EXECUTION COPY
TERM LOAN AGREEMENT
Dated as of March 9, 2007
SCOTTISH ANNUITY & LIFE INSURANCE COMPANY (CAYMAN) LTD.,
as Borrower,
SCOTTISH RE GROUP LIMITED and
EACH SUBSIDIARY OF SCOTTISH RE GROUP LIMITED
listed as a Guarantor on the Signature Pages hereto,
as Guarantors,
THE LENDERS
listed as Lenders on the Signature Pages hereto,
as Lenders
and
ABLECO FINANCE LLC,
as Agent
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS; CERTAIN TERMS................................1
Section 1.01 Definitions.............................................1
Section 1.02 Terms Generally........................................24
Section 1.03 Accounting and Other Terms.............................24
Section 1.04 Time References........................................24
ARTICLE II THE LOAN.................................................24
Section 2.01 Commitments............................................24
Section 2.02 Draws; Making the Loan.................................25
Section 2.03 Repayment of Loan; Evidence of Debt....................25
Section 2.04 Interest...............................................26
Section 2.05 Prepayment of Loan.....................................27
Section 2.06 Fees...................................................29
Section 2.07 Taxes..................................................30
ARTICLE III INTENTIONALLY LEFT BLANK.................................32
ARTICLE IV FEES, PAYMENTS AND OTHER COMPENSATION....................32
Section 4.01 Payments; Computations and Statements..................32
Section 4.02 Sharing of Payments, Etc...............................33
Section 4.03 Apportionment of Payments..............................33
Section 4.04 Increased Costs and Reduced Return.....................34
ARTICLE V CONDITIONS TO LOAN.......................................35
Section 5.01 Conditions Precedent to Effectiveness..................35
Section 5.02 Conditions to Loans....................................40
ARTICLE VI REPRESENTATIONS AND WARRANTIES...........................41
Section 6.01 Representations and Warranties.........................41
Section 6.02 Representations as to Foreign Obligors.................49
ARTICLE VII COVENANTS OF THE LOAN PARTIES............................51
Section 7.01 Affirmative Covenants..................................51
Section 7.02 Negative Covenants.....................................61
Section 7.03 Financial Covenants....................................66
ARTICLE VIII EVENTS OF DEFAULT........................................68
Section 8.01 Events of Default......................................68
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ARTICLE IX AGENT....................................................72
Section 9.01 Appointment............................................72
Section 9.02 Nature of Duties.......................................73
Section 9.03 Rights, Exculpation, Etc...............................74
Section 9.04 Reliance...............................................75
Section 9.05 Indemnification........................................75
Section 9.06 Agent Individually.....................................75
Section 9.07 Successor Agent........................................75
Section 9.08 Collateral Matters.....................................76
Section 9.09 Agency for Perfection..................................77
ARTICLE X GUARANTY.................................................78
Section 10.01 Guaranty...............................................78
Section 10.02 Guaranty Absolute......................................78
Section 10.03 Waiver.................................................79
Section 10.04 Continuing Guaranty; Assignments.......................80
Section 10.05 Subrogation............................................80
Section 10.06 Guaranty Limitations...................................80
ARTICLE XI MISCELLANEOUS............................................81
Section 11.01 Notices, Etc...........................................81
Section 11.02 Amendments, Etc........................................82
Section 11.03 No Waiver; Remedies, Etc...............................83
Section 11.04 Expenses; Taxes; Attorneys' Fees.......................83
Section 11.05 Right of Set-off.......................................84
Section 11.06 Severability...........................................84
Section 11.07 Assignments and Participations.........................85
Section 11.08 Counterparts...........................................87
Section 11.09 GOVERNING LAW..........................................88
Section 11.10 CONSENT TO JURISDICTION; SERVICE OF PROCESS AND
VENUE..................................................88
Section 11.11 WAIVER OF JURY TRIAL, ETC..............................89
Section 11.12 Consent by the Agent and Lenders.......................89
Section 11.13 No Party Deemed Drafter................................89
Section 11.14 Reinstatement; Certain Payments........................89
Section 11.15 Indemnification........................................90
Section 11.16 Records................................................90
Section 11.17 Binding Effect.........................................90
Section 11.18 Interest...............................................91
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Section 11.19 Confidentiality........................................92
Section 11.20 Obligation to Make Payment in Dollars..................92
Section 11.21 Integration............................................93
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SCHEDULES AND EXHIBITS
Schedule 1.01(A) Lenders and Lenders' Commitments
Schedule 1.01(B) Existing Indebtedness
Schedule 1.01(C) Existing Liens
Schedule 1.01(D) Cash and Unrestricted Liquidity Accounts
Schedule 5.01(b)(i) Security Documents
Schedule 6.01(e) Capitalization; Subsidiaries
Schedule 6.01(f) Litigation; Commercial Tort Claims
Schedule 6.01(i) ERISA
Schedule 6.01(j) Tax Sharing Arrangements
Schedule 6.01(q) Operating Lease Obligations
Schedule 6.01(r) Environmental Matters
Schedule 6.01(u) Bank Accounts
Schedule 6.01(v) Intellectual Property
Schedule 6.01(aa) Name; Jurisdiction of Organization; Organizational ID
Number; Chief Place of Business; Chief Executive Office;
FEIN
Schedule 6.01(bb) Trade names
Schedule 7.01(s) Post-Closing Obligations
Schedule 7.02(e) Existing Investments
Schedule 7.02(h) Management Fees
Schedule 7.02(k) Limitations on Dividends and Other Payment Restrictions
Exhibit A Form of Guaranty
Exhibit B [Intentionally left blank]
Exhibit C [Intentionally left blank]
Exhibit D-1 Form of Opinion of LeBoeuf, Lamb, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, U.S.
Counsel to the Credit Parties
Exhibit D-2 Form of Opinion of ▇▇▇▇▇▇ and Calder, Cayman Islands
Counsel to the Credit Parties
Exhibits D-3 to D-6 Forms of Opinion of Local Counsel in Other Jurisdictions
Exhibit E Form of Assignment and Acceptance
Exhibit F Form of Liquidity Analysis
Exhibit G Form of Draw Notice
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TERM LOAN AGREEMENT
TERM LOAN AGREEMENT, dated as of March 9, 2007, by and among SCOTTISH
ANNUITY & LIFE INSURANCE COMPANY (CAYMAN) LTD., an exempted company limited by
shares organized and existing under the laws of the Cayman Islands ("SALIC" or
the "Borrower"), SCOTTISH RE GROUP LIMITED, an exempted company limited by
shares organized and existing under the laws of the Cayman Islands (the
"Parent"), each subsidiary of the Parent listed as a "Guarantor" on the
signature pages hereto or which becomes a Guarantor on or after the Effective
Date pursuant to a Guaranty in substantially the form annexed hereto as Exhibit
A (together with the Parent, each a "Guarantor" and collectively, the
"Guarantors"), the lenders from time to time party hereto (each a "Lender" and
collectively, the "Lenders"), and Ableco Finance LLC, as agent for the Lenders
(in such capacity, together with any successor agent, the "Agent").
RECITALS
The Borrower and the Guarantors have asked the Lenders to extend a
delayed draw term loan in the principal amount of up to $100,000,000 to the
Borrower. The proceeds of the term loan shall be used (i) to pay all the costs
and expenses incurred in connection with the term loan contemplated hereunder
and/or (ii) for general working capital purposes.
The Lenders are severally, and not jointly, willing to extend such
credit to the Borrower subject to the terms and conditions hereinafter set
forth.
In consideration of the premises and the covenants and agreements
contained herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS; CERTAIN TERMS
Section 1.01 Definitions. As used in this Agreement, the following
terms shall have the respective meanings indicated below, such meanings to be
applicable equally to both the singular and plural forms of such terms:
"7.25% Convertible Preferred Shares" means the 7.25% convertible
cumulative participating preferred shares of the Parent offered to affiliates of
Cerberus Capital and MassMutual Capital Partners LLC pursuant to the Securities
Purchase Agreement.
"A.M. Best" means A.M. Best Company, Inc. and any successor thereto.
"Action" has the meaning specified therefor in Section 11.12.
"additional amount" has the meaning specified therefor in Section
2.07(a).
"Affiliate" means, with respect to any Person, any other Person that
directly or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such Person. For purposes of
this definition, "control" of a Person means the power, directly or indirectly,
either to (i) vote 10% or more of the Capital Stock having ordinary voting power
for the election of directors of such Person or (ii) direct or cause the
direction of the management and policies of such Person whether by contract or
otherwise. Notwithstanding anything herein to the contrary, in no event shall
the Agent or any Lender be considered an "Affiliate" of any Credit Party.
"Agent" has the meaning specified therefor in the preamble hereto.
"Agent Advances" has the meaning specified therefor in Section
9.08(a).
"Agent's Account" means an account at a bank designated by the Agent
from time to time as the account into which the Loan Parties shall make all
payments to the Agent for the benefit of the Agent and the Lenders under this
Agreement and the other Loan Documents.
"Agreement" means this Term Loan Agreement, including all amendments,
modifications and supplements and any exhibits or schedules to any of the
foregoing, and shall refer to the Agreement as the same may be in effect at the
time such reference becomes operative.
"Alternative Reserve Agreements" means any funding agreements,
collateral borrowing arrangements, securitizations or other capital markets
solutions entered into by the Parent or any of its Subsidiaries to provide
financial support to an Insurance Subsidiary to satisfy applicable regulatory or
operational reserve requirements.
"Annual Statement" means, with respect to any Person that is an
Insurance Subsidiary, the annual statutory financial statement required to be
filed with the Insurance Department (or similar Governmental Authority) of such
Person's jurisdiction of domicile, together with all exhibits or schedules filed
therewith prepared in conformity with SAP.
"Applicable Foreign Obligor Documents" has the meaning specified
therefor in Section 6.02(a).
"Asset Backed Security" means any fixed-income instrument that
entitles the holder of, or beneficial owner under, the instrument to the whole
or any part of the rights or entitlements of a holder of a receivable or other
asset and any other rights or entitlements in respect of a pool of receivables
or other assets or any money payable by obligors under those receivables or
other assets (whether or not the money is payable to the holder of, or
beneficial owner under, the instrument on the same terms and conditions as under
the receivables or other assets) in relation to receivables or other assets;
provided however, such receivables or assets shall be limited to automobile
loans, credit card receivables and home equity loans and such other Asset-Backed
Security assets as may be acceptable to the Agent.
"Assignment and Acceptance" means an assignment and acceptance entered
into by an assigning Lender and an assignee, and accepted by the Agent, in
accordance with Section 11.07 hereof and substantially in the form of Exhibit E
hereto or such other form acceptable to the Agent.
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"Attributable Indebtedness" means, on any date, (a) in respect of any
Capitalized Leases of any Person, the capitalized amount thereof that would
appear on a balance sheet of such Person prepared as of such date in accordance
with GAAP, and (b) in respect of any Synthetic Lease Obligation, the capitalized
amount of the remaining lease payments under the relevant lease that would
appear on a balance sheet of such Person prepared as of such date in accordance
with GAAP if such lease were accounted for as a capital lease.
"Authorized Officer" means, with respect to any Person, the chief
executive officer, chief financial officer, president or executive vice
president of such Person.
"Available Liquidity" means, with respect to the Parent and the
Borrower at any date of determination, the aggregate (without duplication) of
(i) Cash and Unrestricted Liquidity and (ii) Excess Reserves, determined in each
case as of such date.
"Bankruptcy Code" means the United States Bankruptcy Code (11 U.S.C.
ss. 101, et seq.), as amended, and any successor statute.
"Board of Directors" means, with respect to any Person, the board of
directors (or comparable manager or managers) of such Person or any committee
thereof duly authorized to act on behalf of the board.
"Borrower" has the meaning specified therefor in the preamble hereto.
"Business Day" means any day other than a Saturday, Sunday or other
day on which commercial banks in New York City are authorized or required to
close.
"Capital Expenditures" means, with respect to any Person for any
period, the sum of (i) the aggregate of all expenditures by such Person and its
Subsidiaries during such period that in accordance with GAAP are or should be
included in "property, plant and equipment" or in a similar fixed asset account
on its balance sheet, whether such expenditures are paid in cash or financed and
including all Capitalized Lease Obligations paid or payable during such period,
(ii) to the extent not covered by clause (i) above, the aggregate of all
expenditures by such Person and its Subsidiaries during such period to acquire
by purchase or otherwise the business or fixed assets of, or the Capital Stock
of, any other Person, and (iii) additional capital requirements incurred by such
Person to meet regulatory or rating agency requirements arising out of the
writing of new insurance or reinsurance business.
"Capital Stock" means (i) with respect to any Person that is a
corporate entity, any and all shares, interests, participations or other
equivalents (however designated and whether or not voting) of corporate stock or
capital stock of such Person, and (ii) with respect to any Person that is not a
corporate entity, any and all partnership, membership or other Equity Interests
of such Person.
"Capitalized Lease" means, with respect to any Person, any lease of
real or personal property by such Person as lessee which is (i) required under
GAAP to be capitalized on the balance sheet of such Person or (ii) a transaction
of a type commonly known as a "synthetic lease" (i.e., a lease transaction that
is treated as an operating lease for accounting purposes but
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with respect to which payments of rent are intended to be treated as payments of
principal and interest on a loan for Federal income tax purposes).
"Capitalized Lease Obligations" means, with respect to any Person,
obligations of such Person and its Subsidiaries under Capitalized Leases, and,
for purposes hereof, the amount of any such obligation shall be the capitalized
amount thereof determined in accordance with GAAP.
"Cash and Unrestricted Liquidity" means unrestricted cash and
Permitted Investments owned by the Parent, the Borrower or any Credit Party and
held at any date of determination in an account listed on Schedule 1.01(D) or in
an account that is subject to a perfected first priority security interest to
secure the Obligations.
"Cerberus Capital" means Cerberus Capital Management, L.P., a Delaware
limited partnership.
"Change in Law" has the meaning specified therefor in Section 4.04(a).
"Change of Control" means each occurrence of any of the following:
(a) during any period of twelve consecutive months, individuals who at
the beginning of such period constituted the Board of Directors of the Parent
(together with any new directors whose election by such Board of Directors or
whose nomination for election by the shareholders of the Parent was approved by
a vote of at least a majority the directors of the Parent then still in office
who were either directors at the beginning of such period, or whose election or
nomination for election was previously approved) cease for any reason to
constitute a majority of the Board of Directors of the Parent;
(b) (i) any Credit Party consolidates or amalgamates with or merges
into another entity or conveys, transfers or leases all or substantially all of
its property and assets to another Person, or (ii) any entity consolidates or
amalgamates with or merges into any Credit Party in a transaction pursuant to
which the outstanding voting Capital Stock of such Credit Party is reclassified
or changed into or exchanged for cash, securities or other property, other than
any such transaction described in this clause (ii) in which either (A) in the
case of any such transaction involving the Parent, no person or group (within
the meaning of Section 13(d)(3) of the Exchange Act) has, directly or
indirectly, acquired beneficial ownership of more than 33% of the aggregate
outstanding voting Capital Stock of the Parent or (B) in the case of any such
transaction involving a Credit Party other than the Parent, the Parent has
beneficial ownership of 100% of the aggregate voting power of all Capital Stock
of the resulting, surviving or transferee entity;
(c) any Insurance Subsidiary (other than Scottish Re PCC Limited
(Guernsey)) enters into one or more reinsurance or retrocession agreements that,
individually or in the aggregate, have the effect of transferring all or
substantially all of such Insurance Subsidiary's in-force insurance or
reinsurance business to another Person other than to a Subsidiary of the Parent;
(d) any Person or two or more Persons acting in concert shall have
acquired by contract or otherwise, or shall have entered into a contract or
arrangement (other than the
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Securities Purchase Agreement) that, upon consummation thereof, will result in
its or their acquisition of the power to exercise, directly or indirectly, a
controlling influence over the management or policies of the Parent, or control
over the equity securities of the Parent entitled to vote for members of the
Board of Directors or equivalent governing body of the Parent on a fully-diluted
basis (and taking into account all such securities that such Person or group has
the right to acquire pursuant to any option right) representing more than 33% of
the combined voting power of such securities including through acquisition of
the 7.25% Convertible Preferred Shares; or
(e) (i) the Parent fails to own, directly or indirectly, free and
clear of all Liens, 100% of the Equity Interests of the Borrower, or (ii) the
Parent or the Borrower fails to own directly or indirectly, free and clear of
all Liens 100% of the Equity Interests of each other Credit Party and each other
Insurance Subsidiary (other than Scottish Re PCC Limited (Guernsey) and
World-Wide Life Assurance S.A.), other than, in each case, Liens under Security
Documents securing the Obligations.
"Closing Fee" means an amount equal to 1.5% of the Loan (which for
purposes of this definition shall be deemed to be no less than $100,000,000),
earned in full, payable on the Effective Date.
"Collateral" means all of the property and assets and all interests
therein and proceeds thereof now owned or hereafter acquired by any Person upon
which a Lien is granted or purported to be granted by such Person as security
for all or any part of the Obligations.
"Commitment" means, with respect to each Lender, the commitment of
such Lender to make the Loan to the Borrower in the amount set forth in Schedule
1.01(A) hereto, as the same may be terminated or reduced from time to time in
accordance with the terms of this Agreement.
"Commitment Letter" means the commitment letter, dated as of September
26, 2006, between the Parent and Cerberus Capital.
"Consolidated Net Income" means, for any period, (a) for the Parent
and its Subsidiaries on a consolidated basis, the net income of the Parent and
its Subsidiaries (excluding extraordinary gains but including extraordinary
losses) for that period, and (b) for SALIC and its Subsidiaries on a
consolidated basis, the net income of SALIC and its Subsidiaries (excluding
extraordinary gains but including extraordinary losses) for that period, in each
case calculated in accordance with GAAP.
"Contingent Obligation" means, with respect to any Person, any
obligation of such Person guaranteeing or intended to guarantee any
Indebtedness, leases, dividends or other obligations ("primary obligations") of
any other Person (the "primary obligor") in any manner, whether directly or
indirectly, including, without limitation, (i) the direct or indirect guaranty,
endorsement (other than for collection or deposit in the ordinary course of
business), co-making, discounting with recourse or sale with recourse by such
Person of the obligation of a primary obligor, (ii) the obligation to make
take-or-pay or similar payments, if required, regardless of nonperformance by
any other party or parties to an agreement, (iii) any obligation of such
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Person, whether or not contingent, (A) to purchase any such primary obligation
or any property constituting direct or indirect security therefor, (B) to
advance or supply funds (1) for the purchase or payment of any such primary
obligation or (2) to maintain working capital or equity capital of the primary
obligor or otherwise to maintain the net worth or solvency of the primary
obligor, (C) to purchase property, assets, securities or services primarily for
the purpose of assuring the owner of any such primary obligation of the ability
of the primary obligor to make payment of such primary obligation or (D)
otherwise to assure or hold harmless the holder of such primary obligation
against loss in respect thereof; provided, however, that the term "Contingent
Obligation" shall not include any product warranties extended in the ordinary
course of business. The amount of any Contingent Obligation shall be deemed to
be an amount equal to the stated or determinable amount of the primary
obligation with respect to which such Contingent Obligation is made (or, if
less, the maximum amount of such primary obligation for which such Person may be
liable pursuant to the terms of the instrument evidencing such Contingent
Obligation) or, if not stated or determinable, the maximum reasonably
anticipated liability with respect thereto (assuming such Person is required to
perform thereunder), as determined by such Person in good faith.
"Convertible Preferred Securities" means Convertible Preferred Shares
of the Parent, issued on December 17, 2003 and December 22, 2003, as part of the
issuance of the Hybrid Capital Units.
"Corporate Securities" means commercial paper, Asset Backed Securities
and other obligations of a corporation for borrowed money evidenced by bonds,
debentures, notes, loan agreements or other similar instruments.
"Credit Party" means a Loan Party or a Security Party.
"Cumulative Liquidity Change" means, as of any date, the amount by
which the sum of (i) Available Liquidity plus (ii) the remaining Commitments
available hereunder, in each case as of such date, changes from such amount
determined as of February 28, 2007 (assuming that the amount of Commitments
available hereunder as of February 28, 2007 was $100,000,000).
"Default" means an event which, with the giving of notice or the lapse
of time or both, would constitute an Event of Default.
"Disclosure Schedules" means the disclosure schedules delivered in
connection with the Securities Purchase Agreement.
"Disposition" means any transaction, or series of related
transactions, pursuant to which any Person or any of its Subsidiaries sells,
assigns, transfers or otherwise disposes of any property or assets, including
any sale of books of business through reinsurance agreements or otherwise and
sale of any Subsidiary (in each case, whether now owned or hereafter acquired)
to any other Person, in each case, whether or not the consideration therefor
consists of cash, securities or other assets owned by the acquiring Person,
excluding any sale for cash of assets in the investment portfolio of an
Insurance Subsidiary in its ordinary course of business.
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"Dollar," "Dollars" and the symbol "$" each means lawful money of the
United States of America.
"Draw Date" has the meaning specified therefor in Section 2.02(a)(i).
"Draw Notice" has the meaning specified therefor in Section
2.02(a)(i).
"Effective Date" means the date, on or before March 9, 2007, on which
all of the conditions precedent set forth in Section 5.01 are satisfied or
waived and this Agreement is executed and delivered by the parties hereto.
"Employee Plan" means any "employee pension benefit plan" (as such
term is defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that
is subject to Title IV of ERISA and is sponsored or maintained by any Loan Party
or any ERISA Affiliate or to which any Loan Party or any ERISA Affiliate
contributes or has an obligation to contribute, or in the case of a multiple
employer or other plan described in Section 4064(a) of ERISA, has made
contributions at any time during the immediately preceding five plan years.
"Environmental Actions" means any complaint, summons, citation,
notice, directive, order, claim, litigation, investigation, judicial or
administrative proceeding, judgment, letter or other communication from any
Person or Governmental Authority involving violations of Environmental Laws or
Releases of Hazardous Materials (i) from any assets, properties or businesses
owned or operated by any Loan Party or any of its Subsidiaries or any
predecessor in interest; (ii) from adjoining properties or businesses; or (iii)
onto any facilities which received Hazardous Materials generated by any Loan
Party or any of its Subsidiaries or any predecessor in interest.
"Environmental Laws" means the Comprehensive Environmental Response,
Compensation and Liability Act (42 U.S.C. ss. 9601, et seq.), the Hazardous
Materials Transportation Act (49 U.S.C. ss. 1801, et seq.), the Resource
Conservation and Recovery Act (42 U.S.C. ss. 6901, et seq.), the Federal Clean
Water Act (33 U.S.C. ss. 1251, et seq.), the Clean Air Act (42 U.S.C. ss. 7401
et seq.), the Toxic Substances Control Act (15 U.S.C. ss. 2601, et seq.) and the
Occupational Safety and Health Act (29 U.S.C. ss. 651, et seq.), as such laws
may be amended or otherwise modified from time to time, and any other present or
future federal, state, local or foreign statute, ordinance, rule, regulation,
order, judgment, decree, permit, license or other binding determination of any
Governmental Authority imposing liability or establishing standards of conduct
for protection of the environment or other government restrictions relating to
the protection of the environment or the Release, deposit or migration of any
Hazardous Materials into the environment.
"Environmental Liabilities and Costs" means all liabilities, monetary
obligations, Remedial Actions, losses, damages, punitive damages, consequential
damages, treble damages, costs and expenses (including all reasonable fees,
disbursements and expenses of counsel, experts and consultants and costs of
investigations and feasibility studies), fines, penalties, sanctions and
interest incurred as a result of any claim or demand by any Governmental
Authority or any third party, and which relate to any environmental condition or
a Release of Hazardous Materials from or onto (i) any property presently or
formerly owned by any Loan
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Party or any of its Subsidiaries or (ii) any facility which received Hazardous
Materials generated by any Loan Party or any of its Subsidiaries.
"Environmental Lien" means any Lien in favor of any Governmental
Authority for Environmental Liabilities and Costs.
"Equity Interests" means, with respect to any Person, all of the
shares of Capital Stock of (or other ownership or profit interests in) such
Person, all of the warrants, options or other rights for the purchase or
acquisition from such Person of shares of Capital Stock of (or other ownership
or profit interests in) such Person, all of the securities convertible into or
exchangeable for shares of Capital Stock of (or other ownership or profit
interests in) such Person or warrants, rights or options for the purchase or
acquisition from such Person of such shares (or such other interests), and all
of the other ownership or profit interests in such Person (including
partnership, member or trust interests therein), whether voting or nonvoting,
and whether or not such shares, warrants, options, rights or other interests are
outstanding on any date of determination.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute of similar import, and regulations
thereunder, in each case, as in effect from time to time. References to sections
of ERISA shall be construed also to refer to any successor sections.
"ERISA Affiliate" means, with respect to any Person, any trade or
business (whether or not incorporated) which is a member of a group of which
such Person is a member and which would be deemed to be a "controlled group"
within the meaning of Sections 414(b), (c), (m) and (o) of the Internal Revenue
Code.
"ERISA Event" means (a) a Reportable Event with respect to an Employee
Plan; (b) a withdrawal by the Borrower or any of its ERISA Affiliates from a
Plan subject to Section 4063 of ERISA during a plan year in which it was a
substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation
of operations that is treated as such a withdrawal under Section 4062(e) of
ERISA; (c) a complete or partial withdrawal by the Borrower or any of its ERISA
Affiliates from a Multiemployer Plan or notification that a Multiemployer Plan
is in reorganization; (d) the filing of a notice of intent to terminate, the
treatment of a Plan amendment as a termination under Sections 4041 or 4041A of
ERISA, or the commencement of proceedings by the PBGC to terminate any Employee
Plan or Multiemployer Plan; (e) an event or condition which constitutes grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Employee Plan or Multiemployer Plan; or (f) the
imposition of any liability under Title IV of ERISA, other than for PBGC
premiums due but not delinquent under Section 4007 of ERISA, upon the Borrower
or any of its ERISA Affiliates.
"Event of Default" means any of the events set forth in Section 8.01.
"Excess Reserves" means, at any date of determination, the amount by
which the market value of the assets of the Borrower that are pledged to reserve
credit trusts (owned by SRD or for the benefit of third party cedants) as of
such date exceeds the required amount associated with those assets as of the
last day of the most recent fiscal quarter.
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"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Extraordinary Receipts" means any cash received by the Parent or any
of its Subsidiaries not in the ordinary course of business (and not consisting
of proceeds described in Section 2.05(b)(i) or (ii) hereof), including, without
limitation, (i) foreign, United States, state or local tax refunds, (ii) pension
plan reversions, (iii) proceeds of insurance, (iv) judgments, proceeds of
settlements or other consideration of any kind in connection with any cause of
action, (v) condemnation awards (and payments in lieu thereof), (vi) indemnity
payments and (vii) any purchase price adjustment received in connection with any
purchase agreement.
"Final Maturity Date" means the first anniversary of the Effective
Date, or such earlier date on which the Loan shall become due and payable in
accordance with the terms of this Agreement and the other Loan Documents.
"Financial Statements" means (i) with respect to the Parent, the
audited consolidated and consolidating balance sheet of the Parent and its
Subsidiaries for the Fiscal Year ended December 31, 2006, and the related
consolidated statement of operations, shareholders' equity and cash flows for
the Fiscal Year then ended and (ii) with respect to the Borrower, the unaudited
consolidated and consolidating balance sheet of the Borrower and its
Subsidiaries for the Fiscal Year ended December 31, 2005, and the related
consolidated statement of operations for the Fiscal Year then ended.
"Fiscal Year" means the fiscal year of the Parent and its Subsidiaries
ending on December 31 of each year.
"Fitch" means Fitch, Inc. and any successor thereto.
"Foreign Benefit Plan" means any employee benefit plan, pension plan
or welfare plan not subject to ERISA which is maintained or contributed to for
the benefit of the employees of a Foreign Obligor or its Subsidiaries which,
under applicable law, (a) is required to be funded through a trust or similar
funding vehicle, or (b) creates or could result in a Lien on any property of
such Foreign Obligor or any of its Subsidiaries.
"Foreign Obligor" means any Credit Party that is incorporated or
organized under the laws of a jurisdiction other than the United States, a State
thereof or the District of Columbia.
"FRS Board" means the Board of Governors of the Federal Reserve System
of the United States.
"GAAP" means generally accepted accounting principles in effect from
time to time in the United States, applied on a consistent basis, provided that
for the purpose of Section 7.03 hereof and the definitions used therein, "GAAP"
shall mean generally accepted accounting principles in effect on the date hereof
and consistent with those used in the preparation of the Financial Statements,
provided, further, that if there occurs after the date of this Agreement any
change in GAAP that affects in any respect the calculation of any covenant
contained in Section 7.03 hereof, the Agent and the Borrower shall negotiate in
good faith amendments to the provisions of this Agreement that relate to the
calculation of such covenant with the intent of having the respective positions
of the Lenders and the Borrower after such change in GAAP
-9-
conform as nearly as possible to their respective positions as of the date of
this Agreement and, until any such amendments have been agreed upon, the
covenants in Section 7.03 hereof shall be calculated as if no such change in
GAAP has occurred.
"Governmental Authority" means any nation or government, any Federal,
state, city, town, municipality, county, local or other political subdivision
thereof or thereto and any department, commission, board, bureau,
instrumentality, agency or other entity exercising executive, legislative,
judicial, taxing, regulatory or administrative powers or functions of or
pertaining to government, and including in any event the insurance regulators in
the jurisdictions of Bermuda, Delaware, Cayman Islands, Ireland, Singapore,
South Carolina and the United Kingdom.
"Government Debt" means negotiable Indebtedness issued or guaranteed
by the United States Government or any agency thereof.
"Guaranteed Obligations" has the meaning specified therefor in Section
10.01.
"Guarantor" means (i) the Parent, (ii) each Subsidiary of the Parent
listed as a "Guarantor" on the signature pages hereto, and (iii) each other
Person which guarantees, pursuant to Section 7.01(c) or otherwise, all or any
part of the Obligations.
"Guaranty" means (i) the guaranty of each Guarantor party hereto
contained in Article X hereof, and (ii) each guaranty substantially in the form
of Exhibit A, made by any other Guarantor in favor of the Agent for the benefit
of the Agent and the Lenders pursuant to Section 7.01(c) or otherwise.
"Hazardous Material" means (a) any element, compound or chemical that
is defined, listed or otherwise classified as a contaminant, pollutant, toxic
pollutant, toxic or hazardous substance, extremely hazardous substance or
chemical, hazardous waste, special waste, or solid waste under Environmental
Laws or that is likely to cause immediately, or at some future time, harm to or
have an adverse effect on, the environment or risk to human health or safety,
including, without limitation, any pollutant, contaminant, waste, hazardous
waste, toxic substance or dangerous good which is defined or identified in any
Environmental Law and which is present in the environment in such quantity or
state that it contravenes any Environmental Law; (b) petroleum and its refined
products; (c) polychlorinated biphenyls; (d) any substance exhibiting a
hazardous waste characteristic, including, without limitation, corrosivity,
ignitability, toxicity or reactivity as well as any radioactive or explosive
materials; and (e) any raw materials, building components (including, without
limitation, asbestos-containing materials) and manufactured products containing
hazardous substances listed or classified as such under Environmental Laws.
