1
EXECUTION COPY
EXHIBIT 10.39
================================================================================
$27,500,000
FACILITY AND GUARANTY AGREEMENT
AMONG
AMERUS LIFE HOLDINGS, INC.
THE FIRST NATIONAL BANK OF CHICAGO,
AS AGENT
AND
THE FINANCIAL INSTITUTIONS SIGNATORY HERETO
DATED AS OF
FEBRUARY 12, 1999
================================================================================
2
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS.................................................................................1
ARTICLE II AMOUNTS AND TERMS OF THE LOANS..............................................................9
2.01 The Loans...................................................................................9
2.02 Notes......................................................................................10
2.03 Disbursement of Funds......................................................................11
2.04 Distribution of Payments...................................................................11
2.05 Funding Indemnity..........................................................................11
ARTICLE III CONDITIONS PRECEDENT.......................................................................14
3.01 Conditions to Obligations to Make Initial Loans............................................14
3.02 Conditions to All Loans....................................................................16
3.03 Additional Conditions to Incremental Loans.................................................16
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY..............................................16
4.01 Representations and Warranties of the Company..............................................16
ARTICLE V COVENANTS OF THE COMPANY...................................................................19
5.01 Covenants..................................................................................19
ARTICLE VI PROGRAM EVENTS OF DEFAULT; ACCELERATION....................................................20
6.01 Program Events of Default..................................................................20
6.02 Acceleration...............................................................................23
ARTICLE VII GUARANTY...................................................................................23
7.01 Guaranty of Payment........................................................................23
7.02 Acceptance of Guaranty; No Setoffs.........................................................23
7.03 Nature of Guaranty; Continuing, Absolute and Unconditional.................................23
7.04 Dealings With Borrowers....................................................................25
7.05 Subrogation................................................................................25
7.06 No Collateral..............................................................................25
7.07 Rights To Payments, Etc....................................................................25
7.09 Miscellaneous..............................................................................26
ARTICLE VIII THE AGENT..................................................................................27
8.01 Appointment; Nature of Relationship........................................................27
8.02 Powers.....................................................................................27
8.03 General Immunity...........................................................................27
8.04 No Responsibility for Loans, Recitals, etc.................................................27
i
3
8.05 Action on Instructions of Lenders..........................................................28
8.06 Employment of Agents and Counsel...........................................................28
8.07 Reliance on Documents; Counsel.............................................................28
8.08 Agent's Reimbursement and Indemnification..................................................28
8.09 Notice of Default..........................................................................29
8.10 Rights as a Lender.........................................................................29
8.11 Lender Credit Decision.....................................................................29
8.12 Successor Agent............................................................................29
8.13 Notes......................................................................................30
8.14 Agent's Fee................................................................................30
8.15 Delegation to Affiliates...................................................................30
ARTICLE IX RATABLE PAYMENTS...........................................................................31
9.01 Ratable Payments...........................................................................31
ARTICLE X BENEFIT OF AGREEMENT;
ASSIGNMENTS; PARTICIPATIONS................................................................31
10.01 Successors and Assigns.....................................................................31
10.02 Participations.............................................................................31
10.03 Assignments................................................................................32
10.04 Dissemination of Information...............................................................33
10.05 Tax Treatment..............................................................................33
ARTICLE XI NOTICES....................................................................................33
11.01 Giving Notice..............................................................................33
11.02 Change of Address..........................................................................34
ARTICLE XII MISCELLANEOUS..............................................................................34
12.01 Amendments.................................................................................34
12.02 Preservation of Rights.....................................................................35
12.03 Survival of Representations................................................................35
12.04 Governmental Regulation....................................................................35
12.05 Headings...................................................................................35
12.06 Entire Agreement...........................................................................35
12.07 Several Obligations; Benefits of this Agreement............................................35
12.08 Expenses; Indemnification..................................................................35
12.09 Numbers of Documents.......................................................................37
12.10 Severability of Provisions.................................................................37
12.11 Nonliability of Lenders....................................................................37
12.12 CHOICE OF LAW..............................................................................37
12.13 CONSENT TO JURISDICTION....................................................................38
12.14 WAIVER OF JURY TRIAL.......................................................................38
ii
4
12.15 Disclosure.................................................................................38
12.16 Withholding Tax Exemption..................................................................38
12.17 Execution in Counterparts..................................................................39
iii
5
PAGE
iv
6
v
7
EXHIBITS
Exhibit A - Promissory Note
Exhibit B - Agent Letter of Direction
Exhibit C - ▇▇▇▇▇ Letter of Direction and Authorization
Exhibit D-1 - Notice of Borrowing
Exhibit D-2 - Notice of Borrowing (Conversion Date)
SCHEDULES
Schedule 1.01 - Interest Payment Dates
Schedule 2.05(A) - Fixed Reference Rates
Schedule 2.05(B) - Zero Coupon Methodology
Schedule 2.05(C) - Early Payment Fee
vi
8
FACILITY AND GUARANTY AGREEMENT
THIS FACILITY AND GUARANTY AGREEMENT, dated as of February 12, 1999, is
by and among AMERUS LIFE HOLDINGS, INC., an Iowa corporation (the "Company"),
the Lenders and THE FIRST NATIONAL BANK OF CHICAGO, individually and as Agent
for the Lenders hereunder.
R E C I T A L S:
A. The Company has requested the Lenders to make advances to certain
managers and executives (the "Program Participants") of the Company and its
Subsidiaries in the aggregate principal amount of up to $27,500,000, the
proceeds of which will be used by the Program Participants to purchase Common
Stock and ACES pursuant to the Stock Purchase Program. The Company has also
requested the Lenders to make Incremental Loans to Program Participants.
B. By virtue of the Program Participants' services to the Company and
its Subsidiaries, the Company has derived and will continue to derive
substantial benefits. The Company believes that the ownership of Common Stock
and ACES by the Program Participants which will be facilitated by the Loans will
provide incentive to the Program Participants in performing their jobs so as to
more closely align the interests of the Program Participants with those of the
stockholders of the Company and thus confer significant benefits upon the
Company.
C. It is a condition precedent to the obligation of the Lenders to make
advances to the Program Participants that the Company shall have executed and
delivered this Agreement, thereby guaranteeing the Loans. The Lenders are
willing to extend the Loans in reliance upon the Guaranty and, in good faith,
have not relied upon any Margin Stock as collateral in extending or maintaining
the Loans.
D. The Company desires to execute this Agreement to satisfy the
condition described in the preceding paragraph and to induce the Lenders to make
the Loans contemplated hereby, and the Lenders desire to make the Loans to the
Program Participants only on the terms and subject to the conditions set forth
herein and in the other Loan Documents.
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings herein contained, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
ARTICLE I
DEFINITIONS
9
As used in this Agreement, the following terms shall have the following
meanings:
"2.05(A) Information" has the meaning set forth in Section 2.02(b).
"ACES" means the 7.00% Adjustable Conversion-rate Equity Security Units
issued by the Company pursuant to that certain Prospectus Supplement dated July
21, 1998.
"Advance" means, with respect to any Lender, such Lender's pro-rata
portion of any Loan.
"Agent" means First Chicago in its capacity as agent for the Lenders
pursuant to Article VIII hereof, and not in its individual capacity as a Lender,
and any successor Agent appointed pursuant to Article VIII hereof.
"Aggregate Commitment" means the aggregate of the Commitments of all
the Lenders.
"Agreement" means this Facility and Guaranty Agreement as from time to
time amended, supplemented, restated or otherwise modified and in effect.
"AmerUs Life" shall mean AmerUs Life Insurance Company, a stock life
insurance company.
"Authorization" means a Letter of Direction and Authorization to ▇▇▇▇▇
in the form of Exhibit C hereto executed by a Borrower.
"Authorized Officer" means the President, Chairman, Chief Executive
Officer, any other executive vice president or senior vice president of the
Company, acting singly.
"Borrower Account" has the meaning set forth in Section 4 of the Note.
"Borrower Amount" means, with respect to a Borrower, the maximum
aggregate principal amount of Loans (other than Incremental Loans) which may be
made to such Borrower, as specified by the Company pursuant to the second
sentence of Section 2.01(a), as from time to time reduced pursuant to the third
sentence of such Section.
"Borrower Base Amount" means, with respect to a Borrower, an amount
equal to its Borrower Amount minus its Borrower Option Amount.
"Borrower Event of Repayment" has the meaning set forth in Section 6 of
the Note.
"Borrower Option Amount" means, with respect to a Borrower, that
portion of the Borrower Amount of such Borrower designated by the Company in
accordance with the second sentence of Section 2.01(a) as being for the purpose
of funding the exercise of options to acquire Common Stock.
10
"Borrowers" has the meaning set forth in Section 2.01(a).
"Business Day" means a day (other than a Saturday or Sunday) on which
banks generally are open in Chicago, Illinois for the conduct of substantially
all of their commercial lending activities and on which dealings in United
States Dollars are carried on in the London interbank market.
"Change of Control" shall mean the occurrence of any of the following
events: (i) the Company shall cease to own, directly, or indirectly through
Wholly-Owned Subsidiaries, 100% of the issued and outstanding voting stock of
AmerUs Life ordinarily entitled to vote for the election of directors, or any
other class of stock of AmerUs Life of which the Company owns 50% or less shall
become entitled to elect a majority of AmerUs Life's board of directors; (ii)
failure of Group at any time to own a majority of the voting shares of the
Company as determined pursuant to Section 521A.14 of the Iowa Code other than as
a result of a transaction or series of transactions effecting the
demutualization of American Mutual Holding Company; or (iii) during any period
of 25 consecutive calendar months, individuals who at the beginning of such
period constituted the Board of Directors of the Company (together with any new
directors whose election by such Board of Directors or whose nomination for
election by the stockholders or members, as the case may be, of the Company was
approved by a vote of a majority of the directors then still in office who were
either directors at the beginning of such period or whose election or nomination
for election was previously so approved) cease for any reason to constitute a
majority of such Board of Directors then in office;
"Closing Date" means February 16, 1999.
"Code" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.
"Commitment" means, for each Lender, the commitment of such Lender to
make Loans pursuant hereto not in the aggregate exceeding the amount set forth
opposite such Lender's name on the signature page hereto.
"Common Stock" means the Company's Class A common stock, no par value
per share.
"Company" has the meaning set forth in the introduction hereto.
"Conversion Date" has the meaning set forth in Section 2.02(b).
"Current Payment Rate" means a rate of interest, determined on the
basis of a year of 360 days, equal to $0.40 divided by the weighted average cost
of Shares of Common Stock purchased by ▇▇▇▇▇ pursuant to the Authorizations.
"Dollars" and the sign $ each means lawful currency of the United
States of America.
3
11
"Early Payment Fee" has the meaning set forth in Section 2.05(a).
"Eligible Assignee" shall mean (i) a commercial bank organized under
the laws of the United States of America, or any State thereof, and having total
assets in excess of $10,000,000,000; or (ii) a commercial bank which is
organized under the laws of any other country, and which has total assets in
excess of $10,000,000,000, provided that such bank is acting through a branch or
agency located in the United States of America.
"Existing Credit Agreement" means that certain Credit Agreement dated
as of October 23, 1997 by and among the Company, as borrower, the financial
institutions parties thereto in their capacities as lenders thereunder, The
Chase Manhattan Bank, as administrative agent, as in effect on the date hereof
(giving effect to the amendments and consents dated as of May 30, 1997, May 20,
1998, June 22, 1998, October 2, 1998 and December 4, 1998 but without giving
effect to any future amendments, supplements, modifications or waivers of the
terms thereof unless consented to in writing by the Required Lenders and without
giving effect to any future termination thereof).
"First Chicago" means The First National Bank of Chicago, in its
individual capacity, and its successors.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Group" shall mean AmerUs Group Co., an Iowa corporation.
"Guaranty" means the provisions of Article VII hereof and the rights
and obligations of the Company thereunder.
"Guaranteed Debt" has the meaning set forth in Section 7.01.
"Incremental Loan" means, with respect to a Borrower, the Loans to such
Borrower described in the second sentence of Section 2.01(a) in an amount not in
excess of such Borrower's Shortfall Amount, and "Incremental Loans" means all
such Loans collectively.
"Indebtedness" of any Person shall mean (a) all indebtedness of such
Person for borrowed money, (b) the deferred purchase price of assets or services
which in accordance with GAAP would be shown on the liability side of the
balance sheet of such Person, (c) the face amount of all letters of credit
issued for the account of such Person and, without duplication, all drafts drawn
thereunder, (d) all Indebtedness of a second Person secured by any Lien on any
property owned by such first Person, whether or not such Indebtedness has been
assumed, (e) all Capitalized Lease Obligations of such Person, (f) all
obligations of such Person under Interest Rate Protection Agreements and (g) all
Contingent Obligations of such Person with respect to any of the foregoing;
provided, that
4
12
Indebtedness shall not include (w) obligations of the Company or any of its
Subsidiaries described in clauses (x) or (y) of the definition of "Subsidiary",
(x) trade payables (including payables under insurance contracts and reinsurance
payables) and accrued expenses, in each case arising in the ordinary course of
business and (y) obligations with respect to Policies. For purposes hereof, the
terms "GAAP", "Capitalized Lease Obligations", "Interest Rate Protection
Agreements", "Contingent Obligations", and "Policies" shall have the meanings
ascribed to them by the Ongoing Credit Agreement.
"Initial Loans" means Loans made on the Closing Date in the aggregate
amount of $4,499,750 to fund the purchase of 219,500 ACES from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ &
Co., Incorporated.
"Interest Payment Date" means the Conversion Date and each of the dates
set forth on Schedule 1.01 attached hereto following the Conversion Date.
"Interest Rate" means the rate of interest applicable to the Loans on
and after the Conversion Date. Such rate shall be the fixed rate of interest
agreed upon by the Company and the Lenders pursuant to the first sentence of
Section 2.02(b) unless no such rate is agreed upon, in which case the Interest
Rate shall be the floating rate of interest set forth in the third sentence of
Section 2.02(b).
"Lenders" means the lending institutions listed on the signature pages
to this Agreement and their respective successors and assigns.
"Lending Installation" means with respect to a Lender or the Agent, any
office, branch, subsidiary or affiliate of such Lender or the Agent.
"Letter of Direction" means a letter of direction to the Agent in the
form of Exhibit B hereto executed by a Borrower.
