the immediately succeeding Business Day and any applicable
interest shall continue to accrue.
(b) Subject to the provisions set forth in the
definition of "Interest Period" herein, whenever any payment
hereunder shall be stated to be due on a day other than a
Business Day, such payment shall be made on the next succeeding
Business Day, and such extension of time shall in such case be
included in the computation of interest.
SECTION 5.2 Payments by each Bank. The failure of any
Bank to make its Loan pursuant to Section 2.1 shall not relieve
any other Bank of its obligation hereunder to make its Loan, but
no Bank shall be responsible for the failure of any other Bank to
make the Loan to be made by such other Bank.
SECTION 5.3 Setoff.
(a) The Company agrees that, if at any time (i) any
amount owing by it under this Agreement or any Related Document
is then due and payable to a Bank or (ii) any Event of Default
shall have occurred and be continuing, then such Bank, in its
sole discretion, may apply to the payment of the Liabilities any
and all balances, credits, deposits, accounts or moneys of the
Company then or thereafter with such Bank.
(b) Without limitation of Section 5.3(a), the Company
agrees that, upon and during the continuance of any Event of
Default, such Bank is hereby authorized, at any time and from
time to time, without notice to the Company, (i) to set off
against and to appropriate and apply to the payment of the
Liabilities any and all amounts which such Bank is obligated
to pay over to the Company (whether matured or unmatured, and, in
the case of deposits, whether general or special, time or demand
and however evidenced) and (ii) pending any such action, to the
extent necessary, to hold such amounts as collateral to secure
such Liabilities.
(c) Notwithstanding any other provision of this
Agreement, the Notes or any other Related Document, the Banks
shall not set off against, or appropriate or apply to the payment
of any Liabilities, any of the deposits, accounts or other assets
of any Insurance Subsidiary.
SECTION 5.4 Sharing of Payments. If, other than as
expressly provided elsewhere herein, any Bank shall obtain on
account of the Liabilities held by such Bank any payment (whether
voluntary, involuntary, through the exercise of any right of set-
off, or otherwise) in excess of its Commitment Percentage of
payments on account of the Liabilities obtained by all the Banks,
such Bank shall promptly upon demand purchase from the other
Banks a portion of the Liabilities held by such other Banks as
shall be necessary to cause such purchasing Bank to share the
excess payment ratably with each of them based upon each Bank's
Commitment Percentage; provided, however, that if all or any
portion of such excess payment is thereafter recovered from the
purchasing Bank, such purchase shall to that extent be rescinded
and each other Bank shall repay to the purchasing Bank the
purchase price paid therefor, together with an amount equal to
such paying Bank's Commitment Percentage of any interest or other
amount paid or payable by the purchasing Bank in respect of the
total amount so recovered. The Company agrees that any Bank so
purchasing a portion of another Bank's Liabilities pursuant to
this Section 5.4 may, to the fullest extent permitted by law,
exercise all of its rights of payment (including the right of
setoff) with respect to such purchased Liabilities as fully as if
such Bank were the direct creditor of the Company in the amount
of such purchased Liabilities.
SECTION 6
REPRESENTATIONS AND WARRANTIES
To induce each Bank to enter into this Agreement and to make
its Loan hereunder, the Company represents and warrants to each
Bank that:
SECTION 6.1 Corporate Organization. The Company is a
corporation duly existing and in good standing under the laws of
the State of Delaware and is duly qualified and in good standing
as a foreign corporation authorized to do business in Illinois,
which is the only other jurisdiction in which the Company is
required to be duly qualified and in good standing as a foreign
corporation. The Company's failure to be so qualified in any
other jurisdiction does not materially and adversely affect the
Company's business, operations or financial condition or its
ability to perform its obligations hereunder and under the
Related Documents to which it is a party.
SECTION 6.2 Authorization; No Conflict. The Company's
execution, delivery and performance of this Agreement and each of
the Related Documents to which it is a party and the consummation
of the transactions contemplated by this Agreement and each of
the Related Documents are within the Company's corporate powers,
have been duly authorized by all necessary corporate action,
require no governmental, regulatory or other approval, and (a) do
not and will not contravene or conflict with any provision of (i)
any law the failure of the Company to comply with in the
Company's determination materially and adversely affects the
Company's business, operations or financial condition or its
ability to perform its obligations hereunder and under the
Related Documents to which it is a party, (ii) any judgment,
decree or order applicable to the Company, or (iii) the Company's
articles of incorporation or by-laws, and (b) do not and will not
contravene or conflict with any provision of any agreement or
instrument binding upon the Company or upon any property of the
Company that in the Company's determination materially and
adversely affects the Company's business, operations or financial
condition or its ability to perform its obligations hereunder or
under the Related Documents to which it is a party.
SECTION 6.3 Validity and Binding Nature. This Agreement
and the Related Documents to which the Company is a party are
(or, when duly executed and delivered, will be) the legal, valid
and binding obligations of the Company enforceable against the
Company in accordance with their respective terms.
SECTION 6.4 Financial Statements. The annual and
quarterly historical balance sheets and statements of operations
that have been or shall hereafter be furnished to each Bank by or
at the direction of the Company for the purposes of or in
connection with this Agreement do and will present fairly the
financial condition of the Persons involved as of the dates
thereof and the results of their operations for the period(s)
covered thereby, all in accordance with GAAP, consistently
applied, unless otherwise noted therein.
SECTION 6.5 Litigation and Contingent Liabilities.
(a) No litigation (including, without limitation,
derivative actions), arbitration proceedings, governmental
proceedings or investigations or regulatory proceedings are
pending or, to the best of its knowledge, threatened against the
Company or any Material Subsidiary which in the Company's
determination materially and adversely affects the Company's or
such Material Subsidiary's business, operations or financial
condition or the Company's ability to perform its obligations
hereunder and under the Related Documents to which it is a party.
In addition, to the best of the Company's knowledge, there are no
inquiries, formal or informal, which give rise to such actions,
proceedings or investigations.
(b) The Company and, to the best of the Company's
knowledge, each Material Subsidiary have obtained all licenses,
permits, franchises and other governmental authorizations
necessary to the ownership of its properties or to the conduct of
its businesses, including without limitation all licenses,
permits, franchises and other governmental authorizations
required under all applicable Environmental Laws, a failure to
obtain or violation of which in the Company's determination
materially and adversely affects the Company's or such Material
Subsidiary's business, operations or financial condition or the
Company's ability to perform its obligations hereunder and under
the Related Documents to which it is a party.
(c) The Company does not have any material contingent
liabilities required to be disclosed pursuant to GAAP that are
not provided for or disclosed in the financial statements
referred to in Section 6.4 hereof.
SECTION 6.6 Employee Benefit Plans. To the best of the
Company's knowledge, each Plan complies in all material respects
with all applicable statutes and governmental rules and
regulations (including, without limitation, the requirements of
Section 401(a) of the Internal Revenue Code of 1986, as amended,
to the extent that such Plan is intended to conform to that
section) and during the 12-consecutive-month period prior to the
Closing Date, (i) no Reportable Event has occurred and is
continuing with respect to any Plan subject to Title IV of ERISA,
(ii) neither the Company nor any ERISA Affiliate has withdrawn
from any Plan subject to Title IV of ERISA or instituted steps to
do so, (iii) no steps have been instituted to terminate any Plan
subject to Title IV of ERISA, (iv) no contribution failure has
occurred with respect to any Plan sufficient to give rise
to a lien under Section 302(f) of ERISA, or (v) each Plan which
is intended to be qualified pursuant to Section 401(a) of the
Internal Revenue Code of 1986, as amended, has received a
favorable determination letter. To the best of the Company's
knowledge, no condition exists or event or transaction has
occurred in connection with any Plan which would result in the
incurrence by the Company or any ERISA Affiliate of any
liability, fine or penalty, which in the Company's determination
materially and adversely affects the Company's business,
operations or financial condition, or the ability of the Company
to perform its obligations hereunder and under the Related
Documents to which it is a party. Neither the Company nor any
ERISA Affiliate presently maintains, contributes to or, to the
best of the Company's knowledge, has any liability (including
current or potential withdrawal liability) with respect to any
Multiemployer Plan. To the best of the Company's knowledge,
neither the Company nor any ERISA Affiliate has any liability
with respect to any funded or unfunded postretirement benefit for
employees or former employees (including medical, health or life
insurance) other than liability for continuation coverage
described in Part 6 of Title I of ERISA.
SECTION 6.7 Investment Company Act. The Company is not
an "investment company" or a company "controlled" by an
"investment company", within the meaning of the Investment
Company Act of 1940, as amended.
SECTION 6.8 Regulation U. The Company is not engaged
principally, or as one of its important activities, in the
business of extending credit for the purpose of purchasing or
carrying Margin Stock.
SECTION 6.9 Accuracy of Information. To the best of the
Company's knowledge, all factual information heretofore or
contemporaneously furnished by the Company to any Bank for
purposes of or in connection with this Agreement or any
transaction contemplated hereby is, and all other factual
information hereafter furnished by the Company to any Bank will
be, true and accurate in every material respect on the date as of
which such information is dated or certified, and the Company has
not knowingly omitted and will not knowingly omit any material
fact it deems necessary to prevent such information from being
false or misleading.
SECTION 6.10 Labor Controversies. There are no labor
controversies pending or threatened against the Company or any
Material Subsidiary which in the Company's determination
materially and adversely affect the Company's or such Material
Subsidiary's business, operations or financial condition or the
Company's ability to perform its obligations hereunder and under
the Related Documents to which it is a party.
SECTION 6.11 Tax Status. Except as set forth in Schedule
6.11 hereto, the Company and, to the best of the Company's
knowledge, each Material Subsidiary have made or filed all income
and other tax returns, reports and declarations required by any
jurisdiction to which it is subject, have paid all taxes,
assessments and other charges shown or determined to be due on
such returns, reports and declarations (other than those being
diligently contested in good faith by appropriate proceedings),
and have set aside adequate reserves against liability for taxes,
assessments and charges applicable to periods subsequent to those
covered by such returns, reports and declarations, a failure of
which to file, to pay or to set aside in the Company's
determination materially and adversely affects the Company's or
such Material Subsidiary's business, operations or financial
condition or the Company's ability to perform its obligations
hereunder and under the Related Documents to which it is a party.
SECTION 6.12 No Default. No event has occurred and no
condition exists which, upon the execution and delivery of, or
consummation of any transaction contemplated by, this Agreement
or any Related Document, or upon the funding of the Loans, will
constitute an Event of Default. The Company and each Material
Subsidiary have not received notice of default with respect to
any other material agreement, security or contract, except those
for which a default exists that is not capable of being cured
with the payment of money or as to which a good faith dispute
exists.
SECTION 6.13 Compliance with Applicable Laws. The Company
and, to the best of the Company's knowledge, each Material
Subsidiary are in compliance with the requirements of all
applicable laws, rules, regulations, and orders of all
governmental authorities (federal, state, local or foreign, and
including, without limitation, Environmental Laws and Insurance
Laws), a breach of which would in the Company's determination
materially and adversely affect the Company's or such Material
Subsidiary's business, operations or financial condition, or the
ability of the Company to perform its obligations hereunder and
under the Related Documents to which it is a party.
SECTION 6.14 Insurance. The Company, in its sole
determination, maintains adequate general liability, property and
casualty insurance for its benefit under policies issued by
insurers of recognized responsibility.
SECTION 6.15 Solvency. After giving effect to the
transactions contemplated hereby and by the Related Documents,
the Company is not "insolvent", nor will the Company's incurrence
of obligations to repay the Loans render the Company "insolvent."
For the purposes of this Section 6.15, a corporation is
"insolvent" if (i) the "present fair salable value" (as defined
below) of its assets is less than the amount that will be
required to pay its probable liability on its existing debts and
other liabilities (including contingent liabilities) as they
become absolute and matured; (ii) the property of the Company
constitutes unreasonably small capital for the Company to carry
out its business as now conducted and as proposed to be conducted
including the capital needs of the Company; (iii) the Company
intends to, or believes that it will, incur debts beyond its
ability to pay such debts as they mature (taking into account the
timing and amounts of cash to be received by the Company and
amounts to be payable on or in respect of debt of the Company),
or the cash available to the Company after taking into account
all other anticipated uses of the cash of the Company is
anticipated to be insufficient to pay all such amounts on or in
respect of debt of the Company when such amounts are required to
be paid; or (iv) the Company believes that final judgments
against the Company in actions for money damages will be rendered
at a time when, or in an amount such that, the Company will be
unable to satisfy any such judgments promptly in accordance with
their terms (taking into account the maximum reasonable amount of
such judgments in any such actions and the earliest reasonable
time (as determined in the Company's best judgment) at which such
judgments might be rendered), or the cash available to the
Company after taking into account all other anticipated uses of
the cash of the Company (including the payments on or in respect
of debt referred to in clause (iii) of this Section 6.15), is
anticipated to be insufficient to pay all such judgments promptly
in accordance with their terms. For purposes of this Section
6.15, the following terms have the following meanings: (x) the
term "debts" includes any legal liability, whether matured or
unmatured, liquidated, absolute, fixed or contingent, (y) the
term "present fair salable value" of the Company's assets means
the amount which may be realized, within a reasonable time (as
determined in the Company's best judgment), either through
collection or sale of such assets at their regular market value
and (z) the term "regular market value" means the amount which a
capable and diligent businessman (as determined in the Company's
best judgment) could obtain for the property in question within a
reasonable time (as determined in the Company's best judgment)
from an interested buyer who is willing to purchase under
ordinary selling conditions (as determined in the Company's best
judgment).
SECTION 6.16 Use of Proceeds. The Company will use the
proceeds of the Loans to refinance a borrowing made under the
Revolving Credit Agreement, the proceeds of which borrowing were
in turn used by the Company to purchase 150,000 shares of Class A
Preferred Stock, par value $100 per share, of Pioneer Life
Insurance Company of Illinois.
SECTION 6.17 Subsidiaries. The Company has no
Subsidiaries except as listed on Schedule 6.17 hereto.
SECTION 7
COVENANTS
Until all Liabilities of the Company are paid in full, the
Company agrees that, unless at any time the Majority Banks
(except with respect to such sections that expressly require the
written consent of all of the Banks) shall otherwise expressly
consent in writing, it will:
SECTION 7.1 Reports, Certificates and Other Information.
Furnish to each of the Banks:
(a) Annual Report. On or before the ninetieth (90th)
day after each of the Company's fiscal years, a copy of the
consolidated and consolidating financial statements of the
Company and its Subsidiaries (i) in the case of such consolidated
statements, prepared in conformity with GAAP and audited and
certified by independent certified public accountants of
recognized standing selected by the Company and (ii) in the case
of such consolidating statements, prepared based upon unadjusted
per book entries in the Company's and its Subsidiaries' records,
certified by an Authorized Officer.
(b) Interim Reports. On or before the forty-fifth
(45th) day after the end of each of the first three quarters of
each fiscal year of the Company, a copy of the unaudited
consolidated and consolidating financial statements of the
Company prepared in a manner consistent with the financial
statements referred to in Section 7.1(a) hereof, certified by an
Authorized Officer and consisting of, at least, balance sheets as
at the close of such quarter and statements of earnings for such
quarter and for the period from the beginning of such fiscal year
to the close of such quarter.
(c) Statutory Statements. Promptly upon the filing
thereof, copies of all Statutory Statements required to be filed
by the Company and each Principal Insurance Subsidiary with or to
the insurance commission or department of such Person's
respective state of domicile.
(d) Reports to SEC. Promptly upon the filing or
making thereof, copies of each Form 10-K and Form 10-Q made by
the Company with or to the Securities and Exchange Commission.
(e) Certificates. Simultaneously with the furnishing
of each annual statement and each quarterly statement provided
for in this Section 7.1, a certificate of the Chief Financial
Officer or another Authorized Officer stating that no Event of
Default has occurred and is continuing, or, if there is any such
event, setting forth the details thereof and the action that the
Company is taking or proposes to take with respect thereto and
setting forth computations in reasonable detail demonstrating
compliance with each of the financial ratios and restrictions set
forth in this Section 7.
(f) Notice of Default, Litigation and ERISA Matters.
Promptly upon learning of the occurrence of any of the following,
written notice thereof which describes the same and the steps
being taken by the Company with respect thereto: (i) the
occurrence of an Event of Default, (ii) the institution of, or
any adverse determination in, any litigation, arbitration
proceeding or governmental proceeding in which any injunctive
relief is sought or in which money damages in excess of
$5,000,000 are sought, (iii) the occurrence of a material
Reportable Event with respect to any Plan subject to Title IV of
ERISA, (iv) the institution of any material steps by the Company,
the PBGC or any other Person to terminate any Plan subject to
Title IV of ERISA, (v) the institution of any material steps by
the Company or any ERISA Affiliate to withdraw from any Plan
subject to Title IV of ERISA which would result in material
liability to the Company, (vi) the failure to make a material
required contribution to any Plan if such failure is sufficient
to give rise to a lien under Section 302(f) of ERISA, (vii) the
taking of any material action with respect to a Plan which could
result in the requirement that the Company furnish a bond or
other security to the PBGC or such Plan, (viii) the occurrence of
any event with respect to any Plan which could result in the
incurrence by the Company of any liability, fine or penalty,
which would in the Company's determination materially and
adversely affect the Company's business, operations or financial
condition or the ability of the Company to perform its
obligations hereunder and under the Related Documents to which it
is a party, or (ix) promptly after the incurrence thereof, notice
of any material increase in the contingent liability of the
Company with respect to any postretirement Plan benefits.
(g) Other Information. Such other material
information concerning the Company as any Bank may reasonably
request from time to time.
SECTION 7.2 Corporate Existence and Franchises. Except
as otherwise expressly permitted in this Agreement, maintain and
cause each Material Subsidiary to maintain in full force and
effect its separate existence and all rights, licenses, leases
and franchises reasonably necessary in the Company's sole
discretion to the conduct of its and each Material Subsidiary's
business.
SECTION 7.3 Books, Records and Inspections. Maintain,
and cause each Material Subsidiary to maintain, books and records
in accordance with GAAP in all material respects, each Bank to
have access to the Company's books and records, and permit each
Bank, upon seven (7) days notice to the Company, to inspect the
Company's properties and operations during normal business hours
and at reasonable intervals, but no more frequently than semi-
annually if no Event of Default has occurred.
SECTION 7.4 Insurance. Maintain, and cause each Material
Subsidiary to maintain, such insurance as is required by law.
SECTION 7.5 Taxes and Liabilities. Promptly pay, and
cause each Material Subsidiary to pay, when due all taxes,
duties, assessments and other liabilities (except such taxes,
duties, assessments and other liabilities as the Company or such
Material Subsidiary is diligently contesting in good faith and by
appropriate proceedings; provided that the Company or such
Material Subsidiary has provided for and is maintaining adequate
reserves with respect thereto in accordance with GAAP), a failure
of which to pay in the Company's determination materially and
adversely affects the Company's or such Material Subsidiary's
business, operations or financial condition or the Company's
ability to perform its obligations hereunder and under the
Related Documents to which it is a party.
SECTION 7.6 Cash Flow Coverage. Maintain either:
(A) a ratio of (x) the sum of (i) Available Cash Flow
plus (ii) the Earnings of Pioneer Life Insurance Company of
Illinois, National Group Life Insurance Company and
Continental Life and Accident Company to (y) Debt Service
Requirements equal to or greater than 1.35 to 1 at the end
of each fiscal quarter, such ratio to be calculated for the
period of the four fiscal quarters ending on the most recent
fiscal quarter end prior to the date of computation, or
(B) a ratio of (x) Available Cash Flow to (y) Debt
Service Requirements equal to or greater than 1.00 to 1 at
the end of each fiscal quarter, such ratio to be calculated
for the period of the four fiscal quarters ending on the
most recent fiscal quarter end prior to the date of
computation.
SECTION 7.7 Net Worth. Not permit the Net Worth of the
Company to be less than $65,000,000 at the end of each fiscal
quarter of the Company.
SECTION 7.8 Intentionally Omitted.
SECTION 7.9 Indebtedness. Not, without the prior written
consent of all of the Banks, incur or permit to exist any
Indebtedness that by its terms or otherwise is senior in right of
payment to the Liabilities, except (i) Indebtedness incurred in
connection with Permitted Liens pursuant to Section 7.16 and (ii)
Indebtedness hereinafter incurred that in the aggregate when
added to all other senior Indebtedness incurred after the Closing
Date does not exceed $5,000,000.
SECTION 7.10 Risk-Based Capital. Shall cause each
Principal Insurance Subsidiary on an individual basis to maintain
at all times Total Adjusted Capital equal to or greater than 270%
of Authorized Control Level RBC.
SECTION 7.11 Real Estate Concentration. Shall cause each
Principal Insurance Subsidiary on an individual basis to maintain
at all times a Real Estate Concentration Ratio equal to or less
than 50%.
SECTION 7.12 Investment Quality. Shall cause each
Principal Insurance Subsidiary on an individual basis to maintain
at all times a ratio of (x) Non-Investment Grade Obligations to
(y) Total Invested Assets to be equal to or less that 15%.
SECTION 7.13 Intentionally Omitted.
SECTION 7.14 Insurance Company Leverage Ratio. Shall
cause (a) all Principal Insurance Subsidiaries on a combined
basis to maintain at all times an aggregate Insurance Company
Leverage Ratio of greater than 8.33%, and (b) each Principal
Insurance Subsidiary on an individual basis to maintain at all
times an Insurance Coverage Leverage Ratio of greater than 7.50%.
SECTION 7.15 Insurance Ratings. Shall cause each of the
following Subsidiaries to maintain at all times an insurance
rating from A.M. Best equal to or better than the rating set
forth opposite such Subsidiary's name:
Subsidiary Rating
Pioneer Life Insurance Company of Illinois B
Manhattan National Life Insurance Company A-
National Group Life Insurance Company B
If A.M. Best shall cease to issue ratings for the above-
referenced Subsidiaries, the Banks and the Company shall
negotiate in good faith to agree upon a substitute rating agency
and after such substitute rating agency is agreed upon, the
foregoing minimum ratings will be amended to reflect the
equivalent rating by such substitute rating agency.
SECTION 7.16 Intentionally Omitted.
SECTION 7.17 Change in Nature of Business. Not, and not
permit the Company and its Material Subsidiaries as a whole to,
make any material change in the nature of its business carried on
as of the date first stated above, provided, however, the Company
or any Material Subsidiary may make changes in the nature of its
business provided that any such change made is related in any way
to the medical or insurance businesses.
SECTION 7.18 Depository Relationship. The Company shall
maintain its primary depository and remittance relationship with
the Banks. Pursuant to such primary depository and remittance
relationship, the Company shall maintain with each Bank average
available demand deposits equal to the amount needed to cover
non-credit services provided by such Bank to the Company and its
Subsidiaries, such amount to be determined according to the
published fee schedules of such Bank; provided, however, that the
failure of the Company to maintain such amount with each Bank
shall not be an Event of Default under this Agreement. The
Company agrees that if the amount of available demand deposits
maintained by the Company with such Bank are insufficient to
equal the amount needed to cover non-credit services provided by
such Bank, then such Bank may charge the Company a deficiency fee
sufficient to cover such non-credit services, such deficiency fee
to be determined according to the published fee schedules of such
Bank or the fees being charged to the Company at that time,
whichever are less.
SECTION 7.19 Employee Benefit Plans. Not permit, and not
permit any ERISA Affiliate to permit, any condition to exist in
connection with any Plan which might constitute grounds for the
PBGC to institute proceedings to have such Plan terminated or a
trustee appointed to administer such Plan; and not engage in, or
permit to exist or occur, or permit any ERISA Affiliate to engage
in, or permit to exist or occur, any other condition, event or
transaction with respect to any Plan which would result in the
incurrence by the Company or any ERISA Affiliate of any
liability, fine or penalty, which in either case would in the
Company's determination materially and adversely affect the
Company's business, operations or financial condition, or the
ability of the Company to perform its obligations hereunder and
under the Related Documents to which it is a party.
SECTION 7.20 Use of Proceeds. Not, and not permit any
Subsidiary to, use or permit the direct or indirect use of any
proceeds of or with respect to the Loans for the purpose, whether
immediate, incidental or ultimate, of "purchasing or carrying"
(within the meaning of Regulation U) Margin Stock.
