<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
For the Quarterly Period Ended September 30, 1999.
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
For the transition period from __________ to __________
Commission file number: 1-14667
Washington Mutual, Inc.
-----------------------
(Exact name of registrant as specified in its charter)
Washington 91-1653725
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1201 Third Avenue, Seattle, Washington 98101
(Address of principal executive offices) (Zip Code)
(206) 461-2000
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
The number of shares outstanding of the issuer's classes of common stock as of
October 31, 1999:
Common Stock - 577,304,190
<PAGE> 2
WASHINGTON MUTUAL, INC. AND SUBSIDIARIES
FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 1999
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
PART I
Item 1. Financial Statements:
Consolidated Statements of Income--
Three and Nine Months Ended September 30, 1999 and 1998............. 2
Consolidated Statements of Comprehensive Income--
Three and Nine Months Ended September 30, 1999 and 1998............. 3
Consolidated Statements of Financial Condition--
September 30, 1999 and December 31, 1998............................ 4
Consolidated Statements of Stockholders' Equity--
Nine Months Ended September 30, 1999 and 1998....................... 5
Consolidated Statements of Cash Flows--
Nine Months Ended September 30, 1999 and 1998....................... 6
Notes to Consolidated Financial Statements............................ 8
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations:
General...........................................................13
Results of Operations.............................................14
Review of Financial Condition.....................................21
Asset Quality.....................................................22
Asset and Liability Management Strategy...........................24
Liquidity.........................................................26
Capital Adequacy..................................................27
Year 2000 Project.................................................28
PART II
Item 6. Exhibits and Reports on Form 8-K......................................31
</TABLE>
i
<PAGE> 3
PART I
ITEM 1. FINANCIAL STATEMENTS
In the opinion of management, the accompanying unaudited consolidated
statements of financial condition and related interim consolidated statements of
income, comprehensive income, stockholders' equity and cash flows reflect all
adjustments (which consist only of reclassifications and normal recurring
adjustments) that are necessary for a fair presentation in conformity with
generally accepted accounting principles ("GAAP"). The preparation of financial
statements in conformity with GAAP requires management to make estimates and
assumptions that affect amounts reported in the financial statements.
Certain reclassifications have been made to the 1998 financial statements to
conform to the 1999 presentation. All significant intercompany transactions and
balances have been eliminated. When Washington Mutual, Inc. ("Washington Mutual"
or the "Company") acquires a company through a material pooling of interests,
prior period financial statements are restated to include the accounts of merged
companies. Previously reported balances of the merged companies have been
reclassified to conform to the Company's presentation and restated to give
effect to the mergers. The financial information of Washington Mutual contained
herein has been restated for the merger with H.F. Ahmanson & Company
("Ahmanson"), which was effective on October 1, 1998.
The information included in this Form 10-Q should be read in conjunction with
Washington Mutual's 1998 Annual Report to the Securities and Exchange Commission
on Form 10-K. Interim results are not necessarily indicative of results for a
full year.
1
<PAGE> 4
WASHINGTON MUTUAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------------- -----------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
(dollars in thousands, except per share amounts)
<S> <C> <C> <C> <C>
INTEREST INCOME
Loans $ 2,126,725 $ 2,052,164 $ 6,168,599 $ 6,102,269
Available-for-sale securities 644,262 430,077 1,829,596 1,241,059
Held-to-maturity securities 239,199 288,197 744,992 910,162
Other interest income 49,330 43,840 130,069 130,607
----------- ----------- ----------- -----------
Total interest income 3,059,516 2,814,278 8,873,256 8,384,097
INTEREST EXPENSE
Deposits 775,800 890,311 2,382,121 2,721,536
Borrowings 1,164,050 860,598 3,095,566 2,449,193
----------- ----------- ----------- -----------
Total interest expense 1,939,850 1,750,909 5,477,687 5,170,729
----------- ----------- ----------- -----------
Net interest income 1,119,666 1,063,369 3,395,569 3,213,368
Provision for loan losses 40,799 34,376 125,356 128,745
----------- ----------- ----------- -----------
Net interest income after provision for loan losses 1,078,867 1,028,993 3,270,213 3,084,623
OTHER INCOME
Depositor and other retail banking fees 198,360 150,049 543,891 404,745
Loan servicing income 23,871 27,868 73,783 91,141
Loan related income 24,586 28,135 77,992 83,387
Securities fees and commissions 70,781 50,856 199,667 149,342
Insurance fees and commissions 10,571 14,075 31,510 40,452
Mortgage banking income 14,642 34,210 81,025 101,872
Gain on sale of other assets 6,547 8,677 22,872 23,464
Provision for recourse liability -- (15,917) (5,142) (41,436)
Gain on sale of retail deposit branch systems -- 289,040 -- 289,040
Other operating income 20,161 22,073 60,183 60,824
----------- ----------- ----------- -----------
Total other income 369,519 609,066 1,085,781 1,202,831
OTHER EXPENSE
Salaries and employee benefits 294,323 299,785 898,052 896,423
Occupancy and equipment 139,237 120,820 411,301 367,403
Telecommunications and outsourced information services 70,862 64,211 208,106 190,501
Regulatory assessments 14,621 15,679 44,824 48,570
Transaction-related expense 12,673 20,465 73,044 76,747
Amortization of intangible assets 23,447 27,734 72,082 77,559
Foreclosed asset (income) expense (7,043) (1,786) (6,314) 17,442
Other operating expense 151,336 181,183 476,852 455,939
----------- ----------- ----------- -----------
Total other expense 699,456 728,091 2,177,947 2,130,584
----------- ----------- ----------- -----------
Income before income taxes 748,930 909,968 2,178,047 2,156,870
Income taxes 278,950 349,498 811,275 827,025
----------- ----------- ----------- -----------
NET INCOME $ 469,980 $ 560,470 $ 1,366,772 $ 1,329,845
=========== =========== =========== ===========
Net income attributable to common stock $ 469,980 $ 558,092 $ 1,366,772 $ 1,313,903
=========== =========== =========== ===========
Net income per common share:
Basic $ 0.83 $ 0.98 $ 2.37 $ 2.35
Diluted 0.83 0.96 2.37 2.29
</TABLE>
See Notes to Consolidated Financial Statements.
2
<PAGE> 5
WASHINGTON MUTUAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------------- ----------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
(dollars in thousands)
<S> <C> <C> <C> <C>
Net income $ 469,980 $ 560,470 $ 1,366,772 $ 1,329,845
Other comprehensive income, net of income taxes:
Gross unrealized gain (loss) on securities:
Unrealized holding gain (loss) during the period, net of
deferred income tax (benefit) of $(126,019), $21,196,
$(436,103), and $90,046 (192,855) 33,153 (667,396) 140,841
Gain (loss) included in net income, net of income
tax (benefit) of $(4,099), $2,027, $(3,167) and $6,499 6,274 (3,170) 4,847 (10,165)
Amortization of market adjustment for mortgage-backed
securities ("MBS") transferred in 1997 from available
for sale to held to maturity, net of deferred income
tax of $1,573, $2,729, $5,960, and $7,706 (2,408) (4,269) (9,122) (12,053)
----------- ----------- ----------- -----------
(188,989) 25,714 (671,671) 118,623
Minimum pension liability adjustment (5,033) -- (6,793) --
----------- ----------- ----------- -----------
Other comprehensive income (loss) (194,022) 25,714 (678,464) 118,623
----------- ----------- ----------- -----------
Comprehensive income $ 275,958 $ 586,184 $ 688,308 $ 1,448,468
=========== =========== =========== ===========
</TABLE>
See Notes to Consolidated Financial Statements.
3
<PAGE> 6
WASHINGTON MUTUAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
------------- -------------
(dollars in thousands)
<S> <C> <C>
ASSETS
Cash $ 2,406,198 $ 2,695,454
Cash equivalents 60,911 61,520
Trading securities 30,740 39,068
Available-for-sale securities, amortized cost of $38,962,620 and $32,861,818:
MBS 37,483,437 32,399,591
Investment securities 455,474 517,462
Held-to-maturity securities, fair value of $12,930,222 and $14,112,620:
MBS 12,967,231 13,992,235
Investment securities 138,043 137,247
Loans:
Loans held in portfolio 119,541,616 107,612,197
Loans held for sale 304,418 1,826,549
Reserve for loan losses (1,051,369) (1,067,840)
------------- -------------
Total loans 118,794,665 108,370,906
Investment in Federal Home Loan Banks ("FHLBs") 2,669,898 2,030,027
Foreclosed assets 222,689 274,767
Premises and equipment 1,544,342 1,421,162
Intangible assets 936,433 1,009,666
Mortgage servicing rights 489,037 461,295
Other assets 2,600,806 2,082,881
------------- -------------
Total assets $ 180,799,904 $ 165,493,281
============= =============
LIABILITIES
Deposits:
Interest-bearing checking accounts $ 6,150,686 $ 6,686,682
Noninterest-bearing checking accounts 7,391,511 6,774,049
Savings accounts and money market deposit accounts ("MMDAs") 31,127,144 28,285,868
Time deposit accounts 36,955,147 43,745,542
------------- -------------
Total deposits 81,624,488 85,492,141
Federal funds purchased and commercial paper 1,574,706 2,482,830
Securities sold under agreements to repurchase 28,649,976 17,519,538
Advances from FHLBs 52,531,731 39,748,613
Other borrowings 5,850,417 5,449,508
Other liabilities 1,662,606 5,456,251
------------- -------------
Total liabilities 171,893,924 156,148,881
STOCKHOLDERS' EQUITY
Common stock, no par value: 1,600,000,000 shares
authorized - 574,428,172 and 593,408,525 shares issued -- --
Capital surplus - common stock 2,288,097 2,994,653
Accumulated other comprehensive income (loss):
Unrealized gain (loss) on available-for-sale securities (584,066) 87,605
Minimum pension liability adjustment (20,117) (13,324)
Retained earnings 7,222,066 6,275,466
------------- -------------
Total stockholders' equity 8,905,980 9,344,400
------------- -------------
Total liabilities and stockholders' equity $ 180,799,904 $ 165,493,281
============= =============
</TABLE>
See Notes to Consolidated Financial Statements.
4
<PAGE> 7
WASHINGTON MUTUAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Unaudited)
<TABLE>
<CAPTION>
Capital Accumulated Common
Surplus- Other Stock
Preferred Common Comprehensive Retained in
Total Stock Stock Income (Loss) Earnings Treasury
----------- ----------- ----------- ------------- ----------- -----------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
BALANCE, December 31, 1998 $ 9,344,400 $ -- $ 2,994,653 $ 74,281 $ 6,275,466 $ --
Net income 1,366,772 -- -- -- 1,366,772 --
Cash dividends on common stock (420,172) -- -- -- (420,172) --
Repurchase of common stock, net (755,562) -- (755,562) -- -- --
Common stock issued through employee stock
plans, including tax benefit 49,006 -- 49,006 -- -- --
Other comprehensive loss, net of related
income tax benefit (678,464) -- -- (678,464) -- --
----------- ----------- ----------- ----------- ----------- -----------
BALANCE, September 30, 1999 $ 8,905,980 $ -- $ 2,288,097 $ (604,183) $ 7,222,066 $ --
=========== =========== =========== =========== =========== ===========
BALANCE, December 31, 1997 $ 7,601,085 $ 597,262 $ 2,629,377 $ 62,297 $ 5,244,509 $ (932,360)
Net income 1,329,845 -- -- -- 1,329,845 --
Cash dividends on preferred stock (19,974) -- -- -- (19,974) --
Cash dividends on common stock (301,835) -- -- -- (301,835) --
Repurchase of common stock, net (24,082) -- -- -- -- (24,082)
Redemption or conversion of preferred stock (313,063) (597,262) (112,085) -- -- 396,284
Common stock issued to acquire Coast
Savings Financial, Inc. ("Coast") 925,143 -- 373,078 -- -- 552,065
Common stock issued through employee stock
plans, including tax benefit 100,214 -- 108,551 -- -- (8,337)
Treasury shares retired -- -- (10,896) -- -- 10,896
Other comprehensive income, net of related
income taxes 118,623 -- -- 118,623 -- --
----------- ----------- ----------- ----------- ----------- -----------
BALANCE, September 30, 1998 $ 9,415,956 $ -- $ 2,988,025 $ 180,920 $ 6,252,545 $ (5,534)
=========== =========== =========== =========== =========== ===========
</TABLE>
See Notes to Consolidated Financial Statements.
5
<PAGE> 8
WASHINGTON MUTUAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
-------------------------------
1999 1998
------------ ------------
(dollars in thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 1,366,772 $ 1,329,845
Adjustments to reconcile net income to net cash provided by operating
activities:
Provision for loan losses 125,356 128,745
Mortgage banking income (81,025) (101,872)
Gain on sale of other assets (22,872) (23,464)
Depreciation and amortization 121,196 195,489
Stock dividends from FHLBs (97,598) (80,465)
Provision for recourse liability 5,142 41,436
Decrease in trading securities 9,665 96,978
Origination of loans held for sale (3,496,969) (9,962,820)
Sales of loans held for sale 7,414,583 12,908,315
Increase (decrease) in other assets (307,895) 257,875
Decrease in other liabilities (1,023,140) (145,097)
Other, net 50 (27,727)
------------ ------------
Net cash provided by operating activities 4,013,265 4,617,238
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of available-for-sale securities (17,861,797) (9,302,083)
Purchases of held-to-maturity securities (86,510) (13,079)
Sales of available-for-sale securities 2,146,690 1,373,423
Maturities of available-for-sale securities 117,142 321,661
Maturities of held-to-maturity securities 6,903 2,712
Principal payments on securities 10,372,697 6,447,887
Purchases of FHLB stock (552,153) (296,937)
Purchases of loans (6,339,752) (1,729,182)
Sales of loans 31,079 24,574
Origination of loans, net of principal payments (10,736,970) (5,111,487)
Proceeds from sales of foreclosed assets 275,585 494,308
Cash from Coast acquisition -- 399,590
Purchases of premises and equipment (240,370) (197,585)
Other, net -- 18,465
------------ ------------
Net cash used in investing activities (22,867,456) (7,567,733)
CASH FLOWS FROM FINANCING ACTIVITIES
Decrease in deposits (3,867,653) (5,309,353)
Increase in short-term borrowings 5,397,253 1,867,138
Proceeds from long-term borrowings 86,078,692 46,663,851
Repayments of long-term borrowings (67,916,349) (40,348,363)
Cash dividends paid on preferred and common stock (420,172) (321,711)
Redemption of preferred stock -- (313,161)
Repurchase of common stock, net (755,562) (24,082)
Other capital transactions 48,117 64,973
------------ ------------
Net cash provided by financing activities 18,564,326 2,279,292
------------ ------------
Decrease in cash and cash equivalents (289,865) (671,203)
Cash and cash equivalents, beginning of period 2,756,974 2,719,997
------------ ------------
Cash and cash equivalents, end of period $ 2,467,109 $ 2,048,794
============ ============
</TABLE>
See Notes to Consolidated Financial Statements.
6
<PAGE> 9
WASHINGTON MUTUAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
--------------------------
1999 1998
---------- ----------
(dollars in thousands)
<S> <C> <C>
NONCASH INVESTING ACTIVITIES
Loans exchanged for MBS $2,335,484 $ 647,020
Loans exchanged for trading securities -- 107,544
Real estate acquired through foreclosure 268,596 397,588
Loans originated to facilitate the sale of foreclosed assets 45,089 46,972
Loans held for sale originated to refinance existing loans 2,410,717 3,273,438
Loans held in portfolio originated to refinance existing loans 3,306,774 1,543,479
Trade date purchases not yet settled -- 2,178,226
Trade date sales not yet settled 217,814 272,589
Reserves related to internal securitizations 7,500 833
CASH PAID DURING THE PERIOD FOR
Interest on deposits 2,333,109 2,665,920
Interest on borrowings 3,093,272 2,246,367
Income taxes 777,449 326,528
</TABLE>
See Notes to Consolidated Financial Statements.
7
<PAGE> 10
WASHINGTON MUTUAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1: EARNINGS PER SHARE ("EPS")
Basic EPS excludes dilution and is computed by dividing net income
attributable to common stock by the weighted average number of common shares
outstanding for the period. Diluted EPS reflects the potential dilution that
could occur if all securities or other contracts to issue common stock were
exercised or converted into common stock.
Information used to calculate EPS was as follows:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------------ ------------------------------
1999 1998 1999 1998
------------- ------------- ------------- -------------
(dollars in thousands, except per share amounts)
<S> <C> <C> <C> <C>
Net income:
Net income $ 469,980 $ 560,470 $ 1,366,772 $ 1,329,845
Less: accumulated dividends on preferred stock -- (2,378) -- (15,942)
------------- ------------- ------------- -------------
Basic net income attributable to common stock 469,980 558,092 1,366,772 1,313,903
Add: accumulated dividends paid on convertible
preferred stock -- 1,109 -- 9,269
------------- ------------- ------------- -------------
Diluted net income attributable to common stock $ 469,980 $ 559,201 $ 1,366,772 $ 1,323,172
============= ============= ============= =============
Weighted average shares:
Basic weighted average number of common shares
outstanding 565,360,141 571,589,704 575,777,473 558,830,010
Dilutive effect of outstanding common stock
equivalents 1,333,556 11,759,104 1,997,716 19,588,600
------------- ------------- ------------- -------------
Diluted weighted average number of common
shares outstanding 566,693,697 583,348,808 577,775,189 578,418,610
============= ============= ============= =============
Net income per common share:
Basic $ 0.83 $ 0.98 $ 2.37 $ 2.35
Diluted 0.83 0.96 2.37 2.29
</TABLE>
The decline in the dilutive effect of outstanding common stock equivalents
from the prior year's periods was primarily attributable to the conversion to
common stock of the Company's 6.00% Cumulative Convertible Preferred Stock,
Series D in the third quarter of 1998, which caused a corresponding increase in
the average number of common shares outstanding for the nine months ended
September 30, 1999. In the third quarter of 1999, the increase in the average
number of common shares outstanding resulting from the conversion of common
stock was offset by the repurchase of 8.7 million and 21.0 million shares of the
Company's common stock during the quarter and nine months ended September 30,
1999.
As part of the business combination with Keystone Holdings, Inc., 12 million
shares of common stock, with an assigned value of $27.7417 per share, were
issued to an escrow for the benefit of the general and limited partners of
Keystone Holdings, Inc. and the FSLIC Resolution Fund and their transferees. The
conditions upon which these shares are contingently issuable are not based on
earnings or market price. The contingencies had not occurred at September 30,
1999, and, therefore, the contingently issuable shares have not been included in
the above computations.
8
<PAGE> 11
WASHINGTON MUTUAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
NOTE 2: BORROWINGS
Other borrowings included mandatorily redeemable Company-obligated capital
securities of the Company's subsidiary trusts holding solely $950.0 million
aggregate liquidation amount of subordinated deferrable interest debentures of
the Company as of both September 30, 1999 and December 31, 1998.
In August 1999, the Company issued senior debt securities totaling $750.0
million and bearing a fixed rate of 7.50%. The notes are due on August 15, 2006.
Also in August 1999, Aristar, Inc. issued senior debt securities totaling
$300.0 million and bearing a fixed rate of 7.375%. The notes are due on
September 1, 2004.
NOTE 3: LINES OF BUSINESS
Washington Mutual is managed along five major lines of business: mortgage
banking, consumer banking, commercial banking, financial services, and consumer
finance. The treasury group, although not considered a line of business, is
responsible for the management of investments and interest rate risk. The
financial performance of these business lines is measured by the Company's
profitability reporting processes, which utilize various management accounting
techniques to ensure that each business line's financial results reflect the
underlying performance of that business. Assets not originated through the
Company's business operations are allocated to the treasury group. Prior to the
Ahmanson merger and during the fourth quarter of 1998, Ahmanson was managed as a
distinct business segment of Washington Mutual, and was therefore previously
presented as a separate segment. Subsequent to year-end 1998, management began
integrating the operations of Ahmanson into the Company's five major lines of
business. The corresponding information for periods in 1998 has been restated to
conform with the Company's current basis of segmentation.
Financial highlights by lines of business:
<TABLE>
<CAPTION>
Three Months Ended September 30, 1999
----------------------------------------------------------------------------------------------
Mortgage Consumer Commercial Financial Consumer Treasury/
Banking Banking Banking Services Finance Other Total
---------- ---------- ---------- ---------- ---------- ---------- ----------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Condensed income statement:
Net interest income after
provision for loan losses $ 202,509 $ 610,254 $ 94,721 $ 498 $ 56,329 $ 114,556 $1,078,867
Other income 57,430 213,172 4,110 80,082 7,415 7,310 369,519
Transaction-related expense 137 11,664 137 (40) -- 775 12,673
Direct expense 52,474 249,091 21,844 52,469 32,945 (5,901) 402,922
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income before income taxes 207,328 562,671 76,850 28,151 30,799 126,992 1,032,791
Income taxes 76,937 208,802 28,619 10,811 12,011 47,127 384,307
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income (before centrally
managed expense) 130,391 353,869 48,231 17,340 18,788 79,865 648,484
Centrally managed expense 74,112 201,664 4,787 20 643 2,635 283,861
Income taxes (27,502) (74,836) (1,783) (8) (251) (977) (105,357)
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income $ 83,781 $ 227,041 $ 45,227 $ 17,328 $ 18,396 $ 78,207 $ 469,980
========== ========== ========== ========== ========== ========== ==========
</TABLE>
9
<PAGE> 12
WASHINGTON MUTUAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended September 30, 1999
------------------------------------------------------------------------------------------------
Mortgage Consumer Commercial Financial Consumer Treasury/
Banking Banking Banking Services Finance Other Total
------------ ------------ ------------ ------------ ------------ ------------ ------------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Condensed income statement:
Net interest income after
provision for loan losses $ 625,444 $ 1,809,614 $ 293,977 $ 1,591 $ 163,571 $ 376,016 $ 3,270,213
Other income 200,176 586,752 22,988 234,573 20,938 20,354 1,085,781
Transaction-related expense 13,868 54,207 558 2,156 -- 2,255 73,044
Direct expense 178,779 737,070 62,562 148,791 99,992 3,585 1,230,779
------------ ------------ ------------ ------------ ------------ ------------ ------------
Income before income taxes 632,973 1,605,089 253,845 85,217 84,517 390,530 3,052,171
Income taxes 234,989 595,870 94,514 32,444 32,959 145,055 1,135,831
------------ ------------ ------------ ------------ ------------ ------------ ------------
Net income (before centrally
managed expense) 397,984 1,009,219 159,331 52,773 51,558 245,475 1,916,340
Centrally managed expense 223,314 616,731 16,038 238 1,279 16,524 874,124
Income taxes (82,904) (228,954) (5,971) (90) (499) (6,138) (324,556)
------------ ------------ ------------ ------------ ------------ ------------ ------------
Net income $ 257,574 $ 621,442 $ 149,264 $ 52,625 $ 50,778 $ 235,089 $ 1,366,772
============ ============ ============ ============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
September 30, 1999
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Total assets $ 40,388,799 $ 84,199,197 $ 19,437,360 $ 117,785 $ 3,061,725 $ 33,595,038 $180,799,904
============ ============ ============ ============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended September 30, 1998
------------------------------------------------------------------------------------------------
Mortgage Consumer Commercial Financial Consumer Treasury/
Banking Banking Banking Services Finance Other Total
------------ ------------ ------------ ------------ ------------ ------------ ------------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Condensed income statement:
Net interest income after
provision for loan losses $ 206,191 $ 632,555 $ 99,434 $ 519 $ 49,991 $ 40,303 $ 1,028,993
Other income 85,417 149,927 6,570 58,253 7,844 301,055 609,066
Transaction-related expense 5,013 13,822 765 144 -- 721 20,465
Direct expense 71,152 244,573 18,964 40,347 32,932 15,239 423,207
------------ ------------ ------------ ------------ ------------ ------------ ------------
Income before income taxes 215,443 524,087 86,275 18,281 24,903 325,398 1,194,387
Income taxes 82,693 201,160 33,103 6,962 9,854 124,897 458,669
------------ ------------ ------------ ------------ ------------ ------------ ------------
Net income (before centrally
managed expense) 132,750 322,927 53,172 11,319 15,049 200,501 735,718
Centrally managed expense 73,770 195,150 5,153 485 390 9,471 284,419
Income taxes (28,315) (74,904) (1,977) (185) (154) (3,636) (109,171)
------------ ------------ ------------ ------------ ------------ ------------ ------------
Net income $ 87,295 $ 202,681 $ 49,996 $ 11,019 $ 14,813 $ 194,666 $ 560,470
============ ============ ============ ============ ============ ============ ============
</TABLE>
10
<PAGE> 13
WASHINGTON MUTUAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended September 30, 1998
------------------------------------------------------------------------------------------------------
Mortgage Consumer Commercial Financial Consumer Treasury/
Banking Banking Banking Services Finance Other Total
------------ ------------ ------------ ------------ ------------ ------------ ------------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Condensed income statement:
Net interest income after
provision for loan losses $ 573,078 $ 1,892,600 $ 287,137 $ 1,684 $ 148,555 $ 181,569 $ 3,084,623
Other income 265,266 432,958 17,784 173,794 20,110 292,919 1,202,831
Transaction-related expense 17,277 51,188 792 2,900 -- 4,590 76,747
Direct expense 193,066 703,790 59,107 123,645 99,349 48,329 1,227,286
------------ ------------ ------------ ------------ ------------ ------------ ------------
Income before income taxes 628,001 1,570,580 245,022 48,933 69,316 421,569 2,983,421
Income taxes 240,416 601,326 93,815 18,711 27,427 161,818 1,143,513
------------ ------------ ------------ ------------ ------------ ------------ ------------
Net income (before centrally
managed expense) 387,585 969,254 151,207 30,222 41,889 259,751 1,839,908
Centrally managed expense 214,145 568,058 13,356 2,422 825 27,745 826,551
Income taxes (81,981) (217,492) (5,114) (926) (327) (10,648) (316,488)
------------ ------------ ------------ ------------ ------------ ------------ ------------
Net income $ 255,421 $ 618,688 $ 142,965 $ 28,726 $ 41,391 $ 242,654 $ 1,329,845
============ ============ ============ ============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
September 30, 1998
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Total assets $ 33,114,883 $ 87,461,020 $ 19,598,268 $ 101,777 $ 2,583,769 $ 15,893,000 $158,752,717
============ ============ ============ ============ ============ ============ ============
</TABLE>
11
<PAGE> 14
WASHINGTON MUTUAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
NOTE 4: IMPACT OF APPLICABLE RECENTLY ISSUED OR ADOPTED ACCOUNTING STANDARDS
Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities," was issued in June 1998 and
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts, and for
hedging activities. The Financial Accounting Standards Board has issued SFAS No.
137, "Accounting for Derivative Instruments and Hedging Activities Deferral of
the Effective Date of SFAS No. 133," which delays the implementation date of
SFAS No. 133 for one year, to fiscal years beginning after June 15, 2000. The
effect of the adoption of this statement on the results of operations or the
financial condition of the Company has not yet been determined.
SFAS No. 134, "Accounting for Mortgage-Backed Securities Retained after the
Securitization of Mortgage Loans Held for Sale by a Mortgage Banking
Enterprise," was issued in October 1998. Prior to issuance of SFAS No. 134, when
a mortgage banking company securitized mortgage loans held for sale but did not
sell the security in the secondary market, the security was classified as
trading. SFAS No. 134 requires that the security be classified as either
trading, available for sale or held to maturity according to the Company's
intent unless the Company has already committed to sell the security before or
during the securitization process. The adoption of this statement by the Company
on January 1, 1999 did not affect the results of operations or financial
condition of the Company.
NOTE 5: LONG BEACH FINANCIAL CORPORATION ACQUISITION
On October 1, 1999, Washington Mutual acquired Long Beach Financial
Corporation ("Long Beach"), parent of Long Beach Mortgage Company ("Long Beach
Mortgage") for $375.5 million in cash and stock. The acquisition was accounted
for as a purchase. Under purchase accounting, the assets, liabilities and
stockholders' equity of the acquired entity were recorded on the books of
Washington Mutual at their respective fair values at the time of acquisition.
This created goodwill of approximately $280.0 million, which is being amortized
over 20 years. At September 30, 1999, Long Beach had $527.6 million in assets.
Long Beach was merged with and into the Company. Long Beach Mortgage will retain
its name and operate as a wholly-owned subsidiary of Washington Mutual.
12
<PAGE> 15
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion and analysis should be read in conjunction with the
Consolidated Financial Statements and Notes presented elsewhere in this report.
This report contains forward-looking statements, which are not historical
facts and pertain to future operating results of Washington Mutual, Inc. These
forward-looking statements are within the meaning of the Private Securities
Litigation Reform Act of 1995. These forward-looking statements are inherently
subject to significant business, economic and competitive uncertainties and
contingencies, many of which are beyond the Company's control. In addition,
these forward-looking statements are subject to assumptions with respect to
future business strategies and decisions that are subject to change. Actual
results may differ materially from the results discussed in these
forward-looking statements for the reasons, among others, discussed under the
heading "Business-Risk Factors" in the Company's 1998 Annual Report on Form
10-K, which are incorporated herein by reference.
GENERAL
Washington Mutual, Inc. ("Washington Mutual" or the "Company") is a financial
services company committed to serving consumers and small to mid-sized
businesses. The Company's banking subsidiaries, Washington Mutual Bank, FA
("WMBFA"), Washington Mutual Bank ("WMB") and Washington Mutual Bank fsb
("WMBfsb"), accept deposits from the general public, make residential loans,
consumer loans, and limited types of commercial real estate loans (primarily
loans secured by multi-family properties), and engage in certain commercial
banking activities. The Company's consumer finance operations provide direct
installment loans and related credit insurance services and purchase retail
installment contracts. Washington Mutual also markets annuities and other
insurance products, offers full service securities brokerage, and acts as the
investment advisor to and the distributor of mutual funds.
As interest rates decreased during 1998, the Company experienced a substantial
increase in the percentage of fixed-rate single-family residential ("SFR")
mortgage originations. Since the Company's policy is to sell a substantial
portion of its fixed-rate originations, the Company purchased investment grade
mortgage-backed securities ("MBS") and whole loans in the secondary market
during 1998 and the first half of 1999 in order to utilize its excess capital.
These purchases, however, created assets with generally lower rates of return
than loans originated by the Company and retained in its portfolio. After
reviewing first quarter 1999 results, management re-evaluated its capital
deployment strategy. In April 1999, the Company's Board of Directors approved a
share repurchase program. Consequently, with the introduction of the share
repurchase program, MBS purchases were curtailed. There were, however,
significant purchases of whole loans during the third quarter of 1999.
During the quarter and nine months ended September 30, 1999, the Company had
an unrealized loss on available-for-sale securities of $189.0 million and $671.7
million, which resulted in an unrealized loss balance of $584.1 million at
September 30, 1999. For the quarter and nine months ended September 30, 1998,
the Company had an unrealized gain of $25.7 million and $118.6 million, which
resulted in an unrealized gain balance of $180.9 million at September 30, 1998.
The unrealized loss during the 1999 periods was due to a rise in interest rates.
Commencing in 1998 and continuing through early 1999, mortgage interest rates
generally decreased. During the second and third quarters of 1999, a rise in
long-term interest rates prompted increased originations of adjustable-rate
mortgage ("ARM") loans with a corresponding decrease in fixed-rate loan
originations. ARMs comprised 86% of the Company's SFR originations in the third
quarter of 1999, compared with 48% for the same period a year ago. ARMs
comprised 68% of the Company's SFR originations in the nine months ended
September 30, 1999, compared with 45% in the nine months ended September 30,
1998. The $11.93 billion growth in loans held in portfolio from year-end 1998
was primarily due to an increase in ARM loan originations and the purchase of
whole loans during the nine months ended September 30, 1999. Loan growth during
the third quarter of 1999 was enhanced by a decline in loan prepayment and
refinancing
13
<PAGE> 16
activity. Residential mortgage prepayment rates averaged 19% during the third
quarter of 1999, down from 25% and 24% in the and first and second quarters of
1999.
In April 1999, the Company's Board of Directors approved a share repurchase
program to acquire up to 20 million shares of common stock. In May 1999, the
Company's Board of Directors authorized the repurchase of common shares for
reissuance to shareholders of Long Beach. In July 1999, the Board of Directors
authorized the Company to repurchase up to 30 million additional shares. During
the third quarter of 1999, the Company repurchased 8.7 million common shares at
an average price of $34.16. Of the shares repurchased, 6.3 million shares were
issued in conjunction with the completion of the Long Beach acquisition on
October 1, 1999. During the first nine months of 1999, the Company repurchased
21.0 million common shares at an average price of $35.95.
RESULTS OF OPERATIONS
NET INTEREST INCOME. Net interest income for the third quarter of 1999 was
$1.12 billion, a 5% increase from $1.06 billion in the third quarter of 1998.
The increase was due to a 15% rise in average interest-earning assets to $171.92
billion from $149.47 billion in the third quarter of 1998, which more than
offset the effect of the decline in the net interest spread to 2.50% in the
third quarter of 1999 from 2.69% in the third quarter of 1998. The 6% increase
in net interest income for the nine months ended September 30, 1999 to $3.40
billion was due to a 12% rise in average interest-earning assets from the nine
months ended September 30, 1998. The net interest spread declined to 2.56% in
the nine months ended September 30, 1999 from 2.72% for the same period in 1998.
The Company's net interest margin declined to 2.64% in the third quarter of 1999
from 2.88% for the same period in 1998. Similarly, the net interest margin
declined to 2.72% in the nine months ended September 30, 1999 from 2.89% for the
same period in 1998.
The yield on loans declined 37 basis points to 7.35% for the third quarter of
1999 from 7.72% for the same period in 1998. The yield on loans declined 40
basis points to 7.38% for the nine months ended September 30, 1999 from 7.78%
for the same period in 1998. During 1998 and early 1999, there was a gradual
decline in market interest rates, which reduced the yield on the Company's ARM
portfolio and encouraged the prepayment of loans with higher rates. In addition,
rates on new ARMs originated by the Company were generally lower than the rates
on loans in the Company's portfolio. During the third quarter of 1999, the
increase in long-term interest rates resulted in an increase in ARM
originations. The impact of these higher rates on the existing portfolio was not
immediately reflected in the yield on the loan portfolio due to a two- to
three-month contractual lag before rates begin to adjust upward. In addition,
the majority of ARM loans placed in the portfolio during the third quarter of
1999 contained a one- to three-month "teaser" rate that was significantly below
the current portfolio yield. At September 30, 1999, 75% of total real estate
loans and MBS were adjustable rate.
The yield on MBS declined 45 basis points to 6.70% for the third quarter of
1999 from 7.15% for the same period in 1998. This decline was attributable to
paydowns on higher yielding MBS, the lag in repricing of adjustable-rate MBS,
and purchases of $8.50 billion of MBS to yield a weighted average rate of 6.33%
during the fourth quarter of 1998 and $15.48 billion of MBS purchases to yield a
weighted average rate of 6.25% during the nine months ended September 30, 1999.
Adjustable-rate MBS comprised 55% of total MBS at September 30, 1999. The yield
on MBS declined 49 basis points to 6.69% for the nine months ended September 30,
1999 from 7.18% for the same period a year ago.
The 41 basis point decrease in the cost of deposits to 3.73% during third
quarter 1999 from 4.14% for the same period in 1998 was primarily a result of a
change in the composition of deposits. Higher-costing time deposits decreased
from 54% of total deposits at September 30, 1998 to 45% at September 30, 1999,
which reflected the Company's focus on growing retail transaction accounts
rather than time deposits. Transaction accounts, consisting of savings accounts,
money market deposit accounts ("MMDAs") and checking accounts, have the benefit
of lower interest costs, compared with time deposits.
14
<PAGE> 17
The Company's cost of borrowings declined 40 basis points to 5.47% for third
quarter 1999 from 5.87% for third quarter 1998. Although there was a 50 basis
point Fed tightening late in the second quarter and in the third quarter of
1999, short-term rates were generally lower compared with the same period a year
ago. For example, the three-month London Interbank Offering Rate ("LIBOR")
dropped from an average rate of 5.64% during third quarter 1998 to an average
rate of 5.43% for third quarter 1999. At September 30, 1999, the majority of the
Company's borrowings were tied to LIBOR. Also reflecting this decline in
short-term rates, the cost of borrowings decreased 51 basis points to 5.39% for
the nine months ended September 30, 1999, as compared with 5.90% for the same
period a year ago.
During the quarter and nine months ended September 30, 1999, there was a
change in the mix of interest-bearing liabilities consisting of an increase in
higher costing borrowings and a decline in lower costing deposits. In addition,
the yield on interest-earning assets has declined at a faster rate than the cost
of interest-bearing liabilities. These factors contributed to the compression of
the interest spread and margin during the quarter and nine months ended
September 30, 1999, compared with the same periods in 1998.
Selected average financial balances and the net interest spread and margin
were as follows:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------------------ ------------------------------------
1999 1998 1999 1998
--------------- --------------- --------------- ---------------
(dollars in thousands)
<S> <C> <C> <C> <C>
Average Balances:
Loans $ 115,584,502 $ 106,237,972 $ 111,504,519 $ 104,680,863
MBS 52,239,151 39,482,647 50,767,461 39,021,997
Investment securities 4,101,172 3,753,078 3,799,978 3,969,327
--------------- --------------- --------------- ---------------
Total interest-earning assets 171,924,825 149,473,697 166,071,958 147,672,187
Deposits 82,511,343 85,426,522 83,566,677 86,896,450
Borrowings 84,500,292 58,235,865 76,795,776 55,458,676
--------------- --------------- --------------- ---------------
Total interest-bearing liabilities 167,011,635 143,662,387 160,362,453 142,355,126
Total assets 177,663,218 155,456,034 171,129,534 153,699,694
Stockholders' equity 8,938,658 9,361,631 9,307,584 8,782,311
Weighted Average Yield On:
Loans 7.35% 7.72% 7.38% 7.78%
MBS 6.70 7.15 6.69 7.18
Investment securities 5.62 5.96 5.58 6.13
Interest-earning assets 7.11 7.53 7.13 7.57
Weighted Average Cost of:
Deposits 3.73 4.14 3.81 4.19
Borrowings 5.47 5.87 5.39 5.90
Interest-bearing liabilities 4.61 4.84 4.57 4.85
Net interest spread 2.50 2.69 2.56 2.72
Net interest margin 2.64 2.88 2.72 2.89
</TABLE>
The net interest spread is the difference between the Company's weighted
average yield on its interest-earning assets and the weighted average cost of
its interest-bearing liabilities. The net interest margin measures the Company's
annualized net interest income as a percentage of average interest-earning
assets.
15
<PAGE> 18
The dollar amounts of interest income and interest expense fluctuate depending
upon changes in interest rates and upon changes in amounts (volume) of the
Company's interest-earning assets and interest-bearing liabilities. Changes
attributable to (i) changes in volume (changes in average outstanding balances
multiplied by the prior period's rate), (ii) changes in rate (changes in average
interest rate multiplied by the prior period's volume), and (iii) changes in
rate/volume (changes in rate times the change in volume that were allocated
proportionately to the changes in volume and the changes in rate) were as
follows:
<TABLE>
<CAPTION>
Three Months Ended September 30, Nine Months Ended September 30,
1999 vs. 1998 1999 vs. 1998
--------------------------------------- ---------------------------------------
Increase/(Decrease) Due to Increase/(Decrease) Due to
--------------------------------------- ---------------------------------------
Volume Rate Total Volume Rate Total
--------- --------- --------- --------- --------- ---------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest Income:
Loans $ 175,150 $(100,589) $ 74,561 $ 386,719 $(320,389) $ 66,330
MBS 215,918 (47,051) 168,867 597,059 (150,801) 446,258
Investment securities 5,086 (3,276) 1,810 (7,555) (15,874) (23,429)
--------- --------- --------- --------- --------- ---------
Total interest income 396,154 (150,916) 245,238 976,223 (487,064) 489,159
Interest Expense:
Deposits (29,603) (84,908) (114,511) (101,447) (237,968) (339,415)
Borrowings 364,612 (61,160) 303,452 759,801 (113,428) 646,373
--------- --------- --------- --------- --------- ---------
Total interest expense 335,009 (146,068) 188,941 658,354 (351,396) 306,958
--------- --------- --------- --------- --------- ---------
Net interest income $ 61,145 $ (4,848) $ 56,297 $ 317,869 $(135,668) $ 182,201
========= ========= ========= ========= ========= =========
</TABLE>
OTHER INCOME. Other income was $369.5 million and $1.09 billion for the
quarter and nine months ended September 30, 1999, compared with $609.1 million
and $1.20 billion for the same periods in 1998.
Other income consisted of the following:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
----------- ----------- ----------- -----------
1999 1998 1999 1998
----------- ----------- ----------- -----------
(dollars in thousands)
<S> <C> <C> <C> <C>
Depositor and other retail banking fees $ 198,360 $ 150,049 $ 543,891 $ 404,745
Loan servicing income 23,871 27,868 73,783 91,141
Loan related income 24,586 28,135 77,992 83,387
Securities fees and commissions 70,781 50,856 199,667 149,342
Insurance fees and commissions 10,571 14,075 31,510 40,452
Mortgage banking income 14,642 34,210 81,025 101,872
Gain on sale of other assets 6,547 8,677 22,872 23,464
Provision for recourse liability -- (15,917) (5,142) (41,436)
Gain on sale of retail deposit branch systems -- 289,040 -- 289,040
Other operating income 20,161 22,073 60,183 60,824
----------- ----------- ----------- -----------
Total other income $ 369,519 $ 609,066 $ 1,085,781 $ 1,202,831
=========== =========== =========== ===========
</TABLE>
Depositor and other retail banking fees of $198.4 million for the third
quarter of 1999 increased from $150.0 million for the same period a year ago.
Depositor and other retail banking fees of $543.9 million for the nine months
ended September 30, 1999 increased from $404.7 million for the same period a
year ago. The increase during the third quarter of 1999 was primarily due to
increased nonsufficient funds and overdraft fees resulting from the growth in
transaction deposits. The number of checking accounts increased 10% from
September 30, 1998 to September 30, 1999. In addition, Visa interchange fees
were higher due to increased volume of debit card usage. The increases on both a
quarter and year-to-date basis also reflected the realization of the Company's
consumer banking strategy in the former Great Western and American Savings Bank
financial centers and implementation of this strategy in the former Home Savings
financial centers. The strategy emphasizes the sale of value-added, fee-based
services and an increased emphasis on the collection of fees.
16
<PAGE> 19
The growth in depositor and other retail banking fees has been offset somewhat
by an increase in the amount of deposit account-related losses (included in
other operating expense) incurred by the Company resulting from the increased
number of checking accounts. The number of net new retail checking accounts
increased by 131,371 accounts or 3% during the third quarter of 1999 and 303,655
accounts or 8% during the nine months ended September 30, 1999.
Securities fees and commissions increased to $70.8 million in the third
quarter of 1999 from $50.9 million for the same period in 1998. These fees
increased to $199.7 million in the nine months ended September 30, 1999 from
$149.3 million for the comparable period in 1998. The increases were primarily
attributable to higher sales of mutual funds and annuities during 1999. In
addition, the former Ahmanson securities brokerage business began to offer
Washington Mutual's products and services in early 1999, which resulted in
increased fee income.
Loan servicing income declined to $23.9 million for the third quarter of 1999
from $27.9 million for the comparable period in 1998. Loan servicing income
declined to $73.8 million for the nine months ended September 30, 1999 from
$91.1 million for the same period in 1998 due primarily to a 3.6 basis point
drop in the average servicing fee. Loans serviced for others totaled $51.91
billion at September 30, 1999, up from $50.49 billion a year earlier. Increases
in the portfolio from the sale of fixed-rate loans were offset by the high level
of prepayments brought about by the refinance boom late in 1998 through
mid-1999.
The Company had mortgage banking income during the third quarter of 1999 of
$14.6 million, compared with $34.2 million for the same period a year ago. It is
the Company's strategy to sell the majority of its conforming fixed-rate loan
production in the secondary market. However, due to the rise in interest rates
and resulting customer shift to ARMs, the Company originated and therefore sold
fewer fixed-rate mortgage loans during third quarter 1999. Fixed-rate SFR loan
originations declined to $1.41 billion during third quarter 1999 from $3.77
billion in second quarter 1999 and $5.06 billion in third quarter 1998. The
Company had mortgage banking income during the nine months ended September 30,
1999 of $81.0 million, compared with $101.9 million for the same period a year
ago. Fixed-rate SFR loan originations decreased to $9.68 billion during the nine
months ended September 30, 1999, compared with $15.94 billion for the same
period a year ago.
Gain on sale of other assets was $6.5 million for the third quarter of 1999,
down from $8.7 million for the third quarter of 1998. Gain on sale of other
assets declined slightly to $22.9 million for the nine months ended September
30, 1999 from $23.5 million for the same period in 1998. Third quarter 1999
included $15.8 million in gains attributable to the sale of financial centers,
which were closed as a result of business combinations. These gains were offset
by losses of $10.4 million on the sale of MBS during the third quarter of 1999.
No gains on the sale of financial centers, closed as a result of business
combinations, were included in the comparable periods for 1998.
There was no provision for recourse liability in the third quarter of 1999,
compared with $15.9 million for the same period in 1998. This provision declined
to $5.1 million in the nine months ended September 30, 1999 from $41.4 million
for the same period one year ago. The September 1999 quarterly analysis of the
recourse liability on loans securitized and retained with recourse and loans
sold with recourse confirmed the adequacy of the recourse liability when
compared with the recourse obligation at September 30, 1999. The provision was
higher in 1998 due to the establishment of the recourse liability in that year.
OTHER EXPENSE. Other expense totaled $699.5 million and $2.18 billion for the
quarter and nine months ended September 30, 1999, compared with $728.1 million
and $2.13 billion for the same periods in 1998.
17
<PAGE> 20
Other expense consisted of the following:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------------- ----------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
(dollars in thousands)
<S> <C> <C> <C> <C>
Salaries and employee benefits $ 294,323 $ 299,785 $ 898,052 $ 896,423
Occupancy and equipment:
Premises and equipment 83,671 95,185 254,671 290,281
Data processing 55,566 25,635 156,630 77,122
----------- ----------- ----------- -----------
Total occupancy and equipment 139,237 120,820 411,301 367,403
Telecommunications and outsourced information services 70,862 64,211 208,106 190,501
Regulatory assessments 14,621 15,679 44,824 48,570
Transaction-related expense 12,673 20,465 73,044 76,747
Amortization of intangible assets 23,447 27,734 72,082 77,559
Foreclosed asset (income) expense (7,043) (1,786) (6,314) 17,442
Other operating expense:
Advertising and promotion 28,388 27,961 84,121 85,624
Operating losses and settlements 32,352 24,363 91,043 51,060
Postage 22,291 19,353 65,675 55,938
Professional fees 14,711 12,917 47,923 43,955
Travel and training 11,984 13,495 36,901 33,162
Office supplies 7,996 10,024 25,129 33,067
Other 33,614 73,070 126,060 153,133
----------- ----------- ----------- -----------
Total other operating expense 151,336 181,183 476,852 455,939
----------- ----------- ----------- -----------
Total other expense $ 699,456 $ 728,091 $ 2,177,947 $ 2,130,584
=========== =========== =========== ===========
</TABLE>
Salaries and employee benefits decreased to $294.3 million for the third
quarter of 1999 from $299.8 million for the same period in 1998. Contributing to
the decline was a reduction in average full-time equivalent employees ("FTE")
from 27,887 for the quarter ended September 30, 1998 to 27,433 for the quarter
ended September 30, 1999. Average FTE declined from 28,114 for the second
quarter of 1999 to the third quarter of 1999 due to the completion of
conversions related to the Ahmanson merger. The alignment of Ahmanson loan agent
compensation with the Washington Mutual model also contributed to the decline.
These declines were partially offset by lower loan origination costs resulting
in a reduction in the deferral rate in salaries and benefits which in turn
resulted in slightly higher current costs.
Salaries and employee benefits increased slightly to $898.1 million for the
nine months ended September 30, 1999 from $896.4 million for the same period in
1998. This increase was partially due to an increase in average FTE from 27,044
for the nine months ended September 30, 1998 to 27,822 for the comparable period
in 1999. Average FTE declined from 28,017 for the six months ended June 30, 1999
to the nine months ended September 30, 1999 due to the completion of conversions
related to the Ahmanson merger. Lower loan origination costs resulted in a
reduction in the deferral rate in salaries and benefits which in turn resulted
in slightly higher current costs. These increases were partially offset by the
alignment of Ahmanson loan agent compensation with the Washington Mutual model.
Occupancy and equipment expense was $139.2 million for the third quarter of
1999, up from $120.8 million for the same period a year ago. Occupancy and
equipment expense was $411.3 million for the nine months ended September 30,
1999, compared with $367.4 million for the same period in 1998. The primary
contributors to these increases were computer system upgrades and the conversion
of systems at the former Ahmanson financial centers to Washington Mutual's
platforms, which caused an increase in depreciation and related expenses
recorded under data processing.
Telecommunications and outsourced information services expense increased to
$70.9 million for the third quarter of 1999 from $64.2 million for the same
period in 1998. For the nine months ended September 30, 1999, this expense was
$208.1 million, up from $190.5 million for the same period a year ago. These
increases were primarily due to a new contract with IBM Global Services,
effective January 1, 1999, which increased the cost for 1999.
18
<PAGE> 21
As a result of merger activity, the Company recorded transaction-related
expense of $12.7 million for the third quarter of 1999 and $20.5 million for the
same period in 1998. For the nine months ended September 30, 1999 and 1998, this
expense was $73.0 million and $76.7 million. The majority of the charges were
for contract and temporary employment services, facilities and equipment
impairment, and other costs, which are being expensed as incurred.
Transaction-related expense in the first quarter of 1998 included $23.2 million
related to the Coast acquisition. The Company continued to incur
transaction-related expenses in connection with the Ahmanson merger in third
quarter 1999, during which time several key computer systems were converted.
During the third quarter of 1999, these transaction-related expenses were
partially offset by reductions in the estimates of facilities holding costs of
$11.9 million and severance costs of $2.5 million. During the nine months ended
September 30, 1999, the reduction in the estimates of facilities holding costs
was $19.8 million and severance costs was $3.6 million. There was also a
reduction in contract cancellation costs of $8.9 million for the nine months
ended September 30, 1999. The reduction in estimates of facilities holding costs
and lease payments is attributable, in part, to the fact that certain office
space was subleased sooner and at higher rates than expected. The reduction in
estimates of contract cancellation fees was primarily due to contract
negotiations resulting in lower than originally estimated fees.
Gains of $15.8 million from the sale of financial centers closed as a result
of business combinations were included in other income for the quarter and nine
months ended September 30, 1999.
The Company expected staff reductions related to the Ahmanson merger of
approximately 3,400. As of September 30, 1999, 3,368 employee separations had
occurred. The remaining employee separations are planned to be completed by the
end of December 1999.
At September 30, 1999, the carrying amount of all assets acquired through
mergers and held for future disposal was $49.7 million.
19
<PAGE> 22
Reconciliation of the transaction-related expense and accrual activity was as
follows:
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
June 30, September 30, September 30, September 30,
1999 1999 1999 1999
Accrued Activity Charged Accrued Period
Balance Against Accrual(1) Balance Costs(2)
------------ --------------------- -------------- ---------------
(dollars in thousands)
<S> <C> <C> <C> <C>
Severance $ 19,860 $ (13,020) $ 6,840 $ (5,678)
Premises and equipment 121,028 (11,070) 109,958 (1,194)
Legal, underwriting and other
direct transaction costs -- -- -- 1,122
Contract cancellation costs 5,927 (2,046) 3,881 4,494
Other -- -- -- 13,929
--------- --------- --------- ---------
$ 146,815 $ (26,136) $ 120,679 $ 12,673
========= ========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
Nine Months Nine Months
Ended Ended
December 31, September 30, September 30, September 30,
1998 1999 1999 1999
Accrued Activity Charged Accrued Period
Balance Against Accrual(1) Balance Costs(2)
------------ --------------------- -------------- ---------------
(dollars in thousands)
<S> <C> <C> <C> <C>
Severance $ 86,014 $ (79,174) $ 6,840 $ 4,211
Premises and equipment 158,932 (48,974) 109,958 1,578
Legal, underwriting and other
direct transaction costs -- -- -- 5,163
Contract cancellation costs 15,678 (11,797) 3,881 (2,084)
Other 1,406 (1,406) -- 64,176
--------- --------- --------- ---------
$ 262,030 $(141,351) $ 120,679 $ 73,044
========= ========= ========= =========
- -----------
(1) Amounts include activity charged against the accrual, additional accruals
and reversals of excess accruals.
(2) Amounts include additional accruals and reversals of excess accruals.
</TABLE>
Amortization of intangible assets was $23.4 million for the third quarter of
1999, down from $27.7 million for the same period in 1998. Similarly,
amortization of intangible assets was $72.1 million for the nine months ended
September 30, 1999, compared with $77.6 million for the same period in 1998. In
February 1998, Ahmanson acquired Coast under the purchase accounting method,
which created intangible assets of $516.5 million and amortization expense of
$20.1 million in the nine months ended September 30, 1999, compared with $15.8
million in the same period of 1998. This increase was offset by goodwill and
other intangible assets that had been fully amortized by March 31, 1999.
Foreclosed assets generated net income of $7.0 million during third quarter
1999, compared with $1.8 million for the same period in 1998. Foreclosed assets
generated net income of $6.3 million for the nine months ended September 30,
1999, compared with net expense of $17.4 million for the same period a year ago.
The net income generated during the three and nine months ended September 30,
1999 primarily represented net gains on the sales of real estate owned,
reflecting the improvement in California and Northwest real estate values. The
majority of the net expense during the nine months ended September 30, 1998
represented foreclosed asset expense from the maintenance of a greater number of
foreclosed assets in 1998, as compared with 1999. At September 30, 1999, the
Company had 2,044 foreclosed properties, down from 3,014 a year ago.
Other operating expense was $151.3 million in the third quarter of 1999, down
from $181.2 million for the same period in 1998. Other operating expense
increased to $476.9 million during the nine months ended September 30, 1999 from
$455.9 million for the same period in 1998. During the third quarter of 1998,
the other category of other operating expense included a $30.0 million expense
for the donation of land for open space to support further development of
property owned by Ahmanson as a real estate
20
<PAGE> 23
investment. Excluding this expense, other operating expense was relatively
unchanged from third quarter 1998 to third quarter 1999. The increase for the
nine-month period was primarily due to a rise in operating losses and
settlements to $91.0 million for the nine months ended September 30, 1999 from
$51.1 million for the comparable period a year ago, resulting from the increased
number of checking accounts.
TAXATION. Income taxes include federal and applicable state income taxes and
payments in lieu of taxes. Income taxes of $279.0 million and $811.3 million for
the quarter and nine months ended September 30, 1999 represented an effective
tax rate of 37.25%. Income taxes were $349.5 million and $827.0 million for the
quarter and nine months ended September 30, 1998, which represented effective
tax rates of 38.41% and 38.34%. The decline in the effective tax rate was due,
in part, to benefits realized from certain tax strategies of the Company.
REVIEW OF FINANCIAL CONDITION
ASSETS. At September 30, 1999, the Company's total assets were $180.80
billion, an increase of 9% from $165.49 billion at December 31, 1998. The asset
growth was the result of loan originations and asset purchases, partially offset
by payments on loans and MBS.
SECURITIES. The Company's securities portfolio increased by $3.99 billion to
$51.07 billion during the nine months ended September 30, 1999 due to purchases
of $15.48 billion in investment grade MBS in the secondary market. At September
30, 1999, 55% of MBS in the Company's securities portfolio were adjustable rate,
down from 71% at December 31, 1998 due to purchases of the aforementioned MBS.
These MBS purchases were primarily fixed rate and had an expected average
remaining life from the time of purchase of 4.46 years. At September 30, 1999,
of the $27.87 billion in MBS with an adjustable rate, 81% were indexed to the
Cost of Funds Index of the Eleventh District Federal Home Loan Bank ("FHLB"),
15% were indexed to U.S. Treasury securities, and 4% were indexed to LIBOR.
LOANS. Total loans (net of reserve for loan losses) at September 30, 1999 were
$118.79 billion, a 10% increase from $108.37 billion at December 31, 1998. Loans
held in portfolio increased by $11.93 billion during the nine months ended
September 30, 1999 as a result of originations of $38.27 billion and purchases
of $6.23 billion of whole loans, of which $2.81 billion were specialty mortgage
finance loans at a weighted average yield of 8.65%. Specialty mortgage finance
loans are loans to borrowers who generally would not qualify for a loan from the
Company's banking subsidiaries due to the borrower's credit history, high
debt-to-income ratio or other factors. A reduction in prepayment activity during
third quarter 1999 also contributed to an increase in the loan portfolio. The
$1.52 billion decrease in loans held for sale was primarily due to lower
fixed-rate loan production.
ARM production accounted for 86% and 68% of total SFR originations in the
three and nine months ended September 30, 1999, up from 48% and 45% for the same
periods a year ago. In particular, short-term ARM originations rose to 44% of
total SFR originations in the third quarter of 1999 from 26% in the third
quarter of 1998. Similarly, for the nine months ended September 30, 1999, these
originations rose to 31% from 25% for the same period in 1998. The shift by
borrowers from fixed-rate mortgages to ARMs was in response to a recent increase
in rates for fixed-rate loans and a steepening of the yield curve. The
difference between the yield on a three-month U.S Treasury bill and a ten-year
U.S. government note averaged 110 basis points and 86 basis points in the three
and nine months ended September 30, 1999, compared with 26 basis points and 38
basis points for the same periods in 1998.
LIABILITIES. Due to increased market competition for customer deposits, the
Company has increasingly relied upon wholesale borrowings to fund its asset
growth. Deposits decreased from $85.49 billion at December 31, 1998 to $81.62
billion at September 30, 1999 with the majority of the decrease in time
deposits. The Company's strategy has been to increase its ratio of transaction
accounts to total deposits. As a result of this strategy, transaction accounts
have increased as a percentage of total deposits to 55% at September 30, 1999,
from 49% at year-end 1998. Transaction accounts generally carry lower interest
costs to the Company, compared with time deposit accounts. Even though
transaction accounts are more liquid, they are considered by the Company to be
21
<PAGE> 24
the core relationship with its customers. In the aggregate, the Company views
these core accounts to be a more stable source of long-term funding than time
deposits.
The Company's asset growth during the nine months ended September 30, 1999 was
funded by borrowings in the form of securities sold under agreements to
repurchase ("reverse repurchase agreements") and advances from the FHLBs of
Seattle and San Francisco. The exact mix of borrowings at any given time is
dependent upon a variety of factors, primarily the market pricing of the
individual borrowing sources.
ASSET QUALITY
PROVISION AND RESERVE FOR LOAN LOSSES. The Company analyzes several important
elements in determining the level of the provision for loan losses in any given
period, such as current and historical economic conditions, nonperforming asset
trends, historical loan loss experience, and plans for problem loan
administration and resolution. These elements are also captured in a migration
analysis performed on the loan portfolio on a quarterly basis and used in
determining the loan loss provision.
During the third quarter of 1999, net charge offs increased to $43.0 million
from $38.4 million for the same period in 1998. Net charge offs increased to
$147.0 million for the nine months ended September 30, 1999 from $132.1 million
for the same period a year ago. Included in the nine months ended September 30,
1999 were charge offs of $17.8 million in previously established specific
reserves on four commercial real estate properties that were obtained through
acquisitions. Excluding the charge off of these specific reserves, charge offs
have continued to decline from 1998 levels, which reflects the improvement in
credit quality and real estate values.
The provision for loan losses was $40.8 million for third quarter 1999,
compared with $34.4 million for the same period a year ago. The provision for
the nine months ended September 30, 1999 was $125.4 million, down slightly from
$128.7 million for the comparable period in 1998. Because of favorable credit
trends, the provision for loan losses was $2.2 million and $21.7 million less
than net charge offs for the quarter and nine months ended September 30, 1999.
The Company's consistent application of its loan loss reserve methodology has
resulted in a reduced loan loss reserve level at September 30, 1999, compared
with June 30, 1999 and September 30, 1998. However, no assurance can be given
that the Company will not, in any particular period, sustain loan losses that
are sizable in relation to the amount reserved, or that subsequent evaluation of
the loan portfolio, in light of the factors then prevailing, including economic
conditions and the Company's ongoing examination process and that of its
regulators, will not require significant increases in the reserve for loan
losses.
22
<PAGE> 25
Changes in the reserve for loan losses were as follows:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------------- -----------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
(dollars in thousands)
<S> <C> <C> <C> <C>
Balance, beginning of period $ 1,053,589 $ 1,156,347 $ 1,067,840 $ 1,047,845
Provision for loan losses 40,799 34,376 125,356 128,745
Reserves added through business combinations -- -- -- 107,830
Reserves related to internal securitizations -- (833) (7,500) (833)
Reserves transferred from other liabilities -- -- 12,714 --
Loans charged off:
SFR and SFR construction (9,909) (13,505) (29,513) (52,547)
Manufactured housing, second mortgage and
other consumer (12,186) (7,367) (36,031) (25,662)
Commercial business (689) (1,366) (4,405) (4,133)
Commercial real estate (3,409) (5,795) (30,212) (24,765)
Consumer finance (23,628) (21,917) (70,260) (65,610)
----------- ----------- ----------- -----------
(49,821) (49,950) (170,421) (172,717)
Recoveries of loans previously charged off:
SFR and SFR construction 505 5,918 2,752 14,617
Manufactured housing, second mortgage and
other consumer 966 490 2,240 1,472
Commercial business 107 177 558 361
Commercial real estate 1,395 1,200 5,761 11,463
Consumer finance 3,829 3,761 12,069 12,703
----------- ----------- ----------- -----------
6,802 11,546 23,380 40,616
----------- ----------- ----------- -----------
Net charge offs (43,019) (38,404) (147,041) (132,101)
----------- ----------- ----------- -----------
Balance, end of period $ 1,051,369 $ 1,151,486 $ 1,051,369 $ 1,151,486
=========== =========== =========== ===========
Net charge offs as a percentage of average
loans (annualized) 0.15% 0.14% 0.18% 0.17%
</TABLE>
An analysis of the reserve for loan losses was as follows:
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
------------- ------------
(dollars in thousands)
<S> <C> <C>
Specific and allocated reserves:
Commercial real estate $ 74,574 $ 133,167
Commercial business 18,390 9,690
Builder construction 4,677 852
---------- ----------
97,641 143,709
Unallocated reserves 953,728 924,131
---------- ----------
$1,051,369 $1,067,840
========== ==========
Total reserve for loan losses and recourse liability
as a percentage of:
Nonaccrual loans 140% 129%
Nonperforming assets 110 100
Total reserve for loan losses as a percentage of
total loans (exclusive of the reserve for loan losses) 0.88% 0.98%
</TABLE>
The Company follows the practice of securitizing (with and without recourse)
certain loans and retaining them in its investment portfolio. At September 30,
1999, the Company had $20.51 billion of loans securitized and retained with
recourse, and $4.83 billion of loans and MBS sold with recourse. At September
30, 1999, the total liability for this recourse was $117.0 million.
23
<PAGE> 26
Changes in the recourse liability were as follows:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------ ------------------------
1999 1998 1999 1998
--------- --------- --------- ---------
(dollars in thousands)
<S> <C> <C> <C> <C>
Balance, beginning of period $ 122,003 $ 74,047 $ 144,257 $ 80,157
Transfer of reserve on held-to-maturity REMIC securities -- -- (22,500) --
Transfer from reserve for loan losses -- 833 7,500 833
Charge offs, net of provision for losses (4,974) (2,304) (12,228) (8,414)
--------- --------- --------- ---------
Balance, end of period $ 117,029 $ 72,576 $ 117,029 $ 72,576
========= ========= ========= =========
</TABLE>
NONPERFORMING ASSETS. Assets considered to be nonperforming include nonaccrual
loans and foreclosed assets. Management's classification of a loan as nonaccrual
does not necessarily indicate that the principal of the loan is uncollectible in
whole or in part. Loans securitized or sold with recourse that are four payments
or more past due are included in nonaccrual loans. At foreclosure, such loans
are repurchased by the Company and included in foreclosed assets.
Nonperforming assets were $1.06 billion or 0.58% of total assets at September
30, 1999, compared with $1.21 billion or 0.73% of total assets at December 31,
1998. The reserve as a percentage of nonaccrual loans and nonperforming assets
has increased due to the decline in nonaccrual loans and nonperforming assets.
Nonperforming assets consisted of the following:
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
------------- ------------
(dollars in thousands)
<S> <C> <C>
Nonaccrual loans:
SFR $ 641,928 $ 752,261
SFR construction 19,888 9,188
Manufactured housing 18,097 14,669
Second mortgage and other consumer 27,476 24,284
Commercial business 12,507 7,416
Apartment buildings 34,122 43,653
Other commercial real estate 23,748 33,077
Consumer finance 57,075 53,412
---------- ----------
834,841 937,960
Foreclosed assets 222,689 274,767
---------- ----------
$1,057,530 $1,212,727
========== ==========
Nonperforming assets as a percentage of total assets 0.58% 0.73%
</TABLE>
SFR nonaccrual loans declined $110.3 million from December 31, 1998 to
September 30, 1999. In addition, commercial real estate nonaccrual loans dropped
$18.9 million during the same period. The decrease in these nonaccrual loans is
primarily due to the improvement in the California economy.
ASSET AND LIABILITY MANAGEMENT STRATEGY
The long-run profitability of the Company depends not only on the success of
the services it offers to its customers and the credit quality of its loans and
securities, but also the extent to which its earnings are not negatively
affected by changes in interest rates. The Company engages in a comprehensive
asset and liability management program that attempts to reduce the risk of
significant decreases in net interest income caused by interest rate changes
without unduly penalizing current earnings. As part of this strategy, the
Company actively manages the amounts and maturities of its assets and
liabilities.
One key component of the Company's program is the origination or purchase of
adjustable-rate assets whose repricing characteristics more closely match the
repricing characteristics of the Company's liabilities. At September 30, 1999,
75% of the
24
<PAGE> 27
Company's total SFR loan and MBS portfolio had adjustable rates, compared with
80% at December 31, 1998. The decline resulted from $15.48 billion of primarily
fixed-rate MBS purchases with an expected average remaining life from the time
of purchase of 4.46 years during the nine months ended September 30, 1999.
In addition, in order to better control its interest sensitivity, the Company
attempts to manage its liability durations by utilizing a variety of deposit and
borrowing types and sources. The Company also utilizes derivative instruments to
adjust the interest-sensitivity characteristics of certain of its borrowings and
deposits to better match the assets which the liabilities fund.
The table below represents expected balances that are subject to maturity or a
change in rate. It is conventionally referred to as an interest-rate-sensitivity
gap report. The expected maturity and repricing categories take into
consideration expected prepayment speeds as well as actual amortization of
principal and do not take into consideration reinvestment of cash. Principal
prepayments are the amounts of principal reduction over and above normal
amortization. The Company has used prepayment assumptions based on market
estimates and past experience with its current portfolio. Repricing mechanisms
on the Company's assets are subject to limitations such as caps on the amount
that interest rates and payments on its loans may adjust and, accordingly, such
assets may not respond in the same manner or to the same extent to changes in
interest rates as the Company's liabilities. Since the Company's non-maturity
deposits are not contractually subject to repricing, they have been allocated
based on expected decay rates. Non-rate sensitive items such as the reserve for
loan losses and deferred loan fees/costs are not included in the table. The
balance of fixed-rate loans held for sale is included in the first bucket.
While interest-rate-sensitivity gap helps provide some information about a
financial institution's interest sensitivity, it does not predict the trend of
future earnings. This is due, in part, to lag risk whereby some indices respond
in a lagging manner to market interest rates. For this reason, Washington Mutual
uses financial modeling to forecast earnings under different interest rate
projections.
