<PAGE>
FORM 8-K/A
AMENDMENT NO. 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
CURRENT REPORT
Pursuant to Section 13 of 15(d) of the
Securities Exchange Act of 1934
Date of Report: April 25, 1994
LAURENTIAN CAPITAL CORPORATION
Commission File No.: 0-8403
Incorporated in the I.R.S. Employer Identification No.
State of Delaware 59-1611314
640 Lee Road, Suite 303
Wayne, Pennsylvania 19087
Registrant's Telephone Number
Including Area Code: 610/889-7400
Exhibit Index at Page 4
Page 1 of 103
<PAGE>
AMENDMENT NO. 1 TO CURRENT REPORT ON FORM 8-K
The following amends the Current Report on Form 8-K filed by Laurentian
Capital Corporation on April 26, 1994 to include additional exhibits.
Item 5. OTHER EVENTS.
On April 25, 1994 Laurentian Capital Corporation (the "Company") issued
its press release, a copy of which is attached hereto as Exhibit A, announcing
that it had entered into a five year US $45 million revolving credit facility
to refinance part of the Company's existing US $55 million Revolving
Underwriting Facility ("RUF"). The new credit facility, together with the
payment of $10 million by the Company, satisfied the repayment of the RUF,
which was due on April 25, 1994.
Item 7. EXHIBITS.
Exhibit A Press Release dated April 25, 1994
Exhibit B Credit Agreement dated as of April 25, 1994 among the Company,
the Lenders named therein, and National Bank of Canada, New York
Branch, as Agent
Exhibit C Stock Pledge Agreement made as of April 25, 1994 by the Company,
the Banks named therein, and National Bank of Canada as
Collateral Custody Agent
Exhibit D Long-Term Financing Support Agreement dated as of April 25, 1994
between the Company and Desjardins Laurentian Financial
Corporation
Exhibit E Agreement dated as of April 25, 1994 among Desjardins Laurentian
Financial Corporation, the Company, and National Bank of Canada
in its capacity as Agent
Page 2 of 103
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant duly caused this Amendment No. 1 to Form 8-K to be signed on
its behalf by the undersigned hereunto duly authorized.
LAURENTIAN CAPITAL CORPORATION
BY: /s/ Bernhard M. Koch
-----------------------------
Bernhard M. Koch
Secretary
May 2, 1994
Page 3 of 103
<PAGE>
EXHIBIT INDEX
Page
Number
------
Exhibit A Press Release dated April 25, 1994 5
Exhibit B Credit Agreement dated as of 6
April 25, 1994 among the Company,
the Lenders named therein, and
National Bank of Canada, New York
Branch, as Agent
Exhibit C Stock Pledge Agreement made as 86
of April 25, 1994 by the Company,
the Banks named therein, and National
Bank of Canada as Collateral Custody
Agent
Exhibit D Long-Term Financing Support Agreement 95
dated as of April 25, 1994 between the
Company and Desjardins Laurentian Financial
Corporation
Exhibit E Agreement dated as of April 25, 1994 100
among Desjardins Laurentian Financial
Corporation, the Company, and National Bank
of Canada in its capacity as Agent
Page 4 of 103
<PAGE>
EXHIBIT A
LAURENTIAN CAPITAL CORPORATION
PRESS RELEASE
RELEASE DATE: April 25, 1994
CONTACT PERSON: Bernhard M. Koch 610/889-7400
Laurentian Capital Corporation, a life insurance holding company based in
Philadelphia, Pennsylvania, today reported that it used funds from internal
resources to repay $10 million of debt under its existing US $55 million
Revolving Underwriting Facility which expired today and refinanced the balance.
The Company said it entered into a new five year credit agreement in the amount
of $45 million with a syndicate of four international banks led by National
Bank of Canada. The banks participating are National Bank of Canada, National
Westminster Bank PLC, The Daiwa Bank, Ltd. and Rabobank Nederland. This
transaction will result in a significant reduction in interest expense over
the term of the new credit facility.
Laurentian Capital Corporation (LQ-AMEX) has assets of approximately $976
million and total life insurance in force in excess of $2.8 billion.
Laurentian's primary life insurance subsidiaries are Loyal American Life
Insurance Company, of Mobile, Alabama, and Prairie States Life Insurance Company
of Rapid City, South Dakota.
Page 5 of 103
<PAGE>
Exhibit B
- --------------------------------------------------------------------------------
$45,000,000
CREDIT AGREEMENT
AMONG
LAURENTIAN CAPITAL CORPORATION
AS BORROWER
AND
THE SEVERAL LENDERS NAMED HEREIN
AS LENDERS
AND
NATIONAL BANK OF CANADA,
NEW YORK BRANCH
AS AGENT
DATED AS OF APRIL 25, 1994
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Page 6 of 103
<PAGE>
TABLE OF CONTENTS*
Page
----
ARTICLE 1 - INTERPRETATION
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Singular, Plurals and Dollars . . . . . . . . . . . . . . . . 14
1.3 Division into Articles. . . . . . . . . . . . . . . . . . . . 14
1.4 Accounting Principles . . . . . . . . . . . . . . . . . . . . 14
ARTICLE 2 - COMMITMENTS, REDUCTIONS TO AND TERMINATIONS OF COMMITMENTS AND
REVOLVING NATURE OF THE COMMITMENTS DURING THE REVOLVING PERIOD
2.1 Commitments . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.2 Scheduled Reductions of the Commitments during
the Revolving Period and the Term Period. . . . . . . . . . . 15
2.3 Other Reductions of the Commitments . . . . . . . . . . . . . 15
2.4 Imputation of Reductions of the Commitments . . . . . . . . . 16
2.5 No Subsequent Increases to Commitments. . . . . . . . . . . . 16
2.6 Revolving Nature of the Commitments during
the Revolving Period. . . . . . . . . . . . . . . . . . . . . 16
ARTICLE 3 - PURPOSE
3.1 Purpose of Advances . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE 4 - ADVANCES AND OPERATION OF ACCOUNTS
4.1 Draw Down Notices . . . . . . . . . . . . . . . . . . . . . . 17
4.2 Minimum Draws . . . . . . . . . . . . . . . . . . . . . . . . 17
4.3 Forwarding of Draw Down Notices . . . . . . . . . . . . . . . 18
4.4 Lenders to Make Funds Available . . . . . . . . . . . . . . . 18
4.5 Disbursement of Draw Down Notice Funds. . . . . . . . . . . . 18
4.6 Credits By or on Behalf of Lenders to Constitute
Advances. . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.7 Maintenance of Ledgers by the Agent . . . . . . . . . . . . . 18
4.8 Authority to Debit and Credit . . . . . . . . . . . . . . . . 19
4.9 Set-off and Compensation by the Lenders
against the Borrower's Account. . . . . . . . . . . . . . . . 19
4.10 Failure by any Lender to Advance. . . . . . . . . . . . . . . 19
- --------------------------------------------------------------------------------
* This Table of Contents has been inserted for convenience only and does not
consitute part of this Agreement.
Page 7 of 103
<PAGE>
Page
----
4.11 Temporary Advances by the Agent. . . . . . . . . . . . . . . . . . 20
ARTICLE 5 - INTEREST, STAND-BY FEE, COMMITMENT FEE AND AGENCY FEE
5.1 Interest on a Eurodollar Basis. . . . . . . . . . . . . . . . 20
5.2 Interest on a Prime Rate Basis. . . . . . . . . . . . . . . . 21
5.3 Payment of Interest . . . . . . . . . . . . . . . . . . . . . 21
5.4 Rollovers of the Eurodollar Loans . . . . . . . . . . . . . . 21
5.5 Limits on the Determination of the Eurodollar Rate. . . . . . 22
5.6 Forwarding of Notices by Agent with respect
to Eurodollar Rate Rollovers. . . . . . . . . . . . . . . . . 22
5.7 Establishment of the Eurodollar Rate as
at 11:00 A.M., London Time. . . . . . . . . . . . . . . . . . 22
5.8 No Revocation or Withdrawal of Rollover Notices . . . . . . . 23
5.9 Interest on Loans Generally . . . . . . . . . . . . . . . . . 23
5.10 Computation of Interest and the Stand-By Fee. . . . . . . . . 23
5.11 Stand-By Fee. . . . . . . . . . . . . . . . . . . . . . . . . 23
5.12 Payment of the Stand-By Fee . . . . . . . . . . . . . . . . . 23
5.13 Arrears on the Stand-By Fee . . . . . . . . . . . . . . . . . 23
5.14 Interest Limitation . . . . . . . . . . . . . . . . . . . . . 24
5.15 Commitment Fee. . . . . . . . . . . . . . . . . . . . . . . . 24
5.16 Partial Refund of the Commitment Fee. . . . . . . . . . . . . 24
5.17 Agency Fee. . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE 6 - CHANGES IN CIRCUMSTANCES, INCREASED COSTS AND INDEMNITY
6.1 Change in Circumstances . . . . . . . . . . . . . . . . . . . 25
6.2 Suspension of Rights to Convert . . . . . . . . . . . . . . . 25
6.3 Change in Law . . . . . . . . . . . . . . . . . . . . . . . . 26
6.4 Option to Replace Lenders . . . . . . . . . . . . . . . . . . 27
6.5 Notice to Other Lenders . . . . . . . . . . . . . . . . . . . 28
6.6 Reimbursement of Losses, etc. . . . . . . . . . . . . . . . . 28
6.7 Amount of Losses, etc. . . . . . . . . . . . . . . . . . . . 28
6.8 Lenders to Avoid Creating Additional Liability
for the Borrower. . . . . . . . . . . . . . . . . . . . . . . 29
(ii)
Page 8 of 103
<PAGE>
Page
----
ARTICLE 7 - TAXES AND OTHER CHARGES
7.1 Payments without Deductions . . . . . . . . . . . . . . . . . 29
7.2 Payments of Additional Amounts. . . . . . . . . . . . . . . . 30
7.3 Increase in Interest Rates. . . . . . . . . . . . . . . . . . 30
7.4 Remittances by Taxed Lender . . . . . . . . . . . . . . . . . 30
7.5 Lenders to Avoid Creating Additional Liability
for the Borrower. . . . . . . . . . . . . . . . . . . . . . . 31
7.6 Survival of Agreements. . . . . . . . . . . . . . . . . . . . 31
ARTICLE 8 - PAYMENTS, REPAYMENTS AND OPTIONAL PREPAYMENTS
8.1 Repayment of Revolving Loans. . . . . . . . . . . . . . . . . 31
8.2 Optional Prepayment of the Revolving Loans. . . . . . . . . . 31
8.3 Imputation of Payments. . . . . . . . . . . . . . . . . . . . 32
8.4 Payment of Losses, Expenses and Costs . . . . . . . . . . . . 32
8.5 Currency of Payments. . . . . . . . . . . . . . . . . . . . . 32
8.6 Payments to Agent Only. . . . . . . . . . . . . . . . . . . . 32
8.7 Payment on Business Day and by 11:00 A.M. New York
time. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
8.8 Payment by Agent at the respective Branches
of Account of the Lenders . . . . . . . . . . . . . . . . . . 33
8.9 Obligation to Pay Absolute. . . . . . . . . . . . . . . . . . 33
ARTICLE 9 - SECURITY
9.1 Security. . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.2 Undertaking of the Lenders to Release the
Pledge Agreement and the Loyal American Shares. . . . . . . . 34
9.3 Repayment of Loans not to affect Security . . . . . . . . . . 34
ARTICLE 10 - CONDITIONS PRECEDENT
10.1 Prior to the First Advance. . . . . . . . . . . . . . . . . . 35
10.2 Advances under the Available Commitments during
the Revolving Period. . . . . . . . . . . . . . . . . . . . . 37
(iii)
Page 9 of 103
<PAGE>
Page
----
ARTICLE 11 - REPRESENTATIONS AND WARRANTIES
11.1 Capital Stock of the Borrower . . . . . . . . . . . . . . . . 38
11.2 Capital Stock of the Loyal American . . . . . . . . . . . . . 38
11.3 Material Subsidiaries . . . . . . . . . . . . . . . . . . . . 39
11.4 Ownership of Shares . . . . . . . . . . . . . . . . . . . . . 39
11.5 Organization and Authority. . . . . . . . . . . . . . . . . . 39
11.6 Authorization of Documents by the Borrower. . . . . . . . . . 39
11.7 Authorization of Documents by the DLFC. . . . . . . . . . . . 40
11.8 Compliance with Laws, etc. of Agreement . . . . . . . . . . . 40
11.9 Business. . . . . . . . . . . . . . . . . . . . . . . . . . . 40
11.10 Compliance with Law . . . . . . . . . . . . . . . . . . . . . 40
11.11 Title to Property . . . . . . . . . . . . . . . . . . . . . . 40
11.12 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . 40
11.13 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
11.14 Financial Condition of the Borrower . . . . . . . . . . . . . 41
11.15 No Adverse Change with respect to the Borrower. . . . . . . . 41
11.16 Financial Statements of DLFC. . . . . . . . . . . . . . . . . 41
11.17 No Adverse Change with respect to DLFC. . . . . . . . . . . . 42
11.18 Governmental Regulations. . . . . . . . . . . . . . . . . . . 42
11.19 Material Agreements and Restrictions. . . . . . . . . . . . . 42
11.20 Priority of Lien. . . . . . . . . . . . . . . . . . . . . . . 42
11.21 Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . 42
11.22 U.S. Federal Regulations. . . . . . . . . . . . . . . . . . . 42
11.23 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
11.24 Accuracy and Completeness of Information. . . . . . . . . . . 43
11.25 Survival of Representations and Warranties. . . . . . . . . . 43
ARTICLE 12 - GENERAL COVENANTS
12.1 Preservation of Existence, etc. . . . . . . . . . . . . . . . 44
12.2 Obtain Authorizations . . . . . . . . . . . . . . . . . . . . 44
12.3 Business, Compliance with Applicable Law. . . . . . . . . . . 44
12.4 Maintenance of Properties . . . . . . . . . . . . . . . . . . 45
12.5 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . 45
12.6 Payment of Taxes and Claims . . . . . . . . . . . . . . . . . 45
12.7 Visits and Inspections. . . . . . . . . . . . . . . . . . . . 45
12.8 Payment of Indebtedness . . . . . . . . . . . . . . . . . . . 45
12.9 Maintenance of Shareholders' Equity . . . . . . . . . . . . . 45
(iv)
Page 10 of 103
<PAGE>
Page
----
ARTICLE 13 - INFORMATION COVENANTS
13.1 Quarterly Financial Statements and Information. . . . . . . . 46
13.2 Annual Financial Statements and Information . . . . . . . . . 46
13.3 Certificates: Other Information of the Borrower . . . . . . . 46
13.4 Annual financial Statements of DLFC . . . . . . . . . . . . . 47
13.5 Other Information . . . . . . . . . . . . . . . . . . . . . . 47
13.6 Notice of Litigation and other Matters . . . . . . . . . . . 47
ARTICLE 14 - NEGATIVE COVENANTS
14.1 Loans and Investments in any Person . . . . . . . . . . . . . 48
14.2 Distributions . . . . . . . . . . . . . . . . . . . . . . . . 48
14.3 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
14.4 Sales of Assets . . . . . . . . . . . . . . . . . . . . . . . 49
14.5 Consolidation, Amalgamation, Merger, etc. . . . . . . . . . . 49
14.6 Change in Business. . . . . . . . . . . . . . . . . . . . . . 49
14.7 Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . 50
14.8 Extraordinary Payments. . . . . . . . . . . . . . . . . . . . 50
ARTICLE 15 - EVENTS OF DEFAULT AND REALIZATION
15.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . 51
15.2 Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . 53
15.3 Proceeds of Realization . . . . . . . . . . . . . . . . . . . 54
15.4 Application of Payments . . . . . . . . . . . . . . . . . . . 54
15.5 Calculation of Pro Rata Portions. . . . . . . . . . . . . . . 54
15.6 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
15.7 Dealings with the Borrower and DLFC . . . . . . . . . . . . . 54
ARTICLE 16 - THE AGENT
16.1 Appointment and Authorization . . . . . . . . . . . . . . . . 54
16.2 Interest Holders. . . . . . . . . . . . . . . . . . . . . . . 55
16.3 Consultation with Counsel . . . . . . . . . . . . . . . . . . 55
16.4 Documents . . . . . . . . . . . . . . . . . . . . . . . . . . 55
16.5 Other Transactions with DLFC, the Borrower and
their respective Subsidiaries and Affiliates. . . . . . . . . 55
16.6 Responsibility of the Agent . . . . . . . . . . . . . . . . . 55
16.7 Action by Agent . . . . . . . . . . . . . . . . . . . . . . . 55
(v)
Page 11 of 103
<PAGE>
Page
----
16.8 Notices of Events of Default. . . . . . . . . . . . . . . . . 56
16.9 Responsibility Disclaimed . . . . . . . . . . . . . . . . . . 56
16.10 Indemnification . . . . . . . . . . . . . . . . . . . . . . . 57
16.11 Credit Decision . . . . . . . . . . . . . . . . . . . . . . . 57
16.12 Successor Agent . . . . . . . . . . . . . . . . . . . . . . . 57
16.13 Agent to Deliver Copies . . . . . . . . . . . . . . . . . . . 57
ARTICLE 17 - JUDGMENT CURRENCY
17.1 Judgment Currency . . . . . . . . . . . . . . . . . . . . . . 58
ARTICLE 18 - MISCELLANEOUS
18.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
18.2 Amendments and Waivers. . . . . . . . . . . . . . . . . . . . 59
18.3 Calculations and Determinations to be Conclusive
and Binding . . . . . . . . . . . . . . . . . . . . . . . . . 60
18.4 Compensation and Set-Off. . . . . . . . . . . . . . . . . . . 60
18.5 Recovery for Lenders. . . . . . . . . . . . . . . . . . . . . 60
18.6 No Deemed Payment . . . . . . . . . . . . . . . . . . . . . . 61
18.7 Assignments by the Borrower . . . . . . . . . . . . . . . . . 61
18.8 Payment of Expenses and Taxes . . . . . . . . . . . . . . . . 61
18.9 Assignments by Lenders; Participations:
Purchasing Lenders. . . . . . . . . . . . . . . . . . . . . . 62
18.10 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . 64
18.11 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . 64
18.12 Severability. . . . . . . . . . . . . . . . . . . . . . . . . 65
18.13 No Novation, etc. . . . . . . . . . . . . . . . . . . . . . . 65
18.14 Replacement of Commitment Letter. . . . . . . . . . . . . . . 65
18.15 Lenders to Exercise Rights through Agent. . . . . . . . . . . 65
18.16 Submission To Jurisdiction; Waivers . . . . . . . . . . . . . 65
18.17 Waivers of Jury Trial . . . . . . . . . . . . . . . . . . . . 66
ARTICLE 19 - FORMAL DATE
19.1 Formal Date . . . . . . . . . . . . . . . . . . . . . . . . . 66
(vi)
Page 12 of 103
<PAGE>
Page
----
SCHEDULES
Lenders and Amount of Commitments. . . . . . . . . . . . . . . . . . . "A"
Assignment and Acceptance Agreement. . . . . . . . . . . . . . . . . . "B"
Draw Down Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . "C"
Rollover Notice. . . . . . . . . . . . . . . . . . . . . . . . . . . . "D"
Pledge Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . "E"
Support Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . "F"
DLFC Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . "G"
Opinion of Borrower's Counsel. . . . . . . . . . . . . . . . . . . . . "H"
Opinion of Borrower's New York Counsel . . . . . . . . . . . . . . . . "I"
Opinion of DLFC's Counsel. . . . . . . . . . . . . . . . . . . . . . . "J"
Opinion of Prairie's Counsel . . . . . . . . . . . . . . . . . . . . . "K"
Opinion of DLFC's New York Counsel . . . . . . . . . . . . . . . . . . "L"
Material Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . "M"
Stockholders of the Borrower . . . . . . . . . . . . . . . . . . . . . "N"
Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . "O"
(vii)
Page 13 of 103
<PAGE>
CREDIT AGREEMENT entered into at New York, New York as of April 25, 1994.
AMONG: LAURENTIAN CAPITAL CORPORATION, a corporation incorporated under the
Laws of the State of Delaware, as Borrower
AND: THE SEVERAL LENDERS SET FORTH IN SCHEDULE "A" HERETO
AND: NATIONAL BANK OF CANADA, New York Branch, as Agent for the Lenders
WITNESSETH:
WHEREAS the Borrower wishes to borrow certain monies from the Lenders and the
Lenders are prepared to lend such monies to the Borrower on the terms and
conditions herein contained;
NOW, THEREFORE, FOR GOOD AND VALUABLE CONSIDERATION, the sufficiency and receipt
whereof are hereby acknowledged, the parties hereto have agreed as follows:
ARTICLE 1
INTERPRETATION
1.1 DEFINITIONS. The following words and expressions, wherever used in
this Agreement, unless there be something in the subject or the context
inconsistent therewith, shall have the following meanings:
1.1.1 "Advance" means any advance by any Lender under the
Commitments;
1.1.2 "Affected Lender" means any Lender, which shall have issued
a notice to the Agent pursuant to Section 6.1 and shall include any Taxed
Lender;
1.1.3 "Affiliate" means any Person which, directly or indirectly
is in control of, is controlled by, or is under common control with any
specified Person. For purposes of this definition, a Person shall be deemed to
be "controlled by" a specified Person if such specified Person possesses,
directly or indirectly, power either to (Y) vote 10% or more of the securities
having ordinary voting power for the election of directors of such Person or (Z)
direct or cause the direction of the management and policies of such Person
whether by contract or otherwise;
1.1.4 "Agency Fee" has the meaning ascribed to it in Section 5.17;
1.1.5 "Agent" means National Bank of Canada, New York Branch, and
includes any successor or permitted assign thereof, in its capacity as Agent for
the Lenders, for the purposes of this Agreement and the Security Documents;
Page 14 of 103
<PAGE>
-2-
1.1.6 "Agent's Office" means the office of the Agent located at
National Canada Finance Corporation, 401 East Pratt Street, Suite 631, Baltimore
Maryland 21202, or such other office or branch of the Agent as the Agent may
specify from time to time in accordance with the provisions of Section 18.1;
1.1.7 "Approvals" has the meaning ascribed to it in Section 11.21;
1.1.8 "Assignee" shall have the meaning ascribed to it in
subsection 18.9.1;
1.1.9 "Assignment and Acceptance Agreement" means any assignment
and acceptance agreement in the form attached hereto as Schedule "B" that may be
entered into in connection with the exercise by any Lender of rights under
subsection 18.9.1;
1.1.10 "Available Commitment", with respect to any Lender, means,
as at any time, as determined by the Agent, the difference between the
Commitment, as at any such time, and the Revolving Loan of such Lender and
"Available Commitments" means the aggregate of the Available Commitments of all
the Lenders;
1.1.11 "Banking Day" means any Business Day which is also a day
that is not a legal holiday or a day on which banking institutions are
authorized by Law or by local proclamation to close in London, England;
1.1.12 "Board" means the Board of Governors of the Federal Reserve
System of the United States of America (or any successor);
1.1.13 "Borrower" means Laurentian Capital Corporation, a
corporation incorporated under the Laws of the State of Delaware, and includes
any successor or permitted assign thereof;
1.1.14 "Borrower's Account" means, any of the Dollar accounts
established on behalf of the Borrower by the Agent at the Agent's Office for the
purposes set out in Articles 4 and 8;
1.1.15 "Business Day" means any day, excluding Saturday, Sunday and
any other day which is a legal holiday or a day on which banking institutions
are authorized by Law or by local proclamation to close in New York City;
1.1.16 "Canadian Special Counsel" means Messrs. Martineau Walker or
such other legal counsel which the Agent, at any time and from time to time, may
appoint to advise it and the Lenders and act on their respective behalves in
connection with the federal Laws of Canada and the Laws of the Province of
Quebec;
1.1.17 "Capital Stock" means any and all shares, interests,
participations, warrants, options or other equivalents (however designated) of
capital stock of a corporation or any and all equivalent ownership interests in
a Person (other than a corporation);
1.1.18 "Certificate of Officers" means the certificate referred to
in subsection 10.1.4;
Page 15 of 103
<PAGE>
-3-
1.1.19 "Code" means the Internal Revenue Code of 1986 of the United
States of America, as amended from time to time;
1.1.20 "Collateralized Investment Program" means an investment
program with one or more FHLBs where qualified investments are pledged as
collateral for borrowings from such FHLB(s) for matched arbitrage investment
purchases and short-term liquidity needs;
1.1.21 "Commitment" with respect to any Lender, means, as at any
time, the difference between the Commitment of such Lender as initially
established under Section 2.1 and the aggregate of all reductions of the amount
thereof (up to and including any date such Commitment is being calculated
pursuant to or for the purposes of this Agreement) which result from the
application of the provisions of Sections 2.2 and 2.3 and "Commitments" means
the aggregate of the Commitments of all the Lenders;
1.1.22 "Commitment Fee" means the fee payable in accordance with
the provisions of Section 5.15;
1.1.23 "Commonly Controlled Entity" means an entity, whether or not
incorporated, which is under common control with the Borrower within the meaning
of Section 4001 of ERISA;
1.1.24 "Conversion Date" means, as the case may be, the date as of
which, any basis of calculating interest on the whole or any part of the
Revolving Loans is converted into another or is rolled over on the same basis in
accordance with the provisions of this Agreement;
1.1.25 "Cumulative Net Profits" means, for the period commencing as
of and from January 1, 1993 up to and including the day preceding any day the
"Cumulative Net Profits" are required to be computed for the purposes hereof, an
amount, calculated on the continual and cumulative financial results of the
Borrower, equal to the consolidated cumulative net operating after tax profit or
loss, as the case may be, of the Borrower, calculated without taking into
consideration any extraordinary gains or losses incurred during any such period;
1.1.26 "Default" means any of the events specified in Section 15.1,
the occurrence or failure to occur of which constitutes, or with the passage of
time or the giving of notice or both, would constitute an Event of Default;
1.1.27 "Distribution" has the meaning ascribed to it in Section
14.2;
1.1.28 "DLFC" means Desjardins Laurentian Financial Corporation, a
company incorporated under the Laws of the Province of Quebec, Canada and
includes any successor or permitted assign thereof;
1.1.29 "DLFC Agreement" means the agreement referred to in
subsection 9.1.4, as same may be amended, supplemented or restated at any time
and from time to time;
1.1.30 "Dollars" or "$" means the lawful currency of the United
States of America;
Page 16 of 103
<PAGE>
-4-
1.1.31 "Draw Down Notice" means any notice issued to the Agent by
the Borrower under the provisions of Section 4.1;
1.1.32 "Eligible Reinsurers" has the meaning ascribed to it in
subsection 15.1.7;
1.1.33 "ERISA" means the Employee Retirement Income Security Act of
1974 of the United States of America, as amended from time to time;
1.1.34 "Eurodollar Base Rate" with respect to a Selected Amount of
the Revolving Loan of any Lender, means the annual rate of interest, rounded
upwards, if necessary, to the nearest whole multiple of 1/16%, at which the
Agent, in accordance with its normal practice, would be prepared to offer to
leading banks in the London Interbank Market for delivery on each of the
relevant Rollover Dates and for a period equal to each of the relevant Selected
Maturities based on the number of days comprised therein, deposits in Dollars of
comparable amounts to such Selected Amount, to be outstanding during such
Selected Maturity, at or about 11:00 A.M., London time, two Banking Days prior
to a drawdown date for an Advance or, as the case may be, prior to the relevant
Rollover Date and, thereafter, in each case, to the extent applicable, two
Banking Days prior to the next following Rollover Date;
1.1.35 "Eurodollar Deposit" with respect to any lender, means the
deposit in Dollars that the Agent would be ready to offer as provided in
subsection 1.1.34;
1.1.36 "Eurodollar Loan" with respect to any Lender, means, as at
any time, that portion of the Revolving Loan of such Lender with respect to
which the Borrower has elected to pay interest on a Eurodollar Rate Basis and
"Eurodollar Loans" means the aggregate of the Eurodollar Loans of all the
Lenders;
1.1.37 "Eurodollar Rate" means, with respect to a Selected Amount
of the Revolving Loan of any Lender, a rate per annum (rounded upwards, if
necessary, to the nearest whole multiple of 1/16%) determined by the Agent to be
equal to (Y) the Eurodollar Base Rate for such Selected Amount for the Selected
Maturity for such Loan divided by (Z) 1 minus the Reserve Requirement, if any,
for such Selected Amount of the Loan for such Selected Maturity;
1.1.38 "Eurodollar Rate Basis" means the calculation of interest on
the Revolving Loans, or any portion of any one thereof, as provided in Sections
5.1, 5.3 and 5.4;
1.1.39 "Event of Default" shall have the meaning ascribed to it in
Section 15.1;
1.1.40 "Existing Credit Agreement" means that certain $55,000,000
Revolving Underwriting Facility Agreement entered into on April 25, 1989 among
the Borrower and Swiss Bank Corporation, London Branch as Tender Panel Agent and
Facility Agent, Swiss Bank Corporation, Basle as Issuing and Paying Agent, Swiss
Bank Corporation, National Westminster Bank PLC, Canada Imperial Bank of
Commerce, Banque Indosuez and National Bank of Canada as lenders;
Page 17 of 103
<PAGE>
-5-
1.1.41 "FHLB" means any of the regional Federal Home Loan Banks,
located in the United States of America and includes any successor thereof;
1.1.42 "Financing Lease Obligations" means, with respect to any
Person, the obligations of such Person to pay rent or other amounts under any
lease of (or other arrangement conveying the right to use) real or personal
property, or a combination thereof, which obligations are classified and
accounted for as capital leases on a balance sheet of such Person in accordance
with GAAP and, for the purposes of this Agreement, the amount of such
obligations at any time shall be the capitalized amount thereof at such time
determined in accordance with GAAP consistently applied;
1.1.43 "GAAP" means generally accepted accounting principles in the
United States of America in effect from time to time;
1.1.44 "Governmental Authority" means any nation or government, any
state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government;
1.1.45 "Guarantee Obligation" means with respect to any Person (the
"guaranteeing person"), any obligation (without duplication) of (a) the
guaranteeing person or (b) another Person (including, without limitation, any
bank under any letter of credit) to induce the creation of which the
guaranteeing person has issued a reimbursement, counterindemnity or similar
obligation, in either case, guaranteeing or in effect guaranteeing any
Indebtedness or other similar obligations (the "primary obligations") of any
other Person (the "primary obligor") in any manner, whether directly or
indirectly, including, without limitation, any obligation of the guaranteeing
person, whether or not contingent, (i) to purchase any such primary obligation
or any property constituting direct or indirect security therefor, (ii) to
advance or supply funds (l) for the purchase or payment of any such primary
obligation or (2) to maintain working capital or equity capital of the primary
obligor or otherwise to maintain the net worth or solvency of the primary
obligor or (iii) to purchase property, securities or services primarily for the
purpose of assuring the owner of any such primary obligation of the ability of
the primary obligor to make payment of such primary obligation, PROVIDED,
HOWEVER, that the term Guarantee Obligation shall not include endorsements of