SECTION 7.21 Other Agreements. Not, and not permit any
Material Subsidiary to, enter into any agreement containing any
provision which would be violated or breached by the performance
of the Company's obligations hereunder, under any Related
Document or under any instrument or document delivered or to be
delivered by the Company hereunder or thereunder or in connection
herewith or therewith or which would violate or breach any
provision hereof or thereof or of any such instrument or
document.
SECTION 7.22 Compliance with Applicable Laws. Comply, and
cause each Material Subsidiary to comply, with the requirements
of all applicable laws, rules, regulations, and orders of all
governmental authorities (federal, state, local or foreign, and
including, without limitation, Environmental Laws and Insurance
Laws), a breach of which would in the Company's determination
materially and adversely affect the Company's or such Material
Subsidiary's business, operations or financial condition, or
which would impair the Company's ability to perform its
obligations hereunder and under the Related Documents to which it
is a party.
SECTION 7A
UNRESTRICTED SUBSIDIARIES
SECTION 7A.1 Unrestricted Subsidiaries. The Company may,
from time to time, by written notice to each Bank, designate a
Subsidiary as an Unrestricted Subsidiary (referred to herein as
an "Unrestricted Subsidiary") provided that each of the following
conditions is satisfied:
(a) the proposed Unrestricted Subsidiary shall not be
a Material Subsidiary existing on the Closing Date;
(b) the aggregate Unrestricted Subsidiary Indebtedness
of all Unrestricted Subsidiaries, including the Unrestricted
Subsidiary Indebtedness of the proposed Unrestricted Subsidiary,
shall not exceed $40,000,000;
(c) the proposed Unrestricted Subsidiary shall have no
financial obligations, liabilities or dealings of any kind with
the Company or any Material Subsidiary of the Company, except for
(i) ordinary overhead allocations, (ii) marketing agreements,
administration agreements and other agreements which the Company
customarily enters into with its Subsidiaries so long as the
terms of such agreements are no less favorable to the Company
than the terms of agreements the Company enters into with its
other Subsidiaries, and (iii) other customary inter-corporate
dealings so long as the terms of such dealings are no less
favorable to the Company than the terms of dealings the Company
enters into with its other Subsidiaries; and
(d) the proposed Unrestricted Subsidiary shall not
have, permit to exist or incur any undertaking, indebtedness,
obligation or other liability pursuant to which recourse may be
made to the Company or any Material Subsidiary of the Company,
and neither the Company nor any Material Subsidiary of the
Company shall be or become a guarantor or surety of, or otherwise
be or become responsible in any manner (whether by support
agreement or agreement to purchase any obligations, stock,
assets, goods or services, or to supply or advance any funds,
assets, goods or services, or otherwise) with respect to any
undertaking, indebtedness, obligation or other liability of such
proposed Unrestricted Subsidiary; provided, however, that the
proposed Unrestricted Subsidiary shall be permitted to engage in
the types of transactions prohibited by this Section 7A.1(d), and
the Company shall be permitted to provide guarantees and
sureties, if the Company's obligations under such transactions,
guaranties and sureties (i) are expressly subordinated to the
Company's obligations under this Agreement and (ii) shall not
exceed $2,000,000 in the aggregate for any one Unrestricted
Subsidiary.
SECTION 7A.2 Additional Unrestricted Subsidiaries. In
addition to the Unrestricted Subsidiaries designated pursuant to
Section 7A.1 above, the Company and the Majority Banks can agree
to designate any Subsidiary as an Unrestricted Subsidiary. Any
Unrestricted Subsidiary Indebtedness of an Unrestricted
Subsidiary designated as such pursuant to this Section 7A.2 shall
be excluded from the calculation of the aggregate Unrestricted
Subsidiary Indebtedness permitted pursuant to Section 7A.1.
SECTION 7A.3 Effectiveness of Designation. The
designation by the Company of a Subsidiary as an Unrestricted
Subsidiary shall become effective five (5) Business Days after
the Company delivers a written notice of such designation to each
Bank, which notice shall certify that all of the conditions set
forth in Section 7A.1 have been satisfied with respect to such
Unrestricted Subsidiary.
SECTION 7A.4 Effect of Designation. Other than for
purposes of the financial statements referenced in Section 7.1
hereof, the assets, liabilities, Unrestricted Subsidiary
Indebtedness, income, losses, cash flow, net worth, liens and
other relevant amounts and factors concerning any Unrestricted
Subsidiary shall be excluded from the computations referenced in
Sections 7.6 and 7.9 of this Agreement and, to the extent
applicable, the computations referenced in Sections 7.10 through
7.16, inclusive, of this Agreement, and the Unrestricted
Subsidiaries shall not be subject to any of the other limitations
or restrictions contained herein.
SECTION 8
CONDITIONS TO MAKING THE LOANS
SECTION 8.1 Conditions Precedent. Each Bank's obligation
to make its Loan is subject to the satisfaction of each of the
following conditions precedent:
(a) Fees and Expenses. The Company shall have paid
all fees owed to each of the Banks and reimbursed each of the
Banks for all expenses due and payable hereunder on or before the
Closing Date including, but not limited to, ANB's counsel fees
provided for in Section 10.4 to the extent such counsel shall
have requested payment of such fees.
(b) Documents. Each Bank shall have received all of
the following, each duly executed and delivered and dated the
Closing Date, in form and substance satisfactory to each Bank:
(i) Agreement. This Agreement, executed by the
Company and each Bank.
(ii) Note. A Promissory Note, substantially in the
form of Exhibit A hereto, with appropriate insertions,
issued to such Bank and executed by the Company.
(iii) Resolutions. Certified copies of resolutions
of the Company's Board of Directors or the Executive
Committee of the Company's Board of Directors authorizing
the execution, delivery and performance of this Agreement
and the Related Documents to which the Company is a party
and any other documents provided for herein or therein to be
executed by the Company.
(iv) Consents. Certified copies of all documents
evidencing any necessary corporate action, consents and
governmental approvals, if any, with respect to this
Agreement, the Related Documents, and any other documents
provided for herein or therein to be executed by the
Company.
(v) Incumbency and Signatures. A certificate of the
Secretary or an Assistant Secretary of the Company
certifying the names of the officer or officers of the
Company authorized to sign this Agreement and the Related
Documents to which the Company is a party and any other
documents provided for herein or therein to be executed by
the Company, together with a sample of the true signature of
each such officer. Each Bank may conclusively rely on each
such certificate until formally advised by a like
certificate of any changes therein.
(vi) Opinion of Counsel. Opinion of the general
counsel or the assistant general counsel to the Company in
form and substance reasonably satisfactory to each Bank.
(vii) Constitutive Documents. Certified copies of the
Company's articles of incorporation and by-laws.
(viii) Good Standing Certificates. Certificates of
good standing for the Company in Delaware and Illinois and a
certificate of the insurance commissioner or similar
official of the jurisdiction of incorporation of each
Principal Insurance Subsidiary as to the good standing of
such Principal Insurance Subsidiary.
(ix) Other. Such other documents as each Bank may
reasonably request.
(c) No Default. No Event of Default shall have
occurred and be continuing or will result from the making of the
Loans requested to be made on the Closing Date.
SECTION 9
EVENTS OF DEFAULT AND THEIR EFFECT
SECTION 9.1 Events of Default. Each of the following
shall constitute an Event of Default under this Agreement
following the expiration of any applicable notice or cure period:
(a) Nonpayment of the Loans. Default in the payment
when due of the principal of or interest on the Loans, or the
payment when due of any fees or any other amounts payable by the
Company hereunder and continuance of such default for five (5)
Business Days after the applicable due date, or default in the
payment when due of the principal of or interest on any loan made
under the Revolving Credit Agreement, or the payment when due of
any fees or any other amounts payable by the Company under the
Revolving Credit Agreement and continuance of such default beyond
the applicable grace period as set forth in the Revolving Credit
Agreement.
(b) Nonpayment of Other Indebtedness. Default in the
payment when due (subject to any applicable grace period),
whether by acceleration or otherwise, of any other Indebtedness
of, or guaranteed by, the Company or any Material Subsidiary if
the aggregate amount of any such other Indebtedness that is
accelerated or due and payable, or that may be accelerated or
otherwise become due and payable, by reason of such default is
$5,000,000 or more, or default in the performance or observance
of any obligation or condition with respect to any such other
Indebtedness if the effect of such default is to accelerate the
maturity of any such Indebtedness or cause any of such
Indebtedness of $5,000,000 or more to be prepaid, purchased or
redeemed or to permit the holder or holders thereof, or any
trustee or agent for such holders, to cause such Indebtedness of
$5,000,000 or more to become due and payable prior to its
expressed maturity or to cause such Indebtedness of $5,000,000 or
more to be prepaid, purchased or redeemed.
(c) Bankruptcy or Insolvency. The Company becomes
insolvent or generally fails to pay, or admits in writing its
general inability to pay, debts as they become due; or the
Company applies for, consents to, or acquiesces in the
appointment of, a trustee, receiver or other custodian for the
Company, or any property thereof, or makes a general assignment
for the benefit of creditors; or, in the absence of such
application, consent or acquiescence, a trustee, receiver or
other custodian is appointed for the Company or for a substantial
part of the property thereof and is not discharged within 60
days; or any bankruptcy, reorganization, debt arrangement, or
other case or proceeding under any bankruptcy or insolvency law,
or any dissolution or liquidation proceeding, is commenced in
respect of the Company, and if such case or proceeding is not
commenced by the Company, it is consented to or acquiesced in by
the Company or remains for 60 days undismissed; or the Company
takes any corporate action to authorize, or in furtherance of,
any of the foregoing or the insurance commission or department of
any Principal Insurance Subsidiary's state of domicile takes any
action against such Principal Insurance Subsidiary or the Company
in connection with any of the foregoing.
(d) Specified Noncompliance with this Agreement.
Failure by the Company to comply with or to perform under Section
7.2 (only with respect to the maintenance of the existence of the
Company), Sections 7.6 through 7.16, inclusive, and Section 7.21
hereunder and continuance of such failure for five (5) Business
Days after (i) written notice thereof to the Company from the
Majority Banks or (ii) any Authorized Officer of the Company knew
or should have known of such failure to comply or perform;
provided, however, that, with respect to the failure by the
Company to comply with or to perform under Sections 7.10 through
7.14, inclusive, the continuance of such failure shall be
extended from five (5) Business Days to thirty (30) days if each
Bank receives written notice from the Company prior to the
expiration of such five (5) Business Day period that such failure
is curable within such thirty (30) day period.
(e) Other Noncompliance with this Agreement. Failure
by the Company to comply with or to perform any provision of this
Agreement (and not constituting an Event of Default under any of
the other provisions of this Section 9) and continuance of such
failure for sixty (60) days after (i) written notice thereof to
the Company from the Majority Banks or (ii) any Authorized
Officer of the Company knew of such failure to comply or perform.
(f) Representations and Warranties. Any
representation or warranty made by the Company herein or in
any Related Document is breached in any material respect or is
known by the Company to have been false or misleading in
any material respect when given, or any schedule, certificate,
financial statement, report, notice, or other writing furnished
by the Company to any Bank is known by the Company to have been
false or misleading in any material respect on the date as of
which the facts therein set forth are stated or certified.
(g) Employee Benefit Plans. (i) Institution by the
PBGC, the Company or any ERISA Affiliate of steps to terminate a
Plan subject to Title IV of ERISA if as a result of such
termination, the Company or any ERISA Affiliate would be required
to make a material contribution to such Plan, or would incur a
material liability or obligation to such Plan, (ii) occurrence of
a contribution failure with respect to any Plan sufficient to
give rise to a lien under Section 302(f) of ERISA, or (iii)
incurrence of any material liability (including current or
potential withdrawal liability) by the Company or any ERISA
Affiliate with respect to any Multiemployer Plan.
(h) Judgments. There shall be entered against the
Company one or more final unappealable judgments or decrees in
excess of $5,000,000 in the aggregate at any one time outstanding
for the Company, excluding those judgments or decrees (i) that
shall have been stayed, vacated or bonded, (ii) that shall have
been outstanding less than 30 days from the entry thereof,
(iii) for and to the extent to which the Company is insured and
with respect to which the insurer specifically has determined
that it shall assume responsibility in writing or (iv) for and to
the extent to which the Company is otherwise indemnified if the
terms of such indemnification are satisfactory to the Majority
Banks.
SECTION 9.2 Effect of Event of Default. If any Event of
Default described in Section 9.1(c) shall occur, the Loans, the
Notes and all other Liabilities shall become immediately due and
payable, all without presentment, demand or notice of any kind,
all of which, except as expressly set forth herein, are hereby
expressly waived by the Company; and, in the case of any other
Event of Default, the Majority Banks may, by written notice to
the Company, declare the Loans, the Notes and all other
Liabilities to be due and payable, whereupon the Loans, the Notes
and all other Liabilities shall become immediately due and
payable, all without presentment, demand or notice of any kind,
all of which, except as expressly set forth herein, are hereby
expressly waived by the Company.
SECTION 10
GENERAL
SECTION 10.1 Amendments and Waivers. No amendment or
waiver of any provision of this Agreement or any other Related
Document, and no consent with respect to any departure by the
Company therefrom, shall be effective unless the same shall be in
writing and signed by the Majority Banks, and, in the case of
amendments, signed by the Company, and then any such waiver shall
be effective only in the specific instance and for the specific
purpose for which given; provided, however, that no such waiver,
amendment, or consent shall, unless in writing and signed by all
the Banks, and, in the case of an amendment, signed by the
Company, do any of the following:
(a) subject any Bank to any additional obligations;
(b) postpone or delay any date fixed for any payment
of principal, interest, fees or other amounts due to the Banks
(or any of them) hereunder or under any other Related Document;
(c) reduce the principal of, or the rate of interest
specified herein on the Loans, or of any fees or other amounts
payable hereunder or under any other Related Document;
(d) change the percentage of the Commitments which
shall be required for the Banks or any of them to take action
hereunder; or
(e) amend this Section 10.1 or any provision providing
for consent or other action by all Banks.
SECTION 10.2 Notices. All notices hereunder shall be
in writing. Notices given by mail shall be deemed to have been
given (i) five (5) Business Days after the date sent if sent by
registered or certified mail, postage prepaid, (ii) the next
Business Day if sent by overnight delivery service, (iii) the day
sent if sent by telecopy or telex if sent prior to 5:00 p.m.
local time on a Business Day, otherwise the following day, or
(iv) the day delivered if sent by personal messenger, and:
(a) if to the Company, addressed to the Company at its
address shown below its signature hereto; or
(b) if to a Bank, addressed to such Bank at the
address shown below its signature hereto;
or in the case of any party, such other address as such
party, by written notice received by the other parties to this
Agreement, may have designated as its address for notices.
SECTION 10.3 Accounting Terms; Computations. Unless
otherwise indicated, all accounting terms used herein and not
expressly defined in this Agreement shall have the respective
meanings given to them in accordance with GAAP as in effect on
the Closing Date. Where the character or amount of any asset or
liability or item of income or expense is required to be
determined, or any consolidation or other accounting computation
is required to be made, for purposes of this Agreement such
determination or calculation shall, to the extent applicable and
except as otherwise specified in this Agreement or agreed to in
writing by the Majority Banks, be made in accordance with GAAP as
then in effect.
SECTION 10.4 Costs, Expenses and Taxes.
(a) The Company agrees to pay within thirty (30) days
after demand by each Bank all of such Bank's reasonable
out-of-pocket costs and expenses (including the reasonable fees
and out-of-pocket expenses of such Bank's counsel) in connection
with the preparation, execution and delivery of this Agreement,
the Related Documents and all other instruments or documents
provided for herein or delivered or to be delivered hereunder or
in connection herewith (including, without limitation, all
amendments, supplements and waivers executed and delivered
pursuant hereto or in connection herewith).
(b) The reasonable costs and expenses which any Bank
incurs in any manner or way with respect to the following shall
be part of the Liabilities, payable by the Company within thirty
(30) days after demand if at any time after the date of this
Agreement such Bank: (i) reasonably employs counsel for advice
or other representation (A) to represent such Bank in any
litigation, contest, dispute, suit or proceeding or to commence,
defend or intervene or to take any other action in or with
respect to any litigation, contest, dispute, suit or proceeding
(whether instituted by such Bank, any other Bank, the Company or
any other Person) in any way or respect relating to this
Agreement or the Related Documents or (B) to enforce any of such
Bank's rights with respect to the Company under this Agreement
and the Related Documents; and/or (ii) reasonably seeks to
enforce or enforces any of such Bank's rights and remedies with
respect to the Company under this Agreement and the Related
Documents.
(c) All of the Company's obligations provided for in
this Section 10.4 shall be Liabilities of the Company hereunder.
SECTION 10.5 Indemnification. In consideration of each
Bank's execution and delivery of this Agreement and each Bank's
agreement to make and maintain its Loan, the Company hereby
agrees to indemnify, exonerate and hold such Bank and each of its
officers, directors, employees and agents (herein collectively
called the "Bank Parties" and individually called a "Bank
Party") free and harmless from and against any and all actions,
causes of action, suits, losses, costs (including, without
limitation, all documentary or other stamp taxes or duties),
liabilities and damages, and expenses in connection therewith
(irrespective of whether such Bank Party is a party to the action
for which indemnification hereunder is sought) (the "Indemnified
Liabilities"), including, without limitation, reasonable
attorneys' fees and disbursements, incurred by such Bank Parties
or any of them as a result of, or arising out of, or relating to
(except for such Indemnified Liabilities arising on account of
such Bank Party's gross negligence or willful misconduct):
(a) any transaction financed or to be financed in
whole or in part, directly or indirectly, with the proceeds of
the Loans;
(b) the execution, delivery, performance,
administration or enforcement of this Agreement and the Related
Documents in accordance with their respective terms by any of
such Bank Parties;
(c) any misrepresentation or breach of any
representation or warranty or covenant herein by the Company.
If and to the extent that the foregoing agreements described in
this Section 10.5 may be unenforceable for any reason, the
Company hereby agrees to make the maximum contribution to the
payment and satisfaction of each of the Indemnified Liabilities
which is permissible under applicable law.
SECTION 10.6 Captions and References. The recitals to
this Agreement (except for definitions) and the section captions
used in this Agreement are for convenience only, and shall not
affect the construction of this Agreement.
SECTION 10.7 No Waiver; Cumulative Remedies. No failure
to exercise and no delay in exercising, on the part of the Banks
or any Bank, any right, remedy, power or privilege hereunder,
shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege
hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege.
SECTION 10.8 Governing Law; Jury Trial; Severability.
This Agreement and each Note shall be a contract made under and
governed by the laws of the State of Illinois, without regard to
conflict of laws principles. Wherever possible, each provision
of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of
this Agreement shall be prohibited by or invalid under such law,
such provision shall be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder
of such provision or the remaining provisions of this Agreement.
All obligations of the Company and rights of each Bank, which
obligations and rights are described herein or in the Note issued
to such Bank, shall be in addition to and not in limitation of
those provided by applicable law.
THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT TO TRIAL
BY JURY IN ANY ACTION OR PROCEEDING (i) TO ENFORCE OR DEFEND ANY
RIGHTS UNDER OR IN CONNECTION WITH THIS AGREEMENT, THE RELATED
DOCUMENTS, THE LOANS, OR ANY AMENDMENT, INSTRUMENT, DOCUMENT OR
AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED
IN CONNECTION HEREWITH OR THEREWITH, OR (ii) ARISING FROM ANY
DISPUTE OR CONTROVERSY IN CONNECTION WITH OR RELATED TO THIS
AGREEMENT, THE RELATED DOCUMENTS, THE LOANS, OR ANY SUCH
AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT, AND AGREES THAT ANY
SUCH ACTION OR COUNTERCLAIM SHALL BE TRIED BEFORE A COURT AND NOT
BEFORE A JURY.
____________________
Agreed and Acknowledged by the Company
THE COMPANY IRREVOCABLY AGREES THAT, SUBJECT TO EACH BANK'S
SOLE AND ABSOLUTE ELECTION, ANY ACTION OR PROCEEDING IN ANY WAY,
MANNER OR RESPECT ARISING OUT OF THIS AGREEMENT, THE RELATED
DOCUMENTS, THE LOANS, OR ANY AMENDMENT, INSTRUMENT, DOCUMENT OR
AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN
CONNECTION HEREWITH OR THEREWITH, OR ARISING FROM ANY DISPUTE
OR CONTROVERSY ARISING IN CONNECTION WITH OR RELATED TO THIS
AGREEMENT, THE RELATED DOCUMENTS, THE LOANS, OR ANY SUCH
AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT SHALL BE LITIGATED
IN THE COURTS HAVING SITUS WITHIN THE CITY OF CHICAGO, THE STATE
OF ILLINOIS, AND THE COMPANY HEREBY CONSENTS AND SUBMITS TO THE
JURISDICTION OF ANY LOCAL, STATE OR FEDERAL COURT LOCATED WITHIN
SUCH CITY AND STATE. THE COMPANY HEREBY WAIVES ANY RIGHT IT
MAY HAVE TO TRANSFER OR CHANGE THE VENUE OF ANY LITIGATION
BROUGHT AGAINST THE COMPANY BY ANY BANK IN ACCORDANCE WITH THIS
SECTION 10.8.
SECTION 10.9 Counterparts. This Agreement and any
amendment or supplement hereto or any waiver or consent granted
in connection herewith may be executed in any number of
counterparts and by the different parties on separate
counterparts and each such counterpart shall be deemed to be an
original, but all such counterparts shall together constitute but
one and the same Agreement.
SECTION 10.10 Successors and Assigns. Subject to Section
10.12, this Agreement shall be binding upon the Company, each
Bank and their respective successors and assigns, and shall inure
to the benefit of the Company, each Bank and each Bank's
successors and assigns. The Company shall have no right to
assign its rights or delegate its duties under this Agreement.
SECTION 10.11 Prior Agreements. The terms and conditions
set forth in this Agreement shall supersede all prior
negotiations, agreements, discussions, correspondence, memoranda
and understandings (whether written or oral) of the Company and
the Banks concerning or relating to the subject matter of this
Agreement (including, without limitation, the terms set forth in
the proposal letter dated February 13, 1995 issued by the Banks
to Mr. Peter W. Nauert).
SECTION 10.12 Assignments; Participations. (a) Each Bank
shall have the right to assign, with the written consent of the
Company, which shall not be unreasonably withheld, to any
Affiliate of such Bank and to one or more banks or other
financial institutions, all or a portion of its rights and
obligations under this Agreement (including, without limitation,
all or a portion of its Loan and the Note issued to such Bank)
and the Related Documents. For purposes of this Section, it
shall not be unreasonable for the Company to withhold its consent
to a proposed assignee if, as a result of such proposed
assignment, any one Bank's Commitment Percentage would be in
excess of fifty percent (50%) or there would be more than six (6)
banks or financial institutions party to this Agreement. Upon
any such assignment, (x) the assignee shall become a party hereto
and, to the extent of such assignment, have all rights and
obligations of such Bank hereunder and under the Related
Documents and (y) such Bank shall, to the extent of such
assignment, relinquish its rights and be released from its
obligations hereunder and under the Related Documents. The
Company hereby agrees to execute and deliver such documents, and
to take such other actions, as such Bank may reasonably request
to accomplish the foregoing. Upon such assignment, this
Agreement shall be deemed to be amended to the extent, but only
to the extent, necessary to reflect the addition of the assignee
and the resulting adjustment of the Commitment Percentages
arising therefrom.
(b) In addition to the assignments permitted in
clause (a) of this Section 10.12, each Bank and any assignee
pursuant to clause (a) above shall have the right with the
written consent of the Company to grant participations to one or
more banks or other financial institutions in or to its Loan, the
Related Documents, and the Note held by such Bank or such
assignee, provided that (i) each Bank's obligations under this
Agreement shall remain unchanged and (ii) the Company shall
continue to deal solely and exclusively with such Bank. No
holder of a participation in all or any part of a Loan, the
Related Documents, or any Note shall have any rights under this
Agreement; provided, however, that, to the extent permitted by
applicable law, each holder of a participation shall have the
same rights as each Bank under Section 5.3.