25
<PAGE> 28
The interest-rate-sensitivity gap report was as follows:
<TABLE>
<CAPTION>
September 30, 1999
Projected Repricing
- ---------------------------------------------------------------------------------------------------------
0-3 4-12 1-5
Months Months Years Thereafter
- ---------------------------------------------------------------------------------------------------------
(dollars in thousands)
<S> <C> <C> <C> <C>
Interest Sensitive Assets
Adjustable-rate loans (1) $ 61,794,479 $ 10,664,978 $23,087,125 $ 671,580
Fixed-rate loans (1) 1,853,851 3,376,820 9,149,204 9,181,764
Adjustable-rate securities (1), (2) 26,989,385 3,597,509 292,381 127,218
Fixed-rate securities (1) 1,158,437 2,932,440 9,829,329 10,082,295
Cash and cash equivalents 2,467,109 - - -
------------------------------------------------------------
Total sensitive assets $ 94,263,261 $ 20,571,747 $42,358,039 $20,062,857
============================================================
Interest Sensitive Liabilities
Noninterest-bearing checking accounts (3) $ 408,386 $ 989,239 $ 2,763,403 $ 3,239,890
Interest-bearing checking accounts,
savings accounts, and MMDAs (3) 4,714,810 7,822,006 14,964,656 9,766,400
Time deposit accounts 8,521,720 21,673,311 6,677,620 80,809
Short-term and adjustable-rate
borrowings 64,581,474 10,204,009 - -
Fixed-rate borrowings 3,561,747 4,170,519 3,838,437 2,276,991
Derivatives matched against liabilities (15,806,800) 4,393,000 12,163,800 (750,000)
------------------------------------------------------------
Total sensitive liabilities $ 65,981,337 $ 49,252,084 $40,407,916 $14,614,090
------------------------------------------------------------
Repricing Gap $ 28,281,924 $(28,680,337) $ 1,950,123 $ 5,448,767
============================================================
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
0-3 0-12 0-5
Months Months Years Thereafter
- ---------------------------------------------------------------------------------------------------------
(dollars in thousands)
<S> <C> <C> <C> <C>
Cumulative Gap $ 28,281,924 $ (398,413) $ 1,551,710 $ 7,000,477
============================================================
Cumulative gap as a percentage
of total assets 15.64% (0.22)% 0.86% 3.87%
- -----------
(1) Based on scheduled maturity or scheduled repricing and estimated repayments
of principal.
(2) Includes FHLB stock.
(3) Based on experienced and anticipated decay rates of checking, savings, and
MMDAs.
</TABLE>
A conventional measure of interest rate sensitivity for savings institutions
is the one-year gap, which is calculated by dividing the difference between
assets maturing or repricing within one year and total liabilities maturing or
repricing within one year by total assets.
At September 30, 1999, the one-year gap or cumulative gap as a percentage of
total assets in the 0-12 month category was a negative 0.22%, compared with a
positive 2.90% at December 31, 1998. The repricing of the Company's interest
sensitive assets generally matches that of its interest sensitive liabilities.
The market risk characteristics of the Company's assets and liabilities at
September 30, 1999 were not materially different from year-end 1998.
LIQUIDITY
Liquidity management focuses on the need to meet both short-term funding
requirements and long-term growth objectives. The long-term growth objectives of
the Company are to attract and retain stable consumer deposit relationships and
to maintain stable sources of wholesale funds. Because the low interest rate
environment of recent years inhibited growth of consumer deposits, Washington
Mutual has supported its growth through business combinations with other
financial institutions and by increasing its
26
<PAGE> 29
use of wholesale borrowings. Should the Company not be able to increase deposits
either internally or through acquisitions, its ability to grow would be
dependent upon, and to a certain extent limited by, its borrowing capacity.
Washington Mutual monitors its ability to meet short-term cash requirements
using guidelines established by its Board of Directors. These guidelines ensure
that short-term secured borrowing capacity is sufficient to satisfy
unanticipated cash needs. As part of this process, the Company is developing
plans for potential liquidity requirements for the Year 2000. Refer to separate
discussion of "Year 2000 Project" below.
Regulations promulgated by the Office of Thrift Supervision ("OTS") require
that the Company's federal savings banks maintain for each calendar quarter an
average daily balance of liquid assets at least equal to 4.00% of the prior
quarter end's balance of withdrawable deposits plus borrowings due within one
year. At September 30, 1999, both of the Company's federal savings banks had
liquidity ratios in excess of 4.00%.
As presented in the Consolidated Statements of Cash Flows, the sources of
liquidity vary between the comparable periods. The statement of cash flows
includes operating, investing and financing categories. Cash flows from
operating activities included net income for the nine months ended September 30,
1999 of $1.37 billion, $73.1 million for noncash items and $2.57 billion of
other net cash inflows from operating activities. Cash flows from investing
activities consisted mainly of both proceeds from and purchases of securities,
and loan principal repayments and loan originations. For the nine months ended
September 30, 1999, cash flows from investing activities included sales,
maturities and principal payments on securities totaling $12.64 billion. Loans
originated and purchased for investment were in excess of repayments and sales
by $17.05 billion, and $17.95 billion was used for the purchase of securities.
Cash flows from financing activities consisted of the net change in the
Company's deposit accounts and short-term borrowings, the proceeds and
repayments from both long-term reverse repurchase agreements and FHLB advances,
the issuance of long-term debt, and the repurchase of the Company's common
stock. For the nine months ended September 30, 1999, the above mentioned
financing activities increased cash and cash equivalents by $18.94 billion on a
net basis. Cash and cash equivalents were $2.47 billion at September 30, 1999.
See "Consolidated Financial Statements - Consolidated Statements of Cash Flows."
At September 30, 1999, the Company was in a position to obtain approximately
$27.39 billion in additional borrowings primarily through the use of
collateralized borrowings and deposits of public funds using unpledged MBS and
other wholesale borrowing sources.
CAPITAL ADEQUACY
The Company's capital (stockholders' equity) was $8.91 billion at September
30, 1999, down from $9.34 billion at December 31, 1998. During the first nine
months of 1999, the Company repurchased 21.0 million common shares at an average
price of $35.95. These stock repurchases, the unrealized loss on
available-for-sale ("AFS") securities of $584.1 million, and the growth in
assets contributed to a decline in the stockholders' equity ratio of 4.93% at
the end of third quarter 1999 from 5.65% at December 31, 1998. Excluding the
unrealized loss on AFS securities, the ratio of capital to total assets would
have been 5.25% at September 30, 1999. At December 31, 1998, there was an
unrealized gain on AFS securities of $87.6 million.
The regulatory capital ratios of WMBFA, WMB and WMBfsb and the minimum
regulatory requirements to be categorized as well-capitalized were as follows:
<TABLE>
<CAPTION>
September 30, 1999
---------------------- Well-Capitalized
WMBFA WMB WMBfsb Minimum
------ ------ ------ ----------------
<S> <C> <C> <C> <C>
Capital ratios:
Leverage 5.59% 5.63% 8.17% 5.00%
Tier 1 risk-based 10.07 10.37 13.87 6.00
Total risk-based 11.36 11.14 15.09 10.00
</TABLE>
27
<PAGE> 30
In addition, Aristar, Inc.'s industrial bank, First Community Industrial Bank,
met all Federal Deposit Insurance Corporation requirements to be categorized as
well-capitalized at September 30, 1999.
The Company's federal savings banking subsidiaries are also required by OTS
regulations to maintain core capital of at least 3.00% of assets and tangible
capital of at least 1.50% of assets. WMBFA and WMBfsb both satisfied these
requirements at September 30, 1999.
The Company's broker-dealer subsidiary is also subject to capital
requirements. At September 30, 1999, it was in compliance with its applicable
capital requirements.
YEAR 2000 PROJECT
This section contains forward-looking statements that have been prepared on
the basis of management's best judgments and currently available information and
constitutes a Year 2000 Readiness Disclosure within the meaning of the Year 2000
Readiness Disclosure Act of 1998. These forward-looking statements are
inherently subject to significant business, third-party and regulatory
uncertainties and contingencies, many of which are beyond the Company's control.
In addition, these forward-looking statements are based on current assessments
and remediation plans, which are based on certain representations of third-party
service providers and are subject to change. Accordingly, there can be no
assurance that the Company's results of operations will not be adversely
affected by difficulties or delays in the Company's or third parties' Year 2000
readiness efforts. See "Risks" below for a discussion of factors that may cause
such forward-looking statements to differ from actual results.
The Company has implemented a company-wide program to renovate, test and
document the readiness ("Year 2000 readiness") of its electronic systems,
programs and processes ("Computer Systems") and facilities to properly recognize
dates to and through the Year 2000 (the "Year 2000 Project"). While the Company
is in various stages of modification and testing of individual Year 2000 Project
components, the Year 2000 Project is proceeding generally on schedule.
The Company has assigned its Executive Vice President of Operations to oversee
the Year 2000 Project, has set up a Year 2000 Project Office, and has charged a
senior management team representing all of its significant operational areas to
act as a Steering Committee. The Company has dedicated a substantial amount of
management and staff time on the Year 2000 Project. In addition, it has engaged
IBM to provide supplemental technical and management resources to assess and
test the Year 2000 readiness of its Computer Systems, Deloitte Consulting Group
LLC to assist in documenting certain aspects of the Year 2000 Project, and CB
Richard Ellis to provide technical and management resources in executing the
Year 2000 Project with respect to facilities. Monthly progress reports are made
to the Board of Directors, and the Board's Audit Committee reviews Year 2000
Project progress on a quarterly basis.
The Project
The Company has divided its Year 2000 Project into the following general
phases, consistent with guidance issued by the Federal Financial Institutions
Examinations Council (the "FFIEC"): (i) inventory and assessment; (ii)
renovation, which includes repair or replacement; (iii) validation, which
includes testing of Computer Systems and its connections with other computer
systems; (iv) due diligence on third-party service providers; and (v)
development of contingency plans. The Year 2000 Project is divided into four
categories: mainframe systems, non-mainframe systems, third-party service
providers, and facilities.
The inventory and assessment phase is complete, and each component that has
been identified has been assigned a priority rating corresponding to its
significance. The rating has allowed the Company to direct its attention to
those Computer Systems, third-party service providers, and facilities that it
deems more critical to its ongoing business and the maintenance of good customer
relationships.
The Company has also completed the process of repairing or replacing and
testing the components of its Computer Systems it deems most critical and has
tested these Computer
28
<PAGE> 31
Systems in an integrated environment. It has also completed the process of
repairing or replacing and testing the components of its facilities it deems
most critical. It has also adopted business contingency plans for the Computer
Systems and facilities that it has determined to be most critical. These plans
conform to guidance from the FFIEC on business contingency planning for Year
2000 readiness. Contingency plans include, among other actions, manual
workarounds and identification of resource requirements and alternative
solutions for resuming critical business processes in the event of a year
2000-related failure.
Prior to 1998, the Company undertook strategic business initiatives that
shifted a significant portion of the cost for Year 2000 readiness to third-party
service providers. The Company relies on third-party service providers for
significant business processes such as item processing, loan servicing, and
desktop and communications management. It has been communicating with its
third-party service providers to assess and monitor their Year 2000 readiness.
The Company has completed its due diligence on third-party service providers for
its most critical business processes, including the testing of connections with
these service providers, where possible, although the monitoring of these
service providers will continue. The Company has established contingency plans
for the service providers it deems most critical and will continue monitoring to
determine whether to implement specific contingency plans.
The Company has completed testing the connections between its Computer Systems
and third-party computer systems that it deems most critical. Additional testing
of these Computer Systems and third-party computer systems will continue through
1999.
The Company continues to assess its risk from other environmental factors over
which it has little control, such as electrical power supply, and voice and data
transmission. Because of the nature of the factors, however, the Company is not
actively engaged in any repair, replacement or testing efforts for these
services.
Costs
While the Company does not believe that the process of making its Computer
Systems Year 2000 ready will result in material cost, it is expected that a
substantial amount of management and staff time will be required on the Year
2000 Project. The Company spent approximately $21.5 million during 1998 and the
nine months ended September 30, 1999 on its Year 2000 Project, and it currently
expects to spend approximately $11.5 million more before it concludes its Year
2000 readiness efforts. In 1996 and 1997, the Company spent approximately $30.3
million on technology-related initiatives, which had the effect of reducing its
current cost of Year 2000 readiness.
Risks
Based on its current assessments and remediation plans, which are based in
part on certain representations of third-party service providers, the Company
does not expect that it will experience a significant disruption of its
operations as a result of the change to the new millennium. Although the Company
has no reason to conclude that a failure will occur, the most reasonably likely
worst-case Year 2000 scenario would entail a disruption or failure of its power
supply or voice and data transmission suppliers, a Computer System, a
third-party service provider, or a facility. If such a failure were to occur,
the Company would implement its contingency plan. While it is impossible to
quantify the impact of such a scenario, the most reasonably likely worst-case
scenario would entail a diminishment of service levels, some customer
inconvenience, and additional costs from the contingency plan implementation,
which are not currently estimable. While the Company has contingency plans to
address a temporary disruption in these services, there can be no assurance that
any disruption or failure will be only temporary, that the contingency plans
will function as anticipated, or that the Company's results of operations will
not be adversely affected in the event of a prolonged disruption or failure.
There can be no assurance that the FFIEC or other federal regulators will not
issue new regulatory requirements that require additional work by the Company
and, if issued, that new regulatory requirements will not increase the cost or
delay the completion of the Year 2000 Project.
29
<PAGE> 32
Liquidity Plan
Washington Mutual has developed and implemented a Liquidity Plan to identify,
monitor, and resolve potential funding impacts related to Year 2000. The plan
includes early warning of funding trends and alternative sources of funds in the
event of a disruption.
The Company has also developed and implemented a Cash Contingency Plan to
identify, monitor, and resolve potential impacts to cash sources and
distribution systems related to Year 2000. The plan includes early warning of
cash trends and alternative sources of cash in the event of a disruption.
30
<PAGE> 33
PART II
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
See Index of Exhibits on page 33.
(b) Reports on Form 8-K
During the third quarter of 1999, the Company filed a report on Form 8-K dated
July 20, 1999. The report included under Item 7 of Form 8-K a press release
announcing Washington Mutual's second quarter 1999 financial results and
unaudited consolidated financial statements for the quarter and six months ended
June 30, 1999. The report also included under Item 7 of Form 8-K a press release
announcing an additional share repurchase program.
During the third quarter of 1999, the Company filed a report on Form 8-K dated
June 29, 1999. The report included under Item 7 of Form 8-K a slide presentation
to investors at a conference on June 29, 1999.
During the third quarter of 1999, the Company filed a report on Form 8-K dated
August 5, 1999. The report included under Item 7 of the Form 8-K an Underwriting
Agreement dated August 5, 1999 between the Registrant and Chase Securities Inc.,
Lehman Brothers Inc., Salomon Smith Barney Inc. and Goldman, Sachs & Co. for the
Company to issue senior debt securities totaling $750.0 million and bearing a
fixed rate of 7.50%. The notes are due on August 15, 2006.
During the third quarter of 1999, the Company filed a report on Form 8-K dated
August 25, 1999. The report included under Item 7 of Form 8-K a slide
presentation to investors and analysts.
During the third quarter of 1999, the Company also filed a report on Form 8-K
dated September 15, 1999. The report included under Item 7 of Form 8-K a press
release reporting the shareholders of Long Beach Financial Corporation had
approved the merger with Washington Mutual.
31
<PAGE> 34
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized, on November 12, 1999.
WASHINGTON MUTUAL, INC.
By: /s/ FAY L. CHAPMAN
-----------------------------------------
Fay L. Chapman
Senior Executive Vice President
and General Counsel
By: /s/ RICHARD M. LEVY
-----------------------------------------
Richard M. Levy
Senior Vice President and Controller
(Principal Accounting Officer)
32
<PAGE> 35
WASHINGTON MUTUAL, INC.
INDEX OF EXHIBITS
<TABLE>
<CAPTION>
Exhibit No.
- -----------
<S> <C>
3.1 Amended and restated Articles of Incorporation of the Registrant,
as amended (filed herewith).
3.2 Restated By-laws of the Registrant, as amended (filed herewith).
4.1 Rights Agreement dated October 16, 1990 (filed as an exhibit to the
Company's Current Report on Form 8-K dated November 29, 1994 and
incorporated herein by reference. File No. 0-25188).
4.2 Amendment No. 1 to Rights Agreement, dated October 31, 1994 (filed
as an exhibit to the Company's Current Report on Form 8-K dated
November 29, 1994 and incorporated herein by reference. File No.
0-25188).
4.3 The registrant agrees to furnish the Securities and Exchange
Commission, upon request, with copies of all instruments defining
the rights of holders of long-term debt of registrant and its
consolidated subsidiaries.
10.1 364-Day Credit Agreement by and among the Registrant and Aristar,
Inc. and The Chase Manhattan Bank, as Administrative Agent (filed
herewith).
10.2 Four-Year Credit Agreement by and among the Registrant and Aristar,
Inc. and The Chase Manhattan Bank, as Administrative Agent (filed
herewith).
27 Financial Data Schedule.*
- -----------
* Filed electronically with the Securities and Exchange Commission.
</TABLE>
33
<PAGE> 1
EXHIBIT 3.1
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
WASHINGTON MUTUAL, INC.
Pursuant to the provisions of RCW 23B.10.070 of the Washington Business
Corporation Act, WASHINGTON MUTUAL, INC., a Washington corporation, hereby
restates its Articles of Incorporation as now and heretofore amended:
ARTICLE I
NAME
The name of this corporation is:
WASHINGTON MUTUAL, INC.
ARTICLE II
CAPITAL STOCK
A. Issuance of and Payment for Stock. The total number of shares of
capital stock which the Company has authority to issue is 1,610,000,000 shares
of which 1,600,000,000 shares shall be shares of common stock with no par value
per share and 10,000,000 shares shall be shares of preferred stock with no par
value per share. The shares may be issued by the Company from time to time as
approved by its Board of Directors without the approval of the shareholders. The
consideration for issuance of the shares shall be paid in full before their
issuance. Neither promissory notes nor the promise of future services shall
constitute payment or part payment for the issuance of shares of the Company.
The consideration for the shares shall be cash, tangible or intangible property,
labor or services actually performed for the Company or any combination of the
foregoing. In the absence of actual fraud in the transaction, the value of such
property, labor or services, as determined by the Board of Directors of the
Company, shall be conclusive. Upon payment of such consideration, such shares
shall be deemed to be fully paid and non-assessable.
B. Voting by Class or Series. Except as expressly provided in these
Articles or in any resolutions of the Board of Directors designating and
establishing the terms of any series of preferred stock, no holders of any class
or series of capital stock shall have any right to vote as a separate class or
series or to vote more than one vote per share.
<PAGE> 2
Notwithstanding the foregoing, the restriction on voting separately by class or
series shall not apply to the extent that applicable law requires such voting,
nor shall this restriction apply to any amendment to these Articles which would
adversely change the specific terms of any class or series of capital stock as
set forth in this Article II or in any resolution of the Board of Directors
designating and establishing the terms of any series of preferred stock. For
purposes of the preceding sentence, an amendment which increases the number of
authorized shares of any class or series of capital stock, or substitutes the
surviving institution in a merger or consolidation for the Company, shall not be
such an adverse change.
C. Common Stock. On matters on which holders of common stock are
entitled to vote, each holder of shares of common stock shall be entitled to one
vote for each share held by such holder.
Whenever there shall have been paid, or declared and set aside for
payment, to the holders of the outstanding shares of any class of stock having
preference over the common stock as to the payment of dividends, the full amount
of dividends and of sinking fund or retirement fund or other retirement
payments, if any, to which such holders are respectively entitled in preference
to the common stock, then dividends may be paid on the common stock and on any
class or series of stock entitled to participate therewith as to dividends, out
of any assets legally available for the payment of dividends; but only when and
as declared by the Board of Directors.
In the event of any liquidation, dissolution or winding up of the
Company, after there shall have been paid to or set aside for the holders of any
class having preferences over the common stock in the event of liquidation,
dissolution or winding up of the full preferential amounts to which they are
respectively entitled, the holders of the common stock, and of any class or
series of stock entitled to participate therewith, in whole or in part, as to
distribution of assets, shall be entitled, after payment or provision for
payment of all debts and liabilities of the Company, to receive pro rata the
remaining assets of the Company available for distribution, in cash or in kind.
Each share of common stock shall have the same relative rights as and be
identical in all respects with all the other shares of common stock.
D. Preferred Stock. The authorized Preferred Stock shall be
comprised of 10,000,000 shares no par value per share. The Board of Directors of
the Company is authorized by resolution or resolutions from time to time
adopted, to provide for the issuance of preferred stock in one or more
additional series by designating and establishing the terms of such a series.
With respect to any such series, the Board of Directors is authorized to fix and
state the voting powers, designations, preferences and relative, participating,
optional or other special right of the shares of each such series and
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<PAGE> 3
the qualifications, limitations and restrictions thereon, including, but not
limited to, determination of any of the following:
(1) The distinctive serial designation and the number of
shares constituting such series;
(2) The dividend rates or the amount of dividends to be paid
on the shares of such series, whether dividends shall be cumulative and, if so,
from which date or dates, the payment date or dates for dividends, and the
participating or other special rights, if any, with respect to dividends;
(3) The voting powers, full, special or limited, if any, of
shares of such series;
(4) Whether the shares of such series shall be redeemable
and, if so, the price or prices at which, and the terms and conditions on which,
such shares may be redeemed;
(5) The amount or amounts payable upon the shares of such
series in the event of voluntary or involuntary liquidation, dissolution or
winding up of the Company;
(6) Whether the shares of such series shall be entitled to
the benefit of a sinking or retirement fund to be applied to the purchase or
redemption of such shares, and if so entitled, the amount of such fund and the
manner of its application, including the price or prices at which such shares
may be redeemed or purchased through the application of such fund;
(7) Whether the shares of such series shall be convertible
into, or exchangeable for, shares of any other class or classes or of any other
series of the same or any other class or classes of stock of the Company and, if
so convertible or exchangeable, the conversion price or prices, or the rate of
exchange, and the adjustments thereof, if any, at which such conversion or
exchange may be made, and any other terms and conditions of such conversion or
exchange; and
(8) Whether the shares of such series which are redeemed or
converted shall have the status of authorized but unissued shares of serial
preferred stock and whether such shares may be reissued as shares of the same or
any other series of serial Preferred Stock.
Each share of each series of preferred stock shall have the same
relative rights as and be identical in all respects with all the other shares of
the same series.
While the foregoing authorizes the Board of Directors, in establishing
the terms of a series of Preferred Stock, to permit holders of that series of
Preferred Stock to elect
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<PAGE> 4
separately one or more directors, in no event shall the total number of
directors separately elected by holders of one or more series of Preferred Stock
equal or exceed fifty percent (50%) of the total number of authorized directors.
ARTICLE III
PREEMPTIVE RIGHTS
The shareholders of the Company shall have no preemptive rights to
acquire additional shares of the Company.
ARTICLE IV
BOARD OF DIRECTORS
The Company shall be managed by a Board of Directors. The number of
directors shall be stated in the Company's Bylaws, provided, however, that such
number shall be not less than five (5). There shall be three classes of elected
directors designated as Class 1, Class 2, and Class 3 directors. Each class
shall contain one-third of the total number of directors, as near as may be. The
terms of the Class 1 directors shall expire at the first annual shareholders'
meeting after their election. The terms of the Class 2 directors shall expire at
the second annual shareholders' meeting after their election. The terms of the
Class 3 directors shall expire at the third annual shareholders' meeting after
their election. At each annual shareholders' meeting held thereafter, directors
shall be chosen for a term of three years to succeed those whose terms expire. A
vacancy on the Board of Directors may be filled by the Board in accordance with
the applicable provisions of the Company's Bylaws. A director elected to fill a
vacancy shall be elected for a term of office continuing only until the next
election of directors by shareholders.
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<PAGE> 5
ARTICLE V
REMOVAL OF DIRECTORS
Any director may be removed by the shareholders only with good cause and
in accordance with the applicable provisions of the Company's Bylaws.
ARTICLE VI
CUMULATIVE VOTING
The right to cumulate votes in the election of directors shall not exist
with respect to shares of stock of the Company.
ARTICLE VII
BYLAWS
The Board of Directors has the power to adopt, amend or repeal the
Bylaws of the Company, subject to the concurrent power of the shareholders, by
at least two-thirds affirmative vote of the shares of the Company entitled to
vote thereon, to adopt, amend or repeal the Bylaws.
ARTICLE VIII
SHAREHOLDER VOTE REQUIRED TO APPROVE SUBSTANTIAL BUSINESS TRANSACTION
If pursuant to the Washington Business Corporations Act the Company's
shareholders are required to approve a plan of merger, share exchange, or other
disposition of all, or substantially all of the Company's property, otherwise
than in the usual and regular course of business (each of the foregoing, a
"Substantial Business Transaction"), then (a) if two-thirds of the directors
vote to recommend the Substantial Business Transaction to the shareholders, the
Substantial Business Transaction shall be approved by each voting group entitled
to vote thereon by a simple majority of all votes entitled to be cast by that
group; (b) in all other cases where a shareholder vote is required by the
Washington Business Corporation Act, such Act, as it may be amended, shall
control.
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<PAGE> 6
ARTICLE IX
INDEMNIFICATION
The Company shall indemnify any individual made a party to a
proceeding because that individual is or was a director of the Company and shall
advance or reimburse the reasonable expenses incurred by such individual in
advance of final disposition of the proceeding, without regard to the
limitations in RCW 23B.08.510 through 23B.08.550 of the Washington Business
Corporation Act, or any other limitation that may hereafter be enacted to the
extent such limitation may be disregarded if authorized by the articles of
incorporation, to the full extent and under all circumstances permitted by
applicable law.
ARTICLE X
BUSINESS COMBINATIONS
A. For the purposes of this Article X:
(1) The terms "Affiliate" and "Associate" shall have the
meanings attached to them by Rule 12b-2 under the Securities Exchange Act of
1934, as amended, or any similar successor rule.
(2) The term "beneficial owner" and correlative terms shall
have the meaning as set forth in Rule 13d-3 under the Securities Exchange Act of
1934, as amended, or any similar successor rule. Without limitation and in
addition to the foregoing, any shares of Voting Stock of the Company which any
Major Stockholder has the right to vote or to acquire (i) pursuant to any
agreement, (ii) by reason of tenders of shares by shareholders of the Company in
connection with or pursuant to a tender offer made by such Major Stockholder
(whether or not any tenders have been accepted, but excluding tenders which have
been rejected), or (iii) upon the exercise of conversion rights, warrants,
options or otherwise, shall be deemed "beneficially owned" by such Major
Stockholder.
(3) The term "Business Combination" shall mean:
(a) any merger or consolidation (whether in a single
transaction or a series of related transactions, including a series of separate
transactions with a Major Stockholder, any Affiliate or Associate thereof or any
Person acting in concert therewith) of the Company or any Subsidiary with or
into a Major Stockholder or of a Major Stockholder into the Company or a
Subsidiary;
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<PAGE> 7
(b) any sale, lease, exchange, transfer,
distribution to stockholders or other disposition, including without limitation,
a mortgage, pledge or any other security device, to or with a Major Stockholder
by the Company or any of its Subsidiaries (in a single transaction or a series
of related transactions) of all, substantially all or any Substantial Part of
the assets of the Company or a Subsidiary (including, without limitation, any
securities of a Subsidiary);
(c) the purchase, exchange, lease or other
acquisition by the Company or any of its Subsidiaries (in a single transaction
or a series of related transactions) of all, substantially all or any
Substantial Part of the assets or business of a Major Stockholder;
(d) the issuance of any securities, or of any
rights, warrants or options to acquire any securities, of the Company or a
Subsidiary to a Major Stockholder or the acquisition by the Company or a
Subsidiary of any securities, or of any rights, warrants or options to acquire
any securities, of a Major Stockholder;
(e) any reclassification of Voting Stock,
recapitalization or other transaction (other than a redemption in accordance
with the terms of the security redeemed) which has the effect, directly or
indirectly, of increasing the proportionate amount of Voting Stock of the
Company or any Subsidiary which is beneficially owned by a Major Stockholder, or
any partial or complete liquidation, spin off, split off or split up of the
Company or any Subsidiary; provided, however, that this Section A(3)(e) shall
not relate to any transaction of the types specified herein that has been
approved by a majority of the Continuing Directors; and
(f) any agreement, contract or other arrangement
providing for any of the transactions described herein.
(4) The term "Continuing Director" shall mean (i) a person
who was a member of the Board of Directors of the Company immediately prior to
the time that any then-existing Major Stockholder became a Major Stockholder, or
(ii) a person designated (before initially becoming a director) as a Continuing
Director by a majority of the then Continuing Directors. All references to a
vote of the Continuing Directors shall mean a vote of the total number of
Continuing Directors.
(5) The term "Major Stockholder" shall mean any Person
which, together with its Affiliates and Associates and any Person acting in
concert therewith, is the beneficial owner of five percent (5%) or more of the
votes held by the holders of the outstanding shares of the Voting Stock of the
Company, and any Affiliate or Associate of a Major Stockholder, including a
Person acting in concert therewith. The term "Major Stockholder" shall not
include a Subsidiary.
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<PAGE> 8
(6) The term "other consideration to be received" shall
include, without limitation, Voting Stock retained by the Company's existing
shareholders in the event of a Business Combination which is a merger or
consolidation in which the Company is the surviving corporation.
(7) The term "Person" shall mean any individual,
corporation, partnership or other person, group or entity (other than the
Company, any Subsidiary or a trustee holding stock for the benefit of employees
of the Company or its Subsidiaries, or any one of them, pursuant to one or more
employee benefit plans or arrangements). When two or more persons act as a
partnership, limited partnership, syndicate, association or other group for the
purpose of acquiring, holding or disposing of shares of stock, such
partnerships, syndicate, association or group will be deemed a "Person."
(8) The term "Subsidiary" shall mean any business entity
fifty percent (50%) or more of which is beneficially owned by the Company.
(9) The term "Substantial Part," as used in reference to the
assets of the Company or any Subsidiary or of any Major Stockholder means assets
having a value of more than five percent (5%) of the total consolidated assets
of the Company and its Subsidiaries as of the end of the Company's most recent
fiscal year ending prior to the time the determination is made.
(10) The term "Voting Stock" shall mean the stock or other
securities entitled to vote upon any action to be taken in connection with any
Business Combination or entitled to vote generally in the election of directors,
including stock or other securities convertible into Voting Stock.
B. Notwithstanding any other provisions of these Articles of
Incorporation and except as set forth in Section C of this Article X, neither
the Company nor any Subsidiary shall be a party to a Business Combination
unless:
(1) The Business Combination was approved by the Board of
Directors of the Company prior to the Major Stockholder involved in the Business
Combination becoming such; or
(2) The Major Stockholder involved in the Business
Combination sought and obtained the unanimous prior approval of the Board of
Directors to become a Major Stockholder and the Business Combination was
approved by a majority of the Continuing Directors; or
(3) The Business Combination was approved by at least eighty
percent (80%) of the Continuing Directors of the Company; or
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<PAGE> 9
(4) The Business Combination was approved by at least
ninety-five percent (95%) of the outstanding Voting Stock beneficially owned by
shareholders other than any Major Stockholder.
C. The approval requirements of Section B shall not apply if:
(1) The Business Combination is approved by at least the
majority vote of the shares of the Voting Stock and the majority vote of the
shares of the Voting Stock beneficially owned by shareholders other than any
Major Stockholder; and
(2) All of the following conditions are satisfied:
(a) The aggregate of the cash and the fair market
value of other consideration to be received per share (as adjusted for stock
splits, stock dividends, reclassification of shares into a lesser number and
similar events) by holders of the common stock of the Company in the Business
Combination is not less than the higher of (i) the highest per share price
(including brokerage commissions, soliciting dealers' fees, dealer-management
compensation, and other expenses, including, but not limited to, costs of
newspaper advertisements, printing expenses and attorneys' fees) paid by the
Major Stockholder in acquiring any of the Company's common stock; or (ii) an
amount which bears the same or a greater percentage relationship to the market
price of the Company's common stock immediately prior to the announcement of
such Business Combination as the highest per share price determined in (i) above
bears to the market price of the Company's common stock immediately prior to the
commencement of acquisition of the Company's common stock by such Major
Stockholder, but in no event in excess of two times the highest per share price
determined in (i) above; and
(b) The consideration to be received in such
Business Combination by holders of the common stock of the Company shall be,
except to the extent that a stockholder agrees otherwise as to all or a part of
his or her shares, in the same form and of the same kind as paid by the Major
Stockholder in acquiring his Voting Stock.
(c) After becoming a Major Stockholder and prior to
the consummation of such Business Combination, (i) such Major Stockholder shall
not have acquired any newly issued shares of capital stock, directly or
indirectly, from the Company or a Subsidiary (except upon conversion of
convertible securities acquired by it prior to becoming a Major Stockholder or
upon compliance with the provisions of this Article X or as a result of a pro
rata stock dividend or stock split), and (ii) such Major Stockholder shall not
have received the benefit, directly or indirectly (except proportionately as a
shareholder), of any loans, advances, guarantees, pledges or other financial
assistance or tax credits provided by the Company or a Subsidiary, or made any
major changes in the Company's business or equity capital structure; and
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<PAGE> 10
(d) A proxy statement responsive to the requirements
of the Securities Exchange Act of 1934, whether or not the Company is then
subject to such requirements, shall be mailed to all shareholders of the Company
for the purpose of soliciting shareholder approval of such Business Combination
and shall contain on the front thereof, in a prominent place, (i) any
recommendations as to the advisability (or inadvisability) of the Business
Combination which the Continuing Directors may choose to state, and (ii) the
opinion of a reputable national investment banking firm as to the fairness (or
lack thereof) of the terms of such Business Combination, from the point of view
of the remaining shareholders of the Company. Such investment banking firm shall
be engaged solely on behalf of the remaining shareholders, be paid a reasonable
fee for their services by the Company upon receipt of such opinion, and be one
of the so-called major bracket investment banking firms which has not previously
been associated with such Major Stockholder and to be selected by a majority of
the Continuing Directors.
D. During the time a Major Stockholder exists, a resolution to
voluntarily dissolve the Company shall be adopted only upon: (1) the consent of
all of the Company's shareholders; or (2) the affirmative vote of at least
two-thirds of the total number of directors, the affirmative vote of the holders
of at least two-thirds of the shares of the Company entitled to vote thereon,
and the affirmative vote of the holders of at least two-thirds of the shares of
each class of shares entitled to vote thereon as a class, if any.
E. As to any particular transaction, the Continuing Directors shall
have the power and duty to determine, on the basis of information known to them:
(1) The amount of Voting Stock beneficially held by any
Person;
(2) Whether a Person is an Affiliate or an Associate of
another;
(3) Whether a Person is acting in concert with another;
(4) Whether the assets subject to any Business Combination
constitute a Substantial Part;
(5) Whether a proposed transaction is subject to the
provisions of this Article; and
(6) Such other matters with respect to which a determination
is required under this Article.
Any such determination shall be conclusive and binding for all purposes
of this Article.
The affirmative vote required by this Article is in addition to the vote
of the holders of any class or series of stock of the Company otherwise required
by law, these
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<PAGE> 11
Articles of Incorporation, any resolution which has been adopted by the Board of
Directors providing for the issuance of a class or series of stock or any
agreement between the Company and any national securities exchange.
ARTICLE XI
AMENDMENT
The Company may amend these Articles of Incorporation if approved by
each voting group entitled to vote thereon by a simple majority of all the votes
entitled to be cast by that voting group at any regular meeting or special
meeting duly called for that purpose in the manner prescribed by its Bylaws,
provided, however, that Article X may not be repealed or amended in any respect
unless such action is approved by at least a ninety-five percent (95%) vote of
the outstanding Voting Stock beneficially owned by shareholders other than any
Major Stockholder, and provided further, that the board of Directors may,
without shareholder approval, amend these Articles (i) to the extent permitted
under the Washington Business Corporation Act or (ii) as necessary to designate
the preferences, limitations, and relative rights of a class or series of shares
of the Company prior to issuance of any shares in that class or series.
ARTICLE XII
LIMITATION OF LIABILITY
A director of the Company shall not be personally liable to the Company
or its shareholders for monetary damages for conduct as a director ("Protected
Conduct"). However, Protected Conduct shall exclude (i) acts or omissions which
involve intentional misconduct by the director or a knowing violation of law by
the director, (ii) any conduct violating Section 23B.08.310 of the Revised Code
of Washington, and (iii), any transaction from which the director will
personally receive a benefit in money, property or services to which the
director is not legally entitled. If Washington law is amended to authorize
corporate action further eliminating or limiting the personal liability of
directors, then the liability of a director of the Company shall be eliminated
or limited to the fullest extent permitted by Washington law, as so amended. Any
repeal or modification of this Article XII by the shareholders of the Company
shall not adversely affect any right or protection of a director of the Company
existing at the time of such repeal or modification.
ARTICLE XIII
The street address of the registered office of the Company is:
- 11 -
<PAGE> 12
1201 Third Avenue
15th Floor
Seattle, Washington 98101
and the name of the registered agent at that address is:
Marc R. Kittner
ARTICLE XIV
SPECIAL MEETINGS OF SHAREHOLDERS
Special meetings of the shareholders for any purpose or purposes, unless
otherwise prescribed by statute, may be called by the board of directors or by
any other person or persons authorized to do so in the Company's Bylaws.
Notwithstanding RCW 23B.07.020(1) (b) or any other provision in these Articles
or the Company's Bylaws, a special meeting of the shareholders may be called by
the shareholders only if the holders of at least twenty-five percent of all the
votes to be cast on any issue proposed to be considered at the proposed special
meeting sign, date and deliver to the Company's secretary one or more written
demands for the meeting describing the purpose or purposes for which it is to be
held.
DATED at Seattle, Washington, on the __________ day of October, 1999.
WASHINGTON MUTUAL, INC.
By:
-------------------------------------
Kerry K. Killinger
President, Chairman and
Chief Executive Officer
-12-
<PAGE> 1
EXHIBIT 3.2
WASHINGTON MUTUAL, INC.
THIRD QUARTER 1999 AMENDMENTS TO BYLAWS
(Amendments after June 30, 1999)
ARTICLE III
Article III, Section 3.13 of the Corporation's Bylaws was amended, effective
9/21/99, to read as follows:
SECTION 3.13. NOTICE OF NOMINATION. Nominations for the election of
directors and proposals for any new business to be taken up at any annual or
special meeting of shareholders may be made by the board of directors of the
corporation or by any shareholder of the corporation entitled to vote generally
in the election of directors. In order for a shareholder of the corporation to
make any such nomination or proposal at any annual meeting, the shareholder's
nomination or proposal must be in writing and received at the Executive Offices
of the corporation by the Secretary of the corporation not less than 120 days in
advance of the date corresponding to the date in the previous year on which the
corporation's proxy statement was released to security holders in connection
with the previous year's annual meeting of security holders, except that if no
annual meeting was held in the previous year or the date of the annual meeting
has been changed by more than 30 calendar days from the date of the previous
year's annual meeting, a proposal shall be received by the corporation in
accordance with the method set forth hereafter for proposals or nominations in
advance of a special meeting of shareholders. In order for a shareholder of the
corporation to make any nomination or proposal to be taken up at a special
meeting of shareholders, the shareholder's nomination or proposal must be in
writing and received at the Executive Offices of the corporation by the
Secretary of the corporation not less than 45 days nor more than 75 days prior
to any such meeting. Each such notice given by a shareholder with respect to
nominations for the election of directors shall set forth (i) the name, age,
business address and, if known, residence address of each nominee proposed in
such notice, (ii) the principal occupation or employment of each such nominee,
and (iii) the number of shares of stock of the corporation which are
beneficially owned by each such nominee.
<PAGE> 2
ARTICLE V
Article V of the Corporation's Bylaws was amended and restated, effective
7/20/99, to read as follows:
ARTICLE V - OFFICERS
SECTION 5.1. RANKS AND TERMS IN OFFICE. The officers of the corporation
shall be a Chief Executive Officer, a Chairman, a President of the Corporation,
a General Auditor, a Controller, and such Vice Chairmen, Group Presidents,
Senior Executive Vice Presidents, Executive Vice Presidents, Senior Vice
Presidents, First Vice Presidents or Vice Presidents as the board of directors
may designate and elect, or such other officers as the board of directors may
designate and elect or the Chief Executive Officer may designate and appoint.
Officers shall serve until the termination of their employment or their
earlier removal from service as officers. Any officer may be removed, with or
without cause, by the board of directors, but such removal shall be without
prejudice to the contractual rights, if any, of the person so removed. Any
officer who has been elected by the board of directors may be suspended with or
without pay by the Chief Executive Officer, and any other officer may be removed
or suspended with or without pay by the Chief Executive Officer, but such
removal or suspension shall be without prejudice to the contractual rights, if
any, of the person so removed or suspended. The termination of any officer's
employment shall constitute removal of such person from office, effective as of
the date of termination of employment.
SECTION 5.2. CHIEF EXECUTIVE OFFICER. The Chief Executive Officer of the
corporation shall have direct supervision and management of its affairs and the
general powers and duties of supervision and management usually vested in the
Chief Executive officer of a corporation, subject to the Bylaws and policies of
the corporation. The Chief Executive Officer shall be ex-officio a member of all
committees except the Audit Committee and the Compensation and Stock Option
Committee. The Chief Executive Officer shall perform such other duties as may be
assigned by the board of directors. In the absence of the Chief Executive
Officer, his duties shall be assumed by the President of the Corporation, and in
their absence such duties shall be assumed by a person designated by the Chief
Executive Officer or the board of directors.
SECTION 5.3. CHAIRMAN. The Chairman shall preside over all meetings of
the board of directors. The Chairman shall preside over all meetings of the
shareholders, which duty shall include the authority to adjourn such meetings.
The Chairman shall perform such other duties as
<PAGE> 3
may be assigned by the board of directors or the Chief Executive Officer, or as
may be set forth in the policies and procedural directives of the corporation.
In the event of the Chairman's incapacity, the Chairman's duties shall be
assumed by the Chief Executive Officer or, in the event of the Chief Executive
Officer's incapacity, the duties of the Chairman shall be assumed by the
President of the Corporation, and in their absence such duties shall be assumed
by a person designated by the board of directors.
SECTION 5.4. PRESIDENT OF THE CORPORATION. The President of the
Corporation shall perform such duties as may be assigned by the Chief Executive
Officer or the board of directors, or as may be set forth in the policies and
procedural directives of the corporation.
SECTION 5.5. GENERAL AUDITOR. The General Auditor shall supervise and
maintain continuous audit control of the assets and liabilities of the
corporation. He shall be responsible only to the board of directors in
coordination with the Chief Executive officer. He shall perform such other
duties as may be assigned to him by the Chief Executive Officer or the President
of the Corporation from time to time, only to the extent that such other duties
do not compromise the independence of audit control.
SECTION 5.6. CONTROLLER. The Controller shall be the chief accounting
officer of the corporation and shall have supervisory control and direction of
the general accounting, accounting procedure, budgeting and general bookkeeping,
and shall be the custodian of the general accounting books, records, forms and
papers. He shall also perform such other duties as may be assigned from time to
time by the Chief Executive Officer, the President of the Corporation, a Vice
Chairman, a Group President, a Senior Executive Vice President or an Executive
Vice President, or as may be set forth in the policies and procedural directives
of the corporation, only to the extent that such other duties do not compromise
the independence of audit control.
SECTION 5.7. VICE CHAIRMEN, GROUP PRESIDENTS, SENIOR EXECUTIVE VICE
PRESIDENTS, EXECUTIVE VICE PRESIDENTS. Any Vice Chairmen, Group Presidents,
Senior Executive Vice Presidents, Executive Vice Presidents shall perform such
duties as may be assigned from time to time by the Chief Executive Officer or
the President of the Corporation, or as may be set forth in the policies and
procedural directives of the corporation.
SECTION 5.8. SENIOR VICE PRESIDENTS, FIRST VICE PRESIDENTS AND VICE
PRESIDENTS. Senior Vice Presidents, First Vice Presidents and Vice Presidents
shall perform such duties as may be assigned from time to time by the Chief
Executive Officer, the President of the Corporation, a Vice Chairmen, a Group
President, a Senior Executive Vice President or a
<PAGE> 4
Executive Vice President, or as may be set forth in the policies and procedural
directives of the corporation.
SECTION 5.9. SECRETARY AND ASSISTANT SECRETARY. The Secretary shall keep
the minutes of all meetings of the board of directors and of the shareholders.
He shall give such notices to the directors as may be required by law or by
these Bylaws. He shall have the custody of the corporate seal, if any, and the
contracts, papers and documents belonging to the corporation. He shall also
perform such other duties as may be assigned from time to time by the Chief
Executive Officer, the President of the Corporation, a Vice Chairman, a Group
President, a Senior Executive Vice President or an Executive Vice President, or
as may be set forth in the policies and procedural directives of the
corporation. In the absence of the Secretary, the powers and duties of the
Secretary shall devolve upon an Assistant Secretary or such person as shall be
designated by the Chief Executive Officer.
SECTION 5.10. COMBINING OFFICES. An officer who holds one office may,
with or without resigning from such existing office, be elected by the board of
directors to hold, in addition to such existing office, the office of Chairman,
Vice Chairman, Group President Senior Executive Vice President, Senior Vice
President, First Vice President or Vice President. An officer who holds one
office may, with or without resigning from such existing office, be appointed by
the Chief Executive Officer to hold, in addition to such existing office,
another office other than the office of Chairman, Vice Chairman, Group President
Senior Executive Vice President, Senior Vice President, First Vice President or
Vice President.
SECTION 5.11. OTHER OFFICERS. The other Officers shall perform such
duties as may be assigned by the Chief Executive Officer, the President of the
Corporation, a Vice Chairman, a Group President, a Senior Executive Vice
President or an Executive Vice President, or as may be set forth in the policies
and procedural directives of the corporation. The Chief Executive Officer may
designate such functional titles to an officer, as the Chief Executive Officer
deems appropriate from time to time.
SECTION 5.12. OFFICIAL BONDS. The corporation may be indemnified in the
event of the dishonest conduct or unfaithful performance of an officer,
employee, or agent by a corporate fidelity bond, the premiums for which may be
paid by the corporation.
SECTION 5.13. EXECUTION OF CONTRACTS AND OTHER DOCUMENTS. The Chief
Executive Officer, the President of the Corporation, or any Vice Chairman, Group
President, or Senior Executive Vice President may from time to time designate
the officers, employees or agents of the corporation who shall have authority to
sign deeds, contracts, satisfactions, releases, and
<PAGE> 5
assignments of mortgages, and all other documents or instruments in writing to
be made or executed by the corporation.
SECTION 5.14. RESIGNATION. Any officer may resign at any time by
delivering written notice to the Chief Executive Officer, the President, the
Secretary or the board of directors, or by giving oral notice at any meeting of
the board. Any such resignation shall take effect at any subsequent time
specified therein, or if the time is not specified, upon delivery thereof and,
unless otherwise specified therein, the acceptance of such resignation shall not
be necessary to make it effective.
SECTION 5.15. COMPENSATION OF OFFICERS AND EMPLOYEES. The compensation
of officers and employees shall be fixed from time to time in such manner as the
board of directors or the Compensation and Stock Option Committee shall
determine. No officer shall be prevented from receiving a salary by reason of
the fact that such officer is also a director of the corporation.
SECTION 5.16. VOTING OF SHARES HELD BY CORPORATION. Shares of another
corporation held by this corporation may be voted in person or by proxy by the
Chief Executive Officer, by the President of the Corporation, by a Vice
Chairman, by a Group President, by a Senior Executive Vice President, by an
Executive Vice President, or by a Senior Vice President.
<PAGE> 6
WASHINGTON MUTUAL, INC.
AMENDMENTS TO BYLAWS
(Amendments since the September 28, 1994, adoption of Restated Bylaws; organized
according to the affected article and, within the section for each article,
organized chronologically)
<TABLE>
<CAPTION>
Date of
Article Effect of Amendment Amendment
------- ------------------- ---------
<S> <C> <C>
Article II The board of directors of this corporation shall 1/16/96
consist of thirteen (13) directors.
Article II The board of directors of this corporation shall 12/17/96
consist of fifteen (15) directors.
Article II The board of directors of this corporation shall 4/15/97
consist of thirteen (13) directors.
Article II The board of directors of this corporation shall 6/17/97
consist of seventeen (17) directors.
Article II The board of directors of this corporation shall 7/15/97
consist of sixteen (16) directors.
Article II The board of directors of this corporation shall 4/21/98
consist of fifteen (15) directors.
Article II The board of directors of this corporation shall 9/15/98
consist of up to eighteen (18) directors.
</TABLE>
<PAGE> 7
WASHINGTON MUTUAL, INC.
AMENDMENTS TO BYLAWS -- PAGE 2
- ------------------------------
Article V of the Corporation's Bylaws was amended and restated, effective
6/15/99, to read as follows:
ARTICLE V - OFFICERS
SECTION 5.1. RANKS AND TERMS IN OFFICE. The officers of the corporation
shall be a Chief Executive Officer, a Chairman, a President of the Corporation,
a General Auditor, a Controller, and such Vice Chairmen, Group Presidents,
Senior Executive Vice Presidents, Executive Vice Presidents, Senior Vice
Presidents, First Vice Presidents or Vice Presidents as the board of directors
may designate and elect, or such other officers as the board of directors may
designate and elect.
Officers shall serve until the termination of their employment or their
earlier removal from service as officers. Any officer may be removed, with or
without cause, by the board of directors, but such removal shall be without
prejudice to the contractual rights, if any, of the person so removed.
SECTION 5.2. CHIEF EXECUTIVE OFFICER. The Chief Executive Officer of the
corporation shall have direct supervision and management of its affairs and the
general powers and duties of supervision and management usually vested in the
Chief Executive officer of a corporation, subject to the Bylaws and policies of
the corporation. The Chief Executive Officer shall be ex-officio a member of all
committees except the Audit Committee and the Compensation and Stock Option
Committee. The Chief Executive Officer shall perform such other duties as may be
assigned by the board of directors. In the absence of the Chief Executive
Officer, his duties shall be assumed by the President of the Corporation, and in
their absence such duties shall be assumed by a person designated by the Chief
Executive Officer or the board of directors.
SECTION 5.3. CHAIRMAN. The Chairman shall preside over all meetings of the
board of directors. The Chairman shall preside over all meetings of the
shareholders, which duty shall include the authority to adjourn such meetings.
The Chairman shall perform such other duties as may be assigned by the board of
directors or the Chief Executive Officer, or as may be set forth in the policies
and procedural directives of the corporation. In the event of the Chairman's
incapacity, the Chairman's duties shall be assumed by the Chief Executive
Officer or, in the event of the Chief Executive Officer's incapacity, the duties
of the Chairman shall be assumed by the President of the Corporation, and in
their absence such duties shall be assumed by a person designated by the board
of directors.
SECTION 5.4. PRESIDENT OF THE CORPORATION. The President of the
Corporation shall perform such duties as may be assigned by the Chief Executive
Officer or the board of directors, or as may be set forth in the policies and
procedural directives of the corporation.
<PAGE> 8
WASHINGTON MUTUAL, INC.
AMENDMENTS TO BYLAWS -- PAGE 3
- --------------------------------
SECTION 5.5. GENERAL AUDITOR. The General Auditor shall supervise and
maintain continuous audit control of the assets and liabilities of the
corporation. He shall be responsible only to the board of directors in
coordination with the Chief Executive officer. He shall perform such other
duties as may be assigned to him by the Chief Executive Officer or the President
of the Corporation from time to time, only to the extent that such other duties
do not compromise the independence of audit control.
SECTION 5.6. CONTROLLER. The Controller shall be the chief accounting
officer of the corporation and shall have supervisory control and direction of
the general accounting, accounting procedure, budgeting and general bookkeeping,
and shall be the custodian of the general accounting books, records, forms and
papers. He shall also perform such other duties as may be assigned from time to
time by the Chief Executive Officer, the President of the Corporation, a Vice
Chairman, a Group President, a Senior Executive Vice President or an Executive
Vice President, or as may be set forth in the policies and procedural directives
of the corporation, only to the extent that such other duties do not compromise
the independence of audit control.
SECTION 5.7. VICE CHAIRMEN, GROUP PRESIDENTS, SENIOR EXECUTIVE VICE
PRESIDENTS, EXECUTIVE VICE PRESIDENTS. Any Vice Chairmen, Group Presidents,
Senior Executive Vice Presidents, Executive Vice Presidents shall perform such
duties as may be assigned from time to time by the Chief Executive Officer or
the President of the Corporation, or as may be set forth in the policies and
procedural directives of the corporation.
SECTION 5.8. SENIOR VICE PRESIDENTS, FIRST VICE PRESIDENTS AND VICE
PRESIDENTS. Senior Vice Presidents, First Vice Presidents and Vice Presidents
shall perform such duties as may be assigned from time to time by the Chief
Executive Officer, the President of the Corporation, a Vice Chairmen, a Group
President, a Senior Executive Vice President or a Executive Vice President, or
as may be set forth in the policies and procedural directives of the
corporation.
SECTION 5.9. SECRETARY AND ASSISTANT SECRETARY. The Secretary shall keep
the minutes of all meetings of the board of directors and of the shareholders.
He shall give such notices to the directors as may be required by law or by
these Bylaws. He shall have the custody of the corporate seal, if any, and the
contracts, papers and documents belonging to the corporation. He shall also
perform such other duties as may be assigned from time to time by the Chief
Executive Officer, the President of the Corporation, a Vice Chairman, a Group
President, a Senior Executive Vice President or an Executive Vice President, or
as may be set forth in the policies and procedural directives of the
corporation. In the absence of the Secretary, the powers and duties of the
Secretary shall devolve upon an Assistant Secretary or such person as shall be
designated by the Chief Executive Officer.
<PAGE> 9
WASHINGTON MUTUAL, INC.
AMENDMENTS TO BYLAWS -- PAGE 4
- ------------------------------
SECTION 5.10. COMBINING OFFICES. An officer who holds one office may, with
or without resigning from such existing office, be elected by the board of
directors to hold another office.
SECTION 5.11. OTHER OFFICERS. The other Officers shall perform such duties
as may be assigned by the Chief Executive Officer, the President of the
Corporation, a Vice Chairman, a Group President, a Senior Executive Vice
President or an Executive Vice President, or as may be set forth in the policies
and procedural directives of the corporation. The Chief Executive Officer may
designate such functional titles to an officer, as the Chief Executive Officer
deems appropriate from time to time.
SECTION 5.12. OFFICIAL BONDS. The corporation may be indemnified in the
event of the dishonest conduct or unfaithful performance of an officer,
employee, or agent by a corporate fidelity bond, the premiums for which may be
paid by the corporation.
SECTION 5.13. EXECUTION OF CONTRACTS AND OTHER DOCUMENTS. The Chief
Executive Officer, the President of the Corporation, or any Vice Chairman, Group
President, or Senior Executive Vice President may from time to time designate
the officers, employees or agents of the corporation who shall have authority to
sign deeds, contracts, satisfactions, releases, and assignments of mortgages,
and all other documents or instruments in writing to be made or executed by the
corporation.
SECTION 5.14. RESIGNATION. Any officer may resign at any time by
delivering written notice to the Chief Executive Officer, the President, the
Secretary or the board of directors, or by giving oral notice at any meeting of
the board. Any such resignation shall take effect at any subsequent time
specified therein, or if the time is not specified, upon delivery thereof and,
unless otherwise specified therein, the acceptance of such resignation shall not
be necessary to make it effective.
SECTION 5.15. COMPENSATION OF OFFICERS AND EMPLOYEES. The board of
directors shall fix compensation of officers and may fix compensation of other
employees from time to time. No officer shall be prevented from receiving a
salary by reason of the fact that such officer is also a director of the
corporation.
SECTION 5.16. VOTING OF SHARES HELD BY CORPORATION. Shares of another
corporation held by this corporation may be voted in person or by proxy by the
Chief Executive Officer, by the President of the Corporation, by a Vice
Chairman, by a Group President, by a Senior Executive Vice President, by an
Executive Vice President, or by a Senior Vice President.
<PAGE> 10
WASHINGTON MUTUAL, INC.
AMENDMENTS TO BYLAWS -- PAGE 5
- ------------------------------
Article IV, Section 4.3 of the Corporation's Bylaws was amended, effective
4/20/99, to read as follows:
SECTION 4.3 ANNUAL AND OTHER REGULAR MEETINGS. Regular meetings of the
Board shall be held at two-thirty o'clock, or an earlier hour in the discretion
of the Chairman or the President, on the third Tuesday of the months of January,
February, April, June, July, September, October, and December unless such day is
a legal holiday, in which case the meeting shall be held on the first business
day thereafter, or unless such meeting has been canceled by the Chairman or the
President upon giving notice to the members of the Board at least three calendar
days before the date on which such meeting is scheduled. The date of any regular
meeting may be changed to such other date within the month as shall be
determined by the Chairman or the President, or in the absence of the Chairman
or the President, by any three members of the Board, provided notice of the time
and place of such meeting is given as provided in Section 4.4. In each year, the
regular meeting on the day of the Annual Meeting of Shareholders shall be known
as the Annual Meeting of the Board.
<PAGE> 11
WASHINGTON MUTUAL, INC.
AMENDMENTS TO BYLAWS -- PAGE 6
- ------------------------------
<TABLE>
<S> <C> <C>
Article IV Sec. 4.14. CORPORATE RELATIONS COMMITTEE The 2/17/98
Section 4.14 Chairman, with the approval of the board of
directors, may appoint from among the members of the board
of the Corporation, a Corporate Relations Committee which
shall consist of no fewer than two Directors and shall
monitor the performance of voluntary commitments that the
Corporation has made to support its communities, and the
contributions by the Corporation to the Washington Mutual
Foundation.
Article IV Section 4.14. CORPORATE RELATIONS COMMITTEE. The 12/16/97
Section 4.14 Chairman, with the approval of the board of
directors, may appoint from among the members of the board
of the Corporation, a Corporate Relations Committee which
shall consist of no fewer than two Directors and shall have
supervisory control and direction of the performance of
voluntary commitments that the Corporation has made to
support its communities, and of contributions by the
Corporation to the Washington Mutual Foundation.
Article IV Section 4.15 CORPORATE DEVELOPMENT COMMITTEE. The 12/16/97
Section 4.15 Chairman, with the approval of the board of
directors, shall appoint from among the members of the
board a Corporate Development Committee which shall consist
of the Chairman of the Board and not less than two other
directors. The Corporate Development Committee shall
exercise all the authority of the Board: (A) with regard to
the authorization of negotiations and approval of the terms
of offers and agreements and of investments relating to
mergers and acquisitions not involving a change of control
of the Corporation; provided, that further action of the
board of directors shall be required for submission to
shareholders of a plan of merger or consolidation; and (B)
with regard to approval of the final terms, rights,
designations and preferences of stock to be issued by the
Corporation, provided, that prior action of the board of
directors shall be required to specify the maximum number
or value of the shares to be issued.
</TABLE>
<PAGE> 12
WASHINGTON MUTUAL, INC.
AMENDMENTS TO BYLAWS -- PAGE 7
- ------------------------------
<TABLE>
<S> <C> <C>
Prior Article IV, Section 4.16 OTHER BOARD COMMITTEES. The Board of 12/16/97
Section 4.14 Directors may by resolution designate from among
renumbered as its members such other committees as the Board in
Article IV, its discretion may determine, each of which must
Section 4.16 have two or more members. To the extent provided
in such resolutions, each such committee shall have and may
exercise the authority of the board of directors, except as
limited by applicable law. The designation of any such
committee and the delegation thereto of authority shall not
relieve the Board of Directors, or any members thereof, of
any responsibility imposed by law. In addition, the
Chairman of the Board, with the approval of the Board of
Directors, may appoint from among the members of the Board
such committees as he deems appropriate.
Article IV Section 4.17 COMMITTEE PROCEDURES. Except as 12/16/97
Section 4.17 provided in the bylaws or in specific resolutions
of the Board of Directors, the committees of the Board
shall be governed by the same rules regarding meetings,
action without meetings, notice, waiver of notice, and
quorum and voting requirements as applied to the Board of
Directors.
Prior Article IV, Renumbered as Article IV, Sections 4.18 through 12/16/97
Sections 4.15 4.22, respectively.
through 4.19
</TABLE>
<PAGE> 13
WASHINGTON MUTUAL, INC.
AMENDMENTS TO BYLAWS -- PAGE 8
- ------------------------------
<TABLE>
<S> <C> <C>
Article IV Section 4.4. SPECIAL MEETINGS. Special meetings 9/16/97
Section 4.4 of the board of directors may be called by the
board of directors, the chairman of the board, or the
president. The notice of a special meeting of the board of
directors shall state the date and time and, if the meeting
is not exclusively telephonic, the place of the meeting.
Unless otherwise required by law, neither the business to
be transacted at, nor the purpose of, any regular or
special meeting of the board of directors need be specified
in the notice or waiver of notice of such meeting. Notice
shall be given by the person or persons authorized to call
such meeting, or by the secretary at the direction of the
person or persons authorized to call such meeting. The
notice may be oral or written. If the notice is orally
communicated in person or by telephone to the director or
to the director's personal secretary or is sent by
electronic mail, telephone or wireless equipment, which
transmits a facsimile of the notice to the director's
electronic mail designation or telephone number appearing
on the records of the corporation, the notice of a meeting
shall be timely if sent no later than twenty-four (24)
hours prior to the time set for such meeting. If the notice
is sent by courier to the director's address appearing on
the records of the corporation, the notice of a meeting
shall be timely if sent no later than three (3) full days
prior to the time set for such meeting. If the notice is
sent by mail to the director's address appearing on the
records of the corporation, the notice of a meeting shall
be timely if sent no later than five (5) full days prior to
the time set for such meeting.
Article V Sec. 5.1 RANKS AND TERMS IN OFFICE. The officers 9/16/97
Sec. 5.1 of the corporation shall be a Chief Executive
Officer, a President, a controller, a General Auditor, a
Secretary and such Executive Vice Presidents, Senior Vice
Presidents, First Vice Presidents, Vice Presidents, or
other officers as the Board may designate.
The officers shall be elected by the board of directors, to
serve, unless earlier removed, until the next annual
meeting of directors and until the appointment and
qualification of their successors. Officers may be
terminated or removed at will at any time.
Article V Sec. 5.8 SENIOR VICE PRESIDENTS, FIRST VICE 9/16/97
Sec. 5.8 PRESIDENTS, AND VICE PRESIDENTS. Any Senior Vice
Presidents, First Vice Presidents, and Vice Presidents
shall perform such duties as may be specified in duly
adopted policies of the corporation or as may from time to
time be assigned to them by the Chief Executive Officer,
the President, or an Executive Vice President.
</TABLE>
<PAGE> 14
WASHINGTON MUTUAL, INC.
AMENDMENTS TO BYLAWS -- PAGE 9
- ------------------------------
<TABLE>
<S> <C> <C>
Article V Sec. 5.12 CONTRACTS AND SATISFACTIONS. The Chief 9/16/97
Sec. 5.12 Executive Officer, the President, or any Executive
Vice President may from time to time designate the
officers or employees of Washington Mutual, Inc.
who shall have authority to sign deeds, contracts,
satisfactions, releases, and assignments of
mortgages, and all other instruments in writing to
be made or executed by the corporation.
Article V Section 5.2 CHIEF EXECUTIVE OFFICER. The Chief 4/15/97
Section 5.2 Executive Officer of the corporation shall have
direct supervision and management of its affairs and the
general powers and duties of supervision and management
usually vested in the Chief Executive Officer of a
corporation, subject to the Bylaws of the corporation. He
shall be ex-officio a member of all committees except the
Audit Committee and the Compensation and Stock Option
Committee. The Chief Executive Officer shall perform such
other duties as may be assigned by the board of directors.
In the absence of the Chief Executive Officer, his duties
shall be assumed by the President, and in their absence
such duties shall be assume by a person designated by the
Chief Executive Officer or the board of directors.
</TABLE>
<PAGE> 15
WASHINGTON MUTUAL, INC.
AMENDMENTS TO BYLAWS -- PAGE 10
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Article IV Section 4.11. AUDIT COMMITTEE. The board of 2/18/97
Section 4.11 directors, at any regular meeting of the Board,
shall elect from their number an Audit Committee of not
less than three members, none of whom shall be employed by
the corporation. At least annually the Board of Directors
shall determine that each Committee member is independent
of management of the corporation and not a "large customer"
as defined by the Code of Federal Regulations, and that at
least two Committee members have banking or related
financial expertise.
The Audit Committee (a) shall review the basis for
the audited financial statements of the corporation; (b)
shall oversee the corporation's internal control structure,
its accounting and financial reporting process, its
independent audit function, and its compliance with
applicable laws and regulations; (c) shall cause such
examination of the records and affairs of the corporation
to be made for the purpose of determining its financial
condition as is necessary under applicable State and
Federal laws and regulations; (d) shall review compliance
with all corporate policies that have been approved by the
Board; and (e) shall have such other responsibilities as
required by law or regulation or as determined to be
necessary or appropriate in the judgment of the Board or
the Chairperson of the Committee, including but not limited
to ensuring the independence of the corporation's internal
audit functions.
In performing all of its responsibilities, the
Audit Committee may take whatever steps it deems necessary.
Among other things, the Audit Committee shall have
authority to require the assistance of the corporation's
General Auditor, of the corporation's Internal Audit
Department, of management, of the corporation's independent
public accountant, and of outside counsel to perform these
responsibilities.
</TABLE>
<PAGE> 16
WASHINGTON MUTUAL, INC.
AMENDMENTS TO BYLAWS -- PAGE 11
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Article VIII This section is hereby amended so that the 2/20/96
Section 8.6 existing language is retained except that it is
identified as subparagraph (a), the final period in the
paragraph is replaced by a semicolon and the word "or", and
a new subparagraph (b) is added as follows:
(b) The corporation shall pay for or reimburse the
reasonable expenses incurred by any officer or employee of
the corporation, who is not a director, who is a party to a
proceeding in advance of final disposition of the proceeding
if: (1) such person furnishes the corporation with an
affidavit stating that (a) he or she was made a party to a
proceeding because he or she is or was an officer or
employee of the corporation, (b) he or she acted in good
faith, (c) the conduct in question was carried out in his or
her official capacity with the corporation, and (d) his or
her conduct was in the corporation's best interests, (2)
such person furnishes the corporation with a written
undertaking, executed personally, to repay the advance if it
is ultimately determined that such person did not meet the
standard of conduct set forth in the affidavit and (3) such
payment or reimbursement is approved in writing by the
President or the Chief Executive Officer of the corporation,
or by a designee of either of them.
</TABLE>
<PAGE> 17
RESTATED
BYLAWS
OF
WASHINGTON MUTUAL, INC.
<PAGE> 18
Originally adopted on SEPTEMBER 28, 1994
Restated on MARCH 16, 1995
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TABLE OF CONTENTS
<TABLE>
<S> <C>
Article I. OFFICES...........................................................................1
Article II. NUMBER OF DIRECTORS..............................................................1
Article III. SHAREHOLDERS....................................................................1
Section 3.1 Annual Meeting................................................................1
Section 3.2 Special Meetings..............................................................1
Section 3.3 Place of Meetings.............................................................1
Section 3.4 Fixing of Record Date.........................................................1
Section 3.5 Voting Lists..................................................................2
Section 3.6 Notice of Meetings............................................................2
Section 3.7 Waiver of Notice..............................................................3
Section 3.8 Manner of Acting; Proxies.....................................................3
Section 3.9 Quorum........................................................................3
Section 3.10 Voting of Shares.............................................................3
Section 3.11 Voting for Directors.........................................................4
Section 3.12 Voting of Shares by Certain Holders..........................................4
Section 3.13 Notice of Nomination.........................................................5
Section 3.14 Action Without a Meeting.....................................................5
Article IV. BOARD OF DIRECTORS...............................................................5
Section 4.1 General Powers................................................................5
Section 4.2 Number, Tenure and Qualification..............................................5
Section 4.3 Annual and Other Regular Meetings.............................................5
Section 4.4 Special Meetings..............................................................6
Section 4.5 Waiver of Notice..............................................................6
Section 4.6 Quorum........................................................................6
Section 4.7 Manner of Acting..............................................................6
Section 4.8 Participation by Conference Telephone.........................................7
Section 4.9 Presumption of Assent.........................................................7
Section 4.10 Action by Board Without a Meeting............................................7
Section 4.11 Audit Committee..............................................................7
Section 4.12 Compensation and Stock Option Committee......................................7
Section 4.13 Directors' Loan & Investment Committee.......................................8
Section 4.14 Other Board Committees.......................................................9
Section 4.15 Resignation..................................................................9
Section 4.16 Removal......................................................................9
Section 4.17 Vacancies....................................................................9
Section 4.18 Compensation.................................................................9
</TABLE>
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<TABLE>
<S> <C>
Section 4.19 Chairman of the Board........................................................9
Article V. OFFICERS.........................................................................10
Section 5.1 Ranks and Terms in Office....................................................10
Section 5.2 Chief Executive Officer......................................................10
Section 5.3 President....................................................................10
Section 5.4 Senior Executive Vice President..............................................10
Section 5.5 Controller...................................................................10
Section 5.6 General Auditor..............................................................10
Section 5.7 Secretary and Assistant Secretary............................................11
Section 5.8 Executive Vice Presidents....................................................11
Section 5.9 Senior Vice Presidents and Vice Presidents...................................11
Section 5.10 Combining Offices...........................................................11
Section 5.11 Other Officers..............................................................11
Section 5.12 Official Bonds..............................................................11
Section 5.13 Contracts and Satisfactions.................................................11
Section 5.14 Resignation.................................................................11
Section 5.15 Compensation of Officers and Employees......................................12
Article VI. SHARES..........................................................................12
Section 6.1 Certificates for Shares......................................................12
Section 6.2 Issuance of Shares...........................................................12
Section 6.3 Beneficial Ownership.........................................................12
Section 6.4 Transfer of Shares...........................................................12
Section 6.5 Lost or Destroyed Certificates...............................................12
Section 6.6 Stock Transfer Records.......................................................12
Article VII. SEAL...........................................................................13
Article VIII. INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND
AGENTS......................................................................................13
Section 8.1 Director's Right To Indemnification..........................................13
Section 8.2 Director's Burden of Proof and Procedure For Payment.........................14
Section 8.3 Right of Claimant to Bring Suit..............................................14
Section 8.4 Nonexclusivity of Rights.....................................................14
Section 8.5 Insurance, Contracts and Funding.............................................14
Section 8.6 Indemnification of Officers, Employees and Agents of the Corporation.........15
Section 8.7 Contract Right...............................................................15
Section 8.8 Severability.................................................................15
</TABLE>
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<TABLE>
<S> <C>
Article IX. BOOKS AND RECORDS...............................................................15
Article X. FISCAL YEAR......................................................................15
Article XI. VOTING OF SHARES OF ANOTHER CORPORATION.........................................15
Article XII. AMENDMENTS TO BYLAWS...........................................................16
</TABLE>
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BYLAWS
OF
WASHINGTON MUTUAL, INC.