"Lien" has the meaning ascribed to it by the Ongoing Credit Agreement.
"Loan" means the sum of the amounts advanced to a Borrower by the
Lenders pursuant to Section 2.01 and "Loans" means all such Loans collectively.
"Loan Documents" means this Agreement, each Note, each Letter of
Direction, each Authorization, and any and all other documents or agreements
executed in connection with this Agreement and contemplated hereby or thereby
and executed by the Company or any Borrower in favor of the Agent or any Lender,
as the same may be amended, supplemented, restated or otherwise modified from
time to time and in effect.
"Margin Stock" has the meaning ascribed to it by Regulation U.
5
13
"Material Adverse Effect" shall mean a material adverse effect on the
business, property, assets, liabilities, condition (financial or otherwise) or
prospects of the Company or of the Company and its Subsidiaries taken as a
whole.
"Material Subsidiary" means a direct or indirect Subsidiary of the
Company which meets any of the following conditions: (i) the Company's and its
other Subsidiaries' investments in and advances to the Subsidiary exceed 10
percent of the total assets of the Company and its Subsidiaries consolidated as
of the end of the Company's most recently completed fiscal year; (ii) the
Company's and its other Subsidiaries' proportionate share of the total assets
(after intercompany eliminations) of the Subsidiary exceeds 10 percent of the
total assets of the Company and its Subsidiaries consolidated as of the end of
the Company's most recently completed fiscal year; or (iii) the Company's and
its other Subsidiaries' equity in the income from continuing operations of the
Subsidiary exceeds 10 percent of such income of the Company and its Subsidiaries
consolidated for the Company's most recently completed fiscal year.
"Maturity Date" means (a) March 5, 2004 if the Conversion Date is on or
prior to June 6, 1999, (b) June 7, 2004 if the Conversion Date is between June
7, 1999 and September 7, 1999, inclusive, and (c) September 8, 2004 if the
Conversion Date is after September 7, 1999.
"Note" means a master promissory note in the form of Exhibit A hereto
executed by a Borrower in an original principal amount equal to such Borrower's
Borrower Amount, and "Notes" means, collectively, all such promissory notes, in
each case as the same may be amended, supplemented, restated or otherwise
modified from time to time and in effect.
"Notice of Assignment" has the meaning set forth in Section 10.03(b).
"Notice of Borrowing" means a notice of borrowing in the form of
Exhibit D-1 or D-2 hereto.
"Obligations" means all unpaid principal of and accrued and unpaid
interest on the Notes, all accrued and unpaid fees and Early Payment Fees and
all expenses, reimbursements, indemnities and other obligations of the Company
or any Borrower to the Lenders or any Lender, the Agent or any indemnified party
hereunder or under any Loan Document if such expense, reimbursement, indemnity
or obligation arises under or pursuant to such Loan Documents.
"Ongoing Credit Agreement" means that certain Credit Agreement dated as
of October 23, 1997 by and among the Company, as borrower, the financial
institutions parties thereto in their capacities as lenders thereunder, The
Chase Manhattan Bank, as administrative agent, as in effect on the date hereof
(giving effect to the amendments and consents dated as of May 30, 1997, May 20,
1998, June 22, 1998, October 2, 1998 and December 4, 1998), as from time to time
amended or restated.
"Option Amount" means the sum of the Borrower Option Amount for all
Borrowers.
6
14
"Option Loans" means Loans (other than Incremental Loans) made on the
Conversion Date, the proceeds of which are utilized to fund the exercise of
options to purchase Common Stock.
"Participants" has the meaning provided in Section 10.02(a) hereof.
"Person" means any individual, partnership, joint venture, firm,
corporation, association, limited liability company, trust or other enterprise
or any government or political subdivision or any agency, department or
instrumentality thereof.
"Program Event of Default" has the meaning set forth in Section 6.01.
"Pro-rata" means when used with respect to a Lender, and any described
aggregate or total amount, an amount equal to said Lender's pro-rata share or
portion based on its percentage of the aggregate outstanding principal amount of
outstanding Notes, or, if no such principal amount is outstanding, based on its
percentage of the Aggregate Commitment.
"Purchaser" has the meaning set forth in Section 10.03(a).
"Regulation T" means Regulation T of the Board of Governors of the
Federal Reserve System as from time to time in effect and shall include any
successor or other regulation or official interpretation of such Board of
Governors relating to the extension of credit by securities brokers and dealers
for the purpose of purchasing or carrying margin stocks.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor or other
regulation or official interpretation of said Board of Governors relating to the
extension of credit by banks or other Persons for the purpose of purchasing or
carrying margin stocks.
"Regulation X" means Regulation X of the Board of Governors of the
Federal Reserve System as from time to time in effect and shall include any
successor or other regulation or official interpretation of said Board of
Governors relating to the extension of credit by the specified lenders for the
purpose of purchasing or carrying margin stocks.
"Reimbursement Agreement" means an agreement entered into between the
Company and a Borrower in connection with his/her Loans relating to his/her
obligation to reimburse the Company for amounts paid to the Lenders in respect
of such Borrower pursuant to the Guaranty, as from time to time amended in the
sole discretion of the Company.
"Reimbursement Obligations" means, with respect to any Borrower, all
obligations of such Borrower to the Company which now exist or may arise out of
or in connection with the Guaranty or the performance by the Company of its
obligations thereunder, including all such obligations under his/her
Reimbursement Agreement.
7
15
"Required Lenders" means Lenders in the aggregate having at least
66-2/3% of the then aggregate unpaid principal amount of all Loans or, if no
such principal amount is then outstanding, Lenders in the aggregate holding at
least 66-2/3% of the Aggregate Commitment.
"▇▇▇▇▇" means ▇▇▇▇▇ & Co., which has been selected by the Company in
its sole discretion as a broker to facilitate the orderly purchase of shares of
Common Stock and ACES under the Stock Purchase Program.
"Shortfall Amount" means, with respect to any Borrower, the amount of
interest which has accrued on such Borrower's Loans up to but excluding the
Conversion Date less the amount of all payments made in respect of such accrued
interest on or prior to the Business Day next following the Subscription Date.
"Stock Purchase Program" means the AmerUs Life Holdings, Inc. Executive
Stock Purchase Plan adopted by the Board of Directors of the Company on November
13, 1998, entitling certain managers and executives of the Company and its
Subsidiaries to purchase Common Stock and ACES of the Company, as such Stock
Purchase Program may be amended, supplemented, restated or otherwise modified
from time to time in the sole discretion of the Company.
"Subscription Date" has the meaning set forth in Section 2.02(b).
"Subsidiary" of any Person shall mean and include (a) any corporation
more than 50% of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such Person directly or
indirectly through Subsidiaries and (b) any partnership, association, joint
venture or other entity in which such Person directly or indirectly through
Subsidiaries has more than a 50% equity or voting interest at the time. Unless
otherwise expressly provided, all references herein to "Subsidiary" shall mean a
Subsidiary of the Company; provided that, notwithstanding the foregoing
provisions of this definition, any grantor trust or limited liability company
established by the Company and/or its Subsidiaries in order to effectuate the
lease/leaseback transaction with Linzer Elektrizitats-, Fernwarme- und
Verkehrsbetriebe Aktiengesellschaft ("ESG") with respect to a cogeneration
facility in Linz, Austria as described in the summary of terms and structure
delivered to the Administrative Agent and the Banks prior to the Fourth
Amendment Effective Date (all as defined in the Existing Credit Agreement), and
any trust or limited liability company formed by the Company and/or its
Subsidiaries after the Fourth Amendment Effective Date to effectuate
transactions with ESG or any other Person in which the Indebtedness of the
Company and its Subsidiaries incurred in connection therewith is comprised
solely of (x) obligations which are non-recourse to the Company or any of its
Subsidiaries and (y) other obligations which are or will be 100% defeased by
U.S. Government obligations (each such
8
16
transaction, including the lease/leaseback with ESG, a "Permitted Transaction"),
shall not constitute Subsidiaries for purposes of this Agreement.
"Transferee" has the meaning set forth in Section 10.04.
"Unmatured Default" means an event which but for the lapse of time or
the giving of notice, or both, would constitute a Program Event of Default.
"Wholly-Owned Subsidiary" of any Person shall mean any Subsidiary of
such Person to the extent all of the capital stock or other ownership interests
in such Subsidiary, other than directors' or nominees' qualifying shares, is
owned directly or indirectly by such Person.
The foregoing definitions shall be equally applicable to both the
singular and plural forms of the defined terms. The words "herein," "hereof" and
words of similar import as used in this Agreement shall refer to this Agreement
as a whole and not to any particular provision in this Agreement. References to
"Articles," "Sections," "subsections," "paragraphs," "Exhibits", "clauses" and
"Schedules" in this Agreement shall refer to Sections, subsections, paragraphs,
Exhibits, clauses and Schedules of this Agreement unless otherwise expressly
provided; references to Persons include their respective permitted successors
and assigns or, in the case of governmental Persons, Persons succeeding to the
relevant functions of such persons. Any term which is stated to be used herein
with the same meaning as set forth in the Existing Credit Agreement or Ongoing
Credit Agreement, as applicable, shall be deemed to incorporate herein any other
definitions from the Existing Credit Agreement or Ongoing Credit Agreement, as
applicable, which comprise part of the definition of such term.
ARTICLE II
AMOUNTS AND TERMS OF THE LOANS
2.01 The Loans.
(a) Each Lender severally (and not jointly) agrees, on the terms and
conditions set forth in this Agreement, to make Loans from time to time on and
after the Closing Date to and including the Conversion Date to individual
Program Participants (such Program Participants who request and obtain a Loan
hereunder are referred to as a "Borrower" individually and as the "Borrowers"
collectively), severally and not jointly, in amounts not to exceed in the
aggregate the amount of its respective Commitment; provided that no Loans (other
than Option Loans and Incremental Loans) may be made after the Subscription Date
and Option Loans shall be made only on the Conversion Date. Each Lender also
severally (and not jointly) agrees, on the terms and conditions set forth in
this Agreement, to make a Loan to each Borrower on the Conversion Date in an
amount not in excess of such Lender's Pro-rata share of the Shortfall Amount of
such Borrower; provided, however, that the aggregate amount of all Loans (other
than Incremental Loans) shall not exceed $25,000,000 and
9
17
the aggregate amount of all Incremental Loans shall not exceed $2,500,000. Each
of the Borrowers and the Borrower Amount of such Borrower shall be identified in
a writing separately delivered by the Company to the Agent at least one Business
Day prior to the Closing Date, which writing shall specify that portion, if any,
of such Borrower Amount which is for the purpose of funding the exercise of
options to acquire Common Stock. Such maximum aggregate principal amount for any
Borrower may be reduced from time to time by the Company by written notice of
the amount of such reduction from the Company to the Agent delivered on or prior
to the Subscription Date. No amount of the Loans which are repaid or prepaid by
the Borrowers may be reborrowed hereunder.
(b) Except as the Company and the Lenders may otherwise agree, all
Loans shall be made in accordance herewith and with the terms of the Notes in up
to eight draws on or prior to the Subscription Date and two draws (one in
respect of Option Loans and one in respect of Incremental Loans) on the
Conversion Date. No Lender shall be obligated to make a Loan to a Borrower
unless the Borrower Amount of such Borrower is equal to or greater than
$100,000. The Loans to a Borrower hereunder shall consist of Loans made to such
Borrower from the several Lenders on a Pro-rata basis. The aggregate Loans made
by the Lenders on any borrowing date shall be allocated among the Borrowers
ratably relative to (i) the Borrower Base Amount of each Borrower in the case of
Loans made on or prior to the Subscription Date, (ii) the Borrower Option Amount
of each Borrower in the case of the Option Loans made on the Conversion Date and
(iii) the Shortfall Amount of each Borrower in the case of the Incremental Loans
made on the Conversion Date.
2.02 Notes.
(a) The Loans made to each Borrower, and such Borrower's obligation to
repay such Loans, shall be evidenced by a single Note issued by such Borrower to
the Agent (for the benefit of all of the Lenders sharing in the Loans to such
Borrower), which shall provide, among other things, that (i) such Note shall
mature, and the outstanding principal amount thereof and the unpaid accrued
interest thereon shall be due and payable, on the Maturity Date, (ii) such
Borrower shall pay interest on the unpaid principal amount of such Loans made to
such Borrower at the rates as provided in the Note from the date of such Loans
until such principal amount is paid in full, payable to the Agent, for the
benefit of the Lenders, in arrears on each Interest Payment Date, (iii) such
Note shall be prepayable at the option of the Borrower only as and to the extent
provided in the Note and (iv) any such prepayments shall be subject to the
payment of an Early Payment Fee and related fees as set forth in the Note. All
interest payments and prepayments in respect of any Loan shall be applied by the
Agent among the Lenders on a Pro-rata basis (based on each Lender's Pro-rata
share of the outstanding principal amount thereof).
(b) Promptly after the earlier to occur of (a) the date designated as
the "Subscription Date" by the Company in a writing to the Agent delivered on or
prior to such designated date or (b) September 30, 1999 (such earlier date
hereinafter being referred to as the "Subscription Date"), the Lenders and the
Company shall confer and in good faith seek to agree within three Business Days
after the Subscription Date upon the fixed rate of interest at which the Notes
shall accrue interest on
10
18
and after the Conversion Date (which rate shall be the rate reasonably
determined by First Chicago to be the simple interest rate which is
approximately equivalent to the market yield to the Maturity Date, as agreed to
by the Company and the Lenders), the Current Payment Rate and the rates and
dates to be inserted into Schedule 2.05(A) (the "2.05(A) Information"). Subject
to the following sentence, the date designated as the "Conversion Date" by the
Agent, which date shall be no more than three Business Days after the date on
which such fixed interest rate, the Current Payment Rate and the 2.05(A)
Information are agreed upon, is hereinafter referred to as the "Conversion
Date". In the event that the Lenders and the Company do not reach agreement on
such fixed interest rate, the Current Payment Rate and the 2.05(A) Information
within three Business Days after the Subscription Date, then from and after the
fourth Business Day after the Subscription Date the rate of interest applicable
to the Notes shall be a floating rate of interest equal to the Corporate Base
Rate (as defined in the Note) per annum and such fourth Business Day shall be
the "Conversion Date". Upon the determination of the Conversion Date, the
Interest Rate and, if applicable, the Current Payment Rate and the 2.05(A)
Information pursuant to this Section, the Agent shall promptly give notice of
same to the Borrowers.