(c) The Company hereby consents to the disclosure of
any information obtained in connection herewith (i) by each Bank,
to any bank or other financial institution which is an assignee
or potential assignee with respect to which the Company has given
its written consent pursuant to clause (a) above, and (ii) by
each Bank and any assignee pursuant to clause (a) above, to any
bank or other financial institution which is a participant or
potential participant with respect to which the Company has given
its written consent pursuant to clause (b) above, it being
understood that each Bank and each assignee shall advise any such
bank or other financial institution of its obligation to keep
confidential any nonpublic information disclosed to it pursuant
to this Section 10.12.
SECTION 10.13 Confidentiality. Each Bank agrees to take
normal and reasonable precautions and exercise due care to
maintain the confidentiality of all information provided to it by
the Company in connection with this Agreement or any other
Related Document, and neither it nor any of its Affiliates shall
use any such information for any purpose or in any manner other
than pursuant to the terms contemplated by this Agreement, except
to the extent such information (i) was or becomes generally
available to the public other than as a result of a disclosure by
such Bank, or (ii) was or becomes available on a non-confidential
basis from a source other than the Company, provided that such
source is not bound by a confidentiality agreement with the
Company known to such Bank; provided, further, however, that any
Bank may disclose such information (A) at the request or pursuant
to any requirement of any governmental or regulatory authority to
which such Bank is subject or in connection with an examination
of such Bank by any such authority; (B) pursuant to subpoena or
other court process, provided that, if it is lawful to do so,
such Bank shall give prompt notice to the Company of service
thereof so that the Company may seek a protective order or other
appropriate remedy or waive compliance with the provisions of
this Section 10.13; (C) when required to do so in accordance with
the provisions of any applicable requirement of law; (D) to the
extent reasonably required in connection with any litigation or
proceeding to which any Bank or their respective Affiliates may
be party, (E) to the extent reasonably required in connection
with the exercise of any remedy hereunder or under any other
Related Document, and (F) to such Bank's independent auditors and
other professional advisors provided that each such entity agrees
to maintain the confidentiality of such information pursuant to
the terms of this Section.
SECTION 10.14 Credit Decision. Each Bank expressly
acknowledges that no other Bank has made any representation or
warranty to it and that no act by any other Bank hereinafter
taken, including any review of the affairs of the Company and its
Subsidiaries, shall be deemed to constitute any representation or
warranty by such other Bank to any Bank. Each Bank represents to
the other Banks that it has independently and without reliance
upon such other Banks and based on such documents and information
as it has deemed appropriate, made its own appraisal of and
investigation into the business, prospects, operations, property,
financial and other condition and creditworthiness of the Company
and its Subsidiaries, and all applicable bank regulatory and
other laws and regulations relating to the transactions
contemplated thereby, and made its own decision to enter into
this Agreement and extend credit to the Company hereunder. Each
Bank also represents that it will, independently and without
reliance upon the other Banks and based on such documents and
information as it shall deem appropriate at the time, continue to
make its own credit analysis, appraisals and decisions in taking
or not taking action under this Agreement and the other Related
Documents, and to make such investigations as it deems necessary
to inform itself as to the business, prospects, operations,
property, financial and other condition and creditworthiness of
the Company and its Subsidiaries. No Bank shall have any duty or
responsibility to provide any other Bank with any credit or other
information concerning the business, prospects, operations,
property, financial and other condition or creditworthiness of
the Company which may come into the possession of such Bank.
[Remainder of this page intentionally left blank.]
IN WITNESS WHEREOF, the Company and each Bank have caused
this Agreement to be executed and delivered as of the day and
year first above written.
THE COMPANY:
PIONEER FINANCIAL SERVICES, INC.
By:
Title:
1750 Golf Road
Schaumburg, Illinois 60101
Attention: David Vickers
Val Rajic
Telephone: (708) 995-0400
Telecopy: (708) 413-7195
THE BANKS:
COMMITMENT: AMERICAN NATIONAL BANK AND TRUST
$9,000,000 COMPANY OF CHICAGO
By
Vice President
33 North LaSalle Street
Chicago, Illinois 60690
Attention: Arthur W. Murray
Telephone: (312) 661-6943
Telecopy: (312) 661-6675
$4,000,000 FIRSTAR BANK MILWAUKEE, N.A.
By
Title:
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Attention: Stephen E. Check
Telephone:__________________________
Telecopy:___________________________
$2,000,000 BANK ONE, ROCKFORD, NA
By
Title:
East State at Mulford Road
Rockford, Illinois 61110-4900
Attention: Robert Opperman
Telephone: (815) 962-3771
Telecopy: (815) 394-1889
Schedule 5.1
Wire Transfer/Account Information
American National Bank and
Trust Company of Chicago
ABA #: 071000770
Account No.: 4069692
Reference: Pioneer Term Loan
Firstar Bank Milwaukee, N.A.
ABA #: 075000022
Reference: Pioneer Term Loan
Bank One, Rockford, NA
ABA #: 071900401
Reference: Pioneer Term Loan
Schedule 6.11
Tax Liabilities
None
Schedule 6.17
Subsidiaries
Principal Insurance Subsidiaries
Insurance Subsidiaries
Other Subsidiaries
Execution
Copy
AMENDED AND RESTATED
CREDIT AGREEMENT
Dated as of March 22, 1995
among
PIONEER FINANCIAL SERVICES, INC.,
AMERICAN NATIONAL BANK AND TRUST
COMPANY OF CHICAGO,
as Agent
and
AMERICAN NATIONAL BANK AND TRUST
COMPANY OF CHICAGO,
FIRSTAR BANK MILWAUKEE, N.A.
and
BANK ONE, ROCKFORD, NA
TABLE OF CONTENTS
Page
SECTION 1
CERTAIN DEFINITIONS . . . . . . . . . 1
SECTION 1.1 Terms Defined in this Agreement . . . . . 1
SECTION 2
BANK'S COMMITMENT; BORROWING PROCEDURES; LCs . . . 11
SECTION 2.1 Bank's Commitment to Make Loans . . . . . 11
SECTION 2.3 Procedure for Borrowing . . . . . . . . . 12
SECTION 2.4 Conversion and Continuation Elections. . 13
SECTION 2.5 LC Documentation. . . . . . . . . . . . . 14
SECTION 2.6 Agreement to Repay LC Drawings. . . . . . 16
SECTION 2.6A Participations. . . . . . . . . . . . . . 16
SECTION 2.7 Mandatory Payment of LC Liability. . . . 18
SECTION 2.8 LC Operations. . . . . . . . . . . . . . 19
SECTION 2.9 Voluntary Termination or Reduction of
Commitments. . . . . . . . . . . . . . . . . . . . 19
SECTION 2.11 Mandatory Prepayment. . . . . . . . . . . 20
SECTION 2.12 Repayment. . . . . . . . . . . . . . . . 20
SECTION 3
NOTES EVIDENCING THE LOANS . . . . . . . 20
SECTION 3.1 Notes . . . . . . . . . . . . . . . . . . 20
SECTION 4
INTEREST, FEES AND COSTS . . . . . . . . 21
SECTION 4.1 Interest . . . . . . . . . . . . . . . . 21
SECTION 4.2 Fees. . . . . . . . . . . . . . . . . . . 21
(a) Intentionally Omitted. . . . . . . . . . 21
(b) Unused Commitment Fees. . . . . . . . . . 21
(c) Letter of Credit Fees. . . . . . . . . . 22
(d) Letter of Credit Issuance Fees. . . . . . 22
SECTION 4.3 Computation of Fees and Interest. . . . . 22
SECTION 4.4 Increased Costs; Capital Adequacy . . . . 22
SECTION 4.5 Funding Losses. . . . . . . . . . . . . . 24
SECTION 5
MAKING OF PAYMENTS . . . . . . . . . 25
SECTION 5.1 Payments by the Company . . . . . . . . . 25
SECTION 5.2 Payments by the Banks to the Agent. . . . 26
SECTION 5.3 Setoff . . . . . . . . . . . . . . . . . 26
SECTION 5.4 Sharing of Payments. . . . . . . . . . . 27
SECTION 6
REPRESENTATIONS AND WARRANTIES . . . . . . 27
SECTION 6.1 Corporate Organization . . . . . . . . . 27
SECTION 6.2 Authorization; No Conflict . . . . . . . 28
SECTION 6.3 Validity and Binding Nature . . . . . . . 28
SECTION 6.4 Financial Statements . . . . . . . . . . 28
SECTION 6.5 Litigation and Contingent Liabilities . . 28
SECTION 6.6 Employee Benefit Plans . . . . . . . . . 29
SECTION 6.7 Investment Company Act . . . . . . . . . 29
SECTION 6.8 Regulation U . . . . . . . . . . . . . . 30
SECTION 6.9 Accuracy of Information . . . . . . . . . 30
SECTION 6.10 Labor Controversies . . . . . . . . . . . 30
SECTION 6.11 Tax Status . . . . . . . . . . . . . . . 30
SECTION 6.12 No Default . . . . . . . . . . . . . . . 30
SECTION 6.13 Compliance with Applicable Laws . . . . . 30
SECTION 6.14 Insurance . . . . . . . . . . . . . . . . 31
SECTION 6.15 Solvency. . . . . . . . . . . . . . . . . 31
SECTION 6.16 Use of Proceeds. . . . . . . . . . . . . 32
SECTION 6.17 Subsidiaries. . . . . . . . . . . . . . . 32
SECTION 7
COVENANTS . . . . . . . . . . . . 32
SECTION 7.1 Reports, Certificates and Other
Information . . . . . . . . . . . . . . . . . . . . 32
(a) Annual Report. . . . . . . . . . . . . . 32
(b) Interim Reports. . . . . . . . . . . . . 32
(c) Statutory Statements. . . . . . . . . . . 32
(d) Reports to SEC. . . . . . . . . . . . . . 32
(e) Certificates . . . . . . . . . . . . . . 33
(f) Notice of Default, Litigation and ERISA
Matters . . . . . . . . . . . . . . . . . 33
(g) Other Information . . . . . . . . . . . . 33
SECTION 7.2 Corporate Existence and Franchises . . . 34
SECTION 7.3 Books, Records and Inspections . . . . . 34
SECTION 7.4 Insurance . . . . . . . . . . . . . . . . 34
SECTION 7.5 Taxes and Liabilities . . . . . . . . . . 34
SECTION 7.6 Cash Flow Coverage . . . . . . . . . . . 34
SECTION 7.7 Net Worth. . . . . . . . . . . . . . . . 34
SECTION 7.8 Funds for Refinancing. . . . . . . . . . 34
SECTION 7.9 Indebtedness. . . . . . . . . . . . . . . 35
SECTION 7.10 Risk-Based Capital . . . . . . . . . . . 35
SECTION 7.11 Real Estate Concentration. . . . . . . . 35
SECTION 7.12 Investment Quality. . . . . . . . . . . . 35
SECTION 7.13 Intentionally Omitted. . . . . . . . . . 35
SECTION 7.14 Insurance Company Leverage Ratio. . . . 35
SECTION 7.15 Intentionally Omitted. . . . . . . . . . 35
SECTION 7.17 Change in Nature of Business . . . . . . 35
SECTION 7.18 Depository Relationship . . . . . . . . . 36
SECTION 7.19 Employee Benefit Plans . . . . . . . . . 36
SECTION 7.20 Use of Proceeds . . . . . . . . . . . . . 36
SECTION 7.21 Other Agreements . . . . . . . . . . . . 36
SECTION 7.22 Compliance with Applicable Laws . . . . . 36
SECTION 7A
UNRESTRICTED SUBSIDIARIES . . . . . . . . 37
SECTION 7A.1 Unrestricted Subsidiaries. . . . . . . . 37
SECTION 7A.2 Additional Unrestricted Subsidiaries. . . 38
SECTION 7A.3 Effectiveness of Designation. . . . . . . 38
SECTION 8
CONDITIONS TO MAKING LOANS AND ISSUING LCS . . . 38
SECTION 8.1 Initial Loans. . . . . . . . . . . . . . 38
(a) Fees and Expenses . . . . . . . . . . . . 38
(b) Documents . . . . . . . . . . . . . . . . 38
SECTION 8.2 All Loans and LCs. . . . . . . . . . . . 40
(a) No Default, etc. . . . . . . . . . . . . 40
(b) Notice. . . . . . . . . . . . . . . . . . 40
SECTION 9
EVENTS OF DEFAULT AND THEIR EFFECT . . . . . 40
SECTION 9.1 Events of Default . . . . . . . . . . . . 40
(a) Nonpayment of the Loan . . . . . . . . . 40
(b) Nonpayment of Other Indebtedness . . . . 40
(c) Bankruptcy or Insolvency . . . . . . . . 41
(d) Specified Noncompliance with this
Agreement . . . . . . . . . . . . . . . . 41
(e) Other Noncompliance with this Agreement . 41
(f) Representations and Warranties . . . . . 41
(g) Employee Benefit Plans . . . . . . . . . 42
(h) Judgments . . . . . . . . . . . . . . . . 42
SECTION 9.2 Effect of Event of Default . . . . . . . 42
SECTION 9A
THE AGENT . . . . . . . . . . . . 42
SECTION 9A.1 Appointment and Authorization . . . . . . 42
SECTION 9A.2 Delegation of Duties . . . . . . . . . . 43
SECTION 9A.3 Liability of Agent . . . . . . . . . . . 43
SECTION 9A.4 Reliance by Agent . . . . . . . . . . . . 43
SECTION 9A.5 Notice of Default . . . . . . . . . . . . 44
SECTION 9A.6 Credit Decision . . . . . . . . . . . . . 44
SECTION 9A.7 Indemnification . . . . . . . . . . . . . 44
SECTION 9A.8 Agent in Individual Capacity . . . . . . 45
SECTION 9A.9 Successor Agent . . . . . . . . . . . . . 45
SECTION 10
GENERAL . . . . . . . . . . . . 46
SECTION 10.1 Amendments and Waivers . . . . . . . . . 46
SECTION 10.2 Notices . . . . . . . . . . . . . . . . . 46
SECTION 10.3 Accounting Terms; Computations . . . . . 47
SECTION 10.4 Costs, Expenses and Taxes . . . . . . . . 47
SECTION 10.5 Indemnification . . . . . . . . . . . . . 48
SECTION 10.6 Captions and References . . . . . . . . . 49
SECTION 10.7 No Waiver; Cumulative Remedies. . . . . . 49
SECTION 10.8 Governing Law; Jury Trial; Severability . 49
SECTION 10.9 Counterparts . . . . . . . . . . . . . . 50
SECTION 10.10 Successors and Assigns . . . . . . . . . 50
SECTION 10.11 Prior Agreements . . . . . . . . . . . . 50
SECTION 10.12 Assignments; Participations . . . . . . . 50
SECTION 10.13 Confidentiality. . . . . . . . . . . . . 51
SECTION 10.14 Notification of Addresses, Etc. . . . . . 52
SCHEDULES AND EXHIBITS
SCHEDULE 6.11 Tax Liabilities
SCHEDULE 6.17 Subsidiaries
EXHIBIT A Form of Note
EXHIBIT B Form of Notice of Borrowing
EXHIBIT C Form of Notice of Conversion/Continuation
AMENDED AND RESTATED
CREDIT AGREEMENT
This Amended and Restated Credit Agreement dated as of March
22, 1995 (this "Agreement"), is among (i) PIONEER FINANCIAL
SERVICES, INC., a Delaware corporation (herein, together with its
successors and assigns, called the "Company"), (ii) AMERICAN
NATIONAL BANK AND TRUST COMPANY OF CHICAGO, as administrative
agent (in such capacity, the "Agent") and (iii) AMERICAN NATIONAL
BANK AND TRUST COMPANY OF CHICAGO, a national banking association
(herein, together with its successors and assigns, called the
"ANB"), FIRSTAR BANK MILWAUKEE, N.A., a national banking
association (herein, together with its successors and assigns,
called "Firstar") and BANK ONE, ROCKFORD, NA, a national banking
association (herein, together with its successors and assigns,
called "Bank One") (ANB, Firstar and Bank One collectively
referred to as the "Banks" and individually as a "Bank").
W I T N E S S E T H:
WHEREAS, the Company, the Agent and the Banks are party to
that certain Credit Agreement dated as of December 22, 1993 (as
amended, supplemented or otherwise modified from time to time,
the "Existing Agreement") pursuant to which the Banks severally
agreed to make available to the Company a revolving credit
facility;
WHEREAS, the Company, the Agent and the Banks desire to
amend and restate the terms and provisions of the Existing
Agreement in the form of this Agreement;
NOW, THEREFORE, in consideration of the mutual agreements
contained herein, the parties hereto agree as follows:
SECTION 1
CERTAIN DEFINITIONS
SECTION 1.1 Terms Defined in this Agreement. When used
herein the following terms shall have the following respective
meanings:
"Adjusted Capital and Surplus" means, with respect to each
Principal Insurance Subsidiary as of any date, the sum of (i)
Capital and Surplus for such Principal Insurance Subsidiary and
(ii) the asset valuation reserve of such Principal Insurance
Subsidiary as of such date determined in accordance with
Statutory Accounting Principles.
"Affiliate" means, with respect to any Person, any other
Person directly or indirectly controlling, controlled by, or
under direct or indirect common control with, such Person. A
Person shall be deemed to control another Person if such first
Person possesses, directly or indirectly, the power to direct or
cause the direction of the management and policies of such other
Person, whether through ownership of voting securities, by
contract or otherwise.
"Agent's Payment Office" means the address for payments set
forth on the signature page hereto in relation to the Agent or
such other address as the Agent may from time to time specify in
accordance with Section 10.2.
"Agent-Related Persons" means the Agent and any successor
Agent appointed under Section 9A.9, together with their
respective Affiliates, and the officers, directors, employees,
agents and attorneys-in-fact of such Persons and Affiliates.
"Aggregate Commitment" means the combined Commitments of the
Banks in the amount of seventeen million dollars ($17,000,000),
as such amount may be reduced from time to time pursuant to this
Agreement.
"Aggregate Stated Amount" shall mean, as of the date of
determination, the aggregate Stated Amounts of all LCs.
"Agreement" means this Credit Agreement as it may be
amended, supplemented or otherwise modified from time to time in
accordance with the terms hereof.
"ANB" - see Preamble.
"Applicable Margin" means (a) with respect to Base Rate
Loans, -0-, (b) with respect to CD Rate Loans, two percent
(2.00%) per annum, and (c) with respect to Eurodollar Rate Loans,
two percent (2.00%) per annum.
"Authorized Control Level RBC" shall have the same meaning
as the term "Authorized Control Level RBC" as defined in the NAIC
Risk-Based Capital (RBC) for Life and/or Health Insurers Model
Act, as such term may be amended by the NAIC from time to time.
"Authorized Officer" means the Chairman, the President, any
Executive Vice President, the Treasurer or any Vice President of
the Company that are designated as authorized officers pursuant
to a resolution of the Board of Directors of the Company (each
Bank shall be entitled to rely on such resolution until revoked
or amended in writing by the Company).
"Available Cash Flow" means, for any accounting period,
without duplication of items that may be included in more than
one of the following computations, the sum of (i) the aggregate
Distributable Profits from the Insurance Subsidiaries for such
period, and (ii) the combined net after tax income of the Non-
Insurance Operating Subsidiaries for such period, plus
depreciation, amortization and other non-cash expenses of the
Non-Insurance Operating Subsidiaries for such period, minus all
capitalized expenditures of the Non-Insurance Operating
Subsidiaries for such period, all to be determined in accordance
with GAAP.
"Bank" or "Banks" - see Preamble.
"Bank One" - see Preamble.
"Bank Parties" - see Section 10.5.
"Base Rate" means at any time and from time to time the rate
of interest per annum which ANB most recently announced as its
base rate at Chicago, Illinois, which rate shall not necessarily
be the lowest rate of interest which ANB charges its customers.
"Base Rate Loan" means a Loan that bears interest based on
the Base Rate and the Applicable Margin with respect thereto.
"Borrowing" means a borrowing hereunder consisting of the
several Loans made to the Company on the same day by each Bank
pursuant to Section 2 hereof and having the same interest rate
basis and Interest Period.
"Business Day" means any day of the year on which each Bank
is open for business in the city where such Bank's main office is
located.
"Capital and Surplus" means, with respect to each Insurance
Subsidiary, such Insurance Subsidiary's capital and surplus as
reported on such Insurance Subsidiary's Statutory Statements most
recently filed with the department of insurance of such Insurance
Subsidiary's state of incorporation.
"CD Rate" means with respect to each Interest Period to be
applicable to a CD Rate Loan, the rate of interest per annum
payable on a certificate or certificates of deposit purchased by
the Company from ANB concurrently in connection with the
extension of a CD Rate Loan.
"CD Rate Loan" means a Loan that bears interest based on the
CD Rate and the Applicable Margin with respect thereto.
"Clean-up Date" shall mean the first day of any Clean-up
Period.
"Clean-up Period" shall mean, during such period of twelve
consecutive months determined on a rolling basis, any period of
sixty consecutive days in which no Loans are outstanding.
"Commitment", with respect to each Bank, has the meaning
specified in Section 2.1.
"Commitment Percentage" means, as to any Bank, the
percentage equivalent at the time of determination of such Bank's
Commitment divided by the Aggregate Commitment.
"Company" - see Preamble.
"Conversion Date" means any date on which the Company
converts a Base Rate Loan to a Eurodollar Rate Loan or a CD Rate
Loan; a CD Rate Loan to a Eurodollar Rate Loan or a Base Rate
Loan; or a Eurodollar Rate Loan to a CD Rate Loan or a Base Rate
Loan.
"Debt Service Requirements" means, for any accounting
period, the aggregate of the principal, interest and other
dividends, payments or distributions made or required to be made
(i) to each Bank under this Agreement, (ii) with respect to other
Indebtedness and (iii) with respect to the Preferred Stock.
"Distributable Profits" means, for any accounting period,
(i) the greater of (A) 10% of the aggregate Capital and Surplus
of all Insurance Subsidiaries, and (B) the aggregated net after-
tax profits of all Insurance Subsidiaries, determined in
accordance with Statutory Accounting Principles for such period
minus (ii) the after-tax profits of each Principal Insurance
Subsidiary that must be retained by such Principal Insurance
Subsidiary to maintain the Total Adjusted Capital required by
Section 7.10.
"Dollar(s)" and the sign "$" means lawful money of the
United States of America.
"Environmental Laws" means any and all federal, state or
local environmental or health and safety-related laws,
regulations, rules, ordinances, orders or directives.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and any successor statute of similar import,
together with the regulations thereunder and under the Internal
Revenue Code of 1986, as amended, in each case as in effect from
time to time. References to sections of ERISA shall be construed
to also refer to any successor sections.
"ERISA Affiliate" means any corporation, trade or business
that is, along with the Company, a member of a controlled group
of corporations or a controlled group of trades or businesses, as
described in Sections 414(b) and 414(c), respectively, of the
Internal Revenue Code of 1986, as amended, or Section 4001 of
ERISA.
"Eurodollar Rate Loan" means a Loan that bears interest
based on LIBOR and the Applicable Margin with respect thereto.
"Event of Default" means any of the events described in
Section 9.1.
"Existing Agreement" - see First Recital.
"Federal Funds Rate" means, 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 Board
(including any such successor, "H.15(519)") for such date
opposite the caption "Federal Funds (Effective)". If on any
relevant day such rate is not yet published in H.15(519), the
rate for such day will be the rate set forth in the daily
statistical release designated as the Composite 3:30 p.m.
Quotations for U.S. Government Securities, or any successor
publication, published by the Federal Reserve Bank of New York
(including any such successor, the "Composite 3:30 p.m.
Quotation") for such day under the caption "Federal Funds
Effective Rate". If on any relevant day the appropriate rate is
not yet published in either H.15(519) or the Composite 3:30 p.m.
Quotations, the rate for such day will be the arithmetic mean as
determined by the Agent of the rates for the last transaction in
overnight Federal funds arranged prior to 9:00 a.m. (New York
time) on that day by each of three leading brokers of Federal
funds transactions in New York City selected by the Agent.
"Federal Reserve Board" means the Board of Governors of the
Federal Reserve System, or any entity succeeding to any of its
principal functions.
"Firstar" - see Preamble.