instruments for deposit or collection in the ordinary course of business. The
amount of any Guarantee Obligation of any guaranteeing person shall be deemed to
be the lower of (a) an amount equal to the stated or determinable amount of the
primary obligation in respect of which such Guarantee Obligation is made and (b)
the maximum amount for which such guaranteeing person may be liable pursuant to
the terms of the instrument embodying such Guarantee Obligation, unless such
primary obligation and the maximum amount for which such guaranteeing person may
be liable are not stated or determinable, in which case the amount of such
Guarantee Obligation shall be such guaranteeing person's maximum reasonably
anticipated liability in respect thereof as determined by the Borrower in good
faith;
1.1.46 "Indebtedness" with respect to any Person, at a particular
date, means the sum (without duplication) at such date of (i) indebtedness of
such Person for borrowed money or obligations of such Person issued or assumed
as the deferred purchase price of property or services (excluding pension
benefits or trade accounts payable and accrued expenses arising in the ordinary
Page 18 of 103
<PAGE>
-6-
course of business in accordance with customary trade terms), (ii) all
obligations of such Person evidenced by bonds, debentures, notes or similar
instruments, (iii) all Indebtedness of others secured by (or for which the
holder of such Indebtedness has an existing right, contingent or otherwise, to
be secured by) any Lien on property owned or acquired by such Person (to the
extent of such Person's ownership of such property), whether or not the
obligations secured thereby have been assumed by such Person, (iv) all Guarantee
Obligations of such Person, (v) all Financing Lease Obligations of such Person,
(vi) any obligations of such Person in respect of banker's acceptances
discounted with recourse and (vii) obligations in respect of any letters of
credit supporting any of the foregoing. The Indebtedness of any Person shall
include the Indebtedness of any partnership in which such Person is a general
partner, other than to the extent that the instrument or agreement evidencing
such Indebtedness expressly limits the liability of such person in respect
thereof;
1.1.47 "Insolvency" means with respect to any Multiemployer Plan,
the condition that such Plan is insolvent within the meaning of such term as
used in Section 4245 of ERISA;
1.1.48 "Insolvent" means pertaining to a condition of Insolvency;
1.1.49 "Interest Payment Date" means, while any amounts are
outstanding under any:
1.1.49.1 Prime Rate Loan, the 26th day of each and every
month of each year with respect to amounts of interest accrued on such Revolving
Loan as of the 25th day of each such month; and
1.1.49.2 Eurodollar Loan, each day on which interest is
payable on any Selected Amount forming part of such Eurodollar Loan in
accordance with the provisions of subsection 5.3.2; and
1.1.49.3 Loan, the last day of the Revolving Period or, if
applicable, of the Term Period;
1.1.50 "Investment" has the meaning ascribed to it in Section 14.1;
1.1.51 "Investment Grade" shall mean A-1 or higher by S&P or P-1 or
higher by Moody's or the equivalent of such rating by S&P or Moody's or by any
other Rating Agency selected as provided herein for commercial paper with
maturities of not more than 90 days; and fixed maturities instruments rated BBB
or higher by S&P or Baa3 or higher by Moody's or the equivalent of such rating
by S&P or Moody's or by any other Rating Agency selected as provided herein;
1.1.52 "Law" means all applicable provisions of statutes,
ordinances, decrees, orders in council, rules, regulations, treaties and all
applicable determinations, rulings, orders and decrees of Governmental
Authorities and arbitrators;
1.1.53 "Lender" means any Person who may at any time and from time
to time be set forth in Schedule "A" hereof as a Lender hereunder and shall
include any successor or permitted assign of any such Person and "Lenders" is
the collective reference to all such Persons;
Page 19 of 103
<PAGE>
-7-
1.1.54 "Lien" means any interest in property or the income or
profits therefrom securing an obligation owed to, or a claim by, a Person other
than the owner (which for the purposes hereof shall include a possessor under a
title retention agreement and a lessee under a lease hereinbelow described) of
such property, whether such interest is based on common law, civil law, statute
or contract, and including, but not limited to, any security interest, hypothec,
mortgage, pledge, lien, claim, charge, cession, transfer, assignment,
encumbrance, title retention agreement, lessor's interest under a lease which
would be capitalized on a balance sheet of the owner of such property or
analogous instrument in, of or on any property or the income or profits
therefrom of a Person;
1.1.55 "Liquid Investments" means:
1.1.55.1 certificates of deposit maturing within 90 days
of the acquisition thereof denominated in Dollars and issued by (x) a Lender or
(y) a bank or trust company having combined capital and surplus of at least
$500,000,000 and which has (or which is a Subsidiary of a bank holding company
which has) publicly traded debt securities rated AA or higher by S&P or Aa-2 or
higher by Moody's;
1.1.55.2 obligations issued or guaranteed by the United
States of America, with maturities of not more than 90 days after the date of
issue; and
1.1.55.3 commercial paper with maturities of not more than
90 days and a published rating of not less than A-1 from S&P or P-1 from
Moody's;
1.1.56 "Loan" with respect to any Lender, means, as at any time,
the sum of the Revolving Loan of such Lender, plus any other amounts in
principal, interest, fees (including, without limitation, the Stand-By Fee, the
Commitment Fee and the Agency Fee) and accessories and interest on arrears of
interest, fees and accessories, in each case, due and payable to such Lender
hereunder by the Borrower including, without limitation, any such amounts with
respect to which the Borrower is liable as a consequence of any indemnity herein
contained, and "Loans" means the aggregate of the Loans of all the Lenders;
1.1.57 "Loan Documents" is the collective reference to this
Agreement and the Security Documents;
1.1.58 "Loan Ledger" has the meaning ascribed to it in Section 4.7;
1.1.59 "Local Taxes" has the meaning ascribed to it in Section 7.1;
1.1.60 "Loyal American" means Loyal American Life Insurance
Company, a corporation incorporated under the Laws of the State of Alabama and
includes any successor or permitted assign thereof;
1.1.61 "Loyal American Shares" is the collective reference to the
1,000 shares of the Capital Stock of Loyal American registered in the name of
the Borrower and represented by a share certificate bearing number A35599;
Page 20 of 103
<PAGE>
-8-
1.1.62 "Majority Lenders" means, as at any time, Lenders to which
no less than 66 2/3% of the Loans are owing or, if no Loans are then
outstanding, Lenders having no less than 66 2/3% of the Commitments;
1.1.63 "Market Value" means the market value determined by the FHLB
for the collateral pledged under the Collateralized Investment Program;
1.1.64 "Material Adverse Effect" means a material adverse effect on
(w) the business, operations, assets, liabilities, financial position, results
of operations or business prospects of the Borrower and its Subsidiaries, taken
as a whole, (x) the ability of DLFC or the Borrower to perform their respective
obligations under any Loan Document to which it may be a party, (y) the validity
or enforceability of any Loan Document or (z) the rights and remedies of the
Agent and/or the Lenders under any Loan Document;
1.1.65 "Material Subsidiary" means, as at any date, (y) Loyal
American and (z) any Subsidiary of the Borrower whose total assets, after
excluding intercompany accounts, are in excess of 2.5% of the total assets of
the Borrower and its Subsidiaries, with any determination being made as at the
end of the most recently completed fiscal quarter for which consolidated
financial statements have been prepared, except to the extent that on such date
the chief financial officer of the Borrower has actual reason to know to the
contrary;
1.1.66 "Moody's" means Moody's Investors Service, Inc. and any
successor thereof;
1.1.67 "Multiemployer Plan" means a Plan which is a multiemployer
plan as defined in Section 4001(a)(3) of ERISA;
1.1.68 "New MBS" means any mortgage backed security, or debt or
equity instrument which is rated by one or both of Moody's and S&P as Investment
Grade, which may be purchased by the Borrower as contemplated in clause (y) of
subsection 14.7.8;
1.1.69 "Original Currency" has the meaning ascribed to it in
Section 17.1;
1.1.70 "Participants" has the meaning ascribed to it in subsection
18.9.5;
1.1.71 "PBGC" means the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA;
1.1.72 "Permitted Encumbrances" means, as of any particular time,
any one or more of the following:
1.1.72.1 Liens in favor of the Agent pursuant to the Pledge
Agreement;
1.1.72.2 Liens to secure taxes, assessments and other
government charges or claims for labor, material or supplies in respect of
obligations not overdue or if such obligations are being contested, such
contestation is permitted under the provisions of Section 11.13;
Page 21 of 103
<PAGE>
-9-
1.1.72.3 deposits or pledges made in connection with, or to
secure payment of, workmen's compensation, unemployment insurance, old age
pensions or other social security obligations;
1.1.72.4 encumbrances consisting of easements, rights of way,
zoning restrictions, restrictions on the use of real property and defects and
irregularities in the title thereto and other minor liens or encumbrances none
of which in the opinion of the Majority Lenders interferes materially with the
use of the property affected in the ordinary conduct of the business of the
Borrower or any of its Subsidiaries, which defects do not individually or in the
aggregate have a Material Adverse Effect;
1.1.72.5 Liens securing Indebtedness permitted under the
provisions of subsections 14.7.6 and 14.7.9 PROVIDED, HOWEVER, that such Liens
constitute Purchase Money Liens;
1.1.72.6 Liens contemplated in subsection 14.7.8;
1.1.73 "Person" means any corporation, natural person, firm, joint
venture, partnership, trust, unincorporated organization, Governmental Authority
or other entity of whatever nature;
1.1.74 "Plan" means at any particular time, any employee benefit
plan which is covered by ERISA and in respect of which the Borrower or a
Commonly Controlled Entity is (or, if such plan were terminated at such time,
would under Section 4069 of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA;
1.1.75 "Pledge Agreement" means the pledge agreement referred to in
subsection 9.1.1, as same may be amended, supplemented or restated at any time
and from time to time;
1.1.76 "Prime Rate" means, the rate of interest, expressed as an
annual rate, quoted or announced from time to time by the Agent, on any day in
New York City, as being its reference rate of interest then in effect for
determining interest rates on commercial loans made in the United States of
America in Dollars by the Agent;
1.1.77 "Prime Rate Basis" means the calculation of interest on the
Revolving Loans or any portion of any one thereof as provided in Sections 5.2
and 5.3;
1.1.78 "Prime Rate Loan" with respect to any Lender, means, as at
any time, that portion of the Revolving Loan of such Lender with respect to
which the Borrower, under the terms of this Agreement, is required to pay
interest on a Prime Rate Basis and "Prime Rate Loans" means the aggregate of the
Prime Rate Loans of all the Lenders;
1.1.79 "Pro Rata Share" means, with respect to any Lender:
1.1.79.1 in the case of any one of Sections 15.5 and 16.10, the
ratio of the Loan of such Lender to the Loans; and
Page 22 of 103
<PAGE>
-10-
1.1.79.2 in all other cases, the ratio of the Commitment of
such Lender to the Commitments of the Lenders;
1.1.80 "Public or Private Placement" has the meaning ascribed to it
in Section 5.16;
1.1.81 "Purchase Money Lien" means any Lien on any fixed assets
purchased or leased (under a lease which would be capitalized on the balance
sheet of the owner of the property which is the object of such lease) by the
Borrower or any of its Subsidiaries which is confined exclusively to the
property so purchased or leased (and whether given to the vendor, the lessor or
to a lender) and which was existing at the time of purchase or lease or which is
created or assumed or arises within 90 days after the date of purchase or lease
and includes any Lien extending, renewing or refunding any such original Lien on
any such fixed assets, PROVIDED, that the Indebtedness outstanding on the date
of such extension, renewal or refunding on the fixed assets securing the
Indebtedness extended, renewed or refunded is not increased upon such extension,
renewal or refunding. For the purposes hereof, "fixed assets" means, such
assets as are treated as fixed assets in accordance with GAAP;
1.1.82 "Rating Agency" means, S&P and Moody's, or if S&P or Moody's
or both shall not make a rating on any debt or equity instrument contemplated in
this Agreement which is publicly available, a nationally recognized securities
rating agency or agencies, as the case may be, in the United States of America,
selected by the Agent which shall be substituted for S&P or Moody's or both, as
the case may be;
1.1.83 "Register" has the meaning ascribed to it in subsection
18.9.3;
1.1.84 "Regulation D" means Regulation D of the Board, as the same
may be amended or supplemented from time to time;
1.1.85 "Regulatory Change" means, with respect to any Lender, any
change on or after the date of this Agreement in any United States federal or
state or in any foreign, Laws or regulations (including Regulation D) or the
adoption or making on or after such date of any interpretations, directives or
requests applying to a class of lenders including such Lender of or under any
United States federal or state, or any foreign, Laws or regulations (whether or
not having the force of law) by any court or governmental or monetary authority
charged with the interpretation or administration thereof;
1.1.86 "Reorganization" means, with respect to any Multiemployer
Plan, the condition that such Plan is in reorganization within the meaning of
such term as used in Section 4241 of ERISA;
1.1.87 "Replacement Lender" means a lending institution designated
by the Borrower pursuant to Section 6.4;
1.1.88 "Reportable Event" means any of the events set forth in
Section 4043(b) of ERISA, other than those events as to which the thirty-day
notice period is waived under subsections .13, .14, .16, .18, .19 or .20 of PBGC
Reg. SECTION 2615;
Page 23 of 103
<PAGE>
-11-
1.1.89 "Requirement of Law" with respect to any Person, means the
certificate of incorporation and by-laws or other organizational or governing
documents of such Person and any Law, in each case applicable to or binding upon
such Person or any of its property or to which such Person or any of its
property is subject;
1.1.90 "Reserve Requirement" means, with respect to a Selected
Amount of the Revolving Loan of any Lender, for any Selected Maturity therefor,
the average maximum rate at which reserves (including any marginal, supplemental
or emergency reserves) are required to be maintained during such Selected
Maturity under Regulation D by member banks of the Federal Reserve System in New
York City with deposits exceeding $1,000,000,000 against "Eurocurrency
liabilities" (as such term is used in Regulation D). Without limiting the
effect of the foregoing, the Reserve Requirement shall reflect any other
reserves required to be maintained by such member banks by reason of any
Regulatory Change against (y) any category of liabilities which includes
deposits by reference to which the Eurodollar Rate is to be determined as
provided in the definition of "Eurodollar Base Rate" or (z) any category of
extensions of credit or other assets which include Eurodollar Loans;
1.1.91 "Responsible Officers" means the chief financial officer and
any one among the president, any vice-president, the treasurer or any other
senior executive officer of the Borrower;
1.1.92 "Revolving Loan" with respect to any Lender, means, as at
any time, the aggregate of the outstanding amount of monies advanced by:
1.1.92.1 such Lender under its Commitment; and
1.1.92.2 another Lender or Lenders under their respective
Commitments and subsequently assigned to such Lender as herein contemplated;
and
"Revolving Loans" means the aggregate of the Revolving Loans of all the Lenders;
1.1.93 "Revolving Period" means the period commencing as of and
from the date hereof and terminating at the earlier of:
1.1.93.1 3:00 P.M., New York time, April 25, 1999;
1.1.93.2 the date of the termination of the Support Agreement;
and
1.1.93.3 the date the Commitments are terminated and cancelled
under the provisions of either one of Sections 2.3 and 15.2, as the case may be;
1.1.94 "Rollover Date" means, with respect to any one of the
Eurodollar Loans, as the case may be, the Conversion Date with respect to such
Eurodollar Loans, the date of any Advance or the first day of any Selected
Maturity of such Eurodollar Loans;
1.1.95 "Rollover Notice" means any notice issued to the Agent by
the Borrower under the provisions of Section 5.4;
Page 24 of 103
<PAGE>
-12-
1.1.96 "S&P" means Standard & Poor's Corporation and includes any
successor thereof;
1.1.97 "Scheduled Commitment Reduction Date" means any one among
(y) the first Business Days of any one of November 1997, May 1998 and November
1998 and (z) the last day of the Revolving Period, unless the Revolving Period
has terminated as a consequence of the termination of the Support Agreement, in
which case, it shall be the last day of the Term Period;
1.1.98 "Scheduled Reduction of the Commitments" means the amount by
which the Commitments are reduced on any Scheduled Commitment Reduction Date
under the terms of Sections 2.2 and 2.3, subject to any reduction of such amount
resulting from the provisions of subsection 2.4.3;
1.1.99 "SEC" means the Securities and Exchange Commission of the
United States of America;
1.1.100 "Second Currency" has the meaning ascribed to it in Section
17.1;
1.1.101 "Security Documents" is the collective reference to the
Pledge Agreement, the Loyal American Shares, the Support Agreement and the DLFC
Agreement;
1.1.102 "Selected Amount" means, with respect to any Eurodollar Loan
of any Lender, the whole or any portion of any Advance of such Lender or any
portion of the Revolving Loan of such Lender as to which the Borrower, under the
provisions of either one of Sections 4.1 and 5.4, has requested that interest
payable thereon be calculated in accordance with the provisions of Sections 5.1,
5.3 and 5.4;
1.1.103 "Selected Maturity" means, with respect to any of the
Eurodollar Loans, a period commencing as of and from a particular Rollover Date
and terminating 30, 60 or 90 days thereafter, as elected by the Borrower under
the relevant provisions of Sections 4.1 and 5.4 PROVIDED, HOWEVER, with regard
to the calculation of the commencement and the termination of any period under
this paragraph:
1.1.103.1 if any Selected Maturity would otherwise end on a day
that is not a Business Day, such Selected Maturity shall be extended to the next
succeeding Business Day unless the result of such extension would be to carry
such Selected Maturity into another calendar month in which event such Selected
Maturity shall end on the immediately preceding Business Day;
1.1.103.2 any Selected Maturity that would otherwise extend
beyond the Revolving Period shall end on the last day of the Revolving Period,
unless the Revolving Period has terminated as a consequence of the termination
of the Support Agreement, in which case, the said Selected Maturity shall end on
the last day of the Term Period; and
Page 25 of 103
<PAGE>
-13-
1.1.103.3 any Selected Maturity 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 Selected Maturity)
shall end on the last Business Day of a calendar month;
1.1.104 "Shareholders' Equity" means, as at any time, calculated on
a consolidated basis, the sum for the Borrower of all issued and fully paid
Capital Stock at par or stated value, paid in capital surplus, contributed
capital and retained earnings, but exclusive of any write-up of the value of any
asset if made on the books of the Borrower;
1.1.105 "Significant Subsidiary" means any Subsidiary of the
Borrower which would qualify as a "Significant Subsidiary" for the purposes of
reporting by the Borrower under any form 8-K prepared pursuant to Section 13 or
15(d) of the 1934 Act;
1.1.106 "Single Employer Plan" means any Plan which is covered by
Title IV of ERISA, but which is not a Multiemployer Plan;
1.1.107 "Special Counsel" means Messrs. White & Case and Messrs.
Martineau Walker or such other legal counsel which the Agent, at any time and
from time to time, may appoint to advise it and the Lenders and act on their
respective behalves in connection with the transactions contemplated herein;
1.1.108 "Stand-By Fee" means the fee payable in accordance with the
provisions of Sections 5.11, 5.12 and 5.13;
1.1.109 "Subsidiary" as to any Person, means a corporation of which
the Voting Shares are at the time owned, or the management of which is otherwise
controlled, directly or indirectly through one or more intermediaries, or both,
by such Person;
1.1.110 "Substitute Basis" means the substitute basis for the
continuation of the Eurodollar Loans referred to in subsection 6.2.2;
1.1.111 "Support Agreement" means the support agreement referred to
in subsection 9.1.3, as same may be amended, supplemented or restated at any
time and from time to time;
1.1.112 "Taxed Lender" has the meaning ascribed to it in Section
7.1;
1.1.113 "Taxes" has the meaning ascribed to it in Section 7.1;
1.1.114 "Term Period" means the period commencing as of and from the
day following the termination of the Revolving Period and terminating at the
earlier of:
1.1.114.1 3:00 P.M. New York time, April 25, 1999; and
1.1.114.2 the date the Commitments are terminated and cancelled
under the provisions of either one of Sections 2.3 and 15.2.
Page 26 of 103
<PAGE>
-14-
It is expressly acknowledged that the Term Period shall only commence if the
Revolving Period terminates as a consequence of the termination of the Support
Agreement;
1.1.115 "this Agreement", "this Credit Agreement", "these presents",
"herein", "hereby", "hereunder", "hereof", "hereto" and similar expressions
refer collectively to this Credit Agreement and the accompanying schedules, as
same may be amended, supplemented or restated at any time and from time to time;
1.1.116 "Transferee" has the meaning ascribed to it in subsection
18.9.6;
1.1.117 "Voting Shares" means Capital Stock of any class of any body
corporate having the right to elect at least a majority of the board of
directors of such body corporate, and includes, for the purposes of this
definition, Capital Stock which, by contract or by virtue of the incorporating
documents and all amendments thereto of such body corporate, only carry the
right to vote conditionally on the happening of any event, and no Capital Stock
shall be deemed to cease to be voting shares solely by reason of a right to vote
accruing to shares of another class or classes by reason of the happening of
such event;
1.1.118 "1934 Act" means the Securities Exchange Act of 1934 of the
United States of America, as amended from time to time.
1.2 SINGULAR, PLURALS AND DOLLARS. Unless there be something in the
subject or the context inconsistent therewith, words importing the singular only
shall include the plural and vice versa and words importing the masculine gender
shall include the feminine gender, and vice versa and all references to dollars
shall mean Dollars.
1.3 DIVISION INTO ARTICLES. The division of this Agreement into
Articles, Sections, subsections and paragraphs and the insertion of titles are
only for reference and do not affect the meaning or the interpretation of the
present Agreement.
1.4 ACCOUNTING PRINCIPLES. Unless otherwise expressly provided herein or
the Majority Lenders expressly consent thereto, all calculations required to be
made under the terms hereof and all financial statements, balance sheets and
related statements shall be prepared on a consolidated basis and in the case of
the Borrower, in accordance with GAAP.
Page 27 of 103
<PAGE>
-15-
ARTICLE 2
COMMITMENTS, REDUCTIONS TO AND TERMINATIONS
OF COMMITMENTS AND REVOLVING NATURE OF THE COMMITMENTS
DURING THE REVOLVING PERIOD
2.1 COMMITMENTS. Each Lender, severally and neither jointly nor jointly
and severally, agrees, upon the terms and subject to the conditions of this
Agreement, to lend to the Borrower an amount of up to but not exceeding, in the
aggregate, the amount set forth opposite its name as shown in Schedule "A"
hereof as the Commitment of each such Lender.
2.2 SCHEDULED REDUCTIONS OF THE COMMITMENTS DURING THE REVOLVING PERIOD
AND THE TERM PERIOD. The Borrower does hereby expressly acknowledge and agree
that during the Revolving Period and, if applicable, during the Term Period, the
Commitments shall be reduced successively on the first Business Day of November
1997, May 1998 and November 1998 by an amount equal, in each case, to
$4,583,333.
2.3 OTHER REDUCTIONS OF THE COMMITMENTS. The Borrower does hereby
expressly acknowledge and agree that in addition to the reductions of the
Commitments contemplated in Section 2.2:
2.3.1. on the first day of the Term Period, the Commitments shall
be reduced to an amount equal to the Revolving Loans outstanding on the last day
of the Revolving Period;
2.3.2 on the last day of the Revolving Period, the Commitment of
each Lender shall be terminated in its entirety, unless, the Revolving Period
has terminated as a consequence of the termination of the Support Agreement, in
which case, the Commitment of each Lender shall be terminated in its entirety on
the last day of the Term Period;
2.3.3 during the Revolving Period and, if applicable, during the
Term Period, the Borrower shall have the right, effective on the fifth Business
Day following the receipt by the Agent of a written notice from the Borrower to
that effect, to terminate the Commitments or, from time to time, to reduce the
amount of the Commitments; PROVIDED, HOWEVER, that no such termination or
reduction shall be permitted (y) if the Stand-By Fee on the amount of the
Commitments proposed to be so terminated or reduced, accrued to the effective
date of such requested termination or reduction is not paid by such effective
date or (z) if, after giving effect to such termination or reduction and to any
repayment of the Revolving Loans made on the effective date of such requested
termination or reduction, the Revolving Loans which may be outstanding on the
aforesaid effective date would exceed the aggregate amount of the Commitments as
so proposed to be reduced. Any partial reduction of the Commitments shall be
effected in minimum amounts of $5,000,000 and in whole multiples of $1,000,000.
Any notice of a reduction of the Commitments delivered to the Agent under the
terms of this subsection 2.3.3, may not subsequently be revoked or withdrawn and
shall oblige the Borrower to reduce the Commitments by the amount and on the
date specified in such notice;
Page 28 of 103
<PAGE>
-16-
2.3.4 as of and from the date any optional prepayment is made
during the Term Period under Section 8.2, the Commitments shall be reduced
successively by an amount equal to the principal amount of such optional
prepayment; and
2.3.5 where under the provisions of Article 6, the Borrower is
required to repay any affected Prime Rate Loan or Eurodollar Loan of any Lender,
the Commitment of such Lender, on the date of any such required repayment, shall
be reduced by an amount equal to the amount of any such required repayment.
2.4 IMPUTATION OF REDUCTIONS OF THE COMMITMENTS. Any reduction of the
Commitments:
2.4.1 contemplated in any one of Section 2.2 and subsections
2.3.1, 2.3.3 and 2.3.4 shall be imputed to the Commitment of each Lender on the
basis of its Pro Rata Share of any such reductions;
2.4.2 contemplated in any one of subsections 2.3.1 and 2.3.5 shall
be imputed to the reductions of the Commitments contemplated in Section 2.2 and
subsection 2.3.2 in the inverse order of the respective effective dates thereof;
and
2.4.3 contemplated in subsections 2.3.3 and 2.3.4 which is a
partial reduction of the Commitments, shall be imputed in order to effect a
proportional reduction to the Scheduled Reductions of the Commitments such that
following any such partial reduction, each Scheduled Reduction of the
Commitments shall be equal to the product resulting from the multiplication of
an amount equal to such Scheduled Reduction of the Commitments as originally
established under Section 2.2 or subsection 2.3.2, as the case may be, by a
fraction, the numerator of which shall be equal to the amount of the Commitments
as so reduced and the denominator of which shall be equal to $45,000,000.
2.5 NO SUBSEQUENT INCREASES TO COMMITMENTS. Where under the terms of
Sections 2.2 and 2.3 the Commitment of any Lender has been terminated or
reduced, same may not subsequently be increased, any such termination or
reduction being permanent.
2.6 REVOLVING NATURE OF THE COMMITMENTS DURING THE REVOLVING
PERIOD. Subject to and upon compliance with all of the relevant terms and
conditions of this Agreement, at any time and from time to time during the
Revolving Period, any optional prepayment of the whole or any part of the
Revolving Loans made by the Borrower as provided in Section 8.2 may be
reborrowed under and to the extent that there are any Available Commitments.
Save as expressly provided for in this Section 2.6, no other amount paid, repaid
or prepaid under the terms of this Agreement may be reborrowed.
Page 29 of 103
<PAGE>
-17-
ARTICLE 3
PURPOSE
3.1 PURPOSE OF ADVANCES. All Advances by the Lenders to the Borrower
hereunder shall be used by the Borrower exclusively for the following purposes:
3.1.1 the first Advance shall be used entirely for the purpose of
refinancing up to $45,000,000 of the Indebtedness of the Borrower, in principal,
interest and fees under the Existing Credit Agreement; and
3.1.2 all subsequent Advances shall be used for the purpose of
financing the working capital requirements of the Borrower.