(c) Upon the occurrence and during the continuance of any Program Event
of Default, the Agent may (and at the request of any Lender, the Agent shall)
request that the Borrowers execute and deliver amended and restated Notes for
each Lender in replacement of the existing master Notes.
2.03 Disbursement of Funds. Pursuant to the Letters of Direction of the
Borrowers, (a) the proceeds of all Loans (other than Initial Loans, Option Loans
and Incremental Loans) will be disbursed directly to ▇▇▇▇▇ & Co. for the account
of the applicable Borrower, (b) the proceeds of the Initial Loans shall be
disbursed directly to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co., Incorporated for the benefit of the
Borrowers, (c) the proceeds of all Option Loans will be disbursed directly to
the Borrower Account of the applicable Borrower and then further paid from such
account to the Company for the account of the Borrower and (d) the proceeds of
all Incremental Loans will be disbursed directly to the Lenders for the account
of the Borrowers in payment of the Shortfall Amount of the Borrowers.
2.04 Distribution of Payments. The Agent agrees to make payments of
amounts received for the account of any Lender in accordance with Section 3 of
the applicable Borrower's Note.
2.05 Funding Indemnity.
(a) The Early Payment Fee payable under each Note to First Chicago in
respect of any of the principal amount thereof paid during the period from the
Conversion Date to (but not including) the Maturity Date, calculated with
respect to the principal amount of such Note to be prepaid, shall be an amount
equal to (i) the sum of (A) an amount equal to the difference, if any, between
the Present Value of the remaining fixed rate payments under the Reference Swap
(exclusive of accruals to but excluding the Break Date) minus the Present Value
of the fixed rate payments under the Redeployment Swap; provided, however, that
if the value of (i)(A) is negative, such amount shall not exceed the amount of
deferred interest (i.e. the excess of the amount of interest which has
11
19
accrued at the Interest Rate under such Note over the amount of interest which
has accrued at the Current Payment Rate under such Note) owed on such Note plus
(B) if the Break Date is not an Interest Payment Date, an amount equal to the
positive difference, if any, between the Present Value of the Current Floating
Rate payment under the Redeployment Swap minus the Present Value of the Current
Floating Rate payment under the Reference Swap (exclusive of accruals to but
excluding the Break Date), or (ii) if the Zero Coupon Rate cannot be determined,
the amount of all Losses of First Chicago MINUS, in the case of either clause
(i) or clause (ii), the difference between interest on the principal amount of
the Note accrued and paid during the period from the Conversion Date to (but not
including) the Maturity Date accrued at the Interest Rate for the period from
and including the Conversion Date such principal amount was outstanding and
interest on such amount calculated at the applicable Current Payment Rate for
such period (the amount calculated by reference to clause (i) or (ii) above
which relates to any Note or prepayment thereof being referred to, relative to
such Note or prepayment, as the "Early Payment Fee"). An example of the
computation of the Early Payment Fee is attached as Schedule 2.05(C) hereto. In
the event of a conflict between the method of computing the Early Payment Fee as
described above and as described on such example, the methodology set forth on
such example (which is incorporated herein by reference) shall control.
Notwithstanding the foregoing, no Early Payment Fee shall be payable in respect
of any prepayment of any Loan prior to the Conversion Date or, if and only if a
fixed rate of interest has not become applicable to the Notes pursuant to
Section 2.02(b), any prepayment of any Loan on or after the Conversion Date.
(b) For purposes of this Section 2.05, the following terms shall have
the following meanings:
"Break Date" means, with respect to any Break Event, the date
on which such Break Event occurs.
"Break Event" means any voluntary or mandatory (whether as a
result of acceleration or otherwise) repayment of all or any portion of
any Loan during the period from the Conversion Date to (but not
including) the Maturity Date.
"Current Floating Rate" means, with respect to the Reference
Swap, LIBOR determined two London banking days prior to the Interest
Payment Date next preceding the Break Date, and with respect to the
Redeployment Swap, LIBOR referred to in the definition of Redeployment
Swap.
"LIBOR" means the London interbank offered rate appearing as
of 11:00 a.m. (London time) on Telerate Page 3750.
"Loss" means, with respect to First Chicago, an amount equal
to the total amount required by First Chicago, as determined in good
faith by First Chicago as of the Break Date, to compensate it for any
losses, costs and expenses that it may incur as a result of the
12
20
occurrence of the Break Event, including, without limitation, any costs
of maintaining, terminating, hedging or deploying any fixed rate or
floating rate funding arrangements or commitments and/or any
transactions employed to hedge differences arising between the Interest
Rate of the Loans and the floating rate cost of funds, as determined
with reference to market interest rates or prices available or existing
at or about the time of such Break Event.
"Present Value" means, in respect of any amount, the value of
the amount on the Break Date after discounting such amount to present
value from its respective due date at the Zero Coupon Rate in the case
of fixed rate payments or at the Current Floating Rate of the
Redeployment Swap in the case of floating rate payments.
"Redeployment Swap" means, with respect to a Break Event, an
interest rate swap entered into at a rate per annum equal to the fixed
rate a swap dealer would bid to enter into as a fixed rate payor,
determined by First Chicago in good faith (as of 2:00 p.m., Chicago
time, two days prior to the Break Date) on the basis of the quotation
First Chicago would provide as a fixed rate payor to another swap
dealer (or if First Chicago declines to provide such quotation for
whatever reason, then on the basis of what a leading interest rate swap
dealer selected by First Chicago in good faith is willing to bid as a
fixed rate payor to enter into the Redeployment Swap as quoted to First
Chicago on such date of determination) and having the same terms as the
Reference Swap, except that it (a) commences on the Break Date, (b) has
equal fixed payments and (c) has an initial floating rate payment
calculated at LIBOR plus .80% per annum determined on the Break Date
for U.S. Dollar deposits having a maturity equal to the period from
such Break Date to the next succeeding Interest Payment Date, or, if
there exists no LIBOR rate for U.S. Dollar deposits of such maturity
maturing immediately before or immediately after such maturity,
whichever is higher. If the Redeployment Swap has a notional amount
less than $5,000,000, then the Redeployment Swap will be deemed to have
a notional amount of $5,000,000 for the sole purpose of obtaining any
such quotation.
"Reference Swap" means an interest rate swap (a) deemed to
have been entered into no later than two London banking days prior to
the Conversion Date (and confirmed in writing to the Company) and
commencing on the Conversion Date, (b) having a notional amount at any
time equal to that part of the aggregate principal amount of the Loans
outstanding on the Conversion Date and which has become subject to the
Break Event, (c) maturing on the Maturity Date and (d) obligating the
floating rate payor to make payments on each Interest Payment Date
after the Conversion Date at LIBOR determined two London banking days
before the next preceding Interest Payment Date for three-month U.S.
Dollar deposits plus .80% per annum, calculated for actual days elapsed
on a 360-day year basis, in exchange for receiving fixed rate payments
from a fixed rate payor on such dates in such amounts as set forth on
Schedule 2.05(A) (each such rate, the "Reference Fixed Rate", which the
parties agree will be the swap market rate two London banking days
before the Interest
13
21
Rate is set, as reasonably determined by First Chicago), calculated for
actual days elapsed on a 360-day year basis.
"Telerate Page 3750" means the display designated as "Page
3750" on the Telerate Service (or such other page as may replace Page
3750 on that service or such other service as may be nominated by the
British Bankers' Association as the information vendor for the purpose
of displaying British Bankers' Association Interest Settlement Rates
for U.S. Dollar deposits).
"Zero Coupon Rate" means the rate of interest charged for a
future single payment assuming no interest payments prior to the
payment date. Each fixed payment will be discounted using the Zero
Coupon Methodology. The Zero Coupon Rate for each fixed payment date
will be determined using the appropriate LIBOR rate and the rates
implied by the "90 Day Euro$" futures contracts at the Chicago
Mercantile Exchange (IMM) at IMM Settlement (2:00 p.m. Chicago time)
two days prior to the Break Date as appropriate to the respective
payment dates.
"Zero Coupon Methodology" means the discounting methodology
set forth on Schedule 2.05(B) hereto.
(c) If for any reason any Early Payment Fee is not recoverable in full
from a Borrower or the Company pursuant to the terms of the applicable Note or
Article VII, the Company agrees, as its independent primary obligation, to pay
such amount to the applicable Lender (without duplication of amounts otherwise
paid) upon demand as additional consideration for entering into this Agreement
and funding the Loans.
(d) In the event that any Option Loan or Incremental Loan referenced in
a Notice of Borrowing delivered by the Company is not made on the Conversion
Date for any reason (other than a breach by a Lender of its obligations
hereunder), the Company will indemnify each Lender upon demand for any loss or
cost incurred by it resulting therefrom, including, without limitation, any loss
or cost incurred in liquidating or employing deposits acquired to fund or
maintain its Option Loans or in terminating or unwinding any interest rate
exchange or similar arrangement entered into by such Lender in connection with
such Loans. Such loss or cost will be calculated consistent with Section
2.05(a).
ARTICLE III
CONDITIONS PRECEDENT
3.01 Conditions to Obligations to Make Initial Loans. The obligations
of the Lenders to make the initial Loans to the Borrowers shall be subject to
the fulfillment of each of the following conditions precedent and receipt by the
Agent, with sufficient copies for each Lender, of each of the
14
22
following (each such document to be in form and substance reasonably
satisfactory to the Agent and its counsel):
(a) Agreement. An executed original of this Agreement, which shall be
in full force and effect, together with all schedules, exhibits, certificates,
instruments, opinions, documents and financial statements required to be
delivered pursuant hereto.
(b) Notes. A Note duly executed by each Borrower evidencing the Loan to
such Borrower, dated the Closing Date, and payable to the order of the Lenders.
(c) Borrower Information. Each Borrower shall have delivered to the
Agent a personal financial statement in form satisfactory to the Agent.
(d) Legal Opinion. Written opinions of internal and outside counsel to
the Company, in form and substance satisfactory to the Agent.
(e) Agent Letter of Direction. A Letter of Direction executed by each
Borrower (and, if the applicable Borrower Account is a joint account, executed
by each joint account holder).
(f) ▇▇▇▇▇ Authorization. An Authorization executed by each Borrower
(and, if the applicable Borrower Account is a joint account, executed by each
joint account holder).
(g) ▇▇▇▇▇ Documents. All documents that ▇▇▇▇▇ & Co. may request in
connection with the Stock Purchase Program and the Loan Documents and the
transactions to be consummated in connection therewith.
(h) Charter Documents. Copies of the certificate of incorporation of
the Company, together with all amendments thereto, both certified by the
appropriate governmental officer in its jurisdiction of incorporation, together
with a certificate of existence issued by the Secretary of State of Iowa and
such other jurisdictions as shall be requested by the Agent.
(i) Secretary's Certificate. A certificate, executed by the Secretary
or Assistant Secretary of the Company, which shall (i) identify by name and
title and bear the signature of the officers of the Company authorized to sign
the Loan Documents upon which certificate the Agent and the Lenders shall be
entitled to rely until informed of any change in writing by the Company and (ii)
attach and certify copies of the Company's bylaws and its Board of Directors'
resolutions authorizing the execution, delivery and performance of the Loan
Documents to which the Company is a party.
(j) Officer's Certificate. A certificate, dated the Closing Date,
signed by the treasurer of the Company, stating that no Default or Event of
Default has occurred
15
23
and is continuing under the Existing Credit Agreement, that no Program Event of
Default or Unmatured Default has occurred and is continuing and that the
representations and warranties contained in Article IV are true and correct on
and as of the Closing Date.
(k) List of Borrowers and Loan Amounts. One Business Day prior to the
Closing Date, a list identifying each anticipated Borrower and the Borrower
Amount of such Borrower.
(l) Account Applications. The Agent shall have received on or prior to
the Closing Date a completed account application and such other supporting
documentation from each Borrower sufficient to open the Borrower Account of each
Borrower.
(m) Other Documents. Such other documents as the Agent or its counsel
may reasonably request.
Subject to the following sentence, if each of the conditions precedent
set forth in this Section 3.01 has not been fully satisfied or waived on the
Closing Date, then this Agreement and the other Loan Documents shall
automatically terminate and be of no further force and effect without any
further action by any party hereto or thereto, provided that all indemnification
provisions set forth in the Loan Documents shall survive such termination. If
all of the above conditions are satisfied on or before the Closing Date, except
with respect to one or more Borrowers (each a "Deficient Borrower") any
condition set forth in Section 3.01(b), (c), (e), (f), (g) or (l) is not
satisfied, the Lenders shall not be obligated to make Loans to the Deficient
Borrowers but shall remain obligated to make Loans to the other Borrowers.
Solely for purposes of Section 3.01(b), (c), (e), (f), (g) and (l) only,
required delivery shall be deemed to have been made to the Agent if arrangements
for the delivery thereof have been made which are satisfactory to the Agent.
3.02 Conditions to All Loans. The Lenders shall not be required to make
any Loan unless on the applicable borrowing date:
(a) There exists no Program Event of Default or Unmatured Default and
none would result from the Loans requested for such borrowing date.
(b) The representations and warranties contained in Article IV are true
and correct as of such borrowing date except to the extent any such
representation or warranty is stated to relate solely to an earlier date, in
which case such representation or warranty shall be true and correct on and as
of such earlier date.
Each Borrowing Notice with respect to each such Loan (even though such notice is
delivered by ▇▇▇▇▇ & Co. pursuant to the Authorization) shall constitute a
representation and warranty by the Company that the conditions contained in
Sections 3.02(a) and (b) have been satisfied.
3.03 Additional Conditions to Incremental Loans. The Lenders shall not
be required to make an Incremental Loan to any Borrower unless on or prior to
the Conversion Date the applicable
16
24
Borrower has executed and delivered to the Agent an amendment to the Note, in
form reasonably satisfactory to the Agent, reflecting an increase in the
principal amount of the Note equal to the amount of the Incremental Loan.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
4.01 Representations and Warranties of the Company. The Company
represents and warrants to the Agent and to each Lender as follows:
(a) Corporate Status. The Company and each of its Subsidiaries (i) is a
duly organized and validly existing corporation or business trust or other
entity in good standing under the laws of the jurisdiction of its organization
and has the corporate or other organizational power and authority to own its
property and assets and to transact the business in which it is engaged and
presently proposes to engage, except, to the extent the foregoing is applicable
to any Subsidiary, where such Subsidiary's failure to have such status or power
could not reasonably be expected to have a Material Adverse Effect and (ii) has
been duly qualified and is authorized to do business and is in good standing in
all jurisdictions where it is required to be so qualified and where the failure
to be so qualified could reasonably be expected to have a Material Adverse
Effect.