GAAP means the generally accepted accounting principles in
the United States of America with such changes thereto as
(i) shall be consistent with the then-effective principles
promulgated or adopted by the Financial Accounting Standards
Board and its predecessors and successors and (ii) shall be
concurred in by the independent certified public accountants of
recognized standing certifying any financial statements of the
Company and its Subsidiaries.
"Indebtedness" means, as of any date, all indebtedness,
obligations or other liabilities of the Company and its
Subsidiaries as of such date (i) for borrowed money, (ii)
evidenced by bonds, debentures, notes or other similar
instruments for borrowed money, or (iii) pursuant to any
guarantee of any indebtedness, obligations or other liabilities
of any other Person of the type described in clauses (i) or (ii);
provided, however, that (a) the amounts set forth in clauses (i),
(ii) and (iii) shall not be double counted and (b) Indebtedness
shall not include indebtedness, obligations or other liabilities
of the Company to any Subsidiary or indebtedness, obligations or
other liabilities of any Subsidiary to the Company or another
Subsidiary.
"Indemnified Liabilities" - see Section 10.5.
"Initial Closing Date" means December 22, 1993.
"Insurance Company Leverage Ratio" means, for each Principal
Insurance Subsidiary on an individual basis as of any date and
for all Principal Insurance Subsidiaries on a combined basis as
of any date, the ratio of (x) Adjusted Capital and Surplus to (y)
Total Assets.
"Insurance Laws" means any and all federal or state laws,
regulations, rules, ordinances, orders or directives that pertain
to the regulation of insurance companies, as such.
"Insurance Subsidiaries" means, as of any date, all
Subsidiaries of the Company that are engaged in the insurance
business and are subject to regulation by the insurance
commission or department of any state or other jurisdiction. The
Insurance Subsidiaries of the Company as of the date of this
Agreement are set forth in Schedule 6.17 attached hereto.
"Interest Payment Date" means, (a) with respect to any CD
Rate Loan or Eurodollar Rate Loan, the last day of each Interest
Period applicable to such Loan, provided, however, that if any
Interest Period for a CD Rate Loan or Eurodollar Rate Loan
exceeds 90 days or three months, respectively, the date which
falls 90 days or three months (as the case may be) after the
beginning of such Interest Period and after each Interest Payment
Date thereafter shall also be an Interest Payment Date, and (b)
with respect to any Base Rate Loan, the last Business Day of each
calendar quarter and each date upon which such Loan is prepaid or
converted to a Eurodollar Rate Loan or a CD Rate Loan.
"Interest Period" means, (a) with respect to any Eurodollar
Rate Loan, the period commencing on the Business Day the Loan is
disbursed or continued or on the Conversion Date on which the
Loan is converted to the Eurodollar Rate Loan and ending on the
date one, two, three or six months thereafter, as selected by the
Company in its Notice of Borrowing or Notice of
Conversion/Continuation; and (b) with respect to any CD Rate
Loan, the period commencing on the Business Day the CD Rate Loan
is disbursed or continued or on the Conversion Date on which a
Loan is converted to the CD Rate Loan and ending 30, 60, 90 or
180 days thereafter, as selected by the Company in its Notice of
Borrowing or Notice of Conversion/Continuation;
provided that:
(i) if any Interest Period pertaining to a Eurodollar
Rate Loan or CD Rate Loan would otherwise end on a day which
is not a Business Day, that Interest Period shall be
extended to the next succeeding Business Day unless, in the
case of a 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
immediately preceding Business Day;
(ii) any Interest Period pertaining to a Eurodollar
Rate Loan that begins on the last Business Day of a calendar
month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such
Interest Period) shall end on the last Business Day of the
calendar month at the end of such Interest Period; and
(iii) no Interest Period for any Loan shall extend
beyond a Clean-up Date or the Termination Date.
"Investment Grade Obligations" means, as of any date for
each Principal Insurance Subsidiary, investments having an NAIC
investment rating of 1 or 2; or a Standard & Poor's rating within
the range of ratings from AAA to BBB-; or a Moody's rating within
the range of ratings from Aaa to Baa3.
"Issuing Bank" means American National Bank and Trust
Company of Chicago in its capacity as issuing bank with respect
to LCs issued under and pursuant to the terms of this Agreement.
"LC" - see Section 2.2.
"LC Application" - see Section 2.5.
"Liabilities" means any and all of the Company's obligations
to the Banks, howsoever created, arising or evidenced, whether
direct or indirect, absolute or contingent, now or hereafter
existing, or due or to become due, which arise out of or in
connection with this Agreement or the Related Documents.
"LIBOR" means, with respect to each Interest Period to be
applicable to a Eurodollar Rate Loan, the rate of interest per
annum determined by the Agent obtained by dividing (a) the
Telerate Screen Rate for such Interest Period or (b) if the
Telerate Screen Rate is unavailable at the time the LIBOR rate is
to be determined, a rate determined on the basis of the offered
rates for deposits in U.S. dollars for a period approximately
equal to such Interest Period which appear on the Reuters Screen
LIBO Page, as of 11:00 a.m., London time, on the day that is two
London banking days preceding the beginning of such Interest
Period by (c) a percentage equal to 100% minus the stated maximum
rate (expressed as a percentage) as prescribed by the Federal
Reserve Board of all reserve requirements (including, without
limitation, any marginal, emergency, supplemental, special or
other reserves) applicable on the first day of such Interest
Period to any member bank of the Federal Reserve System in
respect of Eurodollar funding or liabilities.
"Lien" means any mortgage, pledge, lien, security interest
or other charge or encumbrance, including the retained security
title of a conditional vendor or lessor.
"Loan" means an extension of credit by a Bank to the Company
pursuant to Section 2, and may be a Base Rate Loan, CD Rate Loan
or a Eurodollar Rate Loan.
"Majority Banks" means at any time a group of Banks that
shall include ANB and at least one other Bank.
"Margin Stock" has the meaning given to such term in
Regulation U.
"Material Subsidiary" means any Subsidiary of the Company,
the financial condition of which, when consolidated with the
financial condition of the Company, has a material effect on such
financial condition of the Company, and shall include, without
limitation, each Principal Insurance Subsidiary.
"Mortgage" means, as of any date, as to each Principal
Insurance Subsidiary, the amount of such Principal Insurance
Subsidiary's mortgage loans on real estate calculated in
accordance with Statutory Accounting Principles.
"Multiemployer Plan" means a "multiemployer plan" as defined
in ERISA.
"NAIC" means the National Association of Insurance
Commissioners and any successor thereto.
"Net Worth" means, with respect to the Company, as at the
time any determination thereof is made, the consolidated
shareholders' equity (including common stock, additional paid-in
capital, retained earnings, and net unrealized gains and losses).
"Non-Insurance Operating Subsidiaries" means, as of any
date, all Subsidiaries of the Company that are not Insurance
Subsidiaries. The Non-Insurance Operating Subsidiaries of the
Company as of the date of this Agreement are set forth in
Schedule 6.17 attached hereto.
"Non-Investment Grade Obligations" means, as of any date,
for each Principal Insurance Subsidiary, any fixed maturity debt
instrument investment that is not an Investment Grade Obligation.
"Note" or "Notes" - see Section 3 and Exhibit A.
"Notice of Borrowing" means a notice given by the Company to
the Agent pursuant to Section 2.3, in substantially the form of
Exhibit B.
"Notice of Conversion/Continuation" means a notice given by
the Company to the Agent pursuant to Section 2.4, in
substantially the form of Exhibit C.
"PBGC" means the Pension Benefit Guaranty Corporation and
any entity succeeding to any or all of its functions under ERISA.
"Permitted Liens" - see Section 7.16.
"Person" means an individual or a corporation, partnership,
limited liability company, trust, incorporated or unincorporated
association, joint venture, joint stock company, government (or
any agency or political subdivision thereof) or other entity of
any kind.
"Plan" means an "employee pension benefit plan", as such
term is defined in Section 3(2) of ERISA, an "employee welfare
benefit plan," as such term is defined in Section 3(1) of ERISA,
or any bonus, deferred compensation, stock purchase, stock
option, severance, salary continuation, vacation, sick leave,
fringe benefit, incentive, insurance, welfare or similar
arrangement.
"Preferred Stock" means the shares of the Company's
Cumulative Convertible Exchangeable Preferred Stock, having a
stated value of $25 per share.
"Principal Insurance Subsidiaries" means, as of any date,
any Insurance Subsidiary that is or becomes engaged in a material
amount of insurance business and has been designated in writing
by all of the Banks and the Company as a Principal Insurance
Subsidiary. The following Insurance Subsidiaries shall be deemed
to be Principal Insurance Subsidiaries as of the date of this
Agreement and until designated otherwise by all of the Banks and
the Company : Pioneer Life Insurance Company of Illinois, an
Illinois corporation; National Group Life Insurance Company, an
Illinois corporation; and Manhattan National Life Insurance
Company, an Illinois corporation.
"Real Estate Concentration Ratio" means, as of any date, as
to each Principal Insurance Subsidiary, the ratio of (a) the sum
of (i) Real Estate Investments plus (ii) Mortgages to (b) Capital
and Surplus.
"Real Estate Investments" means, as of any date, as to each
Principal Insurance Subsidiary, the sum of (a) the book value of
properties acquired in satisfaction of debt calculated in
accordance with Statutory Accounting Principles plus (b) the
investment in investment real estate calculated in accordance
with Statutory Accounting Principles; provided, that the
properties occupied by the Company or any Subsidiary shall be
excluded from the calculation of Real Estate Investments for
purposes of this Agreement.
"Regulation U" means Regulation U of the Board of Governors
of the Federal Reserve System and any successor rule or
regulation of similar import as in effect from time to time.
"Reimbursement Obligations" - see Section 2.6.
"Related Documents" means, collectively, this Agreement,
each Note issued by the Company to each Bank, and all other
documents, instruments and agreements executed by the Company and
delivered to the Agent or the Banks pursuant to or in connection
with this Agreement or any of the foregoing.
"Reportable Event" means a reportable event (as defined in
Section 4043(b) of ERISA) for which notice has not been waived
pursuant to applicable regulations.
"Restatement Closing Date" means the date on which all
conditions precedent set forth in Section 8.1 are satisfied or
waived by all the Banks.
"Reuters Screen LIBO Page" means the display page designated
"LIBO" on the Reuters Monitor Money Rates Service (or such other
page that may replace that page on such service for the purpose
of displaying comparable rates).
"Stated Amount" shall mean, with respect to any LC and as of
the date of determination, the maximum amount for which a draw or
demand for payment may then be made thereunder, whether or not
such maximum amount is defined in such LC as the "Stated Amount"
thereof.
"Statutory Accounting Principles" means the accounting
principles used in the preparation of Statutory Statements in
accordance with the rules and regulations prescribed by the
insurance commission or department of each Insurance Subsidiary's
respective state of domicile in effect as of the date of this
Agreement. In the event that there is a material change in such
accounting principles subsequent to the date hereof, the
covenants contained herein and affected by such change shall be
adjusted as necessary to preserve the force and effect of such
covenants by the Company (provided that prior to any such
adjustment the Company shall consult with the Agent with respect
to any such adjustment) subject to the reasonable objection of
the Majority Banks.
"Statutory Statements" means, with respect to an Insurance
Subsidiary, the annual or quarterly accounting statement for such
Insurance Subsidiary prepared in accordance with Statutory
Accounting Principles, as filed with the insurance commissioner
or department of each jurisdiction in which such Insurance
Subsidiary is subject to regulation.
"Subsidiary" means a corporation, association or business
entity of which the Company and/or its other Subsidiaries own,
directly or indirectly, such number of outstanding shares as have
more than 50% of the ordinary voting power for the election of
such entity's directors.
"Telerate Screen Rate" means, for any Interest Period to be
applicable to a Eurodollar Rate Loan, the rate for deposits in
U.S. dollars for a period approximately equal to such Interest
Period which appears on Page 3750 of the Dow Jones Telerate
Service (or such other page that may replace that page on such
service for the purpose of displaying comparable rates) as of
11:00 a.m., London time, on the day that is two London banking
days preceding the beginning of such Interest Period.
"Term Loan Credit Agreement" means that certain Credit
Agreement dated as of March 22, 1995 between the Company and the
Banks, as the same may be amended, supplemented or otherwise
modified from time to time.
"Termination Date" - means the earlier to occur of:
(a) April 30, 1996; and
(b) the date on which the Aggregate Commitment shall
terminate in accordance with the provisions of this
Agreement.
"Total Adjusted Capital" shall have the same meaning as the
term "Total Adjusted Capital" as defined in the NAIC Risk-Based
Capital (RBC) for Life and/or Health Insurers Model Act, as such
term may be amended by the NAIC from time to time.
"Total Assets" means, as of any date, as to each Principal
Insurance Subsidiary, the total net admitted assets calculated as
of such date in accordance with Statutory Accounting Principles.
"Total Invested Assets" means, as of any date, as to each
Principal Insurance Subsidiary, the amount of such Insurance
Subsidiary's cash and invested assets calculated in accordance
with Statutory Accounting Principles.
"Unrestricted Subsidiary" - see Section 7A.1.
"Unrestricted Subsidiary Indebtedness" means, as of any
date, for any Unrestricted Subsidiary, all indebtedness,
obligations or other liabilities of such Unrestricted Subsidiary
and its Subsidiaries as of such date (i) for borrowed money, (ii)
evidenced by bonds, debentures, notes or other similar
instruments for borrowed money, or (iii) pursuant to any
guarantee of any indebtedness, obligations, or other liabilities
of any other Person of the type described in clauses (i) or (ii);
provided, however, that the amounts set forth in clauses (i),
(ii) and (iii) shall not be double counted.
SECTION 2
BANK'S COMMITMENT; BORROWING PROCEDURES; LCs
SECTION 2.1 Bank's Commitment to Make Loans. (a) On the
terms and subject to the conditions set forth in this Agreement,
each Bank severally agrees to make revolving loans (each such
loan called a "Loan" and collectively called the "Loans") to the
Company from time to time on any Business Day during the period
from the Restatement Closing Date to the Termination Date, in an
aggregate amount not to exceed at any time outstanding the amount
set forth opposite such Bank's name on the signature page hereof
under the heading "Commitment" (such amount as the same may be
reduced pursuant to Section 2.9 or as a result of one or more
assignments pursuant to Section 10.12, such Bank's "Commitment")
minus the sum of (a) such Bank's Commitment Percentage of the
aggregate Stated Amount of all LCs issued and outstanding and (b)
such Bank's Commitment Percentage of the aggregate amount of all
Reimbursement Obligations; provided, however, that after giving
effect to any Borrowing of Loans, the aggregate principal amount
of all outstanding Loans plus the sum of (c) the Aggregate Stated
Amount of all LCs issued and outstanding and (d) the aggregate
amount of all Reimbursement Obligations, shall not exceed the
Aggregate Commitment. The Company and each Bank agree and
acknowledge that each Bank's portion of each Borrowing of Loans
shall be based pro rata on such Bank's Commitment Percentage
determined at the time of such Borrowing.
(b) The Company agrees that, with respect to each
Bank's Commitment Percentage of each Loan that is a CD Rate Loan,
the Company shall purchase from such Bank a certificate or
certificates of deposit in an amount equal to such Bank's
Commitment Percentage of each such Loan having a term equal to
the Interest Period applicable to such Loan.
SECTION 2.2 Issuing Bank's Commitment to Issue LCs. On
the terms and subject to the conditions set forth in this
Agreement, the Issuing Bank agrees, as the Company may from time
to time request, to issue for the account of the Company letters
of credit (each such letter of credit called an "LC" and
collectively called the "LCs") from time to time on any Business
Day during the period from the Restatement Closing Date to the
Termination Date, in a Stated Amount not to exceed the Aggregate
Commitment minus the sum of (a) the aggregate principal amount of
all Loans then outstanding and not repaid, (b) the aggregate
Stated Amount of all LCs previously issued and then outstanding
and (c) the aggregate amount of all Reimbursement Obligations.
SECTION 2.3 Procedure for Borrowing.
(a) Each Borrowing of Loans shall be made upon the
Company's irrevocable written notice delivered to the Agent in
accordance with Section 10.2 in the form of a Notice of Borrowing
(which notice must be received by the Agent prior to 11:00 a.m.
(Chicago time) (i) two Business Days prior to the requested
Borrowing date, in the case of Eurodollar Rate Loans, (ii) one
Business Day prior to the requested Borrowing Date, in the case
of CD Rate Loans, and (iii) on the requested Borrowing date, in
the case of Base Rate Loans) specifying:
(A) the amount of the Borrowing, which shall be in an
aggregate minimum principal amount of one hundred thousand
dollars ($100,000);
(B) the requested Borrowing date, which shall be a
Business Day;
(C) whether the Borrowing is to be comprised of
Eurodollar Rate Loans, CD Rate Loans or Base Rate Loans;
(D) in the case of Eurodollar Rate Loans and CD Rate
Loans, the duration of the Interest Period applicable to
such Loans included in such notice. If the Notice of
Borrowing shall fail to specify the duration of the Interest
Period for any Borrowing comprised of CD Rate Loans or
Eurodollar Rate Loans, such Interest Period shall be 30 days
or one month, respectively; and
(E) the account of the Company to which the proceeds
of such Borrowing shall be deposited.
(b) Upon receipt of the Notice of Borrowing, the Agent
will promptly notify each Bank thereof and of the amount of such
Bank's Commitment Percentage of the Borrowing.
(c) Each Bank will make the amount of its Commitment
Percentage of the Borrowing available to the Agent for the
account of the Company at the Agent's Payment Office by 2:00 p.m.
(Chicago time) on the Borrowing date requested by the Company in
funds immediately available to the Agent. Promptly after receipt
of all such amounts by the Agent, the proceeds of all such Loans
will be disbursed by the Agent to such account of the Company
designated in writing by the Company in the Notice of Borrowing
in like funds as received by the Agent.
(d) Unless the Majority Banks shall otherwise agree,
during the existence of an Event of Default, the Company may not
elect to have a Loan be made as, or converted into or continued
as, a Eurodollar Rate Loan or a CD Rate Loan.
SECTION 2.4 Conversion and Continuation Elections.
(a) The Company may upon irrevocable written notice to
the Agent in accordance with Section 2.4(b):
(i) elect to convert on any Business Day, any Base
Rate Loans (or any part thereof in an amount not less than
$100,000) into Eurodollar Rate Loans or CD Rate Loans; or
(ii) elect to convert on the last day of any Interest
Period with respect thereto any Eurodollar Rate Loans (or
any part thereof in an amount not less than $100,000) into
Base Rate Loans or CD Rate Loans; or
(iii) elect to convert on the last day of any
Interest Period with respect thereto any CD Rate Loans (or
any part thereof in an amount not less than $100,000) into
Base Rate Loans or Eurodollar Rate Loans; or
(iv) elect on the last day of any Interest Period with
respect to any Eurodollar Rate Loans or CD Rate Loans (or
any part thereof in an amount not less than $100,000) to
continue such Eurodollar Rate Loans or CD Rate Loans (or
such part thereof) as such;
provided, that if the aggregate amount of CD Rate Loans or
Eurodollar Rate Loans shall have been reduced, by payment,
prepayment, or conversion of part thereof, to be less than
$100,000, such CD Rate Loans or Eurodollar Rate Loans shall
automatically convert into Base Rate Loans, and on and after such
date until the amount of Loans shall exceed $100,000 the right of
the Company to continue such Loans as, and convert such Loans
into, Eurodollar Rate Loans or CD Rate Loans, as the case may be,
shall terminate.
(b) The Company shall deliver a Notice of
Conversion/Continuation in accordance with Section 10.2 to be
received by the Agent not later than 11:00 a.m. (Chicago time) at
least (i) two Business Days in advance of the Conversion Date or
continuation date, if the Loans are to be converted into or
continued as Eurodollar Rate Loans, (ii) one Business Day in
advance of the Conversion Date or continuation date, if the Loans
are to be converted into or continued as CD Rate Loans, and (ii)
on the Conversion Date, if the Loans are to be converted into
Base Rate Loans, specifying:
(A) the proposed Conversion Date or continuation date;
(B) the aggregate amount of Loans to be converted or
continued;
(C) the nature of the proposed conversion or
continuation; and
(D) the duration of the requested Interest Period.
(c) If upon the expiration of any Interest Period
applicable to CD Rate Loans or Eurodollar Rate Loans, the Company
has failed to select timely a new Interest Period to be
applicable to such CD Rate Loans or Eurodollar Rate Loans, as the
case may be, or if any Event of Default shall then exist, the
Company shall be deemed to have elected to convert such CD Rate
Loans or Eurodollar Rate Loans into Base Rate Loans effective as
of the expiration date of such current Interest Period.
(d) Upon receipt of a Notice of
Conversion/Continuation, the Agent will promptly notify each Bank
thereof, or, if no timely notice is provided by the Company, the
Agent will promptly notify each Bank of the details of any
automatic conversion.
(e) Unless the Majority Banks shall otherwise agree,
during the existence of an Event of Default, the Company may not
elect to have a Loan converted into or continued as a Eurodollar
Rate Loan or a CD Rate Loan.
SECTION 2.5 LC Documentation. (a) Each of the Company's
requests for an LC must be received by the Agent and the Issuing
Bank at least two Business Days prior to the requested issue date
of such LC, and shall be accompanied by a duly completed
application therefor (the "LC Application") and such other
documents, in support thereof as the Issuing Bank may reasonably
require, and all of such applications and documents shall be in
form and substance reasonably satisfactory to the Issuing Bank.
In addition, the proposed form of each LC shall be in form and
substance reasonably satisfactory to the Issuing Bank, due regard
being given to the customs and conventions followed by the
Issuing Bank in the issuance of letters of credit generally and
the advice of the Banks from time to time given to the Issuing
Bank as to necessary or desirable terms and provisions in the
form of any such proposed LC. Upon receipt of any request for an
LC, the Agent will promptly notify each Bank thereof and deliver
to each Bank a copy of the LC Application and each other document
received by the Agent in connection with such request for an LC.
Each LC shall have an expiry date that shall in no event be later
than one year after the Termination Date.
(b) Subject to the terms and conditions of this
Agreement, including, without limitation, Section 2.2, Section
2.5(a) and Section 8.2 hereof, the Issuing Bank shall issue the
requested LC in accordance with the Issuing Bank's usual and
customary business practices on the date requested for such
issuance by the Company in the request made by the Company
pursuant to the terms of Section 2.5(a) hereof. Notwithstanding
the foregoing, if the Issuing Bank shall have received written
notice from the Agent or any Bank on or before the Business Day
prior to the date of the Issuing Bank's issuance of such proposed
LC that one or more of the conditions set forth in Section 8.2 is
not then satisfied, then, until such condition is satisfied and
the Issuing Bank receives written notice thereof, the Issuing
Bank shall have no obligation to issue any LC. Each Bank agrees
that it shall not unreasonably give any such notice or
unreasonably fail to withdraw any such notice.
(c) The Issuing Bank shall promptly give the Agent
notice upon the issuance of an LC hereunder and a copy of the LC
so issued by such Issuing Bank, and the Agent shall promptly
thereafter give notice of such issuance and a copy of such LC to
the Banks. An LC otherwise issued in accordance with the terms
of this Agreement shall be an LC notwithstanding any failure by
the Issuing Bank or the Agent to provide any such notice or
copies in a timely manner.
(d) The Company may request that an LC be extended
beyond its stated expiry date or otherwise renewed by giving the
Issuing Bank and the Agent written notice of any such extension
or renewal not later than ten Business Days prior to the date
(the "LC Extension Date") that such LC would have expired absent
such extension or renewal. Each such notice (an "LC Extension
Request") shall specify the LC that is being extended or renewed
and the proposed new expiration date of such LC. The Agent shall
promptly advise each Bank of its receipt of, and provide to each
Bank a copy of, each LC Extension Request. The new expiration
date proposed for any LC may not be a date that is on or after
one year after the Termination Date. Following proper delivery
of an LC Extension Request pursuant to this Section, the Issuing
Bank shall, subject to Section 8.2, extend the expiration date of
or renew any LC issued by the Issuing Bank. Notwithstanding the
foregoing, if the Issuing Bank shall have received written notice
from the Agent or any Bank on or before the Business Day prior to
the Issuing Bank's proposed extension of the expiration date of
an LC that one or more of the conditions set forth in Section 8.2
is not then satisfied, then, until such condition is satisfied
and the Issuing Bank receives written notice thereof, the Issuing
Bank shall have no obligation to extend the expiration date of
such LC.