ARTICLE I. OFFICES
The principal office and place of business of the corporation in the
state of Washington shall be located at 1201 Third Avenue, Seattle, Washington
98101.
The corporation may have such other offices within or without the state
of Washington as the board of directors may designate or the business of the
corporation may require from time to time.
ARTICLE II. NUMBER OF DIRECTORS
The board of directors of this corporation shall consist of fifteen (15)
directors.
ARTICLE III. SHAREHOLDERS
SECTION 3.1 ANNUAL MEETING. The annual meeting of the shareholders shall
be held on the third Tuesday in the month of April in each year, beginning with
the year 1995, at 10:00 a.m., or at such other date or time as may be determined
by the board of directors, for the purpose of electing directors and for the
transaction of such other business as may come before the meeting. If the day
fixed for the annual meeting shall be a legal holiday in the state of
Washington, the meeting shall be held on the next succeeding business day. If
the election of directors is not held on the day designated herein for any
annual meeting of the shareholders or at any adjournment thereof, the board of
directors shall cause the election to be held at a meeting of the shareholders
as soon thereafter as may be convenient.
SECTION 3.2 SPECIAL MEETINGS. Special meetings of the shareholders for
any purpose or purposes unless otherwise prescribed by statute may be called by
the Chairman, by the board of directors, or by the written request of any
director or holders of at least twenty-five percent (25%) of the votes entitled
to be cast on each issue to be considered at the special meeting.
SECTION 3.3 PLACE OF MEETINGS. Meetings of the shareholders shall be
held at either the principal office of the corporation or at such other place
within or without the state of Washington as the person or persons calling the
meeting may designate.
SECTION 3.4 FIXING OF RECORD DATE. For the purpose of determining
shareholders entitled to notice of or to vote at any meeting of shareholders or
any adjournment thereof, or
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shareholders entitled to receive payment of any dividend, or in order to make a
determination of shareholders for any other proper purpose, the board of
directors may fix in advance a date as the record date for any such
determination of shareholders, which date in any case shall not be more than
seventy (70) days and, in the case of a meeting of shareholders, not less than
20 days prior to the date on which the particular action requiring such
determination of shareholders is to be taken. If no record date is fixed for the
determination of shareholders entitled to notice of or to vote at a meeting of
shareholders, or shareholders entitled to receive payment of a dividend or
distribution, the day before the first notice of a meeting is dispatched to
shareholders or the date on which the resolution of the board of directors
authorizing such dividend or distribution is adopted, as the case may be, shall
be the record date for such determination of shareholders. When a determination
of shareholders entitled to notice of or to vote at any meeting of shareholders
has been made as provided in this section, such determination shall apply to any
adjournment thereof unless the board of directors fixes a new record date, which
it must do if the meeting is adjourned to a date more than one hundred twenty
(120) days after the date fixed for the original meeting.
The record date for determining shareholders entitled to take action
without a meeting is the date the first shareholder signs the consent in lieu of
meeting.
SECTION 3.5 VOTING LISTS. At least ten (10) days before each meeting of
the shareholders, the officer or agent having charge of the stock transfer books
for shares of the corporation shall prepare an alphabetical list of all its
shareholders on the record date who are entitled to vote at the meeting or any
adjournment thereof, arranged by voting group, and within each voting group by
class or series of shares, with the address of and the number of shares held by
each, which record for a period of ten (10) days prior to the meeting shall be
kept on file at the principal office of the corporation or at a place identified
in the meeting notice in the city where the meeting will be held. Such record
shall be produced and kept open at the time and place of the meeting and shall
be subject to the inspection of any shareholder, shareholder's agent or
shareholder's attorney at any time during the meeting or any adjournment
thereof. Failure to comply with the requirements of this bylaw shall not affect
the validity of any action taken at the meeting.
SECTION 3.6 NOTICE OF MEETINGS. Written or printed notice stating the
date, time and place of a meeting of shareholders and, in the case of a special
meeting of shareholders, the purpose or purposes for which the meeting is
called, shall be given by the person or persons calling the meeting or by the
Secretary at the direction of such person or persons to each shareholder of
record entitled to vote at such meeting (unless required by law to send notice
to all shareholders regardless of whether or not such shareholders are entitled
to vote), not less than ten (10) days and not more than sixty (60) days before
the meeting, except that notice of a meeting to act on an amendment to the
articles of incorporation, a plan of merger or share exchange, a proposed sale,
lease, exchange or other disposition of all or substantially all of the assets
of the corporation other than in the usual course of business, or the
dissolution of the corporation shall be given not less than twenty (20) days and
not more than sixty (60) days before the meeting. Written notice may be
transmitted by: Mail, private carrier or personal delivery; telegraph or
teletype; or telephone, wire or wireless equipment which transmits a
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facsimile of the notice. Such notice shall be effective upon dispatch if sent to
the shareholder's address, telephone number, or other number appearing on the
records of the corporation.
If an annual or special shareholders' meeting is adjourned to a
different date, time or place, notice need not be given of the new date, time or
place if the new date, time or place is announced at the meeting before
adjournment unless a new record date is or must be fixed. If a new record date
for the adjourned meeting is or must be fixed, however, notice of the adjourned
meeting must be given to persons who are shareholders as of the new record date.
SECTION 3.7 WAIVER OF NOTICE. A shareholder may waive any notice
required to be given under the provisions of these bylaws, the articles of
incorporation or by applicable law, whether before or after the date and time
stated therein. A valid waiver is created by any of the following three methods:
(a) in writing signed by the shareholder entitled to the notice and delivered to
the corporation for inclusion in its corporate records; (b) by attendance at the
meeting, unless the shareholder at the beginning of the meeting objects to
holding the meeting or transacting business at the meeting; or (c) by failure to
object at the time of presentation of a matter not within the purpose or
purposes described in the meeting notice.
SECTION 3.8 MANNER OF ACTING; PROXIES. A shareholder may vote either in
person or by proxy. A shareholder may vote by proxy by means of a proxy
appointment form which is executed in writing by the shareholder, his agent, or
by his duly authorized attorney-in-fact. All proxy appointment forms shall be
filed with the secretary of the corporation before or at the commencement of
meetings. No unrevoked proxy appointment form shall be valid after eleven (11)
months from the date of its execution unless otherwise expressly provided in the
appointment form. No proxy appointment may be effectively revoked until notice
in writing of such revocation has been given to the secretary of the corporation
by the shareholder appointing the proxy.
SECTION 3.9 QUORUM. At any meeting of the shareholders, a majority in
interest of all the shares entitled to vote on a matter by the voting group,
represented in person or by proxy by shareholders of record, shall constitute a
quorum of that voting group for action on that matter. If less than a majority
is represented, a majority of those represented may adjourn the meeting to such
time and place as they may determine, without further notice, except as set
forth in Section 3.6. Once a share is represented at a meeting, other than to
object to holding the meeting or transacting business, it is deemed to be
present for purposes of a quorum for the remainder of the meeting and for any
adjournment of that meeting unless a new record date is or must be fixed for the
adjourned meeting. At such reconvened meeting, any business may be transacted
which might have been transacted at the adjourned meeting. If a quorum exists,
action on a matter is approved by a voting group if the votes cast within the
voting group favoring the action exceed the votes cast within the voting group
opposing the action, unless the question is one upon which a different vote is
required by express provision of law or of the articles of incorporation or of
these bylaws.
SECTION 3.10 VOTING OF SHARES. Each outstanding share, regardless of
class, shall be entitled to one vote on each matter submitted to a vote at a
meeting of shareholders, except as may be otherwise provided in the articles of
incorporation.
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SECTION 3.11 VOTING FOR DIRECTORS. In the election of directors every
shareholder of record entitled to vote at the election shall have the right to
vote in person the number of shares owned by him for as many persons as there
are directors to be elected and for whose election he has a right to vote.
Shareholders entitled to vote at any election of directors shall have no right
to cumulate votes. In any election of directors the candidates elected are those
receiving the largest numbers of votes cast by the shares entitled to vote in
the election, up to the number of directors to be elected by such shares.
SECTION 3.12 VOTING OF SHARES BY CERTAIN HOLDERS.
3.12.1 Shares standing in the name of another corporation,
domestic or foreign, may be voted by such officer, agent or proxy as the board
of directors of such corporation may determine. A certified copy of a resolution
adopted by such directors shall be conclusive as to their determination.
3.12.2 Shares held by a personal representative, administrator,
executor, guardian or conservator may be voted by such administrator, executor,
guardian or conservator, without a transfer of such shares into the name of such
personal representative, administrator, executor, guardian or conservator.
Shares standing in the name of a trustee may be voted by such trustee, but no
trustee shall be entitled to vote shares held in trust without a transfer of
such shares into the name of the trustee.
3.12.3 Shares standing in the name of a receiver may be voted by
such receiver, and shares held by or under the control of a receiver may be
voted by the receiver without the transfer thereof into his name if authority so
to do is contained in an appropriate order of the court by which such receiver
was appointed.
3.12.4 If shares are held jointly by three or more fiduciaries,
the will of the majority of the fiduciaries shall control the manner of voting
or appointment of a proxy, unless the instrument or order appointing such
fiduciaries otherwise directs.
3.12.5 Unless the pledge agreement expressly provides otherwise,
a shareholder whose shares are pledged shall be entitled to vote such shares
until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote the shares so transferred.
3.12.6 Shares held by another corporation shall not be voted at
any meeting or counted in determining the total number of outstanding shares
entitled to vote at any given time if a majority of the shares entitled to vote
for the election of directors of such other corporation is held by this
corporation.
3.12.7 On and after the date on which written notice of
redemption of redeemable shares has been dispatched to the holders thereof and a
sum sufficient to redeem such shares has been deposited with a bank or trust
company with irrevocable instruction and authority to pay the
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redemption price to the holders thereof upon surrender of certificates therefor,
such shares shall not be entitled to vote on any matter and shall be deemed to
be not outstanding shares.
SECTION 3.13 NOTICE OF NOMINATION. Nominations for the election of
directors and proposals for any new business to be taken up at any annual or
special meeting of shareholders may be made by the board of directors of the
corporation or by any shareholder of the corporation entitled to vote generally
in the election of directors. In order for a shareholder of the corporation to
make any such nomination or proposal at any annual meeting, the shareholder must
first give notice thereof in writing, delivered or mailed by first class United
States mail, postage prepaid (the "Required Method of Mailing"), to the
Secretary of the corporation not less than 90 days in advance of the date
corresponding to the date that the corporation's proxy statement was released to
security holders in connection with the previous year's annual meeting of
security holders, except that if no annual meeting was held in the previous year
or the date of the annual meeting has been changed by more than 30 calendar days
from the date of the previous year's annual meeting, a proposal shall be
received by the corporation in accordance with the method set forth hereafter
for proposals or nominations in advance of a special meeting of shareholders.
Notice of shareholder nominations or proposals to be taken up at a special
meeting of shareholders must be delivered or mailed by the Required Method of
Mailing to the Secretary of the corporation not less than ten days nor more than
sixty days prior to any such meeting. Each such notice given by a shareholder
with respect to nominations for the election of directors shall set forth (i)
the name, age, business address and, if known, residence address of each nominee
proposed in such notice, (ii) the principal occupation or employment of each
such nominee, and (iii) the number of shares of stock of the corporation which
are beneficially owned by each such nominee.
SECTION 3.14 ACTION WITHOUT A MEETING. Any action permitted or required
to be taken at a meeting of the shareholders may be taken without a meeting if
one or more consents in writing setting forth the action so taken shall be
signed by all the shareholders.
ARTICLE IV. BOARD OF DIRECTORS
SECTION 4.1 GENERAL POWERS. The business and affairs of the corporation
shall be managed by its board of directors.
SECTION 4.2 NUMBER, TENURE AND QUALIFICATION. The number of directors
set forth in Article II of these bylaws may be increased or decreased from time
to time by amendment to or in the manner provided in these bylaws. No decrease,
however, shall have the effect of shortening the term of any incumbent director
unless such director resigns or is removed in accordance with the provisions of
these bylaws. The directors shall be classified and shall hold such terms as set
forth in the articles of incorporation. In all cases, directors shall serve
until their successors are duly elected and qualified or until their earlier
resignation, removal from office or death. Directors need not be residents of
the state of Washington or shareholders of the corporation.
SECTION 4.3 ANNUAL AND OTHER REGULAR MEETINGS. Regular meetings of the
board shall be held at two-thirty o'clock, or an earlier hour in the discretion
of the Chairman or the
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President, in the afternoon of the third Tuesday of the months of January,
February, March, April, May, June, July, September, October, and December unless
such day is a legal holiday, in which case the meeting shall be held on the
first business day thereafter, or unless such meeting has been canceled by the
Chairman or the President upon giving notice to the members of the board at
least three calendar days before the date on which such meeting is scheduled.
The date of any regular meeting may be changed to such other date within the
month as shall be determined by the Chairman or the President, or in their
absence by the Senior Executive Vice President, or in the absence of the
Chairman, the President, and the Senior Executive Vice President, by any three
members of the board, provided notice of the time and place of such meeting is
given as provided in Section 4.4. In each year, the regular meeting on the day
of the Annual Meeting of Shareholders shall be known as the Annual Meeting of
the Board.
SECTION 4.4 SPECIAL MEETINGS. Special meetings of the board of directors
may be called by the board of directors, the chairman of the board, or the
president. Notice of special meetings of the board of directors stating the
date, time and place thereof shall be given at least three (3) days prior to the
date set for such meeting by the person or persons authorized to call such
meeting, or by the secretary at the direction of the person or persons
authorized to call such meeting. The notice may be oral or written. Oral notice
may be communicated in person or by telephone, wire or wireless equipment, which
does not transmit a facsimile of the notice. Oral notice is effective when
communicated. Written notice may be transmitted by mail, private carrier, or
personal delivery; telegraph or teletype; or telephone, wire, or wireless
equipment which transmits a facsimile of the notice. Written notice is effective
upon dispatch if such notice is sent to the director's address, telephone
number, or other number appearing on the records of the corporation. If no place
for such meeting is designated in the notice thereof, the meeting shall be held
at the principal office of the corporation. Unless otherwise required by law,
neither the business to be transacted at, nor the purpose of, any regular or
special meeting of the board of directors need be specified in the notice or
waiver of notice of such meeting.
SECTION 4.5 WAIVER OF NOTICE. Any director may waive notice of any
meeting at any time. Whenever any notice is required to be given to any director
of the corporation pursuant to applicable law, a waiver thereof in writing
signed by the director, entitled to notice, shall be deemed equivalent to the
giving of notice. The attendance of a director at a meeting shall constitute a
waiver of notice of the meeting except where a director attends a meeting for
the express purpose of objecting to the transaction of any business because the
meeting is not lawfully convened. A director waives objection to consideration
of a particular matter at a meeting that is not within the purpose or purposes
described in the meeting notice, unless the director objects to considering the
matter when it is presented.
SECTION 4.6 QUORUM. A majority of the number of directors specified in
or fixed in accordance with these bylaws shall constitute a quorum for the
transaction of any business at any meeting of directors. If less than a majority
shall attend a meeting, a majority of the directors present may adjourn the
meeting from time to time without further notice, and a quorum present at such
adjourned meeting may transact business.
SECTION 4.7 MANNER OF ACTING. If a quorum is present when a vote is
taken, the affirmative vote of a majority of directors present is the act of the
board of directors.
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SECTION 4.8 PARTICIPATION BY CONFERENCE TELEPHONE. Directors may
participate in a regular or special meeting of the board by, or conduct the
meeting through the use of, any means of communication by which all directors
participating can hear each other during the meeting and participation by such
means shall constitute presence in person at the meeting.
SECTION 4.9 PRESUMPTION OF ASSENT. A director who is present at a
meeting of the board of directors at which action is taken shall be presumed to
have assented to the action taken unless such director's dissent shall be
entered in the minutes of the meeting or unless such director shall file his
written dissent to such action with the person acting as secretary of the
meeting before the adjournment thereof or shall forward such dissent by
registered mail to the secretary of the corporation immediately after
adjournment of the meeting. Such right to dissent shall not apply to a director
who voted in favor of such action.
SECTION 4.10 ACTION BY BOARD WITHOUT A MEETING. Any action permitted or
required to be taken at a meeting of the board of directors may be taken without
a meeting if one or more written consents setting forth the action so taken,
shall be signed, either before or after the action taken, by all the directors.
Action taken by written consent is effective when the last director signs the
consent, unless the consent specifies a later effective date.
SECTION 4.11 AUDIT COMMITTEE. The board of directors, at any regular
meeting of the Board, shall elect from their number an Audit Committee of not
less than three members, none of whom shall be employed by the corporation. At
least annually the board of directors shall determine that each Committee member
is independent of management of the corporation and not a "large customer" of
the corporation or any of its subsidiaries as defined by the Code of Federal
Regulations, and that at least two Committee members have banking or related
financial management expertise.
The Audit Committee (a) shall review the basis for the audited financial
statements of the corporation; (b) shall oversee the corporation's adherence to
the laws and regulations governing the corporation's operations; (c) shall
review compliance with all corporate policies that have been approved by the
Board; and (d) shall have such other responsibilities as required by law or
regulation or as determined necessary or appropriate in the judgment of the
Board or the Chairperson of the Committee, including but not limited to ensuring
the independence of the corporation's internal audit functions.
In performing all of its responsibilities, the Audit Committee may take
whatever steps it deems necessary. Among other things, the Audit Committee shall
have authority to require the assistance of the corporation's General Auditor,
of management, of the corporation's independent public accountant, and of
outside counsel to perform these responsibilities.
SECTION 4.12 COMPENSATION AND STOCK OPTION COMMITTEE.
The board of directors at any regular meeting of the board, shall elect
from their number a Compensation and Stock Option Committee which committee
shall have not less than three members, none of whom shall be employed by the
corporation.
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The Compensation and Stock Option Committee shall concern itself with
all forms of compensation and benefits for officers and employees of the
corporation. It shall serve as the Option Committee pursuant to the stock option
plans of the corporation, and shall have oversight of the corporation's pension
and retirement plans and such other plans as are subject to the Employees
Retirement Income Security Act of 1974. The Compensation and Stock Option
Committee shall determine the proper salaries which the Board is to establish
for all officers of the corporation who are in Salary Grade 19 or higher, and
shall have oversight of the determination of the compensation of other officers
and employees of the corporation.
The Compensation and Stock Option Committee shall have all the authority
of the Board of Directors to oversee the administration of and to amend policies
that govern the corporation's employee relations (the "Employee Policies")
following initial approval by the Board.
The compensation and Stock Option Committee shall report to the Board on
any material amendment of the Employee Policies.
SECTION 4.13 DIRECTORS' LOAN & INVESTMENT COMMITTEE. At any regular
meeting of the board, the Chairman of the Board, with the approval of the board
of directors shall appoint from the members of the board a Directors' Loan &
Investment Committee. The Committee shall consist of the Chairman and President
(if he is a member of the board) of the Corporation and certain other members of
the board, a majority of whom shall not be officers of the Corporation. The
Chairman of the Board shall appoint a committee chairman who is not an officer
of the Corporation.
The Committee Chairman shall coordinate with the Corporation's staff in
the preparation of reports for the Committee and the Board.
The Committee shall have oversight of the officers of the Corporation
who are responsible for the loans or investments of the Corporation and for
managing the sale, exchange and other disposition of loans or investments.
Its power shall include, but not be limited to oversight of all
securities and loan investments and dispositions, and all purchases of real
estate and the disposition of all property, real or personal, tangible or
intangible, acquired by the Corporation in satisfaction of debts owing to it or
otherwise (except the Corporation premises or other real property acquired for
use by the Corporation).
In connection with the monitoring of the Corporation's return on
investments in subsidiaries and other Corporations, the Committee shall also
have oversight of the officers of the Corporation who are responsible for such
investments.
The Committee shall have authority to oversee the administration of the
policies that govern the Corporation's loans or investments. The Committee shall
have all the authority of the board of directors to amend such policies
following initial approval by the Board.
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SECTION 4.14 OTHER BOARD COMMITTEES. The board of directors may by
resolution designate from among its members such other committees as the board
in its discretion may determine, each of which must have two (2) or more
members. All committees of the board shall be governed by the same rules
regarding meetings, action without meetings, notice, waiver of notice, and
quorum and voting requirements as applied to the board of directors, except that
unless otherwise specified in the bylaws or the resolution creating the
committee, notice of the date, time and place of the meeting may be given only
one (1) day prior to the date set for the meeting. To the extent provided in
such resolutions, each such committee shall have and may exercise the authority
of the board of directors, except as limited by applicable law. The designation
of any such committee and the delegation thereto of authority shall not relieve
the board of directors, or any members thereof, of any responsibility imposed by
law.
SECTION 4.15 RESIGNATION. Any director may resign at any time by
delivering written notice to the chairman of the board, the president, the
secretary, or the registered office of the corporation, or by giving oral notice
at any meeting of the directors or shareholders. Any such resignation shall take
effect at any subsequent time specified therein, or if the time is not
specified, upon delivery thereof and, unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective.
SECTION 4.16 REMOVAL. At a meeting of the shareholders called expressly
for that purpose, any director or the entire board of directors may be removed
from office, with cause, by a vote of the holders of a majority of the shares
then entitled to vote at an election of the director or directors whose removal
is sought. If the board of directors or any one or more directors is so removed,
new directors may be elected at this same meeting.
SECTION 4.17 VACANCIES. A vacancy on the board of directors may occur by
the resignation, removal or death of an existing director, or by reason of
increasing the number of directors on the board of directors as provided in
these bylaws. Except as may be limited by the articles of incorporation, any
vacancy occurring in the board of directors may be filled by the affirmative
vote of four-fifths of the remaining directors though less than a quorum. A
director elected to fill a vacancy shall be elected for a team of office
continuing only until the next election of directors by shareholders.
If the vacant office was held by a director or elected by holders of one
or more authorized classes or series of shares, only the holders of those
classes or series of shares are entitled to vote to fill the vacancy.
SECTION 4.18 COMPENSATION. By resolution of the board of directors, the
directors may be paid a fixed sum plus their expenses, if any, for attendance at
meetings of the board of directors or committee thereof, or a stated salary as
director. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor.
SECTION 4.19 CHAIRMAN OF THE BOARD. The Chairman shall preside at
meetings of the board of directors. In the absence of the Chairman and the Chief
Executive Officer, the directors
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present may select someone from their number to preside. The Chairman shall be
ex-officio a member of all committees, except the Audit Committee and the
Compensation and Stock Option Committee. The Chairman shall perform such other
duties as may be assigned by the board of directors.
ARTICLE V. OFFICERS
SECTION 5.1 RANKS AND TERMS IN OFFICE. The officers of the corporation
shall be a Chief Executive Officer, a President, a Senior Executive Vice
President, a Controller, a General Auditor, a Secretary and such Executive Vice
Presidents, Senior Vice Presidents, Vice Presidents, or other officers as the
Board may designate.
The officers shall be elected by the board of directors, to serve,
unless earlier removed, until the next annual meeting of directors and until the
appointment and qualification of their successors. Officers may be terminated or
removed at will at any time.
SECTION 5.2 CHIEF EXECUTIVE OFFICER. The Chief Executive Officer of the
corporation shall have direct supervision and management of its affairs and the
general powers and duties of supervision and management usually vested in the
Chief Executive officer of a corporation, subject to the Bylaws of the
corporation. He shall be ex-officio a member of all committees. The Chief
Executive Officer shall perform such other duties as may be assigned by the
board of directors. In the absence of the Chief Executive Officer, his duties
shall be assumed by the President, and in their absence such duties shall be
assumed by a person designated by the Chief Executive Officer or the board of
directors.
SECTION 5.3 PRESIDENT. The President shall perform such duties as may be
assigned by the Chief Executive Officer or the board of directors. The President
shall preside over all meetings of the shareholders, which duty shall include
the authority to adjourn such meetings.
SECTION 5.4 SENIOR EXECUTIVE VICE PRESIDENT. The Senior Executive Vice
President shall perform such duties as may be assigned to him or her by the
Chief Executive Officer or the President.
SECTION 5.5 CONTROLLER. The Controller shall be the chief accounting
officer of the corporation and shall have supervisory control and direction of
the general accounting, accounting procedure, budgeting and general bookkeeping,
and shall be the custodian of the general accounting books, records, forms and
papers. He shall also perform such other duties as may from time to time be
assigned to him by the Chief Executive Officer, the President, the Senior
Executive Vice President or an Executive Vice President.
SECTION 5.6 GENERAL AUDITOR. The General Auditor shall supervise and
maintain continuous audit control of the assets and liabilities of the
corporation. He shall be responsible only to the board of directors in
coordination with the Chief Executive officer. He shall perform such other
duties as may be assigned to him by the Chief Executive Officer, the President,
the
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Senior Executive Vice President or an Executive Vice President, only to the
extent that such other duties do not compromise the independence of audit
control.
SECTION 5.7 SECRETARY AND ASSISTANT SECRETARY. The Secretary shall keep
the minutes of all meetings of the board of directors and of the shareholders.
He shall give such notices to the directors as may be required by law or by
these Bylaws. He shall have the custody of the corporate seal, if any, and the
contracts, papers and documents belonging to the corporation. He shall also
perform such other duties as may from time to time be assigned to him by the
Chief Executive Officer, the President, the Senior Executive Vice President or
an Executive Vice President. In the absence of the Secretary, the powers and
duties of the Secretary shall devolve upon an Assistant Secretary or such person
as shall be designated by the Secretary or the Chief Executive Officer.
SECTION 5.8 EXECUTIVE VICE PRESIDENTS. Any Executive Vice President
shall perform such duties as may be assigned to him by the Chief Executive
Officer of the President.
SECTION 5.9 SENIOR VICE PRESIDENTS AND VICE PRESIDENTS. Any Senior Vice
Presidents and Vice Presidents shall perform such duties as may be assigned to
them by the Chief Executive Officer, the President, the Senior Executive Vice
President or an Executive Vice President.
SECTION 5.10 COMBINING OFFICES. An officer whom the board of directors
elects or has previously elected to hold one office may be elected by the board
of directors to hold another office, with or without resigning from the previous
office, as the board of directors shall determine upon a recommendation of the
Chief Executive Officer.
SECTION 5.11 OTHER OFFICERS. The other Officers shall perform such
duties as may be assigned to them by the Chief Executive Officer or the
President. The Chief Executive Officer or the President may designate such
functional titles to an Officer as he deems appropriate from time to time.
SECTION 5.12 OFFICIAL BONDS. The corporation may be indemnified in the
event of the dishonest conduct or unfaithful performance of an officer,
employee, or agent by a corporate fidelity bond, the premiums for which may be
paid by the corporation.
SECTION 5.13 CONTRACTS AND SATISFACTIONS. The Chief Executive Officer,
the President, or in their absence the Senior Executive Vice President, shall
from time to time designate the officers or employees who shall have authority
to sign deeds, contracts, satisfactions, releases, and assignments of mortgages,
and all other instruments in writing to be made or executed by the corporation.
SECTION 5.14 RESIGNATION. Any officer may resign at any time by
delivering written notice to the chairman of the board, the President, a
Vice-president, the Secretary or the board of directors, or by giving oral
notice at any meeting of the board. Any such resignation shall take effect at
any subsequent time specified therein, or if the time is not specified, upon
delivery thereof and, unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
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SECTION 5.15 COMPENSATION OF OFFICERS AND EMPLOYEES. The board of
directors shall fix compensation of officers and may fix compensation of other
employees from time to time. No officer shall be prevented from receiving a
salary by reason of the fact that such officer is also a director of the
corporation.
ARTICLE VI. SHARES
SECTION 6.1 CERTIFICATES FOR SHARES. The shares of the corporation may
be represented by certificates in such form as prescribed by the board of
directors. Signatures of the corporate officers on the certificate may be
facsimiles if the certificate is manually signed on behalf of a transfer agent,
or registered by a registrar, other than the corporation itself or an employee
of the corporation. All certificates shall be consecutively numbered or
otherwise identified. All certificates shall bear such legend or legends as
prescribed by the board of directors or these bylaws.
SECTION 6.2 ISSUANCE OF SHARES. Shares of the corporation shall be
issued only when authorized by the board of directors, which authorization shall
include the consideration to be received for each share.
SECTION 6.3 BENEFICIAL OWNERSHIP. Except as otherwise permitted by these
bylaws, the person in whose name shares stand on the books of the corporation
shall be deemed by the corporation to be the owner thereof for all purposes. The
board of directors may adopt by resolution a procedure whereby a shareholder of
the corporation may certify in writing to the corporation that all or a portion
of the shares registered in the name of such shareholder are held for the
account of a specified person or persons. Upon receipt by the corporation of a
certification complying with such procedure, the persons specified in the
certification shall be deemed, for the purpose or purposes set forth in the
certification, to be the holders of record of the number of shares specified in
place of the shareholder making the certification.
SECTION 6.4 TRANSFER OF SHARES. Transfer of shares of the corporation
shall be made only on the stock transfer books of the corporation by the holder
of record thereof or by his legal representative who shall furnish proper
evidence of authority to transfer, or by his attorney thereunto authorized by
power of attorney duly executed and filed with the secretary of the corporation,
on surrender for cancellation of the certificate for the shares. All
certificates surrendered to the corporation for transfer shall be cancelled and
no new certificate shall be issued until the former certificate for a like
number of shares shall have been surrendered and cancelled.
SECTION 6.5 LOST OR DESTROYED CERTIFICATES. In the case of a lost,
destroyed or mutilated certificate, a new certificate may be issued therefor
upon such terms and indemnity to the corporation as the board of directors may
prescribe.
SECTION 6.6 STOCK TRANSFER RECORDS. The stock transfer books shall be
kept at the principal office of the corporation or at the office of the
corporation's transfer agent or registrar. The name and address of the person to
whom the shares represented by any certificate, together
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with the class, number of shares and date of issue, shall be entered on the
stock transfer books of the corporation. Except as provided in these bylaws, the
person in whose name shares stand on the books of the corporation shall be
deemed by the corporation to be the owner thereof for all purposes.
ARTICLE VII. SEAL
This corporation need not have a corporate seal. If the directors adopt
a corporate seal, the seal of the corporation shall be circular in form and
consist of the name of the corporation, the state and year of incorporation, and
the words "Corporate Seal."
ARTICLE VIII. INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS
SECTION 8.1 DIRECTOR'S RIGHT TO INDEMNIFICATION. Each person who was or
is made a party or is threatened to be made a party to or is involved
(including, without limitation, as a witness) in any actual or threatened
action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he or she is or was a director of the
corporation or, being or having been such a director, he or she is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to employee benefit plans, whether
the basis of such proceeding is alleged action in an official capacity as a
director or in any other capacity while serving as a director, shall be
indemnified and held harmless by the corporation against all expense, liability
and loss (including attorneys' fees, judgments, fines, ERISA excise taxes or
penalties and amounts to be paid in settlement) actually and reasonably incurred
or suffered by such person in connection therewith; provided, however, that (a)
the corporation shall not indemnify any person from or on account of any acts or
omissions of such person finally adjudged to be intentional misconduct or
knowing violation of the law of such person, or from conduct of the person in
violation of RCW 23B.08.310, or from or on account of any transaction with
respect to which it is finally adjudged that such person personally received a
benefit in money, property, or services to which such person was not legally
entitled, and (b) except as provided in subsection 8.3 with respect to
proceedings seeking to enforce rights to indemnification, the corporation shall
indemnify any such person seeking indemnification in connection with a
proceeding (or part thereof) initiated by such person only if such proceeding
(or part thereof) was authorized by the board of directors of the corporation.
Such indemnification shall continue as to a person who has ceased to be a
director and shall inure to the benefit of his or her heirs, executors and
administrators. If the Washington Business Corporation Act is amended to
authorize further indemnification of directors, then directors of the
corporation shall be indemnified to the fullest extent permitted by the
Washington Business Corporation Act, as so amended.
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SECTION 8.2 DIRECTOR'S BURDEN OF PROOF AND PROCEDURE FOR PAYMENT.
(a) The claimant shall be presumed to be entitled to
indemnification under this Article upon submission of a written claim (and, in
an action brought to enforce a claim for expenses incurred in defending any
proceeding in advance of its final disposition, where the undertaking in (b)
below has been tendered to the corporation) and thereafter the corporation shall
have the burden of proof to overcome the presumption that the claimant is so
entitled.
(b) The right to indemnification shall include the right to be
paid by the corporation the expenses incurred in defending any such proceeding
in advance of its final disposition; provided, however, that the payment of such
expenses in advance of the final disposition of a proceeding shall be made only
upon delivery to the corporation of an undertaking, by or on behalf of such
director, to repay all amounts so advanced if it shall ultimately be determined
that such director is not entitled to be indemnified under this Article or
otherwise.
SECTION 8.3 RIGHT OF CLAIMANT TO BRING SUIT. If a claim under this
Article is not paid in full by the corporation within sixty (60) days after a
written claim has been received by the corporation, except in the case of a
claim for expenses incurred in defending a proceeding in advance of its final
disposition, in which case the applicable period shall be twenty (20) days, the
claimant may at any time thereafter bring suit against the corporation to
recover the unpaid amount of the claim and, to the extent successful in whole or
in part, the claimant shall be entitled to be paid also the expense of
prosecuting such claim. Neither the failure of the corporation (including its
board of directors, its shareholders or independent legal counsel) to have made
a determination prior to the commencement of such action that indemnification of
or reimbursement or advancement of expenses to the claimant is proper in the
circumstances nor an actual determination by the corporation (including its
board of directors, its shareholders or independent legal counsel) that the
claimant is not entitled to indemnification or to the reimbursement or
advancement of expenses shall be a defense to the action or create a presumption
that the claimant is not so entitled.
SECTION 8.4 NONEXCLUSIVITY OF RIGHTS. The right to indemnification and
the payment of expenses incurred in defending a proceeding in advance of its
final disposition conferred in this Article shall not be exclusive of any other
right which any person may have or hereafter acquire under any statute,
provision of the Articles of Incorporation, Bylaws, agreement, vote of
shareholders or disinterested directors or otherwise.
SECTION 8.5 INSURANCE, CONTRACTS AND FUNDING. The corporation may
maintain insurance, at its expense, to protect itself and any director, officer,
employee or agent of the corporation or another corporation, partnership, joint
venture, trust or other enterprise against any expense, liability or loss,
whether or not the corporation would have the power to indemnify such person
against such expense, liability or loss under the Washington Business
Corporation Act. The corporation may, without any shareholder action, enter into
contracts with such director or officer in furtherance of the provisions of this
Article and may create a trust fund, grant a security interest or use other
means (including, without limitation, a letter of credit) to
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ensure the payment of such amounts as may be necessary to effect indemnification
as provided in this Article.
SECTION 8.6 INDEMNIFICATION OF OFFICERS, EMPLOYEES AND AGENTS OF THE
CORPORATION. The corporation may, by action of its board of directors from time
to time, provide indemnification and pay expenses in advance of the final
disposition of a proceeding to officers, employees and agents of the corporation
or another corporation, partnership, joint venture trust or other enterprise
with the same scope and effect as the provisions of this Article with respect to
the indemnification and advancement of expenses of directors of the corporation
or pursuant to rights granted pursuant to, or provided by, the Washington
Business Corporation Act or otherwise.
SECTION 8.7 CONTRACT RIGHT. The rights to indemnification conferred in
this Article shall be a contract right and any amendment to or repeal of this
Article shall not adversely affect any right or protection of a director of the
corporation for or with respect to any acts or omissions of such director or
officer occurring prior to such amendment or repeal.
SECTION 8.8 SEVERABILITY. If any provision of this Article or any
application thereof shall be invalid, unenforceable or contrary to applicable
law, the remainder of this Article, or the application of such provision to
persons or circumstances other than those as to which it is held invalid,
unenforceable or contrary to applicable law, shall not be affected thereby and
shall continue in full force and effect.
ARTICLE IX. BOOKS AND RECORDS
The corporation shall keep correct and complete books and records of
account, stock transfer books, minutes of the proceedings of its shareholders
and the board of directors and such other records as may be necessary or
advisable.
ARTICLE X. FISCAL YEAR
The fiscal year of the corporation shall be the calendar year.
ARTICLE XI. VOTING OF SHARES OF ANOTHER CORPORATION
Shares of another corporation held by this corporation may be voted by
the Chief Executive Officer, by the President, by the Senior Executive Vice
President, by an Executive Vice President, or by a Senior Vice President, or by
proxy appointment form executed by any of them, unless the directors by
resolution shall designate some other person to vote the shares.
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ARTICLE XII. AMENDMENTS TO BYLAWS
These bylaws may be altered, amended or repealed, and new bylaws may be
adopted, by the board of directors, subject to the concurrent power of the
shareholders, by at least two-thirds affirmative vote of the shares of the
corporation entitled to vote thereon, to alter amend or repeal these bylaws or
to adopt new bylaws.
The undersigned, being the secretary of the corporation, hereby
certifies that these bylaws are the restated bylaws of WASHINGTON MUTUAL, INC.,
adopted by resolution of the directors on September 28, 1994 and amended on
October 19, 1994, November 28, 1994 and December 20, 1994.
DATED this 16th day of March, 1995.
/s/ WILLIAM L. LYNCH
----------------------------------------
William L. Lynch, Secretary
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EXHIBIT 10.1
================================================================================
364-DAY CREDIT AGREEMENT
dated as of
August 11, 1999
between
WASHINGTON MUTUAL, INC.
ARISTAR, INC.,
as Borrowers
The LENDERS Party Hereto
BANK OF AMERICA, N.A.
BANC ONE CAPITAL MARKETS, INC.
BANK OF MONTREAL,
as Syndication Agents
and
THE CHASE MANHATTAN BANK,
as Administrative Agent
$600,000,000
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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ARTICLE I
DEFINITIONS
SECTION 1.01. Defined Terms...................................................1
SECTION 1.02. Classification of Loans and Borrowings..........................20
SECTION 1.03. Terms Generally.................................................20
SECTION 1.04. Accounting Terms; GAAP..........................................21
ARTICLE II
THE CREDITS
SECTION 2.01. The Commitments.................................................21
SECTION 2.02. Loans and Borrowings............................................22
SECTION 2.03. Requests for Syndicated Borrowings..............................23
SECTION 2.04. Competitive Bid Procedure.......................................24
SECTION 2.05. Funding of Borrowings...........................................26
SECTION 2.06. Interest Elections..............................................27
SECTION 2.07. Termination and Reduction of the Commitments....................28
SECTION 2.08. Repayment of Loans; Evidence of Debt............................29
SECTION 2.09. Prepayment of Loans.............................................32
SECTION 2.10. Fees............................................................33
SECTION 2.11. Interest........................................................34
SECTION 2.12. Alternate Rate of Interest......................................35
SECTION 2.13. Increased Costs.................................................36
SECTION 2.14. Break Funding Payments..........................................37
SECTION 2.15. Taxes...........................................................38
SECTION 2.16. Payments Generally; Pro Rata Treatment; Sharing of Set-offs.....39
SECTION 2.17. Mitigation Obligations; Replacement of Lenders..................41
SECTION 2.18. Extension of Commitment Termination Date........................42
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. Organization; Powers............................................44
SECTION 3.02. Authorization; Enforceability...................................44
SECTION 3.03. Governmental Approvals; No Conflicts............................44
SECTION 3.04. Financial Condition; No Material Adverse Change.................45
SECTION 3.05. Properties......................................................45
SECTION 3.06. Litigation and Environmental Matters............................45
SECTION 3.07. Compliance with Laws and Agreements.............................46
SECTION 3.08. Investment and Holding Company Status...........................46
SECTION 3.09. Taxes...........................................................46
SECTION 3.10. ERISA...........................................................46
SECTION 3.11. Disclosure......................................................47
SECTION 3.12. Use of Credit...................................................47
SECTION 3.13. Material Agreements and Liens...................................47
SECTION 3.14. Subsidiaries....................................................48
ARTICLE IV
CONDITIONS
SECTION 4.01. Effective Date..................................................48
SECTION 4.02. Each Credit Event...............................................50
ARTICLE V
AFFIRMATIVE COVENANTS
SECTION 5.01. Financial Statements and Other Information......................50
SECTION 5.02. Notices of Material Events......................................52
SECTION 5.03. Existence; Conduct of Business..................................53
SECTION 5.04. Payment of Obligations..........................................53
SECTION 5.05. Maintenance of Properties; Insurance............................53
</TABLE>
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SECTION 5.06. Books and Records; Inspection Rights............................54
SECTION 5.07. Compliance with Laws............................................54
SECTION 5.08. Use of Proceeds.................................................54
ARTICLE VI
NEGATIVE COVENANTS
SECTION 6.01. Liens...........................................................55
SECTION 6.02. Fundamental Changes.............................................56
SECTION 6.03. Certain Restrictions on Subsidiaries............................57
SECTION 6.04. Certain Financial Covenants.....................................57
SECTION 6.05. Insured Subsidiary Capital......................................58
SECTION 6.06. Payment of Dividends............................................58
ARTICLE VII
EVENTS OF DEFAULT
ARTICLE VIII
AGENTS
SECTION 8.01 Administrative Agent.............................................62
SECTION 8.02 Syndication Agents...............................................64
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Notices.........................................................65
SECTION 9.02. Waivers; Amendments.............................................65
SECTION 9.03. Expenses; Indemnity; Damage Waiver..............................66
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SECTION 9.04. Successors and Assigns..........................................68
SECTION 9.05. Survival........................................................71
SECTION 9.06. Counterparts; Integration; Effectiveness........................72
SECTION 9.07. Severability....................................................72
SECTION 9.08. Right of Setoff.................................................72
SECTION 9.09. Governing Law; Jurisdiction; Etc................................72
SECTION 9.10. WAIVER OF JURY TRIAL............................................73
SECTION 9.11. Headings........................................................74
SECTION 9.12. Treatment of Certain Information; Confidentiality...............74
</TABLE>
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SCHEDULE I - Commitments
SCHEDULE II - Material Agreements and Liens
SCHEDULE III - Litigation
SCHEDULE IV - Environmental Matters
SCHEDULE V - Subsidiaries
EXHIBIT A - Form of Assignment and Acceptance
EXHIBIT B - Form of Opinion of Counsel to the Borrower
EXHIBIT C - Form of Opinion of Special New York Counsel to Chase
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<PAGE> 7
364-DAY CREDIT AGREEMENT dated as of August 11, 1999, between
WASHINGTON MUTUAL, INC. ("WAMU"), and ARISTAR, INC. ("Aristar"; each of WAMU and
Aristar is herein referred to as a "Borrower" and, collectively, as the
"Borrowers"), the LENDERS party hereto, and THE CHASE MANHATTAN BANK, as
Administrative Agent.
The Borrowers have requested that the Lenders (as so defined)
make loans to them in an aggregate principal amount not exceeding $600,000,000
at any one time outstanding. The Lenders are prepared to make such loans upon
the terms and conditions hereof, and, accordingly, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Defined Terms. As used in this Agreement, the
following terms have the meanings specified below:
"ABR", when used in reference to any Loan or Borrowing, refers
to whether such Loan, or the Loans constituting such Borrowing, are bearing
interest at a rate determined by reference to the Alternate Base Rate.
"Acquisition" shall mean any transaction, or any series of
related transactions, consummated after the date of this Agreement, by which
WAMU and/or one or more of its Subsidiaries (in one transaction or as the most
recent transaction in a series of related transactions) (a) acquires any going
business or all or substantially all of the assets of any Person (or division or
operating unit thereof), whether through purchase of assets, merger or otherwise
or, (b) directly or indirectly acquires control of securities or other ownership
interests representing more than 50% of the equity or more than 50% of the
ordinary voting power or, in the case of a partnership, more than 50% of the
general partnership interests of any corporation, limited liability company,
partnership, association or other entity.
"Adjusted LIBO Rate" means, for the Interest Period for any
Eurodollar Borrowing, an interest rate per annum (rounded upwards, if necessary,
to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest Period
multiplied by (b) the Statutory Reserve Rate for such Interest Period.
"Administrative Agent" means Chase, in its capacity as
administrative agent for the Lenders hereunder.
364-Day Credit Agreement
<PAGE> 8
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"Administrative Questionnaire" means an Administrative
Questionnaire in a form supplied by the Administrative Agent.
"Affiliate" means, with respect to a specified Person, another
Person that directly, or indirectly through one or more intermediaries, Controls
or is Controlled by or is under common Control with the Person specified.
"Alternate Base Rate" means, for any day, a rate per annum equal
to the greatest of (a) the Prime Rate in effect on such day, (b) the Base CD
Rate for such day plus 1% and (c) the Federal Funds Effective Rate for such day
plus 1/2 of 1%. Any change in the Alternate Base Rate due to a change in the
Prime Rate, the Base CD Rate or the Federal Funds Effective Rate shall be
effective from and including the effective date of such change in the Prime
Rate, the Base CD Rate or the Federal Funds Effective Rate, as the case may be.
"Applicable Percentage" means, with respect to any Lender, the
percentage of the total Commitments represented by such Lender's Commitment. If
the Commitments have terminated or expired, the Applicable Percentages shall be
determined based upon the aggregate principal amount of the Syndicated Loans
held by the Lenders or, if no Syndicated Loans are outstanding, the Commitments
most recently in effect, giving effect to any assignments.
"Applicable Rate" means, for any day, with respect to any ABR
Loan, zero, or with respect to any Syndicated Eurodollar Loan, or with respect
to the facility fees or utilization fees payable hereunder, as the case may be,
the applicable rate per annum set forth below under the caption, "Eurodollar
Spread", "Facility Fee Rate" or "Utilization Fee Rate", respectively, based upon
the ratings by Moody's and S&P, respectively, applicable on such date to the
Index Debt:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
Index Debt
Ratings Eurodollar Facility Fee Utilization Fee
(S&P/Moody's) Spread Rate Rate
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Category 1 (alpha)A+/A1 .230% .070% .050%
- --------------------------------------------------------------------------------------------
Category 2 A-/A3 .270% .080% .100%
- --------------------------------------------------------------------------------------------
Category 3 BBB+/Baa1 .350% .100% .125%
- --------------------------------------------------------------------------------------------
Category 4 BBB/Baa2 .500% .125% .125%
- --------------------------------------------------------------------------------------------
Category 5 (alpha)BBB-/Baa3 .600% .150% .125%
- --------------------------------------------------------------------------------------------
</TABLE>
364-Day Credit Agreement
<PAGE> 9
- 3 -
For purposes of the foregoing, (i) if either Moody's or S&P
shall not have in effect a rating for the Index Debt of a Borrower (other than
by reason of the circumstances referred to in the last sentence of this
definition), then such rating agency shall be deemed to have established a
rating for the Index Debt of such Borrower in Category 5; and (ii) if the
ratings established or deemed to have been established by Moody's and S&P for
the Index Debt shall be changed (other than as a result of a change in the
rating system of Moody's or S&P), such change shall be effective as of the date
on which it is first announced by the applicable rating agency. Each change in
the Applicable Rate shall apply during the period commencing on the effective
date of such change and ending on the date immediately preceding the effective
date of the next such change. If the rating system of Moody's or S&P shall
change, or if either such rating agency shall cease to be in the business of
rating corporate debt obligations, the Borrowers and the Lenders shall negotiate
in good faith to amend this definition to reflect such changed rating system or
the unavailability of ratings from such rating agency and, pending the
effectiveness of any such amendment, the Applicable Rate shall be determined by
reference to the rating most recently in effect prior to such change or
cessation.
Subject to the foregoing,
(a) with respect to any facility fees payable under Section
2.10(a):
(i) the Applicable Rate with respect to Tranche A shall be
determined by reference to the higher Index Debt rating assigned by
Moody's and S&P to the Borrower with the lower overall Index Debt rating
assigned by Moody's and S&P; and
(ii) the Applicable Rate with respect to Tranche B shall be
determined by reference to higher Index Debt rating assigned by Moody's
and S&P to Aristar;
provided that if there shall be a difference of two or more rating categories
between the ratings assigned by Moody's and S&P to the Index Debt of the
Borrower by reference to whose Index Debt the Applicable Rate is to be
determined, such Applicable Rate shall be determined by reference to the Index
Debt rating that is one category lower than the higher of the two Index Debt
ratings assigned by Moody's and S&P; and
(b) with respect to any utilization fees payable by a Borrower
under Section 2.10(b) and any Syndicated Eurodollar Loan made to such Borrower,
the Applicable Rate shall be determined by reference to the higher Index Debt
rating assigned by Moody's and S&P to such Borrower, provided that if there
shall be a difference of two or more rating categories between the ratings
assigned by Moody's and S&P to the Index Debt of such Borrower, such Applicable
Rate shall be determined by reference to the Index Debt rating that is one
category lower than the higher of the two Index Debt ratings assigned by Moody's
and S&P.
364-Day Credit Agreement
<PAGE> 10
- 4 -
"Aristar" means Aristar, Inc., a Delaware corporation.
"Assessment Rate" means, for any day, the annual assessment rate
in effect on such day that is payable by a member of the Bank Insurance Fund
classified as "well-capitalized" and within supervisory subgroup "B" (or a
comparable successor risk classification) within the meaning of 12 C.F.R. Part
327 (or any successor provision) to the Federal Deposit Insurance Corporation
for insurance by such Corporation of time deposits made in Dollars at the
offices of such member in the United States of America; provided that if, as a
result of any change in any law, rule or regulation, it is no longer possible to
determine the Assessment Rate as aforesaid, then the Assessment Rate shall be
such annual rate as shall be determined by the Administrative Agent to be
representative of the cost of such insurance to the Lenders.
"Asset Securitization" shall mean a public or private transfer
of installment receivables, credit card receivables, lease receivables or any
other type of secured or unsecured financial assets which transfer is recorded
as a sale according to generally accepted accounting principles as of the date
of such transfer.
"Availability Period" means the period from and including the
Effective Date to and including the Commitment Termination Date.
"Bank Regulatory Authority" means the Board, the Comptroller of
the Currency, the Federal Deposit Insurance Corporation and all other relevant
bank regulatory authorities (including relevant state bank regulatory
authorities).
"Base CD Rate" means, for any day, the sum of (a) the
Three-Month Secondary CD Rate for such day multiplied by the Statutory Reserve
Rate for such day plus (b) the Assessment Rate for such day.
"Board" means the Board of Governors of the Federal Reserve
System of the United States of America.
"Borrowers" means collectively, Aristar and WAMU.
"Borrowing" means (a) all ABR Loans made to, or converted or
continued by, a Borrower on the same date or (b) all Syndicated Eurodollar Loans
or Competitive Loans made to a Borrower of the same Class and Type that have the
same Interest Period (or any single Competitive Loan made to such Borrower that
does not have the same Interest Period as any other Competitive Loan of the same
Type). For purposes hereof, the date of a Syndicated Borrowing comprising one or
more Loans that have been converted or continued shall be the effective date of
the most recent conversion or continuation of such Loan or Loans.
364-Day Credit Agreement
<PAGE> 11
- 5 -
"Borrowing Request" means a request by a Borrower for a
Syndicated Borrowing in accordance with Section 2.03.
"Business Day" means any day that is not a Saturday, Sunday or
other day on which commercial banks in New York City are authorized or required
by law to remain closed; provided that, when used in connection with a
Eurodollar Loan, the term "Business Day" shall also exclude any day on which
banks are not open for dealings in Dollar deposits in the London interbank
market.
"Capital Lease Obligations" of any Person means 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 required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP,
and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP.
"Change in Control" shall mean (a) the acquisition of ownership,
directly or indirectly, beneficially or of record, by any Person or group
(within the meaning of the Securities Exchange Act of 1934 and the rules of the
SEC thereunder as in effect on the date hereof), of shares representing more
than 25% of the aggregate ordinary voting power represented by the issued and
outstanding capital stock of WAMU; (b) during any period of 25 consecutive
calendar months, a majority of the Board of Directors of WAMU ceasing to be
composed of individuals (i) who were members of said Board on the first day of
such period, (ii) whose election or nomination to said Board was approved by
individuals referred to in clause (i) above constituting at the time of such
election or nomination at least a majority of said Board or (iii) whose election
or nomination to said Board was approved by individuals referred to in clauses
(i) and (ii) above constituting at the time of such election or nomination at
least a majority of said Board; (c) the acquisition by any Person or group of
direct or indirect possession of the power to direct or cause to direct the
management or policies of WAMU, whether through the ability to exercise voting
power, by contract or otherwise; or (d) the failure of WAMU to own at least 80%
of the outstanding capital stock of Aristar.
"Change in Law" means (a) the adoption of any law, rule or
regulation after the date of this Agreement, (b) any change in any law, rule or
regulation or in the interpretation or application thereof by any Governmental
Authority after the date of this Agreement or (c) compliance by any Lender (or,
for purposes of Section 2.13(b), by any lending office of such Lender or by such
Lender's holding company, if any) with any request, guideline or directive
(whether or not having the force of law) of any Governmental Authority made or
issued after the date of this Agreement.
"Chase" means The Chase Manhattan Bank.
364-Day Credit Agreement
<PAGE> 12
- 6 -
"Class", when used in reference to any Loan or Borrowing, refers
to whether such Loan, or the Loans constituting such Borrowing, are Syndicated
Loans or Competitive Loans.
"Code" means the Internal Revenue Code of 1986, as amended from
time to time.
"Commitments" means, collectively, the Tranche A Commitments and
the Tranche B Commitments.
"Commitment Termination Date" means August 10, 2000 as such date
may be extended pursuant to Section 2.18.
"Competitive", when used in reference to any Loan or Borrowing,
refers to whether such Loan, or the Loans constituting such Borrowing, are made
pursuant to Section 2.04.
"Competitive Bid" means an offer by a Lender to make a
Competitive Loan in accordance with Section 2.04.
"Competitive Bid Rate" means, with respect to any Competitive
Bid, the Margin or the Fixed Rate, as applicable, offered by the Lender making
such Competitive Bid.
"Competitive Bid Request" means a request by a Borrower for
Competitive Bids in accordance with Section 2.04.
"Control" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a
Person, whether through the ability to exercise voting power, by contract or
otherwise. "Controlling" and "Controlled" have meanings correlative thereto.
"Consolidated Assets" shall mean, at any date, the amount at
which the assets of WAMU and its Subsidiaries are or should be shown on a
consolidated statement of financial position prepared in accordance with GAAP as
at such date.
"Consolidated Equity" shall mean, at any date, the amount of
stockholders' equity of WAMU and its Subsidiaries determined on a consolidated
basis without duplication in accordance with GAAP (and, for the purposes of
Section 6.04 only, shall include Special Preferred Equity Securities, but only
to the extent that such Special Preferred Equity Securities could be treated as
Tier 1 capital of WAMU if WAMU were a bank holding company subject to regulation
by the Board of Governors of the Federal Reserve System).
364-Day Credit Agreement
<PAGE> 13
- 7 -
"Consolidated Subsidiary" means at any date any Subsidiary or
other entity the accounts of which would be consolidated with those of Aristar
in its consolidated financial statements as of such date.
"Default" means any event or condition which constitutes an
Event of Default or which upon notice, lapse of time or both would, unless cured
or waived, become an Event of Default.
"Disclosed Matters" means the actions, suits and proceedings
disclosed in Schedule III and the environmental matters disclosed in Schedule
IV.
"Dollars" or "$" refers to lawful money of the United States of
America.
"Double Leverage Ratio" means, at any date, the ratio of (a) the
sum of (i) the aggregate book value of the Investments of WAMU in the capital
notes and stock of its Subsidiaries as at such date plus (ii) the aggregate
amount of intangibles (including purchased mortgage servicing rights and
purchased credit card relationships) of the Subsidiaries of WAMU as at such date
to (b) Consolidated Equity as at such date.
"Effective Date" means the date on which the conditions
specified in Section 4.01 are satisfied (or waived in accordance with Section
9.02).
"Environmental Laws" means all laws, rules, regulations, codes,
ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by any Governmental Authority,
relating in any way to the environment, preservation or reclamation of natural
resources, the management, release or threatened release of any Hazardous
Material or to health and safety matters.
"Environmental Liability" means any liability, contingent or
otherwise (including any liability for damages, costs of environmental
remediation, fines, penalties or indemnities), of either Borrower or any of
their respective Subsidiaries directly or indirectly resulting from or based
upon (a) violation of any Environmental Law, (b) the generation, use, handling,
transportation, storage, treatment or disposal of any Hazardous Materials, (c)
exposure to any Hazardous Materials, (d) the release or threatened release of
any Hazardous Materials into the environment or (e) any contract, agreement or
other consensual arrangement pursuant to which liability is assumed or imposed
with respect to any of the foregoing.
"Equity Rights" means, with respect to any Person, any
subscriptions, options, warrants, commitments, preemptive rights or agreements
of any kind (including any shareholders' or voting trust agreements) for the
issuance, sale, registration or voting of, or
364-Day Credit Agreement
<PAGE> 14
- 8 -
securities convertible into, any additional shares of capital stock of any
class, or partnership or other ownership interests of any type in, such Person.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time.
"ERISA Affiliate" means, with respect to a Borrower, any trade
or business (whether or not incorporated) that, together with such Borrower, is
treated as a single employer under Section 414(b) or (c) of the Code, or, solely
for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as
a single employer under Section 414 of the Code.
"ERISA Event" means (a) any "reportable event", as defined in
Section 4043 of ERISA or the regulations issued thereunder with respect to a
Plan (other than an event for which the 30-day notice period is waived); (b) the
existence with respect to any Plan of an "accumulated funding deficiency" (as
defined in Section 412 of the Code or Section 302 of ERISA), whether or not
waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d)
of ERISA of an application for a waiver of the minimum funding standard with
respect to any Plan; (d) the incurrence by either Borrower or any of their
respective ERISA Affiliates of any liability under Title IV of ERISA with
respect to the termination of any Plan; (e) the distribution of or receipt by
either Borrower or any of their respective ERISA Affiliates from the PBGC or a
plan administrator of any notice relating to an intention to terminate any Plan
or Plans or to appoint a trustee to administer any Plan or the institution of
proceedings by from the PBGC or a plan administrator in relation to the
foregoing; (f) the incurrence by either Borrower or any of their respective
ERISA Affiliates of any liability (including the obligation to satisfy secondary
liability as a result of a purchaser default) with respect to the withdrawal or
partial withdrawal from any Plan or Multiemployer Plan; (g) the receipt by
either Borrower or any of their respective ERISA Affiliates of any notice, or
the receipt by any Multiemployer Plan from either Borrower or any of their
respective ERISA Affiliates of any notice, concerning the imposition of
Withdrawal Liability or a determination that a Multiemployer Plan is, or is
expected to be, insolvent or in reorganization, within the meaning of Title IV
of ERISA; (h) the institution of a proceeding by a fiduciary of any
Multiemployer Plan against either Borrower or any of their respective ERISA
Affiliates to enforce Section 515 of ERISA, which proceeding is not dismissed
within 30 days; or (i) the adoption of an amendment to any Plan that, pursuant
to Section 401(a)(29) of the Code or Section 307 of ERISA, would result in the
loss of tax-exempt status of the trust of which such Plan is a part if either
Borrower or any of their respective ERISA Affiliates fails to timely provide
security to the Plan in accordance with the provisions of said Sections.
"Eurodollar", when used in reference to any Loan or Borrowing,
refers to whether such Loan, or the Loans constituting such Borrowing, are
bearing interest at a rate determined by
364-Day Credit Agreement
<PAGE> 15
- 9 -
reference to (a) in the case of a Syndicated Loan or Borrowing, the Adjusted
LIBO Rate, or (b) in the case of a Competitive Loan or Borrowing, the LIBO Rate.
"Event of Default" has the meaning assigned to such term in
Article VII.
"Excluded Taxes" means, with respect to the Administrative
Agent, any Lender or any other recipient of any payment to be made by or on
account of any obligation of either Borrower hereunder, (a) income or franchise
taxes imposed on (or measured by) its net income by the United States of
America, or by the jurisdiction under the laws of which such recipient is
organized or in which its principal office is located or, in the case of any
Lender, in which its applicable lending office is located, (b) any branch
profits taxes imposed by the United States of America or any similar tax imposed
by any other jurisdiction in which such Borrower is located and (c) in the case
of a Foreign Lender (other than an assignee pursuant to a request by such
Borrower under Section 2.17(b)), any withholding tax that is imposed on amounts
payable to such Foreign Lender at the time such Foreign Lender becomes a party
to this Agreement or is attributable to such Foreign Lender's failure or
inability to comply with Section 2.15(e), except to the extent that such Foreign
Lender's assignor (if any) was entitled, at the time of assignment, to receive
additional amounts from such Borrower with respect to such withholding tax
pursuant to Section 2.15(a).
"Existing Commitment Termination Date" has the meaning
attributed thereto in Section 2.18(a).
"Existing Credit Facilities" means, collectively, (a) the
Amended and Restated Credit Agreement dated as of August 22, 1996 among Aristar,
the lenders party thereto and Bank of Montreal, as administrative agent for such
lenders, as heretofore amended, (b) the Amended and Restated 364-Day Credit
Agreement dated as of November 25, 1997 between WAMU, the lenders party thereto
and Chase, as administrative agent for such lenders, as heretofore amended, and
(c) the Amended and Restated Four-Year Credit Agreement dated as of November 25,
1997 between WAMU, the lenders party thereto and Chase, as administrative agent
for such lenders, as heretofore amended.
"Federal Funds Effective Rate" means, for any day, the weighted
average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.
<PAGE> 16
- 10 -
"Financial Officer" means, with respect to a Borrower, the chief
financial officer, principal accounting officer, treasurer or controller of such
Borrower.
"Fixed Rate" means, with respect to any Competitive Loan (other
than a Competitive Eurodollar Loan), the fixed rate of interest per annum
specified by the Lender making such Competitive Loan in its related Competitive
Bid.
"Fixed Rate Loan" means a Competitive Loan bearing interest at a
Fixed Rate.
"Foreign Lender" means any Lender that is organized under the
laws of a jurisdiction other than that in which either Borrower is located. For
purposes of this definition, the United States of America, each State thereof
and the District of Columbia shall be deemed to constitute a single
jurisdiction.
"GAAP" means generally accepted accounting principles in the
United States of America.
"Governmental Authority" means the government of the United
States of America, any other nation or any political subdivision thereof,
whether state or local, and any agency, authority, instrumentality, regulatory
body, court, central bank or other entity exercising executive, legislative,
judicial, taxing, regulatory or administrative powers or functions of or
pertaining to government.
"Guarantee" of or by any Person (the "guarantor") means any
obligation, contingent or otherwise, of the guarantor guaranteeing or having the
economic effect of guaranteeing any Indebtedness or other obligation of any
other Person (the "primary obligor") in any manner, whether directly or
indirectly, and including any obligation of the guarantor, direct or indirect,
(a) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other obligation or to purchase (or to advance or
supply funds for the purchase of) any security for the payment thereof, (b) to
purchase or lease property, securities or services for the purpose of assuring
the owner of such Indebtedness or other obligation of the payment thereof, (c)
to maintain working capital, equity capital or any other financial statement
condition or liquidity of the primary obligor so as to enable the primary
obligor to pay such Indebtedness or other obligation or (d) as an account party
in respect of any letter of credit or letter of guaranty issued to support such
Indebtedness or obligation; provided, that the term Guarantee shall not include
endorsements for collection or deposit in the ordinary course of business.
"Hazardous Materials" means all explosive or radioactive
substances or wastes and all hazardous or toxic substances, wastes or other
pollutants, including petroleum or petroleum distillates, asbestos or asbestos
containing materials, polychlorinated biphenyls, radon
<PAGE> 17
- 11 -
gas, infectious or medical wastes and all other substances or wastes of any
nature regulated pursuant to any Environmental Law.
"Hedging Agreement" means any interest rate protection
agreement, foreign currency exchange agreement, commodity price protection
agreement or other interest or currency exchange rate or commodity price hedging
arrangement.
"Indebtedness" of any Person means, without duplication, (a) all
obligations of such Person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such Person
upon which interest charges are customarily paid, (d) all obligations of such
Person under conditional sale or other title retention agreements relating to
property acquired by such Person, (e) all obligations of such Person in respect
of the deferred purchase price of property or services (excluding current
accounts payable incurred in the ordinary course of business), (f) 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, whether or not the Indebtedness
secured thereby has been assumed, (g) all Guarantees by such Person of
Indebtedness of others, (h) all Capital Lease Obligations of such Person, (i)
all obligations, contingent or otherwise, of such Person as an account party in
respect of letters of credit and letters of guaranty and (j) all obligations,
contingent or otherwise, of such Person in respect of bankers' acceptances. The
Indebtedness of any Person shall include the Indebtedness of any other entity
(including any partnership in which such Person is a general partner) to the
extent such Person is liable therefor as a result of such Person's ownership
interest in or other relationship with such entity, except to the extent the
terms of such Indebtedness provide that such Person is not liable therefor.
"Indemnified Taxes" means Taxes other than Excluded Taxes.
"Index Debt" means, with respect to a Borrower, senior,
unsecured, long-term indebtedness for borrowed money of such Borrower that is
not guaranteed by any other Person or subject to any other credit enhancement.
"Insured Subsidiary" means any insured depositary institution
(as defined in 12 U.S.C. Section 1813(c) (or any successor provision), as
amended, re-enacted or redesignated from time to time, that is controlled
(within the meaning of 12 U.S.C. Section 1841 (or any successor provision), as
amended, re-enacted or redesignated from time to time) by either Borrower.
"Interest Election Request" means a request by a Borrower to
convert or continue a Syndicated Borrowing in accordance with Section 2.06.
<PAGE> 18
- 12 -
"Interest Payment Date" means (a) with respect to any ABR Loan,
each Quarterly Date, (b) with respect to any Eurodollar Loan, the last day of
each Interest Period therefor and, in the case of any Interest Period for a
Eurodollar Loan that is more than three months long, each day prior to the last
day of such Interest Period that occurs at intervals of three months after the
first day of such Interest Period and (c) with respect to any Fixed Rate Loan,
the last day of the Interest Period therefor and, in the case of any Interest
Period for a Fixed Rate Loan that is more than 90 days long (unless otherwise
specified in the applicable Competitive Bid Request), each day prior to the last
day of such Interest Period that occurs at intervals of 90 days after the first
day of such Interest Period, and any other dates that are specified in the
applicable Competitive Bid Request as Interest Payment Dates with respect to
such Loan.