ARTICLE 4
ADVANCES AND OPERATION OF ACCOUNTS
4.1 DRAW DOWN NOTICES. Subject to and upon compliance with all of the
relevant terms and conditions of this Agreement, at any time and from time to
time during the Revolving Period, upon delivery to the Agent at or before 11:00
A.M., New York time, on any Business Day of a notice substantially in the form
attached hereto as Schedule "C", the Borrower shall have the right to draw down
the whole or any part of the Available Commitments. Any such notice shall be
delivered to the Agent at least three Banking Days prior to any Advance. Any
Draw Down Notice, once delivered to the Agent, may not subsequently be revoked
or withdrawn by the Borrower. For all purposes of this Agreement, any Draw Down
Notice delivered to the Agent after 11:00 A.M., New York time, on any Business
Day, shall be deemed to have been so delivered on the next following Business
Day. Notwithstanding the foregoing, with respect to the first Advance, the Draw
Down Notice may be delivered to the Agent as hereinabove contemplated at or
before 11:00 A.M., New York time, on the Business Day that such first Advance is
requested to be made. Furthermore, interest on such first Advance shall be
calculated and payable on a Prime Rate Basis, PROVIDED, HOWEVER, that upon such
Advance being made, the Agent shall be deemed irrevocably to have been requested
by the Borrower to convert the totality of the Prime Rate Loans so advanced into
Eurodollar Loans on the third Banking Day following such Advance and to
determine the Eurodollar Rate applicable thereto on the basis of a Selected
Maturity of 30 days.
4.2 MINIMUM DRAWS. During the Revolving Period, the Borrower may draw
down from time to time the whole or any part of the Available Commitments as
provided in Section 4.1:
4.2.1 in Dollars only; and
4.2.2 in minimum draws equal to the lesser of (y) the aggregate
amount of the Available Commitments and (z) $5,000,000 and in whole multiples of
$1,000,000, PROVIDED, HOWEVER, that the first draw shall be for an amount of not
less than the amount of the Commitments.
Page 30 of 103
<PAGE>
-18-
4.3 FORWARDING OF DRAW DOWN NOTICES. Upon receipt of any Draw Down
Notice, the Agent shall deliver a copy thereof to each of the Lenders by 3:00
P.M., New York time, of the day it shall have received same PROVIDED the
Borrower shall have delivered such Draw Down Notice to the Agent by 11:00 A.M.,
New York time, of such day. Concurrently with the delivery of such copy of the
Draw Down Notice, the Agent shall deliver a notice to each Lender notifying it
(y) of its Pro Rata Share of the requested Advance, rounded up to the nearest
$100, and (z) of the Selected Amount or the Selected Amounts for such Lender,
rounded up to the nearest $100,000, with respect to each of the Selected
Maturities selected by the Borrower under the terms of the said Draw Down
Notice, except that, if the principal amount of such Selected Amount or Selected
Amounts would not be $100,000 or a whole multiple thereof, such principal amount
shall be increased or reduced by the Agent in its sole discretion to the nearest
whole multiple of $100,000. Notwithstanding the foregoing, with respect to the
first Advance, the Agent shall perform the foregoing functions as expeditiously
as possible upon receipt of the relevant Draw Down Notice, and may, if it has
prior knowledge, perform the foregoing functions prior to and in anticipation of
the receipt of the said Draw Down Notice.
4.4 LENDERS TO MAKE FUNDS AVAILABLE. Subject to the conditions set forth
in Article 10, by no later than 12:00 noon, New York time, on the date of the
requested Advance specified in the copy of the Draw Down Notice delivered to
each of the Lenders under the provisions of Section 4.3, each Lender shall make
available to the Agent, in same-day funds, an amount equal to the Pro Rata Share
of such Lender of the Advance to be made on the date requested as specified in
any Draw Down Notice or Notices.
4.5 DISBURSEMENT OF DRAW DOWN NOTICE FUNDS. On the date of any requested
Advance specified in a Draw Down Notice, subject to the conditions set forth in
Article 10, the Agent shall disburse the funds it shall have received under the
terms of Section 4.4 by crediting such funds to the Borrower's Account. It is
expressly acknowledged and agreed that where prior to crediting such funds to
the Borrower's Account, the Agent receives from the Borrower, in form and
substance satisfactory to the Agent, an unconditional and irrevocable direction
of payment instructing the Agent as to how to dispose of such funds, or
alternatively, a particular Draw Down Notice provides such a direction of
payment, the Agent shall comply with such direction of payment and for all
purposes of this Agreement, such funds, irrevocably and conclusively, shall be
deemed to have been disbursed to the Borrower, if they are disposed of in the
manner contemplated in any such direction of payment.
4.6 CREDITS BY OR ON BEHALF OF LENDERS TO CONSTITUTE ADVANCES. The
Borrower hereby expressly acknowledges and agrees with respect to the Borrower's
Account that all deposits and credits made into said account under the terms
hereof by the Agent in its personal capacity as a Lender hereunder or in its
capacity as Agent on behalf of the other Lenders shall constitute Advances by
the Lenders under the terms hereof.
4.7 MAINTENANCE OF LEDGERS BY THE AGENT. The Agent will open and
maintain on its books at the Agent's Office a loan ledger (the "Loan Ledger")
for the Borrower evidencing the whole and each constituent part of the Loans.
The said ledgers shall constitute, in the absence of manifest error, conclusive
evidence of the whole and each constituent part of the Loans, the date any
Advance is made to the Borrower and the aggregate amounts from time to time paid
by the
Page 31 of 103
<PAGE>
-19-
Borrower on account of principal of and interest on such Loans and on account
of the Stand-By Fee with respect to the Available Commitments. Any failure of
the Agent to record a transaction on the Loan Ledger in a timely fashion shall
not affect or impair the validity of the obligation of the Borrower to repay
the Loans by and when herein provided. The Agent shall advise the Borrower
and each of the Lenders promptly after the end of each calendar month of the
entries during the previous month and of the aggregate amounts due by the
Borrower to the Lenders hereunder. The obligation of the Borrower to repay
the Loans shall be evidenced by this Agreement and by the Loan Ledger
maintained by the Agent,it being the intention of the parties hereto that the
obligations of the Borrower with respect to the Loans are to be evidenced only
as stated herein and not by separate promissory notes.
4.8 AUTHORITY TO DEBIT AND CREDIT. The Borrower does hereby expressly
and irrevocably authorize the Agent to effect all the necessary, debits,
deposits and credits with respect to the Borrower's Account, the whole in order
for the Agent to accommodate the Lenders in making Advances and in order to
accommodate the Borrower in making payments to the Lenders and the Agent, the
whole under and subject to the terms of this Agreement.
4.9 SET-OFF AND COMPENSATION BY THE LENDERS AGAINST THE BORROWER'S
ACCOUNT. In addition to any rights now or hereafter granted to any Lender
under Law and not by way of limitation of any such rights, upon the occurrence
of an Event of Default, the Lenders, through the Agent, are hereby irrevocably
authorized by the Borrower, at any time and from time to time, without notice to
the Borrower, or to any other Person, any such notice being hereby expressly
waived, to effect compensation, to set-off, to appropriate and to apply any and
all deposits and credits in the Borrower's Account and any other Indebtedness at
any time held or owing by such Lenders through the Agent to or for the credit or
account of the Borrower against and on account of the obligations and
liabilities of the Borrower to the Lenders under this Agreement or the Security
Documents or any one thereof as herein provided, including, but not limited to,
all claims of any nature or description arising out of or connected with this
Agreement or the Security Documents or any one thereof, irrespective of whether
or not the Agent shall have made any demand hereunder or shall have declared the
amounts referred to in subsections 15.2.1 and 15.2.2 to be immediately due and
payable as provided in Section 15.2 and although said obligations and
liabilities or any one thereof, shall be contingent and unmatured. With respect
to the said accounts, all deposits and credits made in said accounts shall
permit the Lenders to exercise through the Agent, their rights under this
Section 4.9 notwithstanding the fact that such accounts shall be maintained with
the Agent. For the purposes of the application of this Section 4.9, the
Borrower and the Lenders agree that the benefit of any term applicable to any
deposit, credit, indebtedness, liability or obligation (collectively referred to
in this Section 4.9 as the "Deposit") referred to in this Section 4.9 shall be
lost immediately before the time when the Lenders shall exercise, through the
Agent, their rights under this Section 4.9 in respect of such Deposit.
4.10 FAILURE BY ANY LENDER TO ADVANCE. The failure by any Lender to make
an Advance in accordance with its obligations hereunder shall not relieve the
other Lenders of their several obligations to make an Advance (in accordance
with their respective obligations) equal to their respective Pro Rata Share of
the aggregate amount of any Advance requested by the Borrower, nor shall any
Lender be responsible for the obligations of any other Lender.
Page 32 of 103
<PAGE>
-20-
4.11 TEMPORARY ADVANCES BY THE AGENT. Without in any way limiting the
generality of the provisions of Section 4.10, unless the Agent shall have
received a written notice from a Lender by 5:00 P.M., New York time, of the
Business Day prior to the date of any requested Advance that such Lender will
not make available to the Agent such Lender's Pro Rata Share of such Advance,
the Agent may irrevocably and unconditionally assume that such Lender shall make
such Pro Rata Share available to the Agent on the date of such requested Advance
in accordance with the provisions of Section 4.4 and the Agent may, in reliance
upon such assumption, make available to the Borrower on such date a
corresponding amount. If a Lender does not so make available to the Agent its
Pro Rata Share of such Advance and the Agent does make available to the Borrower
such amount, such Lender shall pay such Pro Rata Share to the Agent on demand,
together with interest thereon for each day from and including the date such Pro
Rata Share of such requested Advance was not made available, at a rate per annum
equal to that which the Borrower would have been obliged to pay to such Lender
had the said Lender made available such Pro Rata Share of such requested
Advance. A certificate of the Agent submitted to any Lender with respect to any
amount owing under this Section 4.11 shall be conclusive, absent manifest error.
If such amount is so made available to the Borrower, in the absence of such
notice from such Lender, such payment to the Agent by such Lender shall
constitute such Lender's Advance on the date of such requested Advance for all
purposes of this Agreement. If such amount is not so made available to the
Agent, then the Agent shall notify the Borrower of such failure and, without in
any way affecting or otherwise diminishing the obligation of such Lender to pay
such amount to the Agent on demand, on the third Business Day following the date
of such requested Advance, the Borrower shall pay to the Agent such Pro Rata
Share together with interest thereon for each day that the Borrower had the use
of such Pro Rata Share of the requested Advance at a rate per annum equal to
that which the Borrower would have been obliged to pay to such Lender had the
said Lender made available such Pro Rata Share of such requested Advance. Any
such amount advanced by and repaid to the Agent shall not be deemed to be a Loan
hereunder.
ARTICLE 5
INTEREST, STAND-BY FEE, COMMITMENT FEE
AND AGENCY FEE
5.1 INTEREST ON A EURODOLLAR BASIS. The principal amount of the
Revolving Loan of each Lender which, at any time and from time to time remains
outstanding and which is not a Prime Rate Loan, shall bear interest, computed
daily, on the daily balance of the said Revolving Loan, from each relevant
Rollover Date at an annual rate applicable for each such day equal to the
Eurodollar Rate applicable to each relevant Selected Amount of such Lender plus
1.125% and shall be in effect from and including such Rollover Date up to and
including the day preceding the next following Rollover Date.
Page 33 of 103
<PAGE>
-21-
5.2 INTEREST ON A PRIME RATE BASIS. The principal amount of the
Revolving Loan of each Lender which, at any time and from time to time remains
outstanding and upon which the Borrower, under the terms of this Agreement, is
required to pay interest on a Prime Rate Basis shall bear interest, computed
daily, on the daily balance of the said Revolving Loan from the date of its
first Advance or its Conversion Date, as the case may be, up to and including
the day preceding the day of its full repayment (whether under the provisions of
Article 8 or 15, as the case may be), at an annual rate applicable for each such
day equal to the Prime Rate at the close of business on each such day.
5.3 PAYMENT OF INTEREST. The interest payable in accordance with any of
the foregoing provisions and computed as aforesaid on the amount outstanding
from time to time shall be payable in arrears:
5.3.1 in the case of the Prime Rate Loans, on the 26th day of each
month, the first such payment of interest becoming due and payable on the first
Interest Payment Date following the date the first said Advance was made, with
interest on all overdue interest payable at the rate applicable to principal
plus 2.00% during the period in which it remains unpaid, computed daily,
compounded monthly on each Interest Payment Date and payable upon the demand of
the Agent, which demand shall be made at the request of the Majority Lenders;
5.3.2 in the case of the Eurodollar Loans, on the next following
Rollover Date applicable to a Selected Amount or Selected Amounts, with interest
on all overdue interest at an annual rate applicable for each day during the
period in which it remains unpaid equal to the highest rate of interest then
payable under the Eurodollar Loans plus 2.00%, computed daily, compounded
monthly in arrears on the 26th day of each month and payable upon the demand of
the Agent, which demand shall be made at the request of the Majority Lenders.
The calculation of the commencement and the termination of any period under this
subsection 5.3.2 shall be made in conformity with the provisions of paragraphs
1.1.103.1 to 1.1.103.3 inclusively; and
5.3.3 in the case of the Revolving Loans as a whole, on the last
day of the Revolving Period, or, if applicable, of the Term Period.
5.4 ROLLOVERS OF THE EURODOLLAR LOANS. Effective on any Business Day
during the Revolving Period and the Term Period, by written notice to the Agent,
substantially in the form attached hereto as Schedule "D", at least three
Banking Days prior to the Conversion Date (which for the purposes of this
Section 5.4 must be a Rollover Date and a Banking Day) the Borrower may request
that the interest payable on the principal amount of the Eurodollar Loan of each
Lender, which is to be rolled over, be calculated in accordance with the
provisions of Sections 5.1 and .3. By so requesting, the Borrower shall elect
that the Eurodollar Rate be determined by the Agent two Banking Days prior to a
Rollover Date with respect to a Selected Amount or Selected Amounts for each
Lender on the basis of a Eurodollar Deposit or Deposits in a principal amount
approximately equal to the Selected Amount or each of the Selected Amounts of
such Lender having a maturity of 30, 60 or 90 days as applicable, after such
Rollover Date. The same procedure as that described above shall be followed
where the Borrower issues a Draw Down Notice and requests an Advance. Where the
Borrower, in connection with a rollover referred to above, has not delivered a
notice to the Agent under the terms of this Section 5.4 by 11:00 A.M., New York
time, three Banking Days
Page 34 of 103
<PAGE>
-22-
prior to the relevant Rollover Date, the Borrower shall be deemed to have
elected to have interest on the affected Selected Amount or Selected Amounts of
each Lender calculated on a Eurodollar Rate Basis determined on the basis of a
Selected Maturity of 30 days.
5.5 LIMITS ON THE DETERMINATION OF THE EURODOLLAR RATE. Nothing
contained in this Agreement shall be construed or interpreted so as to permit
the Borrower, in connection with the determination of the Eurodollar Rate:
5.5.1 to elect a Selected Maturity on any Rollover Date which
would extend beyond the termination of the Revolving Period or, if applicable,
the Term Period; or
5.5.2 with respect to any Selected Maturity, to elect Selected
Amounts which in the aggregate would be for a principal amount of less than
$5,000,000 and whole multiples of $1,000,000; or
5.5.3 to elect otherwise than identical Selected Maturities for
each of the Lenders and Selected Amounts for each Lender corresponding in
principal to the Pro Rata Share of such Lender.
Without limiting the generality of the foregoing, the Borrower shall elect
Selected Maturities, with respect to Selected Amounts of not less than each of
the Scheduled Reductions of Commitments, which shall mature on each Scheduled
Commitment Reduction Date.
5.6 FORWARDING OF NOTICES BY AGENT WITH RESPECT TO EURODOLLAR RATE
ROLLOVERS. Upon receipt of any Rollover Notice under the provisions of Section
5.4, the Agent shall deliver a copy thereof to each of the Lenders by 3:00 P.M.,
New York time, of the day it shall have received same provided the Borrower
shall have delivered such Rollover Notice to the Agent by 11:00 A.M., New York
time, of such day. Concurrently with the delivery of such copy of the Rollover
Notice, the Agent shall deliver a notice to each Lender notifying it (y) of its
Pro Rata Share of the Eurodollar Loans which the Borrower requests to be rolled
over rounded up to the nearest $100,000 and (z) of the Selected Amount or the
Selected Amounts for such Lender, rounded up to the nearest $100,000, with
respect to each of the Selected Maturities selected by the Borrower under the
terms of the said Rollover Notice, except that, if the principal amount of such
Selected Amount or Selected Amounts would not be $100,000 or a whole multiple
thereof, such principal amount shall be increased or reduced by the Agent in its
sole discretion to the nearest whole multiple of $100,000. For all purposes of
this Agreement, any Rollover Notice delivered to the Agent after 11:00 A.M., New
York time, on any Banking Day, shall be deemed to have been delivered on the
next following Banking Day.
5.7 ESTABLISHMENT OF THE EURODOLLAR RATE AS AT 11:00 A.M., LONDON
TIME. The Eurodollar Rate shall be established as at 11:00 A.M., London time,
two Banking Days prior to the relevant Rollover Date. Before the end of
business, two Banking Days prior to the said Rollover Date, the Agent shall
notify the Borrower and each of the Lenders what shall be the Eurodollar Rate
applicable to each Selected Amount for each Selected Maturity.
Page 35 of 103
<PAGE>
-23-
5.8 NO REVOCATION OR WITHDRAWAL OF ROLLOVER NOTICES. Any Rollover Notice
once delivered to the Agent, may not subsequently be revoked or withdrawn by the
Borrower.
5.9 INTEREST ON LOANS GENERALLY. Where no specific provision is made in
this Agreement for interest on any outstanding amount which may be payable by
the Borrower under the terms of this Agreement, interest thereon shall be
computed and be payable on a Eurodollar Rate Basis determined on the basis of a
Selected Maturity of 30 days.
5.10 COMPUTATION OF INTEREST AND THE STAND-BY FEE. Under the terms of
this Agreement:
5.10.1 interest in respect of the Prime Rate Loans shall be
calculated on the basis of a 365 or, as the case may be, 366 day year for the
actual days elapsed during such period;
5.10.2 interest in respect of Eurodollar Loans shall be calculated
on the basis of a 360 day year for the actual days elapsed; and
5.10.3 the Stand-By Fee shall be calculated on the basis of a 360
day year for the actual days elapsed.
5.11 STAND-BY FEE. The Borrower hereby covenants and agrees to pay to the
Agent, for the account of each Lender, a Stand-By Fee equal to 0.375% per annum,
computed daily, on the daily balance of the Available Commitment of each such
Lender during the Revolving Period.
5.12 PAYMENT OF THE STAND-BY FEE. The Stand-By Fee payable in accordance
with the provisions of Section 5.11 and computed as aforesaid shall be payable
in arrears on the 26th day of each of the months of January, April, July and
October, the first such payment of the Stand-By Fee becoming due and payable on
July 26, 1994. Where at any time during the Revolving Period, the Commitments
are terminated or reduced as contemplated in Section 2.3, as of and on the
effective date of such termination or reduction, the Borrower shall pay the
Stand-By Fee associated with the amount of the Commitments so terminated accrued
to such date.
5.13 ARREARS ON THE STAND-BY FEE. Any arrears on the payment of the
Stand-By Fee shall bear interest, computed daily, on the daily balance thereof
from the date it becomes due up to and including the date preceding the date of
full payment thereof at an annual rate applicable for each such day equal to the
highest rate of interest then payable under the Eurodollar Loans plus 2.5%,
compounded monthly in arrears on the 26th day of each month and payable upon the
demand of the Agent, which demand shall be made at the request of the Majority
Lenders, with interest at the rate applicable to the principal amount of the
Stand-By Fee during the period in which it remains unpaid, computed and payable
as aforesaid. PROVIDED, HOWEVER, where no Eurodollar Loans are outstanding, any
arrears on the payment of the Stand-By Fee shall bear interest as aforesaid at
an annual rate applicable on each such day equal to the Prime Rate at the close
of business on each such day, compounded monthly in arrears on the 26th day of
each month, and payable upon the demand of the Agent, which demand shall be made
at the request of the Majority Lenders, with interest on all overdue interest at
the rate applicable to the principal amount of the Stand-By Fee during the
period in which it remains unpaid, computed and payable as aforesaid.
Page 36 of 103
<PAGE>
-24-
5.14 INTEREST LIMITATION. Notwithstanding any other term of this
Agreement or any other document referred to herein or therein, the maximum
amount of interest which may be charged to or collected from any Person liable
hereunder shall be absolutely limited to, and shall in no event exceed, the
maximum amount of interest which could lawfully be charged or collected under
applicable law (including, to the extent applicable, the provisions of 5197 of
the Revised Statutes of the United States of America, as amended, 12 U.S.C.
Section 85, as amended), so that the maximum of all amounts constituting
interest under applicable law, howsoever computed, shall never exceed as to any
Person liable therefor such lawful maximum, and any term of this Agreement or
any other document referred to herein or therein which could be construed as
providing for interest in excess of such lawful maximum shall be and hereby is
made expressly subject to and modified by the provisions of this Section.
5.15 COMMITMENT FEE. The Borrower hereby covenants and agrees to pay to
the Agent, for the account of the Lenders, a Commitment Fee equal to 0.75% of
the Commitments as initially established under Section 2.1. The Commitment Fee
shall be payable concurrently with the execution of this Agreement and, except
as expressly provided in Section 5.16, shall under no circumstances be
refundable in whole or in part even if no Advance is ever made under the terms
hereof.
5.16 PARTIAL REFUND OF THE COMMITMENT FEE. Where at any time during a
period of 180 days following the execution of this Agreement, the Borrower
successfully completes either a public issue or a private placement of any
equity instrument, debt instrument convertible into equity or of any pure debt
instrument, in each case under terms and conditions no more onerous than those
contemplated in this Agreement (such placement to be referred to herein as a
"Public or Private Placement") and uses the net proceeds of same to effect an
optional prepayment of the Revolving Loans under Section 8.2 and does
furthermore exercise its rights under subsection 2.3.3 and reduces the
Commitments by an amount equal to such net proceeds, then the Lenders shall
reimburse to the Borrower a portion of the Commitment Fee previously received by
them equal to 0.375% of the amount by which the Borrower so reduced the
Commitments. For the purposes hereof, in determining whether or not the terms
and conditions attaching to any of the foregoing instruments are more onerous
than those contemplated in this Agreement, the following shall be considered as
constituting more onerous terms (v) a maturity which is prior to April 25, 1999,
(w) an aggregate pricing attaching to the instrument which is greater than that
relating to the Commitments and the Revolving Loans, PROVIDED, HOWEVER, that
where such instrument would bear interest at a fixed rate until maturity, such
rate of interest may be higher than that applicable to the Revolving Loans so
long as it does not exceed the prevailing market rate for such instruments, (x)
covenants which are more restrictive than those contemplated in this Agreement,
(y) defaults and events of default that would permit the holders of such
instruments to accelerate maturity earlier than the Lenders are permitted to do
under the terms hereof or (z) the creation of Liens on any assets of the
Borrower or any Subsidiary thereof or the granting or undertaking by DLFC or any
Subsidiary thereof of any Guarantee Obligation which provides greater benefits
than those contemplated by the Support Agreement.
Page 37 of 103
<PAGE>
-25-
5.17 AGENCY FEE. The Borrower shall pay to the Agent, for its account
exclusively, an annual agency fee (to be determined by separate agreement
between the Agent and the Borrower) in advance, (the "Agency Fee") the first
payment becoming due and payable concurrently with the execution of this
Agreement and thereafter, on each successive anniversary of such date until the
later of the date the Commitments are terminated or cancelled and the date that
the Loans are repaid in full. Under no circumstances shall the Agency Fee be
refundable either in whole or in part, even if no Advance is ever made under the
terms hereof.
ARTICLE 6
CHANGES IN CIRCUMSTANCES, INCREASED COSTS AND INDEMNITY
6.1 CHANGE IN CIRCUMSTANCES. If and each time that the Agent shall
reasonably determine that by reason of circumstances affecting the relevant
markets for Dollar deposits generally, adequate and reasonable means do not
exist for ascertaining the interest rate applicable to Eurodollar Loans or any
part thereof for any Selected Maturity, or the Agent shall receive a notice from
any Affected Lender that:
6.1.1 by reason of circumstances affecting the relevant markets
generally, deposits in Dollars are not available to such Affected Lender in such
market in the ordinary course of business in sufficient amounts to enable it to
make or maintain a Eurodollar Loan, for any Selected Maturity; or
6.1.2 by reason of any change in any Law or any change in exchange
controls or fiscal regulations (whether or not having the force of law) it is
impracticable for such Affected Lender to make or maintain a Eurodollar Loan for
any Selected Maturity; or
6.1.3 the Eurodollar Rate does not represent, by an amount which
the Affected Lender or Lenders deem in their sole discretion to be material, the
effective cost of funding a Eurodollar Loan to be made for any Selected Maturity
or continued for any new Selected Maturity by the Affected Lender;
the Agent shall promptly give notice of such determination by it or of receipt
by it of such notice as the case may be, to the Borrower and each of the
Lenders. Any notice given to the Agent by any Affected Lender under the
provisions of either one of subsections 6.1.2 or 6.1.3, must be accompanied by a
written explanation, and in the case of a notice under subsection 6.1.2 only, as
soon as same becomes available to such Affected Lender, must be accompanied by a
copy of the relevant Law, or of an extract thereof.
6.2 SUSPENSION OF RIGHTS TO CONVERT. If a notice has been given by the
Agent pursuant to Section 6.1:
6.2.1 such new Eurodollar Loans, if any, shall not be made
(whether pursuant to an Advance or a rollover) by the Lenders or an Affected
Lender or Lenders, as the case may be, and the Borrower's right to elect that
Advances be made or maintained as, or once made be rolled over
Page 38 of 103
<PAGE>
-26-
as Eurodollar Loans, by the Lenders or an Affected Lender or Lenders, as the
case may be, shall be suspended until such time as the Agent shall have
concluded or shall have been notified by an Affected Lender that the
circumstances giving rise to such suspension no longer exist, whereupon, it
shall notify the Borrower and the Lenders of such conclusion or notification as
the case may be; and
6.2.2 each of the Lenders or the Affected Lender or Lenders, as
the case may be, over the course of the next 10 Business Days following the
issuance of the notice by the Agent under Section 6.1, shall negotiate in good
faith with the Borrower and deliver to the Borrower in writing the terms of a
substitute basis for the continuation of the Eurodollar Loans of the Lenders, or
each of the Affected Lender or Lenders, as the case may be, which is,
financially, the substantial equivalent to each of the Lenders or the Affected
Lender or Lenders, as the case may be, of the terms provided herein. The terms
of the Substitute Basis for the Eurodollar Loans shall be effective from the
date agreed to by the Borrower and the Affected Lender or Lenders and the
provisions of this Agreement respecting such Eurodollar Loans shall be amended,
IPSO FACTO, to accord with the terms of the Substitute Basis. The Borrower
shall sign such documents, deeds and instruments and shall do all such things as
each of the Lenders or the Affected Lender or Lenders, as the case may be, shall
consider useful or necessary to give effect to the Substitute Basis. If by the
expiry of the said 10 Business Days no agreement has been reached with respect
to the Substitute Basis, the affected outstanding Eurodollar Loans, if any, will
thereupon and as of the said 10th Business Day, automatically be converted into
Prime Rate Loans and the Borrower shall forthwith upon receipt of a demand
therefor, pay to the Agent, for the account of the Lenders or the Affected
Lender or Lenders, as the case may be, the amounts referred to in Sections 6.6
and 6.7.
6.3 CHANGE IN LAW. If any Lender shall determine (which determination
shall be evidenced by a certificate submitted to the Agent and the Borrower by
such Lender and shall be final and conclusive upon all the parties hereto absent
manifest error) that w) the entering into force or the putting into effect of
any existing Law, directive, guideline (whether or not having the force of law)
or in the interpretation or administration thereof by any Governmental Authority
or other authority charged with the interpretation or administration thereof, x)
the adoption by any Governmental Authority of any Law, directive or guideline
(whether or not having the force of law), y) any change in any Law, directive or
guideline (whether or not having the force of law), or in the interpretation or
administration thereof by any Governmental Authority or other authority charged
with the interpretation or administration thereof, or z) any reversal by any
Governmental Authority or other authority of an interpretation of any Law,
directive or guideline (whether or not having the force of law), has:
6.3.1 made or shall make it unlawful or contrary to any such Law,
directive or guideline for such Lender to maintain or give effect to all or any
part of its obligations as contemplated by this Agreement, or to make or
maintain all or any part of its Prime Rate Loan or Eurodollar Loan hereunder,
then, the obligations of such Lender to so maintain or give effect to such part
of such obligations, or to make or maintain such part of such Prime Rate Loan or
Eurodollar Loan shall terminate, and, subject to the provisions of any such Law,
directive or guideline and those of Sections 6.6 and 6.7 with respect to losses,
expenses and costs, the Borrower, to the extent not prohibited by any such
Requirement of Law may convert such Prime Rate Loan or Eurodollar Loan, as the
case may be, into the other or may repay the affected Prime Rate Loan
Page 39 of 103
<PAGE>
-27-
or Eurodollar Loan of such Lender in full with accrued interest thereon, which
conversion or repayment shall be made at the expiration of the relevant Selected
Maturity last to expire before the effective date of such adoption, change or
reversal, or, if in the judgment of such Lender immediate conversion or
repayment is required, immediately upon demand of such Lender. Where any such
conversion is prohibited by any such Requirement of Law, then the Borrower shall
repay the affected Prime Rate Loan or Eurodollar Loan, as the case may be, of
such Lender in full with accrued interest thereon as contemplated above; or
6.3.2 x) imposed, modified, or deemed applicable any loan ceiling
against such Lender, or imposed, modified or deemed applicable any special tax,
reserve, deposit or similar requirement with respect to assets held by, deposits
in or for the account of, the acquisition of funds by, or loans or commitments
to lend by such Lender, or y) changed the basis of taxation of payments to such
Lender under this Agreement (other than a change affecting taxation on the
overall net income of such Lender), or z) imposed on such Lender any other
condition (including, but without limiting the generality of the foregoing, the
amount of capital required or expected to be maintained by such Lender as a
result of this Agreement or its Commitment) or monetary restraint with respect
to this Agreement (including without limitation with respect to the Stand-by
Fee), the Prime Rate Loan or the Eurodollar Loan, by such Lender, or any other
document, instrument or transaction contemplated hereby, and the result of any
of the foregoing is to increase the cost to such Lender of making or maintaining
its Commitment or any of its Prime Rate Loan or Eurodollar Loan, as the case may
be, or to reduce any amount receivable by such Lender hereunder with respect to
the Stand-by Fee or the Commitment Fee or with respect to an Prime Rate Loan or
a Eurodollar Loan, as the case may be, by an amount which such Lender deems to
be material, the Borrower, within 10 Business Days of receipt of the certificate
referred to above:
6.3.2.1 shall pay to such Lender such additional amount or
amounts computed by such Lender as will, on an after-tax basis, compensate such
Lender for such additional costs or reduction in amounts receivable; and
6.3.2.2 subject to the provisions of Sections 6.6 and 6.7 with
respect to losses, expenses and costs, to the extent not prohibited by any such
Requirement of Law, may convert such Prime Rate Loan or Eurodollar Loan, as the
case may be, of such Lender into the other or may repay the affected Prime Rate
Loan or Eurodollar Loan, as the case may be, of such Lender in full with accrued
interest thereon. Where any such conversion is prohibited by any such
Requirement of Law, then the Borrower shall repay the affected Prime Rate Loan
or Eurodollar Loan, as the case may be, of such Lender in full with accrued
interest thereon as contemplated above.