(e) The Company may request that an LC be amended at
any time by giving the Issuing Bank and the Agent written notice
thereof not later than ten Business Days prior to the date
proposed for such amendment. Each such notice (an "LC Amendment
Request") shall specify in reasonable detail the changes that are
then being requested to be made in the applicable LC and the
changes, if any, in the information specified in the original
request with respect to such LC delivered pursuant to Section
2.5(a). The Agent shall promptly advise the Banks of its receipt
of, and provide a copy to each Bank of, each LC Amendment
Request. If the Issuing Bank and the Agent, after consultation
with any Bank that provides comments on any such LC Amendment
Request, agree to such amendment, such amendment shall be given
effect; provided, that (i) any extension of the expiration date
or renewal of an LC shall be subject to the terms of Section
2.5(d), and (ii) any amendment which increases the face amount of
an LC shall be deemed an issuance of a new LC with a face amount
equal to the amount of such increase, and shall be subject to the
provisions of this Agreement, including without limitation,
Section 2.2, Section 2.5(a) and Section 8.2.
SECTION 2.6 Agreement to Repay LC Drawings. (a) The
Company hereby agrees to reimburse the Issuing Bank (collectively
called the "Reimbursement Obligations" and individually a
"Reimbursement Obligation"), for each payment or disbursement
made by the Issuing Bank under any LC honoring any demand for
payment made by the beneficiary thereunder immediately following
the occurrence of any such payment or disbursement. Any
Reimbursement Obligation not repaid on the date of the applicable
payment or disbursement giving rise thereto shall bear interest
on the amount so paid or disbursed by the Issuing Bank from the
date of payment or disbursement made by the Issuing Bank to but
not including the date the Issuing Bank is reimbursed therefor,
at a rate per annum equal to the Base Rate from time to time in
effect plus two percent (2.00%) per annum. Interest shall be
computed for the actual number of days elapsed on the basis of a
year consisting of 360 days.
(b) Any action taken or omitted to be taken by the
Issuing Bank under or in connection with any LC, if taken or
omitted in the absence of willful misconduct or gross negligence,
shall not put the Issuing Bank under any resulting liability to
any Bank or, assuming that the Issuing Bank has complied with the
applicable procedures specified herein and a Bank has not given a
notice contemplated by Section 2.5(b) that continues in full
force and effect, relieve any Bank of its obligations hereunder
to the Issuing Bank.
SECTION 2.6A Participations. (a) Upon the issuance by
the Issuing Bank of any LC in accordance with the procedures and
the terms set forth herein, each Bank shall be deemed to have
irrevocably and unconditionally purchased and received from the
Issuing Bank, without recourse or warranty, an undivided interest
and participation to the extent of such Bank's Commitment
Percentage in such LC (including, without limitation, all
obligations of the Company with respect thereto other than
amounts owing to the Issuing Bank under Section 4.2(d)),
provided, that the participation of any Bank in any LC hereunder
shall at no time exceed an amount equal to such Bank's Commitment
minus the sum of (i) the aggregate principal amount of all Loans
made by such Bank then outstanding and not repaid, (ii) such
Bank's Commitment Percentage of the aggregate Stated Amount of
all LCs previously issued and then outstanding and (iii) such
Bank's Commitment Percentage of the aggregate amount of all
Reimbursement Obligations.
(b) (i) In the event that the Issuing Bank makes any
payment or disbursement under any LC and the Company shall not
have repaid such amount to the Issuing Bank pursuant to Section
2.6(a), the Issuing Bank shall promptly notify the Agent, which
shall promptly notify each Bank, of such failure, and each Bank
severally agrees to promptly and unconditionally pay to the Agent
for the account of the Issuing Bank the amount of such Bank's
Commitment Percentage of such payment or disbursement in same day
funds and the Agent shall promptly pay such amount, and any other
amounts received by the Agent for the Issuing Bank's account
pursuant to this Section 2.6A(b), to the Issuing Bank. If the
Agent so notifies such Bank prior to 11:00 A.M. (Chicago time) on
any Business Day, such Bank shall make available to the Agent for
the account of the Issuing Bank its Commitment Percentage of the
amount of such payment or disbursement on such Business Day in
same day funds (or on the next succeeding Business Day if notice
is given after such time). The failure of any Bank to make
available to the Agent for the account of the Issuing Bank its
Commitment Percentage of any such payment or disbursement shall
not relieve any other Bank of its obligation hereunder to make
available to the Agent for the account of the Issuing Bank its
Commitment Percentage of any payment or disbursement on the date
such payment is to be made.
(ii) In the event that any Bank fails to fund its
Commitment Percentage of any payment or disbursement required to
be made by the Banks to the Agent for the benefit of the Issuing
Bank in accordance with the provisions of clause (i) above, until
the earlier of such Bank's cure of such failure and the
termination of the Bank's Commitment, the proceeds of all amounts
thereafter paid or repaid to the Agent by the Company (or any
Person on behalf of the Company) and contemplated hereunder to be
disbursed to such Bank for application against amounts owing such
Bank hereunder shall be disbursed instead to the Issuing Bank by
the Agent on behalf of such Bank to cure, in full or in part,
such failure by such Bank, and, upon such disbursement payment to
such Bank shall be deemed to have been made. Notwithstanding
anything in this Agreement to the contrary:
(A) if the Issuing Bank has theretofore applied any
portion of any cash collateral pledged to it to secure
Reimbursement Obligations relating to the applicable LC as
reimbursement for such Reimbursement Obligations, any
amounts disbursed to the Issuing Bank by the Agent in
accordance with this Section 2.6A(b)(ii) (net of any
interest due the Issuing Bank) shall be used by the Issuing
Bank to restore such cash collateral; and
(B) a Bank shall be deemed to have cured its failure
to fund its Commitment Percentage of any such required
payment in respect of an LC at such time as an amount equal
to such Bank's Commitment Percentage (determined as of the
time of the Agent's receipt of notice of the failure by the
Company to reimburse the Issuing Bank with respect to a
payment or disbursement under such LC) of such required
payment plus any interest accrued thereon is fully funded to
the Issuing Bank, whether made by such Bank itself, by
operation of the terms of this Section 2.6A(b)(ii) or by the
Company directly to the Issuing Bank.
Interest shall accrue on the amount that should have been paid by
the defaulting Bank, for each day from the date such amount shall
have been due until the date such amount is repaid to the Agent
for the benefit of the Issuing Bank, at the Federal Funds Rate as
in effect for each such day. The provisions of this Section
2.6A(b) shall not relieve the Company from paying interest at the
applicable interest rate under Section 2.6(a).
(c) Whenever the Issuing Bank receives a payment on account
of a Reimbursement Obligation, including any interest thereon, as
to which the Agent has received for the account of the Issuing
Bank any payments from the Banks pursuant to this Section 2.6A,
it shall promptly pay to the Agent and the Agent shall promptly
pay to each Bank that has funded its participating interest
therein, in the kind of funds so received, an amount equal to
such Bank's Commitment Percentage thereof (according to the
amounts so funded). Each such payment shall be made by the
Issuing Bank or the Agent, as the case may be, on the Business
day on which such Person receives the funds paid to it pursuant
to the preceding sentence, if received prior to 11:00 a.m.
(Chicago time) on such Business Day, and otherwise on the next
succeeding Business Day. If the Issuing Bank or the Agent, as
the case may be, shall fail to pay to any Bank the amount due
such Bank pursuant to this Section when due, the Issuing Bank or
the Agent, as the case may be, shall be obligated to pay to such
Bank interest on the amount that should have been paid hereunder
for each day from the date such amount shall have become due
until the date such amount is paid, at the Federal Funds Rate as
in effect for each such day.
(d) The obligations of (i) a Bank to make payments to the
Agent for the account of the Issuing Bank with respect to a
payment or disbursement made under an LC issued pursuant to this
Agreement and (ii) the Company to reimburse the Issuing Bank for
payments and disbursements made by the Issuing Bank under any LC
shall, in each case, be absolute and unconditional under any and
all circumstances and irrespective of any setoff, counterclaim or
defense to payment which the Company may have or have had against
the Issuing Bank or such beneficiary, including, without
limitation, any defense based on the failure of such demand for
payment to conform to the material terms of such LC or any
nonapplication or misapplication by such beneficiary of the
proceeds of such demand for payment or the legality, validity,
regularity or enforceability of such LC or any document or
contract related to or required to be presented under the terms
of such LC; provided, however, that neither the Company nor the
Banks shall be obligated to reimburse the Issuing Bank for any
wrongful payment or disbursement made by such Issuing Bank under
such LC as a result of acts or omissions constituting negligence
or willful misconduct on the part of the Issuing Bank.
SECTION 2.7 Mandatory Payment of LC Liability. The
Company agrees that, upon (i) its receipt of a written notice
from the Agent acting upon the written request of the Majority
Banks stating that an Event of Default has occurred or (ii) its
receipt of a written notice from the Agent that the Termination
Date has occurred, it will promptly pay to the Agent for the
account of the Issuing Bank an amount equal to the amount of the
then aggregate Stated Amount of all LCs issued and outstanding
hereunder. The Agent, the Issuing Bank and the Company hereby
agree that the Company's payment of such amount shall be by means
of purchasing from the Issuing Bank or its designee a certificate
or certificates of deposit in an amount equal to the amount of
the then aggregate Stated Amount of all LCs issued and
outstanding hereunder. Any amounts so received by the Issuing
Bank or certificates of deposit issued by the Issuing Bank or its
designee pursuant to the provisions of the foregoing sentence
shall be retained by the Issuing Bank as collateral security for
the Reimbursement Obligation of the Company with respect to such
LCs. Subject to Section 2.6A and so long as no Event of Default
has occurred and is continuing, upon the expiration of any LC,
the Issuing Bank will return to the Agent, and the Agent shall
return to the Company, all such funds with respect to such LC not
used to pay Reimbursement Obligations.
SECTION 2.8 LC Operations. The Issuing Bank shall,
promptly following its receipt thereof, (i) examine all documents
purporting to represent a demand for payment by the beneficiary
under any LC to ascertain that the same appear on their face to
be in conformity with the terms and conditions of such LC and
(ii) notify the Agent and the Company in writing of each such
demand for payment. If, after examination, the Issuing Bank
shall have determined that a demand for payment under such LC
does not conform to the terms and conditions of such LC, then the
Issuing Bank shall, as soon as reasonably practicable, give
notice to the beneficiary, the Agent and the Company to the
effect that negotiation was not in accordance with the terms and
conditions of such LC, stating the reasons therefor and that the
relevant document is being held at the disposal of such
beneficiary or is being returned to such beneficiary, as the
Issuing Bank may elect. The beneficiary may attempt to correct
any such nonconforming demand for payment under such LC if, and
to the extent that, such beneficiary is entitled (without regard
to the provisions of this sentence) and able to do so. If the
Issuing Bank determines that a demand for payment under such LC
conforms to the terms and conditions of such LC, then the Issuing
Bank shall make payment to the beneficiary in accordance with the
terms of such LC. The Issuing Bank shall have the right to
require the beneficiary to surrender such LC to the Issuing Bank
on the stated expiration date of such LC.
SECTION 2.9 Voluntary Termination or Reduction of
Commitments. The Company may, upon not less than one Business
Days' prior written notice to the Agent, terminate the Aggregate
Commitment or permanently reduce the Aggregate Commitment by an
aggregate minimum amount of $100,000; provided that no such
reduction or termination shall be permitted if, after giving
effect thereto and to any prepayments of the Loans made on the
effective date thereof, the sum of (i) the then outstanding
principal amount of the Loans, (ii) the Aggregate Stated Amount
of all LCs issued and outstanding and (iii) the aggregate amount
of all Reimbursement Obligations, would exceed the amount of the
Aggregate Commitment then in effect. Any reduction of the
Aggregate Commitment shall be applied to each Bank's Commitment
in accordance with such Bank's Commitment Percentage. All
commitment fees with respect to the portion of the Commitments
that are being reduced that have accrued to, but not including,
the effective date of any reduction or termination of
Commitments, shall be paid on the effective date of such
reduction or termination.
The Company, the Agent and each Bank acknowledge and agree
that on the Restatement Closing Date the Aggregate Commitment and
the Commitment of each Bank is amended as set forth in this
Agreement.
SECTION 2.10 Optional Prepayments. Subject to Section
4.5, the Company may, at any time or from time to time, ratably
prepay Loans in whole or in part in any amount; provided that the
Company's written notice of such prepayment shall be delivered to
the Agent in accordance with Section 10.2 prior to 11:00 a.m.
(Chicago time) (i) two Business Days prior to the requested date
of prepayment, in the case of Eurodollar Rate Loans; (ii) one
Business Day prior to the requested date of prepayment, in the
case of CD Rate Loans, and (iii) on the requested date of
prepayment, in the case of Base Rate Loans. Such notice of
prepayment shall specify the date of repayment, the aggregate
amount of such prepayment, and whether such prepayment is of Base
Rate Loans, CD Rate Loans or Eurodollar Rate Loans, or any
combination thereof. Such notice shall not thereafter be
revocable by the Company. The Agent will promptly notify each
Bank of such notice and of such Bank's Commitment Percentage of
such prepayment. If such notice is given by the Company, the
Company shall make such prepayment and the payment amount
specified in such notice shall be due and payable on the date
specified therein, together with accrued interest to each such
date on the amount prepaid and any amounts required pursuant to
Section 4.5.
SECTION 2.11 Mandatory Prepayment. On each Clean-up Date,
the Company shall make a mandatory prepayment to the Agent for
the benefit of the Banks of the outstanding principal amount of
all Loans outstanding on such Clean-up Date together with accrued
interest to such Clean-up Date on such Loans and any amounts
required pursuant to Section 4.5.
SECTION 2.12 Repayment. The Company shall repay to the
Agent for the benefit of the Banks in full on the Termination
Date the aggregate principal amount of the Loans outstanding on
the Termination Date.
SECTION 3
NOTES EVIDENCING THE LOANS
SECTION 3.1 Notes. Each Bank's Loans shall be evidenced
by a promissory note (herein, as the same may be amended,
modified or supplemented from time to time, and together with any
renewals thereof or exchanges or substitutions therefor,
individually called a "Note" and collectively called the
"Notes"), substantially in the form set forth in Exhibit A, with
appropriate insertions, dated the Restatement Closing Date,
payable to the order of such Bank in the principal amount equal
to such Bank's Commitment or the aggregate principal amount of
the Loans outstanding to such Bank, whichever is less. Such Note
shall amend, restate, supersede and replace in its entirety the
existing promissory note payable to the order of such Bank and
issued in connection with the Existing Agreement. The date and
amount of the Loans made by each Bank and of each repayment of
principal thereon received by such Bank shall be recorded by such
Bank in its records or, at its option, on the schedule attached
to its Note. The aggregate unpaid principal amount so recorded
shall be rebuttable presumptive evidence of the principal amount
owing and unpaid on such Note to such Bank. The failure so to
record any such amount or any error in so recording any such
amount, however, shall not limit or otherwise affect the
Company's obligations hereunder or under such Note to repay the
principal amount of the Loans evidenced by such Note together
with all interest accruing thereon. Each Note shall provide for
the payment of interest as provided in Section 4.
SECTION 4
INTEREST, FEES AND COSTS
SECTION 4.1 Interest.
(a) Subject to Section 4.1(c), each Loan shall bear
interest on the outstanding principal amount thereof from the
date when made until it becomes due at a rate per annum equal to
the CD Rate, LIBOR or the Base Rate, as the case may be, plus the
Applicable Margin.
(b) Interest on 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 pursuant to Section 2.10 for the
portion of the Loans so prepaid and upon payment (including
prepayment) in full thereof, including, without limitation, on
each Clean-up Date pursuant to Section 2.11 and, during the
existence of any Event of Default, interest shall be paid on
demand.
(c) If any amount of principal of or interest on any Loan,
or any other amount payable hereunder or under any Related
Document is not paid in full when due (whether at stated
maturity, by acceleration, demand or otherwise), the Company
agrees to pay interest on such unpaid principal or other amount,
from the date such amount becomes due until the date such amount
is paid in full, payable on demand, at a fluctuating rate per
annum equal to the Base Rate plus two percent (2.00%) per annum.
SECTION 4.2 Fees.
(a) Intentionally Omitted.
(b) Unused Commitment Fees. The Company shall pay to the
Agent for the account of each Bank an unused commitment fee at
the rate of 0.30% per annum on the daily average amount of the
difference between such Bank's Commitment from time to time in
effect minus the sum of (i) such Bank's Commitment Percentage of
the aggregate principal amount of all Loans then outstanding and
not repaid, (ii) such Bank's Commitment Percentage of the
aggregate Stated Amount of all LCs issued and outstanding and
(iii) such Bank's Commitment Percentage of the aggregate amount
of all Reimbursement Obligations. The Agent shall provide the
Company with an invoice for the amount of the unused commitment
fee due to each Bank for each quarterly period ending on the last
day of each March, June, September and December, commencing on
December 31, 1993. Such unused commitment fee shall accrue from
the Initial Closing Date to the Termination Date and shall be due
and payable quarterly in arrears no later than thirty (30) days
after the Company receives the invoice referred to above, with
the final payment to be made on the Termination Date; provided
that, in connection with any reduction or termination of
Commitments pursuant to Section 2.9, including without limitation
the reduction in the Aggregate Commitment effective on the
Restatement Closing Date, the accrued, unused commitment fee
calculated for the period ending on such date shall also be paid
on the date of such reduction or termination, with the next
succeeding quarterly payment being calculated on the basis of the
period from the reduction or termination date to such quarterly
payment date. The unused commitment fees provided in this
subsection shall accrue at all times after the Initial Closing
Date, including during any Clean-up Period.
(c) Letter of Credit Fees. The Company shall pay to the
Agent for the account of each Bank a letter of credit fee at the
rate of 1.00% per annum of such Bank's Commitment Percentage of
the aggregate Stated Amount of all LCs issued and outstanding.
Such letter of credit fee shall accrue from the date of issuance
of each LC to the date of termination of such LC as set forth in
such LC and shall be due and payable quarterly in advance, with
the first such payment due on the date of issuance of each such
LC.
(d) Letter of Credit Issuance Fees. The Company shall pay
to the Agent for the account of the Issuing Bank a letter of
credit issuance fee on the date of issuance of each LC at a rate
to be determined according to the standard fee schedules of the
Issuing Bank with respect to letters of credit.
SECTION 4.3 Computation of Fees and Interest.
(a) All computations of interest in respect of the Base
Rate and all computations of letter of credit fees pursuant to
Section 4.2(c) shall be made on the basis of a year of 365 or 366
days, as the case may be, and actual days elapsed. All other
computations of fees and interest under this Agreement shall be
made on the basis of a 360-day year and actual days elapsed.
Interest and fees shall accrue during each period during which
interest or such fees are computed from and including the first
day thereof to but excluding the last day thereof.
(b) The Agent will, with reasonable promptness, notify the
Company and the Banks of each determination of a Eurodollar Rate
or CD Rate; provided, however, that any failure to do so shall
not relieve the Company of any liability hereunder or provide the
basis for any claim against the Agent. Each determination of an
interest rate by the Agent pursuant hereto shall be conclusive
and binding on the Company and the Banks in the absence of
manifest error.
SECTION 4.4 Increased Costs; Capital Adequacy.
(a) If (i) Regulation D of the Board of Governors of the
Federal Reserve System, or (ii) after the date hereof, the
adoption of any applicable law, rule or regulation, or any change
therein, or any change in the interpretation or administration
thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof,
or compliance by a Bank with any request or directive (whether or
not having the force of law) of any such authority, central bank
or comparable agency issued after the date hereof,
(A) shall subject such Bank to any tax, duty or
other charge with respect to any Eurodollar Rate Loan or CD
Rate Loan made by such Bank, the Note issued to such Bank,
such Bank's obligation to make or maintain any such Loan,
any LC issued by the Issuing Bank or the Issuing Bank's
obligation to make or maintain any such LC, or shall change
the basis of taxation of payments to a Bank or the Issuing
Bank, as the case may be, of the principal of or interest on
any such Eurodollar Rate Loan or CD Rate Loan or such LC or
any other amounts due under this Agreement in respect of any
such Eurodollar Rate Loan or CD Rate Loan or such LC or such
Bank's or the Issuing Bank's, as the case may be, obligation
to make or maintain any such Eurodollar Rate Loan or CD Rate
Loan or such LC (except for changes in the rate of tax on
the overall income of such Bank imposed by any governmental
authority); or
(B) shall impose, modify or deem applicable any
reserve (including, without limitation, any reserve imposed
by the Federal Reserve Board but excluding, in the case of
Eurodollar Rate Loans, any reserve prescribed by the Federal
Reserve Board included in the determination of LIBOR),
special deposit or similar requirement against assets of,
deposits with or for the account of, or credit extended by,
such Bank;
and the result of any of the foregoing is to increase the cost to
such Bank of making or maintaining any Loan or to the Issuing
Bank of issuing or maintaining any LC, or to reduce the amount of
any sum received or receivable by such Bank or the Issuing Bank,
as the case may be, under this Agreement or under its Note with
respect thereto, then within 30 days after demand by such Bank,
with a copy of such demand to the Agent (which demand shall be
accompanied by a statement setting forth in reasonable detail the
basis of such demand), the Company shall pay to the Agent for the
account of such Bank such additional amount or amounts as will
compensate such Bank for such increased costs or such reduction,
provided, however, that any such amount or amounts payable by the
Company shall not exceed the increased costs or amount of
reduction of such Bank or the Issuing Bank, as the case may be,
in direct proportion to any such Loan or any such LC.
(b) If either (i) the introduction of or any change in or
in the interpretation of any law or regulation or (ii) compliance
by a Bank with any new guideline or request from any central bank
or other governmental authority affects or would affect the
amount of capital required or expected to be maintained by
such Bank or any corporation controlling such Bank and the amount
of such capital is increased by or based upon the existence of
such Bank's commitment to make or maintain any Loan by such Bank
hereunder or in the case of the Issuing Bank, its commitment to
issue any LC hereunder, then, within 30 days after demand by such
Bank, with a copy to the Agent (which demand shall set forth in
reasonable detail the basis of such demand), the Company shall
pay to the Agent for the account of such Bank, from time to time
as reasonably specified by such Bank, additional amounts
sufficient to compensate such Bank in the light of such
circumstances, to the extent that such Bank reasonably determines
such increase in capital to be allocable to the existence of such
Bank's commitment to make or maintain any Loan hereunder or in
the case of the Issuing Bank, its commitment to issue any LC
hereunder, provided, however, that any such amount or amounts
payable by the Company shall not exceed the increased amount of
capital required to be maintained by such Bank and allocable to
any such Loan or any such LC, as the case may be, in direct
proportion to any such Loan or any such LC.
SECTION 4.5 Funding Losses. The Company agrees to
reimburse each Bank and to hold each Bank harmless from any loss
or expense which such Bank may sustain or incur as a consequence
of:
(a) the failure of the Company to make when due any payment
of principal of any Eurodollar Rate Loan or CD Rate Loan
(including payments made after any acceleration thereof) not
resulting from any Bank's failure to act;
(b) the failure of the Company to borrow, continue or
convert a Loan after the Company has given (or is deemed to have
given) a Notice of Borrowing or a Notice of
Conversion/Continuation;
(c) the failure of the Company to make any prepayment after
the Company has given a notice in accordance with Section 2.10 or
Section 2.11;
(d) the prepayment of a Eurodollar Rate Loan or a CD Rate
Loan on a day which is not the last day of the Interest Period
with respect thereto; or
(e) the conversion pursuant to Section 2.4 of any
Eurodollar Rate Loan or CD Rate Loan to a Loan of another type on
a day that is not the last day of the Interest Period with
respect thereto;
including, in each case, (i) any such loss or expense arising
from the liquidation or reemployment of funds obtained by it to
maintain its Eurodollar Rate Loans or CD Rate Loans hereunder or
from fees payable to terminate the deposits from which such funds
were obtained and (ii) with respect to any certificate of deposit
purchased by the Company from each Bank in connection with a CD
Rate Loan, any penalty assessed by such Bank for the early
withdrawal of the funds deposited under any such certificate of
deposit in accordance with such Bank's usual and customary
practices that are not otherwise waived by such Bank, it being
understood that for purposes of this Section 4.5, any such
penalty assessed by such Bank for the early withdrawal of funds
deposited under any such certificate of deposit shall constitute
the only losses and expenses of such Bank that may be recovered
by such Bank pursuant to this Section 4.5.