"Highest Lawful Rate" means, with respect to the Agent or any Lender,
the maximum non-usurious interest rate, if any, that at any time or from time to
time may be contracted for, taken, reserved, charged or received on the
Obligations under laws applicable to the Agent or such Lender which are
currently in effect or, to the extent allowed by law, under such applicable laws
which may hereafter be in effect and which allow a higher maximum non-usurious
interest rate than applicable laws now allow.
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"HSBC Facilities" means the collateral/back-up facilities, and related
Swap Contracts, entered into by the Borrower and SRD with HSBC Bank USA,
National Association and its Affiliates, as such facilities and Swap Contracts
have been amended, modified or supplemented from time to time.
"HSBC Forbearance Agreement" means the Amended and Restated
Forbearance Agreement, dated as of November 26,2006, between HSBC Bank USA,
National Association and the Borrower.
"Hybrid Capital Units" means the 5.875% Hybrid Capital Units, with a
stated amount of $25 per unit, of the Parent.
"Indebtedness" means, with respect to any Person, without duplication,
whether or not included as indebtedness or liabilities of such Person under
GAAP, (i) all indebtedness of such Person for borrowed money; (ii) all
obligations of such Person for the deferred purchase price of property or
services (other than trade payables or other accounts payable incurred in the
ordinary course of such Person's business and not outstanding for more than 90
days after the date such payable was created); (iii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments or
upon which interest payments are customarily made; (iv) all reimbursement,
payment or other obligations and liabilities of such Person created or arising
under any conditional sales or other title retention agreement with respect to
property used and/or acquired by such Person, even though the rights and
remedies of the lessor, seller and/or lender thereunder may be limited to
repossession or sale of such property; (v) all Capitalized Lease Obligations of
such Person; (vi) all obligations and liabilities, contingent or otherwise, of
such Person, in respect of letters of credit, acceptances and similar
facilities; (vii) all obligations and liabilities, calculated on a basis
satisfactory to the Agent and in accordance with accepted practice, of such
Person under Swap Contracts; (viii) all monetary obligations under any
receivables factoring, receivable sales or similar transactions and all monetary
obligations under any synthetic lease, tax ownership/operating lease,
off-balance sheet financing or similar financing; (ix) all Contingent
Obligations; (x) liabilities due and payable under Title IV of ERISA with
respect to any plan (other than a Multiemployer Plan) covered by Title IV of
ERISA and maintained for employees of such Person or any of its ERISA
Affiliates; (xi) withdrawal liability due and payable under ERISA by such Person
or any of its ERISA Affiliates with respect to any Multiemployer Plan; (xii) any
obligations of such Person under any Alternative Reserve Agreement; (xiii) any
funding agreement issued by any Insurance Subsidiary; and (xiv) all obligations
referred to in clauses (i) through (xiii) of this definition of another Person
secured by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) a Lien upon property owned by such
Person, even though such Person has not assumed or become liable for the payment
of such Indebtedness. The Indebtedness of any Person shall include the
Indebtedness of any partnership of or joint venture in which such Person is a
general partner or a joint venturer. The amount of any capital lease or
Synthetic Lease Obligation as of any date shall be deemed to be the amount of
Attributable Indebtedness in respect thereof as of such date. For the avoidance
of doubt, except as otherwise expressly provided above, Indebtedness shall not
include the obligations of the Parent or any of its Subsidiaries under primary
policies, reinsurance agreements, retrocession agreements or other insurance
agreements which are entered into in the ordinary course of the
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Parent's or such Subsidiary's reinsurance business (including security posted to
secure obligations thereunder).
"Indemnified Matters" has the meaning specified therefor in Section
11.15.
"Indemnitees" has the meaning specified therefor in Section 11.15.
"Insolvency Proceeding" means any proceeding commenced by or against
any Person under any provision of the Bankruptcy Code or under any other
bankruptcy or insolvency law, winding-up, dissolutions, reorganizations,
examinership, assignments for the benefit of creditors, formal or informal
moratoria, compromises, compositions, suspensions of payments or extensions
generally with creditors, or proceedings seeking reorganization, arrangement, or
other similar relief.
"Insurance Department" means with respect to any jurisdiction, the
Governmental Authority primarily charged with the regulation of the business of
insurance in such jurisdiction.
"Insurance Subsidiaries" means the Borrower and each direct or
indirect Subsidiary of the Borrower or the Parent which is licensed by any
Governmental Authority to engage in the insurance or reinsurance business or
otherwise engages in the insurance or reinsurance business.
"Intellectual Property" means all patents, patent applications,
trademarks, service marks, trade names, copyrights, proprietary software,
inventions and other proprietary items.
"Intercreditor Deed" means the Intra-group Debt Subordination Deed,
dated as of March 9, 2007, among the Parent, the Borrower, the companies
identified therein as original Guarantors and original Intra-group Creditors,
the Lenders and the Agent.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended (or any successor statute thereto) and the regulations thereunder.
"Investment Policies" means the Investment Policies established for
the making of investments by the Parent and its Subsidiaries as in effect on the
Effective Date, as set forth in a writing delivered by the Borrower to the Agent
on or prior to the Effective Date, together with such changes as shall be
approved from time to time by the Required Lenders.
"Keep Well Agreements" means (a) the Net Worth Maintenance Agreement
between the Parent, SALIC and SRD dated as of January 1, 2002, (b) the Net Worth
Maintenance Agreement restated as of February 1, 2002 among SALIC and SRE, (c)
the Guarantee dated as of January 1, 2002 among the Parent, SALIC and SRL, (d)
the Net Worth Maintenance Agreement between the Parent, SALIC and Scottish Re
Life Corporation, a Delaware corporation, dated as of January 1, 2004, (e) the
Net Worth Maintenance Agreement between SALIC and Scottish Re Life (Bermuda)
Limited, a company formed under the laws of Bermuda, dated as of December 31,
2004, and (f) similar net worth maintenance agreements entered into by the
Parent or any of its Subsidiaries in favor of a wholly-owned Insurance
Subsidiary which are required by the Governmental Authority regulating such
Insurance Subsidiary or by a rating agency rating the financial strength of such
Insurance Subsidiary,
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provided such agreements are no more onerous than the Keep Well Agreement
described in clause (b) above.
"Lease" means any lease of real property to which any Loan Party or
any of its Subsidiaries is a party as lessor or lessee.
"Lender" has the meaning specified therefor in the preamble hereto.
"Lien" means any mortgage, deed of trust, pledge, lien (statutory or
otherwise), security interest, charge or other encumbrance or security or
preferential arrangement of any nature, including, without limitation, any
conditional sale or title retention arrangement, any Capitalized Lease and any
assignment, deposit arrangement or financing lease intended as, or having the
effect of, security.
"Loans" means, collectively, the loans made by the Lenders to the
Borrower on or after the Effective Date pursuant to Section 2.01 or, in the
context of an individual Lender, any loan made by such Lender to the Borrower on
or after the Effective Date pursuant to Section 2.01.
"Loan Document" means this Agreement, the Intercreditor Deed, any
Guaranty, any Security Document, any UCC Filing Authorization Letter and any
other agreement, instrument, and other document executed and delivered pursuant
hereto or thereto or otherwise evidencing or securing the Loan or any other
Obligation.
"Loan Parties" means the Borrower, the Parent and each other
Guarantor.
"Material Adverse Change" means a material adverse change (or any
circumstance or condition that could reasonably be expected to result in a
material adverse change) with respect to the Parent and its Subsidiaries and the
Borrower and its Subsidiaries, in each case taken as a whole, or the condition,
financial or otherwise, business, operations, assets, liabilities or prospects
of the Parent and its Subsidiaries and the Borrower and its Subsidiaries, in
each case taken as a whole, from that set forth in the Parent's Financial
Statements, other than any of the following: (1) a downgrade by Standard &
Poor's, Moody's, Fitch or A.M. Best of the financial strength rating of the
Borrower to any level at or above "CCC" (in the case of Standard & Poor's or
Fitch), "Caa2" (in the case of Moody's) or "C" (in the case of A.M. Best), (2)
any securities litigation, investigation or proceeding (in each case relating to
the Parent's financial reports or SEC filings), or any development pertaining to
any litigation, investigation or proceeding pending as of the date of the
Commitment Letter, (3) the existence of any liquidity strain of either the
Parent or the Borrower, (4) any adverse change or effect that is caused by or
that arises out of conditions affecting the life reinsurance industry or
financial markets generally, including, without limitation, changes in
applicable law or accounting principles, and any general economic, market or
political conditions (including changes in interest rates) and conditions caused
by natural catastrophes, acts of war, hostility or terrorism or other force
majeure events, (5) any non-cash charges to earnings (e.g., valuation allowance
on deferred assets), (6) any recapture, claim or dispute under any ceding or
assuming reinsurance agreement to which any Insurance Subsidiary is a party, (7)
any disruption or delay in the sale process being pursued by the Parent, (8) any
governmental or regulatory investigation relating to the matters
-13-
described in the Parent's 2006 annual report on Form 10-K or other prior SEC
filings, (9) any change in the market value of the equity in the Parent, and
(10) any material adverse change (or any circumstance or condition that could
reasonably be expected to result in a material adverse change) of which the
Lender had knowledge as of the date of the Commitment Letter, in each case as
reasonably determined by the Lender.
"Material Adverse Effect" means a material adverse effect on any of
(i) the operations, business, assets, properties, condition (financial or
otherwise), results of operations or prospects of the Parent, the Borrower or
any material Subsidiary or the Parent and its Subsidiaries taken as a whole,
(ii) the ability of any Credit Party to perform any of its obligations under any
Loan Document to which it is a party, (iii) the legality, validity or
enforceability of this Agreement or any other Loan Document, (iv) the rights and
remedies of the Agent or any Lender under any Loan Document, or (v) the
validity, perfection or priority of a Lien in favor of the Agent for the benefit
of the Lenders on any of the Required Collateral.
"Material Contract" means all of the material contracts of the Parent
and its Subsidiaries that are required to be described in the Parent's SEC
Reports.
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc. and any successor
thereto.
"Multiemployer Plan" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA to which any Loan Party or any of its ERISA
Affiliates has contributed to, or has been obligated to contribute, at any time
during the preceding six (6) years.
"Net Worth" means the Shareholders' Equity of the Parent or the
Borrower, as the case may be, calculated in accordance with GAAP, as adjusted
for preferred shares, but excluding accumulated other comprehensive income, fair
value of embedded derivatives (net) and any change in the valuation allowance
with respect to deferred tax assets, provided that Net Worth shall be adjusted
to exclude the effects of cessions or retrocessions by the Borrower or any
Insurance Subsidiary of more than $50,000,000 of cumulative insurance or
reinsurance losses and loss expenses in reinsurance or retrocession transactions
entered into after the date hereof with the primary purpose of enhancing the
capital, surplus or liquidity of the Borrower or any Insurance Subsidiary.
"New Lending Office" has the meaning specified therefor in Section
2.07(d).
"Non-Cumulative Perpetual Preferred Shares" means the Non-Cumulative
Perpetual Preferred Shares of Parent, issued on June 28, 2005.
"Non-U.S. Lender" has the meaning specified therefor in Section
2.07(d).
"Obligations" means all present and future indebtedness, obligations,
and liabilities of each Loan Party to the Agent and the Lenders arising under
the Loan Documents, whether or not the right of payment in respect of such claim
is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
disputed, undisputed, legal, equitable, secured, unsecured, and whether or not
such claim is discharged, stayed or otherwise affected by any proceeding
referred to in Section 8.01. Without limiting the generality of the foregoing,
the Obligations of each Loan Party under the Loan Documents include (a) the
obligation to pay
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principal, interest, charges, expenses, fees, attorneys' fees and disbursements,
indemnities and other amounts payable by such Person under the Loan Documents,
and (b) the obligation of such Person to reimburse any amount in respect of any
of the foregoing that the Agent or any Lender (in its sole discretion) may elect
to pay or advance on behalf of such Person.
"Operating Lease Obligations" means all obligations for the payment of
rent for any real or personal property under leases or agreements to lease,
other than Capitalized Lease Obligations.
"Other Taxes" has the meaning specified therefor in Section 2.07(b).
"Parent" has the meaning specified therefor in the preamble hereto.
"Parent Consolidated Indebtedness" means, as of any date of
determination, for the Parent and its Subsidiaries on a consolidated basis, the
sum of (a) the outstanding principal amount of all obligations, whether current
or long-term, for borrowed money (including Obligations hereunder) and all
obligations evidenced by bonds, debentures, notes, loan agreements or other
similar instruments, (b) all purchase money Indebtedness, (c) all direct
obligations arising under letters of credit (including standby and commercial)
which have been drawn but not reimbursed by the Person for whose account such
letter of credit was issued, bankers' acceptances, bank guaranties, surety bonds
and similar instruments, (d) all obligations in respect of the deferred purchase
price of property or services (other than trade accounts payable in the ordinary
course of business), (e) Attributable Indebtedness in respect of capital leases
and Synthetic Lease Obligations and Swap Termination Value, (f) without
duplication, all Contingent Obligations with respect to outstanding Indebtedness
of the types specified in clauses (a) through (e) above of Persons other than
its Subsidiaries, (g) the drawn portion of the Funding Agreement between the
Borrower and Stingray Investor Trust and (h) all Indebtedness of the types
referred to in clauses (a) through (g) above of any partnership or joint venture
(other than a joint venture that is itself a corporation or limited liability
company) in which the Parent or one of its Subsidiaries is a general partner or
joint venturer, unless such Indebtedness is expressly made non-recourse to the
Parent or such Subsidiary; provided, however, the obligations of the Parent or
any of its Subsidiaries under funding agreements other than as set forth in
clause (g) above and under the Keep Well Agreements shall be excluded for
purposes of calculating Parent Consolidated Indebtedness.
"Parent Debt to Capitalization Ratio" means the ratio of (a) Parent
Consolidated Indebtedness to (b) the sum of Parent Consolidated Indebtedness
plus Parent Net Worth.
"Participant Register" has the meaning specified therefor in Section
11.07(g).
"Payment Office" means the Agent's office located at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ (10171,) or at such other office or offices of
the Agent as may be designated in writing from time to time by the Agent to the
Borrower.
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
thereto.
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"Permitted Indebtedness" means:
(a) any Indebtedness owing to the Agent and any Lender under this
Agreement and the other Loan Documents;
(b) any other Indebtedness listed on Schedule 1.01(B), and the
extension of maturity, refinancing or modification of the terms thereof;
provided, however, that (i) such extension, refinancing or modification is
pursuant to terms that are not less favorable to the Parent or its Subsidiaries
that are the obligor(s) thereunder and the Lenders than the terms of the
Indebtedness being extended, refinanced or modified and (ii) after giving effect
to such extension, refinancing or modification, the maximum amount of such
Indebtedness permitted to be incurred under the extension, refinancing or
modification is not greater than the maximum amount of Indebtedness permitted to
be incurred immediately prior to such extension, refinancing or modification;
(c) Indebtedness permitted by clause (f) of the definition of
"Permitted Lien";
(d) Indebtedness permitted under Section 7.02(e);
(e) Indebtedness in respect of funding agreements issued by Insurance
Subsidiaries after the Effective Date in favor of the Stingray Investor Trust up
to an aggregate principal amount not to exceed $15,000,000;
(f) Indebtedness for standby letters of credit issued pursuant to a
letter of credit facility in effect on the Effective Date and listed on Schedule
1.01(B) (and any renewal, extension or replacement thereof so long as the
maximum amount available thereunder is not increased);
(g) Indebtedness under the Keep Well Agreements; and
(h) Indebtedness not otherwise permitted hereunder in an aggregate
principal amount not to exceed $10,000,000 at any time outstanding.
"Permitted Investments" means (i) marketable direct obligations issued
or unconditionally guaranteed by the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case, maturing within six months from the date of acquisition thereof; (ii)
commercial paper, maturing not more than (270) days after the date of issue
rated P-1 by Moody's and A-1 by Standard & Poor's; (iii) certificates of deposit
maturing not more than (270) days after the date of issue, issued by commercial
banking institutions and money market or demand deposit accounts maintained at
commercial banking institutions, each of which is a member of the Federal
Reserve System and has a combined capital and surplus and undivided profits of
not less than $500,000,000; (iv) repurchase agreements having maturities of not
more than (90) days from the date of acquisition which are entered into with
major money center banks included in the commercial banking institutions
described in clause (iii) above and which are secured by readily marketable
direct obligations of the United States Government or any agency thereof, (v)
money market accounts maintained with mutual funds having assets in excess of
$2,500,000,000; and (vi) tax exempt securities rated A or higher by Moody's and
A+ or higher by Standard & Poor's.
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"Permitted Liens" means:
(a) Liens securing the Obligations;
(b) Liens for taxes, assessments and governmental charges the payment
of which is not required under Section 7.01(d)(i);
(c) Liens imposed by law, such as carriers', warehousemen's,
mechanics', materialmen's and other similar Liens arising in the ordinary course
of business and securing obligations (other than Indebtedness for borrowed
money) that are not overdue by more than (30) days or are being contested in
good faith and by appropriate proceedings promptly initiated and diligently
conducted, and a reserve or other appropriate provision, if any, as shall be
required by GAAP shall have been made therefor;
(d) customary liens in favor of a securities intermediary or
depository bank arising pursuant to account maintenance agreements and securing
only fees and expenses thereunder;
(e) Liens described on Schedule 1.01(C), but not the extension of
coverage thereof to other property or the extension of maturity, refinancing or
other modification of the terms thereof or the increase of the maximum amount of
Indebtedness to be secured thereby;
(f) (i) purchase money Liens on equipment acquired or held by any Loan
Party or any of its Subsidiaries in the ordinary course of its business to
secure the purchase price of such equipment or Indebtedness incurred solely for
the purpose of financing the acquisition of such equipment or (ii) Liens
existing on such equipment at the time of its acquisition; provided, however,
that (A) no such Lien shall extend to or cover any other property of any Loan
Party or any of its Subsidiaries, (B) the principal amount of the Indebtedness
secured by any such Lien shall not exceed the lesser of 80% of the fair market
value or the cost of the property so held or acquired and (C) the aggregate
principal amount of Indebtedness secured by any or all such Liens shall not
exceed at any one time outstanding $10,000,000;
(g) deposits and pledges of cash securing (i) obligations incurred in
respect of workers' compensation, unemployment insurance or other forms of
governmental insurance or benefits, (ii) the performance of bids, tenders,
leases, contracts (other than for the payment of money) and statutory
obligations or (iii) obligations on surety or appeal bonds, but only to the
extent such deposits or pledges are made or otherwise arise in the ordinary
course of business and secure obligations not past due;
(h) Liens granted by an Insurance Subsidiary in connection with trust
or other security arrangements pursuant to reinsurance and retrocession
agreements entered into in the ordinary course of business;
(i) easements, zoning restrictions and similar encumbrances on real
property and minor irregularities in the title thereto that do not (i) secure
obligations for the payment of money or (ii) materially impair the value of such
property or its use by any Loan Party or any of its Subsidiaries in the normal
conduct of such Person's business; and
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(j) Liens not otherwise permitted hereunder provided that the
aggregate maximum amount of the obligations secured thereby does not exceed
$5,000,000 at any time.
"Perpetual Preferred Stock" means preferred stock issued from time to
time by the Parent which preferred stock is not redeemable at the option of the
holder thereof.
"Person" means an individual, corporation, limited liability company,
partnership, association, joint-stock company, trust, unincorporated
organization, joint venture or other enterprise or entity or Governmental
Authority.
"Plan" means any Employee Plan or Multiemployer Plan.
"Pledged Subsidiary" means each of SAC, SALIC, SRH, SHBB, SHI, SAIL,
SRE, SCRM, SHBM, SRD, SRIB, SRL and ▇▇▇▇▇.
"Post-Default Rate" means a rate of interest per annum equal to the
rate of interest otherwise in effect from time to time pursuant to the terms of
this Agreement plus 2%, or, if a rate of interest is not otherwise in effect,
interest at the highest rate specified herein for the Loan then outstanding
prior to an Event of Default plus 2%.
"Pro Rata Share" means the percentage obtained by dividing (i) the
unpaid principal amount of such Lender's portion of the Loan, by (ii) the
aggregate unpaid principal amount of the Loan.
"Quarterly Statements" means, with respect to any Person that is an
Insurance Subsidiary, the quarterly statutory financial statement required to be
filed with the Insurance Department (or similar Governmental Authority) of such
Person's jurisdiction of domicile, together with all exhibits or schedules filed
therewith prepared in conformity with SAP.
"Reference Bank" means JPMorgan Chase Bank, its successors or any
other commercial bank designated by the Agent from time to time.
"Reference Rate" means the rate of interest publicly announced by the
Reference Bank in New York, New York from time to time as its reference rate,
base rate or prime rate. The reference rate, base rate or prime rate is
determined from time to time by the Reference Bank as a means of pricing some
loans to its borrowers and neither is tied to any external rate of interest or
index nor necessarily reflects the lowest rate interest actually charged by the
Reference Bank to any particular class or category of customers. Each change in
the Reference Rate shall be effective from and including the date such change is
publicly announced as being effective.
"Register" has the meaning specified therefor in Section 11.07(d).
"Registered Loan" has the meaning specified therefor in Section
11.07(d).
"Regulation T", "Regulation U" and "Regulation X" mean, respectively,
Regulations T, U and X of the FRS Board or any successor, as the same may be
amended or supplemented from time to time.
-18-
"Related Fund" means, with respect to any Person, an Affiliate of such
Person, or a fund or account managed by such Person or an Affiliate of such
Person.
"Release" means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, seeping, migrating,
dumping or disposing of any Hazardous Material (including the abandonment or
discarding of barrels, containers and other closed receptacles containing any
Hazardous Material) into the indoor or outdoor environment, including, without
limitation, the movement of Hazardous Materials through or in the ambient air,
soil, surface or ground water, or property.
"Remedial Action" means all actions taken to (i) clean up, remove,
remediate, contain, treat, monitor, assess, evaluate or in any other way address
Hazardous Materials in the indoor or outdoor environment; (ii) prevent or
minimize a Release or threatened Release of Hazardous Materials so they do not
migrate or endanger or threaten to endanger public health or welfare or the
indoor or outdoor environment; (iii) perform pre-remedial studies and
investigations and post-remedial operation and maintenance activities; or (iv)
perform any other actions authorized by (42) U.S.C. ss. (9601.)
"Reportable Event" means an event described in Section 4043 of ERISA
(other than an event not subject to the provision for 30-day notice to the PBGC
under the regulations promulgated under such Section).
"Required Collateral" means (1) the Capital Stock of (x) the Borrower
and (y) each other Pledged Subsidiary; (2) obligations payable by any Subsidiary
of the Parent to the Parent, the Borrower or any other Security Party, to the
extent such collateral is not Restricted Property; (3) all securities, such as
preferred stock and subordinated notes, held by the Parent or any of its
Subsidiaries in Orkney Re II plc and all Equity Interests in SPV Holding
Ballantyne I and SPV Holding Ballantyne II, and (4) all unencumbered cash and
investment accounts of any Security Party designated as "Required Collateral" on
Schedule 6.01(u), together with all cash and investments on deposit therein from
time to time.
"Required Lenders" means Lenders whose Pro Rata Share aggregate at
least 51%.
"Restricted Action" means an action by the Parent or any Subsidiary
that (a) would result in a violation of applicable capital requirements,
including requirements for broker/dealers, insurance laws or regulations or
insurance license terms or conditions at the time in effect if taken without
regulatory consent which has not been obtained, or (b) would result in a breach
of or default under any third party agreement at the time in effect and existing
on the Effective Date, provided that an action will not constitute a Restricted
Action unless reasonable efforts have been made to obtain necessary regulatory
or other third party consents for such action.
"Restricted Payments" has the meaning specified therefor in Section
7.02(h).
"Restricted Property" means property of the Parent or any Subsidiary
of the Parent, real or personal, tangible or intangible, in which the creation
of a security interest, pledge or lien in favor of the Agent for the benefit of
the Lenders (a) would result in a violation of applicable capital requirements,
including requirements for broker/dealers, insurance laws or
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regulations or insurance license terms or conditions at the time in effect, (b)
can be effected only pursuant to regulatory consent and such consent, in the
reasonable commercial judgment of the Loan Parties, cannot be obtained without
material detriment to the Parent or any of its Subsidiaries or (c) is subject to
a Lien (other than a Lien arising by operation of law) in effect and existing on
the Effective Date in favor of any Person (other than the Agent for the benefit
of the Lenders) and the consent of such Person (if required) has not been
obtained; provided that neither the Capital Stock of the direct Subsidiaries of
the Parent or Borrower nor any Property described in clause (4) of the
definition of Required Collateral will under any circumstances constitute
Restricted Property.
"SAC" means The Scottish Annuity Company (Cayman) Ltd., an exempted
company incorporated in the Cayman Islands with limited liability.
"SAIL" means Scottish Annuity & Life International Insurance Company
(Bermuda) Ltd., a corporation incorporated and existing under the laws of
Bermuda..
"▇▇▇▇▇" means Scottish Annuity & Life Insurance Company (Bermuda)
Limited, a corporation incorporated and existing under the laws of Bermuda..
"SALIC" has the meaning specified therefor in the preamble.
"SAP" means the statutory accounting practices prescribed or permitted
by the Department of Insurance or other similar Governmental Authority in such
Insurance Subsidiary's domicile for the preparation of annual statements and
other financial reports by insurance companies of the same type as such
Insurance Subsidiary.
"SEC" means the Securities and Exchange Commission or any other
similar or successor agency of the Federal government administering the
Securities Act.
"SEC Reports" means the filings with the SEC of the Parent and its
Subsidiaries on Forms 10-K, 10-Q or 8-K pursuant to the Exchange Act.
"Securities Act" means the Securities Act of 1933, as amended, or any
similar Federal statute, and the rules and regulations of the SEC thereunder,
all as the same shall be in effect from time to time.
"Securities Purchase Agreement" means the Securities Purchase
Agreement, dated as of November 26, 2006, among the Parent, MassMutual Capital
Partners LLC and SRGL Acquisition, LLC, as amended, modified or waived from time
to time in accordance with the terms thereof.
"Security Documents" means the following, each in form satisfactory to
the Agent and sufficient to grant a perfected security interest in the
Collateral described therein (and with the priority described therein) under
applicable laws to which such Collateral, or the pledge of such Collateral, may
be subjected: (a) the documents listed on Schedule 5.01(b)(i), (b) any security
documents required to be delivered pursuant to Section 7.01(c) or Section
7.01(d), and (c) any other document entered into by the Parent or any of its
Subsidiaries or any other Person creating or evidencing security for all or any
part of the Obligations under the Loan Documents.
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"Security Party" means the Parent or any Subsidiary of the Parent that
is a grantor under a Security Document.
"Shareholders' Equity" or "Shareholder's Equity" means, as to any
Person as of any date of determination, the consolidated shareholders' equity of
such Person and its Subsidiaries as of that date determined in accordance with
GAAP.
"SHBB" means Scottish Holdings (Barbados) Ltd., a limited liability
company incorporated and existing under the laws of Barbados.
"SHBM" means Scottish Annuity & Life Holdings (Bermuda) Limited, a
corporation incorporated and existing under the laws of Bermuda.
"SHI" means Scottish Holdings, Inc., a Delaware corporation.
"SRCM" means Scottish Re Capital Markets, Inc., a Delaware
corporation.
"SRE" means Scottish Re (U.S.), Inc., a Delaware corporation.
"SRD" means Scottish Re (Dublin) Limited, a private limited liability
company incorporated and existing under the laws of Ireland.
"SRH" means Scottish Re Holdings Limited, a company organized under
the laws of England and Wales.
"SRIB" means Scottish Re International (Bermuda) Ltd., a corporation
incorporated and existing under the laws of Bermuda..
"SRL" means Scottish Re Limited, a company organized under the laws of
England and Wales.
"SRLC" means Scottish Re Life Corporation, a Delaware corporation.
"Standard & Poor's" means Standard & Poor's Ratings Services, a
division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc. and any successor thereto.
"Subsidiary" means, with respect to any Person at any date, any
corporation, limited or general partnership, limited liability company, trust,
estate, association, joint venture or other business entity (i) the accounts of
which would be consolidated with those of such Person in such Person's
consolidated financial statements if such financial statements were prepared in
accordance with GAAP or (ii) of which more than 50% of (A) the outstanding
Capital Stock having (in the absence of contingencies) ordinary voting power to
elect a majority of the Board of Directors or other managing body of such
Person, (B) in the case of a partnership or limited liability company, the
interest in the capital or profits of such partnership or limited liability
company or (C) in the case of a trust, estate, association, joint venture or
other entity, the beneficial interest in such trust, estate, association or
other entity business is, at the time of determination, owned or controlled
directly or indirectly through one or more intermediaries, by
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such Person. For purposes of this Agreement, Orkney Holdings, LLC, Orkney Re,
Inc., Orkney Re II plc and Ballantyne Re plc shall not be deemed Subsidiaries of
the Parent.
"Swap Contract" means (a) any and all rate swap transactions, basis
swaps, credit derivative transactions, forward rate transactions, commodity
swaps, commodity options, forward commodity contracts, equity or equity index
swaps or options, bond or bond price or bond index swaps or options or forward
bond or forward bond price or forward bond index transactions, interest rate
options, forward foreign exchange transactions, cap transactions, floor
transactions, collar transactions, currency swap transactions, cross-currency
rate swap transactions, currency options, spot contracts, or any other similar
transactions or any combination of any of the foregoing (including any options
to enter into any of the foregoing), whether or not any such transaction is
governed by or subject to any master agreement, and (b) any and all transactions
of any kind, and the related confirmations, which are subject to the terms and
conditions of, or governed by, any form of master agreement published by the
International Swaps and Derivatives Association, Inc., any International Foreign
Exchange Master Agreement, or any other master agreement (any such master
agreement, together with any related schedules, a "Master Agreement"), including
any such obligations or liabilities under any Master Agreement.
"Swap Termination Value" means, in respect of any one or more Swap
Contracts, after taking into account the effect of any legally enforceable
netting agreement relating to such Swap Contracts, (a) for any date on or after
the date such Swap Contracts have been closed out and termination value(s)
determined in accordance therewith, such termination value(s), and (b) for any
date prior to the date referenced in clause (a), the amount(s) determined as the
▇▇▇▇-to-market value(s) for such Swap Contracts, as determined based upon one or
more mid-market or other readily available quotations provided by any recognized
dealer in such Swap Contracts (which may include a Lender or any Affiliate of a
Lender).
"Synthetic Lease Obligation" means the monetary obligation of a Person
under (a) a so-called synthetic, off-balance sheet or tax retention lease, or
(b) an agreement for the use or possession of property creating obligations that
do not appear on the balance sheet of such Person but which, upon the insolvency
or bankruptcy of such Person, would be characterized as the indebtedness of such
Person (without regard to accounting treatment).
"Taxes" has the meaning specified therefor in Section 2.07(a).
