EXECUTION COPY
ALLMERICA FINANCIAL CORPORATION
_____________________________
CREDIT AGREEMENT
Dated as of May 29, 1998
______________________________
THE CHASE MANHATTAN BANK,
as Administrative Agent
FLEET NATIONAL BANK,
as Co-Agent
____________________
$150,000,000
____________________
CHASE SECURITIES INC.,
as Arranger
TABLE OF CONTENTS
This Table of Contents is not part of the Agreement to which it is
attached but is inserted for convenience of reference only.
Page
Section 1. Definitions and Accounting Matters. 1
1.01 Certain Defined Terms. 1
1.02 Accounting Terms and Determinations. 13
1.03 Types of Loans. 14
Section 2. Commitments, Loans, and Prepayments. 14
2.01 Loans. 14
2.02 Borrowings. 15
2.03 Changes of Commitments. 15
2.04 Loan Fee. 15
2.05 Lending Offices. 15
2.06 Several Obligations; Remedies Independent. 15
2.07 Evidence of Debt. 16
2.08 Prepayments and Conversions or Continuations of Loans. 16
2.09 Extension of Commitment Termination Date. 17
Section 3. Payments of Principal and Interest. 18
3.01 Repayment of Loans. 18
3.02 Interest. 18
Section 4. Payments; Pro Rata Treatment; Computations; Etc. 19
4.01 Payments. 19
4.02 Pro Rata Treatment. 20
4.03 Computations. 20
4.04 Minimum Amounts. 20
4.05 Certain Notices. 21
4.06 Non-Receipt of Funds by the Administrative Agent. 22
4.07 Sharing of Payments, Etc. 23
Section 5. Yield Protection, Etc. 24
5.01 Additional Costs. 24
5.02 Limitation on Types of Loans. 26
5.03 Illegality. 27
5.04 Treatment of Affected Loans. 27
5.05 Compensation. 27
5.06 U.S. Taxes. 28
Section 6. Conditions Precedent. 29
6.01 Initial Loan. 29
6.02 Initial and Subsequent Loans. 30
Section 7. Representations and Warranties. 31
7.01 Corporate Existence. 31
7.02 Financial Condition. 31
7.03 Litigation. 32
7.04 No Breach. 32
Page
7.05 Action. 32
7.06 Approvals. 32
7.07 Margin Stock. 33
7.08 ERISA. 33
7.09 Taxes. 33
7.10 Investment Company Act. 33
7.11 Public Utility Holding Company Act. 33
7.12 Environmental Matters. 33
7.13 Subsidiaries, Etc. 34
7.14 Title to Assets. 34
7.15 True and Complete Disclosure. 35
7.16. Compliance with Laws and Agreements. 35
7.17. Year 2000. 35
Section 8. Covenants of the Company. 36
8.01 Financial Statements Etc. 36
8.02 Litigation. 40
8.03 Existence, Etc. 40
8.04 Prohibition of Fundamental Changes. 41
8.05 Limitation on Liens. 42
8.06 Indebtedness. 44
8.07 Lines of Business. 44
8.08 Transactions with Affiliates. 45
8.09 Use of Proceeds. 45
8.10 Total Debt to Total Capitalization. 45
8.11 Minimum Adjusted Statutory Surplus. 45
8.12 Insurance. 45
Section 9. Events of Default. 46
Section 10. Agents. 49
10.01 Appointment, Powers and Immunities. 49
10.02 Reliance by Administrative Agent. 50
10.03 Defaults. 50
10.04 Rights as a Lender. 51
10.05 Indemnification. 51
10.06 Non-Reliance on Administrative Agent and Other Lenders. 51
10.07 Failure to Act. 52
10.08 Resignation or Removal of Administrative Agent. 52
10.09 Co-Agent. 53
Section 11. Miscellaneous. 53
11.01 Waiver. 53
11.02 Notices. 53
11.03 Expenses, Etc. 53
11.04 Amendments, Etc. 55
11.05 Successors and Assigns. 55
11.06 Assignments and Participations. 55
11.07 Replacement of Lender. 57
11.08 Survival. 58
11.09 Captions. 58
11.10 Counterparts. 58
11.11 Governing Law; Submission to Jurisdiction. 59
11.12 Waiver of Jury Trial. 59
11.13 Treatment of Certain Information; Confidentiality. 59
Page
SCHEDULE I -- Commitments
SCHEDULE II -- Indebtedness
SCHEDULE III -- Subsidiaries
SCHEDULE IV -- Investment Company Act
EXHIBIT A - Form of Opinion of Counsel to the Company
EXHIBIT B - Form of Opinion of Special New York Counsel to Chase
EXHIBIT C - Form of Confidentiality Agreement
EXHIBIT D - Form of Assignment and Acceptance
CREDIT AGREEMENT dated as of May 29, 1998, among: ALLMERICA
FINANCIAL CORPORATION, a corporation duly organized and validly existing under
the laws of the State of Delaware (the "Company"); each of the lenders
signatory hereto (individually, a "Lender" and, collectively, the "Lenders");
and THE CHASE MANHATTAN BANK, a New York banking corporation, as
administrative agent for the Lenders (in such capacity, together with its
successors in such capacity, the "Administrative Agent").
The Company has requested that the Lenders make loans to it in an
aggregate principal amount not exceeding $150,000,000 at any one time
outstanding and the Lenders are prepared to make such loans upon the terms and
conditions hereof. Accordingly, the parties hereto agree as follows:
Section 1. Definitions and Accounting Matters.
1.01 Certain Defined Terms.
As used herein, the following terms shall have the following meanings (all
terms defined in this Section 1.01 or in other provisions of this Agreement in
the singular to have the same meanings when used in the plural and vice
versa):
"Additional Commitment Lender" shall have the meaning set forth in
Section 2.09 hereof.
"Adjusted Statutory Surplus" shall mean, with respect to FAFLIC or
Hanover, the sum, on any date, for FAFLIC or Hanover, as the case may be, and
its Subsidiaries (determined on a consolidated basis in accordance with SAP),
of (a) Statutory Surplus on such date plus (b) the amount of AVR on such date.
"Administrative Questionnaire" shall mean an Administrative
Questionnaire in the form supplied by the Administrative Agent.
"Affiliate" shall mean any Person that directly or indirectly
controls, or is under common control with, or is controlled by, the Company.
As used in this definition, "control" (including, with its correlative
meanings, "controlled by" and "under common control with") shall mean
possession, directly or indirectly, of power to direct or cause the direction
of management or policies (whether through ownership of securities or
partnership or other ownership interests, by contract or otherwise), provided
that, in any event, any Person that owns directly or indirectly securities
having 20% or more of the voting power for the election of directors or other
governing body of a corporation or 20% or more of the partnership or other
ownership interests of any other Person (other than as a limited partner of
such other Person) will be deemed to control such corporation or other Person.
Notwithstanding the foregoing, (a) no individual shall be an Affiliate solely
by reason of being, nor considered to have the power to direct or cause the
direction of management or policies solely by reason of being or actions taken
as, a director, officer or employee of the Company or any of its Subsidiaries
and (b) none of the Subsidiaries of the Company shall be Affiliates.
"AFLIAC" shall mean Allmerica Financial Life Insurance and Annuity
Company, a Delaware insurance company.
"Applicable Insurance Regulatory Authority" shall mean, when used
with respect to any Insurance Subsidiary, the insurance department or similar
administrative authority or agency located in the State in which such
Insurance Subsidiary is domiciled.
"Applicable Lending Office" shall mean, for each Lender and for each
Type of Loan, the "Lending Office" of such Lender (or of an affiliate of such
Lender) designated for such Type of Loan in the Administrative Questionnaire
submitted by such Lender or such other office of such Lender (or of an
affiliate of such Lender) as such Lender may from time to time specify to the
Administrative Agent and the Company as the office by which its Loans of such
Type are to be made and maintained.
"Applicable Loan Fee Percentage" shall mean 0.06% per annum.
"Applicable Margin" shall mean, with respect to Eurodollar Loans,
0.19% per annum.
"APY" shall mean Allmerica Property & Casualty Companies, Inc., a
Delaware corporation.
"AVR" shall mean, with respect to FAFLIC or Hanover, on any date of
determination thereof, the asset valuation reserve (as determined in
accordance with SAP) as at the last day of the fiscal quarter of FAFLIC or
Hanover, as the case may be, and its Subsidiaries ending on or most recently
ended prior to such date.
"Bankruptcy Code" shall mean the Federal Bankruptcy Code of 1978, as
amended from time to time.
"Base Rate" shall mean, for any day, a rate per annum equal to the
higher of (a) the Federal Funds Rate for such day plus 1/2 of 1% and (b) the
Prime Rate for such day. Each change in any interest rate provided for herein
based upon the Base Rate resulting from a change in the Base Rate shall take
effect at the time of such change in the Base Rate.
"Base Rate Loans" shall mean Loans that bear interest at rates based
upon the Base Rate.
"Basle Accord" shall mean the proposals for risk-based capital
framework described by the Basle Committee on Banking Regulations and
Supervisory Practices in its paper entitled "International Convergence of
Capital Measurement and Capital Standards" dated July 1988, as amended,
modified and supplemented and in effect from time to time or any replacement
thereof.
"Business Day" shall mean any day (a) on which commercial banks are
not authorized or required to close in New York City and (b) if such day
relates to a borrowing of, a payment or prepayment of principal of or interest
on, a Conversion of or into, or an Interest Period for, a Eurodollar Loan or a
notice by the Company with respect to any such borrowing, payment, prepayment,
Conversion or Interest Period, that is also a day on which dealings in Dollar
deposits are carried out in the London interbank market.
"Capital Lease Obligations" shall mean, for any Person, all
obligations of such Person to pay rent or other amounts under a lease of (or
other agreement conveying the right to use) Property to the extent such
obligations are required to be classified and accounted for as a capital lease
on a balance sheet of such Person under GAAP, and, for purposes of this
Agreement, the amount of such obligations shall be the capitalized amount
thereof, determined in accordance with GAAP.
"Chase" shall mean The Chase Manhattan Bank.
"Citizens" shall mean Citizens Insurance Company of America, a
Michigan insurance company.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"Commitment" shall mean, as to each Lender, the obligation of such
Lender to make Loans in an aggregate principal amount at any one time
outstanding up to but not exceeding the amount set forth on Schedule I
opposite the name of such Lender or, in the case of a Person that becomes a
Lender pursuant to an assignment permitted under Section 11.06(b) or 11.07
hereof, as specified in the respective instrument of assignment pursuant to
which such assignment is effected (as the same may be reduced at any time or
from time to time pursuant to Section 2.03 hereof). The initial aggregate
amount of the Lenders' Commitments is $150,000,000.
"Commitment Termination Date" shall mean May 28, 1999, as such date
may be extended pursuant to Section 2.09 hereof.
"Consent Date" shall have the meaning assigned to such term in
Section 2.09.
"Continue", "Continuation" and "Continued" shall refer to the
continuation pursuant to Section 2.08 hereof of a Eurodollar Loan from one
Interest Period to the next Interest Period.
"Convert", "Conversion" and "Converted" shall refer to a conversion
pursuant to Section 2.08 hereof of one Type of Loans into another Type of
Loans, which may be accompanied by the transfer by a Lender (at its sole
discretion) of a Loan from one Applicable Lending Office to another.
"Default" shall mean an Event of Default or an event that with
notice or lapse of time or both would become an Event of Default.
"Dollars" and "$" shall mean lawful money of the United States of
America.
"Environmental Claim" shall mean, with respect to any Person, any
written notice, claim, demand or other communication (collectively, a "claim")
by any other Person alleging or asserting such Person's liability for
investigatory costs, cleanup costs, governmental response costs, damages to
natural resources or other Property, personal injuries, fines or penalties
arising out of, based on or resulting from (i) the presence, or Release into
the environment, of any Hazardous Material at any location, whether or not
owned by such Person, or (ii) circumstances forming the basis of any
violation, or alleged violation, of any Environmental Law. The term
"Environmental Claim" shall include, without limitation, any claim by any
governmental authority for enforcement, cleanup, removal, response, remedial
or other actions or damages pursuant to any applicable Environmental Law, and
any claim by any third party seeking damages, contribution, indemnification,
cost recovery, compensation or injunctive relief resulting from the presence
of Hazardous Materials or arising from alleged injury or threat of injury to
health, safety or the environment.
"Environmental Laws" shall mean any and all present and future
Federal, state, local and foreign laws, rules or regulations, and any orders
or decrees, in each case as now or hereafter in effect, relating to the
regulation or protection of human health, safety or the environment or to
emissions, discharges, releases or threatened releases of pollutants,
contaminants, chemicals or toxic or hazardous substances or wastes into the
indoor or outdoor environment, including, without limitation, ambient air,
soil, surface water, ground water, wetlands, land or subsurface strata, or
otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of pollutants,
contaminants, chemicals or toxic or hazardous substances or wastes.
"Equity Rights" shall mean, with respect to any Person, any
subscriptions, options, warrants, commitments, preemptive rights or agreements
of any kind (including, without limitation, any stockholders' or voting trust
agreements) for the issuance, sale, registration or voting of, or securities
convertible into, any additional shares of capital stock of any class, or
partnership or other ownership interests of any type in, such Person.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time.
"ERISA Affiliate" shall mean any corporation or trade or business
that is a member of any group of organizations (i) described in Section 414(b)
or (c) of the Code of which the Company is a member and (ii) solely for
purposes of potential liability under Section 302(c)(11) of ERISA and
Section 412(c)(11) of the Code and the lien created under Section 302(f) of
ERISA and Section 412(n) of the Code, described in Section 414(m) or (o) of
the Code of which the Company is a member.
"Eurodollar Base Rate" shall mean, with respect to any Eurodollar
Loan for any Interest Period therefor:
(a) the rate per annum appearing on display page 3750 of the Dow
▇▇▇▇▇ Markets (Telerate) Service (or any successor or substitute
therefor) as of 11:00 a.m., London time, two Business Days prior to the
first day of such Interest Period for such Loan as the London Interbank
Offered Rate (as defined below) for Dollar deposits having a term
comparable to such Interest Period; or
(b) if no such rate appears on display page 3750 of the Dow ▇▇▇▇▇
Markets (Telerate) Service (or any successor or substitute therefor) or,
if said page shall cease to be publicly available or if the information
contained on said page, in the reasonable judgment of the Administrative
Agent, shall cease accurately to reflect the rate offered by leading
banks in the London interbank market (the "London Interbank Offered
Rate") (as reported by any publicly available source of similar market
data selected by the Administrative Agent that, in the reasonable
judgment of the Administrative Agent, accurately reflects the London
Interbank Offered Rate), the rate per annum, as determined by the
Administrative Agent, quoted by Chase at approximately 11:00 a.m., London
time (or as soon thereafter as practicable), on the date two Business
Days prior to the first day of such Interest Period for such Loan for the
offering by Chase to leading banks in the London interbank market of
Dollar deposits having a term comparable to such Interest Period and in
an amount comparable to the principal amount of the Eurodollar Loan to be
made for such Interest Period.
"Eurodollar Loans" shall mean Loans that bear interest at rates
based on rates referred to in the definition of "Eurodollar Base Rate" in this
Section 1.01.
"Eurodollar Rate" shall mean, for any Eurodollar Loan for any
Interest Period therefor, a rate per annum (rounded upwards, if necessary, to
the nearest 1/100 of 1%) equal to the Eurodollar Base Rate for such Interest
Period divided by 1 minus the Reserve Requirement (if any) for such Interest
Period.
"Event of Default" shall have the meaning assigned to such term in
Section 9 hereof.
"Existing Commitment Termination Date" shall have the meaning
assigned to such term in Section 2.09.
"FAFLIC" shall mean First Allmerica Financial Life Insurance
Company, a Wholly-Owned Subsidiary of the Company.
"Federal Funds Rate" shall mean, for any day, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on
such day, as published by the Federal Reserve Bank of New York on the Business
Day next succeeding such day, provided that (a) if the day for which such rate
is to be determined is not a Business Day, the Federal Funds Rate for such day
shall be such rate on such transactions on the next preceding Business Day as
so published on the next succeeding Business Day and (b) if such rate is not
so published for any Business Day, the Federal Funds Rate for such Business
Day shall be the average rate charged to Chase on such Business Day on such
transactions as determined by the Administrative Agent.
"Funded Debt" shall mean, for any Person: (a) all Indebtedness for
such Person that should be reflected on a balance sheet of such Person in
accordance with GAAP and (b) all Indebtedness for any other Person that should
be reflected on a balance sheet of such other Person in accordance with GAAP
and that is secured by a Lien on the Property of such Person, is supported by
a letter of credit issued for account of, or is Guaranteed by, such Person;
provided that Funded Debt shall include the aggregate liquidation preference
of all preferred securities that are mandatorily redeemable, exchangeable or
convertible into debt at the option of the holder or redeemable at the option
of the holder, less than ten years after issue.
"GAAP" shall mean generally accepted accounting principles applied
on a basis consistent with those that, in accordance with the last sentence of
Section 1.02(a) hereof, are to be used in making the calculations for purposes
of determining compliance with this Agreement.
"Guarantee" shall mean a guarantee, an endorsement, a contingent
agreement to purchase or to furnish funds for the payment or maintenance of,
or otherwise to be or become contingently liable under or with respect to, the
Indebtedness, other obligations, net worth, working capital or earnings of any
Person, or a guarantee of the payment of dividends or other distributions upon
the stock or equity interests of any Person, or an agreement to purchase, sell
or lease (as lessee or lessor) Property, products, materials, supplies or
services primarily for the purpose of enabling a debtor to make payment of
such debtor's obligations or an agreement to assure a creditor against loss,
and including, without limitation, causing a bank or other financial
institution to issue a letter of credit or other similar instrument for the
benefit of another Person, but excluding endorsements for collection or
deposit in the ordinary course of business. The terms "Guarantee" and
"Guaranteed" used as a verb shall have a correlative meaning.
"Hanover" shall mean The Hanover Insurance Company, a New Hampshire
insurance company.
"Hazardous Material" shall mean, collectively, (a) any petroleum or
petroleum products, flammable materials, explosives, radioactive materials,
asbestos, urea formaldehyde foam insulation, and transformers or other
equipment that contain polychlorinated biphenyls, (b) any chemicals or other
materials or substances that are now or hereafter become defined as or
included in the definition of "hazardous substances", "hazardous wastes",
"hazardous materials", "extremely hazardous wastes", "restricted hazardous
wastes", "toxic substances", "toxic pollutants", "contaminants", "pollutants"
or words of similar import under any Environmental Law and (c) any other
chemical or other material or substance, exposure to which is now or hereafter
prohibited, limited or regulated under any Environmental Law.
"Indebtedness" shall mean, for any Person: (a) obligations created,
issued or incurred by such Person for borrowed money (whether by loan, the
issuance and sale of debt securities or the sale of Property to another Person
subject to an understanding or agreement, contingent or otherwise, to
repurchase such Property from such Person); (b) obligations of such Person to
pay the deferred purchase or acquisition price of Property or services, other
than trade accounts payable (other than for borrowed money) arising, and
accrued expenses incurred, in the ordinary course of business; (c)
Indebtedness of others secured by a Lien on the Property of such Person,
whether or not the respective indebtedness so secured has been assumed by such
Person; (d) obligations of such Person in respect of letters of credit or
similar instruments issued or accepted by banks and other financial
institutions for account of such Person; (e) Capital Lease Obligations of such
Person; and (f) Guarantees by such Person of Indebtedness of others; provided
that Indebtedness shall not include (i) obligations with respect to insurance
policies, annuities, guaranteed investment contracts and similar products
underwritten by, or Reinsurance Agreements or Retrocession Agreements entered
into by, an Insurance Subsidiary in the ordinary course of its business, (ii)
obligations with respect to Surplus Relief Reinsurance ceded by an Insurance
Subsidiary and (iii) Rate Hedging Obligations.
"Insurance Subsidiaries" shall mean, collectively, FAFLIC, Hanover
and any other Subsidiary of the Company licensed to do an insurance business.
