EXHIBIT 10(Z)
SECOND AMENDMENT
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SECOND AMENDMENT, dated as of November 19, 1999 (this "Amendment"), to
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the Credit Agreement, dated as of August 13, 1997 (as heretofore amended or
otherwise modified, the "Credit Agreement"), among HUMANA INC., a Delaware
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corporation (the "Company"), the several banks and other financial institutions
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from time to time parties to this Agreement (the "Banks"), BANK OF AMERICA, a
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national banking association, as documentation agent (in such capacity, the
"Documentation Agent") and THE CHASE MANHATTAN BANK, a New York banking
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corporation, as administrative agent for the Banks thereunder (in such capacity,
the "Agent") and as CAF Loan agent (in such capacity, the "CAF Loan Agent").
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W I T N E S S E T H:
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WHEREAS, pursuant to the Credit Agreement, the Banks have agreed to make,
and have made, certain loans and other extensions of credit to the Company; and
WHEREAS, the Company has requested that certain provisions of the Credit
Agreement be amended in the manner provided for in this Amendment;
NOW, THEREFORE, the parties hereto hereby agree as follows:
I. Defined Terms; Amendments to Section 1.1. (a) Terms defined in the
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Credit Agreement and used herein shall have the meanings given to them in the
Credit Agreement.
(b) The following definition of "Second Amendment Effective Date" is
hereby added to Section 1.1 of the Credit Agreement immediately after the
definition of "Riverview Square":
"Second Amendment Effective Date": as defined in the Second Amendment,
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dated as of November 19, 1999."
(c) The definition of "Applicable Margin" set forth in Section 1.1 of the
Credit Agreement is hereby deleted in its entirety and replaced with the
following new definition:
""Applicable Margin": with respect to each day for each Type of Revolving
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Credit Loan, the higher of (a) the rate per annum determined in accordance
with Schedule II and (b) the rate per annum determined in accordance with
Schedule IIA."
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(d) The definition of "Consolidated Net Worth" set forth in Section 1.1 of
the Credit Agreement is hereby deleted in its entirety and replaced with the
following new definition:
""Consolidated Net Worth": at any date, the stockholders' equity of the
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Company and its Subsidiaries at such date, determined in accordance with
GAAP; provided, that up to $300,000,000 of goodwill written off after the
Second Amendment Effective Date will be added back to Consolidated Net
Worth."
(e) The definition of "Consolidated EBIT" set forth in Section 1.1 of the
Credit Agreement is hereby amended by replacing the word "and" appearing
immediately before clause (ii) with a comma and adding the following immediately
after the parenthetical at the end:
"and (iii) for the purpose of calculating Consolidated EBIT for any period
that includes the first fiscal quarter of 1999, the amount shall be
adjusted by adding charges recorded in such fiscal quarter, in an amount
not exceeding $90,000,000, relating to additional medical claims expense
including $50,000,000 related to premium deficiencies, $35,000,000 to
strengthen medical claims payable and $5,000,000 for a payment to
Columbia/HCA, and for the purpose of calculating Consolidated EBIT for any
period after the Second Amendment Effective Date, the amount shall be
adjusted by adding back one time charges recorded in such period, in an
aggregate amount not exceeding $50,000,000, related to the reduction in the
work force of the Company and its Subsidiaries and an increase in the
provisions for reserves in Managed Care Indemnity, Inc., the Company's
wholly-owned professional liability insurance Subsidiary."
II. Other Amendments to the Credit Agreement.
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1 Amendment to Section 2.4. Section 2.4 of the Credit Agreement is
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hereby amended and restated in its entirety as follows:
"2.4 Fees. (a) The Company agrees to pay to the Agent, for the account
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of each Bank, on the last day of each fiscal quarter, a facility fee in
respect of the average daily amount of the Commitment of such Bank during
such fiscal quarter (such amount, the "Average Quarterly Commitment"). Such
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fee shall be computed at the rate per annum equal to the higher of (i) the
rate per annum determined in accordance with Schedule II and (ii) the rate
per annum determined in accordance with Schedule IIA.