"Termination Event" means (i) a Reportable Event with respect to any
Employee Plan, (ii) any event that causes any Loan Party or any of its ERISA
Affiliates to incur liability under Section 409, 502(i), 502(l), 515, 4062,
4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or Section 4971 or 4975 of the
Internal Revenue Code, (iii) the filing of a notice of intent to terminate an
Employee Plan or the treatment of an Employee Plan amendment as a termination
under Section 4041 of ERISA, (iv) the institution of proceedings by the PBGC to
terminate an Employee Plan, or (v) any other event or condition which might
constitute grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Employee Plan.
"Total Commitment" means the sum of the Commitments.
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"Transferable Net Cash Proceeds" means, (i) with respect to any
Disposition by the Parent or any of its Subsidiaries, the amount of cash
received (directly or indirectly) from time to time (whether as initial
consideration or through the payment or disposition of deferred consideration)
by or on behalf of the Parent or any of its Subsidiaries, in connection
therewith after deducting therefrom only (A) the amount of any Indebtedness
secured by any Lien permitted by Section 7.02(a) on any asset (other than
Indebtedness assumed by the purchaser of such asset) which is required to be,
and is, repaid in connection with such Disposition (other than Indebtedness
under this Agreement), (B) reasonable expenses related thereto incurred by the
Parent or any of its Subsidiaries in connection therewith, (C) transfer taxes
and/or withholding taxes paid to any taxing authorities by or on behalf of the
Parent or any of its Subsidiaries in connection therewith or in connection with
the transfer of such amounts to the Borrower, and (D) net income taxes (or
franchise taxes in lieu thereof) actually paid by or on behalf of the Parent or
any of its Subsidiaries in connection with such Disposition (after taking into
account any tax credits or deductions and any tax sharing arrangements) and (ii)
with respect to the issuance or incurrence of any Indebtedness by any Person or
any of its Subsidiaries, or the sale or issuance by the Parent or any of its
Subsidiaries of any shares of its Capital Stock, the aggregate amount of cash
received (directly or indirectly) from time to time (whether as initial
consideration or through the payment or disposition of deferred consideration)
by the Parent or any of its Subsidiaries in connection therewith, after
deducting therefrom only (A) reasonable expenses related thereto incurred by the
Parent or any of its Subsidiaries in connection therewith, (B) transfer taxes
and/or withholding taxes actually paid by or on behalf of the Parent or any of
its Subsidiaries in connection therewith or in connection with the transfer of
such amounts to the Borrower and (C) net income taxes (or franchise taxes in
lieu thereof) to be paid in connection therewith (after taking into account any
tax credits or deductions and any tax sharing arrangements); in each case of
clause (i) and (ii) to the extent, but only to the extent, that (A) the amounts
so deducted are (x) actually paid to a Person that, except in the case of
reasonable out-of-pocket expenses, is not an Affiliate of the Parent or any of
its Subsidiaries and (y) properly attributable to such transaction or to the
asset that is the subject thereof, and (B) the balance remaining may be
transferred (by dividend, loan or otherwise) to the Borrower without violating
any contractual, regulatory, or rating agency restrictions binding upon the
entity receiving such balance.
"Transferee" has the meaning specified therefor in Section 2.07(a).
"UCC Filing Authorization Letter" means a letter duly executed by each
Credit Party authorizing the Agent to file appropriate financing statements on
Form UCC-1 without the signature of such Credit Party in such office or offices
as may be necessary or, in the opinion of the Agent, desirable to perfect the
security interests purported to be created by each Security Document.
"Uniform Commercial Code" has the meaning specified therefor in
Section (1.03.)
"Unused Line Fee" means a fee equal to 0.50% per annum of the unused
portion of the Loan, payable monthly in arrears on the first day of each month
following the Effective Date.
"WARN" has the meaning specified therefor in Section 6.01(y).
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Section (1.02) Terms Generally. The definitions of terms herein shall
apply equally to the singular and plural forms of the terms defined. Whenever
the context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without limitation". The word "will"
shall be construed to have the same meaning and effect as the word "shall".
Unless the context requires otherwise, (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any Person shall be construed to include such Person's successors and
assigns, (c) the words "herein", "hereof" and "hereunder", and words of similar
import, shall be construed to refer to this Agreement in its entirety and not to
any particular provision hereof, (d) all references herein to Articles,
Sections, Exhibits and Schedules shall be construed to refer to Articles and
Sections of, and Exhibits and Schedules to, this Agreement and (e) the words
"asset" and "property" shall be construed to have the same meaning and effect
and to refer to any right or interest in or to assets and properties of any kind
whatsoever, whether real, personal or mixed and whether tangible or intangible.
References in this Agreement to "determination" by the Agent include good faith
estimates by the Agent (in the case of quantitative determinations) and good
faith beliefs by the Agent (in the case of qualitative determinations).
Section (1.03) Accounting and Other Terms. Unless otherwise expressly
provided herein, each accounting term used herein shall have the meaning given
it under GAAP applied on a basis consistent with those used in preparing the
Financial Statements. All terms used in this Agreement which are defined in
Article 8 or Article 9 of the Uniform Commercial Code as in effect from time to
time in the State of New York (the "Uniform Commercial Code") and which are not
otherwise defined herein shall have the same meanings herein as set forth
therein, provided that terms used herein which are defined in the Uniform
Commercial Code as in effect in the State of New York on the date hereof shall
continue to have the same meaning notwithstanding any replacement or amendment
of such statute except as the Agent may otherwise determine.
Section (1.04) Time References. Unless otherwise indicated herein, all
references to time of day refer to Eastern Standard Time or Eastern daylight
saving time, as in effect in New York City on such day. For purposes of the
computation of a period of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
means "to but excluding"; provided, however, that with respect to a computation
of fees or interest payable to the Agent or any Lender, such period shall in any
event consist of at least one full day.
ARTICLE II
THE LOAN
Section (2.01) Commitments.
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(a) Subject to the terms and conditions and relying upon the
representations and warranties herein set forth, each Lender severally agrees to
make, in up to four separate draws, a Loan to the Borrower, directly or through
the Agent, in an aggregate principal amount not to exceed the amount of such
Lender's Commitment.
(b) Notwithstanding the foregoing, the aggregate principal amount of
the Loans shall not exceed the Total Commitment. Any principal amount of the
Loans which is repaid or prepaid may not be reborrowed.
Section (2.02) Draws; Making the Loan.
(a) The Borrower may borrow up to the entire remaining principal
amount of the Commitments, provided that
(i) the Borrower has delivered written notice in the form of
Exhibit G attached hereto (a "Draw Notice"), to the Agent at least two Business
Days prior to the date of any draw (a "Draw Date") specifying the Draw Date and
certifying that the conditions specified in Section 5.02 have been satisfied;
(ii) after the initial Draw Date, any subsequent Draw Date shall
occur no sooner than the week following the week in which the prior Draw Date
occurred; and
(iii) any draw shall be in a principal amount not less than
$25,000,000 and no greater than the aggregate remaining available Commitments.
(b) Except as otherwise provided in this subsection 2.02(b), the Loans
shall be made by the Lenders simultaneously in proportion to the amounts of
their respective Commitments, it being understood that no Lender shall be
responsible for any default by any other Lender in that other Lender's
obligations to make a Loan requested hereunder, nor shall the Commitment of any
Lender be increased or decreased as a result of the default by any other Lender
in that other Lender's obligation to make a Loan requested hereunder, and each
Lender shall be obligated to make the Loans required to be made by it by the
terms of this Agreement regardless of the failure by any other Lender.
Section (2.03) Repayment of Loan; Evidence of Debt.
(a) The outstanding principal of the Loan shall be repaid in full on
the Final Maturity Date.
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(b) Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing the Indebtedness of the Borrower to such
Lender resulting from the Loan made by such Lender, including the amounts of
principal and interest payable and paid to such Lender from time to time
hereunder.
(c) The Agent shall maintain accounts in which it shall record (i) the
amount of each Lender's Loan made hereunder, (ii) the amount of any principal or
interest due and payable or to become due and payable from the Borrower to each
Lender hereunder and (iii) the amount of any sum received by the Agent hereunder
for the account of the Lenders and each Lender's share thereof.
(d) The entries made in the accounts maintained pursuant to paragraph
(b) or (c) of this Section shall be prima facie evidence of the existence and
amounts of the obligations recorded therein; provided that the failure of any
Lender or the Agent to maintain such accounts or any error therein shall not in
any manner affect the obligation of the Borrower to repay the Loan in accordance
with the terms of this Agreement.
(e) Any Lender may request that the Loan made by it be evidenced by a
promissory note. In such event, the Borrower shall execute and deliver to such
Lender a promissory note payable to the order of such Lender (or, if requested
by such Lender, to such Lender and its registered assigns) in a form furnished
by the Agent and reasonably acceptable to the Borrower. Thereafter, the Loan
evidenced by such promissory note and interest thereon shall at all times
(including after assignment pursuant to Section 11.07) be represented by one or
more promissory notes in such form payable to the order of the payee named
therein (or, if such promissory note is a registered note, to such payee and its
registered assigns).
Section (2.04) Interest.
(a) Loans. The Loans shall bear interest on the principal amount
thereof from time to time outstanding, from the initial Draw Date until paid in
full, at the applicable rate set forth opposite the corresponding senior
unsecured credit rating of the Parent, as follows:
----------------------------------------------------------------------
Standard and Poor's/▇▇▇▇▇'▇
senior unsecured credit rating for the Parent Interest Rate
----------------------------------------------------------------------
BB-/Ba3 or less 18%
----------------------------------------------------------------------
BB/Ba2 17%
----------------------------------------------------------------------
BB+/Ba1 15%
----------------------------------------------------------------------
BBB-/Baa3 13%
----------------------------------------------------------------------
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----------------------------------------------------------------------
BBB/Baa2 12%
----------------------------------------------------------------------
BBB+/Baa1 11%
----------------------------------------------------------------------
A-/A3 or more 10%
----------------------------------------------------------------------
In the case of a split rating, the lower of the two ratings shall apply.
(b) Default Interest. To the extent permitted by law, upon the
occurrence and during the continuance of an Event of Default, the principal of,
and all accrued and unpaid interest on, the Loans, and all other outstanding
Obligations of the Loan Parties under this Agreement and the other Loan
Documents, shall bear interest, from the date such Event of Default occurred
until the date such Event of Default is cured or waived in writing in accordance
herewith, at a rate per annum equal at all times to the Post-Default Rate.
(c) Interest Payment. Interest on the Loan shall be payable in cash,
monthly, in arrears, on the first Business Day of each month, commencing on the
first day of the month following the Effective Date and at maturity (whether
upon demand, by acceleration or otherwise). Interest at the Post-Default Rate
shall be payable on demand.
(d) General. All interest shall be computed on the basis of a year of
360 days for the actual number of days, including the first day but excluding
the last day, elapsed.
Section 2.05 Prepayment of Loan.
(a) Optional Prepayment. The Borrower may at any time, upon at least
five (5) Business Days' prior written notice to the Agent, prepay without
penalty or premium the principal of the Loan, in whole or in part. Each
prepayment made pursuant to this clause (a) shall be accompanied by the payment
of accrued interest to the date of such payment on the amount prepaid.
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(b) Mandatory Prepayment.
(i) Immediately upon the first Disposition by any Loan Party or
its Subsidiaries yielding proceeds (with all prior Dispositions effected by the
Loan Parties and their Subsidiaries since the Effective Date) in excess of
$1,000,000 in cash or property, the Borrower shall prepay the outstanding
principal amount of the Loan in an amount equal to 100% of the Transferable Net
Cash Proceeds of such Disposition to the extent of such excess. Thereafter,
immediately upon any Disposition by any Loan Party or its Subsidiaries, the
Borrower shall prepay the outstanding principal amount of the Loan in an amount
equal to 100% of the Transferable Net Cash Proceeds of such Disposition. Nothing
contained in this subsection (i) shall permit any Loan Party or any of its
Subsidiaries to make a Disposition of any property other than in accordance with
Section 7.02(c)(ii).
(ii) Upon the issuance or incurrence by any Loan Party or any of
its Subsidiaries of any Indebtedness (other than Permitted Indebtedness), or the
sale or issuance by any Loan Party or any of its Subsidiaries of any shares of
its Capital Stock (other than any issuance pursuant to the terms of Hybrid
Capital Units or any issuance of the 7.25% Convertible Preferred Shares), the
Borrower shall prepay the outstanding principal amount of the Loan in an amount
equal to 100% of the Transferable Net Cash Proceeds of such issuance, incurrence
or sale. The provisions of this subsection (ii) shall not be deemed to be
implied consent to any such issuance, incurrence or sale otherwise prohibited by
the terms and conditions of this Agreement.
(iii) Upon the receipt by any Loan Party or any of its
Subsidiaries of any Extraordinary Receipts, the Borrower shall prepay the
outstanding principal amount of the Loan in an amount equal to 100% of such
Extraordinary Receipts, net of any reasonable expenses and taxes actually paid
as a result of the receipt of such amount incurred in collecting such
Extraordinary Receipts.
(iv) Upon the receipt by any Loan Party or any of its
Subsidiaries of any distribution of cash in respect of residual interests held
by such Person in outstanding securitization vehicles (including Orkney
Holdings, LLC, Orkney Re, Inc., Orkney Re II, plc and Ballantyne Re plc), the
Borrower shall immediately repay the outstanding principal amount of the Loan in
an amount equal to such cash received net of any reasonable expenses incurred in
enforcing such residual interests and taxes actually paid as a result of the
receipt of such amount.
(c) Change of Control.
(i) In the event of a Change of Control (including, without
limitation, upon any issuance of the 7.25% Convertible Preferred Shares), or
upon the Parent or any Subsidiary's entering into an agreement (other than the
Securities Purchase Agreement) that could reasonably be expected to result in a
Change of Control, then the Borrower shall give prompt written notice thereof to
the Agent for the Lenders, which notice shall be given as far in
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advance of such Change of Control as may be practicable and shall contain a
notice of pre-payment, to occur on a date specified in such notice (which date
shall be upon or prior to the effective date of such Change of Control and, in
any event, not less than 30 days and not more than 75 days after the date of
such notice), of the Loans held by each Lender in full or in part, such
prepayment to be made without premium.
(ii) Any notice of prepayment pursuant to this Section 2.05(c)
shall be accompanied by an Officer's Certificate certifying the particulars of
such Change of Control or expected Change of Control and, in the event that this
notice is triggered by the Parent's or such Subsidiary's entering into an
agreement that is expected to result in a Change of Control, the expected date
of the consummation of such Change of Control. Thereafter, in the case of an
expected Change of Control, the Borrower shall (A) furnish the Agent a
subsequent Officer's Certificate confirming that such agreement is due to be
consummated on a specific date, or (B) (if applicable) promptly notifying of the
termination of any such agreement with respect to such Change of Control prior
to the consummation thereof, in which case, the Borrower's prepayment obligation
shall be deemed to have terminated without any further obligations on the part
of the Borrower with respect to such offer.
(iii) Absent a termination of Borrower's prepayment obligation
pursuant to Section 2.05(c)(ii)(B), the principal amount of each Lender's Loans
shall become due and payable on the date specified in such notice of prepayment,
together with all accrued interest.
(d) Interest and Fees. Any prepayment made pursuant to this Section
2.05 shall be accompanied by accrued interest on the principal amount being
prepaid to the date of prepayment, and if such prepayment would reduce the
amount of the outstanding Loan to zero such prepayment shall be accompanied by
the payment of all fees accrued to such date pursuant to Section 2.06.
(e) Cumulative Prepayments. Except as otherwise expressly provided in
this Section 2.05, payments with respect to any subsection of this Section 2.05
are in addition to payments made or required to be made under any other
subsection of this Section 2.05.
Section 2.06 Fees. The Borrower shall pay the fees set forth in the
Commitment Letter in the amounts and on the dates set forth in the Commitment
Letter, including, without limitation, the following fees:
(a) Closing Fee. Upon the Effective Date, the Borrower shall pay to
the Agent, for the account of the Lenders, the Closing Fee. Such fee is
nonrefundable and deemed fully earned on the Effective Date and is payable on
the Effective Date.
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(b) Unused Line Fee. From and after the Effective Date on the first
day of each calendar month until the date on which all Obligations are paid in
full, the Borrower shall pay to the Agent, for the account of the Lenders, the
Unused Line Fee. Such fee is nonrefundable and deemed fully earned when paid and
shall be payable monthly in arrears on the first day of each month following the
Effective Date and upon maturity (whether upon demand, by acceleration or
otherwise).
Section 2.07 Taxes. (a) Any and all payments by any Loan Party
hereunder or under any other Loan Document shall be made free and clear of and
without deduction for any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto,
excluding taxes imposed on the net income (and franchise taxes in lieu of net
income taxes) of the Agent or any Lender (or any other recipient of such
payment) by the jurisdiction in which such Person is organized or has its
lending office (all such nonexcluded taxes, levies, imposts, deductions, charges
withholdings and liabilities, collectively or individually, "Taxes"). If any
Loan Party shall be required to deduct any Taxes from or in respect of any sum
payable hereunder to the Agent or any Lender, (i) the sum payable shall be
increased by the amount (an "additional amount") necessary so that after making
all required deductions (including deductions applicable to additional sums
payable under this Section 2.07) the Agent or such Lender shall receive an
amount equal to the sum it would have received had no such deductions been made,
(ii) such Loan Party shall make such deductions and (iii) such Loan Party shall
pay the full amount deducted to the relevant Governmental Authority in
accordance with applicable law.
(b) In addition, each Loan Party agrees to pay to the relevant
Governmental Authority in accordance with applicable law any present or future
stamp or documentary taxes or any other excise or property taxes, charges or
similar levies that arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement or any
other Loan Document ("Other Taxes"). Each Loan Party shall deliver to the Agent
and each Lender official receipts in respect of any Taxes or Other Taxes payable
hereunder promptly after payment of such Taxes or Other Taxes.
(c) The Loan Parties hereby jointly and severally indemnify and agree
to hold each Agent and each Lender harmless from and against Taxes and Other
Taxes (including, without limitation, Taxes and Other Taxes imposed on any
amounts payable under this Section 2.07) paid by such Person, whether or not
such Taxes or Other Taxes were correctly or legally asserted. Such
indemnification shall be paid within 10 days from the date on which any such
Person makes written demand therefor specifying in reasonable detail the nature
and amount of such Taxes or Other Taxes, provided that each of the Agent and the
Lenders agrees that it will promptly return to the Loan Parties any refund net
of any reasonable expenses and applicable taxes which in the sole discretion of
the Lender is received in respect of any Taxes or Other Taxes imposed on any
amounts payable under this Section 2.07; provided further, that each Loan Party
agrees to promptly return such refund to the Lender or Agent if it receives
notice from such Lender or Agent that the Lender or Agent is required to repay
such refund.
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Nothing contained herein shall require such Lender or Agent to make its returns
(or any other information relating to its taxes which it deems confidential)
available to any Loan Party.
(d) (i) U.S. Withholding Tax. Each Lender that is organized under the
laws of a jurisdiction outside the United States (a "Non-U.S. Lender") agrees
that it shall, no later than the Effective Date (or, in the case of a Lender
which becomes a party hereto pursuant to Section 11.07 hereof after the
Effective Date, promptly after the date upon which such Lender becomes a party
hereto) deliver to the Borrower (with a copy to the Agent) one properly
completed and duly executed copy of either U.S. Internal Revenue Service Form
▇-▇▇▇▇, ▇-▇▇▇▇ or W-8IMY or any subsequent versions thereof or successors
thereto, in each case claiming complete exemption from, or reduced rate of, U.S.
Federal withholding tax and payments of interest hereunder. In addition, in the
case of a Non-U.S. Lender claiming exemption from U.S. Federal withholding tax
under Section 871(h) or 881(c) of the Internal Revenue Code, such Non-U.S.
Lender hereby represents to the Agent and the Borrower that such Non-U.S. Lender
is not a bank for purposes of Section 881(c) of the Internal Revenue Code, is
not a 10-percent shareholder (within the meaning of Section 871(h)(3)(B) of the
Internal Revenue Code) of the Parent and is not a controlled foreign corporation
related to the Parent (within the meaning of Section 864(d)(4) of the Internal
Revenue Code), and such Non-U.S. Lender agrees that it shall promptly notify the
Agent in the event any such representation is no longer accurate. Such forms
shall be delivered by each Non-U.S. Lender on or before the date it becomes a
party to this Agreement for purposes of Section 2.07 and on or before the date,
if any, such Non-U.S. Lender changes its applicable lending office by
designating a different lending office (a "New Lending Office"). In addition,
such Non-U.S. Lender shall deliver such forms within 20 days after receipt of a
written request therefor from the Borrower or the Agent. Notwithstanding any
other provision of this Section 2.07, a Non-U.S. Lender shall not be required to
deliver any form pursuant to this Section 2.07(d) that such Non-U.S. Lender is
not legally able to deliver.
(ii) Non-U.S. Withholding Tax. If a Lender is entitled to an
exemption from or reduction in the rate of the imposition, deduction or
withholding of any Tax or Other Tax under the laws of any jurisdiction outside
of the United States in which the Borrower (or other Loan Party) is organized or
has an office, or any treaty to which such jurisdiction is a party, with respect
to any payments under this Agreement or any other Loan Document, then the Lender
shall deliver to the Borrower (with a copy to the Agent) and the relevant
Governmental Authority, in the manner and at the time or times prescribed by
applicable law, such properly completed and duly executed documentation
prescribed by applicable law or reasonably requested by the Borrower or the
Agent as will permit such payments to be made without the imposition, deduction
or withholding of such Tax or Other Tax or at a reduced rate of taxation;
provided, that such Lender has not determined in good faith that furnishing such
form could have a material adverse impact on the business or operations of, or a
material unindemnified adverse tax impact or risk thereof, to such Lender.
(e) The Loan Parties shall not be required to indemnify any Lender, or
pay any additional amounts to any Lender, in respect of withholding tax pursuant
to this Section 2.07
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to the extent that (i) the obligation to withhold amounts with respect to such
withholding tax existed on the date such Lender became a party to this Agreement
or, with respect to payments to a New Lending Office, the date such Non-U.S.
Lender designated such New Lending Office with respect to its Loan; provided,
however, that this clause (i) shall not apply to the extent the indemnity
payment or additional amounts any Lender through a New Lending Office, would be
entitled to receive (without regard to this clause (i)) do not exceed the
indemnity payment or additional amounts that the Person making the assignment,
participation or transfer to such Lender making the designation of such New
Lending Office, would have been entitled to receive in the absence of such
assignment, participation, transfer or designation, or (ii) the obligation to
pay such additional amounts would not have arisen but for a failure by such
Lender to comply with the provisions of clause (d) above.
(f) Any Lender or the Agent claiming any indemnity payment or
additional payment amounts payable pursuant to this Section 2.07 shall use
reasonable efforts (consistent with legal and regulatory restrictions) to file
any certificate or document reasonably requested in writing by the Borrower or
to change the jurisdiction of its applicable lending office if the making of
such a filing or change would avoid the need for or reduce the amount of any
such indemnity payment or additional amount that may thereafter accrue, would
not require such Lender or the Agent to disclose any information such Lender or
the Agent deems confidential and would not, in the sole determination of such
Lender or the Agent, be otherwise disadvantageous to such Lender or the Agent.
(g) The obligations of the Loan Parties under this Section 2.07 shall
survive the termination of this Agreement and the payment of the Loan and all
other amounts payable hereunder.
ARTICLE III
Intentionally Left Blank
ARTICLE IV
FEES, PAYMENTS AND OTHER COMPENSATION
Section 4.01 Payments; Computations and Statements. (a) The Borrower
will make each payment under this Agreement not later than 12:00 noon (New York
City time) on the day when due, in lawful money of the United States of America
and in immediately available funds, to the Agent's Account. All payments
received by the Agent after 12:00 noon (New York City time) on any Business Day
will be deemed received on the next succeeding Business Day. All payments shall
be made by the Borrower without set-off, counterclaim, deduction or other
defense to the Agent and the Lenders. After receipt, the Agent will promptly
thereafter cause to be distributed like funds relating to the payment of
principal and interest ratably to the Lenders in accordance with their Pro Rata
Shares and like funds relating to the payment of any other amount
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payable to any Lender to such Lender, in each case to be applied in accordance
with the terms of this Agreement, provided that the Agent will cause to be
distributed all interest and fees received from or for the account of the
Borrower not less than once each month and in any event promptly after receipt
thereof. Whenever any payment to be made under any such Loan Document shall be
stated to be due on a day other than a Business Day, such payment shall be made
on the next succeeding Business Day and such extension of time shall in such
case be included in the computation of interest or fees, as the case may be. All
computations of fees shall be made by the Agent on the basis of a year of 360
days for the actual number of days (including the first day but excluding the
last day) occurring in the period for which such fees are payable. Each
determination by the Agent of an interest rate or fees hereunder shall be
conclusive and binding for all purposes in the absence of manifest error.
(b) The Agent shall provide the Borrower, promptly after the end of
each calendar month, a summary statement (in the form from time to time used by
the Agent) of the amount of interest accrued on the Loan to the Borrower during
such month and the amount and nature of all fees, commissions, expenses and
other Obligations arising or becoming due during such month. All entries on any
such statement shall be presumed to be correct and, thirty (30) days after the
same is sent, shall be final and conclusive absent manifest error.
Section 4.02 Sharing of Payments, Etc. If any Lender shall obtain any
payment (whether voluntary, involuntary, through the exercise of any right of
set-off, or otherwise) on account of any Obligation in excess of its ratable
share of payments on account of similar obligations obtained by all the Lenders,
such Lender shall forthwith purchase from the other Lenders such participations
in such similar obligations held by them as shall be necessary to cause such
purchasing Lender to share the excess payment ratably with each of them;
provided, however, that if all or any portion of such excess payment is
thereafter recovered from such purchasing Lender, such purchase from each Lender
shall be rescinded and such Lender shall repay to the purchasing Lender the
purchase price to the extent of such recovery together with an amount equal to
such Lender's ratable share (according to the proportion of (i) the amount of
such Lender's required repayment to (ii) the total amount so recovered from the
purchasing Lender of any interest or other amount paid by the purchasing Lender
in respect of the total amount so recovered). The Borrower agrees that any
Lender so purchasing a participation from another Lender pursuant to this
Section 4.02 may, to the fullest extent permitted by law, exercise all of its
rights (including the Lender's right of set-off) with respect to such
participation as fully as if such Lender were the direct creditor of the
Borrower in the amount of such participation.
Section 4.03 Apportionment of Payments. Subject to Section 2.02 hereof
and to any written agreement among the Agent and/or the Lenders:
(a) all payments of principal and interest in respect of the
outstanding Loan, and all other payments in respect of the Obligations, other
than fees under Section 2.06, shall be allocated by the Agent among such of the
Lenders as are entitled thereto, in proportion to their respective Pro Rata
Shares or otherwise as provided herein or, in respect of payments not made on
account of the Loan, as designated by the Person making payment when the payment
is made.
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(b) Notwithstanding the preceding paragraph, after the occurrence and
during the continuance of an Event of Default, the Agent may, and upon the
direction of the Required Lenders shall, apply all payments in respect of any
Obligations and all proceeds of the Collateral, subject to the provisions of
this Agreement, (i) first, ratably to pay the Obligations in respect of any
fees, expense reimbursements, indemnities and other amounts then due to the
Agent until paid in full; (ii) second, ratably to pay the Obligations in respect
of any fees and indemnities then due to the Lenders until paid in full; (iii)
third, ratably to pay interest due in respect of the Loan until paid in full;
(iv) fourth, ratably to pay principal of the Loan and Agent Advances until paid
in full; and (v) fifth, to the ratable payment of all other Obligations then due
and payable.
(c) For purposes of Section 4.03(b), "paid in full" with respect to
interest shall include interest accrued after the commencement of any Insolvency
Proceeding irrespective of whether a claim for such interest is allowable in
such Insolvency Proceeding.
(d) In the event of a direct conflict between the priority provisions
of this Section 4.03 and other provisions contained in any other Loan Document,
it is the intention of the parties hereto that both such priority provisions in
such documents shall be read together and construed, to the fullest extent
possible, to be in concert with each other. In the event of any actual,
irreconcilable conflict that cannot be resolved as aforesaid, the terms and
provisions of this Section 4.03 shall control and govern.
Section 4.04 Increased Costs and Reduced Return. (a) If any Lender or
the Agent shall have determined that the adoption or implementation of, or any
change in, any law, rule, treaty or regulation, or any policy, guideline or
directive of, or any change in, the interpretation or administration thereof by,
any court, central bank or other administrative or Governmental Authority, or
compliance by any Lender or the Agent or any Person controlling any such Lender
or the Agent with any directive of, or guideline from, any central bank or other
Governmental Authority or the introduction of, or change in, any accounting
principles applicable to any Lender or the Agent or any Person controlling any
such Lender or the Agent (in each case, whether or not having the force of law)
(each, a "Change in Law"), shall (i) subject such Lender or the Agent or any
Person controlling such Lender or the Agent to any tax, duty or other charge
with respect to this Agreement or the Loan made by such Lender or the Agent or
any L/C Participation by such Lender, or change the basis of taxation to such
Lender or the Agent or any Person controlling such Lender or the Agent of any
amounts payable hereunder (except for taxes on the overall net income of such
Lender or the Agent or any Person controlling such Lender or the Agent and Taxes
or Other Taxes covered by Section 2.07), (ii) impose, modify or deem applicable
any reserve, special deposit or similar requirement against the Loan, or against
assets of or held by, or deposits with or for the account of, or credit extended
by, such Lender or the Agent or any Person controlling such Lender or the Agent
or (iii) impose on such Lender or the Agent or any Person controlling such
Lender or the Agent any other condition regarding this Agreement or the Loan or
L/C Participation, and the result of any event referred to in clauses (i), (ii)
or (iii) above shall be to increase the cost to such Lender or the Agent of
making the Loan, or agreeing to make the Loan or of acquiring or holding any L/C
Participation, or to reduce any amount received or receivable by such Lender or
the Agent hereunder, then,
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upon demand by any such Lender or the Agent, the Borrower shall pay to such
Lender or the Agent such additional amounts as will compensate such Lender or
the Agent for such increased costs or reductions in amount.
(b) If any Lender or the Agent shall have determined that any Change
in Law either (i) affects or would affect the amount of capital required or
expected to be maintained by such Lender or the Agent or any Person controlling
such Lender or the Agent, and such Lender or the Agent determines that the
amount of such capital is increased as a direct or indirect consequence of the
Loan made or maintained or any guaranty or participation with respect thereto or
any L/C Participation, such Lender's or the Agent's or such other controlling
Person's other obligations hereunder, or (ii) has or would have the effect of
reducing the rate of return on such Lender's or the Agent's or such other
controlling Person's capital to a level below that which such Lender or the
Agent or such controlling Person could have achieved but for such circumstances
as a consequence of the Loan made or maintained or any guaranty or participation
with respect thereto or any agreement to make Loans, or such Lender's or the
Agent's or such other controlling Person's other obligations hereunder (in each
case, taking into consideration, such Lender's or the Agent's or such other
controlling Person's policies with respect to capital adequacy), then, upon
demand by such Lender or the Agent, the Borrower shall pay to such Lender or the
Agent from time to time such additional amounts as will compensate such Lender
or the Agent for such cost of maintaining such increased capital or such
reduction in the rate of return on such Lender's or the Agent's or such other
controlling Person's capital.
