EXHIBIT 10.19
CREDIT AGREEMENT
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COMMITTED LINE OF CREDIT NOTE
$25,000,000 December 21, 2001
FOR VALUE RECEIVED, SEI INVESTMENTS COMPANY (the "Borrower"), with an address at
1 Freedom Valley Drive, Oaks, PA 19456, promises to pay to the order of PNC
BANK, NATIONAL ASSOCIATION (the "Bank"), in lawful money of the United States of
America in immediately available funds at its offices located at 1600 Market
Street, Philadelphia, PA 19103, or at such other location as the Bank may
designate from time to time, the principal sum of TWENTY FIVE MILLION DOLLARS
($25,000,000) (the "Facility") or such lesser amount as may be advanced to or
for the benefit of the Borrower hereunder, together with interest accruing on
the outstanding principal balance from the date hereof, all as provided below:
1. Advances. The Borrower may request advances, repay and request additional
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advances hereunder until the Expiration Date, subject to the terms and
conditions of this Note and the Loan Documents (as hereinafter defined). The
"Expiration Date" shall mean December 19, 2002, or such later date as may be
designated by the Bank by written notice from the Bank to the Borrower. The
Borrower acknowledges and agrees that in no event will the Bank be under any
obligation to extend or renew the Facility or this Note beyond the Expiration
Date. The Borrower may request advances hereunder upon giving oral or written
notice to the Bank by 1:00 p.m. (Philadelphia, Pennsylvania time) (a) on the day
of the proposed advance, in the case of advances to bear interest under the Base
Rate Option (as hereinafter defined) and (b) three (3) Business Days prior to
the proposed advance, in the case of advances to bear interest under the
Euro-Rate Option (as hereinafter defined), followed promptly thereafter by the
Borrower's written confirmation to the Bank of any oral notice. The aggregate
unpaid principal amount of advances under this Note shall not exceed the face
amount of this Note.
2. Rate of Interest. Each advance outstanding under this Note will bear interest
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at a rate or rates per annum as may be selected by the Borrower from the
interest rate options set forth below (each, an "Option"):
(i) Base Rate Option. A rate of interest per annum which is at all times
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equal to the Prime Rate ("Base Rate"). For purposes hereof, the term "Prime
Rate" shall mean the rate publicly announced by the Bank from time to time as
its prime rate. The Prime Rate is determined from time to time by the Bank as a
means of pricing some loans to its borrowers. The Prime Rate is not tied to any
external rate of interest or index, and does not necessarily reflect the lowest
rate of interest actually charged by the Bank to any particular class or
category of customers. If and when the Prime Rate changes, the rate of interest
with respect to any advance to which the Base Rate Option applies will change
automatically without notice to the Borrower, effective on the date of any such
change. There are no required minimum interest periods for advances bearing
interest under the Base Rate Option.
(ii) Euro-Rate Option. A rate per annum equal to the sum of (a) the
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Euro-Rate plus (b) one hundred twenty-five (125) basis points (1.25%), for the
applicable Euro-Rate Interest Period.
For purposes hereof, the following terms shall have the following meanings:
"Business Day" shall mean any day other than a Saturday or Sunday or a
legal holiday on which commercial banks are authorized or required to be
closed for business in Philadelphia, Pennsylvania. "Euro-Rate" shall mean,
with respect to any advance to which the Euro-Rate Option applies for the
applicable Euro-Rate Interest Period, the interest rate per annum
determined by the Bank by dividing (the resulting quotient rounded upwards,
if necessary, to the nearest 1/100th of 1%) (i) the rate of interest
determined by the Bank in accordance with its usual procedures (which
determination shall be conclusive absent manifest error) to be the
eurodollar rate two (2) Business Days prior to the first day of such
Euro-Rate Interest Period for an amount comparable to such advance and
having a borrowing date and a
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maturity comparable to such Euro-Rate Interest Period by (ii) a number
equal to 1.00 minus the Euro-Rate Reserve Percentage.
"Euro-Rate Interest Period" shall mean the period of one (1), two (2),
three (3) or six (6) months selected by the Borrower commencing on the date
of disbursement of an advance (or the date of conversion of an advance to
the Euro-Rate Option, as the case may be) and each successive period
selected by the Borrower thereafter; provided, that if a Euro-Rate Interest
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Period would end on a day which is not a Business Day, it shall end on the
next succeeding Business Day, unless such day falls in the succeeding
calendar month in which case the Euro-Rate Interest Period shall end on the
next preceding Business Day. In no event shall any Euro-Rate Interest
Period end on a day after the Expiration Date.
"Euro-Rate Reserve Percentage" shall mean the maximum effective percentage
in effect on such day as prescribed by the Board of Governors of the
Federal Reserve System (or any successor) for determining the reserve
requirements (including, without limitation, supplemental, marginal and
emergency reserve requirements) with respect to eurocurrency funding
(currently referred to as "Eurocurrency liabilities").
The Euro-Rate shall be adjusted with respect to any advance to which the
Euro-Rate Option applies on and as of the effective date of any change in the
Euro-Rate Reserve Percentage. The Bank shall give prompt notice to the Borrower
of the Euro-Rate as determined or adjusted in accordance herewith, which
determination shall be conclusive absent manifest error.
If the Bank determines (which determination shall be final and conclusive) that,
by reason of circumstances affecting the eurodollar market generally, deposits
in dollars (in the applicable amounts) are not being offered to banks in the
eurodollar market for the selected term, or adequate means do not exist for
ascertaining the Euro-Rate, then the Bank shall give ten (10) business days
notice thereof to the Borrower. After the Borrower's receipt of such notice and
until the Bank notifies the Borrower in writing that the circumstances giving
rise to such suspension no longer exist, (a) the availability of the Euro-Rate
Option shall be suspended, and (b) the interest rate for all advances then
bearing interest under the Euro-Rate Option shall be converted at the expiration
of the then current Euro-Rate Interest Period(s) to the Base Rate Option.
In addition, if, after the date of this Note, the Bank shall determine (which
determination shall be final and conclusive) that any enactment, promulgation or
adoption of or any change in any applicable law, rule or regulation, or any
change in the interpretation or administration thereof by a governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by the Bank with any guideline, request or
directive (whether or not having the force of law) of any such authority,
central bank or comparable agency shall make it unlawful or impossible for the
Bank to make or maintain or fund loans under the Euro-Rate Option, the Bank
shall notify the Borrower in writing. Upon receipt of such notice, until the
Bank notifies the Borrower in writing that the circumstances giving rise to such
determination no longer apply, (a) the availability of the Euro-Rate Option
shall be suspended, and (b) the interest rate on all advances then bearing
interest under the Euro-Rate Option shall be converted to the Base Rate Option
either (i) on the last day of the then current Euro-Rate Interest Period(s) if
the Bank may lawfully continue to maintain advances under the Euro-Rate Option
to such day, or (ii) immediately if the Bank may not lawfully continue to
maintain advances under the Euro-Rate Option.
The foregoing notwithstanding, it is understood that the Borrower may select
different Options to apply simultaneously to different portions of the advances
and may select up to three (3) different interest periods to apply
simultaneously to different portions of the advances bearing interest under the
Euro-Rate Option. Interest hereunder will be calculated on the basis of a year
of 360 days for the actual number of days elapsed. In no event will the rate of
interest hereunder exceed the maximum rate allowed by law.
