REVOLVING CREDIT AGREEMENT
by and among
MERCURY GENERAL CORPORATION,
THE LENDERS PARTY HERETO,
AND
THE BANK OF NEW YORK, AS AGENT
UNION BANK OF CALIFORNIA, AS CO-AGENT
AND
FIRST NATIONAL BANK OF CHICAGO, AS CO-AGENT
WITH
BNY CAPITAL MARKETS, INC.
AS LEAD ARRANGER
________________
$100,000,000
________________
Dated as of October 30, 1998
TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS AND PRINCIPLES OF CONSTRUCTION .............. 1
Section 1.1 Definitions ............................................. 1
Section 1.2 Principles of Construction .............................. 13
ARTICLE 2 AMOUNT AND TERMS OF LOANS ............................... 14
Section 2.1 Loans ................................................... 14
Section 2.2 Notes ................................................... 14
Section 2.3 Procedure for Borrowing ................................. 15
Section 2.4 Termination or Reduction of Aggregate Commitments ....... 16
Section 2.5 Prepayments of the Loans ................................ 16
Section 2.6 Conversions and Continuations ........................... 17
Section 2.7 Interest Rate and Payment Dates ......................... 18
Section 2.8 Taxes ................................................... 19
Section 2.9 Substituted Interest Rate ............................... 21
Section 2.10 Illegality .............................................. 22
Section 2.11 Increased Costs ......................................... 22
Section 2.12 Capital Adequacy ........................................ 23
Section 2.13 Lending Offices ......................................... 24
Section 2.14 Indemnification for Loss ................................ 24
Section 2.15 Option to Fund .......................................... 25
Section 2.16 Use of Proceeds ......................................... 25
Section 2.17 Extension of Maturity Date .............................. 25
Section 2.18 Agent's Records ......................................... 26
Section 2.19 Mitigation of Taxes and Costs ........................... 26
ARTICLE 3 FEES; PAYMENTS .......................................... 27
Section 3.1 Commitment Fee .......................................... 27
Section 3.2 Pro Rata Treatment and Application of Principal Payments. 27
ARTICLE 4 REPRESENTATIONS AND WARRANTIES .......................... 28
Section 4.1 Subsidiaries ............................................ 28
Section 4.2 Existence and Power ..................................... 28
Section 4.3 Authority ............................................... 28
Section 4.4 Binding Agreement ....................................... 28
Section 4.5 Litigation .............................................. 28
Section 4.6 Required Consents ....................................... 29
Section 4.7 No Conflicting Agreements ............................... 29
Section 4.8 Compliance with Applicable Laws ......................... 29
Section 4.9 Taxes ................................................... 29
Section 4.10 Governmental Regulations ................................ 30
Section 4.11 Federal Reserve Regulations; Use of Loan Proceeds ....... 30
Section 4.12 Plans ................................................... 30
Section 4.13 Financial Statements .................................... 30
Section 4.14 Property ................................................ 31
Section 4.15 Licenses, Franchises, Etc ............................... 31
Section 4.16 Environmental Matters ................................... 31
Section 4.17 Labor Relations ......................................... 32
Section 4.18 Burdensome Obligations .................................. 32
Section 4.19 No Misrepresentation .................................... 33
Section 4.20 Year 2000 ............................................... 33
ARTICLE 5 CONDITIONS TO FIRST LOANS ............................... 33
Section 5.1 Evidence of Action ...................................... 33
Section 5.2 This Agreement .......................................... 34
Section 5.3 Notes ................................................... 34
Section 5.4 Approvals ............................................... 34
Section 5.5 Opinion of Counsel to the Borrower ...................... 34
Section 5.6 Opinion of Special Counsel .............................. 34
Section 5.7 Payment of Fees ......................................... 34
Section 5.8 Other Documents ......................................... 35
ARTICLE 6 CONDITIONS OF LENDING - ALL LOANS ....................... 35
Section 6.1 Compliance .............................................. 35
Section 6.2 Loan Closings ........................................... 35
Section 6.3 Borrowing Request ....................................... 35
Section 6.4 Other Documents ......................................... 35
ARTICLE 7 AFFIRMATIVE COVENANTS ................................... 36
Section 7.1 Financial Statements .................................... 36
Section 7.2 Certificates; Other Information ......................... 37
Section 7.3 Legal Existence ......................................... 38
Section 7.4 Taxes ................................................... 38
Section 7.5 Insurance ............................................... 38
Section 7.6 Payment of Indebtedness and Performance of Obligations .. 39
Section 7.7 Condition of Property ................................... 39
Section 7.8 Observance of Legal Requirements ........................ 39
Section 7.9 Inspection of Property; Books and Records; Discussions .. 39
Section 7.10 Authorizations .......................................... 39
Section 7.11 Adjusted Net Worth ...................................... 40
Section 7.12 GAAP Net Worth .......................................... 40
Section 7.13 Leverage Ratio .......................................... 40
Section 7.14 Interest Coverage Ratio ................................. 40
Section 7.15 Year 2000 Covenant ...................................... 40
ARTICLE 8 NEGATIVE COVENANTS ...................................... 40
Section 8.1 Indebtedness of Subsidiaries ............................ 41
Section 8.2 Liens ................................................... 41
Section 8.3 Mergers, Acquisitions and Dispositions .................. 42
Section 8.4 Line of Business ........................................ 42
Section 8.5 Articles of Incorporation and By-laws ................... 42
Section 8.6 Fiscal Year ............................................. 42
Section 8.7 Transactions with Affiliates ............................ 42
Section 8.8 Issuance of Additional Stock by Subsidiaries ............ 43
Section 8.9 Reinsurance Agreements .................................. 43
Section 8.10 Adoption of Pension Plans ............................... 43
ARTICLE 9 DEFAULT ................................................. 43
Section 9.1 Events of Default ....................................... 43
ARTICLE 10 THE AGENT ............................................... 46
Section 10.1 Appointment ............................................. 46
Section 10.2 Delegation of Duties .................................... 47
Section 10.3 Exculpatory Provisions .................................. 47
Section 10.4 Reliance by Agent ....................................... 47
Section 10.5 Notice of Default ....................................... 48
Section 10.6 Non-Reliance on Agent and Other Lenders ................. 48
Section 10.7 Indemnification ......................................... 49
Section 10.8 Agent in Its Individual Capacity ........................ 49
Section 10.9 Successor Agent ......................................... 49
ARTICLE 11 OTHER PROVISIONS ........................................ 50
Section 11.1 Amendments and Waivers .................................. 50
Section 11.2 Notices ................................................. 51
Section 11.3 No Waiver; Cumulative Remedies .......................... 52
Section 11.4 Survival of Representations and Warranties .............. 52
Section 11.5 Payment of Expenses and Taxes ........................... 52
Section 11.6 Assignments and Participations .......................... 53
Section 11.7 Counterparts ............................................ 55
Section 11.8 Adjustments; Set-off .................................... 55
Section 11.9 Construction ............................................ 56
Section 11.10 Indemnity ............................................... 56
Section 11.11 Governing Law ........................................... 57
Section 11.12 Headings Descriptive .................................... 57
Section 11.13 Severability ............................................ 57
Section 11.14 Integration ............................................. 57
Section 11.15 Consent to Jurisdiction ................................. 57
Section 11.16 Service of Process ...................................... 58
Section 11.17 No Limitation on Service or Suit ........................ 58
Section 11.18 WAIVER OF TRIAL BY JURY ................................. 58
EXHIBITS
--------
Exhibit A List of Commitments
Exhibit B Form of Note
Exhibit C Form of Borrowing Request
Exhibit D Form of Assignment and Acceptance Agreement
Exhibit E Form of Opinion of Counsel to the Borrower
Exhibit F Form of Opinion of Special Counsel
Exhibit G Form of Notice of Conversion/Continuation
SCHEDULES
---------
Schedule 1.1 List of Lending Offices
Schedule 4.1 List of Subsidiaries
Schedule 4.5 List of Litigation
Schedule 8.1 List of Existing Indebtedness
Schedule 8.2 List of Existing Liens
REVOLVING CREDIT AGREEMENT, dated as of October 30, 1998, by and among
MERCURY GENERAL CORPORATION, a California corporation (the "Borrower"), the
lenders party hereto (collectively, together with their respective assigns, the
"Lenders", and each a "Lender") and THE BANK OF NEW YORK, as agent for the
Lenders (in such capacity, the "Agent").
ARTICLE 1 DEFINITIONS AND PRINCIPLES OF CONSTRUCTION
Section 1.1 Definitions
As used in this Agreement, terms defined in the preamble have the
meanings therein indicated, and the following terms have the following meanings:
"ABR Advances": the Loans (or any portions thereof) at such time as
they (or such portions) are made and/or being maintained at a rate of interest
based upon the Alternate Base Rate.
"Accountants": KPMG Peat Marwick (or any successor thereto), or such
other firm of certified public accountants of recognized national standing
selected by the Borrower and reasonably satisfactory to the Agent.
"Acquisition": with respect to any Person, the purchase or other
acquisition by such Person, by any means whatsoever (including by devise,
bequest, gift, through a dividend or otherwise and whether in a single
transaction or in a series of related transactions), of (i) the Capital Stock
of, or other equity securities of, any other Person if, immediately thereafter,
such other Person would be either a Subsidiary of such Person or otherwise under
the control of such Person, (ii) any business, going concern or division or
segment thereof, or (iii) the Property of any other Person other than in the
ordinary course of business, provided, however, that no acquisition of all or
substantially all of the assets of such other Person shall be deemed to be in
the ordinary course of business.
"Adjusted Net Worth": at any date of determination, the sum of all
amounts which would be included under shareholders' equity on a Consolidated
balance sheet of the Borrower determined in accordance with GAAP (without
adjusting the value of securities held by the Borrower or its Subsidiaries to
market value as contemplated under FASB 115 for securities designated as
"available for sale").
"Advance": an ABR Advance or a Eurodollar Advance, as the case may be.
"Affected Advance": defined in Section 2.9.
"Affected Principal Amount": in the event that (i) the Borrower shall
fail for any reason to borrow, convert or continue after it shall have notified
the Agent of its intent to do so in any instance in which it shall have
requested a Eurodollar Advance, an amount equal to the principal amount of such
Eurodollar Advance; (ii) a Eurodollar Advance shall terminate pursuant to the
provisions hereof prior to the last day of the Interest Period applicable
thereto, an amount equal to the principal amount of such Eurodollar Advance; and
(iii) the Borrower shall prepay or repay all
or any part of the principal amount of a Eurodollar Advance prior to the last
day of the Interest Period applicable thereto, an amount equal to the principal
amount of such Eurodollar Advance so prepaid or repaid.
"Affiliate": as to any Person, any other Person which, directly or
indirectly, is in control of, is controlled by, or is under common control with,
such Person. For purposes of this definition, control of a Person shall mean the
power, direct or indirect, (i) to vote 5% or more of the securities or other
interests having ordinary voting power for the election of directors or other
managing Persons thereof or (ii) to direct or cause the direction of the
management and policies of such Person, whether by contract or otherwise.
"Aggregate Commitments": on any date, the sum of all Commitments on
such date.
"Agreement": this Revolving Credit Agreement, as the same may be
amended, supplemented or otherwise modified from time to time.
"Alternate Base Rate": on any date, a rate of interest per annum equal
to the higher of (i) the Federal Funds Rate in effect on such date plus 1/2 of
1% or (ii) the BNY Rate in effect on such date.
"Annual Statements": defined in Section 4.13(b).
"Applicable Insurance Code": with respect to any Insurance Subsidiary,
the insurance code of any jurisdiction where such Insurance Subsidiary is
domiciled or is conducting an insurance business, as in effect from time to time
and including any successor code or statute thereto, together with the
regulations issued thereunder.
"Applicable Insurance Regulatory Authority": with respect to any
Insurance Subsidiary, the insurance department or similar Governmental Authority
located in the jurisdiction in which such Insurance Subsidiary is domiciled and,
to the extent that it has any regulatory authority over such Insurance
Subsidiary, in each other jurisdiction in which such Insurance Subsidiary is
licensed.
"Applicable Lending Office": in respect of any Lender, (i) in the case
of such Lender's ABR Advances, its Domestic Lending Office and (ii) in the case
of such Lender's Eurodollar Advances, its Eurodollar Lending Office.
"Applicable Margin": (i) with respect to the unpaid principal balance
of ABR Advances, the applicable percentage set forth below in the column
entitled "ABR Advances", (ii) with respect to the unpaid principal balance of
Eurodollar Advances, the applicable percentage set forth below in the column
entitled "Eurodollar Advances", and (iii) with respect to the Commitment Fee,
the applicable percentage set forth below in the column entitled "Commitment
Fee"; in each case opposite the applicable Pricing Level:
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ABR Eurodollar Commitment
Pricing Level Advances Advances Fee
-------------------- --------- ----------- -----------
Pricing Level I 0% 0.4000% .1200%
Pricing Level II 0% 0.4500% .1200%
Pricing Level III 0% 0.5750% .1200%
Pricing Level IV 0% 0.6500% .1200%
"Assignment and Acceptance Agreement": an assignment and acceptance
agreement executed by an assignor and an assignee pursuant to which the assignor
assigns to the assignee all or any portion of such assignor's Notes and
Commitment, substantially in the form of Exhibit D.
"Assignment Fee": defined in Section 11.6(b).
"Authorized Signatory": as to (i) any Person which is a corporation,
the chairman of the board, the president, any vice president, the chief
financial officer or any other duly authorized officer (acceptable to the Agent)
of such Person and (ii) any Person which is not a corporation, the general
partner or other managing Person thereof.
"Benefited Lender": defined in Section 11.8.
"BNY": The Bank of New York.
"BNY Rate": a rate of interest per annum equal to the rate of interest
publicly announced in New York City by BNY from time to time as its prime
commercial lending rate, such rate to be adjusted automatically (without notice)
on the effective date of any change in such publicly announced rate.
"Borrowing Date": any Business Day specified in a Borrowing Request as
a date on which the Borrower requests the Lenders to make Loans.
"Borrowing Request": a request for Loans in the form of Exhibit C.
"Business Day": for all purposes other than as set forth in clause
(ii) below, (i) any day other than a Saturday, Sunday or a day on which
commercial banks located in New York City and Los Angeles are authorized or
required by law or other governmental action to close and (ii) with respect to
all notices and determinations in connection with, and payments of principal and
interest on, Eurodollar Advances, any day which is a Business Day described in
clause (i) above and which is also a day on which dealings in foreign currency
and exchange and Eurodollar funding between banks may be carried on in London,
England.
"Capital Lease Obligations": with respect to any Person, the
obligations of such Person with respect to leases which, in accordance with
GAAP, are required to be capitalized on the financial statements of such Person.
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"Code": the Internal Revenue Code of 1986, as amended from time to
time, or any successor thereto, and the rules and regulations issued thereunder,
as from time to time in effect.
"Commitment": in respect of any Lender, such Lender's undertaking
during the Commitment Period to make Loans, subject to the terms and conditions
hereof, in an aggregate outstanding principal amount not exceeding the amount
set forth next to the name of such Lender in Exhibit A under the heading
"Commitments", as such amount may be reduced pursuant to Section 2.4.
"Commitment Fee": defined in Section 3.1.
"Commitment Period": the period from the Effective Date until the
Business Day immediately preceding the Maturity Date.
"Commitment Percentage": as to any Lender, the percentage set forth
opposite the name of such Lender in Exhibit A under the heading "Commitment
Percentage".
"Compensatory Interest Payment": defined in Section 2.7(c).
"Consolidated": the Borrower and its Subsidiaries which are
consolidated for financial reporting purposes.
"Consolidated Statutory Capital and Surplus": at any date the
consolidated statutory capital and surplus of the Borrower and its Subsidiaries
determined as of such date in accordance with SAP.
"Consolidating": the Borrower and its Subsidiaries taken separately.
"Contingent Obligation": as to any Person (the "secondary obligor"),
-----------------
any obligation, without duplication, of such secondary obligor (i) guaranteeing
or in effect guaranteeing any return on any investment made by another Person,
or (ii) guaranteeing or in effect guaranteeing any indebtedness, lease, dividend
or other obligation ("primary obligation") of any other Person (the "primary
------------------ -------
obligor") in any manner, whether directly or indirectly, including, without
-------
limitation, any obligation of such secondary obligor, whether contingent, (A) to
purchase any such primary obligation or any Property constituting direct or
indirect security therefor, (B) to advance or supply funds (x) for the purchase
or payment of any such primary obligation or (y) 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, securities or
services primarily for the purpose of assuring the beneficiary of any such
primary obligation of the ability of the primary obligor to make payment of such
primary obligation, (D) otherwise to assure or hold harmless the beneficiary of
such primary obligation against loss in respect thereof, and (E) in respect of
the liabilities of any partnership in which such secondary obligor is a general
partner, except to the extent that such liabilities of such partnership are
nonrecourse to such secondary obligor and its separate Property, provided,
however, that the term "Contingent Obligation" shall not include (1) amounts
potentially
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owed on or with respect to insurance policies issued or sold in the ordinary
course of business, (2) premiums for any such policies, to the extent
attributable to a period after a particular date upon which Contingent
Obligations are being determined or (3) the indorsement of instruments for
deposit or collection in the ordinary course of business. The amount of any
Contingent Obligation of a Person shall be deemed to be an amount equal to the
stated or determinable amount of the primary obligation in respect of which such
Contingent Obligation is made or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof as determined by such Person
in good faith.
"Control Person": defined in Section 2.12.
"Conversion/Continuation Date": the date on which (i) a Eurodollar
Advance is converted to an ABR Advance, (ii) the date on which an ABR Advance is
converted to a Eurodollar Advance or (iii) the date on which a Eurodollar
Advance is continued as a new Eurodollar Advance.
"Default": any event or condition which constitutes an Event of
Default or which, with the giving of notice, the lapse of time, or any other
condition, would, unless cured or waived, become an Event of Default.
"Disposition": with respect to any Person, any sale, ceding,
assignment, transfer or other disposition by such Person, by any means, of (a)
any Operating Entity, or (b) any other Property of such Person, provided,
however, that the term "Disposition" shall not include any sale, ceding,
assignment, transfer or other disposition by a Person that is a corporation (i)
to a wholly-owned Subsidiary of that Person or (ii) as a dividend to that
Person's shareholders.
"Dollars" and "$": lawful currency of the United States of America.
"Domestic Lending Office": in respect of any Lender, initially, the
office or offices of such Lender designated as such on Schedule 1.1; thereafter,
such other office of such Lender through which it shall be making or maintaining
ABR Advances, as reported by such Lender to the Agent and the Borrower.
"EBITDA": for any period, net income of the Borrower and its Non-
Insurance Subsidiaries for such period, determined on a Consolidated basis in
accordance with GAAP, plus the sum of, without duplication, (i) Interest
Expense, (ii) provision for income taxes of the Borrower and its Non-Insurance
Subsidiaries and (iii) depreciation, amortization and other non-cash charges of
the Borrower and its Non-Insurance Subsidiaries, each to the extent deducted in
determining such net income for such period.