(b) Corporate Power and Authority. The Company has the corporate power
and authority to execute, deliver and carry out the terms and provisions of the
Loan Documents to which it is a party and has taken all necessary corporate
action to authorize the execution, delivery and performance of the Loan
Documents to which it is a party. The Company has duly executed and delivered
each Loan Document to which it is a party and each such Loan Document
constitutes the legal, valid and binding, obligation of the Company enforceable
against the Company in accordance with its terms, except to the extent that
enforceability thereof may be limited by applicable bankruptcy, insolvency,
moratorium or similar laws affecting creditors' rights generally and general
principles of equity regardless of whether enforcement is sought in a proceeding
in equity or at law.
(c) No Contravention of Laws, Agreements or Organizational Documents.
Neither the execution, delivery and performance by the Company of the Loan
Documents to which it is a party nor compliance with the terms and provisions
thereof, nor the consummation of the transactions contemplated therein, (i) will
contravene any applicable provision of any law, statute, rule, regulation,
order, writ, injunction or decree of any court or governmental instrumentality,
(ii) will conflict or be inconsistent with or result in any breach of any of the
terms, covenants, conditions or provisions of, or constitute a default under, or
result in the creation or imposition of (or the obligation to create or impose)
any lien upon any of the property or assets of the Company or any of its
Subsidiaries pursuant to the terms of, any indenture, mortgage, deed of trust,
loan agreement, credit agreement (including without limitation the Existing
Credit Agreement) or any other material instrument to which the Company or any
of its Subsidiaries is a party or by which it or any of its property or assets
17
25
are bound or to which it may be subject or (iii) will violate any provision of
the Certificate of Incorporation or By-Laws of the Company or any of its
Subsidiaries.
(d) Litigation and Contingent Liabilities. There are no actions, suits
or proceedings pending or threatened in writing involving the Company or any of
its Subsidiaries (including, without limitation, with respect to this Agreement
or any documentation executed in connection herewith) (i) that have or could
reasonably be expected to have a Material Adverse Effect or (ii) that could
reasonably be expected to have a material adverse effect on the rights or
remedies of the Lenders or the Agent or on the ability of the Company to perform
its respective obligations to the Lenders, the Agent hereunder and under the
other Loan Documents to which it is, or will be, a party.
(e) Approvals. No order, consent, approval, license, authorization, or
validation of, or filing, recording or registration with, or exemption by, any
Governmental Authority (including without limitation the Iowa Insurance
Division) is required to authorize or is required in connection with (i) the
execution, delivery and performance of any Loan Document or (ii) the legality,
validity, binding effect or enforceability of any Loan Document.
(f) Financial Condition; Financial Statements. (a) The December 31,
1997 audited consolidated financial statements of the Company and its
Subsidiaries and the September 30, 1998 unaudited consolidated financial
statements of the Company and its Subsidiaries previously delivered by the
Company to the Lenders present fairly in all material respects at the dates of
said statements the financial position of the Company and its Subsidiaries, as
applicable, and the results of operations for the periods covered thereby. All
such financial statements have been prepared in accordance with GAAP (as such
term is defined in the Existing Credit Agreement), as applicable, consistently
applied except to the extent provided in the notes to said financial statements.
(g) Existing Credit Agreement. There exists no Default or Event of
Default (as defined in the Existing Credit Agreement) and (ii) all
representations and warranties contained therein are true and correct in all
material respects with the same effect as though such representations and
warranties had been made on the date hereof (it being understood and agreed that
any representation or warranty which by its terms is made as of a specified date
shall be required to be true and correct in all material respects only as of
such specified date).
(h) Copy to Borrowers. The Company has furnished a copy of this
Agreement to each Borrower.
(i) Adoption of the Stock Purchase Program. The Stock Purchase Program
has been duly adopted, and the Stock Purchase Program and the purchase of the
Common Stock and ACES pursuant thereto have been duly approved, by all requisite
corporate action on behalf of the Company, and the Common Stock and ACES, when
so purchased, shall have been duly issued in compliance with all applicable laws
and shall be fully paid and non-assessable.
18
26
(j) Borrower Event of Repayment. To the best knowledge of the Company,
no event has occurred and is continuing or would result from the making of the
Loans, that constitutes a Borrower Event of Repayment with respect to any
Borrower or would constitute a Borrower Event of Repayment with respect to any
Borrower but for the requirement that notice be given or time elapse or both.
(k) Regulation T, U and X. No part of the proceeds of any Loan will be
used in a manner which would violate, or result in a violation of, Regulation T,
Regulation U or Regulation X. Neither the making of any Loan hereunder, the
providing of the Guaranty by the Guarantors, the use of the proceeds thereof,
nor any other aspect of the transactions contemplated hereby will violate or be
inconsistent with the provisions of Regulation T, Regulation U or Regulation X.
No Margin Stock has been or will be pledged by any Borrower or by any other
Person to secure the Reimbursement Obligations of such Borrower. No
Reimbursement Obligations of any Borrower are or will be "indirectly secured"
(as defined in Regulation U) by any Margin Stock.
(l) True and Complete Disclosure. All factual information (taken as a
whole) heretofore or contemporaneously furnished by or on behalf of the Company
or any of its Subsidiaries to the Agent or any Lender (including, without
limitation, all information contained in the Loan Documents) for purposes of or
in connection with this Agreement or any transaction contemplated herein is true
and accurate in all material respects on the date as of which such information
is dated and not incomplete by omitting to state any material fact necessary to
make such information (taken as a whole) not misleading at such time in light of
the circumstances under which such information was provided.
ARTICLE V
COVENANTS OF THE COMPANY
5.01 Covenants. So long as any Note or any Obligation shall remain
unpaid (or any commitment which could give rise to any Obligations shall exist),
unless the Required Lenders shall otherwise consent in writing:
(a) Preservation of Corporate Existence, Etc. The Company shall (i)
preserve and maintain its corporate existence; and (ii) preserve and maintain,
and cause each Subsidiary to preserve and maintain, its corporate existence,
rights (charter and statutory), and franchises except where the failure to do so
could not reasonably be expected to have a Material Adverse Effect.
(b) Financial Reports and Other Information. The Company shall promptly
furnish to the Agent: (i) all financial and other information required to be
delivered by the Company by Section 6.01 of the Existing Credit Agreement not
later than the time such information is required to be delivered by such
Section; (ii) as soon as possible, and in any event within five Business Days
after the Company shall become aware of the occurrence of a Change of Control or
a Program Event of Default or an event which, with notice or lapse of time or
both, could constitute a Change of Control
19
27
or a Program Event of Default, a statement of the chief financial officer of the
Company setting forth details of such Change of Control or Program Event of
Default or event and the action which the Company proposes to take with respect
thereto; (iii) as soon as possible, and in any event within five Business Days
after an executive officer of the Company shall have actual knowledge of the
occurrence of a Borrower Event of Repayment under any Note, a statement of an
Authorized Officer of the Company setting forth the details of such Borrower
Event of Repayment; and (iv) such other information (including non-financial
information) relating to the Company, its Subsidiaries or any Borrower as the
Agent or any Lender may reasonably request.
(c) Subordinated Debt. If at any time hereafter the Company shall incur
any Indebtedness which is contractually subordinated in right of payment to the
obligations of the Company under the Existing Credit Agreement or any successor
agreement to the Existing Credit Agreement, the Company shall cause such
subordinated obligations to also be subordinated in right of payment to the
Obligations of the Company under this Agreement to the same extent as such
subordinated obligations are subordinated to the obligations of the Company
under the Existing Credit Agreement or any successor agreement thereto.
(d) Inspection. The Company shall permit, and cause each Subsidiary to
permit, the Agent, and its representatives and agents, to inspect any of the
properties, corporate books and financial records of the Company and its
Subsidiaries, to examine and make copies of the books of account and other
financial records of the Company and its Subsidiaries, and to discuss the
affairs, finances and accounts of the Company and its Subsidiaries with, and to
be advised as to the same by, their respective officers or directors, at such
reasonable times during normal business hours and intervals as the Agent may
reasonably designate.
(e) Liens. From and after the earliest date (the "Trigger Date") upon
which (i) the Ongoing Credit Agreement is terminated, (ii) First Chicago ceases
to be a party thereto or (iii) the Ongoing Credit Agreement or any extension of
credit thereunder is secured, the Company shall not, and shall not permit any
Subsidiary to, create any Lien upon any of its assets or properties except (i)
Liens permitted by the Ongoing Credit Agreement as in effect immediately prior
to the Trigger Date and (ii) other Liens (as defined in the Ongoing Credit
Agreement immediately prior to the Trigger Date) securing aggregate Indebtedness
not in excess of $25,000.000. In the event that at any time the Company's 6.95%
Senior Notes due June 15, 2005 become secured by any assets or property, or are
guarantied by any Person, then the Company shall cause the Obligations to be
equally and ratably secured by such assets or property and equally and ratably
guarantied by such Person pursuant to documentation satisfactory to the Required
Lenders.
(f) Security. The Company will not permit any Reimbursement Obligation
of any Borrower to be secured or "indirectly secured" (within the meaning of
Regulation U) by any Margin Stock.
20
28
(g) Use of Proceeds. The Company will apply the proceeds of the Option
Loans to each Borrower to payment of the stock option exercise price of the
Common Stock of the Company being acquired by such Borrower pursuant to the
Stock Purchase Program.
(h) Minimum Risk-Based Capital. The Company will not permit the
Risk-Based Capital for any Material Regulated Insurance Company to be less than
350%. For purposes of this Section 5.01(h), "Risk-Based Capital" and "Material
Regulated Insurance Company" shall have the meanings ascribed to them by the
Existing Credit Agreement.
ARTICLE VI
PROGRAM EVENTS OF DEFAULT; ACCELERATION
6.01 Program Events of Default. Each of the following events shall
constitute a "Program Event of Default":
(a) Any representation or warranty made by or on behalf of the Company
to the Lenders or the Agent under or in connection with this Agreement shall
prove to have been incorrect in any material respect when made;
(b) The Company shall fail to perform or observe any term, covenant or
agreement set forth in Section 5.01(b)(ii), (f), (g) or (h);
(c) The Company shall fail to perform or observe any term, covenant or
agreement set forth in Section 7.01 or 7.03 if the failure to perform or observe
such term, covenant or agreement set forth therein shall remain unremedied for
five (5) Business Days after written notice thereof shall have been given to the
Company by the Agent or any Lender;
(d) The Company shall fail to perform or observe any other term,
covenant or agreement contained in this Agreement (other than Section 5.01(h))
or any other Loan Document to which it is a party on its part to be performed or
observed if the failure to perform or observe such term, covenant or agreement
set forth therein shall remain unremedied for thirty (30) days after written
notice thereof shall have been given to the Company by the Agent or any Lender;
(e) (i) The Company or any of its Subsidiaries shall (A) default in any
payment with respect to Indebtedness (other than the Obligations) in excess of
$5,000,000 (or such greater amount, not to exceed $25,000,000, as may be
provided in the corresponding provision of the Ongoing Credit Agreement)
individually or in the aggregate, for the Company and its Subsidiaries, beyond
the period of grace, if any, provided in the instrument or agreement under which
such Indebtedness was created or (B) default in the observance or performance of
any agreement or condition relating to any such Indebtedness (or to Indebtedness
under the Ongoing Credit Agreement) contained in any instrument or agreement
evidencing, securing or relating thereto, or any other event shall occur or
condition
21
29
exist, the effect of which default or other event or condition is (x) to cause,
or (y) to permit the holder or holders of such Indebtedness (or a trustee or
agent on behalf of such holder or holders) to cause (determined without regard
to whether any notice of acceleration, or any lapse of time prior to the
effectiveness of any notice of acceleration, is required), any such Indebtedness
to become due prior to its stated maturity (provided that, in the case of (y),
no Program Event of Default shall occur unless such event or condition continues
without cure or waiver for twenty days after the Company has knowledge of such
event or condition); or (ii) any such Indebtedness of the Company or its
Subsidiaries shall be declared to be due and payable in accordance with the
terms of such Indebtedness or required to be prepaid, other than by a regularly
scheduled required prepayment or as a mandatory prepayment (unless such required
prepayment or mandatory prepayment results from a default thereunder or an event
of the type that constitutes an Event of Default under the Existing Credit
Agreement), prior to the stated maturity thereof;
(f) The Company or any of its Material Subsidiaries shall commence a
voluntary case concerning itself under Title 11 of the United States Code
entitled "Bankruptcy," as now or hereafter in effect, or any successor thereto
(the "Bankruptcy Code"); or an involuntary case is commenced against the Company
or any of its Material Subsidiaries and the petition is not controverted within
20 days, or is not dismissed within 60 days, after commencement of the case; or
a custodian (as defined in the Bankruptcy Code) is appointed for, or takes
charge of, all or substantially all of the property of the Company or any of its
Material Subsidiaries; or the Company or any of its Material Subsidiaries
commences (including by way of applying for or consenting to the appointment of,
or the taking of possession by, a rehabilitator, receiver, custodian, trustee,
conservator or liquidator (collectively, a "conservator") of itself or all or
any substantial portion of its property) any other proceeding under any
reorganization, arrangement, adjustment of debt, relief of debtors, dissolution,
insolvency, liquidation, rehabilitation, conservatorship or similar law of any
jurisdiction whether now or hereafter in effect relating to the Company or any
of its Material Subsidiaries; or any such proceeding is commenced against (i)
any Regulated Insurance Company (as defined in the Existing Credit Agreement)
which is engaged in the business of underwriting insurance and/or reinsurance in
the United States, or (ii) the Company or any of its Material Subsidiaries
(other than (x) any Regulated Insurance Company described in the immediately
preceding clause (i) or (y) any dissolution or liquidation proceeding commenced
against any Material Subsidiary which is a non-Regulated Insurance Company), and
in the case of either clause (i) or (ii) remains undismissed for a period of 60
days; or the Company or any of its Material Subsidiaries is adjudicated
insolvent or bankrupt; or any order of relief or other order approving any such
case or proceeding is entered; or (i) any Regulated Insurance Company which is
engaged in the business of underwriting insurance and/or reinsurance in the
United States suffers any appointment of any conservator or the like for it or
any substantial part of its property, or (ii) the Company or any of its Material
Subsidiaries (other than any Regulated Insurance Company described in the
immediately preceding clause (i)) suffers any appointment of any conservator or
the like for it or any substantial part of its property either of which
continues undischarged or unstayed for a period of 60 days; or the Company or
any of its Material Subsidiaries makes a general assignment for the benefit of
creditors; or any corporate action is taken by the Company or any of its
Material Subsidiaries for the purpose of effecting any of the foregoing;
22
30
(g) The Company shall default in the performance or observance of
Section 5.01(e) or (h) herein or Section 7.10 or 7.11 of the Existing Credit
Agreement;
(h) The Guaranty shall fail to remain in full force or effect or any
action shall be taken by the Company, any of its Subsidiaries or any
Governmental Authority to discontinue or to assert the invalidity or
unenforceability thereof, or the Company denies that it has any further
liability hereunder, or gives notice to such effect; or
(i) there shall occur a Change of Control.
provided, however, that no event described in Section 6.01(e) or (g) shall
constitute a Program Event of Default unless within five (5) Business Days after
the receipt of notice thereof from the Agent the Company fails to pledge
(pursuant to documentation reasonably satisfactory to the Agent) to the Agent,
for the benefit of the Lenders, as security for the Company's Obligations U.S.
government securities satisfactory to the Agent having a value at least equal to
one hundred and five percent (105%) of (1) the then outstanding principal amount
of all Notes plus (2) the aggregate amount of all interest which has accrued on
the Notes and is unpaid on such date plus (3) the amount of interest which would
accrue on such principal of the Notes from such date to the Maturity Date. So
long as no other Program Event of Default or Unmatured Default is pending,
collateral provided by the Company pursuant to the preceding sentence in respect
of a Program Event of Default under Section 6.01(e) shall be released upon the
waiver or cure of such Program Event of Default in accordance with the terms of
the documentation governing the applicable defaulted other Indebtedness.