3. Interest Rate Election. Subject to the terms and conditions of this Note, at
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the end of each interest period applicable to any advance, the Borrower may
renew the Option applicable to such advance or convert such advance to a
different Option; provided that, during any period in which any Event of Default
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(as hereinafter defined) has occurred and is continuing, any advances bearing
interest under the Euro-Rate Option shall, at the
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Bank's sole discretion, be converted at the end of the applicable Euro-Rate
Interest Period to the Base Rate Option and the Euro-Rate Option will not be
available to Borrower with respect to any new advances until such Event of
Default has been cured by the Borrower or waived by the Bank. The Borrower shall
notify the Bank of each election of an Option, each conversion from one Option
to another, the amount of the advances then outstanding to be allocated to each
Option and where relevant the interest periods therefor. In the case of
converting to the Euro-Rate Option, such notice shall be given at least three
(3) Business Days prior to the commencement of any Euro-Rate Interest Period. If
no notice of conversion or renewal is timely received by the Bank, the Borrower
shall be deemed to have converted such advance to the Base Rate Option. Any such
election shall be promptly confirmed in writing as provided herein, including,
without limitation, by electronic mail or facsimile.
4. Advance Procedures. A request for advance made by telephone must be promptly
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confirmed in writing by such method as the Bank may require. The Borrower
authorizes the Bank to accept telephonic requests for advances, and the Bank
shall be entitled to rely upon the authority of any person providing such
instructions. The Borrower hereby indemnifies and holds the Bank harmless from
and against any and all damages, losses, liabilities, costs and expenses
(including reasonable attorneys' fees and expenses) which may arise or be
created by the acceptance of such telephone requests or making such advances
except in the event of the Bank's gross negligence. The Bank will enter on its
books and records, which entry when made will be presumed correct, the date and
amount of each advance, the interest rate and interest period applicable
thereto, as well as the date and amount of each payment.
5. Payment Terms. The Borrower shall pay accrued interest on the unpaid
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principal balance of this Note in arrears: (a) for the portion of advances
bearing interest under the Base Rate Option, on the first day of each quarter
during the term hereof, (b) for the portion of advances bearing interest under
the Euro-Rate Option, on the last day of the respective Euro-Rate Interest
Period for such advance, (c) if any Euro-Rate Interest Period is longer than
three (3) months, then also on the three (3) month anniversary of such interest
period and every three (3) months thereafter, and (d) for all advances, at
maturity, whether by acceleration of this Note or otherwise, and after maturity,
on demand until paid in full. All outstanding principal and accrued interest
hereunder shall be due and payable in full on the Expiration Date.
If any payment under this Note shall become due on a Saturday, Sunday or public
holiday under the laws of the State where the Bank's office indicated above is
located, such payment shall be made on the next succeeding business day and such
extension of time shall be included in computing interest in connection with
such payment. The Borrower hereby authorizes the Bank to charge the Borrower's
deposit account at the Bank for any payment if not paid when due, including any
applicable cure period. Payments received will be applied to charges, fees and
expenses (including attorneys' fees), accrued interest and principal in any
order the Bank may choose, in its sole discretion.
6. Late Payments; Default Rate. If the Borrower fails to make any payment of
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principal, interest or other amount coming due pursuant to the provisions of
this Note within 10 calendar days of the date due and payable, the Borrower also
shall pay to the Bank a late charge equal to the lesser of two percent (2%) of
the amount of such payment or $250.00 (the "Late Charge"). Such 10 day period
shall not be construed in any way to extend the due date of any such payment.
Upon maturity, whether by acceleration, demand or otherwise, and at the Bank's
option upon the occurrence of any Event of Default (as hereinafter defined) and
during the continuance thereof, this Note shall bear interest at a rate per
annum (based on a year of 360 days and actual days elapsed) which shall be two
percentage points (2%) in excess of the interest rate in effect from time to
time under this Note but not more than the maximum rate allowed by law (the
"Default Rate"). The Default Rate shall continue to apply whether or not
judgment shall be entered on this Note. Both the Late Charge and the Default
Rate are imposed as liquidated damages for the purposes of defraying the Bank's
expenses incident to the handling of delinquent payments, but are in addition
to, and not in lieu of, the Bank's exercise of any rights and remedies
hereunder, under the other Loan Documents or under applicable law, and any fees
and expenses of any agents or attorneys which the Bank may employ. In addition,
the Default Rate reflects the increased credit risk to the Bank of carrying a
loan that is in default. The Borrower agrees that the Late Charge and Default
Rate are reasonable forecasts of just compensation for anticipated and actual
harm incurred by the Bank, and that the actual harm incurred by the Bank cannot
be estimated with certainty and without difficulty.
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7. Prepayment. The Borrower shall have the right to prepay at any time and from
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time to time, in whole or in part, without penalty, any advance hereunder which
is accruing interest under the Base Rate Option. If the Borrower prepays
(whether voluntary, on default or otherwise) all or any part of any advance
which is accruing interest under the Euro-Rate Option on other than the last day
of the applicable Euro-Rate Interest Period, the Borrower shall pay to the Bank,
on demand therefor, all amounts due pursuant to paragraph 8 below, including the
Cost of Prepayment, if any.
8. Yield Protection. The Borrower shall pay to the Bank, on written demand
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therefor, together with the written evidence of the justification therefor, all
direct costs incurred, losses suffered or payments made by Bank by reason of any
change in law or regulation or its interpretation imposing any reserve, deposit,
allocation of capital, or similar requirement (including without limitation,
Regulation D of the Board of Governors of the Federal Reserve System) on the
Bank, its holding company or any of their respective assets. In addition, the
Borrower agrees to indemnify the Bank against any liabilities, losses or
expenses (including loss of margin, any loss or expense sustained or incurred in
liquidating or employing deposits from third parties, and any loss or expense
incurred in connection with funds acquired to effect, fund or maintain any
advance (or any part thereof) bearing interest under the Euro-Rate Option) which
the Bank sustains or incurs as a consequence of either (i) the Borrower's
failure to make a payment on the due date thereof, (ii) the Borrower's
revocation (expressly, by later inconsistent notices or otherwise) in whole or
in part of any notice given to Bank to request, convert, renew or prepay any
advance, or (iii) the Borrower's payment, prepayment or conversion of any
advance bearing interest under the Euro-Rate Option on a day other than the last
day of the applicable Euro-Rate Interest Period, including but not limited to
the Cost of Prepayment. "Cost of Prepayment" means an amount equal to the
present value, if positive, of the product of (a) the difference between (i) the
yield, on the beginning date of the applicable interest period, of a U.S.
Treasury obligation with a maturity similar to the applicable interest period
minus (ii) the yield, on the prepayment date, of a U.S. Treasury obligation with
a maturity similar to the remaining maturity of the applicable interest period,
and (b) the principal amount to be prepaid, and (c) the number of years,
including fractional years from the prepayment date to the end of the applicable
interest period. The yield on any U.S. Treasury obligation shall be determined
by reference to Federal Reserve Statistical Release H.15(519) "Selected Interest
Rates". For purposes of making present value calculations, the yield to maturity
of a similar maturity U.S. Treasury obligation on the prepayment date shall be
deemed the discount rate. The Cost of Prepayment shall also apply to any
payments made after acceleration of the maturity of this Note. The Bank's
determination of an amount payable under this paragraph shall, in the absence of
manifest error, be conclusive and shall be payable on demand.