"Interest Period" means:
(a) for any Borrowing (other than an ABR Borrowing), the
Interest Period of the Loan or Loans constituting such Borrowing;
(b) for any Syndicated Eurodollar Loan, the period commencing on
the date of such Loan and ending on the numerically corresponding day in
the calendar month that is one, two, three or six months thereafter, as
specified in the applicable Borrowing Request or Interest Election
Request;
(c) for any Competitive Eurodollar Loan, the period commencing
on the date of such Loan and ending on the numerically corresponding day
in the calendar month that is one, two, three or six months thereafter,
as specified in the applicable Competitive Bid Request; and
(d) for any Fixed Rate Loan, the period (which shall not be less
than 7 days or more than 180 days) commencing on the date of such Loan
and ending on the date specified in the applicable Competitive Bid
Request;
provided, that (i) if any Interest Period would end on a day other than a
Business Day, such Interest Period shall be extended to the next succeeding
Business Day unless, in the case of a Eurodollar Borrowing only, such next
succeeding Business Day would fall in the next calendar month, in which case
such Interest Period shall end on the next preceding Business Day and (ii) any
Interest Period pertaining to a Eurodollar Borrowing that commences on the last
Business Day of a calendar month (or on a day for which there is no numerically
corresponding day in the last calendar month of such Interest Period) shall end
on the last Business Day of the last calendar month of such Interest Period. For
purposes hereof, the date of a Loan initially shall be the date on which such
Loan is made and, in the case of a Syndicated Loan, thereafter shall be the
effective date of the most recent conversion or continuation of such Loan.
<PAGE> 19
- 13 -
"Investment" means, for any Person: (a) the acquisition (whether
for cash, property, services or securities or otherwise) of capital stock,
bonds, notes, debentures, partnership or other ownership interests or other
securities of any other Person or any agreement to make any such acquisition
(including any "short sale" or any sale of any securities at a time when such
securities are not owned by the Person entering into such sale); (b) the making
of any deposit with, or advance, loan or other extension of credit to, any other
Person (including the purchase of property from another Person subject to an
understanding or agreement, contingent or otherwise, to resell such property to
such Person); (c) the entering into of any Guarantee of, or other contingent
obligation with respect to, Indebtedness or other liability of any other Person
and (without duplication) any amount committed to be advanced, lent or extended
to such Person; or (d) the entering into of any Hedging Agreement.
"Lenders" means the Persons listed on Schedule I and any other
Person that shall have become a party hereto pursuant to an Assignment and
Acceptance, other than any such Person that ceases to be a party hereto pursuant
to an Assignment and Acceptance.
"LIBO Rate" means, for the Interest Period for any Eurodollar
Borrowing, the rate appearing on Page 3750 of the Telerate Service of Bridge
Information Services (or on any successor or substitute page of such Service, or
any successor to or substitute for such Service, providing rate quotations
comparable to those currently provided on such page of such Service, as
determined by the Administrative Agent from time to time for purposes of
providing quotations of interest rates applicable to Dollar deposits in the
London interbank market) at approximately 11:00 a.m., London time, two Business
Days prior to the commencement of such Interest Period, as the rate for the
offering of Dollar deposits with a maturity comparable to such Interest Period.
In the event that such rate is not available at such time for any reason, then
the LIBO Rate for such Interest Period shall be the rate at which Dollar
deposits of $5,000,000 and for a maturity comparable to such Interest Period are
offered by the principal London office of the Administrative Agent in
immediately available funds in the London interbank market at approximately
11:00 a.m., London time, two Business Days prior to the commencement of such
Interest Period.
"Lien" means, with respect to any asset, (a) any mortgage, deed
of trust, lien, pledge, hypothecation, encumbrance, charge or security interest
in, on or of such asset, (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect as any of the
foregoing) relating to such asset and (c) in the case of securities, any
purchase option, call or similar right of a third party with respect to such
securities.
"Loans" means the loans made by the Lenders to the Borrowers (or
to either of them) pursuant to this Agreement.
<PAGE> 20
- 14 -
"Major Subsidiaries" shall mean Washington Mutual Bank and
Washington Mutual Bank, FA.
"Margin" means, with respect to any Competitive Loan bearing
interest at a rate based on the LIBO Rate, the marginal rate of interest, if
any, to be added to or subtracted from the LIBO Rate to determine the rate of
interest applicable to such Loan, as specified by the Lender making such Loan in
its related Competitive Bid.
"Margin Stock" means "margin stock" within the meaning of
Regulations T, U and X of the Board.
"Material Adverse Effect" means a material adverse effect on (a)
the business, assets, operations, prospects or condition, financial or
otherwise, of either Borrower and its Subsidiaries, in each case, taken as a
whole, (b) the ability of either Borrower to perform any of its obligations
under this Agreement or (c) the rights of or benefits available to the Lenders
under this Agreement.
"Material Indebtedness" means Indebtedness (other than the
Loans), or obligations in respect of one or more Hedging Agreements, of any one
or more of the Borrowers and their respective Subsidiaries in an aggregate
principal amount exceeding $40,000,000. For purposes of determining Material
Indebtedness, the "principal amount" of the obligations of any Person in respect
of any Hedging Agreement at any time shall be the maximum aggregate amount
(giving effect to any netting agreements) that such Person would be required to
pay if such Hedging Agreement were terminated at such time.
"Maturity Date" has the meaning set forth in Section 2.08(b)(i).
"Moody's" means Moody's Investors Service, Inc.
"Multiemployer Plan" means a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.
"Non-Extending Lender" has the meaning set forth in Section
2.18(a).
"Non-Extending Lender Term Loan Maturity Date" has the meaning
set forth in Section 2.08(b)(ii).
"Non-Extending Lender Term Loan" has the meaning set forth in
Section 2.08(b)(ii).
<PAGE> 21
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"Non-Material Subsidiaries" shall mean, as at any date,
Subsidiaries of WAMU the total assets of which, in the aggregate, do not exceed
one percent (1%) of the Consolidated Assets of WAMU and all of its Subsidiaries,
as at such date.
"Non-Performing Assets" shall mean, as at any date, the sum, for
WAMU and its Subsidiaries (determined on a consolidated basis without
duplication in accordance with GAAP) of the following: (a) non-accrual loans
plus (b) accruing loans past due 90 days or more plus (c) other non-performing
assets plus (d) other real estate owned plus (e) without duplication for amounts
included as other real estate owned, property acquired pursuant to in-substance
foreclosures.
"Other Taxes" means any and all present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies arising from any payment made hereunder or from the execution, delivery
or enforcement of, or otherwise with respect to, this Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation referred
to and defined in ERISA and any successor entity performing similar functions.
"Permitted Encumbrances" means:
(a) Liens imposed by law for taxes that are not yet due or are
being contested in compliance with Section 5.04;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's and other like Liens imposed by law, arising in the ordinary
course of business and securing obligations that are not overdue by more
than 30 days or are being contested in compliance with Section 5.04;
(c) pledges and deposits made in the ordinary course of business
in compliance with workers' compensation, unemployment insurance and
other social security laws or regulations;
(d) cash deposits to secure the performance of bids, trade
contracts, leases, statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature, in each case
in the ordinary course of business;
(e) judgment liens in respect of judgments that do not
constitute an Event of Default under clause (k) of Article VII; and
<PAGE> 22
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(f) easements, zoning restrictions, rights-of-way and similar
encumbrances on real property imposed by law or arising in the ordinary
course of business that in the aggregate are not material in amount and
do not materially detract from the value of the affected property or
interfere with the ordinary conduct of business of any of the Borrowers
and their Subsidiaries;
provided that the term "Permitted Encumbrances" shall not include any Lien
securing Indebtedness.
"Person" means any natural person, corporation, limited
liability company, trust, joint venture, association, company, partnership,
Governmental Authority or other entity.
"Plan" means any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA, and in respect of which either Borrower
or any of their respective ERISA Affiliates is (or, if such plan were
terminated, would under Section 4069 of ERISA be deemed to be) an "employer" as
defined in Section 3(5) of ERISA.
"Prime Rate" means the rate of interest per annum publicly
announced from time to time by Chase as its prime rate in effect at its
principal office in New York City; each change in the Prime Rate shall be
effective from and including the date such change is publicly announced as being
effective.
"Quarterly Dates" means the last Business Day of March, June,
September and December in each year, the first of which shall be the first such
day after the date hereof.
"Register" has the meaning set forth in Section 9.04.
"Related Parties" means, with respect to any specified Person,
such Person's Affiliates and the respective directors, officers, employees,
agents and advisors of such Person and such Person's Affiliates.
"Repurchase Arrangements" shall mean repurchase and reverse
repurchase arrangements with respect to securities and financial instruments.
"Required Lenders" means, at any time, Lenders having Revolving
Credit Exposures and unused Commitments representing more than 50% of the sum of
the total Revolving Credit Exposures and unused Commitments at such time
(provided that, for purposes of declaring the Loans to be due and payable
pursuant to Article VII, and for all purposes after the Loans become due and
payable pursuant to Article VII or the Commitments expire or
<PAGE> 23
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terminate, the outstanding Competitive Loans of the Lenders shall be included in
their respective Revolving Credit Exposures in determining the Required
Lenders).
"Restricted Payment" means any dividend or other distribution
(whether in cash, securities or other property) with respect to any shares of
any class of capital stock of Aristar, or any payment (whether in cash,
securities or other property), including any sinking fund or similar deposit, on
account of the purchase, redemption, retirement, acquisition, cancellation or
termination of any such shares of capital stock of Aristar or of any option,
warrant or other right to acquire any such shares of capital stock of Aristar.
"Revolving Credit Exposure" means, with respect to any Lender at
any time, the aggregate outstanding principal amount of such Lender's Syndicated
Loans at such time.
"SEC" means the Securities and Exchange Commission or any
Governmental Authority succeeding to any or all of the functions of said
Commission.
"Senior Indebtedness" means all Indebtedness of Aristar other
than Subordinated Indebtedness.
"Special Preferred Equity Securities" shall mean preferred
equity securities, if any, issued by a wholly-owned Subsidiary of WAMU of the
type marketed under proprietary names such as MIPS, SKIS and TOPRS.
"S&P" means Standard & Poor's Ratings Services, a Division of
The McGraw-Hill Companies, Inc.
"Statutory Reserve Rate" means, for any day (or for the Interest
Period for any Eurodollar Borrowing), a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board to which the Administrative Agent is subject on such
day (or, with respect to an Interest Period, the denominator of which is the
number one minus the arithmetic mean of such aggregates for the days in such
Interest Period) (a) with respect to the Base CD Rate, for new negotiable
nonpersonal time deposits in Dollars of over $100,000 with maturities
approximately equal to three months and (b) with respect to the Adjusted LIBO
Rate, for eurocurrency funding (currently referred to as "Eurocurrency
liabilities" in Regulation D of the Board). Such reserve percentages shall
include those imposed pursuant to such Regulation D. Eurodollar Loans shall be
deemed to constitute eurocurrency funding and to be subject to such reserve
requirements without benefit of or credit for proration, exemptions or offsets
that may be available from time to time to any Lender under such
<PAGE> 24
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Regulation D or any comparable regulation. The Statutory Reserve Rate shall be
adjusted automatically on and as of the effective date of any change in any
reserve percentage.
"Subordinated Indebtedness" means all Indebtedness of Aristar
which is subordinate and junior in right and time of payment to any other
Indebtedness (including all Loans and interest thereon).
"Subsidiary" means, with respect to any Person (the "parent") at
any date, any corporation, limited liability company, partnership, association
or other entity the accounts of which would be consolidated with those of the
parent in the parent's consolidated financial statements if such financial
statements were prepared in accordance with GAAP as of such date, as well as any
other corporation, limited liability company, partnership, association or other
entity (a) of which securities or other ownership interests representing more
than 50% of the equity or more than 50% of the ordinary voting power or, in the
case of a partnership, more than 50% of the general partnership interests are,
as of such date, owned, controlled or held, or (b) that is, as of such date,
otherwise Controlled, by the parent or one or more subsidiaries of the parent or
by the parent and one or more subsidiaries of the parent.
"Syndicated Loan" means a Loan made pursuant to Section 2.01
including each Term Loan and Non-Extending Lender Term Loan that has been
converted from a Syndicated Loan pursuant to Section 2.08(b)(i) or (ii).
"Tangible Net Worth" means, as at any date,
(a) with respect to WAMU, the sum of:
(i) Consolidated Equity as at such date; minus
(ii) the amount of Special Preferred Equity
Securities, to the extent otherwise included in Consolidated
Equity, as at such date; minus
(iii) the sum for WAMU and its Subsidiaries
(determined on a consolidated basis without duplication in
accordance with GAAP) of the cost of treasury shares and the
book value of all assets that should be classified as
intangibles (without duplication of deductions in respect of
items already deducted in arriving at Consolidated Equity) but
in any event including goodwill, minority interests, research
and development costs, trademarks, trade names, copyrights,
patents and franchises, unamortized debt discount and expense,
all reserves and any write-up in the book value of assets
resulting from a revaluation thereof subsequent to December 31,
1998, all determined as at such date.
<PAGE> 25
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(b) with respect to Aristar, the stockholders' equity of Aristar
and its Consolidated Subsidiaries less the amount (to the extent
reflected in determining such consolidated stockholders' equity) of all
unamortized debt discount and expense, unamortized deferred charges,
goodwill, patents, trademarks, service marks, trade names, anticipated
future benefit of tax loss carry-forwards, copyrights organization or
developmental expenses and other intangible assets of Aristar and its
Consolidated Subsidiaries, all determined on a consolidated basis as of
such date minus the aggregate principal amount of Indebtedness as at
such date owing to Aristar or any Subsidiaries of Aristar by WAMU or any
Subsidiaries of WAMU that are not Aristar or Subsidiaries of Aristar.
"Taxes" means any and all present or future taxes, levies,
imposts, duties, deductions, charges or withholdings imposed by any Governmental
Authority.
"Three-Month Secondary CD Rate" means, for any day, the
secondary market rate for three-month certificates of deposit reported as being
in effect on such day (or, if such day is not a Business Day, the next preceding
Business Day) by the Board through the public information telephone line of the
Federal Reserve Bank of New York (which rate will, under the current practices
of the Board, be published in Federal Reserve Statistical Release H.15(519)
during the week following such day) or, if such rate is not so reported on such
day or such next preceding Business Day, the average of the secondary market
quotations for three-month certificates of deposit of major money center banks
in New York City received at approximately 10:00 a.m., New York City time, on
such day (or, if such day is not a Business Day, on the next preceding Business
Day) by the Administrative Agent from three negotiable certificate of deposit
dealers of recognized standing selected by it.
"Tranche" means Tranche A or Tranche B.
"Tranche A Commitment" means as to each Tranche A Lender, the
obligation of such Lender to make Syndicated Loans pursuant to Section 2.01(a),
as such commitment may be (a) reduced from time to time pursuant to Section 2.07
and (b) reduced or increased from time to time pursuant to assignments by or to
such Lender pursuant to Section 9.04. The initial amount of each Tranche A
Lender's Commitment is set forth on Schedule I, or in the Assignment and
Acceptance pursuant to which such Lender shall have assumed such Commitment, as
applicable. The initial aggregate amount of the Tranche A Commitments shall be
$250,000,000.
"Tranche A Lender" means a Lender having a Tranche A Commitment
or holding Tranche A Loans.
"Tranche A Loans" shall mean the loans provided for in Section
2.01(a).
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"Tranche B Commitment" means as to each Tranche B Lender, the
obligation of such Lender to make Syndicated Loans pursuant to Section 2.01(b),
as such commitment may be (a) reduced from time to time pursuant to Section 2.07
and (b) reduced or increased from time to time pursuant to assignments by or to
such Lender pursuant to Section 9.04. The initial amount of each Tranche B
Lender's Commitment is set forth on Schedule I, or in the Assignment and
Acceptance pursuant to which such Lender shall have assumed such Commitment, as
applicable. The initial aggregate amount of the Tranche B Commitments shall be
$350,000,000.
"Tranche B Lender" means a Lender having a Tranche B Commitment
or holding Tranche B Loans.
"Transactions" means the execution, delivery and performance by
the Borrowers of this Agreement, the borrowing of Loans and the use of the
proceeds thereof.
"Type", when used in reference to any Loan or Borrowing, refers
to whether the rate of interest on such Loan, or on the Loans constituting such
Borrowing, is determined by reference to the Adjusted LIBO Rate, the Alternate
Base Rate or, in the case of a Competitive Loan or Borrowing, the LIBO Rate or a
Fixed Rate.
"WAMU" means Washington Mutual, Inc., a Washington corporation.
"Withdrawal Liability" means liability to a Multiemployer Plan
as a result of a complete or partial withdrawal from such Multiemployer Plan, as
such terms are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02. Classification of Loans and Borrowings. For
purposes of this Agreement, Loans may be classified and referred to by Class
(e.g., a "Syndicated Loan"), by Type (e.g., a "Eurodollar Loan"), by Tranche
(e.g., a "Tranche A Loan")or by any combination thereof. Borrowings also may be
classified and referred to by Class (e.g., a "Syndicated Borrowing"), by Type
(e.g., a "Eurodollar Borrowing"), by Tranche (e.g., a "Tranche A Borrowing") or
by any combination thereof.
SECTION 1.03. Terms Generally. The definitions of terms herein
shall apply equally to the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words "include", "includes" and
"including" shall be deemed to be followed by the phrase "without limitation".
The word "will" shall be construed to have the same meaning and effect as the
word "shall". Unless the context requires otherwise (a) any definition of or
reference to any agreement, instrument or other document herein shall be
construed as referring to such agreement, instrument or other document as from
time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or
<PAGE> 27
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modifications set forth herein), (b) any reference herein to any Person shall be
construed to include such Person's successors and assigns, (c) the words
"herein", "hereof" and "hereunder", and words of similar import, shall be
construed to refer to this Agreement in its entirety and not to any particular
provision hereof, (d) all references herein to Articles, Sections, Exhibits and
Schedules shall be construed to refer to Articles and Sections of, and Exhibits
and Schedules to, this Agreement and (e) the words "asset" and "property" shall
be construed to have the same meaning and effect and to refer to any and all
tangible and intangible assets and properties, including cash, securities,
accounts and contract rights.
SECTION 1.04. Accounting Terms; GAAP. Except as otherwise
expressly provided herein, all terms of an accounting or financial nature shall
be construed in accordance with GAAP, as in effect from time to time; provided
that, if the Borrowers notify the Administrative Agent that the Borrowers
request an amendment to any provision hereof to eliminate the effect of any
change occurring after the date hereof in GAAP or in the application thereof on
the operation of such provision (or if the Administrative Agent notify the
Borrowers that the Required Lenders request an amendment to any provision hereof
for such purpose), regardless of whether any such notice is given before or
after such change in GAAP or in the application thereof, then such provision
shall be interpreted on the basis of GAAP as in effect and applied immediately
before such change shall have become effective until such notice shall have been
withdrawn or such provision amended in accordance herewith.
ARTICLE II
THE CREDITS
SECTION 2.01. The Commitments
(a) Tranche A Loans. Subject to the terms and conditions set
forth herein, each Tranche A Lender agrees to make Syndicated Loans to either or
both of the Borrowers from time to time during the Availability Period in an
aggregate principal amount that will not result in (a) such Lender's Revolving
Credit Exposure under such Tranche exceeding such Lender's Commitment under such
Tranche or (b) the sum of the total Revolving Credit Exposures (including
Non-Extending Lender Term Loans) under such Tranche plus the aggregate principal
amount of outstanding Competitive Loans under such Tranche exceeding the sum of
the total Commitments plus outstanding Non-Extending Lender Term Loans under
such Tranche. Within the foregoing limits and subject to the terms and
conditions set forth herein, the Borrowers may borrow, prepay and reborrow
Syndicated Tranche A Loans.
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(b) Tranche B Loans. Subject to the terms and conditions set
forth herein, each Tranche B Lender agrees to make Syndicated Loans to Aristar
from time to time during the Availability Period in an aggregate principal
amount that will not result in (a) such Lender's Revolving Credit Exposure under
such Tranche exceeding such Lender's Commitment under such Tranche or (b) the
sum of the total Revolving Credit Exposures (including Non-Extending Lender Term
Loans) under such Tranche plus the aggregate principal amount of outstanding
Competitive Loans under such Tranche exceeding the sum of the total Commitments
plus outstanding Non-Extending Lender Term Loans under such Tranche. Within the
foregoing limits and subject to the terms and conditions set forth herein,
Aristar may borrow, prepay and reborrow Syndicated Tranche B Loans.
SECTION 2.02. Loans and Borrowings.
(a) Obligations of Lenders. Each Syndicated Loan shall be made
as part of a Borrowing consisting of Loans of the same Type made by the Lenders
ratably in accordance with their respective Commitments. Each Competitive Loan
shall be made in accordance with the procedures set forth in Section 2.04. The
failure of any Lender to make any Loan required to be made by it shall not
relieve any other Lender of its obligations hereunder; provided that the
Commitments and Competitive Bids of the Lenders are several and no Lender shall
be responsible for any other Lender's failure to make Loans as required.
(b) Type of Loans. Subject to Section 2.12, (i) each Syndicated
Borrowing shall be constituted entirely of ABR Loans or Eurodollar Loans as the
relevant Borrower may request in accordance herewith, and (ii) each Competitive
Borrowing shall be constituted entirely of Eurodollar Loans or Fixed Rate Loans
as the relevant Borrower may request in accordance herewith. Each Lender at its
option may make any Eurodollar Loan by causing any domestic or foreign branch or
Affiliate of such Lender to make such Loan; provided that any exercise of such
option shall not affect the obligation of the relevant Borrower to repay such
Loan in accordance with the terms of this Agreement.
(c) Minimum Amounts; Limitation on Number of Borrowings. At the
commencement of the Interest Period for any Syndicated Eurodollar Borrowing,
such Borrowing shall be in an aggregate amount of $10,000,000 or a larger
multiple of $1,000,000. At the time that each ABR Borrowing is made, such
Borrowing shall be in an aggregate amount equal to $5,000,000 or a larger
multiple of $1,000,000; provided that an ABR Borrowing may be in an aggregate
amount that is equal to the entire unused balance of the total Commitments.
Borrowings of more than one Type and Class and Tranche may be outstanding at the
same time; provided that there shall not at any time be more than a total of 10
Syndicated Eurodollar Borrowings outstanding.
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(d) Limitations on Lengths of Interest Periods. Notwithstanding
any other provision of this Agreement, the Borrowers shall not be entitled to
request, or to elect to convert to or continue as a Syndicated Eurodollar
Borrowing, any Borrowing if the Interest Period requested therefor would end
after the Commitment Termination Date except that a Borrower shall be entitled
to request, or to elect to convert to or continue as a Syndicated Eurodollar
Borrowing, any Borrowing after it has provided notice to convert the Syndicated
Loans constituting (or to constitute) such Borrowing to term loans in accordance
with Section 2.08(a)(iii) if the Interest Period requested therefor would end
after the Commitment Termination Date so long as such requested Interest Period
would not end after the Maturity Date.
SECTION 2.03. Requests for Syndicated Borrowings. To request a
Syndicated Borrowing, the relevant Borrower shall notify the Administrative
Agent of such request by telephone (a) in the case of a Syndicated Eurodollar
Borrowing, not later than 11:00 a.m., New York City time, three Business Days
before the date of the proposed Borrowing or (b) in the case of an ABR
Borrowing, not later than 11:00 a.m., New York City time, one Business Day
before the date of the proposed Borrowing. Each such telephonic Borrowing
Request shall be irrevocable and shall be confirmed promptly by hand delivery or
telecopy to the Administrative Agent of a written Borrowing Request in a form
approved by the Administrative Agent and signed by the relevant Borrower. Each
such telephonic and written Borrowing Request shall specify the following
information in compliance with Section 2.02:
(i) the aggregate amount of the requested Borrowing;
(ii) the date of such Borrowing, which shall be a Business Day;
(iii) whether such Borrowing is to be an ABR Borrowing or a
Eurodollar Borrowing;
(iv) in the case of a Syndicated Eurodollar Borrowing, the
Interest Period therefor, which shall be a period contemplated by the
definition of the term "Interest Period";
(v) in the case of a Borrowing by Aristar, the Tranche under
which such Borrowing is to be made; and
(vi) the location and number of the relevant Borrower's account
to which funds are to be disbursed, which shall comply with the
requirements of Section 2.05.
If no election as to the Type of Syndicated Borrowing is specified, then the
requested Syndicated Borrowing shall be an ABR Borrowing. If no Interest Period
is specified with respect to any
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requested Syndicated Eurodollar Borrowing, then the relevant Borrower shall be
deemed to have selected an Interest Period of one month's duration. Promptly
following receipt of a Borrowing Request in accordance with this Section, the
Administrative Agent shall advise each Lender of the details thereof and of the
amount of such Lender's Loan to be made as part of the requested Borrowing.
SECTION 2.04. Competitive Bid Procedure.
(a) Requests for Bids by the Borrowers. Subject to the terms and
conditions set forth herein, from time to time during the period from the
Effective Date to but excluding the Commitment Termination Date either Borrower
or both Borrowers may request Competitive Bids and may (but shall not have any
obligation to) accept Competitive Bids and borrow Competitive Loans under any
Tranche available to it; provided that the sum of the total Revolving Credit
Exposures under such Tranche plus the aggregate principal amount of outstanding
Competitive Loans under such Tranche at any time shall not exceed the total
Commitments under such Tranche. To request Competitive Bids, the relevant
Borrower shall notify the Administrative Agent of such request by telephone, in
the case of a Eurodollar Borrowing, not later than 11:00 a.m., New York City
time, four Business Days before the date of the proposed Borrowing and, in the
case of a Fixed Rate Borrowing, not later than 10:00 a.m., New York City time,
one Business Day before the date of the proposed Borrowing; provided that the
Borrowers may submit up to (but not more than) two Competitive Bid Requests
under a Tranche on the same day, but a Competitive Bid Request under such
Tranche shall not be made within five Business Days after the date of any
previous Competitive Bid Request under such Tranche, unless any and all such
previous Competitive Bid Requests shall have been withdrawn or all Competitive
Bids received in response thereto rejected. Each such telephonic Competitive Bid
Request shall be confirmed promptly by hand delivery or telecopy to the
Administrative Agent of a written Competitive Bid Request in a form approved by
the Administrative Agent and signed by the relevant Borrower. Each such
telephonic and written Competitive Bid Request shall specify the following
information in compliance with Section 2.02:
(i) the aggregate amount of the requested Borrowing;
(ii) the date of such Borrowing, which shall be a Business Day;
(iii) whether such Borrowing is to be a Eurodollar Borrowing or
a Fixed Rate Borrowing;
(iv) the Interest Period for such Borrowing, which shall be a
period contemplated by the definition of the term "Interest Period";
<PAGE> 31
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(v) in the case of a Borrowing by Aristar, the Tranche under
which such Borrowing is to be made; and
(vi) the location and number of the relevant Borrower's account
to which funds are to be disbursed, which shall comply with the
requirements of Section 2.05.
Promptly following receipt of a Competitive Bid Request in accordance with this
Section, the Administrative Agent shall notify the Lenders of the details
thereof by telecopy, inviting the Lenders to submit Competitive Bids.
(b) Making of Bids by Lenders. Each Lender under the relevant
Tranche may (but shall not have any obligation to) make one or more Competitive
Bids to the relevant Borrower in response to a Competitive Bid Request. Each
Competitive Bid by a Lender must be in a form approved by the Administrative
Agent and must be received by the Administrative Agent by telecopy, in the case
of a Competitive Eurodollar Borrowing, not later than 9:30 a.m., New York City
time, three Business Days before the proposed date of such Competitive
Borrowing, and in the case of a Fixed Rate Borrowing, not later than 9:30 a.m.,
New York City time, on the proposed date of such Competitive Borrowing.
Competitive Bids that do not conform substantially to the form approved by the
Administrative Agent may be rejected by the Administrative Agent, and the
Administrative Agent shall notify the applicable Lender of such rejection as
promptly as practicable. Each Competitive Bid shall specify (i) the principal
amount (which shall be $10,000,000 or a larger multiple of $1,000,000 and which
may equal the entire principal amount of the Competitive Borrowing requested by
the relevant Borrower) of the Competitive Loan or Loans that the Lender is
willing to make, (ii) the Competitive Bid Rate or Competitive Bid Rates at which
the Lender is prepared to make such Loan or Loans (expressed as a percentage
rate per annum in the form of a decimal to no more than four decimal places) and
(iii) the Interest Period for each such Loan and the last day thereof.
(c) Notification of Bids by Administrative Agent. The
Administrative Agent shall promptly notify the relevant Borrower by telecopy of
the Competitive Bid Rate and the principal amount specified in each Competitive
Bid and the identity of the Lender that shall have made such Competitive Bid.
(d) Acceptance of Bids by the Borrowers. Subject only to the
provisions of this paragraph, the relevant Borrower may accept or reject any
Competitive Bid. Such Borrower shall notify the Administrative Agent by
telephone, confirmed by telecopy in a form approved by the Administrative Agent,
whether and to what extent it has decided to accept or reject each Competitive
Bid, in the case of a Competitive Eurodollar Borrowing, not later than 10:30
a.m., New York City time, three Business Days before the date of the proposed
Competitive Borrowing, and in the case of a Fixed Rate Borrowing, not later than
10:30 a.m., New York City time, on the proposed date of the Competitive
Borrowing; provided, that (i) the failure of such
<PAGE> 32
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Borrower to give such notice shall be deemed to be a rejection of each
Competitive Bid, (ii) such Borrower shall not accept a Competitive Bid made at a
particular Competitive Bid Rate if such Borrower rejects a Competitive Bid made
at a lower Competitive Bid Rate, (iii) the aggregate amount of the Competitive
Bids accepted by such Borrower shall not exceed the aggregate amount of the
requested Competitive Borrowing specified in the related Competitive Bid
Request, (iv) to the extent necessary to comply with clause (iii) of this
proviso, such Borrower may accept Competitive Bids at the same Competitive Bid
Rate in part, which acceptance, in the case of multiple Competitive Bids at such
Competitive Bid Rate, shall be made pro rata in accordance with the amount of
each such Competitive Bid, and (v) except pursuant to clause (iv) of this
proviso, no Competitive Bid shall be accepted for a Competitive Loan unless such
Competitive Loan is in a principal amount of $10,000,000 or a larger multiple of
$1,000,000; provided further that if a Competitive Loan must be in an amount
less than $10,000,000 because of the provisions of clause (iv) of the first
proviso of this paragraph, such Competitive Loan may be in an amount of
$1,000,000 or any multiple thereof, and in calculating the pro rata allocation
of acceptances of portions of multiple Competitive Bids at a particular
Competitive Bid Rate pursuant to such clause (iv) the amounts shall be rounded
to multiples of $1,000,000 in a manner determined by the relevant Borrower. A
notice given by the relevant Borrower pursuant to this paragraph shall be
irrevocable.
(e) Notification of Acceptances by the Administrative Agent. The
Administrative Agent shall promptly notify each bidding Lender by telecopy
whether or not its Competitive Bid has been accepted (and, if so, the amount and
Competitive Bid Rate so accepted), and each successful bidder will thereupon
become bound, subject to the terms and conditions hereof, to make the
Competitive Loan in respect of which its Competitive Bid has been accepted.
(f) Bids by the Administrative Agent. If the Administrative
Agent shall elect to submit a Competitive Bid in its capacity as a Lender, it
shall submit such Competitive Bid directly to the relevant Borrower at least one
quarter of an hour earlier than the time by which the other Lenders are required
to submit their Competitive Bids to the Administrative Agent pursuant to
paragraph (b) of this Section.
SECTION 2.05. Funding of Borrowings.
(a) Funding by Lenders. Each Lender shall make each Loan to be
made by it hereunder on the proposed date thereof by wire transfer of
immediately available funds by 12:00 noon, New York City time, to the account of
the Administrative Agent most recently designated by it for such purpose by
notice to the Lenders. The Administrative Agent will make such Loans available
to the relevant Borrower by promptly crediting the amounts so received, in like
funds, to an account of such Borrower maintained with the Administrative Agent
in New York City and designated by such Borrower in the applicable Borrowing
Request or Competitive Bid Request.
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(b) Presumption by the Administrative Agent. Unless the
Administrative Agent shall have received notice from a Lender prior to the
proposed date of any Borrowing that such Lender will not make available to the
Administrative Agent such Lender's share of such Borrowing, the Administrative
Agent may assume that such Lender has made such share available on such date in
accordance with paragraph (a) of this Section and may, in reliance upon such
assumption, make available to the relevant Borrower a corresponding amount. In
such event, if a Lender has not in fact made its share of the applicable
Borrowing available to the Administrative Agent, then the applicable Lender and
the relevant Borrower severally agree to pay to the Administrative Agent
forthwith on demand such corresponding amount with interest thereon, for each
day from and including the date such amount is made available to such Borrower
to but excluding the date of payment to the Administrative Agent, at (i) in the
case of such Lender, the Federal Funds Effective Rate or (ii) in the case of
such Borrower, the interest rate applicable to ABR Loans. If such Lender pays
such amount to the Administrative Agent, then such amount shall constitute such
Lender's Loan included in such Borrowing.
SECTION 2.06. Interest Elections.
(a) Elections by the Borrowers for Syndicated Borrowings. Each
Syndicated Borrowing initially shall be of the Type specified in the applicable
Borrowing Request and, in the case of a Syndicated Eurodollar Borrowing, shall
have the Interest Period specified in such Borrowing Request. Thereafter, the
relevant Borrower may elect to convert such Borrowing to a Borrowing of a
different Type or to continue such Borrowing as a Borrowing of the same Type
and, in the case of a Syndicated Eurodollar Borrowing, may elect the Interest
Period therefor, all as provided in this Section. The relevant Borrower may
elect different options with respect to different portions of the affected
Borrowing, in which case each such portion shall be allocated ratably among the
Lenders holding the Loans constituting such Borrowing, and the Loans
constituting each such portion shall be considered a separate Borrowing. This
Section shall not apply to Competitive Borrowings, which may not be converted or
continued.
(b) Notice of Elections. To make an election pursuant to this
Section, the relevant Borrower shall notify the Administrative Agent of such
election by telephone by the time that a Borrowing Request would be required
under Section 2.03 if such Borrower were requesting a Syndicated Borrowing of
the Type resulting from such election to be made on the effective date of such
election. Each such telephonic Interest Election Request shall be irrevocable
and shall be confirmed promptly by hand delivery or telecopy to the
Administrative Agent of a written Interest Election Request in a form approved
by the Administrative Agent and signed by the relevant Borrower.
(c) Information in Interest Election Requests. Each telephonic
and written Interest Election Request shall specify the following information in
compliance with Section 2.02:
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(i) the name of the Borrower and the Borrowing to which such
Interest Election Request applies and, if different options are being
elected with respect to different portions thereof, the portions thereof
to be allocated to each resulting Borrowing (in which case the
information to be specified pursuant to clauses (iii) and (iv) of this
paragraph shall be specified for each resulting Borrowing);
(ii) the effective date of the election made pursuant to such
Interest Election Request, which shall be a Business Day;
(iii) whether the resulting Borrowing is to be an ABR Borrowing
or a Eurodollar Borrowing; and
(iv) if the resulting Borrowing is a Eurodollar Borrowing, the
Interest Period therefor after giving effect to such election, which
shall be a period contemplated by the definition of the term "Interest
Period".
If any such Interest Election Request requests a Eurodollar Borrowing but does
not specify an Interest Period, then the relevant Borrower shall be deemed to
have selected an Interest Period of one month's duration.
(d) Notice by the Administrative Agent to Lenders. Promptly
following receipt of an Interest Election Request, the Administrative Agent
shall advise each Lender of the details thereof and of such Lender's portion of
each resulting Borrowing.
(e) Failure to Elect; Events of Default. If the relevant
Borrower fails to deliver a timely Interest Election Request with respect to a
Syndicated Eurodollar Borrowing prior to the end of the Interest Period
therefor, then, unless such Borrowing is repaid as provided herein, at the end
of such Interest Period such Borrowing shall be converted to an ABR Borrowing.
Notwithstanding any contrary provision hereof, if an Event of Default has
occurred and is continuing and the Administrative Agent, at the request of the
Required Lenders, so notifies the relevant Borrower, then, so long as an Event
of Default is continuing (i) no outstanding Syndicated Borrowing may be
converted to or continued as a Syndicated Eurodollar Borrowing and (ii) unless
repaid, each Syndicated Eurodollar Borrowing shall be converted to an ABR
Borrowing at the end of the Interest Period therefor.
SECTION 2.07. Termination and Reduction of the Commitments.
(a) Scheduled Termination.
(i) Unless previously terminated, the Commitments shall
terminate at the close of business on the Commitment Termination Date;
and
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(ii) The Commitments of each Non-Extending Lender shall
terminate as provided in Section 2.18(c).
(b) Voluntary Termination or Reduction. The Borrowers may at any
time terminate, or from time to time reduce, the Commitments under any Tranche;
provided that (i) each reduction of the Commitments shall be in an amount that
is an integral multiple of $10,000,000 and (ii) the Borrowers shall not
terminate or reduce the Commitments if, after giving effect to any concurrent
prepayment of the Loans in accordance with Section 2.09, the sum of the total
Revolving Credit Exposures plus the aggregate principal amount of outstanding
Competitive Loans would exceed the total Commitments.
(c) Notice of Voluntary Termination or Reduction. The Borrowers
shall notify the Administrative Agent of any election to terminate or reduce the
Commitments under paragraph (b) of this Section at least three Business Days
prior to the effective date of such termination or reduction, specifying such
election and the effective date thereof. Promptly following receipt of any
notice, the Administrative Agent shall advise the Lenders of the contents
thereof. Each notice delivered by the Borrowers pursuant to this Section shall
be irrevocable; provided that a notice of termination of the Commitments
delivered by the Borrowers may state that such notice is conditioned upon the
effectiveness of other credit facilities, in which case such notice may be
revoked by the Borrowers (by notice to the Administrative Agent on or prior to
the specified effective date) if such condition is not satisfied.
(d) Effect of Termination or Reduction. Any termination or
reduction of the Commitments shall be permanent. Each reduction of the
Commitments shall be made ratably among the Lenders in accordance with their
respective Commitments.
SECTION 2.08. Repayment of Loans; Evidence of Debt.
(a) Repayment. Each Borrower hereby unconditionally promises to
pay the Loans as follows:
(i) subject to Sections 2.18, 2.08(b)(i) and 2.08(b)(ii), to the
Administrative Agent for account of the Lenders, on the Commitment
Termination Date, the then unpaid principal amount of the Syndicated
Loans made to such Borrower that are outstanding at the close of
business on the Commitment Termination Date, and
(ii) to the Administrative Agent for account of the respective
Lender the then unpaid principal amount of each Competitive Loan of such
Lender made to such Borrower on the last day of the Interest Period
therefor.
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(b) Term-Out Option.
(i) If the Commitment Termination Date shall not have been
extended, each Borrower may, by notice to the Administrative Agent not
less than 10 days prior to the Commitment Termination Date convert all
Syndicated Loans made to such Borrower that are outstanding on the
Commitment Termination Date to term loans (each, a "Term Loan" and
collectively, the "Term Loans"). Each Term Loan shall bear interest,
until the payment in full thereof, at the rates provided for in Section
2.11 and shall otherwise constitute a Syndicated Loan for all purposes
of this Agreement. The relevant Borrower hereby unconditionally promises
to pay to the Administrative Agent for account of the Lenders the unpaid
principal amount of the Term Loans made to such Borrower that are
outstanding on the date that is six months after the Commitment
Termination Date (or, if such date is not a Business Day, the next
preceding Business Day) (the "Maturity Date"). Anything in this Section
2.08(b)(i) to the contrary notwithstanding, any such conversion shall be
subject to the conditions precedent that: (i) no Default shall have
occurred and be continuing on the Commitment Termination Date and (ii)
the representations and warranties made by such Borrower in Article III
hereof shall be true and complete on and as of such Commitment
Termination Date with the same force and effect as if made on and as of
such date (or, if any such representation or warranty is expressly
stated to have been made as of a specific date, as of such specific
date). Each notice of conversion delivered by either Borrower in
accordance with this Section 2.08(b)(i) shall constitute a certification
by such Borrower to the effect set forth in the preceding sentence (both
as of the date of such notice date and, unless such Borrower, after
delivery of such notice, otherwise notifies the Administrative Agent
prior to the Commitment Termination Date, as of such date).
(ii) If the requisite percentage of Lenders have agreed to
extend the Commitment Termination Date pursuant to Section 2.18, each
Borrower may convert all Syndicated Loans of Non-Extending Lenders to
such Borrower that are outstanding on the applicable Existing Commitment
Termination Date to term loans (each, a "Non-Extending Lender Term
Loan") by notice to the Administrative Agent and the Non-Extending
Lenders not less than 10 days prior to such Existing Commitment
Termination Date. Each Non-Extending Lender Term Loan shall bear
interest, until the payment in full thereof, at the rates provided for
in Section 2.11 and shall otherwise constitute a Syndicated Loan for all
purposes of this Agreement. The relevant Borrower hereby unconditionally
promises to pay to the Administrative Agent for account of the Lenders
the unpaid principal amount of the Non-Extending Lender Term Loans made
to such Borrower that are outstanding on the date that is six months
after the applicable Existing Commitment Termination Date (or, if such
date is not Business Day, the next preceding Business Day) (a
"Non-Extending Lender Term Loan Maturity Date"). Anything in this
Section 2.08(b)(ii) to the
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contrary notwithstanding, any such conversion shall be subject to the
conditions precedent that: (i) no Default shall have occurred and be
continuing on the applicable Existing Commitment Termination Date and
(ii) the representations and warranties made by such Borrower in Article
III hereof shall be true and complete on and as of such Existing
Commitment Termination Date with the same force and effect as if made on
and as of such date (or, if any such representation or warranty is
expressly stated to have been made as of a specific date, as of such
specific date). Each notice of conversion delivered by either Borrower
in accordance with this Section 2.08(b)(ii) shall constitute a
certification by such Borrower to the effect set forth in the preceding
sentence (both as of the date of such notice date and, unless the
Borrower, after delivery of such notice, otherwise notifies the
Administrative Agent prior to the applicable Existing Commitment
Termination Date, as of such date).
(c) Manner of Payment. Prior to any repayment or prepayment of
any Borrowings hereunder, the relevant Borrower shall select the Borrowing or
Borrowings to be paid and shall notify the Administrative Agent by telephone
(confirmed by telecopy) of such selection not later than 11:00 a.m., New York
City time, three Business Days before the scheduled date of such repayment;
provided that each repayment of Borrowings by a Borrower shall be applied to
repay any outstanding ABR Borrowings of such Borrower before any other
Borrowings. If the relevant Borrower fails to make a timely selection of the
Borrowing or Borrowings to be repaid or prepaid, such payment shall be applied,
first, to pay any outstanding ABR Borrowings of such Borrower and, second, to
other Borrowings of such Borrower in the order of the remaining duration of
their respective Interest Periods (the Borrowing with the shortest remaining
Interest Period to be repaid first), and for these purposes, Competitive Loans
shall be deemed to be in the same Class as Loans. Each payment of a Syndicated
Borrowing shall be applied ratably to the Loans included in such Borrowing.
(d) Maintenance of Loan Accounts by Lenders. Each Lender shall
maintain in accordance with its usual practice an account or accounts evidencing
the indebtedness of each Borrower to such Lender resulting from each Loan made
by such Lender, including the Tranche, the amounts of principal and interest
payable and paid to such Lender from time to time hereunder.
(e) Maintenance of Loan Accounts by the Administrative Agent.
The Administrative Agent shall maintain accounts in which it shall record (i)
the name of the Borrower and the amount of each Loan to such Borrower made
hereunder, the Class, Type and Tranche thereof and each Interest Period
therefor, (ii) the amount of any principal or interest due and payable or to
become due and payable from each Borrower to each Lender hereunder and (iii) the
amount of any sum received by the Administrative Agent from either Borrower
hereunder for account of the Lenders and each Lender's share thereof.
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(f) Effect of Entries. The entries made in the accounts
maintained pursuant to paragraph (d) or (e) of this Section shall be prima facie
evidence of the existence and amounts of the obligations recorded therein;
provided that the failure of any Lender or the Administrative Agent to maintain
such accounts or any error therein shall not in any manner affect the obligation
of either Borrower to repay the Loans in accordance with the terms of this
Agreement.
(g) Promissory Notes. Any Lender may request that Loans made by
it be evidenced by a promissory note. In such event, the relevant Borrower shall
prepare, execute and deliver to such Lender a promissory note payable to the
order of such Lender (or, if requested by such Lender, to such Lender and its
registered assigns) and in a form approved by the Administrative Agent.
Thereafter, the Loans evidenced by such promissory note and interest thereon
shall at all times (including after assignment pursuant to Section 9.04) be
represented by one or more promissory notes in such form payable to the order of
the payee named therein (or, if such promissory note is a registered note, to
such payee and its registered assigns).
SECTION 2.09. Prepayment of Loans.
(a) Optional Prepayments Right to Prepay Borrowings. Each
Borrower shall have the right at any time and from time to time to prepay any
Borrowing in whole or in part, subject to the requirements of this Section;
provided that no Borrower shall have the right to prepay any Competitive Loan
without the prior consent of the Lender thereof.
(b) Notices, Etc. The relevant Borrower shall notify the
Administrative Agent by telephone (confirmed by telecopy) of any optional
prepayment hereunder of a Borrowing made by such Borrower (i) in the case of
prepayment of a Syndicated Eurodollar Borrowing or of a Competitive Borrowing,
not later than 11:00 a.m., New York City time, three Business Days before the
date of prepayment or (ii) in the case of prepayment of an ABR Borrowing, not
later than 11:00 a.m., New York City time, one Business Day before the date of
prepayment. Each such notice shall be irrevocable and shall specify the
prepayment date and the principal amount of each Borrowing or portion thereof to
be prepaid; provided that, if a notice of prepayment is given in connection with
a conditional notice of termination of the Commitments as contemplated by
Section 2.07, then such notice of prepayment may be revoked if such notice of
termination is revoked in accordance with Section 2.07. Promptly following
receipt of any such notice relating to a Syndicated Borrowing or Competitive
Borrowing, the Administrative Agent shall advise the relevant Lenders of the
contents thereof. Each partial prepayment of any Borrowing shall be in an amount
that would be permitted in the case of a Borrowing of the same Type as provided
in Section 2.02. Each prepayment of a Syndicated Borrowing shall be applied
ratably to the Loans included in the prepaid Borrowing. Prepayments shall be
accompanied by accrued interest to the extent required by Section 2.11 and shall
be made in the manner specified in Section 2.08(c).
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SECTION 2.10. Fees.
(a) Facility Fee. With respect to each Tranche, the relevant
Borrower(s) agree(s) to pay to the Administrative Agent for account of each
Lender under such Tranche a facility fee, which shall accrue at the Applicable
Rate on the daily amount of the Commitment of such Lender (whether used or
unused) under such Tranche during the period from and including the date hereof
to but excluding the date such Commitment terminates; provided that, if such
Lender continues to have any Revolving Credit Exposure after its Commitment
terminates, then such facility fee shall continue to accrue on the daily
aggregate outstanding principal amount of Loans (including Competitive Loans) of
such Lender from and including the date on which its Commitment terminates to
but excluding the date on which such Lender ceases to have any Loans
outstanding. Accrued facility fees shall be payable on each Quarterly Date, on
each date the Commitments of any Lender terminate, on each Non-Extending Lender
Term Loan Maturity Date and on the Maturity Date, commencing on the first such
date to occur after the date hereof; provided that any facility fees accruing
after the date on which the Commitments terminate (or, with respect to facility
fees owing by a Borrower in the event that such Borrower elects to convert
Syndicated Loans to Term Loans as provided in Section 2.08(b)(i), accruing after
the Maturity Date) shall be payable on demand. All facility fees shall be
computed on the basis of a year of 360 days and shall be payable for the actual
number of days elapsed (including the first day but excluding the last day).
(b) Utilization Fee. With respect to each Tranche, the relevant
Borrower(s) agree(s) to pay a fee to the Administrative Agent for account of
each Lender under such Tranche a utilization fee, which shall accrue at the
Applicable Rate on the daily aggregate outstanding principal amount of Loans
(including Competitive Loans) of such Lender under such Tranche for each day on
which the aggregate outstanding principal amount of the Loans under such Tranche
equals or exceeds an amount equal to 50% of the Commitments under such Tranche
(and for this purpose, each Non-Extending Lender shall be deemed to have a
Commitment under each Tranche in an amount equal to the aggregate outstanding
principal amount of its Non-Extending Lender Term Loans under such Tranche and
each Lender shall be deemed to have a Commitment under each Tranche in an amount
equal to the aggregate outstanding principal amount of its Term Loans under such
Tranche). Accrued utilization fees shall be payable on each Quarterly Date, on
each date the Commitments of any Lender terminate, on each Non-Extending Lender
Term Loan Maturity Date and on the Maturity Date, commencing on the first such
date to occur after the date hereof; provided that any utilization fees accruing
after the date on which the Commitments terminate (or, with respect to
utilization fees owing by a Borrower in the event that such Borrower elects to
convert Syndicated Loans to Term Loans as provided in Section 2.08(b)(i),
accruing after the Maturity Date) shall be payable on demand. All utilization
fees shall be computed on the basis of a year of 360 days and shall be payable
for the actual number of days elapsed (including the first day but excluding the
last day). Utilization fees
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payable under this Section 2.10(b) with respect to any day under Tranche A shall
be allocated between the Borrowers pro rata according to the respective
aggregate outstanding principal amounts of Loans under such Tranche owing by the
Borrowers on such day.
(c) Administrative Agent Fees. The Borrowers agree to pay to the
Administrative Agent, for its own account, fees payable in the amounts and at
the times separately agreed upon between the Borrowers and the Administrative
Agent.
(d) Payment of Fees. All fees payable hereunder shall be paid on
the dates due, in immediately available funds, to the Administrative Agent for
distribution, in the case of facility fees, to the Lenders entitled thereto.
Fees paid shall not be refundable under any circumstances.
SECTION 2.11. Interest.
(a) ABR Loans. The Loans constituting each ABR Borrowing shall
bear interest at a rate per annum equal to the Alternate Base Rate plus the
Applicable Rate.
(b) Eurodollar Loans. The Loans constituting each Eurodollar
Borrowing shall bear interest at a rate per annum equal to (i) in the case of a
Syndicated Eurodollar Loan, the Adjusted LIBO Rate for the Interest Period for
such Borrowing plus the Applicable Rate, or (ii) in the case of a Competitive
Eurodollar Borrowing, the LIBO Rate for the Interest Period for such Borrowing
plus (or minus, as applicable) the Margin applicable to such Loan.
(c) Fixed Rate Loans. Each Fixed Rate Loan shall bear interest
at a rate per annum equal to the Fixed Rate applicable to such Loan.
(d) Default Interest. Notwithstanding the foregoing, if any
principal of or interest on any Loan or any fee or other amount payable by
either Borrower hereunder is not paid when due, whether at stated maturity, upon
acceleration or otherwise, such overdue amount shall bear interest, after as
well as before judgment, at a rate per annum equal to (i) in the case of overdue
principal of any Loan, 2% plus the rate otherwise applicable to such Loan as
provided above or (ii) in the case of any other amount, 2% plus the rate
applicable to ABR Loans as provided in paragraph (a) of this Section.
(e) Payment of Interest. Accrued interest on each Loan shall be
payable in arrears on each Interest Payment Date for such Loan and, in the case
of Syndicated Loans, upon termination of the Commitments; provided that (i)
interest accrued pursuant to paragraph (d) of this Section shall be payable on
demand, (ii) in the event of any repayment or prepayment of any Loan (other than
a prepayment of an ABR Loan prior to the Commitment Termination Date), accrued
interest on the principal amount repaid or prepaid shall be payable on the date
of such
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repayment or prepayment and (iii) in the event of any conversion of any
Syndicated Eurodollar Borrowing prior to the end of the Interest Period
therefor, accrued interest on such Borrowing shall be payable on the effective
date of such conversion.
(f) Computation. All interest hereunder shall be computed on the
basis of a year of 360 days except that interest computed by reference to the
Alternate Base Rate at times when the Alternate Base Rate is based on the Prime
Rate shall be computed on the basis of a year of 365 days (or 366 days in a leap
year), and in each case shall be payable for the actual number of days elapsed
(including the first day but excluding the last day). The applicable Alternate
Base Rate, Adjusted LIBO Rate or LIBO Rate shall be determined by the
Administrative Agent, and such determination shall be conclusive absent manifest
error.
SECTION 2.12. Alternate Rate of Interest. If prior to the
commencement of the Interest Period for a Eurodollar Borrowing:
(a) the Administrative Agent determines (which determination
shall be conclusive absent manifest error) that adequate and reasonable
means do not exist for ascertaining the Adjusted LIBO Rate or the LIBO
Rate, as applicable, for such Interest Period; or
(b) the Administrative Agent is advised by the Required Lenders
(or, in the case of a Competitive Eurodollar Loan, the Lender that is
required to make such Loan) that the Adjusted LIBO Rate or the LIBO
Rate, as applicable, for such Interest Period will not adequately and
fairly reflect the cost to such Lenders (or Lender) of making or
maintaining their Loans (or its Loan) included in such Borrowing for
such Interest Period;
then the Administrative Agent shall give notice thereof to the Borrowers and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agent notifies the Borrowers and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Syndicated Borrowing to, or
continuation of any Syndicated Borrowing as, a Syndicated Eurodollar Borrowing
shall be ineffective, (ii) if any Borrowing Request requests a Syndicated
Eurodollar Borrowing, such Borrowing shall be made as an ABR Borrowing and (iii)
any request by the relevant Borrower for a Competitive Eurodollar Borrowing
shall be ineffective; provided that if the circumstances giving rise to such
notice do not affect all the Lenders, then requests by the such Borrower for
Competitive Eurodollar Borrowings may be made to Lenders that are not affected
thereby.
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SECTION 2.13. Increased Costs.
(a) Increased Costs Generally. If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets of, deposits with or for
account of, or credit extended by, any Lender (except any such reserve
requirement reflected in the Adjusted LIBO Rate); or
(ii) impose on any Lender or the London interbank market any
other condition affecting this Agreement or Eurodollar Loans or Fixed
Rate Loans made by such Lender;
and the result of any of the foregoing shall be to increase the cost to such
Lenders of making or maintaining any Eurodollar Loan or Fixed Rate Loan (or of
maintaining its obligation to make any such Loan) or to reduce the amount of any
sum received or receivable by such Lender hereunder (whether of principal,
interest or otherwise), then the relevant Borrower will pay to such Lender such
additional amount or amounts as will compensate such Lender for such additional
costs incurred or reduction suffered.
(b) Capital Requirements. If any Lender determines that any
Change in Law regarding capital requirements has or would have the effect of
reducing the rate of return on such Lender's capital or on the capital of such
Lender's holding company, if any, as a consequence of this Agreement or the
Loans made by such Lender to a level below that which such Lender or such
Lender's holding company could have achieved but for such Change in Law (taking
into consideration such Lender's policies and the policies of such Lender's
holding company with respect to capital adequacy), then from time to time each
Borrower will pay to such Lender such additional amount or amounts as will
compensate such Lender or such Lender's holding company for any such reduction
suffered.
(c) Certificates from Lenders. A certificate of a Lender setting
forth the amount or amounts necessary to compensate such Lender or its holding
company, as the case may be, as specified in paragraph (a) or (b) of this
Section shall be delivered to the relevant Borrower and shall be conclusive
absent manifest error. Such Borrower(s) shall pay such Lender the amount shown
as due on any such certificate within 10 days after receipt thereof.
(d) Delay in Requests. Failure or delay on the part of any
Lender to demand compensation pursuant to this Section shall not constitute a
waiver of such Lender's right to demand such compensation; provided that neither
Borrower shall be required to compensate a Lender pursuant to this Section for
any increased costs or reductions incurred more than six months prior to the
date that such Lender notifies the relevant Borrower(s) of the Change in Law
giving rise to such increased costs or reductions and of such Lender's intention
to claim compensation therefor; provided further that, if the Change in Law
giving rise to such increased
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costs or reductions is retroactive, then the six-month period referred to above
shall be extended to include the period of retroactive effect thereof.
(e) Competitive Loans. Notwithstanding the foregoing provisions
of this Section, a Lender shall not be entitled to compensation pursuant to this
Section in respect of any Competitive Loan if the Change in Law that would
otherwise entitle it to such compensation shall have been publicly announced
prior to submission of the Competitive Bid pursuant to which such Loan was made.
SECTION 2.14. Break Funding Payments. In the event of (a) the
payment of any principal of any Eurodollar Loan or Fixed Rate Loan other than on
the last day of an Interest Period therefor (including as a result of an Event
of Default or as a result of the failure to satisfy the conditions precedent to
the conversion of Syndicated Loans to Term Loans or Non-Extending Lender Term
Loans set forth in Section 2.03(b)(i) or (ii), as the case may be) (b) the
conversion of any Syndicated Eurodollar Loan other than on the last day of an
Interest Period therefor, (c) the failure to borrow, convert, continue or prepay
any Syndicated Loan on the date specified in any notice delivered pursuant
hereto (regardless of whether such notice is permitted to be revocable under
Section 2.09(b) and is revoked in accordance herewith), (d) the failure to
borrow any Competitive Loan after accepting the Competitive Bid to make such
Loan, or (e) the assignment of any Eurodollar Loan or Fixed Rate Loan other than
on the last day of an Interest Period therefor as a result of a request by
either Borrower pursuant to Section 2.17, then, in any such event, the relevant
Borrower shall compensate each Lender for the loss, cost and expense
attributable to such event. In the case of a Eurodollar Loan, the loss to any
Lender attributable to any such event shall be deemed to include an amount
determined by such Lender to be equal to the excess, if any, of (i) the amount
of interest that such Lender would pay for a deposit equal to the principal
amount of such Loan for the period from the date of such payment, conversion,
failure or assignment to the last day of the then current Interest Period for
such Loan (or, in the case of a failure to borrow, convert or continue, the
duration of the Interest Period that would have resulted from such borrowing,
conversion or continuation) if the interest rate payable on such deposit were
equal to the Adjusted LIBO Rate for such Interest Period, over (ii) the amount
of interest that such Lender would earn on such principal amount for such period
if such Lender were to invest such principal amount for such period at the
interest rate that would be bid by such Lender (or an affiliate of such Lender)
for Dollar deposits from other banks in the eurodollar market at the
commencement of such period. A certificate of any Lender setting forth any
amount or amounts that such Lender is entitled to receive pursuant to this
Section shall be delivered to the relevant Borrower and shall be conclusive
absent manifest error. Such Borrower shall pay such Lender the amount shown as
due on any such certificate within 10 days after receipt thereof.
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SECTION 2.15. Taxes.
(a) Payments Free of Taxes. Any and all payments by or on
account of any obligation of each Borrower hereunder shall be made free and
clear of and without deduction for any Indemnified Taxes or Other Taxes;
provided that if either Borrower shall be required to deduct any Indemnified
Taxes or Other Taxes from such payments, then (i) the sum payable shall be
increased as necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section) the
Administrative Agent or Lender (as the case may be) receives an amount equal to
the sum it would have received had no such deductions been made, (ii) such
Borrower shall make such deductions and (iii) such Borrower shall pay the full
amount deducted to the relevant Governmental Authority in accordance with
applicable law.
(b) Payment of Other Taxes by the Borrowers. In addition, each
Borrower shall pay any Other Taxes to the relevant Governmental Authority in
accordance with applicable law.
(c) Indemnification by the Borrowers. Each Borrower shall
indemnify the Administrative Agent and each Lender, within 10 days after written
demand therefor, for the full amount of any Indemnified Taxes or Other Taxes
(including Indemnified Taxes or Other Taxes imposed or asserted on or
attributable to amounts payable under this Section) paid by the Administrative
Agent or such Lender, as the case may be, and any penalties, interest and
reasonable expenses arising therefrom or with respect thereto, whether or not
such Indemnified Taxes or Other Taxes were correctly or legally imposed or
asserted by the relevant Governmental Authority. A certificate as to the amount
of such payment or liability delivered to the relevant Borrower by a Lender, or
by the Administrative Agent on its own behalf or on behalf of a Lender, shall be
conclusive absent manifest error.
(d) Evidence of Payments. As soon as practicable after any
payment of Indemnified Taxes or Other Taxes by the relevant Borrower to a
Governmental Authority, such Borrower shall deliver to the Administrative Agent
the original or a certified copy of a receipt issued by such Governmental
Authority evidencing such payment, a copy of the return reporting such payment
or other evidence of such payment reasonably satisfactory to the Administrative
Agent.
(e) Foreign Lenders. Any Foreign Lender that is entitled to an
exemption from or reduction of withholding tax under the law of the jurisdiction
in which the relevant Borrower is located, or any treaty to which such
jurisdiction is a party, with respect to payments under this Agreement shall
deliver to such Borrower (with a copy to the Administrative Agent), at the time
or times prescribed by applicable law or reasonably requested by such Borrower,
such properly completed and executed documentation prescribed by applicable law
as will permit such payments to be made without withholding or at a reduced
rate.
<PAGE> 45
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SECTION 2.16. Payments Generally; Pro Rata Treatment; Sharing of
Set-offs.
(a) Payments by the Borrowers. Each Borrower shall make each
payment required to be made by it hereunder (whether of principal, interest or
fees, or under Section 2.13, 2.14 or 2.15, or otherwise) prior to 12:00 noon,
New York City time, on the date when due, in immediately available funds,
without set-off or counterclaim; provided that if a new Loan is to be made by
any Lender to a Borrower on a date such Borrower is to repay any principal of an
outstanding Loan of such Lender, such Lender shall apply the proceeds of such
new Loan to the payment of the principal to be repaid by such Borrower and only
an amount equal to the difference between the principal to be borrowed and the
principal to be repaid shall be made available by such Lender to the
Administrative Agent as provided in Section 2.05 or paid by such Borrower to the
Administrative Agent pursuant to this paragraph, as the case may be. Any amounts
received after such time on any date may, in the discretion of the
Administrative Agent, be deemed to have been received on the next succeeding
Business Day for purposes of calculating interest thereon. All such payments
shall be made to the Administrative Agent at its offices at 270 Park Avenue, New
York, New York, except that payments pursuant to Sections 2.13, 2.14, 2.15 and
9.03 shall be made directly to the Persons entitled thereto. The Administrative
Agent shall distribute any such payments received by it for account of any other
Person to the appropriate recipient promptly following receipt thereof. If any
payment hereunder shall be due on a day that is not a Business Day, the date for
payment shall be extended to the next succeeding Business Day and, in the case
of any payment accruing interest, interest thereon shall be payable for the
period of such extension. All payments hereunder shall be made in Dollars.
(b) Application of Insufficient Payments. If at any time
insufficient funds are received by and available to the Administrative Agent to
pay fully all amounts of principal, interest and fees then due hereunder, such
funds shall be applied (i) first, to pay interest and fees then due hereunder,
ratably among the parties entitled thereto in accordance with the amounts of
interest and fees then due to such parties, and (ii) second, to pay principal
then due hereunder, ratably among the parties entitled thereto in accordance
with the amounts of principal then due to such parties.
(c) Pro Rata Treatment. Except to the extent otherwise provided
herein: (i) each payment of facility fee and utilization fee under Section 2.10
with respect to a Tranche shall be made for account of the Lenders under such
Tranche, and each termination or reduction of the amount of the Commitments
under such Tranche under Section 2.07 shall be applied to the respective
Commitments of the Lenders under such Tranche, pro rata according to the amounts
of their respective Commitments under such Tranche; (ii) each Syndicated
Borrowing under a Tranche shall be allocated pro rata among the Lenders under
such Tranche according to the amounts of their respective Commitments under such
Tranche (in the case of the making of
<PAGE> 46
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Syndicated Loans) or their respective Loans under such Tranche (in the case of
conversions and continuations of Loans); (iii) each payment or prepayment of
principal of Syndicated Loans under a Tranche by the relevant Borrower shall be
made for account of the Lenders under such Tranche pro rata in accordance with
the respective unpaid principal amounts of the Syndicated Loans under such
Tranche held by them; and (iv) each payment of interest on Syndicated Loans
under a Tranche by the relevant Borrower shall be made for account of the
Lenders under such Tranche pro rata in accordance with the respective amounts of
interest on such Loans then due and payable to such Lenders.
(d) Sharing of Payments by Lenders. If any Lender shall, by
exercising any right of set-off or counterclaim or otherwise, obtain payment in
respect of any principal of or interest on any of its Syndicated Loans under any
Tranche resulting in such Lender receiving payment of a greater proportion of
the aggregate amount of its Syndicated Loans under such Tranche and accrued
interest thereon then due than the proportion received by any other Lender, then
the Lender receiving such greater proportion shall purchase (for cash at face
value) participations in the Syndicated Loans of such Tranche of other Lenders
under such Tranche to the extent necessary so that the benefit of all such
payments shall be shared by the Lenders under such Tranche ratably in accordance
with the aggregate amount of principal of and accrued interest on their
respective Syndicated Loans under such Tranche; provided that (i) if any such
participations are purchased and all or any portion of the payment giving rise
thereto is recovered, such participations shall be rescinded and the purchase
price restored to the extent of such recovery, without interest, and (ii) the
provisions of this paragraph shall not be construed to apply to any payment made
by either Borrower pursuant to and in accordance with the express terms of this
Agreement or any payment obtained by a Lender as consideration for the
assignment of or sale of a participation in any of its Loans under any Tranche
to any assignee or participant, other than to either Borrower or any Subsidiary
or Affiliate thereof (as to which the provisions of this paragraph shall apply).
Each Borrower consents to the foregoing and agrees, to the extent it may
effectively do so under applicable law, that any Lender acquiring a
participation pursuant to the foregoing arrangements may exercise against such
Borrower rights of set-off and counterclaim with respect to such participation
as fully as if such Lender were a direct creditor of such Borrower in the amount
of such participation.
(e) Presumptions of Payment. Unless the Administrative Agent
shall have received notice from the relevant Borrower prior to the date on which
any payment is due to the Administrative Agent for account of the Lenders
hereunder that such Borrower will not make such payment, the Administrative
Agent may assume that such Borrower has made such payment on such date in
accordance herewith and may, in reliance upon such assumption, distribute to the
Lenders under such Tranche the amount due. In such event, if such Borrower has
not in fact made such payment, then each of the Lenders under such Tranche
severally agrees to repay to the Administrative Agent forthwith on demand the
amount so distributed to such
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Lender with interest thereon, for each day from and including the date such
amount is distributed to it to but excluding the date of payment to the
Administrative Agent, at the Federal Funds Effective Rate.
(f) Certain Deductions by the Administrative Agent. If any
Lender shall fail to make any payment required to be made by it pursuant to
Section 2.05(b) or 2.16(e), then the Administrative Agent may, in its discretion
(notwithstanding any contrary provision hereof), apply any amounts thereafter
received by the Administrative Agent for account of such Lender to satisfy such
Lender's obligations under such Sections until all such unsatisfied obligations
are fully paid.
SECTION 2.17. Mitigation Obligations; Replacement of Lenders.
(a) Designation of a Different Lending Office. If any Lender
requests compensation under Section 2.13, or if either Borrower is required to
pay any additional amount to any Lender or any Governmental Authority for
account of any Lender pursuant to Section 2.15, then such Lender shall use
reasonable efforts to designate a different lending office for funding or
booking its Loans hereunder or to assign its rights and obligations hereunder to
another of its offices, branches or affiliates, if, in the judgment of such
Lender, such designation or assignment (i) would eliminate or reduce amounts
payable pursuant to Section 2.13 or 2.15, as the case may be, in the future and
(ii) would not subject such Lender to any unreimbursed cost or expense and would
not otherwise be disadvantageous to such Lender. Each Borrower hereby agrees to
pay all reasonable costs and expenses incurred by any Lender in connection with
any such designation or assignment.
(b) Replacement of Lenders. If any Lender requests compensation
under Section 2.13, or if either Borrower is required to pay any additional
amount to any Lender or any Governmental Authority for account of any Lender
pursuant to Section 2.15, or if any Lender defaults in its obligation to fund
Loans hereunder, then such Borrower may, at its sole expense and effort, upon
notice to such Lender and the Administrative Agent, require such Lender to
assign and delegate, without recourse (in accordance with and subject to the
restrictions contained in Section 9.04), all its interests, rights and
obligations under this Agreement (other than any outstanding Competitive Loans
held by it) to an assignee that shall assume such obligations (which assignee
may be another Lender, if a Lender accepts such assignment); provided that (i)
such Borrower shall have received the prior written consent of the
Administrative Agent, which consent shall not unreasonably be withheld, (ii)
such Lender shall have received payment of an amount equal to the outstanding
principal of its Loans (other than Competitive Loans), accrued interest thereon,
accrued fees and all other amounts payable to it hereunder, from the assignee
(to the extent of such outstanding principal and accrued interest and fees) or
the relevant Borrower (in the case of all other amounts) and (iii) in the case
of any such assignment resulting from a claim for compensation under Section
2.13 or payments required to
<PAGE> 48
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be made pursuant to Section 2.15, such assignment will result in a reduction in
such compensation or payments. A Lender shall not be required to make any such
assignment and delegation if, prior thereto, as a result of a waiver by such
Lender or otherwise, the circumstances entitling the relevant Borrower to
require such assignment and delegation cease to apply.