(b) The Company agrees to pay to the Agent the other fees in the
amounts, and on the dates, agreed to by the Company and the Agent in the
fee letter, dated June 4, 1997, between the Agent and the Company.
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(c) For any day on which the Aggregate Outstanding Extensions of
Credit of all Banks equals or exceeds an amount equal to one third of the
aggregate Commitments of all the Banks, the Company agrees to pay to the
Agent for the account of the Banks (ratably in accordance with their
Commitments) a fee in an amount equal to 0.125% per annum on the Aggregate
Outstanding Extensions of Credit of all Banks on such day. Any accrued fees
payable in accordance with the immediately preceding sentence shall be
payable on the last day of each fiscal quarter and on the earlier of the
date the Commitments are terminated and the Termination Date."
2 Amendment to Section 3.3. Subsection 3.3(a) of the Credit Agreement
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is hereby amended and restated in its entirety as follows:
"(a) The Company shall pay to the Agent, for the account of the Issuing
Bank and the L/C Participants, a letter of credit commission with respect
to each Letter of Credit, computed at the rate per annum equal to the
higher of (i) the rate per annum determined in accordance with Schedule II
and (ii) the rate per annum determined in accordance with Schedule IIA, of
which .100% per annum shall be payable to the Issuing Bank and the balance
shall be payable to the L/C Participants and the Issuing Bank to be shared
ratably among them in accordance with their respective Commitment
Percentages. Such fee shall be payable on each L/C Fee Payment Date and
shall be nonrefundable."
3 Amendment to Sections 4.3, 4.4, 4.7 and 4.9. Each of sections 4.3,
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4.4, 4.7 and 4.9 of the Credit Agreement is hereby amended and restated in its
entirety as follows:
"4.3 Litigation. Except as disclosed in the Company's Annual Report on Form
10-K for its fiscal year ended December 31, 1996 and the Company's
Quarterly Report on Form 10-Q for its fiscal quarter ended March 31, 1997
filed with the Securities and Exchange Commission and previously
distributed to the Banks or disclosed in writing to the Banks between the
date thereof and November 19, 1999 (the "Updated Disclosure Letter"), as of
the Second Amendment Effective Date there is no litigation, at law or in
equity, or any proceeding before any federal, state, provincial or
municipal board or other governmental or administrative agency, including
without limitation, HMO Regulators and Insurance Regulators, pending or to
the knowledge of the Company threatened which, after giving effect to any
applicable insurance, may involve any material risk of a Material Adverse
Effect or which seeks to enjoin the consummation of any of the transactions
contemplated by this Agreement or any other Loan Document, and no judgment,
decree, or order of any federal, state, provincial or municipal court,
board or other governmental or administrative agency, including without
limitation, HMO Regulators and Insurance Regulators, has been issued
against the Company or any Subsidiary which has, or may involve, a material
risk of a Material Adverse Effect. The Company does not believe that the
final resolution of the matters disclosed in its Annual Report on Form 10-K
for its fiscal year ended December 31, 1996 and the Company's Quarterly
Report on Form 10-Q for its fiscal quarter ended March 31, 1997 filed with
the Securities and Exchange
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Commission and previously distributed to the Banks or the Updated
Disclosure Letter, will have a Material Adverse Effect."
"4.4 Disclosure. Neither this Agreement nor any agreement, document,
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certificate or statement furnished to the Banks by the Company in
connection herewith (including, without limitation, the information
relating to the Company and its Subsidiaries included in the Confidential
Information Memorandum dated July 1997 delivered in connection with the
syndication of the credit facilities hereunder) contained at the time
furnished to the Banks any untrue statement of material fact or, taken as a
whole together with all other information furnished to the Banks by the
Company, omitted to state a material fact necessary in order to make the
statements contained herein or therein not misleading. All pro forma
financial statements made available to the Banks have been prepared in good
faith based upon reasonable assumptions. There is no fact known to the
Company which materially adversely affects or could reasonably be expected
to materially adversely affect the business, operations, affairs or
condition of the Company and its Subsidiaries on a consolidated basis,
except to the extent that they may be affected by future general economic
conditions and except as set forth in paragraph 2 of the Updated Disclosure
Letter."