6.02 Acceleration. If any Program Event of Default described in Section
6.01(f) occurs with respect to the Company, the Obligations shall become
immediately due and payable and all obligations of the Lenders to make Loans
shall immediately terminate without any election or action on the part of the
Agent or any Lender. If any other Program Event of Default occurs and is
continuing, the Agent, at the direction of the Required Lenders, may, by notice
to the Company and the Borrowers, declare the Notes, all interest thereon and
all Obligations to be forthwith due and payable, whereupon the Notes, all such
interest and all Obligations shall become and be forthwith due and payable,
without presentment, demand, protest, or further notice of any kind, or
terminate or suspend the obligations of the Lenders to make Loans, or both.
ARTICLE VII
GUARANTY
7.01 Guaranty of Payment. The Company hereby absolutely, irrevocably
and unconditionally guarantees prompt, full and complete payment when due,
whether at stated maturity, upon acceleration or otherwise, and at all times
thereafter, of (a) the principal of and interest on the
23
31
Loans made by the Lenders to the Borrowers, (b) all other fees (including Early
Payment Fees), reimbursements, indemnities and other obligations (including,
without limitation, reasonable out-of-pocket costs and expenses (including
reasonable attorneys' fees and disbursements) incurred in connection with any
enforcement of or collection under the Guaranty) of the Borrowers from time to
time owing to the Lenders or the Agent pursuant to the Notes and (c) all
obligations of the Borrower in respect of any Overdraft (as defined in the
Notes), the proceeds of which are used to pay principal, interest or other
amounts owing in respect of the Notes (collectively, the "Guaranteed Debt").
Notwithstanding the foregoing, the liability of the Company hereunder in respect
of the principal amount of Loans shall be limited to $25,000,000.
7.02 Acceptance of Guaranty; No Setoffs. The Company waives notice of
the acceptance of this Guaranty and of the extension or incurrence of the
Guaranteed Debt or any part thereof. The Company further waives all setoffs and
counterclaims and presentment, protest, notice, filing of claims with a court in
the event of receivership, bankruptcy or reorganization of any Borrower, demand
or action on delinquency in respect of the Guaranteed Debt or any part thereof,
including any right to require the Agent or the Lenders to ▇▇▇ any Borrower, any
other guarantor or any other person obligated with respect to the Guaranteed
Debt or any part thereof, or otherwise to enforce payment thereof against any
collateral securing the Guaranteed Debt or any part thereof.
7.03 Nature of Guaranty; Continuing, Absolute and Unconditional. The
Company hereby agrees that, to the fullest extent permitted by law, (a) its
obligations hereunder shall be continuing, absolute and unconditional under any
and all circumstances and not subject to any reduction, limitation, impairment,
termination, defense (other than indefeasible payment in full), setoff,
counterclaim or recoupment whatsoever (all of which are hereby expressly waived
by it to the fullest extent permitted by law), whether by reason of any claim of
any character whatsoever, including, without limitation, any claim of waiver,
release, surrender, alteration or compromise (other than, with respect to any
Loan, the contractual and voluntary permanent release by the Lenders of the
obligation of the applicable Borrower to make payment of such Loan) and (b) the
validity and enforceability of this Guaranty shall not be impaired or affected
by any of the following: (i) any extension, modification or renewal of, or
indulgence with respect to, or substitution for, the Guaranteed Debt or any part
thereof or any agreement relating thereto at any time; (ii) any failure or
omission to perfect or maintain any lien on, or preserve rights to, any security
or collateral or to enforce any right, power or remedy with respect to the
Guaranteed Debt or any part thereof or any agreement relating thereto, or any
collateral securing the Guaranteed Debt or any part thereof; (iii) any waiver of
any right, power or remedy or of any default with respect to the Guaranteed Debt
or any part thereof or any agreement relating thereto or with respect to any
collateral securing the Guaranteed Debt or any part thereof; (iv) any release,
surrender, compromise, settlement, waiver, subordination or modification, with
or without consideration, of any collateral securing the Guaranteed Debt or any
part thereof, any other guaranties with respect to the Guaranteed Debt or any
part thereof, or any other obligations of any person or entity with respect to
the Guaranteed Debt or any part thereof; (v) the enforceability or validity of
the Guaranteed Debt or any part thereof or the genuineness, enforceability or
validity of any agreement relating thereto or with respect to any collateral
securing the Guaranteed Debt or
24
32
any part thereof; (vi) the application of payments received from any source to
the payment of indebtedness other than the Guaranteed Debt, any part thereof or
amounts which are not covered by this Guaranty even though the Lenders might
lawfully have elected to apply such payments to any part or all of the
Guaranteed Debt or to amounts which are not covered by this Guaranty; (vii) the
insolvency, bankruptcy or any other change in the legal status of any Borrower;
(viii) any change in, or the imposition of, any law, decree, regulation or other
governmental act which does or might impair, delay or in any way affect the
validity, enforceability or the payment when due of the Guaranteed Debt; (ix)
the failure of any Borrower to take any action required in connection with the
performance of the Guaranteed Debt; (x) the existence of any claim, setoff or
other rights which the Company may have at any time against any Borrower or any
other guarantor in connection herewith or with any unrelated transaction; (xi)
the disallowance of all or any portion of any of the Lenders' claims for
repayment of the Guaranteed Debt under section 502 or 506 of the United States
Bankruptcy Code; or (xii) any other fact or circumstance which might otherwise
constitute grounds at law or equity for the discharge or release of the Company
from its obligations hereunder other than (A) indefeasible payment in full of
the Guaranteed Debt or (B) with respect to any Loan, the contractual and
voluntary permanent release by the Lenders of the obligation of the applicable
Borrower to make payment of such Loan, all whether or not the Company shall have
had notice or knowledge of any act or omission referred to in the foregoing
clauses (i) through (xii) of this Section. It is agreed that the Company's
liability hereunder is independent of any other guaranties or other obligations
at any time in effect with respect to the Guaranteed Debt or any part thereof
and that the Company's liability hereunder may be enforced regardless of the
existence, validity, enforcement or non-enforcement of any such other guaranties
or other obligations or any provision of any applicable law or regulation
purporting to prohibit payment by any Borrower of the Guaranteed Debt in the
manner agreed upon among the Agent, the Lenders and any Borrower. To the extent
that, by operation of Section 18 of any Note or otherwise, the Lenders are not
entitled to collect any portion of the Guaranteed Debt in the amount and manner
provided for in any Note (such portion being the "Excess Amount"), the Company
shall nevertheless be obligated to, and shall, pay such Excess Amounts to the
Lenders upon demand made on or after the date such Excess Amount was otherwise
due.
7.04 Dealings With Borrowers. Subject to Section 12.01, credit may be
granted or continued from time to time by the Lenders to the Borrowers without
notice to or authorization from the Company regardless of any Borrower's
financial or other condition at the time of any such grant or continuation.
Neither the Agent nor any Lender shall have an obligation to disclose or discuss
with the Company its assessment of the financial condition of any Borrower.
7.05 Subrogation. The Company shall be subrogated to all rights of the
Agent and the Lenders against a Borrower in respect of any amounts paid to the
Agent and the Lenders by the Company in respect of such Borrower pursuant to the
provisions hereof; provided, however, that the Company shall not be entitled to
enforce or to receive any payments arising out of, or based upon, such right of
subrogation with respect to a Borrower until all of the principal of and
interest on such Borrower's Note, if applicable, and all other Obligations of
such Borrower, have been paid in full.
25
33
7.06 No Collateral. Notwithstanding any reference herein to any
collateral securing any of the Guaranteed Debt, it is acknowledged that, on the
date hereof, neither the Company nor any Borrower has granted, or has any
obligation to grant, any security interest in or other lien on any of its
property (including, without limitation, the Common Stock and ACES) to the
Lenders as security for the Guaranteed Debt.
7.07 Rights To Payments, Etc. In the event that acceleration of the
time for payment of any of the Guaranteed Debt is stayed upon the insolvency,
bankruptcy or reorganization of any Borrower, or otherwise, all such amounts
shall nonetheless be payable by the Company forthwith upon demand by the Agent
or the Required Lenders. The Company further agrees that, to the extent that any
Borrower makes a payment or payments to any of the Lenders on the Guaranteed
Debt, or the Agent or the Lenders receive any proceeds of collateral securing
the Guaranteed Debt, which payment or receipt of proceeds or any part thereof is
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required to be returned or repaid to any Borrower, its estate, trustee,
receiver, debtor in possession or any other party, including, without
limitation, the Company, under any insolvency or bankruptcy law, state or
federal law, common law or equitable cause, then to the extent of such payment,
return or repayment, the obligation or part thereof which has been paid, reduced
or satisfied by such amount shall be reinstated and continued in full force and
effect as of the date when such initial payment, reduction or satisfaction
occurred.
7.08 Taxes. Any taxes (excluding federal income taxes and other income
taxes on the overall net income of the Agent or any Lender imposed by the
jurisdiction in which the Agent or such Lender is incorporated or has its
principal place of business) or other similar assessments or charges payable or
ruled payable by any governmental authority in respect of this Agreement or any
of the other Loan Documents pertaining to the Company shall be paid by the
Company, together with interest and penalties, if any. Any payments made by the
Company under this Agreement shall be made free and clear of, and without
deduction or withholding for or on account of, any present or future income,
stamp or other taxes, levies, imposts, duties, charges, fees, deductions or
withholdings, now or hereafter imposed, levied, collected, withheld or assessed
by any Governmental Authority (excluding taxes imposed on its overall net income
by the jurisdiction in which the Agent or such Lender is incorporated or has its
principal place of business) ("Taxes"). If any such Taxes are required to be
withheld from any amounts payable to the Agent or any Lender hereunder, the
amounts so payable to the Agent or such Lender shall be increased to the extent
necessary to yield to the Agent or such Lender (after payment of all Taxes)
interest or any such other amounts payable hereunder at the rates or in the
amounts specified in or pursuant to this Agreement or the Notes, as applicable.
Whenever any Taxes are payable by the Company, as promptly as practicable
thereafter the Company shall send to the Agent for its own account or for the
account of such Lender, as the case may be, a certified copy of an original
official receipt received by the Company showing payment thereof. If the Company
fails to pay any Taxes when due to the appropriate taxing authority or fails to
remit the required receipts or other required documentary evidence, the Company
shall indemnify the Agent and the Lenders for any incremental taxes, interest or
penalties that may become payable
26
34
by the Agent or any Lender as a result of any
such failure. The agreements in this Section 7.08 shall survive the payment in
full of all amounts payable under this Agreement.
7.09 Miscellaneous.
(a) Any determination by a court of competent jurisdiction of the
amount of any Guaranteed Debt owing by any Borrower to the Lenders shall be
conclusive and binding on the Company irrespective of whether the Company was a
party to the suit or action in which such determination was made.
(b) Subject to the provisions of Section 7.07, this Guaranty shall
continue in effect until this Agreement has terminated, the Guaranteed Debt has
been paid in full and the other conditions of this Guaranty have been satisfied.
(c) In addition to and without limitation of any rights, powers or
remedies of the Agent or the Lenders under applicable law, any time after
maturity of the Guaranteed Debt, whether by acceleration or otherwise, the Agent
or the Lenders may, in their sole discretion, with notice after the fact to the
Company and regardless of the acceptance of any security or collateral for the
payment hereof, appropriate and apply toward the payment of the Guaranteed Debt
(i) any indebtedness due or to become due from any of the Lenders to the Company
and (ii) any moneys, credits or other property belonging to the Company
(including all account balances, whether provisional or final and whether or not
collected or available but excluding any Margin Stock) at any time held by or
coming into the possession of any of the Agent or any Lender whether for deposit
or otherwise.
(d) Wherever possible, each provision of this Guaranty shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Guaranty shall be prohibited by or invalid under
such law, such provision shall be ineffective to the extent of such prohibition
or invalidity without invalidating the remainder of such provision or the
remaining provisions of this Guaranty.