SECTION 2.18. Extension of Commitment Termination Date.
(a) The Borrowers may, by notice to the Administrative Agent
(which shall promptly notify the Lenders) not later than 45 days and not earlier
than 60 days prior to the Commitment Termination Date then in effect hereunder
(the "Existing Commitment Termination Date"), request that the Lenders extend
the Commitment Termination Date for an additional 364 days from the Existing
Commitment Termination Date. Each Lender, acting in its sole discretion, shall,
by notice to the Borrowers and the Administrative Agent given not earlier than
45 days prior to the Existing Commitment Termination Date, but not later than
the date (herein, the "Consent Date") that is 30 days prior to the Existing
Commitment Termination Date (except that, if such date is not a Business Day,
such notice shall be given on the next succeeding Business Day), advise the
Borrowers and the Administrative Agent whether or not such Lender agrees to such
extension; provided that, if such Lender gives notice of its consent to such
extension prior to the Consent Date, such Lender may revoke such consent at any
time prior to the Consent Date by giving notice of such revocation to the
Borrowers and the Administrative Agent; and provided further that each Lender
that determines not to extend the Commitment Termination Date (a "Non-Extending
Lender") shall notify the Administrative Agent (which shall notify the Lenders)
of such fact promptly after such determination (but in any event no later than
the Consent Date) and any Lender that does not advise the Borrowers on or before
the Consent Date shall be deemed to be a Non-Extending Lender. The election of
any Lender to agree to such extension shall not obligate any other Lender to so
agree.
(b) If (and only if) the total of the Commitments of the Lenders
that have agreed so to extend the Commitment Termination Date shall be at least
66-2/3% of the aggregate amount of the Commitments in effect immediately prior
to the Consent Date, the Borrowers shall have the right on or before the
Existing Commitment Termination Date to replace each Non-Extending Lender with,
and otherwise add to this Agreement, one or more other lenders (which may
include any Lender, each prior to the Existing Commitment Termination Date an
"Additional Commitment Lender") with the approval of the Administrative Agent
(which approval shall not be unreasonably withheld), each of which Additional
Commitment Lenders shall have entered into an agreement in form and substance
satisfactory to the Borrowers and the Administrative Agent pursuant to which
such Additional Commitment Lender shall, effective as of the Existing Commitment
Termination Date, undertake a Commitment (and, if any such
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Additional Commitment Lender is already a Lender, its Commitment shall be in
addition to such Lender's Commitment hereunder on such date).
(c) If (and only if) the total of the Commitments of the Lenders
that have agreed so to extend the Commitment Termination Date shall be at least
66-2/3% of the aggregate amount of the Commitments in effect immediately prior
to the Consent Date, then, effective as of the Existing Commitment Termination
Date, the Existing Commitment Termination Date shall be extended to the date
falling 364 days after the Existing Commitment Termination Date (except that, if
such date is not a Business Day, such Commitment Termination Date as so extended
shall be the next preceding Business Day) and each Additional Commitment Lender
shall thereupon become a "Lender" for all purposes of this Agreement.
Notwithstanding the foregoing, the extension of the Existing
Commitment Termination Date shall not be effective with respect to any Lender
unless:
(i) no Default shall have occurred and be continuing on each of
the date of the notice requesting such extension, on the Consent Date
and on the Existing Commitment Termination Date;
(ii) each of the representations and warranties made by the
Borrowers in Article 3 hereof shall be true and complete on and as of
each of the date of the notice requesting such extension, the Consent
Date and the Existing Commitment Termination Date with the same force
and effect as if made on and as of such date (or, if any such
representation or warranty is expressly stated to have been made as of a
specific date, as of such specific date); and
(iii) subject to Section 2.08(b)(ii), each Non-Extending Lender
shall have been paid in full by the Borrowers all amounts owing to such
Lender hereunder on or before the Existing Commitment Termination Date.
Even if the Existing Commitment Termination Date is extended as aforesaid, the
Commitment of each Non-Extending Lender shall terminate on the Existing
Commitment Termination Date.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
Each Borrower represents and warrants to the Lenders that:
SECTION 3.01. Organization; Powers. Each of such Borrower and
its Subsidiaries (except Non-Material Subsidiaries) is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization, has all requisite power and authority to carry on its business as
now conducted and, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect, is qualified to do business in, and is in good standing in, every
jurisdiction where such qualification is required.
SECTION 3.02. Authorization; Enforceability. The Transactions
are within such Borrower's corporate powers and have been duly authorized by all
necessary corporate and, if required, by all necessary shareholder action. This
Agreement has been duly executed and delivered by such Borrower and constitutes
a legal, valid and binding obligation of such Borrower, enforceable in
accordance with its terms, except as such enforceability may be limited by (a)
bankruptcy, insolvency, reorganization, moratorium or similar laws of general
applicability affecting the enforcement of creditors' rights and (b) the
application of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
SECTION 3.03. Governmental Approvals; No Conflicts. The
Transactions with respect to such Borrower (a) do not require any consent or
approval of, registration or filing with, or any other action by, any
Governmental Authority, except such as have been obtained or made and are in
full force and effect, (b) will not violate any applicable law or regulation or
the charter, by-laws or other organizational documents of such Borrower or any
of its Subsidiaries or any order of any Governmental Authority, (c) will not
violate or result in a default under any indenture, agreement or other
instrument binding upon such Borrower or any of its Subsidiaries or assets, or
give rise to a right thereunder to require any payment to be made by any such
Person, and (d) will not result in the creation or imposition of any Lien on any
asset of such Borrower or any of its Subsidiaries.
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SECTION 3.04. Financial Condition; No Material Adverse Change.
(a) Financial Condition. Such Borrower has heretofore furnished
to the Lenders its consolidated balance sheet and statements of income,
stockholders' equity and cash flows (i) as of and for the fiscal year ended
December 31, 1998, reported on by Deloitte & Touche LLP, independent public
accountants for WAMU and Aristar, and (ii) as of and for the fiscal quarter and
the portion of the fiscal year ended June 30, 1999, certified by the chief
financial officer of such Borrower. Such financial statements present fairly, in
all material respects, the financial position and results of operations and cash
flows of such Borrower and its Subsidiaries as of such dates and for such
periods in accordance with GAAP, subject to year-end audit adjustments and the
absence of footnotes in the case of the statements referred to in clause (ii) of
the first sentence of this paragraph.
(b) No Material Adverse Change. From December 31, 1998 to the
date of this Agreement, there has been no material adverse change in the
business, assets, operations, prospects or condition, financial or otherwise, of
such Borrower and its Subsidiaries, taken as a whole.
(c) Year 2000 Issues. Such Borrower is aware of the problem that
may be presented for certain computer systems by use of date fields and the like
prior to, on and after January 1, 2000 and has developed and is implementing a
plan to help assure that the computer systems of such Borrower and its
Subsidiaries (including systems and equipment supplied by others or with which
such Borrower or any of its Subsidiaries' systems interface) will not be
materially affected by such problems. The cost of such development and
implementation and of the reasonably foreseeable consequences of the "Year 2000
problem" to such Borrower and its Subsidiaries is not anticipated to result in a
Default under this Agreement or to have a Material Adverse Effect.
SECTION 3.05. Properties. Such Borrower and its Subsidiaries has
good title to, or valid leasehold interests in, all its real and personal
property material to its business, except to the extent that failure to have
such title could not reasonably be expected to have a Material Adverse Effect.
SECTION 3.06. Litigation and Environmental Matters.
(a) Actions, Suits and Proceedings. There are no actions, suits
or proceedings by or before any arbitrator or Governmental Authority now pending
against or, to the knowledge of such Borrower, threatened against or affecting
such Borrower or any of its Subsidiaries (i) as to which there is a reasonable
likelihood of an adverse determination and that, if adversely determined, could
reasonably be expected, individually or in the aggregate, to result in a
Material
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Adverse Effect (other than the Disclosed Matters) or (ii) that involve this
Agreement or the Transactions.
(b) Environmental Matters. Except for the Disclosed Matters and
except with respect to any other matters that, individually or in the aggregate,
could not reasonably be expected to result in a Material Adverse Effect, neither
such Borrower nor any of its Subsidiaries (i) has failed to comply with any
Environmental Law or to obtain, maintain or comply with any permit, license or
other approval required under any Environmental Law, (ii) has become subject to
any Environmental Liability, (iii) has received notice of any claim with respect
to any Environmental Liability or (iv) knows of any basis for any Environmental
Liability.
SECTION 3.07. Compliance with Laws and Agreements. Such Borrower
and its Subsidiaries is in compliance with all laws, regulations and orders of
any Governmental Authority applicable to it or its property and all indentures,
agreements and other instruments binding upon it or its property, except where
the failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect. No Default has occurred and is
continuing.
SECTION 3.08. Investment and Holding Company Status. Neither
such Borrower nor any of its Subsidiaries is (a) an "investment company" as
defined in, or subject to regulation under, the Investment Company Act of 1940
or (b) a "holding company" as defined in, or subject to regulation under, the
Public Utility Holding Company Act of 1935.
SECTION 3.09. Taxes. Such Borrower and its Subsidiaries has
timely filed or caused to be filed all Tax returns and reports required to have
been filed and has paid or caused to be paid all Taxes required to have been
paid by it, except (a) Taxes that are being contested in good faith by
appropriate proceedings and for which such Person has set aside on its books
adequate reserves or (b) to the extent that the failure to do so could not
reasonably be expected to result in a Material Adverse Effect.
SECTION 3.10. ERISA. No ERISA Event has occurred or is
reasonably expected to occur that, when taken together with all other such ERISA
Events for which liability is reasonably expected to occur, could reasonably be
expected to result in a Material Adverse Effect. The present value of all
accumulated benefit obligations under each Plan (based on the assumptions used
for purposes of Statement of Financial Accounting Standards No. 87) did not, as
of the date of the most recent financial statements reflecting such amounts,
exceed the fair market value of the assets of such Plan, and there were no
underfunded Plans (based on the assumptions used for purposes of Statement of
Financial Accounting Standards No. 87) as of the date of the most recent
financial statements in which such underfunded Plans would be reflected.
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SECTION 3.11. Disclosure. Such Borrower has disclosed to the
Lenders all agreements, instruments and corporate or other restrictions to which
it or any of its Subsidiaries is subject, and all other matters known to it,
that, individually or in the aggregate, could reasonably be expected to result
in a Material Adverse Effect. None of the reports, financial statements,
certificates, schedules or other information furnished by or on behalf of such
Borrower to the Lender in connection with the negotiation of this Agreement or
delivered hereunder (as modified or supplemented by other information so
furnished) contains any material misstatement of fact or omits to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that, with
respect to projected financial information, such Borrower represents only that
such information was prepared in good faith based upon assumptions believed to
be reasonable at the time.
SECTION 3.12. Use of Credit. Neither such Borrower nor any of
its Subsidiaries is engaged principally, or as one of its important activities,
in the business of extending credit for the purpose, whether immediate,
incidental or ultimate, of buying or carrying Margin Stock in violation of
Regulations T, U or X of the Board, and no part of the proceeds of any Loan
hereunder will be used to buy or carry any Margin Stock in violation of
Regulations T, U or X of the Board.
SECTION 3.13. Material Agreements and Liens.
(a) Material Agreements. Part A of Schedule II is a complete and
correct list of each credit agreement, loan agreement, indenture, purchase
agreement, guarantee, letter of credit or other arrangement providing for or
otherwise relating to any Indebtedness or any extension of credit (or commitment
for any extension of credit) to, or guarantee by, such Borrower or any of its
Subsidiaries (excluding Repurchase Arrangements, deposits, annuities or Federal
funds transactions, each entered into by such Borrower or any of its
Subsidiaries in the ordinary course of its business, Hedging Agreements or
borrowings from the Federal Home Loan Bank and any commercial paper or medium
term note program of such Borrower or any of its Subsidiaries), outstanding on
the date hereof the aggregate principal or face amount of which equals or
exceeds (or may equal or exceed) $10,000,000, and the aggregate principal or
face amount outstanding or that may become outstanding under each such
arrangement is correctly described in Part A of Schedule II.
(b) Liens. Part B of Schedule II is a complete and correct list
of each Lien securing Indebtedness of any Person outstanding on the date hereof
(excluding Repurchase Arrangements, deposits, annuities or Federal funds
transactions, each entered into by such Borrower or any of its Subsidiaries in
the ordinary course of its Business, and Hedging Agreements or borrowings from
the Federal Home Loan Bank) the aggregate principal or face amount of which
equals or exceeds (or may equal or exceed) $10,000,000 and covering any
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property of either Borrower or any of their Subsidiaries, and the aggregate
Indebtedness secured (or that may be secured) by each such Lien and the property
covered by each such Lien is correctly described in Part B of Schedule II.
SECTION 3.14. Subsidiaries.
(a) Subsidiaries. Set forth in Part A of Schedule V is a
complete and correct list of all of the Subsidiaries of such Borrower as of the
date hereof, together with, for each such Subsidiary, (i) the jurisdiction of
organization of such Subsidiary, (ii) each Person holding ownership interests in
such Subsidiary and (iii) the nature of the ownership interests held by each
such Person and the percentage of ownership of such Subsidiary represented by
such ownership interests. Except as disclosed in Part A of Schedule V, (x) such
Borrower and its Subsidiaries owns, free and clear of Liens, and has the
unencumbered right to vote, all outstanding ownership interests in each Person
shown to be held by it in Part A of Schedule V, (y) all of the issued and
outstanding capital stock of each such Person organized as a corporation is
validly issued, fully paid and nonassessable and (z) there are no outstanding
Equity Rights with respect to such Person.
(b) Restrictions on Subsidiaries. None of the Subsidiaries of
such Borrower is, on the date hereof, subject to any indenture, agreement,
instrument or other arrangement of the type described in Section 6.03.
ARTICLE IV
CONDITIONS
SECTION 4.01. Effective Date. The obligations of the Lenders to
make Loans hereunder shall not become effective until the date on which the
Administrative Agent shall have received each of the following documents, each
of which shall be satisfactory to the Administrative Agent (and to the extent
specified below, to each Lender) in form and substance (or such condition shall
have been waived in accordance with Section 9.02):
(a) Executed Counterparts. From each party hereto either (i) a
counterpart of this Agreement signed on behalf of such party or (ii)
written evidence satisfactory to the Administrative Agent (which may
include telecopy transmission of a signed signature page to this
Agreement) that such party has signed a counterpart of this Agreement.
(b) Opinion of Counsel to the Borrowers. A favorable written
opinion (addressed to the Administrative Agent and the Lenders and dated
the Effective Date) of Heller
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Ehrman White & McAuliffe, counsel for the Borrowers, substantially in
the form of Exhibit B, and covering such other matters relating to the
Borrowers, this Agreement or the Transactions as the Required Lenders
shall reasonably request (and the Borrowers hereby instruct such counsel
to deliver such opinion to the Lenders and the Administrative Agent).
(c) Opinion of Special New York Counsel to Chase. An opinion,
dated the Effective Date, of Milbank, Tweed, Hadley & McCloy LLP,
special New York counsel to Chase, substantially in the form of Exhibit
C (and Chase hereby instructs such counsel to deliver such opinion to
the Lenders).
(d) Corporate Documents. Such documents and certificates as the
Administrative Agent or its counsel may reasonably request relating to
the organization, existence and good standing of each Borrower, the
authorization of the Transactions and any other legal matters relating
to the Borrowers, this Agreement or the Transactions, all in form and
substance satisfactory to the Administrative Agent and its counsel.
(e) Officer's Certificate. A certificate, dated the Effective
Date and signed by the President, a Vice President or a Financial
Officer of each Borrower, confirming compliance with the conditions set
forth in the lettered clauses of the first sentence of Section 4.02.
(f) Cancellation of Existing Credit Facilities. Evidence that
the Existing Credit Facilities shall have been (or shall be
simultaneously) cancelled and all amounts owing thereunder shall have
been paid in full.
(g) Other Documents. Such other documents as the Administrative
Agent or any Lender or special New York counsel to Chase may reasonably
request.
The obligation of any Lender to make its initial Loan hereunder
is also subject to the payment by the Borrowers of such fees as the Borrowers
shall have agreed to pay to any Lender or the Administrative Agent or Chase in
its capacity as lead Arranger in connection herewith, including the reasonable
fees and expenses of Milbank, Tweed, Hadley & McCloy LLP special New York
counsel to Chase, in connection with the negotiation, preparation, execution and
delivery of this Agreement and the Loans hereunder (to the extent that
statements for such fees and expenses have been delivered to the Borrowers).
The Administrative Agent shall notify the Borrowers and the
Lenders of the Effective Date, and such notice shall be conclusive and binding.
Notwithstanding the foregoing, the obligations of the Lenders to make Loans
hereunder shall not become effective unless each of the foregoing conditions is
satisfied (or waived pursuant to Section 9.02) on or prior to
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3:00 p.m., New York City time, on August 11, 1999 (and, in the event
such conditions are not so satisfied or waived, the Commitments shall
terminate at such time).
SECTION 4.02. Each Credit Event. The obligation of each Lender
to make a Loan to the relevant Borrower on the occasion of any Borrowing is
subject to the satisfaction of the following conditions:
(a) the representations and warranties of such Borrower set
forth in this Agreement (except, in the case of any Borrowing that does
not increase the outstanding aggregate principal amount of the Loans of
any Lender, the representations and warranties in Sections 3.06(a),
3.06(b) and 3.10) shall be true and correct on and as of the date of
such Borrowing (or, if any such representation or warranty is expressly
stated to have been made as of a specific date, as of such specific
date); and
(b) at the time of and immediately after giving effect to such
Borrowing, no Default shall have occurred and be continuing.
Each Borrowing shall be deemed to constitute a representation and warranty by
the relevant Borrower on the date thereof as to the matters specified in the
preceding sentence.
ARTICLE V
AFFIRMATIVE COVENANTS
Until the Commitments have expired or been terminated and the
principal of and interest on each Loan and all fees payable hereunder shall have
been paid in full, each Borrower covenants and agrees with the Lenders that:
SECTION 5.01. Financial Statements and Other Information. Such
Borrower will furnish to the Administrative Agent and each Lender (provided that
only WAMU shall furnish the reports referred to in paragraphs (f) and (g)
below):
(a) within 105 days after the end of each fiscal year of such
Borrower, the audited consolidated balance sheet and related statements
of operations, stockholders' equity and cash flows of such Borrower and
its Subsidiaries as of the end of and for such year, setting forth in
each case in comparative form the figures for the previous fiscal year,
all reported on by Deloitte & Touche LLP or other independent public
accountants of recognized national standing (without a "going concern"
or like qualification or exception and without any qualification or
exception as to the scope of such audit) to the effect that
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such consolidated financial statements present fairly in all material
respects the financial condition and results of operations of such
Borrower and its Subsidiaries on a consolidated basis in accordance with
GAAP consistently applied and a statement of such accountants to the
effect that, in making the examination necessary for their opinion,
nothing came to their attention that caused them to believe that such
Borrower was not in compliance with Section 6.04 hereof, insofar as such
Section relates to accounting matters (it being understood that delivery
to the Lender of such Borrower's Report on Form 10-K filed with the SEC
shall satisfy the financial statement requirements of this Section
5.01(a) so long as the information required to be contained in such
Report is substantially the same as that required under this Section
5.01(a));
(b) within 75 days after the end of each of the first three
fiscal quarters of each fiscal year of such Borrower, the consolidated
balance sheet and related statements of operations, stockholders' equity
and cash flows of such Borrower and its Subsidiaries as of the end of
and for such fiscal quarter and the then elapsed portion of the fiscal
year, setting forth in each case in comparative form the figures for
(or, in the case of the balance sheet, as of the end of) the
corresponding period or periods of the previous fiscal year, all
certified by a Financial Officer of such Borrower as presenting fairly
in all material respects the financial condition and results of
operations of such Borrower and its Subsidiaries on a consolidated basis
in accordance with GAAP consistently applied, subject to normal year-end
audit adjustments and the absence of footnotes (it being understood that
delivery to the Lender of such Borrower's Report on Form 10-Q filed with
the SEC shall satisfy the financial statement requirements of this
Section 5.01(b) so long as the information required to be contained in
such Report is substantially the same as that required under this
Section 5.01(b));
(c) concurrently with any delivery of financial statements under
clause (a) or (b) of this Section, a certificate of a Financial Officer
of such Borrower (i) certifying as to whether a Default has occurred
and, if a Default has occurred, specifying the details thereof and any
action taken or proposed to be taken with respect thereto, (ii) setting
forth reasonably detailed calculations demonstrating compliance with
Section 6.04, and (iii) stating whether any change in GAAP or in the
application thereof has occurred since the date of the audited financial
statements referred to in Section 3.04 and, if any such change has
occurred, specifying the effect of such change on the financial
statements accompanying such certificate;
(d) concurrently with any delivery of financial statements under
clause (a) of this Section, a certificate of the accounting firm that
reported on such financial statements stating whether they obtained
knowledge during the course of their examination of such
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financial statements of any Default (which certificate may be limited to
the extent required by accounting rules or guidelines);
(e) promptly after the same become publicly available, copies of
all periodic and other reports, proxy statements and other materials
filed by such Borrower or any of its Subsidiaries with the SEC, or with
any national securities exchange or the Office of Thrift Supervision, or
distributed by such Borrower to its shareholders generally, as the case
may be;
(f) promptly upon their becoming available, and in any event
within 90 days after the end of each fiscal quarter of each fiscal year
of WAMU, the "Reports of Condition and Income" (report no. H(b)-11, or
any successor form thereto) of WAMU, all such reports prepared in
accordance with regulatory accounting principles prescribed by the
Federal Financial Institutions Examination Council;
(g) promptly upon their becoming available, and in any event
within 75 days after the end of each fiscal quarter of each fiscal year
of WAMU, the Statements of Condition and Operations, including all
supporting schedules (Office of Thrift Supervision Form 1313, or any
successor form thereto) for Washington Mutual Bank, FA, all such
statements prepared in accordance with Office of Thrift Supervision
instructions; and
(h) promptly following any request therefor, such other
information regarding the operations, business affairs and financial
condition of such Borrower or any of its Subsidiaries, or compliance
with the terms of this Agreement, as the Administrative Agent or any
Lender may reasonably request.
SECTION 5.02. Notices of Material Events. Each Borrower will
furnish to the Administrative Agent and each Lender prompt written notice of the
following:
(a) the occurrence of any Default;
(b) the filing or commencement of any action, suit or proceeding
by or before any arbitrator or Governmental Authority against or
affecting such Borrower or any of its Affiliates that, if adversely
determined, could reasonably be expected to result in a Material Adverse
Effect;
(c) the occurrence of any ERISA Event that, alone or together
with any other ERISA Events that have occurred, could reasonably be
expected to result in liability of such Borrower and its Subsidiaries in
an aggregate amount exceeding $35,000,000;
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(d) the assertion of any environmental matter by any Person
against, or with respect to the activities of, such Borrower or any of
its Subsidiaries and any alleged violation of or non-compliance with any
Environmental Laws or any permits, licenses or authorizations, other
than any environmental matter or alleged violation that, if adversely
determined, would not (either individually or in the aggregate) have a
Material Adverse Effect; and
(e) any other development (including a development arising out
of a "Year 2000 problem") that results in, or could reasonably be
expected to result in, a Material Adverse Effect.
Each notice delivered under this Section shall be accompanied by a statement of
a Financial Officer or other executive officer of such Borrower setting forth
the details of the event or development requiring such notice and any action
taken or proposed to be taken with respect thereto.
SECTION 5.03. Existence; Conduct of Business. Each Borrower
will, and will cause each of its Subsidiaries to, do or cause to be done all
things necessary to preserve, renew and keep in full force and effect its legal
existence and the rights, licenses, permits, privileges and franchises material
to the conduct of its business; provided that the foregoing shall not prohibit
(a) any merger, consolidation, liquidation, dissolution or other transaction
permitted under Section 6.02 and (b) any Subsidiary that is not a Major
Subsidiary of such Borrower from entering into any merger or consolidation or
amalgamation or from liquidating, winding up or dissolving, itself (or suffering
any liquidation or dissolution) or prohibit a disposition by or of such
Subsidiary.
SECTION 5.04. Payment of Obligations. Each Borrower will, and
will cause each of its Subsidiaries to, pay its obligations, including Tax
liabilities, that, if not paid, could result in a Material Adverse Effect before
the same shall become delinquent or in default, except where (a) the validity or
amount thereof is being contested in good faith by appropriate proceedings, (b)
such Borrower or such Subsidiary has set aside on its books adequate reserves
with respect thereto in accordance with GAAP and (c) the failure to make payment
pending such contest could not reasonably be expected to result in a Material
Adverse Effect.
SECTION 5.05. Maintenance of Properties; Insurance. Each
Borrower will, and will cause each of its Subsidiaries to, (a) keep and maintain
all property material to the conduct of its business in good working order and
condition, ordinary wear and tear excepted, and (b) maintain, with financially
sound and reputable insurance companies, insurance in such amounts and against
such risks as are customarily maintained by companies engaged in the same or
similar businesses operating in the same or similar locations.
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SECTION 5.06. Books and Records; Inspection Rights. Each
Borrower will, and will cause each of its Subsidiaries to, keep proper books of
record and account in which full, true and correct entries are made of all
dealings and transactions in relation to its business and activities. Each
Borrower will, and will cause each of its Subsidiaries to, permit any
representatives designated by the Administrative Agent or any Lender, upon
reasonable prior notice, to visit and inspect its properties, to examine and
make extracts from its books and records, and to discuss its affairs, finances
and condition with its officers and independent accountants, all at such
reasonable times and as often as reasonably requested.
SECTION 5.07. Compliance with Laws. Each Borrower will, and will
cause each of its Subsidiaries to, comply with all laws, rules, regulations and
orders of any Governmental Authority applicable to it or its property, except
where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.
SECTION 5.08. Use of Proceeds. Each Borrower will use the
proceeds of the Loans hereunder solely for general corporate purposes, including
commercial paper back-up, in the ordinary course of business (in compliance with
all applicable legal and regulatory requirements, including, without limitation,
Regulations U and X and the Securities Act of 1933, as amended, and the
Securities Exchange Act of 1934, as amended, and the regulations thereunder);
provided that, without the consent of each Lender, such Borrower may not use the
proceeds of any of the Loans hereunder to finance or refinance, directly or
indirectly, an Acquisition of any Person (or the acquisition of (i) more than
50% of the publicly traded stock (of any class) of any Person or (ii) any of the
publicly traded stock (of any class) of any Person after such Borrower or any of
its Subsidiaries shall have been required to file a Schedule 13D under the
Securities Exchange Act of 1934, as amended, with respect to such stock) unless
such Acquisition (or acquisition) has been approved by the board of directors of
such Person or officers thereof duly authorized to do so; provided further that
neither the Administrative Agent nor any Lender shall have any responsibility as
to the use of any of such proceeds.
ARTICLE VI
NEGATIVE COVENANTS
Until the Commitments have expired or terminated and the
principal of and interest on each Loan and all fees payable hereunder have been
paid in full, each Borrower covenants and agrees with the Lenders that:
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SECTION 6.01. Liens. Such Borrower will not, nor (where such
Borrower is Aristar) will it permit any of its Subsidiaries (other than Insured
Subsidiaries) to, create, incur, assume or permit to exist any Lien on any
property or asset now owned or hereafter acquired by it except:
(a) Permitted Encumbrances;
(b) any Lien on any property or asset of such Borrower or any of
its Subsidiaries existing on the date hereof and set forth in Part B of
Schedule II;
(c) any Lien existing on any property or asset prior to the
acquisition thereof by such Borrower or any of its Subsidiaries or
existing on any property or asset of any Person that becomes a
Subsidiary of such Borrower after the date hereof prior to the time such
Person becomes such a Subsidiary; provided that (i) such Lien is not
created in contemplation of or in connection with such acquisition or
such Person becoming a Subsidiary of such Borrower, as the case may be,
(ii) such Lien shall not apply to any other property or assets of such
Borrower or any of its Subsidiaries and (iii) such Lien shall secure
only those obligations which it secures on the date of such acquisition
or the date such Person becomes such a Subsidiary, as the case may be
and extensions, renewals and replacements thereof that do not increase
the outstanding principal amount thereof;
(d) Liens on fixed or capital assets acquired, constructed or
improved by such Borrower or any of its Subsidiaries; provided that (i)
such security interests and the Indebtedness secured thereby are
incurred prior to or within 90 days after such acquisition or the
completion of such construction or improvement, (ii) the Indebtedness
secured thereby does not exceed 80% of the cost of acquiring,
constructing or improving such fixed or capital assets and (iii) such
security interests shall not apply to any other property or assets of
such Borrower or any of its Subsidiaries;
(e) Liens arising out of Repurchase Arrangements;
(f) Liens arising out of or securing Hedging Agreements;
(g) Liens arising out of Asset Securitizations and not involving
all, or substantially all, of the assets of the respective transferor;
(h) Liens in favor of WAMU and its Subsidiaries (other than by
Aristar or any of its Subsidiaries) arising in connection with
intercompany transactions between WAMU and any of such Subsidiaries;
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(i) Liens in favor of Aristar and its Subsidiaries arising in
connection with intercompany transactions between Aristar and any of
such Subsidiaries;
(j) Liens involving the pledge by WAMU of any interest in
capital stock of, or other ownership interest in, any Subsidiary of WAMU
(other than a Major Subsidiary or Aristar);
(k) Liens involving the pledge of any interest in a debt
instrument made to WAMU by any Subsidiary of WAMU (other than a Major
Subsidiary);
(l) Liens involving the pledge of property of WAMU or any of its
Subsidiaries (other than by Aristar or any of its Subsidiaries) securing
Indebtedness in an aggregate principal amount not exceeding 2% of the
Tangible Net Worth of WAMU; and
(m) Liens involving the pledge of property of Aristar or any of
its Subsidiaries securing Indebtedness in an aggregate principal amount
not exceeding 5% of the Tangible Net Worth of Aristar.
SECTION 6.02. Fundamental Changes.
(a) Mergers, Consolidations, Disposal of Assets, Etc. Such
Borrower will not, nor will it permit any of its Major Subsidiaries to, merge
into or consolidate with any other Person, or permit any other Person to merge
into or consolidate with it, or sell, transfer, lease or otherwise dispose of
(in one transaction or in a series of transactions) all or substantially all of
its assets, or all or substantially all of the stock of any of its Subsidiaries
(in each case, whether now owned or hereafter acquired), or liquidate or
dissolve, except that, if at the time thereof and immediately after giving
effect thereto no Default shall have occurred and be continuing (i) any Major
Subsidiary may merge into WAMU in a transaction in which WAMU is the surviving
corporation, (ii) any Major Subsidiary may merge into any Subsidiary of WAMU in
a transaction in which the surviving entity is a wholly owned Subsidiary of
WAMU, (iii) any Major Subsidiary may sell, transfer, lease or otherwise dispose
of its assets to WAMU or to another wholly owned Subsidiary of WAMU, (iv) such
Borrower or any Major Subsidiary of such Borrower may merge or consolidate with
any other Person if (x) in the case of a merger or consolidation of such
Borrower, such Borrower is the surviving corporation and, in any other case, the
surviving corporation is, after giving effect to such merger or consolidation, a
wholly owned Subsidiary of such Borrower and (y) after giving effect thereto no
Default would exist hereunder and (v) any Subsidiary of either Borrower may
liquidate or dissolve if the relevant Borrower determines in good faith that
such liquidation or dissolution is in the best interests of such Borrower and is
not materially disadvantageous to the Lenders; provided that if any such
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merger shall be between a Subsidiary and a wholly owned Subsidiary of such
Borrower , then the wholly owned Subsidiary shall be the continuing or surviving
corporation.
(b) Lines of Business. Such Borrower will not, nor will it
permit any of its Subsidiaries to, engage to any substantial extent in any line
or lines of business activity other than (i) the business of owning and
operating a depository institution (as defined in 12 U.S.C. Section 1813(c)), a
consumer finance company, a mortgage company, an insurance company, a trust
company, an investment advisor or a securities broker-dealer, (ii) the business
of providing other financial services or (iii) any business that may be engaged
in by a Washington state chartered savings bank (as defined in RCW 32.04.020), a
Federal savings association (as defined in 12 U.S.C. Section 1462(5)) or a bank
holding company (as defined in 12 U.S.C. Section 1841(a)) or a Subsidiary of any
of them.
SECTION 6.03. Certain Restrictions on Subsidiaries. Such
Borrower will not permit any of its Subsidiaries to enter into, after the date
hereof, any indenture, agreement, instrument or other arrangement that, directly
or indirectly, prohibits or restrains, or has the effect of prohibiting or
restraining, or imposes materially adverse conditions upon, the incurrence or
payment of Indebtedness, the granting of Liens, the declaration or payment of
dividends, the making of loans, advances, guarantees or Investments or the sale,
assignment, transfer or other disposition of property if the effect of any such
indenture, agreement, instrument or other arrangement could reasonably be
expected to result in a Material Adverse Effect.
SECTION 6.04. Certain Financial Covenants.
(a) WAMU
(i) Double Leverage Ratio. WAMU will not permit the Double
Leverage Ratio to exceed 1:30 to 1:00 at any time.
(ii) Tangible Net Worth. WAMU will not permit its Tangible Net
Worth at any time to be less than the sum of (x) $5,500,000,000 plus (y)
40% of the net income of WAMU and its Subsidiaries (determined on a
consolidated basis without duplication in accordance with GAAP and for
which purpose any net loss shall be deemed to be a net income of zero)
for each fiscal quarter of WAMU ending after June 30, 1999 plus (z) 40%
of the aggregate net proceeds received by WAMU from the issuance by WAMU
after the date of this Agreement of shares of its capital stock
(iii) Maximum Non-Performing Assets. WAMU will not permit
Non-Performing Assets at any time to constitute more than 4.5% of
Consolidated Assets at such time.
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(b) Aristar
(i) Tangible Net Worth. Aristar will not permit its Tangible Net
Worth at any time to be less than the sum of (x) $275,000,000 plus (y)
40% of the net income of Aristar and its Subsidiaries (determined on a
consolidated basis without duplication in accordance with GAAP and for
which purpose any net loss shall be deemed to be a net income of zero)
for each fiscal quarter of Aristar ending after June 30, 1999.
(ii) Senior Debt Ratio. Aristar will not permit the ratio of (x)
the aggregate principal amount of all Senior Indebtedness (other than
Indebtedness owing among Aristar and its Consolidated Subsidiaries)
outstanding at any time to (y) its Tangible Net Worth at such time to be
greater than 10.0 to 1.0.
(iii) Permissible Indebtedness. Aristar will not permit the
aggregate amount of all Indebtedness (other than Indebtedness among
Aristar and its Consolidated Subsidiaries) outstanding at any time owed
by its Consolidated Subsidiaries (other than Insured Subsidiaries) to
exceed 15% of the aggregate amount of all Indebtedness (other than
Indebtedness owing among Aristar and its Consolidated Subsidiaries) then
outstanding of Aristar and its Consolidated Subsidiaries (other than
Insured Subsidiaries).
SECTION 6.05. Insured Subsidiary Capital. Such Borrower will at
all times ensure that none of its Insured Subsidiaries is "undercapitalized",
"significantly undercapitalized" or "critically undercapitalized" for purposes
of 12 U.S.C. Section 1831o, as amended, re-enacted or redesignated from time to
time; and such Borrower and its Insured Subsidiaries will at all times maintain
such amount of capital as may be prescribed by all applicable Bank Regulatory
Authorities, whether by guideline, regulation, agreement or order.
SECTION 6.06. Payment of Dividends. Such Borrower will not, and
will not permit any of its Subsidiaries to, declare or make, or agree to pay or
make, directly or indirectly, any Restricted Payment, provided Aristar may
declare and pay dividends with respect to its capital stock provided that, at
the time of declaration and payment thereof and after giving effect thereto, no
Event of Default shall have occurred and be continuing.
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ARTICLE VII
EVENTS OF DEFAULT
If any of the following events ("Events of Default") shall
occur:
(a) either Borrower shall fail to pay any principal of any Loan
when and as the same shall become due and payable, whether at the due
date thereof or at a date fixed for prepayment thereof or otherwise;
(b) either Borrower shall fail to pay any interest on any Loan
or any fee or any other amount (other than an amount referred to in
clause (a) of this Article) payable under this Agreement, when and as
the same shall become due and payable, and such failure shall continue
unremedied for a period of three or more Business Days;
(c) any representation or warranty made or deemed made by or on
behalf of either Borrower or any of their Subsidiaries in or in
connection with this Agreement or any amendment or modification hereof,
or in any report, certificate, financial statement or other document
furnished pursuant to or in connection with this Agreement or any
amendment or modification hereof, shall prove to have been incorrect in
any material respect when made or deemed made;
(d) either Borrower shall fail to observe or perform any
covenant, condition or agreement contained in Section 5.02(a), 5.03
(with respect to the Borrower's existence), 5.08 or in Article VI (other
than Section 6.02(b);
(e) either Borrower shall fail to observe or perform any
covenant, condition or agreement contained in this Agreement (other than
those specified in clause (a), (b) or (d) of this Article) and such
failure shall continue unremedied for a period of 30 or more days after
notice thereof from the Administrative Agent (given at the request of
any Lender) to such Borrower;
(f) either Borrower or any of their Subsidiaries shall fail to
make any payment (whether of principal or interest and regardless of
amount) in respect of any Material Indebtedness, when and as the same
shall become due and payable;
(g) any event or condition occurs that results in any Material
Indebtedness becoming due prior to its scheduled maturity or that
enables or permits (with or without the giving of notice, the lapse of
time or both) the holder or holders of any Material Indebtedness or any
trustee or agent on its or their behalf to cause any Material
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Indebtedness to become due, or to require the prepayment, repurchase,
redemption or defeasance thereof, prior to its scheduled maturity;
provided that this clause (g) shall not apply to secured Indebtedness
that becomes due as a result of the voluntary sale or transfer of the
property or assets securing such Indebtedness;
(h) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed seeking (i) liquidation,
reorganization or other relief in respect of either Borrower or any of
their Subsidiaries (other than Non-Material Subsidiaries) or its debts,
or of a substantial part of its assets, under any Federal, state or
foreign bankruptcy, insolvency, receivership or similar law now or
hereafter in effect or (ii) the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for either
Borrower or any of their Subsidiaries (other than Non-Material
Subsidiaries) or for a substantial part of its assets, and, in any such
case, such proceeding or petition shall continue undismissed for a
period of 60 or more days or an order or decree approving or ordering
any of the foregoing shall be entered;
(i) either Borrower or any of their Subsidiaries (other than
Non-Material Subsidiaries) shall (i) voluntarily commence any proceeding
or file any petition seeking liquidation, reorganization or other relief
under any Federal, state or foreign bankruptcy, insolvency, receivership
or similar law now or hereafter in effect, (ii) consent to the
institution of, or fail to contest in a timely and appropriate manner,
any proceeding or petition described in clause (h) of this Article,
(iii) apply for or consent to the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for such
Borrower or any of its Subsidiaries (other than Non-Material
Subsidiaries) or for a substantial part of its assets, (iv) file an
answer admitting the material allegations of a petition filed against it
in any such proceeding, (v) make a general assignment for the benefit of
creditors or (vi) take any action for the purpose of effecting any of
the foregoing;
(j) either Borrower or any of their Subsidiaries (other than
Non-Material Subsidiaries) shall become unable, admit in writing its
inability or fail generally to pay its debts as they become due;
(k) one or more judgments for the payment of money in an
aggregate amount in excess of $40,000,000 (exclusive of judgment amounts
fully covered by insurance where the insurer has admitted liability in
respect of such judgment) or $120,000,000 (regardless of insurance
coverage) shall be rendered against either Borrower or any of their
Subsidiaries or any combination thereof and the same shall remain
undischarged for a period of 30 consecutive days during which execution
shall not be effectively stayed, or any action shall be legally taken by
a judgment creditor to attach or levy upon any assets of either Borrower
or any of their Subsidiaries to enforce any such judgment;
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(l) an ERISA Event shall have occurred that, in the opinion of
the Required Lenders, when taken together with all other ERISA Events
that have occurred, could reasonably be expected to result in a Material
Adverse Effect;
(m) a Change in Control shall occur;
(n) WAMU or any of its Subsidiaries and any Bank Regulatory
Authority shall enter into any supervisory agreement, consent order or
any agreement (in writing or otherwise) affecting in any material
respect the management, business, properties, condition (financial or
otherwise) or operations, present or prospective, of WAMU and its
Subsidiaries taken as a whole; or any Bank Regulatory Authority shall
issue a cease and desist order to or in respect of WAMU or any of its
Subsidiaries;
(o) any Insured Subsidiary shall cease accepting deposits or
making commercial loans on the instruction of any Federal, state or
other regulatory body with authority to give such instruction other than
pursuant to an instruction generally applicable to banks organized under
the jurisdiction of organization of such Insured Subsidiary;
(p) (i) any Bank Regulatory Authority shall notify any Insured
Subsidiary that such Insured Subsidiary's capital stock has become
impaired; (ii) any of Washington Mutual Bank, Washington Mutual Bank fsb
or Washington Mutual Bank, FA shall, cease to be an insured bank under
the Federal Deposit Insurance Act, as amended, and the rules and
regulations promulgated thereunder; or (iii) any Insured Subsidiary
(other than Washington Mutual Bank, Washington Mutual Bank fsb or
Washington Mutual Bank, FA) shall pursuant to an order of any Bank
Regulatory Authority, cease to be an insured bank under the Federal
Deposit Insurance Act, as amended, and the rules and regulations
promulgated thereunder; provided however, in the case of (ii) and (iii)
that the event is not the result of a transaction permitted under
Section 6.02(a) or Section 5.03;
(q) any Insured Subsidiary shall be required (whether or not the
time allowed by the appropriate Bank Regulatory Authority for the
submission of such plan has been established or elapsed) to submit a
capital restoration plan of the type referred to in 12 U.S.C. Section
1831o(b)(2)(C), as amended, re-enacted or redesignated from time to
time; or
(r) WAMU shall Guarantee in writing (voluntarily or otherwise)
the capital of any Insured Subsidiary as part of or in connection with
any agreement or arrangement with any Bank Regulatory Authority;
then, and in every such event (other than an event with respect to the relevant
Borrower described in clause (h) or (i) of this Article), and at any time
thereafter during the continuance of such event, the Administrative Agent may,
and at the request of the Required Lenders shall, by
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notice to such Borrower, take either or both of the following actions, at the
same or different times: (i) terminate the Commitments available to such
Borrower, and thereupon the Commitments available to such Borrower shall
terminate immediately, and (ii) declare the Loans to such Borrower then
outstanding to be due and payable in whole (or in part, in which case any
principal not so declared to be due and payable may thereafter be declared to be
due and payable), and thereupon the principal of the Loans so declared to be due
and payable, together with accrued interest thereon and all fees and other
obligations of such Borrower accrued hereunder, shall become due and payable
immediately, without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by such Borrower; and in case of any event with
respect to such Borrower described in clause (h) or (i) of this Article, the
Commitments available to such Borrower shall automatically terminate and the
principal of the Loans to such Borrower then outstanding, together with accrued
interest thereon and all fees and other obligations of such Borrower accrued
hereunder, shall automatically become due and payable, without presentment,
demand, protest or other notice of any kind, all of which are hereby waived by
such Borrower.
ARTICLE VIII
AGENTS
SECTION 8.01 Administrative Agent.
(a) Subject to Section 8.01(f), each of the Lenders hereby
irrevocably appoints the Administrative Agent as its agent and authorizes the
Administrative Agent to take such actions on its behalf and to exercise such
powers as are delegated to the Administrative Agent by the terms hereof,
together with such actions and powers as are reasonably incidental thereto.
(b) The Person serving as the Administrative Agent hereunder
shall have the same rights and powers in its capacity as a Lender as any other
Lender and may exercise the same as though it were not the Administrative Agent,
and such Person and its Affiliates may accept deposits from, lend money to and
generally engage in any kind of business with the Borrowers or any Subsidiaries
or other Affiliates thereof as if it were not the Administrative Agent
hereunder.
(c) The Administrative Agent shall not have any duties or
obligations except those expressly set forth herein. Without limiting the
generality of the foregoing, (a) the Administrative Agent shall not be subject
to any fiduciary or other implied duties, regardless of whether a Default has
occurred and is continuing, (b) the Administrative Agent shall not have
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any duty to take any discretionary action or exercise any discretionary powers,
except discretionary rights and powers expressly contemplated hereby that the
Administrative Agent is required to exercise in writing by the Required Lenders,
and (c) except as expressly set forth herein, the Administrative Agent shall not
have any duty to disclose, and shall not be liable for the failure to disclose,
any information relating to the Borrowers or any of their respective
Subsidiaries that is communicated to or obtained by the bank serving as
Administrative Agent or any of its Affiliates in any capacity. The
Administrative Agent shall not be liable for any action taken or not taken by it
with the consent or at the request of the Required Lenders or in the absence of
its own gross negligence or willful misconduct. The Administrative Agent shall
be deemed not to have knowledge of any Default unless and until written notice
thereof is given to the Administrative Agent by a Borrower or a Lender, and the
Administrative Agent shall not be responsible for or have any duty to ascertain
or inquire into (i) any statement, warranty or representation made in or in
connection with this Agreement, (ii) the contents of any certificate, report or
other document delivered hereunder or in connection herewith, (iii) the
performance or observance of any of the covenants, agreements or other terms or
conditions set forth herein, (iv) the validity, enforceability, effectiveness or
genuineness of this Agreement or any other agreement, instrument or document, or
(v) the satisfaction of any condition set forth in Article IV or elsewhere
herein, other than to confirm receipt of items expressly required to be
delivered to the Administrative Agent.
(d) The Administrative Agent shall be entitled to rely upon, and
shall not incur any liability for relying upon, any notice, request,
certificate, consent, statement, instrument, document or other writing believed
by it to be genuine and to have been signed or sent by the proper Person. The
Administrative Agent also may rely upon any statement made to it orally or by
telephone and reasonably believed by it to be made by the proper Person, and
shall not incur any liability for relying thereon. The Administrative Agent may
consult with legal counsel (who may be counsel for a Borrower), independent
accountants and other experts selected by it, and shall not be liable for any
action taken or not taken by it in accordance with the advice of any such
counsel, accountants or experts.
(e) The Administrative Agent may perform any and all its duties
and exercise its rights and powers by or through any one or more sub-agents
appointed by the Administrative Agent. The Administrative Agent and any such
sub-agent may perform any and all its duties and exercise its rights and powers
through their respective Related Parties. The exculpatory provisions of the
preceding paragraphs shall apply to any such sub-agent and to the Related
Parties of the Administrative Agent and any such sub-agent, and shall apply to
their respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as Administrative Agent.
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(f) The Administrative Agent may resign at any time by notifying
the Lenders and the Borrowers. Upon any such resignation, the Required Lenders
shall have the right, in consultation with the Borrowers, to appoint a
successor. If no successor shall have been so appointed by the Required Lenders
and shall have accepted such appointment within 30 days after the retiring
Administrative Agent gives notice of its resignation, then the retiring
Administrative Agent's resignation shall nonetheless become effective and (1)
the retiring Administrative Agent shall be discharged from its duties and
obligations hereunder and (2) the Required Lenders shall perform the duties of
the Administrative Agent (and all payments and communications provided to be
made by, to or through the Administrative Agent shall instead be made by or to
each Lender directly) until such time as the Required Lenders appoint a
successor agent as provided for above in this paragraph. Upon the acceptance of
its appointment as Administrative Agent hereunder by a successor, such successor
shall succeed to and become vested with all the rights, powers, privileges and
duties of the retiring (or retired) Administrative Agent and the retiring
Administrative Agent shall be discharged from its duties and obligations
hereunder (if not already discharged therefrom as provided above in this
paragraph). The fees payable by the Borrowers to a successor Administrative
Agent shall be the same as those payable to its predecessor unless otherwise
agreed between the Borrowers and such successor. After the Administrative
Agent's resignation hereunder, the provisions of this Article and Section 9.03
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 Administrative Agent.
(g) Each Lender acknowledges that it has, independently and
without reliance upon the Administrative Agent or any other Lender and based on
such documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and
information as it shall from time to time deem appropriate, continue to make its
own decisions in taking or not taking action under or based upon this Agreement,
any related agreement or any document furnished hereunder or thereunder.
SECTION 8.02 Syndication Agents. The Syndication Agents named on
the cover page of this Agreement, in their capacity as such, shall have no
obligation, responsibility or required performance hereunder and shall not
become liable in any manner to any party hereto. No party hereto shall have any
obligation or liability, or owe any performance, hereunder, to the Syndication
Agents in their capacity as such.
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ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Notices. Except in the case of notices and other
communications expressly permitted to be given by telephone, all notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
(a) if to WAMU, to it at 1201 3rd Avenue, Seattle, Washington
98101, Attention of Marangal I. Domingo (Telecopy No.(206) 554-4954;
Telephone No. (206) 461-8956);
(b) if to Aristar, to WAMU at the address specified in (a) above
and to Aristar at 8900 Grand Oak Circle, Tampa, Florida 33637, Attention
of Phil Goodeve (Telecopy No. (813) 632-4582; Telephone No. (813)
632-4586);
(c) if to the Administrative Agent, to The Chase Manhattan Bank,
1 Chase Manhattan Plaza, 8th Floor, New York, New York 10081, Attention
of Loan and Agency Services Group (Telecopy No. (212) 552-5658;
Telephone No. (212) 552-7500), with a copy to The Chase Manhattan Bank,
270 Park Avenue, New York, New York 10017, Attention of Christine
Herrick (Telecopy No. (212) 270-1789; Telephone No. (212) 270-9747); and
(d) if to a Lender, to it at its address (or telecopy number)
set forth in its Administrative Questionnaire.
Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto (or, in the case
of any such change by a Lender, by notice to the Borrowers and the
Administrative Agent). All notices and other communications given to any party
hereto in accordance with the provisions of this Agreement shall be deemed to
have been given on the date of receipt.
SECTION 9.02. Waivers; Amendments.
(a) No Deemed Waivers; Remedies Cumulative. No failure or delay
by the Administrative Agent or any Lender in exercising any right or power
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right or power, or any abandonment or discontinuance of
steps to enforce such a right or power, preclude any other or further exercise
thereof or the exercise of any other right or power. The rights and remedies of
the Administrative Agent and the Lenders hereunder are cumulative and are not
exclusive of any rights or remedies that they would otherwise have. No waiver of
any provision of this
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Agreement or consent to any departure by the Borrowers therefrom shall in any
event be effective unless the same shall be permitted by paragraph (b) of this
Section, and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. Without limiting the generality of
the foregoing, the making of a Loan shall not be construed as a waiver of any
Default, regardless of whether the Administrative Agent or any Lender may have
had notice or knowledge of such Default at the time.
(b) Amendments. Neither this Agreement nor any provision hereof
may be waived, amended or modified except pursuant to an agreement or agreements
in writing entered into by the Borrowers and the Required Lenders or by the
Borrowers and the Administrative Agent with the consent of the Required Lenders;
provided that no such agreement shall (i) increase the Commitment of any Lender
without the written consent of each Lender, (ii) reduce the principal amount of
any Loan or reduce the rate of interest thereon, or reduce any fees payable
hereunder, without the written consent of each Lender, (iii) postpone the
scheduled date of payment of the principal amount of any Loan, or any interest
thereon, or any fees payable hereunder, or reduce the amount of, waive or excuse
any such payment, or postpone the scheduled date of expiration of any
Commitment, without the written consent of each Lender, (iv) alter the manner in
which payments or prepayments of principal, interest or other amounts hereunder
shall be applied as among the Lenders or Tranches or Types or Classes of Loans,
without the written consent of each Lender, or (v) change any of the provisions
of this Section or the definition of the term "Required Lenders" or any other
provision hereof specifying the number or percentage of Lenders required to
waive, amend or modify any rights hereunder or make any determination or grant
any consent hereunder, without the written consent of each Lender; and provided
further that no such agreement shall amend, modify or otherwise affect the
rights or duties of the Administrative Agent hereunder without the prior written
consent of the Administrative Agent.
SECTION 9.03. Expenses; Indemnity; Damage Waiver.
(a) Costs and Expenses. The Borrowers shall pay (i) all
reasonable out-of-pocket expenses incurred by the Administrative Agent and its
Affiliates, including the reasonable fees, charges and disbursements of counsel
for the Administrative Agent, in connection with the syndication of the credit
facilities provided for herein, the preparation and administration of this
Agreement or any amendments, modifications or waivers of the provisions hereof
(whether or not the transactions contemplated hereby or thereby shall be
consummated) and (ii) all out-of-pocket expenses incurred by the Administrative
Agent or any Lender, including the fees, charges and disbursements of any
counsel for the Administrative Agent, or any Lender, in connection with the
enforcement or protection of its rights in connection with this Agreement,
including its rights under this Section, or in connection with the Loans made
hereunder, including in connection with any workout, restructuring or
negotiations in respect thereof.
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(b) Indemnification by the Borrowers. The Borrowers, jointly and
severally, shall indemnify the Administrative Agent and each Lender, and each
Related Party of any of the foregoing Persons (each such Person being called an
"Indemnitee") against, and to hold each Indemnitee harmless from, any and all
losses, claims, damages, liabilities and related expenses, including the fees,
charges and disbursements of any counsel for any Indemnitee, incurred by or
asserted against any Indemnitee arising out of, in connection with, or as a
result of (i) the execution or delivery of this Agreement or any agreement or
instrument contemplated hereby, the performance by the parties hereto of their
respective obligations hereunder or the consummation of the Transactions or any
other transactions contemplated hereby, (ii) any Loan or the use of the proceeds
therefrom, (iii) any actual or alleged presence or release of Hazardous
Materials on or from any property owned or operated by either Borrower or any of
their Subsidiaries, or any Environmental Liability related in any way to either
Borrower or any of their Subsidiaries, or (iv) any actual or prospective claim,
litigation, investigation or proceeding relating to any of the foregoing,
whether based on contract, tort or any other theory and regardless of whether
any Indemnitee is a party thereto; provided that such indemnity shall not, as to
any Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses resulting from the gross negligence or wilful
misconduct of such Indemnitee.
(c) Reimbursement by Lenders. To the extent that the Borrowers
fail to pay any amount required to be paid by them to the Administrative Agent
under paragraph (a) or (b) of this Section, each Lender severally agrees to pay
to the Administrative Agent such Lender's Applicable Percentage (determined as
of the time that the applicable unreimbursed expense or indemnity payment is
sought) of such unpaid amount; provided that the unreimbursed expense or
indemnified loss, claim, damage, liability or related expense, as the case may
be, was incurred by or asserted against the Administrative Agent in its capacity
as such.
(d) Waiver of Consequential Damages, Etc. To the extent
permitted by applicable law, neither Borrower shall assert, and each Borrower
hereby waives, any claim against any Indemnitee, on any theory of liability, for
special, indirect, consequential or punitive damages (as opposed to direct or
actual damages) arising out of, in connection with, or as a result of, this
Agreement or any agreement or instrument contemplated hereby, the Transactions,
any Loan or the use of the proceeds thereof.
(e) Payments. All amounts due under this Section shall be
payable not later than ten days after written demand therefor.
SECTION 9.04. Successors and Assigns.
(a) Assignments Generally. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns permitted hereby, except that the Borrowers
may not assign or otherwise transfer any of their
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respective rights or obligations hereunder without the prior written consent of
each Lender (and any attempted assignment or transfer by either Borrower without
such consent shall be null and void). Nothing in this Agreement, expressed or
implied, shall be construed to confer upon any Person (other than the parties
hereto, their respective successors and assigns permitted hereby and, to the
extent expressly contemplated hereby, the Related Parties of each of the
Administrative Agent and the Lenders) any legal or equitable right, remedy or
claim under or by reason of this Agreement.
(b) Assignments by Lenders. Any Lender may assign to one or more
assignees all or a portion of its rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans at the time owing to
it); provided that (i) except in the case of an assignment to a Lender or an
Affiliate of a Lender, each of the relevant Borrower and the Administrative
Agent must give their prior written consent to such assignment (which consent
shall not be unreasonably withheld), (ii) except in the case of an assignment to
a Lender or an Affiliate of a Lender or an assignment of the entire remaining
amount of the assigning Lender's Commitment, the amount of the Commitment of the
assigning Lender subject to each such assignment (determined as of the date the
Assignment and Acceptance with respect to such assignment is delivered to the
Administrative Agent) shall not be less than $5,000,000 unless each of the
relevant Borrower and the Administrative Agent otherwise consent, (iii) each
partial assignment shall be made as an assignment of a proportionate part of all
the assigning Lender's rights and obligations under this Agreement, except that
this clause (iii) shall not apply to rights in respect of outstanding
Competitive Loans, (iv) the parties to each assignment shall execute and deliver
to the Administrative Agent an Assignment and Acceptance, together with a
processing and recordation fee of $3,000, and (v) the assignee, if it shall not
be a Lender, shall deliver to the Administrative Agent an Administrative
Questionnaire; provided further that any consent of the relevant Borrower
otherwise required under this paragraph shall not be required if an Event of
Default under clause (h), (i) or (j) of Article VII has occurred and is
continuing. Upon acceptance and recording pursuant to paragraph (d) of this
Section, from and after the effective date specified in each Assignment and
Acceptance, the assignee thereunder shall be a party hereto and, to the extent
of the interest assigned by such Assignment and Acceptance, have the rights and
obligations of a Lender under this Agreement, and the assigning Lender
thereunder shall, to the extent of the interest assigned by such Assignment and
Acceptance, be released from its obligations under this Agreement (and, in the
case of an Assignment and Acceptance covering all of the assigning Lender's
rights and obligations under this Agreement, such Lender shall cease to be a
party hereto but shall continue to be entitled to the benefits of Sections 2.13,
2.14, 2.15 and 9.03). Any assignment or transfer by a Lender of rights or
obligations under this Agreement that does not comply with this paragraph shall
be treated for purposes of this Agreement as a sale by such Lender of a
participation in such rights and obligations in accordance with paragraph (e) of
this Section.
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(c) Maintenance of Register by the Administrative Agent. The
Administrative Agent, acting for this purpose as an agent of the Borrowers,
shall maintain at one of its offices in New York City a copy of each Assignment
and Acceptance 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, and the Borrowers,
the Administrative 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, notwithstanding notice to the contrary. The
Register shall be available for inspection by the Borrowers and any Lender, at
any reasonable time and from time to time upon reasonable prior notice.
(d) Effectiveness of Assignments. Upon its receipt of a duly
completed Assignment and Acceptance executed by an assigning Lender and an
assignee, the assignee's completed Administrative Questionnaire (unless the
assignee shall already be a Lender hereunder), the processing and recordation
fee referred to in paragraph (b) of this Section and any written consent to such
assignment required by paragraph (b) of this Section, the Administrative Agent
shall accept such Assignment and Acceptance and record the information contained
therein in the Register. No assignment shall be effective for purposes of this
Agreement unless it has been recorded in the Register as provided in this
paragraph.
(e) Participations. Any Lender may, without the consent of the
Borrowers or the Administrative Agent, sell participations to one or more banks
or other entities (a "Participant") in all or a portion of such Lender's rights
and obligations under this Agreement (including all or a portion of its
Commitment and the Loans owing to it); provided that (i) such Lender's
obligations under this Agreement shall remain unchanged, (ii) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations and (iii) the Borrowers, the Administrative Agent and the other
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement. Any
agreement or instrument pursuant to which a Lender sells such a participation
shall provide that such Lender shall retain the sole right to enforce this
Agreement and to approve any amendment, modification or waiver of any provision
of this Agreement; provided that such agreement or instrument may provide that
such Lender will not, without the consent of the Participant, agree to any
amendment, modification or waiver described in the first proviso to Section
9.02(b) that affects such Participant. Subject to paragraph (f) of this Section,
each Borrower agrees that each Participant shall be entitled to the benefits of
Sections 2.13, 2.14 and 2.15 to the same extent as if it were a Lender and had
acquired its interest by assignment pursuant to paragraph (b) of this Section.
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(f) Limitations on Rights of Participants. A Participant shall
not be entitled to receive any greater payment under Section 2.13 or 2.15 than
the applicable Lender would have been entitled to receive with respect to the
participation sold to such Participant, unless the sale of the participation to
such Participant is made with the relevant Borrower's prior written consent. A
Participant that would be a Foreign Lender if it were a Lender shall not be
entitled to the benefits of Section 2.15 unless the relevant Borrower is
notified of the participation sold to such Participant and such Participant
agrees, for the benefit of such Borrower, to comply with Section 2.15(e) as
though it were a Lender.
(g) Certain Pledges. Any Lender may at any time pledge or assign
a security interest in all or any portion of its rights under this Agreement to
secure obligations of such Lender, including any such pledge or assignment to a
Federal Reserve Bank, and this Section shall not apply to any such pledge or
assignment of a security interest; provided that no such pledge or assignment of
a security interest shall release a Lender from any of its obligations hereunder
or substitute any such assignee for such Lender as a party hereto.
(h) No Assignments to the Borrowers or Affiliates. Anything in
this Section to the contrary notwithstanding, no Lender may assign or
participate any interest in any Loan held by it hereunder to either Borrower or
any of its respective Affiliates or Subsidiaries without the prior consent of
each Lender.
(i) Special Purpose Vehicles. Notwithstanding anything to the
contrary contained herein, any Lender (a "Granting Lender") may grant to a
special purpose funding vehicle (an "SPC") of such Granting Lender, identified
as such in writing from time to time by the Granting Lender to the
Administrative Agent and the Borrowers, the option to provide all or any part of
any Loan that such Granting Lender would otherwise be obligated to make,
provided that (i) nothing herein shall constitute a commitment to make any Loan
by any SPC, (ii) if an SPC elects not to exercise such option or otherwise fails
to provide all or any part of such Loan, the Granting Lender shall make such
Loan pursuant to the terms hereof, and (iii) the rights of any such SPC shall be
derivative of the rights of the Granting Lender, and such SPC shall be subject
to all of the restrictions upon the Granting Lender herein contained. Each SPC
shall be conclusively presumed to have made arrangements with its Granting
Lender for the exercise of voting and other rights hereunder in a manner which
is acceptable to the SPC, the Administrative Agent, the Lenders and the
Borrowers, and each of the Administrative Agent, the Lenders and the Borrowers
shall be entitled to rely upon and deal solely with the Granting Lender with
respect to Loans made by or through its SPC. The making of a Loan by an SPC
hereunder shall utilize the Commitment of the Granting Lender to the same
extent, and as if, such Loan were made by the Granting Lender. Each party hereto
hereby agrees (which agreement shall survive the termination of this Agreement)
that, prior to the date that is one year and one day after the payment in full
of all outstanding senior indebtedness of any SPC, it will not institute
against, or
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join any other person in instituting against, such SPC, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings or similar
proceedings under the laws of the United States or any State thereof, in respect
of claims arising out of this Agreement, provided that the Granting Lender for
each SPC hereby agrees to indemnify, save and hold harmless each other party
hereto for any loss, cost, damage and expense arising out of their inability to
institute any such proceeding against its SPC. In addition, notwithstanding
anything to the contrary contained in this Section 9.04(i), any SPC may (i) with
the prior written consent of the relevant Borrower and the Administrative Agent
(which consents shall not be unreasonably withheld) but without paying any
processing fee therefor, assign all or a portion of its interests in any Loans
to its Granting Lender or to any financial institutions providing liquidity
and/or credit facilities to or for the account of such SPC to fund the Loans
made by such SPC or to support the securities (if any) issued by such SPC to
fund such Loans (but nothing contained herein shall be construed in derogation
of the obligation of the Granting Lender to make Loans hereunder), provided that
neither the consent of the SPC or of any such assignee shall be required for
amendments or waivers hereunder except for those amendments or waivers for which
the consent of participants is required under Section 9.02, and (ii) disclose on
a confidential basis (in the same manner described in Section 9.12) any
non-public information relating to its Loans to any rating agency, commercial
paper dealer or provider of a surety, guarantee or credit or liquidity
enhancement to such SPC.
SECTION 9.05. Survival. All covenants, agreements,
representations and warranties made by the Borrowers herein and in the
certificates or other instruments delivered in connection with or pursuant to
this Agreement shall be considered to have been relied upon by the other parties
hereto and shall survive the execution and delivery of this Agreement and the
making of any Loans, regardless of any investigation made by any such other
party or on its behalf and notwithstanding that the Administrative Agent or any
Lender may have had notice or knowledge of any Default or incorrect
representation or warranty at the time any credit is extended hereunder, and
shall continue in full force and effect as long as the principal of or any
accrued interest on any Loan or any fee or any other amount payable under this
Agreement is outstanding and unpaid and so long as the Commitments have not
expired or terminated. The provisions of Sections 2.13, 2.14, 2.15 and 9.03 and
Article VIII shall survive and remain in full force and effect regardless of the
consummation of the transactions contemplated hereby, the repayment of the
Loans, the expiration or termination of the Commitments or the termination of
this Agreement or any provision hereof.
SECTION 9.06. Counterparts; Integration; Effectiveness. This
Agreement may be executed in counterparts (and by different parties hereto on
different counterparts), each of which shall constitute an original, but all of
which when taken together shall constitute a single contract. This Agreement and
any separate letter agreements with respect to fees payable to the
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Administrative Agent constitute the entire contract between and among the
parties relating to the subject matter hereof and supersede any and all previous
agreements and understandings, oral or written, relating to the subject matter
hereof. Except as provided in Section 4.01, this Agreement shall become
effective when it shall have been executed by the Administrative Agent and when
the Administrative Agent shall have received counterparts hereof which, when
taken together, bear the signatures of each of the other parties hereto, and
thereafter shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. Delivery of an executed counterpart
of a signature page to this Agreement by telecopy shall be effective as delivery
of a manually executed counterpart of this Agreement.
SECTION 9.07. Severability. Any provision of this Agreement held
to be invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.
SECTION 9.08. Right of Setoff. If an Event of Default shall have
occurred and be continuing, each Lender is hereby authorized at any time and
from time to time, to the fullest extent permitted by law, to set off and apply
any and all deposits (general or special, time or demand, provisional or final)
at any time held and other indebtedness at any time owing by such Lender to or
for the credit or the account of the relevant Borrower against any of and all
the obligations of such Borrower now or hereafter existing under this Agreement
held by such Lender, irrespective of whether or not such Lender shall have made
any demand under this Agreement and although such obligations may be unmatured.
The rights of each Lender under this Section are in addition to other rights and
remedies (including other rights of setoff) which such Lender may have.
SECTION 9.09. Governing Law; Jurisdiction; Etc.
(a) Governing Law. This Agreement shall be construed in
accordance with and governed by the law of the State of New York.
(b) Submission to Jurisdiction. Each Borrower hereby irrevocably
and unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of the Supreme Court of the State of New York sitting in New York
County and of the United States District Court of the Southern District of New
York, and any appellate court from any thereof, in any action or proceeding
arising out of or relating to this Agreement, or for recognition or enforcement
of any judgment, and each of the parties hereto hereby irrevocably and
unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be
<PAGE> 79
- 73 -
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Nothing in this Agreement shall affect any
right that the Administrative Agent or any Lender may otherwise have to bring
any action or proceeding relating to this Agreement against the Borrowers or
their respective properties in the courts of any jurisdiction.
(c) Waiver of Venue. Each Borrower hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection which it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement in
any court referred to in paragraph (b) of this Section. Each of the parties
hereto hereby irrevocably waives, to the fullest extent permitted by law, the
defense of an inconvenient forum to the maintenance of such action or proceeding
in any such court.
(d) Service of Process. Each party to this Agreement irrevocably
consents to service of process in the manner provided for notices in Section
9.01. Nothing in this Agreement will affect the right of any party to this
Agreement to serve process in any other manner permitted by law.
SECTION 9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER
BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
SECTION 9.11. Headings. Article and Section headings and the
Table of Contents used herein are for convenience of reference only, are not
part of this Agreement and shall not affect the construction of, or be taken
into consideration in interpreting, this Agreement.
SECTION 9.12. Treatment of Certain Information; Confidentiality.