"4.7 Changes in Condition. Since December 31, 1998, there has been no
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development or event nor any prospective development or event, which has
had, or could reasonably be expected to have, a Material Adverse Effect."
"4.9 Tax Returns. The Company and each of its Subsidiaries have filed all
tax returns which are required to be filed and have paid, or made adequate
provision for the payment of, all taxes which have or may become due
pursuant to said returns or to assessments received. All federal tax
returns of the Company and its Subsidiaries through their fiscal years
ended in 1993 have been audited by the Internal Revenue Service or are not
subject to such audit by virtue of the expiration of the applicable period
of limitations, and the results of such audits are fully reflected in the
balance sheets referred to in subsection 4.6. The Company knows of no
material additional assessments since said date for which adequate reserves
have not been established."
4 Amendment to Section 7.5. Section 7.5 of the Credit Agreement is
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hereby amended by deleting the word "or" immediately before subsection 7.5(f)
and deleting subsection 7.5(f) in its entirety and substituting the following in
lieu thereof:
"(f) the sale or other disposition of any other property so long as no
Default or Event of Default shall have occurred and be continuing; provided
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that the aggregate book value of all assets so sold or disposed of in any
fiscal year of the Company (disregarding the book value of any assets sold
or disposed of in accordance with subsection 7.5(g) below in the fiscal
year in which such sale or other disposition is completed) shall not exceed
in the aggregate 12% of the Consolidated Assets of the Company and its
Subsidiaries as at the end of the immediately preceding fiscal year of the
Company; or
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(g) the sale or other disposition of the Company's workers' compensation
division and the Company's dental division, the aggregate book value of
which assets shall not exceed $300,000,000"
III. Amendments to Schedules to the Credit Agreement.
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1 Amendment to Schedule II. Schedule II to the Credit Agreement is
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hereby deleted in its entirety and replaced by Schedule II to this Amendment.
IV. Addition of Schedule IIA. The Credit Agreement is hereby amended by
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adding Schedule IIA, a copy which is attached hereto.
V. Notification of Commitment Reduction. The Agent hereby notifies the
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Banks that the Company has, in accordance with Section 2.5(a) of the Credit
Agreement, reduced the amount of the Commitments in an aggregate amount such
that the aggregate amount of the remaining Commitments is $1,000,000,000.
VI. Substitution of New Schedule 1. Schedule 1 to the Credit Agreement is
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hereby revised and restated by reducing the stated amount of each Bank's
Commitment's by an amount equal to one third of the amount presently listed as
such Bank's Commitment.
VII. Effective Date. This Amendment shall become effective on the date (the
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"Second Amendment Effective Date") on which the Agent receives (i) counterparts
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of this Amendment executed by each of the Company, the Agent and the Required
Banks and (ii) an amendment fee from the Company for the account of each Bank
delivering an executed counterpart of this Amendment on or before November 19,
1999 in an amount agreed to between the Company and the Agent.
VIII. General.
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1 Representation and Warranties. To induce the Agent and CAF Loan Agent
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and the Banks parties hereto to enter into this Amendment, the Company hereby
represents and warrants to the Agent and CAF Loan Agent and all of the Banks as
of the Second Amendment Effective Date that (a) this Amendment constitutes the
legal, valid and binding obligation of the Company, enforceable against it in
accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency, fraudulent conveyances, reorganization, moratorium or
similar laws affecting creditors' rights generally, by general equitable
principles (whether enforcement is sought by proceedings in equity or at law)
and by an implied covenant of good faith and fair dealing, (b) the
representations and warranties made by the Company in the Credit
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Agreement (as modified hereby) are true and correct in all material respects on
and as of the date hereof (except to the extent that such representations and
warranties are expressly stated to relate to an earlier date, in which case such
representations and warranties shall have been true and correct in all material
respects on and as of such earlier date), (c) the representation and warranty
set forth in subsection 4.7 of the Credit Agreement (without giving effect to
the modifications effected hereby except that the phrase 'could reasonably be
expected to" shall be used in lieu of the word "may") is true and correct in all
material respects as of the Second Amendment Effective Date and (d) no Default
or Event of Default has occurred and is continuing.