ARTICLE VIII
THE AGENT
8.01 Appointment; Nature of Relationship. The First National Bank of
Chicago is hereby appointed by each of the Lenders as its contractual
representative (herein referred to as the "Agent") hereunder and under each
other Loan Document, and each of the Lenders irrevocably authorizes the Agent to
act as the contractual representative of such Lender with the rights and duties
expressly set forth herein and in the other Loan Documents. The Agent agrees to
act as such contractual representative upon the express conditions contained in
this Article VIII. Notwithstanding the use of the defined term "Agent," it is
expressly understood and agreed that the Agent shall not have any fiduciary
responsibilities to any Lender by reason of this Agreement or any other Loan
Document and that the Agent is merely acting as the contractual representative
of the Lenders with only those duties
27
35
as are expressly set forth in this Agreement and the other Loan Documents. In
its capacity as the Lenders' contractual representative, the Agent (i) does not
hereby assume any fiduciary duties to any of the Lenders, (ii) is a
"representative" of the Lenders within the meaning of Section 1-201 of the
Uniform Commercial Code and (iii) is acting as an independent contractor, the
rights and duties of which are limited to those expressly set forth in this
Agreement and the other Loan Documents. Each of the Lenders hereby agrees to
assert no claim against the Agent on any agency theory or any other theory of
liability for breach of fiduciary duty, all of which claims each
8.02 Powers. The Agent shall have and may exercise such powers under
the Loan Documents as are specifically delegated to the Agent by the terms of
each thereof, together with such powers as are reasonably incidental thereto.
The Agent shall have no implied duties to the Lenders, or any obligation to the
Lenders to take any action thereunder except any action specifically provided by
the Loan Documents to be taken by the Agent.
8.03 General Immunity. Neither the Agent nor any of its directors,
officers, employees, or agents in their capacity as representatives of the Agent
shall be liable to the Company, the Lenders or any Borrower for any action taken
or omitted to be taken by it or them hereunder or under any other Loan Document
or in connection herewith or therewith except to the extent such action or
inaction is determined in a final non-appealable judgment by a court of
competent jurisdiction to have arisen from the gross negligence or willful
misconduct of such Person.
8.04 No Responsibility for Loans, Recitals, etc. Neither the Agent nor
any of its directors, officers, agents or employees shall be responsible for or
have any duty to ascertain, inquire into, or verify (a) any statement, warranty
or representation made in connection with any Loan Document or any borrowing
hereunder; (b) the performance or observance of any of the covenants or
agreements of any obligor under any Loan Document, including, without
limitation, any agreement by an obligor to furnish information directly to each
Lender; (c) the satisfaction of any condition specified in Article III, except
receipt of items required to be delivered solely to the Agent; (d) the existence
or possible existence of any Program Event of Default or Unmatured Default; (e)
the validity, enforceability, effectiveness, sufficiency or genuineness of any
Loan Document or any other instrument or writing furnished in connection
therewith; (f) the value, sufficiency, creation, perfection or priority of any
Lien in any collateral security; or (g) the financial condition of any Borrower
or the Company. The Agent shall have no duty to disclose to the Lenders
information that is not required to be furnished by the Company to the Agent at
such time, but is voluntarily furnished by the Company to the Agent (either in
its capacity as Agent or in its individual capacity).
8.05 Action on Instructions of Lenders. The Agent shall in all cases be
fully protected in acting, or in refraining from acting, hereunder and under any
other Loan Document in accordance with written instructions signed by the
Required Lenders, and such instructions and any action taken or failure to act
pursuant thereto shall be binding on all of the Lenders. The Lenders hereby
acknowledge that the Agent shall be under no duty to take any discretionary
action permitted to be taken by it pursuant to the provisions of this Agreement
or any other Loan Document unless it shall
28
36
be requested in writing to do so by the Required Lenders. The Agent shall be
fully justified in failing or refusing to take any action hereunder and under
any other Loan Document unless it shall first be indemnified to its satisfaction
by the Lenders Pro rata against any and all liability, cost and expense that it
may incur by reason of taking or continuing to take any such action.
8.06 Employment of Agents and Counsel. The Agent may execute any of its
duties as Agent hereunder and under any other Loan Document by or through
employees, agents, and attorneys-in-fact and shall not be answerable to the
Lenders, except as to money or securities received by it or its authorized
agents, for the default or misconduct of any such agents or attorneys-in-fact
selected by it with reasonable care. The Agent shall be entitled to advice of
counsel concerning the contractual arrangement between the Agent and the Lenders
and all matters pertaining to the Agent's duties hereunder and under any other
Loan Document.
8.07 Reliance on Documents; Counsel. The Agent shall be entitled to
rely upon any Note, notice, consent, certificate, affidavit, letter, telegram,
statement, paper or document believed by it to be genuine and correct and to
have been signed or sent by the proper person or persons, and, in respect to
legal matters, upon the opinion of counsel selected by the Agent, which counsel
may be employees of the Agent.
8.08 Agent's Reimbursement and Indemnification. The Lenders agree to
reimburse and indemnify the Agent ratably in proportion to their respective
Commitments (or, if the Commitments have been terminated, in proportion to their
Commitments immediately prior to such termination) (a) for any amounts not
reimbursed by the Company or the Borrowers for which the Agent is entitled to
reimbursement by the Company or the Borrowers under the Loan Documents, (b) for
any other expenses incurred by the Agent on behalf of the Lenders, in connection
with the preparation, execution, delivery, administration and enforcement of the
Loan Documents (including, without limitation, for any expenses incurred by the
Agent in connection with any dispute between the Agent and any Lender or between
two or more of the Lenders) and (c) for any liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind and nature whatsoever which may be imposed on, incurred by or
asserted against the Agent in any way relating to or arising out of the Loan
Documents or any other document delivered in connection therewith or the
transactions contemplated thereby (including, without limitation, for any such
amounts incurred by or asserted against the Agent in connection with any dispute
between the Agent and any Lender or between two or more of the Lenders), or the
enforcement of any of the terms of the Loan Documents or of any such other
documents, provided that no Lender shall be liable for any of the foregoing to
the extent any of the foregoing is found in a final non-appealable judgment by a
court of competent jurisdiction to have resulted from the gross negligence or
willful misconduct of the Agent. The obligations of the Lenders under this
Section 8.08 shall survive payment of the Obligations and termination of this
Agreement.
8.09 Notice of Default. The Agent shall not be deemed to have knowledge
or notice of the occurrence of any Program Event of Default, Unmatured Default
or Borrower Event of Repayment
29
37
unless the Agent has received written notice from a Lender or the Company
referring to this Agreement describing such Program Event of Default, Unmatured
Default or Borrower Event of Repayment and stating that such notice is a "notice
of default". In the event that the Agent receives such a notice, the Agent shall
give prompt notice thereof to the Lenders.
8.10 Rights as a Lender. In the event the Agent is a Lender, the Agent
shall have the same rights and powers hereunder and under any other Loan
Document with respect to its Commitment and its Loans as any Lender and may
exercise the same as though it were not the Agent, and the term "Lender" or
"Lenders" shall, at any time when the Agent is a Lender, unless the context
otherwise indicates, include the Agent in its individual capacity. The Agent and
its Affiliates may accept deposits from, lend money to, and generally engage in
any kind of trust, debt, equity or other transaction, in addition to those
contemplated by this Agreement or any other Loan Document, with the Company, any
of its Subsidiaries or any Borrower in which the Company, or such Subsidiary or
such Borrower is not restricted hereby from engaging with any other Person. The
Agent, in its individual capacity, is not obligated to remain a Lender.
8.11 Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon the Agent, the Arranger or any other
Lender and based on the financial statements prepared by the Company and such
other documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement and the other Loan
Documents. Each Lender also acknowledges that it will, independently and without
reliance upon the Agent, the Arranger or any other Lender and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under this
Agreement and the other Loan Documents.
8.12 Successor Agent. The Agent may resign at any time by giving
written notice thereof to the Lenders and the Company, such resignation to be
effective upon the appointment of a successor Agent or, if no successor Agent
has been appointed, forty-five days after the retiring Agent gives notice of its
intention to resign. The Agent may be removed at any time with or without cause
by written notice received by the Agent from the Required Lenders, such removal
to be effective on the date specified by the Required Lenders. Upon any such
resignation or removal, the Required Lenders shall have the right to appoint, on
behalf of the Company and the Lenders, a successor Agent. If no successor Agent
shall have been so appointed by the Required Lenders within thirty days after
the resigning Agent's giving notice of its intention to resign, then the
resigning Agent may appoint, on behalf of the Company and the Lenders, a
successor Agent. Notwithstanding the previous sentence, the Agent may at any
time without the consent of the Company or any Lender, appoint any of its
Affiliates which is a commercial bank as a successor Agent hereunder. If the
Agent has resigned or been removed and no successor Agent has been appointed,
the Lenders may perform all the duties of the Agent hereunder and the Company
shall make all payments in respect of the Obligations to the applicable Lender
and for all other purposes shall deal directly with the Lenders. No successor
Agent shall be deemed to be appointed hereunder until such successor Agent has
accepted the appointment. Any such successor Agent shall be a commercial bank
having capital and
30
38
retained earnings of at least $100,000,000. Upon the acceptance of any
appointment as Agent hereunder by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the resigning or removed Agent. Upon the effectiveness of the
resignation or removal of the Agent, the resigning or removed Agent shall be
discharged from its duties and obligations hereunder and under the Loan
Documents. After the effectiveness of the resignation or removal of an Agent,
the provisions of this Article VIII shall continue in effect for the benefit of
such Agent in respect of any actions taken or omitted to be taken by it while it
was acting as the Agent hereunder and under the other Loan Documents.
8.13 Notes. The Agent shall retain possession of the Notes on behalf of
the Lenders. Each Lender shall be entitled, upon request, to examine or receive
a copy of any Note. The Agent shall have only the duty to exercise reasonable
care in the custody and preservation of the Notes, which duty shall be fully
satisfied if the Agent accords such Notes treatment substantially the same as
that which it accords similar property owned by it. If any Borrower has issued
Replacement Notes (as defined in the Note) pursuant to Section 17 of his or her
Note, then upon the request of any Lender the Agent shall deliver to such Lender
the Replacement Note payable to its order.
8.14 Agent's Fee. The Company agrees to pay to the Agent, for its own
account, the fees agreed to by the Company and the Agent pursuant to that
certain letter agreement dated February 11, 1999, or as otherwise agreed from
time to time.
8.15 Delegation to Affiliates. The Company and the Lenders agree that
the Agent may delegate any of its duties under this Agreement to any of its
Affiliates. Any such Affiliate (and such Affiliate's directors, officers, agents
and employees) which performs duties in connection with this Agreement shall be
entitled to the same benefits of the indemnification, waiver and other
protective provisions to which the Agent is entitled under Articles VIII and
XII.
ARTICLE IX
RATABLE PAYMENTS
9.01 Ratable Payments. If any Lender, whether by setoff or otherwise,
has payment made to it upon its Loans (other than payments received pursuant to
Section 2.05 or Section 12.08) in a greater proportion than its Pro-rata share
of all such Loans, such Lender agrees, promptly upon demand, to purchase a
portion of the Loans held by the other Lenders so that after such purchase each
Lender will hold its ratable proportion of Loans. If any Lender, whether in
connection with setoff or amounts which might be subject to setoff or otherwise,
receives collateral or other protection for its Obligations or such amounts
which may be subject to setoff, such Lender agrees, promptly upon demand, to
take such action necessary such that all Lenders share in the benefits of such
collateral ratably in proportion to their Loans. In case any such payment is
disturbed by legal process, or otherwise, appropriate further adjustments shall
be made.
ARTICLE X
31
39
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
10.01 Successors and Assigns. The terms and provisions of the Loan
Documents shall be binding upon and inure to the benefit of the Company and the
Lenders and their respective successors and assigns, except that the Company
shall not have the right to assign its rights or obligations under the Loan
Documents, provided that any assignment by any Lender must be made in compliance
with Section 10.03. Notwithstanding the preceding sentence, any Lender may at
any time, without the consent of the Company or the Agent, assign all or any
portion of its rights under this Agreement and its Notes to a Federal Reserve
Bank; provided, however, that no such assignment to a Federal Reserve Bank shall
release the transferor Lender from its obligations hereunder. The Agent may
treat the payee of any Note as the owner thereof (to the extent of its Pro-rata
interest therein) for all purposes hereof unless and until such payee complies
with Section 10.03 in the case of an assignment thereof or, in the case of any
other transfer, a written notice of the transfer is filed with the Agent. Any
assignee or transferee of a Note agrees by acceptance thereof to be bound by all
the terms and provisions of the Loan Documents. Any request, authority or
consent of any Person, who at the time of making such request or giving such
authority or consent is the holder of any Note, shall be conclusive and binding
on any subsequent holder, transferee or assignee of such Note or of any Note or
Notes issued in exchange therefor.
10.02 Participations.
(a) Permitted Participants; Effect. Any Lender may, in the ordinary
course of its business and in accordance with applicable law, at any time sell
to one or more banks or other entities ("Participants") participating interests
in any Loan owing to such Lender, any Note held by or payable to such Lender or
any other interest of such Lender under the Loan Documents. In the event of any
such sale by a Lender of participating interests to a Participant, such Lender's
obligations under the Loan Documents shall remain unchanged, such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations, such Lender shall remain the holder of any such Note for all
purposes under the Loan Documents, all amounts payable by the Company under this
Agreement or by the Borrowers under the Notes shall be determined as if such
Lender had not sold such participating interests, and the Company, the Borrowers
and the Agent shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under the Loan Documents.
(b) Voting Rights. Each Lender shall retain the sole right to approve,
without the consent of any Participant, any amendment, modification or waiver of
any provision of the Loan Documents other than any amendment, modification or
waiver which effects any of the modifications referenced in clauses (a)(i)
through (v) of Section 12.01.
(c) Benefit of Setoff. The Company agrees that each Participant shall
be deemed to have the right of setoff provided in Section 7.09(c) in respect of
its participating interest in amounts owing
32
40
under the Loan Documents to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under the Loan
Documents; provided, that each Lender shall retain the right of setoff provided
in Section 7.09(c) with respect to the amount of participating interests sold to
each Participant. The Lenders agree to share with each Participant, and each
Participant, by exercising the right of setoff provided in Section 7.09(c),
agrees to share with each Lender, any amount received pursuant to the exercise
of its right of setoff, such amounts to be shared in accordance with Section
9.01 as if each Participant were a Lender.