"Interest Period" shall mean, with respect to any Eurodollar Loan,
each period commencing on the date such Eurodollar Loan is made or Converted
from a Base Rate Loan or (in the event of a Continuation) the last day of the
next preceding Interest Period for such Loan and ending on the numerically
corresponding day in the first, second, third or sixth calendar month
thereafter, as the Company may select as provided in Section 4.05 hereof,
except that each Interest Period that commences on the last Business Day of a
calendar month (or on any day for which there is no numerically corresponding
day in the appropriate subsequent calendar month) shall end on the last
Business Day of the appropriate subsequent calendar month.
Notwithstanding the foregoing: (i) if any Interest Period would
otherwise end after the Commitment Termination Date, such Interest Period
shall not be available hereunder; (ii) each Interest Period that would
otherwise end on a day that is not a Business Day shall end on the next
succeeding Business Day (or, if such next succeeding Business Day falls in the
next succeeding calendar month, on the next preceding Business Day); and
(iii) notwithstanding clause (i) above, no Interest Period shall have a
duration of less than one month and, if the Interest Period for any Eurodollar
Loan would otherwise be a shorter period, such Loan shall not be available
hereunder for such period.
"Investment" shall mean, for any Person: (a) the acquisition
(whether for cash, Property, services or securities or otherwise) of capital
stock, bonds, notes, debentures, partnership or other ownership interests or
other securities of any other Person or any agreement to make any such
acquisition (including, without limitation, any "short sale" or any sale of
any securities at a time when such securities are not owned by the Person
entering into such sale); (b) the making of any deposit with, or advance, loan
or other extension of credit to, any other Person (including the purchase of
Property from another Person subject to an understanding or agreement,
contingent or otherwise, to resell such Property to such Person); (c) the
entering into of any Guarantee of, or other contingent obligation with respect
to, Indebtedness or other liability of any other Person and (without
duplication) any amount committed to be advanced, lent or extended to such
Person; or (d) the incurring of any Rate Hedging Obligations.
"Lien" shall mean, with respect to any Property, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of
such Property. For purposes of this Agreement, a Person shall be deemed to
own subject to a Lien any Property that it has acquired or holds subject to
the interest of a vendor or lessor under any conditional sale agreement,
capital lease or other title retention agreement (other than an operating
lease) relating to such Property.
"Loans" shall mean the loans provided for in Section 2.01 hereof,
which may be Base Rate Loans and/or Eurodollar Loans.
"Majority Lenders" shall mean Lenders having more than 50% of the
aggregate amount of the Commitments or, if the Commitments shall have
terminated, Lenders holding more than 50% of the aggregate unpaid principal
amount of the Loans.
"Margin Stock" shall mean "margin stock" within the meaning of
Regulations U and X.
"Material Adverse Change" shall mean a material adverse change in or
affecting (a) the Property, business, operations or condition (financial or
otherwise) of the Company and its Subsidiaries taken as a whole, (b) the
ability of the Company to perform its obligations hereunder, (c) the validity
or enforceability of this Agreement, (d) the rights and remedies of the
Lenders and the Administrative Agent hereunder or (e) the timely payment of
the principal of or interest on the Loans or other amounts payable in
connection therewith.
"Material Adverse Effect" shall mean a material adverse effect on
(a) the Property, business, operations or condition (financial or otherwise)
of the Company and its Subsidiaries taken as a whole, (b) the ability of the
Company to perform its obligations hereunder, (c) the validity or
enforceability of this Agreement, (d) the rights and remedies of the Lenders
and the Administrative Agent hereunder or (e) the timely payment of the
principal of or interest on the Loans or other amounts payable in connection
therewith.
"Material Insurance Subsidiary" shall mean any Insurance Subsidiary
that is a Material Subsidiary.
"Material Subsidiary" shall mean, at any time, any Subsidiary of the
Company that as of such time would meet the definition of "significant
subsidiary" contained as of the date hereof in Regulation S-X of the
Securities and Exchange Commission if the percentage of 10 percent wherever it
appears therein were changed to 5 percent.
"Multiemployer Plan" shall mean a multiemployer plan defined as such
in Section 3(37) of ERISA to which contributions have been made by the Company
or any ERISA Affiliate and that is covered by Title IV of ERISA.
"NAIC" shall mean the National Association of Insurance
Commissioners and any successor thereto.
"Non-extending Lender" shall have the meaning assigned to such term
in Section 2.09.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Person" shall mean any individual, corporation, company, voluntary
association, partnership, limited liability company, joint venture, trust,
unincorporated organization or government (or any agency, instrumentality or
political subdivision thereof).
"Plan" shall mean an employee benefit or other plan established or
maintained by the Company or any ERISA Affiliate and that is covered by Title
IV of ERISA, other than a Multiemployer Plan.
"Post-Default Rate" shall mean a rate per annum equal to 2.0% plus
the Base Rate as in effect from time to time, provided that, with respect to
principal of a Eurodollar Loan that shall become due (whether at stated
maturity, by acceleration or otherwise) on a day other than the last day of
any Interest Period therefor, the "Post-Default Rate" shall be, for the period
from and including such due date to but excluding the last day of such
Interest Period, 2.0% plus the interest rate for such Loan as provided in
Section 3.02(b) hereof and, thereafter, the rate provided for above in this
definition.
"Prime Rate" shall mean the rate of interest from time to time
announced by Chase at the Principal Office as its prime commercial lending
rate.
"Principal Office" shall mean the principal office of Chase, located
on the date hereof at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
"Principal Insurance Subsidiary" shall mean AFLIAC, Citizens,
FAFLIC and Hanover.
"Property" shall mean any right or interest in or to property of any
kind whatsoever, whether real, personal or mixed and whether tangible or
intangible.
"Quarterly Dates" shall mean the last Business Day of March, June,
September and December in each year, the first of which shall be the first
such day after the date hereof.
"Rate Hedging Obligations" shall mean, for any Person, any and all
net obligations of such Person, whether absolute or contingent and howsoever
and whensoever created, arising, evidenced or acquired (including all
renewals, extensions and modifications thereof and substitutions therefor),
under (i) any agreements, devices or arrangements designed to protect at least
one of the parties thereto from the fluctuations of interest rates, exchange
rates or forward rates applicable to such party's assets, liabilities or
exchange transactions, including but not limited to, dollar-denominated or
cross-currency interest rate exchange agreements, forward currency exchange
agreements, interest rate cap or collar protection agreements, forward rate
currency or interest rate options, puts and warrants, or any similar
derivative transactions and (ii) any and all cancellations, buy backs,
reversals, terminations or assignments of any of the forgoing.
"Regulations A, D, U and X" shall mean, respectively, Regulations A,
D, U and X of the Board of Governors of the Federal Reserve System (or any
successor), as the same may be modified and supplemented and in effect from
time to time.
"Regulatory Change" shall mean, with respect to any Lender, any
change after the date hereof in Federal, state or foreign law or regulations
(including, without limitation, Regulation D) or the adoption or making after
such date of any interpretation, directive or request applying to a class of
banks including such Lender of or under any Federal, state or foreign law or
regulations (whether or not having the force of law and whether or not failure
to comply therewith would be unlawful) by any court or governmental or
monetary authority charged with the interpretation or administration thereof.
"Reinsurance Agreement" shall mean any agreement, contract, treaty
or other arrangement (other than Surplus Relief Reinsurance) whereby other
insurers assume insurance from any Insurance Subsidiary or any Subsidiary of
such Insurance Subsidiary.
"Release" shall mean any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration into
the indoor or outdoor environment, including, without limitation, the movement
of Hazardous Materials through ambient air, soil, surface water, ground water,
wetlands, land or subsurface strata.
"Reserve Requirement" shall mean, for any Interest Period for any
Eurodollar Loan, the average maximum rate at which reserves (including,
without limitation, any marginal, supplemental or emergency reserves) are
required to be maintained during such Interest Period under Regulation D by
member banks of the Federal Reserve System in New York City with deposits
exceeding one billion Dollars against "Eurocurrency liabilities" (as such term
is used in Regulation D). Without limiting the effect of the foregoing, the
Reserve Requirement shall include any other reserves required to be maintained
by such member banks by reason of any Regulatory Change with respect to
(i) any category of liabilities that includes deposits by reference to which
the Eurodollar Base Rate is to be determined as provided in the definition of
"Eurodollar Base Rate" in this Section 1.01 or (ii) any category of extensions
of credit or other assets that includes Eurodollar Loans.
"Retrocession Agreement" shall mean any agreement, contract, treaty
or other arrangement (other than Surplus Relief Reinsurance) whereby any
Insurance Subsidiary or any Subsidiary of such Insurance Subsidiary cedes
reinsurance to other insurers (other than to another Insurance Subsidiary or
any of its Subsidiaries).
"SAP" shall mean, with respect to any Insurance Subsidiary, the
accounting procedures and practices prescribed or permitted by the Applicable
Insurance Regulatory Authority, applied on a basis consistent with those that,
in accordance with the last sentence of Section 1.02(a) hereof, are to be used
in making the calculations for purposes of determining compliance with this
Agreement.
"Special Preferred Securities" shall mean preferred securities that
are mandatorily redeemable, exchangeable or convertible into debt at the
option of the holder or redeemable at the option of the holder, ten years or
more after the issuance thereof and issued by the Company and/or one or more
Subsidiaries of the Company, and that would not be reflected as a liability in
a consolidated balance sheet of the Company and its Subsidiaries prepared in
accordance with generally accepted accounting principles.
"Statutory Statement" shall mean, as to any Insurance Subsidiary, a
statement of the condition and affairs of such Insurance Subsidiary, prepared
in accordance with statutory accounting practices required or permitted by the
Applicable Insurance Regulatory Authority, and filed with the Applicable
Insurance Regulatory Authority.
"Statutory Surplus" shall mean, for any Insurance Subsidiary, on any
date of determination thereof, the aggregate amount of surplus as regards
policyholders of such Insurance Subsidiary (determined in accordance with
SAP).
"Subordinated Indebtedness" shall mean (a) the Company's 8.207%
Junior Subordinated Deferrable Interest Debentures due 2027, (b) Special
Preferred Securities and (c) any other Indebtedness (i) for which the Company
is directly and primarily liable, (ii) in respect of which none of its
Subsidiaries is contingently or otherwise obligated and (iii) that is
subordinated to the obligations of the Company to pay principal of and
interest on the Loans hereunder on terms, and pursuant to documentation
containing other terms (including interest, amortization, covenants and events
of default), in form and substance satisfactory to the Majority Lenders.
"Subsidiary" shall mean, with respect to any Person, any
corporation, limited liability company, partnership, association or other
entity of which at least a majority of the securities or other ownership
interests having by the terms thereof ordinary voting power to elect a
majority of the board of directors or other persons performing similar
functions of such corporation, limited liability company, partnership,
association or other entity (irrespective of whether or not at the time
securities or other ownership interests of any other class or classes of such
corporation, partnership or other entity shall have or might have voting power
by reason of the happening of any contingency) is at the time directly or
indirectly owned or controlled by such Person or one or more Subsidiaries of
such Person or by such Person and one or more Subsidiaries of such Person.
"Surplus Relief Reinsurance" shall mean any transaction in which any
Insurance Subsidiary or any Subsidiary of such Insurance Subsidiary cedes
business under a reinsurance agreement that would be considered a
"financing-type" reinsurance agreement as determined by the independent
certified public accountants of the Company in accordance with principles
published by the Financial Accounting Standards Board or the Second Edition of
the AICPA Audit Guide for Stock Life Insurance Companies (pp. 91-92), as the
same may be revised from time to time.
"Total Capitalization" shall mean, at any date, the sum (without
duplication) of Total Debt plus Total Shareholders' Equity plus the aggregate
liquidation preference of Special Preferred Securities.
"Total Debt" shall mean, as at any date, the sum for the Company and
its Subsidiaries (determined on a consolidated basis without duplication in
accordance with GAAP) of all Funded Debt.
"Total Shareholders' Equity" shall mean at any date the aggregate
shareholders' equity for the Company and its Subsidiaries (determined in
accordance with GAAP).
"Type" shall have the meaning assigned to such term in Section 1.03
hereof.
"Wholly-Owned Subsidiary" shall mean, with respect to any Person,
any corporation, partnership or other entity of which all of the equity
securities or other ownership interests (other than, in the case of a
corporation, directors' qualifying shares) are directly or indirectly owned or
controlled by such Person or one or more Wholly-Owned Subsidiaries of such
Person or by such Person and one or more Wholly-Owned Subsidiaries of such
Person.
1.02 Accounting Terms and Determinations.
(a) Except as otherwise expressly provided herein, all accounting
terms used herein shall be interpreted, and all financial statements and
certificates and reports as to financial matters required to be delivered to
the Lenders hereunder shall (unless otherwise disclosed to the Lenders in
writing at the time of delivery thereof in the manner described in
subsection (b) below) be prepared, in accordance with generally accepted
accounting principles or statutory accounting practices, as the case may be,
applied on a basis consistent with those used in the preparation of the latest
financial statements furnished to the Lenders hereunder (which, prior to the
delivery of the first financial statements under Section 8.01 hereof, shall
mean the audited, or annual statutory, financial statements as at December 31,
1997 referred to in Section 7.02 hereof). All calculations made for the
purposes of determining compliance with this Agreement shall (except as
otherwise expressly provided herein) be made by application of generally
accepted accounting principles or statutory accounting practices, as the case
may be, applied on a basis consistent with those used in the preparation of
the latest annual or quarterly financial statements furnished to the Lenders
pursuant to Section 8.01 hereof (or, prior to the delivery of the first
financial statements under Section 8.01 hereof, used in the preparation of the
audited, or annual statutory, financial statements as at December 31, 1997
referred to in Section 7.02 hereof) unless (i) the Company shall have objected
to determining such compliance on such basis at the time of delivery of such
financial statements or (ii) the Majority Lenders shall so object in writing
within 30 days after delivery of such financial statements, in either of which
events such calculations shall be made on a basis consistent with those used
in the preparation of the latest financial statements as to which such
objection shall not have been made (which, if objection is made in respect of
the first financial statements delivered under Section 8.01 hereof, shall mean
the audited, or annual statutory, financial statements referred to in
Section 7.02 hereof).
(b) The Company shall deliver to the Lenders at the same time as
the delivery of any annual or quarterly financial statement under Section 8.01
hereof (i) a description in reasonable detail of any material variation
between the application of accounting principles, or statutory accounting
practices, employed in the preparation of such statement and the application
of accounting principles, or statutory accounting practices, employed in the
preparation of the next preceding annual or quarterly financial statements as
to which no objection has been made in accordance with the last sentence of
subsection (a) above and (ii) reasonable estimates of the difference between
such statements arising as a consequence thereof.
1.03 Types of Loans.
Loans hereunder are distinguished by "Type". The "Type" of a Loan refers to
whether such Loan is a Base Rate Loan or a Eurodollar Loan, each of which
constitutes a Type.
Section 2. Commitments, Loans, and Prepayments.
2.01 Loans.
Each Lender severally agrees, on the terms and conditions of this Agreement,
to make loans to the Company in Dollars during the period from and including
the date hereof to but not including the Commitment Termination Date in an
aggregate principal amount at any one time outstanding up to but not exceeding
the amount of the Commitment of such Lender as in effect from time to time.
Subject to the terms and conditions of this Agreement, during such period the
Company may borrow, repay and reborrow the amount of the Commitments by means
of Base Rate Loans and Eurodollar Loans and may Convert Loans of one Type into
Loans of another Type (as provided in Section 2.08 hereof) or Continue Loans
of one Type as Loans of the same Type (as provided in Section 2.08 hereof);
provided that no more than six separate Interest Periods in respect of
Eurodollar Loans from each Lender may be outstanding at any one time.
2.02 Borrowings.
The Company shall give the Administrative Agent notice of each borrowing
hereunder as provided in Section 4.05 hereof. Not later than 1:00 p.m. New
York time on the date specified for each borrowing hereunder, each Lender
shall make available the amount of the Loan or Loans to be made by it on such
date to the Administrative Agent, at an account designated by the
Administrative Agent and maintained with Chase at the Principal Office, in
immediately available funds, for account of the Company. The amount so
received by the Administrative Agent shall, subject to the terms and
conditions of this Agreement, be made available to the Company by depositing
the same, in immediately available funds, in an account of the Company
designated by the Company and maintained with Chase at the Principal Office.
2.03 Changes of Commitments.
(a) The aggregate amount of the Commitments shall be automatically
reduced to zero on the Commitment Termination Date.
(b) The Company shall have the right at any time or from time to
time (i) so long as no Loans are outstanding, to terminate the Commitments and
(ii) to reduce the aggregate unused amount of the Commitments; provided that
(x) the Company shall give notice of each such termination or reduction as
provided in Section 4.05 hereof and (y) each partial reduction shall be in an
aggregate amount at least equal to $5,000,000 (or a larger multiple of
$1,000,000).
(c) The Commitments once terminated or reduced may not be
reinstated.
2.04 Loan Fee.
The Company shall pay to the Administrative Agent for account of each Lender
loan fees on the amount of such Lender's Commitment (whether or not utilized)
for the period from and including the date hereof to but not including the
earlier of the date such Commitment is terminated and the Commitment
Termination Date, at a rate per annum equal to the Applicable Loan Fee
Percentage. Accrued loan fees shall be payable on each Quarterly Date in
arrears and on the earlier of the date the Commitments are terminated and the
Commitment Termination Date.
2.05 Lending Offices.
The Loans of each Type made by each Lender shall be made and maintained at
such Lender's Applicable Lending Office for Loans of such Type.
2.06 Several Obligations; Remedies Independent.
The failure of any Lender to make any Loan to be made by it on the date
specified therefor shall not relieve any other Lender of its obligation to
make its Loan on such date, but neither any Lender nor the Administrative
Agent shall be responsible for the failure of any other Lender to make a Loan
to be made by such other Lender, and (except as otherwise provided in
Section 4.06 hereof) no Lender shall have any obligation to the Administrative
Agent or any other Lender for the failure by such Lender to make any Loan
required to be made by such Lender. The amounts payable by the Company at any
time hereunder to each Lender shall be a separate and independent debt and
each Lender shall be entitled to protect and enforce its rights arising out of
this Agreement, and it shall not be necessary for any other Lender or the
Administrative Agent to consent to, or be joined as an additional party in,
any proceedings for such purposes.
2.07 Evidence of Debt.
(a) Each Lender shall maintain in accordance with its usual
practice an account or accounts evidencing the indebtedness of the Company to
such Lender resulting from each Loan made by such Lender, including the
amounts of principal and interest payable and paid to such Lender from time to
time hereunder.
(b) The Administrative Agent shall maintain accounts in which it
shall record (i) the date, amount, Type, interest rate and duration of
Interest Period (if applicable) of each Loan made hereunder, (ii) the amount
of any principal or interest due and payable or to become due and payable from
the Company to each Lender hereunder and (iii) the amount of any sum received
by the Administrative Agent hereunder for the account of the Lenders and each
Lender's share thereof.
(c) The entries made in the accounts maintained pursuant to clause
(a) or (b) of this Section 2.07 shall be prima facie evidence of the existence
and amounts of the obligations recorded therein; provided that the failure of
any Lender or the Administrative Agent to maintain such accounts or any error
therein shall not in any manner affect the obligation of the Company to repay
the Loans in accordance with the terms of this Agreement.
(d) Any Lender may request that Loans made by it to the Company be
evidenced by a promissory note of the Company. In such event, the Company
shall prepare, execute and deliver to such Lender a promissory note payable to
the order of such Lender and in a form approved by the Administrative Agent.
2.08 Prepayments and Conversions or Continuations of Loans.
Subject to Section 4.04 hereof, the Company shall have the right to prepay
Loans, or to Convert Loans of one Type into Loans of another Type or Continue
Loans of one Type as Loans of the same Type, at any time or from time to time,
provided that: (a) the Company shall give the Administrative Agent notice of
each such prepayment, Conversion or Continuation as provided in Section 4.05
hereof (and, upon the date specified in any such notice of prepayment, the
amount to be prepaid shall become due and payable hereunder) and (b)
Eurodollar Loans may be prepaid or Converted at any time from time to time,
provided that the Company shall pay any amounts owing under Section 5.05
hereof in the event of any such prepayment or Conversion on any date other
than the last day of any Interest Period for such Loans. Notwithstanding the
foregoing, and without limiting the rights and remedies of the Lenders under
Section 9 hereof, in the event that any Event of Default shall have occurred
and be continuing, the Administrative Agent may (and at the request of the
Majority Lenders shall) suspend the right of the Company to Convert any Loan
into a Eurodollar Loan, or to Continue any Loan as a Eurodollar Loan, in which
event all Loans shall be Converted (on the last day(s) of the respective
Interest Periods therefor) or Continued, as the case may be, as Base Rate
Loans.