(a) Treatment of Certain Information. Each Borrower acknowledges
that from time to time financial advisory, investment banking and other services
may be offered or provided to such Borrower or one or more of its Subsidiaries
(in connection with this Agreement or otherwise) by any Lender or by one or more
subsidiaries or affiliates of such Lender and each
<PAGE> 80
- 74 -
Borrower hereby authorizes each Lender to share any information delivered to
such Lender by such Borrower and its Subsidiaries pursuant to this Agreement, or
in connection with the decision of such Lender to enter into this Agreement, to
any such subsidiary or affiliate, it being understood that any such subsidiary
or affiliate receiving such information shall be bound by the provisions of
paragraph (b) of this Section as if it were a Lender hereunder. Such
authorization shall survive the repayment of the Loans, the expiration or
termination of the Commitments or the termination of this Agreement or any
provision hereof.
(b) Confidentiality. Each of the Administrative Agent and the
Lenders agrees to maintain the confidentiality of the Information (as defined
below), except that Information may be disclosed (i) to its and its Affiliates'
directors, officers, employees and agents, including accountants, legal counsel
and other advisors (it being understood that the Persons to whom such disclosure
is made will be informed of the confidential nature of such Information and
instructed to keep such Information confidential), (ii) to the extent requested
by any regulatory authority, (iii) to the extent required by applicable laws or
regulations or by any subpoena or similar legal process, (iv) to any other party
to this Agreement, (v) in connection with the exercise of any remedies hereunder
or any suit, action or proceeding relating to this Agreement or the enforcement
of rights hereunder, (vi) subject to an agreement containing provisions
substantially the same as those of this paragraph, to any assignee of or
Participant in, or any prospective assignee of or Participant in, any of its
rights or obligations under this Agreement, (vii) with the consent of the
Borrowers or (viii) to the extent such Information (A) becomes publicly
available other than as a result of a breach of this paragraph or (B) becomes
available to the Administrative Agent or any Lender on a nonconfidential basis
from a source other than the Borrowers. For the purposes of this paragraph,
"Information" means all information received from either Borrower relating to
such Borrower or its business, other than any such information that is available
to the Administrative Agent or any Lender on a nonconfidential basis prior to
disclosure by such Borrower; provided that, in the case of information received
from such Borrower after the date hereof, such information is clearly identified
at the time of delivery as confidential. Any Person required to maintain the
confidentiality of Information as provided in this Section shall be considered
to have complied with its obligation to do so if such Person has exercised the
same degree of care to maintain the confidentiality of such Information as such
Person would accord to its own confidential information.
<PAGE> 81
- 75 -
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of the
day and year first above written.
WASHINGTON MUTUAL, INC.
By
--------------------------------------
Name:
Title:
ARISTAR, INC.
By
--------------------------------------
Name:
Title:
<PAGE> 82
- 76 -
LENDERS
THE CHASE MANHATTAN BANK,
individually and as Administrative Agent
By
--------------------------------------
Name:
Title:
BANK OF AMERICA, N.A.
By
--------------------------------------
Name:
Title:
BANK OF MONTREAL
By
--------------------------------------
Name:
Title:
FIRST NATIONAL BANK OF CHICAGO
By
--------------------------------------
Name:
Title:
<PAGE> 83
- 77 -
WELLS FARGO BANK
By
--------------------------------------
Name:
Title:
ABN AMRO BANK N.V.
By
--------------------------------------
Name:
Title:
FIRST UNION NATIONAL BANK
By
--------------------------------------
Name:
Title:
UNION BANK OF CALIFORNIA
By
--------------------------------------
Name:
Title:
<PAGE> 84
- 78 -
CITIBANK, N.A.
By
--------------------------------------
Name:
Title:
CREDIT LYONNAIS NEW YORK BRANCH
By
--------------------------------------
Name:
Title:
WESTDEUTCHE LANDESBANK
GIROZENTRALE
By
--------------------------------------
Name:
Title:
THE BANK OF NEW YORK
By
--------------------------------------
Name:
Title:
<PAGE> 85
- 79 -
DEUTSCHE BANK AG
By
--------------------------------------
Name:
Title:
KEY BANK
By
--------------------------------------
Name:
Title:
CREDIT SUISSE FIRST BOSTON
By
--------------------------------------
Name:
Title:
MELLON BANK
By
--------------------------------------
Name:
Title:
<PAGE> 86
- 80 -
US BANK
By
--------------------------------------
Name:
Title:
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By
--------------------------------------
Name:
Title:
BANCA DI ROMA
By
--------------------------------------
Name:
Title:
SUNTRUST BANK, MIAMI,
NATIONAL ASSOCIATION
By
--------------------------------------
Name:
Title:
<PAGE> 87
- 81 -
NORDDEUTSCHE LANDESBANK
By
--------------------------------------
Name:
Title:
<PAGE> 88
SCHEDULE I
Tranche A Commitments
<TABLE>
<CAPTION>
Name of Tranche A Lender Commitment($)
- ------------------------ ---------------
<S> <C>
The Chase Manhattan Bank 20,833,333.33
Bank of America, N.A. 20,833,333.33
Bank of Montreal 20,833,333.33
First National Bank of Chicago 20,833,333.33
Wells Fargo Bank 16,666,666.67
ABN AMRO Bank N.V. 16,666,666.67
First Union National Bank 16,666,666.67
Union Bank of California 14,583,333.33
Citibank, N.A. 13,020,833.33
Credit Lyonnais New York Branch 9,375,000.00
Westdeutche Landesbank Girozentrale 9,375,000.00
The Bank of New York 9,375,000.00
Deutsche Bank AG
New York and/or Cayman Islands Branches 9,375,000.00
Key Bank 9,375,000.00
Credit Suisse First Boston 9,375,000.00
Mellon Bank 9,375,000.00
US Bank 4,687,500.00
Morgan Guaranty Trust Company of New York 4,687,500.00
Banca Di Roma 4,687,500.00
SunTrust Bank, Miami, National Association 4,687,500.00
Norddeutsche Landesbank Girozentrale
' New York Branch and/or Cayman Islands Branch 4,687,500.00
---------------
$250,000,000.00
===============
</TABLE>
Schedule I to Agreement
<PAGE> 89
Tranche B Commitments
<TABLE>
<CAPTION>
Name of Tranche B Lender Commitment($)
- ------------------------ ---------------
<S> <C>
The Chase Manhattan Bank 29,166,666.67
Bank of America, N.A. 29,166,666.67
Bank of Montreal 29,166,666.67
First National Bank of Chicago 29,166,666.67
Wells Fargo Bank 23,333,333.33
ABN AMRO Bank N.V. 23,333,333.33
First Union National Bank 23,333,333.33
Union Bank of California 20,416,666.67
Citibank, N.A. 18,229,166.67
Credit Lyonnais New York Branch 13,125,000.00
Westdeutche Landesbank Girozentrale 13,125,000.00
The Bank of New York 13,125,000.00
Deutsche Bank AG
New York and/or Cayman Islands Branches 13,125,000.00
Key Bank 13,125,000.00
Credit Suisse First Boston 13,125,000.00
Mellon Bank 13,125,000.00
US Bank 6,562,500.00
Morgan Guaranty Trust Company of New York 6,562,500.00
Banca Di Roma 6,562,500.00
SunTrust Bank, Miami, National Association 6,562,500.00
Norddeutsche Landesbank Girozentrale
New York Branch and/or Cayman Islands Branch 6,562,500.00
---------------
$350,000,000.00
</TABLE>
Schedule I to Agreement
<PAGE> 90
SCHEDULE II
Material Agreements and Liens
Part A - Material Agreements
See attached.
Part B - Liens
None
Schedule II to Agreement
<PAGE> 91
SCHEDULE III
Litigation
None
Schedule III to Agreement
<PAGE> 92
SCHEDULE IV
Environmental Matters
None
Schedule IV to Agreement
<PAGE> 93
SCHEDULE V
Subsidiaries
See attached
Schedule V to Agreement
<PAGE> 94
EXHIBIT A
[Form of Assignment and Acceptance]
ASSIGNMENT AND ACCEPTANCE
Reference is made to the 364-Day Credit Agreement dated as of
August [__], 1999 (as amended and in effect on the date hereof, the
"Agreement"), between Washington Mutual, Inc., Aristar, Inc., the Lenders named
therein and The Chase Manhattan Bank, as Administrative Agent for the Lenders.
Terms defined in the Agreement are used herein with the same meanings.
The Assignor named below hereby sells and assigns, without
recourse, to the Assignee named below, and the Assignee hereby purchases and
assumes, without recourse, from the Assignor, effective as of the Assignment
Date set forth below, the interests set forth below (the "Assigned Interest") in
the Assignor's rights and obligations under the Agreement, including the
interests set forth below in the Tranche [A][B](1) Commitment of the Assignor on
the Assignment Date and Competitive Loans and Syndicated Loans owing to the
Assignor which are outstanding on the Assignment Date, together with unpaid
interest accrued on the assigned Loans to the Assignment Date, and the amount,
if any, set forth below of the fees accrued to the Assignment Date for account
of the Assignor. The Assignee hereby acknowledges receipt of a copy of the
Agreement. From and after the Assignment Date (i) the Assignee shall be a party
to and be bound by the provisions of the Agreement and, to the extent of the
interests assigned by this Assignment and Acceptance, have the rights and
obligations of a Lender thereunder and (ii) the Assignor shall, to the extent of
the interests assigned by this Assignment and Acceptance, relinquish its rights
and be released from its obligations under the Agreement.
This Assignment and Acceptance is being delivered to the
Administrative Agent together with (i) if the Assignee is a Foreign Lender, any
documentation required to be delivered by the Assignee pursuant to Section
2.15(e) of the Agreement, duly completed and executed by the Assignee, and (ii)
if the Assignee is not already a Lender under the Agreement, an Administrative
Questionnaire in the form supplied by the Administrative Agent, duly completed
by the Assignee. The [Assignee/Assignor] shall pay the fee payable to the
Administrative Agent pursuant to Section 9.04(b) of the Agreement.
This Assignment and Acceptance shall be governed by and
construed in accordance with the laws of the State of New York.
- --------
(1) Insert as appropriate.
Assignment and Acceptance
<PAGE> 95
- 2 -
Date of Assignment:
Legal Name of Assignor:
Legal Name of Assignee:
Assignee's Address for Notices:
Effective Date of Assignment
("Assignment Date")(2):
<TABLE>
<CAPTION>
Percentage Assigned of
Facility/Commitment
(set forth, to at
Principal Amount least 8 decimals, as a
Assigned (and percentage of the
identifying Facility and the
information as to aggregate Commitments
individual of all Lenders
Facility Competitive Loans) thereunder)
- -------- ------------------ ----------------------
<S> <C> <C>
Commitment Assigned: $ %
Syndicated Loans:
Competitive Loans:
Fees Assigned (if any):
</TABLE>
The terms set forth above and below are hereby agreed to:
[NAME OF ASSIGNOR], as Assignor
By:
-------------------------------------
Name:
Title:
- -----------
(2) Must be at least five Business Days after execution hereof by all
required parties.
<PAGE> 96
- 3 -
[NAME OF ASSIGNOR], as Assignor
By:
-------------------------------------
Name:
Title:
Assignment and Acceptance
<PAGE> 97
- 4 -
The undersigned hereby consent to the within assignment:(3)
WASHINGTON MUTUAL, INC.
By:
-----------------------------------
Name:
Title:
ARISTAR, INC.
By:
-----------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK,
as Administrative Agent
By:
-----------------------------------
Name:
Title:
- --------
(3) Consents to be included to the extent required by Section 9.04(b) of the
Agreement.
<PAGE> 98
EXHIBIT B
[Form of Opinion of Counsel to the Borrowers]
__________, 1999
To the Lenders party to the Agreement referred to
below and The Chase Manhattan Bank, as
Administrative Agent
Ladies and Gentlemen:
We have acted as counsel to Washington Mutual, Inc.("WAMU") and
Aristar, Inc. ("Aristar" and together with WAMU, the "Borrowers") in connection
with the 364-Day Credit Agreement (the "Agreement") dated as of August [__],
1999, between the Borrowers, the lenders party thereto and The Chase Manhattan
Bank, as Administrative Agent, providing for loans to be made by said lenders to
the Borrowers in an aggregate principal amount not exceeding $600,000,000. Terms
defined in the Agreement are used herein as defined therein. This opinion letter
is being delivered pursuant to Section 4.01(b) of the Agreement.
In rendering the opinions expressed below, we have examined the
following agreements, instruments and other documents:
(a) the Agreement; and
(b) such records of the Borrowers and such other documents
as we have deemed necessary as a basis for the opinions expressed below.
In our examination, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals and
the conformity with authentic original documents of all documents submitted to
us as copies. When relevant facts were not independently established, we have
relied upon statements of governmental officials and upon representations made
in or pursuant to the Agreement and certificates of appropriate representatives
of the Borrowers.
In rendering the opinions expressed below, we have assumed, with
respect to all of the documents referred to in this opinion letter, that
(except, to the extent set forth in the opinions expressed below, as to the
Borrowers):
Opinion of Counsel to the Borrowers
<PAGE> 99
- 2 -
(i) such documents have been duly authorized by, have been duly
executed and delivered by, and constitute legal, valid, binding and
enforceable obligations of, all of the parties to such documents;
(ii) all signatories to such documents have been duly
authorized; and
(iii) all of the parties to such documents are duly organized
and validly existing and have the power and authority (corporate or
other) to execute, deliver and perform such documents.
Based upon and subject to the foregoing and subject also to the
comments and qualifications set forth below, and having considered such
questions of law as we have deemed necessary as a basis for the opinions
expressed below, we are of the opinion that:
1. WAMU is a corporation duly organized, validly existing and in
good standing under the laws of the State of Washington. Each Subsidiary
of the Borrowers is a corporation duly organized, validly existing and
in good standing under the laws of the respective state indicated
opposite its name in Schedule V to the Agreement. Each of the Borrowers
and their respective Subsidiaries has all requisite power and authority
to carry on its business as now conducted and, except where the failure
to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, is qualified to do
business in, and is in good standing in, every jurisdiction where such
qualification is required.
2. The Transactions are within the corporate powers of the
Borrowers.
3. The Transactions have been duly authorized by all necessary
corporate action on the part of the Borrowers.
4. The Agreement has been duly executed and delivered by the
Borrowers.
5. Under conflict of law principles for the State of Washington,
the stated choice of New York law to govern the Agreement will be
honored by the courts of the State of Washington and the Agreement will
be construed in accordance with, and will be treated as being governed
by, the law of the State of New York. However, if the Agreement were
stated to be governed by and construed in accordance with the law of the
State of Washington, or if a court of the State of Washington were to
apply the law of the State of Washington to the Agreement, the Agreement
would nevertheless constitute the legal, valid and binding obligation of
WAMU, enforceable against WAMU in accordance with its terms, except as
may be limited by bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or other similar laws relating to or affecting
the rights of
<PAGE> 100
- 3 -
creditors generally and except as the enforceability of the Agreement is
subject to the application of general principles of equity (regardless
of whether considered in a proceeding in equity or at law), including
(a) the possible unavailability of specific performance, injunctive
relief or any other equitable remedy and (b) concepts of materiality,
reasonableness, good faith and fair dealing.
6. The Transactions (a) do not require any consent or approval
of, registration or filing with, or any other action by, any
Governmental Authority, (b) will not violate any applicable law or
regulation or the charter, by-laws or other organizational documents of
the Borrowers or any of their respective Subsidiaries or any order of
any Governmental Authority, (c) will not violate or result in a default
under any indenture, agreement or other instrument binding upon the
Borrowers or any of their respective Subsidiaries or assets, or give
rise to a right thereunder to require any payment to be made by any such
Person, and (d) will not result in the creation or imposition of any
Lien on any asset of the Borrowers or any of their respective
Subsidiaries.
7. Except as set forth in Schedules III and IV to the Agreement,
we have no knowledge (after due inquiry) of any actions, suits or
proceedings by or before any arbitrator or Governmental Authority now
pending against or threatened against or affecting the Borrowers or any
of their respective Subsidiaries (a) as to which there is a reasonable
possibility of an adverse determination and that, if adversely
determined, could reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect (other than the Disclosed
Matters) or (b) that involve the Agreement or the Transactions.
8. Neither of the Borrowers nor any of their respective
Subsidiaries is (a) an "investment company" as defined in, or subject to
regulation under, the Investment Company Act of 1940 or (b) a "holding
company" as defined in, or subject to regulation under, the Public
Utility Holding Company Act of 1935.
The foregoing opinions are subject to the following comments and
qualifications:
(A) The enforceability of Section 9.03 of the Agreement may be
limited by (i) laws rendering unenforceable indemnification contrary to
Federal or state securities laws and the public policy underlying such
laws and (ii) laws limiting the enforceability of provisions exculpating
or exempting a party, or requiring indemnification of a party for,
liability for its own action or inaction, to the extent the action or
inaction involves gross negligence, recklessness, willful misconduct or
unlawful conduct.
<PAGE> 101
- 4 -
(B) The enforceability of provisions in the Agreement to the
effect that terms may not be waived or modified except in writing may be
limited under certain circumstances.
(C) We express no opinion as to (i) the effect of the laws of
any jurisdiction in which any Lender is located (other than the State of
Washington and Delaware) that limit the interest, fees or other charges
such Lender may impose, (ii) the last sentence of Section 2.16(d) of the
Agreement and (iii) the first sentence of Section 9.09(b) of the
Agreement, insofar as such sentence relates to the subject matter
jurisdiction of the United States District Court for the Southern
District of New York to adjudicate any controversy related to the
Agreement.
The foregoing opinions are limited to matters involving the
Federal laws of the United States of America, the Delaware General
Corporation Law and the law of the State of Washington, and we do not
express any opinion as to the laws of any other jurisdiction.
At the request of our clients, this opinion letter is, pursuant
to Section 4.01(b) of the Agreement, provided to you by us in our capacity as
counsel to the Borrowers and may not be relied upon by any Person for any
purpose other than in connection with the transactions contemplated by the
Agreement without, in each instance, our prior written consent.
Very truly yours,
<PAGE> 102
EXHIBIT C
[Form of Opinion of Special New York Counsel to Chase]
__________, 1999
To the Lenders party to the Agreement referred to
below and The Chase Manhattan Bank,
as Administrative Agent
Ladies and Gentlemen:
We have acted as special New York counsel to The Chase Manhattan
Bank ("Chase") in connection with the 364-Day Credit Agreement (the "Agreement")
dated as of August [__], 1999, between Washington Mutual, Inc. ("WAMU"),
Aristar, Inc. ("Aristar" and, together with WAMU, the "Borrowers"), the lenders
party thereto and Chase, as Administrative Agent, providing for loans to be made
by said lenders to the Borrowers in an aggregate principal amount not exceeding
$600,000,000. Terms defined in the Agreement are used herein as defined therein.
This opinion letter is being delivered pursuant to Section 4.01(c) of the
Agreement.
In rendering the opinions expressed below, we have examined the
following agreements, instruments and other documents:
(a) the Agreement; and
(b) such records of the Borrowers and such other documents
as we have deemed necessary as a basis for the opinions expressed below.
In our examination, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals and
the conformity with authentic original documents of all documents submitted to
us as copies. When relevant facts were not independently established, we have
relied upon representations made in or pursuant to the Agreement.
In rendering the opinions expressed below, we have assumed, with
respect to all of the documents referred to in this opinion letter, that:
(i) such documents have been duly authorized by, have been
duly executed and delivered by, and (except to the extent set forth in
the opinions expressed below as to the Borrowers) constitute legal,
valid, binding and enforceable obligations of, all of the parties to
such documents;
(ii) all signatories to such documents have been duly
authorized; and
<PAGE> 103
- 2 -
(iii) all of the parties to such documents are duly organized
and validly existing and have the power and authority (corporate or
other) to execute, deliver and perform such documents.
Based upon and subject to the foregoing and subject also to the
comments and qualifications set forth below, and having considered such
questions of law as we have deemed necessary as a basis for the opinions
expressed below, we are of the opinion that the Agreement constitutes the legal,
valid and binding obligation of the Borrowers, enforceable against each Borrower
in accordance with its terms, except as may be limited by bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or other similar
laws relating to or affecting the rights of creditors generally and except as
the enforceability of the Agreement is subject to the application of general
principles of equity (regardless of whether considered in a proceeding in equity
or at law), including (a) the possible unavailability of specific performance,
injunctive relief or any other equitable remedy and (b) concepts of materiality,
reasonableness, good faith and fair dealing.
The foregoing opinions are subject to the following comments and
qualifications:
(A) The enforceability of Section 9.03 of the Agreement may be
limited by (i) laws rendering unenforceable indemnification contrary to
Federal or state securities laws and the public policy underlying such
laws and (ii) laws limiting the enforceability of provisions exculpating
or exempting a party, or requiring indemnification of a party for,
liability for its own action or inaction, to the extent the action or
inaction involves gross negligence, recklessness, willful misconduct or
unlawful conduct.
(B) The enforceability of provisions in the Agreement to the
effect that terms may not be waived or modified except in writing may be
limited under certain circumstances.
(C) We express no opinion as to (i) the effect of the laws of
any jurisdiction in which any Lender is located (other than the State of
New York) that limit the interest, fees or other charges such Lender may
impose, (ii) the last sentence of Section 2.16(d) of the Agreement and
(iii) Section 9.09(b) of the Agreement, insofar as such sentence relates
to the subject matter jurisdiction of the United States District Court
for the Southern District of New York to adjudicate any controversy
related to the Agreement.
The foregoing opinions are limited to matters involving the
Federal laws of the United States of America and the law of the State of New
York, and we do not express any opinion as to the laws of any other
jurisdiction.
<PAGE> 104
- 3 -
At the request of our client, this opinion letter is, pursuant
to Section 4.01(c) of the Agreement, provided to you by us in our capacity as
special New York counsel to Chase and may not be relied upon by any Person for
any purpose other than in connection with the transactions contemplated by the
Agreement without, in each instance, our prior written consent.
Very truly yours,
<PAGE> 1
EXHIBIT 10.2
================================================================================
FOUR-YEAR CREDIT AGREEMENT
dated as of
August 11, 1999
between
WASHINGTON MUTUAL, INC.
ARISTAR, INC.,
as Borrowers
The LENDERS Party Hereto
BANK OF AMERICA, N.A.
BANC ONE CAPITAL MARKETS, INC.
BANK OF MONTREAL,
as Syndication Agents
and
THE CHASE MANHATTAN BANK,
as Administrative Agent
$600,000,000
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I
DEFINITIONS
SECTION 1.01. Defined Terms...................................................1
SECTION 1.02. Classification of Loans and Borrowings.........................20
SECTION 1.03. Terms Generally................................................20
SECTION 1.04. Accounting Terms; GAAP.........................................20
ARTICLE II
THE CREDITS
SECTION 2.01. The Commitments................................................21
SECTION 2.02. Loans and Borrowings...........................................21
SECTION 2.03. Requests for Syndicated Borrowings.............................22
SECTION 2.04. Competitive Bid Procedure......................................23
SECTION 2.05. Funding of Borrowings..........................................26
SECTION 2.06. Interest Elections.............................................26
SECTION 2.07. Termination and Reduction of the Commitments...................28
SECTION 2.08. Repayment of Loans; Evidence of Debt...........................29
SECTION 2.09. Prepayment of Loans............................................30
SECTION 2.10. Fees...........................................................31
SECTION 2.11. Interest.......................................................32
SECTION 2.12. Alternate Rate of Interest.....................................33
SECTION 2.13. Increased Costs................................................33
SECTION 2.14. Break Funding Payments.........................................35
SECTION 2.15. Taxes..........................................................35
SECTION 2.16. Payments Generally; Pro Rata Treatment; Sharing of Set-offs....36
SECTION 2.17. Mitigation Obligations; Replacement of Lenders.................39
SECTION 2.18. Extension of Commitment Termination Date.......................40
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. Organization; Powers...........................................42
SECTION 3.02. Authorization; Enforceability..................................42
SECTION 3.03. Governmental Approvals; No Conflicts...........................42
SECTION 3.04. Financial Condition; No Material Adverse Change................43
SECTION 3.05. Properties.....................................................43
SECTION 3.06. Litigation and Environmental Matters...........................43
SECTION 3.07. Compliance with Laws and Agreements............................44
SECTION 3.08. Investment and Holding Company Status..........................44
SECTION 3.09. Taxes..........................................................44
SECTION 3.10. ERISA..........................................................44
SECTION 3.11. Disclosure.....................................................45
SECTION 3.12. Use of Credit..................................................45
SECTION 3.13. Material Agreements and Liens..................................45
SECTION 3.14. Subsidiaries...................................................46
ARTICLE IV
CONDITIONS
SECTION 4.01. Effective Date.................................................46
SECTION 4.02. Each Credit Event..............................................48
ARTICLE V
AFFIRMATIVE COVENANTS
SECTION 5.01. Financial Statements and Other Information.....................48
SECTION 5.02. Notices of Material Events.....................................50
SECTION 5.03. Existence; Conduct of Business.................................51
SECTION 5.04. Payment of Obligations.........................................51
SECTION 5.05. Maintenance of Properties; Insurance...........................51
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SECTION 5.06. Books and Records; Inspection Rights...........................52
SECTION 5.07. Compliance with Laws...........................................52
SECTION 5.08. Use of Proceeds................................................52
ARTICLE VI
NEGATIVE COVENANTS
SECTION 6.01. Liens..........................................................53
SECTION 6.02. Fundamental Changes............................................54
SECTION 6.03. Certain Restrictions on Subsidiaries...........................55
SECTION 6.04. Certain Financial Covenants....................................55
SECTION 6.05. Insured Subsidiary Capital.....................................56
SECTION 6.06. Payment of Dividends...........................................56
ARTICLE VII
EVENTS OF DEFAULT
ARTICLE VIII
AGENTS
SECTION 8.01 Administrative Agent............................................60
SECTION 8.02 Syndication Agents..............................................62
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Notices........................................................63
SECTION 9.02. Waivers; Amendments............................................63
SECTION 9.03. Expenses; Indemnity; Damage Waiver.............................64
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SECTION 9.04. Successors and Assigns.........................................65
SECTION 9.05. Survival.......................................................69
SECTION 9.06. Counterparts; Integration; Effectiveness.......................69
SECTION 9.07. Severability...................................................70
SECTION 9.08. Right of Setoff................................................70
SECTION 9.09. Governing Law; Jurisdiction; Etc...............................70
SECTION 9.10. WAIVER OF JURY TRIAL...........................................71
SECTION 9.11. Headings.......................................................71
SECTION 9.12. Treatment of Certain Information; Confidentiality..............71
</TABLE>
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<PAGE> 6
SCHEDULE I - Commitments
SCHEDULE II - Material Agreements and Liens
SCHEDULE III - Litigation
SCHEDULE IV - Environmental Matters
SCHEDULE V - Subsidiaries
EXHIBIT A - Form of Assignment and Acceptance
EXHIBIT B - Form of Opinion of Counsel to the Borrower
EXHIBIT C - Form of Opinion of Special New York Counsel to Chase
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<PAGE> 7
FOUR-YEAR CREDIT AGREEMENT dated as of August 11, 1999, between
WASHINGTON MUTUAL, INC. ("WAMU"), and ARISTAR, INC. ("Aristar"; each of WAMU and
Aristar is herein referred to as a "Borrower" and, collectively, as the
"Borrowers"), the LENDERS party hereto, and THE CHASE MANHATTAN BANK, as
Administrative Agent.
The Borrowers have requested that the Lenders (as so defined)
make loans to them in an aggregate principal amount not exceeding $600,000,000
at any one time outstanding. The Lenders are prepared to make such loans upon
the terms and conditions hereof, and, accordingly, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Defined Terms. As used in this Agreement, the
following terms have the meanings specified below:
"ABR", when used in reference to any Loan or Borrowing, refers
to whether such Loan, or the Loans constituting such Borrowing, are bearing
interest at a rate determined by reference to the Alternate Base Rate.
"Acquisition" shall mean any transaction, or any series of
related transactions, consummated after the date of this Agreement, by which
WAMU and/or one or more of its Subsidiaries (in one transaction or as the most
recent transaction in a series of related transactions) (a) acquires any going
business or all or substantially all of the assets of any Person (or division or
operating unit thereof), whether through purchase of assets, merger or otherwise
or, (b) directly or indirectly acquires control of securities or other ownership
interests representing more than 50% of the equity or more than 50% of the
ordinary voting power or, in the case of a partnership, more than 50% of the
general partnership interests of any corporation, limited liability company,
partnership, association or other entity.
"Adjusted LIBO Rate" means, for the Interest Period for any
Eurodollar Borrowing, an interest rate per annum (rounded upwards, if necessary,
to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest Period
multiplied by (b) the Statutory Reserve Rate for such Interest Period.
"Administrative Agent" means Chase, in its capacity as
administrative agent for the Lenders hereunder.
Four-Year Credit Agreement
<PAGE> 8
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"Administrative Questionnaire" means an Administrative
Questionnaire in a form supplied by the Administrative Agent.
"Affiliate" means, with respect to a specified Person, another
Person that directly, or indirectly through one or more intermediaries, Controls
or is Controlled by or is under common Control with the Person specified.
"Alternate Base Rate" means, for any day, a rate per annum equal
to the greatest of (a) the Prime Rate in effect on such day, (b) the Base CD
Rate for such day plus 1% and (c) the Federal Funds Effective Rate for such day
plus 1/2 of 1%. Any change in the Alternate Base Rate due to a change in the
Prime Rate, the Base CD Rate or the Federal Funds Effective Rate shall be
effective from and including the effective date of such change in the Prime
Rate, the Base CD Rate or the Federal Funds Effective Rate, as the case may be.
"Applicable Percentage" means, with respect to any Lender, the
percentage of the total Commitments represented by such Lender's Commitment. If
the Commitments have terminated or expired, the Applicable Percentages shall be
determined based upon the aggregate principal amount of the Syndicated Loans
held by the Lenders or, if no Syndicated Loans are outstanding, the Commitments
most recently in effect, giving effect to any assignments.
"Applicable Rate" means, for any day, with respect to any ABR
Loan, zero, or with respect to any Syndicated Eurodollar Loan, or with respect
to the facility fees or utilization fees payable hereunder, as the case may be,
the applicable rate per annum set forth below under the caption, "Eurodollar
Spread", "Facility Fee Rate" or "Utilization Fee Rate", respectively, based upon
the ratings by Moody's and S&P, respectively, applicable on such date to the
Index Debt:
<TABLE>
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Index Debt
Ratings Eurodollar Facility Fee Utilization Fee
(S&P/Moody's) Spread Rate Rate
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Category 1 (chi)A+/A1 .210% .090% .050%
- --------------------------------------------------------------------------------------------
Category 2 A-/A3 .250% .100% .100%
- --------------------------------------------------------------------------------------------
Category 3 BBB+/Baa1 .325% .125% .125%
- --------------------------------------------------------------------------------------------
Category 4 BBB/Baa2 .475% .150% .125%
- --------------------------------------------------------------------------------------------
Category 5 (alpha)BBB-/Baa3 .550% .200% .125%
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<PAGE> 9
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For purposes of the foregoing, (i) if either Moody's or S&P
shall not have in effect a rating for the Index Debt of a Borrower (other than
by reason of the circumstances referred to in the last sentence of this
definition), then such rating agency shall be deemed to have established a
rating for the Index Debt of such Borrower in Category 5; and (ii) if the
ratings established or deemed to have been established by Moody's and S&P for
the Index Debt shall be changed (other than as a result of a change in the
rating system of Moody's or S&P), such change shall be effective as of the date
on which it is first announced by the applicable rating agency. Each change in
the Applicable Rate shall apply during the period commencing on the effective
date of such change and ending on the date immediately preceding the effective
date of the next such change. If the rating system of Moody's or S&P shall
change, or if either such rating agency shall cease to be in the business of
rating corporate debt obligations, the Borrowers and the Lenders shall negotiate
in good faith to amend this definition to reflect such changed rating system or
the unavailability of ratings from such rating agency and, pending the
effectiveness of any such amendment, the Applicable Rate shall be determined by
reference to the rating most recently in effect prior to such change or
cessation.
Subject to the foregoing,
(a) with respect to any facility fees payable under Section
2.10(a):
(i) the Applicable Rate with respect to Tranche A shall be
determined by reference to the higher Index Debt rating assigned by
Moody's and S&P to the Borrower with the lower overall Index Debt rating
assigned by Moody's and S&P; and
(ii) the Applicable Rate with respect to Tranche B shall be
determined by reference to higher Index Debt rating assigned by Moody's
and S&P to Aristar;
provided that if there shall be a difference of two or more rating categories
between the ratings assigned by Moody's and S&P to the Index Debt of the
Borrower by reference to whose Index Debt the Applicable Rate is to be
determined, such Applicable Rate shall be determined by reference to the Index
Debt rating that is one category lower than the higher of the two Index Debt
ratings assigned by Moody's and S&P; and
(b) with respect to any utilization fees payable by a Borrower
under Section 2.10(b) and any Syndicated Eurodollar Loan made to such Borrower,
the Applicable Rate shall be determined by reference to the higher Index Debt
rating assigned by Moody's and S&P to such Borrower, provided that if there
shall be a difference of two or more rating categories between the ratings
assigned by Moody's and S&P to the Index Debt of such Borrower, such Applicable
Rate shall be determined by reference to the Index Debt rating that is one
category lower than the higher of the two Index Debt ratings assigned by Moody's
and S&P.
<PAGE> 10
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"Aristar" means Aristar, Inc., a Delaware corporation.
"Assessment Rate" means, for any day, the annual assessment rate
in effect on such day that is payable by a member of the Bank Insurance Fund
classified as "well-capitalized" and within supervisory subgroup "B" (or a
comparable successor risk classification) within the meaning of 12 C.F.R. Part
327 (or any successor provision) to the Federal Deposit Insurance Corporation
for insurance by such Corporation of time deposits made in Dollars at the
offices of such member in the United States of America; provided that if, as a
result of any change in any law, rule or regulation, it is no longer possible to
determine the Assessment Rate as aforesaid, then the Assessment Rate shall be
such annual rate as shall be determined by the Administrative Agent to be
representative of the cost of such insurance to the Lenders.
"Asset Securitization" shall mean a public or private transfer
of installment receivables, credit card receivables, lease receivables or any
other type of secured or unsecured financial assets which transfer is recorded
as a sale according to generally accepted accounting principles as of the date
of such transfer.
"Availability Period" means the period from and including the
Effective Date to and including the Commitment Termination Date.
"Bank Regulatory Authority" means the Board, the Comptroller of
the Currency, the Federal Deposit Insurance Corporation and all other relevant
bank regulatory authorities (including relevant state bank regulatory
authorities).
"Base CD Rate" means, for any day, the sum of (a) the
Three-Month Secondary CD Rate for such day multiplied by the Statutory Reserve
Rate for such day plus (b) the Assessment Rate for such day.
"Board" means the Board of Governors of the Federal Reserve
System of the United States of America.
"Borrowers" means collectively, Aristar and WAMU.
"Borrowing" means (a) all ABR Loans made to, or converted or
continued by, a Borrower on the same date or (b) all Syndicated Eurodollar Loans
or Competitive Loans made to a Borrower of the same Class and Type that have the
same Interest Period (or any single Competitive Loan made to such Borrower that
does not have the same Interest Period as any other Competitive Loan of the same
Type). For purposes hereof, the date of a Syndicated Borrowing comprising one or
more Loans that have been converted or continued shall be the effective date of
the most recent conversion or continuation of such Loan or Loans.
<PAGE> 11
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"Borrowing Request" means a request by a Borrower for a
Syndicated Borrowing in accordance with Section 2.03.
"Business Day" means any day that is not a Saturday, Sunday or
other day on which commercial banks in New York City are authorized or required
by law to remain closed; provided that, when used in connection with a
Eurodollar Loan, the term "Business Day" shall also exclude any day on which
banks are not open for dealings in Dollar deposits in the London interbank
market.
"Capital Lease Obligations" of any Person means 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 required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP,
and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP.
"Change in Control" shall mean (a) the acquisition of ownership,
directly or indirectly, beneficially or of record, by any Person or group
(within the meaning of the Securities Exchange Act of 1934 and the rules of the
SEC thereunder as in effect on the date hereof), of shares representing more
than 25% of the aggregate ordinary voting power represented by the issued and
outstanding capital stock of WAMU; (b) during any period of 25 consecutive
calendar months, a majority of the Board of Directors of WAMU ceasing to be
composed of individuals (i) who were members of said Board on the first day of
such period, (ii) whose election or nomination to said Board was approved by
individuals referred to in clause (i) above constituting at the time of such
election or nomination at least a majority of said Board or (iii) whose election
or nomination to said Board was approved by individuals referred to in clauses
(i) and (ii) above constituting at the time of such election or nomination at
least a majority of said Board; (c) the acquisition by any Person or group of
direct or indirect possession of the power to direct or cause to direct the
management or policies of WAMU, whether through the ability to exercise voting
power, by contract or otherwise; or (d) the failure of WAMU to own at least 80%
of the outstanding capital stock of Aristar.
"Change in Law" means (a) the adoption of any law, rule or
regulation after the date of this Agreement, (b) any change in any law, rule or
regulation or in the interpretation or application thereof by any Governmental
Authority after the date of this Agreement or (c) compliance by any Lender (or,
for purposes of Section 2.13(b), by any lending office of such Lender or by such
Lender's holding company, if any) with any request, guideline or directive
(whether or not having the force of law) of any Governmental Authority made or
issued after the date of this Agreement.
"Chase" means The Chase Manhattan Bank.
<PAGE> 12
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"Class", when used in reference to any Loan or Borrowing, refers
to whether such Loan, or the Loans constituting such Borrowing, are Syndicated
Loans or Competitive Loans.
"Code" means the Internal Revenue Code of 1986, as amended from
time to time.
"Commitments" means, collectively, the Tranche A Commitments and
the Tranche B Commitments.
"Commitment Termination Date" means August 11, 2003 as such date
may be extended pursuant to Section 2.18.
"Competitive", when used in reference to any Loan or Borrowing,
refers to whether such Loan, or the Loans constituting such Borrowing, are made
pursuant to Section 2.04.
"Competitive Bid" means an offer by a Lender to make a
Competitive Loan in accordance with Section 2.04.
"Competitive Bid Rate" means, with respect to any Competitive
Bid, the Margin or the Fixed Rate, as applicable, offered by the Lender making
such Competitive Bid.
"Competitive Bid Request" means a request by a Borrower for
Competitive Bids in accordance with Section 2.04.
"Control" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a
Person, whether through the ability to exercise voting power, by contract or
otherwise. "Controlling" and "Controlled" have meanings correlative thereto.
"Consolidated Assets" shall mean, at any date, the amount at
which the assets of WAMU and its Subsidiaries are or should be shown on a
consolidated statement of financial position prepared in accordance with GAAP as
at such date.
"Consolidated Equity" shall mean, at any date, the amount of
stockholders' equity of WAMU and its Subsidiaries determined on a consolidated
basis without duplication in accordance with GAAP (and, for the purposes of
Section 6.04 only, shall include Special Preferred Equity Securities, but only
to the extent that such Special Preferred Equity Securities could be treated as
Tier 1 capital of WAMU if WAMU were a bank holding company subject to regulation
by the Board of Governors of the Federal Reserve System).
<PAGE> 13
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"Consolidated Subsidiary" means at any date any Subsidiary or
other entity the accounts of which would be consolidated with those of Aristar
in its consolidated financial statements as of such date.
"Default" means any event or condition which constitutes an
Event of Default or which upon notice, lapse of time or both would, unless cured
or waived, become an Event of Default.
"Disclosed Matters" means the actions, suits and proceedings
disclosed in Schedule III and the environmental matters disclosed in Schedule
IV.
"Dollars" or "$" refers to lawful money of the United States of
America.
"Double Leverage Ratio" means, at any date, the ratio of (a) the
sum of (i) the aggregate book value of the Investments of WAMU in the capital
notes and stock of its Subsidiaries as at such date plus (ii) the aggregate
amount of intangibles (including purchased mortgage servicing rights and
purchased credit card relationships) of the Subsidiaries of WAMU as at such date
to (b) Consolidated Equity as at such date.
"Effective Date" means the date on which the conditions
specified in Section 4.01 are satisfied (or waived in accordance with Section
9.02).
"Environmental Laws" means all laws, rules, regulations, codes,
ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by any Governmental Authority,
relating in any way to the environment, preservation or reclamation of natural
resources, the management, release or threatened release of any Hazardous
Material or to health and safety matters.
"Environmental Liability" means any liability, contingent or
otherwise (including any liability for damages, costs of environmental
remediation, fines, penalties or indemnities), of either Borrower or any of
their respective Subsidiaries directly or indirectly resulting from or based
upon (a) violation of any Environmental Law, (b) the generation, use, handling,
transportation, storage, treatment or disposal of any Hazardous Materials, (c)
exposure to any Hazardous Materials, (d) the release or threatened release of
any Hazardous Materials into the environment or (e) any contract, agreement or
other consensual arrangement pursuant to which liability is assumed or imposed
with respect to any of the foregoing.
"Equity Rights" means, with respect to any Person, any
subscriptions, options, warrants, commitments, preemptive rights or agreements
of any kind (including any shareholders' or voting trust agreements) for the
issuance, sale, registration or voting of, or
<PAGE> 14
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securities convertible into, any additional shares of capital stock of any
class, or partnership or other ownership interests of any type in, such Person.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time.
"ERISA Affiliate" means, with respect to a Borrower, any trade
or business (whether or not incorporated) that, together with such Borrower, is
treated as a single employer under Section 414(b) or (c) of the Code, or, solely
for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as
a single employer under Section 414 of the Code.
"ERISA Event" means (a) any "reportable event", as defined in
Section 4043 of ERISA or the regulations issued thereunder with respect to a
Plan (other than an event for which the 30-day notice period is waived); (b) the
existence with respect to any Plan of an "accumulated funding deficiency" (as
defined in Section 412 of the Code or Section 302 of ERISA), whether or not
waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d)
of ERISA of an application for a waiver of the minimum funding standard with
respect to any Plan; (d) the incurrence by either Borrower or any of their
respective ERISA Affiliates of any liability under Title IV of ERISA with
respect to the termination of any Plan; (e) the distribution of or receipt by
either Borrower or any of their respective ERISA Affiliates from the PBGC or a
plan administrator of any notice relating to an intention to terminate any Plan
or Plans or to appoint a trustee to administer any Plan or the institution of
proceedings by from the PBGC or a plan administrator in relation to the
foregoing; (f) the incurrence by either Borrower or any of their respective
ERISA Affiliates of any liability (including the obligation to satisfy secondary
liability as a result of a purchaser default) with respect to the withdrawal or
partial withdrawal from any Plan or Multiemployer Plan; (g) the receipt by
either Borrower or any of their respective ERISA Affiliates of any notice, or
the receipt by any Multiemployer Plan from either Borrower or any of their
respective ERISA Affiliates of any notice, concerning the imposition of
Withdrawal Liability or a determination that a Multiemployer Plan is, or is
expected to be, insolvent or in reorganization, within the meaning of Title IV
of ERISA; (h) the institution of a proceeding by a fiduciary of any
Multiemployer Plan against either Borrower or any of their respective ERISA
Affiliates to enforce Section 515 of ERISA, which proceeding is not dismissed
within 30 days; or (i) the adoption of an amendment to any Plan that, pursuant
to Section 401(a)(29) of the Code or Section 307 of ERISA, would result in the
loss of tax-exempt status of the trust of which such Plan is a part if either
Borrower or any of their respective ERISA Affiliates fails to timely provide
security to the Plan in accordance with the provisions of said Sections.
"Eurodollar", when used in reference to any Loan or Borrowing,
refers to whether such Loan, or the Loans constituting such Borrowing, are
bearing interest at a rate determined by
<PAGE> 15
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reference to (a) in the case of a Syndicated Loan or Borrowing, the Adjusted
LIBO Rate, or (b) in the case of a Competitive Loan or Borrowing, the LIBO Rate.
"Event of Default" has the meaning assigned to such term in
Article VII.
"Excluded Taxes" means, with respect to the Administrative
Agent, any Lender or any other recipient of any payment to be made by or on
account of any obligation of either Borrower hereunder, (a) income or franchise
taxes imposed on (or measured by) its net income by the United States of
America, or by the jurisdiction under the laws of which such recipient is
organized or in which its principal office is located or, in the case of any
Lender, in which its applicable lending office is located, (b) any branch
profits taxes imposed by the United States of America or any similar tax imposed
by any other jurisdiction in which such Borrower is located and (c) in the case
of a Foreign Lender (other than an assignee pursuant to a request by such
Borrower under Section 2.17(b)), any withholding tax that is imposed on amounts
payable to such Foreign Lender at the time such Foreign Lender becomes a party
to this Agreement or is attributable to such Foreign Lender's failure or
inability to comply with Section 2.15(e), except to the extent that such Foreign
Lender's assignor (if any) was entitled, at the time of assignment, to receive
additional amounts from such Borrower with respect to such withholding tax
pursuant to Section 2.15(a).
"Existing Commitment Termination Date" has the meaning
attributed thereto in Section 2.18(a).
"Existing Credit Facilities" means, collectively, (a) the
Amended and Restated Credit Agreement dated as of August 22, 1996 among Aristar,
the lenders party thereto and Bank of Montreal, as administrative agent for such
lenders, as heretofore amended, (b) the Amended and Restated 364-Day Credit
Agreement dated as of November 25, 1997 between WAMU, the lenders party thereto
and Chase, as administrative agent for such lenders, as heretofore amended, and
(c) the Amended and Restated Four-Year Credit Agreement dated as of November 25,
1997 between WAMU, the lenders party thereto and Chase, as administrative agent
for such lenders, as heretofore amended.
"Federal Funds Effective Rate" means, for any day, the weighted
average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.
<PAGE> 16
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"Financial Officer" means, with respect to a Borrower, the chief
financial officer, principal accounting officer, treasurer or controller of such
Borrower.
"Fixed Rate" means, with respect to any Competitive Loan (other
than a Competitive Eurodollar Loan), the fixed rate of interest per annum
specified by the Lender making such Competitive Loan in its related Competitive
Bid.
"Fixed Rate Loan" means a Competitive Loan bearing interest at a
Fixed Rate.
"Foreign Lender" means any Lender that is organized under the
laws of a jurisdiction other than that in which either Borrower is located. For
purposes of this definition, the United States of America, each State thereof
and the District of Columbia shall be deemed to constitute a single
jurisdiction.
"GAAP" means generally accepted accounting principles in the
United States of America.
"Governmental Authority" means the government of the United
States of America, any other nation or any political subdivision thereof,
whether state or local, and any agency, authority, instrumentality, regulatory
body, court, central bank or other entity exercising executive, legislative,
judicial, taxing, regulatory or administrative powers or functions of or
pertaining to government.
"Guarantee" of or by any Person (the "guarantor") means any
obligation, contingent or otherwise, of the guarantor guaranteeing or having the
economic effect of guaranteeing any Indebtedness or other obligation of any
other Person (the "primary obligor") in any manner, whether directly or
indirectly, and including any obligation of the guarantor, direct or indirect,
(a) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other obligation or to purchase (or to advance or
supply funds for the purchase of) any security for the payment thereof, (b) to
purchase or lease property, securities or services for the purpose of assuring
the owner of such Indebtedness or other obligation of the payment thereof, (c)
to maintain working capital, equity capital or any other financial statement
condition or liquidity of the primary obligor so as to enable the primary
obligor to pay such Indebtedness or other obligation or (d) as an account party
in respect of any letter of credit or letter of guaranty issued to support such
Indebtedness or obligation; provided, that the term Guarantee shall not include
endorsements for collection or deposit in the ordinary course of business.
"Hazardous Materials" means all explosive or radioactive
substances or wastes and all hazardous or toxic substances, wastes or other
pollutants, including petroleum or petroleum distillates, asbestos or asbestos
containing materials, polychlorinated biphenyls, radon
<PAGE> 17
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gas, infectious or medical wastes and all other substances or wastes of any
nature regulated pursuant to any Environmental Law.
"Hedging Agreement" means any interest rate protection
agreement, foreign currency exchange agreement, commodity price protection
agreement or other interest or currency exchange rate or commodity price hedging
arrangement.
"Indebtedness" of any Person means, without duplication, (a) all
obligations of such Person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such Person
upon which interest charges are customarily paid, (d) all obligations of such
Person under conditional sale or other title retention agreements relating to
property acquired by such Person, (e) all obligations of such Person in respect
of the deferred purchase price of property or services (excluding current
accounts payable incurred in the ordinary course of business), (f) 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, whether or not the Indebtedness
secured thereby has been assumed, (g) all Guarantees by such Person of
Indebtedness of others, (h) all Capital Lease Obligations of such Person, (i)
all obligations, contingent or otherwise, of such Person as an account party in
respect of letters of credit and letters of guaranty and (j) all obligations,
contingent or otherwise, of such Person in respect of bankers' acceptances. The
Indebtedness of any Person shall include the Indebtedness of any other entity
(including any partnership in which such Person is a general partner) to the
extent such Person is liable therefor as a result of such Person's ownership
interest in or other relationship with such entity, except to the extent the
terms of such Indebtedness provide that such Person is not liable therefor.
"Indemnified Taxes" means Taxes other than Excluded Taxes.
"Index Debt" means, with respect to a Borrower, senior,
unsecured, long-term indebtedness for borrowed money of such Borrower that is
not guaranteed by any other Person or subject to any other credit enhancement.
"Insured Subsidiary" means any insured depositary institution
(as defined in 12 U.S.C. Section 1813(c) (or any successor provision), as
amended, re-enacted or redesignated from time to time, that is controlled
(within the meaning of 12 U.S.C. Section 1841 (or any successor provision), as
amended, re-enacted or redesignated from time to time) by either Borrower.
"Interest Election Request" means a request by a Borrower to
convert or continue a Syndicated Borrowing in accordance with Section 2.06.
<PAGE> 18
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"Interest Payment Date" means (a) with respect to any ABR Loan,
each Quarterly Date, (b) with respect to any Eurodollar Loan, the last day of
each Interest Period therefor and, in the case of any Interest Period for a
Eurodollar Loan that is more than three months long, each day prior to the last
day of such Interest Period that occurs at intervals of three months after the
first day of such Interest Period and (c) with respect to any Fixed Rate Loan,
the last day of the Interest Period therefor and, in the case of any Interest
Period for a Fixed Rate Loan that is more than 90 days long (unless otherwise
specified in the applicable Competitive Bid Request), each day prior to the last
day of such Interest Period that occurs at intervals of 90 days after the first
day of such Interest Period, and any other dates that are specified in the
applicable Competitive Bid Request as Interest Payment Dates with respect to
such Loan.
"Interest Period" means:
(a) for any Borrowing (other than an ABR Borrowing), the
Interest Period of the Loan or Loans constituting such Borrowing;
(b) for any Syndicated Eurodollar Loan, the period commencing on
the date of such Loan and ending on the numerically corresponding day in
the calendar month that is one, two, three or six months thereafter, as
specified in the applicable Borrowing Request or Interest Election
Request;
(c) for any Competitive Eurodollar Loan, the period commencing
on the date of such Loan and ending on the numerically corresponding day
in the calendar month that is one, two, three or six months thereafter,
as specified in the applicable Competitive Bid Request; and
(d) for any Fixed Rate Loan, the period (which shall not be less
than 7 days or more than 180 days) commencing on the date of such Loan
and ending on the date specified in the applicable Competitive Bid
Request;
provided, that (i) if any Interest Period would end on a day other than a
Business Day, such Interest Period shall be extended to the next succeeding
Business Day unless, in the case of a Eurodollar Borrowing only, such next
succeeding Business Day would fall in the next calendar month, in which case
such Interest Period shall end on the next preceding Business Day and (ii) any
Interest Period pertaining to a Eurodollar Borrowing that commences on the last
Business Day of a calendar month (or on a day for which there is no numerically
corresponding day in the last calendar month of such Interest Period) shall end
on the last Business Day of the last calendar month of such Interest Period. For
purposes hereof, the date of a Loan initially shall be the date on which such
Loan is made and, in the case of a Syndicated Loan, thereafter shall be the
effective date of the most recent conversion or continuation of such Loan.
<PAGE> 19
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"Investment" means, for any Person: (a) the acquisition (whether
for cash, property, services or securities or otherwise) of capital stock,
bonds, notes, debentures, partnership or other ownership interests or other
securities of any other Person or any agreement to make any such acquisition
(including any "short sale" or any sale of any securities at a time when such
securities are not owned by the Person entering into such sale); (b) the making
of any deposit with, or advance, loan or other extension of credit to, any other
Person (including the purchase of property from another Person subject to an
understanding or agreement, contingent or otherwise, to resell such property to
such Person); (c) the entering into of any Guarantee of, or other contingent
obligation with respect to, Indebtedness or other liability of any other Person
and (without duplication) any amount committed to be advanced, lent or extended
to such Person; or (d) the entering into of any Hedging Agreement.
"Lenders" means the Persons listed on Schedule I and any other
Person that shall have become a party hereto pursuant to an Assignment and
Acceptance, other than any such Person that ceases to be a party hereto pursuant
to an Assignment and Acceptance.
"LIBO Rate" means, for the Interest Period for any Eurodollar
Borrowing, the rate appearing on Page 3750 of the Telerate Service of Bridge
Information Services (or on any successor or substitute page of such Service, or
any successor to or substitute for such Service, providing rate quotations
comparable to those currently provided on such page of such Service, as
determined by the Administrative Agent from time to time for purposes of
providing quotations of interest rates applicable to Dollar deposits in the
London interbank market) at approximately 11:00 a.m., London time, two Business
Days prior to the commencement of such Interest Period, as the rate for the
offering of Dollar deposits with a maturity comparable to such Interest Period.
In the event that such rate is not available at such time for any reason, then
the LIBO Rate for such Interest Period shall be the rate at which Dollar
deposits of $5,000,000 and for a maturity comparable to such Interest Period are
offered by the principal London office of the Administrative Agent in
immediately available funds in the London interbank market at approximately
11:00 a.m., London time, two Business Days prior to the commencement of such
Interest Period.
"Lien" means, with respect to any asset, (a) any mortgage, deed
of trust, lien, pledge, hypothecation, encumbrance, charge or security interest
in, on or of such asset, (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect as any of the
foregoing) relating to such asset and (c) in the case of securities, any
purchase option, call or similar right of a third party with respect to such
securities.
"Loans" means the loans made by the Lenders to the Borrowers (or
to either of them) pursuant to this Agreement.
<PAGE> 20
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"Major Subsidiaries" shall mean Washington Mutual Bank and
Washington Mutual Bank, FA.
"Margin" means, with respect to any Competitive Loan bearing
interest at a rate based on the LIBO Rate, the marginal rate of interest, if
any, to be added to or subtracted from the LIBO Rate to determine the rate of
interest applicable to such Loan, as specified by the Lender making such Loan in
its related Competitive Bid.
"Margin Stock" means "margin stock" within the meaning of
Regulations T, U and X of the Board.
"Material Adverse Effect" means a material adverse effect on (a)
the business, assets, operations, prospects or condition, financial or
otherwise, of either Borrower and its Subsidiaries, in each case, taken as a
whole, (b) the ability of either Borrower to perform any of its obligations
under this Agreement or (c) the rights of or benefits available to the Lenders
under this Agreement.
"Material Indebtedness" means Indebtedness (other than the
Loans), or obligations in respect of one or more Hedging Agreements, of any one
or more of the Borrowers and their respective Subsidiaries in an aggregate
principal amount exceeding $40,000,000. For purposes of determining Material
Indebtedness, the "principal amount" of the obligations of any Person in respect
of any Hedging Agreement at any time shall be the maximum aggregate amount
(giving effect to any netting agreements) that such Person would be required to
pay if such Hedging Agreement were terminated at such time.
"Moody's" means Moody's Investors Service, Inc.
"Multiemployer Plan" means a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.
"Non-Extending Lender" has the meaning set forth in Section
2.18(a).
"Non-Material Subsidiaries" shall mean, as at any date,
Subsidiaries of WAMU the total assets of which, in the aggregate, do not exceed
one percent (1%) of the Consolidated Assets of WAMU and all of its Subsidiaries,
as at such date.
"Non-Performing Assets" shall mean, as at any date, the sum, for
WAMU and its Subsidiaries (determined on a consolidated basis without
duplication in accordance with GAAP) of the following: (a) non-accrual loans
plus (b) accruing loans past due 90 days or more plus (c) other non-performing
assets plus (d) other real estate owned plus (e) without duplication for
<PAGE> 21
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amounts included as other real estate owned, property acquired pursuant to
in-substance foreclosures.
"Other Taxes" means any and all present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies arising from any payment made hereunder or from the execution, delivery
or enforcement of, or otherwise with respect to, this Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation referred
to and defined in ERISA and any successor entity performing similar functions.
"Permitted Encumbrances" means:
(a) Liens imposed by law for taxes that are not yet due or are
being contested in compliance with Section 5.04;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's and other like Liens imposed by law, arising in the ordinary
course of business and securing obligations that are not overdue by more
than 30 days or are being contested in compliance with Section 5.04;
(c) pledges and deposits made in the ordinary course of business
in compliance with workers' compensation, unemployment insurance and
other social security laws or regulations;
(d) cash deposits to secure the performance of bids, trade
contracts, leases, statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature, in each case
in the ordinary course of business;
(e) judgment liens in respect of judgments that do not
constitute an Event of Default under clause (k) of Article VII; and
(f) easements, zoning restrictions, rights-of-way and similar
encumbrances on real property imposed by law or arising in the ordinary
course of business that in the aggregate are not material in amount and
do not materially detract from the value of the affected property or
interfere with the ordinary conduct of business of any of the Borrowers
and their Subsidiaries;
provided that the term "Permitted Encumbrances" shall not include any Lien
securing Indebtedness.
<PAGE> 22
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"Person" means any natural person, corporation, limited
liability company, trust, joint venture, association, company, partnership,
Governmental Authority or other entity.
"Plan" means any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA, and in respect of which either Borrower
or any of their respective ERISA Affiliates is (or, if such plan were
terminated, would under Section 4069 of ERISA be deemed to be) an "employer" as
defined in Section 3(5) of ERISA.
"Prime Rate" means the rate of interest per annum publicly
announced from time to time by Chase as its prime rate in effect at its
principal office in New York City; each change in the Prime Rate shall be
effective from and including the date such change is publicly announced as being
effective.
"Quarterly Dates" means the last Business Day of March, June,
September and December in each year, the first of which shall be the first such
day after the date hereof.
"Register" has the meaning set forth in Section 9.04.
"Related Parties" means, with respect to any specified Person,
such Person's Affiliates and the respective directors, officers, employees,
agents and advisors of such Person and such Person's Affiliates.
"Repurchase Arrangements" shall mean repurchase and reverse
repurchase arrangements with respect to securities and financial instruments.
"Required Lenders" means, at any time, Lenders having Revolving
Credit Exposures and unused Commitments representing more than 50% of the sum of
the total Revolving Credit Exposures and unused Commitments at such time
(provided that, for purposes of declaring the Loans to be due and payable
pursuant to Article VII, and for all purposes after the Loans become due and
payable pursuant to Article VII or the Commitments expire or terminate, the
outstanding Competitive Loans of the Lenders shall be included in their
respective Revolving Credit Exposures in determining the Required Lenders).
"Restricted Payment" means any dividend or other distribution
(whether in cash, securities or other property) with respect to any shares of
any class of capital stock of Aristar, or any payment (whether in cash,
securities or other property), including any sinking fund or similar deposit, on
account of the purchase, redemption, retirement, acquisition, cancellation or
termination of any such shares of capital stock of Aristar or of any option,
warrant or other right to acquire any such shares of capital stock of Aristar.
<PAGE> 23
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"Revolving Credit Exposure" means, with respect to any Lender at
any time, the aggregate outstanding principal amount of such Lender's Syndicated
Loans at such time.
"SEC" means the Securities and Exchange Commission or any
Governmental Authority succeeding to any or all of the functions of said
Commission.
"Senior Indebtedness" means all Indebtedness of Aristar other
than Subordinated Indebtedness.
"Special Preferred Equity Securities" shall mean preferred
equity securities, if any, issued by a wholly-owned Subsidiary of WAMU of the
type marketed under proprietary names such as MIPS, SKIS and TOPRS.
"S&P" means Standard & Poor's Ratings Services, a Division of
The McGraw-Hill Companies, Inc.
"Statutory Reserve Rate" means, for any day (or for the Interest
Period for any Eurodollar Borrowing), a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board to which the Administrative Agent is subject on such
day (or, with respect to an Interest Period, the denominator of which is the
number one minus the arithmetic mean of such aggregates for the days in such
Interest Period) (a) with respect to the Base CD Rate, for new negotiable
nonpersonal time deposits in Dollars of over $100,000 with maturities
approximately equal to three months and (b) with respect to the Adjusted LIBO
Rate, for eurocurrency funding (currently referred to as "Eurocurrency
liabilities" in Regulation D of the Board). Such reserve percentages shall
include those imposed pursuant to such Regulation D. Eurodollar Loans shall be
deemed to constitute eurocurrency funding and to be subject to such reserve
requirements without benefit of or credit for proration, exemptions or offsets
that may be available from time to time to any Lender under such Regulation D or
any comparable regulation. The Statutory Reserve Rate shall be adjusted
automatically on and as of the effective date of any change in any reserve
percentage.
"Subordinated Indebtedness" means all Indebtedness of Aristar
which is subordinate and junior in right and time of payment to any other
Indebtedness (including all Loans and interest thereon).
"Subsidiary" means, with respect to any Person (the "parent") at
any date, any corporation, limited liability company, partnership, association
or other entity the accounts of which would be consolidated with those of the
parent in the parent's consolidated financial statements if such financial
statements were prepared in accordance with GAAP as of such date,
<PAGE> 24
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as well as any other corporation, limited liability company, partnership,
association or other entity (a) of which securities or other ownership interests
representing more than 50% of the equity or more than 50% of the ordinary voting
power or, in the case of a partnership, more than 50% of the general partnership
interests are, as of such date, owned, controlled or held, or (b) that is, as of
such date, otherwise Controlled, by the parent or one or more subsidiaries of
the parent or by the parent and one or more subsidiaries of the parent.
"Syndicated Loan" means a Loan made pursuant to Section 2.01.
"Tangible Net Worth" means, as at any date,
(a) with respect to WAMU, the sum of:
(i) Consolidated Equity as at such date; minus
(ii) the amount of Special Preferred Equity
Securities, to the extent otherwise included in Consolidated
Equity, as at such date; minus
(iii) the sum for WAMU and its Subsidiaries
(determined on a consolidated basis without duplication in
accordance with GAAP) of the cost of treasury shares and the
book value of all assets that should be classified as
intangibles (without duplication of deductions in respect of
items already deducted in arriving at Consolidated Equity) but
in any event including goodwill, minority interests, research
and development costs, trademarks, trade names, copyrights,
patents and franchises, unamortized debt discount and expense,
all reserves and any write-up in the book value of assets
resulting from a revaluation thereof subsequent to December 31,
1998, all determined as at such date.
(b) with respect to Aristar, the stockholders' equity of
Aristar and its Consolidated Subsidiaries less the amount (to the extent
reflected in determining such consolidated stockholders' equity) of all
unamortized debt discount and expense, unamortized deferred charges,
goodwill, patents, trademarks, service marks, trade names, anticipated
future benefit of tax loss carry-forwards, copyrights organization or
developmental expenses and other intangible assets of Aristar and its
Consolidated Subsidiaries, all determined on a consolidated basis as of
such date minus the aggregate principal amount of Indebtedness as at
such date owing to Aristar or any Subsidiaries of Aristar by WAMU or any
Subsidiaries of WAMU that are not Aristar or Subsidiaries of Aristar.
"Taxes" means any and all present or future taxes, levies,
imposts, duties, deductions, charges or withholdings imposed by any Governmental
Authority.
<PAGE> 25
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"Three-Month Secondary CD Rate" means, for any day, the
secondary market rate for three-month certificates of deposit reported as being
in effect on such day (or, if such day is not a Business Day, the next preceding
Business Day) by the Board through the public information telephone line of the
Federal Reserve Bank of New York (which rate will, under the current practices
of the Board, be published in Federal Reserve Statistical Release H.15(519)
during the week following such day) or, if such rate is not so reported on such
day or such next preceding Business Day, the average of the secondary market
quotations for three-month certificates of deposit of major money center banks
in New York City received at approximately 10:00 a.m., New York City time, on
such day (or, if such day is not a Business Day, on the next preceding Business
Day) by the Administrative Agent from three negotiable certificate of deposit
dealers of recognized standing selected by it.
"Tranche" means Tranche A or Tranche B.
"Tranche A Commitment" means as to each Tranche A Lender, the
obligation of such Lender to make Syndicated Loans pursuant to Section 2.01(a),
as such commitment may be (a) reduced from time to time pursuant to Section 2.07
and (b) reduced or increased from time to time pursuant to assignments by or to
such Lender pursuant to Section 9.04. The initial amount of each Tranche A
Lender's Commitment is set forth on Schedule I, or in the Assignment and
Acceptance pursuant to which such Lender shall have assumed such Commitment, as
applicable. The initial aggregate amount of the Tranche A Commitments shall be
$250,000,000.
"Tranche A Lender" means a Lender having a Tranche A Commitment
or holding Tranche A Loans.
"Tranche A Loans" shall mean the loans provided for in Section
2.01(a).
"Tranche B Commitment" means as to each Tranche B Lender, the
obligation of such Lender to make Syndicated Loans pursuant to Section 2.01(b),
as such commitment may be (a) reduced from time to time pursuant to Section 2.07
and (b) reduced or increased from time to time pursuant to assignments by or to
such Lender pursuant to Section 9.04. The initial amount of each Tranche B
Lender's Commitment is set forth on Schedule I, or in the Assignment and
Acceptance pursuant to which such Lender shall have assumed such Commitment, as
applicable. The initial aggregate amount of the Tranche B Commitments shall be
$350,000,000.
"Tranche B Lender" means a Lender having a Tranche B Commitment
or holding Tranche B Loans.
"Transactions" means the execution, delivery and performance by
the Borrowers of this Agreement, the borrowing of Loans and the use of the
proceeds thereof.
<PAGE> 26
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"Type", when used in reference to any Loan or Borrowing, refers
to whether the rate of interest on such Loan, or on the Loans constituting such
Borrowing, is determined by reference to the Adjusted LIBO Rate, the Alternate
Base Rate or, in the case of a Competitive Loan or Borrowing, the LIBO Rate or a
Fixed Rate.
"WAMU" means Washington Mutual, Inc., a Washington corporation.
"Withdrawal Liability" means liability to a Multiemployer Plan
as a result of a complete or partial withdrawal from such Multiemployer Plan, as
such terms are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02. Classification of Loans and Borrowings. For
purposes of this Agreement, Loans may be classified and referred to by Class
(e.g., a "Syndicated Loan"), by Type (e.g., a "Eurodollar Loan"), by Tranche
(e.g., a "Tranche A Loan")or by any combination thereof. Borrowings also may be
classified and referred to by Class (e.g., a "Syndicated Borrowing"), by Type
(e.g., a "Eurodollar Borrowing"), by Tranche (e.g., a "Tranche A Borrowing") or
by any combination thereof.
SECTION 1.03. Terms Generally. The definitions of terms herein
shall apply equally to the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words "include", "includes" and
"including" shall be deemed to be followed by the phrase "without limitation".
The word "will" shall be construed to have the same meaning and effect as the
word "shall". Unless the context requires otherwise (a) any definition of or
reference to any agreement, instrument or other document herein shall be
construed as referring to such agreement, instrument or other document as from
time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth herein),
(b) any reference herein to any Person shall be construed to include such
Person's successors and assigns, (c) the words "herein", "hereof" and
"hereunder", and words of similar import, shall be construed to refer to this
Agreement in its entirety and not to any particular provision hereof, (d) all
references herein to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules to,
this Agreement and (e) the words "asset" and "property" shall be construed to
have the same meaning and effect and to refer to any and all tangible and
intangible assets and properties, including cash, securities, accounts and
contract rights.
SECTION 1.04. Accounting Terms; GAAP. Except as otherwise
expressly provided herein, all terms of an accounting or financial nature shall
be construed in accordance with GAAP, as in effect from time to time; provided
that, if the Borrowers notify the Administrative Agent that the Borrowers
request an amendment to any provision hereof to eliminate the effect of any
change occurring after the date hereof in GAAP or in the application
<PAGE> 27
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thereof on the operation of such provision (or if the Administrative Agent
notify the Borrowers that the Required Lenders request an amendment to any
provision hereof for such purpose), regardless of whether any such notice is
given before or after such change in GAAP or in the application thereof, then
such provision shall be interpreted on the basis of GAAP as in effect and
applied immediately before such change shall have become effective until such
notice shall have been withdrawn or such provision amended in accordance
herewith.