"Effective Date": October 30, 1998.
"Employee Benefit Plan": an employee benefit plan within the meaning
of Section 3(3) of ERISA maintained, sponsored or contributed to by the
Borrower, any of its Subsidiaries or any ERISA Affiliate.
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"Environmental Laws": any and all federal, state and local laws
relating to the environment, the use, storage, transporting, manufacturing,
handling, discharge, disposal or recycling of hazardous substances, materials or
pollutants or industrial hygiene, and including, without limitation, (i) the
Comprehensive Environmental Response, Compensation and Liability Act, as
amended, 42 USCA (S)9601 et seq.; (ii) the Resource Conservation and Recovery
-- ---
Act of 1976, as amended, 42 ▇▇▇▇ (▇)▇▇▇▇ et seq.; (iii) the Toxic Substance
-- ---
Control Act, as amended, 15 USCA (S)2601 et. seq.; (iv) the Water Pollution
-- ---
Control Act, as amended, 33 USCA (S)1251 et. seq.; (v) the Clean Air Act, as
-- ---
amended, 42 ▇▇▇▇ (▇)▇▇▇▇ et seq.; (vi) the Hazardous Material Transportation
Act, as amended, 49 USCA (S)1801 et seq. and (vii) all rules, regulations,
-- ---
judgments, decrees, injunctions and restrictions thereunder and any analogous
state law.
"ERISA": the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the rules and regulations issued thereunder, as
from time to time in effect.
"ERISA Affiliate": when used with respect to an Employee Benefit Plan,
ERISA, the PBGC or a provision of the Code pertaining to employee benefit plans,
any Person that is a member of any group of organizations within the meaning of
Sections 414(b), (c), (m) or (o) of the Code of which the Borrower or any of its
Subsidiaries is a member.
"Eurodollar Advances": collectively, the Loans (or any portions
thereof) at such time as they (or such portions) are made and/or being
maintained at a rate of interest based upon the Eurodollar Rate.
"Eurodollar Lending Office": in respect of any Lender, initially, the
office, branch or affiliate of such Lender designated as such on Schedule 1.1
(or, if no such office branch or affiliate is specified, its Domestic Lending
Office); thereafter, such other office, branch or affiliate of such Lender
through which it shall be making or maintaining Eurodollar Advances, as reported
by such Lender to the Agent and the Borrower.
"Eurodollar Rate": with respect to the Interest Period applicable to
any Eurodollar Advance, a rate of interest per annum, as determined by the
Agent, obtained by dividing (and then rounding to the nearest 1/16 of 1% or, if
there is no nearest 1/16 of 1%, then to the next higher 1/16 of 1%):
(a) the rate, as reported by BNY to the Agent, quoted by BNY to
leading banks in the interbank eurodollar market as the rate at which BNY is
offering Dollar deposits in an amount equal approximately to the Eurodollar
Advance of BNY to which such Interest Period shall apply for a period equal to
such Interest Period, as quoted at approximately 11:00 A.M. two Business Days
prior to the first day of such Interest Period, by
(b) a number equal to 1.00 minus the aggregate of the then stated
maximum rates during such Interest Period of all reserve requirements
(including, without limitation, marginal, emergency, supplemental and special
reserves), expressed as a decimal, established by the Board of Governors of the
Federal Reserve System and any other banking
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authority to which BNY and other major United States money center banks are
subject, in respect of eurocurrency funding (currently referred to as
"Eurocurrency liabilities" in Regulation D of the Board of Governors of the
Federal Reserve System) or in respect of any other category of liabilities
including deposits by reference to which the interest rate on Eurodollar
Advances is determined or any category of extensions of credit or other assets
which includes loans by non-domestic offices of any Lender to United States
Residents. Such reserve requirements shall include, without limitation, those
imposed under such Regulation D. Eurodollar Advances shall be deemed to
constitute Eurocurrency liabilities and as such shall be deemed to be subject to
such reserve requirements without benefit of credits for proration, exceptions
or offsets which may be available from time to time to any Lender under such
Regulation D. The Eurodollar Rate shall be adjusted automatically on and as of
the effective date of any change in any such reserve requirement.
"Event of Default": any of the events specified in Section 9.1,
provided that any requirement for the giving of notice, the lapse of time, or
any other condition has been satisfied.
"Extension Request": defined in Section 2.17.
"Federal Funds Rate": for any day, a rate per annum (expressed as a
decimal, rounded upwards, if necessary, to the next higher 1/100 of 1%), equal
to the weighted average of the rates on overnight federal funds transactions
with members of the Federal Reserve System arranged by federal funds brokers on
such day, as published by the Federal Reserve Bank of New York on the Business
Day next succeeding such day, provided that (i) if the day for which such rate
is to be determined is not a Business Day, the Federal Funds Rate for such day
shall be such rate on such transactions on the next preceding Business Day as so
published on the next succeeding Business Day, and (ii) if such rate is not so
published for any day, the Federal Funds Rate for such day shall be the average
of the quotations for such day on such transactions received by BNY as
determined by BNY and reported to the Agent.
"Financial Statements": defined in Section 4.13(a).
"GAAP": generally accepted accounting principles as from time to time
in effect in the United States.
"GAAP Net Worth": at any date of determination, the sum of all amounts
which would be included under shareholders' equity on a Consolidated balance
sheet of the Borrower determined in accordance with GAAP.
"Governmental Authority": any nation or government, any state or other
political subdivision thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government
and any court or arbitrator (including, without limitation, any Applicable
Insurance Regulatory Authority).
"Hazardous Substance": any hazardous or toxic substance, material or
waste, including, but not limited to, (i) those substances, materials, and
wastes listed in the United States Department of Transportation Hazardous
Materials Table (49 CFR 172.101) or by the
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Environmental Protection Agency as hazardous substances (40 CFR Part 302) and
amendments thereto and replacements therefor and (ii) any substance, pollutant
or material defined as, or designated in, any Environmental Law as a "hazardous
substance," "toxic substance," "hazardous material," "hazardous waste,"
"restricted hazardous waste," "pollutant," "toxic pollutant" or words of similar
import.
"Highest Lawful Rate": as to any Lender, the maximum rate of interest,
if any, that at any time or from time to time may be contracted for, taken,
charged or received by such Lender on the Notes held thereby or which may be
owing to such Lender pursuant to this Agreement and the other Loan Documents
under the laws applicable to such Lender and this transaction.
"Indebtedness": as to any Person, at a particular time, all items
which constitute, without duplication, (i) indebtedness for borrowed money or
the deferred purchase price of Property (other than trade payables and accrued
expenses incurred in the ordinary course of business), (ii) indebtedness
evidenced by notes, bonds, debentures or similar instruments, (iii) obligations
with respect to any conditional sale or title retention agreement, (iv)
indebtedness arising under acceptance facilities and the amount available to be
drawn under all letters of credit issued for the account of such Person and,
without duplication, all drafts drawn thereunder to the extent such Person shall
not have reimbursed the issuer in respect of the issuer's payment of such
drafts, (v) all liabilities secured by any Lien on any Property owned by such
Person even though such Person has not assumed or otherwise become liable for
the payment thereof (other than carriers', warehousemen's, mechanics',
repairmen's or other like non-consensual statutory Liens arising in the ordinary
course of business), (vi) obligations under Capital Lease Obligations and (vii)
Contingent Obligations; provided that, for purposes of this definition, (a)
"Indebtedness" shall not include obligations in respect of interest rate caps,
collars, swaps or other similar agreements, and (b) Indebtedness under clauses
(iii) or (v) shall be taken at the lesser of the principal amount of such
Indebtedness and the value of the property subject to the Lien referred to
therein.
"Indemnified Person": defined in Section 11.10.
"Insurance Subsidiary": each Subsidiary of the Borrower set forth on
Schedule 4.1 under the heading "Engaged in an Insurance Business."
"Intellectual Property": all copyrights, trademarks, servicemarks,
patents, trade names and service names.
"Interest Coverage Ratio": at any date of determination, the ratio of
(i) the sum of (x) EBITDA of the Borrower and its Non-Insurance Subsidiaries for
the immediately preceding four fiscal quarters of the Borrower plus (y) the
----
greater of (1) 10% of Statutory Surplus of the Insurance Subsidiaries at such
date of determination and (2) Statutory Net Income of the Insurance Subsidiaries
for the immediately preceding four fiscal quarters of the Borrower to (ii)
Interest Expense for the immediately preceding four fiscal quarters of the
Borrower.
"Interest Expense": for any period, the sum of, without duplication,
all interest and commitment fees (adjusted to give effect to all interest rate
swap, cap or other interest rate hedging
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arrangements and fees and expenses paid in connection with the same, all as
determined in accordance with GAAP), paid or accrued in respect of all
Indebtedness of the Borrower and its Subsidiaries determined on a Consolidated
basis in accordance with GAAP during such period.
"Interest Payment Date": (i) as to any ABR Advance, the last day of
each March, June, September and December commencing on the first of such days to
occur after such ABR Advance is made or any Eurodollar Advance is converted to
an ABR Advance, (ii) as to any Eurodollar Advance in respect of which the
Borrower has selected an Interest Period of one, two or three months, the last
day of such Interest Period, and (iii) as to any Eurodollar Advance in respect
of which the Borrower has selected an Interest Period of six months, the day
which is three months after the first day of such Interest Period and the last
day of such Interest Period.
"Interest Period": with respect to any Eurodollar Advance requested by
the Borrower, the period commencing on, as the case may be, the Borrowing Date
or Conversion/Continuation Date with respect to such Eurodollar Advance and
ending one, two, three or six months thereafter, as selected by the Borrower in
its irrevocable Borrowing Request or its irrevocable Notice of
Conversion/Continuation, provided, however, that (i) if any Interest Period
would otherwise end on a day which is not a Business Day, such Interest Period
shall be extended to the next succeeding Business Day unless the result of such
extension would be to carry such Interest Period into another calendar month, in
which event such Interest Period shall end on the immediately preceding Business
Day, (ii) any Interest Period that begins on the last Business Day of a calendar
month (or on a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period) shall end on the last
Business Day of a calendar month and (iii) the Borrower shall select Interest
Periods so as not to have more than five different Interest Periods outstanding
at any one time for all Loans.
"Leverage Ratio": as of any date, the ratio of (a) Consolidated
Indebtedness of the Borrower on such date, to (b) the sum of (i) Consolidated
Indebtedness of the Borrower on such date, plus (ii) Adjusted Net Worth on such
date.
"Lien": any mortgage, pledge, hypothecation, assignment, deposit or
preferential arrangement, encumbrance, lien (statutory or other), or other
security agreement or security interest of any kind or nature whatsoever,
including, without limitation, any conditional sale or other title retention
agreement and any capital or financing lease having substantially the same
economic effect as any of the foregoing.
"Loan Documents": collectively, this Agreement and the Notes.
"Loan" and "Loans": defined in Section 2.1.
"Margin Stock": any "margin stock", as defined in Regulation U of the
Board of Governors of the Federal Reserve System, as the same may be amended or
supplemented from time to time.
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"Material Adverse Change": a material adverse change in (i) the
financial condition, operations, business, prospects or Property of the Borrower
and its Subsidiaries taken as a whole, (ii) the ability of the Borrower to
perform its obligations under the Loan Documents or (iii) the ability of the
Agent and the Lenders to enforce the Loan Documents, including, without
limitation, as a result of a change of law since December 31, 1997.
"Material Adverse Effect": a material adverse effect on (i) the
financial condition, operations, business, prospects or Property of the Borrower
and its Subsidiaries taken as a whole, (ii) the ability of the Borrower to
perform its obligations under the Loan Documents or (iii) the ability of the
Agent and the Lenders to enforce the Loan Documents, including, without
limitation, as a result of a change of law since December 31, 1997.
"Maturity Date": October 29, 1999 (or any date subsequent thereto
resulting from an extension of the Maturity Date pursuant to Section 2.17), or
such earlier date on which the Notes shall become due and payable, whether by
acceleration or otherwise.
"Multiemployer Plan": a Pension Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"NAIC": the National Association of Insurance Commissioners, or any
association or Governmental Authority successor to the functions thereof.
"1996 Revolving Credit": the Revolving Credit Agreement, dated as of
November 21, 1996, by and among the Borrower, the lenders party thereto and BNY
as agent.
"Non-Insurance Subsidiary": each Subsidiary of the Borrower set forth
on Schedule 4.1 under the heading "Not Engaged in an Insurance Business."
"Note" and "Notes": defined in Section 2.2.
"Notice of Conversion/Continuation": a notice substantially in the
form of Exhibit G.
"Operating Entity": (a) any Person, (b) any business or operating unit
of a Person which is, or could be, operated separate and apart from the other
businesses and operations of such Person, or (c) any other line of business or
business segment.
"Pension Plan": at any date of determination, any Employee Benefit
Plan (including a Multiemployer Plan), the funding requirements of which (under
Section 302 of ERISA or Section 412 of the Code) are, or at any time within the
six years immediately preceding such date, were in whole or in part, the
responsibility of the Borrower, any of its Subsidiaries or any ERISA Affiliate.
"Permitted Liens": Liens permitted to exist under Section 8.2.
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"Person": any individual, firm, partnership, joint venture,
corporation, limited liability company, association, business enterprise, joint
stock company, unincorporated association, trust, Governmental Authority or any
other entity, whether acting in an individual, fiduciary, or other capacity, and
for the purpose of the definition of "ERISA Affiliate", a trade or business.
"Pricing Level I": any time when the Leverage Ratio is less than or
equal to .10:1.00.
"Pricing Level II": any time when the Leverage Ratio is greater than
.10:1.00, but less than or equal to .15:1.00.
"Pricing Level III": any time when the Leverage Ratio is greater than
.15:1.00, but less than or equal to .25:1.00.
"Pricing Level IV": any time when the Leverage Ratio is greater than
.25:1.00
"Property": all types of real, personal, tangible, intangible or mixed
property.
"Real Property": all real property owned or leased by the Borrower or
any of its Subsidiaries.
"Reinsurance Agreement": any agreement, contract, treaty, certificate
or other arrangement under which any Insurance Subsidiary agrees to transfer or
cede to another insurer all or part of the liabilities assumed, or the assets
held, by such Insurance Subsidiary under one or more policies of insurance
(including, without limitation, any agreement, contract, treaty, certificate or
other arrangement that is treated as such by any Applicable Insurance Regulatory
Authority of such Insurance Subsidiary).
"Remaining Interest Period": (i) in the event that the Borrower shall
fail for any reason to borrow a Loan in respect of which it shall have requested
a Eurodollar Advance or convert an Advance to, or continue an Advance as, a
Eurodollar Advance after it shall have notified the Agent of its intent to do
so, a period equal to the Interest Period that the Borrower elected in respect
of such Eurodollar Advance; or (ii) in the event that a Eurodollar Advance shall
terminate pursuant to the provisions hereof prior to the last day of the
Interest Period applicable thereto, a period equal to the remaining portion of
such Interest Period if such Interest Period had not been so terminated; or
(iii) in the event that the Borrower shall prepay or repay all or any part of
the principal amount of a Eurodollar Advance prior to the last day of the
Interest Period applicable thereto, a period equal to the period from and
including the date of such prepayment or repayment to but excluding the last day
of such Interest Period.
"Reporting Insurance Subsidiary": on any date, each Insurance
Subsidiary which, as of the end of the fiscal quarter immediately preceding such
date, (i) had a Statutory Surplus of at least 5% of consolidated Statutory
Surplus of the Insurance Subsidiaries at the end of such fiscal quarter or (ii)
accounted for at least 5% of consolidated net premiums written by the Insurance
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Subsidiaries for the 4 fiscal quarters immediately preceding such date.
"Required Lenders": at any time when no Loans are outstanding, Lenders
having Commitments (or if no Commitments then exist, Lenders having Commitments
on the last day on which Commitments did exist) equal to at least 66 2/3% of the
aggregate Commitments of all the Lenders, and at any time when Loans are
outstanding, Lenders holding Notes having an unpaid principal balance equal to
at least 66 2/3% of the aggregate Loans outstanding.
"Restricted Payment": as to any Person (i) any dividend or other
distribution, direct or indirect, on account of any shares of any class of Stock
or other equity interest in such Person now or hereafter outstanding (other than
a dividend payable solely in shares of such Stock to the holders of such shares)
and (ii) any redemption, retirement, sinking fund or similar payment, purchase
or other acquisition, direct or indirect, of any shares of any class of Stock or
other equity interest in such Person now or hereafter outstanding.
"SAP": with respect to each Insurance Subsidiary, statutory accounting
principles in effect from time to time prescribed or permitted by the Applicable
Insurance Regulatory Authority in the preparation of the financial statements of
such Subsidiary.
"SEC": the Securities and Exchange Commission or any Governmental
Authority succeeding to the functions thereof.
"Special Counsel": ▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP, special counsel to the
Agent.
"Statutory Net Income": with respect to the Insurance Subsidiaries for
any period, the consolidated statutory net income of the Insurance Subsidiaries
for such period computed in accordance with SAP and consistent with that
reported on line 16, page 4, column 1 of the Summary of Operations Statement in
the Annual Statement.
"Statutory Surplus": with respect to the Insurance Subsidiaries at any
date of determination, the consolidated statutory surplus of the Insurance
Subsidiaries on such date computed in accordance with SAP and consistent with
that reported on line 25, page 3, column 1 of the Liabilities, Surplus and Other
Funds Statement in the Annual Statement.
"Stock": as to any Person, all shares, interests, partnership
interests, limited liability company interests, participations, rights in or
other equivalents (however designated) of such Person's equity (however
designated) and any rights, warrants or options exchangeable for or convertible
into such shares, interests, participations, rights or other equity.
"Subsidiary": as to any Person, any corporation, association,
partnership, limited liability company, joint venture or other business entity
of which such Person or any Subsidiary of such Person, directly or indirectly,
either (i) in respect of a corporation, owns or controls more than 50% of the
outstanding Stock having ordinary voting power to elect a majority of the board
of directors or similar managing body, irrespective of whether a class or
classes shall or might have voting power by reason of the happening of any
contingency, or (ii) in respect of an association,
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partnership, limited liability company, joint venture or other business entity,
is entitled to share in more than 50% of the profits and losses, however
determined.
"Tax": any present or future tax, levy, impost, duty, charge, fee,
deduction or withholding of any nature and whatever called, by a Governmental
Authority, on whomsoever and wherever imposed, levied, collected, withheld or
assessed.
"Tax on the Overall Net Income": as to any Person, a Tax imposed by
the jurisdiction in which that Person's principal office (and/or, in the case of
a Lender, its Domestic Lending Office) is located or by any political
subdivision or taxing authority thereof or in which that Person is deemed to be
doing business on all or part of the net income, profits or gains of that Person
(whether worldwide, or only insofar as such income, profits or gains are
considered to arise in or to relate to a particular jurisdiction, or otherwise).