2.09 Extension of Commitment Termination Date.
(a) The Company may, by notice to the Administrative Agent (which
shall promptly notify the Lenders) not less than 40 days and not more than 45
days prior to the Commitment Termination Date then in effect hereunder (the
"Existing Commitment Termination Date"), request that the Lenders extend the
Commitment Termination Date for an additional 364 days from the Existing
Commitment Termination Date. Each Lender, acting in its sole discretion,
shall, by notice to the Company and the Administrative Agent given on or
before the date (herein, the "Consent Date") that is 30 days prior to the
Existing Commitment Termination Date (except that, if such date is not a
Business Day, such notice shall be given on the next succeeding Business Day),
advise the Company and the Administrative Agent whether or not such Lender
agrees to such extension; provided that, if such Lender gives notice of its
consent to such extension prior to the Consent Date, such Lender may revoke
such consent at any time prior to the Consent Date by giving notice of such
revocation to the Company and the Administrative Agent; and provided further
that each Lender that determines not to extend the Commitment Termination Date
(a "Non-extending Lender") shall notify the Administrative Agent (which shall
notify the Lenders) of such fact promptly after such determination (but in any
event no later than the Consent Date) and any Lender that does not advise the
Company on or before the Consent Date shall be deemed to be a Non-extending
Lender. The election of any Lender that does not advise the Company on or
before the Consent Date shall be deemed to be a Non-extending Lender. The
election of any Lender to agree to such extension shall not obligate any other
Lender to so agree.
(b) Subject to paragraph (c) of this Section, the Company shall
have the right on or before the Existing Commitment Termination Date to
replace each Non-extending Lender with, and otherwise add to this Agreement,
one or more other lenders (which may include any Lender, each prior to the
Existing Commitment Termination Date an "Additional Commitment Lender") with
the approval of the Administrative Agent (which approval shall not be
unreasonably withheld), each of which Additional Commitment Lenders shall have
entered into an agreement in form and substance satisfactory to the Company
and the Administrative Agent pursuant to which such Additional Commitment
Lender shall, effective as of the Existing Commitment Termination Date,
undertake a Commitment (and, if any such Additional Commitment Lender is
already a Lender, its Commitment shall be in addition to such Lender's
Commitment hereunder on such date).
(c) if (and only if) the total of the Commitments of the Lenders
and (without duplication) the Additional Commitment Lenders, that have agreed
so to extend the Commitment Termination Date shall be more than 50% of the
aggregate amount of the Commitments in effect immediately prior to the Consent
Date, then, effective as of the Existing Commitment Termination Date, the
Existing Commitment Termination Date shall be extended to the date falling 364
days after the Existing Commitment Termination Date (except that, if such date
is not a Business Day, such Commitment Termination Date as so extended shall
be the next preceding Business Day) and each Additional Commitment Lender
shall thereupon become a "Lender" for all purposes of this Agreement.
Notwithstanding the foregoing, the extension of the Existing
Commitment Termination Date shall not be effective with respect to any Lender
unless:
(i) no Default shall have occurred and be continuing on each of the
date of the notice requesting such extension, on the Consent Date and on
the Existing Commitment Termination Date;
(ii) each of the representations and warranties made by the Company
in Section 7 hereof shall be true and complete on and as of each of the
date of the notice requesting such extension, the Consent Date and the
Existing Commitment Termination Date with the same force and effect as if
made on and as of such date (or, if any such representation or warranty
is expressly stated to have been made as of a specific date, as of such
specific date); and
(iii) each Non-extending Lender shall have been paid in full by
the Company all amounts owing to such Lender hereunder on or before
the Existing Commitment Termination Date.
Section 3. Payments of Principal and Interest.
3.01 Repayment of Loans.
The Company hereby promises to pay to the Administrative Agent for account
of each Lender the entire outstanding principal amount of such Lender's Loans,
and each Loan shall mature, on the Commitment Termination Date.
3.02 Interest.
The Company hereby promises to pay to the Administrative Agent for account
of each Lender interest on the unpaid principal amount of each Loan made by
such Lender for the period from and including the date of such Loan to but
excluding the date such Loan shall be paid in full, at the following rates per
annum:
(a) during such periods as such Loan is a Base Rate Loan, the Base
Rate (as in effect from time to time); and
(b) during such periods as such Loan is a Eurodollar Loan, for
each Interest Period relating thereto, the Eurodollar Rate for such Loan for
such Interest Period plus the Applicable Margin.
Notwithstanding the foregoing, if any principal of or interest on any Loan or
any fee or other amount payable by the Company hereunder is not paid when due,
whether at stated maturity, upon acceleration or otherwise, the Company hereby
promises to pay (i) interest on the unpaid principal amount of each Loan made
by such Lender at a rate per annum equal to 2% plus the rate otherwise
applicable to such Loan as provided in the preceding paragraphs of this
Section and (ii) the applicable Post-Default Rate on all overdue amounts
(other than overdue principal). Accrued interest on each Loan shall be
payable (i) in the case of a Base Rate Loan, quarterly in arrears on the
Quarterly Dates, (ii) in the case of a Eurodollar Loan, on the last day of
each Interest Period therefor (and, in the case of any Interest Period longer
than three months, on each successive date three months after the commencement
of such Interest Period) and (iii) in the case of any Loan, upon the payment
or prepayment thereof or the Conversion of such Loan to a Loan of another Type
(but only on the principal amount so paid, prepaid or Converted), except that
interest payable at the Post-Default Rate shall be payable from time to time
on demand. Promptly after the determination of any interest rate provided for
herein or any change therein, the Administrative Agent shall give notice
thereof to the Lenders to which such interest is payable and to the Company.
Section 4. Payments; Pro Rata Treatment; Computations; Etc.
4.01 Payments.
(a) Except to the extent otherwise provided herein, all payments
of principal, interest and other amounts to be made by the Company under this
Agreement, shall be made in Dollars, in immediately available funds, without
deduction, set-off or counterclaim, to the Administrative Agent at an account
designated by the Administrative Agent and maintained with Chase at the
Principal Office, not later than 1:00 p.m. New York time on the date on which
such payment shall become due (each such payment made after such time on such
due date to be deemed to have been made on the next succeeding Business Day).
(b) The Company shall, at the time of making each payment under
this Agreement for account of any Lender, specify to the Administrative Agent
(which shall so notify the intended recipient(s) thereof) the Loans or other
amounts payable by the Company hereunder to which such payment is to be
applied (and in the event that the Company fails to so specify, or if an Event
of Default has occurred and is continuing, the Administrative Agent may
distribute such payment to the Lenders for application in such manner as it or
the Majority Lenders, subject to Section 4.02 hereof, may determine to be
appropriate).
(c) Each payment received by the Administrative Agent under this
Agreement for account of any Lender shall be paid by the Administrative Agent
promptly to such Lender, in immediately available funds, for account of such
Lender's Applicable Lending Office for the Loan or other obligation in respect
of which such payment is made.
(d) If the due date of any payment under this Agreement would
otherwise fall on a day that is not a Business Day, such date shall be
extended to the next succeeding Business Day, and interest shall be payable
for any principal so extended for the period of such extension.
(e) The Company shall be fully protected in making all payments of
principal and interest to be made by the Company under this Agreement to the
Administrative Agent.
4.02 Pro Rata Treatment.
Except to the extent otherwise provided herein: (a) each borrowing from the
Lenders under Section 2.01 hereof shall be made from the Lenders, each payment
of loan fees under Section 2.04 hereof shall be made to the Administrative
Agent for account of the Lenders, and each termination or reduction of the
amount of the Commitments under Section 2.03 hereof shall be applied to the
respective Commitments of the Lenders, pro rata according to the amounts of
their respective Commitments; (b) except as otherwise provided in Section 5.04
hereof, Eurodollar Loans having the same Interest Period shall be allocated
pro rata among the Lenders according to the amounts of their respective
Commitments (in the case of the making of Loans) or their respective Loans (in
the case of Conversions and Continuations of Loans); (c) each payment or
prepayment of principal of Loans by the Company shall be made for account of
the Lenders pro rata in accordance with the respective unpaid principal
amounts of the Loans held by them; and (d) each payment of interest on Loans
by the Company shall be made for account of the Lenders pro rata in accordance
with the amounts of interest on such Loans then due and payable to the
respective Lenders.
4.03 Computations.
Interest on Eurodollar Loans and loan fees shall be computed on the basis of
a year of 360 days and actual days elapsed (including the first day but
excluding the last day) occurring in the period for which payable and interest
on Base Rate Loans shall be computed on the basis of a year of 365 or 366
days, as the case may be, and actual days elapsed (including the first day but
excluding the last day) occurring in the period for which payable.
Notwithstanding the foregoing, for each day that the Base Rate is calculated
by reference to the Federal Funds Rate, interest on Base Rate Loans shall be
computed on the basis of a year of 360 days and actual days elapsed.
4.04 Minimum Amounts.
Each borrowing, Conversion and partial prepayment of principal of Loans
shall be in an aggregate amount at least equal to $5,000,000 or a larger
multiple of $1,000,000 (borrowings, Conversions or prepayments of or into
Loans of different Types or, in the case of Eurodollar Loans, having different
Interest Periods at the same time hereunder to be deemed separate borrowings,
Conversions and prepayments for purposes of the foregoing, one for each Type
or Interest Period); provided that the aggregate principal amount of
Eurodollar Loans having the same Interest Period shall be in an amount at
least equal to $5,000,000 or a larger multiple of $1,000,000 and, if any
Eurodollar Loans would otherwise be in a lesser principal amount for any
period, such Loans shall be Base Rate Loans during such period.
4.05 Certain Notices.
Notices by the Company to the Administrative Agent of terminations or
reductions of the Commitments and of borrowings, Conversions, Continuations
and optional prepayments of Loans, of Types of Loans and of the duration of
Interest Periods shall be irrevocable and shall be effective only if received
by the Administrative Agent not later than 10:00 a.m. New York time on the
number of Business Days prior to the date of the relevant termination,
reduction, borrowing, Conversion, Continuation or prepayment or the first day
of such Interest Period specified below:
Number of
Business
Notice Days Prior
Termination or reduction
of Commitments 1
Borrowing or prepayment of,
or Conversions into,
Base Rate Loans same day
Borrowing or prepayment of,
Conversions into, Continuations
as, or duration of Interest
Period for, Eurodollar Loans 3
Each such notice of termination or reduction shall specify the amount of the
Commitments to be terminated or reduced. Each such notice of borrowing,
Conversion, Continuation or optional prepayment shall specify the Loans to be
borrowed, Converted, Continued or prepaid and the amount (subject to
Section 4.04 hereof) and Type of each Loan to be borrowed, Converted,
Continued or prepaid and the date of borrowing, Conversion, Continuation or
optional prepayment (which shall be a Business Day). Each such notice of the
duration of an Interest Period shall specify the Loans to which such Interest
Period is to relate. The Administrative Agent shall promptly notify the
Lenders of the contents of each such notice. In the event that the Company
fails to select the Type of Loan, or the duration of any Interest Period for
any Eurodollar Loan, within the time period and otherwise as provided in this
Section 4.05, such Loan (if outstanding as a Eurodollar Loan) will be
automatically Converted into a Base Rate Loan on the last day of the then
current Interest Period for such Loan or (if outstanding as a Base Rate Loan)
will remain as, or (if not then outstanding) will be made as, a Base Rate
Loan.
4.06 Non-Receipt of Funds by the Administrative Agent.
Unless the Administrative Agent shall have been notified by a Lender or the
Company (the "Payor") prior to the date on which the Payor is to make payment
to the Administrative Agent of (in the case of a Lender) the proceeds of a
Loan to be made by such Lender hereunder or (in the case of the Company) a
payment to the Administrative Agent for account of one or more of the Lenders
hereunder (such payment being herein called the "Required Payment"), which
notice shall be effective upon receipt, that the Payor does not intend to make
the Required Payment to the Administrative Agent, the Administrative Agent may
assume that the Required Payment has been made and may, in reliance upon such
assumption (but shall not be required to), make the amount thereof available
to the intended recipient(s) on such date; and, if the Payor has not in fact
made the Required Payment to the Administrative Agent, the recipient(s) of
such payment shall, on demand, repay to the Administrative Agent the amount so
made available together with interest thereon in respect of each day during
the period commencing on the date (the "Advance Date") such amount was so made
available by the Administrative Agent until the date the Administrative Agent
recovers such amount at a rate per annum equal to the Federal Funds Rate for
such day and, if such recipient(s) shall fail promptly to make such payment,
the Administrative Agent shall be entitled to recover such amount, on demand,
from the Payor, together with interest as aforesaid; provided that if neither
the recipient(s) nor the Payor shall return the Required Payment to the
Administrative Agent within three Business Days of the Advance Date, then,
retroactively to the Advance Date, the Payor and the recipient(s) shall each
be obligated to pay interest on the Required Payment as follows:
(i) if the Required Payment shall represent a payment to be
made by the Company to the Lenders, the Company and the recipient(s)
shall each be obligated retroactively to the Advance Date to pay
interest in respect of the Required Payment at the Post-Default Rate
(without duplication of the obligation of the Company under Section
3.02 hereof to pay interest on the Required Payment at the Post-Default
Rate), it being understood that the return by the recipient(s) of the
Required Payment to the Administrative Agent shall not limit such
obligation of the Company under said Section 3.02 to pay interest at
the Post-Default Rate in respect of the Required Payment and
(ii) if the Required Payment shall represent proceeds of a
Loan to be made by the Lenders to the Company, the Payor and the Company
shall each be obligated retroactively to the Advance Date to pay interest
in respect of the Required Payment pursuant to whichever of the rates
specified in Section 3.02 hereof is applicable to the Type of such Loan,
it being understood that the return by the Company of the Required
Payment to the Administrative Agent shall not limit any claim the Company
may have against the Payor in respect of such Required Payment.
4.07 Sharing of Payments, Etc.
(a) The Company agrees that, in addition to (and without limitation
of) any right of set-off, banker's lien or counterclaim a Lender may otherwise
have, each Lender shall be entitled, at its option (to the fullest extent
permitted by law), to set off and apply any deposit (general or special, time
or demand, provisional or final), or other indebtedness, held by it for the
credit or account of the Company at any of its offices, in Dollars or in any
other currency, against any principal of or interest on any of such Lender's
Loans or any other amount payable to such Lender hereunder, that is not paid
when due (regardless of whether such deposit or other indebtedness are then
due to the Company), in which case it shall promptly notify the Company and
the Administrative Agent thereof; provided that such Lender's failure to give
such notice shall not affect the validity thereof.
(b) If any Lender shall obtain from the Company payment of any
principal of or interest on any Loan owing to it or payment of any other
amount under this Agreement through the exercise of any right of set-off,
banker's lien or counterclaim or similar right or otherwise (other than from
the Administrative Agent as provided herein), and, as a result of such
payment, such Lender shall have received a greater percentage of the principal
of or interest on the Loans or such other amounts then due hereunder by the
Company to such Lender than the percentage received by any other Lender, it
shall promptly purchase from such other Lenders participations in (or, if and
to the extent specified by such Lender, direct interests in) the Loans or such
other amounts, respectively, owing to such other Lenders (or in interest due
thereon, as the case may be) in such amounts, and make such other adjustments
from time to time as shall be equitable, to the end that all the Lenders shall
share the benefit of such excess payment (net of any expenses that may be
incurred by such Lender in obtaining or preserving such excess payment) pro
rata in accordance with the unpaid principal of and/or interest on the Loans
or such other amounts, respectively, owing to each of the Lenders. To such
end all the Lenders shall make appropriate adjustments among themselves (by
the resale of participations sold or otherwise) if such payment is rescinded
or must otherwise be restored.
(c) The Company agrees that any Lender so purchasing such a
participation (or direct interest) may exercise all rights of set-off,
banker's lien, counterclaim or similar rights with respect to such
participation as fully as if such Lender were a direct holder of Loans or
other amounts (as the case may be) owing to such Lender in the amount of such
participation.
(d) Nothing contained herein shall require any Lender to exercise
any such right or shall affect the right of any Lender to exercise, and retain
the benefits of exercising, any such right with respect to any other
indebtedness or obligation of the Company. If, under any applicable
bankruptcy, insolvency or other similar law, any Lender receives a secured
claim in lieu of a set-off to which this Section 4.07 applies, such Lender
shall, to the extent practicable, exercise its rights in respect of such
secured claim in a manner consistent with the rights of the Lenders entitled
under this Section 4.07 to share in the benefits of any recovery on such
secured claim.
Section 5. Yield Protection, Etc.
5.01 Additional Costs.
(a) The Company shall pay directly to each Lender from time to
time such amounts as such Lender may reasonably determine to be necessary to
compensate such Lender for any costs that such Lender determines are
attributable to its making or maintaining of any Eurodollar Loans or its
obligation to make any Eurodollar Loans hereunder, or any reduction in any
amount receivable by such Lender hereunder in respect of any of such Loans or
such obligation (such increases in costs and reductions in amounts receivable
being herein called "Additional Costs"), resulting from any Regulatory Change
that:
(i) shall subject any Lender (or its Applicable Lending
Office for any of such Loans) to any tax, duty or other charge in respect
of such Loans or changes the basis of taxation of any amounts payable to
such Lender under this Agreement in respect of any of such Loans
excluding changes in the rate of tax on the overall net income of such
Lender or of such Applicable Lending Office by the jurisdiction in which
such Lender has its principal office or such Applicable Lending Office);
or
(ii) imposes or modifies any reserve, special deposit or
similar requirements (other than the Reserve Requirement utilized in the
determination of the Eurodollar Rate for such Loan) relating to any
extensions of credit or other assets of, or any deposits with or other
liabilities of, such Lender (including, without limitation, any of such
Loans or any deposits referred to in the definition of "Eurodollar Base
Rate" in Section 1.01 hereof), or any commitment of such Lender
(including, without limitation, the Commitment of such Lender hereunder);
or
(iii) imposes any other condition affecting this Agreement
(or any of such extensions of credit or liabilities) or its Commitment.
If any Lender requests compensation from the Company under this
Section 5.01(a), the Company may, by notice to such Lender (with a copy
to the Administrative Agent), suspend the obligation of such Lender
thereafter to make or Continue Eurodollar Loans, or to Convert Base Rate
Loans into Eurodollar Loans, until the Regulatory Change giving rise to
such request ceases to be in effect (in which case the provisions of
Section 5.04 hereof shall be applicable); provided that such suspension
shall not affect the right of such Lender to receive the compensation so
requested.
(b) Without limiting the effect of the foregoing provisions of
this Section 5.01 (but without duplication), the Company shall pay directly to
each Lender from time to time on request such amounts as such Lender may
reasonably determine to be necessary to compensate such Lender (or, without
duplication, the bank holding company of which such Lender is a subsidiary) for
any costs that it reasonably determines are attributable to the maintenance by
such Lender (or any Applicable Lending Office or such bank holding company),
pursuant to any law or regulation or any interpretation, directive or request
(whether or not having the force of law and whether or not failure to comply
therewith would be unlawful) of any court or governmental or monetary
authority (i) following any Regulatory Change or (ii) implementing any
risk-based capital guideline or other requirement (whether or not having the
force of law and whether or not the failure to comply therewith would be
unlawful) hereafter issued by any government or governmental or supervisory
authority implementing at the national level the Basle Accord, of capital in
respect of its Commitment or Loans (such compensation to include, without
limitation, an amount equal to any reduction of the rate of return on assets
or equity of such Lender (or any Applicable Lending Office or such bank
holding company) to a level below that which such Lender (or any Applicable
Lending Office or such bank holding company) could have achieved but for such
law, regulation, interpretation, directive or request).