(c) All amounts payable under this Section 4.04 shall bear interest
from the date that is ten (10) days after the date of demand by any Lender or
the Agent until payment in full to such Lender or the Agent at the Reference
Rate. A certificate of such Lender or the Agent claiming compensation under this
Section 4.04, specifying the event herein above described and the nature of such
event shall be submitted by such Lender or the Agent to the Borrower, setting
forth the additional amount due and an explanation of the calculation thereof,
and such Lender's or the Agent's reasons for invoking the provisions of this
Section 4.04, and shall be final and conclusive absent manifest error.
ARTICLE V
CONDITIONS TO LOAN
Section 5.01 Conditions Precedent to Effectiveness. This Agreement
shall become effective and the Lenders shall become obligated to make the Loan
on the Effective Date when each of the following conditions precedent, unless
otherwise waived by each Lender, shall have been satisfied in a manner
satisfactory to the Agent:
(a) Legality. The making of the Loan shall not contravene any law,
rule or regulation applicable to the Agent or any Lender.
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(b) Delivery of Documents. The Agent shall have received on or before
the Effective Date the following, each in form and substance satisfactory to the
Agent and, unless indicated otherwise, dated the Effective Date:
(i) Each of the Security Documents listed on Schedule 5.01(b)(i),
duly executed and delivered by the relevant Security Party, granting a first
priority perfected security interest, pledge or lien in the Required Collateral
of such Person (subject, in the case of Required Collateral described in
subclause (4) of the definition of Required Collateral, to Liens permitted
pursuant to subsection (d) of the definition of Permitted Liens) with, in each
case where applicable, all certificates representing any pledged Capital Stock
and accompanied where necessary or appropriate by undated stock powers executed
in blank and other proper instruments of transfer and, in any event, evidence
satisfactory to the Agent of the filing or recordation of interests in the
pledged Capital Stock in such locations as may be required for perfection or
priority.
(ii) a UCC Filing Authorization Letter, if requested, duly
executed by each Security Party, and appropriate financing statements on Form
UCC-1 duly filed in such office or offices as may be necessary or, in the
opinion of the Agent, desirable to perfect the security interests, pledges or
liens purported to be created by each such agreement;
(iii) duly completed perfection certificates executed by each
Security Party, and certified copies of requests for copies of information on
Form UCC-11, listing all effective financing statements which name as debtor any
of the Security Parties and which are filed in the offices referred to in
paragraph (ii) above, together with copies of such financing statements and the
results of searches for any tax Lien and judgment Lien filed against such
Security Party or its property, which results, except as otherwise agreed to in
writing by the Agent, shall not show any such Liens other than Permitted Liens;
(iv) a copy of the resolutions of each Credit Party certified as
of the Effective Date by an Authorized Officer thereof, authorizing (to the
extent appropriate for such Person's participation in the transactions
contemplated hereby or the Loan Documents to which it is a party) (A) the
borrowing hereunder and the transactions contemplated by the Loan Documents to
which such Person is or will be a party, and (B) the execution, delivery and
performance by such Person of each Loan Document to which such Person is or will
be a party and the execution and delivery of the other documents and notices to
be delivered by such Person in connection herewith and therewith;
(v) a certificate of an Authorized Officer of each Credit Party,
certifying the names and true signatures of the representatives of such Person
authorized to sign each Loan Document to which such Person is or will be a party
and the other documents to be executed and delivered by such Person in
connection herewith and therewith, together with evidence of the incumbency of
such Authorized Officers;
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(vi) a true and complete copy of each of the Securities Purchase
Agreement and the HSBC Forbearance Agreement, certified by an Authorized Officer
of the Parent;
(vii) a certificate of authority (or its equivalent) issued by
the Insurance Department of the jurisdiction of organization and each
jurisdiction of foreign qualification of each Insurance Subsidiary in which it
conducts any insurance business, evidencing such Subsidiary's authority to
conduct its insurance business in such jurisdiction;
(viii) a true and complete copy of the charter, certificate of
formation, certificate of limited partnership or other publicly filed
organizational document of each Loan Party certified as of a recent date not
more than 30 days prior to the Effective Date by an appropriate official of the
jurisdiction of organization of such Credit Party which shall set forth the same
complete name of such Credit Party as is set forth herein and the organizational
number of such Credit Party, if an organized number is issued in such
jurisdiction;
(ix) a copy of any charter, by-laws, limited liability company
agreement, operating agreement, agreement of limited partnership, memorandum and
articles of association or other organizational document of each Credit Party
not delivered pursuant to the preceding paragraph, together with all amendments
thereto, certified as of the Effective Date by an Authorized Officer of such
Credit Party;
(x) an opinion of
(A) LeBoeuf, Lamb, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, U.S. counsel to the
Credit Parties;
(B) ▇▇▇▇▇▇ and Calder, Cayman Islands counsel to the Credit
Parties;
(C) Hanschell & Company, Barbados counsel to the Credit
Parties;
(D) ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇, Bermuda counsel to the Credit
Parties;
(E) ▇▇▇▇▇▇▇ ▇▇▇, Ireland counsel to the Credit Parties; and
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(F) LeBoeuf, Lamb, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP (London), UK counsel
to the Credit Parties;
substantially in the form of Exhibits D-1 to D-6, respectively, and as to such
other matters as the Agent may reasonably request;
(xi) a certificate of an Authorized Officer of each the Parent
and the Borrower, certifying as to the matters set forth in Section 5.02(b);
(xii) such financial and other information regarding the Parent
and its Subsidiaries as the Agent may reasonably have requested, including,
without limitation, the Financial Statements, the financial statements of each
Insurance Subsidiary referred to in Section 6.01(g)(ii), and the financial
projections referred to in Section 6.01(g)(iii), certified as of the Effective
Date as true and correct by an Authorized Officer of the Parent;
(xiii) a certificate of the chief financial officer of the
Parent, setting forth in reasonable detail the calculations required to
establish compliance, on a pro forma basis after giving effect to the Loan, with
each of the financial covenants contained in Section 7.03;
(xiv) such depository account control agreements, blocked account
control agreements, and similar agreements and other documents, each in form and
substance satisfactory to the Agent, as the Agent may request with respect to
the Required Collateral consisting of bank accounts and investment accounts;
(xv) A copy or statement of the Investment Policies, certified as
those being in effect on the Effective Date by the senior officer in charge of
the portfolio investments of the Parent and its Subsidiaries;
(xvi) a certificate of an Authorized Officer of the Parent,
certifying the names and true signatures of the persons that are authorized to
provide notices under this Agreement and the other Loan Documents on behalf of
each Loan Party; and
(xvii) such other agreements, instruments, approvals, opinions
and other documents, each satisfactory to the Agent in form and substance, as
the Agent may reasonably request.
(c) Material Adverse Change. No Material Adverse Change has occurred
or become known to the Agent at any time prior to the Effective Date.
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(d) Other Loan Documents. All conditions precedent set forth in each
other Loan Document shall be satisfied to the extent required to be completed
prior to the Effective Date.
(e) Approvals. All consents, authorizations and approvals of, and
filings and registrations with, and all other actions in respect of, any
Governmental Authority or other Person required in connection with the making of
the Loan or the conduct of the Credit Parties' and the Insurance Subsidiaries'
business shall have been obtained and shall be in full force and effect.
(f) Proceedings; Receipt of Documents. All proceedings in connection
with the making of the Loan and the other transactions contemplated by this
Agreement and the other Loan Documents, and all documents incidental hereto and
thereto, shall be satisfactory to the Agent and its counsel, and the Agent and
such counsel shall have received all such information and such counterpart
originals or certified or other copies of such documents as the Agent or such
counsel may reasonably request.
(g) [Intentionally left blank.]
(h) Litigation. There shall exist no claim, action, suit,
investigation, litigation or proceeding, pending or threatened in any court or
before any arbitrator or Governmental Authority which relates to the Loan or
which, in the reasonable judgment of the Agent, has a reasonable likelihood of
resulting in a Material Adverse Effect.
(i) Capital Structure. Any material change to the capital structure of
the Parent and its Subsidiaries, other than as disclosed to the Lender prior to
the execution by the Lender of the Commitment Letter, shall be satisfactory to
the Lender, including any material change to the amounts and terms of the Loan
Parties' other Indebtedness.
(j) No Defaults under Existing Agreements. No default or event of
default (or similar event) shall exist under any indebtedness (as defined in the
Existing Credit Agreement and including swap contracts, other collateral
financing facilities and securitizations) having a value in excess of
$10,000,000 to which the Parent or any of its Subsidiaries is a party, or by
which any of its or their properties are bound.
(k) Ratings. The Parent's unsecured senior debt rating shall be at
least "CCC" (by Standard & Poor's and Fitch) and "Caa2" (by ▇▇▇▇▇'▇), and
▇▇▇▇▇'▇ insurance financial strength rating shall be at least "CCC" (by Standard
& Poor's and Fitch), "Caa2" (by ▇▇▇▇▇'▇) and "C" (by A.M. Best).
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(l) Notice of Proposed Effective Date. The Borrower shall have given
the Agent telephonic notice of the proposed Effective Date, immediately
confirmed in writing, not later than 12:00 noon (New York City time) on the date
which is two Business Days prior to the proposed Effective Date (or such shorter
period as the Agent is willing to accommodate).
(m) Securities Purchase Agreement; Parent Approval. The Securities
Purchase Agreement shall be in full force and effect, no term or condition
thereof shall have been amended, modified or waived without the consent of the
Lenders and no default or event of default shall exist thereunder. The Parent's
Board of Directors and the requisite percentage of its shareholders shall have
approved the issuance by the Parent of the 7.25% Convertible Preferred Shares to
affiliates of Cerberus Capital and MassMutual Capital Partners LLC pursuant to
the Securities Purchase Agreement.
(n) HSBC Forbearance Agreement. The HSBC Forbearance Agreement shall
be in full force and effect, no term or condition thereof shall have been
amended, modified or waived without the consent of the Lenders and no default or
event of default shall exist thereunder.
Section 5.02 Conditions to Loans. The agreement of each Lender to make
any Loan requested to be made by it on any date is subject to the satisfaction
of the following conditions precedent:
(a) Payment of Fees, Etc. The Borrower shall have paid on or before
the date of any Loan all fees, costs, expenses and taxes then payable pursuant
to Section 2.06 and Section 11.04 and the Commitment Letter.
(b) Representations and Warranties; No Event of Default. The following
statements shall be true and correct: (i) the representations and warranties
contained in Article VI and in each other Loan Document, certificate or other
writing delivered to the Agent or any Lender pursuant hereto or thereto on or
prior to the date of any Loan are true and correct on and as of the date of any
Loan as though made on and as of such date, provided however, that on the
Effective Date the representation in Section 6.01(g)(i) shall not apply, and
(ii) no Default or Event of Default shall have occurred and be continuing on the
date of any Loan or after giving effect to any Loan.
(c) Financial condition. Immediately before giving effect to the Loan,
Available Liquidity on the proposed Draw Date will be less than $25,000,000.
Each borrowing by the Borrower hereunder shall constitute a
representation and warranty by the Borrower as of the date of such borrowing
that, prior to giving effect to such borrowing, the conditions contained in this
Section 5.02 have been satisfied.
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES
Section 6.01 Representations and Warranties. Each Loan Party hereby
represents and warrants (provided that each Loan Party represents and warrants
solely with respect to itself and its respective Subsidiaries) to the Agent, and
the Lenders as follows:
(a) Organization, Good Standing, Etc. The Parent and each of its
Subsidiaries (i) is a corporation, limited liability company or limited
partnership duly incorporated, organized or formed, validly existing and (to the
extent applicable under the laws of its jurisdiction of incorporation,
organization or formation) in good standing under the laws of the state or
jurisdiction of its incorporation or organization, (ii) has all requisite power
and authority and all requisite government licenses, authorizations, consents
and approvals to (a) own its assets and conduct its business as now conducted
and as presently contemplated, and (b) make the borrowings hereunder (in the
case of Borrower), and to execute and deliver each Loan Document (if any) to
which it is a party, and to consummate the transactions contemplated thereby,
and (iii) is duly qualified to do business and is licensed and in good standing
in each jurisdiction in which the character of the properties owned, leased or
operated by it or in which the transaction of its business makes such
qualification or license necessary.
(b) Authorization, Etc. The execution, delivery and performance by
each Credit Party of the Loan Documents to which it is a party, (i) have been
duly authorized by all necessary corporate or other organizational action, (ii)
do not and will not conflict with or result in any breach or contravention of,
or require any payment to be made under (a) its charter or by-laws, its limited
liability company or operating agreement or its certificate of partnership or
partnership agreement, as applicable, or any applicable law or any contractual
obligation binding on or otherwise affecting it or any of its properties, or (b)
any order, injunction, writ or decree of any Governmental Authority or any
arbitral award to which such Person or its property is subject, (iii) do not and
will not result in or require the creation of any Lien (other than pursuant to
any Loan Document) upon or with respect to any of its properties or assets, and
(iv) do not and will not result in any default, noncompliance, suspension,
revocation, impairment, forfeiture or non-renewal of any permit, license,
authorization or approval applicable to its operations or any of its properties.
(c) Governmental Approvals. No authorization, approval, consent,
exemption, or other action by, or notice to, or filing with, any Governmental
Authority or any other Person is necessary or required in connection with the
due execution, delivery and performance by, or enforcement against, the Parent
or any of its Subsidiaries of any Loan Document to which it is or will be a
party except such as have been obtained on or prior to the Effective Date and
those that will be obtained pursuant to Section 7.01(s).
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(d) Enforceability of Loan Documents. This Agreement is, and each
other Loan Document to which the Parent or any of its Subsidiaries is or will be
a party, when delivered hereunder, will be, a legal, valid and binding
obligation of such Person, enforceable against such Person in accordance with
its terms, except as may be limited by (i) applicable bankruptcy, insolvency,
reorganization, examinership, moratorium, fraudulent transfer or conveyance or
other similar laws affecting creditor's rights and remedies generally and the
rights and remedies of creditors of insurers generally, and (ii) general
principles of equity (regardless of whether such principles are considered in
proceedings at law or in equity).
(e) Capitalization; Subsidiaries.
(i) On the Effective Date, after giving effect to the
transactions contemplated hereby to occur on the Effective Date, the authorized
Capital Stock of the Parent and the issued and outstanding Capital Stock of the
Parent are as set forth on Schedule 6.01(e). All of the issued and outstanding
shares of Capital Stock of the Parent have been validly issued and are fully
paid and non-assessable, and the holders thereof are not entitled to any
preemptive, first refusal or other similar rights. Except as described on
Schedule 6.01(e), as of the Effective Date, (i) there is no Plan or other
arrangement in existence relating to the issuance of shares of Capital Stock of
the Parent and (ii) there are no outstanding debt or equity securities of the
Parent or any of its Subsidiaries and no outstanding obligations of the Parent
or any of its Subsidiaries convertible into or exchangeable for, or warrants,
options or other rights for the purchase or acquisition from the Parent, or
other obligations of the Parent to issue, directly or indirectly, any shares of
Capital Stock of the Parent.
(ii) Schedule 6.01(e) is a complete and correct description of
the name, jurisdiction of organization and ownership of the outstanding Capital
Stock of each Subsidiary of the Parent in existence on the date hereof and
correctly indicates which Subsidiaries are Insurance Subsidiaries and whether
the Capital Stock of such Subsidiary is represented by a security certificate or
is transferable only by registry of transfer in a registry maintained by or for
the issuer. All of the issued and outstanding shares of Capital Stock of such
Subsidiaries have been validly issued and are fully paid and nonassessable, and
the holders thereof are not entitled to any preemptive, first refusal or other
similar rights. Except as indicated on such Schedule, all such Capital Stock is
owned by the Parent or one or more of its wholly-owned Subsidiaries, free and
clear of all Liens. Except as indicated on such Schedule, there are no
outstanding debt or equity securities of the Parent or any of its Subsidiaries
and no outstanding obligations of the Parent or any of its Subsidiaries
convertible into or exchangeable for, or warrants, options or other rights for
the purchase or acquisition from the Parent or any of its Subsidiaries, or other
obligations of any of its Subsidiaries to issue, directly or indirectly, any
shares of Capital Stock of any Subsidiary of the Parent.
(f) Litigation; Commercial Tort Claims. Except as set forth in
Schedule 6.01(f), (i) there is no pending or, to the best knowledge of any Loan
Party, threatened action, suit, proceeding, claim, investigation or dispute
affecting the Parent, or any of its Subsidiaries or against any of their
properties or revenues, before any court or other
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Governmental Authority or any arbitrator that (A) either individually or in the
aggregate, if adversely determined, could have a Material Adverse Effect or (B)
relates to this Agreement or any other Loan Document or any transaction
contemplated hereby or thereby and (ii) as of the Effective Date, none of the
Parent or any of its Subsidiaries holds any commercial tort claims in respect of
which a claim has been filed in a court of law or a written notice by an
attorney has been given to a potential defendant.
(g) Financial Condition.
(i) The Financial Statements, copies of which have been delivered
to the Agent and each Lender, fairly present in all material respects the
consolidated and consolidating financial condition of the Parent and its
Subsidiaries and the Borrower and its Subsidiaries (as applicable) as at the
respective dates thereof and the consolidated and consolidating results of
operations of the Parent and its Subsidiaries and the Borrower and its
Subsidiaries (as applicable) for the fiscal periods ended on such respective
dates, all in accordance with GAAP, and since December 31, 2006 no event or
development has occurred that has had or could have a Material Adverse Effect.
(ii) The audited Annual Statement as at and for the year ended
December 31, 2005 and the unaudited Quarterly Statements as at and for the three
months ended each of March 31, 2006, June 30, 2006 and (if applicable) September
30, 2006, of each Insurance Subsidiary, copies of which have been delivered to
the Agent and each Lender, (a) were prepared in accordance with SAP consistently
applied throughout the periods covered thereby, (b) fairly present in all
material respects the financial condition of such Person as at the date thereof
and the results of operations of such Person for the period ended thereon, in
each case in accordance with SAP consistently applied throughout the periods
covered thereby, and (c) show all material indebtedness and other liabilities,
direct or contingent, of such Person as at the date thereof, including
liabilities for Taxes, material commitment and Indebtedness.
(iii) The Parent has furnished to the Agent and each Lender a
projection of Available Liquidity as of the last day of each fiscal quarter for
the period from March 31, 2007 through March 31, 2008. Such projections are, and
as updated as of the Effective Date will be, and at the time furnished were or
will be believed by the Parent or the Borrower, as applicable, to be reasonable,
have been or will be prepared on a reasonable basis and in good faith by the
Parent, or the Borrower, as applicable, and were or will be based on assumptions
believed by the Parent or the Borrower, as applicable, to be reasonable at the
time made and upon the best information then reasonably available to the Parent
or the Borrower, as applicable, and the Parent or the Borrower, as applicable,
was not or will not be aware of any facts or information that would lead it to
believe that such projections were or will be are incorrect or misleading in any
material respect.
(h) Compliance with Law, Etc. Neither the Parent nor any of its
Subsidiaries is in violation of its organizational documents, any law, rule,
regulation, judgment, writ,
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injunction, decree or order of any Governmental Authority applicable to it or
any of its property or assets, or any material term of any agreement or
instrument (including, without limitation, any Material Contract) binding on or
otherwise affecting it or any of its properties.
(i) ERISA. Except as set forth on Schedule 6.01(i), (i) each Employee
Plan is in substantial compliance with ERISA and the Internal Revenue Code, (ii)
no Termination Event has occurred nor is reasonably expected to occur with
respect to any Employee Plan, (iii) the most recent annual report (Form 5500
Series) with respect to each Employee Plan, including any required Schedule B
(Actuarial Information) thereto, copies of which have been filed with the
Internal Revenue Service and delivered to the Agent, is complete and correct and
fairly presents the funding status of such Employee Plan, and since the date of
such report there has been no material adverse change in such funding status,
(iv) copies of each agreement entered into with the PBGC, the U.S. Department of
Labor or the Internal Revenue Service with respect to any Employee Plan have
been delivered to the Agent, (v) no Employee Plan had an accumulated or waived
funding deficiency or permitted decrease which would create a deficiency in its
funding standard account or has applied for an extension of any amortization
period within the meaning of Section 412 of the Internal Revenue Code at any
time during the previous 60 months, and (vi) no Lien imposed under the Internal
Revenue Code or ERISA exists or is likely to arise on account of any Employee
Plan within the meaning of Section 412 of the Internal Revenue Code. Except as
set forth on Schedule 6.01(i), no Loan Party or any of its ERISA Affiliates has
incurred any withdrawal liability under ERISA with respect to any Multiemployer
Plan, or is aware of any facts indicating that it or any of its ERISA Affiliates
may in the future incur any such withdrawal liability. No Loan Party or any of
its ERISA Affiliates nor any fiduciary of any Employee Plan has (i) engaged in a
nonexempt prohibited transaction described in Sections 406 of ERISA or 4975 of
the Internal Revenue Code, (ii) failed to pay any required installment or other
payment required under Section 412 of the Internal Revenue Code on or before the
due date for such required installment or payment, (iii) engaged in a
transaction within the meaning of Section 4069 of ERISA or (iv) incurred any
liability to the PBGC which remains outstanding other than the payment of
premiums, and there are no premium payments which have become due which are
unpaid. There are no pending or, to the best knowledge of any Loan Party,
threatened claims, actions, proceedings or lawsuits (other than claims for
benefits in the normal course or those that could not reasonably be expected
(individually or in the aggregate) to have a Material Adverse Effect), or action
by any Governmental Authority, asserted or instituted against (i) any Employee
Plan or its assets, (ii) any fiduciary with respect to any Employee Plan, or
(iii) any Loan Party or any of its ERISA Affiliates with respect to any Employee
Plan. There has been no prohibited transaction or violation of the fiduciary
rules with respect to any Employee Plan that has resulted or could reasonably be
expected to result in a Material Adverse Effect. Except as required by Section
4980B of the Internal Revenue Code, no Loan Party or any of its ERISA Affiliates
maintains an employee welfare benefit plan (as defined in Section 3(1) of ERISA)
which provides health or welfare benefits (through the purchase of insurance or
otherwise) for any retired or former employee of any Loan Party or any of its
ERISA Affiliates or coverage after a participant's termination of employment.
(j) Taxes, Etc. Except as set forth on Schedule 6.01(j), all tax
returns and other reports required by applicable law to be filed by the Parent
or any of its Subsidiaries in any
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jurisdiction have been filed, or extensions have been obtained, except for such
returns or reports as to which the consequences of not filing could not
individually or in the aggregate be material to the Parent and its Subsidiaries
taken together and all taxes, assessments, fees and other governmental charges
levied or imposed upon any such Person or any property, income or assets of any
such Person and which have become due and payable on or prior to the date hereof
have been paid, except to the extent contested in good faith by proper
proceedings and with respect to which adequate reserves have been set aside for
the payment thereof on the Financial Statements in accordance with GAAP, in an
amount not to exceed $5,000,000 at any one time outstanding. There is no
proposed tax assessment against the Parent or any of its Subsidiaries that
would, if made, have a Material Adverse Effect. Neither the Parent nor any of
its Subsidiaries is party to any tax sharing arrangement except as set forth in
Schedule 6.01(j). Notwithstanding any provision in this Agreement to the
contrary, the only representations and warranties made by the Loan Parties with
respect to matters relating to Taxes shall be the representations and warranties
set forth in this Section 6.01(j), and this Agreement shall not be interpreted
in any manner that is contrary thereto.
(k) Regulations T, U and X. Neither the Parent nor any of its
Subsidiaries is or will be engaged in the business of extending credit for the
purpose of purchasing or carrying margin stock (within the meaning of Regulation
T, U or X), and no proceeds of the Loan will be used to purchase or carry any
margin stock or to extend credit to others for the purpose of purchasing or
carrying any margin stock.
(l) Nature of Business. Neither the Parent nor any of its Subsidiaries
is engaged in any business other than issuing and reinsuring life insurance,
loss of license insurance, annuities and annuity-type products, wealth
management or serving as a holding company for a Subsidiary engaged in such
business.
(m) Adverse Agreements, Etc. Neither the Parent nor any of its
Subsidiaries is a party to any agreement or instrument, or subject to any
charter, limited liability company agreement, partnership agreement or other
corporate, partnership or limited liability company restriction or any judgment,
order, regulation, ruling or other requirement of a court or other Governmental
Authority, which has, or in the future would reasonably be likely to have, a
Material Adverse Effect.
(n) Permits, Etc. The Parent and each of its Subsidiaries has, and is
in compliance with, all material permits, licenses, authorizations, approvals,
entitlements and accreditations required for such Person lawfully to own, lease,
manage or operate, or to acquire, each business currently owned, leased, managed
or operated, or to be acquired, by such Person. No condition exists or event has
occurred which, in itself or with the giving of notice or lapse of time or both,
would result in the suspension, revocation, impairment, forfeiture or
non-renewal of any such material permit, license, authorization, approval,
entitlement or accreditation, and there is no claim that any thereof is not in
full force and effect.
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(o) Ownership of Property; Liens. The Parent and each of its
Subsidiaries has good record and marketable title in fee simple (or its
equivalent in the relevant jurisdiction) to, or valid leasehold interests in,
all real property, and good title to or valid leasehold interests in all
personal property, necessary or used in the ordinary conduct of its business,
except for such defects in title or interest as could not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect. The
property of the Parent and each of its Subsidiaries is subject to no Liens,
other than the Permitted Liens.
(p) Full Disclosure. The Parent has disclosed to the Agent and Lenders
all agreements, instruments and corporate or other restrictions to which the
Parent or any of its Subsidiaries is subject, and all other matters known to it,
that, individually or in the aggregate, could result in a Material Adverse
Effect. None of this Agreement, the Schedules thereto, the written reports,
financial statements, certificates or other written information furnished by or
on behalf of any Credit Party to the Agent or any Lender in connection with the
transactions contemplated hereby and the negotiation of this Agreement or
delivered hereunder or under any other Loan Document (in each case, as modified
or supplemented by other information so furnished) contains any material
misstatement of fact or omits to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided that, with respect to projected financial
information, each Loan Party represents only that such information was prepared
in good faith based upon assumptions believed to be reasonable at the time
prepared. There is no contingent liability or fact that may have a Material
Adverse Effect which has not been set forth in a footnote included in the
Financial Statements or a Schedule hereto. All agreements to which any Loan
Party or any of its Subsidiaries is a party relating to the HSBC Facilities and
all HSBC arrangements referred to in Section 5.01(n) (oral or written) have been
disclosed to the Lenders in writing.
(q) Operating Lease Obligations. On the Effective Date, neither the
Parent nor any of its Subsidiaries has any Operating Lease Obligations other
than the Operating Lease Obligations set forth on Schedule 6.01(q).
(r) Environmental Matters. Except as set forth on Schedule 6.01(r),
(i) the operations of the Parent and each of its Subsidiaries are in material
compliance with all Environmental Laws; (ii) there has been no Release at any of
the properties owned or operated by any such Person or a predecessor in
interest, or at any disposal or treatment facility which received Hazardous
Materials generated by any such Person or any predecessor in interest which
could have a Material Adverse Effect; (iii) no Environmental Action has been
asserted against any such Person or any predecessor in interest nor does any
such Person have knowledge or notice of any threatened or pending Environmental
Action against any such Person or any predecessor in interest which could have a
Material Adverse Effect; (iv) no Environmental Actions have been asserted
against any facilities that may have received Hazardous Materials generated by
any such Person or any predecessor in interest which could have a Material
Adverse Effect; (v) no property now or formerly owned or operated by any such
Person has been used as a treatment or disposal site for any Hazardous Material;
(vi) no such Person has failed to report to the proper Governmental Authority
any Release which is required to be so reported by
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any Environmental Laws which could have a Material Adverse Effect; (vii) each
such Person holds all licenses, permits and approvals required under any
Environmental Laws in connection with the operation of the business carried on
by it, except for such licenses, permits and approvals as to which a such
Person's failure to maintain or comply with could not have a Material Adverse
Effect; and (viii) no such Person has received any notification pursuant to any
Environmental Laws that (A) any work, repairs, construction or Capital
Expenditures are required to be made in respect as a condition of continued
compliance with any Environmental Laws, or any license, permit or approval
issued pursuant thereto or (B) any license, permit or approval referred to above
is about to be reviewed, made, subject to limitations or conditions, revoked,
withdrawn or terminated, in each case, except as could not have a Material
Adverse Effect.
(s) Insurance. The Parent and each of its Subsidiaries maintains the
following insurance with financially sound and reputable insurance companies not
Affiliates of the Parent or any of its Subsidiaries, in such amounts, with such
deductibles and against such risks, including fire, as is customary with
companies in the same or similar businesses and operating in localities where
the applicable Subsidiary operates: (i) casualty insurance (loss or damage to
its properties), (ii) worker's compensation insurance in the amount required by
applicable law, (iii) public liability insurance in the amount customary with
companies in the same or similar business against claims for personal injury or
death on properties owned, occupied or controlled by it, and (iv) such other
insurance as may be required by law (including, without limitation, against
larceny, embezzlement or other criminal misappropriation).
(t) Use of Proceeds. The proceeds of the Loan shall be used as stated
in the Recitals of this Agreement.
(u) Location of Bank Accounts and Other Collateral. Schedule 6.01(u)
sets forth as, of the date hereof, a complete and accurate list of each deposit,
checking or other bank account, each securities account and other accounts
(each, an "account") maintained by the Parent, the Borrower or any Security
Party or similar entity, with any financial intermediary, together with a
description thereof (i.e., identifying the bank or broker dealer or other
institution with which such account is maintained and the account number and the
purpose thereof), an estimate of the balance held in such account at February
28, 2007, and identifying those accounts forming part of Required Collateral.
(v) Intellectual Property. Schedule 6.01(v) sets forth all material
Intellectual Property owned or licensed by the Parent, the Borrower or any
Security Party. The Parent and each of its Subsidiaries owns or licenses or
otherwise has the right to use all licenses, permits, patents, patent
applications, trademarks, trademark applications, service marks, trade names,
copyrights, copyright applications, franchises, authorizations, non-governmental
licenses and permits and other intellectual property rights that are necessary
for the operation of its business, without infringement upon or conflict with
the rights of any other Person with respect thereto, except for such
infringements and conflicts which, individually or in the aggregate, could not
have a Material Adverse Effect.
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(w) Material Contracts. The SEC reports contain a complete and
accurate list as of the Effective Date of all Material Contracts to which the
Parent or any of its Subsidiaries is a Party, showing the parties and subject
matter thereof and amendments and modifications thereto. Each such Material
Contract (i) is in full force and effect and is binding upon and enforceable
against each such Person that is a party thereto and, to the best knowledge of
such Person, all other parties thereto in accordance with its terms, (ii) has
not been otherwise materially amended or modified in any material respect, and
(iii) is not in default in any material respect due to the action of any such
Person or, to the best knowledge of any such Person, any other party thereto.
(x) Investment Company Act. None of the Parent or any of its
Subsidiaries is an "investment company", as such term is defined in the
Investment Company Act of 1940, as amended, or is registered or required to be
registered thereunder.