6.4 OPTION TO REPLACE LENDERS. If any Lender shall become an Affected
Lender, or if any Lender shall fail to make an Advance in accordance with its
obligations hereunder, (in such latter case, such Lender, in this Section 6.4
shall be referred to as a "defaulting Lender") then, in each such case, provided
there does not then exist any Default or Event of Default, the Borrower may
request one or more Replacement Lenders to take over all or the affected portion
of such Lender's then outstanding Loans and to assume all or the affected
portion of such Lender's Commitment and obligations hereunder. If one or more
Replacement Lenders shall so agree, and if the Agent shall have consented in
writing to such assignment (which consent shall not be unreasonably withheld),
Page 40 of 103
<PAGE>
-28-
the Loans and Commitment of such Affected Lender or defaulting Lender, as the
case may be, may, at the direction of the Borrower, be automatically assigned to
such Replacement Lenders in accordance with subsection 18.9.1, in such amounts
as the Borrower may designate; PROVIDED, HOWEVER, that prior to any such
assignment, the Borrower shall have paid to the Affected Lender or defaulting
Lender, as the case may be, all amounts owing to it under Sections 6.2, 6.3,
6.6, 6.7 and Article 7.
6.5 NOTICE TO OTHER LENDERS. The Agent shall promptly give notice of
receipt by it of any notice delivered pursuant to the provisions of this Article
6 to each of the other Lenders and the Borrower.
6.6 REIMBURSEMENT OF LOSSES, ETC. Whenever any Lender or the Agent shall
sustain or incur any losses, out-of-pocket expenses, funding expenses or any
other costs in connection with:
6.6.1 the failure of the Borrower to borrow pursuant to a Draw
Down Notice issued under the provisions of Article 4 or the failure to rollover
pursuant to a Rollover Notice issued under the provisions of Article 5 (in each
case whether by reason of the Borrower's determination not to proceed, the non-
fulfilment of any of the conditions imposed on the Borrower set forth in this
Agreement or otherwise); or
6.6.2 the declaration that the Agent is required to make under
Section 15.2 requiring payment upon acceleration; or
6.6.3 conversions pursuant to Section 6.2; or
6.6.4 conversions or payments pursuant to Section 6.3; or
6.6.5 assignments to Replacement Lenders as contemplated in
Section 6.4; or
6.6.6 any payment, repayment, optional prepayment or mandatory
prepayment referred to in Sections 8.1 and 8.2 and subsection 8.4;
the Borrower agrees to pay such Lender or the Agent, upon demand, an amount
certified by such Lender or the Agent to be sufficient to compensate such Lender
or the Agent for all such losses, expenses and costs. The agreements of the
Borrower with respect to Sections 6.6 and 6.7 shall survive the repayment of the
Loans and the termination of this Agreement.
6.7 AMOUNT OF LOSSES, ETC. The losses, expenses and costs referred to in
Section 6.6 shall include, but not be limited to losses, expenses and costs
incurred by a Lender in connection with the redeployment of funds converted,
repaid, prepaid, not borrowed or not paid or prepaid, as the case may be, in an
amount equal to the premium, if any, that such Lender would be required to pay
were it to purchase, in the relevant market, prior to its maturity, on the date
of such conversion, repayment, prepayment, failure to borrow or failure to repay
or prepay, as the case may be, a term deposit instrument in a principal amount
equal to the affected Selected Amount and whose maturity is equal to the
remaining term of the affected Selected Maturity, and bearing interest at a rate
equal to the rate applicable or that would have been applicable under the terms
hereof to the funds
Page 41 of 103
<PAGE>
-29-
converted, repaid, prepaid, not borrowed, not paid or not prepaid, as the case
may be, on the date of such conversion, repayment, prepayment, failure to borrow
or failure to repay or prepay, as the case may be. The Agent or the Lender
making a claim under the provisions of Sections 6.6 and 6.7, as promptly as
practicable, shall provide to the Borrower a statement, supported where
applicable by documentary evidence, explaining in reasonable detail the amount
of any such loss, expenses or cost, which statement shall, in the absence of
manifest error, be conclusive with respect to the parties hereto.
6.8 LENDERS TO AVOID CREATING ADDITIONAL LIABILITY FOR THE
BORROWER. Each Lender agrees to use its best efforts to avoid incurring any
liability for which the Borrower is required to indemnify such Lender pursuant
to this Article 6 which best efforts shall include the transfer of the Loan of
such Lender to another office, branch, Subsidiary or Affiliate of such Lender.
PROVIDED, HOWEVER, that nothing herein shall require such Lender to take any
action which would cause such Lender or such Subsidiary or Affiliate thereof to
incur any additional cost or expense, or which would reduce any amount to be
received by such Lender or such Subsidiary or Affiliate thereof by an amount
which such Lender deems to be material or which would require such Lender or
such Subsidiary or Affiliate thereof to take any action which such Lender
determines in its sole judgment to be inadvisable for regulatory, competitive or
internal management reasons; and PROVIDED, FURTHER, that the Borrower shall
reimburse such Lender or such Subsidiary or Affiliate thereof for any such
additional cost incurred by such Lender in taking any action pursuant to this
Section 6.8.
ARTICLE 7
TAXES AND OTHER CHARGES
7.1 PAYMENTS WITHOUT DEDUCTIONS. The Borrower agrees to pay the Loans of
each Lender, in principal, interest, fees and accessories, free and clear of and
without deduction or withholding for (y) any and all present and future taxes
(including stamp taxes), levies, imposts, deductions, charges, withholdings,
duties, fees, interest, fines or penalties, but excluding however, taxes imposed
upon such Lender (any such Lender shall be referred to herein as a "Taxed
Lender") by the jurisdiction and political subdivision in which it may be
located or under the Laws of which it may have been constituted that may be
imposed from time to time either by the jurisdiction from which payment is made
or in connection with any amount required to be paid to such Taxed Lender
pursuant to this Agreement or by any jurisdiction with respect to the
preparation, execution, delivery, registration, performance, amendment or
enforcement of this Agreement (all of the foregoing, other than the excluded
items shall be collectively referred to herein as the "Local Taxes"), and (z)
any and all present and future taxes (including stamp taxes), levies, imposts,
deductions, charges, withholdings, duties, fees, interest, fines or penalties
that may be imposed from time to time by any jurisdiction with respect to the
payment by the Borrower of or the reimbursement by the Borrower for any Local
Taxes (all of the foregoing listed in clauses (y) and (z), other than the
excluded items, shall be collectively referred to herein as the "Taxes"). In
the event that any Taxed Lender shall have paid any Taxes, which under the terms
of this Section 7.1, the Borrower is obliged to pay, the Borrower, upon demand
shall reimburse such Taxed Lender the
Page 42 of 103
<PAGE>
-30-
amount of any such Taxes so paid by the latter, with interest on such amount, as
contemplated in this Agreement.
7.2 PAYMENTS OF ADDITIONAL AMOUNTS. If the Borrower is at any time
required by Law to make any deduction or withholding in respect of any Taxes
from any amount payable under this Agreement or is prevented by operation of Law
from paying, causing to be paid or reimbursing the payment of any Taxes, the
Borrower agrees to pay such additional amount as may be necessary in order that
the net amounts received by any Taxed Lender or Lenders, after such deduction or
withholding and after the deduction of any such Taxes not paid, caused to be
paid or reimbursed by the Borrower, shall equal the amounts which would have
been realized by such Taxed Lender or Lenders, if such deduction or withholding
had not been made and if such Taxes had been paid, caused to be paid or
reimbursed by the Borrower. Such additional amounts shall be paid (y) in the
case of amounts payable as a result of a deduction or withholding from an amount
payable under this Agreement, on the date the latter amount is payable and (z)
in the case of an amount payable as a result of the failure by the Borrower to
pay or reimburse such Taxes, on the earlier of the date on which such Taxes are
due and the fifth day following the receipt by the Borrower of a notice from the
Taxed Lender that such Taxes have been paid by such Taxed Lender.
7.3 INCREASE IN INTEREST RATES. If the Borrower is prevented by
operation of Law from paying or causing to be paid any amount required to be
paid by Section 7.2, the Borrower agrees to pay as additional interest payable
under this Agreement an amount equal to such required amount, on the applicable
Interest Payment Date if such amount is in respect of interest or, if otherwise,
on the next succeeding Interest Payment Date. The Borrower, at the request of
any Taxed Lender shall sign such documents, deeds and instruments and shall do
all such things as such Taxed Lender shall consider useful or necessary to give
full force and effect to such increase in the rate of interest.
7.4 REMITTANCES BY TAXED LENDER. With respect to any of such Taxes, the
Borrower shall make any required payment thereof within the time allowed under
Law and, within 30 days thereafter, shall furnish to any Taxed Lender such
certificates, receipts and other documents as may be available to establish any
tax credit to which such Lender may be entitled. If such Taxed Lender shall
determine that it has irrevocably obtained a credit or similar tax benefit with
respect to income taxes imposed by a jurisdiction in which it may be located or
under the Laws of which it has been constituted, on the basis of the payment of
such Taxes by the Borrower, such Taxed Lender, shall remit to the Borrower
promptly an amount equal to the amount of such credit or benefit as is, in its
discretion, exercised in good faith, equitably allocable to such payment by the
Borrower having taken into account all its dealings giving rise to similar
credits or benefits in relation to the same tax period. If such Taxed Lender
shall determine subsequently that, for any reason, the amount of such credit or
benefit has directly or indirectly been reduced, the Borrower, upon the request
of such Taxed Lender accompanied by evidence of such reduction, shall pay to
such Taxed Lender an amount equal to the amount of such reduction. All
determinations and computations required or permitted by this Section 7.4 shall
be made, and all assumptions, methods of allocation and other principles
necessary for or related to such determinations and computations shall be made
or selected, by such Taxed Lender in its sole discretion and shall constitute
PRIMA FACIE evidence of the amounts or matters so determined or computed.
Page 43 of 103
<PAGE>
-31-
7.5 LENDERS TO AVOID CREATING ADDITIONAL LIABILITY FOR THE
BORROWER. Each Lender agrees to use its best efforts to avoid incurring any
liability for which the Borrower is required to indemnify such Lender pursuant
to this Article 7 which best efforts shall include the transfer of the Loan of
such Lender to another office, branch, Subsidiary or Affiliate of such Lender.
PROVIDED, HOWEVER, that nothing herein shall require such Lender to take any
action which would cause such Lender or such Subsidiary or Affiliate thereof to
incur any additional cost or expense, or which would reduce any amount to be
received by such Lender or such Subsidiary or Affiliate thereof, by an amount
which such Lender deems to be material or which would require such Lender or
such Subsidiary or Affiliate thereof to take any action which such Lender
determines in its sole judgment to be inadvisable for regulatory, competitive or
internal management reasons; and PROVIDED, FURTHER, that the Borrower shall
reimburse such Lender or such Subsidiary or Affiliate thereof for any such
additional cost incurred by such Lender in taking any action pursuant to this
Section 7.5.
7.6 SURVIVAL OF AGREEMENTS. The agreements of the Borrower under this
Article 7 shall survive the repayments of the Loans and the termination of this
Agreement.
ARTICLE 8
PAYMENTS, REPAYMENTS AND OPTIONAL PREPAYMENTS
8.1 REPAYMENT OF REVOLVING LOANS. Where on the effective date of any
reduction to the Commitments, pursuant to any one of Sections 2.2 or 2.3, the
Revolving Loans exceed the Commitments once reduced as at such date, then the
Borrower hereby binds and obliges itself to repay on such effective date of any
such reduction, such portion of the Revolving Loans as would reduce said excess
to nil, PROVIDED, HOWEVER, that where such payment is required to be made on a
day which is not a Rollover Date with respect to the Eurodollar Loans being
repaid, concurrently with any such payment, the Borrower shall pay to the Agent,
for the account of the Lenders, any losses, expenses and costs incurred or to be
incurred by the Lenders in connection with such payment and referred to in
Sections 6.6 and 6.7, together, in all cases, with any accrued and unpaid
interest on any amount to be so repaid. Without in any way limiting the
generality of any of the foregoing, the Borrower shall repay the entire
principal amount of the Revolving Loans on the last day of the Revolving Period,
unless the Revolving Period has terminated as a consequence of the termination
of the Support Agreement, in which case, the Borrower shall repay the entire
principal amount of the Revolving Loan on the last day of the Term Period.
8.2 OPTIONAL PREPAYMENT OF THE REVOLVING LOANS. During the Revolving
Period and the Term Period, upon giving the Agent a notice prior to the proposed
prepayment, the Borrower may, on any Business Day, voluntarily prepay without
penalty or premium, the whole or a part of the principal amount of the Revolving
Loans, PROVIDED, HOWEVER, that where such optional prepayment is made on any day
which is not a Rollover Date with respect to the principal amount of such
Revolving Loans being so prepaid, concurrently with any such optional
prepayment, the Borrower shall pay to the Agent, for the account of the Lenders
any losses, expenses and costs incurred by the Lenders in connection with such
optional prepayment and referred to in Sections 6.6 and 6.7, together, in each
case, with any accrued and unpaid interest on any amounts so prepaid. Any
optional prepayment must be made (y) in whole multiples of $1,000,000 or, as the
case may be (z)
Page 44 of 103
<PAGE>
-32-
in an amount equal to the entire outstanding principal amount of the Revolving
Loans in all cases where the Revolving Loans are proposed to be voluntarily
prepaid in their entirety. Each notice of optional prepayment shall specify the
date the optional prepayment is proposed to be made and the principal amount of
the Revolving Loans proposed to be voluntarily prepaid. Such notice of
prepayment shall be irrevocable and shall oblige the Borrower to prepay the
Loans identified in such notice by the amount and the date stated therein. Any
notice of optional prepayment shall be delivered to the Agent at least three
Banking Days prior to any optional prepayment. Any such notice of prepayment,
once delivered to the Agent, may not subsequently be revoked or withdrawn by the
Borrower.
8.3 IMPUTATION OF PAYMENTS. Any payment, repayment or optional
prepayment made under this Agreement shall be imputed firstly against any
losses, expenses and costs incurred by the Lenders in connection with such
payment, repayment or optional prepayment and referred to in Section 6.7,
secondly against any accrued and unpaid interest on any amounts so paid, repaid
or voluntarily prepaid and thirdly against the principal amount of the Revolving
Loans being paid, repaid or voluntarily prepaid.
8.4 PAYMENT OF LOSSES, EXPENSES AND COSTS. If a repayment or an optional
prepayment referred to in Sections 8.1 and 8.2 is made on any day other than a
Rollover Date, concurrently with any such repayment or optional prepayment, the
Borrower shall pay to the Agent, for the account of the Lenders any losses,
expenses and costs incurred by the Lenders in connection with such repayment or
optional prepayment referred to in Sections 6.6 and 6.7.
8.5 CURRENCY OF PAYMENTS. All payments, repayments or optional
prepayments, as the case may be:
8.5.1 of principal under any of the Loans, shall be made in
Dollars;
8.5.2 of interest, shall be made in Dollars;
8.5.3 of the Stand-By Fee, the Commitment Fee and the Agency Fee,
shall be made in Dollars; and
8.5.4 of amounts referred to in Sections 6.6 and 6.7, shall be
made in the same currency as the losses, expenses and costs incurred by the
Lenders or the Agent, as the case may be.
8.6 PAYMENTS TO AGENT ONLY. All payments, repayments or optional
prepayments of principal of and interest on the Loans and of fees and other
amounts due and to become due hereunder by the Borrower must be effected by
direct payments to the Agent at the Agent's Office, in same day funds. Upon
receipt of any such payments, repayments or optional prepayments, the Agent
shall forthwith distribute to each of the Lenders their Pro Rata Share of the
aggregate amount received by the Agent. If for whatever reason any such
payments, repayments or optional prepayments are made directly to any Lender,
such Lender, following similar procedures of payments contemplated in Section
4.4, shall promptly deliver any amount received to the Agent for distribution.
All payments, repayments or optional prepayments made by the Borrower to the
Agent under this
Page 45 of 103
<PAGE>
-33-
Agreement for the account of the Lenders, shall be deemed to be payments,
repayments or optional prepayments made to the Lenders.
8.7 PAYMENT ON BUSINESS DAY AND BY 11:00 A.M. NEW YORK TIME. Whenever
any payment, repayment or optional prepayment falls due on a day which is not a
Business Day, such payment, repayment or optional prepayment shall be made on
the next following Business Day, save and except in the case of a Eurodollar
Loan, where the result of such an extension would be to extend such payment,
repayment or optional prepayment into another calendar month, same shall be made
on the immediately preceding Business Day. Furthermore, any amounts received
after 11:00 A.M. New York time, on any Business Day, shall be applied to the
appropriate payment, repayment or optional prepayment which was required to be
made on such Business Day, on the next following Business Day. Until so
applied, interest shall continue to accrue as provided in this Agreement on the
amount of such payment, repayment or optional prepayment.
8.8 PAYMENT BY AGENT AT THE RESPECTIVE BRANCHES OF ACCOUNT OF THE LENDERS.
All payments required to be made by the Agent to any of the Lenders shall be
made at such office or branch of such Lender as such Lender may specify from
time to time in accordance with the provisions of Section 18.1 by following at
all times procedures similar to those contemplated in Section 4.4.
8.9 OBLIGATION TO PAY ABSOLUTE. The obligations of the Borrower to make
payments on the Loans as and when in this Agreement provided shall be
unconditional and irrevocable, and shall be paid strictly in accordance with the
terms of this Agreement under all circumstances without any right of
compensation or set-off and notwithstanding any defence, right of action or
claim of any nature whatsoever which the Borrower may at any time have or have
had against the Agent or a Lender, whether in connection with this Agreement or
otherwise.
ARTICLE 9
SECURITY
9.1 SECURITY. As a general and continuing collateral security for the
performance by the Borrower of all its obligations present and future, direct
and indirect, absolute and contingent, presently owing and due and hereafter to
become owing and due to the Lenders and the Agent, including, without limiting
the generality of the foregoing, the performance of the obligations of the
Borrower towards the Lenders and the Agent under this Agreement and the Pledge
Agreement and the obligation to repay in principal, interest and accessories and
upon the terms and conditions provided for hereunder and thereunder, all present
and future Indebtedness of the Borrower and whether the Borrower be bound alone
or with another or others and whether as principal or surety, the Borrower,
either prior to, concurrently with or subsequent to the execution of this
Agreement, shall have:
Page 46 of 103
<PAGE>
-34-
9.1.1 executed and delivered to the Agent a pledge agreement in
the form attached hereto as Schedule "E" pursuant to the terms of which the
Loyal American Shares are to be pledged and a first ranking Lien is to be
created thereon, the whole in favour of the Agent for the benefit of the
Lenders;
9.1.2 delivered to the Agent, in its capacity as "Collateral
Custody Agent" under the Pledge Agreement, all certificates representing or
evidencing the Loyal American Shares, accompanied by duly executed instruments
of transfer or assignment, which instruments shall reflect that any subsequent
transfer or assignment by the Lenders of the Loyal American Shares shall be
subject to the terms and conditions of the Pledge Agreement;
9.1.3 provided the Agent with a duly executed copy of a support
agreement in the form attached hereto as Schedule "F" under the terms of which
DLFC shall provide the Borrower with certain covenants and agreements therein
contemplated; and
9.1.4 provided the Agent with a duly executed copy of an agreement
in the form attached hereto as Schedule "G" under the terms of which DLFC shall
confer upon the Lenders all of the benefit of the Support Agreement.
9.2 UNDERTAKING OF THE LENDERS TO RELEASE THE PLEDGE AGREEMENT AND THE
LOYAL AMERICAN SHARES. The Lenders do hereby covenant and agree to release the
Loyal American Shares from the Lien created thereon by the Pledge Agreement on
condition that:
9.2.1 on the date of any such proposed release, the Commitments
are equal to or less than $35,000,000;
9.2.2 on the date of any such proposed release, no Default or
Event of Default exists;
9.2.3 the Borrower shall have issued a notice to the Agent at
least 10 Business Days prior to the date of the requested release, requesting
same; and
9.2.4 the Borrower shall have paid any costs or expenses incurred
by the Agent or any Lender in connection with any such release.
9.3 REPAYMENT OF LOANS NOT TO AFFECT SECURITY. Subject to Section 9.2,
the repayment of the Loans by the Borrower shall not affect the collateral
security held by the Lenders under the terms of Section 9.1 as security for the
performance by the Borrower of any of its other obligations referred to in the
said Section 9.1.
Page 47 of 103
<PAGE>
-35-
ARTICLE 10
CONDITIONS PRECEDENT
10.1 PRIOR TO THE FIRST ADVANCE. Prior to or concurrently with the
request for the first Advance under the Available Commitments:
10.1.1 the Borrower shall have delivered to the Agent and the
Special Counsel:
10.1.1.1 certified copies of the charter documentation and by-
laws of DLFC, the Borrower and each Material Subsidiary of the Borrower and all
corporate action taken by DLFC and the Borrower authorizing the execution,
delivery and performance of the Loan Documents to which it is a party
(including, without limitation, a certificate of DLFC and the Borrower setting
forth the resolution of its board of directors authorizing the transactions
contemplated thereby);
10.1.1.2 a certificate in respect of the name and signature of
each of the officers or directors, respectively of DLFC, the Borrower and each
Material Subsidiary of the Borrower (y) who is authorized to sign on its behalf
the Loan Documents to which it is a party, and (z) who will, until replaced by
another officer, officers, director or directors duly authorized for that
purpose, act as its representative for the purposes of signing documents and
giving notices and other communications in connection with such Loan Documents.
The Agent and each Lender may rely conclusively on such certificates until the
Agent receives notice in writing from the Borrower to the contrary;
10.1.2 the Borrower shall have:
10.1.2.1 signed and executed such of the Security Documents it
is required to sign and execute and shall have delivered to the Agent the
Security Documents as well as all such other documents referred to in this
Section 10.1; and
10.1.2.2 attended to the due registration or filing of any
financing statement or statements required by any applicable Law with respect to
the Security Documents;
10.1.3 the Borrower shall have delivered to the Agent and the
Special Counsel:
10.1.3.1 the satisfactory opinion of Messrs. Armbrecht,
Jackson, DeMouy, Crowe, Holmes & Reeves, counsel to the Borrower and Loyal
American addressed to the Lenders, the Agent and the Special Counsel and dated
the date of the first Advance hereunder, in substantial conformity with the form
of opinion attached hereto as Schedule "H" and covering such other matters
incidental to the transactions contemplated hereby as the Majority Lenders,
through their Agent, may request;
Page 48 of 103
<PAGE>
-36-
10.1.3.2 the satisfactory opinion of Messrs. Proskauer, Rose,
Goetz & Mendelsohn, special New York counsel to the Borrower addressed to the
Lenders, the Agent and the Special Counsel, and dated the date of the first
Advance hereunder, in substantial conformity with the form of opinion attached
hereto as Schedule "I" and covering such other matters incidental to the
transactions contemplated hereby as the Majority Lenders, through their Agent,
may request;
10.1.3.3 the satisfactory opinions of Messrs. McCarthy,
Tetrault and of Ms. Lise Bernier, Director of Legal Affairs of DLFC who jointly
are counsel to DLFC, addressed to the Lenders, the Agent, the Canadian Special
Counsel, the Special Counsel and to Messrs. Proskauer, Rose, Goetz & Mendelsohn
and dated the date of the first Advance hereunder, in substantial conformity
with the form of opinions attached hereto as Schedule "J" and covering such
other matters incidental to the transactions contemplated hereby as the Majority
Lenders, through their Agents, may request;
10.1.3.4 the satisfactory opinion of Mr. William T. Gaynor Jr.,
Assistant General Counsel to Prairie States Life Insurance Company, counsel to
Prairie States Life Insurance Company and Prairie National Life Insurance
Company addressed to the Lenders, the Agent and the Special Counsel and dated
the date of the first Advance hereunder, in substantial conformity with the form
of opinion attached hereto as Schedule "K" and covering such other matters
incidental to the transactions contemplated hereby as the Majority Lenders,
through their Agent, may request;
10.1.3.5 the satisfactory opinion of Messrs. Proskauer, Rose,
Goetz & Mendelsohn, special New York Counsel to DLFC addressed to the Lenders,
the Agent and the Special Counsel, and dated the date of the first Advance
hereunder, in substantial conformity with the form of opinion attached hereto as
Schedule "L" and covering such other matters incidental to the transactions
contemplated hereby as the Majority Lenders, through their Agent, may request;
10.1.4 the Borrower shall have delivered to the Agent, a
certificate signed by two Responsible Officers of the Borrower attesting and
stating that:
10.1.4.1 each said officer has taken cognizance of all the
terms of the present Agreement and of the contracts, agreements and documents
ancillary thereto and of all documents and agreements governing the borrowings
of the Borrower; and
10.1.4.2 each said officer has taken cognizance and reviewed
the transactions, operations and status of business of the Borrower since the
last certificate given hereunder or, as the case may be, since the execution of
this Agreement, and that all conditions and requirements of this Agreement and
of contracts, agreements and documents ancillary thereto have been accomplished
and satisfied and that each said officer does not know of the existence, as of
the date of the certificate, of a condition or of any fact whatsoever,
constituting or having constituted, a Default or an Event of Default or, if such
condition exists or has existed during the period covered by the certificate,
then specifying its nature and duration and describing the measures taken or
intended to be taken to remedy the Default, Event of Default or anticipated
Event of Default;
Page 49 of 103
<PAGE>
-37-
10.1.5 the Agent shall have received the opinion of the Special
Counsel, addressed to the Lenders and the Agent and dated the date of the first
Advance hereunder, in form and substance satisfactory to the Majority Lenders
covering such matters incidental to the transactions contemplated hereby as the
Majority Lenders, through their Agent, may request;
10.1.6 the Agent shall have received a copy of an exemptive order
issued pursuant to Section 27-29-3(f)(2), CODE OF ALABAMA (1975) by the
Commissioner of Insurance of the State of Alabama with respect to the Pledge
Agreement;
10.1.7 the Agent shall have received the Annual Report on Form 10-K
filed by the Borrower pursuant to Section 13 or 15(d) of the 1934 Act for the
most recent fiscal year terminating prior to the date of the first Advance for
which such a report is due to be filed, which report, in the judgment of the
Majority Lenders, must confirm that there has occurred no material adverse
change since the Annual report of the Borrower on Form 10-K with respect to its
fiscal year ended on December 31, 1993;
10.1.8 the Agent shall have received payment in full of the
Commitment Fee and of the Agency Fee;
10.1.9 the Agent shall have received a statement of account from
the "Facility Agent" under the Existing Credit Agreement setting out the
outstanding Indebtedness of the Borrower under the Existing Credit Agreement, in
principal, interest, fees and accessories;
10.1.10 the Agent shall have received an irrevocable direction of
payment from the Borrower directing that the proceeds of the first Advance be
paid to the "Facility Agent" for the account of the "Banks" under the Existing
Credit Agreement;
10.1.11 the Agent shall have received evidence, satisfactory to the
Majority Lenders, that the Borrower has paid to the "Facility Agent" under the
Existing Credit Agreement an amount equal to the difference between the
Indebtedness of the Borrower, under the Existing Credit Agreement, in principal,
interest, fees and accessories and the amount of the first Advance; and
10.1.12 the Borrower shall have complied with all the applicable
terms and conditions of this Agreement.