(c) Each Lender shall notify the Company of any event occurring
after the date hereof entitling such Lender to compensation under
paragraph (a) or (b) of this Section 5.01 as promptly as practicable, but in
any event within 45 days, after such Lender obtains actual knowledge thereof;
provided that (i) if any Lender fails to give such notice within 45 days after
it obtains actual knowledge of such an event, such Lender shall, with respect
to compensation payable pursuant to this Section 5.01 in respect of any costs
resulting from such event, only be entitled to payment under this Section 5.01
for costs incurred from and after the date 45 days prior to the date that such
Lender does give such notice and (ii) each Lender will designate a different
Applicable Lending Office for the Loans of such Lender affected by such event
if such designation will avoid the need for, or reduce the amount of, such
compensation and will not, in the sole opinion of such Lender, be
disadvantageous to such Lender, except that such Lender shall have no
obligation to designate an Applicable Lending Office located in the United
States of America. Each Lender will furnish to the Company a certificate
setting forth the basis and amount of each request by such Lender for
compensation under paragraph (a) or (b) of this Section 5.01. Determinations
and allocations by any Lender for purposes of this Section 5.01 of the effect
of any Regulatory Change pursuant to paragraph (a) of this Section 5.01, or of
the effect of capital maintained pursuant to paragraph (b) of this
Section 5.01, on its costs or rate of return of maintaining Loans or its
obligation to make Loans, or on amounts receivable by it in respect of Loans,
and of the amounts required to compensate such Lender under this Section 5.01,
shall be conclusive; provided that such determinations and allocations are
made on a reasonable basis.
5.02 Limitation on Types of Loans.
Anything herein to the contrary notwithstanding, if, on or prior to the
determination of any Eurodollar Base Rate for any Interest Period:
(a) clause (b) of the definition of "Eurodollar Base Rate" in
Section 1.01 hereof is the basis for determining rates of interest for
Eurodollar Loans and the Administrative Agent determines, which
determination shall be conclusive, that quotations of interest rates for
the relevant deposits referred to in said clause (b) are not being
provided in the relevant amounts or for the relevant maturities for
purposes of determining rates of interest for Eurodollar Loans as
provided herein; or
(b) the Majority Lenders determine, which determination shall be
conclusive, and notify the Administrative Agent that the relevant rates
of interest referred to in the definition of "Eurodollar Base Rate" in
Section 1.01 hereof upon the basis of which the rate of interest for
Eurodollar Loans for such Interest Period is to be determined are not
likely adequately to cover the cost to such Lenders of making or
maintaining Eurodollar Loans for such Interest Period;
then the Administrative Agent shall give the Company and each Lender prompt
notice thereof and, so long as such condition remains in effect, the Lenders
shall be under no obligation to make additional Eurodollar Loans, to Continue
Eurodollar Loans or to Convert Base Rate Loans into Eurodollar Loans, and the
Company shall, on the last day(s) of the then current Interest Period(s) for
the outstanding Eurodollar Loans, either prepay such Loans or Convert such
Loans into Base Rate Loans in accordance with Section 2.08 hereof.
5.03 Illegality. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Lender or its
Applicable Lending Office to honor its obligation to make or maintain
Eurodollar Loans hereunder (and, in the sole opinion of such Lender, the
designation of a different Applicable Lending Office would either not avoid
such unlawfulness or would be disadvantageous to such Lender), then such
Lender shall promptly notify the Company thereof (with a copy to the
Administrative Agent) and such Lender's obligation to make or Continue, or to
Convert Loans of any other Type into, Eurodollar Loans shall be suspended
until such time as such Lender may again make and maintain Eurodollar Loans
(in which case the provisions of Section 5.04 hereof shall be applicable).
5.04 Treatment of Affected Loans.
If the obligation of any Lender to make Eurodollar Loans or to Continue, or
to Convert Base Rate Loans into, Eurodollar Loans shall be suspended pursuant
to Section 5.01 or 5.03 hereof, such Lender's Eurodollar Loans shall be
automatically Converted into Base Rate Loans on the last day(s) of the then
current Interest Period(s) for Eurodollar Loans (or, in the case of a
Conversion resulting from a circumstance described in Section 5.03 hereof, on
such earlier date as such Lender may specify to the Company with a copy to the
Administrative Agent) and, unless and until such Lender gives notice as
provided below that the circumstances specified in Section 5.01 or 5.03 hereof
that gave rise to such Conversion no longer exist:
(a) to the extent that such Lender's Eurodollar Loans have been so
Converted, all payments and prepayments of principal that would otherwise
be applied to such Lender's Eurodollar Loans shall be applied instead to
its Base Rate Loans; and
(b) all Loans that would otherwise be made or Continued by such
Lender as Eurodollar Loans shall be made or Continued instead as Base
Rate Loans, and all Base Rate Loans of such Lender that would otherwise
be Converted into Eurodollar Loans shall remain as Base Rate Loans.
If such Lender gives notice to the Company with a copy to the Administrative
Agent that the circumstances specified in Section 5.01 or 5.03 hereof that
gave rise to the Conversion of such Lender's Eurodollar Loans pursuant to
this Section 5.04 no longer exist (which such Lender agrees to do promptly
upon such circumstances ceasing to exist) at a time when Eurodollar Loans
made by other Lenders are outstanding, such Lender's Base Rate Loans shall be
automatically Converted, on the first day(s) of the next succeeding Interest
Period(s) for such outstanding Eurodollar Loans, to the extent necessary so
that, after giving effect thereto, all Base Rate Loans and Eurodollar Loans
are allocated among the Lenders ratably (as to principal amounts, Types and
Interest Periods) in accordance with their respective Commitments.
5.05 Compensation.
The Company shall pay to the Administrative Agent for account of each
Lender, upon the request of such Lender through the Administrative Agent, such
amount or amounts as shall be sufficient (in the reasonable opinion of such
Lender) to compensate it for any loss, cost or expense that such Lender
determines is attributable to:
(a) any payment, prepayment or Conversion of a Eurodollar Loan made
by such Lender for any reason (including, without limitation, the
acceleration of the Loans pursuant to Section 9 hereof) on a date other
than the last day of any Interest Period for such Loan; or
(b) any failure by the Company for any reason (including, without
limitation, the failure of any of the conditions precedent specified in
Section 6 hereof to be satisfied) to borrow a Eurodollar Loan from such
Lender on the date for such borrowing specified in the relevant notice of
borrowing given pursuant to Section 2.02 hereof.
Without limiting the effect of the preceding sentence, such compensation shall
include an amount equal to the excess, if any, of (i) the amount of interest
that otherwise would have accrued on the principal amount so paid, prepaid,
Converted or not borrowed for the period from the date of such payment,
prepayment, Conversion or failure to borrow to the last day of the then
current Interest Period for such Loan (or, in the case of a failure to borrow,
the Interest Period for such Loan that would have commenced on the date
specified for such borrowing) at the applicable rate of interest for such Loan
provided for herein over (ii) the amount of interest that otherwise would have
accrued on such principal amount at a rate per annum equal to the interest
component of the amount such Lender would have bid in the London interbank
market for Dollar deposits of leading banks in amounts comparable to such
principal amount and with maturities comparable to such period (as reasonably
determined by such Lender), or if such Lender shall cease to make such bids,
the equivalent bid rate, as reasonably determined by such Lender, derived from
display page 3750 (British Bankers Association - LIBOR) of the Dow ▇▇▇▇▇
Markets (Telerate) Screen (or any successor or substitute therefor) or other
publicly available source as described in the definition of "Eurodollar Base
Rate" in Section 1.01 hereof).
5.06 U.S. Taxes.
(a) The Company agrees to pay to each Lender that is not a
U.S. Person such additional amounts as are necessary in order that the net
payment of any amount due to such non-U.S. Person hereunder after deduction
for or withholding in respect of any U.S. Taxes imposed with respect to such
payment (or in lieu thereof, payment of such U.S. Taxes by such
non-U.S. Person), will not be less than the amount stated herein to be then
due and payable, provided that the foregoing obligation to pay such additional
amounts shall not apply:
(i) to any payment to any Lender hereunder unless such Lender
is, on the date hereof (or on the date it becomes a Lender hereunder
as provided in Section 11.06(b) or 11.07 hereof) and on the date of
any change in the Applicable Lending Office of such Lender, either
entitled to submit a Form 1001 (relating to such Lender and entitling
it to a complete exemption from withholding on all interest to be
received by it hereunder in respect of the Loans) or Form 4224
(relating to all interest to be received by such Lender hereunder in
respect of the Loans), or
(ii) to any U.S. Taxes imposed solely by reason of the
failure by such non-U.S. Person to comply with applicable
certification, information, documentation or other reporting
requirements concerning the nationality, residence, identity or
connections with the United States of America of such non-U.S. Person
if such compliance is required by statute or regulation of the United
States of America as a precondition to relief or exemption from such
U.S. Taxes.
For the purposes of this Section 5.06(a), (A) "U.S. Person" shall mean a
citizen, national or resident of the United States of America, a corporation,
partnership or other entity created or organized in or under any laws of the
United States of America or any State thereof, or any estate or trust that is
subject to Federal income taxation regardless of the source of its income,
(B) "U.S. Taxes" shall mean any present or future tax, assessment or other
charge or levy imposed by or on behalf of the United States of America or any
taxing authority thereof or therein, (C) "Form 1001" shall mean Form 1001
(Ownership, Exemption, or Reduced Rate Certificate) of the Department of the
Treasury of the United States of America and (D) "Form 4224" shall mean
Form 4224 (Exemption from Withholding of Tax on Income Effectively Connected
with the Conduct of a Trade or Business in the United States) of the
Department of the Treasury of the United States of America (or in relation to
either such Form such successor and related forms as may from time to time be
adopted by the relevant taxing authorities of the United States of America to
document a claim to which such Form relates). Each of the Forms referred to
in the foregoing clauses (C) and (D) shall include such successor and related
forms as may from time to time be adopted by the relevant taxing authorities
of the United States of America to document a claim to which such Form
relates.
(b) Within 30 days after paying any amount to the Administrative
Agent or any Lender from which it is required by law to make any deduction or
withholding, and within 30 days after it is required by law to remit such
deduction or withholding to any relevant taxing or other authority, the
Company shall deliver to the Administrative Agent for delivery to such
non-U.S. Person evidence satisfactory to such Person of such deduction,
withholding or payment (as the case may be).
Section 6. Conditions Precedent.
6.01 Initial Loan. The obligation of any Lender to make its initial
Loan hereunder is subject to the conditions precedent that the Administrative
Agent shall have received the following documents (with, in the case of clauses
(a), (b), (c) and (d) below, sufficient copies for each Lender), each of which
shall be satisfactory to the Administrative Agent (and to the extent specified
below, to each Lender) in form and substance:
(a) Corporate Documents. Certified copies of the charter and
by-laws (or equivalent documents) of the Company and of all corporate
authority for the Company (including, without limitation, board of
director resolutions and evidence of the incumbency, including specimen
signatures, of officers) with respect to the execution, delivery and
performance of this Agreement and each other document to be delivered by
the Company from time to time in connection herewith and the Loans
hereunder (and the Administrative Agent and each Lender may conclusively
rely on such certificate until it receives notice in writing from the
Company to the contrary).
(b) Officer's Certificate. A certificate of a senior officer of
the Company to the effect set forth in the first sentence of Section 6.02
hereof.
(c) Opinion of Counsel to the Company. An opinion of Ropes & ▇▇▇▇,
counsel to the Company, substantially in the form of Exhibit A hereto
(provided that the second sentence of paragraph 1 of Exhibit A shall be
given by ▇▇▇▇ ▇. ▇▇▇▇▇, General Counsel of the Company) and covering such
other matters as the Administrative Agent or any Lender may reasonably
request (and the Company hereby instructs such counsel to deliver such
opinion to the Lenders and the Administrative Agent).
(d) Opinion of Special New York Counsel to Chase. An opinion of
Milbank, Tweed, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, special New York counsel to Chase,
substantially in the form of Exhibit B hereto (and Chase hereby instructs
such counsel to deliver such opinion to the Lenders).
(e) Other Documents. Such other documents as the Administrative
Agent or any Lender or special New York counsel to Chase may reasonably
request.
The obligation of any Lender to make its initial Loan hereunder is also
subject to the payment by the Company of such fees as the Company shall have
agreed to pay or deliver to any Lender or the Administrative Agent in
connection herewith, including, without limitation, the reasonable fees and
expenses of Milbank, Tweed, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, special New York counsel to
Chase, in connection with the negotiation, preparation, execution and delivery
of this Agreement and the making of the Loans hereunder (to the extent that
statements for such fees and expenses have been delivered to the Company).
6.02 Initial and Subsequent Loans. The obligation of the Lenders to
make any Loan to the Company upon the occasion of each borrowing hereunder
(including the initial borrowing) is subject to the further conditions
precedent that, both immediately prior to the making of such Loan and also
after giving effect thereto and to the intended use thereof:
(a) no Default shall have occurred and be continuing; and
(b) the representations and warranties made by the Company in
Section 7 hereof (other than, after the date hereof, in the last sentence
of Section 7.02(a)) shall be true and complete on and as of the date of
the making of such Loan with the same force and effect as if made on and
as of such date (or, if any such representation or warranty is expressly
stated to have been made as of a specific date, as of such specific
date).
Each notice of borrowing by the Company hereunder shall constitute a
certification by the Company to the effect set forth in the preceding sentence
(both as of the date of such notice and, unless the Company otherwise notifies
the Administrative Agent prior to the date of such borrowing, as of the date
of such borrowing).
Section 7. Representations and Warranties. The Company represents
and warrants to the Administrative Agent and the Lenders that:
7.01 Corporate Existence. Each of the Company and its Subsidiaries:
(a) is a corporation, partnership or other entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization; (b) has all requisite corporate or other power, and has all
material governmental licenses, authorizations, consents and approvals
necessary to own its assets and carry on its business as now being or as
proposed to be conducted; and (c) is qualified to do business and is in good
standing in all jurisdictions in which the nature of the business conducted by
it makes such qualification necessary and where failure so to qualify could
(either individually or in the aggregate) have a Material Adverse Effect.
7.02 Financial Condition.
(a) The Company has heretofore furnished to each of the Lenders
consolidated balance sheet of the Company and its Subsidiaries as at December
31, 1997 and the related consolidated statements of income, shareholders'
equity and cash flows of the Company and its Subsidiaries for the fiscal year
ended on said date, with the opinion thereon of Price Waterhouse LLP. All
such financial statements present fairly, in all material respects, the
consolidated financial position of the Company and its Subsidiaries, as at
said date and the consolidated results of their operations for the fiscal year
ended on said date, all in accordance with generally accepted accounting
principles and practices applied on a consistent basis. None of the Company
nor any of its Subsidiaries has on the date hereof any material contingent
liabilities, liabilities for taxes, unusual forward or long-term commitments
or unrealized or anticipated losses from any unfavorable commitments, except
as referred to or reflected or provided for in said balance sheet as at said
date. Since December 31, 1997, there has been no Material Adverse Change.
The Company has heretofore furnished to each of the Lenders
the annual Statutory Statements of each Principal Insurance Subsidiary for the
fiscal year ended December 31, 1997 as filed with the Applicable Insurance
Regulatory Authority. All such Statutory Statements present fairly, in all
material respects, the financial condition of such Principal Insurance
Subsidiary as at, and the results of operations for the fiscal year ended
December 31, 1997, in accordance with statutory accounting practices
prescribed or permitted by the Applicable Insurance Regulatory Authority.
7.03 Litigation. There are no legal or arbitral proceedings, or any
proceedings by or before any governmental or regulatory authority or agency,
now pending or (to the knowledge of the Company) threatened against the Company
or any of its Subsidiaries that are reasonably likely (either individually or
in the aggregate) to have a Material Adverse Effect.
7.04 No Breach. None of the execution and delivery of this
Agreement, the consummation of the transactions herein contemplated or
compliance with the terms and provisions hereof will conflict with or result in
a breach of, or require any consent under, the charter or by-laws of the
Company, or any applicable law or regulation, or any order, writ, injunction or
decree of any court or governmental authority or agency, or any agreement or
instrument to which the Company or any of its Subsidiaries is a party or by
which any of them or any of their Property is bound or to which any of them is
subject, or constitute a default under any such agreement or instrument.
7.05 Action. The Company has all necessary corporate power,
authority and legal right to execute, deliver and perform its obligations under
this Agreement; the execution, delivery and performance by the Company of this
Agreement has been duly authorized by all necessary corporate action on its
part (including, without limitation, any required shareholder approvals); and
this Agreement has been duly and validly executed and delivered by the Company
and constitutes its legal, valid and binding obligation, enforceable against
the
Company in accordance with its terms, except as such enforceability may be
limited by (a) bankruptcy, insolvency, reorganization, moratorium or similar
laws of general applicability affecting the enforcement of creditors' rights
and (b) the application of general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at law).
7.06 Approvals. No authorizations, approvals or consents of, and no
filings or registrations with, any governmental or regulatory authority or
agency, or any securities exchange, are necessary for the execution, delivery
or performance by the Company of this Agreement or for the legality, validity
or enforceability hereof or thereof except authorizations, approvals and
consents that have already been obtained and those filings and registrations
that have previously been made.
7.07 Margin Stock. Not more than 25% of the value (as determined by
any reasonable method) of the Property subject to any restriction on (i) sale
or other disposition set forth in Section 8.04 hereof or (ii) Liens set forth
in Section 8.05 hereof is represented by Margin Stock.
7.08 ERISA. Each Plan, and, to the knowledge of the Company, each
Multiemployer Plan, is in compliance in all material respects with, and has
been administered in all material respects in compliance with, the applicable
provisions of ERISA, the Code and any other Federal or State law, and no event
or condition has occurred and is continuing as to which the Company would be
under an obligation to furnish a report to the Lenders under Section 8.01(j)
hereof.
7.09 Taxes. The Company and its Subsidiaries have filed all Federal
income tax returns and all other material tax returns that are required to be
filed by them and have paid all taxes due pursuant to such returns or pursuant
to any assessment received by the Company or any of its Subsidiaries except for
any tax assessment, charge or levy the payment of which is being contested in
good faith and by proper proceedings. The charges, accruals and reserves on
the books of the Company and its Subsidiaries in respect of taxes and other
governmental charges are, in the opinion of the Company, adequate.
7.10 Investment Company Act. Except as disclosed in Schedule IV
hereto, neither the Company nor any of its Subsidiaries is an "investment
company", or a company "controlled" by an "investment company", within the
meaning of the Investment Company Act of 1940, as amended.
7.11 Public Utility Holding Company Act. Neither the Company nor
any of its Subsidiaries is a "holding company", or an "affiliate" of a "holding
company" or a "subsidiary company" of a "holding company", within the meaning
of the Public Utility Holding Company Act of 1935, as amended.
7.12 Environmental Matters. Each of the Company and its
Subsidiaries has obtained all environmental, health and safety permits,
licenses and other authorizations required under all Environmental Laws to
carry on its business as now being or as proposed to be conducted, except to
the extent failure to have any such permit, license or authorization would not
(either individually or in the aggregate) have a Material Adverse Effect. Each
of such permits, licenses and authorizations is in full force and effect and
each of the Company and its Subsidiaries is in compliance with the terms and
conditions thereof, and is also in compliance with all other limitations,
restrictions, conditions, standards, prohibitions, requirements, obligations,
schedules and timetables contained in any applicable Environmental Law or in
any regulation, code, plan, order, decree, judgment, injunction, notice or
demand letter issued, entered, promulgated or approved thereunder, except to
the extent failure to comply therewith would not (either individually or in
the aggregate) have a Material
Adverse Effect.
In addition, no notice, notification, demand, request for
information, citation, summons or order has been issued, no complaint has been
filed, no penalty has been assessed and no investigation or review is pending
or threatened by any governmental or other entity with respect to any alleged
failure by the Company or any of its Subsidiaries to have any environmental,
health or safety permit, license or other authorization required under any
Environmental Law in connection with the conduct of the business of the
Company or any of its Subsidiaries or with respect to any generation,
treatment, storage, recycling, transportation, discharge or disposal, or any
Release of any Hazardous Materials generated by the Company or any of its
Subsidiaries.