"United States": the United States of America (including the States
thereof and the District of Columbia).
"Unqualified Amount": defined in Section 2.7(c).
"Utilization Fee": defined in Section 3.3.
"Year 2000 Issue": defined in Section 4.20.
Section 1.2 Principles of Construction
(a) All terms defined in a Loan Document shall have the meanings
given such terms therein when used in the other Loan Documents or any
certificate, opinion or other document made or delivered pursuant thereto,
unless otherwise defined therein.
(b) As used in the Loan Documents and in any certificate, opinion
or other document made or delivered pursuant thereto, accounting terms not
defined in Section 1.1, and accounting terms partly defined in Section 1.1, to
the extent not defined, shall have the respective meanings given to them under
GAAP, or, to the extent that such terms apply solely to one or more Insurance
Subsidiaries, given to them under SAP.
(c) The phrase "may not" is prohibitive and not permissive.
(d) Unless the context otherwise requires, words in the singular
number include the plural, and words in the plural include the singular.
(e) Unless specifically provided in a Loan Document to the
contrary, references to a time shall refer to New York City time.
(f) Unless specifically provided in a Loan Document to the
contrary, in the computation of periods of time from a specified date to a later
specified date, the word "from"
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means "from and including" and the words "to" and "until" each means "to but
excluding".
(g) References in any Loan Document to a fiscal period shall refer
to that fiscal period of the Borrower.
ARTICLE 2 AMOUNT AND TERMS OF LOANS
Section 2.1 Loans
Subject to the terms and conditions hereof, each Lender severally
agrees to make revolving credit loans (each a "Loan" and, as the context may
----
require, collectively with all other Loans of such Lender and with the Loans of
all other Lenders, the "Loans") to the Borrower from time to time during the
Commitment Period, provided, however, that immediately after giving effect
thereto (i) the outstanding principal balance of such Lender's Loans would not
exceed such Lender's Commitment, and (b) the aggregate outstanding principal
balance of all Lenders' Loans would not exceed the Aggregate Commitments. During
the Commitment Period, the Borrower may borrow, prepay in whole or in part and
reborrow under the Aggregate Commitments, all in accordance with the terms and
conditions of this Agreement.
Section 2.2 Notes
The Loans made by a Lender shall be evidenced by a promissory note
of the Borrower, substantially in the form of Exhibit B, with appropriate
insertions therein as to date and principal amount (each, as indorsed or
modified from time to time, a "Note" and, collectively with the Notes of all
other Lenders, the "Notes"), payable to the order of such Lender for the account
of its Applicable Lending Office and representing the obligation of the Borrower
to pay the lesser of (a) the original amount of the Commitment of such Lender
and (b) the aggregate unpaid principal balance of all Loans made by such Lender,
with interest thereon as prescribed in Section 2.7. Each Note shall (i) be dated
the first Borrowing Date, (ii) be stated to mature on the Maturity Date and
(iii) bear interest from the date thereof on the unpaid principal balance
thereof at the applicable interest rate or rates per annum determined as
provided in Section 2.7. Interest on each Note shall be payable as specified in
Section 2.7.
Section 2.3 Procedure for Borrowing
(a) The Borrower may borrow under the Aggregate Commitments on any
Business Day during the Commitment Period, provided, however, that the Borrower
shall notify the Agent (by telephone or fax) no later than: 12:00 Noon three
Business Days prior to the requested Borrowing Date, in the case of Eurodollar
Advances, and 12:00 Noon, one Business Day prior to the requested Borrowing
Date, in the case of ABR Advances, specifying in each case (i) the aggregate
principal amount to be borrowed under the Aggregate Commitments, (ii) the
requested Borrowing Date, (iii) whether such borrowing is to consist of one or
more Eurodollar Advances, ABR Advances, or a combination thereof and (iv) if the
borrowing is to consist of one or more Eurodollar Advances, the length of the
Interest Period for each such
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Eurodollar Advance, provided, however, that no Interest Period selected in
respect of any Loan shall end after the Maturity Date. If the Borrower fails to
give timely notice in connection with a request for a Eurodollar Advance, the
Borrower shall be deemed to have elected that such Advance shall be made as an
ABR Advance. Each such notice shall be irrevocable and confirmed immediately by
delivery to the Agent of a Borrowing Request. Each Advance shall be in an
aggregate principal amount equal to $3,000,000 or such amount plus a whole
multiple of $1,000,000 in excess thereof, or, if less, the unused amount of the
Aggregate Commitments.
(b) Upon receipt of each notice of borrowing from the Borrower,
the Agent shall promptly notify each Lender thereof. Subject to its receipt of
the notice referred to in the preceding sentence, (i) each Lender will make the
amount of its Commitment Percentage of each borrowing available to the Agent for
the account of the Borrower at the office of the Agent set forth in Section 11.2
not later than 2:00 PM on the relevant Borrowing Date requested by the Borrower,
in funds immediately available to the Agent at such office. The amounts so made
available to the Agent on such Borrowing Date will then, subject to the
satisfaction of the terms and conditions of this Agreement, as determined by the
Agent, be made available on such date to the Borrower by the Agent at the office
of the Agent specified in Section 11.2 by crediting the account of the Borrower
on the books of such office with the aggregate of said amounts received by the
Agent.
(c) Unless the Agent shall have received prior notice from a
Lender (by telephone or otherwise, such notice to be promptly confirmed by fax
or other writing) that such Lender will not make available to the Agent such
Lender's Commitment Percentage of the Loans requested by the Borrower, the Agent
may assume that such Lender has made such share available to the Agent on the
Borrowing Date in accordance with this Section, provided that such Lender
received notice of the proposed borrowing from the Agent, and the Agent may, in
reliance upon such assumption, make available to the Borrower on the Borrowing
Date a corresponding amount. If and to the extent such Lender shall not have so
made its Commitment Percentage of such Loans available to the Agent, such Lender
and the Borrower severally agree to pay to the Agent forthwith on demand such
corresponding amount (to the extent not previously paid by the other), together
with interest thereon for each day from the date such amount is made available
to the Borrower to the date such amount is paid to the Agent, at a rate per
annum equal to, in the case of the Borrower, the applicable interest rate set
forth in Section 2.7 for ABR Advances, and, in the case of such Lender, the
Federal Funds Rate in effect on each such day (as determined by the Agent). Such
payment by the Borrower, however, shall be without prejudice to its rights
against such Lender. If such Lender shall pay to the Agent such corresponding
amount, such amount so paid shall constitute such Lender's Loan as part of the
Loans for purposes of this Agreement, which Loan shall be deemed to have been
made by such Lender on the Borrowing Date applicable to such Loans.
(d) If a Lender makes a new Loan on a Borrowing Date on which the
Borrower is to repay a Loan from such Lender, such Lender shall apply the
proceeds of such new Loan to make such repayment, and only the excess of the
proceeds of such new Loan over the Loan being repaid need be made available to
the Agent.
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(e) Notices of borrowing given by telephone shall be deemed given
when made by telephone and the Agent and the Lenders may rely thereon whether
such notice is confirmed by the delivery of a Borrowing Request.
Section 2.4 Termination or Reduction of Aggregate Commitments
(a) Voluntary Reductions. The Borrower shall have the right, upon
at least three Business Days' prior written notice to the Agent, at any time to
terminate the Aggregate Commitments or from time to time to permanently reduce
the Aggregate Commitments, provided, however, that any such reduction shall be
in the amount of $3,000,000 (or such lesser available amount of the Facility) or
$3,000,000 plus a whole multiple of $1,000,000 in excess thereof.
(b) In General. Reductions of the Aggregate Commitments shall be
applied pro rata according to the Commitment of each Lender. Simultaneously with
each reduction of the Aggregate Commitments under this Section, the Borrower
shall pay the Commitment Fee accrued on the amount by which the Aggregate
Commitments have been reduced and prepay the Loans as required by Section
2.5(b).
Section 2.5 Prepayments of the Loans
(a) Voluntary Prepayments. The Borrower may, at its option, prepay
the Loans without premium or penalty, in full at any time or in part from time
to time by notifying the Agent in writing at least one Business Day prior to the
proposed prepayment date, in the case of Loans consisting of ABR Advances and at
least three Business Days prior to the proposed prepayment date, in the case of
Loans consisting of Eurodollar Advances, in each case specifying whether the
Loans to be prepaid consist of ABR Advances, Eurodollar Advances, or a
combination thereof, the amount to be prepaid and the date of prepayment. Such
notice shall be irrevocable and the amount specified in such notice shall be due
and payable on the date specified, together with accrued interest to the date of
such payment on the amount prepaid. Upon receipt of such notice, the Agent shall
promptly notify each Lender thereof. Each partial prepayment of the Loans
pursuant to this subsection shall be in an aggregate principal amount of
$3,000,000 (or any smaller outstanding balance of the Loans) or $3,000,000 plus
a whole multiple of $1,000,000 in excess thereof. After giving effect to any
partial prepayment with respect to Eurodollar Advances which were made (whether
as the result of a borrowing or a conversion) on the same date and which had the
same Interest Period, the outstanding principal amount of such Eurodollar
Advances shall exceed (subject to Section 2.6) $3,000,000 or such amount plus a
whole multiple of $1,000,000 in excess thereof.
(b) Mandatory Prepayments of Loans Relating to Reductions of the
Aggregate Commitments. Simultaneously with each reduction of the Aggregate
Commitments under Section 2.4, the Borrower shall prepay the Loans by the
amount, if any, by which the aggregate unpaid principal balance of the Loans
exceeds the amount of the Aggregate Commitments as so reduced.
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(c) In General. If any prepayment is made in respect of any
Eurodollar Advance, in whole or in part, prior to the last day of the applicable
Interest Period, the Borrower agrees to indemnify the Lenders in accordance with
Section 2.14.
Section 2.6 Conversions and Continuations
(a) The Borrower may elect from time to time to convert Eurodollar
Advances to ABR Advances by giving the Agent at least one Business Day's prior
irrevocable notice of such election (confirmed by the delivery of a Notice of
Conversion/Continuation), specifying the amount to be so converted, provided,
that any such conversion of Eurodollar Advances shall only be made on the last
day of the Interest Period applicable thereto. In addition, the Borrower may
elect from time to time to (i) convert ABR Advances to Eurodollar Advances and
(ii) to continue Eurodollar Advances by selecting a new Interest Period
therefor, in each case by giving the Agent at least three Business Days' prior
irrevocable notice of such election (confirmed by the delivery of a Notice of
Conversion/Continuation), in the case of a conversion to, or continuation of,
Eurodollar Advances, specifying the amount to be so converted and the initial
Interest Period relating thereto, provided that any such conversion of ABR
Advances to Eurodollar Advances shall only be made on a Business Day and any
such continuation of Eurodollar Advances shall only be made on the last day of
the Interest Period applicable to the Eurodollar Advances which are to be
continued as such new Eurodollar Advances. The Agent shall promptly provide the
Lenders with a copy of each such Notice of Conversion/Continuation. ABR Advances
and Eurodollar Advances may be converted or continued pursuant to this Section
in whole or in part, provided that conversions of ABR Advances to Eurodollar
Advances, or continuations of Eurodollar Advances shall be in an aggregate
principal amount of $3,000,000 or such amount plus a whole multiple of
$1,000,000 in excess thereof.
(b) Notwithstanding anything in this Section to the contrary, no
ABR Advance may be converted to a Eurodollar Advance and no Eurodollar Advance
may be continued, if the Borrower or the Agent has knowledge that an Event of
Default has occurred and is continuing either (i) at the time the Borrower shall
notify the Agent of its election to convert or continue or (ii) on the requested
Conversion/Continuation Date. In such event, such ABR Advance shall be
automatically continued as an ABR Advance, or such Eurodollar Advance shall be
automatically converted to an ABR Advance on the last day of the Interest Period
applicable to such Eurodollar Advance. If an Event of Default shall have
occurred and be continuing, the Agent shall, at the request of the Required
Lenders, notify the Borrower (by telephone or otherwise) that all, or such
lesser amount as the Required Lenders shall designate, of the outstanding
Eurodollar Advances shall be automatically converted to ABR Advances, in which
event such Eurodollar Advances shall be automatically converted to ABR Advances
on the date such notice is given.
(c) No Interest Period selected in respect of conversion or
continuation of any Eurodollar Advance shall end after the Maturity Date.
(d) Each conversion or continuation of a Eurodollar Advance shall
be effected by each Lender by applying the proceeds of its new Eurodollar
Advance to its Eurodollar Advances (or portion thereof) being converted or
continued (it being understood that such
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conversion or continuation shall not constitute a borrowing for purposes of
Sections 4, 5 or 6).
(e) Notices in respect of a conversion or continuation given by
telephone shall be deemed given when made by telephone and the Agent and the
Lenders may rely thereon whether such notice is confirmed by the delivery of a
Notice of Conversion/Continuation.
Section 2.7 Interest Rate and Payment Dates
(a) Prior to Maturity. Except as otherwise provided in Section
2.7(b), prior to maturity, the Loans shall bear interest on the outstanding
principal balance thereof at the applicable interest rate or rates per annum set
forth below:
LOANS RATE
----- ----
Made as ABR Alternate Base Rate plus the
Advances Applicable Margin.
Made as Eurodollar Eurodollar Rate for the
Advances applicable Interest Period
plus the Applicable Margin.
(b) Event of Default. After the occurrence and during the
continuance of a Default or an Event of Default under Section 9.1(a) or (b), the
outstanding principal balance of the Loans shall bear interest at a rate per
annum equal to 2% plus the rate which would otherwise be applicable under
Section 2.7(a), and any overdue interest or other amount payable under the Loan
Documents shall bear interest at a rate per annum equal to the Alternate Base
Rate plus the Applicable Margin plus 2%. All such interest shall be payable on
demand.
(c) In General. Interest on (i) ABR Advances to the extent based on
the BNY Rate shall be calculated on the basis of a 365 or 366-day year (as the
case may be), and (ii) ABR Advances to the extent based on the Federal Funds
Rate and on Eurodollar Advances shall be calculated on the basis of a 360-day
year, in each case, for the actual number of days elapsed, including the first
day but excluding the last. Except as otherwise provided in Section 2.7(b),
interest shall be payable in arrears on each Interest Payment Date and upon each
payment (including prepayment) of the Loans. Any change in the interest rate on
the Loans resulting from a change in the Alternate Base Rate or reserve
requirements shall become effective as of the opening of business on the day on
which such change shall become effective. The Agent shall, as soon as
practicable, notify the Borrower and the Lenders of the effective date and the
amount of each such change in the BNY Rate, but any failure to so notify shall
not in any manner affect the obligation of the Borrower to pay interest on the
Loans in the amounts and on the dates required. Each determination of the
Alternate Base Rate or a Eurodollar Rate by the Agent pursuant to this Agreement
shall be conclusive and binding on the Borrower absent manifest error. At no
time shall the interest rate payable on the Loans, together with the Commitment
Fee and all other amounts payable under the Loan Documents, to the extent the
same are construed to constitute
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interest, exceed the Highest Lawful Rate. If in respect of a ny period during
the term of this Agreement, any amount paid hereunder, to the extent the same
shall (but for the provisions of this Section) constitute or be deemed to
constitute interest, would exceed the maximum amount of interest permitted by
the Highest Lawful Rate during such period (such amount being hereinafter
referred to as an "Unqualified Amount"), then (i) such Unqualified Amount shall
be applied or shall be deemed to have been applied as a prepayment of the Loans,
and (ii) if in any subsequent period during the term of this Agreement, all
amounts payable hereunder in respect of such period which constitute or shall be
deemed to constitute interest shall be less than the maximum amount of interest
permitted by the Highest Lawful Rate during such period, then the Borrower shall
pay to the Lenders in respect of such period an amount (each a "Compensatory
Interest Payment") equal to the lesser of (x) a sum which, when added to all
such amounts, would equal the maximum amount of interest permitted by the
Highest Lawful Rate during such period, and (y) an amount equal to the
Unqualified Amount less all other Compensatory Interest Payments made in respect
thereof. The Borrower acknowledges that to the extent interest payable on ABR
Advances is based on the BNY Rate, such Rate is only one of the bases for
computing interest on loans made by the Lenders, and by basing interest payable
on ABR Advances on the BNY Rate, the Lenders have not committed to charge, and
the Borrower has not in any way bargained for, interest based on a lower or the
lowest rate at which the Lenders may now or in the future make loans to other
borrowers.
Section 2.8 Taxes
(a) Payments to Be Free and Clear. Provided that all
documentation, if any, then required to be delivered by any Lender or the Agent
pursuant to subsection (c) below has been delivered, all sums payable by the
Borrower under the Loan Documents shall be paid free and clear of and (except to
the extent required by law) without any deduction or withholding on account of
any Tax (other than a Tax on the Overall Net Income of any Lender (for which
payment need not be free and clear but no deduction or withholding shall be made
unless then required by applicable law)) imposed, levied, collected, withheld or
assessed by or within the United States or any political subdivision in or of
the United States or any other jurisdiction from or to which a payment is made
by or on behalf of the Borrower or by any federation or organization of which
the United States or any such jurisdiction is a member at the time of payment.
(b) Grossing-up of Payments. If the Borrower or any other Person
is required by law to make any deduction or withholding on account of any such
Tax from any sum paid or payable by the Borrower to the Agent or any Lender
under any of the Loan Documents:
(i) The Borrower shall notify the Agent and such Lender of
any such requirement or any change in any such requirement as soon as the
Borrower becomes aware of it;
(ii) The Borrower shall pay any such Tax before the date on
which penalties attach thereto, such payment to be made (if the liability to pay
is imposed on the Borrower) for its own account or (if that liability is imposed
on the Agent or such Lender, as the case may be) on behalf of and in the name of
the Agent or such Lender;
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(iii) the sum payable by the Borrower to the Agent or a
Lender in respect of which the relevant deduction, withholding or payment is
required shall be increased to the extent necessary to ensure that, after the
making of that deduction, withholding or payment, the Agent or such Lender, as
the case may be, receives on the due date therefor a net sum equal to what it
would have received had no such deduction, withholding or payment been required
or made; and
(iv) within 30 days after paying any sum from which it is
required by law to make any deduction or withholding, and within 30 days after
the due date of payment of any Tax which it is required by clause (b) above to
pay, the Borrower shall deliver to the Agent and the applicable Lender evidence
satisfactory to the other affected parties of such deduction, withholding or
payment and of the remittance thereof to the relevant Governmental Authority;
provided that no such additional amount shall be required to be paid to any
Lender under clause (iii) above except to the extent that any change after the
date hereof (in the case of each Lender listed on the signature pages hereof) or
after the date of the Assignment and Acceptance Agreement pursuant to which such
Lender became a Lender (in the case of each other Lender) in any such
requirement for a deduction, withholding or payment as is specified therein
shall result in an increase in the rate of such deduction, withholding or
payment from that in effect at the date of this Agreement or at the date of such
Assignment and Acceptance, as the case may be, in respect of payments to such
Lender.