(y) Employee and Labor Matters. There is (i) no unfair labor practice
or similar complaint pending or, to the best knowledge of the Parent or any of
its Subsidiaries, threatened against the Parent or any of its Subsidiaries
before any Governmental Authority and no grievance or arbitration proceeding
pending or threatened against the Parent or any of its Subsidiaries which arises
out of or under any collective bargaining agreement, (ii) no strike, labor
dispute, slowdown, stoppage or similar action or grievance pending or threatened
against the Parent or any of its Subsidiaries or (iii) to the best knowledge of
any Loan Party, no union representation question existing with respect to the
employees of the Parent or any of its Subsidiaries and no union organizing
activity taking place with respect to any of the employees of the Parent or any
of its Subsidiaries. None of the Parent or any of its Subsidiaries or any of
their respective Affiliates has incurred any liability or obligation under the
Worker Adjustment and Retraining Notification Act ("WARN") or similar state law,
which remains unpaid or unsatisfied. The hours worked and payments made to
employees of the Parent or any of its Subsidiaries have not been in violation of
the Fair Labor Standards Act or any other applicable legal requirements, except
to the extent such violations could not, individually or in the aggregate,
reasonably be expected to result in a Material Adverse Effect. All material
payments due from the Parent or any of its Subsidiaries on account of wages and
employee health and welfare insurance and other benefits have been paid or
accrued as a liability on the books of such Person, except where the failure to
do so could not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.
(z) No Bankruptcy Filing. Neither the Parent nor any of its
Subsidiaries has initiated an Insolvency Proceeding or the liquidation of all or
a major portion of such Person's assets or property, and neither the Parent nor
any Subsidiary has any knowledge of any an Insolvency Proceeding commenced
against it.
(aa) Name; Jurisdiction of Organization; Organizational ID Number;
Chief Place of Business; Chief Executive Office; FEIN. Schedule 6.01(aa) sets
forth a complete and accurate list as of the date hereof of (i) the exact legal
name of the Parent and each Credit Party, (ii) the jurisdiction of organization
of each such Person, (iii) the organizational identification
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number of each such Person (or indicates that such Person has no organizational
identification number), (iv) the chief executive office of each such Person and
(v) the federal employer identification number (if any) of each such Person.
(bb) Trade names. Schedule 6.01(bb) hereto sets forth a complete and
accurate list as of the Effective Date of all trade names, business names or
similar appellations used by the Parent and each Credit Party during the past
five years.
(cc) Security Interests. On the Effective Date each instrument
referred to in Section 5.01(b)(i) will create in favor of the Agent, for the
benefit of the Lenders, a legal, valid and enforceable pledge, lien or security
interest in the property described therein as the "Collateral". Upon the filing
of the UCC-1 financing statements described in Section 5.01(b)(ii) or such other
actions as will have been accomplished on the Effective Date or which are to be
taken pursuant to Section 7.01(s) with respect to non-U.S. jurisdictions, such
security interests in and Liens on the Collateral granted thereby shall be
perfected, first priority security interests, subject to Permitted Liens, and no
further recordings or filings are or will be required in connection with the
creation, perfection or enforcement of such security interests and Liens, other
than the filing of continuation statements in accordance with applicable law.
(dd) Representations and Warranties in Documents; No Default. All
representations and warranties set forth in this Agreement and the other Loan
Documents are true and correct in all respects at the time as of which such
representations were made and in all respects except as expressly stated to the
contrary will be true and correct in all respects on the Effective Date. No
Material Adverse Change has occurred. No Event of Default has occurred and is
continuing and no condition exists which constitutes a Default or an Event of
Default.
(ee) Securities Purchase Agreement. All representations and warranties
set forth in the Securities Purchase Agreement are true and correct in all
respects at the time as of which such representations were made. The Parent has
performed or complied with in all material respects all obligations, agreements
and covenants required to be performed or complied with by it under the
Securities Purchase Agreement on or prior to the Effective Date.
(ff) Intercompany Obligations. As of the Effective Date, there are no
material amounts owing by any Credit Party to any of its Affiliates except for
amounts owed to (i) Affiliates who are parties to the Intercreditor Deed and
(ii) SRE, SRL, SRLC and SRD.
Section 6.02 Representations as to Foreign Obligors. Each Loan Party
further represents and warrants to the Agent and the Lenders that:
(a) Each of the Parent and any of its Subsidiaries as party to a Loan
Document that is a Foreign Obligor is subject to civil and commercial laws with
respect to its obligations
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under this Agreement and the other Loan Documents to which it is a party
(collectively as to such Foreign Obligor, the "Applicable Foreign Obligor
Documents"), and the execution, delivery and performance by such Foreign Obligor
of the Applicable Foreign Obligor Documents constitute and will constitute
private and commercial acts and not public or governmental acts. Neither such
Foreign Obligor nor any of its property has any immunity from jurisdiction of
any court or from any legal process (whether through service or notice,
attachment prior to judgment, attachment in aid of execution, execution or
otherwise) under the laws of the jurisdiction in which such Foreign Obligor is
organized and existing in respect of its obligations under the Applicable
Foreign Obligor Documents.
(b) The Applicable Foreign Obligor Documents are in proper legal form
under the laws of the jurisdiction in which such Foreign Obligor is organized,
incorporated or formed, as the case may be, and existing for the enforcement
thereof against such Foreign Obligor under the laws of such jurisdiction, and to
ensure the legality, validity, enforceability, priority or admissibility in
evidence of the Applicable Foreign Obligor Documents. It is not necessary to
ensure the legality, validity, enforceability, priority or admissibility in
evidence of the Applicable Foreign Obligor Documents that the Applicable Foreign
Obligor Documents be filed, registered or recorded with, or executed or
notarized before, any court or other authority in the jurisdiction in which such
Foreign Obligor is organized and existing or that any registration charge or
stamp or similar tax be paid on or in respect of the Applicable Foreign Obligor
Documents or any other document, except for (i) any such filing, registration,
recording, execution or notarization as has been made or is not required to be
made until the Applicable Foreign Obligor Document or any other document is
sought to be enforced, (ii) any charge or tax as has been timely paid, and (iii)
any Cayman Islands stamp duty payable if an original Applicable Foreign Obligor
Document is brought to or executed in the Cayman Islands.
(c) There is no tax, levy, impost, duty, fee, assessment or other
governmental charge, or any deduction or withholding, imposed by any
Governmental Authority in or of the jurisdiction in which such Foreign Obligor
is organized and existing either (i) on or by virtue of the execution or
delivery of the Applicable Foreign Obligor Documents or (ii) on any payment to
be made by such Foreign Obligor pursuant to the Applicable Foreign Obligor
Documents, except (i) stamp tax payable with respect to any Loan Document
executed by SRD and (ii) stamp duty payable in the Cayman Islands if the
relevant Applicable Foreign Obligor Documents are brought to or executed in the
Cayman Islands. The Borrower shall promptly pay any stamp tax or stamp duty
which may be owed by any such Foreign Obligor. Each Applicable Foreign Obligor
Documents was executed by each such Foreign Obligor outside its jurisdiction of
organization.
(d) The execution, delivery and performance of the Applicable Foreign
Obligor Documents executed by such Foreign Obligor are, under applicable foreign
exchange control regulations of the jurisdiction in which such Foreign Obligor
is incorporated or organized and existing, not subject to any notification or
authorization except (i) such as have been made or obtained or (ii) such as
cannot be made or obtained until a later date (provided that any
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notification or authorization described in clause (ii) shall be made or obtained
as soon as is reasonably practicable).
ARTICLE VII
COVENANTS OF THE LOAN PARTIES
Section 7.01 Affirmative Covenants. So long as any principal of or
interest on the Loan or any other Obligation (whether or not due) shall remain
unpaid, each Loan Party shall, and shall (except in the case of the covenants
set forth in Sections 7.01(a) and (b)) cause each of its Subsidiaries to (unless
the Required Lenders shall otherwise consent in writing:
(a) Financial Statements and Related Matters. Deliver to the Agent and
each Lender, in form and detail satisfactory to the Agent:
(i) as soon as available, but in any event within 90 days after
the end of each Fiscal Year, (i) in the case of the Parent, the consolidated and
consolidating balance sheet of the Parent and its Subsidiaries as of the end of
such Fiscal Year and the related consolidated and consolidating statements of
income and consolidated statements of cash flow for such period, and (ii) in the
case of the Borrower, the consolidated and consolidating balance sheet of such
Person and its Subsidiaries as of the end of such Fiscal Year and the related
consolidated and consolidating statements of income for such period, each
setting forth in comparative form the figures for the previous comparable fiscal
period, all in reasonable detail and prepared in accordance with GAAP, and each
of such consolidated balance sheets and related consolidated statements shall be
audited and accompanied by a report and opinion of an independent certified
public accountant of nationally recognized standing acceptable to the Agent,
which report and opinion shall be prepared in accordance with GAAP and shall not
be subject to any qualification or exception as to the scope of such audit and
such consolidating statements to be certified by an Authorized Officer of the
Parent or the Borrower, as the case may be, to the effect that such statements
are fairly stated in all material respects when considered in relation to such
consolidated financial statements of the Parent and its Subsidiaries, or the
Borrower and its Subsidiaries, as the case may be;
(ii) as soon as available, but in any event within 45 days after
the end of each of the first three fiscal quarters of each fiscal year, (i) in
the case of the Parent, an unaudited consolidated and consolidating balance
sheet of the Parent and its Subsidiaries as at the end of such fiscal quarter
and the related consolidated and consolidating statements of income or
operations and shareholders' equity and consolidated statements of cash flows
for such fiscal quarter and (ii) in the case of the Borrower, an unaudited
consolidated and consolidating balance sheet of such Person and its Subsidiaries
as at the end of such fiscal quarter and the related consolidated and
consolidating statement of income or operations and shareholder's equity for
such fiscal quarter, each of such consolidated balance sheets and related
consolidated statements shall be certified by an Authorized Officer of the
Parent, or the
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Borrower, as the case may be, as fairly presenting the financial condition,
results of operations, shareholders' equity and cash flows of such Person and
its Subsidiaries in accordance with the GAAP, subject only to normal year-end
audit adjustments and the absence of footnotes, and such consolidating balance
sheet and consolidating statements to be certified by an Authorized Officer of
the Parent or the Borrower, as the case may be, to the effect that such
statements are fairly stated in all material respects when considered in
relation to such consolidated financial statements of the Parent and its
Subsidiaries, or the Borrower and its Subsidiaries, as the case may be;
(iii) as soon as available, and in any event within five days
after the end of each fiscal month of the Parent and its Subsidiaries commencing
with the first fiscal month of the Parent and its Subsidiaries ending after the
Effective Date, a report setting forth the Borrower's Available Liquidity as of
the last day of the preceding fiscal month, all in reasonable detail and
certified by an Authorized Officer of the Borrower as being true and correct in
all material respects.
(iv) simultaneously with the delivery of the financial statements
of the Parent and its Subsidiaries required by clauses (i) and (ii) of this
Section 7.01(a), a certificate of an Authorized Officer of each of the Parent
and the Borrower (A) stating that such Authorized Officer has reviewed the
provisions of this Agreement and the other Loan Documents and has made or caused
to be made under his or her supervision a review of the condition and operations
of the Parent and its Subsidiaries during the period covered by such financial
statements with a view to determining whether the Parent and its Subsidiaries
were in compliance with all of the provisions of this Agreement and such Loan
Documents at the times such compliance is required hereby and thereby, and that
such review has not disclosed, and such Authorized Officer has no knowledge of,
the existence during such period of an Event of Default or Default or, if an
Event of Default or Default existed, describing the nature and period of
existence thereof and the action which the Parent and its Subsidiaries propose
to take or have taken with respect thereto and (B) attaching a schedule showing
the calculations specified in Section 7.03;
(v) promptly, but in no event more than five days, following the
transmittal thereof to the Insurance Department in its jurisdiction of domicile
(the Borrower being deemed for this purpose to be domiciled in the Cayman
Islands and Bermuda), a copy of any Annual Statement or Quarterly Statement of
each Insurance Subsidiary delivered to such Insurance Department prepared in
accordance with SAP and in conformity with the requirements of such Insurance
Department;
(vi) promptly, but in no event more than five days, following the
transmittal thereof to the Insurance Department in its jurisdiction of domicile
(the Borrower being deemed for this purpose to be domiciled in the Cayman
Islands and Bermuda), a copy of the "Statement of Actuarial Opinion" or similar
actuarial statement delivered to such Insurance Department as to the adequacy of
each Insurance Subsidiary's loss reserves, which opinion shall be in conformity
with the requirements of such Insurance Department;
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(vii) promptly, but in no event more than five days, following
the transmittal thereof by or on behalf of each Insurance Subsidiary to the
Insurance Department in its jurisdiction of domicile (the Borrower being deemed
for this purpose to be domiciled in the Cayman Islands and Bermuda), a copy of
the management discussion and analysis or similar statement filed with such
Insurance Department for such Insurance Subsidiary with respect to any financial
statements or other information;
(viii) (A) prior to March 31, 2007, a projection, supplementing
the projection referred to in Section 6.01(g)(iii)(A), showing Available
Liquidity as of the last day of each fiscal month for the period from March 31,
2007 through March 31, 2008, prepared in a manner consistent with the projection
referred to in Section 6.01(g)(iii) and otherwise in form and scope satisfactory
to the Agent, and (B) as soon as available and in any event not later than
December 31, 2007, projected quarterly balance sheets and income statements of
the Parent and its Subsidiaries and the Borrower and its Subsidiaries for the
Fiscal Year ending in 2008, supplementing and superseding the financial
projections referred to in Section 6.01(g)(iii)(B), in form and substance
satisfactory to the Agent, all such financial projections to be certified by an
Authorized Officer of the Parent as being reasonable, to be prepared on a
reasonable basis and in good faith, and to be based on assumptions believed by
the Parent to be reasonable at the time made and from the best information then
available to the Parent;
(ix) promptly after any request by the Agent, copies of any
detailed audit reports, management letters or recommendations submitted to the
Board of Directors (or the audit committee of the Board of Directors) of any
Loan Party by independent accountants in connection with the accounts or books
of such Person or any of its Subsidiaries, or any audit of any of them; and
(x) promptly after the same are available, copies of each annual
report, proxy or financial statement or other report or communication sent to
the stockholders of the Parent or any holders of Indebtedness of the Parent or
any of its Subsidiaries (not held by the Parent or one of its Subsidiaries), and
copies of all annual, regular, periodic and special reports and registration
statements which the Parent or any Subsidiary may file or be required to file
with the SEC under Section 13 or 15(d) of the Exchange Act or under the rules of
any other national domestic or foreign securities exchange, and not otherwise
required to be delivered to the Agent pursuant hereto.
(b) Other Materials and Notices. Deliver to the Agent and each Lender,
in form and detail satisfactory to the Agent:
(i) promptly, and in any event within five days after receipt
thereof by the Parent or any Subsidiary thereof, copies of each notice or other
correspondence received from the SEC (or comparable agency in any applicable
non-U.S. jurisdiction) concerning any investigation or possible investigation or
other inquiry by such agency regarding financial or other operational results of
the Parent or any Subsidiary thereof.
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(ii) within five days of receipt, a copy of any financial
examination reports by a Governmental Authority with respect to a Loan Party or
any of its Insurance Subsidiaries relating to the insurance business of such
Person (when, and if, prepared) provided that a Loan Party shall only be
required to deliver any interim report hereunder at such time as such Loan Party
has knowledge that a final report will not be issued and delivered to the Agent
within 90 days of any such interim report;
(iii) within five days after the filing thereof, copies of (x)
all filings with rating agencies and (y) all filings (other than ordinary course
requalifications, nonmaterial tax and insurance rate and other ministerial
regulatory filings) with Governmental Authorities by a Loan Party or any of its
Insurance Subsidiaries, including, without limitation, filings which seek
approval of Governmental Authorities with respect to transactions between such
Loan Party or such Insurance Subsidiary and its Affiliates;
(iv) within five days of such notice, notice of proposed or
actual suspension, termination or revocation of any material license of any Loan
Party or any of its Insurance Subsidiaries by any Governmental Authority or of
receipt of notice from any Governmental Authority notifying a Loan Party or any
of its Insurance Subsidiaries of a hearing relating to such a suspension,
termination or revocation, including any request by a Governmental Authority
which commits the Parent or any of its Subsidiaries to take, or refrain from
taking, any action or which otherwise materially and adversely affects the
authority of such Loan Party or any such Insurance Subsidiary to conduct its
business;
(v) within five days of such notice, notice of any pending or
threatened investigation or regulatory proceeding (other than routine periodic
investigations or reviews) by any Governmental Authority concerning the
business, practices or operations of a Loan Party or any of its Insurance
Subsidiaries;
(vi) promptly, notice of any actual or, to the best of the
applicable Loan Party's knowledge, proposed material changes in the applicable
laws governing the investment or dividend practices of such Borrower or any of
its Insurance Subsidiaries;
(vii) promptly upon formation or acquisition of any Subsidiary
after the Effective Date, written notice of the name, purpose and capitalization
of such Subsidiary and whether such Subsidiary is an Insurance Subsidiary;
(viii) as soon as possible, and in any event within three
Business Days after an Authorized Officer of any Loan Party becomes aware
thereof, notice of (1) the occurrence of any Default or Event of Default; (2)
any matter that has resulted or could reasonably be expected to result in a
Material Adverse Effect, including (i) breach or non-performance of, or any
default under, a contractual obligation of the Parent or any of its
Subsidiaries; (ii) any dispute, litigation, investigation, proceeding or
suspension between the
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Parent or any of its Subsidiaries and any Governmental Authority; or (iii) the
commencement of, or any material development in, any litigation or proceeding
affecting the Parent or any of its Subsidiaries, including pursuant to any
applicable Environmental Laws; (3) the occurrence of any ERISA Event; (4) any
material change in accounting policies or financial reporting practices by the
Parent or any of its Subsidiaries; and (5) any announcement by ▇▇▇▇▇'▇ or
Standard & Poor's of any change or possible change in the Parent's unsecured
senior debt rating, and in the case of each of items (1) through (3),
accompanied by a statement of an Authorized Officer of the Parent setting forth
details of the occurrence and stating what action the Parent has taken and
proposes to take or cause to be taken with respect thereto;
(ix) promptly after submission to any Governmental Authority, and
in any event not later than five days after such submission is made, all
documents and information furnished to such Governmental Authority in connection
with any investigation of the Parent or any of its Subsidiaries other than
routine inquiries by such Governmental Authority;
(x) promptly after the commencement thereof but in any event not
later than five days after service of process with respect thereto on, or the
obtaining of knowledge thereof by, any Loan Party, notice of each action, suit
or proceeding before any court or other Governmental Authority or other
regulatory body or any arbitrator which, if adversely determined, could have a
Material Adverse Effect;
(xi) (A) as soon as possible, notice of any purported default or
termination under the HSBC Forbearance Agreement and (B) as soon as possible and
in any event within five days after execution, receipt or delivery thereof,
copies of any material notices that any Loan Party executes or receives in
connection with the HSBC Forbearance Agreement or any Material Contract;
(xii) as soon as possible and in any event within five days after
execution, receipt or delivery thereof, copies of any material notices that any
Loan Party executes or receives in connection with the sale or other Disposition
of the Capital Stock of, or all or substantially all of the assets of, any of
its Subsidiaries; and
(xiii) promptly, such additional information regarding the
business, financial or organizational affairs of any Loan Party or any of its
Subsidiaries, or compliance with the terms of the Loan Documents, as the Agent
or any Lender may from time to time reasonably request.
(c) Additional Guaranties; Additional Collateral. Use best efforts to
cause (and in connection therewith deliver such other relevant agreements,
instruments, approvals, legal opinions or other documents as the Agent may
reasonably request):
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(i) each Subsidiary of the Parent that is not an Insurance
Subsidiary to become a Guarantor, in the case of each such Person, at such time
as its becoming a Guarantor would not constitute a Restricted Action;
(ii) the interest of the Parent or any Security Party (i) in
personal property, tangible or intangible (including Capital Stock of a
Subsidiary), that was Restricted Property on the Effective Date but is no longer
Restricted Property, and (2) in personal property, tangible or intangible
(including Capital Stock of a Subsidiary), acquired after the Effective Date
that is not, or has ceased to be, Restricted Property, to be subjected to a
Security Document providing a first priority perfected security interest, pledge
or lien in such property in favor of the Agent for the benefit of the Lenders
within 10 Business Days following the later of the Effective Date or the date
such account ceases to be Restricted Property, subject to Permitted Liens; and
(iii) the interest of the Parent or any Security Party in bank
accounts and investment accounts listed on Schedule 6.01(u) to be subjected to a
perfected first priority security interest, pledge or lien in such property in
favor of the Agent for the benefit of the Lenders pursuant to a control
agreement within 10 Business Days following the latter of the Effective Date or
the date such account ceases to be Restricted Property, subject to Permitted
Liens described in clause (d) of the definition thereof.
Notwithstanding the foregoing, the provisions of this Section 7.01(c)
shall not apply to assets as to which the Agent shall determine in its
reasonable discretion, after consultation with the Parent, that the costs and
burdens of obtaining and/or perfecting a security interest are excessive in
relation to the value of the security afforded thereby.
(d) After-acquired Collateral.
(i) With respect to any property acquired after the Effective
Date by any Security Party (other than real property of any Subsidiary) as to
which the Agent, for the benefit of the Lenders, does not have a perfected
Security Interest, promptly, to the extent so doing would not constitute a
Restricted Action, (i) execute and deliver to the Agent such amendments to the
Security Documents or such other documents as the Agent deems necessary to grant
to the Agent, for the benefit of the Lenders, a security interest in such
property and (ii) take all actions necessary to grant to the Agent, for the
benefit of the Lenders, a perfected first priority security interest in such
property (subject to Permitted Liens), including the filing of Uniform
Commercial Code financing statements in such jurisdictions as may be required by
the relevant Security Document or by law or as may be requested by the Agent.
(ii) With respect to any fee interest in any real property having
a value (together with improvements thereof) of at least $1,000,000 acquired
after the Effective Date by the Parent or any Subsidiary, promptly, to the
extent so doing would not constitute a Restricted Action, (i) execute and
deliver a first priority mortgage, in favor of the Agent, for the benefit of
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the Lenders, covering such real property, (ii) if requested by the Agent,
provide the Lenders with (x) title and extended coverage insurance covering such
real property in an amount at least equal to the purchase price of such real
property (or such other amount as shall be reasonably specified by the Agent)
and (y) any consents or estoppels reasonably deemed necessary or advisable by
the Agent in connection with such mortgage, each of the foregoing in form and
substance reasonably satisfactory to the Agent and (iii) if requested by the
Agent, deliver to the Agent legal opinions relating to the matters described
above, which opinions shall be in form and substance, and from counsel,
reasonably satisfactory to the Agent.
(iii) With respect to any new Subsidiary created or acquired
after the Effective Date by the Parent or any Subsidiary, promptly give notice
of such acquisition or creation to the Agent and, to the extent so doing would
not constitute a Restricted Action, (i) execute and deliver to the Agent such
amendments to the Security Documents as the Agent deems necessary to grant to
the Agent, for the benefit of the Lenders, a perfected first priority security
interest in the Capital Stock of such new Subsidiary, (ii) deliver to the Agent
the certificates, if any, representing such Capital Stock, together with undated
stock powers, in blank, executed and delivered by a duly authorized officer of
the relevant grantor, (iii) cause such new Subsidiary (A) to enter into a
Security Document, and (B) to take such actions necessary to grant to the Agent
for the benefit of the Lenders a perfected security interest in its Collateral,
including the filing of Uniform Commercial Code financing statements in such
jurisdictions as may be required by the Security Document or by law or as may be
requested by the Agent and (iv) if requested by the Agent, deliver to the Agent
legal opinions relating to the matters described above, which opinions shall be
in form and substance, and from counsel, reasonably satisfactory to the Agent,
provided that no security interest shall be granted in any Restricted Property.
Notwithstanding the foregoing, the provisions of this Section 7.01(d)
shall not apply to assets as to which the Agent shall determine in its
reasonable discretion, after consultation with the Parent, that the costs and
burdens of obtaining and/or perfecting a security interest are excessive in
relation to the value of the security afforded thereby.
(e) Payment of Obligations. Pay and discharge as the same shall become
due and payable, all its obligations and liabilities, including (i) all tax
liabilities, assessments and governmental charges or levies upon it or its
properties or assets, unless the same are being contested in good faith by
appropriate proceedings diligently conducted and adequate reserves in accordance
with GAAP are being maintained by the Person subject thereto; (ii) all lawful
claims which, if unpaid, would by law become a Lien upon its property, other
than Liens described in clause (b) or (c) of the definition of Permitted Liens;
and (iii) all Indebtedness, as and when due and payable, but subject to any
subordination provisions contained in any instrument or agreement evidencing
such Indebtedness.
(f) Preservation of Existence, Etc. (i) Preserve, renew and maintain
in full force and effect its legal existence and good standing (to the extent
such concept is applicable) under the laws of the jurisdiction of its
organization except in a transaction permitted by
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Section 7.02(c); (ii) take all reasonable action to maintain all rights,
privileges, permits, licenses and franchises necessary or desirable in the
normal conduct of its business, except to the extent that failure to do so could
not reasonably be expected to have a Material Adverse Effect; and (iii) preserve
or renew all of its registered Intellectual Property, the non-preservation of
which could reasonably be expected to have a Material Adverse Effect.
(g) Maintenance of Properties. (i) Maintain, preserve and protect all
of its material properties and equipment necessary in the operation of its
business in good working order and condition, ordinary wear and tear excepted;
and (ii) make all necessary repairs thereto and renewals and replacements
thereof except where the failure to do so could not reasonably be expected to
have a Material Adverse Effect.
(h) Maintenance of Insurance. Maintain with financially sound and
reputable insurance companies not Affiliates of the Parent, insurance with
respect to its properties and business against loss or damage of the kinds
customarily insured against by Persons engaged in the same or similar business,
of such types and in such amounts as are customarily carried under similar
circumstances by such other Persons.
(i) Compliance with Laws. Comply, and cause each of its Subsidiaries
to comply, in all material respects with all applicable laws, rules,
regulations, writs orders (including, without limitation, all Environmental
Laws), judgments, decrees and awards (including any settlement of any claim
that, if breached, could give rise to any of the foregoing), such compliance to
include, without limitation, (i) paying before the same become delinquent all
taxes, assessments and governmental charges or levies imposed upon it or upon
its income or profits or upon any of its properties, and (ii) paying all lawful
claims which if unpaid might become a Lien or charge upon any of its properties,
except, in each case, to the extent contested in good faith by proper
proceedings which stay the imposition of any penalty, fine or Lien resulting
from the non-payment thereof and with respect to which adequate reserves have
been set aside for the payment thereof in accordance with GAAP.
(j) Environmental. (i) Keep any property either owned or operated by
it or any of its Subsidiaries free of any Environmental Liens; (ii) comply, and
cause each of its Subsidiaries to comply, in all material respects with
Environmental Laws and provide to the Agent any documentation of such compliance
which the Agent may reasonably request; (iii) provide the Agent written notice
within five (5) days of any Release of a Hazardous Material in excess of any
reportable quantity from or onto property at any time owned or operated by it or
any of its Subsidiaries and take any Remedial Actions required to ▇▇▇▇▇ said
Release; (iv) provide the Agent with written notice within ten (10) days of the
receipt of any of the following: (A) notice that an Environmental Lien has been
filed against any property of any Loan Party or any of its Subsidiaries; (B)
commencement of any Environmental Action or notice that an Environmental Action
will be filed against any Loan Party or any of its Subsidiaries; and (C) notice
of a violation, citation or other administrative order which could have a
Material Adverse Effect and (v) defend, indemnify and hold harmless the Agent
and the Lenders and their transferees, and their respective employees, agents,
officers and directors, from and against any
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claims, demands, penalties, fines, liabilities, settlements, damages, costs or
expenses (including, without limitation, attorney and consultant fees,
investigation and laboratory fees, court costs and litigation expenses) arising
out of (A) the generation, presence, disposal, Release or threatened Release of
any Hazardous Materials on, under, in, originating or emanating from any
property at any time owned or operated by any Loan Party or any of its
Subsidiaries (or its predecessors in interest or title), (B) any personal injury
(including wrongful death) or property damage (real or personal) arising out of
or related to the presence or Release of such Hazardous Materials, (C) any
request for information, investigation, lawsuit brought or threatened,
settlement reached or order by a Governmental Authority relating to the presence
or Release of such Hazardous Materials, (D) any violation of any Environmental
Law and/or (E) any Environmental Action filed against the Agent or any Lender.
(k) Books and Records. (i) Maintain proper books of record and
account, in which full, true and correct entries in conformity with GAAP or SAP,
as applicable, consistently applied shall be made of all financial transactions
and matters involving the assets and business of such Person as the case may be,
and (ii) maintain such books of record and account in material conformity with
all applicable requirements of any Governmental Authority having regulatory
jurisdiction over such Person as the case may be.
(l) Inspection Rights. Permit representatives and independent
contractors of the Agent and each Lender to visit and inspect any of its
properties, to examine its organizational, financial and operating records, and
make copies thereof or abstracts therefrom, and to discuss its affairs, finances
and accounts with its directors, officers, and independent public accountants,
all at the expense of the Borrower and at such reasonable times during normal
business hours and as often as may be reasonably desired, upon reasonable
advance notice to the Borrower; provided, however, that when an Event of Default
exists and is continuing the Agent or any Lender (or any of their respective
representatives or independent contractors) may do any of the foregoing at the
expense of the Borrower at any time during normal business hours and without
advance notice. In furtherance of the foregoing, each Loan Party hereby
authorizes its independent accountants, and the independent accountants of each
of its Subsidiaries, to discuss the affairs, finances and accounts of such
Person (independently or together with representatives of such Person) with the
agents and representatives of the Agent in accordance with this Section 7.01(l).
(m) Use of Proceeds. Use the proceeds of the Term Loan solely in the
manner set forth in the Recitals.
(n) Approvals and Authorizations. Maintain all authorizations,
consents, approvals and licenses from, exemptions of, and filings and
registrations (i) with, each Governmental Authority of the jurisdiction in which
the Parent, the Borrower and each of its Parent's other Subsidiaries is
organized and existing, and (ii) with each Governmental Authority of any other
jurisdiction in which such action is necessary for the conduct of the business
of any Insurance Subsidiary doing business in such jurisdiction or in which such
action is required for
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the conduct for its business as to be conducted (unless in the case of this
clause (ii), the failure to take such action could not reasonably be expected
to have a Material Adverse Effect).