10.2 ADVANCES UNDER THE AVAILABLE COMMITMENTS DURING THE REVOLVING
PERIOD. Subject to and upon compliance with all of the relevant terms and
conditions of this Agreement, at any time and from time to time during the
Revolving Period, the Borrower may draw down the whole or any part of the
Available Commitments, if on or prior to the date of any requested Advance, the
Agent:
10.2.1 shall have received a Draw Down Notice no less than three
Banking Days prior to a requested Advance;
10.2.2 shall have received a Certificate of Officers dated as of
the date of a requested Advance;
Page 50 of 103
<PAGE>
-38-
10.2.3 shall have calculated that the amount of the requested
Advance is not greater than the Available Commitments and in the case of the
first Advance, shall have concluded that it is not for less than the
Commitments; and
10.2.4 shall not have been informed by any Lender that a Default or
Event of Default exists under the terms hereof.
ARTICLE 11
REPRESENTATIONS AND WARRANTIES
So long as any Loan or any other amount payable hereunder is outstanding and
unpaid or the Borrower shall have the right to borrow hereunder (whether or not
the conditions to borrowing have been or can be fulfilled), the Borrower hereby
represents and warrants to the Lenders and the Agent with respect to itself and
its various Material Subsidiaries that:
11.1 CAPITAL STOCK OF THE BORROWER. The authorized Capital Stock of the
Borrower consists of 20,000,000 shares of voting common stock, $.05 par value
per share, of which, as of April 15, 1994, 7,593,757 shares were issued and
outstanding, and 5,000,000 preferred shares, $.01 par value per share, issuable
in series, of which, as of April 15, 1994, 41,468 Series A Redeemable
Convertible Preferred Shares ("Preferred Shares") were issued and outstanding
and 808 of such Preferred Shares were held by Loyal American. All such
outstanding shares of Capital Stock of the Borrower have been validly issued and
are fully paid and nonassessable shares, free of preemptive rights. Except for
options with respect to 534,023 shares of the Borrower's common stock granted
pursuant to the Borrower's Amended and Restated Executive Stock Option Plan,
there are no outstanding, nor has the Borrower agreed to grant or to issue, any
options, warrants or similar rights to others to acquire or receive any of its
authorized but unissued shares of Capital Stock. 517,739 shares of the
Borrower's Capital Stock were held on April 15, 1994 in the treasury of the
Borrower. There are no voting trusts or other agreements or understandings with
respect to the voting of the Capital Stock of the Borrower of which the Borrower
is aware. The Borrower's voting common stock is vested with all the voting
rights of the Borrower and the Borrower is not subject to any obligations
(contingent or otherwise) to repurchase or otherwise acquire or obtain any
shares of its Capital Stock except with respect to the Preferred Shares. The
Voting Shares of the Borrower are publicly traded on the American Stock
Exchange.
11.2 CAPITAL STOCK OF THE LOYAL AMERICAN. The authorized Capital Stock of
Loyal American consists of 2,500 shares of voting common stock, $3,000 par value
per share, of which, as of the date hereof, 1,000 shares are issued and
outstanding. All such outstanding shares of Capital Stock have been validly
issued and are fully paid and non-assessable shares and free of preemptive
rights. There are no outstanding, nor has Loyal American agreed to grant or to
issue, any options, warrants or similar rights to others to acquire or receive
any of its authorized but unissued shares of Capital Stock. No shares of the
Capital Stock of Loyal American are held on the date hereof in the treasury of
Loyal American. There are no voting trusts or other agreements or
understandings with respect to the voting of the Capital Stock of Loyal
American. The voting common stock of Loyal American is vested with all the
voting rights of Loyal American. Loyal American is not subject to
Page 51 of 103
<PAGE>
-39-
any obligation (contingent or otherwise) to repurchase or otherwise acquire or
retain any shares of its Capital Stock.
11.3 MATERIAL SUBSIDIARIES. The only Material Subsidiaries of the
Borrower are as listed in Schedule "M" hereto. The said Schedule correctly sets
forth as to each Material Subsidiary its name, the jurisdiction of its
incorporation, the jurisdiction of its principal place of business, the name of
its parent company, and the number of authorized shares of Capital Stock of such
Material Subsidiary. Each Material Subsidiary is a corporation duly organized,
validly existing and in good standing under the Laws of its jurisdiction of
incorporation and has all requisite power and authority (corporate and other)
and all necessary franchises and rights to own and operate its properties and to
conduct its business as currently conducted and as currently proposed to be
conducted. All of the outstanding shares of Capital Stock of each class of each
said Material Subsidiary have been validly issued and are fully paid and
nonassessable and are free and clear of any Liens.
11.4 OWNERSHIP OF SHARES. Schedule "N" hereof sets forth certain
information concerning each Person who, to the knowledge of the Borrower,
beneficially owns or exercises control over Voting Shares of the Borrower
comprising more than 10% of the votes attached to all of the Voting Shares of
the Borrower.
11.5 ORGANIZATION AND AUTHORITY. Each of DLFC, the Borrower and each
Material Subsidiary of the Borrower (x) is a corporation duly organized, validly
existing and in good standing under the Laws of the jurisdiction of its
incorporation; (y) has all requisite power and authority (corporate and other)
and all necessary franchises, licenses, permits and rights to own and operate
its properties, to conduct its business as currently conducted and as currently
proposed to be conducted; and (z) has made all filings and holds all licenses,
permits and foreign corporation registrations which are required under the Laws
of each jurisdiction in which the properties owned (or held under lease) by it
or the nature of its activities makes such filings, qualifications, licenses,
permits or registrations necessary, except for any such filings, qualifications,
licenses, permits or registrations, which, if not made or obtained would not
singly or in the aggregate have a Material Adverse Effect.
11.6 AUTHORIZATION OF DOCUMENTS BY THE BORROWER. The Borrower has the
power, and has taken all necessary action, to authorize it to enter into the
transactions contemplated hereunder, to create the security provided in such of
the Security Documents to which it is a party and to execute, deliver and
perform this Agreement and each of the Security Documents to which it is a party
in accordance with the terms thereof and to consummate the transactions
contemplated hereby and thereby. This Agreement and each of the Security
Documents to which Borrower is a party have been duly executed and delivered by
its duly authorized officers and this Agreement is, and each of the Security
Documents to which the Borrower is a party, when executed and delivered in
accordance with this Agreement will be a legal, valid and binding obligation of
the Borrower enforceable in accordance with its terms, subject, as to
enforcement of remedies, to any applicable bankruptcy, insolvency or other
similar Law affecting the enforcement of creditor's rights generally, and
subject to the limitation that the availability of the remedy of specific
performance or injunctive relief is subject to the discretion of the court
before which any proceeding therefor may be brought.
Page 52 of 103
<PAGE>
-40-
11.7 AUTHORIZATION OF DOCUMENTS BY THE DLFC. DLFC has the power, and has
taken all necessary action, to authorize it to enter into the transactions
contemplated by the Support Agreement and the DLFC Agreement, to create the
security provided in such of the Security Documents to which it is a party and
to execute, deliver and perform each of the Security Documents to which it is a
party in accordance with the terms thereof and to consummate the transactions
contemplated thereby. Each of the Security Documents to which DLFC is a party
has been duly executed and delivered by its duly authorized officers and
constitute the legal, valid and binding obligation of DLFC enforceable in
accordance with its terms, subject, as to enforcement of remedies, to any
applicable bankruptcy, insolvency or other similar Law affecting the enforcement
of creditor's rights generally, and subject to the limitation that the
availability of the remedy of specific performance or injunctive relief is
subject to the discretion of the court before which any proceeding therefor may
be brought.
11.8 COMPLIANCE WITH LAWS, ETC. OF AGREEMENT. The execution, delivery and
performance of this Agreement and each of the Security Documents in accordance
with their respective terms and the consummation of the transactions
contemplated hereby and thereby do not and will not require any consent or
approval, violate any Law, conflict with, result in a breach of, or constitute a
default under the incorporating documents, as amended from time to time, or
under the by-laws of anyone of DLFC, the Borrower or any Material Subsidiary of
the Borrower or under any agreement or instrument to which any one thereof is a
party or by which any one thereof or any of their respective properties may be
bound, or result in or require the creation or imposition of any Lien (other
than a Permitted Encumbrance) upon or with respect to any property now owned or
hereafter acquired by anyone thereof, except for the consents referred to in
subsection 10.1.6.
11.9 BUSINESS. The Borrower is engaged solely in the business of
financial services and other activities incidental thereto. Loyal American is
engaged solely in the business of insurance and financial services and other
activities incidental thereto.
11.10 COMPLIANCE WITH LAW. DLFC, the Borrower and each Material Subsidiary
of the Borrower are in compliance with all Laws, including without limiting the
generality of the foregoing, those relating to environmental matters,
non-compliance with which would, singly or in the aggregate, have a Material
Adverse Effect.
11.11 TITLE TO PROPERTY. The Borrower and each of its Material
Subsidiaries have good, marketable and legal title to all of their respective
properties and assets. None of the properties or assets of the Borrower or any
of its Material Subsidiaries is subject to any Lien, except Permitted Encumbran-
ces.
11.12 LITIGATION. Except as set out in Schedule "O", there is no action,
notice of infraction, suit or proceeding pending against nor, to the knowledge
of the Borrower, any action, notice of infraction, suit or proceeding threatened
against or in any other manner relating adversely to DLFC, the Borrower or any
Material Subsidiary of the Borrower or any of their respective properties in any
court or before any arbitrator of any kind or before or by any Governmental
Authority which is likely to be ultimately resolved in a manner which would,
singly or in the aggregate, have a Material Adverse Effect.
Page 53 of 103
<PAGE>
-41-
11.13 TAXES. All federal, state, provincial and other tax returns of DLFC,
the Borrower and the Material Subsidiaries of the Borrower required by Law to be
filed have been duly filed, and all federal, state, provincial and other taxes,
assessments and other governmental charges or levies upon DLFC, the Borrower and
the Material Subsidiaries of the Borrower and any of their respective
properties, incomes, profits, capital and assets, which are due and payable,
have been paid, except any such payment of which the concerned party is
contesting in good faith by appropriate proceedings and for which, in each case,
appropriate reserves have been provided on the books of DLFC, the Borrower or
the affected Material Subsidiary or Subsidiaries of the Borrower, as the case
may be, and as to which, in each case, neither any Lien, other than a Permitted
Encumbrance, has attached, nor any foreclosure, distraint, seizure, attachment,
sale or similar proceeding has been commenced. The charges, accruals and
reserves on the books of DLFC, the Borrower and the Material Subsidiaries of the
Borrower in respect of taxes are adequate, in the judgment of DLFC, the Borrower
and the Material Subsidiaries of the Borrower, respectively.
11.14 FINANCIAL CONDITION OF THE BORROWER. The audited consolidated
balance sheet of the Borrower and its Subsidiaries contained in the Borrower's
Annual Report on Form 10-K, prepared pursuant to Section 13 or 15(d) of the 1934
Act, for the year ended December 31, 1993, filed with the SEC and the related
consolidated statements of income and retained earnings and cash flows for such
period, accompanied by the report of Coopers & Lybrand, and the unaudited
consolidated balance sheet of the Borrower and its Subsidiaries contained in the
Borrower's Quarterly Report on Form 10-Q, prepared pursuant to Section 13 or
15(d) of the 1934 Act, for the quarters ended March 31, 1993, June 30, 1993 and
September 30, 1993 filed with the SEC and the related consolidated statement of
income and condensed statement of cash flows for such period, copies of which
have heretofore been furnished to the Lenders, present fairly the consolidated
financial position of the Borrower and its Subsidiaries as at such dates and the
consolidated results of their operations and changes in financial position for
the periods then ended. All such financial statements, including the schedules
and notes to such financial statements, have been prepared in accordance with
GAAP applied consistently throughout the periods involved. As of the date
hereof, neither the Borrower nor any of its Subsidiaries has any contingent
liability, liability for taxes, long-term lease or unusual forward or long-term
commitment which is material to the financial condition of the Borrower or any
of its Subsidiaries and which is not reflected in the foregoing statements or in
the notes thereto;
11.15 NO ADVERSE CHANGE WITH RESPECT TO THE BORROWER. Since December 31,
1993, there has been no material adverse change in the business, assets,
liabilities, financial position, results of operations or business prospects of
the Borrower and no event has occurred or failed to occur which has had or will
have a Material Adverse Effect.
11.16 FINANCIAL STATEMENTS OF DLFC. The financial statements and balance
sheet of DLFC as at December 31, 1993, and related statements of operations,
shareholders' equity and changes in financial position for the fiscal year then
ended, all as certified by Raymond, Chabot, Martin, Pare are complete and
correct in all material respects and present fairly, in accordance with Canadian
generally accepted accounting principles, consistently applied, the financial
position of DLFC as at such date. Except as disclosed in such balance sheets
and statements, DLFC has no material liabilities, contingent or otherwise, and
there were no material unrealized or anticipated losses of DLFC.
Page 54 of 103
<PAGE>
-42-
11.17 NO ADVERSE CHANGE WITH RESPECT TO DLFC. Since December 31, 1993,
there has been no material adverse change in the business, assets, liabilities,
financial position, results of operations or business prospects of DLFC and no
event has occurred or failed to occur which has had or will have a Material
Adverse Effect.
11.18 GOVERNMENTAL REGULATIONS. Neither DLFC, the Borrower nor any
Material Subsidiary of the Borrower is required to obtain any consent, approval,
authorization, permit or license from, or effect any filing or registration
with, any federal, state, provincial or local regulatory authority in connection
with the execution, delivery and performance, in accordance with their
respective terms, of any Loan Documents to which it is party, the borrowing
hereunder and the granting of the security created by the Security Documents,
except the consents referred to in subsection 10.1.6.
11.19 MATERIAL AGREEMENTS AND RESTRICTIONS. Neither one of DLFC, the
Borrower nor any Material Subsidiary of the Borrower is a party to any
indenture, loan or credit agreement, or any lease or other agreement or
instrument, or subject to any governmental or other restriction, or any
judgment, decree or order of any Governmental Authority which has or, so far as
the Borrower can now reasonably foresee, will have a Material Adverse Effect.
11.20 PRIORITY OF LIEN. The Liens created, evidenced or constituted by the
Pledge Agreement are valid and are subject to no Liens that are prior to, on a
parity with or junior thereto and are enforceable as security for the
obligations secured thereby against the Borrower and all third parties.
11.21 APPROVALS. Except for any of such Approvals which, if not obtained
or if not in full force and effect, would not singly or in the aggregate have a
Material Adverse Effect, all approvals, certificates of authorization, consents,
permits, orders, registrations, declarations, filings, notices and other actions
to be taken in respect of any federal, state, provincial or local Governmental
Authority (the "Approvals"), which are necessary for the ownership and operation
by each one of DLFC, the Borrower and the Material Subsidiaries of the Borrower
of its business and all of the properties related thereto, have been duly
obtained, made or taken and are in full force and effect, are not subject to
further approval or appeal, or any pending or threatened legal or administrative
proceedings, and the Borrower has no knowledge of any facts which, as a matter
of Law, are sufficient to justify the commencement by any Governmental Authority
of any proceeding for the termination or revocation of such Approvals.
11.22 U.S. FEDERAL REGULATIONS. No part of the proceeds of the Revolving
Loans hereunder will be used for "purchasing" or "carrying" any "margin stock"
within the respective meanings of each of the quoted terms under Regulation U of
the Board as now and from time to time hereafter in effect or for any purpose
which violates the provisions of the Regulations of the Board. If requested by
the Agent, the Borrower will furnish to each Lender a statement to the foregoing
effect in conformity with the requirements of Federal Reserve Form U-1 referred
to in said Regulation U.
Page 55 of 103
<PAGE>
-43-
11.23 ERISA. No Reportable Event has occurred during the immediately
preceding six-year period with respect to any Plan which, if such Plan then
terminated, could have a Material Adverse Effect, and each Plan has complied and
has been administered in all material respects with applicable provisions of
ERISA and the Code. The present value of all benefits under each Single
Employer Plan maintained by the Borrower or any Commonly Controlled Entity
(based on those assumptions used to fund such Plan) did not, as of the end of
the last Plan year applicable thereto, exceed the value of the assets of such
Plan allocable to such Benefits by an amount which could have a Material Adverse
Effect. Except as disclosed pursuant to Section 13.6, neither the Borrower nor
any Commonly Controlled Entity has during the immediately preceding six-year
period had a complete or partial withdrawal from any Multiemployer Plan which
would have a Material Adverse Effect, and the liability to which the Borrower or
any Commonly Controlled Entity would become subject under ERISA if the Borrower
or any such Commonly Controlled Entity were to withdraw completely from all
Multiemployer Plans as the most recent valuation date applicable thereto could
not have a Material Adverse Effect. Neither the Borrower nor any Commonly
Controlled Entity has received notice that any Multiemployer Plan is in
Reorganization or Insolvent nor, to the best knowledge of the Borrower, is any
such Reorganization or Insolvency reasonably likely to occur.
11.24 ACCURACY AND COMPLETENESS OF INFORMATION. All information, reports
and other papers and data relating to the Borrower, and any Material Subsidiary
of the Borrower, furnished to any Lender by or on behalf of the Borrower or any
of the said Persons, as the case may be, were, at the time the same were so
furnished, taken as a whole, complete and correct in all material respects to
the extent necessary to give such Lender a true and accurate knowledge of the
subject matter. No fact is currently known to the Borrower which has or may
have a Material Adverse Effect which has not been set forth or referred to
herein or in such information, reports and other papers and data or otherwise
specifically disclosed in writing to the Lenders.
11.25 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All statements contained
in any certificate, financial statement, legal opinion or other document
delivered to the Agent or any Lender by or on behalf of the Borrower, including
or pursuant to or in connection with this Agreement, the Security Documents or
any other documents contemplated by any thereof or any amendments to any
thereof, or in connection with any of the transactions contemplated hereby or
thereby, shall constitute representations and warranties made under this
Agreement. All representations and warranties made under this Agreement, other
than those made under or in connection with Sections 11.1, 11.2, 11.3 and 11.4
and other than those the incorrectness of which individually or in the
aggregate, would not have a Material Effect shall be deemed to be made and shall
be true and correct, in all material aspects, at and as of the date of this
Agreement, at and as of the date of any Advance hereunder and so long as any
Loan or other amount payable hereunder is outstanding and unpaid. The
representations and warranties made under or in connection with Sections 11.1,
11.2, 11.3 and 11.4 shall be true and correct, in all material respects, at and
as of the date of this Agreement. All representations and warranties made under
this Agreement shall survive, and not be waived, by the execution and delivery
of this Agreement, any investigation by or on behalf of the Agent or any Lender
or the making of any Loan under this Agreement.
Page 56 of 103
<PAGE>
-44-
ARTICLE 12
GENERAL COVENANTS
So long as any Loan or any other amount payable hereunder is outstanding and
unpaid or the Borrower shall have the right to borrow hereunder (whether or not
the conditions to borrowing have been or can be fulfilled), and unless the
Majority Lenders shall otherwise consent in writing, which consent shall not be
unreasonably withheld, the Borrower covenants and agrees with respect to itself
and its various Material Subsidiaries, as applicable, that it will and will
cause each of its Material Subsidiaries to:
12.1 PRESERVATION OF EXISTENCE, ETC. Preserve and maintain its corporate
existence and preserve and maintain all rights, franchises, licenses and
privileges necessary or desirable in the normal conduct of its business, and
qualify and remain qualified and authorized to do business in each jurisdiction
which the character of its properties or the nature of its business requires
such qualification or authorization and where the failure to so preserve and
maintain said rights, franchises, licences and privileges or where the failure
to qualify, as the case may be, would singly or in the aggregate, have a
Material Adverse Effect. So long as the Borrower shall be entitled to borrow
hereunder, the Borrower shall maintain, and take all actions necessary to
maintain, in full force and effect the action taken by the Borrower to authorize
the borrowings hereunder and the execution, delivery and performance in
accordance with their respective terms of this Agreement, and any other
documents required or contemplated hereunder and the consummation of the
transactions contemplated hereby and thereby, and notify the Agent of any change
in the incumbency of Persons authorized by the Borrower to sign documents as
stated in the certificate of incumbency referred to in paragraph 10.1.1.2 (and
the Agent and the Lenders shall be entitled to assume that such certificate and
any subsequent notice with respect thereto continue to be correct unless and
until the Borrower shall have notified the Agent in writing of any change in the
facts stated therein).
12.2 OBTAIN AUTHORIZATIONS. From time to time, obtain and maintain or
cause to be obtained and maintained any authorization, Approval, license or
consent of or from any official, agency or instrumentality of any federal,
provincial or local Governmental Authority or any political subdivision thereof
which may be or become necessary or required in order that the Borrower may
fulfil its obligations hereunder and under the Security Documents.
12.3 BUSINESS, COMPLIANCE WITH APPLICABLE LAW. Engage solely in the
business referred to in Section 11.9, carry on and conduct its business in a
proper and efficient manner so as to preserve and protect the earnings, incomes
and profits therefrom and keep or cause to be kept, proper and lawful records
and books of account and make or cause to be made therein, true and faithful
entries of all dealings and transactions in relation to its business, all in
accordance with GAAP applied on a consistent basis and comply with all
Requirements of Law and the terms and conditions of all permits, licenses,
certificates and Approvals, non-compliance with which would, singly or in the
aggregate, have a Material Adverse Effect, PROVIDED, HOWEVER, that nothing
herein shall require the Borrower or any of its Material Subsidiaries to comply
with any Requirement of Law or the terms or conditions of any permit, license,
certificate or Approval so long as the applicability or validity
Page 57 of 103
<PAGE>
-45-
thereof shall be contested by it in good faith and by appropriate proceedings
and so long as non-compliance while so contesting shall not have a Material
Adverse Effect.
12.4 MAINTENANCE OF PROPERTIES. Maintain or cause to be maintained in
good repair, working order and condition all properties used or useful in its
business (whether owned or held under lease), and from time to time make or
cause to be made all needed and appropriate repairs, renewals, replacements,
additions, betterments and improvements thereto.
12.5 INSURANCE. Maintain insurance from responsible companies in such
amounts and against such risks as is usually carried by owners of similar
businesses and properties in the same general areas in which the Borrower or any
of its Material Subsidiaries, as the case may be, operates.
12.6 PAYMENT OF TAXES AND CLAIMS. Pay and discharge all taxes,
assessments and governmental charges or levies imposed upon it or upon its
income, capital or profits or upon any properties belonging to it prior to the
date on which penalties attach thereto, and all lawful claims for rents, labour,
materials and supplies which, if unpaid, might become a Lien or charge upon any
of its properties, provided, however, that such tax, assessment, charge, levy or
claim which is being contested in good faith by appropriate proceedings need not
be paid if appropriate reserves shall have been set aside on the appropriate
books, and only for so long as such tax, assessment, charge, levy, claim or
quarterly instalment does not become a Lien or charge other than a Permitted
Encumbrance and no foreclosure, distraint, seizure, attachment, sale or similar
proceedings shall have been commenced.
12.7 VISITS AND INSPECTIONS. Permit representatives of any of the Lenders
to visit and inspect its properties during normal business hours, inspect and
make extracts from and copies of its books and records and discuss with its
principal officers its business, assets, liabilities, financial position,
results of operations and business prospects.
12.8 PAYMENT OF INDEBTEDNESS. Pay any and all of its Indebtedness the
amount of which exceeds singly or in the aggregate $1,000,000 when and as the
same becomes due, save and except for such Indebtedness unless it or others on
its behalf are contesting diligently and in good faith its obligation to pay and
for which it has provided the Lenders with security reasonable to the Majority
Lenders, in an amount sufficient to pay in principal, interest and costs, such
Indebtedness, should such contestation be unsuccessful. The provisions of this
Section 12.8 shall pertain only to the Borrower.
12.9 MAINTENANCE OF SHAREHOLDERS' EQUITY. Maintain at all times, on a
consolidated basis for the Borrower, Shareholders' Equity of not less than
$75,000,000.
Page 58 of 103
<PAGE>
-46-
ARTICLE 1.
INFORMATION COVENANTS
So long as any Loan or any other amount payable hereunder is outstanding and
unpaid or the Borrower shall have the right to borrow hereunder (whether or not
the conditions to borrowing have been or can be fulfilled) and unless the
Majority Lenders shall otherwise consent in writing, which consent shall not be
unreasonably withheld, the Borrower covenants and agrees that it will furnish or
cause to be furnished to the Agent:
13.1 QUARTERLY FINANCIAL STATEMENTS AND INFORMATION. As soon as
available, but in any event no later than 60 days after the end of each of the
first three quarterly periods of each fiscal year of the Borrower, copies of (y)
the Quarterly Report on Form 10-Q filed by the Borrower pursuant to Section 13
or 15(d) of the 1934 Act with the SEC (or if the Borrower is no longer a
reporting company under the 1934 Act, such comparable information) containing
the condensed consolidated balance sheet of the Borrower and its Subsidiaries at
the end of, and the related condensed consolidated statements of income and
condensed statements of cash flows for, the interim period ending at the end of,
such quarter, and (z) the respective quarterly financial statements filed by
each Material Subsidiary which files such with insurance regulatory authorities.
13.2 ANNUAL FINANCIAL STATEMENTS AND INFORMATION. As soon as available,
but in any event within 105 days after the end of each fiscal year of the
Borrower, copies of (y) of the Annual report on Form 10-K filed by the Borrower
pursuant to Section 13 or 15(d) of the 1934 Act with the SEC (or if the Borrower
is no longer a reporting company under the 1934 Act, such comparable
information) containing the consolidated balance sheet of the Borrower and its
Subsidiaries at the end of, and the related consolidated statements of income
and retained earnings and cash flows for, such year, and (z) the respective
annual statutory statements filed by each Material Subsidiary which files such
with insurance regulatory authorities.
13.3 CERTIFICATES: OTHER INFORMATION OF THE BORROWER. the following:
13.3.1 concurrently with the delivery of the financial statements
referred to in Sections 13.1 and 13.2, a Certificate of Officers and a
certificate of the Responsible Officers providing any changes that may result to
Schedule "M" with respect to the Material Subsidiaries of the Borrower; and
13.3.2 to the extent not provided pursuant to Sections 13.1 and
13.2, (x) concurrently with the delivery of the financial statements referred to
in Section 13.2 above, copies of the financial statements and reports which the
Borrower sends to its stockholders for such period, (y) contemporaneously with
the delivery thereof to its stockholders, copies of the annual report and proxy
statement which the Borrower sends to its stockholders, and (z) within 15 days
after the same are sent or filed, respectively, copies of all other financial
statements, prospectus, reports on Form 8-K and any other reports which the
Borrower sends to its stockholders or files with the SEC.
Page 59 of 103
<PAGE>
-47-
13.4 ANNUAL FINANCIAL STATEMENTS OF DLFC. Within 120 days after the end
of each fiscal year of DLFC, the financial statements and balance sheet of DLFC
and the Subsidiaries thereof listed below as at the end of such fiscal year and
the related consolidated statements of operations, earnings and retained
earnings, shareholders' equity and changes in financial position for such fiscal
year, setting forth in each case in comparative form, the figures as at the end
of and for the previous fiscal year, all as certified by a Canadian firm of
independent chartered accountants of recognized standing appointed by DLFC. The
Subsidiaries of DLFC to which reference is made above are Desjardins Trusco
Inc., Desjardins Securities Inc., Societe de portefeuille du Groupe Desjardins
assurances generales Inc., Laurentian Bank of Canada and Laurentian Financial
Inc. as well as such other Subsidiaries of DLFC which from time to time shall
represent on the consolidated statements of DLFC a position of equivalent
importance to that presently represented by the foregoing Subsidiaries of DLFC.
13.5 OTHER INFORMATION. From time to time and promptly upon each request,
such data, certificates, reports, statements, documents or further information
regarding the business, assets, liabilities, financial position, results of
operations or business prospects of the Borrower or any of its Material
Subsidiaries as the Agent may reasonably request.
13.6 NOTICE OF LITIGATION AND OTHER MATTERS. Prompt notice of the
following events after the Borrower has become aware thereof:
13.6.1 the commencement of all proceedings (including any notices
of infraction) and investigations by or before any Governmental Authority and
all actions and proceedings in any court or before any arbitrator against, or
(to the extent known to the Borrower) in any other way relating adversely to
DLFC, the Borrower or any Material Subsidiaries of the Borrower or any of their
respective properties, assets or businesses which, if adversely determined,
could singly or when aggregated with all other such proceedings, investigations
and actions if adversely determined, have a Material Adverse Effect;
13.6.2 any material change with respect to the business, assets,
liabilities, financial position, results of operations or business prospects of
DLFC, the Borrower or any Material Subsidiary of the Borrower, other than
changes in the ordinary course of business which will not have a Materially
Adverse Effect;
13.6.3 any Default or Event of Default or the occurrence or
non-occurrence of any event which constitutes, or which with the passage of time
or giving of notice or both would constitute a default under any material
agreement, other than this Agreement, to which DLFC, the Borrower or any
Material Subsidiary of the Borrower is a party or by which any one thereof or
any of their respective properties may be bound, giving in each case the details
thereof and specifying the action proposed to be taken with respect thereto;
13.6.4 the occurrence or expected occurrence of any Reportable
Event with respect to any Plan or any withdrawal from, or the termination,
Reorganization or Insolvency of, any Multiemployer Plan, or the institution of
proceedings or the taking of any other action by PBGC, the Borrower or any
Commonly Controlled Entity, or any Multiemployer Plan with respect to the
withdrawal from, or the terminating, Reorganization or Insolvency of, any Plan.
Page 60 of 103
<PAGE>
-48-
ARTICLE 2.