SECTION 5
MAKING OF PAYMENTS
SECTION 5.1 Payments by the Company.
(a) All payments (including prepayments) to be made by the
Company on account of principal, interest, fees and other amounts
required hereunder shall, except as otherwise expressly provided
herein, be made to the Agent for the ratable account of the Banks
at the Agent's Payment Office without condition or reservation of
right by wire transfer in immediately available funds (ABA #
071000770, Account No.: 4069692, Reference: Pioneer Revolving
Loan, or pursuant to such other instructions or to such other
account as the Agent may from time to time notify the Company),
no later than 12:00 noon (Chicago time) on the date specified
herein. Any payment which is received by the Agent later than
12:00 noon (Chicago time) shall be deemed to have been received
on the immediately succeeding Business Day and any applicable
interest or fee shall continue to accrue. The Agent will
promptly distribute to each Bank its Commitment Percentage of
such principal, interest, fees or other amounts, in like funds as
received, but in any event shall distribute such amounts no later
than the close of business on the date received by the Agent if
received by the Agent no later than 12:00 noon on such date. If
the Agent shall fail to pay to any Bank the amount due such Bank
pursuant to this Section when due, the Agent shall be obligated
to pay to such Bank interest on the amount that should have been
paid hereunder for each day from the date such amount shall have
become due until the date such amount is paid, at the Federal
Funds Rate as in effect for each such day.
(b) Subject to the provisions set forth in the definition
of "Interest Period" herein, whenever any payment hereunder shall
be stated to be due on a day other than a Business Day, such
payment shall be made on the next succeeding Business Day, and
such extension of time shall in such case be included in the
computation of interest or fees, as the case may be.
(c) Unless the Agent shall have received written notice
from the Company prior to the date on which any payment is due to
the Banks hereunder that the Company will not make such payment
in full as and when required hereunder, the Agent may assume that
the Company has made such payment in full to the Agent on such
date in immediately available funds and the Agent may (but shall
not be so required), in reliance upon such assumption, cause to
be distributed to each Bank on such due date an amount equal to
the amount then due such Bank. If and to the extent the Company
shall not have made such payment in full to the Agent, each Bank
shall repay to the Agent on demand such amount distributed to
such Bank, together with interest thereon for each day from the
date such amount is distributed to such Bank until the date such
Bank repays such amount to the Agent, at the Federal Funds Rate
as in effect for each such day.
SECTION 5.2 Payments by the Banks to the Agent.
(a) Unless the Agent shall have received written notice
from a Bank, with respect to each Borrowing (other than a
Borrowing of Base Rate Loans), at least one Business Day prior to
the date of any proposed Borrowing (or, in the case of a
Borrowing of Base Rate Loans, on the applicable Borrowing date),
that such Bank will not make available to the Agent as and when
required hereunder for the account of the Company the amount of
that Bank's Commitment Percentage of the Borrowing, the Agent may
assume that each Bank has made such amount available to the Agent
in immediately available funds on the Borrowing date and the
Agent may (but shall not be so required), in reliance upon such
assumption, make available to the Company on such date a
corresponding amount. If and to the extent any Bank shall not
have made its full amount available to the Agent in immediately
available funds and the Agent in such circumstances has made
available to the Company such amount, that Bank shall on the next
Business Day following the date of such Borrowing make such
amount available to the Agent, together with interest at the
Federal Funds Rate for and determined as of each day during such
period. A notice of the Agent submitted to any Bank with respect
to amounts owing under this Section 5.2(a) shall be conclusive,
absent manifest error. If such amount is so made available, such
payment to the Agent shall constitute such Bank's Loan on the
date of Borrowing for all purposes of this Agreement. If such
amount is not made available to the Agent on the next Business
Day following the date of such Borrowing, the Agent shall notify
the Company of such failure to fund and, upon demand by the
Agent, the Company shall pay such amount to the Agent for the
Agent's account, together with interest thereon for each day
elapsed since the date of such Borrowing, at a rate per annum
equal to the interest rate applicable at the time to the Loans
comprising such Borrowing.
(b) The failure of any Bank to make any Loan on any date of
Borrowing shall not relieve any other Bank of any obligation
hereunder to make a Loan on the date of such Borrowing, but no
Bank shall be responsible for the failure of any other Bank to
make the Loan to be made by such other Bank on the date of any
Borrowing.
SECTION 5.3 Setoff.
(a) The Company agrees that, if at any time (i) any amount
owing by it under this Agreement or any Related Document is then
due and payable to a Bank or (ii) any Event of Default shall have
occurred and be continuing, then such Bank, in its sole
discretion, may apply to the payment of the Liabilities any and
all balances, credits, deposits, accounts or moneys of the
Company then or thereafter with such Bank.
(b) Without limitation of Section 5.3(a), the Company
agrees that, upon and during the continuance of any Event of
Default, such Bank is hereby authorized, at any time and from
time to time, without notice to the Company, (i) to set off
against and to appropriate and apply to the payment of the
Liabilities (whether matured or unmatured) any and all amounts
which such Bank is obligated to pay over to the Company (whether
matured or unmatured, and, in the case of deposits, whether
general or special, time or demand and however evidenced) and
(ii) pending any such action, to the extent necessary, to hold
such amounts as collateral to secure such Liabilities.
(c) Notwithstanding any other provision of this Agreement,
the Notes or any other Related Document, the Banks shall not set
off against, or appropriate or apply to the payment of any
Liabilities, any of the deposits, accounts or other assets of any
Insurance Subsidiary.
SECTION 5.4 Sharing of Payments. If, other than as
expressly provided elsewhere herein, any Bank shall obtain on
account of the Liabilities held by such Bank any payment (whether
voluntary, involuntary, through the exercise of any right of set-
off, or otherwise) in excess of its Commitment Percentage of
payments on account of the Liabilities obtained by all the Banks,
such Bank shall promptly (a) notify the Agent of such fact and
(b) upon demand purchase from the other Banks a portion of the
Liabilities held by such other Banks as shall be necessary to
cause such purchasing Bank to share the excess payment ratably
with each of them based upon each Bank's Commitment Percentage;
provided, however, that if all or any portion of such excess
payment is thereafter recovered from the purchasing Bank, such
purchase shall to that extent be rescinded and each other Bank
shall repay to the purchasing Bank the purchase price paid
therefor, together with an amount equal to such paying Bank's
Commitment Percentage of any interest or other amount paid or
payable by the purchasing Bank in respect of the total amount so
recovered. The Company agrees that any Bank so purchasing a
portion of another Bank's Liabilities pursuant to this Section
5.4 may, to the fullest extent permitted by law, exercise all of
its rights of payment (including the right of setoff) with
respect to such purchased Liabilities as fully as if such Bank
were the direct creditor of the Company in the amount of such
purchased Liabilities. The Agent will keep records (which shall
be conclusive and binding in the absence of manifest error) of
amounts purchased pursuant to this Section 5.4 and will in each
case notify the Banks following any purchases or repayments.
SECTION 6
REPRESENTATIONS AND WARRANTIES
To induce each Bank to enter into this Agreement and to make
Loans and to induce the Issuing Bank to enter into this Agreement
and issue LCs hereunder, the Company represents and warrants to
each Bank, the Issuing Bank and the Agent that:
SECTION 6.1 Corporate Organization. The Company is a
corporation duly existing and in good standing under the laws of
the State of Delaware and is duly qualified and in good standing
as a foreign corporation authorized to do business in Illinois,
which is the only other jurisdiction in which the Company is
required to be duly qualified and in good standing as a foreign
corporation. The Company's failure to be so qualified in any
other jurisdiction does not materially and adversely affect the
Company's business, operations or financial condition or its
ability to perform its obligations hereunder and under the
Related Documents to which it is a party.
SECTION 6.2 Authorization; No Conflict. The Company's
execution, delivery and performance of this Agreement and each of
the Related Documents to which it is a party and the consummation
of the transactions contemplated by this Agreement and each of
the Related Documents are within the Company's corporate powers,
have been duly authorized by all necessary corporate action,
require no governmental, regulatory or other approval, and (a) do
not and will not contravene or conflict with any provision of (i)
any law the failure of the Company to comply with in the
Company's determination materially and adversely affects the
Company's business, operations or financial condition or its
ability to perform its obligations hereunder and under the
Related Documents to which it is a party, (ii) any judgment,
decree or order applicable to the Company, or (iii) the Company's
articles of incorporation or by-laws, and (b) do not and will not
contravene or conflict with any provision of any agreement or
instrument binding upon the Company or upon any property of the
Company that in the Company's determination materially and
adversely affects the Company's business, operations or financial
condition or its ability to perform its obligations hereunder or
under the Related Documents to which it is a party.
SECTION 6.3 Validity and Binding Nature. This Agreement
and the Related Documents to which the Company is a party are
(or, when duly executed and delivered, will be) the legal, valid
and binding obligations of the Company enforceable against the
Company in accordance with their respective terms.
SECTION 6.4 Financial Statements. The annual and
quarterly historical balance sheets and statements of operations
that have been or shall hereafter be furnished to the Agent, the
Issuing Bank or any Bank by or at the direction of the Company
for the purposes of or in connection with this Agreement do and
will present fairly the financial condition of the Persons
involved as of the dates thereof and the results of their
operations for the period(s) covered thereby, all in accordance
with GAAP, consistently applied, unless otherwise noted therein.
SECTION 6.5 Litigation and Contingent Liabilities.
(a) No litigation (including, without limitation,
derivative actions), arbitration proceedings, governmental
proceedings or investigations or regulatory proceedings are
pending or, to the best of its knowledge, threatened against the
Company or any Material Subsidiary which in the Company's
determination materially and adversely affects the Company's or
such Material Subsidiary's business, operations or financial
condition or the Company's ability to perform its obligations
hereunder and under the Related Documents to which it is a party.
In addition, to the best of the Company's knowledge, there are no
inquiries, formal or informal, which give rise to such actions,
proceedings or investigations.
(b) The Company and, to the best of the Company's
knowledge, each Material Subsidiary have obtained all licenses,
permits, franchises and other governmental authorizations
necessary to the ownership of its properties or to the conduct of
its businesses, including without limitation all licenses,
permits, franchises and other governmental authorizations
required under all applicable Environmental Laws, a failure to
obtain or violation of which in the Company's determination
materially and adversely affects the Company's or such Material
Subsidiary's business, operations or financial condition or the
Company's ability to perform its obligations hereunder and under
the Related Documents to which it is a party.
(c) The Company does not have any material contingent
liabilities required to be disclosed pursuant to GAAP that are
not provided for or disclosed in the financial statements
referred to in Section 6.4 hereof.
SECTION 6.6 Employee Benefit Plans. To the best of the
Company's knowledge, each Plan complies in all material respects
with all applicable statutes and governmental rules and
regulations (including, without limitation, the requirements of
Section 401(a) of the Internal Revenue Code of 1986, as amended,
to the extent that such Plan is intended to conform to that
section) and during the 12-consecutive-month period prior to the
Restatement Closing Date, (i) no Reportable Event has occurred
and is continuing with respect to any Plan subject to Title IV
of ERISA, (ii) neither the Company nor any ERISA Affiliate has
withdrawn from any Plan subject to Title IV of ERISA or
instituted steps to do so, (iii) no steps have been instituted to
terminate any Plan subject to Title IV of ERISA, (iv) no
contribution failure has occurred with respect to any Plan
sufficient to give rise to a lien under Section 302(f) of ERISA,
or (v) each Plan which is intended to be qualified pursuant to
Section 401(a) of the Internal Revenue Code of 1986, as amended,
has received a favorable determination letter. To the best of
the Company's knowledge, no condition exists or event or
transaction has occurred in connection with any Plan which would
result in the incurrence by the Company or any ERISA Affiliate of
any liability, fine or penalty, which in the Company's
determination materially and adversely affects the Company's
business, operations or financial condition, or the ability of
the Company to perform its obligations hereunder and under the
Related Documents to which it is a party. Neither the Company
nor any ERISA Affiliate presently maintains, contributes to or,
to the best of the Company's knowledge, has any liability
(including current or potential withdrawal liability) with
respect to any Multiemployer Plan. To the best of the Company's
knowledge, neither the Company nor any ERISA Affiliate has any
liability with respect to any funded or unfunded postretirement
benefit for employees or former employees (including medical,
health or life insurance) other than liability for continuation
coverage described in Part 6 of Title I of ERISA.
SECTION 6.7 Investment Company Act. The Company is not
an "investment company" or a company "controlled" by an
"investment company", within the meaning of the Investment
Company Act of 1940, as amended.
SECTION 6.8 Regulation U. The Company is not engaged
principally, or as one of its important activities, in the
business of extending credit for the purpose of purchasing or
carrying Margin Stock.
SECTION 6.9 Accuracy of Information. To the best of the
Company's knowledge, all factual information heretofore or
contemporaneously furnished by the Company to the Agent, the
Issuing Bank or any Bank for purposes of or in connection with
this Agreement or any transaction contemplated hereby is, and all
other factual information hereafter furnished by the Company to
the Agent, the Issuing Bank 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 the Company has not
knowingly omitted and will not knowingly omit any material fact
it deems necessary to prevent such information from being false
or misleading.
SECTION 6.10 Labor Controversies. There are no labor
controversies pending or threatened against the Company or any
Material Subsidiary which in the Company's determination
materially and adversely affect the Company's or such Material
Subsidiary's business, operations or financial condition or the
Company's ability to perform its obligations hereunder and under
the Related Documents to which it is a party.
SECTION 6.11 Tax Status. Except as set forth in Schedule
6.11 hereto, the Company and, to the best of the Company's
knowledge, each Material Subsidiary have made or filed all income
and other tax returns, reports and declarations required by any
jurisdiction to which it is subject, have paid all taxes,
assessments and other charges shown or determined to be due on
such returns, reports and declarations (other than those being
diligently contested in good faith by appropriate proceedings),
and have set aside adequate reserves against liability for taxes,
assessments and charges applicable to periods subsequent to those
covered by such returns, reports and declarations, a failure of
which to file, to pay or to set aside in the Company's
determination materially and adversely affects the Company's or
such Material Subsidiary's business, operations or financial
condition or the Company's ability to perform its obligations
hereunder and under the Related Documents to which it is a party.
SECTION 6.12 No Default. No event has occurred and no
condition exists which, upon the execution and delivery of, or
consummation of any transaction contemplated by, this Agreement
or any Related Document, or upon the funding of any Loan or the
issuance of any LC, will constitute an Event of Default. The
Company and each Material Subsidiary have not received notice of
default with respect to any other material agreement, security or
contract, except those for which a default exists that is not
capable of being cured with the payment of money or as to which a
good faith dispute exists.
SECTION 6.13 Compliance with Applicable Laws. The Company
and, to the best of the Company's knowledge, each Material
Subsidiary are in compliance with the requirements of all
applicable laws, rules, regulations, and orders of all
governmental authorities (Federal, state, local or foreign, and
including, without limitation, Environmental Laws and Insurance
Laws), a breach of which would in the Company's determination
materially and adversely affect the Company's or such Material
Subsidiary's business, operations or financial condition, or the
ability of the Company to perform its obligations hereunder and
under the Related Documents to which it is a party.
SECTION 6.14 Insurance. The Company, in its sole
determination, maintains adequate general liability, property and
casualty insurance for its benefit under policies issued by
insurers of recognized responsibility.
SECTION 6.15 Solvency. After giving effect to the
transactions contemplated hereby and by the Related Documents,
the Company is not "insolvent", nor will the Company's incurrence
of obligations to repay any Loan or to reimburse the Issuing Bank
with respect to the Issuing Bank's honoring a draw under an LC
render the Company "insolvent." For the purposes of this Section
6.15, a corporation is "insolvent" if (i) the "present fair
salable value" (as defined below) of its assets is less than the
amount that will be required to pay its probable liability on its
existing debts and other liabilities (including contingent
liabilities) as they become absolute and matured; (ii) the
property of the Company constitutes unreasonably small capital
for the Company to carry out its business as now conducted and as
proposed to be conducted including the capital needs of the
Company; (iii) the Company intends to, or believes that it will,
incur debts beyond its ability to pay such debts as they mature
(taking into account the timing and amounts of cash to be
received by the Company and amounts to be payable on or in
respect of debt of the Company), or the cash available to the
Company after taking into account all other anticipated uses of
the cash of the Company is anticipated to be insufficient to pay
all such amounts on or in respect of debt of the Company when
such amounts are required to be paid; or (iv) the Company
believes that final judgments against the Company in actions for
money damages will be rendered at a time when, or in an amount
such that, the Company will be unable to satisfy any such
judgments promptly in accordance with their terms (taking into
account the maximum reasonable amount of such judgments in any
such actions and the earliest reasonable time (as determined in
the Company's best judgment) at which such judgments might be
rendered), or the cash available to the Company after taking into
account all other anticipated uses of the cash of the Company
(including the payments on or in respect of debt referred to in
clause (iii) of this Section 6.15), is anticipated to be
insufficient to pay all such judgments promptly in accordance
with their terms. For purposes of this Section 6.15, the
following terms have the following meanings: (x) the term "debts"
includes any legal liability, whether matured or unmatured,
liquidated, absolute, fixed or contingent, (y) the term "present
fair salable value" of the Company's assets means the amount
which may be realized, within a reasonable time (as determined in
the Company's best judgment), either through collection or sale
of such assets at their regular market value and (z) the term
"regular market value" means the amount which a capable and
diligent businessman (as determined in the Company's best
judgment) could obtain for the property in question within a
reasonable time (as determined in the Company's best judgment)
from an interested buyer who is willing to purchase under
ordinary selling conditions (as determined in the Company's best
judgment).
SECTION 6.16 Use of Proceeds. The Company will use the
proceeds of any Loans for general corporate purposes, including
but not limited to financing future acquisitions and future
working capital needs, including transactions with Affiliates.
SECTION 6.17 Subsidiaries. The Company has no
Subsidiaries except as listed on Schedule 6.17 hereto.
SECTION 7
COVENANTS
Until the expiration or termination of each Bank's
Commitment and thereafter until all Liabilities of the Company
are paid in full and all LCs have expired or been terminated, the
Company agrees that, unless at any time the Majority Banks
(except with respect to such sections that expressly require the
written consent of all of the Banks) shall otherwise expressly
consent in writing, it will:
SECTION 7.1 Reports, Certificates and Other Information.
Furnish to the Agent, the Issuing Bank and each of the Banks:
(a) Annual Report. On or before the ninetieth (90th) day
after each of the Company's fiscal years, a copy of the
consolidated and consolidating financial statements of the
Company and its Subsidiaries (i) in the case of such consolidated
statements, prepared in conformity with GAAP and audited and
certified by independent certified public accountants of
recognized standing selected by the Company and (ii) in the case
of such consolidating statements, prepared based on unadjusted
per book entries in the Company's and its Subsidiaries' records,
certified by an Authorized Officer.
(b) Interim Reports. On or before the forty-fifth (45th)
day after the end of each of the first three quarters of each
fiscal year of the Company, a copy of the unaudited consolidated
and consolidating financial statements of the Company prepared in
a manner consistent with the financial statements referred to in
Section 7.1(a) hereof, certified by an Authorized Officer and
consisting of, at least, balance sheets as at the close of such
quarter and statements of earnings for such quarter and for the
period from the beginning of such fiscal year to the close of
such quarter.
(c) Statutory Statements. Promptly upon the filing thereof,
copies of all Statutory Statements required to be filed by the
Company and each Principal Insurance Subsidiary with or to the
insurance commission or department of such Person's respective
state of domicile.
(d) Reports to SEC. Promptly upon the filing or making
thereof, copies of each Form 10-K and Form 10-Q made by the
Company with or to the Securities and Exchange Commission.
(e) Certificates. Simultaneously with the furnishing of
each annual statement and each quarterly statement provided for
in this Section 7.1, a certificate of the Chief Financial Officer
or another Authorized Officer (i) stating that no Event of
Default has occurred and is continuing, or, if there is any such
event, setting forth the details thereof and the action that the
Company is taking or proposes to take with respect thereto, (ii)
setting forth computations in reasonable detail demonstrating
compliance with each of the financial ratios and restrictions set
forth in this Section 7, and (iii) that the Company either has
funds or investments or has the ability to promptly obtain funds
from its Subsidiaries, including, without limitation, by means of
inter-corporate loans or advances from such Subsidiaries,
dividends or other distributions from such Subsidiaries or
purchases by such Subsidiaries of stock, other securities or
assets of, or fees for services that are due and payable from,
other Subsidiaries of the Company, in an amount not less than the
sum of (A) the amount of all principal of and interest on all
Loans outstanding, (B) the Aggregate Stated Amount of all LCs
issued and outstanding and (C) the aggregate amount of all
Reimbursement Obligations, and that the ability of the Company to
promptly obtain such funds will not violate or result in the
breach of any law, rule, regulation or order of any governmental
authority (federal, state, local or foreign and including,
without limitation, Insurance Laws).
(f) Notice of Default, Litigation and ERISA Matters.
Promptly upon learning of the occurrence of any of the following,
written notice thereof which describes the same and the steps
being taken by the Company with respect thereto: (i) the
occurrence of an Event of Default, (ii) the institution of, or
any adverse determination in, any litigation, arbitration
proceeding or governmental proceeding in which any injunctive
relief is sought or in which money damages in excess of
$5,000,000 are sought, (iii) the occurrence of a material
Reportable Event with respect to any Plan subject to Title IV of
ERISA, (iv) the institution of any material steps by the Company,
the PBGC or any other Person to terminate any Plan subject to
Title IV of ERISA, (v) the institution of any material steps by
the Company or any ERISA Affiliate to withdraw from any Plan
subject to Title IV of ERISA which would result in material
liability to the Company, (vi) the failure to make a material
required contribution to any Plan if such failure is sufficient
to give rise to a lien under Section 302(f) of ERISA, (vii) the
taking of any material action with respect to a Plan which could
result in the requirement that the Company furnish a bond or
other security to the PBGC or such Plan, (viii) the occurrence of
any event with respect to any Plan which could result in the
incurrence by the Company of any liability, fine or penalty,
which would in the Company's determination materially and
adversely affect the Company's business, operations or financial
condition or the ability of the Company to perform its
obligations hereunder and under the Related Documents to which it
is a party, or (ix) promptly after the incurrence thereof, notice
of any material increase in the contingent liability of the
Company with respect to any postretirement Plan benefits.
(g) Other Information. Such other material information
concerning the Company as the Agent, the Issuing Bank or any Bank
may reasonably request from time to time.
SECTION 7.2 Corporate Existence and Franchises. Except
as otherwise expressly permitted in this Agreement, maintain and
cause each Material Subsidiary to maintain in full force and
effect its separate existence and all rights, licenses, leases
and franchises reasonably necessary in the Company's sole
discretion to the conduct of its and each Material Subsidiary's
business.
SECTION 7.3 Books, Records and Inspections. Maintain,
and cause each Material Subsidiary to maintain, books and records
in accordance with GAAP in all material respects, the Agent on
behalf of the Banks to have access to the Company's books and
records, and permit the Agent on behalf of the Banks, upon seven
(7) days notice to the Company, to inspect the Company's
properties and operations during normal business hours and at
reasonable intervals, but no more frequently than semi-annually
if no Event of Default has occurred.
SECTION 7.4 Insurance. Maintain, and cause each Material
Subsidiary to maintain, such insurance as is required by law.
SECTION 7.5 Taxes and Liabilities. Promptly pay, and
cause each Material Subsidiary to pay, when due all taxes,
duties, assessments and other liabilities (except such taxes,
duties, assessments and other liabilities as the Company or such
Material Subsidiary is diligently contesting in good faith and by
appropriate proceedings; provided that the Company or such
Material Subsidiary has provided for and is maintaining adequate
reserves with respect thereto in accordance with GAAP), a failure
of which to pay in the Company's determination materially and
adversely affects the Company's or such Material Subsidiary's
business, operations or financial condition or the Company's
ability to perform its obligations hereunder and under the
Related Documents to which it is a party.