(o) Further Assurances. Take such action and execute, acknowledge and
deliver, and cause each of its Subsidiaries to take such action and execute,
acknowledge and deliver, at its sole cost and expense, such agreements,
instruments or other documents as the Agent may reasonably require from time to
time in order (i) to carry out more effectively the purposes of this Agreement
and the other Loan Documents, (ii) to subject to valid and perfected first
priority Liens any of the Collateral, (iii) to establish and maintain the
validity and effectiveness of any of the Loan Documents and the validity,
perfection and priority of the Liens intended to be created thereby, and (iv) to
better assure, convey, grant, assign, transfer and confirm unto the Agent and
each Lender the rights now or hereafter intended to be granted to it under this
Agreement or any other Loan Document. In furtherance of the foregoing, to the
maximum extent permitted by applicable law, each Loan Party (i) authorizes the
Agent to execute any such agreements, instruments or other documents in such
Loan Party's name and to file such agreements, instruments or other documents in
any appropriate filing office, (ii) authorizes the Agent to file any financing
statement required hereunder or under any other Loan Document under which such
Loan party is a debtor, and any continuation statement or amendment with respect
thereto, in any appropriate filing office without the signature of such Loan
Party, and (iii) ratifies the filing of any financing statement, and any
continuation statement or amendment with respect thereto, filed without the
signature of such Loan Party.
(p) Subordination. Cause all Indebtedness and other obligations (other
than any obligations arising under any Keep Well Agreements) now or hereafter
owed by any Credit Party to any of its Affiliates (other than (i) Orkney
Holdings, LLC, Orkney Re, Inc., Orkney Re II plc and Ballantyne Re plc and (ii)
subject to the obligations of the Loan Parties under Section 7.01(s), SRE, SRL,
SRD and SRLC for as long as such subordination would constitute a Restricted
Action), to be subordinated in right of payment and security to the Indebtedness
and other Obligations owing from such Credit Party to the Agent and the Lenders
under the terms of the Intercreditor Deed, unless such subordination would
constitute a Restricted Action.
(q) Fiscal Year. Cause the Fiscal Year of the Parent and its
Subsidiaries to end on December 31 of each calendar year unless the Agent
consents to a change in such Fiscal Year (and appropriate related changes to
this Agreement).
(r) Funds Concentration. Operate its business (to the extent
consistent with the fiduciary responsibilities of the board of directors of the
Parent and each Subsidiary and except to the extent that any of the following
would constitute a Restricted Action) so that (i) cash and investments not
required for the current operations of itself and its Subsidiaries are held in
cash accounts or investment accounts of the Borrower in which the Agent has a
perfected first priority security interest, subject to Liens permitted by
subsection (d) of the definition of Permitted Liens, (ii) the Borrower does not
advance funds to or invest in any of its Subsidiaries that are not Loan Parties
except when necessary in the ordinary course business operations of a Subsidiary
or required under applicable insurance regulatory requirements and rating agency
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requirements, including, but not limited to, settlements under inter-company
retrocessions and payments under inter-company agreements, including Keep Well
Agreements; and (iii) each of its Subsidiaries transfers to the Borrower
promptly the ownership of funds and investments surplus to the ordinary course
of business requirements of such Subsidiary and the Borrower, in turn, shall
promptly deposit such funds in cash accounts or investment accounts in which the
Agent has a perfected first priority security interest, subject to Liens
permitted by subsection (d) of the definition of Permitted Liens.
(s) Post-Closing Obligations. Deliver the documents and perform the
actions described in Schedule 7.01(s), each in the time period as set forth
therein. The terms and provisions of Schedule 7.01(s) are incorporated herein by
reference.
Section 7.02 Negative Covenants. So long as any principal of or
interest on the Loan or any other Obligation (whether or not due) shall remain
unpaid, each Loan Party shall not, unless the Required Lenders shall otherwise
consent in writing:
(a) Liens, Etc. Create, incur, assume or suffer to exist, or permit
any of its Subsidiaries to create, incur, assume or suffer to exist, any Lien
upon or with respect to any of its properties, assets or revenues, whether now
owned or hereafter acquired; file or suffer to exist under the Uniform
Commercial Code or any similar law or statute of any jurisdiction, a financing
statement (or the equivalent thereof) that names it or any of its Subsidiaries
as debtor; sign or suffer to exist any security agreement authorizing any
secured party thereunder to file such financing statement (or the equivalent
thereof); sell any of its property or assets subject to an understanding or
agreement, contingent or otherwise, to repurchase such property or assets
(including sales of accounts receivable) with recourse to it or any of its
Subsidiaries or assign or otherwise transfer, or permit any of its Subsidiaries
to assign or otherwise transfer, any account or other right to receive income;
other than, as to all of the above, Permitted Liens.
(b) Indebtedness. Create, incur, assume, guarantee or suffer to exist,
or otherwise become or remain liable with respect to, or permit any of its
Subsidiaries to create, incur, assume, guarantee or suffer to exist or otherwise
become or remain liable with respect to, any Indebtedness other than Permitted
Indebtedness.
(c) Fundamental Changes; Dispositions. Wind-up, liquidate or dissolve,
or merge, consolidate or amalgamate with any Person, or convey, sell, lease or
sublease, transfer or otherwise dispose of, whether in one transaction or a
series of related transactions, all or any part of its business, property or
assets, whether now owned or hereafter acquired (or agree to do any of the
foregoing), or purchase or otherwise acquire, whether in one transaction or a
series of related transactions, all or any part of the assets of any Person (or
any division thereof) (or agree to do any of the foregoing), or permit any of
its Subsidiaries to do any of the foregoing; provided, however, that
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(i) any wholly-owned Subsidiary of any Loan Party (other than
another Loan Party) may be merged into such Loan Party or another wholly-owned
Subsidiary of such Loan Party, or may consolidate with another wholly-owned
Subsidiary of such Loan Party, so long as (A) no other provision of this
Agreement would be violated thereby, (B) such Loan Party gives the Agent at
least 60 days' prior written notice of such merger or consolidation, (C) no
Default or Event of Default shall have occurred and be continuing either before
or after giving effect to such transaction, and (D) the Lenders' rights in any
Collateral, including, without limitation, the existence, perfection and
priority of any Lien thereon, are not adversely affected by such merger;
(ii) any Loan Party and its Subsidiaries may (A) dispose of
obsolete or worn-out equipment in the ordinary course of business, and (B)
otherwise enter into any Disposition for cash in an aggregate amount not less
than the fair market value of such property or assets, provided that (x) the
cash proceeds of such Dispositions do not, individually or in the aggregate,
exceed $5,000,000 during the period from the Effective Date to the Final
Maturity Date and (y) the Transferable Net Cash Proceeds of such Dispositions
are paid to the Agent for the benefit of the Lenders to the extent required by
the terms of Section 2.05(b)(i); and
(iii) any Loan Party and its Subsidiaries may purchase or sell
assets in the ordinary course of their respective existing businesses (in
accordance with the Investment Policies, to the extent applicable) to the extent
not restricted by any other provisions of this Agreement.
(d) Change in Nature of Business. Make, or permit any of its
Subsidiaries to make, any change in the nature of its business described in
Section 6.01(l).
(e) Loans, Advances, Investments, Etc. Make or commit or agree to make
any loan, advance guarantee of obligations, other extension of credit or capital
contributions to, or hold or invest in or commit or agree to hold or invest in,
or purchase or otherwise acquire or commit or agree to purchase or otherwise
acquire any shares of the Capital Stock, bonds, notes, debentures or other
securities of, or make or commit or agree to make any other investment in, any
other Person, or purchase or own any futures contract or otherwise become liable
for the purchase or sale of currency or other commodities at a future date in
the nature of a futures contract, or permit any of its Subsidiaries to do any of
the foregoing, except for: (i) investments acquired by it or its Subsidiaries in
accordance with the Investment Policies, (ii) investments existing on the date
hereof, as set forth on Schedule 7.02(e) hereto, but not any increase in the
amount thereof as set forth in such Schedule or any other modification of the
terms thereof, (iii) so long as no Default or Event of Default shall have
occurred (or would occur as a result thereof), (A) loans and advances by it to a
Loan Party (other than the Parent) and (B) additional loans and advances made to
any Subsidiary of the Parent in the ordinary course of business of the lending
entity, including, without limitation, pursuant to Keep Well Agreements, and
(iv) Permitted Investments.
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(f) Lease Obligations. Create, incur or suffer to exist, or permit any
of its Subsidiaries to create, incur or suffer to exist, any obligations as
lessee (i) for the payment of rent for any real or personal property in
connection with any sale and leaseback transaction, or (ii) for the payment of
rent for any real or personal property under leases or agreements to lease,
other than Operating Lease Obligations listed on Schedules 6.01(q) and
additional Operating Lease Obligations which would not cause the aggregate
amount of all Operating Lease Obligations owing by all Loan Parties and their
Subsidiaries in any Fiscal Year to exceed $5,000,000.
(g) Capital Expenditures. Make or commit or agree to make, or permit
any of its Subsidiaries to make or commit or agree to make, any Capital
Expenditure (by purchase or Capitalized Lease or otherwise) other than Capital
Expenditures described in subclause (iii) of the definition thereof in an
aggregate amount not to exceed $10,000,000 during the period from the Effective
Date through the Final Maturity Date.
(h) Restricted Payments. (i) Declare or pay any dividend or other
distribution, direct or indirect, on account of any Capital Stock of any Loan
Party or any of its Subsidiaries, now or hereafter outstanding, (ii) make any
repurchase, redemption, retirement, defeasance, sinking fund or similar payment,
purchase or other acquisition for value, direct or indirect, of any Capital
Stock of any Loan Party or any direct or indirect parent of any Loan Party, now
or hereafter outstanding, (iii) make any payment to retire, or to obtain the
surrender of, any outstanding warrants, options or other rights for the purchase
or acquisition of shares of any class of Capital Stock of any Loan Party, now or
hereafter outstanding, (iv) return any Capital Stock to any shareholders or
other equity holders of any Loan Party or any of its Subsidiaries, or make any
other distribution of property, assets, shares of Capital Stock, warrants,
rights, options, obligations or securities thereto as such, (v) make any
voluntary or optional payment, or redeem, defease, prepay, any unsecured or
subordinated Indebtedness or (vi) except as set forth on Schedule 7.02(h), pay
any management fees or any other fees or expenses (including the reimbursement
thereof by any Loan Party or any of its Subsidiaries) pursuant to any
management, consulting or other services agreement to any of the shareholders or
other equityholders of any Loan Party or any of its Subsidiaries or other
Affiliates, or to any other Subsidiaries or Affiliates of any Loan Party (all of
the foregoing collectively "Restricted Payments"); provided, however, (A) any
Loan Party or other Subsidiary of the Parent may, so long as no Default or Event
of Default shall have occurred, make Restricted Payments to the Parent and the
Parent may make Restricted Payments (1) to enable the Parent to redeem (or in
the case of the Parent to redeem) the outstanding Convertible Preferred
Securities on May 21, 2007 for cash consideration not exceeding $7,400,000, (2)
to enable the Parent to pay (or in the case of the Parent to pay) the scheduled
dividend on May 21, 2007 to the holders of the Convertible Preferred Securities
in an aggregate amount not to exceed $250,000 and (3) to enable the Parent to
pay (or in the case of the Parent to pay) regular quarterly dividends to the
holders of the Parent's Non-Cumulative Perpetual Preferred Shares, with a
liquidation preference of $25 per share, in an aggregate amount not to exceed
$9,100,000, and (B) any Subsidiary of the Parent may make Restricted Payments to
the Borrower or to any other Subsidiary of the Parent (other than the Parent).
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(i) Federal Reserve Regulations. Permit the Loan or the proceeds of
the Loan under this Agreement to be used by it or any of its Subsidiaries for
any purpose that would cause such Loan to be a margin loan under the provisions
of Regulation T, U or X of the FRS Board.
(j) Transactions with Affiliates. Enter into, renew, extend or be a
party to, or permit any of its Subsidiaries to enter into, renew, extend or be a
party to, any transaction or series of related transactions (including, without
limitation, the purchase, sale, lease, transfer or exchange of property or
assets of any kind or the rendering of services of any kind) with any Affiliate,
except (i) in the ordinary course of business in a manner and to an extent
consistent with past practice and necessary or desirable for the prudent
operation of its business, for fair consideration and on terms no less favorable
to it or its Subsidiaries than would be obtainable in a comparable arm's length
transaction with a Person that is not an Affiliate thereof, (ii) transactions
between or among any Loan Parties or between the Borrower and any Subsidiaries
of the Parent on terms favorable to the Borrower and (iii) Keep Well Agreements.
(k) Limitations on Dividends and Other Payment Restrictions Affecting
Subsidiaries. Create or otherwise cause, incur, assume, suffer or permit to
exist or become effective any consensual encumbrance or restriction of any kind
on its ability or the ability of any Subsidiary of any Loan Party (i) to pay
dividends or to make any other distribution on any shares of Capital Stock of
such Subsidiary owned by any Loan Party or any of its Subsidiaries, (ii) to pay
or prepay or to subordinate any Indebtedness owed to any Loan Party or any of
its Subsidiaries, (iii) to make loans or advances to any Loan Party or any of
its Subsidiaries or (iv) to transfer any of its property or assets (x) to any
Loan Party or any of its Subsidiaries or (y) except for any such restrictions as
are listed on Schedule 7.02(k), to any person, or permit any of its Subsidiaries
to do any of the foregoing; provided, however, that nothing in any of clauses
(i) through (iv) of this Section 7.02(k) shall prohibit or restrict compliance
with:
(A) this Agreement and the other Loan Documents;
(B) any agreements in effect on the date of this Agreement
and described on Schedule 7.02(k);
(C) any applicable law, rule or regulation (including,
without limitation, applicable currency control laws,
applicable insurance laws and applicable state
corporate statutes restricting the payment of dividends
in certain circumstances);
(D) in the case of clause (k)(iv), any agreement setting
forth customary restrictions on the subletting,
assignment or transfer of any property or asset that is
a lease, license, conveyance or contract of similar
property or assets; or
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(E) in the case of clause (k)(iv), any agreement,
instrument or other document evidencing a Permitted
Lien restricting on customary terms the transfer of any
property or assets subject thereto.
(l) Limitation on Issuance of Capital Stock. Except pursuant to the
Securities Purchase Agreement, issue or sell or enter into any agreement or
arrangement for the issuance and sale of, or permit any of its Subsidiaries to
issue or sell or enter into any agreement or arrangement for the issuance and
sale of, any shares of its Capital Stock, any securities convertible into or
exchangeable for its Capital Stock or any warrants.
(m) Modifications of Indebtedness, Organizational Documents and
Certain Other Agreements; Etc. (i) Amend, modify, waive or otherwise change (or
permit the amendment, modification or other change in any manner of) any of the
provisions of any of its or its Subsidiaries' Indebtedness or of any instrument
or agreement (including, without limitation, any purchase agreement, indenture,
loan agreement or security agreement) relating to any such Indebtedness if such
amendment, modification, waiver or change would shorten the final maturity or
average life to maturity of, or require any payment to be made earlier than the
date originally scheduled on, such Indebtedness, would increase the interest
rate applicable to such Indebtedness, would change the subordination provision,
if any, of such Indebtedness, or would otherwise be adverse to the Lenders or
the issuer of such Indebtedness in any respect, (ii) except for the Obligations,
make any voluntary or optional payment, prepayment, redemption, defeasance,
sinking fund payment or other acquisition for value of any of its or its
Affiliates Indebtedness (including, without limitation, by way of depositing
money or securities with the trustee therefor before the date required for the
purpose of paying any portion of such Indebtedness when due), or refund,
refinance, replace or exchange any other Indebtedness for any such Indebtedness
(except to the extent such new Indebtedness is otherwise expressly permitted by
the definition of "Permitted Indebtedness"), or make any payment, prepayment,
redemption, defeasance, sinking fund payment or repurchase of any outstanding
Indebtedness as a result of any asset sale, change of control, issuance and sale
of debt or equity securities or similar event, or give any notice with respect
to any of the foregoing, (iii) except as permitted by Section 7.02(c), amend,
modify or otherwise change its name, jurisdiction of organization,
organizational identification number or FEIN or (iv) amend, modify or otherwise
change its certificate of incorporation or bylaws (or other similar
organizational documents), including, without limitation, by the filing or
modification of any certificate of designation, or any agreement or arrangement
entered into by it, with respect to any of its Capital Stock (including any
shareholders' agreement), or enter into any new agreement with respect to any of
its Capital Stock.
(n) Investment Company Act of 1940. Engage in any business, enter into
any transaction, use any securities or take any other action or permit any of
its Subsidiaries to do any of the foregoing, that would cause it or any of its
Subsidiaries to become subject to the registration requirements of the
Investment Company Act of 1940, as amended, by virtue of being an
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"investment company" or a company "controlled" by an "investment company" not
entitled to an exemption within the meaning of such Act.
(o) ERISA. (i) Engage, or permit any ERISA Affiliate to engage, in any
transaction described in Section 4069 of ERISA; (ii) engage, or permit any ERISA
Affiliate to engage, in any prohibited transaction described in Section 406 of
ERISA or 4975 of the Internal Revenue Code for which a statutory or class
exemption is not available or a private exemption has not previously been
obtained from the U.S. Department of Labor; (iii) adopt or permit any ERISA
Affiliate to adopt any employee welfare benefit plan within the meaning of
Section 3(1) of ERISA which provides benefits to employees after termination of
employment other than as required by Section 601 of ERISA or applicable law;
(iv) fail to make any contribution or payment to any Multiemployer Plan which it
or any ERISA Affiliate may be required to make under any agreement relating to
such Multiemployer Plan, or any law pertaining thereto; or (v) fail, or permit
any ERISA Affiliate to fail, to pay any required installment or any other
payment required under Section 412 of the Internal Revenue Code on or before the
due date for such installment or other payment.
(p) Environmental. Permit the use, handling, generation, storage,
treatment, Release or disposal of Hazardous Materials at any property owned or
leased by it or any of its Subsidiaries, except in compliance with Environmental
Laws and so long as such use, handling, generation, storage, treatment, Release
or disposal of Hazardous Material does not result in a Material Adverse Effect.
(q) Certain Agreements. Agree to or permit any of its Subsidiaries to
agree to any material amendment or other material change to or material waiver
of any of its rights under any Material Contract.
(r) Restriction on Ceding Business. Enter into or permit any Insurance
Subsidiary to enter into any reinsurance or retrocession agreement under which
such Loan Party or such Insurance Subsidiary is the ceding or retroceding party
other than in the ordinary course of business consistent with past practices.
(s) HSBC Forbearance Agreement. (i) Fail to take any action (or to
omit to take any action) necessary to maintain the HSBC Forbearance Agreement in
full force and effect or (ii) agree to any amendment, modification or waiver of
any of the terms thereof in a manner that would be adverse to the Parent without
the consent of the Required Lenders.
Section 7.03 Financial Covenants.
(a) So long as any principal of or interest on the Loan or any other
Obligation (whether or not due) shall remain unpaid, unless the Required Lenders
shall otherwise consent in writing:
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(i) SALIC Net Worth. SALIC shall not fail to maintain a Net Worth
of at least $800,000,000.
(ii) Parent Net Worth. The Parent shall not fail to maintain a
Net Worth of at least $845,000,000.
(iii) Minimum Liquidity. The Parent and the Borrower shall not
fail to maintain at least $20,000,000 of (i) Available Liquidity plus (ii)
remaining available Commitments hereunder.
(iv) Parent Debt to Capitalization Ratio. The Parent shall not
fail to maintain the Parent Debt to Capitalization Ratio at 32% or less.
(v) Minimum Risk-Based Capital. The Parent shall not fail to
cause SRE to maintain Total Adjusted Capital at no less than 175% of the Company
Action Level RBC of SRE, where "Total Adjusted Capital" and "Company Action
Level RBC" have the respective meanings given in Section 5801 of the Delaware
Insurance Code.
(vi) Minimum Policyholder Surplus. The Parent shall not permit
the net worth of SALIC (excluding inadmissible assets), determined in accordance
with SAP and as filed with SALIC's Cayman regulators, to be less than
$800,000,000.
(vii) Cumulative Liquidity Change. The Parent and the Borrower
shall not permit the Cumulative Liquidity Change as of the last day of any
calendar month to be a negative amount having a higher absolute value than the
absolute value of the respective negative amount set forth for such day below:
------------------------------------------------------------------------------
Maximum Permitted Change
(amounts in parentheses
Last day of Calendar Month being negative amounts)
-------------------------- -----------------------
------------------------------------------------------------------------------
March 31, 2007 ($22,700,000)
------------------------------------------------------------------------------
April 30, 2007 ($40,200,000)
------------------------------------------------------------------------------
May 31, 2007 ($75,200,000)
------------------------------------------------------------------------------
June 30, 2007 ($82,600,000)
----------------------------------------------------------------------------
July 31, 2007 ($92,600,000)
----------------------------------------------------------------------------
August 31, 2007 ($112,100,000)
----------------------------------------------------------------------------
September 30, 2007 ($116,800,000)
----------------------------------------------------------------------------
October 31, 2007 ($126,800,000)
----------------------------------------------------------------------------
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----------------------------------------------------------------------------
November 30, 2007 ($141,800,000)
----------------------------------------------------------------------------
December 31, 2007 ($141,300,000)
----------------------------------------------------------------------------
January 31, 2008 ($151,300,000)
----------------------------------------------------------------------------
February 29, 2008 ($161,300,000)
----------------------------------------------------------------------------
(b) Calculation of Parent Financial Covenants. For purposes of
calculating the Parent Debt to Capitalization Ratio, any mezzanine equity,
Convertible Preferred Securities or Perpetual Preferred Stock issued by the
Parent will be accorded the same treatment as given to such mezzanine equity,
Convertible Preferred Securities or Perpetual Preferred Stock by ▇▇▇▇▇'▇. For
purposes of calculating the Parent Debt to Capitalization Ratio, Indebtedness
under Alternative Reserve Agreements will be excluded if ▇▇▇▇▇'▇ does not
include Indebtedness under such Alternative Reserve Agreement as financial
leverage.
ARTICLE VIII
EVENTS OF DEFAULT
Section 8.01 Events of Default. If any of the following Events of
Default shall occur and be continuing:
(a) the Borrower shall (i) fail to pay any principal on the Loan when
due, or (ii) fail to pay any interest on the Loan, any Agent Advance or any fee,
indemnity or other amount payable under this Agreement or any other Loan
Document on or before the date that is two Business Days after the date when due
(whether by scheduled maturity, required prepayment, acceleration, demand or
otherwise);
(b) any representation or warranty, certification or statement of fact
made or deemed made by or on behalf of any Credit Party or by any officer of the
foregoing under or in connection with any Loan Document or under or in
connection with any report, certificate, or other document delivered to the
Agent or any Lender pursuant to any Loan Document shall have been incorrect in
any material respect when made or deemed made;
(c) any Loan Party shall fail to perform or comply with any covenant
or agreement contained in paragraphs (b), (c), (d), (e), (f), (g), (h), (i),
(j), (k), (l), (m), (r) or (s) of Section 7.01, Section 7.02 or Section 7.03, or
any Credit Party shall fail to perform or comply with any covenant or agreement
contained in any Security Document to which it is a party (after the expiration
of any grace period or cure period provided for therein) or any Security
Document is enforced in accordance with its terms;
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(d) any Credit Party shall fail to perform or comply with (i) any
term, covenant or agreement contained in Section 7.01(a) of this Agreement
(other than subparagraphs (vi), (vii), (viii), (ix) and (x) thereof) and such
failure, if capable of being remedied, shall remain unremedied for a period of
10 days, (ii) any term, covenant or agreement contained in subparagraphs (vi),
(vii), (viii), (ix) and (x) of Section 7.01(a) of this Agreement and such
failure, if capable of being remedied, shall remain unremedied for a period of
five (5) days, and (iii) any other term, covenant or agreement contained in any
Loan Document to be performed or observed by it and, except as set forth in
subsections (a), (b), (c) or (d) of this Section 8.01, such failure, if capable
of being remedied, shall remain unremedied for 20 days after the earlier of the
date a senior officer of any Loan Party becomes aware of such failure and the
date written notice of such default shall have been given by the Agent to the
Borrower;
(e) the Parent or any of its Subsidiaries shall fail to pay any
principal of or interest or premium on any of its Indebtedness (excluding
Indebtedness evidenced by this Agreement), to the extent that the aggregate
principal amount of all such Indebtedness exceeds $10,000,000, when due (whether
by scheduled maturity, required prepayment, acceleration, demand or otherwise)
and such failure shall continue after the applicable grace period, if any,
specified in the agreement or instrument relating to such Indebtedness, or any
other default under any agreement or instrument relating to any such
Indebtedness, or any other event, shall occur and shall continue after the
applicable grace period, if any, specified in such agreement or instrument, if
the effect of such default or event is to accelerate, or to permit the
acceleration of, the maturity of such Indebtedness; or any such Indebtedness
shall be declared to be due and payable, or required to be prepaid (other than
by a regularly scheduled required prepayment), redeemed, purchased or defeased
or an offer to prepay, redeem, purchase or defease such Indebtedness shall be
required to be made, in each case, prior to the stated maturity thereof;
(f) there occurs under any Swap Contract an Early Termination Date (as
defined in such Swap Contract) resulting from (i) any event of default under
such Swap Contract as to which the Parent or any of its Significant Subsidiaries
is the Defaulting Party (as defined in such Swap Contract) or the guarantor of
the obligations of the Defaulting Party or (ii) any Termination Event (as so
defined) under such Swap Contract as to which such Person is an Affected Party
(as so defined) or the guarantor of the obligations of such Affected Party other
than an Early Termination Event (as defined in the relevant Swap Contract) which
permits the counterparty to terminate for its convenience and, in either event,
the aggregate amount of all such Swap Termination Values owed by such Persons as
a result thereof is greater than $10,000,000;
(g) the Parent or any of its Subsidiaries (i) shall institute, or
consent to the institution of any proceeding or voluntary case seeking to
adjudicate it bankrupt or insolvent, or seeking dissolution, liquidation,
winding up, examinership, administration, reorganization, arrangement,
adjustment, moratorium, rehabilitation, protection, relief, compromise or
composition of it or its debts under any law relating to bankruptcy, insolvency,
reorganization or relief of debtors, or seeking the entry of an order for relief
or the appointment of a receiver, administrator, administrative receiver,
examiner, compulsory manager, trustee, custodian or
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other similar official for any such Person or for any substantial part of its
property, (ii) shall be generally not paying its debts as such debts become due
or shall admit in writing its inability to pay its debts generally, (iii) shall
make a general assignment for the benefit of creditors, or (iv) shall take any
action to authorize or effect any of the actions set forth above in this
subsection (g);
(h) any proceeding shall be instituted against the Parent or any of
its Subsidiaries seeking to adjudicate it bankrupt or insolvent, or seeking
dissolution, liquidation, winding up, administration, reorganization,
examinership, composition, compromise, arrangement, adjustment, moratorium,
protection, rehabilitation, relief of debtors, or seeking the entry of an order
for relief or the appointment of a receiver, examiner, administrator,
administrative receiver, compulsory manager, trustee, custodian or other similar
official for any such Person or for any substantial part of its property, and
either such proceeding shall remain undismissed or unstayed for a period of 60
days or any of the actions sought in such proceeding (including, without
limitation, the entry of an order for relief against any such Person or the
appointment of a receiver, trustee, custodian or other similar official for it
or for any substantial part of its property) shall occur;
(i) any provision of any Loan Document shall at any time for any
reason (other than pursuant to the express terms thereof) cease to be valid and
binding on or enforceable against the Credit Party intended to be a party
thereto, or the validity or enforceability thereof shall be contested by any
party thereto, or a proceeding shall be commenced by any Credit Party or any
Governmental Authority having jurisdiction over any of them, seeking to
establish the invalidity or unenforceability thereof, or any such Person shall
deny in writing that it has any liability or obligation purported to be created
under any Loan Document or purports to revoke, terminate or rescind any Loan
Document;
(j) any Security Document after delivery thereof pursuant hereto,
shall for any reason fail or cease to create a valid and perfected and, except
to the extent permitted by the terms hereof or thereof, first priority security
interest, pledge or lien in favor of the Agent for the benefit of the Agent and
the Lenders on any material portion of the Collateral purported to be covered
thereby;
(k) any bank at which any deposit account, blocked account, or lockbox
account of any Credit Party is maintained shall fail to comply in any material
respect with any of the terms of any deposit account, blocked account, lockbox
account or similar agreement to which such bank is a party or any securities
intermediary, commodity intermediary or other financial institution at any time
in custody, control or possession of any investment property of any Credit Party
shall fail to comply in any material respect with any of the terms of any
investment property control agreement to which such Person is a party;
(l) one or more judgments, orders or awards (or any settlement of any
claim that, if breached, could result in a judgment, order or award) for the
payment of money
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exceeding $10,000,000 in the aggregate shall be rendered against the Parent or
any of its Subsidiaries and remain unsatisfied and either (i) enforcement
proceedings shall have been commenced by any creditor upon any such judgment,
order, award or settlement, (ii) there shall be a period of 10 consecutive days
after entry thereof during which a stay of enforcement of any such judgment,
order, award or settlement, by reason of a pending appeal or otherwise, shall
not be in effect, or (iii) at any time during which a stay of enforcement of any
such judgment, order, award or settlement, by reason of a pending appeal or
otherwise, is in effect, such judgment, order, award or settlement is not bonded
in the full amount of such judgment, order, award or settlement; provided,
however, that any such judgment, order, award or settlement shall not give rise
to an Event of Default under this subsection (l) if and for so long as (A) the
amount of such judgment, order, award or settlement is covered by a valid and
binding policy of insurance between the defendant and the insurer covering full
payment thereof and (B) such insurer has been notified, and has not disputed the
claim made for payment, of the amount of such judgment, order, award or
settlement;
(m) the Parent or any of its Subsidiaries is enjoined, restrained or
in any way prevented by the order of any court or any Governmental Authority
from conducting all or any material part of its business for more than fifteen
(15) days;
(n) any cessation of a substantial part of the business of the Parent
or any of its Subsidiaries for a period which materially and adversely affects
the ability of such Person to continue its business on a profitable basis;
(o) the loss, suspension or revocation of, or failure to renew, any
license or permit now held or hereafter acquired by the Parent or any of its
Subsidiaries, if such loss, suspension, revocation or failure to renew could
reasonably be expected to result in a Material Adverse Effect;
(p) the indictment, or the threatened indictment of the Parent or any
of its Subsidiaries under any criminal statute, or commencement or threatened
commencement of criminal or civil proceedings against such Person, pursuant to
which statute or proceedings the penalties or remedies sought or available
include forfeiture to any Governmental Authority of any material portion of the
property of such Person;
(q) (i) An ERISA Event occurs with respect to an Employee Plan or
Multiemployer Plan which has resulted or could reasonably be expected to result
in liability of the Borrower under Title IV of ERISA to the Employee Plan,
Multiemployer Plan or the PBGC, or (ii) the Borrower or any ERISA Affiliate
fails to pay when due, after the expiration of any applicable grace period, any
installment payment with respect to its withdrawal liability under Section 4201
of ERISA under a Multiemployer Plan or (iii) institution of any steps by a
Foreign Obligor or any other Person to terminate a Foreign Benefit Plan if as a
result of such termination, a Foreign Obligor or any of their respective
Subsidiaries could be required to make a contribution to such Foreign Benefit
Plan, or could incur a liability or obligation to such Foreign
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Benefit Plan, or (iv) a contribution failure with respect to any Foreign Benefit
Plan sufficient to give rise to a Lien under applicable law occurs and the
aggregate exposure of the Parent and its Subsidiaries as a result of all such
liabilities, failures and obligations exceeds $10,000,000;
(r) the Parent fails to file with the SEC the Parent's annual report
on Form 10-K or the Parent's quarterly report on Form 10-Q prior to or within
ten (10) days after the filing deadline established by the SEC in General
Instruction A of the applicable Form, as such deadline may be extended in
accordance with Exchange Act Rule 12b-25 as in effect on the date hereof;
(s) the Securities Purchase Agreement is amended, modified or
terminated without the consent of the Required Lenders; and
(t) any breach or default by any party under any terms or provisions
of the HSBC Forbearance Agreement, or the HSBC Forbearance Agreement shall
terminate in accordance with its terms;
then, and in any such event, the Agent may, and shall at the request of the
Required Lenders, by notice to the Borrower and the Parent, declare all or any
portion of the Loan then outstanding to be due and payable, whereupon all or
such portion of the aggregate principal of the Loan, all accrued and unpaid
interest thereon, all fees and all other amounts payable under this Agreement
and the other Loan Documents shall become due and payable immediately, without
presentment, demand, protest or further notice of any kind, all of which are
hereby expressly waived by each Loan Party and exercise any and all of its other
rights and remedies under applicable law, hereunder and under the other Loan
Documents; provided, however, that upon the occurrence of any Event of Default
described in subsection (g) or (h) of this Section 8.01 with respect to any Loan
Party, without any notice to any Loan Party or any other Person or any act by
the Agent or any Lender, the Loan, together with all accrued and unpaid interest
thereon, all fees and all other amounts due under this Agreement and the other
Loan Documents shall become due and payable automatically and immediately,
without presentment, demand, protest or notice of any kind, all of which are
expressly waived by each Loan Party. Notwithstanding the foregoing, the parties
hereto acknowledge that the exercise of rights and the enforcement of remedies
under the Loan Documents may be subject to regulatory approval and other third
party consents.