NEGATIVE COVENANTS
So long as any Loan or any other amount payable hereunder is outstanding and
unpaid or the Borrower shall have the right to borrow hereunder (whether or not
the conditions to borrowing have been or can be fulfilled), and unless the
Majority Lenders shall otherwise consent in writing, which consent shall not be
unreasonably withheld, the Borrower covenants and agrees that it will not and as
each of the following provisions may require, will ensure that its Material
Subsidiaries do not:
14.1 Loans and Investments in any Person. Directly or indirectly, make
any loan, advance, extension of credit, capital contribution or investment to or
in any Person, or purchase or otherwise acquire for a consideration any
evidences of Indebtedness, Capital Stock, partnership units or other securities
of any Person or acquire assets of another Person in circumstances which would
qualify such acquisition as a bulk sale (referred to herein as an "Investment")
other than Investments in:
14.1.1 Liquid Investments;
14.1.2 any debt or equity instrument which is rated by one or both
of Moody's and S&P on the date the Investment is made as Investment Grade; and
14.1.3 other securities made in the ordinary course of business by
the Borrower.
The provisions of this Section shall pertain only to the Borrower.
14.2 DISTRIBUTIONS. Declare or pay any dividends or return any capital to
its stockholders or authorize or make any other distribution, payment or
delivery of property or cash to its stockholders, as such, or redeem, retire,
purchase or otherwise acquire, directly or indirectly, for a consideration, any
of its Capital Stock of any class now or hereafter outstanding, or set aside any
funds for any of the foregoing purposes (collectively referred to herein as a
"Distribution"). Notwithstanding the foregoing provisions of this Section 14.2,
but subject nevertheless to the conditions provided below:
14.2.1 to the extent permitted by applicable Law, the Borrower may
declare and pay dividends on and may redeem its currently outstanding Preferred
Shares defined in Section 11.1; and
14.2.2 the Borrower may declare or make payment with respect to any
Distributions at any time on condition that at the time of such declaration or
payment, no Default or Event of Default exists or after the making of such a
declaration or payment, no Default or Event of Default would result as a
consequence thereof and, further, that the sum of (x) the sum of the aggregate
amount of any Distribution declared or paid during the period commencing as of
and from January 1, 1993 up to and including the day preceding any day any other
Distributions are proposed to be declared or paid or any sums are proposed to be
paid pursuant to the provisions of
Page 61 of 103
<PAGE>
-49-
Section 14.8 plus any sums paid pursuant to the provisions of Section 14.8
during any such period, (y) the aggregate amount of any such Distribution
proposed to be declared or paid at such time plus (z) any sums proposed to be
paid pursuant to the provisions of Section 14.8, does not exceed in the
aggregate an amount equal to 50% of the Cumulative Net Profits of the Borrower
up to the time of such declaration or payment.
The provisions of this Section shall pertain only to the Borrower.
14.3 LIENS. Create, assume, incur or suffer to exist, directly or
indirectly, any Lien on or in respect of any property whether now owned or
possessed or hereafter acquired or possessed by the Borrower or any of its
Subsidiaries, other than Permitted Encumbrances.
14.4 SALES OF ASSETS. Sell, alienate, assign, lease or otherwise dispose
of the whole or any part of the property or assets of the Borrower or any of its
Material Subsidiaries or enter into any sale and leaseback transaction with
respect to any of such property or assets, except that the Borrower and its
Material Subsidiaries may effect (y) routine and customary dispositions of
assets in the ordinary course of business and for the purpose of carrying on
same and (z) other dispositions of assets PROVIDED, HOWEVER, that the aggregate
net book value of assets disposed by the Borrower and its Material Subsidiaries
pursuant to this clause (z) of Section 14.4 cannot exceed in the aggregate, as
of and from the date hereof up to and including the date that the Loans shall
have been repaid in full and the Commitments terminated, 10% of the Borrower's
consolidated assets as they appeared on the Annual Report on Form 10-K dated
December 31, 1993 which the Borrower delivered to the Agent.
14.5 CONSOLIDATION, AMALGAMATION, MERGER, ETC. Wind-up, liquidate or
dissolve the affairs of the Borrower or any of its Significant Subsidiaries or
enter into or permit any of its Significant Subsidiaries to enter into any
transaction of amalgamation, merger or consolidation (or agree or permit the
agreement to do any of the foregoing at any future time) save and except for any
amalgamation, merger or consolidation among two or more Significant Subsidiaries
or among the Borrower and one or more of the Significant Subsidiaries, PROVIDED,
HOWEVER, that where any such permitted amalgamation, merger or consolidation
includes Loyal American, the stock of the resulting or consolidated corporations
must be pledged in favour of the Agent for the benefit of the Lenders under the
same terms and conditions as those contemplated in the Pledge Agreement
immediately upon the occurrence of such amalgamation, merger or consolidation.
Upon such pledge and as a condition to such amalgamation, merger or
consolidation involving Loyal American being permitted under the terms of this
Section 14.5, the Borrower shall provide the Agent with such opinions of
appropriate counsel and consents as were provided with respect to the pledging
of the Loyal American Shares prior to the first Advance.
14.6 CHANGE IN BUSINESS. Effect or cause to be effected any material
change in the business of the Borrower described in Section 11.9 nor in any of
the respective businesses of the Subsidiaries of the Borrower, to the extent
that same does not constitute the business of financial services, insurance and
other activities incidental thereto.
Page 62 of 103
<PAGE>
-50-
14.7 INDEBTEDNESS. Create, assume, incur or otherwise become or remain
obligated in respect of, or permit to be outstanding for the Borrower or any
Material Subsidiary thereof, any Indebtedness, other than:
14.7.1 under this Agreement and the Security Documents;
14.7.2 such Indebtedness secured by a Lien which is a Permitted
Encumbrance;
14.7.3 such Indebtedness representing the deferred purchase price
of property or services incurred in the ordinary course of business and for the
purpose of carrying on same and more commonly known as trade indebtedness;
14.7.4 such Indebtedness which is a Public or Private Placement,
PROVIDED that the net proceeds of any such Public or Private Placement are used
in their entirety to effect an optional prepayment of the Revolving Loans under
Section 8.2 and the Borrower does furthermore exercise its rights under
subsection 2.3.3 and reduces the Commitments by an amount equal to such net
proceeds concurrently with the creation of such Indebtedness;
14.7.5 current liabilities for taxes and assessments incurred in
the ordinary course of business;
14.7.6 such Indebtedness which is assumed in connection with an
acquisition to which the Majority Lenders have consented or is otherwise
permitted under the provisions of Section 14.1;
14.7.7 such Indebtedness which is reflected in the consolidated
financial statements of the Borrower contained in the Annual Report referred to
in Section 10.1.7 or incurred since the date of such financial statements in the
ordinary course of business not in connection with the borrowing of money or the
obtaining of credit;
14.7.8 such Indebtedness owing to one or more FHLB's pursuant to a
Collateralized Investment Program, PROVIDED, HOWEVER, that (w) the aggregate
principal amount of all such Indebtedness outstanding from time to time is not
less than 80% of the Market Value of the mortgage backed securities pledged in
favour of all such FHLB's as collateral for such Indebtedness, (x) the aggregate
Market Value of mortgage backed securities pledged in favour of all such FHLB's
does not exceed $50,000,000, (y) the proceeds of the advances made by all such
FHLB's are used by the Borrower exclusively for the purchase of New MBS and (z)
no New MBS shall be pledged in favour of any FHLB as collateral for such
Indebtedness.
14.8 EXTRAORDINARY PAYMENTS. In any fiscal year of the Borrower, pay or
set aside any funds for the purpose of paying by the Borrower or any of its
Subsidiaries of any management fees or other extraordinary payments, benefits or
salaries or other remunerations to any of the Borrower's stockholders or to any
of their Affiliates (other than the Borrower or officers, directors or
Subsidiaries of the Borrower) in an aggregate amount which would exceed
$1,000,000, PROVIDED, HOWEVER, that any payment hereunder shall for all purposes
hereof constitute and be deemed to be a Distribution and must under all
circumstances also comply with the provisions of Section 14.2 in order for same
to be made.
Page 63 of 103
<PAGE>
-51-
ARTICLE 3.
EVENTS OF DEFAULT AND REALIZATION
15.1 EVENTS OF DEFAULT. The occurrence of any of the following events
during the term of this Agreement shall constitute an event of default (herein
referred to as an "Event of Default"):
15.1.1 the Borrower shall fail to make any payment of principal
under any of the Loans when due in accordance with the terms hereof; or to pay
any interest or fees under the Loans, or any other amount payable hereunder as
and when such amount becomes due in accordance with the terms hereof; or
15.1.2 should any statement, certificate, representation or
warranty made or furnished by or on behalf of the Borrower or DLFC or pursuant
to this Agreement or any of the Security Documents prove at any time to have
been substantially incorrect or inaccurate at the time same are required to be
true by the terms hereof; or
15.1.3 should the Borrower default in the performance or fulfilment
of any other obligation or covenant hereunder, or any other covenant assumed by
the Borrower in relation to the Commitments and such Default shall not have been
remedied within 60 days following the giving by the Agent of notice thereof; or
15.1.4 should DLFC or the Borrower, or any Person who is a party to
any of the Security Documents default in the performance or fulfilment of any of
their respective obligations or covenants under any of the Security Documents
and in the case of such Default by DLFC under the Support Agreement or the DLFC
Agreement, such Default shall not have been remedied within 30 days following
the giving by the Agent to DLFC of a notice thereof or appropriate actions shall
not have been commenced and diligently pursued by DLFC during such 30 day period
for the purpose of acquiring all necessary approvals and consents in order to
perform its obligations under the Support Agreement or the DLFC Agreement, as
the case may be, and in the event that such actions have been so commenced
within such period, such Default is not remedied within 60 days following the
initial giving by the Agent of the aforesaid notice; or
15.1.5 should:
15.1.5.1 either DLFC, the Borrower or any of the Borrower's
Material Subsidiaries commence any case, proceeding or other action (X) under
any existing or future Law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization or relief of debtors, seeking to have an
order for relief entered with respect to it, or seeking to adjudicate it a
bankrupt or insolvent, or seeking reorganization, arrangement, adjustment,
winding-up, liquidation, dissolution, composition or other relief with respect
to it or its debts, or (y) seeking appointment of a receiver, trustee, custodian
or other similar official for it or for all or any substantial part of its
assets, or either DLFC, the Borrower, or any of the Borrowers's Material
Subsidiaries make a general assignment for the benefit of its creditors; or
Page 64 of 103
<PAGE>
-52-
15.1.5.2 there be commenced against either DLFC, the Borrower
or any of the Borrower's Material Subsidiaries any case, proceeding or other
action of a nature referred to in paragraph 15.1.5.1 above which (x) results in
the entry of an order for relief or any such adjudication or appointment or (y)
remains undismissed, undischarged or unbonded for a period of 30 days; or
15.1.5.3 there be commenced against either DLFC, the Borrower
or any of the Borrower's Material Subsidiaries any case, proceeding or other
action seeking issuance of a warrant of attachment, execution, distraint or
similar process against all or any substantial part of its assets which results
in the entry of an order for any such relief which shall not have been vacated,
discharged, or stayed or bonded pending appeal within 30 days from the entry
thereof; or
15.1.5.4 either DLFC, the Borrower or any of the Borrower's
Material Subsidiaries take any action in furtherance of, or indicating its
consent to, approval of, or acquiescence in, any of the acts set forth in
paragraphs 15.1.5.1, 15.1.5.2 or 15.1.5.3 above; or
15.1.5.5 either DLFC, the Borrower or any of the Borrower's
Material Subsidiaries generally not, or admit in writing its inability to, pay
its debts as they become due; or
15.1.6 should:
15.1.6.1 any Person engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any Plan;
or
15.1.6.2 any "accumulated funding deficiency" (as defined in
Section 302 of ERISA), whether or not waived, exist with respect to any Plan; or
15.1.6.3 a Reportable Event occur with respect to, or
proceedings commence to have a trustee appointed, or a trustee be appointed, to
administer or to terminate, any Single Employer Plan, which Reportable Event or
commencement of proceedings or appointment of a trustee is, in the reasonable
opinion of the Majority Lenders, likely to result in the termination of such
Plan for purposes of Title IV of ERISA; or
15.1.6.4 any Single Employer Plan terminate for purposes of
Title IV of ERISA; or
15.1.6.5 the Borrower or any Commonly Controlled Entity incur,
or in the reasonable opinion of the Majority Lenders, be likely to incur, any
liability in connection with a withdrawal from, or the Insolvency or
Reorganization of, a Multiemployer Plan; or
15.1.6.6 any other event or condition occur or exist, with
respect to a Single Employer Plan or a Multiemployer Plan;
and in each case in paragraphs 15.1.6.1 through 15.1.6.6 above, such event or
condition, together with all other such events or conditions, if any, could
subject the Borrower or any of its Material Subsidiaries to any tax, penalty or
other liabilities in the aggregate material in relation to the
Page 65 of 103
<PAGE>
-53-
business, operations, property or financial or other condition of the Borrower
and its Material Subsidiaries taken as a whole and such Default shall not have
been remedied within 60 days following the issuance by the Agent of a notice
thereof; or
15.1.7 should a judgment or decree (other than a consent decree
entered into under the Comprehensive Environmental Response, Compensation and
Liability Act of the United States of America with which the Borrower or its
Material Subsidiaries, as the case may be, are complying) be entered against
either the Borrower or any of the Borrower's Material Subsidiaries involving in
the aggregate a liability (net of the amount of any liability covered by
Eligible Reinsurers) of $1,000,000 or more and such judgment or decree not have
been vacated, discharged, stayed or bonded pending appeal within 30 days from
the entry thereof. For the purposes of this subsection 15.1.7, "Eligible
Reinsurers" shall mean, as at any time, a group of reinsurers who have been
granted a rating category of B or higher in the latest edition of Best's
Insurance Reports, PROVIDED, HOWEVER, that where any such reinsurer is, at any
time, in a state of receivership or where any superintending or regulatory
authority of any jurisdiction having authority over such reinsurer, has
intervened in the management of such reinsurer, then, for all purposes of the
definition of an "Eligible Reinsurer", as of and from such time, such reinsurer
shall be excluded from such definition; or
15.1.8 should either one of the Borrower or DLFC default with
respect to any of its Indebtedness (other than the Indebtedness of the Borrower,
under this Agreement and the Security Documents) which singly or in the
aggregate exceeds $1,000,000 in the case of the Borrower or $10,000,000 in the
case of DLFC, unless said Person or others on their behalf are contesting
diligently and in good faith their, or either one thereof, obligation to pay and
for which they, or either one thereof have provided the Lenders with security
reasonable to the Majority Lenders, in an amount sufficient to pay in principal,
interest and costs, such Indebtedness, should such contestation be unsuccessful;
or
15.1.9 should DLFC fail at any time to maintain the entire legal
title to or beneficial interest in at least 51% of the shares of stock of the
Borrower, outstanding from time to time, having power under ordinary
circumstances to vote for the election of members of the board of directors of
the Borrower.
15.2 REMEDIES. If an Event of Default shall have occurred and be
continuing and in every such event, the Agent, at the request of the Majority
Lenders, shall declare as being immediately due and payable, without
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived by the Borrower, anything in this Agreement to the
contrary notwithstanding:
15.2.1 the entire amount of the Loans then outstanding in principal
and interest; and
15.2.2 an amount equal to the amount of the losses, expenses and
costs incurred by the Lenders and referred to in Sections 6.6 and 6.7; and
each of the Commitments shall thereupon, at the discretion of the Majority
Lenders, forthwith terminate and be cancelled and thereupon the Lenders may
exercise any and all of their rights and recourses under this Agreement and any
of the Security Documents.
Page 66 of 103
<PAGE>
-54-
15.3 PROCEEDS OF REALIZATION. Subject to the provisions of Section 18.5,
the proceeds of realization under any of the Security Documents or any credit or
compensating balances of the Borrower held by the Agent, as agent for the
Lenders, or by any of the Lenders shall be applied as follows:
15.3.1 firstly, to pay or reimburse in full all costs, charges and
expenses incurred and outstanding in connection with such realization, as
established by the Majority Lenders; and
15.3.2 secondly, to pay or reimburse in full the outstanding Loans
and the Borrower Obligations.
15.4 APPLICATION OF PAYMENTS. Subject only to the provisions of Sections
15.3 and 18.5, the Lenders shall apply the proceeds of realization and of any
credit or compensating balances therein referred to against such part of the
Indebtedness of the Borrower under this Agreement as the Majority Lenders deem
best.
15.5 CALCULATION OF PRO RATA PORTIONS. The costs, charges and expenses,
as well as the proceeds of realization and the credit and compensating balances
referred to in Section 15.3, shall be shared by each Lender on the basis of its
respective Pro Rata Share.
15.6 NOTICES. Save as otherwise expressly provided for herein, no notice
of any kind shall be required to be given to the Borrower or DLFC by the Agent
or the Lenders for the purpose of putting the Borrower or DLFC in default, said
party being in default by the mere lapse of time allowed for the performance of
an obligation or by the mere happening of an event constituting an Event of
Default.
15.7 DEALINGS WITH THE BORROWER AND DLFC. The Agent, upon the request of
the Majority Lenders, may grant extensions of time and other indulgences, and
subject to Section 18.2, take and give up security, accept compositions, grant
releases and discharges and otherwise deal with DLFC and the Borrower as the
Majority Lenders may see fit without prejudice to the liability of the Borrower
or of DLFC or to the Lenders' rights in respect of the security conferred upon
them under the terms hereof.
ARTICLE 4.
THE AGENT
16.1 APPOINTMENT AND AUTHORIZATION. Each Lender hereby irrevocably
appoints and authorizes, and hereby agrees that it will require any transferee
of any interest in any of its Loans (other than a holder of a participation in
any of its Loans) and/or in its Commitment irrevocably to appoint and authorize,
the Agent to take such actions as agent on its behalf and to exercise such
powers hereunder and under the Security Documents as are delegated to the Agent
by the terms hereof and thereof, together with such powers as are reasonably
incidental thereto. Neither the Agent nor any of its directors, officers,
employees or agents shall be liable for any action taken or omitted to
Page 67 of 103
<PAGE>
-55-
be taken by it or them hereunder or under the Security Documents in connection
herewith or therewith, except for its or their own gross negligence or wilful
misconduct.
16.2 INTEREST HOLDERS. The Agent may treat each Lender, or the Person
designated in the last notice filed with it under this Article, as the holder of
all of the interests of such Lender in its Loan and in its Commitment until
written notice of transfer, signed by such Lender (or the Person designated in
the last notice filed with the Agent) and by the Person designated in such
notice of transfer and in form and substance satisfactory to the Agent, shall
have been filed with the Agent.
16.3 CONSULTATION WITH COUNSEL. The Agent may consult with legal counsel
selected by it and shall not be liable for any action taken or suffered by it in
good faith in accordance with the advice or opinion of such counsel.
16.4 DOCUMENTS. The Agent shall not be under any duty to examine into or
pass upon the validity, effectiveness or genuineness of any of the Security
Documents, this Agreement or any instrument, document or communication furnished
pursuant thereto or hereto in connection herewith or therewith, and the Agent
shall be entitled to assume that the same are valid, effective and genuine, have
been signed or sent by the proper parties and are what they purport to be.
16.5 OTHER TRANSACTIONS WITH DLFC, THE BORROWER AND THEIR RESPECTIVE
SUBSIDIARIES AND AFFILIATES. With respect to its Commitment and the Loan made
and to be made from time to time by the Agent in its personal capacity as a
Lender hereunder, it shall have the same rights and powers hereunder as any
other Lender and may exercise the same as though it were not the Agent, and the
Agent and its Subsidiaries and Affiliates may accept deposits from, lend money
to and generally engage in any kind of business with DLFC, the Borrower and
their respective Subsidiaries and Affiliates, and Persons doing business with
any of the said Persons, as if it were not the Agent and without any obligation
to account therefor.
16.6 RESPONSIBILITY OF THE AGENT. The duties and obligations of the Agent
under this Agreement and the Security Documents are only those expressly set
forth herein and therein. The Agent shall be entitled to assume that no Default
or Event of Default has occurred and is continuing, unless the Agent has actual
knowledge, or has been notified by the Borrower of such fact, or has been
notified by a Lender that such Lender considers that a Default or an Event of
Default has occurred and is continuing (specifying in detail the nature
thereof). The Agent shall not have any duty to investigate whether a Default or
an Event of Default has occurred.
16.7 ACTION BY AGENT. The Agent shall:
16.7.1 be entitled to use its discretion with respect to exercising
or refraining from exercising any rights which may be vested in it by, and with
respect to taking or refraining from taking any action or actions which it may
be able to take under or in respect of, this Agreement, unless the Agent shall
have been instructed by the Majority Lenders to exercise such rights or to take
or refrain from taking such action, provided that the Agent shall not exercise
any rights under Article 15 of this Agreement or under the Security Document,
without the request of the Majority Lenders. The Agent shall incur no liability
under or in respect of this Agreement or any of the Security Documents, with
respect to anything which it may do or refrain from doing in the
Page 68 of 103
<PAGE>
-56-
reasonable exercise of its judgment (including, without limitation, in the
performance of any function it is required to perform under any one of Articles
4, 5, 6, 8 or 15) or which may seem to it to be necessary or desirable in the
circumstances, except for its gross negligence or wilful misconduct; and
16.7.2 in all cases be fully protected in acting or refraining from
acting under this Agreement or any of the Security Documents, in accordance with
the instructions of the Majority Lenders, and any action taken or failure to act
pursuant to such instructions shall be binding on all Lenders.
16.8 NOTICES OF EVENTS OF DEFAULT. In the event that the Agent shall
acquire actual knowledge, or shall have been notified, of any Default or Event
of Default, the Agent shall promptly notify the Lenders and shall take such
action and assert such rights under this Agreement or any of the Security
Documents, as the Majority Lenders shall request in writing, and the Agent shall
not be subject to any liability by reason of its acting pursuant to any such
request. If the Majority Lenders shall fail for five days after receipt of the
notice of any Default or Event of Default to request the Agent to take action or
to assert rights under this Agreement or any of the Security Documents, in
respect of such Default or Event of Default, the Agent may, but shall not be
required to, take such action and assert such rights (other than rights under
Article 15 hereof) as it deems in its discretion to be advisable for the
protection of the Lenders.
16.9 RESPONSIBILITY DISCLAIMED. The Agent shall not be under any
liability or responsibility whatsoever as Agent:
16.9.1 to the Borrower, DLFC or any other Person as a consequence
of any failure or delay in performance by, or any breach by, any Lender of any
of its obligations under this Agreement;
16.9.2 to any Lender, as a consequence of any failure or delay in
performance by, or any breach by, the Borrower or DLFC of any of its obligations
under this Agreement or any of the Security Documents; or
16.9.3 to any Lender, for any statements, representations or
warranties in this Agreement, the Security Documents or any other document
contemplated thereby or any information provided pursuant to this Agreement or
any of the Security Documents or any other document contemplated thereby or for
the validity, effectiveness, enforceability or sufficiency of this Agreement,
the Security Documents or any other document contemplated thereby.
Nothing in this Section 16.9 shall be construed or interpreted as augmenting or
altering the circumstances under which the Agent or any director, officer,
employee or agent thereof may be held liable under the terms of this Agreement.
Page 69 of 103
<PAGE>
-57-
16.10 INDEMNIFICATION. The Lenders agree to indemnify the Agent (to the
extent not reimbursed by the Borrower) in accordance with their respective Pro
Rata Share, from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever which may be imposed on, incurred by or
asserted against the Agent in any way relating to or arising out of its
functions as Agent under this Agreement, the Security Documents or any other
document contemplated hereby or thereby, or any action taken or omitted to be
taken by the Agent under this Agreement, the Security Documents or any other
document contemplated hereby or thereby, except that no Lender shall be liable
to the Agent for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
from the gross negligence or wilful misconduct of the Agent.
16.11 CREDIT DECISION. Each Lender represents and warrants to the Agent
that:
16.11.1 in making its decision to enter into this Agreement and to
make its Loan it has independently taken whatever steps it considers necessary
to evaluate the financial condition and affairs of DLFC, the Borrower and the
Subsidiaries of the Borrower and that it has made an independent credit judgment
without reliance upon any information furnished by or through the Agent; and
16.11.2 so long as any portion of its Loan remains outstanding, it
will continue to make its own independent evaluation of the financial condition
and affairs of DLFC, the Borrower and the Subsidiaries of the Borrower.
16.12 SUCCESSOR AGENT. Subject to the appointment and acceptance of a
successor Agent as provided below, the Agent may resign at any time by giving
written notice thereof to the Lenders and the Agent and may be removed at any
time with or without cause by the Majority Lenders. Upon any such resignation
or removal, the Majority Lenders shall have the right to appoint a successor
Agent (which shall be one of the Lenders, unless none of the Lenders which is
qualified wishes to accept such appointment and which must be approved by the
Borrower). If no successor Agent shall have been so appointed by the Majority
Lenders and shall have accepted such appointment within 30 days after the
retiring Agent's giving of notice of resignation or the Majority Lenders'
removal of the retiring Agent, then the retiring Agent may, on behalf of the
Lenders, appoint a successor Agent which shall be a bank which has an office in
New York City with a combined capital and surplus of at least $250,000,000 and
which must be approved by the Borrower. Upon the acceptance of any appointment
as Agent hereunder by a successor Agent, such successor Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges, duties and
obligations of the retiring Agent, and the retiring Agent shall be discharged
from its duties and obligations hereunder. After any retiring Agent's
resignation or removal hereunder as Agent, the provisions of this Article shall
continue in effect for its benefit in respect of any actions taken or omitted to
be taken by it while it was acting as the Agent.
16.13 AGENT TO DELIVER COPIES. Upon receipt of any information, report,
statement and other paper and data furnished to the Agent under the terms hereof
by or on behalf of the Borrower, the Agent shall promptly communicate and
deliver copies thereof to the Lenders.
Page 70 of 103
<PAGE>
-58-
ARTICLE 17
JUDGMENT CURRENCY
17.1 JUDGMENT CURRENCY. If for the purpose of obtaining or enforcing
judgment in any court or for any other purpose hereunder, it is necessary to
convert an amount due, advanced or to be advanced hereunder in the currency in
which it is due, advanced or to be advanced (the "Original Currency") into
another currency (the "Second Currency"), the rate of exchange applied shall be
that at which in accordance with normal banking procedures, the Agent could
purchase, in the United States money market the Original Currency with the
Second Currency on the Business Day on which judgment is given, the amount is
due or advanced or is to be advanced, as the case may be. The Borrower agrees
that its obligations, in respect of any amounts due from it to the Lenders in
the Original Currency hereunder shall, notwithstanding any judgment expressed or
payment made in the Second Currency, be discharged only to the extent that, on
the Business Day following receipt of any sums so paid or adjudged to be due
hereunder in the Second Currency, the Agent, on behalf of the Lenders may, in
accordance with normal banking procedure, purchase, in the United States money
market, the Original Currency with the amount of the Second Currency so paid or
so adjudged to be due; and if the amount of the Original Currency so purchased
is less than the amount originally due in the Original Currency, the Borrower
agrees as a separate obligation and notwithstanding any such payment or judgment
to indemnify the Lenders concerned against such loss.
ARTICLE 18
MISCELLANEOUS
18.1 NOTICES. Except as otherwise specified herein, all notices,
requests, demands or other communications to or upon the respective parties
hereto shall be in writing, (including by tested telex or telecopy) and shall be
deemed to have been duly given or made to the party to which such notice,
request, demand or other communication is required or permitted to be given or
made under this Agreement, when delivered to such party (by prepaid courier or
by telecopier, tested telex or hand delivery) at its address and attention set
forth with its signature below, or at such other address as any of the parties
hereto may hereafter notify the others in writing. No other method of giving
notice is hereby precluded. Any such notice, request, demand or other
communication sent as aforesaid shall be deemed to have been received by the
party to whom it is addressed upon delivery, if delivered and when transmitted,
if sent by telecopier or telex, PROVIDED, HOWEVER, that in the event normal
mail, telecopier or telex service shall be interrupted by strike, force majeure
or other cause, then the party sending the notice, request, demand or other
communication, shall ensure prompt receipt of such notice, request, demand or
other communication by the other party or parties.
Page 71 of 103
<PAGE>
-59-
18.2 AMENDMENTS AND WAIVERS. The rights and remedies of the Lenders under
this Agreement shall be cumulative and not exclusive of any rights or remedies
which they would otherwise have, and no failure or delay by the Agent or the
Lenders in exercising any right shall operate as a waiver thereof, nor shall any
single or partial exercise of any power or right preclude its other or further
exercise or the exercise of any other power or right. Subject to the provisions
of subsections 18.2.1 and 18.2.2 with respect in each case to amendments only,
any term, covenant, agreement or condition contained in this Agreement may be
amended with the consent of the Borrower and the Majority Lenders, and such
amendment shall be binding upon all of the parties hereto, or compliance
therewith may be waived (either generally or in a particular instance and either
retroactively or prospectively) by the Majority Lenders, and such waiver shall
be binding upon all of the Lenders, and in any such event the failure to
observe, perform or discharge any covenant, condition or obligation waived or
amended (whether such amendment is executed or such consent or waiver is given
before or after such failure) shall not be construed as a breach of such
covenant, condition or obligation or an Event of Default. Without the prior
written consent of:
18.2.1 all of the Lenders, no amendment shall, except as otherwise
expressly permitted hereunder:
18.2.1.1 affect the aggregate amount of the Commitments or the
amount of the Commitment of any Lender, save and except with respect to any
modification to the Commitment of any Lender resulting from the operation of the
provisions of subsection 18.9.1, in which case, only the consent of the parties
involved in such operation shall be required to effect such modification;
18.2.1.2 alter the agreed time for the payment of the principal
of or interest on the Loans or the amount of principal thereof or decrease the
rate of interest thereon;
18.2.1.3 permit any subordination of the principal of or
interest on any Loans;
18.2.1.4 decrease the amount of any fees to be paid to any
Lender;
18.2.1.5 change the percentage of the Lenders required to
constitute the Majority Lenders;
18.2.1.6 release or permit the release of the whole or any part
of the Liens created under the Security Documents or amend any provisions
thereof; or
18.2.1.7 affect the provisions of subsections 1.1.93 or 1.1.114
with respect to the Revolving Period and the Term Period;
18.2.2 the Agent, no amendment shall affect any provision of this
Agreement dealing with rights and obligations of the Agent, including without
limitation any provision of Article 16.