All environmental investigations, studies, audits, tests, reviews or
other analyses conducted by or that are in the possession of the Company or
any of its Subsidiaries in relation to facts, circumstances or conditions at
or affecting any site or facility now or previously owned, operated or leased
by the Company or any of its Subsidiaries and that could result in a Material
Adverse Effect have been made available to the Lenders.
7.13 Subsidiaries, Etc. Set forth in Schedule II hereto is a
complete and correct list of all of the Subsidiaries of the Company as of the
date hereof together with, for each such Subsidiary, (i) the jurisdiction of
organization of such Subsidiary, (ii) each Person holding ownership interests
in such Subsidiary and (iii) the nature of the ownership interests held by each
such Person and the percentage of ownership of such Subsidiary represented by
such ownership interests. Except as disclosed in Schedule II hereto, (x) each
of the Company and its Subsidiaries owns, free and clear of Liens, and has the
unencumbered right to vote, all outstanding ownership interests in each Person
shown to be held by it in Schedule II hereto, (y) all of the issued and
outstanding capital stock of each such Person organized as a corporation is
validly issued, fully paid and nonassessable and (z) there are no outstanding
Equity Rights with respect to such Person (other than the registration rights
of holders of Special Preferred Securities of the Company or its Subsidiaries).
7.14 Title to Assets. The Company and its Subsidiaries own and have
on the date hereof good title (subject only to Liens permitted by Section 8.05
hereof) to the Properties shown to be owned in the most recent financial
statements referred to in Section 7.02 hereof (other than Properties consisting
of "separate account assets" on the Company's consolidated balance sheet or
Properties disposed of in the ordinary course of business or otherwise
permitted to be disposed of pursuant to Section 8.04 hereof). The Company and
its Subsidiaries own and have on the date hereof good title to, and enjoy on
the date hereof peaceful and undisturbed possession of, all Properties (subject
only to Liens permitted by Section 8.05 hereof) that are necessary for the
operation and conduct of their businesses.
7.15 True and Complete Disclosure. The information, reports,
financial statements, exhibits and schedules furnished in writing by or on
behalf of the Company to the Administrative Agent or any Lender in connection
with the negotiation, preparation or delivery of this Agreement or included
herein or delivered pursuant hereto, when taken as a whole do not contain any
untrue statement of material fact or omit to state any material fact necessary
to make the statements herein or therein, in light of the circumstances under
which they were made, not misleading. All written information furnished after
the date hereof by the Company and its Subsidiaries to the Administrative Agent
and the Lenders in connection with this Agreement and the transactions
contemplated hereby will be true, complete and accurate in every material
respect, or (in the case of projections) based on reasonable estimates, on the
date as of which such information is stated or certified. There is no fact
known to the Company that could have a Material Adverse Effect that has not
been disclosed herein or in a report, financial statement, exhibit, schedule,
disclosure letter or other writing furnished to the Lenders for use in
connection with the transactions contemplated hereby.
7.16 Compliance with Laws and Agreements. The Company and each of
its Material Subsdiaries is in compliance with laws, regulations and orders of
any governmental agency or authority applicable to it or its Properties and all
indentures, agreements and other instruments binding upon it or its Property,
except where the failure to do so, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.
7.17 Year 2000. The Company anticipates that all reprogramming
required to permit the proper functioning, in and following the year 2000, of
the Company's and each of its Subsidiaries' computer systems and the testing of
all such systems, as so reprogrammed, will be completed by July 1, 1999, except
to the extent the failure to so complete such reprogramming or testing could
not reasonably be expected to have a Material Adverse Effect. The cost to the
Company and its Subsidiaries of such reprogramming and testing and of the
reasonably foreseeable consequences of year 2000 to the Company and its
Subsidiaries (including, without limitation, reprogramming errors and the
failure of others' systems or equipment) is not anticipated to result in a
Default or to have a Material Adverse Effect.
Section 8. Covenants of the Company. The Company covenants and
agrees with the Lenders and the Administrative Agent that, so long as any
Commitment or Loan is outstanding and until payment in full of all amounts
payable by the Company hereunder:
8.01 Financial Statements Etc. The Company shall deliver to each of
the Lenders:
(a) as soon as available and in any event within 45 days after the
end of each of the first three quarterly fiscal periods of each fiscal
year of the Company, consolidated statements of income, shareholders'
equity and cash flows of the Company and its Subsidiaries for such period
and for the period from the beginning of the respective fiscal year to
the end of such period, and the related consolidated balance sheet of the
Company and its Subsidiaries as at the end of such period, setting forth
in each case in comparative form the corresponding consolidated figures
for the corresponding periods in the preceding fiscal year (except that,
in the case of balance sheet, such comparison shall be to the last day of
the prior fiscal year), accompanied by a certificate of a senior
financial officer of the Company, which certificate shall state that said
consolidated financial statements present fairly, in all material
respects, the consolidated financial position and results of operations
of the Company and its Subsidiaries, in each case in accordance with
generally accepted accounting principles, consistently applied, as at the
end of, and for, such period (subject to normal year-end audit
adjustments);
(b) as soon as available and in any event within 90 days after the
end of each fiscal year of the Company, consolidated statements of
income, shareholders' equity and cash flows of the Company and its
Subsidiaries for such fiscal year and the related consolidated balance
sheet of the Company and its Subsidiaries as at the end of such fiscal
year, setting forth in each case in comparative form the corresponding
consolidated figures for the preceding fiscal year, and accompanied by an
opinion thereon of independent certified public accountants of recognized
national standing, which opinion shall state that said consolidated
financial statements present fairly, in all material respects, the
consolidated financial position and results of operations of the Company
and its Subsidiaries as at the end of, and for, such fiscal year in
accordance with generally accepted accounting principles, and a statement
of such accountants to the effect that, in making the examination
necessary for their opinion, nothing came to their attention that caused
them to believe that the Company was not in compliance with Sections 8.10
and 8.11 hereof, insofar as such Sections relate to accounting matters,
in each case in accordance with generally accepted accounting principles,
consistently applied, as at the end of, and for, such fiscal year;
(c) promptly after filing with the Applicable Insurance Regulatory
Authority and in any event within 55 days after the end of each of the
first three quarterly fiscal periods of each fiscal year of each
Principal Insurance Subsidiary, the quarterly Statutory Statement of such
Principal Insurance Subsidiary for such quarterly fiscal period, together
with the opinion thereon of a senior financial officer of such Insurance
Subsidiary stating that such Statutory Statement presents fairly, in all
material respects, the financial position of such Principal Insurance
Subsidiary for such quarterly fiscal period in accordance with statutory
accounting practices required or permitted by the Applicable Insurance
Regulatory Authority;
(d) promptly after filing with the Applicable Insurance Regulatory
Authority and in any event within 90 days after the end of each fiscal
year of each Principal Insurance Subsidiary, the annual Statutory
Statement of such Principal Insurance Subsidiary for such year, together
with (i) the opinion thereon of a senior financial officer of such
Principal Insurance Subsidiary stating that said annual Statutory
Statement presents fairly, in all material respects, the financial
position of such Principal Insurance Subsidiary for such fiscal year in
accordance with statutory accounting practices required or permitted by
the Applicable Insurance Regulatory Authority and (ii) with respect to
Hanover and FAFLIC, a certificate of the chief actuary of such Insurance
Subsidiary, affirming the adequacy of reserves taken by such Insurance
Subsidiary, in respect of future policyholder benefits as at the end of
such fiscal year (as shown on such financial statements);
(e) within 180 days after the end of each fiscal year of each
Principal Insurance Subsidiary, the report of Price Waterhouse LLP (or
other independent certified public accountants of recognized national
standing) on the annual Statutory Statements delivered pursuant to
Section 8.01(d) hereof;
(f) promptly upon their becoming available, copies of all
registration statements and regular periodic reports, if any, that the
Company shall have filed with the Securities and Exchange Commission (or
any governmental agency substituted therefor) or any national securities
exchange;
(g) promptly upon the mailing thereof to the shareholders of the
Company generally or to holders of Subordinated Indebtedness generally,
copies of all financial statements, reports and proxy statements so
mailed;
(h) promptly after each Principal Insurance Subsidiary receives the
results of a triennial examination by its Applicable Insurance Regulatory
Authority of its financial condition and operations and/or any of its
Subsidiaries, a copy thereof;
(i) promptly following the delivery or receipt by any Principal
Insurance Subsidiary or any of their respective Subsidiaries of any
material correspondence, notice or report to or from any Applicable
Insurance Regulatory Authority (including, without limitation, any NAIC
specified real estate and mortgage survey, or any successor report or
survey, filed with the NAIC), a copy thereof;
(j) as soon as possible, and in any event within ten Business Days
after the Company knows or has reason to believe that any of the events
or conditions specified below with respect to any Plan or Multiemployer
Plan has occurred or exists, a statement signed by a senior financial
officer of the Company setting forth details respecting such event or
condition and the action, if any, that the Company or its ERISA Affiliate
proposes to take with respect thereto (and a copy of any report or notice
required to be filed with or given to the PBGC by the Company or an ERISA
Affiliate with respect to such event or condition):
(i) any reportable event, as defined in Section 4043(b)
of ERISA and the regulations issued thereunder, with respect to a
Plan, as to which the PBGC has not by regulation waived the
requirement of Section 4043(a) of ERISA that it be notified within 30
days of the occurrence of such event (provided that a failure to meet
the minimum funding standard of Section 412 of the Code or Section
302
of ERISA, including, without limitation, the failure to make on or
before its due date a required installment under Section 412(m) of
the Code or Section 302(e) of ERISA, shall be a reportable event
regardless of the issuance of any waivers in accordance with
Section 412(d) of the Code); and any request for a waiver under
Section 412(d) of the Code for any Plan;
(ii) the distribution under Section 4041 of ERISA of a
notice of intent to terminate any Plan or any action taken by the
Company or an ERISA Affiliate to terminate any Plan;
(iii) the institution by the PBGC of proceedings under
Section 4042 of ERISA for the termination of, or the appointment of
a trustee to administer, any Plan, or the receipt by the Company or
any ERISA Affiliate of a notice from a Multiemployer Plan that such
action has been taken by the PBGC with respect to such Multiemployer
Plan;
(iv) the complete or partial withdrawal from a Multiemployer
Plan by the Company or any ERISA Affiliate that results in liability
under Section 4201 or 4204 of ERISA (including the obligation to
satisfy secondary liability as a result of a purchaser default) or
the receipt by the Company or any ERISA Affiliate of notice from a
Multiemployer Plan that it is in reorganization or insolvency
pursuant to Section 4241 or 4245 of ERISA or that it intends to
terminate or has terminated under Section 4041A of ERISA;
(v) the institution of a proceeding by a fiduciary of any
Multiemployer Plan against the Company or any ERISA Affiliate to
enforce Section 515 of ERISA, which proceeding is not dismissed
within 30 days; and
(vi) the adoption of an amendment to any Plan that, pursuant
to Section 401(a)(29) of the Code or Section 307 of ERISA, would
result in the loss of tax-exempt status of the trust of which such
Plan is a part if the Company or an ERISA Affiliate fails to timely
provide security to the Plan in accordance with the provisions of
said Sections;
(k) promptly after the Company knows or has reason to believe that
any Default has occurred, a notice of such Default describing the same in
reasonable detail and, together with such notice or as soon thereafter as
possible, a description of the action that the Company has taken or
proposes to take with respect thereto; and
(l) from time to time such other information regarding the
financial condition, operations or business of the Company or any of its
Subsidiaries (including, without limitation, any Plan or Multiemployer
Plan and any reports or other information required to be filed under
ERISA) as any Lender or the Administrative Agent may reasonably request.
The Company will furnish to each Lender, at the time it furnishes each set of
financial statements pursuant to paragraph (a) or (b) above, a certificate of
a senior financial officer of the Company (i) to the effect that no Default
has occurred and is continuing (or, if any Default has occurred and is
continuing, describing the same in reasonable detail and describing the action
that the Company has taken or proposes to take with respect thereto) and
(ii) setting forth in reasonable detail the computations necessary to
determine whether the Company is in compliance with Sections 8.10 and 8.11
hereof as of the end of the respective quarterly fiscal period or fiscal year.
8.02 Litigation. The Company will promptly give to each Lender
notice of all legal or arbitral proceedings, and of all proceedings by or
before any governmental or regulatory authority or agency, and any material
development in respect of such legal or other proceedings, affecting the
Company or any of its Subsidiaries, except proceedings that could not
reasonably be expected (either individually or in the aggregate) to have a
Material Adverse Effect. Without limiting the generality of the foregoing, the
Company will give to each ender notice of the assertion of any Environmental
Claim by any Person against, or with respect to the activities of, the Company
or any of its Subsidiaries and notice of any alleged violation of or non-
compliance with any Environmental
Laws or any permits, licenses or authorizations, other than any Environmental
Claim or alleged violation that could not reasonably be expected (either
individually or in the aggregate) to result in a Material Adverse Effect.
8.03 Existence, Etc. The Company will, and will cause each of its
Material Insurance Subsidiaries to:
(a) preserve and maintain its legal existence and all of its
material rights, privileges, licenses and franchises (provided that
nothing in this Section 8.03 shall prohibit any transaction expressly
permitted under Section 8.04 hereof);
(b) comply with the requirements of all applicable laws, rules,
regulations and orders of governmental or regulatory authorities if
failure to comply with such requirements could reasonably be expected
(either individually or in the aggregate) to result in a Material Adverse
Effect;
(c) pay and discharge all taxes, assessments and governmental
charges or levies imposed on it or on its income or profits or on any of
its Property prior to the date on which penalties attach thereto, except
for any such tax, assessment, charge or levy the payment of which is
being contested in good faith and by proper proceedings and against which
adequate reserves are being maintained;
(d) do all things necessary in the judgement of management to
maintain, preserve, protect and keep all of its tangible Properties in
good repair, working order and condition, and make all necessary and
proper repairs, renewals and replacements so that its business carried on
in connection therewith may be properly conducted at all times;
(e) keep adequate records and books of account, in which complete
entries will be made in accordance with generally accepted accounting
principles consistently applied; and
(f) permit representatives of any Lender or the Administrative
Agent, during normal business hours, to examine, copy and make extracts
from its books and records, to inspect any of its Properties, and to
discuss its business and affairs with its officers, all to the extent
reasonably requested by such Lender or the Administrative Agent (as the
case may be); provided that, prior to the occurrence of a Default, the
Lenders will use reasonable efforts to coordinate their inspection
through the Administrative Agent so as to minimize any disruption to the
business of the Company and its Subsidiaries.
8.04Prohibition of Fundamental Changes. The Company will not, nor
will it permit any of its Material Insurance Subsidiaries to, enter into any
transaction of merger or consolidation or amalgamation, or liquidate, wind up
or dissolve itself (or suffer any liquidation or dissolution).
The Company will not, nor will it permit any of its Material
Insurance Subsidiaries to, acquire any business from, or capital stock of, or
be a party to any acquisition of, any Person.
The Company will not directly or indirectly, nor will it permit any
of its Material Insurance Subsidiaries to, convey, sell, lease, transfer or
otherwise dispose of, in one transaction or a series of transactions, all or a
substantial part of its business or Property, whether now owned or hereafter
acquired (including, without limitation, receivables and leasehold interests,
but excluding (i) any Property sold or disposed of in the ordinary course of
business and on ordinary business terms and (ii) any Property consisting of
Margin Stock held as part of "separate account assets", so long as the
liabilities or obligations in respect of such "separate account assets" have
not been Guaranteed by the Company or any of its Subsidiaries).
Notwithstanding the foregoing provisions of this Section 8.04:
(a) any Subsidiary of the Company may be merged or consolidated
with or into: (i) the Company if the Company shall be the continuing or
surviving corporation or (ii) any other such Subsidiary; provided that
(x) if any such transaction shall be between a Subsidiary and a Wholly-
Owned Subsidiary, the Wholly-Owned Subsidiary shall be the continuing or
surviving corporation;
(b) any Subsidiary of the Company may sell, lease, transfer or
otherwise dispose of any or all of its Property (upon voluntary
liquidation or otherwise) to the Company or a Wholly-Owned Subsidiary of
the Company;
(c) the Company or any Subsidiary of the Company may merge or
consolidate with any other Person if (i) in the case of a merger or
consolidation of the Company, the Company is the surviving corporation
and, in any other case, the surviving corporation is a Wholly-Owned
Subsidiary of the Company and (ii) after giving effect thereto no Default
would exist hereunder;
(d) the Company or any Wholly-Owned Subsidiary of the Company or
Citizens Corporation may acquire capital stock of Citizens Corporation;
(e) the Company may enter into any Reinsurance Agreement, including
any Reinsurance Agreement relating to the ceding of its individual
disability insurance business; and
(f) the Company or any of its Subsidiaries may consummate
acquisitions of other Persons subsequent to the date of this Agreement;
provided that, (a) upon giving effect to each such acquisition the Person
so acquired by the Company shall have either been merged into the Company
or any Subsidiary (with the Company or its Subsidiary as the surviving
entity) or such Person shall have become a Wholly-Owned Subsidiary of the
Company, (b) no Default shall exist immediately before giving effect to
such acquisition and after giving effect to such acquisition and (c) such
acquisition is consummated pursuant to a negotiated acquisition agreement
on a non-hostile basis approved by a majority of the board of directors
of all Persons parties thereto and involves the purchase of a business
line similar, related or incidental to that of the Company and its
Subsidiaries as of the date of this Agreement.
8.05 Limitation on Liens. The Company will not, nor will it permit
any of its Subsidiaries to, create, incur, assume or suffer to exist any Lien
upon any of its Property (other than Property consisting of Margin Stock held
as part of "separate account assets", so long as the liabilities or
obligations in respect of such "separate account assets" have not been
Guaranteed by the Company or any of its Subsidiaries), whether now owned or
hereafter acquired, except:
(a) Liens in existence on the date hereof;
(b) Liens imposed by any governmental authority for taxes,
assessments or charges not yet due or that are being contested in good
faith and by appropriate proceedings if adequate reserves with respect
thereto are maintained on the books of the Company or the affected
Subsidiaries, as the case may be, in accordance with GAAP or SAP, as the
case may be;
(c) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of
business that are not overdue for a period of more than 30 days or that
are being contested in good faith and by appropriate proceedings and
Liens securing judgments but only to the extent for an amount and for a
period not resulting in an Event of Default under Section 9(i) hereof;
(d) pledges or deposits under worker's compensation, unemployment
insurance and other social security legislation;
(e) deposits to secure the performance of bids, trade contracts
(other than for Indebtedness), leases, statutory obligations, surety and
appeal bonds, performance bonds, letters of credit and other obligations
of a like nature incurred in the ordinary course of business;
(f) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business and encumbrances
consisting of zoning restrictions, easements, licenses, restrictions on
the use of Property or minor imperfections in title thereto that, in the
aggregate, are not material in amount, and that do not in any case
materially detract from the value of the Property subject thereto or
interfere with the ordinary conduct of the business of the Company or any
of its Subsidiaries;
(g) Liens arising under escrows, trusts, custodianships, separate
accounts, funds withheld procedures, and similar deposits, arrangements,
or agreements established with respect to insurance policies, annuities,
guaranteed investment contracts and similar products underwritten by, or
Reinsurance Agreements entered into by, any Insurance Subsidiary in the
ordinary course of business;
(h) deposits with insurance regulatory authorities;
(i) Liens on Property of any corporation that becomes a Subsidiary
of the Company after the date hereof, provided that such Liens are in
existence at the time such corporation becomes a Subsidiary of the
Company and were not created in anticipation thereof;
(j) Liens upon real and/or tangible personal Property acquired
after the date hereof (by purchase, construction or otherwise) by the
Company or any of its Subsidiaries, each of which Liens either
(A) existed on such Property before the time of its acquisition and was
not created in anticipation thereof or (B) was created solely for the
purpose of securing Indebtedness representing, or incurred to finance,
refinance or refund, the cost (including the cost of construction) of
such Property; provided that (i) no such Lien shall extend to or cover
any Property of the Company or such Subsidiary other than the Property so
acquired and improvements thereon and (ii) the principal amount of
Indebtedness secured by any such Lien shall at no time exceed 80% of the
fair market value (as determined in good faith by a senior financial
officer of the Company) of such Property at the time it was acquired (by
purchase, construction or otherwise);
(k) Liens arising out of the "closed block" of certain individual
participating life insurance policies and contracts of FAFLIC in effect
as of the effective date of the demutualization of FAFLIC;
(l) additional Liens upon real and/or personal Property created
after the date hereof, provided that the aggregate Indebtedness secured
thereby and incurred on and after the date hereof shall not exceed
$10,000,000 in the aggregate at any one time outstanding; and
(m) any extension, renewal or replacement of the foregoing;
provided that the Liens permitted hereunder shall not be spread to cover
any additional Indebtedness or Property (other than a substitute of like
Property) unless such additional Indebtedness or Property would have been
permitted in connection with the original creation, incurrence or
assumption of such Lien.