ARTICLE II
THE CREDITS
SECTION 2.01. The Commitments
(a) Tranche A Loans. Subject to the terms and conditions set
forth herein, each Tranche A Lender agrees to make Syndicated Loans to either or
both of the Borrowers from time to time during the Availability Period in an
aggregate principal amount that will not result in (a) such Lender's Revolving
Credit Exposure under such Tranche exceeding such Lender's Commitment under such
Tranche or (b) the sum of the total Revolving Credit Exposures under such
Tranche plus the aggregate principal amount of outstanding Competitive Loans
under such Tranche exceeding the total Commitments under such Tranche. Within
the foregoing limits and subject to the terms and conditions set forth herein,
the Borrowers may borrow, prepay and reborrow Syndicated Tranche A Loans.
(b) Tranche B Loans. Subject to the terms and conditions set
forth herein, each Tranche B Lender agrees to make Syndicated Loans to Aristar
from time to time during the Availability Period in an aggregate principal
amount that will not result in (a) such Lender's Revolving Credit Exposure under
such Tranche exceeding such Lender's Commitment under such Tranche or (b) the
sum of the total Revolving Credit Exposures under such Tranche plus the
aggregate principal amount of outstanding Competitive Loans under such Tranche
exceeding the total Commitments under such Tranche. Within the foregoing limits
and subject to the terms and conditions set forth herein, Aristar may borrow,
prepay and reborrow Syndicated Tranche B Loans.
SECTION 2.02. Loans and Borrowings.
(a) Obligations of Lenders. Each Syndicated Loan shall be made
as part of a Borrowing consisting of Loans of the same Type made by the Lenders
ratably in accordance with their respective Commitments. Each Competitive Loan
shall be made in accordance with the procedures set forth in Section 2.04. The
failure of any Lender to make any Loan required to
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be made by it shall not relieve any other Lender of its obligations hereunder;
provided that the Commitments and Competitive Bids of the Lenders are several
and no Lender shall be responsible for any other Lender's failure to make Loans
as required.
(b) Type of Loans. Subject to Section 2.12, (i) each Syndicated
Borrowing shall be constituted entirely of ABR Loans or Eurodollar Loans as the
relevant Borrower may request in accordance herewith, and (ii) each Competitive
Borrowing shall be constituted entirely of Eurodollar Loans or Fixed Rate Loans
as the relevant Borrower may request in accordance herewith. Each Lender at its
option may make any Eurodollar Loan by causing any domestic or foreign branch or
Affiliate of such Lender to make such Loan; provided that any exercise of such
option shall not affect the obligation of the relevant Borrower to repay such
Loan in accordance with the terms of this Agreement.
(c) Minimum Amounts; Limitation on Number of Borrowings. At the
commencement of the Interest Period for any Syndicated Eurodollar Borrowing,
such Borrowing shall be in an aggregate amount of $10,000,000 or a larger
multiple of $1,000,000. At the time that each ABR Borrowing is made, such
Borrowing shall be in an aggregate amount equal to $5,000,000 or a larger
multiple of $1,000,000; provided that an ABR Borrowing may be in an aggregate
amount that is equal to the entire unused balance of the total Commitments.
Borrowings of more than one Type and Class and Tranche may be outstanding at the
same time; provided that there shall not at any time be more than a total of 10
Syndicated Eurodollar Borrowings outstanding.
(d) Limitations on Lengths of Interest Periods. Notwithstanding
any other provision of this Agreement, the Borrowers shall not be entitled to
request, or to elect to convert to or continue as a Syndicated Eurodollar
Borrowing, any Borrowing if the Interest Period requested therefor would end
after the Commitment Termination Date.
SECTION 2.03. Requests for Syndicated Borrowings. To request a
Syndicated Borrowing, the relevant Borrower shall notify the Administrative
Agent of such request by telephone (a) in the case of a Syndicated Eurodollar
Borrowing, not later than 11:00 a.m., New York City time, three Business Days
before the date of the proposed Borrowing or (b) in the case of an ABR
Borrowing, not later than 11:00 a.m., New York City time, one Business Day
before the date of the proposed Borrowing. Each such telephonic Borrowing
Request shall be irrevocable and shall be confirmed promptly by hand delivery or
telecopy to the Administrative Agent of a written Borrowing Request in a form
approved by the Administrative Agent and signed by the relevant Borrower. Each
such telephonic and written Borrowing Request shall specify the following
information in compliance with Section 2.02:
(i) the aggregate amount of the requested Borrowing;
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(ii) the date of such Borrowing, which shall be a Business Day;
(iii) whether such Borrowing is to be an ABR Borrowing or a
Eurodollar Borrowing;
(iv) in the case of a Syndicated Eurodollar Borrowing, the
Interest Period therefor, which shall be a period contemplated by the
definition of the term "Interest Period";
(v) in the case of a Borrowing by Aristar, the Tranche under
which such Borrowing is to be made; and
(vi) the location and number of the relevant Borrower's account
to which funds are to be disbursed, which shall comply with the
requirements of Section 2.05.
If no election as to the Type of Syndicated Borrowing is specified, then the
requested Syndicated Borrowing shall be an ABR Borrowing. If no Interest Period
is specified with respect to any requested Syndicated Eurodollar Borrowing, then
the relevant Borrower shall be deemed to have selected an Interest Period of one
month's duration. Promptly following receipt of a Borrowing Request in
accordance with this Section, the Administrative Agent shall advise each Lender
of the details thereof and of the amount of such Lender's Loan to be made as
part of the requested Borrowing.
SECTION 2.04. Competitive Bid Procedure.
(a) Requests for Bids by the Borrowers. Subject to the terms and
conditions set forth herein, from time to time during the period from the
Effective Date to but excluding the Commitment Termination Date either Borrower
or both Borrowers may request Competitive Bids and may (but shall not have any
obligation to) accept Competitive Bids and borrow Competitive Loans under any
Tranche available to it; provided that the sum of the total Revolving Credit
Exposures under such Tranche plus the aggregate principal amount of outstanding
Competitive Loans under such Tranche at any time shall not exceed the total
Commitments under such Tranche. To request Competitive Bids, the relevant
Borrower shall notify the Administrative Agent of such request by telephone, in
the case of a Eurodollar Borrowing, not later than 11:00 a.m., New York City
time, four Business Days before the date of the proposed Borrowing and, in the
case of a Fixed Rate Borrowing, not later than 10:00 a.m., New York City time,
one Business Day before the date of the proposed Borrowing; provided that the
Borrowers may submit up to (but not more than) two Competitive Bid Requests
under a Tranche on the same day, but a Competitive Bid Request under such
Tranche shall not be made within five Business Days after the date of any
previous Competitive Bid Request under such Tranche, unless any and all such
previous Competitive Bid Requests shall have been withdrawn
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or all Competitive Bids received in response thereto rejected. Each such
telephonic Competitive Bid Request shall be confirmed promptly by hand delivery
or telecopy to the Administrative Agent of a written Competitive Bid Request in
a form approved by the Administrative Agent and signed by the relevant Borrower.
Each such telephonic and written Competitive Bid Request shall specify the
following information in compliance with Section 2.02:
(i) the aggregate amount of the requested Borrowing;
(ii) the date of such Borrowing, which shall be a Business Day;
(iii) whether such Borrowing is to be a Eurodollar Borrowing or
a Fixed Rate Borrowing;
(iv) the Interest Period for such Borrowing, which shall be a
period contemplated by the definition of the term "Interest Period";
(v) in the case of a Borrowing by Aristar, the Tranche under
which such Borrowing is to be made; and
(vi) the location and number of the relevant Borrower's account
to which funds are to be disbursed, which shall comply with the
requirements of Section 2.05.
Promptly following receipt of a Competitive Bid Request in accordance with this
Section, the Administrative Agent shall notify the Lenders of the details
thereof by telecopy, inviting the Lenders to submit Competitive Bids.
(b) Making of Bids by Lenders. Each Lender under the relevant
Tranche may (but shall not have any obligation to) make one or more Competitive
Bids to the relevant Borrower in response to a Competitive Bid Request. Each
Competitive Bid by a Lender must be in a form approved by the Administrative
Agent and must be received by the Administrative Agent by telecopy, in the case
of a Competitive Eurodollar Borrowing, not later than 9:30 a.m., New York City
time, three Business Days before the proposed date of such Competitive
Borrowing, and in the case of a Fixed Rate Borrowing, not later than 9:30 a.m.,
New York City time, on the proposed date of such Competitive Borrowing.
Competitive Bids that do not conform substantially to the form approved by the
Administrative Agent may be rejected by the Administrative Agent, and the
Administrative Agent shall notify the applicable Lender of such rejection as
promptly as practicable. Each Competitive Bid shall specify (i) the principal
amount (which shall be $10,000,000 or a larger multiple of $1,000,000 and which
may equal the entire principal amount of the Competitive Borrowing requested by
the relevant Borrower) of the Competitive Loan or Loans that the Lender is
willing to make, (ii) the Competitive Bid Rate or Competitive Bid Rates at which
the Lender is prepared to make such Loan or Loans (expressed
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as a percentage rate per annum in the form of a decimal to no more than four
decimal places) and (iii) the Interest Period for each such Loan and the last
day thereof.
(c) Notification of Bids by Administrative Agent. The
Administrative Agent shall promptly notify the relevant Borrower by telecopy of
the Competitive Bid Rate and the principal amount specified in each Competitive
Bid and the identity of the Lender that shall have made such Competitive Bid.
(d) Acceptance of Bids by the Borrowers. Subject only to the
provisions of this paragraph, the relevant Borrower may accept or reject any
Competitive Bid. Such Borrower shall notify the Administrative Agent by
telephone, confirmed by telecopy in a form approved by the Administrative Agent,
whether and to what extent it has decided to accept or reject each Competitive
Bid, in the case of a Competitive Eurodollar Borrowing, not later than 10:30
a.m., New York City time, three Business Days before the date of the proposed
Competitive Borrowing, and in the case of a Fixed Rate Borrowing, not later than
10:30 a.m., New York City time, on the proposed date of the Competitive
Borrowing; provided, that (i) the failure of such Borrower to give such notice
shall be deemed to be a rejection of each Competitive Bid, (ii) such Borrower
shall not accept a Competitive Bid made at a particular Competitive Bid Rate if
such Borrower rejects a Competitive Bid made at a lower Competitive Bid Rate,
(iii) the aggregate amount of the Competitive Bids accepted by such Borrower
shall not exceed the aggregate amount of the requested Competitive Borrowing
specified in the related Competitive Bid Request, (iv) to the extent necessary
to comply with clause (iii) of this proviso, such Borrower may accept
Competitive Bids at the same Competitive Bid Rate in part, which acceptance, in
the case of multiple Competitive Bids at such Competitive Bid Rate, shall be
made pro rata in accordance with the amount of each such Competitive Bid, and
(v) except pursuant to clause (iv) of this proviso, no Competitive Bid shall be
accepted for a Competitive Loan unless such Competitive Loan is in a principal
amount of $10,000,000 or a larger multiple of $1,000,000; provided further that
if a Competitive Loan must be in an amount less than $10,000,000 because of the
provisions of clause (iv) of the first proviso of this paragraph, such
Competitive Loan may be in an amount of $1,000,000 or any multiple thereof, and
in calculating the pro rata allocation of acceptances of portions of multiple
Competitive Bids at a particular Competitive Bid Rate pursuant to such clause
(iv) the amounts shall be rounded to multiples of $1,000,000 in a manner
determined by the relevant Borrower. A notice given by the relevant Borrower
pursuant to this paragraph shall be irrevocable.
(e) Notification of Acceptances by the Administrative Agent. The
Administrative Agent shall promptly notify each bidding Lender by telecopy
whether or not its Competitive Bid has been accepted (and, if so, the amount and
Competitive Bid Rate so accepted), and each successful bidder will thereupon
become bound, subject to the terms and
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conditions hereof, to make the Competitive Loan in respect of which its
Competitive Bid has been accepted.
(f) Bids by the Administrative Agent. If the Administrative
Agent shall elect to submit a Competitive Bid in its capacity as a Lender, it
shall submit such Competitive Bid directly to the relevant Borrower at least one
quarter of an hour earlier than the time by which the other Lenders are required
to submit their Competitive Bids to the Administrative Agent pursuant to
paragraph (b) of this Section.
SECTION 2.05. Funding of Borrowings.
(a) Funding by Lenders. Each Lender shall make each Loan to be
made by it hereunder on the proposed date thereof by wire transfer of
immediately available funds by 12:00 noon, New York City time, to the account of
the Administrative Agent most recently designated by it for such purpose by
notice to the Lenders. The Administrative Agent will make such Loans available
to the relevant Borrower by promptly crediting the amounts so received, in like
funds, to an account of such Borrower maintained with the Administrative Agent
in New York City and designated by such Borrower in the applicable Borrowing
Request or Competitive Bid Request.
(b) Presumption by the Administrative Agent. Unless the
Administrative Agent shall have received notice from a Lender prior to the
proposed date of any Borrowing that such Lender will not make available to the
Administrative Agent such Lender's share of such Borrowing, the Administrative
Agent may assume that such Lender has made such share available on such date in
accordance with paragraph (a) of this Section and may, in reliance upon such
assumption, make available to the relevant Borrower a corresponding amount. In
such event, if a Lender has not in fact made its share of the applicable
Borrowing available to the Administrative Agent, then the applicable Lender and
the relevant Borrower severally agree to pay to the Administrative Agent
forthwith on demand such corresponding amount with interest thereon, for each
day from and including the date such amount is made available to such Borrower
to but excluding the date of payment to the Administrative Agent, at (i) in the
case of such Lender, the Federal Funds Effective Rate or (ii) in the case of
such Borrower, the interest rate applicable to ABR Loans. If such Lender pays
such amount to the Administrative Agent, then such amount shall constitute such
Lender's Loan included in such Borrowing.
SECTION 2.06. Interest Elections.
(a) Elections by the Borrowers for Syndicated Borrowings. Each
Syndicated Borrowing initially shall be of the Type specified in the applicable
Borrowing Request and, in the case of a Syndicated Eurodollar Borrowing, shall
have the Interest Period specified in such Borrowing Request. Thereafter, the
relevant Borrower may elect to convert such Borrowing to a Borrowing of a
different Type or to continue such Borrowing as a Borrowing of the same Type
<PAGE> 33
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and, in the case of a Syndicated Eurodollar Borrowing, may elect the Interest
Period therefor, all as provided in this Section. The relevant Borrower may
elect different options with respect to different portions of the affected
Borrowing, in which case each such portion shall be allocated ratably among the
Lenders holding the Loans constituting such Borrowing, and the Loans
constituting each such portion shall be considered a separate Borrowing. This
Section shall not apply to Competitive Borrowings, which may not be converted or
continued.
(b) Notice of Elections. To make an election pursuant to this
Section, the relevant Borrower shall notify the Administrative Agent of such
election by telephone by the time that a Borrowing Request would be required
under Section 2.03 if such Borrower were requesting a Syndicated Borrowing of
the Type resulting from such election to be made on the effective date of such
election. Each such telephonic Interest Election Request shall be irrevocable
and shall be confirmed promptly by hand delivery or telecopy to the
Administrative Agent of a written Interest Election Request in a form approved
by the Administrative Agent and signed by the relevant Borrower.
(c) Information in Interest Election Requests. Each telephonic
and written Interest Election Request shall specify the following information in
compliance with Section 2.02:
(i) the name of the Borrower and the Borrowing to which such
Interest Election Request applies and, if different options are being
elected with respect to different portions thereof, the portions thereof
to be allocated to each resulting Borrowing (in which case the
information to be specified pursuant to clauses (iii) and (iv) of this
paragraph shall be specified for each resulting Borrowing);
(ii) the effective date of the election made pursuant to such
Interest Election Request, which shall be a Business Day;
(iii) whether the resulting Borrowing is to be an ABR Borrowing
or a Eurodollar Borrowing; and
(iv) if the resulting Borrowing is a Eurodollar Borrowing, the
Interest Period therefor after giving effect to such election, which
shall be a period contemplated by the definition of the term "Interest
Period".
If any such Interest Election Request requests a Eurodollar Borrowing but does
not specify an Interest Period, then the relevant Borrower shall be deemed to
have selected an Interest Period of one month's duration.
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(d) Notice by the Administrative Agent to Lenders. Promptly
following receipt of an Interest Election Request, the Administrative Agent
shall advise each Lender of the details thereof and of such Lender's portion of
each resulting Borrowing.
(e) Failure to Elect; Events of Default. If the relevant
Borrower fails to deliver a timely Interest Election Request with respect to a
Syndicated Eurodollar Borrowing prior to the end of the Interest Period
therefor, then, unless such Borrowing is repaid as provided herein, at the end
of such Interest Period such Borrowing shall be converted to an ABR Borrowing.
Notwithstanding any contrary provision hereof, if an Event of Default has
occurred and is continuing and the Administrative Agent, at the request of the
Required Lenders, so notifies the relevant Borrower, then, so long as an Event
of Default is continuing (i) no outstanding Syndicated Borrowing may be
converted to or continued as a Syndicated Eurodollar Borrowing and (ii) unless
repaid, each Syndicated Eurodollar Borrowing shall be converted to an ABR
Borrowing at the end of the Interest Period therefor.
SECTION 2.07. Termination and Reduction of the Commitments.
(a) Scheduled Termination.
(i) Unless previously terminated, the Commitments shall
terminate at the close of business on the Commitment Termination Date;
and
(ii) The Commitments of each Non-Extending Lender shall
terminate as provided in Section 2.18(c).
(b) Voluntary Termination or Reduction. The Borrowers may at any
time terminate, or from time to time reduce, the Commitments under any Tranche;
provided that (i) each reduction of the Commitments shall be in an amount that
is an integral multiple of $10,000,000 and (ii) the Borrowers shall not
terminate or reduce the Commitments if, after giving effect to any concurrent
prepayment of the Loans in accordance with Section 2.09, the sum of the total
Revolving Credit Exposures plus the aggregate principal amount of outstanding
Competitive Loans would exceed the total Commitments.
(c) Notice of Voluntary Termination or Reduction. The Borrowers
shall notify the Administrative Agent of any election to terminate or reduce the
Commitments under paragraph (b) of this Section at least three Business Days
prior to the effective date of such termination or reduction, specifying such
election and the effective date thereof. Promptly following receipt of any
notice, the Administrative Agent shall advise the Lenders of the contents
thereof. Each notice delivered by the Borrowers pursuant to this Section shall
be irrevocable; provided that a notice of termination of the Commitments
delivered by the Borrowers may state that such notice is conditioned upon the
effectiveness of other credit
<PAGE> 35
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facilities, in which case such notice may be revoked by the Borrowers (by notice
to the Administrative Agent on or prior to the specified effective date) if such
condition is not satisfied.
(d) Effect of Termination or Reduction. Any termination or
reduction of the Commitments shall be permanent. Each reduction of the
Commitments shall be made ratably among the Lenders in accordance with their
respective Commitments.
SECTION 2.08. Repayment of Loans; Evidence of Debt.
(a) Repayment. Each Borrower hereby unconditionally promises to
pay the Loans as follows:
(i) subject to Section 2.18, to the Administrative Agent for
account of the Lenders, on the Commitment Termination Date, the then
unpaid principal amount of the Syndicated Loans made to such Borrower
that are outstanding at the close of business on the Commitment
Termination Date, and
(ii) to the Administrative Agent for account of the respective
Lender the then unpaid principal amount of each Competitive Loan of such
Lender made to such Borrower on the last day of the Interest Period
therefor.
(b) Manner of Payment. Prior to any repayment or prepayment of
any Borrowings hereunder, the relevant Borrower shall select the Borrowing or
Borrowings to be paid and shall notify the Administrative Agent by telephone
(confirmed by telecopy) of such selection not later than 11:00 a.m., New York
City time, three Business Days before the scheduled date of such repayment;
provided that each repayment of Borrowings by a Borrower shall be applied to
repay any outstanding ABR Borrowings of such Borrower before any other
Borrowings. If the relevant Borrower fails to make a timely selection of the
Borrowing or Borrowings to be repaid or prepaid, such payment shall be applied,
first, to pay any outstanding ABR Borrowings of such Borrower and, second, to
other Borrowings of such Borrower in the order of the remaining duration of
their respective Interest Periods (the Borrowing with the shortest remaining
Interest Period to be repaid first), and for these purposes, Competitive Loans
shall be deemed to be in the same Class as Loans. Each payment of a Syndicated
Borrowing shall be applied ratably to the Loans included in such Borrowing.
(c) Maintenance of Loan Accounts by Lenders. Each Lender shall
maintain in accordance with its usual practice an account or accounts evidencing
the indebtedness of each Borrower to such Lender resulting from each Loan made
by such Lender, including the Tranche, the amounts of principal and interest
payable and paid to such Lender from time to time hereunder.
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(d) Maintenance of Loan Accounts by the Administrative Agent.
The Administrative Agent shall maintain accounts in which it shall record (i)
the name of the Borrower and the amount of each Loan to such Borrower made
hereunder, the Class, Type and Tranche thereof and each Interest Period
therefor, (ii) the amount of any principal or interest due and payable or to
become due and payable from each Borrower to each Lender hereunder and (iii) the
amount of any sum received by the Administrative Agent from either Borrower
hereunder for account of the Lenders and each Lender's share thereof.
(e) Effect of Entries. The entries made in the accounts
maintained pursuant to paragraph (c) or (d) of this Section shall be prima facie
evidence of the existence and amounts of the obligations recorded therein;
provided that the failure of any Lender or the Administrative Agent to maintain
such accounts or any error therein shall not in any manner affect the obligation
of either Borrower to repay the Loans in accordance with the terms of this
Agreement.
(g) Promissory Notes. Any Lender may request that Loans made by
it be evidenced by a promissory note. In such event, the relevant Borrower shall
prepare, execute and deliver to such Lender a promissory note payable to the
order of such Lender (or, if requested by such Lender, to such Lender and its
registered assigns) and in a form approved by the Administrative Agent.
Thereafter, the Loans evidenced by such promissory note and interest thereon
shall at all times (including after assignment pursuant to Section 9.04) be
represented by one or more promissory notes in such form payable to the order of
the payee named therein (or, if such promissory note is a registered note, to
such payee and its registered assigns).
SECTION 2.09. Prepayment of Loans.
(a) Optional Prepayments Right to Prepay Borrowings. Each
Borrower shall have the right at any time and from time to time to prepay any
Borrowing in whole or in part, subject to the requirements of this Section;
provided that no Borrower shall have the right to prepay any Competitive Loan
without the prior consent of the Lender thereof.
(b) Notices, Etc. The relevant Borrower shall notify the
Administrative Agent by telephone (confirmed by telecopy) of any optional
prepayment hereunder of a Borrowing made by such Borrower (i) in the case of
prepayment of a Syndicated Eurodollar Borrowing or of a Competitive Borrowing,
not later than 11:00 a.m., New York City time, three Business Days before the
date of prepayment or (ii) in the case of prepayment of an ABR Borrowing, not
later than 11:00 a.m., New York City time, one Business Day before the date of
prepayment. Each such notice shall be irrevocable and shall specify the
prepayment date and the principal amount of each Borrowing or portion thereof to
be prepaid; provided that, if a notice of prepayment is given in connection with
a conditional notice of termination of the Commitments as contemplated by
Section 2.07, then such notice of prepayment may be revoked if such notice of
termination is revoked in accordance with Section 2.07. Promptly following
receipt of any such
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notice relating to a Syndicated Borrowing or Competitive Borrowing, the
Administrative Agent shall advise the relevant Lenders of the contents thereof.
Each partial prepayment of any Borrowing shall be in an amount that would be
permitted in the case of a Borrowing of the same Type as provided in Section
2.02. Each prepayment of a Syndicated Borrowing shall be applied ratably to the
Loans included in the prepaid Borrowing. Prepayments shall be accompanied by
accrued interest to the extent required by Section 2.11 and shall be made in the
manner specified in Section 2.08(b).
SECTION 2.10. Fees.
(a) Facility Fee. With respect to each Tranche, the relevant
Borrower(s) agree(s) to pay to the Administrative Agent for account of each
Lender under such Tranche a facility fee, which shall accrue at the Applicable
Rate on the daily amount of the Commitment of such Lender (whether used or
unused) under such Tranche during the period from and including the date hereof
to but excluding the date such Commitment terminates; provided that, if such
Lender continues to have any Revolving Credit Exposure after its Commitment
terminates, then such facility fee shall continue to accrue on the daily
aggregate outstanding principal amount of Loans (including Competitive Loans) of
such Lender from and including the date on which its Commitment terminates to
but excluding the date on which such Lender ceases to have any Loans
outstanding. Accrued facility fees shall be payable on each Quarterly Date and
on each date the Commitments of any Lender terminate, commencing on the first
such date to occur after the date hereof; provided that any facility fees
accruing after the date on which the Commitments terminate shall be payable on
demand. All facility fees shall be computed on the basis of a year of 360 days
and shall be payable for the actual number of days elapsed (including the first
day but excluding the last day).
(b) Utilization Fee. With respect to each Tranche, the relevant
Borrower(s) agree(s) to pay a fee to the Administrative Agent for account of
each Lender under such Tranche a utilization fee, which shall accrue at the
Applicable Rate on the daily aggregate outstanding principal amount of Loans
(including Competitive Loans) of such Lender under such Tranche for each day on
which the aggregate outstanding principal amount of the Loans under such Tranche
equals or exceeds an amount equal to 50% of the Commitments under such Tranche.
Accrued utilization fees shall be payable on each Quarterly Date and on each
date the Commitments of any Lender terminate, commencing on the first such date
to occur after the date hereof; provided that any utilization fees accruing
after the date on which the Commitments terminate shall be payable on demand.
All utilization fees shall be computed on the basis of a year of 360 days and
shall be payable for the actual number of days elapsed (including the first day
but excluding the last day). Utilization fees payable under this Section 2.10(b)
with respect to any day under Tranche A shall be allocated between the Borrowers
pro rata according to the respective
<PAGE> 38
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aggregate outstanding principal amounts of Loans under such Tranche owing by the
Borrowers on such day.
(c) Administrative Agent Fees. The Borrowers agree to pay to the
Administrative Agent, for its own account, fees payable in the amounts and at
the times separately agreed upon between the Borrowers and the Administrative
Agent.
(d) Payment of Fees. All fees payable hereunder shall be paid on
the dates due, in immediately available funds, to the Administrative Agent for
distribution, in the case of facility fees, to the Lenders entitled thereto.
Fees paid shall not be refundable under any circumstances.
SECTION 2.11. Interest.
(a) ABR Loans. The Loans constituting each ABR Borrowing shall
bear interest at a rate per annum equal to the Alternate Base Rate plus the
Applicable Rate.
(b) Eurodollar Loans. The Loans constituting each Eurodollar
Borrowing shall bear interest at a rate per annum equal to (i) in the case of a
Syndicated Eurodollar Loan, the Adjusted LIBO Rate for the Interest Period for
such Borrowing plus the Applicable Rate, or (ii) in the case of a Competitive
Eurodollar Borrowing, the LIBO Rate for the Interest Period for such Borrowing
plus (or minus, as applicable) the Margin applicable to such Loan.
(c) Fixed Rate Loans. Each Fixed Rate Loan shall bear interest
at a rate per annum equal to the Fixed Rate applicable to such Loan.
(d) Default Interest. Notwithstanding the foregoing, if any
principal of or interest on any Loan or any fee or other amount payable by
either Borrower hereunder is not paid when due, whether at stated maturity, upon
acceleration or otherwise, such overdue amount shall bear interest, after as
well as before judgment, at a rate per annum equal to (i) in the case of overdue
principal of any Loan, 2% plus the rate otherwise applicable to such Loan as
provided above or (ii) in the case of any other amount, 2% plus the rate
applicable to ABR Loans as provided in paragraph (a) of this Section.
(e) Payment of Interest. Accrued interest on each Loan shall be
payable in arrears on each Interest Payment Date for such Loan and, in the case
of Syndicated Loans, upon termination of the Commitments; provided that (i)
interest accrued pursuant to paragraph (d) of this Section shall be payable on
demand, (ii) in the event of any repayment or prepayment of any Loan (other than
a prepayment of an ABR Loan prior to the Commitment Termination Date), accrued
interest on the principal amount repaid or prepaid shall be payable on the date
of such repayment or prepayment and (iii) in the event of any conversion of any
Syndicated Eurodollar
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Borrowing prior to the end of the Interest Period therefor, accrued interest on
such Borrowing shall be payable on the effective date of such conversion.
(f) Computation. All interest hereunder shall be computed on the
basis of a year of 360 days except that interest computed by reference to the
Alternate Base Rate at times when the Alternate Base Rate is based on the Prime
Rate shall be computed on the basis of a year of 365 days (or 366 days in a leap
year), and in each case shall be payable for the actual number of days elapsed
(including the first day but excluding the last day). The applicable Alternate
Base Rate, Adjusted LIBO Rate or LIBO Rate shall be determined by the
Administrative Agent, and such determination shall be conclusive absent manifest
error.
SECTION 2.12. Alternate Rate of Interest. If prior to the
commencement of the Interest Period for a Eurodollar Borrowing:
(a) the Administrative Agent determines (which determination
shall be conclusive absent manifest error) that adequate and reasonable
means do not exist for ascertaining the Adjusted LIBO Rate or the LIBO
Rate, as applicable, for such Interest Period; or
(b) the Administrative Agent is advised by the Required Lenders
(or, in the case of a Competitive Eurodollar Loan, the Lender that is
required to make such Loan) that the Adjusted LIBO Rate or the LIBO
Rate, as applicable, for such Interest Period will not adequately and
fairly reflect the cost to such Lenders (or Lender) of making or
maintaining their Loans (or its Loan) included in such Borrowing for
such Interest Period;
then the Administrative Agent shall give notice thereof to the Borrowers and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agent notifies the Borrowers and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Syndicated Borrowing to, or
continuation of any Syndicated Borrowing as, a Syndicated Eurodollar Borrowing
shall be ineffective, (ii) if any Borrowing Request requests a Syndicated
Eurodollar Borrowing, such Borrowing shall be made as an ABR Borrowing and (iii)
any request by the relevant Borrower for a Competitive Eurodollar Borrowing
shall be ineffective; provided that if the circumstances giving rise to such
notice do not affect all the Lenders, then requests by the such Borrower for
Competitive Eurodollar Borrowings may be made to Lenders that are not affected
thereby.
SECTION 2.13. Increased Costs.
(a) Increased Costs Generally. If any Change in Law shall:
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(i) impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets of, deposits with or for
account of, or credit extended by, any Lender (except any such reserve
requirement reflected in the Adjusted LIBO Rate); or
(ii) impose on any Lender or the London interbank market any
other condition affecting this Agreement or Eurodollar Loans or Fixed
Rate Loans made by such Lender;
and the result of any of the foregoing shall be to increase the cost to such
Lenders of making or maintaining any Eurodollar Loan or Fixed Rate Loan (or of
maintaining its obligation to make any such Loan) or to reduce the amount of any
sum received or receivable by such Lender hereunder (whether of principal,
interest or otherwise), then the relevant Borrower will pay to such Lender such
additional amount or amounts as will compensate such Lender for such additional
costs incurred or reduction suffered.
(b) Capital Requirements. If any Lender determines that any
Change in Law regarding capital requirements has or would have the effect of
reducing the rate of return on such Lender's capital or on the capital of such
Lender's holding company, if any, as a consequence of this Agreement or the
Loans made by such Lender to a level below that which such Lender or such
Lender's holding company could have achieved but for such Change in Law (taking
into consideration such Lender's policies and the policies of such Lender's
holding company with respect to capital adequacy), then from time to time each
Borrower will pay to such Lender such additional amount or amounts as will
compensate such Lender or such Lender's holding company for any such reduction
suffered.
(c) Certificates from Lenders. A certificate of a Lender setting
forth the amount or amounts necessary to compensate such Lender or its holding
company, as the case may be, as specified in paragraph (a) or (b) of this
Section shall be delivered to the relevant Borrower and shall be conclusive
absent manifest error. Such Borrower(s) shall pay such Lender the amount shown
as due on any such certificate within 10 days after receipt thereof.
(d) Delay in Requests. Failure or delay on the part of any
Lender to demand compensation pursuant to this Section shall not constitute a
waiver of such Lender's right to demand such compensation; provided that neither
Borrower shall be required to compensate a Lender pursuant to this Section for
any increased costs or reductions incurred more than six months prior to the
date that such Lender notifies the relevant Borrower(s) of the Change in Law
giving rise to such increased costs or reductions and of such Lender's intention
to claim compensation therefor; provided further that, if the Change in Law
giving rise to such increased costs or reductions is retroactive, then the
six-month period referred to above shall be extended to include the period of
retroactive effect thereof.
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(e) Competitive Loans. Notwithstanding the foregoing provisions
of this Section, a Lender shall not be entitled to compensation pursuant to this
Section in respect of any Competitive Loan if the Change in Law that would
otherwise entitle it to such compensation shall have been publicly announced
prior to submission of the Competitive Bid pursuant to which such Loan was made.
SECTION 2.14. Break Funding Payments. In the event of (a) the
payment of any principal of any Eurodollar Loan or Fixed Rate Loan other than on
the last day of an Interest Period therefor (including as a result of an Event
of Default) (b) the conversion of any Syndicated Eurodollar Loan other than on
the last day of an Interest Period therefor, (c) the failure to borrow, convert,
continue or prepay any Syndicated Loan on the date specified in any notice
delivered pursuant hereto (regardless of whether such notice is permitted to be
revocable under Section 2.09(b) and is revoked in accordance herewith), (d) the
failure to borrow any Competitive Loan after accepting the Competitive Bid to
make such Loan, or (e) the assignment of any Eurodollar Loan or Fixed Rate Loan
other than on the last day of an Interest Period therefor as a result of a
request by either Borrower pursuant to Section 2.17, then, in any such event,
the relevant Borrower shall compensate each Lender for the loss, cost and
expense attributable to such event. In the case of a Eurodollar Loan, the loss
to any Lender attributable to any such event shall be deemed to include an
amount determined by such Lender to be equal to the excess, if any, of (i) the
amount of interest that such Lender would pay for a deposit equal to the
principal amount of such Loan for the period from the date of such payment,
conversion, failure or assignment to the last day of the then current Interest
Period for such Loan (or, in the case of a failure to borrow, convert or
continue, the duration of the Interest Period that would have resulted from such
borrowing, conversion or continuation) if the interest rate payable on such
deposit were equal to the Adjusted LIBO Rate for such Interest Period, over (ii)
the amount of interest that such Lender would earn on such principal amount for
such period if such Lender were to invest such principal amount for such period
at the interest rate that would be bid by such Lender (or an affiliate of such
Lender) for Dollar deposits from other banks in the eurodollar market at the
commencement of such period. A certificate of any Lender setting forth any
amount or amounts that such Lender is entitled to receive pursuant to this
Section shall be delivered to the relevant Borrower and shall be conclusive
absent manifest error. Such Borrower shall pay such Lender the amount shown as
due on any such certificate within 10 days after receipt thereof.
SECTION 2.15. Taxes.
(a) Payments Free of Taxes. Any and all payments by or on
account of any obligation of each Borrower hereunder shall be made free and
clear of and without deduction for any Indemnified Taxes or Other Taxes;
provided that if either Borrower shall be required to deduct any Indemnified
Taxes or Other Taxes from such payments, then (i) the sum payable
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shall be increased as necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section)
the Administrative Agent or Lender (as the case may be) receives an amount equal
to the sum it would have received had no such deductions been made, (ii) such
Borrower shall make such deductions and (iii) such Borrower shall pay the full
amount deducted to the relevant Governmental Authority in accordance with
applicable law.
(b) Payment of Other Taxes by the Borrowers. In addition, each
Borrower shall pay any Other Taxes to the relevant Governmental Authority in
accordance with applicable law.
(c) Indemnification by the Borrowers. Each Borrower shall
indemnify the Administrative Agent and each Lender, within 10 days after written
demand therefor, for the full amount of any Indemnified Taxes or Other Taxes
(including Indemnified Taxes or Other Taxes imposed or asserted on or
attributable to amounts payable under this Section) paid by the Administrative
Agent or such Lender, as the case may be, and any penalties, interest and
reasonable expenses arising therefrom or with respect thereto, whether or not
such Indemnified Taxes or Other Taxes were correctly or legally imposed or
asserted by the relevant Governmental Authority. A certificate as to the amount
of such payment or liability delivered to the relevant Borrower by a Lender, or
by the Administrative Agent on its own behalf or on behalf of a Lender, shall be
conclusive absent manifest error.
(d) Evidence of Payments. As soon as practicable after any
payment of Indemnified Taxes or Other Taxes by the relevant Borrower to a
Governmental Authority, such Borrower shall deliver to the Administrative Agent
the original or a certified copy of a receipt issued by such Governmental
Authority evidencing such payment, a copy of the return reporting such payment
or other evidence of such payment reasonably satisfactory to the Administrative
Agent.
(e) Foreign Lenders. Any Foreign Lender that is entitled to an
exemption from or reduction of withholding tax under the law of the jurisdiction
in which the relevant Borrower is located, or any treaty to which such
jurisdiction is a party, with respect to payments under this Agreement shall
deliver to such Borrower (with a copy to the Administrative Agent), at the time
or times prescribed by applicable law or reasonably requested by such Borrower,
such properly completed and executed documentation prescribed by applicable law
as will permit such payments to be made without withholding or at a reduced
rate.
SECTION 2.16. Payments Generally; Pro Rata Treatment; Sharing of
Set-offs.
(a) Payments by the Borrowers. Each Borrower shall make each
payment required to be made by it hereunder (whether of principal, interest or
fees, or under Section 2.13, 2.14 or 2.15, or otherwise) prior to 12:00 noon,
New York City time, on the date when due, in
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immediately available funds, without set-off or counterclaim; provided that if a
new Loan is to be made by any Lender to a Borrower on a date such Borrower is to
repay any principal of an outstanding Loan of such Lender, such Lender shall
apply the proceeds of such new Loan to the payment of the principal to be repaid
by such Borrower and only an amount equal to the difference between the
principal to be borrowed and the principal to be repaid shall be made available
by such Lender to the Administrative Agent as provided in Section 2.05 or paid
by such Borrower to the Administrative Agent pursuant to this paragraph, as the
case may be. Any amounts received after such time on any date may, in the
discretion of the Administrative Agent, be deemed to have been received on the
next succeeding Business Day for purposes of calculating interest thereon. All
such payments shall be made to the Administrative Agent at its offices at 270
Park Avenue, New York, New York, except that payments pursuant to Sections 2.13,
2.14, 2.15 and 9.03 shall be made directly to the Persons entitled thereto. The
Administrative Agent shall distribute any such payments received by it for
account of any other Person to the appropriate recipient promptly following
receipt thereof. If any payment hereunder shall be due on a day that is not a
Business Day, the date for payment shall be extended to the next succeeding
Business Day and, in the case of any payment accruing interest, interest thereon
shall be payable for the period of such extension. All payments hereunder shall
be made in Dollars.
(b) Application of Insufficient Payments. If at any time
insufficient funds are received by and available to the Administrative Agent to
pay fully all amounts of principal, interest and fees then due hereunder, such
funds shall be applied (i) first, to pay interest and fees then due hereunder,
ratably among the parties entitled thereto in accordance with the amounts of
interest and fees then due to such parties, and (ii) second, to pay principal
then due hereunder, ratably among the parties entitled thereto in accordance
with the amounts of principal then due to such parties.
(c) Pro Rata Treatment. Except to the extent otherwise provided
herein: (i) each payment of facility fee and utilization fee under Section 2.10
with respect to a Tranche shall be made for account of the Lenders under such
Tranche, and each termination or reduction of the amount of the Commitments
under such Tranche under Section 2.07 shall be applied to the respective
Commitments of the Lenders under such Tranche, pro rata according to the amounts
of their respective Commitments under such Tranche; (ii) each Syndicated
Borrowing under a Tranche shall be allocated pro rata among the Lenders under
such Tranche according to the amounts of their respective Commitments under such
Tranche (in the case of the making of Syndicated Loans) or their respective
Loans under such Tranche (in the case of conversions and continuations of
Loans); (iii) each payment or prepayment of principal of Syndicated Loans under
a Tranche by the relevant Borrower shall be made for account of the Lenders
under such Tranche pro rata in accordance with the respective unpaid principal
amounts of the Syndicated Loans under such Tranche held by them; and (iv) each
payment of interest on Syndicated Loans
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under a Tranche by the relevant Borrower shall be made for account of the
Lenders under such Tranche pro rata in accordance with the respective amounts of
interest on such Loans then due and payable to such Lenders.
(d) Sharing of Payments by Lenders. If any Lender shall, by
exercising any right of set-off or counterclaim or otherwise, obtain payment in
respect of any principal of or interest on any of its Syndicated Loans under any
Tranche resulting in such Lender receiving payment of a greater proportion of
the aggregate amount of its Syndicated Loans under such Tranche and accrued
interest thereon then due than the proportion received by any other Lender, then
the Lender receiving such greater proportion shall purchase (for cash at face
value) participations in the Syndicated Loans of such Tranche of other Lenders
under such Tranche to the extent necessary so that the benefit of all such
payments shall be shared by the Lenders under such Tranche ratably in accordance
with the aggregate amount of principal of and accrued interest on their
respective Syndicated Loans under such Tranche; provided that (i) if any such
participations are purchased and all or any portion of the payment giving rise
thereto is recovered, such participations shall be rescinded and the purchase
price restored to the extent of such recovery, without interest, and (ii) the
provisions of this paragraph shall not be construed to apply to any payment made
by either Borrower pursuant to and in accordance with the express terms of this
Agreement or any payment obtained by a Lender as consideration for the
assignment of or sale of a participation in any of its Loans under any Tranche
to any assignee or participant, other than to either Borrower or any Subsidiary
or Affiliate thereof (as to which the provisions of this paragraph shall apply).
Each Borrower consents to the foregoing and agrees, to the extent it may
effectively do so under applicable law, that any Lender acquiring a
participation pursuant to the foregoing arrangements may exercise against such
Borrower rights of set-off and counterclaim with respect to such participation
as fully as if such Lender were a direct creditor of such Borrower in the amount
of such participation.
(e) Presumptions of Payment. Unless the Administrative Agent
shall have received notice from the relevant Borrower prior to the date on which
any payment is due to the Administrative Agent for account of the Lenders
hereunder that such Borrower will not make such payment, the Administrative
Agent may assume that such Borrower has made such payment on such date in
accordance herewith and may, in reliance upon such assumption, distribute to the
Lenders under such Tranche the amount due. In such event, if such Borrower has
not in fact made such payment, then each of the Lenders under such Tranche
severally agrees to repay to the Administrative Agent forthwith on demand the
amount so distributed to such Lender with interest thereon, for each day from
and including the date such amount is distributed to it to but excluding the
date of payment to the Administrative Agent, at the Federal Funds Effective
Rate.
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(f) Certain Deductions by the Administrative Agent. If any
Lender shall fail to make any payment required to be made by it pursuant to
Section 2.05(b) or 2.16(e), then the Administrative Agent may, in its discretion
(notwithstanding any contrary provision hereof), apply any amounts thereafter
received by the Administrative Agent for account of such Lender to satisfy such
Lender's obligations under such Sections until all such unsatisfied obligations
are fully paid.
SECTION 2.17. Mitigation Obligations; Replacement of Lenders.
(a) Designation of a Different Lending Office. If any Lender
requests compensation under Section 2.13, or if either Borrower is required to
pay any additional amount to any Lender or any Governmental Authority for
account of any Lender pursuant to Section 2.15, then such Lender shall use
reasonable efforts to designate a different lending office for funding or
booking its Loans hereunder or to assign its rights and obligations hereunder to
another of its offices, branches or affiliates, if, in the judgment of such
Lender, such designation or assignment (i) would eliminate or reduce amounts
payable pursuant to Section 2.13 or 2.15, as the case may be, in the future and
(ii) would not subject such Lender to any unreimbursed cost or expense and would
not otherwise be disadvantageous to such Lender. Each Borrower hereby agrees to
pay all reasonable costs and expenses incurred by any Lender in connection with
any such designation or assignment.
(b) Replacement of Lenders. If any Lender requests compensation
under Section 2.13, or if either Borrower is required to pay any additional
amount to any Lender or any Governmental Authority for account of any Lender
pursuant to Section 2.15, or if any Lender defaults in its obligation to fund
Loans hereunder, then such Borrower may, at its sole expense and effort, upon
notice to such Lender and the Administrative Agent, require such Lender to
assign and delegate, without recourse (in accordance with and subject to the
restrictions contained in Section 9.04), all its interests, rights and
obligations under this Agreement (other than any outstanding Competitive Loans
held by it) to an assignee that shall assume such obligations (which assignee
may be another Lender, if a Lender accepts such assignment); provided that (i)
such Borrower shall have received the prior written consent of the
Administrative Agent, which consent shall not unreasonably be withheld, (ii)
such Lender shall have received payment of an amount equal to the outstanding
principal of its Loans (other than Competitive Loans), accrued interest thereon,
accrued fees and all other amounts payable to it hereunder, from the assignee
(to the extent of such outstanding principal and accrued interest and fees) or
the relevant Borrower (in the case of all other amounts) and (iii) in the case
of any such assignment resulting from a claim for compensation under Section
2.13 or payments required to be made pursuant to Section 2.15, such assignment
will result in a reduction in such compensation or payments. A Lender shall not
be required to make any such assignment and delegation if, prior thereto, as a
result of a waiver by such Lender or otherwise, the
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circumstances entitling the relevant Borrower to require such assignment and
delegation cease to apply.
SECTION 2.18. Extension of Commitment Termination Date.
(a) The Borrowers may, by notice to the Administrative Agent
(which shall promptly notify the Lenders) not later than 45 days and not earlier
than 60 days prior to the Commitment Termination Date then in effect hereunder
(the "Existing Commitment Termination Date"), request that the Lenders extend
the Commitment Termination Date for an additional year from the Existing
Commitment Termination Date. Each Lender, acting in its sole discretion, shall,
by notice to the Borrowers and the Administrative Agent given not earlier than
45 days prior to the Existing Commitment Termination Date, but not later than
the date (herein, the "Consent Date") that is 30 days prior to the Existing
Commitment Termination Date (except that, if such date is not a Business Day,
such notice shall be given on the next succeeding Business Day), advise the
Borrowers and the Administrative Agent whether or not such Lender agrees to such
extension; provided that, if such Lender gives notice of its consent to such
extension prior to the Consent Date, such Lender may revoke such consent at any
time prior to the Consent Date by giving notice of such revocation to the
Borrowers and the Administrative Agent; and provided further that each Lender
that determines not to extend the Commitment Termination Date (a "Non-Extending
Lender") shall notify the Administrative Agent (which shall notify the Lenders)
of such fact promptly after such determination (but in any event no later than
the Consent Date) and any Lender that does not advise the Borrowers on or before
the Consent Date shall be deemed to be a Non-Extending Lender. The election of
any Lender to agree to such extension shall not obligate any other Lender to so
agree.
(b) If (and only if) the total of the Commitments of the Lenders
that have agreed so to extend the Commitment Termination Date shall be at least
66-2/3% of the aggregate amount of the Commitments in effect immediately prior
to the Consent Date, the Borrowers shall have the right on or before the
Existing Commitment Termination Date to replace each Non-Extending Lender with,
and otherwise add to this Agreement, one or more other lenders (which may
include any Lender, each prior to the Existing Commitment Termination Date an
"Additional Commitment Lender") with the approval of the Administrative Agent
(which approval shall not be unreasonably withheld), each of which Additional
Commitment Lenders shall have entered into an agreement in form and substance
satisfactory to the Borrowers and the Administrative Agent pursuant to which
such Additional Commitment Lender shall, effective as of the Existing Commitment
Termination Date, undertake a Commitment (and, if any such Additional Commitment
Lender is already a Lender, its Commitment shall be in addition to such Lender's
Commitment hereunder on such date).
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(c) If (and only if) the total of the Commitments of the Lenders
that have agreed so to extend the Commitment Termination Date shall be at least
66-2/3% of the aggregate amount of the Commitments in effect immediately prior
to the Consent Date, then, effective as of the Existing Commitment Termination
Date, the Existing Commitment Termination Date shall be extended to the date
falling one year days after the Existing Commitment Termination Date (except
that, if such date is not a Business Day, such Commitment Termination Date as so
extended shall be the next preceding Business Day) and each Additional
Commitment Lender shall thereupon become a "Lender" for all purposes of this
Agreement.
Notwithstanding the foregoing, the extension of the Existing
Commitment Termination Date shall not be effective with respect to any Lender
unless:
(i) no Default shall have occurred and be continuing on each of
the date of the notice requesting such extension, on the Consent Date
and on the Existing Commitment Termination Date;
(ii) each of the representations and warranties made by the
Borrowers in Article 3 hereof shall be true and complete on and as of
each of the date of the notice requesting such extension, the Consent
Date and the Existing Commitment Termination Date with the same force
and effect as if made on and as of such date (or, if any such
representation or warranty is expressly stated to have been made as of a
specific date, as of such specific date); and
(iii) each Non-Extending Lender shall have been paid in full by
the Borrowers all amounts owing to such Lender hereunder on or before
the Existing Commitment Termination Date.
Even if the Existing Commitment Termination Date is extended as aforesaid, the
Commitment of each Non-Extending Lender shall terminate on the Existing
Commitment Termination Date. Notwithstanding anything herein contained, the
Commitment Termination Date may not be extended more than three times under this
Section 2.18.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
Each Borrower represents and warrants to the Lenders that:
SECTION 3.01. Organization; Powers. Each of such Borrower and
its Subsidiaries (except Non-Material Subsidiaries) is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization, has all requisite power and authority to carry on its business as
now conducted and, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect, is qualified to do business in, and is in good standing in, every
jurisdiction where such qualification is required.
SECTION 3.02. Authorization; Enforceability. The Transactions
are within such Borrower's corporate powers and have been duly authorized by all
necessary corporate and, if required, by all necessary shareholder action. This
Agreement has been duly executed and delivered by such Borrower and constitutes
a legal, valid and binding obligation of such Borrower, enforceable in
accordance with its terms, except as such enforceability may be limited by (a)
bankruptcy, insolvency, reorganization, moratorium or similar laws of general
applicability affecting the enforcement of creditors' rights and (b) the
application of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
SECTION 3.03. Governmental Approvals; No Conflicts. The
Transactions with respect to such Borrower (a) do not require any consent or
approval of, registration or filing with, or any other action by, any
Governmental Authority, except such as have been obtained or made and are in
full force and effect, (b) will not violate any applicable law or regulation or
the charter, by-laws or other organizational documents of such Borrower or any
of its Subsidiaries or any order of any Governmental Authority, (c) will not
violate or result in a default under any indenture, agreement or other
instrument binding upon such Borrower or any of its Subsidiaries or assets, or
give rise to a right thereunder to require any payment to be made by any such
Person, and (d) will not result in the creation or imposition of any Lien on any
asset of such Borrower or any of its Subsidiaries.
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SECTION 3.04. Financial Condition; No Material Adverse Change.
(a) Financial Condition. Such Borrower has heretofore furnished
to the Lenders its consolidated balance sheet and statements of income,
stockholders' equity and cash flows (i) as of and for the fiscal year ended
December 31, 1998, reported on by Deloitte & Touche LLP, independent public
accountants for WAMU and Aristar, and (ii) as of and for the fiscal quarter and
the portion of the fiscal year ended June 30, 1999, certified by the chief
financial officer of such Borrower. Such financial statements present fairly, in
all material respects, the financial position and results of operations and cash
flows of such Borrower and its Subsidiaries as of such dates and for such
periods in accordance with GAAP, subject to year-end audit adjustments and the
absence of footnotes in the case of the statements referred to in clause (ii) of
the first sentence of this paragraph.
(b) No Material Adverse Change. From December 31, 1998 to the
date of this Agreement, there has been no material adverse change in the
business, assets, operations, prospects or condition, financial or otherwise, of
such Borrower and its Subsidiaries, taken as a whole.
(c) Year 2000 Issues. Such Borrower is aware of the problem that
may be presented for certain computer systems by use of date fields and the like
prior to, on and after January 1, 2000 and has developed and is implementing a
plan to help assure that the computer systems of such Borrower and its
Subsidiaries (including systems and equipment supplied by others or with which
such Borrower or any of its Subsidiaries' systems interface) will not be
materially affected by such problems. The cost of such development and
implementation and of the reasonably foreseeable consequences of the "Year 2000
problem" to such Borrower and its Subsidiaries is not anticipated to result in a
Default under this Agreement or to have a Material Adverse Effect.
SECTION 3.05. Properties. Such Borrower and its Subsidiaries has
good title to, or valid leasehold interests in, all its real and personal
property material to its business, except to the extent that failure to have
such title could not reasonably be expected to have a Material Adverse Effect.
SECTION 3.06. Litigation and Environmental Matters.
(a) Actions, Suits and Proceedings. There are no actions, suits
or proceedings by or before any arbitrator or Governmental Authority now pending
against or, to the knowledge of such Borrower, threatened against or affecting
such Borrower or any of its Subsidiaries (i) as to which there is a reasonable
likelihood of an adverse determination and that, if adversely determined, could
reasonably be expected, individually or in the aggregate, to result in a
Material
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Adverse Effect (other than the Disclosed Matters) or (ii) that involve this
Agreement or the Transactions.
(b) Environmental Matters. Except for the Disclosed Matters and
except with respect to any other matters that, individually or in the aggregate,
could not reasonably be expected to result in a Material Adverse Effect, neither
such Borrower nor any of its Subsidiaries (i) has failed to comply with any
Environmental Law or to obtain, maintain or comply with any permit, license or
other approval required under any Environmental Law, (ii) has become subject to
any Environmental Liability, (iii) has received notice of any claim with respect
to any Environmental Liability or (iv) knows of any basis for any Environmental
Liability.
SECTION 3.07. Compliance with Laws and Agreements. Such Borrower
and its Subsidiaries is in compliance with all laws, regulations and orders of
any Governmental Authority applicable to it or its property and all indentures,
agreements and other instruments binding upon it or its property, except where
the failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect. No Default has occurred and is
continuing.
SECTION 3.08. Investment and Holding Company Status. Neither
such Borrower nor any of its Subsidiaries is (a) an "investment company" as
defined in, or subject to regulation under, the Investment Company Act of 1940
or (b) a "holding company" as defined in, or subject to regulation under, the
Public Utility Holding Company Act of 1935.
SECTION 3.09. Taxes. Such Borrower and its Subsidiaries has
timely filed or caused to be filed all Tax returns and reports required to have
been filed and has paid or caused to be paid all Taxes required to have been
paid by it, except (a) Taxes that are being contested in good faith by
appropriate proceedings and for which such Person has set aside on its books
adequate reserves or (b) to the extent that the failure to do so could not
reasonably be expected to result in a Material Adverse Effect.
SECTION 3.10. ERISA. No ERISA Event has occurred or is
reasonably expected to occur that, when taken together with all other such ERISA
Events for which liability is reasonably expected to occur, could reasonably be
expected to result in a Material Adverse Effect. The present value of all
accumulated benefit obligations under each Plan (based on the assumptions used
for purposes of Statement of Financial Accounting Standards No. 87) did not, as
of the date of the most recent financial statements reflecting such amounts,
exceed the fair market value of the assets of such Plan, and there were no
underfunded Plans (based on the assumptions used for purposes of Statement of
Financial Accounting Standards No. 87) as of the date of the most recent
financial statements in which such underfunded Plans would be reflected.
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SECTION 3.11. Disclosure. Such Borrower has disclosed to the
Lenders all agreements, instruments and corporate or other restrictions to which
it or any of its Subsidiaries is subject, and all other matters known to it,
that, individually or in the aggregate, could reasonably be expected to result
in a Material Adverse Effect. None of the reports, financial statements,
certificates, schedules or other information furnished by or on behalf of such
Borrower to the Lender in connection with the negotiation of this Agreement or
delivered hereunder (as modified or supplemented by other information so
furnished) contains any material misstatement of fact or omits to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that, with
respect to projected financial information, such Borrower represents only that
such information was prepared in good faith based upon assumptions believed to
be reasonable at the time.
SECTION 3.12. Use of Credit. Neither such Borrower nor any of
its Subsidiaries is engaged principally, or as one of its important activities,
in the business of extending credit for the purpose, whether immediate,
incidental or ultimate, of buying or carrying Margin Stock in violation of
Regulations T, U or X of the Board, and no part of the proceeds of any Loan
hereunder will be used to buy or carry any Margin Stock in violation of
Regulations T, U or X of the Board.
SECTION 3.13. Material Agreements and Liens.
(a) Material Agreements. Part A of Schedule II is a complete and
correct list of each credit agreement, loan agreement, indenture, purchase
agreement, guarantee, letter of credit or other arrangement providing for or
otherwise relating to any Indebtedness or any extension of credit (or commitment
for any extension of credit) to, or guarantee by, such Borrower or any of its
Subsidiaries (excluding Repurchase Arrangements, deposits, annuities or Federal
funds transactions, each entered into by such Borrower or any of its
Subsidiaries in the ordinary course of its business, Hedging Agreements or
borrowings from the Federal Home Loan Bank and any commercial paper or medium
term note program of such Borrower or any of its Subsidiaries), outstanding on
the date hereof the aggregate principal or face amount of which equals or
exceeds (or may equal or exceed) $10,000,000, and the aggregate principal or
face amount outstanding or that may become outstanding under each such
arrangement is correctly described in Part A of Schedule II.
(b) Liens. Part B of Schedule II is a complete and correct list
of each Lien securing Indebtedness of any Person outstanding on the date hereof
(excluding Repurchase Arrangements, deposits, annuities or Federal funds
transactions, each entered into by such Borrower or any of its Subsidiaries in
the ordinary course of its Business, and Hedging Agreements or borrowings from
the Federal Home Loan Bank) the aggregate principal or face amount of which
equals or exceeds (or may equal or exceed) $10,000,000 and covering any
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property of either Borrower or any of their Subsidiaries, and the aggregate
Indebtedness secured (or that may be secured) by each such Lien and the property
covered by each such Lien is correctly described in Part B of Schedule II.
SECTION 3.14. Subsidiaries.
(a) Subsidiaries. Set forth in Part A of Schedule V is a
complete and correct list of all of the Subsidiaries of such Borrower as of the
date hereof, together with, for each such Subsidiary, (i) the jurisdiction of
organization of such Subsidiary, (ii) each Person holding ownership interests in
such Subsidiary and (iii) the nature of the ownership interests held by each
such Person and the percentage of ownership of such Subsidiary represented by
such ownership interests. Except as disclosed in Part A of Schedule V, (x) such
Borrower and its Subsidiaries owns, free and clear of Liens, and has the
unencumbered right to vote, all outstanding ownership interests in each Person
shown to be held by it in Part A of Schedule V, (y) all of the issued and
outstanding capital stock of each such Person organized as a corporation is
validly issued, fully paid and nonassessable and (z) there are no outstanding
Equity Rights with respect to such Person.
(b) Restrictions on Subsidiaries. None of the Subsidiaries of
such Borrower is, on the date hereof, subject to any indenture, agreement,
instrument or other arrangement of the type described in Section 6.03.
ARTICLE IV
CONDITIONS
SECTION 4.01. Effective Date. The obligations of the Lenders to
make Loans hereunder shall not become effective until the date on which the
Administrative Agent shall have received each of the following documents, each
of which shall be satisfactory to the Administrative Agent (and to the extent
specified below, to each Lender) in form and substance (or such condition shall
have been waived in accordance with Section 9.02):
(a) Executed Counterparts. From each party hereto either (i) a
counterpart of this Agreement signed on behalf of such party or (ii)
written evidence satisfactory to the Administrative Agent (which may
include telecopy transmission of a signed signature page to this
Agreement) that such party has signed a counterpart of this Agreement.
(b) Opinion of Counsel to the Borrowers. A favorable written
opinion (addressed to the Administrative Agent and the Lenders and dated
the Effective Date) of Heller
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Ehrman White & McAuliffe, counsel for the Borrowers, substantially in
the form of Exhibit B, and covering such other matters relating to the
Borrowers, this Agreement or the Transactions as the Required Lenders
shall reasonably request (and the Borrowers hereby instruct such counsel
to deliver such opinion to the Lenders and the Administrative Agent).
(c) Opinion of Special New York Counsel to Chase. An opinion,
dated the Effective Date, of Milbank, Tweed, Hadley & McCloy LLP,
special New York counsel to Chase, substantially in the form of Exhibit
C (and Chase hereby instructs such counsel to deliver such opinion to
the Lenders).
(d) Corporate Documents. Such documents and certificates as the
Administrative Agent or its counsel may reasonably request relating to
the organization, existence and good standing of each Borrower, the
authorization of the Transactions and any other legal matters relating
to the Borrowers, this Agreement or the Transactions, all in form and
substance satisfactory to the Administrative Agent and its counsel.
(e) Officer's Certificate. A certificate, dated the Effective
Date and signed by the President, a Vice President or a Financial
Officer of each Borrower, confirming compliance with the conditions set
forth in the lettered clauses of the first sentence of Section 4.02.
(f) Cancellation of Existing Credit Facilities. Evidence that
the Existing Credit Facilities shall have been (or shall be
simultaneously) cancelled and all amounts owing thereunder shall have
been paid in full.
(g) Other Documents. Such other documents as the Administrative
Agent or any Lender or special New York counsel to Chase may reasonably
request.
The obligation of any Lender to make its initial Loan hereunder
is also subject to the payment by the Borrowers of such fees as the Borrowers
shall have agreed to pay to any Lender or the Administrative Agent or Chase in
its capacity as lead Arranger in connection herewith, including the reasonable
fees and expenses of Milbank, Tweed, Hadley & McCloy LLP special New York
counsel to Chase, in connection with the negotiation, preparation, execution and
delivery of this Agreement and the Loans hereunder (to the extent that
statements for such fees and expenses have been delivered to the Borrowers).
The Administrative Agent shall notify the Borrowers and the
Lenders of the Effective Date, and such notice shall be conclusive and binding.
Notwithstanding the foregoing, the obligations of the Lenders to make Loans
hereunder shall not become effective unless each of the foregoing conditions is
satisfied (or waived pursuant to Section 9.02) on or prior to
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3:00 p.m., New York City time, on August 11, 1999 (and, in the event
such conditions are not so satisfied or waived, the Commitments shall
terminate at such time).
SECTION 4.02. Each Credit Event. The obligation of each Lender
to make a Loan to the relevant Borrower on the occasion of any Borrowing is
subject to the satisfaction of the following conditions:
(a) the representations and warranties of such Borrower set
forth in this Agreement (except, in the case of any Borrowing that does
not increase the outstanding aggregate principal amount of the Loans of
any Lender, the representations and warranties in Sections 3.06(a),
3.06(b) and 3.10) shall be true and correct on and as of the date of
such Borrowing (or, if any such representation or warranty is expressly
stated to have been made as of a specific date, as of such specific
date); and
(b) at the time of and immediately after giving effect to such
Borrowing, no Default shall have occurred and be continuing.
Each Borrowing shall be deemed to constitute a representation and warranty by
the relevant Borrower on the date thereof as to the matters specified in the
preceding sentence.
ARTICLE V
AFFIRMATIVE COVENANTS
Until the Commitments have expired or been terminated and the
principal of and interest on each Loan and all fees payable hereunder shall have
been paid in full, each Borrower covenants and agrees with the Lenders that:
SECTION 5.01. Financial Statements and Other Information. Such
Borrower will furnish to the Administrative Agent and each Lender (provided that
only WAMU shall furnish the reports referred to in paragraphs (f) and (g)
below):
(a) within 105 days after the end of each fiscal year of such
Borrower, the audited consolidated balance sheet and related statements
of operations, stockholders' equity and cash flows of such Borrower and
its Subsidiaries as of the end of and for such year, setting forth in
each case in comparative form the figures for the previous fiscal year,
all reported on by Deloitte & Touche LLP or other independent public
accountants of recognized national standing (without a "going concern"
or like qualification or exception and without any qualification or
exception as to the scope of such audit) to the effect that
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such consolidated financial statements present fairly in all material
respects the financial condition and results of operations of such
Borrower and its Subsidiaries on a consolidated basis in accordance with
GAAP consistently applied and a statement of such accountants to the
effect that, in making the examination necessary for their opinion,
nothing came to their attention that caused them to believe that such
Borrower was not in compliance with Section 6.04 hereof, insofar as such
Section relates to accounting matters (it being understood that delivery
to the Lender of such Borrower's Report on Form 10-K filed with the SEC
shall satisfy the financial statement requirements of this Section
5.01(a) so long as the information required to be contained in such
Report is substantially the same as that required under this Section
5.01(a));
(b) within 75 days after the end of each of the first three
fiscal quarters of each fiscal year of such Borrower, the consolidated
balance sheet and related statements of operations, stockholders' equity
and cash flows of such Borrower and its Subsidiaries as of the end of
and for such fiscal quarter and the then elapsed portion of the fiscal
year, setting forth in each case in comparative form the figures for
(or, in the case of the balance sheet, as of the end of) the
corresponding period or periods of the previous fiscal year, all
certified by a Financial Officer of such Borrower as presenting fairly
in all material respects the financial condition and results of
operations of such Borrower and its Subsidiaries on a consolidated basis
in accordance with GAAP consistently applied, subject to normal year-end
audit adjustments and the absence of footnotes (it being understood that
delivery to the Lender of such Borrower's Report on Form 10-Q filed with
the SEC shall satisfy the financial statement requirements of this
Section 5.01(b) so long as the information required to be contained in
such Report is substantially the same as that required under this
Section 5.01(b));
(c) concurrently with any delivery of financial statements under
clause (a) or (b) of this Section, a certificate of a Financial Officer
of such Borrower (i) certifying as to whether a Default has occurred
and, if a Default has occurred, specifying the details thereof and any
action taken or proposed to be taken with respect thereto, (ii) setting
forth reasonably detailed calculations demonstrating compliance with
Section 6.04, and (iii) stating whether any change in GAAP or in the
application thereof has occurred since the date of the audited financial
statements referred to in Section 3.04 and, if any such change has
occurred, specifying the effect of such change on the financial
statements accompanying such certificate;
(d) concurrently with any delivery of financial statements under
clause (a) of this Section, a certificate of the accounting firm that
reported on such financial statements stating whether they obtained
knowledge during the course of their examination of such
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financial statements of any Default (which certificate may be limited to
the extent required by accounting rules or guidelines);
(e) promptly after the same become publicly available, copies of
all periodic and other reports, proxy statements and other materials
filed by such Borrower or any of its Subsidiaries with the SEC, or with
any national securities exchange or the Office of Thrift Supervision, or
distributed by such Borrower to its shareholders generally, as the case
may be;
(f) promptly upon their becoming available, and in any event
within 90 days after the end of each fiscal quarter of each fiscal year
of WAMU, the "Reports of Condition and Income" (report no. H(b)-11, or
any successor form thereto) of WAMU, all such reports prepared in
accordance with regulatory accounting principles prescribed by the
Federal Financial Institutions Examination Council;
(g) promptly upon their becoming available, and in any event
within 75 days after the end of each fiscal quarter of each fiscal year
of WAMU, the Statements of Condition and Operations, including all
supporting schedules (Office of Thrift Supervision Form 1313, or any
successor form thereto) for Washington Mutual Bank, FA, all such
statements prepared in accordance with Office of Thrift Supervision
instructions; and
(h) promptly following any request therefor, such other
information regarding the operations, business affairs and financial
condition of such Borrower or any of its Subsidiaries, or compliance
with the terms of this Agreement, as the Administrative Agent or any
Lender may reasonably request.
SECTION 5.02. Notices of Material Events. Each Borrower will
furnish to the Administrative Agent and each Lender prompt written notice of the
following:
(a) the occurrence of any Default;
(b) the filing or commencement of any action, suit or proceeding
by or before any arbitrator or Governmental Authority against or
affecting such Borrower or any of its Affiliates that, if adversely
determined, could reasonably be expected to result in a Material Adverse
Effect;
(c) the occurrence of any ERISA Event that, alone or together
with any other ERISA Events that have occurred, could reasonably be
expected to result in liability of such Borrower and its Subsidiaries in
an aggregate amount exceeding $35,000,000;
<PAGE> 57
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(d) the assertion of any environmental matter by any Person
against, or with respect to the activities of, such Borrower or any of
its Subsidiaries and any alleged violation of or non-compliance with any
Environmental Laws or any permits, licenses or authorizations, other
than any environmental matter or alleged violation that, if adversely
determined, would not (either individually or in the aggregate) have a
Material Adverse Effect; and
(e) any other development (including a development arising out
of a "Year 2000 problem") that results in, or could reasonably be
expected to result in, a Material Adverse Effect.