Page 72 of 103
<PAGE>
-60-
Nothing contained in this Agreement or in any of the Security
Documents, including, without limitation, the specific reference to Lenders in
certain provisions and to Majority Lenders in other provisions, should be
construed or interpreted as in any way limiting or restricting the generality of
the provisions of this Section 18.2. The parties hereto agree that any waiver
referred to in this Section 18.2, once issued to the Borrower in writing by the
Agent, purporting to act on behalf of the Majority Lenders or all of the
Lenders, as the case may be, shall be binding on all of the parties.
18.3 CALCULATIONS AND DETERMINATIONS TO BE CONCLUSIVE AND BINDING. In the
absence of manifest error, any calculation or determination to be made under the
terms of this Agreement by the Agent or the Majority Lenders, when made, shall
be conclusive and binding on all the parties.
18.4 COMPENSATION AND SET-OFF. In addition to any rights now or hereafter
granted under Law and not by way of limitation of any such rights, upon the
occurrence of an Event of Default, each Lender is hereby authorized by the
Borrower, at any time or from time to time, without prior notice to the Borrower
or to any other Person, any such notice being hereby expressly waived, subject
to the provisions of Section 18.5, to effect compensation, to set-off and to
appropriate and to apply any and all deposits (general or special, time or
demand, including, but not limited to, indebtedness evidenced by certificates of
deposit, in each case whether matured or unmatured) and any other indebtedness
at any time held or owing by such Lender to or for the credit or the account of
the Borrower against and on account of the obligations and liabilities of the
Borrower to such Lender under this Agreement, including, but not limited to, all
claims of any nature or description arising out of or connected with this
Agreement, irrespective of whether or not the Agent shall have made any demand
hereunder or shall have declared the amounts referred to in subsections 15.2.1
and 15.2.2 to be due and payable as permitted by Section 15.2 and although said
obligations and liabilities or any of them, shall be contingent or unmatured.
For the purposes of the application of this Section 18.4, the Borrower and the
Lenders agree that the benefit of any term applicable to any Lender's deposit,
credit, indebtedness, liability or obligation (collectively referred to in this
Section 18.4 as the "Deposit") referred to in this Section 18.4 shall be lost
immediately before the time when such Lender shall exercise its rights under
this Section 18.4 in respect of a relevant Deposit of such Lender. Subsequent
to the exercise of rights under this Section 18.4, the Lender or Lenders having
exercised same shall notify the Borrower of such exercise.
18.5 RECOVERY FOR LENDERS. Each Lender agrees that if it shall exercise
any right under Section 18.4 or any other right of counterclaim, compensation,
set-off, banker's lien, realization of security, or similar right with respect
to property of the Borrower, or if under any applicable bankruptcy, insolvency
or other similar Law, it receives a secured claim the security for which is a
debt owed by it to the Borrower, the amount thereof shall constitute proceeds of
realization under Section 15.3 and shall be dealt with in the same manner as
therein provided as if a realization had occurred. All amounts thus recovered
by any Lender shall promptly be delivered to the Agent under Section 8.6 for
distribution.
Page 73 of 103
<PAGE>
-61-
18.6 NO DEEMED PAYMENT. Where any Lender, whether under the provisions of
this Agreement or otherwise, receives or recovers from the Borrower an amount
greater than the amount ultimately payable to it under the provisions of this
Agreement, but as a consequence of the provisions of Section 18.5 does not
retain the totality of such amount, as between the Borrower on the one hand and
that Lender, on the other hand, that excess amount not retained by such Lender
shall be treated as not having been paid to such Lender for the purposes of this
Agreement.
18.7 ASSIGNMENTS BY THE BORROWER. The rights of the Borrower hereunder
are declared to be purely personal and may therefore not be assigned or
transferred, nor can the Borrower assign or transfer any of its obligations, any
such assignment being null and void insofar as the Lenders are concerned and
rendering any balance then outstanding of amounts referred to in Section 15.2
immediately due and payable at the option of the Majority Lenders, and relieving
the Lenders from the obligation of making any or any further Advances hereunder.
18.8 PAYMENT OF EXPENSES AND TAXES. The Borrower agrees to pay or
reimburse the Agent for all its reasonable out-of-pocket costs and expenses
incurred in connection with the development, preparation and execution of, and
any amendment, supplement or modification to this Agreement and the Security
Documents and the consummation of the transactions contemplated hereby and
thereby, including, without limitation, the reasonable syndication and legal
costs incurred by the Agent. The Borrower agrees (w) to pay or reimburse each
Lender and the Agent for all their costs and expenses incurred in connection
with any advice sought by the Agent or the Lenders on the construction of the
present Agreement or any of the Security Documents or in anticipation of the or
for the purpose of determining whether or not to exercise any or all of their
rights and recourses under the present Agreement and the Security Documents, (x)
to pay or reimburse each Lender and the Agent for all their costs and expenses
incurred in connection with the enforcement or preservation of any right under
this Agreement and the Security Documents including, without limitation,
reasonable fees and disbursements of counsel to the Agent and to the several
Lenders, (y) to pay, indemnify, and hold each Lender and the Agent harmless from
any and all recording and filing fees and any and all liabilities with respect
to, or resulting from any delay in paying, stamp, excise and other taxes, if
any, which may be payable or determined to be payable in connection with the
execution and delivery of, or consummation of any of the transactions
contemplated by, or any amendment, supplement or modification of, or any waiver
or consent under or in respect of this Agreement, the Security Documents and any
such other documents, and (z) to pay, indemnify, and hold each Lender and the
Agent in its capacity as such harmless from and against any and all other
liabilities, obligations, losses (subject to Sections 6.6 and 6.7 in the case of
any Lender in respect of any losses, expenses or costs governed by such
Sections), damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever with respect to the execution,
delivery, enforcement, performance and administration of this Agreement and the
transactions contemplated hereby (all the foregoing, collectively, the
"indemnified liabilities"), PROVIDED that the Borrower shall have no obligation
hereunder to the Agent or any Lender with respect to indemnified liabilities
which have been determined by a final judgment of a court of competent
jurisdiction to have resulted primarily from the gross negligence or willful
misconduct of the Agent or any such Lender. The agreements in this Section
shall survive repayment of the Loans and the termination of this Agreement.
Page 74 of 103
<PAGE>
-62-
18.9 ASSIGNMENTS BY LENDERS; PARTICIPATIONS: PURCHASING LENDERS.
18.9.1 Each Lender may assign to one or more banks or other
financial institutions all or a portion of its interests, rights and obligations
under this Agreement (including all or a portion of its Commitment and the Loans
at the time owing to it); PROVIDED, HOWEVER, that (v) prior to the occurrence of
an Event of Default, no Lender may so assign to any Person which is a non-
resident of the United States under the Code, (w) except in the case of an
assignment occurring after the exercise of rights under Section 15.2 or of an
assignment to a Lender or a Subsidiary or Affiliate of a Lender which is a bank
or financial institution (on condition that, in respect of any such assignment
to a Subsidiary or Affiliate of a Lender, same does not result in any additional
cost hereunder for the Borrower), the Borrower must give its written consent to
such assignment (which consent shall not be unreasonably withheld), (x) the
Agent must give its written consent to such assignment (which consent shall not
be unreasonably withheld), (y) the amount of the Commitment of the assigning
Lender subject to each such assignment (determined as of the date the Assignment
and Acceptance Agreement with respect to such assignment is delivered to the
Agent) shall not be less than $5,000,000 and (z) the parties to each such
assignment shall execute with and deliver to the Agent an Assignment and
Acceptance Agreement with respect to such assignment and a processing and
recordation fee of $2,000 payable by such parties, PROVIDED, HOWEVER, that such
processing and recordation fee shall not be payable with respect to such an
assignment where the Assignee is a Subsidiary or an Affiliate of the assignor.
Upon acceptance and recording pursuant to subsection 18.9.4, from and after the
effective date specified in each Assignment and Acceptance Agreement, the
assignee thereunder (an "Assignee") shall be a party hereto and, to the extent
provided in such Assignment and Acceptance Agreement, have the rights and
obligations of, and shall for all purposes be, a Lender under this Agreement and
the assigning Lender thereunder shall, to the extent and in the amount in which
they are assigned pursuant to such assignment, be released from its obligations
under this Agreement (and, in the case of an Assignment and Acceptance Agreement
covering all or the remaining portion of an assigning Lender's rights and
obligations under this Agreement, such Lender shall cease to be a party hereto).
Upon the effectiveness of any Assignment and Acceptance Agreement, Schedule "A"
shall be deemed amended to reflect the identities and Commitments of the Lenders
after giving effect thereto;
18.9.2 by executing and delivering an Assignment and Acceptance
Agreement, the assigning Lender thereunder and the Assignee thereunder shall be
deemed to confirm to and agree with each other and the other parties hereto as
follows: (u) other than the representation and warranty that it is the legal and
beneficial owner of the interest being assigned thereby free and clear of any
adverse claim, such assigning Lender makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with this Agreement or the execution,
legality, validity, enforceability, genuineness, sufficiency or value of this
Agreement, any other Loan Document or any other instrument or document furnished
pursuant hereto; (v) such assigning Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition of DLFC,
the Borrower or any Material Subsidiary of the Borrower or the performance or
observance by DLFC or the Borrower of any of its obligations under this
Agreement, any other Loan Document or any other instrument or document furnished
pursuant hereto to which it may be a party; (w) such Assignee confirms that it
has received a copy of this Agreement and the other Loan Documents, together
with copies of the most recent financial statements delivered pursuant to
Sections 13.1 and
Page 75 of 103
<PAGE>
-63-
13.2 and such other documents and information as it has deemed appropriate to
make its own credit analysis and decision to enter into such Assignment and
Acceptance Agreement; (x) such Assignee will independently and without reliance
upon the Agent, such assigning Lender or any other Lender and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under this
Agreement; (y) such Assignee appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers under this Agreement
as are delegated to the Agent by the terms hereof, together with such powers as
are reasonably incidental thereto; and (z) such Assignee agrees that it will
perform in accordance with their terms all the obligations which by the terms of
this Agreement are required to be performed by it as a Lender;
18.9.3 the Agent shall maintain at one of its offices in the City
of New York a copy of each Assignment and Acceptance Agreement delivered to it
and a register for the recordation of the names and addresses of the Lenders,
and the Commitment of, and principal amount of the Loans owing to, each Lender
pursuant to the terms hereof from time to time (the "Register"). The entries in
the Register shall be conclusive in the absence of manifest error and the
Borrower, the Agent and the Lenders may treat each Person whose name is recorded
in the Register pursuant to the terms hereof as a Lender hereunder for all
purposes of this Agreement. The Register shall be available for inspection by
the Borrower and any Lender, at any reasonable time and from time to time upon
reasonable prior notice;
18.9.4 upon its receipt of a duly completed Assignment and
Acceptance Agreement executed by the parties thereto, the processing and
recordation fee referred to in subsection 18.9.1 above and if required, the
written consent of the Borrower to such assignment, the Agent shall (subject to
the consent of the Agent to such assignment), (x) accept such Assignment and
Acceptance Agreement, (y) record the information contained therein in the
Register and (z) give prompt notice thereof to the Lenders and the Borrower;
18.9.5 any Lender may, in the ordinary course of its commercial
banking business and in accordance with applicable Law, at any time sell to one
or more additional banks or other financial institutions ("Participants")
participating interests in any Loan owing to such Lender, any Commitment of such
Lender or any other interest of such Lender hereunder. In the event of any such
sale by a Lender of participating interests to a Participant, such Lender's
obligations under this Agreement to the other parties to this Agreement shall
remain unchanged, such Lender shall remain the party to this Agreement and
solely responsible for the performance thereof and the Borrower and the Agent
shall continue to deal solely and directly with such Lender in connection with
such Lender's rights and obligations under this Agreement. The Borrower agrees
that each Participant shall be deemed to have the right of set-off or
compensation to the extent provided in Sections 4.9 and 18.4 in respect of its
participating interest in amounts owing under this Agreement to the same extent
as if the amount of its participating interest were owing directly to it as a
Lender under this Agreement; PROVIDED that such right of set-off or compensation
shall be subject to the obligation of such Participant to share with the
Lenders, and the Lenders agree to share with such Participant, as provided in
Section 18.5. The Borrower also agrees that no Participant shall have any
right to consent to or refrain from consenting to any amendment, waiver or other
modification of any provision of this Agreement or any Security Document,
PROVIDED, that each Participant shall have the right to consent to any
amendment, of any provision of this Agreement which directly
Page 76 of 103
<PAGE>
-64-
extends the Revolving Period, reduces the stated rate or extends the scheduled
time of payment of interest on any Loan or reduces the principal amount of any
Loan, in each case solely with respect to any Loans in which such Participant
has a participating interest. The Borrower also agrees that each Participant
shall be entitled to the benefits of Articles 6 and 7 with respect to its
participation in the Commitments and the Loans outstanding from time to time, in
each case with effect as of and from the date on which such Participant becomes
a Participant. Notwithstanding the immediately preceding sentence, the Borrower
shall not be required to pay to any Lender for the benefit of any Participant
more than the amount which it would have been required to pay to the Lender
which granted an interest in the Loans or other obligations of the Borrower
payable hereunder;
18.9.6 the Borrower authorizes each Lender to disclose to any
Assignee or Participant (each, a "TRANSFEREE") and any prospective Transferee
any and all financial information in such Lender's possession concerning the
Borrower and its Subsidiaries and Affiliates which has been delivered to such
Lender by or on behalf of the Borrower pursuant to this Agreement or which has
been delivered to such Lender by or on behalf of the Borrower in connection with
such Lender's credit evaluation of DLFC, the Borrower and the Borrower's
Subsidiaries and Affiliates prior to becoming a party to this Agreement, subject
to such Transferee's agreeing to the confidentiality restrictions, if any,
applicable thereto agreed to by such Lender;
18.9.7 if, pursuant to this Section 18.9, any interest in this
Agreement is transferred to any Transferee which is organized under the Laws of
any jurisdiction other than the United States or any State thereof, the assignor
Lender shall cause such Transferee, concurrently with the effectiveness of such
transfer, (x) to represent to the assignor Lender (for the benefit of the
assignor Lender, the Agent and the Borrower) that under applicable Law no taxes
will be required to be withheld by the Agent, the Borrower or the assignor
Lender with respect to any payments to be made to such Transferee in respect of
the Loans, (y) to furnish to the assignor Lender (and, in the case of any
Assignee registered in the Register, the Agent and the Borrower) either U.S.
Internal Revenue Service Form 4224 or U.S. Internal Revenue Service Form 1001
(wherein such Transferee claims entitlement to complete exemption from United
States federal withholding tax on all interest payments hereunder) and (z) to
agree (for the benefit of the assignor Lender, the Agent and the Borrower) to
provide the assignor Lender (and, in the case of any Assignee registered in the
Register, the Agent and the Borrower) a new Form 4224 or Form 1001 upon the
expiration or obsolescence of any previously delivered form and comparable
statements in accordance with applicable United States Law and regulations and
amendments duly executed and completed by such Transferee and to comply from
time to time with all applicable United States Laws and regulations with regard
to such withholding tax exemption.
18.10 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
separate counterparts shall together constitute but one and the same instrument.
18.11 GOVERNING LAW. This Agreement and the interpretation and enforcement
thereof shall be governed by and in accordance with the Laws in force in the
State of New York.
Page 77 of 103
<PAGE>
-65-
18.12 SEVERABILITY. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof in that jurisdiction or affecting the validity or
enforceability of such provision in any other jurisdiction.
18.13 NO NOVATION, ETC. Any Lien provided at any time and from time to
time to the Lenders or any one thereof by the Borrower shall not constitute a
payment nor shall it operate as a novation of any amount due hereunder and shall
not operate by way of compensation, set-off or confusion of or merge with any
indebtedness or liability of the Borrower or of any other Person or Persons
(including the Lenders or any one thereof) to the Lenders or any one thereof
under any deed, guarantee, contract, bill of exchange, promissory note, letter
of credit, certificate of deposit or other instrument by which the same may now
or at any time hereafter be represented or evidenced.
18.14 REPLACEMENT OF COMMITMENT LETTER. This Agreement replaces and
supersedes:
18.14.1 that certain letter addressed by National Bank of Canada to
the Borrower dated November 26, 1993, which letter was accepted by the Borrower
on December 2, 1993; and
18.14.2 all other oral or written agreements, understandings and
undertakings between the Lenders, or any one thereof and the Agent or the
Borrower relating to the Commitments.
18.15 LENDERS TO EXERCISE RIGHTS THROUGH AGENT. Subject only to the extent
that under the provisions of Articles 6 or 7 a single Lender is affected and
subject to the provisions of Section 18.2, the Lenders shall only exercise their
rights and remedies under this Agreement and the Security Documents through the
Agent, who shall only act or refrain from acting at the request of the Majority
Lenders.
18.16 SUBMISSION TO JURISDICTION; WAIVERS. The Borrower hereby expressly
irrevocably and unconditionally:
18.16.1 submits for itself and its property in any legal action or
proceeding relating to this Agreement, or for recognition and enforcement of any
judgment in respect thereof, to the non-exclusive general jurisdiction of the
Courts of the State of New York, the courts of the United States of America for
the Southern District of New York and appellate courts from any thereof;
18.16.2 consents that any such action or proceeding may be brought
in such courts and waives any objection that it may now or hereafter have to the
venue of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or claim
the same;
18.16.3 agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or certified
mail (or any substantially similar form of mail), postage prepaid, to the
Borrower at its last address notified to the Agent pursuant to the provisions of
Section 18.1;
Page 78 of 103
<PAGE>
-66-
18.16.4 agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by Law or shall limit the right
to sue in any other jurisdiction; and
18.16.5 waives, to the maximum extent not prohibited by Law, any
right it may have to claim or recover in any legal action or proceeding referred
to in this subsection any special, exemplary, punitive or consequential damages.
18.17 WAIVERS OF JURY TRIAL. The Borrower, the Agent and each of the
Lenders hereby irrevocably and unconditionally waive trial by jury in any legal
action or proceeding relating to this Agreement or any other Loan Document and
for any counterclaim therein.
ARTICLE 19
FORMAL DATE
19.1 FORMAL DATE. For the purpose of convenience, this Agreement may be
referred to as bearing formal date of April 25, 1994, irrespective of the actual
date of its execution.
Page 79 of 103
<PAGE>
-67-
IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of the date
and in the place first hereinabove mentioned.
LAURENTIAN CAPITAL
CORPORATION
Per: /s/ Robert T. Rakich
-------------------------------------------
Title: President and Chief Executive
Officer
and Per: /s/ Bernhard M. Koch
-------------------------------------------
Title: Senior Vice-President,
Chief Financial Officer, Treasurer
and Secretary
Address: 640 Lee Road
Suite 303
Wayne, Pennsylvania
19087
Attention: Chief Financial Officer
Telecopier: (215) 889-7406 or (610) 889-7406
Page 80 of 103
<PAGE>
-68-
NATIONAL BANK OF CANADA,
NEW YORK BRANCH,
FOR ITSELF AND AS AGENT
Per: /s/ Michael E. Williams
-------------------------------------------
Title: Vice President
and Per: /s/ Richard P. Brown
-------------------------------------------
Title: Vice President
Address: 125 West 55th Street
New York, New York
10019
with a copy to
National Canada Finance Corporation
401 East Pratt Street
Suite 631
Baltimore, MD
21202
Attention: Vice-President
National Canadian Finance Corporation
Telecopier: (410) 837-8359
Page 81 of 103
<PAGE>
-69-
THE DAIWA BANK, LTD.
Per: /s/ Thomas Howard
-------------------------------------------
Title: Vice President
and Per: /s/ Michael J. Fox
-------------------------------------------
Title: Vice President
Address: 2450 CNG Tower
625 Liberty Place
Pittsburgh, PA
15222
Attention: Vice-President and Manager
Telecopier: (412) 288-1819
Page 82 of 103
<PAGE>
-70-
COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEENBANK B.A./ "RABOBANK NEDERLAND",
NEW YORK BRANCH
Per: /s/ Ian Reece
-------------------------------------------
Title: Vice President & Manager
and Per: /s/ Robert B. Benoit
-------------------------------------------
Title: Senior Vice President
Address: 245 Park Avenue
New York
New York 10167
Attention: Vice-President and Manager
Telecopier: (212) 916-7837
Page 83 of 103
<PAGE>
-71-
NATIONAL WESTMINSTER BANK PLC
Per: /s/ Luc St-Arnault
-------------------------------------------
Title: Regional Vice President
and Per:
-------------------------------------------
Title:
Address: c/o National Westminster Bank of Canada
2000 McGill College Avenue
Suite 575
Montreal, Quebec
Canada
H3A 3H3
Attention: Vice-President
Telecopier: (514) 287-0862
Page 84 of 103
<PAGE>
SCHEDULE "A"
LENDERS AND AMOUNT OF COMMITMENTS
<TABLE>
<CAPTION>
Lenders Commitments
------- -----------
<S> <C>
National Bank of Canada $ 15,000,000
New York Branch
The Daiwa Bank, Ltd. $ 10,000,000
Cooperatieve Centrale
Raiffeisen-Boerenleenbank B.A./
"Rabobank Nederland", New York Branch $ 10,000,000
National Westminster Bank PLC $ 10,000,000
--------------
$ 45,000,000 TOTAL
</TABLE>
<PAGE>
Exhibit C
STOCK PLEDGE AGREEMENT
This Stock Pledge Agreement (as the same may be amended, supplemented or
restated from time to time, shall be referred to herein as the "Pledge
Agreement") made as of the 25th day of April, 1994 by and between Laurentian
Capital Corporation, a Delaware corporation (such corporation and all successors
thereto shall be referred to herein as the "Pledgor"); National Bank of Canada,
New York branch ("National"), The Daiwa Bank, Ltd., National Westminster Bank
PLC and Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A./"RaboBank
Nederland", New York branch (such banks and all successors or assigns thereof
and all such other persons who may from time to time become lenders under the
Credit Agreement hereinafter defined shall be referred to herein collectively as
the "Banks"), the Banks being the Lenders identified in that certain Credit
Agreement (as the same may be amended, supplemented or restated from time to
time, shall be referred to herein as the "Credit Agreement") made as of the 25th
day of April, 1994 by and among Pledgor and the Banks; and National Bank of
Canada, having offices in New York, New York (the "Collateral Custody Agent"),
as collateral custody agent hereunder.
WHEREAS, contemporaneously herewith the Pledgor and the Banks have entered
into the Credit Agreement; and
WHEREAS, in consideration of the extension of credit by the Banks to
Pledgor, Pledgor has agreed pursuant to the Credit Agreement to pledge all of
the outstanding capital stock of its wholly-owned subsidiary, Loyal American
Life Insurance Company, an Alabama corporation (such corporation and all
successors thereto shall be referred to herein as "Loyal American Life"), as
security for the indebtedness incurred under the Credit Agreement; and
WHEREAS, the parties hereto desire to effect such pledge and to provide for
custody of the stock so pledged to be maintained by the Collateral Custody
Agent, by means of this Pledge Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained and other good and valuable consideration, the receipt of which
is hereby acknowledged, the parties hereto agree as follows:
Section 1. PLEDGE. The Pledgor hereby pledges, assigns and transfers to
the Banks, and grants to the Banks a continuing security interest in, one
thousand (1,000) shares of the common stock, $3,000 par value per share, of
Loyal American Life, being all of the outstanding shares of capital stock of
Loyal American Life (the "Pledged Stock"), together with all dividends,
interest, cash, instruments, securities and other property at any time received,
receivable or otherwise distributed in respect of or in exchange for the Pledged
Stock (all of the foregoing being referred
Page 86 of 103
<PAGE>
to collectively as "Collateral"), and all proceeds of any and all of the
Collateral.
Section 2. TRANSFER OF COLLATERAL. Pledgor contemporaneously herewith has
delivered to the Collateral Custody Agent, as Collateral Custody Agent for the
Banks, all certificates representing or evidencing the Pledged Stock,
accompanied by duly executed instruments of transfer or assignment, which
instruments reflect that any subsequent transfer or assignment by the Banks of
the Pledged Stock is subject to the terms and conditions of this Pledge
Agreement. The Collateral Custody Agent shall hold the Pledged Stock on behalf
of the Banks until required to transfer the Pledged Stock to or to the order of
the Banks or to Pledgor, as the case may be, in accordance with the terms of
this Pledge Agreement.
Section 3. OBLIGATIONS SECURED. This Pledge Agreement and the security
interest granted hereby secure the payment and performance when due of all
indebtedness, liabilities, obligations and undertakings of Pledgor to the Banks
arising under or pursuant to the Credit Agreement and the Pledge Agreement
(herein collectively referred to as the "Obligations" and individually as an
"Obligation").
Section 4. REPRESENTATIONS AND WARRANTIES. Pledgor hereby represents and
warrants to the Banks as follows:
(a) Pledgor is the sole owner of the Pledged Stock, free and clear of any
lien, security interest, option, right of first refusal, or other charge or
encumbrance, except for the security interest created by this Pledge Agreement
and any charge or encumbrance as may be imposed by the Change of Control Laws
defined in Section 6 hereof.
(b) All of the Pledged Stock has been duly and validly authorized and
issued, free and clear of any restrictions on transfer other than those imposed
by the Change of Control Laws defined in Section 6 hereof, and Pledgor has and
shall have the right to transfer the Pledged Stock and grant a security interest
therein to the Banks as provided in this Pledge Agreement, subject to the
provisions of Section 6 below.
(c) No effective financing statement or similar notice covering any
Collateral is or shall be on file in any recording office, and no other pledge
or assignment thereof has been made, except in favor of the Banks.
(d) Pledgor shall defend the interests of the Banks in the Collateral
against the claims and demands of all other persons.
2
Page 87 of 103
<PAGE>
Section 5. DIVIDENDS, INTEREST AND VOTING POWER.
(a) Prior to any Event of Default, as defined in Section 9 hereof, and
thereafter until the conditions specified in subsection (c) of this Section 5
have been satisfied so that the Banks shall be entitled to exercise voting
rights and receive dividends as described in such subsection (c), Pledgor shall
be entitled: (i) to exercise all voting power pertaining to the Pledged Stock
for all purposes; and (ii) to receive and retain any and all dividends (other
than stock or liquidating dividends) declared or paid on the Pledged Stock.
(b) (i) If, upon the dissolution or liquidation (in whole or in part) of
Loyal American Life, any sum is paid as a liquidating dividend or otherwise on
or with respect to the Pledged Stock, such sum shall be paid to the Banks to be
held as Collateral hereunder or applied to Obligations then due, in such order
and in such amounts as is specified in the Credit Agreement for payments
thereunder, and the rights of the Banks to same under the terms of this Pledge
Agreement shall under no circumstances be subject to the provisions of Section
6. (ii) If any stock dividend is declared on the Pledged Stock, or any shares
of stock or fractions thereof are issued pursuant to any so-called "stock split"
involving the Pledged Stock, or if any shares of stock, obligations or other
non-cash property are distributed on or with respect to the Pledged Stock,
whether on account of recapitalization, bankruptcy or receivership,
reorganization, merger or consolidation of Loyal American Life, or otherwise,
the shares of stock, obligations or other property so distributed shall be
delivered to the Collateral Custody Agent to be held by it as Collateral
hereunder, and, to the extent such shares of stock, obligations or other
property so distributed are not subject to the Change of Control Laws defined on
Section 6, the rights of the Banks to same under the terms of this Pledge
Agreement shall under no circumstances be subject to the provisions of Section
6. Any cash so distributed shall be paid to the Banks and held or applied as
provided in subsection (b)(i).
(c) Upon and after an Event of Default (unless the same is previously
cured), the Banks shall become entitled, but only after compliance with the
provisions of Section 6 hereof, to exercise voting power pertaining to Pledged
Stock and to receive and retain as Collateral hereunder or apply, as provided in
subsection (b)(i) of this Section 5, to any Obligations then due (whether by
acceleration or otherwise) any and all dividends at any time declared or paid on
Pledged Stock.
(d) All payments, shares of stock and other cash or non-cash property
referred to in subsections (b) and (c) of this Section 5, if received by Pledgor
in the circumstances therein described, shall be delivered by Pledgor to the
Banks or the Collateral Custody Agent, as the case may be, immediately upon
receipt thereof
3
Page 88 of 103
<PAGE>
by Pledgor (duly endorsed or assigned to the Banks as appropriate) in the
identical form received by Pledgor.