(c) U.S. Tax Certificates. Each Lender that is organized under the
laws of any jurisdiction other than the United States shall deliver to the Agent
for transmission to the Borrower, on or prior to the Effective Date (in the case
of each Lender listed on the signature pages hereof) or on the effective date of
the Assignment and Acceptance Agreement pursuant to which it becomes a Lender
(in the case of each other Lender), and at such other times as may be necessary
in the determination of the Borrower or the Agent (each in the reasonable
exercise of its discretion), such certificates, documents or other evidence,
properly completed and duly executed by such Lender (including, without
limitation, Internal Revenue Service Form 1001 or Form 4224 or any other
certificate or statement of exemption required by Treasury Regulations Section
1.1441-4(a) or Section 1.1441-6(c) or any successor thereto) to establish that
such Lender is not subject to deduction or withholding of United States federal
income tax under Section 1441 or 1442 of the Code or otherwise (or under any
comparable provisions of any successor statute) with respect to any payments to
such Lender of principal, interest, fees or other amounts payable under any of
the Loan Documents. The Borrower shall not be required to pay any additional
amount to any such Lender under subsection (b)(iii) above if such Lender shall
have failed to satisfy the requirements of the immediately preceding sentence;
provided that if such Lender shall have satisfied such requirements on the
Effective Date (in the case of each Lender listed on the signature pages hereof)
or on the effective date of the Assignment and Acceptance Agreement pursuant to
which it became a Lender (in the case of each other Lender), nothing in this
subsection shall relieve the Borrower of its obligation to pay any additional
amounts pursuant to subsection (b)(iii) above in the event that, as a result of
any change in applicable law, such Lender is no longer properly entitled to
deliver certificates, documents or
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other evidence at a subsequent date establishing the fact that such Lender is
not subject to withholding as described in the immediately preceding sentence.
(d) Tax Refund. If any Lender or the Agent, as applicable, receives
a refund (whether by way of direct payment or by offset) of any Tax for which a
payment has been made pursuant to subsection 2.8(b)(ii) which, in the reasonable
good faith judgment of such Lender or Agent, as the case may be, is allocable to
such payment made under subsection 2.8(B)(ii), the amount of such refund
(together with any interest received thereon) shall be paid to the Borrower to
the extent payment has been made in full pursuant to subsection 2.8(b)(ii).
Section 2.9 Substituted Interest Rate
In the event that (i) the Agent shall have determined (which
determination shall be conclusive and binding upon the Borrower) that by reason
of circumstances affecting the interbank eurodollar market either adequate and
reasonable means do not exist for ascertaining the Eurodollar Rate applicable
pursuant to Section 2.7 or (ii) the Required Lenders shall have notified the
Agent that they have determined (which determination shall be conclusive and
binding on the Borrower) that the applicable Eurodollar Rate will not adequately
and fairly reflect the cost to such Lenders of maintaining or funding loans
bearing interest based on such Eurodollar Rate, with respect to any portion of
the Loans that the Borrower has requested be made as Eurodollar Advances or
Eurodollar Advances that will result from the requested conversion or
continuation of any portion of the Advances into or of Eurodollar Advances
(each, an "Affected Advance"), the Agent shall promptly notify the Borrower and
the Lenders (by telephone or otherwise, to be promptly confirmed in writing) of
such determination, on or, to the extent practicable, prior to the requested
Borrowing Date or Conversion/Continuation Date for such Affected Advances. If
the Agent shall give such notice, (a) any Affected Advances shall be made as ABR
Advances, (b) the Advances (or any portion thereof) that were to have been
converted to or continued as Affected Advances shall be converted to or
continued as ABR Advances and (c) any outstanding Affected Advances shall be
converted, on the last day of the then current Interest Period with respect
thereto, to ABR Advances. Until any notice under clauses (i) or (ii), as the
case may be, of this Section has been withdrawn by the Agent (by notice to the
Borrower promptly upon either (x) the Agent having determined that such
circumstances affecting the interbank eurodollar market no longer exist and that
adequate and reasonable means do exist for determining the Eurodollar Rate
pursuant to Section 2.7 or (y) the Agent having been notified by such Required
Lenders that circumstances no longer render the Advances (or any portion
thereof) Affected Advances, no further Eurodollar Advances shall be required to
be made by the Lenders, nor shall the Borrower have the right to convert or
continue all or any portion of the Loans to Eurodollar Advances.
Section 2.10 Illegality
Notwithstanding any other provisions herein, if any law,
regulation, treaty or directive, or any change therein or in the interpretation
or application thereof, shall make it unlawful for any Lender to make or
maintain its Eurodollar Advances as contemplated by this Agreement, (i) the
commitment of such Lender hereunder to make Eurodollar Advances or convert ABR
Advances to Eurodollar Advances shall forthwith be suspended and (ii) such
Lender's Loans
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then outstanding as Eurodollar Advances affected hereby, if any, shall be
converted automatically to ABR Advances on the last day of the then current
Interest Period applicable thereto or within such earlier period as required by
law. If the commitment of any Lender with respect to Eurodollar Advances is
suspended pursuant to this Section and such Lender shall notify the Agent and
the Borrower that it is once again legal for such Lender to make or maintain
Eurodollar Advances, such Lender's commitment to make or maintain Eurodollar
Advances shall be reinstated.
Section 2.11 Increased Costs
In the event that any law, regulation, treaty or directive
hereafter enacted, promulgated, approved or issued or any change in any
presently existing law, regulation, treaty or directive therein or in the
interpretation or application thereof by any Governmental Authority charged with
the administration thereof or compliance by any Lender (or any corporation
directly or indirectly owning or controlling such Lender) with any request or
directive from any central bank or other Governmental Authority:
(a) does or shall subject any Lender to any Taxes of any kind
whatsoever with respect to any Eurodollar Advances or its obligations under this
Agreement to make Eurodollar Advances, or change the basis of taxation of
payments to any Lender of principal, interest or any other amount payable
hereunder in respect of its Eurodollar Advances, including any Taxes required to
be withheld from any amounts payable under the Loan Documents (except for
imposition of, or change in the rate of, Tax on the Overall Net Income of such
Lender or its Applicable Lending Office for any of such Advances by the
jurisdiction in which such Lender is incorporated or has its principal office or
such Applicable Lending Office, including, in the case of Lenders incorporated
in any State of the United States, such tax imposed by the United States); or
(b) does or shall impose, modify or make applicable any reserve,
special deposit, compulsory loan, assessment, increased cost or similar
requirement against assets held by, or deposits of, or advances or loans by, or
other credit extended by, or any other acquisition of funds by, any office of
such Lender in respect of its Eurodollar Advances which is not otherwise
included in the determination of a Eurodollar Rate;
(c) and the result of any of the foregoing is to increase the cost
to such Lender of making, renewing, converting, continuing or maintaining its
Eurodollar Advances or its commitment to make such Eurodollar Advances, or to
reduce any amount receivable hereunder in respect of its Eurodollar Advances,
then, in any such case, the Borrower shall pay such Lender, upon its demand, any
additional amounts necessary to compensate such Lender for such additional cost
or reduction in such amount receivable which such Lender deems to be material as
determined by such Lender; provided, however, that nothing in this Section shall
require the Borrower to indemnify the Lenders with respect to withholding Taxes
for which the Borrower has no obligation under Section 2.8 or any other
increased costs, expenses, Taxes or other matters incurred by a Lender more than
90 days prior to the date that such Lender delivers notice to the Borrower of
such increased cost, expense, tax or matter. A statement setting forth the
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calculations of any additional amounts payable pursuant to the foregoing
sentence submitted by a Lender to the Borrower shall be conclusive absent
manifest error.
Section 2.12 Capital Adequacy
If the amount of capital required or expected to be maintained by
any Lender or any Person directly or indirectly owning or controlling such
Lender (each a "Control Person"), shall be affected by (i) the introduction or
phasing in of any law, rule or regulation after the Effective Date, (ii) any
change after the Effective Date in the interpretation of any existing law, rule
or regulation by any central bank or United States or foreign Governmental
Authority charged with the administration thereof or (iii) compliance by such
Lender or such Control Person with any directive, guideline or request from any
central bank or United States or foreign Governmental Authority (whether or not
having the force of law) promulgated or made after the Effective Date, and such
Lender shall have determined that such introduction, phasing in, change or
compliance shall have had or will thereafter have the effect of reducing (A) the
rate of return on such Lender's or such Control Person's capital, or (B) the
asset value to such Lender or such Control Person of the Loans made or
maintained by such Lender, in either case to a level below that which such
Lender or such Control Person could have achieved or would thereafter be able to
achieve but for such introduction, phasing in, change or compliance (after
taking into account such Lender's or such Control Person's policies regarding
capital adequacy) by an amount deemed by such Lender to be material to such
Lender or Control Person, then, within ten days after demand by such Lender,
accompanied by a statement setting forth the calculations of any additional
amount payable under this Section, which statement shall be conclusive absent
manifest error, the Borrower shall pay to such Lender or such Control Person
such additional amount or amounts as shall be sufficient to compensate such
Lender or such Control Person, as the case may be, for such reduction, provided,
however, that nothing in this Section shall require the Borrower to compensate
any Lender for any such reduction arising more than 90 days prior to the date
that such Lender delivers notice thereof to the Borrower.
Section 2.13 Lending Offices
Each Lender shall have the right at any time and from time to time
to transfer its Loans to a different office, provided that such Lender shall
promptly notify the Agent and the Borrower of any such change of office. Such
office shall thereupon become such Lender's Domestic Lending Office or
Eurodollar Lending Office, as the case may be, provided, however, that no such
Lender shall be entitled to receive any greater amount under Sections 2.9, 2.11
and 2.12 as a result of a transfer of any such Loans to a different office of
such Lender than it would be entitled to immediately prior thereto unless such
claim would have arisen even if such transfer had not occurred.
Section 2.14 Indemnification for Loss
Notwithstanding anything contained herein to the contrary, if the
Borrower shall fail to borrow or convert or continue on a Borrowing Date or
Conversion/Continuation Date after it shall have given notice to do so in which
it shall have requested a Eurodollar Advance, or if a
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Eurodollar Advance shall be terminated or suspended pursuant to the provisions
hereof prior to the last day of the Interest Period applicable thereto, or if,
while a Eurodollar Advance is outstanding, any repayment or prepayment of such
Eurodollar Advance is made for any reason (including, without limitation, as a
result of acceleration, illegality or an assignment pursuant to Section 2.19(b))
on a date which is prior to the last day of the Interest Period applicable
thereto, the Borrower agrees to indemnify each Lender against, and to pay on
demand directly to such Lender, any loss or expense suffered by such Lender as a
result of such failure to borrow, convert or continue, termination, repayment or
prepayment, including, without limitation, an amount, if greater than zero,
equal to:
A x (B-C) x D
---
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where:
"A" equals such Lender's Commitment Percentage of the Affected Principal Amount;
"B" equals the Eurodollar Rate (expressed as a decimal) applicable to such
Eurodollar Advances;
"C" equals the applicable Eurodollar Rate (expressed as a decimal) in effect on
or about the first day of the applicable Remaining Interest Period, based on the
applicable rates offered or bid, as the case may be, on or about such date, for
deposits in an amount equal approximately to such Lender's Commitment Percentage
of the Affected Principal Amount with an Interest Period equal approximately to
the applicable Remaining Interest Period, as determined by such Lender;
"D" equals the number of days from and including the first day of the applicable
Remaining Interest Period to but excluding the last day of such Remaining
Interest Period;
and any other out-of-pocket loss or expense (including any internal processing
charge customarily charged by such Lender) suffered by such Lender in connection
with such Eurodollar Advance, including, without limitation, in liquidating or
employing deposits acquired to fund or maintain the funding of its Commitment
Percentage of the Affected Principal Amount, or redeploying funds prepaid or
repaid, in amounts which correspond to its Commitment Percentage of the Affected
Principal Amount. Each determination by the Agent or a Lender pursuant to this
Section shall be conclusive and binding on the Borrower absent manifest error.
Section 2.15 Option to Fund
Each Lender has indicated that, if the Borrower elects to borrow or
convert or continue to Eurodollar Advances, such Lender may wish to purchase one
or more deposits in order to fund or maintain its funding of its Eurodollar
Advances during the Interest Period in question; it being understood that the
provisions of this Agreement relating to such funding are included only for the
purpose of determining the rate of interest to be paid on such Eurodollar
Advances and for purposes of determining amounts owning under Sections 2.11,
2.12 and 2.14. Each Lender shall be entitled to fund and maintain its funding of
all or any part of each Eurodollar Advance made by it in
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any manner it sees fit, but all such determinations shall be made as if such
Lender had actually funded and maintained its funding of such Eurodollar Advance
during the applicable Interest Period through the purchase of deposits in an
amount equal to such Eurodollar Advance and having a maturity corresponding to
such Interest Period. The obligations of the Borrower under Sections 2.8, 2.9,
2.10, 2.11 and 2.12 shall survive the termination of the Aggregate Commitments,
the payment of the Notes and all other amounts payable under the Loan Documents.
Section 2.16 Use of Proceeds
The Borrower agrees that the proceeds of the Loans shall be used
solely for its general corporate purposes not inconsistent with the provisions
hereof, including, without limitation, the purchase and retirement of
outstanding common stock of the Borrower (but not the purchase or carrying of
any other Margin Stock) and the provision by Borrower to its Subsidiaries of
funds for use in connection with the business, operations and general corporate
purposes of such Subsidiaries. Notwithstanding anything to the contrary
contained herein, the Borrower further agrees that no part of the proceeds of
any Loan will be used, directly or indirectly, for a purpose which violates any
law, rule or regulation of any Governmental Authority, including the provisions
of Regulations T, U or X of the Board of Governors of the Federal Reserve
System, as amended.
Section 2.17 Extension of Maturity Date
Provided that no Default or Event of Default shall exist, the
Borrower may request that the Maturity Date be extended for additional periods
of 364 days each by giving written notice thereof (each an "Extension Request")
to the Agent at any time during the period which is not more than 60 days nor
less than 30 days prior to any then current Maturity Date and, upon receipt of
each such notice, the Agent shall promptly notify each Lender thereof. The then
current Maturity Date shall not be extended unless and until each Lender, in its
sole and absolute discretion, shall have consented, in writing, to such request,
in which event such then existing Maturity Date shall be extended to the date
occurring 364 days from the date of the last such consent, provided, however,
that if such date is not a Business Day, such extended Maturity Date shall be
the immediately preceding Business Day. In the event that any Lender shall not
have granted its consent to an Extension Request, the then current Maturity Date
shall remain in effect. Each Lender shall endeavor to respond to each Extension
Request by no later than 15 days following the receipt by such Lender from the
Agent of notice of such Extension Request, provided that each Lender which shall
have failed so to respond by such time shall be deemed not to have consented
thereto.
Section 2.18 Agent's Records
The Agent's records regarding the amount of each Loan, each payment
by the Borrower of principal and interest on the Loans and other information
relating to the Loans shall be presumptively correct absent manifest error.
Section 2.19 Mitigation of Taxes and Costs
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(a) Each Lender agrees that, if requested by the Borrower after
the occurrence of an event or the existence of a condition that would require
the Borrower to make payments to such Lender under Section 2.8, 2.11 or 2.12, it
will, to the extent not inconsistent with such Lender's internal policies, use
reasonable efforts (subject to overall policy considerations of such Lender) (i)
to make, fund or maintain the Commitments or Loans of such lender through
another lending office of such Lender, or (ii) take such other reasonable
measures, if as a result the additional amounts that would otherwise be required
to be paid by the Borrower with respect to such Lender pursuant to said Sections
would be materially reduced and if, as determined by such Lender in its sole
discretion, the making, funding or maintaining of such Commitments or Loans
through such other lending office or in accordance with such other measures, as
the case may be, would not otherwise adversely affect such Commitments or Loans
or the interests or such Lender.
(b) If the Borrower becomes obligated to pay additional amounts
described in Section 2.8, 2.11 or 2.12 as a result of any condition described in
such Sections and payment of such amount is demanded by any Lender, then,
provided that no Default or Event of Default shall exist, the Borrower may, on
ten Business Days' prior written notice to the Agent and such Lender, cause such
Lender to (and such Lender shall) assign all of its rights and obligations under
this Agreement to a Lender or other bank selected by the Borrower and acceptable
to the Agent for a purchase price equal to the outstanding principal amount of
such Lender's Loans and all accrued interest and fees thereon, provided that in
no event shall the assigning Lender be required to pay or surrender to such
purchasing Lender or other bank any of the fees received by such assigning
Lender pursuant to this Agreement. The Borrower shall remain obligated to pay to
such assigning Lender all additional amounts required to be paid by the Borrower
pursuant to such Sections had there been no such assignment.
ARTICLE 3 FEES; PAYMENTS
Section 3.1 Commitment Fee
The Borrower agrees to pay to the Agent, for the account of the
Lenders in accordance with each Lender's Commitment Percentage, a fee (the
"Commitment Fee"), during the Commitment Period, equal to the Applicable Margin
times the excess of (a) the Aggregate Commitments (excluding the amount of any
cancelled or reduced portion of the Aggregate Commitments for which the
Commitment Fee was paid upon each such cancellation or reduction under Section
2.4(b)) over (b) the average daily sum of the outstanding principal balance of
the Loans. The Commitment Fee shall be payable quarterly in arrears on the last
day of each March, June, September and December of each year, commencing on the
first such day following the Effective Date, and ending on the date that the
Aggregate Commitments shall expire or otherwise terminate. The Commitment Fee
shall be calculated on the basis of a 360-day year for the actual number of days
elapsed.
Section 3.2 Pro Rata Treatment and Application of Principal Payments
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Each payment, including each prepayment, of principal and interest
on the Loans and of the Commitment Fee shall be made by the Borrower to the
Agent at its office set forth in Section 11.2 in funds immediately available to
the Agent at such office by 2:00 P.M. on the due date for such payment, and,
promptly upon receipt thereof by the Agent, shall be remitted by the Agent in
like funds as received, to the Lenders according to the Commitment Percentage of
each Lender, in the case of the Commitment Fee, and pro rata according to the
aggregate outstanding principal balance of the Loans, in the case of principal
and interest due thereon. The failure of the Borrower to make any such payment
by such time shall not constitute a default hereunder, provided that such
payment is made on such due date, but any such payment made after 2:00 P.M. on
such due date shall be deemed to have been made on the next Business Day for the
purpose of calculating interest on amounts outstanding on the Loans. If any
payment hereunder or under the Notes shall be due and payable on a day which is
not a Business Day, the due date thereof (except as otherwise provided in the
definition of Interest Period) shall be extended to the next Business Day and
(except with respect to payments in respect of the Commitment Fee) interest
shall be payable at the applicable rate specified herein during such extension.