9. Other Loan Documents. This Note is issued in connection with a Letter
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Agreement between the Borrower and the Bank dated on or before the date hereof,
and the other agreements and documents executed in connection therewith or
referred to therein, the terms of which are incorporated herein by reference (as
amended, modified or renewed from time to time, collectively the "Loan
Documents"), and is secured by the property described in the Loan Documents (if
any) and by such other collateral as previously may have been or may in the
future be granted to the Bank to secure this Note.
10. Events of Default. The occurrence of any of the following events will be
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deemed to be an "Event of Default" under this Note: (i) the nonpayment of any
principal, interest or other indebtedness under this Note when due; (ii) the
occurrence of any event of default or default and the lapse of any notice or
cure period under any Loan Document or any other debt, liability or obligation
to the Bank of any Obligor; (iii) the filing by or against any Obligor of any
proceeding in bankruptcy, receivership, insolvency, reorganization, liquidation,
conservatorship or similar proceeding (and, in the case of any such proceeding
instituted against any Obligor, such proceeding is not dismissed or stayed
within 30 days of the commencement thereof, provided that the Bank shall not be
obligated to advance additional funds during such period); (iv) any assignment
by any Obligor for the benefit of creditors, or any levy, garnishment,
attachment or similar proceeding is instituted against any property of any
Obligor held by or deposited with the Bank; (v) a default with respect to any
other indebtedness of any Obligor for borrowed money in an aggregate amount in
excess of $500,000, if the effect of such default is to cause or permit the
acceleration of such debt; (vi) the commencement of any foreclosure or
forfeiture proceeding, execution or attachment against any collateral securing
the obligations of any Obligor to the Bank; (vii) the entry of a final judgment
against any Obligor which individually or when combined with other such
judgments causes
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the aggregate of such judgments in excess of confirmed insurance coverage to
exceed $2,000,000 and the failure of such Obligor to discharge the judgment
within 30 days of the entry thereof; (viii) any material adverse change in any
Obligor's business, assets, operations, financial condition or results of
operations; (ix) any Obligor ceases doing business as a going concern; (x) any
representation or warranty made by any Obligor to the Bank in any Loan Document,
or any other documents now or in the future evidencing or securing the
obligations of any Obligor to the Bank, is false, erroneous or misleading in any
material respect; or (xi) any Obligor's failure to observe or perform after the
lapse of any required notice or cure period any covenant or other agreement with
the Bank contained in any Loan Document or any other documents now or in the
future evidencing or securing the obligations of any Obligor to the Bank. As
used herein, the term "Obligor" means any Borrower and any Guarantor, and the
term "Guarantor" means any guarantor of the Borrower's obligations to the Bank
existing on the date of this Note or arising in the future.
Upon the occurrence of an Event of Default: (a) the Bank shall be under no
further obligation to make advances hereunder; (b) if an Event of Default
specified in clause (iii) or (iv) above shall occur, the outstanding principal
balance and accrued interest hereunder together with any additional amounts
payable hereunder shall be immediately due and payable without demand or notice
of any kind; (c) if any other Event of Default shall occur, the outstanding
principal balance and accrued interest hereunder together with any additional
amounts payable hereunder, at the Bank's option and without demand or notice of
any kind, may be accelerated and become immediately due and payable; (d) at the
Bank's option, this Note will bear interest at the Default Rate from the date of
the occurrence of the Event of Default; and (e) the Bank may exercise from time
to time any of the rights and remedies available under the Loan Documents or
under applicable law.
11. Right of Setoff. In addition to all liens upon and rights of setoff against
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the Borrower's money, securities or other property given to the Bank by law,
upon the occurrence of an Event of Default the Bank shall have, with respect to
the Borrower's obligations to the Bank under this Note and to the extent
permitted by law, a contractual right of setoff against, and the Borrower hereby
assigns, conveys, delivers, pledges and transfers to the Bank all of the
Borrower's right, title and interest in and to, all of the Borrower's deposits,
moneys, securities and other property now or hereafter in the possession of or
on deposit with, or in transit to, the Bank or any other direct or indirect
subsidiary of The PNC Financial Group, Inc., whether held in a general or
special account or deposit, or whether held for safekeeping or otherwise,
excluding, however, all IRA, Keogh, and trust accounts. Every such right of
setoff may be exercised without demand upon or notice to the Borrower upon the
occurrence of an Event of Default.
12. Miscellaneous. All notices, demands, requests, consents, approvals and other
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communications required or permitted hereunder must be in writing (except as may
be agreed otherwise above with respect to borrowing requests) and will be
effective upon receipt. Such notices and other communications may be
hand-delivered, sent by electronic mail or by facsimile transmission with
confirmation of delivery and a copy sent by first-class mail, or sent by
nationally recognized overnight courier service, to the addresses for the Bank
and the Borrower set forth above or to such other address as either may give to
the other in writing for such purpose. No delay or omission on the Bank's part
to exercise any right or power arising hereunder will impair any such right or
power or be considered a waiver of any such right or power, nor will the Bank's
action or inaction impair any such right or power. No modification, amendment or
waiver of any provision of this Note nor consent to any departure by the
Borrower therefrom will be effective unless made in a writing signed by the Bank
and the Borrower. The Borrower agrees to pay on demand, to the extent permitted
by law, all costs and expenses incurred by the Bank in the enforcement of its
rights in this Note and in any security therefor, including without limitation
reasonable fees and expenses of the Bank's counsel. If any provision of this
Note is found to be invalid by a court, all the other provisions of this Note
will remain in full force and effect. The Borrower and all other makers and
indorsers of this Note hereby forever waive presentment, protest, notice of
dishonor and notice of non-payment. The Borrower also waives all defenses based
on suretyship or impairment of collateral. If this Note is executed by more than
one Borrower, the obligations of such persons or entities hereunder will be
joint and several. This Note shall bind the Borrower and its heirs, executors,
administrators, successors and assigns, and the benefits hereof shall inure to
the benefit of the Bank and its successors and assigns; provided, however, that
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the Borrower may not assign this Note in whole or in part without the Bank's
written consent and the Bank at any time may assign this Note in whole or in
part.
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This Note has been delivered to and accepted by the Bank and will be deemed to
be made in the State where the Bank's office indicated above is located. THIS
NOTE WILL BE INTERPRETED AND THE RIGHTS AND LIABILITIES OF THE BANK AND THE
BORROWER DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE WHERE THE BANK'S
OFFICE INDICATED ABOVE IS LOCATED, EXCLUDING ITS CONFLICT OF LAWS RULES. The
Borrower hereby irrevocably consents to the exclusive jurisdiction of any state
or federal court in the county or judicial district where the Bank's office
indicated above is located; provided that nothing contained in this Note will
prevent the Bank from bringing any action, enforcing any award or judgment or
exercising any rights against the Borrower individually, against any security or
against any property of the Borrower within any other county, state or other
foreign or domestic jurisdiction. The Borrower acknowledges and agrees that the
venue provided above is the most convenient forum for both the Bank and the
Borrower. The Borrower waives any objection to venue and any objection based on
a more convenient forum in any action instituted under this Note.