2 Payment of Expenses. The Company agrees to pay or reimburse the Agent
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and CAF Loan Agent for all of its out-of-pocket costs and reasonable expenses
incurred in connection with this Amendment, any other documents prepared in
connection herewith and the transactions contemplated hereby, including, without
limitation, the reasonable fees and disbursements of counsel to the Agent and
CAF Loan Agent.
3 No Other Amendments; Confirmation. Except as expressly amended,
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modified and supplemented hereby, the provisions of the Credit Agreement and the
Notes are and shall remain in full force and effect.
4 GOVERNING LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE
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PARTIES HERETO SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK.
5 Counterparts. This Amendment may be executed by one or more of the
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parties to this Agreement on any number of separate counterparts, and all of
said counterparts taken together shall be deemed to constitute one and the same
instrument. A set of the copies of this Amendment signed by all the parties
shall be lodged with the Company and the Agent and CAF Loan Agent. This
Amendment may be delivered by facsimile transmission of the relevant signature
pages hereof.
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SCHEDULE II
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Applicable Margins
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REVOLVING CREDIT LOANS
Consolidated
Capitalization Alternate Base Facility Fee L/C Commission
Ratio Rate Loans Eurodollar Loans (Rate Per Annum) (Rate Per Annum)
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less than .20 .000% .1200% .0650% .2200%
at least .20 but .000% .1300% .0700% .2300%
less than .30
at least .30 but .000% .1600% .0900% .2600%
less than .35
at least .35 but .000% .2000% .1000% .3000%
less than .40
at least .40 .000% .3000% .1500% .4000%
Any change of the Applicable Margin or Facility Fee rate resulting from a
change in the Consolidated Capitalization Ratio shall become effective on the
first Business Day following the date to which the Consolidated Capitalization
Ratio Certificate reflecting such change is applicable.
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SCHEDULE IIA
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Applicable Margins
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REVOLVING CREDIT LOANS
Alternate Base Eurodollar Facility Fee L/C Commission
Rating Rate Loans Loans (Rate Per Annum) (Rate Per Annum)
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Rating I .000% .350% .100% .450%
Rating II .000% .375% .125% .475%
Rating III .000% .475% .150% .575%
Rating IV .000% .575% .175% .675%
Rating V .000% .800% .200% .900%
For purposes of this Schedule the following terms shall have the
following meanings:
"Rating": the respective rating of each of the Rating Agencies
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applicable to the long-term senior unsecured non-credit enhanced debt of the
Company, as announced by the Rating Agencies from time to time.
"Rating Agencies": collectively, S&P and ▇▇▇▇▇'▇.
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"Rating Category": each of Rating I, Rating II, Rating III, Rating IV
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and Rating V.
"Rating I, Rating II, Rating III, Rating IV and Rating V": the
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respective Ratings set forth below:
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Rating
Category S&P ▇▇▇▇▇'▇
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Rating I greater than or greater than or
equal to BBB+ equal to Baa1
Rating II lower than BBB+ lower than Baa1
and greater than and greater than
or equal to BBB or equal to Baa2
Rating III lower than BBB lower than Baa2
and greater than and greater than
or equal to BBB- or equal to Baa3
Rating IV lower than BBB- lower than Baa3
and greater than and greater than
or equal to BB+ or equal to Ba1
Rating V lower than BB+ lower than Ba1
; provided, that (i) if on any day the Ratings of the Rating Agencies
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do not fall in the same Rating Category, then the Rating Category of
the lower of such Ratings shall be applicable for such day, (ii) if on
any day the Rating of only one of the Rating Agencies is available,
then the Rating Category of such Rating shall be applicable for such
day and (iii) if on any day a Rating is available from neither of the
Rating Agencies, then Rating V shall be applicable for such day. Any
change in the applicable Rating Category resulting from a change in
the Rating of a Rating Agency shall become effective on the date such
change is publicly announced by such Rating Agency.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed and delivered by their respective proper and duly authorized
officers as of the day and year first above written.
HUMANA INC.