Each notice delivered under this Section shall be accompanied by a statement of
a Financial Officer or other executive officer of such Borrower setting forth
the details of the event or development requiring such notice and any action
taken or proposed to be taken with respect thereto.
SECTION 5.03. Existence; Conduct of Business. Each Borrower
will, and will cause each of its Subsidiaries to, do or cause to be done all
things necessary to preserve, renew and keep in full force and effect its legal
existence and the rights, licenses, permits, privileges and franchises material
to the conduct of its business; provided that the foregoing shall not prohibit
(a) any merger, consolidation, liquidation, dissolution or other transaction
permitted under Section 6.02 and (b) any Subsidiary that is not a Major
Subsidiary of such Borrower from entering into any merger or consolidation or
amalgamation or from liquidating, winding up or dissolving, itself (or suffering
any liquidation or dissolution) or prohibit a disposition by or of such
Subsidiary.
SECTION 5.04. Payment of Obligations. Each Borrower will, and
will cause each of its Subsidiaries to, pay its obligations, including Tax
liabilities, that, if not paid, could result in a Material Adverse Effect before
the same shall become delinquent or in default, except where (a) the validity or
amount thereof is being contested in good faith by appropriate proceedings, (b)
such Borrower or such Subsidiary has set aside on its books adequate reserves
with respect thereto in accordance with GAAP and (c) the failure to make payment
pending such contest could not reasonably be expected to result in a Material
Adverse Effect.
SECTION 5.05. Maintenance of Properties; Insurance. Each
Borrower will, and will cause each of its Subsidiaries to, (a) keep and maintain
all property material to the conduct of its business in good working order and
condition, ordinary wear and tear excepted, and (b) maintain, with financially
sound and reputable insurance companies, insurance in such amounts and against
such risks as are customarily maintained by companies engaged in the same or
similar businesses operating in the same or similar locations.
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SECTION 5.06. Books and Records; Inspection Rights. Each
Borrower will, and will cause each of its Subsidiaries to, keep proper books of
record and account in which full, true and correct entries are made of all
dealings and transactions in relation to its business and activities. Each
Borrower will, and will cause each of its Subsidiaries to, permit any
representatives designated by the Administrative Agent or any Lender, upon
reasonable prior notice, to visit and inspect its properties, to examine and
make extracts from its books and records, and to discuss its affairs, finances
and condition with its officers and independent accountants, all at such
reasonable times and as often as reasonably requested.
SECTION 5.07. Compliance with Laws. Each Borrower will, and will
cause each of its Subsidiaries to, comply with all laws, rules, regulations and
orders of any Governmental Authority applicable to it or its property, except
where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.
SECTION 5.08. Use of Proceeds. Each Borrower will use the
proceeds of the Loans hereunder solely for general corporate purposes, including
commercial paper back-up, in the ordinary course of business (in compliance with
all applicable legal and regulatory requirements, including, without limitation,
Regulations U and X and the Securities Act of 1933, as amended, and the
Securities Exchange Act of 1934, as amended, and the regulations thereunder);
provided that, without the consent of each Lender, such Borrower may not use the
proceeds of any of the Loans hereunder to finance or refinance, directly or
indirectly, an Acquisition of any Person (or the acquisition of (i) more than
50% of the publicly traded stock (of any class) of any Person or (ii) any of the
publicly traded stock (of any class) of any Person after such Borrower or any of
its Subsidiaries shall have been required to file a Schedule 13D under the
Securities Exchange Act of 1934, as amended, with respect to such stock) unless
such Acquisition (or acquisition) has been approved by the board of directors of
such Person or officers thereof duly authorized to do so; provided further that
neither the Administrative Agent nor any Lender shall have any responsibility as
to the use of any of such proceeds.
ARTICLE VI
NEGATIVE COVENANTS
Until the Commitments have expired or terminated and the
principal of and interest on each Loan and all fees payable hereunder have been
paid in full, each Borrower covenants and agrees with the Lenders that:
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SECTION 6.01. Liens. Such Borrower will not, nor (where such
Borrower is Aristar) will it permit any of its Subsidiaries (other than Insured
Subsidiaries) to, create, incur, assume or permit to exist any Lien on any
property or asset now owned or hereafter acquired by it except:
(a) Permitted Encumbrances;
(b) any Lien on any property or asset of such Borrower or any of
its Subsidiaries existing on the date hereof and set forth in Part B of
Schedule II;
(c) any Lien existing on any property or asset prior to the
acquisition thereof by such Borrower or any of its Subsidiaries or
existing on any property or asset of any Person that becomes a
Subsidiary of such Borrower after the date hereof prior to the time such
Person becomes such a Subsidiary; provided that (i) such Lien is not
created in contemplation of or in connection with such acquisition or
such Person becoming a Subsidiary of such Borrower, as the case may be,
(ii) such Lien shall not apply to any other property or assets of such
Borrower or any of its Subsidiaries and (iii) such Lien shall secure
only those obligations which it secures on the date of such acquisition
or the date such Person becomes such a Subsidiary, as the case may be
and extensions, renewals and replacements thereof that do not increase
the outstanding principal amount thereof;
(d) Liens on fixed or capital assets acquired, constructed or
improved by such Borrower or any of its Subsidiaries; provided that (i)
such security interests and the Indebtedness secured thereby are
incurred prior to or within 90 days after such acquisition or the
completion of such construction or improvement, (ii) the Indebtedness
secured thereby does not exceed 80% of the cost of acquiring,
constructing or improving such fixed or capital assets and (iii) such
security interests shall not apply to any other property or assets of
such Borrower or any of its Subsidiaries;
(e) Liens arising out of Repurchase Arrangements;
(f) Liens arising out of or securing Hedging Agreements;
(g) Liens arising out of Asset Securitizations and not involving
all, or substantially all, of the assets of the respective transferor;
(h) Liens in favor of WAMU and its Subsidiaries (other than by
Aristar or any of its Subsidiaries) arising in connection with
intercompany transactions between WAMU and any of such Subsidiaries;
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(i) Liens in favor of Aristar and its Subsidiaries arising in
connection with intercompany transactions between Aristar and any of
such Subsidiaries;
(j) Liens involving the pledge by WAMU of any interest in
capital stock of, or other ownership interest in, any Subsidiary of WAMU
(other than a Major Subsidiary or Aristar);
(k) Liens involving the pledge of any interest in a debt
instrument made to WAMU by any Subsidiary of WAMU (other than a Major
Subsidiary);
(l) Liens involving the pledge of property of WAMU or any of its
Subsidiaries (other than by Aristar or any of its Subsidiaries) securing
Indebtedness in an aggregate principal amount not exceeding 2% of the
Tangible Net Worth of WAMU; and
(m) Liens involving the pledge of property of Aristar or any of
its Subsidiaries securing Indebtedness in an aggregate principal amount
not exceeding 5% of the Tangible Net Worth of Aristar.
SECTION 6.02. Fundamental Changes.
(a) Mergers, Consolidations, Disposal of Assets, Etc. Such
Borrower will not, nor will it permit any of its Major Subsidiaries to, merge
into or consolidate with any other Person, or permit any other Person to merge
into or consolidate with it, or sell, transfer, lease or otherwise dispose of
(in one transaction or in a series of transactions) all or substantially all of
its assets, or all or substantially all of the stock of any of its Subsidiaries
(in each case, whether now owned or hereafter acquired), or liquidate or
dissolve, except that, if at the time thereof and immediately after giving
effect thereto no Default shall have occurred and be continuing (i) any Major
Subsidiary may merge into WAMU in a transaction in which WAMU is the surviving
corporation, (ii) any Major Subsidiary may merge into any Subsidiary of WAMU in
a transaction in which the surviving entity is a wholly owned Subsidiary of
WAMU, (iii) any Major Subsidiary may sell, transfer, lease or otherwise dispose
of its assets to WAMU or to another wholly owned Subsidiary of WAMU, (iv) such
Borrower or any Major Subsidiary of such Borrower may merge or consolidate with
any other Person if (x) in the case of a merger or consolidation of such
Borrower, such Borrower is the surviving corporation and, in any other case, the
surviving corporation is, after giving effect to such merger or consolidation, a
wholly owned Subsidiary of such Borrower and (y) after giving effect thereto no
Default would exist hereunder and (v) any Subsidiary of either Borrower may
liquidate or dissolve if the relevant Borrower determines in good faith that
such liquidation or dissolution is in the best interests of such Borrower and is
not materially disadvantageous to the Lenders; provided that if any such
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merger shall be between a Subsidiary and a wholly owned Subsidiary of such
Borrower , then the wholly owned Subsidiary shall be the continuing or surviving
corporation.
(b) Lines of Business. Such Borrower will not, nor will it
permit any of its Subsidiaries to, engage to any substantial extent in any line
or lines of business activity other than (i) the business of owning and
operating a depository institution (as defined in 12 U.S.C. Section 1813(c)), a
consumer finance company, a mortgage company, an insurance company, a trust
company, an investment advisor or a securities broker-dealer, (ii) the business
of providing other financial services or (iii) any business that may be engaged
in by a Washington state chartered savings bank (as defined in RCW 32.04.020), a
Federal savings association (as defined in 12 U.S.C. Section 1462(5)) or a bank
holding company (as defined in 12 U.S.C. Section 1841(a)) or a Subsidiary of any
of them.
SECTION 6.03. Certain Restrictions on Subsidiaries. Such
Borrower will not permit any of its Subsidiaries to enter into, after the date
hereof, any indenture, agreement, instrument or other arrangement that, directly
or indirectly, prohibits or restrains, or has the effect of prohibiting or
restraining, or imposes materially adverse conditions upon, the incurrence or
payment of Indebtedness, the granting of Liens, the declaration or payment of
dividends, the making of loans, advances, guarantees or Investments or the sale,
assignment, transfer or other disposition of property if the effect of any such
indenture, agreement, instrument or other arrangement could reasonably be
expected to result in a Material Adverse Effect.
SECTION 6.04. Certain Financial Covenants.
(a) WAMU
(i) Double Leverage Ratio. WAMU will not permit the Double
Leverage Ratio to exceed 1:30 to 1:00 at any time.
(ii) Tangible Net Worth. WAMU will not permit its Tangible Net
Worth at any time to be less than the sum of (x) $5,500,000,000 plus (y)
40% of the net income of WAMU and its Subsidiaries (determined on a
consolidated basis without duplication in accordance with GAAP and for
which purpose any net loss shall be deemed to be a net income of zero)
for each fiscal quarter of WAMU ending after June 30, 1999 plus (z) 40%
of the aggregate net proceeds received by WAMU from the issuance by WAMU
after the date of this Agreement of shares of its capital stock
(iii) Maximum Non-Performing Assets. WAMU will not permit
Non-Performing Assets at any time to constitute more than 4.5% of
Consolidated Assets at such time.
(b) Aristar
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(i) Tangible Net Worth. Aristar will not permit its Tangible Net
Worth at any time to be less than the sum of (x) $275,000,000 plus (y)
40% of the net income of Aristar and its Subsidiaries (determined on a
consolidated basis without duplication in accordance with GAAP and for
which purpose any net loss shall be deemed to be a net income of zero)
for each fiscal quarter of Aristar ending after June 30, 1999.
(ii) Senior Debt Ratio. Aristar will not permit the ratio of (x)
the aggregate principal amount of all Senior Indebtedness (other than
Indebtedness owing among Aristar and its Consolidated Subsidiaries)
outstanding at any time to (y) its Tangible Net Worth at such time to be
greater than 10.0 to 1.0.
(iii) Permissible Indebtedness. Aristar will not permit the
aggregate amount of all Indebtedness (other than Indebtedness among
Aristar and its Consolidated Subsidiaries) outstanding at any time owed
by its Consolidated Subsidiaries (other than Insured Subsidiaries) to
exceed 15% of the aggregate amount of all Indebtedness (other than
Indebtedness owing among Aristar and its Consolidated Subsidiaries) then
outstanding of Aristar and its Consolidated Subsidiaries (other than
Insured Subsidiaries).
SECTION 6.05. Insured Subsidiary Capital. Such Borrower will at
all times ensure that none of its Insured Subsidiaries is "undercapitalized",
"significantly undercapitalized" or "critically undercapitalized" for purposes
of 12 U.S.C. Section 1831o, as amended, re-enacted or redesignated from time to
time; and such Borrower and its Insured Subsidiaries will at all times maintain
such amount of capital as may be prescribed by all applicable Bank Regulatory
Authorities, whether by guideline, regulation, agreement or order.
SECTION 6.06. Payment of Dividends. Such Borrower will not, and
will not permit any of its Subsidiaries to, declare or make, or agree to pay or
make, directly or indirectly, any Restricted Payment, provided Aristar may
declare and pay dividends with respect to its capital stock provided that, at
the time of declaration and payment thereof and after giving effect thereto, no
Event of Default shall have occurred and be continuing.
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ARTICLE VII
EVENTS OF DEFAULT
If any of the following events ("Events of Default") shall
occur:
(a) either Borrower shall fail to pay any principal of any Loan
when and as the same shall become due and payable, whether at the due
date thereof or at a date fixed for prepayment thereof or otherwise;
(b) either Borrower shall fail to pay any interest on any Loan
or any fee or any other amount (other than an amount referred to in
clause (a) of this Article) payable under this Agreement, when and as
the same shall become due and payable, and such failure shall continue
unremedied for a period of three or more Business Days;
(c) any representation or warranty made or deemed made by or on
behalf of either Borrower or any of their Subsidiaries in or in
connection with this Agreement or any amendment or modification hereof,
or in any report, certificate, financial statement or other document
furnished pursuant to or in connection with this Agreement or any
amendment or modification hereof, shall prove to have been incorrect in
any material respect when made or deemed made;
(d) either Borrower shall fail to observe or perform any
covenant, condition or agreement contained in Section 5.02(a), 5.03
(with respect to the Borrower's existence), 5.08 or in Article VI (other
than Section 6.02(b);
(e) either Borrower shall fail to observe or perform any
covenant, condition or agreement contained in this Agreement (other than
those specified in clause (a), (b) or (d) of this Article) and such
failure shall continue unremedied for a period of 30 or more days after
notice thereof from the Administrative Agent (given at the request of
any Lender) to such Borrower;
(f) either Borrower or any of their Subsidiaries shall fail to
make any payment (whether of principal or interest and regardless of
amount) in respect of any Material Indebtedness, when and as the same
shall become due and payable;
(g) any event or condition occurs that results in any Material
Indebtedness becoming due prior to its scheduled maturity or that
enables or permits (with or without the giving of notice, the lapse of
time or both) the holder or holders of any Material Indebtedness or any
trustee or agent on its or their behalf to cause any Material
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Indebtedness to become due, or to require the prepayment, repurchase,
redemption or defeasance thereof, prior to its scheduled maturity;
provided that this clause (g) shall not apply to secured Indebtedness
that becomes due as a result of the voluntary sale or transfer of the
property or assets securing such Indebtedness;
(h) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed seeking (i) liquidation,
reorganization or other relief in respect of either Borrower or any of
their Subsidiaries (other than Non-Material Subsidiaries) or its debts,
or of a substantial part of its assets, under any Federal, state or
foreign bankruptcy, insolvency, receivership or similar law now or
hereafter in effect or (ii) the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for either
Borrower or any of their Subsidiaries (other than Non-Material
Subsidiaries) or for a substantial part of its assets, and, in any such
case, such proceeding or petition shall continue undismissed for a
period of 60 or more days or an order or decree approving or ordering
any of the foregoing shall be entered;
(i) either Borrower or any of their Subsidiaries (other than
Non-Material Subsidiaries) shall (i) voluntarily commence any proceeding
or file any petition seeking liquidation, reorganization or other relief
under any Federal, state or foreign bankruptcy, insolvency, receivership
or similar law now or hereafter in effect, (ii) consent to the
institution of, or fail to contest in a timely and appropriate manner,
any proceeding or petition described in clause (h) of this Article,
(iii) apply for or consent to the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for such
Borrower or any of its Subsidiaries (other than Non-Material
Subsidiaries) or for a substantial part of its assets, (iv) file an
answer admitting the material allegations of a petition filed against it
in any such proceeding, (v) make a general assignment for the benefit of
creditors or (vi) take any action for the purpose of effecting any of
the foregoing;
(j) either Borrower or any of their Subsidiaries (other than
Non-Material Subsidiaries) shall become unable, admit in writing its
inability or fail generally to pay its debts as they become due;
(k) one or more judgments for the payment of money in an
aggregate amount in excess of $40,000,000 (exclusive of judgment amounts
fully covered by insurance where the insurer has admitted liability in
respect of such judgment) or $120,000,000 (regardless of insurance
coverage) shall be rendered against either Borrower or any of their
Subsidiaries or any combination thereof and the same shall remain
undischarged for a period of 30 consecutive days during which execution
shall not be effectively stayed, or any action shall be legally taken by
a judgment creditor to attach or levy upon any assets of either Borrower
or any of their Subsidiaries to enforce any such judgment;
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(l) an ERISA Event shall have occurred that, in the opinion of
the Required Lenders, when taken together with all other ERISA Events
that have occurred, could reasonably be expected to result in a Material
Adverse Effect;
(m) a Change in Control shall occur;
(n) WAMU or any of its Subsidiaries and any Bank Regulatory
Authority shall enter into any supervisory agreement, consent order or
any agreement (in writing or otherwise) affecting in any material
respect the management, business, properties, condition (financial or
otherwise) or operations, present or prospective, of WAMU and its
Subsidiaries taken as a whole; or any Bank Regulatory Authority shall
issue a cease and desist order to or in respect of WAMU or any of its
Subsidiaries;
(o) any Insured Subsidiary shall cease accepting deposits or
making commercial loans on the instruction of any Federal, state or
other regulatory body with authority to give such instruction other than
pursuant to an instruction generally applicable to banks organized under
the jurisdiction of organization of such Insured Subsidiary;
(p) (i) any Bank Regulatory Authority shall notify any Insured
Subsidiary that such Insured Subsidiary's capital stock has become
impaired; (ii) any of Washington Mutual Bank, Washington Mutual Bank fsb
or Washington Mutual Bank, FA shall, cease to be an insured bank under
the Federal Deposit Insurance Act, as amended, and the rules and
regulations promulgated thereunder; or (iii) any Insured Subsidiary
(other than Washington Mutual Bank, Washington Mutual Bank fsb or
Washington Mutual Bank, FA) shall pursuant to an order of any Bank
Regulatory Authority, cease to be an insured bank under the Federal
Deposit Insurance Act, as amended, and the rules and regulations
promulgated thereunder; provided however, in the case of (ii) and (iii)
that the event is not the result of a transaction permitted under
Section 6.02(a) or Section 5.03;
(q) any Insured Subsidiary shall be required (whether or not the
time allowed by the appropriate Bank Regulatory Authority for the
submission of such plan has been established or elapsed) to submit a
capital restoration plan of the type referred to in 12 U.S.C. Section
1831o(b)(2)(C), as amended, re-enacted or redesignated from time to
time; or
(r) WAMU shall Guarantee in writing (voluntarily or otherwise)
the capital of any Insured Subsidiary as part of or in connection with
any agreement or arrangement with any Bank Regulatory Authority;
then, and in every such event (other than an event with respect to the relevant
Borrower described in clause (h) or (i) of this Article), and at any time
thereafter during the continuance of such event, the Administrative Agent may,
and at the request of the Required Lenders shall, by
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notice to such Borrower, take either or both of the following actions, at the
same or different times: (i) terminate the Commitments available to such
Borrower, and thereupon the Commitments available to such Borrower shall
terminate immediately, and (ii) declare the Loans to such Borrower then
outstanding to be due and payable in whole (or in part, in which case any
principal not so declared to be due and payable may thereafter be declared to be
due and payable), and thereupon the principal of the Loans so declared to be due
and payable, together with accrued interest thereon and all fees and other
obligations of such Borrower accrued hereunder, shall become due and payable
immediately, without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by such Borrower; and in case of any event with
respect to such Borrower described in clause (h) or (i) of this Article, the
Commitments available to such Borrower shall automatically terminate and the
principal of the Loans to such Borrower then outstanding, together with accrued
interest thereon and all fees and other obligations of such Borrower accrued
hereunder, shall automatically become due and payable, without presentment,
demand, protest or other notice of any kind, all of which are hereby waived by
such Borrower.
ARTICLE VIII
AGENTS
SECTION 8.01 Administrative Agent.
(a) Subject to Section 8.10(f), each of the Lenders hereby
irrevocably appoints the Administrative Agent as its agent and authorizes the
Administrative Agent to take such actions on its behalf and to exercise such
powers as are delegated to the Administrative Agent by the terms hereof,
together with such actions and powers as are reasonably incidental thereto.
(b) The Person serving as the Administrative Agent hereunder
shall have the same rights and powers in its capacity as a Lender as any other
Lender and may exercise the same as though it were not the Administrative Agent,
and such Person and its Affiliates may accept deposits from, lend money to and
generally engage in any kind of business with the Borrowers or any Subsidiaries
or other Affiliates thereof as if it were not the Administrative Agent
hereunder.
(c) The Administrative Agent shall not have any duties or
obligations except those expressly set forth herein. Without limiting the
generality of the foregoing, (a) the Administrative Agent shall not be subject
to any fiduciary or other implied duties, regardless of whether a Default has
occurred and is continuing, (b) the Administrative Agent shall not have
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any duty to take any discretionary action or exercise any discretionary powers,
except discretionary rights and powers expressly contemplated hereby that the
Administrative Agent is required to exercise in writing by the Required Lenders,
and (c) except as expressly set forth herein, the Administrative Agent shall not
have any duty to disclose, and shall not be liable for the failure to disclose,
any information relating to the Borrowers or any of their respective
Subsidiaries that is communicated to or obtained by the bank serving as
Administrative Agent or any of its Affiliates in any capacity. The
Administrative Agent shall not be liable for any action taken or not taken by it
with the consent or at the request of the Required Lenders or in the absence of
its own gross negligence or willful misconduct. The Administrative Agent shall
be deemed not to have knowledge of any Default unless and until written notice
thereof is given to the Administrative Agent by a Borrower or a Lender, and the
Administrative Agent shall not be responsible for or have any duty to ascertain
or inquire into (i) any statement, warranty or representation made in or in
connection with this Agreement, (ii) the contents of any certificate, report or
other document delivered hereunder or in connection herewith, (iii) the
performance or observance of any of the covenants, agreements or other terms or
conditions set forth herein, (iv) the validity, enforceability, effectiveness or
genuineness of this Agreement or any other agreement, instrument or document, or
(v) the satisfaction of any condition set forth in Article IV or elsewhere
herein, other than to confirm receipt of items expressly required to be
delivered to the Administrative Agent.
(d) The Administrative Agent shall be entitled to rely upon, and
shall not incur any liability for relying upon, any notice, request,
certificate, consent, statement, instrument, document or other writing believed
by it to be genuine and to have been signed or sent by the proper Person. The
Administrative Agent also may rely upon any statement made to it orally or by
telephone and reasonably believed by it to be made by the proper Person, and
shall not incur any liability for relying thereon. The Administrative Agent may
consult with legal counsel (who may be counsel for a Borrower), independent
accountants and other experts selected by it, and shall not be liable for any
action taken or not taken by it in accordance with the advice of any such
counsel, accountants or experts.
(e) The Administrative Agent may perform any and all its duties
and exercise its rights and powers by or through any one or more sub-agents
appointed by the Administrative Agent. The Administrative Agent and any such
sub-agent may perform any and all its duties and exercise its rights and powers
through their respective Related Parties. The exculpatory provisions of the
preceding paragraphs shall apply to any such sub-agent and to the Related
Parties of the Administrative Agent and any such sub-agent, and shall apply to
their respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as Administrative Agent.
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(f) The Administrative Agent may resign at any time by notifying
the Lenders and the Borrowers. Upon any such resignation, the Required Lenders
shall have the right, in consultation with the Borrowers, to appoint a
successor. If no successor shall have been so appointed by the Required Lenders
and shall have accepted such appointment within 30 days after the retiring
Administrative Agent gives notice of its resignation, then the retiring
Administrative Agent's resignation shall nonetheless become effective and (1)
the retiring Administrative Agent shall be discharged from its duties and
obligations hereunder and (2) the Required Lenders shall perform the duties of
the Administrative Agent (and all payments and communications provided to be
made by, to or through the Administrative Agent shall instead be made by or to
each Lender directly) until such time as the Required Lenders appoint a
successor agent as provided for above in this paragraph. Upon the acceptance of
its appointment as Administrative Agent hereunder by a successor, such successor
shall succeed to and become vested with all the rights, powers, privileges and
duties of the retiring (or retired) Administrative Agent and the retiring
Administrative Agent shall be discharged from its duties and obligations
hereunder (if not already discharged therefrom as provided above in this
paragraph). The fees payable by the Borrowers to a successor Administrative
Agent shall be the same as those payable to its predecessor unless otherwise
agreed between the Borrowers and such successor. After the Administrative
Agent's resignation hereunder, the provisions of this Article and Section 9.03
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 Administrative Agent.
(g) Each Lender acknowledges that it has, independently and
without reliance upon the Administrative Agent or any other Lender and based on
such documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and
information as it shall from time to time deem appropriate, continue to make its
own decisions in taking or not taking action under or based upon this Agreement,
any related agreement or any document furnished hereunder or thereunder.
SECTION 8.02 Syndication Agents. The Syndication Agents named on
the cover page of this Agreement, in their capacity as such, shall have no
obligation, responsibility or required performance hereunder and shall not
become liable in any manner to any party hereto. No party hereto shall have any
obligation or liability, or owe any performance, hereunder, to the Syndication
Agents in their capacity as such.
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ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Notices. Except in the case of notices and other
communications expressly permitted to be given by telephone, all notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
(a) if to WAMU, to it at 1201 3rd Avenue, Seattle, Washington
98101, Attention of Marangal I. Domingo (Telecopy No.(206) 554-4954;
Telephone No. (206) 461-8956);
(b) if to Aristar, to WAMU at the address specified in (a) above
and to Aristar at 8900 Grand Oak Circle, Tampa, Florida 33637, Attention
of Phil Goodeve (Telecopy No. (813) 632-4582; Telephone No. (813)
632-4586);
(c) if to the Administrative Agent, to The Chase Manhattan Bank,
1 Chase Manhattan Plaza, 8th Floor, New York, New York 10081, Attention
of Loan and Agency Services Group (Telecopy No. (212) 552-5658;
Telephone No. (212) 552-7500), with a copy to The Chase Manhattan Bank,
270 Park Avenue, New York, New York 10017, Attention of Christine
Herrick (Telecopy No. (212) 270-1789; Telephone No. (212) 270-9747); and
(d) if to a Lender, to it at its address (or telecopy number)
set forth in its Administrative Questionnaire.
Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto (or, in the case
of any such change by a Lender, by notice to the Borrowers and the
Administrative Agent). All notices and other communications given to any party
hereto in accordance with the provisions of this Agreement shall be deemed to
have been given on the date of receipt.
SECTION 9.02. Waivers; Amendments.
(a) No Deemed Waivers; Remedies Cumulative. No failure or delay
by the Administrative Agent or any Lender in exercising any right or power
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right or power, or any abandonment or discontinuance of
steps to enforce such a right or power, preclude any other or further exercise
thereof or the exercise of any other right or power. The rights and remedies of
the Administrative Agent and the Lenders hereunder are cumulative and are not
exclusive of any rights or remedies that they would otherwise have. No waiver of
any provision of this
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Agreement or consent to any departure by the Borrowers therefrom shall in any
event be effective unless the same shall be permitted by paragraph (b) of this
Section, and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. Without limiting the generality of
the foregoing, the making of a Loan shall not be construed as a waiver of any
Default, regardless of whether the Administrative Agent or any Lender may have
had notice or knowledge of such Default at the time.
(b) Amendments. Neither this Agreement nor any provision hereof
may be waived, amended or modified except pursuant to an agreement or agreements
in writing entered into by the Borrowers and the Required Lenders or by the
Borrowers and the Administrative Agent with the consent of the Required Lenders;
provided that no such agreement shall (i) increase the Commitment of any Lender
without the written consent of each Lender, (ii) reduce the principal amount of
any Loan or reduce the rate of interest thereon, or reduce any fees payable
hereunder, without the written consent of each Lender, (iii) postpone the
scheduled date of payment of the principal amount of any Loan, or any interest
thereon, or any fees payable hereunder, or reduce the amount of, waive or excuse
any such payment, or postpone the scheduled date of expiration of any
Commitment, without the written consent of each Lender, (iv) alter the manner in
which payments or prepayments of principal, interest or other amounts hereunder
shall be applied as among the Lenders or Tranches or Types or Classes of Loans,
without the written consent of each Lender, or (v) change any of the provisions
of this Section or the definition of the term "Required Lenders" or any other
provision hereof specifying the number or percentage of Lenders required to
waive, amend or modify any rights hereunder or make any determination or grant
any consent hereunder, without the written consent of each Lender; and provided
further that no such agreement shall amend, modify or otherwise affect the
rights or duties of the Administrative Agent hereunder without the prior written
consent of the Administrative Agent.
SECTION 9.03. Expenses; Indemnity; Damage Waiver.
(a) Costs and Expenses. The Borrowers shall pay (i) all
reasonable out-of-pocket expenses incurred by the Administrative Agent and its
Affiliates, including the reasonable fees, charges and disbursements of counsel
for the Administrative Agent, in connection with the syndication of the credit
facilities provided for herein, the preparation and administration of this
Agreement or any amendments, modifications or waivers of the provisions hereof
(whether or not the transactions contemplated hereby or thereby shall be
consummated) and (ii) all out-of-pocket expenses incurred by the Administrative
Agent or any Lender, including the fees, charges and disbursements of any
counsel for the Administrative Agent, or any Lender, in connection with the
enforcement or protection of its rights in connection with this Agreement,
including its rights under this Section, or in connection with the Loans made
hereunder, including in connection with any workout, restructuring or
negotiations in respect thereof.
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(b) Indemnification by the Borrowers. The Borrowers, jointly and
severally, shall indemnify the Administrative Agent and each Lender, and each
Related Party of any of the foregoing Persons (each such Person being called an
"Indemnitee") against, and to hold each Indemnitee harmless from, any and all
losses, claims, damages, liabilities and related expenses, including the fees,
charges and disbursements of any counsel for any Indemnitee, incurred by or
asserted against any Indemnitee arising out of, in connection with, or as a
result of (i) the execution or delivery of this Agreement or any agreement or
instrument contemplated hereby, the performance by the parties hereto of their
respective obligations hereunder or the consummation of the Transactions or any
other transactions contemplated hereby, (ii) any Loan or the use of the proceeds
therefrom, (iii) any actual or alleged presence or release of Hazardous
Materials on or from any property owned or operated by either Borrower or any of
their Subsidiaries, or any Environmental Liability related in any way to either
Borrower or any of their Subsidiaries, or (iv) any actual or prospective claim,
litigation, investigation or proceeding relating to any of the foregoing,
whether based on contract, tort or any other theory and regardless of whether
any Indemnitee is a party thereto; provided that such indemnity shall not, as to
any Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses resulting from the gross negligence or wilful
misconduct of such Indemnitee.
(c) Reimbursement by Lenders. To the extent that the Borrowers
fail to pay any amount required to be paid by them to the Administrative Agent
under paragraph (a) or (b) of this Section, each Lender severally agrees to pay
to the Administrative Agent such Lender's Applicable Percentage (determined as
of the time that the applicable unreimbursed expense or indemnity payment is
sought) of such unpaid amount; provided that the unreimbursed expense or
indemnified loss, claim, damage, liability or related expense, as the case may
be, was incurred by or asserted against the Administrative Agent in its capacity
as such.
(d) Waiver of Consequential Damages, Etc. To the extent
permitted by applicable law, neither Borrower shall assert, and each Borrower
hereby waives, any claim against any Indemnitee, on any theory of liability, for
special, indirect, consequential or punitive damages (as opposed to direct or
actual damages) arising out of, in connection with, or as a result of, this
Agreement or any agreement or instrument contemplated hereby, the Transactions,
any Loan or the use of the proceeds thereof.
(e) Payments. All amounts due under this Section shall be
payable not later than ten days after written demand therefor.
SECTION 9.04. Successors and Assigns.
(a) Assignments Generally. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns permitted hereby, except that the Borrowers
may not assign or otherwise transfer any of their
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respective rights or obligations hereunder without the prior written consent of
each Lender (and any attempted assignment or transfer by either Borrower without
such consent shall be null and void). Nothing in this Agreement, expressed or
implied, shall be construed to confer upon any Person (other than the parties
hereto, their respective successors and assigns permitted hereby and, to the
extent expressly contemplated hereby, the Related Parties of each of the
Administrative Agent and the Lenders) any legal or equitable right, remedy or
claim under or by reason of this Agreement.
(b) Assignments by Lenders. Any Lender may assign to one or more
assignees all or a portion of its rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans at the time owing to
it); provided that (i) except in the case of an assignment to a Lender or an
Affiliate of a Lender, each of the relevant Borrower and the Administrative
Agent must give their prior written consent to such assignment (which consent
shall not be unreasonably withheld), (ii) except in the case of an assignment to
a Lender or an Affiliate of a Lender or an assignment of the entire remaining
amount of the assigning Lender's Commitment, the amount of the Commitment of the
assigning Lender subject to each such assignment (determined as of the date the
Assignment and Acceptance with respect to such assignment is delivered to the
Administrative Agent) shall not be less than $5,000,000 unless each of the
relevant Borrower and the Administrative Agent otherwise consent, (iii) each
partial assignment shall be made as an assignment of a proportionate part of all
the assigning Lender's rights and obligations under this Agreement, except that
this clause (iii) shall not apply to rights in respect of outstanding
Competitive Loans, (iv) the parties to each assignment shall execute and deliver
to the Administrative Agent an Assignment and Acceptance, together with a
processing and recordation fee of $3,000, and (v) the assignee, if it shall not
be a Lender, shall deliver to the Administrative Agent an Administrative
Questionnaire; provided further that any consent of the relevant Borrower
otherwise required under this paragraph shall not be required if an Event of
Default under clause (h), (i) or (j) of Article VII has occurred and is
continuing. Upon acceptance and recording pursuant to paragraph (d) of this
Section, from and after the effective date specified in each Assignment and
Acceptance, the assignee thereunder shall be a party hereto and, to the extent
of the interest assigned by such Assignment and Acceptance, have the rights and
obligations of a Lender under this Agreement, and the assigning Lender
thereunder shall, to the extent of the interest assigned by such Assignment and
Acceptance, be released from its obligations under this Agreement (and, in the
case of an Assignment and Acceptance covering all of the assigning Lender's
rights and obligations under this Agreement, such Lender shall cease to be a
party hereto but shall continue to be entitled to the benefits of Sections 2.13,
2.14, 2.15 and 9.03). Any assignment or transfer by a Lender of rights or
obligations under this Agreement that does not comply with this paragraph shall
be treated for purposes of this Agreement as a sale by such Lender of a
participation in such rights and obligations in accordance with paragraph (e) of
this Section.
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(c) Maintenance of Register by the Administrative Agent. The
Administrative Agent, acting for this purpose as an agent of the Borrowers,
shall maintain at one of its offices in New York City a copy of each Assignment
and Acceptance 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, and the Borrowers,
the Administrative 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, notwithstanding notice to the contrary. The
Register shall be available for inspection by the Borrowers and any Lender, at
any reasonable time and from time to time upon reasonable prior notice.
(d) Effectiveness of Assignments. Upon its receipt of a duly
completed Assignment and Acceptance executed by an assigning Lender and an
assignee, the assignee's completed Administrative Questionnaire (unless the
assignee shall already be a Lender hereunder), the processing and recordation
fee referred to in paragraph (b) of this Section and any written consent to such
assignment required by paragraph (b) of this Section, the Administrative Agent
shall accept such Assignment and Acceptance and record the information contained
therein in the Register. No assignment shall be effective for purposes of this
Agreement unless it has been recorded in the Register as provided in this
paragraph.
(e) Participations. Any Lender may, without the consent of the
Borrowers or the Administrative Agent, sell participations to one or more banks
or other entities (a "Participant") in all or a portion of such Lender's rights
and obligations under this Agreement (including all or a portion of its
Commitment and the Loans owing to it); provided that (i) such Lender's
obligations under this Agreement shall remain unchanged, (ii) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations and (iii) the Borrowers, the Administrative Agent and the other
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement. Any
agreement or instrument pursuant to which a Lender sells such a participation
shall provide that such Lender shall retain the sole right to enforce this
Agreement and to approve any amendment, modification or waiver of any provision
of this Agreement; provided that such agreement or instrument may provide that
such Lender will not, without the consent of the Participant, agree to any
amendment, modification or waiver described in the first proviso to Section
9.02(b) that affects such Participant. Subject to paragraph (f) of this Section,
each Borrower agrees that each Participant shall be entitled to the benefits of
Sections 2.13, 2.14 and 2.15 to the same extent as if it were a Lender and had
acquired its interest by assignment pursuant to paragraph (b) of this Section.
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(f) Limitations on Rights of Participants. A Participant shall
not be entitled to receive any greater payment under Section 2.13 or 2.15 than
the applicable Lender would have been entitled to receive with respect to the
participation sold to such Participant, unless the sale of the participation to
such Participant is made with the relevant Borrower's prior written consent. A
Participant that would be a Foreign Lender if it were a Lender shall not be
entitled to the benefits of Section 2.15 unless the relevant Borrower is
notified of the participation sold to such Participant and such Participant
agrees, for the benefit of such Borrower, to comply with Section 2.15(e) as
though it were a Lender.
(g) Certain Pledges. Any Lender may at any time pledge or assign
a security interest in all or any portion of its rights under this Agreement to
secure obligations of such Lender, including any such pledge or assignment to a
Federal Reserve Bank, and this Section shall not apply to any such pledge or
assignment of a security interest; provided that no such pledge or assignment of
a security interest shall release a Lender from any of its obligations hereunder
or substitute any such assignee for such Lender as a party hereto.
(h) No Assignments to the Borrowers or Affiliates. Anything in
this Section to the contrary notwithstanding, no Lender may assign or
participate any interest in any Loan held by it hereunder to either Borrower or
any of its respective Affiliates or Subsidiaries without the prior consent of
each Lender.
(i) Special Purpose Vehicles. Notwithstanding anything to the
contrary contained herein, any Lender (a "Granting Lender") may grant to a
special purpose funding vehicle (an "SPC") of such Granting Lender, identified
as such in writing from time to time by the Granting Lender to the
Administrative Agent and the Borrowers, the option to provide all or any part of
any Loan that such Granting Lender would otherwise be obligated to make,
provided that (i) nothing herein shall constitute a commitment to make any Loan
by any SPC, (ii) if an SPC elects not to exercise such option or otherwise fails
to provide all or any part of such Loan, the Granting Lender shall make such
Loan pursuant to the terms hereof, and (iii) the rights of any such SPC shall be
derivative of the rights of the Granting Lender, and such SPC shall be subject
to all of the restrictions upon the Granting Lender herein contained. Each SPC
shall be conclusively presumed to have made arrangements with its Granting
Lender for the exercise of voting and other rights hereunder in a manner which
is acceptable to the SPC, the Administrative Agent, the Lenders and the
Borrowers, and each of the Administrative Agent, the Lenders and the Borrowers
shall be entitled to rely upon and deal solely with the Granting Lender with
respect to Loans made by or through its SPC. The making of a Loan by an SPC
hereunder shall utilize the Commitment of the Granting Lender to the same
extent, and as if, such Loan were made by the Granting Lender. Each party hereto
hereby agrees (which agreement shall survive the termination of this Agreement)
that, prior to the date that is one year and one day after the payment in full
of all outstanding senior indebtedness of any SPC, it will not institute
against, or
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join any other person in instituting against, such SPC, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings or similar
proceedings under the laws of the United States or any State thereof, in respect
of claims arising out of this Agreement, provided that the Granting Lender for
each SPC hereby agrees to indemnify, save and hold harmless each other party
hereto for any loss, cost, damage and expense arising out of their inability to
institute any such proceeding against its SPC. In addition, notwithstanding
anything to the contrary contained in this Section 9.04(i), any SPC may (i) with
the prior written consent of the relevant Borrower and the Administrative Agent
(which consents shall not be unreasonably withheld) but without paying any
processing fee therefor, assign all or a portion of its interests in any Loans
to its Granting Lender or to any financial institutions providing liquidity
and/or credit facilities to or for the account of such SPC to fund the Loans
made by such SPC or to support the securities (if any) issued by such SPC to
fund such Loans (but nothing contained herein shall be construed in derogation
of the obligation of the Granting Lender to make Loans hereunder), provided that
neither the consent of the SPC or of any such assignee shall be required for
amendments or waivers hereunder except for those amendments or waivers for which
the consent of participants is required under Section 9.02, and (ii) disclose on
a confidential basis (in the same manner described in Section 9.12) any
non-public information relating to its Loans to any rating agency, commercial
paper dealer or provider of a surety, guarantee or credit or liquidity
enhancement to such SPC.
SECTION 9.05. Survival. All covenants, agreements,
representations and warranties made by the Borrowers herein and in the
certificates or other instruments delivered in connection with or pursuant to
this Agreement shall be considered to have been relied upon by the other parties
hereto and shall survive the execution and delivery of this Agreement and the
making of any Loans, regardless of any investigation made by any such other
party or on its behalf and notwithstanding that the Administrative Agent or any
Lender may have had notice or knowledge of any Default or incorrect
representation or warranty at the time any credit is extended hereunder, and
shall continue in full force and effect as long as the principal of or any
accrued interest on any Loan or any fee or any other amount payable under this
Agreement is outstanding and unpaid and so long as the Commitments have not
expired or terminated. The provisions of Sections 2.13, 2.14, 2.15 and 9.03 and
Article VIII shall survive and remain in full force and effect regardless of the
consummation of the transactions contemplated hereby, the repayment of the
Loans, the expiration or termination of the Commitments or the termination of
this Agreement or any provision hereof.
SECTION 9.06. Counterparts; Integration; Effectiveness. This
Agreement may be executed in counterparts (and by different parties hereto on
different counterparts), each of which shall constitute an original, but all of
which when taken together shall constitute a single contract. This Agreement and
any separate letter agreements with respect to fees payable to the
<PAGE> 76
- 70 -
Administrative Agent constitute the entire contract between and among the
parties relating to the subject matter hereof and supersede any and all previous
agreements and understandings, oral or written, relating to the subject matter
hereof. Except as provided in Section 4.01, this Agreement shall become
effective when it shall have been executed by the Administrative Agent and when
the Administrative Agent shall have received counterparts hereof which, when
taken together, bear the signatures of each of the other parties hereto, and
thereafter shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. Delivery of an executed counterpart
of a signature page to this Agreement by telecopy shall be effective as delivery
of a manually executed counterpart of this Agreement.
SECTION 9.07. Severability. Any provision of this Agreement held
to be invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.
SECTION 9.08. Right of Setoff. If an Event of Default shall have
occurred and be continuing, each Lender is hereby authorized at any time and
from time to time, to the fullest extent permitted by law, to set off and apply
any and all deposits (general or special, time or demand, provisional or final)
at any time held and other indebtedness at any time owing by such Lender to or
for the credit or the account of the relevant Borrower against any of and all
the obligations of such Borrower now or hereafter existing under this Agreement
held by such Lender, irrespective of whether or not such Lender shall have made
any demand under this Agreement and although such obligations may be unmatured.
The rights of each Lender under this Section are in addition to other rights and
remedies (including other rights of setoff) which such Lender may have.
SECTION 9.09. Governing Law; Jurisdiction; Etc.
(a) Governing Law. This Agreement shall be construed in
accordance with and governed by the law of the State of New York.
(b) Submission to Jurisdiction. Each Borrower hereby irrevocably
and unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of the Supreme Court of the State of New York sitting in New York
County and of the United States District Court of the Southern District of New
York, and any appellate court from any thereof, in any action or proceeding
arising out of or relating to this Agreement, or for recognition or enforcement
of any judgment, and each of the parties hereto hereby irrevocably and
unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be
<PAGE> 77
- 71 -
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Nothing in this Agreement shall affect any
right that the Administrative Agent or any Lender may otherwise have to bring
any action or proceeding relating to this Agreement against the Borrowers or
their respective properties in the courts of any jurisdiction.
(c) Waiver of Venue. Each Borrower hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection which it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement in
any court referred to in paragraph (b) of this Section. Each of the parties
hereto hereby irrevocably waives, to the fullest extent permitted by law, the
defense of an inconvenient forum to the maintenance of such action or proceeding
in any such court.
(d) Service of Process. Each party to this Agreement irrevocably
consents to service of process in the manner provided for notices in Section
9.01. Nothing in this Agreement will affect the right of any party to this
Agreement to serve process in any other manner permitted by law.
SECTION 9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER
BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
SECTION 9.11. Headings. Article and Section headings and the
Table of Contents used herein are for convenience of reference only, are not
part of this Agreement and shall not affect the construction of, or be taken
into consideration in interpreting, this Agreement.
SECTION 9.12. Treatment of Certain Information; Confidentiality.
(a) Treatment of Certain Information. Each Borrower acknowledges
that from time to time financial advisory, investment banking and other services
may be offered or provided to such Borrower or one or more of its Subsidiaries
(in connection with this Agreement or otherwise) by any Lender or by one or more
subsidiaries or affiliates of such Lender and each
<PAGE> 78
- 72 -
Borrower hereby authorizes each Lender to share any information delivered to
such Lender by such Borrower and its Subsidiaries pursuant to this Agreement, or
in connection with the decision of such Lender to enter into this Agreement, to
any such subsidiary or affiliate, it being understood that any such subsidiary
or affiliate receiving such information shall be bound by the provisions of
paragraph (b) of this Section as if it were a Lender hereunder. Such
authorization shall survive the repayment of the Loans, the expiration or
termination of the Commitments or the termination of this Agreement or any
provision hereof.
(b) Confidentiality. Each of the Administrative Agent and the
Lenders agrees to maintain the confidentiality of the Information (as defined
below), except that Information may be disclosed (i) to its and its Affiliates'
directors, officers, employees and agents, including accountants, legal counsel
and other advisors (it being understood that the Persons to whom such disclosure
is made will be informed of the confidential nature of such Information and
instructed to keep such Information confidential), (ii) to the extent requested
by any regulatory authority, (iii) to the extent required by applicable laws or
regulations or by any subpoena or similar legal process, (iv) to any other party
to this Agreement, (v) in connection with the exercise of any remedies hereunder
or any suit, action or proceeding relating to this Agreement or the enforcement
of rights hereunder, (vi) subject to an agreement containing provisions
substantially the same as those of this paragraph, to any assignee of or
Participant in, or any prospective assignee of or Participant in, any of its
rights or obligations under this Agreement, (vii) with the consent of the
Borrowers or (viii) to the extent such Information (A) becomes publicly
available other than as a result of a breach of this paragraph or (B) becomes
available to the Administrative Agent or any Lender on a nonconfidential basis
from a source other than the Borrowers. For the purposes of this paragraph,
"Information" means all information received from either Borrower relating to
such Borrower or its business, other than any such information that is available
to the Administrative Agent or any Lender on a nonconfidential basis prior to
disclosure by such Borrower; provided that, in the case of information received
from such Borrower after the date hereof, such information is clearly identified
at the time of delivery as confidential. Any Person required to maintain the
confidentiality of Information as provided in this Section shall be considered
to have complied with its obligation to do so if such Person has exercised the
same degree of care to maintain the confidentiality of such Information as such
Person would accord to its own confidential information.
<PAGE> 79
- 73 -
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of the
day and year first above written.
WASHINGTON MUTUAL, INC.
By
--------------------------------------
Name:
Title:
ARISTAR, INC.
By
--------------------------------------
Name:
Title:
<PAGE> 80
- 74 -
LENDERS
THE CHASE MANHATTAN BANK,
individually and as Administrative Agent
By
--------------------------------------
Name:
Title:
BANK OF AMERICA, N.A.
By
--------------------------------------
Name:
Title:
BANK OF MONTREAL
By
--------------------------------------
Name:
Title:
FIRST NATIONAL BANK OF CHICAGO
By
--------------------------------------
Name:
Title:
<PAGE> 81
- 75 -
WELLS FARGO BANK
By
--------------------------------------
Name:
Title:
ABN AMRO BANK N.V.
By
--------------------------------------
Name:
Title:
FIRST UNION NATIONAL BANK
By
--------------------------------------
Name:
Title:
UNION BANK OF CALIFORNIA
By
--------------------------------------
Name:
Title:
<PAGE> 82
- 76 -
CITIBANK, N.A.
By
--------------------------------------
Name:
Title:
CREDIT LYONNAIS NEW YORK BRANCH
By
--------------------------------------
Name:
Title:
WESTDEUTCHE LANDESBANK
GIROZENTRALE
By
--------------------------------------
Name:
Title:
THE BANK OF NEW YORK
By
--------------------------------------
Name:
Title:
<PAGE> 83
- 77 -
DEUTSCHE BANK AG
By
--------------------------------------
Name:
Title:
KEY BANK
By
--------------------------------------
Name:
Title:
CREDIT SUISSE FIRST BOSTON
By
--------------------------------------
Name:
Title:
MELLON BANK
By
--------------------------------------
Name:
Title:
<PAGE> 84
- 78 -
US BANK
By
--------------------------------------
Name:
Title:
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By
--------------------------------------
Name:
Title:
BANCA DI ROMA
By
--------------------------------------
Name:
Title:
SUNTRUST BANK, MIAMI,
NATIONAL ASSOCIATION
By
--------------------------------------
Name:
Title:
<PAGE> 85
- 79 -
NORDDEUTSCHE LANDESBANK
By
--------------------------------------
Name:
Title:
<PAGE> 86
SCHEDULE I
Tranche A Commitments
<TABLE>
<CAPTION>
Name of Tranche A Lender Commitment($)
- ------------------------ ----------------
<S> <C>
The Chase Manhattan Bank 20,833,333.33
Bank of America, N.A. 20,833,333.33
Bank of Montreal 20,833,333.33
First National Bank of Chicago 20,833,333.33
Wells Fargo Bank 16,666,666.67
ABN AMRO Bank N.V. 16,666,666.67
First Union National Bank 16,666,666.67
Union Bank of California 14,583,333.33
Citibank, N.A. 13,020,833.33
Credit Lyonnais New York Branch 9,375,000.00
Westdeutche Landesbank Girozentrale 9,375,000.00
The Bank of New York 9,375,000.00
Deutsche Bank AG
NewYork and/or Cayman Islands Branches 9,375,000.00
Key Bank 9,375,000.00
Credit Suisse First Boston 9,375,000.00
Mellon Bank 9,375,000.00
US Bank 4,687,500.00
Morgan Guaranty Trust Company of New York 4,687,500.00
Banca Di Roma 4,687,500.00
SunTrust Bank, Miami, National Association 4,687,500.00
Norddeutsche Landesbank Girozentrale
New York Branch and/or Cayman Islands Branch 4,687,500.00
---------------
$250,000,000.00
===============
</TABLE>
Schedule I to Agreement
<PAGE> 87
- 2 -
Tranche B Commitments
<TABLE>
<CAPTION>
Name of Tranche B Lender Commitment($)
- ------------------------ ----------------
<S> <C>
The Chase Manhattan Bank 29,166,666.67
Bank of America, N.A. 29,166,666.67
Bank of Montreal 29,166,666.67
First National Bank of Chicago 29,166,666.67
Wells Fargo Bank 23,333,333.33
ABN AMRO Bank N.V. 23,333,333.33
First Union National Bank 23,333,333.33
Union Bank of California 20,416,666.67
Citibank, N.A. 18,229,166.67
Credit Lyonnais New York Branch 13,125,000.00
Westdeutche Landesbank Girozentrale 13,125,000.00
The Bank of New York 13,125,000.00
Deutsche Bank AG
New York and/or Cayman Islands Branch 13,125,000.00
Key Bank 13,125,000.00
Credit Suisse First Boston 13,125,000.00
Mellon Bank 13,125,000.00
US Bank 6,562,500.00
Morgan Guaranty Trust Company of New York 6,562,500.00
Banca Di Roma 6,562,500.00
SunTrust Bank, Miami, National Association 6,562,500.00
Norddeutsche Landesbank Girozentrale
New York Branch and/or Cayman Islands Branch 6,562,500.00
---------------
$350,000,000.00
===============
</TABLE>
<PAGE> 88
SCHEDULE II
Material Agreements and Liens
Part A - Material Agreements
See attached
Part B - Liens
None
Schedule II to Agreement
<PAGE> 89
SCHEDULE III
Litigation
None
Schedule III to Agreement
<PAGE> 90
SCHEDULE IV
Environmental Matters
None
Schedule IV to Agreement
<PAGE> 91
SCHEDULE V
Subsidiaries
See attached
Schedule V to Agreement
<PAGE> 92
- 1 -
EXHIBIT A
[Form of Assignment and Acceptance]
ASSIGNMENT AND ACCEPTANCE
Reference is made to the Four-Year Credit Agreement dated as of
August [__], 1999 (as amended and in effect on the date hereof, the
"Agreement"), between Washington Mutual, Inc., Aristar, Inc., the Lenders named
therein and The Chase Manhattan Bank, as Administrative Agent for the Lenders.
Terms defined in the Agreement are used herein with the same meanings.
The Assignor named below hereby sells and assigns, without
recourse, to the Assignee named below, and the Assignee hereby purchases and
assumes, without recourse, from the Assignor, effective as of the Assignment
Date set forth below, the interests set forth below (the "Assigned Interest") in
the Assignor's rights and obligations under the Agreement, including the
interests set forth below in the Tranche [A][B](1) Commitment of the Assignor on
the Assignment Date and Competitive Loans and Syndicated Loans owing to the
Assignor which are outstanding on the Assignment Date, together with unpaid
interest accrued on the assigned Loans to the Assignment Date, and the amount,
if any, set forth below of the fees accrued to the Assignment Date for account
of the Assignor. The Assignee hereby acknowledges receipt of a copy of the
Agreement. From and after the Assignment Date (i) the Assignee shall be a party
to and be bound by the provisions of the Agreement and, to the extent of the
interests assigned by this Assignment and Acceptance, have the rights and
obligations of a Lender thereunder and (ii) the Assignor shall, to the extent of
the interests assigned by this Assignment and Acceptance, relinquish its rights
and be released from its obligations under the Agreement.
This Assignment and Acceptance is being delivered to the
Administrative Agent together with (i) if the Assignee is a Foreign Lender, any
documentation required to be delivered by the Assignee pursuant to Section
2.15(e) of the Agreement, duly completed and executed by the Assignee, and (ii)
if the Assignee is not already a Lender under the Agreement, an Administrative
Questionnaire in the form supplied by the Administrative Agent, duly completed
by the Assignee. The [Assignee/Assignor] shall pay the fee payable to the
Administrative Agent pursuant to Section 9.04(b) of the Agreement.
This Assignment and Acceptance shall be governed by and
construed in accordance with the laws of the State of New York.
(1) Insert as appropriate.
Assignment and Acceptance
<PAGE> 93
- 2 -
Date of Assignment:
Legal Name of Assignor:
Legal Name of Assignee:
Assignee's Address for Notices:
Effective Date of Assignment
("Assignment Date")(2):
<TABLE>
<CAPTION>
Percentage Assigned of
Facility/Commitment
(set forth, to at
Principal Amount least 8 decimals, as a
Assigned (and percentage of the
identifying Facility and the
information as to aggregate Commitments
individual of all Lenders
Facility Competitive Loans) thereunder)
- -------- ------------------ ----------------------
<S> <C> <C>
Commitment Assigned: $ %
Syndicated Loans:
Competitive Loans:
Fees Assigned (if any):
</TABLE>
The terms set forth above and below are hereby agreed to:
[NAME OF ASSIGNOR] ,as Assignor
By:
-------------------------------------
Name:
Title:
- -------
(2) Must be at least five Business Days after execution hereof by all
required parties.
<PAGE> 94
- 3 -
[NAME OF ASSIGNEE] ,as Assignee
By:
-------------------------------------
Name:
Title:
<PAGE> 95
- 4 -
The undersigned hereby consent to the within assignment: 3
WASHINGTON MUTUAL, INC.
By:
----------------------------------
Name:
Title:
ARISTAR, INC.
By:
----------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK,
as Administrative Agent
By:
----------------------------------
Name:
Title:
- -------
(3) Consents to be included to the extent required by Section 9.04(b) of the
Agreement.
<PAGE> 96
EXHIBIT B
[Form of Opinion of Counsel to the Borrowers]
__________, 1999
To the Lenders party to the Agreement referred to
below and The Chase Manhattan Bank,
as Administrative Agent
Ladies and Gentlemen:
We have acted as counsel to Washington Mutual, Inc.("WAMU") and
Aristar, Inc. ("Aristar" and together with WAMU, the "Borrowers") in connection
with the Four-Year Credit Agreement (the "Agreement") dated as of August [__],
1999, between the Borrowers, the lenders party thereto and The Chase Manhattan
Bank, as Administrative Agent, providing for loans to be made by said lenders to
the Borrowers in an aggregate principal amount not exceeding $600,000,000. Terms
defined in the Agreement are used herein as defined therein. This opinion letter
is being delivered pursuant to Section 4.01(b) of the Agreement.
In rendering the opinions expressed below, we have examined the
following agreements, instruments and other documents:
(a) the Agreement; and
(b) such records of the Borrowers and such other documents as we
have deemed necessary as a basis for the opinions expressed below.
In our examination, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals and
the conformity with authentic original documents of all documents submitted to
us as copies. When relevant facts were not independently established, we have
relied upon statements of governmental officials and upon representations made
in or pursuant to the Agreement and certificates of appropriate representatives
of the Borrowers.
In rendering the opinions expressed below, we have assumed, with
respect to all of the documents referred to in this opinion letter, that
(except, to the extent set forth in the opinions expressed below, as to the
Borrowers):
Opinion of Counsel to the Borrowers
<PAGE> 97
- 2 -
(i) such documents have been duly authorized by, have been duly
executed and delivered by, and constitute legal, valid, binding and
enforceable obligations of, all of the parties to such documents;
(ii) all signatories to such documents have been duly
authorized; and
(iii) all of the parties to such documents are duly organized
and validly existing and have the power and authority (corporate or
other) to execute, deliver and perform such documents.
Based upon and subject to the foregoing and subject also to the
comments and qualifications set forth below, and having considered such
questions of law as we have deemed necessary as a basis for the opinions
expressed below, we are of the opinion that:
1. WAMU is a corporation duly organized, validly existing and in
good standing under the laws of the State of Washington. Each Subsidiary
of the Borrowers is a corporation duly organized, validly existing and
in good standing under the laws of the respective state indicated
opposite its name in Schedule V to the Agreement. Each of the Borrowers
and their respective Subsidiaries has all requisite power and authority
to carry on its business as now conducted and, except where the failure
to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, is qualified to do
business in, and is in good standing in, every jurisdiction where such
qualification is required.
2. The Transactions are within the corporate powers of the
Borrowers.
3. The Transactions have been duly authorized by all necessary
corporate action on the part of the Borrowers.
4. The Agreement has been duly executed and delivered by the
Borrowers.
5. Under conflict of law principles for the State of Washington,
the stated choice of New York law to govern the Agreement will be
honored by the courts of the State of Washington and the Agreement will
be construed in accordance with, and will be treated as being governed
by, the law of the State of New York. However, if the Agreement were
stated to be governed by and construed in accordance with the law of the
State of Washington, or if a court of the State of Washington were to
apply the law of the State of Washington to the Agreement, the Agreement
would nevertheless constitute the legal, valid and binding obligation of
WAMU, enforceable against WAMU in accordance with its terms, except as
may be limited by bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or other similar laws relating to or affecting
the rights of
<PAGE> 98
- 3 -
creditors generally and except as the enforceability of the Agreement is
subject to the application of general principles of equity (regardless
of whether considered in a proceeding in equity or at law), including
(a) the possible unavailability of specific performance, injunctive
relief or any other equitable remedy and (b) concepts of materiality,
reasonableness, good faith and fair dealing.
6. The Transactions (a) do not require any consent or approval
of, registration or filing with, or any other action by, any
Governmental Authority, (b) will not violate any applicable law or
regulation or the charter, by-laws or other organizational documents of
the Borrowers or any of their respective Subsidiaries or any order of
any Governmental Authority, (c) will not violate or result in a default
under any indenture, agreement or other instrument binding upon the
Borrowers or any of their respective Subsidiaries or assets, or give
rise to a right thereunder to require any payment to be made by any such
Person, and (d) will not result in the creation or imposition of any
Lien on any asset of the Borrowers or any of their respective
Subsidiaries.
7. [Except as set forth in Schedules III and IV to the
Agreement,] we have no knowledge (after due inquiry) of any actions,
suits or proceedings by or before any arbitrator or Governmental
Authority now pending against or threatened against or affecting the
Borrowers or any of their respective Subsidiaries (a) as to which there
is a reasonable possibility of an adverse determination and that, if
adversely determined, could reasonably be expected, individually or in
the aggregate, to have a Material Adverse Effect (other than the
Disclosed Matters) or (b) that involve the Agreement or the
Transactions.
8. Neither of the Borrowers nor any of their respective
Subsidiaries is (a) an "investment company" as defined in, or subject to
regulation under, the Investment Company Act of 1940 or (b) a "holding
company" as defined in, or subject to regulation under, the Public
Utility Holding Company Act of 1935.
The foregoing opinions are subject to the following comments and
qualifications:
(A) The enforceability of Section 9.03 of the Agreement may be
limited by (i) laws rendering unenforceable indemnification contrary to
Federal or state securities laws and the public policy underlying such
laws and (ii) laws limiting the enforceability of provisions exculpating
or exempting a party, or requiring indemnification of a party for,
liability for its own action or inaction, to the extent the action or
inaction involves gross negligence, recklessness, willful misconduct or
unlawful conduct.
<PAGE> 99
- 4 -
(B) The enforceability of provisions in the Agreement to the
effect that terms may not be waived or modified except in writing may be
limited under certain circumstances.
(C) We express no opinion as to (i) the effect of the laws of
any jurisdiction in which any Lender is located (other than the State of
Washington and Delaware) that limit the interest, fees or other charges
such Lender may impose, (ii) the last sentence of Section 2.16(d) of the
Agreement and (iii) the first sentence of Section 9.09(b) of the
Agreement, insofar as such sentence relates to the subject matter
jurisdiction of the United States District Court for the Southern
District of New York to adjudicate any controversy related to the
Agreement.
The foregoing opinions are limited to matters involving the
Federal laws of the United States of America, the Delaware General Corporation
Law and the law of the State of Washington, and we do not express any opinion as
to the laws of any other jurisdiction.
At the request of our clients, this opinion letter is, pursuant
to Section 4.01(b) of the Agreement, provided to you by us in our capacity as
counsel to the Borrowers and may not be relied upon by any Person for any
purpose other than in connection with the transactions contemplated by the
Agreement without, in each instance, our prior written consent.
Very truly yours,
<PAGE> 100
EXHIBIT C
[Form of Opinion of Special New York Counsel to Chase]
__________, 1999
To the Lenders party to the Agreement referred to
below and The Chase Manhattan Bank,
as Administrative Agent
Ladies and Gentlemen:
We have acted as special New York counsel to The Chase Manhattan
Bank ("Chase") in connection with the Four-Year Credit Agreement (the
"Agreement") dated as of August [__], 1999, between Washington Mutual, Inc.
("WAMU"), Aristar, Inc. ("Aristar" and, together with WAMU, the "Borrowers"),
the lenders party thereto and Chase, as Administrative Agent, providing for
loans to be made by said lenders to the Borrowers in an aggregate principal
amount not exceeding $600,000,000. Terms defined in the Agreement are used
herein as defined therein. This opinion letter is being delivered pursuant to
Section 4.01(c) of the Agreement.
In rendering the opinions expressed below, we have examined the
following agreements, instruments and other documents:
(a) the Agreement; and
(b) such records of the Borrowers and such other documents as we
have deemed necessary as a basis for the opinions expressed below.
In our examination, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals and
the conformity with authentic original documents of all documents submitted to
us as copies. When relevant facts were not independently established, we have
relied upon representations made in or pursuant to the Agreement.
In rendering the opinions expressed below, we have assumed, with
respect to all of the documents referred to in this opinion letter, that:
(i) such documents have been duly authorized by, have been duly
executed and delivered by, and (except to the extent set forth in the
opinions expressed below as to the Borrowers) constitute legal, valid,
binding and enforceable obligations of, all of the parties to such
documents;
(ii) all signatories to such documents have been duly
authorized; and
<PAGE> 101
- 2 -
(iii) all of the parties to such documents are duly organized
and validly existing and have the power and authority (corporate or
other) to execute, deliver and perform such documents.
Based upon and subject to the foregoing and subject also to the
comments and qualifications set forth below, and having considered such
questions of law as we have deemed necessary as a basis for the opinions
expressed below, we are of the opinion that the Agreement constitutes the legal,
valid and binding obligation of the Borrowers, enforceable against each Borrower
in accordance with its terms, except as may be limited by bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or other similar
laws relating to or affecting the rights of creditors generally and except as
the enforceability of the Agreement is subject to the application of general
principles of equity (regardless of whether considered in a proceeding in equity
or at law), including (a) the possible unavailability of specific performance,
injunctive relief or any other equitable remedy and (b) concepts of materiality,
reasonableness, good faith and fair dealing.
The foregoing opinions are subject to the following comments and
qualifications:
(A) The enforceability of Section 9.03 of the Agreement may be
limited by (i) laws rendering unenforceable indemnification contrary to
Federal or state securities laws and the public policy underlying such
laws and (ii) laws limiting the enforceability of provisions exculpating
or exempting a party, or requiring indemnification of a party for,
liability for its own action or inaction, to the extent the action or
inaction involves gross negligence, recklessness, willful misconduct or
unlawful conduct.
(B) The enforceability of provisions in the Agreement to the
effect that terms may not be waived or modified except in writing may be
limited under certain circumstances.
(C) We express no opinion as to (i) the effect of the laws of
any jurisdiction in which any Lender is located (other than the State of
New York) that limit the interest, fees or other charges such Lender may
impose, (ii) the last sentence of Section 2.16(d) of the Agreement and
(iii) Section 9.09(b) of the Agreement, insofar as such sentence relates
to the subject matter jurisdiction of the United States District Court
for the Southern District of New York to adjudicate any controversy
related to the Agreement.
The foregoing opinions are limited to matters involving the
Federal laws of the United States of America and the law of the State of New
York, and we do not express any opinion as to the laws of any other
jurisdiction.
<PAGE> 102
- 3 -
At the request of our client, this opinion letter is, pursuant
to Section 4.01(c) of the Agreement, provided to you by us in our capacity as
special New York counsel to Chase and may not be relied upon by any Person for
any purpose other than in connection with the transactions contemplated by the
Agreement without, in each instance, our prior written consent.
Very truly yours,
RJW/WFC
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE 10-Q OF
WASHINGTON MUTUAL, INC. FOR THE NINE MONTH PERIOD ENDED SEPTEMBER 30, 1999 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 2,406,198
<INT-BEARING-DEPOSITS> 60,911
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 30,740
<INVESTMENTS-HELD-FOR-SALE> 37,938,911
<INVESTMENTS-CARRYING> 13,105,274
<INVESTMENTS-MARKET> 12,930,222
<LOANS> 119,846,034
<ALLOWANCE> 1,051,369
<TOTAL-ASSETS> 180,799,904
<DEPOSITS> 81,624,488
<SHORT-TERM> 0
<LIABILITIES-OTHER> 1,662,606
<LONG-TERM> 0
0
0
<COMMON> 0
<OTHER-SE> 8,905,980
<TOTAL-LIABILITIES-AND-EQUITY> 180,799,904
<INTEREST-LOAN> 6,168,599
<INTEREST-INVEST> 2,574,588
<INTEREST-OTHER> 130,069
<INTEREST-TOTAL> 8,873,256
<INTEREST-DEPOSIT> 2,382,121
<INTEREST-EXPENSE> 5,477,687
<INTEREST-INCOME-NET> 3,395,569
<LOAN-LOSSES> 125,356
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 2,177,947
<INCOME-PRETAX> 2,178,047
<INCOME-PRE-EXTRAORDINARY> 1,366,772
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,366,772
<EPS-BASIC> 2.37
<EPS-DILUTED> 2.37
<YIELD-ACTUAL> 2.72
<LOANS-NON> 834,841
<LOANS-PAST> 0
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<ALLOWANCE-UNALLOCATED> 953,728
</TABLE>