If any payment is made with respect to any Eurodollar Advance prior to the last
day of the applicable Interest Period, the Borrower shall indemnify each Lender
in accordance with Section 2.14.
Section 3.3 Utilization Fee
The Borrower agrees to pay to the Agent, for the account of each
Lender a fee (the "Utilization Fee") equal to 0.05% of the amount of each such
Lender's Loans made when, after giving effect thereto, the aggregate principal
balance of all Loans outstanding hereunder and under the 1996 Revolving Credit
would exceed 66 2/3% of the sum of the Aggregate Commitments, as such term is
defined hereunder and under the 1996 Revolving Credit.
ARTICLE 4 REPRESENTATIONS AND WARRANTIES
In order to induce the Agent and the Lenders to enter into this Agreement
and to make the Loans, the Borrower makes the following representations and
warranties to the Agent and each Lender:
Section 4.1 Subsidiaries
The Borrower has only the Insurance Subsidiaries and Non-Insurance
Subsidiaries set forth on Schedule 4.1.
Section 4.2 Existence and Power
Each of the Borrower and its Subsidiaries is duly organized or
formed and validly existing in good standing under the laws of the jurisdiction
of its incorporation or formation, has all requisite power and authority to own
its Property and to carry on its business as now conducted, and is in good
standing and authorized to do business as a foreign corporation in each
jurisdiction in which the nature of the business conducted therein or the
Property owned therein makes such
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qualification necessary, except where such failure to qualify could not
reasonably be expected to have a Material Adverse Effect.
Section 4.3 Authority
The Borrower has full corporate power and authority to enter into,
execute, deliver and perform the terms of the Loan Documents and to make the
borrowings contemplated thereby all of which have been duly authorized by all
proper and necessary corporate or other applicable action and are in full
compliance with its Articles of Incorporation and By-Laws.
Section 4.4 Binding Agreement
The Loan Documents constitute the valid and legally binding
obligations of the Borrower, enforceable in accordance with their respective
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization or other similar laws now or hereafter in effect
relating to or affecting the rights and remedies of creditors' generally and by
general principles of equity, regardless of whether enforcement is sought in an
action at law or a proceeding in equity, and the discretion of the court before
which any action or proceeding therefor may be brought.
Section 4.5 Litigation
Except as set forth on Schedule 4.5, there are no actions, suits or
proceedings at law or in equity or by or before any Governmental Authority
(whether purportedly on behalf of the Borrower or any its Subsidiaries) pending
or, to the knowledge of the Borrower, threatened against the Borrower or any of
its Subsidiaries or any of their respective Properties or rights, which (i)
could reasonably be expected to have a Material Adverse Effect, (ii) call into
question the validity or enforceability of any of the Loan Documents, or (iii)
could reasonably be expected to result in the rescission, termination or
cancellation of any material license, franchise, right, permit or similar
authorization held by the Borrower or any of its Subsidiaries.
Section 4.6 Required Consents
Except for information filings required to be made in the ordinary
course of business which are not a condition to the Borrower's performance under
the Loan Documents, no consent, authorization or approval of, filing with,
notice to, or exemption by, stockholders, any Governmental Authority or any
other Person is required to authorize, or is required in connection with the
execution, delivery and performance of the Loan Documents or is required as a
condition to the validity or enforceability of the Loan Documents.
Section 4.7 No Conflicting Agreements
Neither the Borrower nor any of its Subsidiaries is in default
under any mortgage, indenture, contract or agreement to which it is a party or
by which it or any of its Property is bound, the effect of which default could
reasonably be expected to have a Material Adverse Effect. The
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execution, delivery or carrying out of the terms of the Loan Documents will not
constitute a default under, or result in the creation or imposition of, or
obligation to create, any Lien upon any Property of the Borrower or any of its
Subsidiaries or result in a breach of or require the mandatory repayment of or
other acceleration of payment under or pursuant to the terms of any such
mortgage, indenture, contract or agreement.
Section 4.8 Compliance with Applicable Laws
Neither the Borrower nor any of its Subsidiaries is in default with
respect to any judgment, order, writ, injunction, decree or decision of any
Governmental Authority which default could reasonably be expected to have a
Material Adverse Effect. Each of the Borrower and its Subsidiaries is complying
in all material respects with all statutes, regulations, rules and orders
applicable to the Borrower or such Subsidiary of all Governmental Authorities,
including, without limitation, all Applicable Insurance Codes and Environmental
Laws, a violation of which could reasonably be expected to have a Material
Adverse Effect.
Section 4.9 Taxes
Each of the Borrower and its Subsidiaries has filed or caused to be
filed all tax returns required to be filed and has paid, or has made adequate
provision for the payment of, all taxes shown to be due and payable on said
returns or in any assessments made against it (other than those being contested
as required under Section 7.4) which would be material to the Borrower or any of
its Subsidiaries, and no tax Liens have been filed with respect thereto. The
charges, accruals and reserves on the books of the Borrower and each of its
Subsidiaries with respect to all federal, state, local and other taxes are, to
the best knowledge of the Borrower, adequate for the payment of all such taxes,
and the Borrower knows of no unpaid assessment which is due and payable against
it or any of its Subsidiaries or any claims being asserted which could
reasonably be expected to have a Material Adverse Effect, except such thereof as
are being contested as required under Section 7.4, and for which adequate
reserves have been set aside in accordance with GAAP.
Section 4.10 Governmental Regulations
Neither the Borrower nor any of its Subsidiaries is subject to
regulation under the Investment Company Act of 1940, as amended, the Public
Utility Holding Company Act of 1935, as amended, or the Federal Power Act, and
neither the Borrower nor any of its Subsidiaries is subject to any statute or
regulation which prohibits or restricts the incurrence of Indebtedness under the
Loan Documents, including, without limitation, statutes or regulations relative
to common or contract carriers or to the sale of electricity, gas, steam, water,
telephone, telegraph or other public utility services.
Section 4.11 Federal Reserve Regulations; Use of Loan Proceeds
Neither the Borrower nor any of its Subsidiaries is engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying any Margin Stock. No part of
the proceeds of the Loans will be used, directly or indirectly,
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for a purpose which violates any law, rule or regulation of any Governmental
Authority, including, without limitation, the provisions of Regulations T, U or
X of the Board of Governors of the Federal Reserve System, as amended. No part
of the proceeds of the Loans will be used, directly or indirectly, to purchase
or carry Margin Stock or to extend credit to others for the purpose of
purchasing or carrying Margin Stock, other than any shares of outstanding stock
of the Borrower that are purchased by the Borrower using the proceeds of the
Loans, which shares shall be returned to the status of authorized and unissued
shares and retired. The Borrower understands that the Lenders, in good faith,
are not relying upon such shares as collateral in extending or maintaining the
Loans.
Section 4.12 Plans
Neither the Borrower nor any Subsidiary has a Pension Plan on the
Effective Date.
Section 4.13 Financial Statements
(a) The Borrower has heretofore delivered to the Agent and the
Lenders copies of its Form 10-K for the fiscal year ending December 31, 1997,
containing the audited Consolidated Balance Sheets of the Borrower and its
Subsidiaries as of December 31, 1997 and December 31, 1996, and the related
Consolidated Statements of Income, Retained Earnings and Cash Flows for the
three year periods ending December 31, 1997, and its Form 10-Q for the fiscal
quarter ended June 30, 1998, containing the unaudited Consolidated Balance Sheet
of the Borrower and its Subsidiaries for such fiscal quarter, together with the
related Consolidated Statements of Income, Retained Earnings and Cash Flows for
the fiscal quarter then ended (with the applicable related notes and schedules,
the "Financial Statements"). The Financial Statements fairly present the
Consolidated financial condition and results of the operations of the Borrower
and its Subsidiaries as of the dates and for the periods indicated therein and
have been prepared in conformity with GAAP. Except as reflected in the Financial
Statements or in the footnotes thereto, neither the Borrower nor any of its
Subsidiaries has any obligation or liability of any kind (whether fixed,
accrued, Contingent, unmatured or otherwise) which, in accordance with GAAP,
should have been shown in the Financial Statements and was not. Since December
31, 1997, the Borrower and each of its Subsidiaries has conducted its business
only in the ordinary course and there has been no Material Adverse Change.
(b) The Borrower has heretofore delivered to the Lenders copies of
the consolidated Annual Statements, as of December 31, 1997, of each of Mercury
Casualty Company and American Mercury Insurance Company (together with the
related notes and schedules thereto, the "Annual Statements"). The Annual
Statements fairly present the financial condition and results of operations of
the Insurance Subsidiaries included therein as of the dates and for the periods
indicated therein and have been prepared in accordance with SAP.
Section 4.14 Property
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Each of the Borrower and its Subsidiaries has good and marketable
title to all of its Property, title to which is material to the Borrower or such
Subsidiary, subject to no Liens except Permitted Liens.
Section 4.15 Licenses, Franchises, Etc.
Each of the Borrower and its Subsidiaries possesses or has the
right to use all licenses, franchises, Intellectual Property, and other rights
as are material and necessary for the conduct of its business, and with respect
to which it is in compliance, with no known conflict with the valid rights of
others which could reasonably be expected to have a Material Adverse Effect. No
event has occurred which permits or, to the best knowledge of the Borrower,
after notice or the lapse of time or both, or any other condition, could
reasonably be expected to permit, the revocation or termination of any such
license, franchise, Intellectual Property, or other right which revocation or
termination could reasonably be expected to have a Material Adverse Effect.
Section 4.16 Environmental Matters
(a) The Borrower and each of its Subsidiaries is in compliance in
all material respects with the requirements of all applicable Environmental
Laws, a violation of which could reasonably be expected to have a Material
Adverse Effect.
(b) No Hazardous Substances have been generated or manufactured
on, transported to or from, treated at, stored at or discharged from any Real
Property in violation of any Environmental Laws which violation could reasonably
be expected to have a Material Adverse Effect; no Hazardous Substances have been
discharged into subsurface waters under any Real Property in violation of any
Environmental Laws which violation could reasonably be expected to have a
Material Adverse Effect; no Hazardous Substances have been discharged from any
Real Property on or into Property or waters (including subsurface waters)
adjacent to any Real Property in violation of any Environmental Laws which
violation could reasonably be expected to have a Material Adverse Effect; and
there are not now, nor ever have been, on any Real Property any underground or
above ground storage tanks containing Hazardous Substances.
(c) Neither the Borrower nor any of its Subsidiaries (i) has
received notice (written or oral) or otherwise learned of any claim, demand,
suit, action, proceeding, event, condition, report, directive, Lien, violation,
non-compliance or investigation indicating or concerning any potential or actual
liability (including, without limitation, potential liability for enforcement,
investigatory costs, cleanup costs, government response costs, removal costs,
remedial costs, natural resources damages, Property damages, personal injuries
or penalties) arising in connection with: (x) any non-compliance with or
violation of the requirements of any applicable Environmental Laws, or (y) the
presence of any Hazardous Substance on any Real Property (or any Real Property
previously owned by the Borrower or any of its Subsidiaries) or the release or
threatened release of any Hazardous Substance into the environment, (ii) to the
knowledge of the Borrower has any threatened or actual liability in connection
with the presence of any Hazardous Substance on any Real Property (or any Real
Property previously owned by the Borrower or any of its Subsidiaries) or the
release or threatened release of any Hazardous
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Substance into the environment, (iii) has received notice of any federal or
state investigation evaluating whether any remedial action is needed to respond
to the presence of any Hazardous Substance on any Real Property (or any Real
Property previously owned by the Borrower or any of its Subsidiaries) or a
release or threatened release of any Hazardous Substance into the environment
for which the Borrower or any of its Subsidiaries is or may be liable, or (iv)
has received notice that the Borrower or any of its Subsidiaries is or may be
liable to any Person under any Environmental Law.
(d) To the knowledge of the Borrower no Real Property is located
in an area identified by the Secretary of Housing and Urban Development as an
area having special flood hazards.
Section 4.17 Labor Relations
There are no material controversies pending between the Borrower or
any of its Subsidiaries and any of their respective employees, which could
reasonably be expected to have a Material Adverse Effect.
Section 4.18 Burdensome Obligations
Neither the Borrower nor any of its Subsidiaries is a party to or
bound by any license, franchise, agreement, deed, lease or other instrument, or
subject to any restriction which, in the opinion of the management of the
Borrower or such Subsidiary is so unusual or burdensome, in the context of its
business, as in the foreseeable future might materially and adversely affect or
impair the revenue or cash flows of the Borrower or such Subsidiary or the
ability of the Borrower to perform its obligations under the Loan Documents. The
Borrower does not presently anticipate that future expenditures by the Borrower
or any of its Subsidiaries needed to meet the provisions of federal or state
statutes, orders, rules or regulations will be so burdensome as to result in a
Material Adverse Effect or Material Adverse Change.
Section 4.19 No Misrepresentation
No representation or warranty contained in any Loan Document and no
certificate or report furnished or to be furnished by the Borrower or any of its
Subsidiaries in connection with the transactions contemplated thereby, contains
or will contain a misstatement of material fact, or, to the best knowledge of
the Borrower, omits or will omit to state a material fact required to be stated
in order to make the statements therein contained not misleading in the light of
the circumstances under which made.
Section 4.20 Year 2000
The Borrower and its Subsidiaries have reviewed the effect of the
Year 2000 Issue on the computer software, hardware and firmware systems and
equipment containing embedded microchips used or relied upon in the conduct of
their businesses (including systems and equipment supplied by others or with
which such computer systems interface). The costs to the
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Borrower and its Subsidiaries of any reprogramming required as a result of the
Year 2000 Issue to permit the proper functioning of such systems and equipment
and the proper processing of data, and the testing of such reprogramming, and of
the reasonably foreseeable consequences of the Year 2000 Issue to the Borrower
and its Subsidiaries (including reprogramming errors and the failure of systems
or equipment supplied by others) are not reasonably expected to result in an
Event of Default or to have a material adverse effect on the business, assets,
operations, prospects or financial condition of the Borrower and its
Subsidiaries. The term "Year 2000 Issue" means the failure of computer software,
---------------
hardware and firmware systems and equipment containing embedded computer chips
to properly receive, transmit, process, manipulate, store, retrieve, retransmit
or in any other way utilize data and information due to the occurrence of the
year 2000 or the inclusion of dates on or after January 1, 2000.
ARTICLE 5 CONDITIONS TO FIRST LOANS
In addition to the conditions precedent set forth in Section 6, the
obligation of each Lender to make its first Loan shall be subject to the
fulfillment of the following conditions precedent:
Section 5.1 Evidence of Action
The Agent shall have received a certificate, dated the first
Borrowing Date, of the Secretary or Assistant Secretary of the Borrower (i)
attaching a true and complete copy of the resolutions of its Board of Directors
and of all documents evidencing other necessary corporate action (in form and
substance satisfactory to the Agent) taken by it to authorize the Loan Documents
and the transactions contemplated thereby, (ii) attaching a true and complete
copy of its Articles of Incorporation and By-Laws, (iii) setting forth the
incumbency of its officer or officers who may sign the Loan Documents, including
therein a signature specimen of such officer or officers and (iv) attaching a
certificate of good standing of the Secretary of State of the State of
California and of each other jurisdiction in which it is qualified to do
business.
Section 5.2 This Agreement
The Agent shall have received counterparts of this Agreement signed
by each of the parties hereto (or receipt by the Agent from a party hereto of a
fax signature page signed by such party which shall have agreed to promptly
provide the Agent with originally executed counterparts hereof).
Section 5.3 Notes
The Agent shall have received the Notes, duly executed by an
Authorized Signatory of the Borrower.
Section 5.4 Approvals
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The Agent shall have received a certificate of an Authorized
Signatory of the Borrower to the effect that all approvals and consents of all
Persons required to be obtained in connection with the consummation of the
transactions contemplated by the Loan Documents have been duly obtained and are
in full force and effect, and that all required notices have been given and all
required waiting periods have expired.
Section 5.5 Opinion of Counsel to the Borrower
The Agent shall have received an opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇,
counsel to the Borrower, addressed to the Agent, the Lenders and Special
Counsel, and dated the first Borrowing Date, substantially in the form of
Exhibit E, and covering such additional matters as the Required Lenders may
reasonably request. It is understood that such opinion is being delivered to the
Agent and the Lenders upon the direction of the Borrower and that the Agent and
the Lenders may and will rely upon such opinion.
Section 5.6 Opinion of Special Counsel
The Agent shall have received an opinion of Special Counsel,
addressed to the Agent and the Lenders and dated the first Borrowing Date
substantially in the form of Exhibit F.
Section 5.7 Payment of Fees
The Borrower shall have paid to the Agent and the Lenders all fees
and expenses which it shall have agreed to pay, to the extent such fees and
expenses shall have become payable on or prior to the Effective Date, and shall
have paid the reasonable fees and disbursements of Special Counsel which the
Borrower is obligated to pay in accordance with Section 11.5 and which shall
have accrued up to the Effective Date.
Section 5.8 Other Documents
The Agent shall have received such other documents (including
financial statements and projections), each in form and substance reasonably
satisfactory to the Agent, as the Agent shall reasonably require in connection
with the making of the first Loans.
ARTICLE 6 CONDITIONS OF LENDING - ALL LOANS
The obligation of each Lender to make any Loan is subject to the
satisfaction of the following conditions precedent as of the date of such Loan:
Section 6.1 Compliance
On each Borrowing Date and after giving effect to the Loans to be
made thereon, (i) the Borrower shall be in compliance with all of the terms,
covenants and conditions thereof, (ii) there shall exist no Default or Event of
Default, (iii) the representations and warranties contained in
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the Loan Documents shall be true and correct with the same effect as though such
representations and warranties had been made on such Borrowing Date (except that
Schedules 4.1 and 4.5 shall have been updated, as appropriate, in order to make
the representations and warranties expressed in Sections 4.1 and 4.5 true and
correct as of such Borrowing Date) and (iv) the aggregate outstanding principal
balance of the Loans will not exceed the Aggregate Commitments. Each borrowing
by the Borrower shall constitute a certification by the Borrower as of such
Borrowing Date that each of the foregoing matters is true and correct in all
respects.
Section 6.2 Loan Closings
All documents required by the provisions of this Agreement to be
executed or delivered to the Agent on or before the applicable Borrowing Date
shall have been executed and shall have been delivered at the office of the
Agent set forth in Section 11.2 on or before such Borrowing Date.
Section 6.3 Borrowing Request
The Agent shall have received a Borrowing Request duly executed by
an Authorized Signatory of the Borrower.
Section 6.4 Concerning Regulation U
If required by Regulation U, the Agent shall have received for each
Lender an appropriately completed Form FR U-1.
Section 6.5 Other Documents
The Agent shall have received such other documents as the Agent or
the Lenders shall reasonably request.