Indebtedness.
The Company will not, nor will it permit any of its Subsidiaries to, create,
incur or suffer to exist any Indebtedness except:
(a) Indebtedness to the Lenders hereunder;
(b) Indebtedness outstanding on the date hereof and listed on
Schedule II hereto;
(c) Subordinated Indebtedness;
(d) Indebtedness of Subsidiaries of the Company to the Company or
to other Subsidiaries of the Company;
(e) keep well and similar arrangements with any Applicable
Insurance Authority; and
(f) additional Indebtedness of the Company and its Subsidiaries
(including, without limitation, Capital Lease Obligations and other
Indebtedness secured by Liens permitted under Sections 8.05(j) or 8.05(l)
hereof) up to but not exceeding $250,000,000 at any one time outstanding.
8.07 Lines of Business. The Company will not, nor will it permit
any of its Subsidiaries to, engage to any substantial extent in any line or
lines of business activity not engaged in by the Company or any of its
Subsidiaries as of the date hereof and businesses related or incidental thereto.
8.08 Transactions with Affiliates. Except as expressly permitted by
this Agreement, the Company will not, nor will it permit any of its Subsidiaries
to, directly or indirectly: (a) make any Investment in an Affiliate; (b)
transfer, sell, lease, assign or otherwise dispose of any Property to an
Affiliate; (c) merge into or consolidate with or purchase or acquire Property
from an Affiliate; or (d) enter into any other transaction directly or
indirectly with or for the benefit of an Affiliate (including, without
limitation, Guarantees and assumptions of obligations of an Affiliate);
provided that (x) any Affiliate who is an individual may serve as a director,
officer or employee of the Company or any of its Subsidiaries and receive
reasonable compensation for his or her services in such capacity and (y) the
company and its Subsidiaries may enter into transactions (other than extensions
of credit by the Company or any of its Subsidiaries to an Affiliate) providing
for the leasing of Property, the rendering or receipt of services or the
purchase or sale of inventory and other Property in the ordinary course of
business if the monetary or business consideration arising therefrom would be
substantially as advantageous to the Company and its Subsidiaries as the
monetary or business consideration that would obtain in a comparable
transaction with a Person not an Affiliate.
8.09 Use of Proceeds. The Company will use the proceeds of the
Loans hereunder only for general corporate purposes of the Company in the
ordinary course of business (in compliance with all applicable legal and
regulatory requirements, including, without limitation, Regulations U and X
and the Securities Act of 1933 and the Securities Exchange Act of 1934 and the
regulations thereunder); provided that the Company shall not use proceeds of
the Loans to make Investments in any Subsidiary of the Company that is listed in
Schedule III hereto; and provided further that neither the Administrative Agent
nor any Lender shall have any responsibility as to the use of any of such
proceeds.
8.10 Total Debt to Total Capitalization. The Company will not, at
any time, permit (a) the sum of (i) Total Debt plus (ii) the aggregate
liquidation preference of all Special Preferred Securities but only that
portion of such aggregate liquidation preference that is at such time equal to,
or in excess of, 15% of Total Capitalization on such date to exceed (b) 35% of
Total Capitalization.
8.11 Minimum Adjusted Statutory Surplus. The Company will not, at
any time, permit the sum of (i) FAFLIC's Adjusted Statutory Surplus plus (ii)
Hanover's Adjusted Statutory Surplus to be less than $1,000,000,000.
8.12 Insurance. The Company will, and will cause each of its
Material Subsidiaries to, (a) maintain insurance with financially sound and
reputable insurance companies (or through self-insurance programs so long as
such self-insurance is administered in accordance with sound business
practices), and with respect to such risks (other than insurance written or
reinsurance assumed by the Company or its Subsidiaries) and in such amounts as
are consistent with sound business practices and (b) furnish to the
Administrative Agent, upon written request, full information as to such
insurance carried.
Section 9. Events of Default. If one or more of the following
events (herein called "Events of Default") shall occur and be continuing:
(a) The Company shall: (i) default in the payment of any principal
of any Loan when due (whether at stated maturity or at mandatory or
optional prepayment); or (ii) default in the payment of any interest on
any Loan, any loan fee or any other amount payable by it hereunder when
due and such default shall have continued unremedied for three Business
Days or more; or
(b) The Company or any of its Subsidiaries shall default in the
payment when due (after giving effect to any applicable grace periods) of
any principal of or interest on any of its other Indebtedness aggregating
$10,000,000 or more; or any event specified in any note, agreement,
indenture or other document evidencing or relating to any such
Indebtedness shall occur if the effect of such event is to cause, or
(with the giving of any notice or the lapse of time or both) to permit
the holder or holders of such Indebtedness (or a trustee or agent on
behalf of such holder or holders) to cause, such Indebtedness to become
due, or to be prepaid in full (whether by redemption, purchase, offer to
purchase or otherwise), prior to its stated maturity or to have the
interest rate thereon reset to a level so that securities evidencing such
Indebtedness trade at a level specified in relation to the par value
thereof; or the Company shall default in the payment when due (after
giving effect to any applicable grace periods) of any amount aggregating
$10,000,000 or more on any of its Rate Hedging Obligations; or any event
specified in any agreement or document relating to any such Rate Hedging
Obligations shall occur if the effect of such event is to cause, or (with
the giving of any notice or the lapse of time or both) to permit,
termination or liquidation payment or payments aggregating $10,000,000 or
more to become due; or
(c) Any representation, warranty or certification made or deemed
made herein (or in any modification or supplement hereto) by the Company,
or any certificate furnished by the Company to any Lender or the
Administrative Agent pursuant to the provisions hereof, shall prove to
have been false or misleading as of the time made or furnished in any
material respect; or
(d) The Company shall default in the performance of any of its
obligations under any of Sections 8.04, 8.05, 8.06, 8.08, 8.10 or 8.11
hereof; or the Company shall default in the performance of any of its
other obligations in this Agreement and such default shall continue
unremedied for a period of thirty or more days after (x) the occurrence
thereof in the case of a default under Section 8.01(k) and (y) notice
thereof to the Company by the Administrative Agent or any Lender (through
the Administrative Agent) in the case of any other default; or
(e) The Company or any of its Insurance Subsidiaries shall admit in
writing its inability to, or be generally unable to, pay its debts as
such debts become due; or
(f) The Company or any of its Insurance Subsidiaries shall
(i) apply for or consent to the appointment of, or the taking of
possession by, a receiver, custodian, trustee, examiner or liquidator of
itself or of all or a substantial part of its Property, (ii) make a
general assignment for the benefit of its creditors, (iii) commence a
voluntary case under the Bankruptcy Code, (iv) file a petition seeking to
take advantage of any other law relating to bankruptcy, insolvency,
reorganization, liquidation, dissolution, arrangement or winding-up, or
composition or readjustment of debts, (v) fail to controvert in a timely
and appropriate manner, or acquiesce in writing to, any petition filed
against it in an involuntary case under the Bankruptcy Code or (vi) take
any corporate action for the purpose of effecting any of the foregoing;
or
(g) A proceeding or case shall be commenced, without the
application or consent of the Company, in any court of competent
jurisdiction, seeking (i) its reorganization, liquidation, dissolution,
arrangement or winding-up, or the composition or readjustment of its
debts, (ii) the appointment of a receiver, custodian, trustee, examiner,
liquidator or the like of the Company or such Subsidiary or of all or any
substantial part of its Property or (iii) similar relief in respect of
the Company or such Subsidiary under any law relating to bankruptcy,
insolvency, reorganization, winding-up, or composition or adjustment of
debts, and such proceeding or case shall continue undismissed, or an
order, judgment or decree approving or ordering any of the foregoing
shall be entered and continue unstayed and in effect, for a period of 60
or more days; or an order for relief against the Company or such
Subsidiary shall be entered in an involuntary case under the Bankruptcy
Code; or
(h) Any Insurance Regulatory Authority shall appoint a rehabitator,
receiver, custodian, trustee, conservator or liquidator or the like
(collectively, a "conservator") for any Insurance Subsidiary, or cause
possession of all or any substantial portion of the property of any
Insurance Subsidiary to be taken by any conservator (or any Insurance
Regulatory Authority shall commence any action to effect any of the
foregoing); or
(i) A final judgment or judgments for the payment of money of
$10,000,000 or more in the aggregate (exclusive of judgment amounts fully
covered by insurance where the insurer has admitted liability in respect
of such judgment) or of $75,000,000 or more in the aggregate (regardless
of insurance coverage) shall be rendered by one or more courts,
administrative tribunals or other bodies having jurisdiction against the
Company or any of its Subsidiaries and the same shall not be discharged
(or provision shall not be made for such discharge), or a stay of
execution thereof shall not be procured, within 30 days from the date of
entry thereof and the Company or the relevant Subsidiary shall not,
within said period of 30 days, or such longer period during which
execution of the same shall have been stayed, appeal therefrom and cause
the execution thereof to be stayed during such appeal; or
(j) An event or condition specified in Section 8.01(j) hereof shall
occur or exist with respect to any Plan or Multiemployer Plan and, as a
result of such event or condition, together with all other such events or
conditions, the Company or any ERISA Affiliate shall incur or in the
opinion of the Majority Lenders shall be reasonably likely to incur a
liability to a Plan, a Multiemployer Plan or the PBGC (or any combination
of the foregoing) that, in the determination of the Majority Lenders,
would (either individually or in the aggregate) have a Material Adverse
Effect; or
(k) A reasonable basis shall exist for the assertion against the
Company or any of its Subsidiaries, or any predecessor in interest of the
Company or any of its Subsidiaries or Affiliates, of (or there shall have
been asserted against the Company or any of its Subsidiaries) an
Environmental Claim that, in the judgment of the Majority Lenders is
reasonably likely to be determined adversely to the Company or any of its
Subsidiaries, and the amount thereof (either individually or in the
aggregate) is reasonably likely to have a Material Adverse Effect
(insofar as such amount is payable by the Company or any of its
Subsidiaries but after deducting any portion thereof that is reasonably
expected to be paid by other creditworthy Persons jointly and severally
liable therefor); or
(l) During any period of 25 consecutive calendar months (or, if
shorter in the duration, the period commencing on the date hereof to but
not including the Commitment Termination Date), a majority of the Board
of Directors of the Company shall no longer be composed of individuals
(i) who were members of said Board on the first day of such period, (ii)
whose election or nomination to said Board was approved by individuals
referred to in clause (i) above constituting at the time of such election
or nomination at least a majority of said Board or (iii) whose election
or nomination to said Board was approved by individuals referred to in
clauses (i) and (ii) above constituting at the time of such election or
nomination at least a majority of said Board;
THEREUPON: (1) in the case of an Event of Default other than one referred to
in clause (f) or (g) of this Section 9 with respect to the Company, the
Administrative Agent may and, upon request of the Majority Lenders, will, by
notice to the Company, terminate the Commitments and/or declare the principal
amount then outstanding of, and the accrued interest on, the Loans and all
other amounts payable by the Company hereunder (including, without limitation,
any amounts payable under Section 5.05 hereof) to be forthwith due and
payable, whereupon such amounts shall be immediately due and payable without
presentment, demand, protest or other formalities of any kind, all of which
are hereby expressly waived by the Company; and (2) in the case of the
occurrence of an Event of Default referred to in clause (f) or (g) of this
Section 9 with respect to the Company, the Commitments shall automatically be
terminated and the principal amount then outstanding of, and the accrued
interest on, the Loans and all other amounts payable by the Company hereunder
(including, without limitation, any amounts payable under Section 5.05 hereof)
shall automatically become immediately due and payable without presentment,
demand, protest or other formalities of any kind, all of which are hereby
expressly waived by the Company.
Section 10. Agents.
10.01 Appointment, Powers and Immunities. Each Lender hereby
appoints and authorizes the Administrative Agent to act as its agent hereunder
with such powers as are specifically delegated to the Administrative Agent by
the terms of this Agreement, together with such other powers as are reasonably
incidental thereto. The Administrative Agent (which term as used in this
sentence and in Section 10.05 and the first sentence of Section 10.06 hereof
shall include reference to its affiliates and its own and its affiliates'
officers, directors, employees and agents):
(a) shall have no duties or responsibilities except those expressly
set forth in this Agreement, and shall not by reason of this Agreement be
a trustee for any Lender;
(b) shall not be responsible to the Lenders for any recitals,
statements, representations or warranties contained in this Agreement, or
in any certificate or other document referred to or provided for in, or
received by any of them under, this Agreement, or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of
this Agreement or any other document referred to or provided for herein
or for any failure by the Company or any other Person to perform any of
its obligations hereunder or thereunder;
(c) shall not be required to initiate or conduct any litigation or
collection proceedings hereunder; and
(d) shall not be responsible for any action taken or omitted to be
taken by it hereunder or under any other document or instrument referred
to or provided for herein or in connection herewith, except for its own
gross negligence or willful misconduct.
The Administrative Agent may employ agents and attorneys-in-fact and shall not
be responsible for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it in good faith. The Administrative Agent may
deem and treat the payee of any promissory note evidencing any Loans hereunder
as the holder thereof for all purposes hereof unless and until a notice of the
assignment or transfer thereof shall have been filed with the Administrative
Agent, together with the consent of the Company to such assignment or transfer
(to the extent required by Section 11.06(b) hereof).
10.02 Reliance by Administrative Agent. The Administrative Agent
shall be entitled to rely upon any certification, notice or other communication
(including, without limitation, any thereof by telephone, telecopy, telegram or
cable) reasonably believed by it to be genuine and correct and to have been
signed or sent by or on behalf of the proper Person or Persons, and upon advice
and statements of legal counsel, independent accountants and other experts
selected by the Administrative Agent. As to any matters not expressly provided
for by this Agreement, the Administrative Agent shall in all cases be fully
protected in acting, or in refraining from acting, hereunder in accordance with
instructions given by the Majority Lenders, and such instructions of the
Majority Lenders and any action taken or failure to act pursuant thereto shall
be binding on all of the Lenders.
10.03 Defaults. The Administrative Agent shall not be deemed to
have knowledge or notice of the occurrence of a Default unless the
Administrative Agent has received notice from a Lender or the Company
specifying such Default and stating that such notice is a "Notice of Default".
In the event that the Administrative Agent receives such a notice of the
occurrence of a Default, the Administrative Agent shall give prompt notice
thereof to the Lenders. The Administrative Agent shall (subject to Section
10.07 hereof) take such action with respect to such Default as shall be
directed by the Majority Lenders, provided that, unless and until the
Administrative Agent shall have received such directions, the Administrative
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default as it shall deem advisable in
the best interest of the Lenders except to the extent that this Agreement
expressly requires that such action be taken, or not be taken, only with the
consent or upon the authorization of the Majority Lenders or all of the Lenders.
10.04 Rights as a Lender. With respect to its Commitment and the
Loans made by it, Chase (and any successor acting as Administrative Agent) in
its capacity as a Lender hereunder shall have the same rights and powers
hereunder as any other Lender and may exercise the same as though it were not
acting as the Administrative Agent, and the term "Lender" or "Lenders" shall,
unless the context otherwise indicates, include the Administrative Agent in its
individual capacity. Chase (and any successor acting as Administrative Agent)
and its affiliates may (without having to account therefor to any Lender)
accept deposits from, lend money to, make investments in and generally engage
in any kind of banking, trust or other business with the Company (and any of
its Subsidiaries or Affiliates) as if it were not acting as the Administrative
Agent, and Chase (and any such successor) and its affiliates may accept fees
and other consideration from the Company for services in connection with this
Agreement or otherwise without having to account for the same to the Lenders.
10.05 Indemnification. The Lenders agree to indemnify the
Administrative Agent (to the extent not reimbursed under Section 11.03 hereof,
but without limiting the obligations of the Company under said Section 11.03)
ratably in accordance with the aggregate principal amount of the Loans held by
the Lenders (or, if no Loans are at the time outstanding, ratably in accordance
with their respective Commitments), for any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind and nature whatsoever that may be imposed on,
incurred by or asserted against the Administrative Agent (including by any
Lender) arising out of or by reason of any investigation in or in any way
relating to or arising out of this Agreement or any other documents
contemplated by or referred to herein or the transactions contemplated hereby
(including, without limitation, the costs and expenses that the Company is
obligated to pay under Section 11.03 hereof, but excluding, unless a Default has
occurred and is continuing, normal administrative costs and expenses incident to
the performance of its agency duties hereunder) or the enforcement of any of the
terms hereof or of any such other documents, provided that no Lender shall be
liable for any of the foregoing to the extent they arise from the gross
negligence or willful misconduct of the party to be indemnified.
10.06 Non-Reliance on Administrative Agent and Other Lenders.
Each Lender agrees that it has, independently and without reliance on the
Administrative Agent or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own credit analysis of the
Company and its Subsidiaries and decision to enter into this Agreement and
that it will, independently and without reliance upon the Administrative Agent
or any other Lender, and based on such documents and information as it shall
deem appropriate at the time, continue to make its own analysis and decisions
in taking or not taking action under this Agreement. The Administrative Agent
shall not be required to keep itself informed as to the performance or
observance by the Company of this Agreement or any other document referred to
or provided for herein or to inspect the Properties or books of the Company or
any of its Subsidiaries. Except for notices, reports and other documents and
information expressly required to be furnished to the Lenders by the
Administrative Agent hereunder, the Administrative Agent shall not have any
duty or responsibility to provide any Lender with any credit or other
information concerning the affairs, financial condition or business of the
Company or any of its Subsidiaries (or any of their affiliates) that may come
into the possession of the Administrative Agent or any of its affiliates.
10.07 Failure to Act. Except for action expressly required of the
Administrative Agent hereunder, the Administrative Agent shall in all cases be
fully justified in failing or refusing to act hereunder unless it shall receive
further assurances to its satisfaction from the Lenders of their
indemnification obligations under Section 10.05 hereof against any and all
liability and expense that may be incurred by it by reason of taking or
continuing to take any such action.
10.08 Resignation or Removal of Administrative Agent. Subject to
the appointment and acceptance of a successor Administrative Agent as provided
below, the Administrative Agent may resign at any time by giving notice thereof
to the Lenders and the Company, and the Administrative Agent may be removed at
any time with or without cause by the Majority Lenders. Upon any such
resignation or removal, the Majority Lenders shall have the right (after, so
long as no Default shall have occurred and be continuing, consultation with the
Company) to appoint a successor Administrative Agent; provided that such
successor Administrative Agent shall be a Lender hereunder. If no successor
Administrative Agent shall have been so appointed by the Majority Lenders and
shall have accepted such appointment within 30 days after the retiring
Administrative Agent's giving of notice of resignation or the Majority Lenders'
removal of the retiring Administrative Agent, then the retiring Administrative
Agent may, on behalf of the Lenders, (after, so long as no Default shall have
occurred and be continuing, consultation with the Company) appoint a successor
Administrative Agent, that shall be Lender hereunder and that is a bank that has
an office in New York, New York with a combined capital and surplus of at least
$500,000,000. Upon the acceptance of any appointment as Administrative Agent
hereunder by a successor Administrative Agent, such successor Administrative
Agent shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Administrative Agent, and the retiring
Administrative Agent shall be discharged from its duties and obligations
hereunder. After any retiring Administrative Agent's resignation or removal
hereunder as Administrative Agent, the provisions of this Section 10 shall
continue in effect for its benefit in respect of any actions taken or omitted
to be taken by it while it was acting as the Administrative Agent.
10.09 Co-Agent. The Co-Agent named on the cover page of this
agreement, in its capacity as such, shall have no obligation, responsibility or
required performance hereunder and shall not become liable in any manner to any
party hereto. No party hereto shall have any obligation or liability, or owe
any performance, hereunder to the Co-Agent in its capacity as such.