Section 6. INSURANCE REGULATORY MATTERS. Notwithstanding any provision
of this Pledge Agreement to the contrary, as it relates to the Pledged Stock
only, the Banks and the Collateral Custody Agent acknowledge that this Pledge
Agreement is subject to the provisions of Sections 27-29-1, ET. SEQ. of the CODE
OF ALABAMA (1975), as the same may be amended from time to time (and to any
successor provisions thereto), and to such regulations as may be promulgated
pursuant thereto or pursuant to any such successor provisions (the foregoing
statutes and regulations being referred to herein as the "Change of Control
Laws"). The Banks and the Collateral Custody Agent agree that, notwithstanding
the occurrence of an Event of Default, neither the Banks nor the Collateral
Custody Agent shall:
(a) exercise any voting power with respect to the Pledged Stock, either
directly or by proxy;
(b) take any action to sell or transfer ownership of the Pledged Stock, or
otherwise exercise the rights specified in Section 6(c) or Section 10 hereof; or
(c) otherwise exercise control, as such term is defined in the Change of
Control Laws, with respect to Loyal American; (including, without limitation, by
causing or attempting to cause Loyal American to enter into any contract with an
affiliate without approval of the Commissioner of Insurance of the State of
Alabama (the "Commissioner"));
unless and until the requirements of the Change of Control Laws have been met,
including without limitation any applicable requirements of informational
filings with or of prior approval of such actions by the Commissioner.
Section 7. COVENANTS OF PLEDGOR.
(a) Pledgor shall furnish to the Banks, promptly upon receipt thereof,
copies of all material notices, requests and other documents received by Pledgor
relating to Collateral.
(b) Pledgor shall not (i) sell, assign, transfer or otherwise dispose
(except as specifically permitted by the provisions of Section 5 hereof) of any
Collateral, or create or suffer to exist any lien, security interest, assignment
by operation of law or other charge or encumbrance on or with respect to, any
Collateral, except for the security interest created by this Agreement; or (ii)
take or permit to be taken any other action in connection with any collateral
which would impair the value of the interest or rights of the Pledgor or of the
Banks therein or thereunder.
4
Page 89 of 103
<PAGE>
(c) Pledgor shall promptly execute and deliver, at the expense of Pledgor,
all such further notices, instruments and documents, including, without
limitation, financing statements, and take all such further action, as may be
necessary or advisable, or as the Banks may reasonably request at any time or
times, in order to perfect, preserve and protect the security interest granted
hereby or to enable the Banks to exercise and enforce their rights, remedies and
powers hereunder with respect to Collateral.
Section 8. CARE OF COLLATERAL. The Banks and the Collateral Custody Agent
shall exercise reasonable care in the custody and preservation of Collateral
while such is actually in the possession of the Banks or the Collateral Custody
Agent. The Banks and the Collateral Custody Agent, respectively, shall be
deemed to have exercised reasonable care in the custody and preservation of such
Collateral as is actually in their possession if the Collateral is accorded
treatment substantially equal to that which the Banks and the Collateral Custody
Agent accord their own property of the same nature.
Section 9. EVENTS OF DEFAULT. An event of default ("Event of Default")
shall be deemed to have occurred hereunder upon the occurrence of any Event of
Default as defined in the Credit Agreement. Upon and after any Event of Default
which is then continuing, any or all Obligations shall become immediately due
and payable at the option of the Banks, and the Banks may dispose of the
Collateral, but only as provided below.
Section 10. DISPOSITION OF COLLATERAL.
(a) Upon and after any Event of Default which is then continuing:
(1) The Banks may direct the Collateral Custody Agent to transfer
custody and possession of the Pledged Stock (and other Collateral, if any,
then in the custody of the Collateral Custody Agent) and the Banks may
thereupon exercise their rights with respect to the Collateral, without
regard to the existence of any other security or source of payment for
Obligations, and in addition to other rights and remedies provided for
herein or otherwise available to them, the Banks shall have all of the
rights and remedies of a secured party on default under the Uniform
Commercial Code ("Code") then in effect in New York.
(2) If any notice to Pledgor of the sale or other disposition of
Collateral is required by then applicable law, fifteen (15) days' prior
notice (or, if longer, the shortest period of time permitted by then
applicable law) to Pledgor of the time and place of any public sale of
Collateral or of the time after which any private sale or any other
intended disposition is to be made shall constitute reasonable
notification.
5
Page 90 of 103
<PAGE>
(3) The Banks are authorized, at any such sale, if the Banks deem it
advisable to do so, in order to comply with any applicable insurance or
securities laws, to restrict the prospective bidders or purchasers to
persons who will represent and agree, among other things, that they are
purchasing the Pledged Stock for their own account for investment, and not
with a view to the distribution or resale thereof, or otherwise to restrict
such sale in such other manner as the Banks deem advisable to insure such
compliance. Sales made subject to such restrictions shall be deemed to
have been made in a commercially reasonable manner.
(4) All cash proceeds received by the Banks in respect of any sale,
collection or other enforcement or disposition of Collateral shall be
applied (after deduction of any amounts payable to the Banks pursuant to
Section 12) against Obligations in such order and in such amounts as is
specified in the Credit Agreement with respect to payments thereunder.
Upon payment in full of all Obligations, the Pledgor shall be entitled to
the return of all Collateral, including cash, which has not been used or
applied toward the payment of Obligations and the Banks shall promptly
transfer or pay same to Pledgor.
(b) As it relates to the Pledged Stock only, the exercise of any right by
the Banks under this Section 10 shall be subject to the provisions of Section 6.
Section 11. RELEASE OF PLEDGED STOCK. Upon reduction of the outstanding
Obligations and the amount of credit commitment under the Credit Agreement to an
amount of $35,000,000 or less, the Banks shall, at the written request of
Pledgor, release the Pledged Stock from the security interest granted by this
Pledge Agreement and cause the Collateral Custody Agent to return same to
Pledgor, and this Pledge Agreement shall thereupon terminate, provided that no
"Default" or "Event of Default" (as both of these expressions are defined in the
Credit Agreement) exists at the time of any such request or proposed release.
Section 12. EXPENSES. Pledgor shall pay to the Banks, on demand, the
amount of any and all reasonable expenses, including without limitation,
reasonable attorneys' fees, legal expenses and brokers' fees, which the Banks
may incur in connection with (a) sale, collection or other enforcement or
disposition of Collateral; (b) exercise or enforcement of any of the rights,
remedies or powers of the Banks hereunder or with respect to any or all
Obligations; or (c) failure by Pledgor to perform or observe any agreements of
Pledgor contained herein.
Section 13. WAIVERS, AMENDMENT AND REMEDIES. Pledgor hereby waives
presentment, demand, notice and protest, notice of acceptance of this Agreement,
and, except as provided in Section
6
Page 91 of 103
<PAGE>
10(b), of all action by the Banks in reliance hereon. No course of dealing by
the Banks in exercising any right, remedy or power hereunder shall operate as a
waiver thereof, and no further exercise thereof and no single or partial
exercise thereof shall preclude any other or further exercise thereof or the
exercise of any other right, remedy or power of the Banks. No amendment,
modification or waiver of any provision of this Agreement and no consent or any
departure by Pledgor therefrom, shall, in any event, be effective unless
contained in a writing signed by the Banks, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given. The rights, remedies and powers of the Banks, not only
hereunder, but also under any instruments and agreements evidencing or securing
Obligations and under applicable law are cumulative, and may be exercised by the
Banks from time to time in such order as they may elect.
Section 14. NOTICES. All demands, notices and other communications from
any party hereto to another hereunder shall be in writing and shall be deemed
effective when delivered in the manner specified in the Credit Agreement (with
the address for notices to the Collateral Custody Agent being that specified
following the execution of this Pledge Agreement by the Collateral Custody
Agent).
Section 15. BINDING EFFECT. This Pledge Agreement shall (a) remain in
full force and effect until payment and satisfaction in full of all Obligations
or the termination hereof in accordance with Section 11 hereof; (b) be binding
upon Pledgor and the successors in title and assigns of Pledgor; and (c) inure
to the benefit of the Banks and their respective successors and assigns.
Section 16. CAPTIONS. The captions of Sections in this Pledge Agreement
have been included for convenience of reference only, shall not define or limit
the provisions hereof and have no legal or other significance whatsoever.
Section 17. PLACE OF CONTRACT; GOVERNING LAW. The parties hereto
acknowledge that this Pledge Agreement has been executed and delivered in the
State of New York. This Pledge Agreement shall be governed by and construed in
accordance with the law of New York. Unless otherwise defined herein, all words
and terms used in this Pledge Agreement which are defined in the Code shall be
deemed to have the meaning accorded to them in the Code. If any provision of
this Pledge Agreement, or the application thereof to any person or circumstance,
is held invalid, such invalidity shall not affect other provisions which can be
given effect without the invalid provision or application, and to this end the
provisions hereof shall be severable.
7
Page 92 of 103
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Pledge Agreement to
be executed by their respective duly authorized officers, as of the date first
above written.
PLEDGOR
LAURENTIAN CAPITAL CORPORATION
By /s/ Robert T. Rakich
---------------------------------------
Its President & Chief Executive Officer
-------------------------------------
BANKS
NATIONAL BANK OF CANADA,
New York Branch
By /s/ Michael E. Williams
-------------------------------------
Its Vice President
------------------------------------
and
By /s/ Richard P. Brown
-------------------------------------
Its Vice President
------------------------------------
THE DAIWA BANK, LTD.
By /s/ Tom Howard
-------------------------------------
Its Vice President
------------------------------------
and
By /s/ Michael J. Fox
-------------------------------------
Its Vice President
------------------------------------
NATIONAL WESTMINSTER BANK PLC
By /s/ Luc St-Arnault
-------------------------------------
Its Regional Vice President
------------------------------------
and
By
-------------------------------------
Its
------------------------------------
8
Page 93 of 103
<PAGE>
COOPERATIEVE CENTRALE
RAIFFEISEN-BOERENLEENBANK B.A./
"RABOBANK NEDERLAND",
New York Branch
By /s/ Ian Reece
-------------------------------------
Its Vice President & Manager
------------------------------------
and
By /s/ Robert B. Benoit
-------------------------------------
Its Senior Vice President
------------------------------------
COLLATERAL CUSTODY AGENT
NATIONAL BANK OF CANADA,
New York Branch
By /s/ Michael E. Williams
-------------------------------------
Its Vice President
------------------------------------
and
By /s/ Richard P. Brown
-------------------------------------
Its Vice President
------------------------------------
Address for notice:
125 West 55th Street
New York, New York 10015
9
Page 94 of 103
<PAGE>
Exhibit D
DESJARDINS LAURENTIAN FINANCIAL CORPORATION
LONG-TERM FINANCING
SUPPORT AGREEMENT
AGREEMENT dated as of April 25, 1994, between Desjardins Laurentian
Financial Corporation, a Quebec corporation, (together with its successors and
assigns herein referred to as "DLFC"), and Laurentian Capital Corporation, a
Delaware corporation ("LCC").
WHEREAS DLFC owns beneficially approximately 82% of the issued and
outstanding Common Stock of LCC; and
WHEREAS to assist LCC in carrying on its business, LCC plans to finance its
existing US $55,000,000 debt with various financial institutions, all or part of
which indebtedness may in turn be refinanced (such indebtedness being herein
referred to as the "Debt").
WHEREAS DLFC intends to provide certain assurances with respect to the Debt
as specified herein for the benefit of holders of Debt (such holders, together
with others to which the Debt is payable, the "Creditors") with respect to the
stock ownership and maintenance of net worth of LCC; and
WHEREAS LCC plans to finance the borrowing requirements of it and certain
of its subsidiaries with the proceeds of the Debt; and
WHEREAS DLFC has an interest in providing support to LCC to enhance the
opportunities of LCC to incur Debt, when needed; and
WHEREAS DLFC desires to maintain the net worth of LCC; and
WHEREAS the corporate interests of DLFC will be furthered and the value of
its investment in LCC preserved and potentially enhanced by its entering into
this Agreement;
NOW, THEREFORE, the parties agree for the benefit of the Creditors as
follows:
1. STOCK OWNERSHIP OF LCC
DLFC will directly (or indirectly through one or more controlled
subsidiaries of DLFC) own and hold the entire legal title to or beneficial
interest in at least 51% of the outstanding shares of stock of LCC having the
power under ordinary circumstances to vote for the election of members of the
Board of Directors of LCC and will not directly or indirectly pledge or in any
way encumber or otherwise dispose of any such shares of stock.
1
Page 95 of 103
<PAGE>
However, DLFC will always have the power to sell or otherwise transfer
to any other company controlling, controlled by or under common control with
DLFC, its stock ownership in LCC, as long as DLFC will continue to be in
compliance with paragraph 1 above.
2. MAINTENANCE OF ASSET LEVEL
DLFC will cause LCC to adhere to a dividend policy, and to legal
requirements related to the payment of dividends by LCC, which will cause the
Net Worth of LCC to be the greater of (i) US $75 million and (ii) the amount of
the Debt.
DLFC will cause the Net Worth of LCC to be at all times the greater of
(i) US $75 million and (ii) the amount of the Debt. As used herein "Net Worth"
shall mean as of the time of any determination thereof, the sum of (i) the
aggregate par value of all classes of capital stock of LCC together with the
face value of all capital notes of LCC (as described below), plus (or minus in
the case of deficiency) (ii) the net unrealized gains (losses) on equity
securities of LCC, plus (or minus in the case of deficiency) (iii) the amount of
the paid-in capital and retained earnings of LCC, all determined on a
consolidated basis in accordance with generally accepted U.S. accounting
principles consistently applied, except that for the purpose of this agreement a
contribution by DLFC in the form of capital notes (as described below), and in
all classes of preferred stock, will be treated as part of "Net Worth".
In the event that the Net Worth of LCC shall be less than the greater
of (i) US $75 million and (ii) the amount of the Debt, DLFC will make, or cause
an affiliate of DLFC to make, a contribution to the capital of LCC to the extent
necessary to increase the Net Worth of LCC to the greater of (i) US $75 million
and (ii) the amount of Debt ("Contribution"). A Contribution may, at DLFC's
option, be a direct contribution to the shareholders' equity of LCC, the
purchase of preferred stock of LCC, or of additional shares of common stock or
other equity of LCC, or the loan of funds in the form of capital notes
(unsecured indebtedness subordinate in a manner satisfactory to the Creditors to
all other indebtedness of LCC for borrowed funds). DLFC will make a
Contribution within ten (10) days after the filing by LCC of any Quarterly
Report on Form 10-Q or Annual Report on Form 10-K with the U.S. Securities and
Exchange Commission which reflects that the Net Worth of LCC is less than the
greater of (i) US $75 million and (ii) the amount of the Debt. In addition,
should the Net Worth of LCC at any other time be less than the greater of (i) US
$75 million and (ii) the amount of the Debt as demonstrated by interim financial
statements of LCC, LCC may demand an immediate Contribution, and DLFC shall make
such Contribution within ten (10) days of such demand.
3. MODIFICATION, AMENDMENT AND TERMINATION
This Agreement may only be modified or amended in ways not less
favorable to LCC or its Creditors and may be terminated at any time by notice
from one party to the
2
Page 96 of 103
<PAGE>
other on not less than ninety (90) days written notice, except that if
termination of this Agreement is necessary to meet any legal or regulatory
requirements applicable to DLFC, this Agreement may be terminated immediately by
DLFC upon written notice to LCC. Notwithstanding any such termination, the
obligations of DLFC under paragraphs 1 and 2 hereof shall remain in full force
and effect until the retirement of Debt supported by this Agreement and
outstanding on the termination date and termination of the commitments of the
Creditors to the Company, unless all of the Creditors (or a trustee acting on
behalf of such Creditors) shall have consented to such termination in writing.
Notwithstanding any other provisions of this Agreement, upon payment in full of
the Debt supported by this Agreement and termination of the commitments of the
Creditors to the Company, this Agreement and all obligations of LCC and DLFC
hereunder shall terminate and be of no further force and effect.
4. ENFORCEMENT OF AGREEMENT
DLFC agrees for the benefit of the Creditors and no others that DLFC
will timely take any and all action necessary to comply with paragraph 2 and
will not hinder or prevent LCC from making a demand. DLFC further agrees that,
if and to the extent that DLFC shall fail to comply with any such demand or with
paragraph 2 or LCC shall fail for whatever reason to make such demand or enforce
its rights under paragraph 2, any Creditor shall have the direct and immediate
right to enforce LCC's rights in respect of paragraph 2 of this Agreement and to
enforce the Contribution.
5. DLFC NOT A GUARANTOR
This Agreement is not, and nothing herein contained, and nothing done
pursuant hereto by DLFC, shall be construed or deemed to constitute, a direct or
indirect guarantee by DLFC to any party of the payment of the interest or
principal of any indebtedness, liability or obligation of any kind or character
(including without limitation the Debt) of LCC or any of LCC's subsidiaries.
6. REPRESENTATIONS AND WARRANTIES
DLFC represents and warrants to and for the benefit of LCC and the
Creditors that:
(A) DLFC is a corporation duly organized and validly existing under
the Companies Act (Quebec), Canada, and is duly authorized to do business in
each jurisdiction where, because of the nature of its activities or properties,
such qualification is required.
(B) The execution, delivery and performance of this Agreement are
within DLFC's corporate powers and have been duly authorized by all necessary
corporate action on the part of, and in respect of, DLFC.
3
Page 97 of 103
<PAGE>
(C) This Agreement has been duly executed and delivered by DLFC and
constitutes a legal, valid and binding obligation of DLFC enforceable against
DLFC in accordance with its terms.
(D) No consent or approval of, or notice to, any governmental body or
regulatory authority or any creditor of DLFC is required for the execution or
delivery of, or the performance of DLFC's obligations under this Agreement, and
such execution, delivery, performance and consummation does not result in any
breach or violation of, or constitute a default under, or result in the creation
of any lien in respect of any property of DLFC pursuant to, (i) the charter or
by-laws of DLFC or any of its subsidiaries, (ii) any law, regulation, rule,
governmental order or judgment applicable to DLFC or any of its subsidiaries or
(iii) any material agreement, contract or instrument binding upon DLFC or any of
its subsidiaries.
7. SUCCESSORS
This Agreement herein set forth shall be mutually binding upon, and
inure to the mutual benefit of DLFC, the Creditors and their respective
successors and assigns.
8. INCREASE
Any increase of the outstanding LCC Debt above $45,000,000 shall
require the prior written approval of DLFC.
9. GOVERNING LAW; JURISDICTION
(A) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAW OF THE STATE OF NEW YORK.
(B) DLFC hereby irrevocably and unconditionally, for the benefit of
the Creditors:
(i) submits for itself and its property in any legal action or
proceeding arising out of or relating to this Agreement, or for recognition and
enforcement of any judgment in respect hereof, to the non-exclusive jurisdiction
of any federal or state court in the Borough of Manhattan, New York City and the
courts of Canada, and consents and agrees to suit being brought in such courts
as any Creditor or the Agent may elect;
(ii) waives to the full extent permitted by law any objection that it
may now or hereafter have to the venue of any such suit, action or proceeding in
any such court or that such suit, action or proceeding has been brought in an
inconvenient forum and agrees not to plead or claim the same;
4
Page 98 of 103
<PAGE>
(iii) designates and directs that its offices on the date hereof
at 1 Complexe Desjardins, 40th Floor, Montreal, Quebec, Canada H5B 1E4, and LCC,
with offices on the date hereof at 640 Lee Road, Suite 303, Wayne, Pennsylvania
19087, United States of America, act as its agent to, receive service of any and
all process and documents on its behalf in any suit, action or proceeding
referred to in clause (i) above in Canada and the Borough of Manhattan, New York
City, respectively, and agrees that service by certified mail, return receipt
requested (or its equivalent) upon the Secretary of either itself, for purposes
of any lawsuit, action or proceeding brought in Canada, or such agent, for
purposes of any lawsuit, action or proceeding brought in the Borough of
Manhattan, New York City, shall constitute valid and effective service upon DLFC
and that failure of such agent to give notice of such service to DLFC shall not
affect or impair in any way the validity of such service or of any judgment
rendered in any suit, action or proceeding based thereon;
(iv) agrees to notify the Agent of the Creditors immediately by telex
or registered or certified mail if any such agent shall cease to act as agent
and, in such event, promptly to designate another agent satisfactory to the
Agent and the Creditors to serve in place of such agent and deliver to the Agent
of the Creditors written evidence of such substitute agent's acceptance of such
designation;
(v) agrees that nothing herein shall affect the right of any Creditor
to affect service of process in any other manner permitted by law, and that the
Creditors shall have the right to bring any legal proceedings (including a
proceeding for enforcement of a judgment entered by any of the aforementioned
courts) against DLFC in such courts or in any other court or jurisdiction in
accordance with applicable law; and
(vi) waives trial by jury in connection with any legal action or
proceeding arising out of or relating to this Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement as of the day and year first above written.
DESJARDINS LAURENTIAN FINANCIAL CORPORATION
By: /s/ Fernard Lafleur
--------------------------------------------------------------
Title: Senior Vice President
-----------------------------------------------------------
Date: April 25, 1994
------------------------------------------------------------
LAURENTIAN CAPITAL CORPORATION
By: /s/ Robert T. Rakich
--------------------------------------------------------------
Title: President & Chief Executive Officer
-----------------------------------------------------------
Date: April 25, 1994
------------------------------------------------------------
5
Page 99 of 103
<PAGE>
Exhibit E
AGREEMENT entered into at New-York City, New-York as of the 25th day of April,
1994.
AMONG: DESJARDINS LAURENTIAN FINANCIAL CORPORATION
AND: LAURENTIAN CAPITAL CORPORATION
AND: NATIONAL BANK OF CANADA, in its capacity as Agent
WITNESSETH:
WHEREAS a Long Term Financing Support Agreement dated as of April 25, 1994, was
executed among Desjardins Laurentian Financial Corporation (which, with its
successors and permitted assigns shall be collectively referred to herein as
"DLFC") and Laurentian Capital Corporation (which, with its successors and
permitted assigns shall be collectively referred to herein as "LCC") whereby
DLFC agreed to provide certain assurances for the benefit of LCC and the
Creditors with respect to the stock ownership and maintenance of net worth of
LCC (the said agreement, as same may be amended, supplemented or restated at any
time and from time to time shall be referred to herein as the "Support
Agreement");
WHEREAS a credit agreement dated as of April 25, 1994 was executed among LCC, as
borrower, National Bank of Canada, The Daiwa Bank, LTD., Cooperatieve Centrale
Raiffeisen-Boerenleenbank B.A./"Rabobank Nederland" and National Westminster
Bank, as lenders and National Bank of Canada as agent (the said agreement, as
same may be amended, supplemented and restated at any time and from time to time
shall be referred to herein as the "Credit Agreement");
WHEREAS under the terms of the Credit Agreement, it is a condition precedent to
the Commitments becoming available to LCC that this agreement be entered into by
the parties hereto;
WHEREAS it is intended by DLFC and LCC under the terms of the Support Agreement
that DLFC shall provide to and for the benefit of the Lenders certain assurances
with respect to the stock ownership and maintenance of Net Worth of LCC;
WHEREAS the parties hereto wish to so provide to and for the benefit of the
Lenders the aforesaid assurances in the same manner and to the same extent as if
the Lenders and the Agent were direct signatories and parties to the Support
Agreement;
WHEREAS the corporate interests of DLFC will be furthered and the value of its
investment in LCC preserved and potentially enhanced by its entering into this
agreement;
Page 100 of 103
<PAGE>
-2-
NOW, THEREFORE, FOR GOOD AND VALUABLE CONSIDERATION, the sufficiency and receipt
whereof are hereby acknowledged, the parties hereto have agreed as follows:
Unless there be something in the subject or the context inconsistent therewith,
all capitalized terms and expressions used herein shall have the same meaning as
that ascribed to them in the Support Agreement or the Credit Agreement, as the
case may be.
1. DLFC and LCC do hereby expressly acknowledge and agree that the Lenders do
constitute the Creditors referred to in the Support Agreement and shall have the
same benefits, rights, recourses and remedies under the Support Agreement in the
same manner and to the same extent as if the Agent and the Lenders from time to
time were direct signatories to the Support Agreement, including, without
limitation, the right to enforce the Support Agreement against DLFC.
2. DLFC does hereby expressly covenant and agree that any benefit, right,
recourse and remedy to and in favor and any representation and warranty made to
and for the benefit of the Creditors under the Support Agreement, shall, subject
to the provisions hereinafter mentioned, be created to and for the benefit of
the Agent and the Lenders, as if at length set forth herein.
3. The benefits, rights, recourses and remedies of the Agent and the Lenders
to enforce the provisions of the Support Agreement shall be exercised by the
Agent, for and on behalf of the Lenders, in the event that DLFC fails to comply
with any demand made by LCC pursuant to the Support Agreement or to otherwise
perform its obligations thereunder or LCC fails for whatever reason to make such
demand or enforce any benefit, right, recourse or remedy under the Support
Agreement.
4. The benefits, rights, recourses and remedies of the Lenders and the Agent
under the Support Agreement and under the terms hereof shall be independent to
those of LCC and may be enforced, by the Agent on behalf of the Lenders,
independently from LCC.
5. For all purposes of the Support Agreement and this agreement, as and when
DLFC shall be obliged to make a Contribution, at its option, it shall be
permitted to perform such obligation either in the manner contemplated under
paragraph 2 of the Support Agreement or by making direct payments to the Agent
for the account of the Lenders of the amounts of any such Contribution. Any
payment so received by the Agent shall be applied in reduction of the Loans.
The provisions of this Section 5 shall not be construed as a modification to
paragraph 5 of the Support Agreement.
6. Notwithstanding the provisions of paragraph 3 of the Support Agreement,
DLFC or LCC shall not be entitled to terminate the Support Agreement unless a
copy of the written notices provided for under said paragraph 3 of the Support
Agreement shall have been forwarded to the Agent within the delays set forth
therein. Furthermore, notwithstanding any such termination:
6.1 the provisions of paragraph 9 of the Support Agreement shall continue
in full force and effect; and
Page 101 of 103
<PAGE>
-3-
6.2 the obligation of DLFC under paragraphs 1 and 2 of the Support
Agreement and under this agreement shall remain in full force and effect until
the repayment in full of the Loans outstanding on the termination date and the
termination of the Commitments, unless the Agent, for and on behalf of the
Lenders, shall have consented to such termination in writing.
7. DLFC does hereby expressly acknowledge and agree that the benefits, rights,
recourses and remedies created herein in favour of the Agent and the Lenders,
are created in favour of the Lenders and in favour of the Agent as agent for
such Person or Persons who now are or may at any time and from time to time
become Lenders under the Credit Agreement, in the same manner and to the same
extent as if each such Person was a Lender named herein.
8. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAW OF THE STATE OF NEW-YORK.
9. DLFC hereby irrevocably and unconditionally, for the benefit of the Agent
and the Lenders:
(i) submits for itself and its property in any legal action or proceeding
arising out of or relating to this agreement, or for recognition and enforcement
of any judgement in respect hereof, to the non-exclusive jurisdiction of any
federal or state court in the Borough of Manhattan, New-York City and the courts
of Canada, and consents and agrees to suit being brought in such courts as the
Agent may elect;
(ii) waives to the full extent permitted by-Law any objection that it may
now or hereinafter have to the venue of any such suit, action or proceeding in
any such court or that such suit, action or proceeding has been brought in an
inconvenient forum and agrees not to be plead or claim the same;
(iii) designates and directs that its offices on the date hereof at 1
Complexe Desjardins, 40th Floor, Montreal, Quebec, Canada H5B1E4, and LCC, with
offices on the date hereof at 640 Lee Road, Suite 303, Wayne, Pennsylvania
19087, United States of America, act as its agent to, receive service of any and
all process and documents on its behalf in any suit, action or proceeding
referred to in clause (i) above in Canada and the Borough of Manhattan, New-York
City, respectively, and agrees that service by certified mail, return receipt
requested (or its equivalent) upon the Secretary of either itself, for purposes
of any lawsuit, action or proceeding brought in Canada, or such agent, for the
purposes of any lawsuit, action or proceeding brought in the Borough of
Manhattan, New-York City, shall constitute valid and effective service upon DLFC
and that failure of such agent to give notice of such service to DLFC shall not
affect or impair in any way the validity of such service or of any judgment
rendered in any suit, action or proceeding based thereon;
(iv) agrees that nothing herein shall affect the right of the Agent, on
behalf of the Lenders, to affect service of process in any other manner
permitted by Law, and that the Agent shall have the right to bring any legal
proceedings (including a proceeding for enforcement of a judgment entered by any
of the aforementioned courts) against DLFC in such courts or in any other court
or jurisdiction in accordance with applicable Law; and
Page 102 of 103
<PAGE>
-4-
(v) waives trial by jury in connection with any legal action or
proceeding arising out of or relating to this agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this
agreement as of the date first hereinabove mentioned.
DESJARDINS LAURENTIAN
FINANCIAL CORPORATION
Per: /s/ Fernard Lafleur
-------------------------------
Per:
-------------------------------
LAURENTIAN CAPITAL CORPORATION
Per: /s/ Robert T. Rakich
-------------------------------
Per: /s/ Bernhard M. Koch
-------------------------------
NATIONAL BANK OF CANADA,
in its capacity as Agent
Per: /s/ Richard P. Brown VP
-------------------------------
Per: /s/ Michael E. Williams VP
-------------------------------
Page 103 of 103