SECTION 7.6 Cash Flow Coverage. Maintain a ratio of (x)
Available Cash Flow to (y) Debt Service Requirements equal to or
greater than 1.10 to 1 at the end of each fiscal quarter of the
Company and its Subsidiaries on a consolidated basis, such ratio
to be calculated for the period of the four fiscal quarters
ending on the most recent fiscal quarter end prior to the date of
computation.
SECTION 7.7 Net Worth. Not permit the Net Worth of the
Company to be less than $65,000,000 at the end of each fiscal
quarter of the Company.
SECTION 7.8 Funds for Refinancing. Shall, at all times,
either have funds or investments or have the ability to promptly
obtain funds from its Subsidiaries, including, without
limitation, by means of inter-corporate loans or advances from
such Subsidiaries, dividends or other distributions from such
Subsidiaries or purchases by such Subsidiaries of stock, other
securities or assets of, or fees for services that are due and
payable from, other Subsidiaries of the Company, in an amount at
all times not less than the sum of (a) the amount of all
principal of and interest on all Loans outstanding, (b) the
Aggregate Stated Amount of all LCs issued and outstanding and (c)
the aggregate amount of all Reimbursement Obligations, and the
ability of the Company to promptly obtain such funds shall not
violate or result in the breach of any law, rule, regulation or
order of any governmental authority (federal, state, local or
foreign and including, without limitation, Insurance Laws).
SECTION 7.9 Indebtedness. Not, without the prior written
consent of all of the Banks, incur or permit to exist any
Indebtedness that by its terms or otherwise is senior in right of
payment to the Liabilities, except (i) Indebtedness hereinafter
incurred in connection with the acquisition of assets or
property, which Indebtedness is secured by the assets or property
so acquired, (ii) Indebtedness originally incurred under this
Agreement and converted into term loan Indebtedness pursuant to
such terms and subject to such documentation as is satisfactory
to the Agent and the Majority Banks in such Majority Banks'
reasonable discretion (provided, however, that no Bank shall,
without its consent, be compelled to convert any Indebtedness
owed to it and originally incurred under this Agreement into term
loan Indebtedness) and (iii) Indebtedness in connection with
Permitted Liens pursuant to Section 7.16.
SECTION 7.10 Risk-Based Capital. Shall cause each
Principal Insurance Subsidiary on an individual basis to maintain
at all times Total Adjusted Capital equal to or greater than 260%
of Authorized Control Level RBC.
SECTION 7.11 Real Estate Concentration. Shall cause each
Principal Insurance Subsidiary on an individual basis to maintain
at all times a Real Estate Concentration Ratio equal to or less
than 50%.
SECTION 7.12 Investment Quality. Shall cause each
Principal Insurance Subsidiary on an individual basis to maintain
at all times a ratio of (x) Non-Investment Grade Obligations to
(y) Total Invested Assets to be equal to or less that 15%.
SECTION 7.13 Intentionally Omitted.
SECTION 7.14 Insurance Company Leverage Ratio. Shall
cause (a) all Principal Insurance Subsidiaries on a combined
basis to maintain at all times an aggregate Insurance Company
Leverage Ratio of greater than 8.33%, and (b) each Principal
Insurance Subsidiary on an individual basis to maintain at all
times an Insurance Coverage Leverage Ratio of greater than 7.50%.
SECTION 7.15 Intentionally Omitted.
SECTION 7.16 Intentionally Omitted.
SECTION 7.17 Change in Nature of Business. Not, and not
permit the Company and its Material Subsidiaries as a whole to,
make any material change in the nature of its business carried on
as of the date first stated above, provided, however, the Company
or any Material Subsidiary may make changes in the nature of its
business provided that any such change made is related in any way
to the medical or insurance businesses.
SECTION 7.18 Depository Relationship. The Company shall
maintain its primary depository and remittance relationship with
the Banks. Pursuant to such primary depository and remittance
relationship, the Company shall maintain with each Bank average
available demand deposits equal to the amount needed to cover
non-credit services provided by such Bank to the Company and its
Subsidiaries, such amount to be determined according to the
published fee schedules of such Bank; provided, however, that the
failure of the Company to maintain such amount with each Bank
shall not be an Event of Default under this Agreement. The
Company agrees that if the amount of available demand deposits
maintained by the Company with such Bank are insufficient to
equal the amount needed to cover non-credit services provided by
such Bank, then such Bank may charge the Company a deficiency fee
sufficient to cover such non-credit services, such deficiency fee
to be determined according to the published fee schedules of such
Bank or the fees being charged to the Company at that time,
whichever are less.
SECTION 7.19 Employee Benefit Plans. Not permit, and not
permit any ERISA Affiliate to permit, any condition to exist in
connection with any Plan which might constitute grounds for the
PBGC to institute proceedings to have such Plan terminated or a
trustee appointed to administer such Plan; and not engage in, or
permit to exist or occur, or permit any ERISA Affiliate to engage
in, or permit to exist or occur, any other condition, event or
transaction with respect to any Plan which would result in the
incurrence by the Company or any ERISA Affiliate of any
liability, fine or penalty, which in either case would in the
Company's determination materially and adversely affect the
Company's business, operations or financial condition, or the
ability of the Company to perform its obligations hereunder and
under the Related Documents to which it is a party.
SECTION 7.20 Use of Proceeds. Not, and not permit any
Subsidiary to, use or permit the direct or indirect use of any
proceeds of or with respect to any Loan for the purpose, whether
immediate, incidental or ultimate, of "purchasing or carrying"
(within the meaning of Regulation U) Margin Stock.
SECTION 7.21 Other Agreements. Not, and not permit any
Material Subsidiary to, enter into any agreement containing any
provision which would be violated or breached by the performance
of the Company's obligations hereunder, under any Related
Document or under any instrument or document delivered or to be
delivered by the Company hereunder or thereunder or in connection
herewith or therewith or which would violate or breach any
provision hereof or thereof or of any such instrument or
document.
SECTION 7.22 Compliance with Applicable Laws. Comply, and
cause each Material Subsidiary to comply, with the requirements
of all applicable laws, rules, regulations, and orders of all
governmental authorities (federal, state, local or foreign, and
including, without limitation, Environmental Laws and Insurance
Laws), a breach of which would in the Company's determination
materially and adversely affect the Company's or such Material
Subsidiary's business, operations or financial condition, or
which would impair the Company's ability to perform its
obligations hereunder and under the Related Documents to which it
is a party.
SECTION 7A
UNRESTRICTED SUBSIDIARIES
SECTION 7A.1 Unrestricted Subsidiaries. The Company may,
from time to time, by written notice to the Agent, a copy of
which the Agent shall promptly deliver to each Bank, designate a
Subsidiary as an Unrestricted Subsidiary (referred to herein as
an "Unrestricted Subsidiary") provided that each of the following
conditions is satisfied:
(a) the proposed Unrestricted Subsidiary shall not be a
Material Subsidiary existing on the Initial Closing Date;
(b) the aggregate Unrestricted Subsidiary Indebtedness of
all Unrestricted Subsidiaries, including the Unrestricted
Subsidiary Indebtedness of the proposed Unrestricted Subsidiary,
shall not exceed $40,000,000;
(c) If Loans made to the Company under this Agreement were
used by the Company directly or indirectly to acquire the
proposed Unrestricted Subsidiary, such Loans shall have been
repaid by the Company pursuant to the terms hereof;
(d) the proposed Unrestricted Subsidiary shall have no
financial obligations, liabilities or dealings of any kind with
the Company or any Material Subsidiary of the Company, except for
(i) ordinary overhead allocations, (ii) marketing agreements,
administration agreements and other agreements which the Company
customarily enters into with its Subsidiaries so long as the
terms of such agreements are no less favorable to the Company
than the terms of agreements the Company enters into with its
other Subsidiaries, and (iii) other customary inter-corporate
dealings so long as the terms of such dealings are no less
favorable to the Company than the terms of dealings the Company
enters into with its other Subsidiaries; and
(e) the proposed Unrestricted Subsidiary shall not have,
permit to exist or incur any undertaking, indebtedness,
obligation or other liability pursuant to which recourse may be
made to the Company or any Material Subsidiary of the Company,
and neither the Company nor any Material Subsidiary of the
Company shall be or become a guarantor or surety of, or otherwise
be or become responsible in any manner (whether by support
agreement or agreement to purchase any obligations, stock,
assets, goods or services, or to supply or advance any funds,
assets, goods or services, or otherwise) with respect to any
undertaking, indebtedness, obligation or other liability of such
proposed Unrestricted Subsidiary; provided, however, that the
proposed Unrestricted Subsidiary shall be permitted to engage in
the types of transactions prohibited by this Section 7A.1(e), and
the Company shall be permitted to provide guarantees and
sureties, if the Company's obligations under such transactions,
guaranties and sureties (i) are expressly subordinated to the
Company's obligations under this Agreement and (ii) shall not
exceed $2,000,000 in the aggregate for any one Unrestricted
Subsidiary.
SECTION 7A.2 Additional Unrestricted Subsidiaries. In
addition to the Unrestricted Subsidiaries designated pursuant to
Section 7A.1 above, the Company and the Majority Banks can agree
to designate any Subsidiary as an Unrestricted Subsidiary. Any
Unrestricted Subsidiary Indebtedness of an Unrestricted
Subsidiary designated as such pursuant to this Section 7A.2 shall
be excluded from the calculation of the aggregate Unrestricted
Subsidiary Indebtedness permitted pursuant to Section 7A.1.
SECTION 7A.3 Effectiveness of Designation. The
designation by the Company of a Subsidiary as an Unrestricted
Subsidiary shall become effective five (5) Business Days after
the Company delivers a written notice of such designation to the
Agent, which notice shall certify that all of the conditions set
forth in Section 7A.1 have been satisfied with respect to such
Unrestricted Subsidiary. The Agent shall promptly deliver to
each Bank a copy of such notice.
SECTION 7A.4 Effect of Designation. Other than for
purposes of the financial statements referenced in Section 7.1
hereof, the assets, liabilities, Unrestricted Subsidiary
Indebtedness, income, losses, cash flow, net worth, liens and
other relevant amounts and factors concerning any Unrestricted
Subsidiary shall be excluded from the computations referenced in
Sections 7.6 and 7.9 of this Agreement and, to the extent
applicable, the computations referenced in Sections 7.10 through
7.16, inclusive, of this Agreement, and the Unrestricted
Subsidiaries shall not be subject to any of the other limitations
or restrictions contained herein.
SECTION 8
CONDITIONS TO MAKING LOANS AND ISSUING LCS
Each Bank's obligation to make any Loan and the Issuing
Bank's obligation to issue any LC is subject to the satisfaction
of each of the following conditions precedent:
SECTION 8.1 Initial Loans. Each Bank's obligation to
make its initial Loan and the Issuing Bank's obligation to issue
its initial LC is, in addition to the conditions precedent
specified in Section 8.2, subject to the satisfaction of each of
the following conditions precedent:
(a) Fees and Expenses. The Company shall have paid all
fees owed to the Agent, the Issuing Bank and each of the Banks
and reimbursed the Agent, the Issuing Bank and each of the Banks
for all expenses due and payable hereunder on or before the
Restatement Closing Date including, but not limited to, ANB's
counsel fees provided for in Section 10.4 to the extent such
counsel shall have requested payment of such fees.
(b) Documents. The Agent shall have received in sufficient
copies for the Issuing Bank and each of the Banks all of the
following, each duly executed and delivered and dated the
Restatement Closing Date, in form and substance satisfactory to
the Agent, the Issuing Bank and each Bank:
(i) Agreement. This Agreement, executed by the
Company, the Agent and each Bank.
(ii) Note. Promissory Notes, substantially in the form
of Exhibit A hereto, with appropriate insertions, issued to
each Bank and executed by the Company.
(iii) Resolutions. Certified copies of resolutions
of the Company's Board of Directors or the Executive
Committee of the Board of Directors authorizing the
execution, delivery and performance of this Agreement and
the Related Documents to which the Company is a party and
any other documents provided for herein or therein to be
executed by the Company.
(iv) Consents. Certified copies of all documents
evidencing any necessary corporate action, consents and
governmental approvals, if any, with respect to this
Agreement, the Related Documents, and any other documents
provided for herein or therein to be executed by the
Company.
(v) Incumbency and Signatures. A certificate of the
Secretary or an Assistant Secretary of the Company
certifying the names of the officer or officers of the
Company authorized to sign this Agreement and the Related
Documents to which the Company is a party and any other
documents provided for herein or therein to be executed by
the Company, together with a sample of the true signature of
each such officer. Each Bank may conclusively rely on each
such certificate until formally advised by a like
certificate of any changes therein.
(vi) Opinion of Counsel. Opinion of the general
counsel or the assistant general counsel to the Company in
form and substance reasonably satisfactory to the Agent.
(vii) Constitutive Documents. Certified copies of the
Company's articles of incorporation and by-laws.
(viii) Good Standing Certificates. Certificates of
good standing for the Company in Delaware and Illinois and a
certificate of the insurance commissioner or similar
official of the jurisdiction of incorporation of each
Principal Insurance Subsidiary as to the good standing of
such Principal Insurance Subsidiary.
(ix) Other. Such other documents as the Agent, the
Issuing Bank or any Bank may reasonably request.
SECTION 8.2 All Loans and LCs. Each Bank's obligation to
make its initial Loan and each subsequent Loan, including the
obligation of such Bank to convert or continue any Loan pursuant
to Section 2.4 hereof, and the Issuing Bank's obligation to issue
the initial LC and each subsequent LC, or any extension or
amendment thereof, is subject to the following conditions
precedent that:
(a) No Default, etc. (i) No Event of Default shall have
occurred and be continuing or will result from the making of such
Loan or the issuance of such LC, and (ii) the Company's
representations and warranties contained in Section 6 shall be
true and correct as of the date of such requested Loan or LC with
the same effect as though made on the date thereof (except to the
extent such representations and warranties expressly refer to an
earlier date, in which case they shall be true and correct as of
such earlier date).
(b) Notice. The Agent shall have received a Notice of
Borrowing pursuant to and in accordance with the provisions of
Section 2.3 hereof or a Notice of Conversion/Continuation
pursuant to and in accordance with the provisions of Section 2.4
hereof, as the case may be.
SECTION 9
EVENTS OF DEFAULT AND THEIR EFFECT
SECTION 9.1 Events of Default. Each of the following
shall constitute an Event of Default under this Agreement
following the expiration of any applicable notice or cure period:
(a) Nonpayment of the Loan. Default in the payment when
due of the principal of or interest on any Loan, or the payment
when due of any fees or any other amounts payable by the Company
hereunder and continuance of such default for five (5) Business
Days after the applicable due date, or default in the payment
when due of the principal of or interest on any loan made under
the Term Loan Credit Agreement, or the payment when due of any
fees or any other amounts payable by the Company under the Term
Loan Credit Agreement and continuance of such default beyond the
applicable grace period as set forth in the Term Loan Credit
Agreement.
(b) Nonpayment of Other Indebtedness. Default in the
payment when due (subject to any applicable grace period),
whether by acceleration or otherwise, of any other Indebtedness
of, or guaranteed by, the Company or any Material Subsidiary if
the aggregate amount of any such other Indebtedness that is
accelerated or due and payable, or that may be accelerated or
otherwise become due and payable, by reason of such default is
$5,000,000 or more, or default in the performance or observance
of any obligation or condition with respect to any such other
Indebtedness if the effect of such default is to accelerate the
maturity of any such Indebtedness or cause any of such
Indebtedness of $5,000,000 or more to be prepaid, purchased or
redeemed or to permit the holder or holders thereof, or any
trustee or agent for such holders, to cause such Indebtedness of
$5,000,000 or more to become due and payable prior to its
expressed maturity or to cause such Indebtedness of $5,000,000 or
more to be prepaid, purchased or redeemed.
(c) Bankruptcy or Insolvency. The Company becomes
insolvent or generally fails to pay, or admits in writing its
general inability to pay, debts as they become due; or the
Company applies for, consents to, or acquiesces in the
appointment of, a trustee, receiver or other custodian for the
Company, or any property thereof, or makes a general assignment
for the benefit of creditors; or, in the absence of such
application, consent or acquiescence, a trustee, receiver or
other custodian is appointed for the Company or for a substantial
part of the property thereof and is not discharged within 60
days; or any bankruptcy, reorganization, debt arrangement, or
other case or proceeding under any bankruptcy or insolvency law,
or any dissolution or liquidation proceeding, is commenced in
respect of the Company, and if such case or proceeding is not
commenced by the Company, it is consented to or acquiesced in by
the Company or remains for 60 days undismissed; or the Company
takes any corporate action to authorize, or in furtherance of,
any of the foregoing or the insurance commission or department of
any Principal Insurance Subsidiary's state of domicile takes any
action against such Principal Insurance Subsidiary or the Company
in connection with any of the foregoing.
(d) Specified Noncompliance with this Agreement. Failure
by the Company to comply with or to perform under Section 7.2
(only with respect to the maintenance of the existence of the
Company), Sections 7.6 through 7.16, inclusive, and Section 7.21
hereunder and continuance of such failure for five (5) Business
Days after (i) written notice thereof to the Company from the
Agent or (ii) any Authorized Officer of the Company knew or
should have known of such failure to comply or perform; provided,
however, that, with respect to the failure by the Company to
comply with or to perform under Sections 7.10 through 7.14,
inclusive, the continuance of such failure shall be extended from
five (5) Business Days to thirty (30) days if the Agent receives
written notice from the Company prior to the expiration of such
five (5) Business Day period that such failure is curable within
such thirty (30) day period.
(e) Other Noncompliance with this Agreement. Failure by
the Company to comply with or to perform any provision of this
Agreement (and not constituting an Event of Default under any of
the other provisions of this Section 9) and continuance of such
failure for sixty (60) days after (i) written notice thereof to
the Company from the Agent or (ii) any Authorized Officer of the
Company knew of such failure to comply or perform.
(f) Representations and Warranties. Any representation
or warranty made by the Company herein or in any Related Document
is breached in any material respect or is known by the Company to
have been false or misleading in any material respect when given,
or any schedule, certificate, financial statement, report,
notice, or other writing furnished by the Company to the Agent,
the Issuing Bank or any Bank is known by the Company to have been
false or misleading in any material respect on the date as of
which the facts therein set forth are stated or certified.
(g) Employee Benefit Plans. (i) Institution by the PBGC,
the Company or any ERISA Affiliate of steps to terminate a Plan
subject to Title IV of ERISA if as a result of such termination,
the Company or any ERISA Affiliate would be required to make a
material contribution to such Plan, or would incur a material
liability or obligation to such Plan; (ii) occurrence of a
contribution failure with respect to any Plan sufficient to give
rise to a lien under Section 302(f) of ERISA, or (iii) incurrence
of any material liability (including current or potential
withdrawal liability) by the Company or any ERISA Affiliate with
respect to any Multiemployer Plan.
(h) Judgments. There shall be entered against the Company
one or more final unappealable judgments or decrees in excess of
$5,000,000 in the aggregate at any one time outstanding for the
Company, excluding those judgments or decrees (i) that shall have
been stayed, vacated or bonded, (ii) that shall have been
outstanding less than 30 days from the entry thereof, (iii) for
and to the extent to which the Company is insured and with
respect to which the insurer specifically has determined that it
shall assume responsibility in writing or (iv) for and to the
extent to which the Company is otherwise indemnified if the terms
of such indemnification are satisfactory to the Majority Banks.
SECTION 9.2 Effect of Event of Default. If any Event of
Default described in Section 9.1(c) shall occur, the Commitments
(if they have not theretofore terminated) shall immediately
terminate and all Loans, the Notes and all other Liabilities
shall become immediately due and payable, all without
presentment, demand or notice of any kind, all of which, except
as expressly set forth herein, are hereby expressly waived by the
Company; and, in the case of any other Event of Default, the
Agent shall, at the request of, or may, with the consent of, the
Majority Banks, by written notice to the Company, declare the
Commitments (if they have not theretofore terminated) to be
terminated and all Loans, the Notes and all other Liabilities to
be due and payable, whereupon such Loans, the Notes and all other
Liabilities shall become immediately due and payable, all without
presentment, demand or notice of any kind, all of which, except
as expressly set forth herein, are hereby expressly waived by the
Company.
SECTION 9A
THE AGENT
SECTION 9A.1 Appointment and Authorization. Each Bank
hereby appoints, designates and authorizes the Agent to take such
action on its behalf under the provisions of this Agreement and
each other Related Document and to exercise such powers and
perform such duties as are expressly delegated to it by the terms
of this Agreement or any other Related Document, together with
such powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary contained elsewhere
in this Agreement or in any other Related Document, the Agent
shall not have any duties or responsibilities, except those
expressly set forth herein, nor shall the Agent have or be deemed
to have any fiduciary relationship with any Bank, and no implied
covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other
Related Document or otherwise exist against the Agent.
SECTION 9A.2 Delegation of Duties. The Agent may execute
any of its duties under this Agreement or any other Related
Document by or through agents, employees or attorneys-in-fact and
shall be entitled to advice of counsel concerning all matters
pertaining to such duties. The Agent shall not be responsible
for the negligence or misconduct of any agent or attorney-in-fact
that it selects with reasonable care.
SECTION 9A.3 Liability of Agent. None of the Agent-
Related Persons shall (i) be liable to any Bank for any action
taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Related Document
(except for its own gross negligence or willful misconduct) or
(ii) be responsible in any manner to any of the Banks for any
recital, statement, representation or warranty made by the
Company or any officer thereof contained in this Agreement or in
any other Related Document, or in any certificate, report,
statement or other document referred to or provided for in, or
received by the Agent under or in connection with, this Agreement
or any other Related Document, or the validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or
any other Related Document, or for any failure of the Company to
perform its obligations hereunder or under any Related Document.
No Agent-Related Person shall be under any obligation to any Bank
to ascertain or to inquire as to the observance or performance of
any of the agreements contained in, or conditions of, this
Agreement or any other Related Document, or to inspect the
properties, books or records of the Company or any of the
Company's Subsidiaries or Affiliates.
SECTION 9A.4 Reliance by Agent.
(a) The Agent shall be entitled to rely, and shall be fully
protected in relying, upon any writing, resolution, notice,
consent, certificate, affidavit, letter, telegram, facsimile,
telex or telephone message, statement or other document or
conversation believed by it to be genuine and correct and to have
been signed, sent or made by the proper Person or Persons, and
upon advice and statements of legal counsel, independent
accountants and other experts selected by the Agent. The Agent
shall be fully justified in failing or refusing to take any
action under this Agreement or any other Related Document unless
it shall first receive such advice or concurrence of the Majority
Banks as it deems appropriate and, if it so requests, it shall
first be indemnified to its satisfaction by the Banks (to the
extent not indemnified by the Company) against any and all
liability and expense that may be incurred by it by reason of
taking or continuing to take any such action. The Agent shall in
all cases be fully protected in acting, or in refraining from
acting, under this Agreement or any other Related Document in
accordance with a request or consent of the Majority Banks (or,
when expressly required hereby, all the Banks) and such request
and any action taken or failure to act pursuant thereto shall be
binding upon all of the Banks.
(b) For purposes of determining compliance with the
conditions specified in Section 8.1, each Bank that has executed
this Agreement shall be deemed to have consented to, approved or
accepted or to be satisfied with each document or other matter
either sent by the Agent to such Bank for consent, approval,
acceptance or satisfaction, or required thereunder to be
consented to or approved by or acceptable or satisfactory to such
Bank.
SECTION 9A.5 Notice of Default. The Agent shall not be
deemed to have knowledge or notice of the occurrence of any Event
of Default, except with respect to defaults in the payment of
principal, interest and fees required to be paid to the Agent for
the account of the Banks, unless the Agent shall have received
written notice from a Bank or the Company referring to this
Agreement, describing such Event of Default and stating that such
notice is a "notice of default". In the event that the Agent
receives such a notice, the Agent shall promptly give notice
thereof to the Banks. The Agent shall take such action with
respect to such Event of Default as shall be requested by the
Majority Banks in accordance with Section 9; provided, however,
that unless and until the Agent shall have received any such
request, the Agent may (but shall not be obligated to) take such
action, or refrain from taking such action, with respect to such
Event of Default as it shall deem advisable or in the best
interest of the Banks.