13. WAIVER OF JURY TRIAL. THE BORROWER IRREVOCABLY WAIVES ANY AND ALL RIGHTS THE
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BORROWER MAY HAVE TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR CLAIM OF ANY
NATURE RELATING TO THIS NOTE, ANY DOCUMENTS EXECUTED IN CONNECTION WITH THIS
NOTE OR ANY TRANSACTION CONTEMPLATED IN ANY OF SUCH DOCUMENTS. THE BORROWER
ACKNOWLEDGES THAT THE FOREGOING WAIVER IS KNOWING AND VOLUNTARY.
The Borrower acknowledges that it has read and understood all the provisions of
this Note, including the confession of judgment and the waiver of jury trial,
and has been advised by counsel as necessary or appropriate.
WITNESS the due execution hereof as a document under seal, as of the date first
written above, with the intent to be legally bound hereby.
[SEAL] SEI INVESTMENTS COMPANY
Attest: By: s/s Kathy Heilig
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Print Name: Print Name: Kathy Heilig
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Title: Title: Controler and Treaserur
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December 21, 2001
SEI Investments Company
1 Freedom Valley Drive
Oaks, PA 19456
Attention: Robert M. Silvestri
Re: $25,000,000 Committed Line of Credit
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Ladies and Gentlemen:
We are pleased to inform you that PNC Bank, National Association (the
"Bank"), has approved your request for a committed line of credit to SEI
Investments Company (the "Borrower"). We look forward to this opportunity to
help you meet the financing needs of your business. All the details regarding
your line of credit are outlined in the following sections of this letter.
1. Facility and Use of Proceeds. This is a committed revolving line of credit
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under which the Borrower may request and the Bank, subject to the terms and
conditions of this letter, will make advances to the Borrower from time to time
until the Expiration Date, in an amount in the aggregate at any time outstanding
not to exceed $25,000,000 (the "Line of Credit" or the "Loan"). The "Expiration
Date" means December 19, 2002, or such later date as may be designated by the
Bank by written notice to the Borrower. Advances under the Line of Credit will
be used for working capital or other general business purposes of the Borrower.
The Borrower may request that the Bank, in lieu of cash advances, issue
trade and/or standby letters of credit (individually, a "Letter of Credit" and
collectively the "Letters of Credit") under the Line of Credit having expiration
dates not later than the Expiration Date, unless approved in writing by the
Bank, and aggregating not more than $2,000,000 in face amount outstanding at any
one time. The availability of advances under the Line of Credit shall be reduced
by the face amount of each Letter of Credit issued and outstanding (whether or
not drawn). Each payment by the Bank under a Letter of Credit shall in the
Bank's discretion constitute an advance of principal under the Line of Credit
and shall be evidenced by the Line of Credit Note (as defined below). The
Letters of Credit shall be governed by the terms of this letter and by one or
more reimbursement agreements, in form and content satisfactory to the Bank,
executed by the Borrower in favor of the Bank (collectively, the "Reimbursement
Agreement"). Each request for the issuance of a Letter of Credit must be
accompanied by the Borrower's execution of an application on the Bank's standard
forms (each, an "Application"), together with all supporting documentation. Each
Letter of Credit will be issued in the Bank's sole discretion and in a form
acceptable to the Bank. The Borrower shall pay the Bank's standard issuance
fees, commissions and expenses therefor as shall be required by the Bank.
2 Note. The obligation of the Borrower to repay advances under the Line of ----
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Credit shall be evidenced by a promissory note (the "Note") in form and content
satisfactory to the Bank.
This letter (the "Letter Agreement"), the Note and the other agreements and
documents executed and/ or delivered pursuant hereto, as each may be amended,
modified, extended or renewed from time to time, will constitute the "Loan
Documents." Capitalized terms not defined herein shall have the meaning ascribed
to them in the Loan Documents.
3 Interest Rate. Interest on the unpaid balance of the Line of Credit advances
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will be charged at the rates, and be payable on the dates and times, set forth
in the Note.
4 Repayment. Subject to the terms and conditions of this Letter Agreement, the
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Borrower may borrow, repay and reborrow under the Line of Credit until the
Expiration Date, on which date the outstanding principal balance and any accrued
but unpaid interest shall be due and payable. Interest will be due and payable
as set forth in the Note, and will be computed on the basis of a year of 360
days and paid on the actual number of days that principal is outstanding.
5 Covenants. Unless compliance is waived in writing by the Bank, until payment
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in full of the Loan and termination of the commitment for the Line of Credit and
expiration or termination of all Letters of Credit:
(a) The Borrower will promptly submit to the Bank such information as
the Bank may reasonably request relating to the Borrower's affairs (including
but not limited to annual Financial Statements and tax returns for the Borrower)
or any security for the Loan.
(b) The Borrower will notify the Bank in writing of the occurrence of
any Event of Default or an act or condition which, with the passage of time, the
giving of notice or both might become an Event of Default.
(c ) The Borrower will comply with the financial and other covenants
included in Exhibit "A" hereto.
6 Representations and Warranties. To induce the Bank to extend the Loan and upon
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the making of each advance to the Borrower or issuing any Letter of Credit under
the Line of Credit, the Borrower represents and warrants as follows:
(a) The Borrower's latest Financial Statements provided to the Bank
are true, complete and accurate in all material respects and fairly present the
financial condition, assets and liabilities, whether accrued, absolute,
contingent or otherwise, and the results of the Borrower's operations for the
period specified therein. The Borrower's Financial Statements have been prepared
in accordance with generally accepted accounting principles consistently applied
from period to period subject in the case of interim statements to normal
year-end adjustments. Since the date of the latest Financial Statements provided
to the Bank, neither the Borrower nor any Subsidiary (as defined in Exhibit A)
has suffered any damage, destruction or loss which has materially adversely
affected its business, assets, operations, financial condition or results of
operations.
(b) There are no actions, suits, proceedings or governmental
investigations pending or, to the knowledge of the Borrower, threatened against
the Borrower or any Subsidiary which could result in a material adverse change
in its business, assets, operations, financial condition or results of
operations and there is no basis known to the Borrower or its officers,
directors or shareholders for any such action, suit, proceedings or
investigation.
(c ) Each of the Borrower and the Subsidiaries has filed all returns
and reports that are required to be filed by it in connection with any federal,
state or local tax, duty or charge levied, assessed or imposed upon it or its
property, including
101
unemployment, social security and similar taxes and all of such taxes have been
either paid or adequate reserve or other provision has been made therefor.
(d) Each of the Borrower and the Subsidiaries is duly organized,
validly existing and in good standing under the laws of the state of its
incorporation or organization and has the power and authority to own and operate
its assets and to conduct its business as now or proposed to be carried on, and
is duly qualified, licensed and in good standing to do business in all
jurisdictions where its ownership of property or the nature of its business
requires such qualification or licensing.
(e) The Borrower has full power and authority to enter into the
transactions provided for in this Letter Agreement and has been duly authorized
to do so by all necessary and appropriate action and when executed and delivered
by the Borrower, this Letter Agreement and the other Loan Documents will
constitute the legal, valid and binding obligations of the Borrower, enforceable
against the Borrower in accordance with their terms.