ARTICLE IX
AGENT
Section 9.01 Appointment. Each Lender (and each subsequent maker of
the Loan by its making thereof) hereby irrevocably appoints and authorizes the
Agent to perform the duties of the Agent as set forth in this Agreement and the
other Loan Documents including: (i) to receive on behalf of each Lender any
payment of principal of or interest on the Loan outstanding hereunder and all
other amounts accrued hereunder for the account of the Lenders
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and paid to the Agent, and, subject to Section 2.02 of this Agreement, to
distribute promptly to each Lender its Pro Rata Share of all payments so
received; (ii) to distribute to each Lender copies of all material notices and
agreements received by the Agent and not required to be delivered to each Lender
pursuant to the terms of this Agreement, provided that the Agent shall not have
any liability to the Lenders for the Agent's inadvertent failure to distribute
any such notices or agreements to the Lenders; (iii) to maintain, in accordance
with its customary business practices, ledgers and records reflecting the status
of the Obligations, the Loan, and related matters and to maintain, in accordance
with its customary business practices, ledgers and records reflecting the status
of the Collateral and related matters; (iv) to execute or file any and all
financing or similar statements or notices, amendments, renewals, supplements,
documents, instruments, proofs of claim, notices and other written agreements
with respect to this Agreement or any other Loan Document; (v) to make the Loan
and Agent Advances, for the Agent or on behalf of the applicable Lenders as
provided in this Agreement or any other Loan Document; (vi) to perform,
exercise, and enforce any and all other rights and remedies of the Lenders with
respect to the Credit Parties, the Obligations, or otherwise related to any of
same to the extent reasonably incidental to the exercise by the Agent of the
rights and remedies specifically authorized to be exercised by the Agent by the
terms of this Agreement or any other Loan Document; (vii) to incur and pay such
fees necessary or appropriate for the performance and fulfillment of its
functions and powers pursuant to this Agreement or any other Loan Document; and
(viii) subject to Section 9.03 of this Agreement, to take such action as the
Agent deems appropriate on its behalf to administer the Loan and the Loan
Documents and to exercise such other powers delegated to the Agent by the terms
hereof or the other Loan Documents (including, without limitation, the power to
give or to refuse to give notices, waivers, consents, approvals and instructions
and the power to make or to refuse to make determinations and calculations)
together with such powers as are reasonably incidental thereto to carry out the
purposes hereof and thereof. As to any matters not expressly provided for by
this Agreement and the other Loan Documents (including, without limitation,
enforcement or collection of the Loan), the Agent shall not be required to
exercise any discretion or take any action, but shall be required to act or to
refrain from acting (and shall be fully protected in so acting or refraining
from acting) upon the instructions of the Required Lenders, and such
instructions of the Required Lenders shall be binding upon all Lenders and all
makers of the Loan; provided, however, that the Agent shall not be required to
take any action which, in the reasonable opinion of the Agent, exposes the Agent
to liability or which is contrary to this Agreement or any other Loan Document
or applicable law.
Section 9.02 Nature of Duties. The Agent shall have no duties or
responsibilities except those expressly set forth in this Agreement or in the
other Loan Documents. The duties of the Agent shall be mechanical and
administrative in nature. The Agent shall not have by reason of this Agreement
or any other Loan Document a fiduciary relationship in respect of any Lender.
Nothing in this Agreement or any other Loan Document, express or implied, is
intended to or shall be construed to impose upon the Agent any obligations in
respect of this Agreement or any other Loan Document except as expressly set
forth herein or therein. Each Lender shall make its own independent
investigation of the financial condition and affairs of the Credit Parties in
connection with the making and the continuance of the Loan hereunder and shall
make its own appraisal of the creditworthiness of the Credit Parties and the
value of the Collateral, and the Agent shall have no duty or responsibility,
either initially or on a
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continuing basis, to provide any Lender with any credit or other information
with respect thereto, whether coming into its possession before the making of
the Loan hereunder or at any time or times thereafter, provided that, upon the
reasonable request of a Lender, the Agent shall provide to such Lender any
documents or reports delivered to the Agent by any Credit Party pursuant to the
terms of this Agreement or any other Loan Document. If the Agent seeks the
consent or approval of the Required Lenders to the taking or refraining from
taking any action hereunder, the Agent shall send notice thereof to each Lender.
The Agent shall promptly notify each Lender any time that the Required Lenders
have instructed the Agent to act or refrain from acting pursuant hereto.
Section 9.03 Rights, Exculpation, Etc. The Agent and its directors,
officers, agents or employees shall not be liable for any action taken or
omitted to be taken by them under or in connection with this Agreement or the
other Loan Documents, except for their own gross negligence or willful
misconduct as determined by a final judgment of a court of competent
jurisdiction. Without limiting the generality of the foregoing, the Agent (i)
may treat the Person registered as the holder of the Loan in the Registry
provided for in Section 11.07(d) as the owner thereof until the Agent receives
written notice of the assignment or transfer thereof, pursuant to Section 11.07
hereof, signed by such payee and in form satisfactory to the Agent; (ii) may
consult with legal counsel (including, without limitation, counsel to the Agent
or counsel to the Loan Parties), independent public accountants, and other
experts selected by any of them and shall not be liable for any action taken or
omitted to be taken in good faith by any of them in accordance with the advice
of such counsel or experts; (iii) makes no warranty or representation to any
Lender and shall not be responsible to any Lender for any statements,
certificates, warranties or representations made in or in connection with this
Agreement or the other Loan Documents; (iv) shall not have any duty to ascertain
or to inquire as to the performance or observance of any of the terms, covenants
or conditions of this Agreement or the other Loan Documents on the part of any
Person, the existence or possible existence of any Default or Event of Default,
or to inspect the Collateral or other property (including, without limitation,
the books and records) of any Person; (v) shall not be responsible to any Lender
for the due execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or the other Loan Documents or any other
instrument or document furnished pursuant hereto or thereto; and (vi) shall not
be deemed to have made any representation or warranty regarding the existence,
value or collectibility of the Collateral, the existence, priority or perfection
of the Agent's Lien thereon, or any certificate prepared by any Credit Party in
connection therewith, nor shall the Agent be responsible or liable to the
Lenders for any failure to monitor or maintain any portion of the Collateral.
The Agent shall not be liable for any apportionment or distribution of payments
made in good faith pursuant to Section 4.03 and, if any such apportionment or
distribution is subsequently determined to have been made in error, the sole
recourse of any Lender to whom payment was due but not made shall be to recover
from other Lenders any payment in excess of the amount which they are determined
to be entitled. The Agent may at any time request instructions from the Lenders
with respect to any actions or approvals which by the terms of this Agreement or
of any of the other Loan Documents the Agent is permitted or required to take or
to grant, and if such instructions are promptly requested, the Agent shall be
absolutely entitled to refrain from taking any action or to withhold any
approval under any of the Loan Documents until it shall have received such
instructions from the Required Lenders. Without limiting the foregoing, no
Lender shall have any right of action whatsoever against the
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Agent as a result of the Agent acting or refraining from acting under this
Agreement or any of the other Loan Documents in accordance with the instructions
of the Required Lenders.
Section 9.04 Reliance. The Agent shall be entitled to rely upon any
written notices, statements, certificates, orders or other documents or any
telephone message believed by it in good faith to be genuine and correct and to
have been signed, sent or made by the proper Person, and with respect to all
matters pertaining to this Agreement or any of the other Loan Documents and its
duties hereunder or thereunder, upon advice of counsel selected by it.
Section 9.05 Indemnification. To the extent that the Agent is not
reimbursed and indemnified by any Credit Party, the Lenders will reimburse and
indemnify the Agent from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses, advances
or disbursements of any kind or nature whatsoever which may be imposed on,
incurred by, or asserted against the Agent in any way relating to or arising out
of this Agreement or any of the other Loan Documents or any action taken or
omitted by the Agent under this Agreement or any of the other Loan Documents, in
proportion to each Lender's Pro Rata Share, including, without limitation,
advances and disbursements made pursuant to Section 9.08; provided, however,
that no Lender shall be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses, advances
or disbursements for which there has been a final judicial determination that
such liability resulted from the Agent's gross negligence or willful misconduct.
The obligations of the Lenders under this Section 9.05 shall survive the payment
in full of the Loan and the termination of this Agreement.
Section 9.06 Agent Individually. With respect to its Pro Rata Share of
the Total Commitment hereunder and the Loan made by it, the Agent shall have and
may exercise the same rights and powers hereunder and is subject to the same
obligations and liabilities as and to the extent set forth herein for any other
Lender or maker of a Loan. The terms "Lenders" or "Required Lenders" or any
similar terms shall, unless the context clearly otherwise indicates, include the
Agent in its individual capacity as a Lender or one of the Required Lenders. The
Agent and its Affiliates may accept deposits from, lend money to, and generally
engage in any kind of banking, trust or other business with any Borrower as if
it were not acting as the Agent pursuant hereto without any duty to account to
the other Lenders.
Section 9.07 Successor Agent.
(a) The Agent may resign from the performance of all its functions and
duties hereunder and under the other Loan Documents at any time by giving at
least thirty (30) Business Days' prior written notice to the Borrower and each
Lender. Such resignation shall take effect upon the acceptance by a successor
Agent of appointment pursuant to clauses (b) and (c) below or as otherwise
provided below.
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(b) Upon any such notice of resignation, the Required Lenders shall
appoint a successor Agent. Upon the acceptance of any appointment as Agent
hereunder by a successor Agent, such successor Agent shall thereupon succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring Agent, and the retiring Agent shall be discharged from its duties and
obligations under this Agreement and the other Loan Documents. After the Agent's
resignation hereunder as the Agent, the provisions of this Article IX shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was the Agent under this Agreement and the other Loan Documents.
(c) If a successor Agent shall not have been so appointed within said
thirty (30) Business Day period, the retiring Agent shall then appoint a
successor Agent who shall serve as the Agent until such time, if any, as the
Required Lenders appoint a successor Agent as provided above.
Section 9.08 Collateral Matters.
(a) The Agent may from time to time make such disbursements and
advances ("Agent Advances") which the Agent, in its sole discretion, deems
necessary or desirable to preserve, protect, prepare for sale or lease or
dispose of the Collateral or any portion thereof, to enhance the likelihood or
maximize the amount of repayment by the Borrower of the Loan and other
Obligations or to pay any other amount chargeable to the Borrower pursuant to
the terms of this Agreement, including, without limitation, costs, fees and
expenses as described in Section 11.04. The Agent Advances shall be repayable on
demand and be secured by the Collateral. The Agent Advances shall constitute
additional Obligations of the Borrower hereunder, payable by the Borrower on
demand. The Agent shall notify each Lender and the Borrower in writing of each
such Agent Advance, which notice shall include a description of the purpose of
such Agent Advance. Without limitation to its obligations pursuant to Section
9.05, each Lender agrees that it shall make available to the Agent, upon the
Agent's demand, in Dollars in immediately available funds, the amount equal to
such Lender's Pro Rata Share of each such Agent Advance. If such funds are not
made available to the Agent by such Lender, the Agent shall be entitled to
recover such funds on demand from such Lender, together with interest thereon
for each day from the date such payment was due until the date such amount is
paid to the Agent, at the rate of interest then payable on the Loan.
(b) The Lenders hereby irrevocably authorize the Agent, at its option
and in its discretion, to release any Lien granted to or held by the Agent upon
any Collateral upon termination of the Commitments and payment and satisfaction
of the Loan and all other Obligations in accordance with the terms hereof; or
constituting property being sold or disposed of in compliance with the terms of
this Agreement and the other Loan Documents; or constituting property in which
the Credit Parties owned no interest at the time the Lien was granted or at any
time thereafter; or if approved, authorized or ratified in writing by the
Lenders. Upon request by the Agent at any time, the Lenders will confirm in
writing the Agent's authority to release particular types or items of Collateral
pursuant to this Section 9.08(b).
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(c) Without in any manner limiting the Agent's authority to act
without any specific or further authorization or consent by the Lenders (as set
forth in Section 9.08(b)), each Lender agrees to confirm in writing, upon
request by the Agent, the authority to release Collateral conferred upon the
Agent under Section 9.08(b). Upon receipt by the Agent of confirmation from the
Lenders of its authority to release any particular item or types of Collateral,
and upon prior written request by any Loan Party, the Agent shall (and is hereby
irrevocably authorized by the Lenders to) execute such documents as may be
necessary to evidence the release of the Liens granted to the Agent for the
benefit of the Lenders upon such Collateral; provided, however, that (i) the
Agent shall not be required to execute any such document on terms which, in the
Agent's opinion, would expose the Agent to liability or create any obligations
or entail any consequence other than the release of such Liens without recourse
or warranty, and (ii) such release shall not in any manner discharge, affect or
impair the Obligations or any Lien upon (or obligations of any Credit Party in
respect of) all interests in the Collateral retained by any Credit Party.
(d) The Agent shall have no obligation whatsoever to any Lender to
assure that the Collateral exists or is owned by the a Credit Party or is cared
for, protected or insured or has been encumbered or that the Lien granted to the
Agent pursuant to this Agreement or any other Loan Document has been properly or
sufficiently or lawfully created, perfected, protected or enforced or is
entitled to any particular priority, or to exercise at all or in any particular
manner or under any duty of care, disclosure or fidelity, or to continue
exercising, any of the rights, authorities and powers granted or available to
the Agent in this Section 9.08 or in any other Loan Document, it being
understood and agreed that in respect of the Collateral, or any act, omission or
event related thereto, the Agent may act in any manner it may deem appropriate,
in its sole discretion, given the Agent's own interest in the Collateral as one
of the Lenders and that the Agent shall have no duty or liability whatsoever to
any other Lender, except as otherwise provided herein.
Section 9.09 Agency for Perfection. The Agent and each Lender hereby
appoints the Agent and each other Lender as agent and bailee for the purpose of
perfecting the security interests in and liens upon the Collateral in assets
which, in accordance with Article 9 of the Uniform Commercial Code, can be
perfected only by possession or control (or where the security interest of a
secured party with possession or control has priority over the security interest
of another secured party) and the Agent and each Lender hereby acknowledges that
it holds possession of or otherwise controls any such Collateral for the benefit
of the Agent and the Lenders as secured party. Should any Lender obtain
possession or control of any such Collateral, such Lender shall notify the Agent
thereof, and, promptly upon the Agent's request therefor shall deliver such
Collateral to the Agent or in accordance with the Agent's instructions. In
addition, the Agent shall also have the power and authority hereunder to appoint
such other sub-agents as may be necessary or required under applicable state law
or otherwise to perform its duties and enforce its rights with respect to the
Collateral and under the Loan Documents. Each Loan Party by its execution and
delivery of this Agreement hereby consents to the foregoing on behalf of itself
and each of its Subsidiaries.
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ARTICLE X
GUARANTY
Section 10.01 Guaranty. Subject to the limitations set forth in
Section 10.06, each Guarantor hereby jointly and severally and unconditionally
and irrevocably guarantees the punctual payment when due, whether at stated
maturity, by acceleration or otherwise, of all Obligations of the Borrower now
or hereafter existing under any Loan Document, whether for principal, interest
(including, without limitation, all interest that accrues after the commencement
of any Insolvency Proceeding of the Borrower, whether or not a claim for
post-filing interest is allowed in such Insolvency Proceeding), fees,
commissions, expense reimbursements, indemnifications or otherwise (such
obligations, to the extent not paid by the Borrower, being the "Guaranteed
Obligations"), and agrees to pay any and all expenses (including reasonable
counsel fees and expenses) incurred by the Agent and the Lenders in enforcing
any rights under the guaranty set forth in this Article X. Without limiting the
generality of the foregoing, each Guarantor's liability shall extend to all
amounts that constitute part of the Guaranteed Obligations and would be owed by
the Borrower to the Agent and the Lenders under any Loan Document but for the
fact that they are unenforceable or not allowable due to the existence of an
Insolvency Proceeding involving the Borrower.
Section 10.02 Guaranty Absolute. Subject to the limitations set forth
in Section 10.06, each Guarantor jointly and severally guarantees that the
Guaranteed Obligations will be paid strictly in accordance with the terms of the
Loan Documents, regardless of any law, regulation, decree or order now or
hereafter in effect in any jurisdiction affecting any of such terms or the
rights of the Agent or the Lenders with respect thereto. Each Guarantor agrees
that this Article X constitutes a guaranty of payment when due and not of
collection and waives any right to require that any resort be made by the Agent
or any Lender to any Collateral. The obligations of each Guarantor under this
Article X are independent of the Guaranteed Obligations, and a separate action
or actions may be brought and prosecuted against each Guarantor to enforce such
obligations, irrespective of whether any action is brought against any Credit
Party or whether any Credit Party is joined in any such action or actions. The
liability of each Guarantor under this Article X shall be irrevocable, absolute
and unconditional irrespective of, and each Guarantor hereby irrevocably waives
any defenses it may now or hereafter have in any way relating to, any or all of
the following:
(a) any lack of validity or enforceability of any Loan Document or any
agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Guaranteed Obligations, or any other amendment
or waiver of or any consent to departure from any Loan Document, including,
without limitation, any increase in the Guaranteed Obligations resulting from
the extension of additional credit to any Credit Party or otherwise;
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(c) any taking, exchange, release or non-perfection of any Collateral,
or any taking, release or amendment or waiver of or consent to departure from
any other guaranty, for all or any of the Guaranteed Obligations;
(d) the existence of any claim, set-off, defense or other right that
any Guarantor may have at any time against any Person, including, without
limitation, the Agent or any Lender;
(e) any change, restructuring or termination of the corporate, limited
liability company or partnership structure or existence of the Parent or any of
its Subsidiaries; or
(f) any other circumstance (including, without limitation, any statute
of limitations) or any existence of or reliance on any representation by the
Agent or the Lenders that might otherwise constitute a defense available to, or
a discharge of, any Credit Party or any other guarantor or surety.
This Article X shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Guaranteed Obligations is rescinded
or must otherwise be returned by the Agent, the Lenders or any other Person upon
the insolvency, bankruptcy, examinership or reorganization of the Borrower or
otherwise, all as though such payment had not been made. Each Guarantor
irrevocably and unconditionally agrees to indemnify the Agent and the Lenders on
demand against any loss, liability or cost incurred by the Agent or the Lenders
as a result of any of the Guaranteed Obligations becoming void, voidable or
unenforceable as against the Borrower. The amount of the loss, liability or cost
shall be equal to the amount which the Agent or the Lenders would otherwise have
been entitled to recover from the Borrower.
Section 10.03 Waiver. Each Guarantor hereby waives (i) promptness and
diligence, (ii) notice of acceptance and any other notice with respect to any of
the Guaranteed Obligations and this Article X and any requirement that the Agent
or the Lenders exhaust any right or take any action against any Credit Party,
any other Person or any Collateral, (iii) any right to compel or direct the
Agent or any Lender to seek payment or recovery of any amounts owed under this
Article X from any one particular fund or source or to exhaust any right or take
any action against any other Credit Party or any other Person or any Collateral,
(iv) any requirement that the Agent or any Lender protect, secure, perfect or
insure any security interest or Lien on any property subject thereto or exhaust
any right to take any action against any Credit Party, any other Person or any
Collateral, and (v) any other defense available to any Guarantor. Each Guarantor
agrees that the Agent and the Lenders shall have no obligation to marshal any
assets in favor of any Guarantor or against, or in payment of, any or all of the
Obligations. Each Guarantor acknowledges that it will receive direct and
indirect benefits from the financing arrangements contemplated herein and that
the waiver set forth in this Section 10.03 is knowingly made in contemplation of
such benefits. Each Guarantor hereby waives any right to revoke this Article X,
and acknowledges that this Article X is continuing in nature and applies to all
Guaranteed Obligations, whether existing now or in the future.
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Section 10.04 Continuing Guaranty; Assignments. This Article X is a
continuing guaranty and shall (a) remain in full force and effect until the
later of the cash payment in full of the Guaranteed Obligations (other than
indemnification obligations as to which no claim has been made) and all other
amounts payable under this Article X and the Final Maturity Date, (b) be binding
upon each Guarantor, its successors and assigns and (c) inure to the benefit of
and be enforceable by the Agent and the Lenders and their successors, pledgees,
transferees and assigns. Without limiting the generality of the foregoing clause
(c), any Lender may pledge, assign or otherwise transfer all or any portion of
its rights and obligations under this Agreement (including, without limitation,
all or any portion of its Loan) to any other Person, and such other Person shall
thereupon become vested with all the benefits in respect thereof granted such
Lender herein or otherwise, in each case as provided in Section 11.07.
Section 10.05 Subrogation. No Guarantor will exercise any rights that
it may now or hereafter acquire against any Credit Party or any other guarantor
that arise from the existence, payment, performance or enforcement of such
Guarantor's obligations under this Article X, including, without limitation, any
right of subrogation, reimbursement, exoneration, contribution or
indemnification and any right to participate in any claim or remedy of the Agent
and the Lenders against any Credit Party or any other guarantor or any
Collateral, whether or not such claim, remedy or right arises in equity or under
contract, statute or common law, including, without limitation, the right to
take or receive from any Credit Party or any other guarantor, directly or
indirectly, in cash or other property or by set-off or in any other manner,
payment or security solely on account of such claim, remedy or right, unless and
until all of the Guaranteed Obligations and all other amounts payable under this
Article X shall have been paid in full in cash and the Final Maturity Date shall
have occurred. If any amount shall be paid to any Guarantor in violation of the
immediately preceding sentence at any time prior to the later of the payment in
full in cash of the Guaranteed Obligations and all other amounts payable under
this Article X and the Final Maturity Date, such amount shall be held in trust
for the benefit of the Agent and the Lenders and shall forthwith be paid to the
Agent and the Lenders to be credited and applied to the Guaranteed Obligations
and all other amounts payable under this Article X, whether matured or
unmatured, in accordance with the terms of this Agreement, or to be held as
Collateral for any Guaranteed Obligations or other amounts payable under this
Article X thereafter arising. If (i) any Guarantor shall make payment to the
Agent and the Lenders of all or any part of the Guaranteed Obligations, (ii) all
of the Guaranteed Obligations and all other amounts payable under this Article X
shall be paid in full in cash and (iii) the Final Maturity Date shall have
occurred, the Agent and the Lenders will, at such Guarantor's request and
expense, execute and deliver to such Guarantor appropriate documents, without
recourse and without representation or warranty, necessary to evidence the
transfer by subrogation to such Guarantor of an interest in the Guaranteed
Obligations resulting from such payment by such Guarantor.
Section 10.06 Guaranty Limitations.
(a) Limitations applicable to all Guarantors. Notwithstanding anything
to the contrary in any Loan Document, each Guarantor shall only be liable under
this Guaranty for the
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lesser of (i) the maximum amount of liability that can be hereby incurred
without rendering this Guaranty, as it relates to such Guarantor, voidable under
applicable law relating to fraudulent conveyance or fraudulent transfer or (ii)
the maximum amount of liability that can be hereby incurred without reducing the
capitalization of such Guarantor below the minimum capitalization requirements
imposed by any Governmental Authority having jurisdiction over such Guarantor.
(b) Limitations applicable to Bermuda Guarantors. Notwithstanding
anything to the contrary in this agreement, the obligations of each Bermuda
Insurance Company to pay the Guaranteed Obligations shall be limited to the
extent necessary for each Bermuda Insurance Company to meet at all times its
margin of solvency ratio, minimum liquidity ratio and all other regulatory
requirements under the ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ and related regulations.
(c) Limitations applicable to English Guarantors. This Guaranty does
not apply to any liability to the extent that it would result in this Guaranty
constituting unlawful financial assistance within the meaning of Section 151 of
the Companies ▇▇▇ ▇▇▇▇.
(d) Guaranty limitations applicable to SRCM. Liability under this
Guaranty shall be limited to the extent necessary for SCRM to maintain at all
times $500,000 in cash in accordance with its minimum capital requirements under
Rule 15c3-1 of the Securities Exchange Act of 1934.
ARTICLE XI
MISCELLANEOUS
Section 11.01 Notices, Etc. All notices and other communications
provided for hereunder shall be in writing and shall be mailed, telecopied or
delivered,
if to any Credit Party, at the following address:
Scottish Annuity & Life Insurance Company (Cayman) Ltd.
▇.▇. ▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ House
▇▇▇▇▇▇ Town, Grand Cayman
Cayman Islands
Attention: President
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
-▇▇-
▇▇▇▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ (10019)
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
if to the Agent, to it at the following address:
Ableco Finance LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, (▇▇)▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ (10171)
Attention: ▇▇▇▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
Debevoise & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ (10022)
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopier: 212-909-6386
or, as to each party, at such other address as shall be designated by such party
in a written notice to the other parties complying as to delivery with the terms
of this Section 11.01. All such notices and other communications shall be
effective, (i) if mailed, when received or three days after deposited in the
mails, whichever occurs first, (ii) if telecopied, when transmitted and
confirmation received, or (iii) if delivered, upon delivery, except that notices
to the Agent pursuant to Article II shall not be effective until received by the
Agent.
Section 11.02 Amendments, Etc. No amendment or waiver of any
provision of this Agreement or any other Loan Document, and no consent to any
departure by any Loan Party therefrom, shall in any event be effective unless
the same shall be in writing and signed by the Loan Parties on the one hand, and
the Required Lenders or by the Agent with the consent of the Required Lenders,
on the other hand, and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given, provided,
however, that no amendment, waiver or consent shall (i) reduce the principal of,
or interest on, the Loan payable to any Lender, reduce the amount of any fee
payable for the account of any Lender, or postpone or extend any date fixed for
any payment of principal of, or interest or fees on, the Loan payable to any
Lender, in each case without the written consent of each Lender affected
thereby, (ii) increase the Total Commitment without the written consent of each
Lender, (iii) change the aggregate unpaid principal amount of the Loan that is
required for the Lenders or any of them to
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take any action hereunder, (iv) amend the definition of "Required Lenders" or
"Pro Rata Share", (v) release all or a substantial portion of the Collateral
(except as otherwise provided in this Agreement and the other Loan Documents),
subordinate any Lien granted in favor of the Agent for the benefit of the
Lenders, or release any Borrower or any Guarantor, or (vi) amend, modify or
waive Section 4.03 or this Section 11.02 of this Agreement, in each case,
without the written consent of each Lender. Notwithstanding the foregoing, no
amendment, waiver or consent shall, unless in writing and signed by the Agent,
affect the rights or duties of the Agent (but not in its capacity as a Lender)
under this Agreement or the other Loan Documents.
Section 11.03 No Waiver; Remedies, Etc. No failure on the part of
the Agent or any Lender to exercise, and no delay in exercising, any right
hereunder or under any other Loan Document shall operate as a waiver thereof;
nor shall any single or partial exercise of any right under any Loan Document
preclude any other or further exercise thereof or the exercise of any other
right. The rights and remedies of the Agent and the Lenders provided herein and
in the other Loan Documents are cumulative and are in addition to, and not
exclusive of, any rights or remedies provided by law. The rights of the Agent
and the Lenders under any Loan Document against any party thereto are not
conditional or contingent on any attempt by the Agent and the Lenders to
exercise any of their rights under any other Loan Document against such party or
against any other Person.
Section 11.04 Expenses; Taxes; Attorneys' Fees. Subject to the
limits set forth in the Securities Purchase Agreement, when aggregated with
expenses thereunder, the Borrower shall pay on demand all costs and expenses
incurred prior to or arising after the Effective Date by or on behalf of the
Agent and each Lender, regardless of whether the transactions contemplated
hereby are consummated, including, without limitation, reasonable fees, costs,
client charges and expenses of counsel for the Agent and each Lender,
accounting, due diligence, periodic field audits, physical counts, valuations,
investigations, searches and filings, monitoring of assets, appraisals of
Collateral, title searches and reviewing environmental assessments,
miscellaneous disbursements, examination, travel, lodging and meals, arising
from or relating to: (a) the negotiation, preparation, execution, delivery,
performance and administration of this Agreement and the other Loan Documents
(including, without limitation, the preparation of any additional Loan Documents
pursuant to Section 7.01(c) or the review of any of the agreements, instruments
and documents referred to in Section 7.01(l)), (b) any requested amendments,
waivers or consents to this Agreement or the other Loan Documents whether or not
such documents become effective or are given, (c) the preservation and
protection of any of the Lenders' rights under this Agreement or the other Loan
Documents, (d) the defense of any claim or action asserted or brought against
the Agent or any Lender by any Person that arises from or relates to this
Agreement, any other Loan Document, the Agent's or the Lenders' claims against
any Credit Party, or any and all matters in connection therewith, (e) the
commencement or defense of, or intervention in, any court proceeding arising
from or related to this Agreement or any other Loan Document, (f) the filing of
any petition, complaint, answer, motion or other pleading by the Agent or any
Lender, or the taking of any action in respect of the Collateral or other
security, in connection with this Agreement or any other Loan Document, (g) the
protection, collection, lease, sale, taking possession of or liquidation of, any
Collateral or other security in connection with this Agreement or any other Loan
Document, (h) any attempt to
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enforce any Lien or security interest in any Collateral or other security in
connection with this Agreement or any other Loan Document, (i) any attempt to
collect from any Credit Party, (j) all liabilities and costs arising from or in
connection with the past, present or future operations of any Credit Party
involving any damage to real or personal property or natural resources or harm
or injury alleged to have resulted from any Release of Hazardous Materials on,
upon or into such property, (k) any Environmental Liabilities and Costs incurred
in connection with the investigation, removal, cleanup and/or remediation of any
Hazardous Materials present or arising out of the operations of any facility of
the Parent or any of its Subsidiaries, (l) any Environmental Liabilities and
Costs incurred in connection with any Environmental Lien or (m) the receipt by
the Agent or any Lender of any advice from professionals with respect to any of
the foregoing. Without limitation of the foregoing or any other provision of any
Loan Document: (x) the Borrower shall pay all stamp, document, transfer,
recording or filing taxes or fees and similar impositions now or hereafter
determined by the Agent or any Lender to be payable in connection with this
Agreement or any other Loan Document, and the Borrower shall save the Agent and
each Lender harmless from and against any and all present or future claims,
liabilities or losses with respect to or resulting from any omission to pay or
delay in paying any such taxes, fees or impositions, (y) the Borrower shall pay
all broker fees for any broker not expressly retained by the Agent or a Lender
that may become due in connection with the transactions contemplated by this
Agreement and the other Loan Documents and (z) if the Borrower fails to perform
any covenant or agreement contained herein or in any other Loan Document, the
Agent may itself perform or cause performance of such covenant or agreement, and
the expenses of the Agent incurred in connection therewith shall be reimbursed
on demand by the Borrower.