Section 11. Miscellaneous.
11.01 Waiver. No failure on the part of the Administrative Agent or
any Lender to exercise and no delay in exercising, and no course of dealing
with respect to, any right, power or privilege under this Agreement shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, power or privilege under this Agreement preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. The
remedies provided herein are cumulative and not exclusive of any remedies
provided by law.
11.02 Notices. All notices and other communications provided for
herein shall be in writing and shall be delivered by hand or overnight courier
service, mailed by certified or registered mail or sent by telecopy, as follows:
(a) if to the Company, to it at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ III, Chief Financial
Officer (Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇);
(b) if to the Administrative Agent, to The Chase Manhattan Bank,
The Loan & Agency Services Group, One Chase ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention of ▇▇▇▇▇ ▇▇▇▇▇▇▇ (Telecopy No. (212)
▇▇▇-▇▇▇▇; Telephone No. (▇▇▇) ▇▇▇-▇▇▇▇), with a copy to The Chase
Manhattan Bank, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Attention of ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇ (Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇); and
(c) if to any Lender, to it at its address (or telecopy number) set
forth in its Administrative Questionnaire.
Any party hereto may change its address or telecopy number for notices and
other communications hereunder by notice to the other parties hereto. All
notices and other communications given to any party hereto in accordance with
the provisions of this Agreement shall be deemed to have been given on the
date of receipt.
11.03 Expenses, Etc. The Company agrees to pay or reimburse each of
the Lenders and the Administrative Agent for: (a) all reasonable out-of-pocket
costs and expenses of the Administrative Agent (including, without limitation,
the reasonable fees and expenses of Milbank, Tweed, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, special
New York counsel to Chase) in connection with (i) the negotiation, preparation,
execution and delivery of this Agreement and the making of the Loans hereunder
and (ii) the negotiation or preparation of any modification, supplement or
waiver of any of the terms of this Agreement (whether or not consummated); (b)
all reasonable out-of-pocket costs and expenses of the Lenders and the
Administrative Agent (including, without limitation, the reasonable fees and
expenses of legal counsel) in connection with (i) any Default and any
enforcement or collection proceedings resulting therefrom, including, without
limitation, all manner of participation in or other involvement with (x)
bankruptcy, insolvency, receivership, foreclosure, winding up or liquidation
proceedings, (y) judicial or regulatory proceedings and (z) workout,
restructuring or other negotiations or proceedings (whether or not the workout,
restructuring or transaction contemplated thereby is consummated) and (ii) the
enforcement of this Section 11.03; and (c) all transfer, stamp, documentary or
other similar taxes, assessments or charges levied by any governmental or
revenue authority in respect of this Agreement or any other document referred
to herein.
The Company hereby agrees to indemnify the Administrative Agent and
each Lender and their respective directors, officers, employees, attorneys and
agents from, and hold each of them harmless against, any and all losses,
liabilities, claims, damages or reasonable expenses incurred by any of them
(including, without limitation, any and all losses, liabilities, claims,
damages or expenses incurred by the Administrative Agent to any Lender,
whether or not the Administrative Agent or any Lender is a party thereto)
arising out of or by reason of any investigation or litigation or other
proceedings (including any threatened investigation or litigation or other
proceedings) relating to the Loans hereunder or any actual or proposed use by
the Company or any of its Subsidiaries of the proceeds of any of the Loans
hereunder, including, without limitation, the reasonable fees and
disbursements of counsel incurred in connection with any such investigation or
litigation or other proceedings (but excluding any such losses, liabilities,
claims, damages or expenses incurred by reason of the gross negligence or
willful misconduct of the Person to be indemnified). Without limiting the
generality of the foregoing, the Company will indemnify the Administrative
Agent and each Lender from, and hold the Administrative Agent and each Lender
harmless against, any losses, liabilities, claims, damages or reasonable
expenses described in the preceding sentence (but excluding, as provided in
the preceding sentence, any loss, liability, claim, damage or reasonable
expense incurred by reason of the gross negligence or willful misconduct of
the Person to be indemnified) arising under any Environmental Law as a result
of the past, present or future operations of the Company or any of its
Subsidiaries (or any predecessor in interest to the Company or any of its
Subsidiaries), or the past, present or future condition of any site or
facility owned, operated or leased at any time by the Company or any of its
Subsidiaries (or any such predecessor in interest), or any Release or
threatened Release of any Hazardous Materials at or from any such site or
facility, excluding any such Release or threatened Release that shall occur
during any period when the Administrative Agent or any Lender shall be in
possession of any such site or facility following the exercise by the
Administrative Agent or any Lender of any of its rights and remedies
hereunder, but including any such Release or threatened Release occurring
during such period that is a continuation of conditions previously in
existence, or of practices employed by the Company and its Subsidiaries, at
such site or facility.
11.04 Amendments, Etc. Except as otherwise expressly provided in
this Agreement, any provision of this Agreement may be modified or supplemented
only by an instrument in writing signed by the Company and the Majority Lenders,
or by the Company and the Administrative Agent acting with the consent of the
Majority Lenders, and any provision of this Agreement may be waived by the
Majority Lenders or by the Administrative Agent acting with the consent of the
Majority Lenders; provided that: (a) no modification, supplement or waiver
shall, unless by an instrument signed by all of the Lenders or by the
Administrative Agent acting with the consent of all of the Lenders: (i)
increase, or extend the term of the Commitments, or extend the time or waive
any requirement for the reduction or termination of the Commitments, (ii)
extend the date fixed for the payment of principal of or interest on any Loan
or any fee hereunder, (iii) reduce the amount of any such payment of
principal, (iv) reduce the rate at which interest is payable thereon or any fee
is payable hereunder, (v) alter the rights or obligations of the Company to
prepay Loans, (vi) alter the manner in which payments or prepayments of
principal, interest or other amounts hereunder shall be applied as between the
Lenders or Types of Loans, (vii) alter the terms of this Section 11.04, (viii)
modify the definition of the term "Majority Lenders" or modify in any other
manner the number or percentage of the Lenders required to make any
determinations or waive any rights hereunder or to modify any provision hereof,
or (ix) waive any of the conditions precedent set forth in Section 6.01
hereof; and (b) any modification or supplement of Section 10 hereof, or of any
of the rights or duties of the Administrative Agent hereunder, shall require
the consent of the Administrative Agent. The Company shall be fully protected
in relying upon consents, modifications and amendments executed by the
Administrative Agent purportedly on the Lenders' behalf.
11.05 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns.
11.06 Assignments and Participations.
(a) The Company may not assign any of its rights or obligations
hereunder without the prior consent of all of the Lenders and the
Administrative Agent.
(b) Each Lender may assign any of its Loans and its Commitment (but
only with the consent of the Administrative Agent and the Company, which
consent shall not be unreasonably withheld); provided that:
(i) no such consent by the Company or the Administrative
Agent shall be required in the case of any assignment to another Lender
or an affiliate of a Lender;
(ii) no such consent by the Company shall be required if an Event
of Default under clause (e), (f), (g) or (h) of Section 9 shall have
occurred and be continuing;
(iii) except to the extent the Company and the Administrative
Agent shall otherwise consent, any such partial assignment (other than to
another Lender) shall be in an amount at least equal to $10,000,000;
(iv) each such assignment by a Lender of its Loans or Commitment
shall be made in such manner so that the same portion of its Loans and
Commitment is assigned to the respective assignee; and
(v) upon each such assignment, the assignor and assignee shall
deliver to the Company and the Administrative Agent an Assignment and
Acceptance substantially in the form of Exhibit D hereto.
Upon execution and delivery by the assignor and the assignee to the Company
and the Administrative Agent of such Assignment and Acceptance, and upon
consent thereto by the Company and the Administrative Agent to the extent
required above, the assignee shall have, to the extent of such assignment
(unless otherwise consented to by the Company and the Administrative Agent),
the obligations, rights and benefits of a Lender hereunder holding the
Commitment and Loans (or portions thereof) assigned to it and specified in
such Assignment and Acceptance (in addition to the Commitment and Loans, if
any, theretofore held by such assignee) and the assigning Lender shall, to the
extent of such assignment, be released from the Commitment (or portion
thereof) so assigned. Upon each such assignment the assigning Lender shall
pay the Administrative Agent an assignment fee of $3,500.
(c) A Lender may sell or agree to sell to one or more other Persons
(each a "Participant") a participation in all or any part of any Loans held by
it, or in its Commitment, provided that such Participant shall not have any
rights or obligations under this Agreement (the Participant's rights against
such Lender in respect of such participation to be those set forth in the
agreements executed by such Lender in favor of the Participant). All amounts
payable by the Company to any Lender under Section 5 hereof in respect of
Loans held by it, and its Commitment, shall be determined as if such Lender
had not sold or agreed to sell any participations in such Loans and
Commitment, and as if such Lender were funding each of such Loan and
Commitment in the same way that it is funding the portion of such Loan and
Commitment in which no participations have been sold. In no event shall a
Lender that sells a participation agree with the Participant to take or
refrain from taking any action hereunder except that such Lender may agree
with the Participant that it will not, without the consent of the Participant,
agree to (i) increase or extend the term of such Lender's Commitment,
(ii) extend the date fixed for the payment of principal of or interest on the
related Loan or Loans or any portion of any fee hereunder payable to the
Participant, (iii) reduce the amount of any such payment of principal,
(iv) reduce the rate at which interest is payable thereon, or any fee
hereunder payable to the Participant, to a level below the rate at which the
Participant is entitled to receive such interest or fee or (v) consent to any
modification, supplement or waiver hereof to the extent that the same, under
Section 11.04 hereof, requires the consent of each Lender.
(d) In addition to the assignments and participations permitted
under the foregoing provisions of this Section 11.06, any Lender may (without
notice to the Company, the Administrative Agent or any other Lender and
without payment of any fee) (i) assign and pledge all or any portion of its
Loans to any Federal Reserve Bank as collateral security pursuant to
Regulation A and any Operating Circular issued by such Federal Reserve Bank
and (ii) assign all or any portion of its rights under this Agreement and its
Loans to an affiliate. No such assignment shall release the assigning Lender
from its obligations hereunder.
(e) A Lender may furnish any information concerning the Company or
any of its Subsidiaries in the possession of such Lender from time to time to
assignees and participants (including prospective assignees and participants),
subject, however, to the provisions of Section 11.13(b) hereof.
(f) Anything in this Section 11.06 to the contrary notwithstanding,
no Lender may assign or participate any interest in any Loan held by it
hereunder to the Company or any of its Affiliates or Subsidiaries without the
prior consent of each Lender.
11.07 Replacement of Lender. In the event that any Lender or, to
the extent applicable, any Participant (the "Affected Lender"):
(a) fails to perform its obligations to fund any portion of any
Loan when required to do so by the terms of this Agreement, or any other
present or future agreement or instrument from time to time entered into
among the Company, any of its Subsidiaries and the Administrative Agent
or any Lender relating to this Agreement, or fails to provide its portion
of any Eurodollar Loan or to convert Base Rate Loans into Eurodollar
Loans on account of any Regulatory Change;
(b) demands payment under the provisions of Section 5.01 in an
amount materially in excess of the amounts with respect thereto demanded
by the other Lenders;
(c) refuses to consent to a proposed amendment, modification,
waiver or other action requiring consent of all of the Lenders under
Section 11.04 that is consented to by all of the other Lenders;
then, so long as no Event of Default exists, the Company shall have the right
to seek a replacement Lender which is reasonably satisfactory to the
Administrative Agent (the "Replacement Lender"). The Replacement Lender shall
purchase the interests of the Affected Lender in the Loan and its Commitment
and shall assume the obligations of the Affected Lender hereunder upon
execution by the Replacement Lender of an Assignment and Acceptance and the
tender by it to the Affected Lender of a purchase price agreed between it and
the Affected Lender (or, if they are unable to agree, a purchase price in the
amount of the Affected Lender's percentage interest in any Loan or appropriate
credit support for contingent amounts included therein, and all other
outstanding obligations payable hereunder then owed to the Affected Lender).
Upon consummation of such assignment, the Replacement Lender shall become a
party this Agreement as a signatory hereto and shall have all the rights and
obligations of the Affected Lender under this Agreement, the Affected Lender
shall be released from its obligations hereunder, and no further consent or
action by any party shall be required. The Company shall sign such documents
and take such other actions reasonably requested by the Replacement Lender to
enable it to share in the benefits of the rights created by this Agreement.
Until the consummation of an assignment in accordance with the forgoing
provisions of this Section 11.07, the Company shall continue to pay the
Affected Lender any amounts payable pursuant to this Agreement as they become
due and payable.
11.08 Survival. The obligations of the Company under Sections 5.01,
5.05, 5.06 and 11.03 hereof, and the obligations of the Lenders under Section
10.05 hereof, shall survive the repayment of the Loans and the termination of
the Commitments and, in the case of any Lender that may assign any interest in
its Commitment or Loans hereunder, shall survive the making of such assignment,
notwithstanding that such assigning Lender may cease to be a "Lender" hereunder
In addition, each representation and warranty made, or deemed to be made by a
notice of any Loan, herein or pursuant hereto shall survive the making of such
representation and warranty, and no Lender shall be deemed to have waived, by
reason of making any Loan, any Default that may arise by reason of such
representation or warranty proving to have been false or misleading,
notwithstanding that such Lender or the Administrative Agent may have had
notice or knowledge or reason to believe that such representation or warranty
was false or misleading at the time such Loan was made.
11.09 Captions. The table of contents and captions and section
headings appearing herein are included solely for convenience of reference and
are not intended to affect the interpretation of any provision of this
Agreement.
11.10 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Agreement by signing
any such counterpart.
11.11 Governing Law; Submission to Jurisdiction. This Agreement
shall be governed by, and construed in accordance with, the law of the State
of New York. The Company hereby submits to the nonexclusive jurisdiction of
the United States District Court for the Southern District of New York and of
the Supreme Court of the State of New York sitting in New York County
(including its Appellate Division), and of any other appellate court in
the State of New York, for the purposes of all legal proceedings arising out
of or relating to this Agreement or the transactions contemplated hereby. The
Company hereby irrevocably waives, to the fullest extent permitted by
applicable law, any objection that it may now or hereafter have to the laying
of the venue of any such proceeding brought in such a court and any claim that
any such proceeding brought in such a court has been brought in an
inconvenient forum.
11.12 Waiver of Jury Trial. EACH OF THE COMPANY, THE ADMINISTRATIVE
AGENT AND THE LENDERS HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
11.13 Treatment of Certain Information; Confidentiality.
(a) The Company acknowledges that from time to time financial
advisory, investment banking and other services may be offered or provided to
the Company or one or more of its Subsidiaries (in connection with this
Agreement or otherwise) by any Lender or by one or more subsidiaries or
affiliates of such Lender and the Company hereby authorizes each Lender to
share any information delivered to such Lender by the Company and its
Subsidiaries pursuant to this Agreement, or in connection with the decision of
such Lender to enter into this Agreement, to any such subsidiary or affiliate,
it being understood that any such subsidiary or affiliate receiving such
information shall be bound by the provisions of paragraph (b) below as if it
were a Lender hereunder. Such authorization shall survive the repayment of
the Loans and the termination of the Commitments.
(b) Each Lender and the Administrative Agent agrees (on behalf of
itself and each of its affiliates, directors, officers, employees and
representatives) to use reasonable precautions to keep confidential, in
accordance with their customary procedures for handling confidential
information of the same nature and in accordance with safe and sound banking
practices, any non-public information supplied to it by the Company pursuant
to this Agreement that is identified by the Company as being confidential at
the time the same is delivered to the Lenders or the Administrative Agent;
provided that nothing herein shall limit the disclosure of any such
information (i) after such information shall have become public (other than
through a violation of this Section 11.13), (ii) to the extent required by
statute, rule, regulation or judicial process, (iii) to counsel for any of the
Lenders or the Administrative Agent, provided that such counsel is advised of
the confidential nature of such information, (iv) to bank examiners (or any
other regulatory authority having jurisdiction over any Lender or the
Administrative Agent), or to auditors or accountants, (v) to the
Administrative Agent or any other Lender (or to Chase Securities Inc.),
(vi) in connection with any litigation to which any one or more of the Lenders
or the Administrative Agent is a party, or in connection with the enforcement
of rights or remedies hereunder, (vii) to a subsidiary or affiliate of such
Lender as provided in paragraph (a) above or (viii) to any assignee or
participant (or prospective assignee or participant) so long as such assignee
or participant (or prospective assignee or participant) first executes and
delivers to the respective Lender a Confidentiality Agreement substantially in
the form of Exhibit C hereto (or executes and delivers to such Lender an
acknowledgement to the effect that it is bound by the provisions of this
Section 11.13(b); and provided further, that in no event shall any Lender or
the Administrative Agent be obligated or required to return any materials
furnished by the Company. The obligations of any assignee that has executed a
Confidentiality Agreement substantially in the form of Exhibit C hereto shall
be superseded by this Section 11.13 upon the date upon which such assignee
becomes a Lender hereunder pursuant to Section 11.06(b) or 11.07 hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered as of the day and year first above written.
ALLMERICA FINANCIAL CORPORATION
By_________________________
Name:
Title:
THE CHASE MANHATTAN BANK,
individually and as Administrative Agent
By_________________________
Name:
Title:
BANKBOSTON, N.A.
By_________________________
Name:
Title:
THE FIRST NATIONAL BANK OF CHICAGO
By_________________________
Name:
Title:
FLEET NATIONAL BANK.
By_________________________
Name:
Title:
THE BANK OF NEW YORK
By_________________________
Name:
Title:
SCHEDULE I
Commitments
[See Section 2.01]
Fleet National Bank $45,000,000
BankBoston, N.A. $30,000,000
The Chase Manhattan Bank $30,000,000
The First National Bank of Chicago $30,000,000
The Bank of New York $15,000,000
$150,000,000
SCHEDULE II
Indebtedness
[See Section 8.06(b)]
(in millions)
Amount
Outstanding at
Borrower Description Maturity April 30, 1998
AFC 7 5/8% Senior Debentures Due 2025 $199.5
AFC Guarantee of the liquidation amount
of the 8.207% of AFC Capital Trust
APC Funding Short-term commercial paper various 1998 $ 34.6
AFLIAC First Union Reverse Repo 5/4/98 $ 12.0
Synthetic Preferred Swaps Notional Amt
First Nationwide Pfds 1-Oct-96 $10,000,000
Hanover Re 12/31/2001 $ 5,000,000
Various Vanilla Swaps on floating rate GIC's various $570,000,000
Muni Inverse/Swap Tax Arbitrage
Florida RITES 2013 $ 2,575,000
Fairfax RITES (2 tranches) 2012/2013 $ 3,535,000
Puerto Rico RITES 2012 $ 2,000,000
Philadelphia RITES 2009 $ 1,780,000
Swap (RITES hedge) 6/21/2017 $23,600,000
Foreign Currency Swaps
Swiss Francs (▇▇▇▇▇ ▇▇▇▇▇ Paper bond) 11/25/2000 $ 6,568,000
Canadian Dollars (hedge Sears Canada bond) 5/18/1999 $14,060,000
Japanese Yen (hedge Argentina bond) 10/6/2000 $ 4,712,000
British Pounds (hedge Inco Limited bond) 7/15/2006 $15,917,250
Finnish markkas (hedge Vietsiluoto Oy Bond) 7/15/1999 $ 8,438,320
Futures Contract
Hedge floating rate GIC's 5 yr. Treasury Notes 6/98 $90,879,551
SCHEDULE III
Subsidiaries
[See Section 7.13]
Subsidiaries as of May 29, 1998
I. Allmerica Financial Corporation (Delaware)
A. Allmerica Funding Corp. (Massachusetts)
B. First Allmerica Financial Life Insurance Company (Massachusetts)
1. ▇▇▇▇▇ ▇▇▇▇▇ Water Company, Inc. (New Jersey)
2. SMA Financial Corp. (Massachusetts)
a. Allmerica Property & Casualty Companies, Inc.(Delaware) (70% owned)
i. APC Funding Corp. (Massachusetts)
ii. Allmerica Financial Insurance Brokers, Inc. (Massachusetts)
iii. Citizens Insurance Company of Illinois (Illinois)
iv. The Hanover Insurance Company (New Hampshire)
1. Allmerica Financial Benefit Insurance Company (Pennsylvania)
2. Allmerica Plus Insurance Agency, Inc. (Massachusetts)
3. The Hanover American Insurance Company (New Hampshire)
4. Hanover Texas Insurance Management Company, Inc. (Texas)
5. Citizens Corporation (Delaware) (82.5% owned)
a. Citizens Insurance Company of Ohio (Ohio)
b. Citizens Insurance Company of America (Michigan)
i. Citizens Management Inc. (Michigan)
c. Citizens Insurance Company of the Midwest (Indiana)
6. AMGRO, Inc. (Massachusetts)
a. Lloyds Credit Corporation (Massachusetts)
7. Massachusetts Bay Insurance Company (New Hampshire)
8. Allmerica Financial Alliance Insurance Company (New Hampshire)
▇. ▇▇▇▇▇▇▇▇ Risk Management Services, Inc. (Delaware)
c. Allmerica Trust Company,N.A.(Federally chartered)(99.2%owned)
d. Allmerica Financial Life Insurance and Annuity Company (Delaware)
1. Somerset Square, Inc. (Massachusetts)
f. Allmerica Investments, Inc. (Massachusetts)
g. Allmerica Investment Management Company, Inc. (Massachusetts)
h. Allmerica Asset Management Company, Inc. (Massachusetts)
i. Allmerica Financial Services Insurance Agency, Inc. (Massachusetts)
j. Allmerica Benefits, Inc. (Florida)
k. Allmerica Asset Management, Limited (Bermuda)
C. Allmerica, Inc. (Massachusetts)
D. AFC Capital Trust I (Delaware)
E. Allmerica Services Corporation (Massachusetts)
F. First Sterling Reinsurance Company Limited (Bermuda)
1. First Sterling Reinsurance Company Limited (Bermuda)
G. Allmerica Property & Casualty Companies, Inc. (Delaware) (30% owned)
SCHEDULE IV
Investment Company Act
[See Section 7.10]
Allmerica Funds, in which Allmerica Investments, Inc. an indirect
Wholly-Owned Subsidiary of the Company, has a $6,000,000 investment, is an
"investment company" within the meaning of the Investment Company Act of 1940.