(f) There does not exist any default or violation by the Borrower of
or under any of the terms, conditions or obligations of: (i) its organizational
documents; (ii) any indenture, mortgage, deed of trust, franchise, permit,
contract, agreement, or other instrument to which it is a party or by which it
is bound; or (iii) any law, regulation, ruling, order, injunction, decree,
condition or other requirement applicable to or imposed upon the Borrower by any
law or by any governmental authority, court or agency.
7 Fees. Beginning on the last day of the first fiscal quarter ending after the
- ------
date of the Note and continuing on the last day of each quarter thereafter until
the Expiration Date, the Borrower shall pay a commitment fee to the Bank, in
arrears, at the rate of one-quarter of one percent (.25%) per annum on the
average daily balance of the Line of Credit which is unused and uncancelled
during the preceding quarter. The commitment fee shall be computed on the basis
of a year of 360 days and paid on the actual number of days elapsed.
8 Expenses. The Borrower shall also reimburse the Bank for the Bank's expenses
- ----------
(including the reasonable fees and expenses of the Bank's outside and in-house
counsel not to exceed $4,000) in documenting and closing this transaction, in
connection with any amendments, modifications or renewals of the Loan, and in
connection with the collection of all of the Borrower's Obligations to the Bank,
including but not limited to enforcement actions relating to the Loan.
9 Other Conditions to Advances. The Bank will not be obligated to make an
- ------------------------------
advance or to issue any Letter of Credit under the Line of Credit until the
Borrower has provided the following, all in form and content satisfactory to the
Bank: certified resolutions of the Borrower's Board of Directors authorizing the
borrowings hereunder and the execution and delivery of this Agreement and the
other Loan Documents; certified certificate or incorporation and by-laws of the
Borrower and a certificate of good standing from the Commonwealth of
Pennsylvania; and an opinion of counsel to the Borrower addressing such matters
relating to the Borrower and this transaction as the Bank may reasonably
request.
10 Additional Provisions. Before the first advance under the Loan and/or the
- ------------------------
issuance of any Letter of Credit, the Borrower shall execute and deliver to the
Bank the Note, an Application for each Letter of Credit and the Reimbursement
Agreement (if applicable) and other required Loan Documents and such other
instruments and documents as the Bank may reasonably request. The Bank will not
be obligated to make any advance or to issue any Letter of Credit under the Line
of Credit if any Event of Default or event which with the passage of time,
provision of notice or both would constitute an Event of Default shall have
occurred and be continuing.
Prior to execution of the final Loan Documents, the Bank may terminate this
Letter Agreement if a material adverse change occurs with respect to the
Borrower, or if the Borrower fails to comply with any of the terms and
conditions of this Letter Agreement.
This Letter Agreement is governed by the laws of the Commonwealth of
Pennsylvania. No modification, amendment or waiver of any of the terms of this
Letter Agreement, nor any consent to any departure by the Borrower therefrom,
will be effective unless made in a writing signed by the party to be charged,
and then such waiver or consent shall be effective only in the specific instance
and for the purpose for which given. When accepted, this Letter Agreement and
the other Loan Documents will constitute the entire agreement between the Bank
and the Borrower concerning the Loan, and shall replace all prior
understandings, statements, negotiations and written materials relating to the
Loan.
The Borrower agrees to indemnify the Bank (and its directors, officers,
employees, agents and controlling persons) against any and all claims, losses,
damages, liabilities, costs and expenses (including, by way of example only,
reasonable fees and expenses of counsel and expert witnesses) which may be
incurred by any of them in connection with any investigation, litigation or
other proceeding relating to the Loan, the Loan Documents and/ or the use of
proceeds of the Loan, except those solely attributable to its or their own gross
negligence or willful misconduct. The Borrower's indemnification obligations are
in addition to any other liability the Borrower may otherwise have, and shall
survive payment in full of the Loans, termination of this Letter Agreement and
the other Loan Documents, and assignment of any rights hereunder.
The Bank will not be responsible for any damages, consequential,
incidental, punitive or otherwise, that may be incurred or alleged by any person
or entity, including the Borrower and the Guarantor, as a result of this Letter
Agreement, the other Loan Documents, the transactions contemplated hereby or
thereby and the use of proceeds of the Loan.
THE BORROWER AND THE BANK IRREVOCABLY WAIVE ANY AND ALL RIGHTS THEY MAY
HAVE TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR CLAIM OF ANY NATURE ARISING
OUT OF THIS LETTER AGREEMENT, THE OTHER LOAN DOCUMENTS AND THE TRANSACTIONS
CONTEMPLATED IN ANY OF SUCH DOCUMENTS AND ACKNOWLEDGE THAT THE FOREGOING WAIVER
IS KNOWING AND VOLUNTARY.
102
If and when a loan closing occurs, this Letter Agreement (as the same may
be amended from time to time) shall survive the closing and will serve as our
loan agreement throughout the term of the Loan.
To accept these terms, please sign the enclosed copy of this Letter
Agreement as set forth below and the Loan Documents and return them to the Bank
within 30 days from the date of this Letter Agreement, or this Letter Agreement
may be terminated at the Bank's option without liability or further obligation
of the Bank.
Thank you for giving PNC Bank this opportunity to work with your business.
We look forward to other ways in which we may be of service to your business.
Very truly yours,
PNC BANK, NATIONAL ASSOCIATION
By:
-----------------------------------
Title:
--------------------------------
103
ACCEPTANCE
With the intent to be legally bound hereby, the above terms and conditions are
hereby agreed to and accepted as of this day of December, 2001.
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BORROWER:
SEI INVESTMENTS COMPANY
By:
-----------------------------------
(SEAL)
Print Name:
---------------------------
Title:
--------------------------------
104
EXHIBIT A
A.FINANCIAL REPORTING COVENANTS:
(1) The Borrower will deliver to the Bank:
(a) Financial Statements for its fiscal year, within 90 days after fiscal
year end, audited and certified without qualification by a certified public
accountant acceptable to the Bank.
(b) Financial Statements for each fiscal quarter, within 45 days after the
quarter end, together with year-to-date and comparative figures for the
corresponding periods of the prior year, certified as true and correct by its
chief financial officer.
(c ) With each delivery of Financial Statements, a certificate of the
Borrower's chief financial officer as to the Borrower's compliance with the
financial covenants set forth below for the period then ended and whether any
Event of Default exists, and, if so, the nature thereof and the corrective
measures the Borrower proposes to take. This certificate shall set forth all
detailed calculations necessary to demonstrate such compliance.
"Financial Statements" means the consolidated balance sheet and statements
of income and cash flows prepared in accordance with generally accepted
accounting principles in effect from time to time ("GAAP") applied on a
consistent basis (subject in the case of interim statements to normal year-end
adjustments).
B. FINANCIAL COVENANTS:
(1) The Borrower will maintain at all times a minimum Consolidated Net
Worth of not less than the sum of (a) $155,152,000 plus (b) an aggregate amount
equal to 50% of its Consolidated Net Income (but, in each case, only if a
positive number) for each completed fiscal year beginning with the fiscal year
ending on December 31, 2001, plus (c) 50% of its Consolidated Net Income (but
only if a positive number) for the period beginning on the first day of the then
current fiscal year and ending at the end of the then most recently completed
fiscal quarter.