ARTICLE 7 AFFIRMATIVE COVENANTS
The Borrower agrees that, so long as this Agreement is in effect, any Loan
remains outstanding and unpaid, or any other amount is owing under any Loan
Document to any Lender or the Agent, the Borrower shall:
Section 7.1 Financial Statements
Maintain, and cause each Subsidiary to maintain, a standard system
of accounting in accordance with GAAP and, with respect to each Insurance
Subsidiary, SAP, and furnish to the Agent and each Lender:
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(a) As soon as available and, in any event, within 105 days after
the close of each fiscal year, a copy of (x) the Borrower's 10-K in respect of
such fiscal year, and (y) (i) the Borrower's Consolidated Balance Sheet as of
the end of such fiscal year, and (ii) the related Consolidated Statements of
Income and Shareholders' Equity and Cash Flows, as of and through the end of
such fiscal year, setting forth in each case in comparative form the
corresponding figures in respect of the previous fiscal year, all in reasonable
detail, and accompanied by a report of the Borrower's auditors, which report
shall be unqualified as to scope of audit and going concern or similar or other
qualification and shall state that (A) such auditors audited such financial
statements, (B) such audit was made in accordance with generally accepted
auditing standards in effect at the time and provides a reasonable basis for
such opinion, and (C) said financial statements have been prepared in accordance
with GAAP;
(b) After request by the Agent therefor, simultaneously with the
delivery of the certified statements required by clause (a) above, copies of a
statement of the Borrower's auditors (i) confirming the computations by the
Borrower (which computations shall accompany such statement and shall be in
reasonable detail) with respect to the Borrower's compliance with Sections 7.11,
7.12, 7.13, and 7.14, and (ii) stating that, in making the examination necessary
for their audit of the financial statements of the Borrower for such fiscal
year, nothing came to their attention that caused them to believe that any
Default or an Event of Default existed on the date of such statements;
(c) As soon as available, and in any event within 60 days after
the end of each of the first three fiscal quarters of each fiscal year, a copy
of (x) the Borrower's 10-Q in respect of such fiscal quarter, and (y) (i) the
Borrower's Consolidated Balance Sheet as of the end of such quarter, and (ii)
the related Consolidated Statements of Income Shareholders' Equity and Cash
Flows for (A) such quarter, and (B) the period from the beginning of the then
current fiscal year to the end of such quarter, in each case in comparable form
with the prior fiscal year, all in reasonable detail and prepared in accordance
with GAAP (without footnotes and subject to year-end audit adjustments);
(d) Simultaneously with the delivery of the financial statements
required by clauses (a) and (c) above, a certificate of the chief financial
officer of the Borrower certifying that no Default or Event of Default shall
have occurred or be continuing or, if so, specifying in such certificate all
such Defaults and Events of Default, and setting forth computations in
reasonable detail demonstrating compliance with Sections 7.11, 7.12, 7.13, and
7.14;
(e) As soon as practicable after the filing thereof but in any
case no later than 105 days after the close of each fiscal year of the Borrower
and 60 days after the close of each fiscal quarter of the Borrower, copies of
each annual and quarterly statutory statement filed by the Borrower or any
Reporting Insurance Subsidiary with the department of insurance of the state of
domicile of each Reporting Insurance Subsidiary or any other Governmental
Authority;
(f) Promptly upon receipt thereof, copies of any audit reports and
management letters delivered in connection with the statements referred to in
Section 7.1(a); and
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(g) From time to time, such other information regarding the
financial position or business of the Borrower and the Subsidiaries, as either
Agent, at the request of any Lender, may reasonably request.
Section 7.2 Certificates; Other Information
Furnish to the Agent and each Lender:
(a) Prompt written notice if: (i) the Borrower becomes aware that
any Indebtedness of the Borrower or any of its Subsidiaries is declared or shall
become due and payable prior to its stated maturity, or is called and not paid
when due, (ii) the Borrower becomes aware that a default shall have occurred
under any note (other than the Notes), or the holder of any such note, or other
evidence of Indebtedness, certificate or security evidencing any such
Indebtedness or any obligee with respect to any other Indebtedness of the
Borrower or any of its Subsidiaries has the right to declare any such
Indebtedness due and payable prior to its stated maturity, or (iii) the Borrower
becomes aware that there shall occur and be continuing a Default or an Event of
Default or a Material Adverse Change;
(b) Promptly following the Borrower becoming aware of the same,
written notice of: (i) any citation, summons, subpoena, order to show cause or
other document naming the Borrower or any of its Subsidiaries a party to any
proceeding before any Governmental Authority which could reasonably be expected
to have a Material Adverse Effect or which calls into question the validity or
enforceability of any of the Loan Documents, and include with such notice a copy
of such citation, summons, subpoena, order to show cause or other document, (ii)
any lapse or other termination of any material license, Intellectual Property,
permit, franchise or other authorization issued to the Borrower or any of its
Subsidiaries by any Person or Governmental Authority, and (iii) any refusal by
any Person or Governmental Authority to renew or extend any such material
license, Intellectual Property, permit, franchise or other authorization, which
lapse, termination, refusal or dispute could reasonably be expected to have a
Material Adverse Effect;
(c) Promptly upon becoming available, copies of all regular or
periodic reports (including, without limitation, current reports on Form 8-K)
which the Borrower or any Subsidiary may now or hereafter be required to file
with or deliver to the SEC, and copies of all material news releases and proxy
statements sent to stockholders;
(d) Prompt written notice of any order, notice, claim or
proceeding received by, or brought against, the Borrower or any of its
Subsidiaries, or with respect to any of the Real Property, under any
Environmental Law.
(e) Such other information as the Agent or any Lender shall
reasonably request from time to time.
Section 7.3 Legal Existence
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Maintain, and cause each of its Subsidiaries so to maintain, its
corporate existence, in good standing in the jurisdiction of its incorporation
and in each other jurisdiction in which the failure so to do could reasonably be
expected to have a Material Adverse Effect.
Section 7.4 Taxes
Pay and discharge when due, and cause each of its Subsidiaries so
to do, all Taxes, assessments and governmental charges, license fees and levies
upon, or with respect to the Borrower or such Subsidiary and all Taxes upon the
income, profits and Property of the Borrower and its Subsidiaries, which if
unpaid, could reasonably be expected to have a Material Adverse Effect or become
a Lien on the Property of the Borrower or such Subsidiary (other than a Lien
described in Section 8.2(i)), unless and to the extent only that such Taxes,
assessments, charges, license fees and levies shall be contested in good faith
and by appropriate proceedings diligently conducted by the Borrower or such
Subsidiary and, provided, that the Borrower shall give the Agent prompt notice
of such contest and that such reserve or other appropriate provision as shall be
required by the Accountants in accordance with GAAP shall have been made
therefor.
Section 7.5 Insurance
Maintain, and cause each of its Subsidiaries to maintain, with
financially sound and reputable insurance companies insurance on all its
Property in at least such amounts and against at least such risks (but including
in any event public liability, property damage, workers' compensation and
business interruption coverage) as are usually insured against in the same
general area by companies engaged in the same or a similar business; and furnish
to the Agent, upon written request, full information as to the insurance
carried.
Section 7.6 Payment of Indebtedness and Performance of Obligations
Pay and discharge when due, and cause each of its Subsidiaries to
pay and discharge, all lawful Indebtedness, obligations and claims for labor,
materials and supplies or otherwise which, if unpaid, might (i) have a Material
Adverse Effect, or (ii) become a Lien upon Property of the Borrower or any of
its Subsidiaries other than a Permitted Lien, unless and to the extent only that
the validity of such Indebtedness, obligation or claim shall be contested in
good faith and by appropriate proceedings diligently conducted by the Borrower
or such Subsidiary, provided that the Borrower shall give the Agent prompt
notice of any such contest and that such reserve or other appropriate provision
as shall be required by the Accountants in accordance with GAAP shall have been
made therefor.
Section 7.7 Condition of Property
At all times, maintain, protect and keep in good repair, working
order and condition (ordinary wear and tear excepted), and cause each of its
Subsidiaries so to do, all Property necessary to the operation of the Borrower's
or such Subsidiary's business.
Section 7.8 Observance of Legal Requirements
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Observe and comply in all respects, and cause each of its
Subsidiaries so to do, with all laws, ordinances, orders, judgments, rules,
regulations, licenses, certifications, franchises, permits, directions and
requirements of all Governmental Authorities, which now or at any time hereafter
may be applicable to it, a violation of which could reasonably be expected to
have a Material Adverse Effect, except such thereof as shall be contested in
good faith and by appropriate proceedings diligently conducted by the Borrower
or such Subsidiary, provided that the Borrower shall give the Agent prompt
notice of such contest and that such reserve or other appropriate provision as
shall be required by the Accountants in accordance with GAAP shall have been
made therefor.
Section 7.9 Inspection of Property; Books and Records; Discussions
Keep proper books of record and account in which full, true and
correct entries in conformity with GAAP and all requirements of law shall be
made of all dealings and transactions in relation to its business and activities
and permit representatives of the Agent and any Lender to visit its offices, to
inspect any of its Property and examine and make copies or abstracts from any of
its books and records at any reasonable time and as often as may reasonably be
desired, and to discuss the business, operations, prospects, licenses, Property
and financial condition of the Borrower and its Subsidiaries with the officers
thereof and the Accountants.
Section 7.10 Authorizations
Maintain and cause each of its Subsidiaries to maintain, in full
force and effect, all licenses, copyrights, patents, trademarks, trade names,
franchises, permits, applications, reports, and other authorizations and rights,
which, if not so maintained, would individually or in the aggregate have a
Material Adverse Effect.
Section 7.11 Adjusted Net Worth
As of any date of determination, have Adjusted Net Worth of not
less than the sum of (a) $500,000,000, plus (b) 50% of the Consolidated net
income (but not less than zero) for each full fiscal quarter ended during the
period commencing on July 1, 1998 and ending on such date of determination.
Section 7.12 GAAP Net Worth
As of any date of determination, have GAAP Net Worth of not less
than the sum of (a) $475,000,000, plus (b) 50% of the Consolidated net income
(but not less than zero) for each full fiscal quarter ended during the period
commencing on July 1, 1998 and ending on such date of determination.
Section 7.13 Leverage Ratio
Maintain at all times a Leverage Ratio of not more than 0.30:1.00.
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Section 7.14 Interest Coverage Ratio
Maintain at all times an Interest Coverage Ratio greater than
2.50:1.00.
Section 7.15 Year 2000 Covenant
The Borrower shall take, and shall cause each of its Subsidiaries
to take, all necessary action to complete in all material respects by June 30,
1999, the reprogramming of computer software, hardware and firmware systems and
equipment containing embedded microchips owned or operated by or for the
Borrower and its Subsidiaries or used or relied upon in the conduct of their
businesses (including systems and equipment supplied by others or with which
such systems of the Borrower or any of its Subsidiaries interface) required as a
result of the Year 2000 Issue to permit the proper functioning of such computer
systems and other equipment and the testing of such systems and equipment, as so
reprogrammed. At the request of the Agent, the Borrower shall provide, and shall
cause each of its Subsidiaries to provide, to the Agent reasonable assurance of
compliance with the preceding sentence.
ARTICLE 8 NEGATIVE COVENANTS
The Borrower agrees that, so long as this Agreement is in effect, any Loan
remains outstanding and unpaid, or any other amount is owing under any Loan
Document to any Lender or the Agent, the Borrower shall not, directly or
indirectly:
Section 8.1 Indebtedness of Subsidiaries
Permit any Subsidiary of the Borrower to create, incur, assume or
suffer to exist any liability for Indebtedness, except (i) Indebtedness existing
on the date hereof as set forth on Schedule 8.1, but not any increases in the
amount thereof, (ii) Indebtedness secured by Liens on Real Property acquired by
such Subsidiary after the Effective Date and (iii) Indebtedness (not in excess
of $25,000,000 aggregate principal amount at any time outstanding) secured by
Liens permitted under Section 8.2(xi), provided that after giving effect to any
Indebtedness permitted under clauses (ii) and (iii) above, the Borrower is in
compliance with the provisions of Sections 7.13, 7.14 and 8.2(vii).
Section 8.2 Liens
Create, incur, assume or suffer to exist any Lien upon any of its
Property, whether now owned or hereafter acquired, or permit any of its
Subsidiaries so to do, except (i) Liens for Taxes, assessments or similar
charges incurred in the ordinary course of business which are not delinquent or
which are being contested in accordance with Section 7.4, provided that
enforcement of such Liens is stayed pending such contest, (ii) Liens in
connection with workers' compensation, unemployment insurance or other social
security obligations (but not ERISA), (iii) deposits or pledges to secure bids,
tenders, contracts (other than contracts for the payment of money), leases,
statutory obligations, surety and appeal bonds and other obligations of like
nature arising in the
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ordinary course of business, (iv) zoning ordinances, easements, rights of way,
minor defects, irregularities, and other similar restrictions affecting real
Property which do not materially adversely affect the value of such real
Property or the financial condition of the Borrower or such Subsidiary or impair
its use for the operation of the business of the Borrower or such Subsidiary,
(v) Liens arising by operation of law such as mechanics', materialmen's,
carriers', warehousemen's liens incurred in the ordinary course of business
which are not delinquent or which are being contested in accordance with Section
7.6, provided that enforcement of such Liens is stayed pending such contest,
(vi) Liens arising out of judgments or decrees aggregating $5,000,000 or less in
existence less than 30 days after the entry thereof or which are being contested
in accordance with Section 7.6, provided that enforcement of such Liens is
stayed pending such contest or the payment of which is covered by insurance as
to which the carrier has acknowledged liability in writing, (vii) Liens on Real
Property of any Subsidiary of the Borrower acquired after the Effective Date to
secure Indebtedness permitted by Section 8.1(ii), incurred in connection with
the acquisition of such Property, provided that each such Lien is limited to
such Property so acquired, (viii) Liens on Property of the Borrower and its
Subsidiaries existing on the Effective Date as set forth on Schedule 8.2 as
renewed from time to time, but not any increases in the amounts secured thereby,
(ix) purchase money security interests in personal property, provided that each
such Lien is limited to such Property so purchased, (x) banker's liens arising
in the ordinary course of business and (xi) Liens on real property owned by
Subsidiaries of the Borrower securing Indebtedness permitted under Section
8.1(iii), provided that such Liens are limited to the real property so owned.
Section 8.3 Mergers, Acquisitions and Dispositions
Consolidate or merge into or with any Person, or make any
Acquisition or Disposition, or enter into any binding agreement to do any of the
foregoing which is not contingent on obtaining the consent of the Required
Lenders, or permit any Subsidiary of the Borrower to do any of the foregoing,
except that (a) a Subsidiary of the Borrower may consolidate and merge with
another wholly-owned Subsidiary of the Borrower, if (i) immediately before and
after giving effect thereto no Default or Event of Default shall or would exist
and (ii) any such consolidation or merger would not cause any Applicable
Insurance Regulatory Authority to restrict the ability of any Insurance
Subsidiary to pay dividends or otherwise make distributions to the Borrower or
any of its Subsidiaries in any manner, and (b) the Borrower may make
Acquisitions and Dispositions, if (i) the aggregate consolidated amount of any
Capital Stock or Property so acquired in any calendar year (determined on the
basis of the fair market value of any Capital Stock or Property acquired), or
the aggregate Consolidated amount of any assets sold, leased or otherwise
disposed of in any calendar year (determined on the basis of the fair market
value of any assets so sold, leased or disposed of) would not exceed 15% of the
Borrower's Consolidated Statutory Capital and Surplus as of the end of the
immediately preceding calendar year, (ii) an Event of Default would not exist
before or after giving effect thereto and (iii) any such Acquisition or
Disposition would not cause any Applicable Insurance Regulatory Authority to
restrict the ability of any Insurance Subsidiary to pay dividends or otherwise
make distributions to the Borrower or any of its Subsidiaries in any manner,
provided, however, that the foregoing shall not limit Dispositions of investment
securities as part of the management of a securities portfolio of the Borrower
or any of its Subsidiaries.
Section 8.4 Line of Business
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Engage, or permit any Subsidiary of the Borrower to engage, in any
material respect in any business other than a business in which the Borrower or
any Subsidiary is engaged in on the Effective Date and any other business
reasonably related thereto.
Section 8.5 Articles of Incorporation and By-laws
Amend or otherwise modify its Articles of Incorporation or By-Laws
in any way which would adversely affect the interests of the Agent and the
Lenders under any of the Loan Documents, or permit any of its Subsidiaries so to
do.
Section 8.6 Fiscal Year
Change its fiscal year from that in effect on the Effective Date,
or permit any of its Subsidiaries so to do.
Section 8.7 Transactions with Affiliates
Become, or permit any Subsidiary to become, a party to any
transaction with any Affiliate of the Borrower on a basis less favorable to the
Borrower or such Subsidiary in any material respect than if such transaction
were not with an Affiliate of the Borrower other than (A) advances made to
employees of the Borrower or any Subsidiary in the ordinary course of business
in connection with their employment, (B) transactions in which the aggregate
rental value, remuneration or other consideration (including the value of a
loan) together with the aggregate rental value, remuneration or other
consideration (including the value of a loan) of all such other transactions
consummated in the year during which such transaction is proposed to be
consummated, does not exceed $5,000,000, (C) management or similar agreements
entered among the Borrower and any Subsidiaries in the ordinary course of
business, (D) transactions effected pursuant to the agreement, date October 7,
1985, by and among the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇ with respect to
the ownership by ▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇ of the Borrower's Common Stock,
(E) payments to officers or directors of the Borrower or any Subsidiaries in the
ordinary course of their employment, (F) dividends otherwise permitted by this
Agreement or (G) the provision by the Borrower to its Subsidiaries of funds as
contemplated by Section 2.16.
Section 8.8 Issuance of Additional Stock by Subsidiaries
Permit any of its Subsidiaries to issue, directly or indirectly,
any additional Stock or other equity interests of such Subsidiary, other than to
the Borrower or to a wholly-owned Subsidiary of the Borrower.
Section 8.9 Reinsurance Agreements
Permit any Insurance Subsidiary to enter into a treaty to cede any
of its obligations to any reinsurer that could reasonably be expected to have a
Material Adverse Effect.
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Section 8.10 Adoption of Pension Plans
Adopt a Pension Plan, or permit any Subsidiary so to do, unless
this Agreement is amended, in form and substance satisfactory to the Required
Lenders, to insert the customary provisions with respect thereto.