EXHIBIT A
[Form of Opinion of Counsel to the Company]
May __, 1998
To the Lenders party to the
Credit Agreement referred to
below and The Chase
Manhattan Lender, as Administrative Agent
Ladies and Gentlemen:
This opinion is being furnished to you pursuant to Section 6.01(c)
of the Credit Agreement dated as of May 29, 1998 (the "Credit Agreement")
between Allmerica Financial Corporation (the "Company"), the lenders party
thereto and The Chase Manhattan Bank, as Administrative Agent, providing for
loans to be made by said lenders to the Company in an aggregate principal
amount not exceeding $150,000,000. All capitalized terms used but not defined
herein have the respective meanings given to such terms in the Credit
Agreement.
We have acted as counsel to the Company in connection with the
Credit Agreement and the transactions contemplated thereby and as such are
familiar with the proceedings taken by it in connection therewith.
In rendering the opinions expressed below, we have examined the
Credit Agreement. We have also examined such certificates, documents and
records, and have made such examination of law, as we have deemed necessary to
enable us to render the opinions expressed below. In addition, we have
examined and relied as to matters of fact upon representations and warranties
contained in the Credit Agreement and in certificates and upon covenants
contained in the Credit Agreement as to the application of the proceeds of the
loans made pursuant thereto.
We call your attention to the fact that each of the Credit Documents
provides that it is to be governed by and construed in accordance with the
laws of the State of New York, and we understand that you are relying on the
advice of your own counsel with respect to all matters involving New York law.
For purposes of rendering the opinions expressed in paragraph 5 below, we have
assumed that the Credit Agreement is to be governed by and construed in
accordance with the internal laws of The Commonwealth of Massachusetts.
The opinions expressed below are limited to matters governed by the
internal laws of The Commonwealth of Massachusetts, the Federal laws of the
United States of America and the Delaware General Corporation Law.
Based upon and subject to the foregoing and subject also to the
comments and qualifications set forth below, we are of the opinion that:
1. The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware. Each
Material Insurance Subsidiary of the Company is a corporation duly
organized, validly existing and in good standing under the laws of the
respective state indicated opposite its name in Schedule II to the Credit
Agreement.
2. The Company has all requisite corporate power to execute and
deliver, and to perform its obligations under, the Credit Agreement. The
Company has all requisite corporate power to borrow under the Credit
Agreement.
3. The execution, delivery and performance by the Company of the
Credit Agreement, and the borrowings by the Company under the Credit
Agreement, have been duly authorized by all necessary corporate action on
the part of the Company.
4. The Credit Agreement has been duly executed and delivered by the
Company.
5. The Credit Agreement constitutes the legal, valid and binding
obligation of the Company, enforceable against the Company in accordance
with its terms, except as may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance or transfer, moratorium or other
similar laws relating to or affecting the rights of creditors generally
and except as the enforceability of the Credit Agreement is subject to
the application of general principles of equity (regardless of whether
considered in a proceeding in equity or at law), including, without
limitation, (a) the possible unavailability of specific performance,
injunctive relief or any other equitable remedy and (b) concepts of
materiality, reasonableness, good faith and fair dealing.
6. No authorization, approval or consent of, and no filing or
registration with, any governmental or regulatory authority or agency of
the United States of America is required on the part of the Company for
the execution, delivery or performance by the Company of the Credit
Agreement or for the borrowings by the Company under the Credit
Agreement.
7. The execution, delivery and performance by the Company of, and
the consummation by the Company of the transactions contemplated by, the
Credit Agreement do not and will not (a) violate any provision of its
charter or by-laws, (b) violate any applicable law, rule or regulation of
the United States of America or The Commonwealth of Massachusetts, (c)
violate any order, writ, injunction or decree of any court or
governmental authority or agency or any arbitral award applicable to the
Company or any of its Subsidiaries of which we have knowledge (after due
inquiry of officers of the Company) or (d) result in a breach of,
constitute a default under, require any consent under, or result in the
acceleration or required prepayment of any indebtedness pursuant to the
terms of, any agreement or instrument to which the Company or any of its
Subsidiaries is a party, or by which any of them is bound or to which any
of them is subject, and which has been or is required to be filed with
the Securities and Exchange Commission, or result in the creation or
imposition of any Lien upon any Property of the Company pursuant to, the
terms of any such agreement or instrument.
The foregoing opinions are subject to the following comments and
qualifications:
(A) The enforceability of Section 11.03 of the Credit Agreement may
be limited by laws rendering unenforceable indemnification contrary to
Federal or state securities laws and the public policy underlying such
laws.
(B) The enforceability of provisions in the Credit Agreement to the
effect that terms may not be waived or modified except in writing may be
limited under certain circumstances.
(C) We express no opinion as to (i) the effect of the laws of any
jurisdiction in which any Lender is located that limit the interest, fees
or other charges such Lender may impose, (ii) Section 4.07(c) of the
Credit Agreement, and (iii) the second sentence of Section 11.11 of the
Credit Agreement, insofar as such sentence relates to the subject matter
jurisdiction of the United States District Court for the Southern
District of New York to adjudicate any controversy related to the Credit
Agreement.
This opinion letter may not be relied upon by any Person for any
purpose other than in connection with the transactions contemplated by the
Credit Agreement without, in each instance, our prior written consent.
Very truly yours,
EXHIBIT B
[Form of Opinion of Special New York Counsel to Chase]
May __, 1998
To the Lenders party to the
Credit Agreement referred to
below and The Chase
Manhattan Lender, as Administrative Agent
Ladies and Gentlemen:
We have acted as special New York counsel to The Chase Manhattan
Bank ("Chase") in connection with (i) the Credit Agreement dated as of May 29,
1998 (the "Credit Agreement") between Allmerica Financial Corporation (the
"Company"), the lenders party thereto and Chase, as Administrative Agent,
providing for loans to be made by said lenders to the Company in an aggregate
principal amount not exceeding $150,000,000 and (ii) the various other
agreements, instruments and other documents referred to in the next following
paragraph. Terms defined in the Credit Agreement are used herein as defined
therein. This opinion letter is being delivered pursuant to Section 6.01(d)
of the Credit Agreement.
We have examined the Credit Agreement. When relevant facts were not
independently established, we have relied upon representations made in or
pursuant to the Credit Agreement.
In rendering the opinions expressed below, we have assumed that:
(i) the Credit Agreement has been duly authorized by, has been
duly executed and delivered by, and (except to the extent set
forth in the opinions below as to the Company) constitutes
legal, valid, binding and enforceable obligations of, all of
the parties to the Credit Agreement;
(ii) all signatories to the Credit Agreement have been duly
authorized; and
(iii) all of the parties to the Credit Agreement are duly organized
and validly existing and have the power and authority
(corporate or other) to execute, deliver and perform the
Credit Agreement.
Based upon and subject to the foregoing and subject also to the
comments and qualifications set forth below, and having considered such
questions of law as we have deemed necessary as a basis for the opinions
expressed below, we are of the opinion that the Credit Agreement constitutes
the legal, valid and binding obligation of the Company, enforceable against
the Company in accordance with its terms, except as may be limited by
bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer,
moratorium or other similar laws relating to or affecting the rights of
creditors generally and except as the enforceability of the Credit Agreement
is subject to the application of general principles of equity (regardless of
whether considered in a proceeding in equity or at law), including, without
limitation, (a) the possible unavailability of specific performance,
injunctive relief or any other equitable remedy and (b) concepts of
materiality, reasonableness, good faith and fair dealing.
The foregoing opinions are subject to the following comments and
qualifications:
(A) The enforceability of Section 11.03 of the Credit Agreement may
be limited by laws limiting the enforceability of provisions exculpating
or exempting a party, or requiring indemnification of a party for,
liability for its own action or inaction, to the extent the action or
inaction involves gross negligence, recklessness, willful misconduct or
unlawful conduct.
(B) The enforceability of provisions in the Credit Agreement to the
effect that terms may not be waived or modified except in writing may be
limited under certain circumstances.
(C) We express no opinion as to (i) the effect of the laws of any
jurisdiction in which any Lender is located (other than the State of New
York) that limit the interest, fees or other charges such Lender may
impose, (ii) Section 4.07(c) of the Credit Agreement, and (iii) the
second sentence of Section 11.11 of the Credit Agreement, insofar as such
sentence relates to the subject matter jurisdiction of the United States
District Court for the Southern District of New York to adjudicate any
controversy related to the Credit Agreement.
The foregoing opinions are limited to matters involving the Federal
laws of the United States and the law of the State of New York, and we do not
express any opinion as to the laws of any other jurisdiction.
At the request of our client, this opinion letter is, pursuant to
Section 6.01(d) of the Credit Agreement, provided to you by us in our capacity
as special New York counsel to Chase and may not be relied upon by any Person
for any purpose other than in connection with the transactions contemplated by
the Credit Agreement without, in each instance, our prior written consent.
Very truly yours,
CDP/RJ
EXHIBIT C
[Form of Confidentiality Agreement]
CONFIDENTIALITY AGREEMENT
[Date]
[Insert Name and
Address of Prospective
Participant or Assignee]
Re: Credit Agreement dated as of May 29, 1998 (the "Credit
Agreement"), between Allmerica Financial Corporation (the
"Company"), the lenders party thereto and The Chase
Manhattan
Bank, as Administrative Agent.
Dear Ladies and Gentlemen:
As a Lender party to the Credit Agreement, we have agreed with the
Company pursuant to Section 11.13 of the Credit Agreement to use reasonable
precautions to keep confidential, except as otherwise provided therein, all
non-public information identified by the Company as being confidential at the
time the same is delivered to us pursuant to the Credit Agreement.
As provided in said Section 11.13, we are permitted to provide you,
as a prospective [holder of a participation in the Loans (as defined in the
Credit Agreement)] [assignee Lender], with certain of such non-public
information subject to the execution and delivery by you, prior to receiving
such non-public information, of a Confidentiality Agreement in this form.
Such information will not be made available to you until your execution and
return to us of this Confidentiality Agreement.
Accordingly, in consideration of the foregoing, you agree (on behalf
of yourself and each of your affiliates, directors, officers, employees and
representatives and for the benefit of us and the Company) that (A) such
information will not be used by you except in connection with the proposed
[participation][assignment] mentioned above and (B) you shall use reasonable
precautions, in accordance with your customary procedures for handling
confidential information and in accordance with safe and sound banking
practices, to keep such information confidential, provided that nothing herein
shall limit the disclosure of any such information (i) after such information
shall have become public (other than through a violation of Section 11.13 of
the Credit Agreement), (ii) to the extent required by statute, rule,
regulation or judicial process, (iii) to your counsel or to counsel for any of
the Lenders or the Administrative Agent, provided that such counsel is advised
of the confidential nature of such information, (iv) to bank examiners (or any
other regulatory authority having jurisdiction over any Lender or the
Administrative Agent), or to auditors or accountants, (v) to the
Administrative Agent or any other Lender (or to Chase Securities Inc.),
(vi) in connection with any litigation to which you or any one or more of the
Lenders or the Administrative Agent are a party, or in connection with the
enforcement of rights or remedies under the Credit Agreement, (vii) to a
subsidiary or affiliate of yours as provided in Section 11.13(a) of the Credit
Agreement or (viii) to any assignee or participant (or prospective assignee or
participant) so long as such assignee or participant (or prospective assignee
or participant) first executes and delivers to you a Confidentiality Agreement
substantially in the form hereof; provided, further, that in no event shall
you be obligated to return any materials furnished to you pursuant to this
Confidentiality Agreement.
If you are a prospective assignee, your obligations under this
Confidentiality Agreement shall be superseded by Section 11.13 of the Credit
Agreement on the date upon which you become a Lender under the Credit
Agreement pursuant to Section 11.06(b) thereof.
Please indicate your agreement to the foregoing by signing as
provided below the enclosed copy of this Confidentiality Agreement and
returning the same to us.
Very truly yours,
[INSERT NAME OF LENDER]
By_________________________
The foregoing is agreed to
as of the date of this letter.
[INSERT NAME OF PROSPECTIVE
PARTICIPANT OR ASSIGNEE]
By_________________________
EXHIBIT D
[Form of Assignment and Acceptance]
ASSIGNMENT AND ACCEPTANCE
Reference is made to the Credit Agreement, dated as of May 29, 1998
(as modified and supplemented and in effect from time to time, the "Credit
Agreement"), between Allmerica Financial Corporation, a Delaware corporation,
the lenders named therein, and The Chase Manhattan Bank, as administrative
agent for such lenders. Terms defined in the Credit Agreement are used
herein as defined therein.
____________________ (the "Assignor") and ____________________ (the
"Assignee") agree as follows:
1. The Assignor hereby irrevocably sells and assigns to the
Assignee without recourse to the Assignor, and the Assignee hereby irrevocably
purchases and assumes from the Assignor without recourse to the Assignor, as
of the Effective Date as set forth in Schedule 1 hereto (the "Effective
Date"), an interest (the "Assigned Interest") in and to the Assignor's rights
and obligations under the Credit Agreement with respect to those credit
facilities contained in the Credit Agreement as are set forth on Schedule 1
(individually, an "Assigned Facility"; collectively, the "Assigned
Facilities"), in a principal amount and percentage for each Assigned Facility
as set forth on Schedule 1.
2. The Assignor (i) makes no representation or warranty and assumes
no responsibility with respect to any statements, warranties or
representations made in or in connection with the Credit Agreement or any
other instrument or document furnished pursuant thereto, or the execution,
legality, validity, enforceability, genuineness, sufficiency or value of the
Credit Agreement or any other instrument or document furnished pursuant
thereto, other than that it has not created any adverse claim upon the
interest being assigned by it hereunder and that such interest is free and
clear of any such adverse claim; (ii) makes no representation or warranty and
assumes no responsibility with respect to the financial condition of the
Company, any of its Subsidiaries or any other obligation or the performance or
observance by the Company, any of its Subsidiaries or any other obligor of any
of their respective obligations under the Credit Agreement or any other
instrument or document furnished pursuant hereto or thereto; and
(iii) attaches the Note(s), if any, held by it evidencing the Assigned
Facilities and requests that the Administrative Agent exchange such Note(s),
if any, for a new Note or Notes payable to the Assignor (if the Assignor has
retained any interest in the Assigned Facility) and a new Note or Notes
payable to the Assignee, if requested by the Assignee pursuant to Section
2.09(d) of the Credit Agreement, in the respective amounts which reflect the
assignment being made hereby (and after giving effect to any other assignments
which have become effective on the Effective Date).
3. The Assignee (i) represents and warrants that it is legally
authorized to enter into this Assignment and Acceptance; (ii) confirms that it
has received a copy of the Credit Agreement, together with copies of the
financial statements referred to in Section 7.02 thereof, the financial
statements delivered pursuant to Section 8.01 thereof, if any, and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Assignment and Acceptance;
(iii) agrees that it will, independently and without reliance upon the
Assignor, the Administrative Agent or any other Lender and based on such
documents and information as it shall deem appropriate at the time, continue
to make its own credit decisions in taking or not taking action under the
Credit Agreement or any other instrument or document furnished pursuant hereto
or thereto; (iv) appoints and authorizes the Administrative Agent to take such
action as administrative agent on its behalf and to exercise such powers and
discretion under the Credit Agreement or any other instrument or document
furnished pursuant hereto or thereto as are delegated to the Administrative
Agent by the terms thereof, together with such powers as are incidental
thereto; and (v) agrees that it will be bound by the provisions of the Credit
Agreement and will perform in accordance with its terms all the obligations
which by the terms of the Credit Agreement are required to be performed by it
as a Lender including, if it is organized under the laws of a jurisdiction
outside the United States of America, its obligation pursuant to Section 5.06
of the Credit Agreement to deliver the forms prescribed by the Internal
Revenue Service of the United States certifying as to the Assignee's exemption
from United States withholding taxes with respect to all payments to be made
to the Assignee under the Credit Agreement, or such other documents as are
necessary to indicate that all such payments are subject to such tax at a rate
reduced by an applicable tax treaty.
4. Following the execution of this Assignment and Acceptance, it
will be delivered to the Administrative Agent for acceptance, effective as of
the Effective Date (which date shall not, unless otherwise agreed to by the
Administrative Agent, be earlier than five Business Days after the date of
such acceptance).
5. Upon such acceptance, from and after the Effective Date, the
Administrative Agent shall make all payments in respect of the Assigned
Interest (including payments of principal, interest, fees and other amounts)
to the Assignee which accrue subsequent to the Effective Date.
6. From and after the Effective Date, (i) the Assignee shall be a
party to the Credit Agreement and, to the extent provided in this Assignment
and Acceptance, have the rights and obligations of a Lender thereunder and
shall be bound by the provisions thereof and (ii) the Assignor shall, to the
extent provided in this Assignment and Acceptance, relinquish its rights and
be released from its obligations under the Credit Agreement except as provided
in Sections 10.05 and 11.12 of the Credit Agreement.
7. This Assignment and Acceptance shall be governed by and
construed in accordance with the law of the State of New York.
8. This Assignment and Acceptance may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Assignment and
Acceptance by signing any such counterpart.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment
and Acceptance to be executed as of the date first above written by their
respective duly authorized officers on Schedule 1 hereto.
Schedule 1 to
Assignment and Acceptance
relating to the Credit Agreement,
dated as of May __, 1998,
between Allmerica Financial Corporation,
the lenders named therein and
The Chase Manhattan Bank,
as administrative agent for the Lenders
(in such capacity, the "Administrative Agent")
Name of Assignor:
Name of Assignee:
Effective Date of Assignment:
Credit Principal Percentage
Facility Assigned Amount Assigned Assigned
[ASSIGNEE] [ASSIGNOR]
By:___________________________ By:__________________________
Title: Title:
[Consented to and] Accepted:
THE CHASE MANHATTAN BANK,
as Administrative Agent
By:__________________________
Title:
[Consented to:
ALLMERICA FINANCIAL CORPORATION
By:__________________________
Title:]