(2) The Borrower will maintain at all times a Consolidated Fixed Charges
Coverage Ratio of at least 1.25 to 1.
(3) The Borrower will maintain at all times a Consolidated Leverage Ratio
of not more than .65 to 1.
Additional Defined Terms used in Exhibit A:
"Capitalized Lease" means any lease obligations with respect to which is
required to be capitalized on a consolidated balance sheet of the lessee and its
subsidiaries in accordance with GAAP.
"Consolidated Fixed Charges" for any period means on a consolidated basis
the sum of (i) all Rentals (other than Rentals on Capitalized Leases) payable
during such period by the Borrower and the Subsidiaries, and (ii) all Interest
Charges on all Indebtedness (including the interest component of Rentals on
Capitalized Leases) of the Borrower and the Subsidiaries.
"Consolidated Fixed Charges Coverage Ratio" means, at any time, the ratio
of (a) Consolidated Income Available for Fixed Charges for the period of four
consecutive fiscal quarters ending on, or most recently ended prior to, such
time to (b) Consolidated Fixed Charges for such period.
"Consolidated Income Available for Fixed Charges" for any period means the
sum of (i) Consolidated Net Income during such period plus, (ii) to the extent
deducted in determining Consolidated Net Income, (A) all provisions for any
Federal, state or other income taxes made by the Borrower and the Subsidiaries
during such period and (B) Consolidated Fixed Charges of the Borrower and the
Subsidiaries during such period.
"Consolidated Net Income" for any period means the gross revenues of the
Borrower and the Subsidiaries for such period less all expenses and other proper
charges (including taxes on income), determined on a consolidated basis after
eliminating earnings or losses attributable to outstanding Minority Interests,
but excluding in any event:
(a) any extraordinary gains or losses on the sale or other disposition of
Investments or fixed or capital assets, and any taxes on such excluded gains and
any tax deductions or credits on account of any such excluded losses;
(b) any net income or any net loss during such period from any discontinued
operations or the disposition thereof,
(c )the proceeds of any life insurance policy;
(d) net earnings and losses of any Subsidiary accrued prior to the date it
became a Subsidiary;
(e) net earnings and losses of any corporation (other than a Subsidiary)
substantially all the assets of which have been acquired in any manner by the
Borrower or any Subsidiary realized by such corporation prior to the date of
such acquisition;
(f) net earnings and losses of any corporation (other than a Subsidiary)
with which the Borrower or a Subsidiary shall have consolidated or which shall
have merged into or with the Borrower or a Subsidiary prior to the date of such
consolidation or merger;
(g) net earnings of any business entity (other than a Subsidiary) in which
the Borrower or any Subsidiary has an ownership interest unless such net
earnings shall have actually been received by the Borrower or such Subsidiary in
the form of cash distributions;
(h) any portion of the net earnings of any Subsidiary which for any reason
is unavailable for payment of dividends to the Borrower or any other Subsidiary;
(i) earnings resulting from any reappraisal, revaluation or write-up of
assets;
(j) any deferred or other credit representing any excess of the equity in
any Subsidiary at the date of acquisition thereof over the amount invested in
such Subsidiary;
(k) any gain arising from the acquisition of any Securities of the Borrower
or any Subsidiary; and
(l) any reversal of any contingency reserve, which reversal is required
under GAAP to be disclosed in the financial statements of the Borrower, except
to the extent that provision for such contingency reserve shall have been made
from income arising during such period.
105
"Consolidated Net Worth" shall mean as of the date of determination, the
Borrower's consolidated capital stock accounts (net of treasury stock, at cost),
plus (or minus in the case of deficit) consolidated retained earnings, minus 50%
of the amount of the goodwill if any, associated with the acquisition of
property which would be required by GAAP to be classified as such on the
consolidated balance sheet of the Borrower and the Subsidiaries.
"Consolidated Total Funded Debt" shall be defined as the sum, without
duplication, of (a) outstanding borrowings under the Line of Credit, plus (b)
the face amount of issued and outstanding letters of credit, plus (c) all other
obligations of the Borrower and its consolidated Subsidiaries for borrowed money
or which has been incurred in connection with the acquisition of assets,
including capital lease obligations, plus (d) the amount of any securitzed
assets sold with or without recourse by the Borrower and/or its subsidiaries
plus, (e) all guarantees provided by the Borrower and the Subsidiaries to third
parties.
"Consolidated Leverage Ratio" shall be defined as the ratio of Consolidated
Total Funded Debt to the sum of (i) Consolidated Total Funded Debt plus (ii)
Consolidated Net Worth.
"Indebtedness" as used in this Agreement means all indebtedness for
borrowed money which in accordance with generally accepted accounting principles
would be considered as a liability, all Rentals under Capitalized Leases, all
guarantees and other contingent obligations in respect of, or obligations to
purchase or otherwise acquire, Indebtedness of others, and Indebtedness of
others secured by any lien on property owned by the Borrower or any Subsidiary,
whether or not the Borrower or such Subsidiary has assumed such Indebtedness.
"Interest Charges" for any period means all interest and all amortization
of debt, discount and expense on any particular Indebtedness for which such
calculations are being made. Computations of Interest Charges on a pro forma
basis for Indebtedness having a variable interest rate shall be calculated at
the rate in effect on the date of any determination.
"Investments" shall mean all investments, in cash or by delivery of
property made, directly or indirectly in any Person, whether by acquisition of
shares of capital stock, indebtedness or other obligations or securities or by
loan, advance, capital contribution or otherwise; provided, however, that
"Investments" shall not mean or include routine investments in property to be
used or consumed in the ordinary course of business (including those assets
designated as loans receivable available for sale in accordance with GAAP).
"Liens" means any interest in property securing an obligation owed to, or a
claim by, a Person other than the owner of the property, whether such interest
is based on the common law, statute or contract, and including but not limited
to the security interest or lien arising from a mortgage, encumbrance, pledge,
conditional sale or trust receipt or a lease, consignment or bailment for
security purposes. The term "Lien" shall include reservations, exceptions,
encroachments, easements, rights-of-way, covenants, conditions, restrictions,
leases and other title exceptions and encumbrances (including, with respect to
stock, stockholder agreement, voting trust agreements, buy-back agreements and
all similar arrangements) affecting property. For the purposes of this Letter
Agreement, the Borrower or a Subsidiary shall be deemed to be the owner of any
property which it has acquired or holds subject to a conditional sale agreement,
Capitalized Lease or other arrangement pursuant to which title to the property
has been retained by or vested in some other Person for security purposes and
such retention or vesting shall constitute a Lien.
"Minority Interests" means any shares of stock of any class of a Subsidiary
(other than directors' qualifying shares as required by laws) that are not owned
by a Borrower and/or one or more of the Subsidiaries. Minority Interests shall
be valued by valuing Minority Interests constituting preferred stock at the
voluntary or involuntary liquidating value of such preferred stock, whichever is
greater, and by valuing Minority Interests constituting common stock at the book
value of capital and surplus applicable thereto adjusted, if necessary, to
reflect any changes from the book value of such common stock required by the
foregoing method of valuing Minority Interests in preferred stock.