ARTICLE 9 DEFAULT
Section 9.1 Events of Default
The following shall each constitute an "Event of Default"
hereunder:
(a) The failure of the Borrower to pay any installment of
principal on any Note on the date when due and payable; or
(b) The failure of the Borrower to pay any installment of interest
or any other fees or expenses payable under any Loan Document or otherwise to
the Agent with respect to the loan facilities established hereunder within three
Business Days after the date when due and payable; or
(c) The use of the proceeds of any Loan in a manner inconsistent
with or in violation of Section 2.16; or
(d) The failure of the Borrower to observe or perform any covenant
or agreement contained in Sections 7.11, 7.12, 7.13, 7.14 or Section 8; or
(e) The failure to observe or perform any other term, covenant, or
agreement contained in any Loan Document and such failure shall have continued
unremedied for a period of 30 days after the earlier of the Borrower becoming
aware of such failure and the receipt by the Borrower of notice of such failure
from the Agent; or
(f) Any representation or warranty made in any Loan Document or in
any certificate, report, opinion (other than an opinion of counsel) or other
document delivered or to be delivered pursuant thereto, shall prove to have been
incorrect or misleading (whether because of misstatement or omission) in any
material respect when made; or
(g) Obligations of the Borrower (other than its obligations under
the Notes) or any of its Subsidiaries, whether as principal, guarantor, surety
or other obligor, for the payment of any Indebtedness or operating leases in
excess of $5,000,000 in the aggregate (i) shall become or shall be declared to
be due and payable prior to the expressed maturity thereof, or (ii) shall not be
paid when due or within any grace period for the payment thereof, or (iii) any
holder of any such obligation shall have the right to declare such obligation
due and payable prior to the expressed maturity thereof; or
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(h) The Borrower or any of its Subsidiaries shall (i) suspend or
discontinue its business, (ii) make an assignment for the benefit of creditors,
(iii) generally not be paying its debts as such debts become due, (iv) admit in
writing its inability to pay its debts as they become due, (v) file a voluntary
petition in bankruptcy, (vi) become insolvent (however such insolvency shall be
evidenced), (vii) file any petition or answer seeking for itself any
reorganization, arrangement, composition, readjustment of debt, liquidation or
dissolution or similar relief under any present or future statute, law or
regulation of any jurisdiction, (viii) petition or apply to any tribunal for any
receiver, custodian or any trustee for any substantial part of its Property,
(ix) be the subject of any such proceeding filed against it which remains
undismissed for a period of 45 days, (x) file any answer admitting or not
contesting the material allegations of any such petition filed against it or any
order, judgment or decree approving such petition in any such proceeding, (xi)
seek, approve, consent to, or acquiesce in any such proceeding, or in the
appointment of any trustee, receiver, sequestrator, custodian, liquidator, or
fiscal agent for it, or any substantial part of its Property, or an order is
entered appointing any such trustee, receiver, sequestrator, custodian,
liquidator or fiscal agent and such order remains in effect for 45 days, (xii)
any conservatorship or similar proceeding is commenced in respect of the
Borrower or any Reporting Insurance Subsidiary by or on behalf of the California
Department of Insurance or the department of insurance of any other state of
domicile having jurisdiction or (xiii) take any formal action for the purpose of
effecting any of the foregoing or looking to the liquidation or dissolution of
the Borrower or such Subsidiary; or
(i) An order for relief is entered under the United States
bankruptcy laws or any other decree or order is entered by a court having
jurisdiction (i) adjudging the Borrower or any of its Subsidiaries bankrupt or
insolvent, (ii) approving as properly filed a petition seeking reorganization,
liquidation, arrangement, adjustment or composition of or in respect of the
Borrower or any of its Subsidiaries under the United States bankruptcy laws or
any other applicable Federal or state law, (iii) appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator (or other similar
official) of the Borrower or any of its Subsidiaries or of any substantial part
of the Property thereof, or (iv) ordering the winding up or liquidation of the
affairs of the Borrower or any of its Subsidiaries, and any such decree or order
continues unstayed and in effect for a period of 45 days; or
(j) Judgments or decrees against the Borrower or any of its
Subsidiaries aggregating in excess of $5,000,000 shall remain unpaid, unstayed,
undischarged, unbonded and undismissed for a period of 30 days unless the
payment thereof is covered in full by insurance as to which the carrier has
acknowledged liability in writing; or
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(k) After the Effective Date (1) Any Person (other than ▇▇▇▇▇▇
▇▇▇▇▇▇ or ▇▇▇▇▇▇ ▇▇▇▇▇▇), acting alone or with a group of Persons acting in
concert, (i) shall have or acquire beneficial ownership of securities (or
options therefor) having 20% or more of the ordinary voting power of the
Borrower, or (ii) shall possess, directly or indirectly, the power to direct or
cause the direction of the management and policies of the Borrower, whether
through the ownership of voting securities, by contract or otherwise, or (2)
directors of the Borrower constituting that percentage necessary to approve
corporate action shall not have been directors on the date hereof or directors
designated or approved by directors on the date hereof; or
(l) Any license, franchise, permit, right, approval or agreement
of the Borrower or any Subsidiary to own or operate any Operating Entity owned
or operated by the Borrower or such Subsidiary (i) is not renewed, or is
suspended or revoked and (ii) the non-renewal, suspension or revocation thereof
would have a Material Adverse Effect; or
(m) Any Loan Document shall cease, for any reason, to be in full
force and effect or the Borrower shall so assert in writing or shall disavow any
of its obligations thereunder; or
(n) An event of default shall occur and be continuing under the
1996 Revolving Credit.
Upon the occurrence of an Event of Default or at any time
thereafter during the continuance thereof, (a) if such event is an Event of
Default specified in clause (h) or (i) above, the Aggregate Commitments shall
immediately and automatically terminate and the Loans, all accrued and unpaid
interest thereon and all other amounts owing under the Loan Documents shall
immediately become due and payable and the Agent may, and, upon the direction of
the Required Lenders shall, exercise any and all remedies and other rights
provided in the Loan Documents, and (b) if such event is any other Event of
Default, any or all of the following actions may be taken: (i) with the consent
of the Required Lenders, the Agent may, and upon the direction of the Required
Lenders shall, by notice to the Borrower, declare the Aggregate Commitments to
be terminated forthwith, whereupon the Aggregate Commitments shall immediately
terminate, and (ii) with the consent of the Required Lenders, the Agent may, and
upon the direction of the Required Lenders shall, by notice of default to the
Borrower, declare the Loans, all accrued and unpaid interest thereon, and all
other amounts owing under the Loan Documents to be due and payable forthwith,
whereupon the same shall immediately become due and payable, and the Agent may,
and upon the direction of the Required Lenders shall, exercise any and all
remedies and other rights provided pursuant to the Loan Documents. Except as
otherwise provided in this Section, presentment, demand, protest and all other
notices of any kind are hereby expressly waived. To the fullest extent not
prohibited by applicable law, the Borrower hereby further expressly waives and
covenants not to assert any appraisement, valuation, stay, extension, redemption
or similar laws, now or at any time hereafter in force which might delay,
prevent or otherwise impede the performance or enforcement of any Loan Document.
In the event that the Aggregate Commitments shall have been
terminated or the Notes shall have been declared due and payable pursuant to the
provisions of this Section, any funds received by the Agent and the Lenders from
or on behalf of the Borrower shall be applied by
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the Agent and the Lenders in liquidation of the Loans and the obligations of the
Borrower under the Loan Documents in the following manner and order: (i) first,
to the payment of interest on, and then the principal portion of, any Loans
which the Agent may have advanced on behalf of any Lender for which the Agent
has not then been reimbursed by such Lender or the Borrower; (ii) second, to the
payment of any fees or expenses due the Agent from the Borrower, (iii) third, to
reimburse the Agent and the Lenders for any expenses (to the extent not paid
pursuant to clause (ii) above) due from the Borrower pursuant to the provisions
of Section 11.5; (iv) fourth, to the payment of accrued Commitment Fees and all
other fees, expenses and amounts due under the Loan Documents (other than
principal and interest on the Notes); (v) fifth, to the payment of interest due
on the Notes; (vi) sixth, to the payment of principal outstanding on the Notes;
and (vii) seventh, to the payment of any other amounts owing to the Agent and
the Lenders under any Loan Document.
ARTICLE 10 THE AGENT
Section 10.1 Appointment
Each Lender hereby irrevocably designates and appoints BNY as the
Agent of such Lender under the Loan Documents and each such Lender hereby
irrevocably authorizes BNY, as the Agent for such Lender, to take such action on
its behalf under the provisions of the Loan Documents and to exercise such
powers and perform such duties as are expressly delegated to the Agent by the
terms of the Loan Documents, together with such other powers as are reasonably
incidental thereto. Notwithstanding any provision to the contrary elsewhere in
any Loan Document, the Agent shall not have any duties or responsibilities other
than those expressly set forth therein, or any fiduciary relationship with any
Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into the Loan Documents or otherwise
exist against the Agent.
Section 10.2 Delegation of Duties
The Agent may execute any of its duties under the Loan Documents by
or through agents or attorneys-in-fact and shall be entitled to rely upon the
advice of counsel concerning all matters pertaining to such duties.
Section 10.3 Exculpatory Provisions
Neither the Agent nor any of its officers, directors, employees,
agents, attorneys-in-fact or affiliates shall be (i) liable for any action
lawfully taken or omitted to be taken by it or such Person under or in
connection with the Loan Documents (except the Agent for its own gross
negligence or willful misconduct), or (ii) responsible in any manner to any of
the Lenders for any recitals, statements, representations or warranties made by
the Borrower or any officer thereof contained in the Loan Documents or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Agent under or in connection with, the Loan Documents or for
the value, validity, effectiveness, genuineness, perfection, enforceability or
sufficiency of any of the Loan Documents or for any failure of the Borrower or
any other Person to perform its
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obligations thereunder. The Agent shall not be under any obligation to any
Lender to ascertain or to inquire as to the observance or performance of any of
the agreements contained in, or conditions of, the Loan Documents, or to inspect
the properties, books or records of the Borrower. The Agent shall not be under
any liability or responsibility whatsoever, as Agent, to the Borrower or any
other Person as a consequence of any failure or delay in performance, or any
breach, by any Lender of any of its obligations under any of the Loan Documents.
Section 10.4 Reliance by Agent
The Agent shall be entitled to rely, and shall be fully protected
in relying, upon any writing, resolution, notice, consent, certificate,
affidavit, opinion, letter, cablegram, telegram, fax, telex or teletype message,
statement, order or other document or conversation believed by it to be genuine
and correct and to have been signed, sent or made by the proper Person or
Persons and upon advice and statements of legal counsel (including, without
limitation, counsel to the Borrower), independent accountants and other experts
selected by the Agent. The Agent may treat each Lender, or the Person designated
in the last notice filed with it under this Section, as the holder of all of the
interests of such Lender in its Loans and in its Note until written notice of
transfer, signed by such Lender (or the Person designated in the last notice
filed with the Agent) and by the Person designated in such written notice of
transfer, in form and substance satisfactory to the Agent, shall have been filed
with the Agent. The Agent shall not be under any duty to examine or pass upon
the validity, effectiveness, enforceability, perfection or genuineness of the
Loan Documents or any instrument, document or communication furnished pursuant
thereto or in connection therewith, and the Agent shall be entitled to assume
that the same are valid, effective and genuine, have been signed or sent by the
proper parties and are what they purport to be. The Agent shall be fully
justified in failing or refusing to take any action under the Loan Documents
unless it shall first receive such advice or concurrence of the Required Lenders
as it deems appropriate. The Agent shall in all cases be fully protected in
acting, or in refraining from acting, under the Loan Documents in accordance
with a request or direction of the Required Lenders, and such request or
direction and any action taken or failure to act pursuant thereto shall be
binding upon all the Lenders and all future holders of the Notes.
Section 10.5 Notice of Default
The Agent shall not be deemed to have knowledge or notice of the
occurrence of any Default or Event of Default unless the Agent has received
written notice thereof from a Lender or the Borrower. In the event that the
Agent receives such a notice, the Agent shall promptly give notice thereof to
the Lenders and the Borrower. The Agent shall take such action with respect to
such Default or Event of Default as shall be directed by the Required Lenders,
provided, however, that unless and until the Agent shall have received such
directions, the Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem to be in the best interests of the Lenders.
Section 10.6 Non-Reliance on Agent and Other Lenders
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Each Lender expressly acknowledges that neither the Agent nor any
of its respective officers, directors, employees, agents, attorneys-in-fact or
affiliates has made any representations or warranties to it and that no act by
the Agent hereinafter, including any review of the affairs of the Borrower,
shall be deemed to constitute any representation or warranty by the Agent to any
Lender. Each Lender represents to the Agent that it has, independently and
without reliance upon the Agent or any other Lender, and based on such documents
and information as it has deemed appropriate, made its own evaluation of and
investigation into the business, operations, Property, financial and other
condition and creditworthiness of the Borrower and made its own decision to
enter into this Agreement. Each Lender also represents that it will,
independently and without reliance upon the Agent or any other Lender, and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, evaluations and decisions in taking or
not taking action under any Loan Document, and to make such investigation as it
deems necessary to inform itself as to the business, operations, Property,
financial and other condition and creditworthiness of the Borrower. Except for
notices, reports and other documents expressly required to be furnished to the
Lenders by the Agent hereunder, the Agent shall not have any duty or
responsibility to provide any Lender with any credit or other information
concerning the business, operations, Property, financial and other condition or
creditworthiness of the Borrower which may come into the possession of the Agent
or any of its officers, directors, employees, agents, attorneys-in-fact or
affiliates.
Section 10.7 Indemnification
Each Lender agrees to indemnify and reimburse the Agent in its
capacity as such (to the extent not promptly reimbursed by the Borrower and
without limiting the obligation of the Borrower to do so), pro rata according to
the outstanding principal balance of the Loans (or at any time when no Loans are
outstanding, according to its Commitment Percentage), from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind whatsoever including,
without limitation, any amounts paid to the Lenders (through the Agent) by the
Borrower pursuant to the terms of the Loan Documents, that are subsequently
rescinded or avoided, or must otherwise be restored or returned) which may at
any time (including, without limitation, at any time following the payment of
the Notes) be imposed on, incurred by or asserted against the Agent in any way
relating to or arising out of the Loan Documents or any other documents
contemplated by or referred to therein or the transactions contemplated thereby
or any action taken or omitted to be taken by the Agent under or in connection
with any of the foregoing; provided, however, that no Lender shall be liable for
the payment of any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements to the
extent resulting solely from the finally adjudicated gross negligence or willful
misconduct of the Agent. Without limitation of the foregoing, each Lender agrees
to reimburse the Agent promptly upon demand for its pro rata share of any unpaid
fees owing to the Agent, and any costs and expenses (including, without
limitation, reasonable fees and expenses of counsel) payable by the Borrower
under Section 11.5, to the extent that the Agent has not been paid such fees or
has not be reimbursed for such costs and expenses by the Borrower. The failure
of any Lender to reimburse the Agent promptly upon demand for its pro rata share
of any amount required to be by the Lenders to the Agent as provided in this
Section shall not relieve any other Lender of its obligation hereunder to
reimburse the Agent for its pro rata share
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of such amount, but no Lender shall be responsible for the failure of other
Lender to reimburse the Agent for such other Lender's pro rata share of such
amount. The agreements in this Section shall survive the payment of all amounts
payable under the Loan Documents.
Section 10.8 Agent in Its Individual Capacity
BNY and its respective affiliates may make loans to, accept
deposits from, issue letters of credit for the account of, and generally engage
in any kind of business with, the Borrower as though BNY were not Agent
hereunder. With respect to the Commitment made or renewed by BNY and the Notes
issued to BNY, BNY shall have the same rights and powers under the Loan
Documents as any Lender and may exercise the same as though it were not the
Agent, and the terms "Lender" and "Lenders" shall in each case include BNY.
Section 10.9 Successor Agent
If at any time the Agent deems it advisable, in its sole
discretion, it may submit to each of the Lenders a written notice of its
resignation as Agent under the Loan Documents, such resignation to be effective
upon the earlier of (i) the written acceptance of the duties of the Agent under
the Loan Documents by a successor Agent and (ii) on the 30th day after the date
of such notice. Upon any such resignation, the Required Lenders shall have the
right to appoint from among the Lenders a successor Agent. If no successor Agent
shall have been so appointed by the Required Lenders and accepted such
appointment in writing within 30 days after the retiring Agent's giving of
notice of resignation, then the retiring Agent may, on behalf of the Lenders,
appoint a successor Agent, which successor Agent shall be a commercial bank
organized under the laws of the United States of America or any State thereof
and having a combined capital, surplus, and undivided profits of at least
$100,000,000. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent's rights, powers, privileges and duties as Agent under
the Loan Documents shall be terminated. The Borrower and the Lenders shall
execute such documents as shall be necessary to effect such appointment. After
any retiring Agent's resignation as Agent, the provisions of the Loan Documents
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Agent under the Loan Documents. If at any time there shall not be a
duly appointed and acting Agent, the Borrower agrees to make each payment due
under the Loan Documents directly to the Lenders entitled thereto during such
time.
ARTICLE 11 OTHER PROVISIONS
Section 11.1 Amendments and Waivers
With the written consent of the Required Lenders, the Agent and the
Borrower may, from time to time, enter into written amendments, supplements or
modifications of the Loan Documents and, with the consent of the Required
Lenders, the Agent on behalf of the Lenders may execute and deliver to any such
parties a written instrument waiving or a consent to a departure
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from, on such terms and conditions as the Agent may specify in such instrument,
any of the requirements of the Loan Documents or any Default or Event of Default
and its consequences; provided, however, that:
(a) no such amendment, supplement, modification, waiver or consent
shall, without the consent of all of the Lenders, (i) increase the Commitments
of any Lender or the Aggregate Commitments, (ii) extend the Maturity Date; (iii)
decrease the rate, or extend the time of payment, of interest of, or change or
forgive the principal amount of, or change the pro rata allocation of payments
under, any Note or change or forgive the payment of any fees, (iv) change the
provisions of Sections 2.11, 2.12, 2.13, 2.14, 2.15, 5, 6, 11.1 or 11.6(a), or
release any security interest or collateral, except to the extent that such
release is specifically provided for in any Loan Document, or release any
guarantor under any guarantee or (v) change the definition of Required Lenders;
and
(b) without the written consent of the Agent, no such amendment,
supplement, modification or waiver shall amend, modify or waive any provision of
Section 10 or otherwise change any of the rights or obligations of the Agent
hereunder or under the Loan Documents.
Any such amendment, supplement, modification or waiver shall apply
equally to each of the Lenders and shall be binding upon the parties to the
applicable Loan Document, the Lenders, the Agent and all future holders of the
Notes. In the case of any waiver, the parties to the applicable Loan Document,
the Lenders and the Agent shall be restored to their former position and rights
hereunder and under the outstanding Notes and other Loan Documents to the extent
provided for in such waiver, and any Default or Event of Default waived shall
not extend to any subsequent or other Default or Event of Default, or impair any
right consequent thereon. The Loan Documents may not be amended orally or by any
course of conduct.