SECTION 9A.6 Credit Decision. Each Bank expressly
acknowledges that none of the Agent-Related Persons has made any
representation or warranty to it and that no act by the Agent
hereinafter taken, including any review of the affairs of the
Company and its Subsidiaries shall be deemed to constitute any
representation or warranty by the Agent to any Bank. Each Bank
represents to the Agent that it has, independently and without
reliance upon the Agent and based on such documents and
information as it has deemed appropriate, made its own appraisal
of and investigation into the business, prospects, operations,
property, financial and other condition and creditworthiness of
the Company and its Subsidiaries, and all applicable bank
regulatory laws relating to the transactions contemplated
thereby, and made its own decision to enter into this Agreement
and extend credit to the Company hereunder. Each Bank also
represents that it will, independently and without reliance upon
the Agent and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit
analysis, appraisals and decisions in taking or not taking action
under this Agreement and the other Related Documents, and to make
such investigations as it deems necessary to inform itself as to
the business, prospects, operations, property, financial and
other condition and creditworthiness of the Company and its
Subsidiaries. Except for notices, reports and other documents
expressly herein required to be furnished to the Banks by the
Agent, the Agent shall not have any duty or responsibility to
provide any Bank with any credit or other information concerning
the business, prospects, operations, property, financial and
other condition or creditworthiness of the Company and its
Subsidiaries that may come into the possession of any of the
Agent-Related Persons.
SECTION 9A.7 Indemnification. Whether or not the
transactions contemplated hereby shall be consummated, the Banks
shall indemnify upon demand the Agent-Related Persons (to the
extent not reimbursed by or on behalf of the Company and without
limiting the obligation of the Company to do so), ratably from
and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses
and disbursements of any kind whatsoever that may at any time
(including at any time following the repayment of the Loans and
reimbursement of the LCs and the termination or resignation of
the related Agent) be imposed on, incurred by or asserted against
any such Person in any way relating to or arising out of this
Agreement or any document contemplated by or referred to herein
or the transactions contemplated hereby or any action taken or
omitted by any such Person under or in connection with any of the
foregoing; provided, however, that no Bank shall be liable for
the payment to any Agent-Related Person of any portion of such
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from
any Agent-Related Person's gross negligence or willful
misconduct. Without limitation of the foregoing, each Bank shall
reimburse the Agent upon demand for its ratable share of any
costs or out-of-pocket expenses (including attorney costs)
incurred by the Agent in connection with the administration,
modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice
in respect of rights or responsibilities under, this Agreement,
any other Related Document, or any document contemplated by or
referred to herein to the extent that the Agent is not reimbursed
for such expenses by or on behalf of the Company. The obligation
of the Banks in this Section shall survive the payment of all
Obligations hereunder.
SECTION 9A.8 Agent in Individual Capacity. ANB and its
Affiliates may make loans to, issue letters of credit for the
account of, accept deposits from, acquire equity interests in and
generally engage in any kind of banking, trust, financial
advisory or other business with the Company and its Subsidiaries
and Affiliates as though ANB were not the Agent hereunder and
without notice to or consent of the Banks. With respect to its
Loans, ANB shall have the same rights and powers under this
Agreement as any other Bank and may exercise the same as though
it were not the Agent, and the terms "Bank" and "Banks" shall
include ANB in its individual capacity.
SECTION 9A.9 Successor Agent. The Agent may resign as
Agent upon 30 days' notice to each of the Banks and the Company.
If the Agent shall resign as Agent under this Agreement, the
Majority Banks shall appoint from among the Banks a successor
agent for the Banks which successor agent shall be approved by
the Company, which consent shall not be unreasonably withheld.
If no successor agent is appointed prior to the effective date of
the resignation of the Agent, the Agent may appoint, after
consulting with the Banks and the Company, 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 Agent and the
term "Agent" shall mean such successor agent and the Agent's
appointment, powers and duties as Agent shall be terminated.
After any retiring Agent's resignation hereunder as Agent, the
provisions of this Section 9A and Sections 10.4 and 10.5 shall
inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent under this Agreement.
Notwithstanding the foregoing, the Agent's resignation shall not
be effective until a successor agent is appointed and such
successor agent accepts such appointment as successor agent
hereunder.
SECTION 10
GENERAL
SECTION 10.1 Amendments and Waivers. No amendment or
waiver of any provision of this Agreement or any other Related
Document, and no consent with respect to any departure by the
Company therefrom, shall be effective unless the same shall be in
writing and signed by the Majority Banks, acknowledged by the
Agent, and, in the case of amendments, signed by the Company, and
then any such waiver shall be effective only in the specific
instance and for the specific purpose for which given; provided,
however, that no such waiver, amendment, or consent shall, unless
in writing and signed by all the Banks, acknowledged by the
Agent, and, in the case of an amendment, signed by the Company,
do any of the following:
(a) increase or extend the Commitment of any Bank (or
reinstate any Commitment terminated pursuant to Section 2.9) or
subject any Bank to any additional obligations;
(b) postpone or delay any date fixed for any payment of
principal, interest, fees or other amounts due to the Banks (or
any of them) hereunder or under any other Related Document;
(c) reduce the principal of, or the rate of interest
specified herein on any Loan, or of any fees or other amounts
payable hereunder or under any other Related Document;
(d) change the percentage of the Commitments which shall be
required for the Banks or any of them to take action hereunder;
or
(e) amend this Section 10.1 or any provision providing for
consent or other action by all Banks; and, provided further, that
no amendment, waiver or consent shall, unless in writing and
signed by the Agent in addition to the Majority Banks or all the
Banks, as the case may be, affect the rights or duties of the
Agent under this Agreement or any other Related Document.
SECTION 10.2 Notices. All notices hereunder shall be
in writing. Notices given by mail shall be deemed to have been
given (i) five (5) Business Days after the date sent if sent by
registered or certified mail, postage prepaid, (ii) the next
Business Day if sent by overnight delivery service, (iii) the day
sent if sent by telecopy or telex if sent prior to 5:00 p.m.
local time on a Business Day, otherwise the following day, or
(iv) the day delivered if sent by personal messenger, and:
(a) if to the Company, addressed to the Company at its
address shown below its signature hereto;
(b) if to the Agent, addressed to the Agent at the address
shown below its signature hereto; or
(c) if to a Bank, addressed to such Bank at the address
shown below its signature hereto;
or in the case of any party, such other address as such
party, by written notice received by the other parties to this
Agreement, may have designated as its address for notices.
SECTION 10.3 Accounting Terms; Computations. Unless
otherwise indicated, all accounting terms used herein and not
expressly defined in this Agreement shall have the respective
meanings given to them in accordance with GAAP as in effect on
the Restatement Closing Date. Where the character or amount of
any asset or liability or item of income or expense is required
to be determined, or any consolidation or other accounting
computation is required to be made, for purposes of this
Agreement such determination or calculation shall, to the extent
applicable and except as otherwise specified in this Agreement or
agreed to in writing by the Majority Banks, be made in accordance
with GAAP as then in effect.
SECTION 10.4 Costs, Expenses and Taxes.
(a) The Company agrees to pay within thirty (30) days after
demand by ANB (including in its capacity as Agent) all of ANB's
(including in its capacity as Agent) reasonable out-of-pocket
costs and expenses (including the reasonable fees and
out-of-pocket expenses of ANB's counsel) in connection with the
preparation, execution and delivery of this Agreement, the
Related Documents and all other instruments or documents provided
for herein or delivered or to be delivered hereunder or in
connection herewith (including, without limitation, all
amendments, supplements and waivers executed and delivered
pursuant hereto or in connection herewith).
(b) The reasonable costs and expenses which the Agent (on
behalf of itself, the Issuing Bank and all other Banks) incurs in
any manner or way with respect to the following shall be part of
the Liabilities, payable by the Company within thirty (30) days
after demand if at any time after the date of this Agreement the
Agent (on behalf of itself, the Issuing Bank and all other
Banks): (i) reasonably employs counsel for advice or other
representation (A) to represent the Agent (on behalf of itself,
the Issuing Bank and all other Banks) in any litigation, contest,
dispute, suit or proceeding or to commence, defend or intervene
or to take any other action in or with respect to any litigation,
contest, dispute, suit or proceeding (whether instituted by the
Agent, the Issuing Bank, such Bank, any other Bank, the Company
or any other Person) in any way or respect relating to this
Agreement or the Related Documents, (B) to enforce any of the
Agent's, the Issuing Bank's or any such Bank's rights with
respect to the Company under this Agreement and the Related
Documents; and/or (ii) reasonably seeks to enforce or enforces
any of the Agent's, the Issuing Bank's or any such Bank's rights
and remedies with respect to the Company under this Agreement and
the Related Documents; provided, however, that notwithstanding
the foregoing, if the interests of the Issuing Bank or any Bank
conflict with the interests of such other Bank as determined by
the Issuing Bank or such Bank, as the case may be, then the
reasonable costs and expenses incurred by the Issuing Bank or
such Bank, as the case may be, in respect of the foregoing shall
be payable by the Company within thirty (30) days after demand by
the Issuing Bank or such Bank, as the case may be.
(c) All of the Company's obligations provided for in this
Section 10.4 shall be Liabilities of the Company hereunder.
SECTION 10.5 Indemnification. In consideration of the
Agent's, the Issuing Bank's and each Bank's execution and
delivery of this Agreement and each Bank's agreement to extend
its Commitment and to make and maintain Loans and the Issuing
Bank's commitment to issue LCs, the Company hereby agrees to
indemnify, exonerate and hold the Agent, the Issuing Bank and
each Bank and each of its officers, directors, employees and
agents (herein collectively called the "Bank Parties" and
individually called a "Bank Party") free and harmless from and
against any and all actions, causes of action, suits, losses,
costs (including, without limitation, all documentary or other
stamp taxes or duties), liabilities and damages, and expenses in
connection therewith (irrespective of whether such Bank Party is
a party to the action for which indemnification hereunder is
sought) (the "Indemnified Liabilities"), including, without
limitation, reasonable attorneys' fees and disbursements,
incurred by such Bank Parties or any of them as a result of, or
arising out of, or relating to (except for such Indemnified
Liabilities arising on account of such Bank Party's gross
negligence or willful misconduct):
(a) any transaction financed or to be financed in whole or
in part, directly or indirectly, with the proceeds of any Loan or
LC;
(b) the execution, delivery, performance, administration
or enforcement of this Agreement and the Related Documents in
accordance with their respective terms by any of such Bank
Parties;
(c) any misrepresentation or breach of any representation
or warranty or covenant herein by the Company.
If and to the extent that the foregoing agreements described in
this Section 10.5 may be unenforceable for any reason, the
Company hereby agrees to make the maximum contribution to the
payment and satisfaction of each of the Indemnified Liabilities
which is permissible under applicable law.
SECTION 10.6 Captions and References. The recitals to
this Agreement (except for definitions) and the section captions
used in this Agreement are for convenience only, and shall not
affect the construction of this Agreement.
SECTION 10.7 No Waiver; Cumulative Remedies. No failure
to exercise and no delay in exercising, on the part of the Agent,
the Issuing Bank or any Bank, any right, remedy, power or
privilege hereunder, shall operate as a waiver thereof; nor shall
any single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, remedy, power or
privilege.
SECTION 10.8 Governing Law; Jury Trial; Severability.
This Agreement and each Note shall be a contract made under and
governed by the laws of the State of Illinois, without regard to
conflict of laws principles. Wherever possible, each provision
of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of
this Agreement shall be prohibited by or invalid under such law,
such provision shall be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder
of such provision or the remaining provisions of this Agreement.
All obligations of the Company and rights of the Agent, the
Issuing Bank and any Bank, which obligations and rights are
described herein or in the Note issued to such Bank, shall be in
addition to and not in limitation of those provided by applicable
law.
THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT TO TRIAL
BY JURY IN ANY ACTION OR PROCEEDING (i) TO ENFORCE OR DEFEND ANY
RIGHTS UNDER OR IN CONNECTION WITH THIS AGREEMENT, THE RELATED
DOCUMENTS, ANY LOAN, ANY LC OR ANY AMENDMENT, INSTRUMENT,
DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE
DELIVERED IN CONNECTION HEREWITH OR THEREWITH, OR (ii) ARISING
FROM ANY DISPUTE OR CONTROVERSY IN CONNECTION WITH OR RELATED TO
THIS AGREEMENT, THE RELATED DOCUMENTS, ANY LOAN, ANY LC, OR ANY
SUCH AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT, AND AGREES
THAT ANY SUCH ACTION OR COUNTERCLAIM SHALL BE TRIED BEFORE A
COURT AND NOT BEFORE A JURY.
____________________
Agreed and Acknowledged by the Company
THE COMPANY IRREVOCABLY AGREES THAT, SUBJECT TO THE AGENT'S,
THE ISSUING BANK'S AND EACH BANK'S SOLE AND ABSOLUTE ELECTION,
ANY ACTION OR PROCEEDING IN ANY WAY, MANNER OR RESPECT ARISING
OUT OF THIS AGREEMENT, THE RELATED DOCUMENTS, ANY LOAN, ANY LC OR
ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR
WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR
THEREWITH, OR ARISING FROM ANY DISPUTE OR CONTROVERSY ARISING IN
CONNECTION WITH OR RELATED TO THIS AGREEMENT, THE RELATED
DOCUMENTS, ANY LOAN, ANY LC OR ANY SUCH AMENDMENT, INSTRUMENT,
DOCUMENT OR AGREEMENT SHALL BE LITIGATED IN THE COURTS HAVING
SITUS WITHIN THE CITY OF CHICAGO, THE STATE OF ILLINOIS, AND THE
COMPANY HEREBY CONSENTS AND SUBMITS TO THE JURISDICTION OF ANY
LOCAL, STATE OR FEDERAL COURT LOCATED WITHIN SUCH CITY AND STATE.
THE COMPANY HEREBY WAIVES ANY RIGHT IT MAY HAVE TO TRANSFER OR
CHANGE THE VENUE OF ANY LITIGATION BROUGHT AGAINST THE COMPANY BY
THE AGENT, THE ISSUING BANK OR ANY BANK IN ACCORDANCE WITH THIS
SECTION 10.8.
SECTION 10.9 Counterparts. This Agreement and any
amendment or supplement hereto or any waiver or consent granted
in connection herewith may be executed in any number of
counterparts and by the different parties on separate
counterparts and each such counterpart shall be deemed to be an
original, but all such counterparts shall together constitute but
one and the same Agreement.
SECTION 10.10 Successors and Assigns. Subject to Section
10.12, this Agreement shall be binding upon the Company, each
Bank and their respective successors and assigns, and shall inure
to the benefit of the Company, each Bank and each Bank's
successors and assigns. The Company shall have no right to
assign its rights or delegate its duties under this Agreement.
SECTION 10.11 Prior Agreements. The terms and conditions
set forth in this Agreement shall supersede all prior
negotiations, agreements, discussions, correspondence, memoranda
and understandings (whether written or oral) of the Company and
the Agent, the Issuing Bank and any Bank concerning or relating
to the subject matter of this Agreement (including, without
limitation, the Existing Agreement and the terms set forth in the
proposal letter dated October 20, 1993 issued by the Banks to Mr.
Peter W. Nauert).
SECTION 10.12 Assignments; Participations. (a) Each Bank
shall have the right to assign, with the written consent of the
Company, which shall not be unreasonably withheld, to any
Affiliate of such Bank and to one or more banks or other
financial institutions, all or a portion of its rights and
obligations under this Agreement (including, without limitation,
all or a portion of its Commitment, the Loans, the LCs and the
Note issued to such Bank) and the Related Documents. For
purposes of this Section, it shall not be unreasonable for the
Company to withhold its consent to a proposed assignee if, as a
result of such proposed assignment, any one Bank's Commitment
Percentage would be in excess of fifty percent (50%) or there
would be more than six (6) banks or financial institutions party
to this Agreement. Upon any such assignment, (x) the assignee
shall become a party hereto and, to the extent of such
assignment, have all rights and obligations of such Bank
hereunder and under the Related Documents and (y) such Bank
shall, to the extent of such assignment, relinquish its rights
and be released from its obligations hereunder and under the
Related Documents. The Company hereby agrees to execute and
deliver such documents, and to take such other actions, as such
Bank may reasonably request to accomplish the foregoing. Upon
such assignment, this Agreement shall be deemed to be amended to
the extent, but only to the extent, necessary to reflect the
addition of the assignee and the resulting adjustment of the
Commitments arising therefrom. The Commitment allocated to each
assignee shall reduce such Commitment of the assigning Bank pro
tanto.
(b) In addition to the assignments permitted in clause (a)
of this Section 10.12, each Bank and any assignee pursuant to
clause (a) above shall have the right with the written consent of
the Company to grant participations to one or more banks or other
financial institutions in or to its Commitment, any Loan, any LC,
the Related Documents, and the Note held by such Bank or such
assignee, provided that (i) each Bank's obligations under this
Agreement shall remain unchanged and (ii) the Company and the
Agent shall continue to deal solely and exclusively with such
Bank. No holder of a participation in all or any part of a
Commitment, the Loans, the LCs, the Related Documents, or any
Note shall have any rights under this Agreement; provided,
however, that, to the extent permitted by applicable law, each
holder of a participation shall have the same rights as each Bank
under Section 5.3.
(c) The Company hereby consents to the disclosure of any
information obtained in connection herewith (i) by each Bank, to
any bank or other financial institution which is an assignee or
potential assignee with respect to which the Company has given
its written consent pursuant to clause (a) above, and (ii) by
each Bank and any assignee pursuant to clause (a) above, to any
bank or other financial institution which is a participant or
potential participant with respect to which the Company has given
its written consent pursuant to clause (b) above, it being
understood that each Bank and each assignee shall advise any such
bank or other financial institution of its obligation to keep
confidential any nonpublic information disclosed to it pursuant
to this Section 10.12.
SECTION 10.13 Confidentiality. Each Bank agrees to take
normal and reasonable precautions and exercise due care to
maintain the confidentiality of all information provided to it by
the Company, or by the Agent on the Company's behalf, in
connection with this Agreement or any other Related Document, and
neither it nor any of its Affiliates shall use any such
information for any purpose or in any manner other than pursuant
to the terms contemplated by this Agreement, except to the extent
such information (i) was or becomes generally available to the
public other than as a result of a disclosure by such Bank, or
(ii) was or becomes available on a non-confidential basis from a
source other than the Company, provided that such source is not
bound by a confidentiality agreement with the Company known to
such Bank; provided, further, however, that any Bank may disclose
such information (A) at the request or pursuant to any
requirement of any governmental or regulatory authority to which
such Bank is subject or in connection with an examination of such
Bank by any such authority; (B) pursuant to subpoena or other
court process, provided that, if it is lawful to do so, such Bank
shall give prompt notice to the Company of service thereof so
that the Company may seek a protective order or other appropriate
remedy or waive compliance with the provisions of this Section
10.13; (C) when required to do so in accordance with the
provisions of any applicable requirement of law; (D) to the
extent reasonably required in connection with any litigation or
proceeding to which the Agent, any Bank or their respective
Affiliates may be party, (E) to the extent reasonably required in
connection with the exercise of any remedy hereunder or under any
other Related Document, and (F) to such Bank's independent
auditors and other professional advisors provided that each such
entity agrees to maintain the confidentiality of such information
pursuant to the terms of this Section.
SECTION 10.14 Notification of Addresses, Etc. Each Bank
shall notify the Agent in writing of any changes in the address
to which notices to such Bank should be directed, of payment
instructions in respect of all payments to be made to it
hereunder and of such other administrative information as the
Agent shall reasonably request.
[Remainder of this page intentionally left blank.]
IN WITNESS WHEREOF, the Company, the Agent, and each Bank
have caused this Agreement to be executed and delivered as of the
day and year first above written.
THE COMPANY:
PIONEER FINANCIAL SERVICES, INC.
By:
Title:
1750 Golf Road
Schaumburg, Illinois 60101
Attention: David Vickers
Val Rajic
Telephone: (708) 995-0400
Telecopy: (708) 413-7195
THE AGENT:
AMERICAN NATIONAL BANK AND TRUST
COMPANY OF CHICAGO
By
Vice President
33 North LaSalle Street
Chicago, Illinois 60690
Attention: Arthur W. Murray
Telephone: (312) 661-6943
Telecopy: (312) 661-6675
THE BANKS:
COMMITMENT: AMERICAN NATIONAL BANK AND TRUST
$9,000,000 COMPANY OF CHICAGO
By
Vice President
33 North LaSalle Street
Chicago, Illinois 60690
Attention: Arthur W. Murray
Telephone: (312) 661-6943
Telecopy: (312) 661-6675
$3,000,000 FIRSTAR BANK MILWAUKEE, N.A.
By
Title:
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Attention: Stephen E. Check
Telephone: ________________________
Telecopy: _________________________
$5,000,000 BANK ONE, ROCKFORD, NA
By
Title:
East State at Mulford Road
Rockford, Illinois 61110-4900
Attention: Robert Opperman
Telephone: (815) 962-3771
Telecopy: (815) 394-1889
Schedule 6.11
Tax Liabilities
None.
Schedule 6.17
Subsidiaries
Principal Insurance Subsidiaries
Insurance Subsidiaries
Non-Insurance Operating Subsidiaries
EXHIBIT 11
PIONEER FINANCIAL SERVICES, INC.
STATEMENT OF COMPUTATION OF PER SHARE EARNINGS
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended
March 31,
1995 1994
Net income $ 4,955 $ 4,500
Average shares outstanding 5,903 6,380
Common Stock equivalents from
dilutive stock options,
based on the treasury stock
method using average market
price 208 351
TOTAL-PRIMARY 6,111 6,731
Common Stock equivalents from
dilutive stock options, based
on the treasury stock method
using closing market price 48 -
Additional shares assuming
conversion of
Preferred Stock 1,362 1,484
Additional shares assuming
conversion of
Subordinated Debentures 4,887 4,892
TOTAL-FULLY DILUTED 12,408 13,107
Net income per share-
Primary* $ .73 $ .60
Net income per share-
Fully Diluted** $ .47 $ .40
* Primary net income per share was calculated after deducting dividends
on Preferred Stock of $498,000 in 1995 and $493,000 in 1994.
** Fully diluted net income per share was calculated after adding tax
effected interest on Subordinated Debentures of $870,000 and $747,000
for the three month periods ended March 31, 1995 and 1994, respectively.
<TABLE> <S> <C>
<ARTICLE> 7
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<DEBT-HELD-FOR-SALE> 452,722
<DEBT-CARRYING-VALUE> 373,980
<DEBT-MARKET-VALUE> 348,549
<EQUITIES> 19,572
<MORTGAGE> 9,969
<REAL-ESTATE> 16,875
<TOTAL-INVEST> 993,859
<CASH> 21,148
<RECOVER-REINSURE> 5,852
<DEFERRED-ACQUISITION> 225,056
<TOTAL-ASSETS> 1,472,696
<POLICY-LOSSES> 971,510
<UNEARNED-PREMIUMS> 74,309
<POLICY-OTHER> 151,471
<POLICY-HOLDER-FUNDS> 19,462
<NOTES-PAYABLE> 79,608<F1>
<COMMON> 7,035<F2>
0
21,285<F3>
<OTHER-SE> 70,996<F4>
<TOTAL-LIABILITY-AND-EQUITY> 1,472,696
169,575
<INVESTMENT-INCOME> 17,497
<INVESTMENT-GAINS> 317
<OTHER-INCOME> 6,630
<BENEFITS> 116,961
<UNDERWRITING-AMORTIZATION> 17,174
<UNDERWRITING-OTHER> 52,375
<INCOME-PRETAX> 7,509
<INCOME-TAX> 2,554
<INCOME-CONTINUING> 4,955
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,955
<EPS-PRIMARY> 0.73
<EPS-DILUTED> 0.47
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
<FN>
<F1>Includes short-term and long-term borrowings and convertible subordinated
debentures.
<F4>Includes additional paid in capital and retained earnings less unrealized
depreciation of securities and treasury stock.
<F2>Common stock at par value.
<F3>Redeemable preferred stock at par value.
</FN>
</TABLE>