"Person" means an individual, partnership, corporation, limited liability
company, association, trust, unincorporated organization, or a government or
agency or political subdivision thereof.
"Rentals" means and includes as of the date of any determination thereof
all fixed payments (including as such all payments which the lessee is obligated
to make to the lessor on termination of the lease or surrender of the property)
payable by the Borrower or a Subsidiary, as lessee or sublessee under a lease of
real or personal property, but shall be exclusive of any amounts required to be
paid by the Borrower or a Subsidiary (whether or not designated as rents or
additional rents) on account of maintenance, repairs, insurance, taxes and
similar charges. Fixed rents under any so-called "percentage leases" shall be
computed solely on the basis of the minimum rents, if any, required to be paid
by the lessee regardless of sales volume or gross revenues.
"Subsidiary" means any corporation or other entity the majority of the
voting stock of which is owned, directly or indirectly, beneficially or of
record, by the Borrower or any Subsidiary, or which is otherwise controlled,
directly or indirectly, by the Borrower or any Subsidiary.
C.NEGATIVE COVENANTS:
(1) The Borrower shall not incur or permit to exist (or allow any
Subsidiary to permit to exist) any Indebtedness, except (i) the borrowing under
the Line of Credit, (ii) Indebtedness with an initial principal balance of
$35,000,000 owing to various insurance companies under Note Purchase Agreements
dated as of February 24, 1997, as amended (the "Senior Notes" or the "Note
Purchase Agreements"); (iii) a term loan of $25,000,000 owing to Firstar Bank,
N.A. under a Loan Agreement initially dated June 26, 2001, as amended, (iv)
unsecured trade credits or debt, or open accounts incurred in the ordinary
course of business or unsecured seller financing of the acquisition of assets or
businesses consistent with the Borrower's business; (v) operating leases
aggregating a maximum of $500,000 per month for normal business purposes; (vi)
106
indebtedness related to purchase money security interests arising in the
ordinary course of the Borrower's business and limited as noted in Section (2)
below; (vii) Indebtedness which constitutes a renewal, extension, substitution,
refinancing, or replacement (collectively "Restructuring") of Indebtedness of
the Borrower and its Subsidiaries, provided that the resulting Indebtedness from
such Restructuring shall not exceed the outstanding principal amount of such
restructured Indebtedness, unless the Borrower and its Subsidiaries would be
specifically permitted hereunder to incur such excess amount of Indebtedness and
still continue to satisfy all financial covenants herein, (viii) non-recourse
Indebtedness of the Borrower and its Subsidiaries incurred in connection with
(a) the financing of the distribution of fund shares that do not assess a
front-end load or sales charge which Indebtedness expressly precludes the
payment thereof from any properties or assets of the Borrower or its
Subsidiaries other than 12b-1 fees, contingent deferred sales charges, and other
substantially similar fees, charges, expenses or liabilities permitted under
applicable law and the proceeds thereof, or (b) financing, acquisition, or
purchase of trade finance receivables which Indebtedness expressly excludes the
payment thereof from any properties or assets of the Borrower and its
Subsidiaries other than such receivables and the proceeds thereof and (ix)
additional unsecured Indebtedness in an aggregate amount not to exceed
$25,000,000 (all such Indebtedness sometimes collectively called herein the
"Permitted Indebtedness").
(2) The Borrower will not, and will not permit any Subsidiary to, create or
incur, or suffer to be incurred or to exist, any Lien on its or their property
or assets, whether now owned or hereafter acquired, or upon any income or
profits therefrom, or transfer any property for the purpose of subjecting the
same to the payment of obligations in priority to the payment of its or their
general creditors, or acquire or agree to acquire, or permit any Subsidiary to
acquire, any property or assets upon conditional sales agreements or other title
retention devices, except as follows (collectively the "Permitted Liens"):
(i) Liens for property taxes and assessments or governmental charges or
levies Liens securing claims or demands of carriers, warehousemen, landlords,
mechanics and materialmen, provided that such Liens are being contested in good
faith and that adequate reserves therefore are established in accordance with
GAAP, that such contests will not materially adversely affect the operations or
financial condition of the Borrower and the Subsidiaries taken as a whole, and
that such taxes and assessments are promptly paid when the dispute is finally
determined;
(ii) Liens of or resulting from any judgment or award, the time for the
appeal or petition for rehearing of which shall not have the expired, or in
respect of which the Borrower or a Subsidiary shall at any time in good faith be
pursuing an appeal or proceeding for a review and in respect to which a stay of
execution pending such appeal or proceeding for review shall have been secured;
(iii)Liens incidental to the conduct of business or the ownership of
properties and assets (including Liens in connection with worker's compensation,
unemployment insurance and other like laws, warehousemen's and attorneys' liens
and statutory landlords' liens) and Liens to secure the performance of bids,
tenders or trade contracts, or to secure statutory obligations, surety or appeal
bonds or other Liens of like general nature incurred in the ordinary course of
business and not in connection with the borrowing of money provided in each
case, the obligation secured is not overdue or, if overdue, is being contested
in good faith by appropriate actions or proceedings;
(iv) Minor survey exceptions or minor encumbrances, easements or
reservations, or rights of others for rights-of-way, utilities and other similar
purposes, or zoning or other restrictions as to the use of real properties,
which are necessary for the conduct of the activities of the Borrower and its
Subsidiaries or which customarily exist on properties of corporations engaged in
similar activities and similarly situated and which do not in any event
materially impair their use in the operation of the business of the Borrower and
its Subsidiaries;
(v) Liens securing Indebtedness of a Subsidiary to the Borrower or to
another Subsidiary;
(vi) Liens existing as of the date hereof and securing Indebtedness of SEI
Financial Services Company ("SFS") under a Nonrecourse Note in the aggregate
amount of $500,000 pursuant to the terms of a certain Nonrecourse Revolving Loan
Agreement, dated as of April 28, 1995, by and between SFS and Crestar Bank,
N.A., with respect to the financing of payments that SFS is required to pay to
Crestar Securities Corporation in connection with the sale of the Class B shares
of CrestFunds, Inc. (such Indebtedness being nonrecourse to SFS and secured by
Rule 12b-1 fees and contingent deferred sales charges to be paid to SFS by
CrestFunds, Inc.);
(vii) Liens incurred after the date hereof given to secure Capitalized
Leases or the payment of the purchase price incurred in connection with the
acquisition of fixed assets useful and intended to be used in carrying on the
business of the Borrower or a Subsidiary, including Liens on such fixed assets
at the time of acquisition thereof or at the time of acquisition by the Borrower
or a Subsidiary of any business entity the owning such fixed assets, whether or
not such existing Liens were given to secure the payment of the purchase price
of the fixed assets to which they attach so long as they were not incurred,
extended or renewed in contemplation of such acquisition, provided, however,
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that (i) the Lien shall attach solely to the fixed assets acquired or purchased,
(ii) at the time of acquisition of such fixed assets, the aggregate amount
remaining unpaid on all indebtedness secured by Liens on such fixed assets
whether or not assumed by the Borrower or a Subsidiary shall not exceed an
amount equal to 100% of the lesser of the total purchase price or fair market
value at the time of acquisition of such fixed assets (as determined in good
faith by the chief financial officer of the Borrower), and (iii) all such
indebtedness shall have been incurred within the applicable limitations provided
in Section (1) hereof;
(viii) Liens renewing, extending or refunding any Lien permitted by
subsections (vi) and (vii) of this Section (2), provided, however, that (i) at
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the time of such extension, renewal or refunding and after giving effect
thereto, no Event of Default exists, (ii) the principal amount of Indebtedness
secured by such Lien immediately prior to such extension, renewal or
107
refunding is not increased or the maturity thereof reduced, and (iii) such Lien
is not extended to any other property of the Borrower or any Subsidiary;
(ix) Other Liens not otherwise permitted by subsections (i) through (viii)
above, provided, however, that the Indebtedness secured thereby is permitted
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pursuant to Section (1) hereof; and
(x) Liens on Rule 12b-1 Fees, contingent deferred sales charges, other
substantially similar fees, charges, expenses or liabilities permitted under
applicable law, and trade finance receivables and the proceeds thereof, provided
that the Indebtedness secured thereby is permitted pursuant to Sections (1)
hereof;
provided, however, that the aggregate Indebtedness of the Borrower and the
- -------- -------
Subsidiaries subject to Permitted Liens hereunder shall never exceed twenty
percent (20%) of Consolidated Net Worth. For purposes of this Section (2), any
Person becoming a Subsidiary after the date of this Agreement shall be deemed to
have incurred all of its then outstanding Liens at the time it becomes a
Subsidiary, and any Person extending, renewing or refunding any Indebtedness
secured by any Lien permitted pursuant to Section (1) shall be deemed to have
incurred such Lien at the time of such extension, renewal or refunding.