Section 11.2 Notices
All notices, requests and demands to or upon the respective parties
to Loan Documents to be effective shall be in writing and, unless otherwise
expressly provided therein, shall be deemed to have been duly given or made when
delivered by hand, or when deposited in the mail, first-class postage prepaid,
or, in the case of notice by fax, when sent, addressed as follows in the case of
the Borrower or the Agent, at the Domestic Lending Office, in the case of each
Lender, or to such other addresses as to which the Agent may be hereafter
notified by the respective parties thereto or any future holders of the Notes:
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The Borrower:
Mercury General Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
Chief Financial Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
The Agent:
The Bank of ▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
Agency Function Administration
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇ or 6366 or 6367
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with a copy to:
The Bank of New York
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇,
except that any notice, request or demand by the Borrower to or upon the Agent
or the Lenders pursuant to Sections 2.3 or 2.6 shall not be effective until
received. Any party to a Loan Document may rely on signatures of the parties
thereto which are transmitted by fax or other electronic means as fully as if
originally signed.
Section 11.3 No Waiver; Cumulative Remedies
No failure to exercise and no delay in exercising, on the part of
the Agent or any Lender, any right, remedy, power or privilege under any Loan
Document shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege under any Loan Document
preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege. The rights, remedies, powers and privileges
under the Loan Documents are cumulative and not exclusive of any rights,
remedies, powers and privileges provided by law.
Section 11.4 Survival of Representations and Warranties
All representations and warranties made under the Loan Documents
and in any document, certificate or statement delivered pursuant thereto or in
connection therewith shall survive the execution and delivery of the Loan
Documents.
Section 11.5 Payment of Expenses and Taxes
The Borrower agrees, promptly upon presentation of a statement or
invoice therefor, and whether any Loan is made (i) to pay or reimburse the Agent
for all its out-of-pocket costs and expenses reasonably incurred in connection
with the development, preparation and execution of, the Loan Documents and the
syndication thereof and any amendment, supplement or modification thereto
(whether or not executed), any documents prepared in connection therewith and
the consummation of the transactions contemplated thereby, including, without
limitation, the reasonable fees and disbursements of Special Counsel, (ii) to
pay or reimburse the Agent and the Lenders for all of their respective costs and
expenses, including, without limitation, reasonable fees and disbursements of
counsel, reasonably incurred in connection with (A) any Default or Event of
Default and any enforcement or collection proceedings resulting therefrom or in
connection with the negotiation of any restructuring or "work-out" (whether
consummated or not) of the obligations of the Borrower under any of the Loan
Documents, (B) the enforcement of this Section and (C) any
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appraisal required in connection with any real Property at any time in the
future taken as collateral security for any obligations under the Loan
Documents, (iii) to pay, indemnify, and hold each Lender and the Agent harmless
from and against, any and all recording and filing fees and any and all
liabilities with respect to, or resulting from any delay in paying, stamp,
excise and other similar taxes, if any, which may be payable or determined to be
payable in connection with the execution and delivery of, or consummation of any
of the transactions contemplated by, or any amendment, supplement or
modification of, or any waiver or consent under or in respect of, the Loan
Documents and any such other documents, and (iv) to pay, indemnify and hold each
Lender and the Agent and each of their respective officers, directors and
employees harmless from and against any and all other liabilities, obligations,
claims, losses, damages, penalties, actions, judgments, suits, costs, expenses
or disbursements of any kind or nature whatsoever (including, without
limitation, reasonable counsel fees and disbursements) with respect to the
enforcement and performance of the Loan Documents, the use of the proceeds of
the Loans and the enforcement and performance of the provisions of any
subordination agreement in favor of the Agent and the Lenders (all the
foregoing, collectively, the "indemnified liabilities") and, if and to the
extent that the foregoing indemnity may be unenforceable for any reason, the
Borrower agrees to make the maximum payment permitted or not prohibited under
applicable law; provided, however, that the Borrower shall have no obligation
hereunder to pay indemnified liabilities to the Agent or any Lender arising from
the finally adjudicated gross negligence or willful misconduct of the Agent or
such Lender or claims between one indemnified party and another indemnified
party. The agreements in this Section shall survive the termination of the
Aggregate Commitments and the payment of all amounts payable under the Loan
Documents.
Section 11.6 Assignments and Participations
(a) The Loan Documents shall be binding upon and inure to the
benefit of the Borrower, the Lenders, the Agent, all future holders of the Notes
and their respective successors and assigns, except that the Borrower may not
assign, delegate or transfer any of its rights or obligations under the Loan
Documents without the prior written consent of the Agent and each Lender.
(b) Each Lender shall have the right at any time, upon written
notice to the Agent of its intent to do so, to sell, assign, transfer or
negotiate all or any part of such Lender's rights and obligations under the Loan
Documents to one or more of its affiliates, to one or more of the other Lenders
(or to affiliates of such other Lenders) or, with the prior written consent of
the Borrower (which consent shall not be unreasonably withheld or delayed and
shall not be required upon the occurrence and during the continuance of an Event
of Default), to sell, assign, transfer or negotiate all or any part of such
Lender's rights and obligations under the Loan Documents to any other bank,
insurance company, pension fund, mutual fund or other financial institution,
provided that (i) each such sale, assignment, transfer or negotiation (other
than sales, assignments, transfers or negotiations (x) to affiliates of such
Lender or (y) of a Lender's entire interest) shall be in a minimum amount of
$5,000,000 and (ii) there shall be paid to the Agent by the assigning Lender (or
the Borrower, in the case of an assignment pursuant to Section 2.19(b)) a fee
(the "Assignment Fee") of $3,500. For each assignment, the parties to such
assignment shall execute and deliver to the Agent for its acceptance and
recording an Assignment and Acceptance
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Agreement. Upon such execution, delivery, acceptance and recording by the Agent,
from and after the effective date specified in such Assignment and Acceptance
Agreement, the assignee thereunder shall be a party hereto and, to the extent
provided in such Assignment and Acceptance Agreement, the assignor Lender
thereunder shall be released from its obligations under the Loan Documents.
Subject to Borrower's right to consent or not to consent to such an assignment
as set forth above, the Borrower agrees upon written request of the Agent and at
the Borrower's expense to execute and deliver (1) to such assignee, Notes, dated
the effective date of such Assignment and Acceptance Agreement, in an aggregate
principal amount equal to the Loans assigned to, and Commitments assumed by,
such assignee and (2) to such assignor Lender, Notes, dated the effective date
of such Assignment and Acceptance Agreement, in an aggregate principal amount
equal to the balance of such assignor Lender's Loans and Commitments, if any,
and each assignor Lender shall cancel and return to the Borrower its existing
Notes. Upon any such sale, assignment or other transfer, the Commitments and the
Commitment Percentages set forth in Exhibit A shall be adjusted accordingly by
the Agent and a new Exhibit A shall be distributed by the Agent to the Borrower
and each Lender.
(c) Each Lender may grant participations in all or any part of its
Loans, its Note and its Commitment to one or more banks, insurance companies,
financial institutions, pension funds or mutual funds, provided that (i) such
Lender's obligations under the Loan Documents shall remain unchanged, (ii) such
Lender shall remain solely responsible to the other parties to the Loan
Documents for the performance of such obligations and (iii) 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 the Loan
Documents, (iv) the voting rights of any holder of any participation shall be
limited to decisions that only do any of the following: (A) subject the
participant to any additional obligation, (B) reduce the principal of, or
interest on the Notes or any fees or other amounts payable hereunder, (C)
postpone any date fixed for the payment of principal of, or interest on the
Notes or any fees or other amounts payable hereunder, (D) release any security
interest or collateral, except to the extent that such release is specifically
provided for in any Loan Document or (E) release any guarantor under any
guarantee. The Borrower acknowledges and agrees that any such participant shall
for purposes of Sections 2.9, 2.11, 2.12 and 2.15 be deemed to be a "Lender";
provided, however, the Borrower shall not, at any time, be obligated to pay any
participant in any interest of any Lender hereunder any sum in excess of the sum
which the Borrower would have been obligated to pay to such Lender in respect of
such interest had such Lender not sold such participation.
(d) If any (i) assignment is made pursuant to subsection (b) above
or (ii) any participation is granted pursuant to subsection (c) above, shall be
made to any Person that is not a U.S. Person, such Person shall furnish such
certificates, documents or other evidence to the Borrower and the Agent, in the
case of clause (i) and to the Borrower and the Lender which sold such
participation in the case of clause (ii), as shall be required by Section
2.9(c).
(e) No Lender shall, as between and among the Borrower, the Agent
and such Lender, be relieved of any of its obligations under the Loan Documents
as a result of any sale, assignment, transfer or negotiation of, or granting of
participations in, all or any part of its Loans, its Commitment or its Note,
except that a Lender shall be relieved of its obligations to the
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extent of any such sale, assignment, transfer, or negotiation of all or any part
of its Loans, its Commitment or its Note pursuant to subsection (b) above.
(f) Notwithstanding anything to the contrary contained in this
Section, any Lender may at any time or from time to time assign all or any
portion of its rights under the Loan Documents to a Federal Reserve Bank,
provided that any such assignment shall not release such assignor from its
obligations thereunder.
Section 11.7 Counterparts
Each Loan Document (other than the Notes) may be executed by one or
more of the parties thereto on any number of separate counterparts and all of
said counterparts taken together shall be deemed to constitute one and the same
document. It shall not be necessary in making proof of any Loan Document to
produce or account for more than one counterpart signed by the party to be
charged. A counterpart of any Loan Document or to any document evidencing, and
of any an amendment, modification, consent or waiver to or of any Loan Document
transmitted by fax shall be deemed to be an originally executed counterpart. A
set of the copies of the Loan Documents signed by all the parties thereto shall
be deposited with each of the Borrower and the Agent. Any party to a Loan
Document may rely upon the signatures of any other party thereto which are
transmitted by fax or other electronic means to the same extent as if originally
signed.
Section 11.8 Adjustments; Set-off
(a) If any Lender (a "Benefited Lender") shall at any time receive
any payment of all or any part of its Loans, or interest thereon, or receive any
collateral in respect thereof (whether voluntarily or involuntarily, by set-off,
pursuant to events or proceedings of the nature referred to in Section 9.1 (h)
or (i), or otherwise) in a greater proportion than any such payment to and
collateral received by any other Lender in respect of such other Lender's Loans,
or interest thereon, such Benefited Lender shall purchase for cash from each of
the other Lenders such portion of each such other Lender's Loans, and shall
provide each of such other Lenders with the benefits of any such collateral, or
the proceeds thereof, as shall be necessary to cause such Benefited Lender to
share the excess payment or benefits of such collateral or proceeds ratably with
each of the Lenders, provided, however, that if all or any portion of such
excess payment or benefits is thereafter recovered from such Benefited Lender,
such purchase shall be rescinded, and the purchase price and benefits returned,
to the extent of such recovery, but without interest. The Borrower agrees that
each Lender so purchasing a portion of another Lender's Loans may exercise all
rights of payment (including, without limitation, rights of set-off, to the
extent not prohibited by law) with respect to such portion as fully as if such
Lender were the direct holder of such portion.
(b) In addition to any rights and remedies of the Lenders provided
by law, upon the occurrence of an Event of Default and the acceleration of the
obligations owing in connection with the Loan Documents, or at any time upon the
occurrence and during the continuance of an Event of Default, under Section
9.1(a) or (b), each Lender shall have the right, without prior notice to the
Borrower, any such notice being expressly waived by the Borrower to the extent
not
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prohibited by applicable law, to set-off and apply against any indebtedness,
whether matured or unmatured, of the Borrower to such Lender, any amount owing
from such Lender to the Borrower, at, or at any time after, the happening of any
of the above-mentioned events. To the extent not prohibited by applicable law,
the aforesaid right of set-off may be exercised by such Lender against the
Borrower or against any trustee in bankruptcy, custodian, debtor in possession,
assignee for the benefit of creditors, receiver, or execution, judgment or
attachment creditor of the Borrower, or against anyone else claiming through or
against the Borrower or such trustee in bankruptcy, custodian, debtor in
possession, assignee for the benefit of creditors, receiver, or execution,
judgment or attachment creditor, notwithstanding the fact that such right of
set-off shall not have been exercised by such Lender prior to the making,
filing or issuance, or service upon such Lender of, or of notice of, any such
petition, assignment for the benefit of creditors, appointment or application
for the appointment of a receiver, or issuance of execution, subpoena, order or
warrant. Each Lender agrees promptly to notify the Borrower and the Agent after
any such set-off and application made by such Lender, provided that the failure
to give such notice shall not affect the validity of such set-off and
application.
Section 11.9 Construction
The Borrower represents that it has been represented by counsel in
connection with the Loan Documents and the transactions contemplated thereby and
that the principle that agreements are to be construed against the draftsman
shall be inapplicable.
Section 11.10 Indemnity
The Borrower agrees to indemnify and hold harmless the Agent and
each Lender and their respective affiliates, directors, officers, employees,
attorneys and agents (each an "Indemnified Person") from and against any loss,
cost, liability, damage or expense (including the reasonable fees and
disbursements of counsel of such Indemnified Person, including all local counsel
hired by any such counsel) incurred by such Indemnified Person in investigating,
preparing for, defending against, or providing evidence, producing documents or
taking any other action in respect of, any commenced or threatened litigation,
administrative proceeding or investigation under any federal securities law or
any other statute of any jurisdiction, or any regulation, or at common law or
otherwise, which is alleged to arise out of or is based upon (i) any untrue
statement or alleged untrue statement of any material fact by the Borrower in
any document or schedule executed or filed with any Governmental Authority by or
on behalf of the Borrower; (ii) any omission or alleged omission to state any
material fact required to be stated in such document or schedule, or necessary
to make the statements made therein, in light of the circumstances under which
made, not misleading; (iii) any acts, practices or omissions or alleged acts,
practices or omissions of the Borrower or its agents relating to the use of the
proceeds of any or all borrowings made by the Borrower which are alleged to be
in violation of Section 2.14, or in violation of any federal securities law or
of any other statute, regulation or other law of any jurisdiction applicable
thereto; or (iv) any acquisition or proposed acquisition by the Borrower of all
or a portion of the Stock, or all or a portion of the assets, of any Person
whether such Indemnified Person is a party thereto. The indemnity set forth
herein shall be in addition to any other obligations or liabilities of the
Borrower to each Indemnified Person under the Loan Documents or at common law or
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otherwise, and shall survive any termination of the Loan Documents, the
expiration of the Commitments and the payment of all indebtedness of the
Borrower under the Loan Documents, provided that the Borrower shall have no
obligation under this Section to an Indemnified Person with respect to any of
the foregoing to the extent found in a final judgment of a court having
jurisdiction to have resulted primarily out of the gross negligence or wilful
misconduct of such Indemnified Person or arising solely from claims between one
such Indemnified Person and another such Indemnified Person.
Section 11.11 Governing Law
The Loan Documents and the rights and obligations of the parties
thereunder shall be governed by, and construed and interpreted in accordance
with, the internal laws of the State of New York, without regard to principles
of conflict of laws.
Section 11.12 Headings Descriptive
Section headings have been inserted in the Loan Documents for
convenience only and shall not be construed to be a part thereof.
Section 11.13 Severability
Every provision of the Loan Documents is intended to be severable,
and if any term or provision thereof shall be invalid, illegal or unenforceable
for any reason, the validity, legality and enforceability of the remaining
provisions thereof shall not be affected or impaired thereby, and any
invalidity, illegality or unenforceability in any jurisdiction shall not affect
the validity, legality or enforceability of any such term or provision in any
other jurisdiction.
Section 11.14 Integration
All exhibits to a Loan Document shall be deemed to be a part
thereof. Except for agreements between the Agent and the Borrower with respect
to certain fees, the Loan Documents embody the entire agreement and
understanding among the Borrower, the Agent and the Lenders with respect to the
subject matter thereof and supersede all prior agreements and understandings
among the Borrower, the Agent and the Lenders with respect to the subject
matter thereof.
Section 11.15 Consent to Jurisdiction
The Borrower hereby irrevocably submits to the jurisdiction of any
New York State or Federal court sitting in the City of New York over any suit,
action or proceeding arising out of or relating to the Loan Documents. The
Borrower hereby irrevocably waives, to the fullest extent permitted or not
prohibited by law, any objection which it may now or hereafter have to the
laying of the venue of any such suit, action or proceeding brought in such a
court and any claim that any such suit, action or proceeding brought in such a
court has been brought in an inconvenient forum. The Borrower hereby agrees that
a final judgment in any such suit, action or proceeding brought in such a court,
after all appropriate appeals, shall be conclusive and binding upon it.
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Section 11.16 Service of Process
The Borrower hereby irrevocably consents to the service of process
in any suit, action or proceeding by sending the same by first class mail,
return receipt requested or by overnight courier service, to the address of the
Borrower set forth in Section 11.2. The Borrower hereby agrees that any such
service (i) shall be deemed in every respect effective service of process upon
it in any such suit, action, or proceeding, and (ii) shall to the fullest extent
enforceable by law, be taken and held to be valid personal service upon and
personal delivery to it.
Section 11.17 No Limitation on Service or Suit
Nothing in the Loan Documents or any modification, waiver, consent
or amendment thereto shall affect the right of the Agent or any Lender to serve
process in any manner permitted by law or limit the right of the Agent or any
Lender to bring proceedings against the Borrower in the courts of any
jurisdiction or jurisdictions in which the Borrower may be served.
Section 11.18 WAIVER OF TRIAL BY JURY
THE AGENT, THE LENDERS AND THE BORROWER HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION ARISING OUT OF, UNDER OR IN CONNECTION WITH THE LOAN
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREIN. FURTHER, THE BORROWER HEREBY
CERTIFIES THAT NO REPRESENTATIVE OR AGENT OF THE AGENT, OR THE LENDERS, OR
COUNSEL TO THE AGENT OR THE LENDERS, HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT THE AGENT OR THE LENDERS WOULD NOT, IN THE EVENT OF SUCH LITIGATION, SEEK
TO ENFORCE THIS WAIVER OF RIGHT TO JURY TRIAL PROVISION. THE BORROWER
ACKNOWLEDGES THAT THE AGENT AND THE LENDERS HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, INTER ALIA, THE PROVISIONS OF THIS SECTION.
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TO EVIDENCE THE FOREGOING, the parties hereto have caused this
Agreement to be duly executed and delivered by their proper and duly authorized
officers as of the day and year first above written.
MERCURY GENERAL CORPORATION
By:______________________________
Name:____________________________
Title:___________________________
THE BANK OF NEW YORK,
Individually and as Agent
By:______________________________
Name:____________________________
Title:___________________________
UNION BANK OF CALIFORNIA, N.A.,
as Co-Agent
By:______________________________
Name:____________________________
Title:___________________________
THE FIRST NATIONAL BANK OF
CHICAGO, as Co-Agent
By:______________________________
Name:____________________________
Title:___________________________
THE CHASE MANHATTAN BANK
By:______________________________
Name:____________________________
Title:___________________________
FLEET NATIONAL BANK
By:______________________________
Name:____________________________
Title:___________________________
CREDIT LYONNAIS NEW YORK BRANCH
By:______________________________
Name:____________________________
Title:___________________________
By:______________________________
Name:____________________________
Title:___________________________