By:_________________________________________
Name:_____________________________________
Title:____________________________________
THE CHASE MANHATTAN BANK, as Agent, as CAF
Loan Agent and as a Bank
By:_________________________________________
Name:_____________________________________
Title:____________________________________
BANK OF AMERICA NATIONAL ASSOCIATION
(formerly known as BANK OF AMERICA NATIONAL
TRUST & SAVINGS ASSOCIATION), as
Documentation Agent and as a Bank
By:_________________________________________
Name:_____________________________________
Title:____________________________________
ASAHI BANK, LIMITED, CHICAGO BRANCH
By:_________________________________
Name:_____________________________
Title:____________________________
BANCA NAZIONALE DEL LAVORO S.P.A.
By:_________________________________
Name:_____________________________
Title:____________________________
By:_________________________________
Name:_____________________________
Title:____________________________
BANCA MONTE DEI PASCHI DI SIENA, SPA
By:______________________________________
Name:__________________________________
Title:_________________________________
By:______________________________________
Name:__________________________________
Title:_________________________________
BANK HAPOALIM B.M.
By:_________________________________
Name:_____________________________
Title:____________________________
BANK ONE, KENTUCKY, NA
By:______________________________________
Name:__________________________________
Title:_________________________________
BANK OF LOUISVILLE AND TRUST COMPANY
By:_________________________________
Name:_____________________________
Title:____________________________
▇▇▇▇▇▇▇ BANK, N.A.
By:______________________________________
Name:__________________________________
Title:_________________________________
CITIBANK, N.A.
By:_________________________________
Name:_____________________________
Title:____________________________
FIRST UNION NATIONAL BANK
By:______________________________________
Name:__________________________________
Title:_________________________________
FIFTH THIRD BANK OF KENTUCKY
By:_________________________________
Name:_____________________________
Title:____________________________
FIRST AMERICAN NATIONAL BANK
By:______________________________________
Name:__________________________________
Title:_________________________________
FIRSTAR BANK, N.A. (formerly known as FIRSTAR
BANK MILWAUKEE, N.A.)
By:____________________________________________
Name:________________________________________
Title:_______________________________________
FIRSTAR BANK, N.A. (as successor by merger to
STAR N.A.)
By:____________________________________________
Name:________________________________________
Title:_______________________________________
KEYBANK NATIONAL ASSOCIATION
By:______________________________________
Name:__________________________________
Title:_________________________________
▇▇▇▇▇▇ GUARANTY TRUST COMPANY OF NEW
YORK
By:____________________________________
Name:________________________________
Title:_______________________________
NATIONAL CITY BANK OF KENTUCKY
By:_________________________________
Name:_____________________________
Title:____________________________
PARIBAS
By:__________________________________
Name:______________________________
Title:_____________________________
By:__________________________________
Name:______________________________
Title:_____________________________
PNC BANK, KENTUCKY, INC.
By:_________________________________
Name:_____________________________
Title:____________________________
STAR BANK, N.A.
By:__________________________________
Name:______________________________
Title:_____________________________
SUNTRUST BANK, NASHVILLE, N.A.
By:_________________________________
Name:_____________________________
Title:____________________________
THE BANK OF NEW YORK
By:__________________________________
Name:______________________________
Title:_____________________________
THE BANK OF NOVA SCOTIA
By:__________________________________
Name:______________________________
Title:_____________________________
BANK ONE, NA (formerly known as THE
FIRST NATIONAL BANK OF CHICAGO)
By:__________________________________
Name:______________________________
Title:_____________________________
THE BANK OF TOKYO-MITSUBISHI, LTD.,
CHICAGO BRANCH
By:__________________________________
Name:____________________________
Title:___________________________
THE SUMITOMO BANK, LIMITED
By:__________________________________
Name:______________________________
Title:_____________________________
THE SANWA BANK, LIMITED
By:__________________________________
Name:______________________________
Title:_____________________________
THE NORTHERN TRUST COMPANY
By:__________________________________
Name:______________________________
Title:_____________________________
WACHOVIA BANK, N.A.
By:__________________________________
Name:____________________________
Title:___________________________
▇▇▇▇▇ FARGO BANK, N.A.
By:__________________________________
Name:______________________________
Title:_____________________________
By:__________________________________
Name:______________________________
Title:_____________________________