(3) Except as otherwise expressly permitted under this Agreement, the
Borrower shall not, and shall not permit any Subsidiary to, enter into or be a
party to any transaction with the Borrower, the Subsidiaries or other
affiliates, except in the ordinary course of business, pursuant to the
reasonable requirements of that entity's business, and upon fair and reasonable
terms which are fully disclosed to the Bank and could be obtained in a
reasonably comparable arm's length transaction with an unrelated third party
(including, without limitation, the continuance of or establishment of
transactions specified in Schedule I hereto or as otherwise previously approved
in writing by the Bank); provided, however, that such limitation shall not apply
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to or affect the power of the Borrower to acquire, accept and repay unsecured
loans and advances from the owner or a Subsidiary of the Borrower or limit
reasonable management fees or dividends which might be payable by the Borrower
to its owner or from a Subsidiary to the Borrower or another affiliate (assuming
such repayment, fees or dividends can be made without breach of the financial
covenants or other provisions of this Letter Agreement).
(4) The Borrower will not, nor will it permit any Subsidiary to,
consolidate or merge with or into, or sell, lease or otherwise transfer all or
any substantial part of its assets to, any other organization or entity, or
discontinue or eliminate any business line or segment, provided that (a) the
--------
Borrower or a Subsidiary may merge with another organization or entity if (i)
the Borrower or such Subsidiary is the corporation surviving such merger and
such survivor is an organization or entity organized under the laws of the
United States of America or one of its States (unless such survivor is a
Subsidiary which is already an existing foreign organization), and (ii)
immediately after giving effect to such merger, no Event of Default shall have
occurred and be continuing, (b) Subsidiaries of the Borrower may merge with one
another, and (c) the foregoing limitation on the sale, lease or other transfer
of assets and on the discontinuation or elimination of a business line or
segment shall not prohibit, at any time, a transfer of assets or the
discontinuance or elimination of a business line or segment (in a single
transaction or in a series of related transactions) unless the aggregate assets
to be so transferred or utilized in a business line or segment to be so
discontinued, when combined with all other assets transferred, and all other
assets utilized in all other business lines or segments discontinued, after the
effective date of the transaction constitutes more than fifteen percent (15%) of
Consolidated Total Assets as set forth or reflected on the most recent
consolidated balance sheet of the Borrower in accordance with GAAP.
(5) The Borrower will not, and will not permit any Subsidiary to, make any
Investments, other than:
(i) Investments existing as of the date hereof and reflected on Schedule I
hereof;
(ii) Investments by the Borrower and its Subsidiaries in and to other
Subsidiaries, including any Investment in a corporation which, after giving
effect to such Investment, will become a Subsidiary;
(iii) Investments in commercial paper maturing in 270 days or less from the
date of acquisition which, at the time of acquisition by the Borrower or any
Subsidiary, is accorded the highest rating by S&P, Moody's or other nationally
recognized credit rating agency of similar standing;
(iv) Investments in direct obligations of the United States of America or
any agency or instrumentality of the United States of America, the payment or
guarantee of which constitutes a full faith and credit obligation of the United
States of America, in either case, maturing in twelve (12) months or less from
the date of acquisition thereof;
(v) Investments in certificates of deposit maturing within one year from
the date of acquisition thereof, issued by any bank or trust company (A) which
is organized under the laws of the United States of America or any State
thereof, and (B) which has capital, surplus and undivided profits aggregating at
least $250,000,000;
(vi) Investments in property to be used in the ordinary course of business
of the Borrower and its Subsidiaries, including assets designated as loans
receivable available for sale in accordance with GAAP;
(vii) Investments in new mutual funds or other pooled investment vehicles
sponsored, managed or administered by the Borrower or any Subsidiary, provided,
--------
however, that the amount of any Investment in any new mutual fund or other
- -------
pooled investment vehicle administered (but not sponsored or managed) by the
Borrower or any Subsidiary shall not exceed the lesser of (A) $500,000, or (B)
the minimum amount of such Investment required by applicable law;
(viii) Investments in the Borrower's common stock related to a disclosed
stock repurchase or buy-back plan;
(ix) Investments in repurchase agreements with a term of not more than 365
days; and
(x) Any other Investments, provided that immediately after giving effect
thereto the aggregate outstanding value of all such other investments (valued
immediately after giving effect thereto) would not exceed the greater of (A)
$12,000,000 and (B) 10% of Consolidated Net Worth, both determined as of the
date that such additional other Investment is made.
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In valuing any Investments for the purpose of applying the limitations set forth
in this Section (5), such Investments shall be taken at the original cost
thereof, without allowance for any subsequent write-offs or application or
depreciation therein, but less any amount repaid or recovered on account of
capital or principal. For purposes of this Section (5), at any time when a
corporation becomes a Subsidiary, all Investments of such corporation at such
time shall be deemed to have been made by such corporation, as a Subsidiary, at
such time.
(6) The Borrower will not make or permit any change in its form of
organization or the nature of its business as carried on as of the date of this
Letter Agreement or permit any person to become the owner of more than thirty
percent (30%) of its outstanding shares other than the Borrower and its
Subsidiaries, any employee benefit plan of the Borrower or its Subsidiaries, any
person appointed or entity organized or established by the Borrower for or
pursuant to any such employee benefit plan, and Alfred P. West, Jr. or his
spouse, and/or a member of his immediate family or, without prior notice to and
written approval by the Bank (which approval shall not be unreasonably
withheld), permit a material change in the members of the Borrower's Board of
Directors or the Borrower's senior management.
109