10.03 Assignments.
(a) Permitted Assignments. Any Lender may, in the ordinary course of
its business and in accordance with applicable law, at any time assign to one or
more banks or other entities ("Purchasers") all or any part of its rights and
obligations under the Loan Documents, provided that with respect to any partial
assignment, except as the Agent may otherwise agree, such Lender ratably assigns
its interest in all of the Notes and, in the case of an assignment to a Person
which is not a Lender or an Affiliate of a Lender, such assignment shall be in
the minimum amount of $5,000,000 or, if less, all of the assigning Lender's
interests in the Notes. Such assignment shall be substantially in the form from
time to time specified by the Agent or in such other form as may be agreed to by
the parties thereto. The consent of the Agent and, so long as no Program Event
of Default is pending, the Company shall be required prior to an assignment
becoming effective with respect to a Purchaser which is not a Lender or an
Affiliate thereof. Such consent, in each case, shall not be unreasonably
withheld in the case of an assignment to a Person which is an Eligible Assignee.
(b) Effect; Effective Date. Upon (a) delivery to the Agent of a notice
of assignment, substantially in the form from time to time specified by the
Agent (a "Notice of Assignment"), together with any consents required by Section
10.03(a), and (b) payment of a $3,500 fee to the Agent by the transferor Lender
for processing such assignment, such assignment shall become effective on the
effective date specified in such Notice of Assignment. On and after the
effective date of such assignment, (a) such Purchaser shall for all purposes be
a Lender party to this Agreement and any other Loan Document executed by the
Lenders and shall have all the rights and obligations of a Lender under the Loan
Documents, to the same extent as if it were an original party hereto, and (b)
the transferor Lender shall be released with respect to the percentage of the
Loans assigned to such Purchaser without any further consent or action by the
Company, the Borrowers, the Lenders or the Agent. Upon the consummation of any
assignment to a Purchaser pursuant to this Section 10.03(b), the transferor
Lender, the Agent, the Borrowers and the Company shall make appropriate
arrangements so that replacement Notes are issued to the Agent to be held on
behalf of such transferor Lender and new Notes or, as appropriate, replacement
Notes, are issued to the Agent to be held on behalf of such Purchaser, in each
case in principal amounts reflecting their percentage of the Loans, as adjusted
pursuant to such assignment.
10.04 Dissemination of Information. The Company authorizes each Lender
to disclose to any Participant or Purchaser or any other Person acquiring an
interest in the Loan Documents by
33
41
operation of law (each a "Transferee") and any prospective Transferee any and
all information in such Lender's possession concerning the creditworthiness of
the Company, its Subsidiaries and the Borrowers, provided such Person agrees in
writing to keep such information confidential and use the same only for the
purpose of making credit determinations in connection with the financing
contemplated hereby and to enforce rights it may have, except that such Person
shall not be restricted from disclosing such information as is (a) required to
be disclosed to any regulatory or administrative body or commission, (b)
required to be disclosed by subpoena or similar process of applicable law, (c)
disclosed to counsel, auditors, and other professional advisors used by such
Person on a need-to-know basis, or (d) deemed necessary by such Person to be
disclosed in conjunction with any litigation between the Company or any Borrower
and such Person, or relating to the financing contemplated hereby.
10.05 Tax Treatment. If any interest in any Loan Document is
transferred to any Transferee which is organized under the laws of any
jurisdiction other than the United States of America or any State thereof, the
transferor Lender shall cause such Transferee, concurrently with the
effectiveness of such transfer, to comply with the provisions of Section 12.16.
ARTICLE XI
NOTICES
11.01 Giving Notice. All notices and other communications provided to
any party hereto under this Agreement or any other Loan Document shall be in
writing, by facsimile, first class U.S. mail or courier and addressed or
delivered to such party at its address set forth below its signature hereto or
at such other address as may be designated by such party in a notice to the
other parties. Any notice, if mailed and properly addressed with first class
postage prepaid, return receipt requested, shall be deemed given three Business
Days after deposit in the U.S. mail; any notice, if transmitted by facsimile,
shall be deemed given when transmitted if a confirmation of transmission to the
addressee is then generated by the sender's fax machine (and a copy thereof is
simultaneously posted in first class U.S. mail); and any notice given by courier
shall be deemed given when received by the addressee.
11.02 Change of Address. The Company, the Agent and any Lender may each
change the address for service of notice upon it by a notice in writing to the
other parties hereto.
ARTICLE XII
MISCELLANEOUS
12.01 Amendments. (a) Subject to the provisions of this Section 12.01
and subject to Section 12 in each of the Notes, the Required Lenders (or the
Agent with the consent in writing of the Required Lenders) and the Company or a
Borrower, as applicable, may enter into agreements
34
42
supplemental hereto for the purpose of adding or modifying any provisions to the
Loan Documents or changing in any manner the rights of the Lenders, the Company
hereunder or waiving any Program Event of Default hereunder; provided, however,
that no such supplemental agreement shall, without the consent of each Lender
affected thereby:
(i) Extend the final maturity of any Loan or Note or reduce
the principal amount thereof, or reduce the rate or amount, or extend
the time of payment, of interest or fees or other amounts payable
thereunder;
(ii) Reduce the percentage specified in the definition of
Required Lenders;
(iii) Release the Company from its obligations under the
Guaranty;
(iv) Amend this Section 12.01; or
(v) Permit any assignment by the Company of its Obligations
or its rights hereunder.
(b) No amendment of any provision of this Agreement relating to the
Agent shall be effective without the written consent of the Agent. The Agent may
waive payment of the fee required under Section 10.03(b) without obtaining the
consent of any other party to this Agreement. The Lenders shall not consent to
any amendment or modification of any Note increasing the principal amount
thereof or the rate of interest payable thereon without the consent of the
Company. The Company hereby consents to the Note amendments contemplated by
Section 3.03.
(c) Upon the agreement of the Company and the Lenders upon the 2.05(A)
Information, Schedule 2.05(A) shall be deemed amended to include such
information.
12.02 Preservation of Rights. No delay or omission of the Lenders or
the Agent to exercise any right under the Loan Documents shall impair such right
or be construed to be a waiver of any Program Event of Default or an
acquiescence therein. Any single or partial exercise of any such right shall not
preclude other or further exercise thereof or the exercise of any other right,
and no waiver, amendment or other variation of the terms, conditions or
provisions of the Loan Documents whatsoever shall be valid unless in writing
signed by the Lenders required pursuant to Section 12.01, and then only to the
extent in such writing specifically set forth. No waiver by the Agent or the
Lenders of any default shall operate as a waiver of any other default or the
same default on a future occasion, and no action by the Agent or the Lenders
permitted hereunder shall in any way affect or impair the Agent's or the
Lenders' rights or powers, or the obligations of the Company under this
Agreement. All remedies contained in the Loan Documents or by law afforded shall
be cumulative and all shall be available to the Agent and the Lenders until the
Obligations have been paid in full.
35
43
12.03 Survival of Representations. All representations and warranties
of the Company contained in this Agreement or in any Loan Document shall survive
delivery of the Notes and the making of the Loans herein contemplated.
12.04 Governmental Regulation. Anything contained in this Agreement to
the contrary notwithstanding, no Lender shall be obligated to extend credit to
any Borrower in violation of any limitation or prohibition provided by any
applicable statute or regulation.
12.05 Headings. Section headings in the Loan Documents are for
convenience of reference only, and shall not govern the interpretation of any of
the provisions of the Loan Documents.
12.06 Entire Agreement. The Loan Documents embody the entire agreement
and understanding among the Company, the Agent and the Lenders and supersede all
prior agreements and understandings between the Company, the Agent and the
Lenders relating to the subject matter thereof other than the fee letter dated
February 11, 1999 between the Company and First Chicago.
12.07 Several Obligations; Benefits of this Agreement. The respective
obligations of the Lenders hereunder are several and not joint and no Lender
shall be the partner or agent of any other (except to the extent to which the
Agent is authorized to act as such). The failure of any Lender to perform any of
its obligations hereunder shall not relieve any other Lender from any of its
obligations hereunder. Except as provided in Section 12.08 with respect to
"Indemnified Parties", this Agreement shall not be construed so as to confer any
right or benefit upon any Person other than the parties to this Agreement and
their respective successors and assigns. This Agreement is not intended to, and
shall not be construed to, create any rights (contractual, equitable, pursuant
to law or otherwise) in favor of any Borrower against the Agent, any Lenders or
the Company, and no Borrower in his or her individual capacity shall have the
right to enforce any rights of the Company hereunder.
12.08 Expenses; Indemnification. (a) The Company shall reimburse the
Agent for any costs and out-of-pocket expenses (including reasonable attorneys'
fees and time charges of attorneys for the Agent, which attorneys may be
employees of the Agent) paid or incurred by the Agent in connection with the
preparation, negotiation, execution, delivery, review, amendment, modification,
and administration of the Loan Documents. The Company also agrees to reimburse
the Agent and the Lenders for any costs and out-of-pocket expenses (including,
without limitation, reasonable attorneys' fees and expenses and time
36
44
charges of attorneys for the Agent and the Lenders, which attorneys may be
employees of the Agent or the Lenders) paid or incurred by the Agent or any
Lender in connection with the collection and enforcement of the Loan Documents.
The Company further agrees to indemnify and hold harmless the Agent and each
Lender, and their respective affiliates (including, without limitation, ▇▇▇▇▇ &
Co. and First Chicago Capital Markets, Inc.), agents, directors, officers and
employees (the Agent and each of the aforementioned Persons being an
"Indemnified Party") against all losses, claims, damages, penalties, judgments,
liabilities and expenses, joint or several (including, without limitation,
reasonable attorneys' fees and expenses and time charges of attorneys for the
Agent and Lenders, which attorneys may be employees of the Agent or the Lenders,
and all expenses of litigation or preparation therefor whether or not the such
Indemnified Party is a party thereto) which any of them may become subject to or
may pay or incur, whether arising under any foreign, federal or state law or
regulation, at common law or otherwise, (including, without limitation, the
Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended and the regulations thereunder) arising out of or relating to this
Agreement, any Note or the other Loan Documents, the performance of ▇▇▇▇▇ under
the Authorizations, the transactions contemplated hereby or thereby, the
purchase or sale of any Common Stock or ACES, any untrue statement or alleged
untrue statement of a material fact contained in the Stock Purchase Program, any
registration statement covering the Common Stock or ACES to be purchased as part
of the Stock Purchase Program or any other document related thereto, the breach
of any representation or warranty contained in this Agreement or the other Loan
Documents, the direct or indirect application or proposed application of the
proceeds of any Loan hereunder, any action brought or threatened by or on behalf
of any Borrower in connection with its Loan, any claim made against any
Indemnified Party by or on behalf of any Borrower in connection with its Loan
or, to the extent permitted by law, any breach of any consumer lending, usury or
similar law relating to the Loans; provided, however, that the Company shall not
be required to indemnify any Indemnified Party against any losses, claims,
damages, penalties, judgments, liabilities or expenses to the extent that they
arise out of the gross negligence or willful misconduct of such Person. The
obligations of the Company under this Section shall survive the termination of
this Agreement and shall be in addition to any liability the Company may
otherwise have.
(b) If the indemnification provided for in Section 12.08(a) is due in
accordance with its terms but is for any reason held by a court to be
unavailable or insufficient to indemnify and hold harmless an Indemnified Party
on grounds of public policy or otherwise, the Company shall contribute to the
aggregate amount of such losses, claims, damages penalties, judgments,
liabilities and expenses (including legal or other expenses reasonably incurred
in connection with investigating or defending same) for which such
indemnification is unavailable or insufficient (i) in such proportion as is
appropriate to reflect the relative benefits received, or sought to be received
by the Company, on the one hand, and the Indemnified Parties entitled to
contribution, on the other hand, in the matters contemplated by this Agreement,
the Notes and the Stock Purchase Program or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand and the
Indemnified Parties on the other hand in connection with the events, actions,
statements, or omissions which resulted in such losses, claims, damages,
penalties, judgments, liabilities and expenses as well as any other relevant
equitable considerations. The relative benefits received, or sought to be
received, by the Company on the one hand and the Indemnified Parties on the
other hand in connection with the purchase of the Common Stock and ACES, the
Loans and this Agreement shall be deemed to be in the same proportion that the
total proceeds of the Loans received by the Program Participants in connection
with the Stock Purchase Program bears to the total fees received by the Agent
and the Lenders under this Agreement and the other Loan Documents. Any
Indemnified Party entitled to contribution will, promptly after receipt of
notice of
37
45
commencement of any action, suit or proceeding against such Indemnified Party in
respect of which a claim for contribution may be made against another party or
parties under this Section 12.08(b), notify such party or parties from whom
contribution may be sought, but the omission to so notify such party or parties
shall not relieve the party or parties from whom contribution may be sought from
any other obligation it or they may have hereunder or otherwise than under this
Section 12.08(b).
12.09 Numbers of Documents. All statements, notices, closing documents,
and requests hereunder shall be furnished to the Agent with sufficient
counterparts so that the Agent may furnish one to each of the Lenders.
12.10 Severability of Provisions. Any provision in any Loan Document
that is held to be inoperative, unenforceable, or invalid in any jurisdiction
shall, as to that jurisdiction, be inoperative, unenforceable, or invalid
without affecting the remaining provisions in that jurisdiction or the
operation, enforceability, or validity of that provision in any other
jurisdiction, and to this end the provisions of all Loan Documents are declared
to be severable.
12.11 Nonliability of Lenders. The relationship between the Company and
the Lenders and the Agent shall be solely that of guarantor and lender. Neither
the Agent nor any Lender shall have any fiduciary responsibilities to the
Company or any Borrower. Neither the Agent nor any Lender undertakes any
responsibility to the Company or any Borrower to review or inform the Company or
any Borrower of any matter in connection with any phase of the Company's
business or operations. The Company agrees that neither the Agent nor any Lender
shall have liability to the Company or any Borrower (whether sounding in tort,
contract or otherwise) for losses suffered by the Company or any Borrower in
connection with, arising out of, or in any way related to, the transactions
contemplated and the relationship established by the Loan Documents, or any act,
omission or event occurring in connection therewith, unless it is determined by
a court of competent jurisdiction by final and non-appealable judgment that such
losses resulted from the gross negligence or willful misconduct of the party
from which recovery is sought.
12.12 CHOICE OF LAW. THE LOAN DOCUMENTS SHALL BE CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS, WITHOUT REGARD TO CONFLICT OF LAWS
PROVISIONS, OF THE STATE OF ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS
APPLICABLE TO NATIONAL BANKING ASSOCIATIONS AND FEDERAL AGENCIES AND BRANCHES OF
FOREIGN BANKS.