Section 11.05 Right of Set-off. Upon the occurrence and during the
continuance of any Event of Default, the Agent or any Lender may, and is hereby
authorized to, at any time and from time to time, without notice to any Loan
Party (any such notice being expressly waived by the Loan Parties) and to the
fullest extent permitted by law, set off and apply any and all deposits (general
or special, time or demand, provisional or final) at any time held and other
Indebtedness at any time owing by the Agent or such Lender to or for the credit
or the account of any Loan Party against any and all obligations of the Loan
Parties either now or hereafter existing under any Loan Document, irrespective
of whether or not the Agent or such Lender shall have made any demand hereunder
or thereunder and although such obligations may be contingent or unmatured. The
Agent and each Lender agrees to notify such Loan Party promptly after any such
set-off and application made by the Agent or such Lender provided that the
failure to give such notice shall not affect the validity of such set-off and
application. The rights of the Agent and the Lenders under this Section 11.05
are in addition to the other rights and remedies (including other rights of
set-off) which the Agent and the Lenders may have under this Agreement or any
other Loan Documents of law or otherwise.
Section 11.06 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining portions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
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Section 11.07 Assignments and Participations.
(a) This Agreement and the other Loan Documents shall be binding upon
and inure to the benefit of each Loan Party and the Agent and each Lender and
their respective successors and assigns; provided, however, that none of the
Loan Parties may assign or transfer any of its rights hereunder or under any
other Loan Document without the prior written consent of each Lender and any
such assignment without the Lenders' prior written consent shall be null and
void.
(b) Each Lender may with the prior written consent of the Agent (after
consultation with the Parent except (x) the case of a transfer to a Lender or an
Affiliate or a Related Fund of such Lender or (y) after the occurrence of an
Event of Default or a Default), assign to one or more other lenders or other
entities all or a portion of its rights and obligations under this Agreement
with respect to all or a portion of its Commitment or the Loan made by it;
provided, however, that (i) such assignment is in an amount which is at least
$5,000,000 or a multiple of $1,000,000 in excess thereof (except such minimum
amount shall not apply to an assignment by a Lender to (x) a Lender, an
Affiliate of such Lender or a Related Fund of such Lender or (y) a group of new
Lenders, each of whom is an Affiliate or Related Fund of each other to the
extent the aggregate amount to be assigned to all such new Lenders is at least
$5,000,000 or a multiple of $1,000,000 in excess thereof), and (ii) the parties
to each such assignment shall execute and deliver to the Agent, for its
acceptance, an Assignment and Acceptance, together with any promissory note
subject to such assignment and such parties shall deliver to the Agent, for the
benefit of the Agent, a processing and recordation fee of $5,000 (except the
payment of such fee shall not be required in connection with an assignment by a
Lender to an Affiliate of such Lender or a Related Fund of such Lender). Upon
such execution, delivery and acceptance, from and after the effective date
specified in each Assignment and Acceptance, which effective date shall be at
least three (3) Business Days after the delivery thereof to the Agent (or such
shorter period as shall be agreed to by the Agent and the parties to such
assignment), (A) the assignee thereunder shall become a "Lender" hereunder and,
in addition to the rights and obligations hereunder held by it immediately prior
to such effective date, have the rights and obligations hereunder that have been
assigned to it pursuant to such Assignment and Acceptance and (B) the assigning
Lender thereunder shall, to the extent that rights and obligations hereunder
have been assigned by it pursuant to such Assignment and Acceptance, relinquish
its rights and be released from its obligations under this Agreement (and, in
the case of an Assignment and Acceptance covering all or the remaining portion
of an assigning Lender's rights and obligations under this Agreement, such
Lender shall cease to be a party hereto).
(c) By executing and delivering an Assignment and Acceptance, the
assigning Lender and the assignee thereunder confirm to and agree with each
other and the other parties hereto as follows: (i) other than as provided in
such Assignment and Acceptance, the assigning Lender makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
any other Loan Document or the execution, legality, validity, enforceability,
genuineness, sufficiency
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or value of this Agreement or any other Loan Document furnished pursuant hereto;
(ii) the assigning Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of any Credit Party or
any of its Subsidiaries or the performance or observance by any Credit Party of
any of its obligations under this Agreement or any other Loan Document furnished
pursuant hereto; (iii) such assignee confirms that it has received a copy of
this Agreement and the other Loan Documents, together with such other documents
and information it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance; (iv) such assignee will,
independently and without reliance upon the assigning Lender, the Agent or any
Lender and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not taking
action under this Agreement and the other Loan Documents; (v) such assignee
appoints and authorizes the Agent to take such action as agent on its behalf and
to exercise such powers under this Agreement and the other Loan Documents as are
delegated to the Agent by the terms hereof and thereof, together with such
powers as are reasonably incidental hereto and thereto; and (vi) such assignee
agrees that it will perform in accordance with their terms all of the
obligations which by the terms of this Agreement and the other Loan Documents
are required to be performed by it as a Lender.
(d) The Agent shall, acting solely for this purpose as a non-fiduciary
agent of the Borrower, maintain, or cause to be maintained at the Payment Office
on behalf of the Borrower, a copy of each Assignment and Acceptance delivered to
and accepted by it and a register (the "Register") for the recordation of the
names and addresses of the Lenders and their respective Commitments, and the
principal amount of the Loan (and stated interest thereon) (the "Registered
Loan") owing to each Lender from time to time. The entries in the Register shall
be conclusive and binding for all purposes, absent manifest error, and the
Borrower, the Agent and the Lenders may treat each Person whose name is recorded
in the Register as a Lender hereunder for all purposes of this Agreement. The
Register shall be available for inspection by the Borrower or the Parent and any
Lender at any reasonable time and from time to time upon reasonable prior
notice.
(e) Upon receipt by the Agent of a completed Assignment and
Acceptance, and subject to any consent required from the Agent pursuant to
Section 11.07(b) (which consent of the Agent must be evidenced by the Agent's
execution of an acceptance to such Assignment and Acceptance), the Agent shall
accept such assignment and record the information contained therein in the
Register.
(f) A Registered Loan (and the registered note, if any, evidencing the
same) may be assigned or sold in whole or in part only by registration of such
assignment or sale on the Register (and each registered note shall expressly so
provide). Any assignment or sale of all or part of such Registered Loan (and the
registered note, if any, evidencing the same) may be effected only by
registration of such assignment or sale on the Register, together with the
surrender of the registered note, if any, evidencing the same duly endorsed by
(or accompanied by a written instrument of assignment or sale duly executed by)
the holder of such registered note, whereupon, at the request of the designated
assignee(s) or transferee(s), one or more new
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registered notes in the same aggregate principal amount shall be issued to the
designated assignee(s) or transferee(s). Prior to the registration of assignment
or sale of any Registered Loan (and the registered note, if any, evidencing the
same), the Agent shall treat the Person in whose name such Registered Loan (and
the registered note, if any, evidencing the same) is registered on the Register
as the owner thereof for the purpose of receiving all payments thereon,
notwithstanding notice to the contrary.
(g) In the event that any Lender sells participations in a Registered
Loan, such Lender shall maintain a register acting for this purpose as a
non-fiduciary agent of the Borrower, on which it enters the name of all
participants in the Registered Loan held by it and the principal amount (and
stated interest thereon) of the portion of the Registered Loan that is the
subject of the participation (the "Participant Register"). A Registered Loan
(and the registered note, if any, evidencing the same) may be participated in
whole or in part only by registration of such participation on the Participant
Register (and each registered note shall expressly so provide). Any
participation of such Registered Loan (and the registered note, if any,
evidencing the same) may be effected only by the registration of such
participation on the Participant Register. The Participant Register shall be
available for inspection by the Borrower, the Parent and any Lender at any
reasonable time and from time to time upon reasonable prior notice.
(h) Any Lender who purchases or is assigned or participates in any
portion of such Registered Loan shall comply with Section 2.07(d).
(i) Each Lender may sell participations to one or more banks or other
entities in accordance with customary practices in or to all or a portion of its
rights and obligations under this Agreement and the other Loan Documents
(including, without limitation, all or a portion of the Loan made by it);
provided, that (i) such Lender's obligations under this Agreement (including
without limitation, its Commitment hereunder) and the other Loan Documents shall
remain unchanged; (ii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations, and the Borrower, the
Agent and the other Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under this
Agreement and the other Loan Documents; and (iii) a participant shall not be
entitled to require such Lender to take or omit to take any action hereunder
except (A) action directly effecting an extension of the maturity dates or
decrease in the principal amount of the Loan, (B) action directly effecting an
extension of the due dates or a decrease in the rate of interest payable on the
Loan or the fees payable under this Agreement, or (C) actions directly effecting
a release of all or a substantial portion of the Collateral or any Credit Party
(except as set forth in Section 9.08 of this Agreement or any other Loan
Document). The Loan Parties agree that each participant shall be entitled to the
benefits of Section 2.07 and Section 4.04 of this Agreement with respect to its
participation in any portion of the Loan as if it were a Lender.
Section 11.08 Counterparts. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which shall be deemed to be an original, but all of which taken together
shall constitute one and the same agreement. Delivery of an executed counterpart
of this Agreement by telecopier shall be equally
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as effective as delivery of an original executed counterpart of this Agreement.
Any party delivering an executed counterpart of this Agreement by telecopier
also shall deliver an original executed counterpart of this Agreement but the
failure to deliver an original executed counterpart shall not affect the
validity, enforceability, and binding effect of this Agreement. The foregoing
shall apply to each other Loan Document mutatis mutandis.
Section 11.09 GOVERNING LAW. THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN
RESPECT OF SUCH OTHER LOAN DOCUMENT) SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
Section 11.10 CONSENT TO JURISDICTION; SERVICE OF PROCESS AND VENUE.
ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT MAY BE BROUGHT IN ▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇ IN THE COUNTY OF
NEW YORK OR OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW
YORK, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH LOAN PARTY HEREBY
IRREVOCABLY ACCEPTS IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY,
THE JURISDICTION OF THE AFORESAID COURTS. EACH LOAN PARTY HEREBY IRREVOCABLY
APPOINTS CT CORPORATION AT ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ (10011) AS ITS AGENT
FOR SERVICE OF PROCESS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING AND FURTHER
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED
COURTS AND IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY
REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE BORROWER AT ITS ADDRESS
FOR NOTICES AS SET FORTH IN SECTION 11.01 AND TO CT CORPORATION, SUCH SERVICE TO
BECOME EFFECTIVE TEN (10) DAYS AFTER SUCH MAILING. NOTHING HEREIN SHALL AFFECT
THE RIGHT OF THE AGENT AND THE LENDERS TO SERVICE OF PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST
ANY CREDIT PARTY IN ANY OTHER JURISDICTION. EACH LOAN PARTY HEREBY EXPRESSLY AND
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH
IT MAY NOW OR HEREAFTER HAVE TO THE JURISDICTION OR LAYING OF VENUE OF ANY SUCH
LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY
SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT
ANY LOAN PARTY HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF
ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE,
ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH
RESPECT TO ITSELF OR ITS PROPERTY, EACH LOAN PARTY HEREBY IRREVOCABLY WAIVES
SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS AGREEMENT AND THE OTHER
LOAN DOCUMENTS.
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Section 11.11 WAIVER OF JURY TRIAL, ETC. EACH LOAN PARTY, THE AGENT
AND EACH LENDER HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM CONCERNING ANY RIGHTS UNDER THIS AGREEMENT OR THE
OTHER LOAN DOCUMENTS, OR UNDER ANY AMENDMENT, WAIVER, CONSENT, INSTRUMENT,
DOCUMENT OR OTHER AGREEMENT DELIVERED OR WHICH IN THE FUTURE MAY BE DELIVERED IN
CONNECTION THEREWITH, OR ARISING FROM ANY FINANCING RELATIONSHIP EXISTING IN
CONNECTION WITH THIS AGREEMENT, AND AGREES THAT ANY SUCH ACTION, PROCEEDINGS OR
COUNTERCLAIM SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. EACH LOAN
PARTY CERTIFIES THAT NO OFFICER, REPRESENTATIVE, AGENT OR ATTORNEY OF THE AGENT
OR ANY LENDER HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE AGENT OR ANY
LENDER WOULD NOT, IN THE EVENT OF ANY ACTION, PROCEEDING OR COUNTERCLAIM, SEEK
TO ENFORCE THE FOREGOING WAIVERS. EACH LOAN PARTY HEREBY ACKNOWLEDGES THAT THIS
PROVISION IS A MATERIAL INDUCEMENT FOR THE AGENT AND THE LENDERS ENTERING INTO
THIS AGREEMENT.
Section 11.12 Consent by the Agent and Lenders. Except as otherwise
expressly set forth herein to the contrary, if the consent, approval,
satisfaction, determination, judgment, acceptance or similar action (an
"Action") of the Agent or any Lender shall be permitted or required pursuant to
any provision hereof or any provision of any other agreement to which any Credit
Party is a party and to which the Agent or any Lender has succeeded thereto,
such Action shall be required to be in writing and may be withheld or denied by
the Agent or such Lender, in its sole discretion, with or without any reason,
and without being subject to question or challenge on the grounds that such
Action was not taken in good faith.
Section 11.13 No Party Deemed Drafter. Each of the parties hereto
agrees that no party hereto shall be deemed to be the drafter of this Agreement.
Section 11.14 Reinstatement; Certain Payments. If any claim is ever
made upon the Agent or any Lender for repayment or recovery of any amount or
amounts received by the Agent or such Lender in payment or on account of any of
the Obligations, the Agent or such Lender shall give prompt notice of such claim
to each other Lender and the Borrower, and if the Agent or such Lender repays
all or part of such amount by reason of (i) any judgment, decree or order of any
court or administrative body having jurisdiction over the Agent or such Lender
or any of its property, or (ii) any good faith settlement or compromise of any
such claim effected by the Agent or such Lender with any such claimant, then and
in such event each Loan Party agrees that (A) any such judgment, decree, order,
settlement or compromise shall be binding upon it notwithstanding the
cancellation of any Indebtedness hereunder or under the other Loan Documents or
the termination of this Agreement or the other Loan Documents, and (B) it shall
be and remain liable to the Agent or such Lender hereunder for the amount so
repaid or recovered to the same extent as if such amount had never originally
been received by the Agent or such Lender.
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Section 11.15 Indemnification.
(a) General Indemnity. In addition to each Loan Party's other
Obligations under this Agreement, each Loan Party agrees to, jointly and
severally, defend, protect, indemnify and hold harmless the Agent, each Lender,
and all of their respective assignees, affiliates, directors, officers, members,
employees and agents (each an "Indemnitee" and collectively the "Indemnitees")
from and against any and all losses, claims, damages, liabilities, obligations,
penalties or other costs and expenses (including without limitation reasonable
attorney's fees, costs and expenses) which are incurred by an Indemnitee or to
which an Indemnitee may become subject whether prior to or from and after the
Effective Date, whether direct, indirect or consequential, as a result of or
arising from or relating to or in connection with any of the following: (i) the
negotiation, preparation, execution or performance or enforcement of this
Agreement, any other Loan Document or of any other document executed in
connection with the transactions contemplated by this Agreement, (ii) the
Agent's or any Lender's furnishing of funds to the Borrower under this Agreement
or the other Loan Documents, including, without limitation, the management of
the Loan, (iii) any matter relating to the Loan transactions contemplated by
this Agreement or the other Loan Documents or by any document executed in
connection with the transactions contemplated by this Agreement or the other
Loan Documents, or (iv) any claim, litigation, investigation or proceeding
relating to any of the foregoing, whether or not any Indemnitee is a party
thereto (collectively, the "Indemnified Matters"); provided, however, that the
Loan Parties shall not have any obligation to any Indemnitee under this
subsection (a) for any Indemnified Matter caused by the gross negligence or
willful misconduct of such Indemnitee, as determined by a final judgment of a
court of competent jurisdiction.
(b) Sharing of Indemnity Obligations. To the extent that the
undertaking to indemnify, pay and hold harmless set forth in this Section 11.15
may be unenforceable because it is in violation of any law or public policy,
each Loan Party shall, jointly and severally, contribute the maximum portion
which it is permitted to pay and satisfy under applicable law, to the payment
and satisfaction of all Indemnified Matters incurred by the Indemnitees. The
indemnities set forth in this Section 11.15 shall survive the repayment of the
Obligations and discharge of any Liens granted under the Loan Documents.
Section 11.16 Records. The unpaid principal of and interest on the
Loan, the interest rate or rates applicable to such unpaid principal and
interest, the duration of such applicability, the Commitments, and the accrued
and unpaid fees payable pursuant to Section 2.06 hereof, including, without
limitation, the Unused Line Fee, shall at all times be ascertained from the
records of the Agent, which shall be conclusive and binding absent manifest
error.
Section 11.17 Binding Effect. This Agreement shall become effective
when it shall have been executed by each Loan Party, the Agent and each Lender
and when the conditions precedent set forth in Section 5.01 hereof have been
satisfied or waived in writing by the Agent, and thereafter shall be binding
upon and inure to the benefit of each Loan Party, the
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Agent and each Lender, and their respective successors and assigns, except that
the Loan Parties shall not have the right to assign their rights hereunder or
any interest herein without the prior written consent of each Lender, and any
assignment by any Lender shall be governed by Section 11.07 hereof.
Section 11.18 Interest. It is the intention of the parties hereto
that the Agent and each Lender shall conform strictly to usury laws applicable
to it. Accordingly, if the transactions contemplated hereby or by any other Loan
Document would be usurious as to the Agent or any Lender under laws applicable
to it (including the laws of the United States of America and the State of New
York or any other jurisdiction whose laws may be mandatorily applicable to the
Agent or such Lender notwithstanding the other provisions of this Agreement),
then, in that event, notwithstanding anything to the contrary in this Agreement
or any other Loan Document or any agreement entered into in connection with or
as security for the Obligations, it is agreed as follows: (i) the aggregate of
all consideration which constitutes interest under law applicable to the Agent
or any Lender that is contracted for, taken, reserved, charged or received by
the Agent or such Lender under this Agreement or any other Loan Document or
agreements or otherwise in connection with the Obligations shall under no
circumstances exceed the maximum amount allowed by such applicable law, any
excess shall be canceled automatically and if theretofore paid shall be credited
by the Agent or such Lender on the principal amount of the Obligations (or, to
the extent that the principal amount of the Obligations shall have been or would
thereby be paid in full, refunded by the Agent or such Lender, as applicable, to
the Borrower); and (ii) in the event that the maturity of the Obligations is
accelerated by reason of any Event of Default under this Agreement or otherwise,
or in the event of any required or permitted prepayment, then such consideration
that constitutes interest under law applicable to the Agent or any Lender may
never include more than the maximum amount allowed by such applicable law, and
excess interest, if any, provided for in this Agreement or otherwise shall be
canceled automatically by the Agent or such Lender, as applicable, as of the
date of such acceleration or prepayment and, if theretofore paid, shall be
credited by the Agent or such Lender, as applicable, on the principal amount of
the Obligations (or, to the extent that the principal amount of the Obligations
shall have been or would thereby be paid in full, refunded by the Agent or such
Lender to the Borrower). All sums paid or agreed to be paid to the Agent or any
Lender for the use, forbearance or detention of sums due hereunder shall, to the
extent permitted by law applicable to the Agent or such Lender, be amortized,
prorated, allocated and spread throughout the full term of the Loan until
payment in full so that the rate or amount of interest on account of the Loan
hereunder does not exceed the maximum amount allowed by such applicable law. If
at any time and from time to time (x) the amount of interest payable to the
Agent or any Lender on any date shall be computed at the Highest Lawful Rate
applicable to the Agent or such Lender pursuant to this Section 11.18 and (y) in
respect of any subsequent interest computation period the amount of interest
otherwise payable to the Agent or such Lender would be less than the amount of
interest payable to the Agent or such Lender computed at the Highest Lawful Rate
applicable to the Agent or such Lender, then the amount of interest payable to
the Agent or such Lender in respect of such subsequent interest computation
period shall continue to be computed at the Highest Lawful Rate applicable to
the Agent or such Lender until the total amount of interest payable to the Agent
or such Lender shall equal the total amount of interest which would have been
payable to the Agent or such Lender if the total amount of interest had been
computed without giving effect to this Section 11.18.
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For purposes of this Section 11.18, the term "applicable law" shall
mean that law in effect from time to time and applicable to the loan transaction
between the Borrower, on the one hand, and the Agent and the Lenders, on the
other, that lawfully permits the charging and collection of the highest
permissible, lawful non-usurious rate of interest on such loan transaction and
this Agreement, including laws of the State of New York and, to the extent
controlling, laws of the United States of America.
The right to accelerate the maturity of the Obligations does not
include the right to accelerate any interest that has not accrued as of the date
of acceleration.
Section 11.19 Confidentiality. The Agent and each Lender 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 its customary procedures for handling confidential information
of this nature and in accordance with safe and sound practices of comparable
commercial finance companies, any non-public information supplied to it by the
Loan Parties pursuant to this Agreement or the other Loan Documents which is
identified in writing by the Loan Parties as being confidential at the time the
same is delivered to such Person (and which at the time is not, and does not
thereafter become, publicly available or available to such Person from another
source not known to be subject to a confidentiality obligation to such Person
not to disclose such information), provided that nothing herein shall limit the
disclosure of any such information (i) to the extent required by statute, rule,
regulation or judicial process, (ii) to counsel for the Agent or any Lender,
(iii) to examiners, auditors or accountants, (iv) in connection with any
litigation to which the Agent or any Lender is a party or (v) to any assignee or
participant (or prospective assignee or participant) so long as such assignee or
participant (or prospective assignee or participant) first agrees, in writing,
to be bound by confidentiality provisions similar in substance to this Section
11.19. Notwithstanding the foregoing, the Agent and each Lender may disclose to
any and all Persons, without limitation of any kind, the tax treatment and tax
structure of the financing contemplated by this Agreement, and all materials of
any kind (including opinions or other tax analyses) that are provided to the
Agent or any Lender relating to such tax treatment and tax structure. Each of
the Agent and the Lenders agrees that, upon receipt of request or identification
of the requirement for disclosure pursuant to clause (iv) hereof, it will make
reasonable efforts to keep the Loan Parties informed of such request or
identification; provided that each Loan Party acknowledges that the Agent and
each Lender may make disclosure as required or requested by any Governmental
Authority or representative thereof and that the Agent and each Lender may be
subject to review by regulatory agencies and may be required to provide to, or
otherwise make available for review by, the representatives of such parties or
agencies any such non-public information, to the extent that such portion of the
non-public information is legally required to be disclosed, in which case the
Agent and each Lender shall use reasonable efforts to obtain assurance that
confidential treatments will be accorded such non-public information.
Section 11.20 Obligation to Make Payment in Dollars. Any payment on
account of an amount that is payable hereunder or under any Loan Document in
Dollars which is made to or for the account of any Lender in any other currency,
whether as a result of any judgment or order or the enforcement thereof or the
realization of any security or the liquidation of any Loan
-92-
Party, shall constitute a discharge of the obligation of the Credit Party under
this Agreement or such Loan Document only to the extent of the amount of Dollars
which such Lender could purchase in the foreign exchange markets in London,
England, with the amount of such other currency in accordance with normal
banking procedures at the rate of exchange prevailing on the London Banking Day
following receipt of the payment first referred to above. If the amount of
Dollars that could be so purchased is less than the amount of Dollars originally
due to such Lender, each Loan Party agrees, to the fullest extent permitted by
law, to indemnify and save harmless such Lender from and against all loss or
damage arising out of or as a result of such deficiency. This indemnity shall,
to the fullest extent permitted by law, constitute an obligation separate and
independent from the other obligations contained in this Agreement and the other
Loan Documents, shall give rise to a separate and independent cause of action,
shall apply irrespective of any indulgence granted by any Lender from time to
time and shall continue in full force and effect notwithstanding any judgment or
order for a liquidated sum in respect of an amount due hereunder or under any
other Loan Document or under any judgment or order. As used herein the term
"London Banking Day" shall mean any day other than Saturday or Sunday or a day
on which commercial banks are required or authorized by law to be closed in
London, England.
Section 11.21 Integration. This Agreement, together with the other
Loan Documents, reflects the entire understanding of the parties with respect to
the transactions contemplated hereby and shall not be contradicted or qualified
by any other agreement, oral or written, before the date hereof.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
-93-
SIGNATURE PAGE TO TERM LOAN AGREEMENT
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
BORROWER:
SCOTTISH ANNUITY & LIFE
INSURANCE COMPANY (CAYMAN)
LTD.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Secretary
Before me, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
a Notary Public in and for the
Cayman Islands, this 9 day of
March 2007.
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
---------------------------------
(My Commission expires on 31st
January, 2008)
GUARANTORS:
SCOTTISH RE GROUP LIMITED
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Secretary
Before me, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
a Notary Public in and for the
Cayman Islands, this 9 day of
March 2007.
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
---------------------------------
(My Commission expires on 31st
January, 2008)
THE SCOTTISH ANNUITY COMPANY (CAYMAN) LTD.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Secretary
Before me, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
a Notary Public in and for the
Cayman Islands, this 9 day of
March 2007.
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
---------------------------------
(My Commission expires on 31st
January, 2008)
SCOTTISH RE HOLDINGS LIMITED.
By: /s/ ▇. ▇▇▇▇▇▇
-------------------------------------
Name: ▇. ▇▇▇▇▇▇
Title: CEO
SCOTTISH ANNUITY & LIFE
HOLDINGS (BERMUDA) LIMITED
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Vice President
Before me, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
a Notary Public in and for the
Cayman Islands, this 9 day of
March 2007.
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
---------------------------------
(My Commission expires on 31st
January, 2008)
SCOTTISH HOLDINGS (BARBADOS)
LTD.
By: /s/ [ILLEGIBLE]
-------------------------------------
Name: [ILLEGIBLE]
Title: Director
And
By: /s/ [ILLEGIBLE]
-------------------------------------
Name: [ILLEGIBLE]
Title: Director
Witness: /s/ Marcel El-▇▇▇▇▇
-----------------------------
Name: Marcel El-▇▇▇▇▇
Address: No. 6 Kent Ridge
▇▇▇▇▇▇ Church
Occupation: Attorney-at-Law
SCOTTISH RE INTERNATIONAL
(BERMUDA) LTD.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Vice President
Before me, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
a Notary Public in and for the
Cayman Islands, this 9 day of
March 2007.
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
---------------------------------
(My Commission expires on 31st
January, 2008)
SCOTTISH ANNUITY & LIFE
INSURANCE COMPANY (BERMUDA)
LTD.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Vice President
Before me, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
a Notary Public in and for the
Cayman Islands, this 9 day of
March 2007.
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
---------------------------------
(My Commission expires on 31st
January, 2008)
SCOTTISH HOLDINGS, INC.
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President/CEO
[State of North Carolina)
County of Mecklenburg)
On the 9th day of March in the year 2007 before me, the undersigned,
personally appeared ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, personally known to me or proved to me
on the basis of satisfactory evidence to be the individual whose name is
subscribed to the within instrument and acknowledged to me that he/she executed
the same in his/her capacity, and that by his/her signature on the instrument,
the individual, or the person upon behalf of which the individual acted,
executed the instrument.
/s/ ▇▇▇ ▇. ▇▇▇▇▇
------------------------------------------
Notary Public
My Commission Expires: 11/16/2007
SCOTTISH ANNUITY & LIFE
INTERNATIONAL INSURANCE
COMPANY (BERMUDA) LTD.
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
[State of North Carolina)
County of Mecklenburg)
On the 9th day of March in the year 2007 before me, the undersigned,
personally appeared ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, personally known to me or proved to me
on the basis of satisfactory evidence to be the individual whose name is
subscribed to the within instrument and acknowledged to me that he/she executed
the same in his/her capacity, and that by his/her signature on the instrument,
the individual, or the person upon behalf of which the individual acted,
executed the instrument.
/s/ ▇▇▇ ▇. ▇▇▇▇▇
------------------------------------------
Notary Public
My Commission Expires: 11/16/2007
SCOTTISH RE CAPITAL MARKETS,
INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: SVP/Secretary
[State of North Carolina)
County of Mecklenburg)
On the 9th day of March in the year 2007 before me, the undersigned,
personally appeared ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, personally known to me or proved to me on
the basis of satisfactory evidence to be the individual whose name is subscribed
to the within instrument and acknowledged to me that he/she executed the same in
his/her capacity, and that by his/her signature on the instrument, the
individual, or the person upon behalf of which the individual acted, executed
the instrument.
/s/ ▇▇▇ ▇. ▇▇▇▇▇
------------------------------------------
Notary Public
My Commission Expires: 11/16/2007
AGENT AND LENDER:
----------------
ABLECO FINANCE LLC
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Senior Vice President
[State of New York )
ss
County of New York )
On the 9th day of March in the year 2007 before me, the undersigned,
personally appeared ▇▇▇▇▇ ▇▇▇▇▇, personally known to me or proved to me on the
basis of satisfactory evidence to be the individual whose name is subscribed to
the within instrument and acknowledged to me that he/she executed the same in
his/her capacity, and that by his/her signature on the instrument, the
individual, or the person upon behalf of which the individual acted, executed
the instrument.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
Notary Public
My Commission Expires: 11/30/2010
LENDER:
------
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY
By: Babson Capital Management LLC, as
Investment Adviser
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Managing Director
[State of North Carolina )
ss
County of Mecklenburg )
On the 8th day of March in the year 2007 before me, the undersigned,
personally appeared ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, personally known to me or proved to me
on the basis of satisfactory evidence to be the individual whose name is
subscribed to the within instrument and acknowledged to me that he/she executed
the same in his/her capacity, and that by his/her signature on the instrument,
the individual, or the person upon behalf of which the individual acted,
executed the instrument.
/s/ [ILLEGIBLE]
------------------------------------------
Notary Public
My Commission Expires: 11/7/2011