12.13 CONSENT TO JURISDICTION. THE COMPANY, THE AGENT AND EACH LENDER
HEREBY IRREVOCABLY SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES
FEDERAL OR ILLINOIS STATE COURT SITTING IN CHICAGO IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENTS AND THE PARTIES HEREBY
IRREVOCABLY AGREE THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR
38
46
PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVE
ANY OBJECTION THEY MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT,
ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN
INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE AGENT OR ANY
LENDER TO BRING PROCEEDINGS AGAINST THE COMPANY IN THE COURTS OF ANY OTHER
JURISDICTION. ANY JUDICIAL PROCEEDING BY THE COMPANY AGAINST THE AGENT OR ANY
LENDER OR ANY AFFILIATE OF THE AGENT OR ANY LENDER INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH
ANY LOAN DOCUMENT SHALL BE BROUGHT ONLY IN A COURT IN CHICAGO, ILLINOIS.
12.14 WAIVER OF JURY TRIAL. THE COMPANY, THE AGENT AND EACH LENDER
HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY
WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT OR THE
RELATIONSHIP ESTABLISHED THEREUNDER.
12.15 Disclosure. The Company and each Lender hereby acknowledge and
agree that First Chicago and/or its Affiliates from time to time may hold other
investments in, make other loans to or have other relationships with the Company
or any Borrower, including, without limitation, in connection with any interest
rate hedging instruments or agreements or swap transactions.
12.16 Withholding Tax Exemption. At least five Business Days prior to
the first date on which interest or fees are payable hereunder for the account
of any Lender, each Lender that is not incorporated under the laws of the United
States of America or a state thereof, agrees that it will deliver to the Company
and the Agent two duly completed and correct copies of United States of America
Internal Revenue Service Form 1001 or 4224, certifying in either case that such
Lender is entitled to receive all payments under this Agreement and the Notes
without deduction or withholding of any United States federal income taxes. Each
Lender which so delivers a Form 1001 or 4224 further undertakes to deliver to
the Company and the Agent two additional duly completed and correct copies of
such form (or a successor form) on or before the date that such form expires
(currently, three successive calendar years for Form 1001 and one calendar year
for Form 4224) or becomes obsolete or after the occurrence of any event
requiring a change in the most recent forms so delivered by it, and such
amendments thereto or extensions or renewals thereof as may be reasonably
requested by the Company or the Agent, in each case certifying that such Lender
is entitled to receive all payments under this Agreement and the Notes without
deduction or withholding of any United States of America federal income taxes,
unless a change in law (including without limitation any change in treaty,
statute or regulation) has occurred after the date hereof and prior to the date
on which any such delivery would otherwise be required which renders all such
forms inapplicable or which would prevent such Lender from duly completing and
delivering any such form with respect to it and such Lender advises the Company
and the Agent that it is not capable of
39
47
receiving payments without any deduction or withholding of United States of
America federal income tax.
12.17 Execution in Counterparts. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement. Delivery of an
executed counterpart of a signature page to this Agreement by telecopier shall
be effective as delivery of a manually executed counterpart of this Agreement.
[signature pages follow]
40
48
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
AMERUS LIFE HOLDINGS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Senior Vice President and Chief
Financial Officer
Address: ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Commitment: $27,500,000 THE FIRST NATIONAL BANK OF CHICAGO,
individually and as Agent
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President
Address: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
▇-▇
▇▇
▇▇▇▇▇▇▇▇ 1.01
INTEREST PAYMENT DATES
March 5, 1999
June 7, 1999
September 8, 1999
December 7, 1999
March 7, 2000
June 7, 2000
September 8, 2000
December 7, 2000
March 7, 2001
June 7, 2001
September 10, 2001
December 7, 2001
March 7, 2002
June 7, 2002
September 9, 2002
December 6, 2002
March 7, 2003
June 6, 2003
September 8, 2003
December 5, 2003
March 5, 2004
June 7, 2004
September 8, 2004
Schedule 1.01
50
SCHEDULE 2.05(A)
FIXED REFERENCE RATES
FROM TO (AND EXCLUDING)
RATE (AND INCLUDING) PAYMENT DATE
[to be agreed upon by the Company and the Lenders pursuant to Section 2.02(b)]
Schedule 2.05(A)
51
SCHEDULE 2.05(B)
ZERO COUPON DISCOUNTING METHODOLOGY
-----------------------------------------------------------
Present Value of Fixed Leg = (P(1) x DF(1) + 3(N) P(i) x DF(i)
[ ] y=2
-----------------------------------------------------------
P(1) = The first remaining fixed payment as defined as the next fixed
payment outstanding in the contract
DF(1) = The first discount factor defined as 1
-------------------
[1 + (R(0) x D(0)/360)]
DF(i) = The ith discount factor for each remaining fixed payment date will
be determined using the Zero Coupon Rate derived from the
appropriate LIBOR rate and the rates implied by the "90 Day Euro$"
futures contracts traded at the Chicago Mercantile Exchange (IMM) as
applicable to each ith payment date.
R(0) = The LIBOR rate quoted on an Annual, Actual/360 basis (expressed as a
percent in decimal form) applicable for the number of days between
the Conversion Date and the first (remaining) Payment Date.
D(0) = The number of days between the Conversion Date and the next fixed
Payment Date.
P(i) = The ith fixed payment remaining as defined in the contract
Schedule 2.05(B)
52
SCHEDULE 2.05(C)
EARLY PAYMENT EXAMPLE
THE FOLLOWING IS AN EXAMPLE OF THE EARLY PAYMENT FEE UNDER CERTAIN
CIRCUMSTANCES. THE ACTUAL EARLY PAYMENT FEE ASSOCIATED WITH ANY PARTICULAR NOTE
PREPAYMENT OR FAILURE TO BORROW WILL DEPEND UPON THE SPECIFIC AMOUNT, CURRENT
INTEREST RATES, AND OTHER CIRCUMSTANCES ASSOCIATED THEREWITH. IT MAY BE MORE OR
LESS THAN THE AMOUNTS COMPUTED BELOW.
The prepayment calculation example on the attached table assumes that the
Borrower has an outstanding Loan of $99,988 that was used to purchase 4210
shares of Common Stock @ an average price of $23.75 per share. The original loan
is presumed to have been a 5 year loan made on Dec. 9, 1995. The simple interest
on the Loan is approximately 7.35877% and the IRR is approximately 6.59%. The
Current Payment Rate is 1.66114% (Actual/360). The prepayment date is assumed to
be December 9, 1998, the third anniversary of setting the fixed rate with 8
quarterly payments remaining. For simplicity, our use of even dates for this
example will cause minor differences from actual payment values arising from
precise day count considerations of an actual loan. These differences would not
normally be materially different from how this example is presented The rates
assumed in this example were as of December 8, 1998.
The change in value of the Loan is captured by discounting the fixed flows of
the Loan at the prevailing implied LIBOR forward rates. The Loan Documents break
out the value into two components: the Early Payment Fee and the deferred
interest. In the attached example, the value of the Loan is $18,282, which
approximates the $17,092 deferred interest due. The balance of $1190 would be
defined as the Early Payment Fee in this example and reflects the LIBOR forward
rates on December 8, 2000 (assuming the Dec.
8, 1998 curve utilized).
COLUMN DEFINITIONS:
A.) Market Libor Swap: in this example, the market value for a 2 year
interest rate swap, which represents the remaining time to maturity
from the original transaction. This value changes with shape of yield
curve, time to maturity, swap spreads, and liquidity conditions in the
interest rate markets.
B.) Notional Amount: represents principal amount of the loan, or the number
of shares purchased multiplied by the per share price.
C.) Spread: represents the spread to the standard LIBOR curve which is used
for calculation purposes. Accounts for credit risk.
D.) Redeployment Swap Rate: Equals (Market Libor Swap) + (Spread).
Analogous to a rate where funds can be reinvested with similar credit
quality.
Schedule 2.05(C)-Page 1
53
E.) Reference Swap Rate: The interest rate that the Loan carries in each
payment period. Reflects the dividend rate on the Common Stock at the
weighted average purchase price, with an assumed dividend amount
($.10/share quarterly) and payment schedule for each quarter until the
final quarter. Final quarter interest rate is a balloon payment
allowing the bank to achieve an acceptable rate of return for a loan of
this style, risk, and cost to administer. The reference swap rates give
rise to a yield-to-maturity (IRR) on the loan for the entire time
horizon. The IRR is separate and distinct from the simple interest
rate, which is a term required by the Loan Documents that reflects the
actual interest paid over the life of the loan. The simple interest
rate is a flat interest rate; it equals ((sum of all Fixed Payments
during life of loan)/(Notional Amount)) X ((360/(Actual Days of Loan)).
F.) Redeployment Payment: Equals (Notional Amount)(Redeployment Swap
Rate)(#Days in period)/360. Represents the amount of interest that
would be required in each period under normal circumstances.
G.) Fixed Payment: Equals (Notional Amount)(Reference Swap Rate)(# Days in
period)/360. Represents the amount of interest that is actually being
paid in each period.
H.) Payment Differential: Equals (Fixed Payment) - (Redeployment Payment).
Difference in interest required for each time period.
I.) PV of Differential: Equals (Payment Differential) (Discount Factor) for
each period. Turns future cash flows into present value terms to
evaluate current ▇▇▇▇-to-market.
J.) Discount Factor: Factor applied to discount a future cash flow to a
present value. "Zero Coupon Rates" (as defined in Section 2.05(b) of
the Facility and Guaranty Agreement), will be reasonably determined by
The First National Bank of Chicago, at time of breakage.
Schedule 2.05(C)-Page 2
54
THE FIRST NATIONAL BANK OF CHICAGO
Valuation Date: 9-Dec-98
Assumed Settlement Date: 11-Dec-98
Last Payment Date: 11-Dec-98
Notional Amount: $99,988
Total
Fixed PV's Float PV's Breakage % of Face
Spot Termination Cost $18,282 $0.00 $18,282 18.284%
---------------------------------------------------------------------------------------------------------------------------
(A) (B) (C) (D) (E) (F)
---------------------------------------------------------------------------------------------------------------------------
FROM: TO: (A+C) (B*D*DAYS/360)
MARKET NOTIONAL REDEPLOYMENT REFERENCE REDEPLOYMENT
LIBOR SWAP AMOUNT SPREAD SWAP RATE SWAP RATE PAYMENT
---------------------------------------------------------------------------------------------------------------------------
11-Dec-98 11-Mar-99 Thursday 4.93879% 99,987.50 0.80% 5.73879% 1.661% 1,434.52
---------------------------------------------------------------------------------------------------------------------------
11-Mar-99 11-Jun-99 Friday 4.93879% 99,987.50 0.80% 5.73879% 1.661% 1,466.40
---------------------------------------------------------------------------------------------------------------------------
11-Jun-99 11-Sep-99 Saturday 4.93879% 99,987.50 0.80% 5.73879% 1.661% 1,466.40
---------------------------------------------------------------------------------------------------------------------------
11-Sep-99 11-Dec-99 Saturday 4.93879% 99,987.50 0.80% 5.73879% 1.661% 1,450.46
---------------------------------------------------------------------------------------------------------------------------
11-Dec-99 11-Mar-00 Saturday 4.93879% 99,987.50 0.80% 5.73879% 1.661% 1,450.46
---------------------------------------------------------------------------------------------------------------------------
11-Mar-00 11-Jun-00 Sunday 4.93879% 99,987.50 0.80% 5.73879% 1.661% 1,466.40
---------------------------------------------------------------------------------------------------------------------------
11-Jun-00 11-Sep-00 Monday 4.93879% 99,987.50 0.80% 5.73879% 1.661% 1,466.40
---------------------------------------------------------------------------------------------------------------------------
11-Sep-00 8-Dec-00 Friday 4.93879% 99,987.50 0.80% 5.73879% 119.500% 1,402.64
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
(G) (H) (I) (J)
---------------------------------------------------------------------------------------------
FROM: TO: (B*E*DAYS/360) (G-F) (H*J)
FIXED PAYMENT PV OF DISCOUNT
PAYMENT DIFFERENTIAL DIFFERENTIAL FACTOR
---------------------------------------------------------------------------------------------
11-Dec-98 11-Mar-99 Thursday 415.23 (1,019.29) (1,006.10) 0.987060
---------------------------------------------------------------------------------------------
11-Mar-99 11-Jun-99 Friday 424.46 (1,041.94) (1,015.92) 0.975032
---------------------------------------------------------------------------------------------
11-Jun-99 11-Sep-99 Saturday 424.46 (1,041.94) (1,003.67) 0.963272
---------------------------------------------------------------------------------------------
11-Sep-99 11-Dec-99 Saturday 419.85 (1,030.61) (980.89) 0.951754
---------------------------------------------------------------------------------------------
11-Dec-99 11-Mar-00 Saturday 419.85 (1,030.61) (968.25) 0.939491
---------------------------------------------------------------------------------------------
11-Mar-00 11-Jun-00 Sunday 424.46 (1,041.94) (966.82) 0.927906
---------------------------------------------------------------------------------------------
11-Jun-00 11-Sep-00 Monday 424.46 (1,041.94) (954.83) 0.916403
---------------------------------------------------------------------------------------------
11-Sep-00 8-Dec-00 Friday 29,207.46 27,804.82 25,178.06 0.905529
---------------------------------------------------------------------------------------------
POSITIVE VALUE BELOW INDICATES AMOUNT OWED BY PARTICIPANT:
PRESENT VALUE OF REDEPLOYMENT FIXED SWAP RATE MINUS PRESENT VALUE OF
REFERENCE FIXED SWAP RATE: $18,281.59
DEFERRED INTEREST* $17,091.96
EARLY PAYMENT FEE** $ 1,189.63
Schedule 2.05(C)-Page 3
55
*THE THREE YEAR ACCRUED DIFFERENCE BETWEEN INTEREST RATE (7.35877% SIMPLE
INTEREST) MINUS CURRENT PAYMENT RATE (1.66114%)
**SIMULATION IMPLICITLY "STEPS DOWN" THE YIELD CURVE BY ASSUMING TODAY'S RATES
PREVAILING IN THE FUTURE.
Schedule 2.05(C)-Page 4