EXHIBIT 10.1
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CREDIT AGREEMENT
Dated as of December 16, 2002
among
DELPHI FINANCIAL GROUP, INC.
as the Borrower,
BANK OF AMERICA, N.A.,
as Administrative Agent,
and
The Other Lenders Party Hereto
WACHOVIA SECURITIES, INC., Joint Lead Arranger
BANC OF AMERICA SECURITIES LLC
Joint Lead Arranger and Sole Book Manager
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TABLE OF CONTENTS
PAGE
SECTION 1 DEFINITIONS.................................................... 1
SECTION 1.1 Certain Defined Terms................................... 1
SECTION 1.2 Credit Agreement Definitions............................ 1
SECTION 2 PLEDGE......................................................... 2
SECTION 3 REPRESENTATIONS AND WARRANTIES................................. 3
SECTION 3.1 Pledged Shares.......................................... 3
SECTION 3.2 Collateral.............................................. 4
SECTION 3.3 Organization, etc....................................... 4
SECTION 3.4 Effectiveness........................................... 4
SECTION 4 COVENANTS...................................................... 5
SECTION 5 CARE OF COLLATERAL............................................. 5
SECTION 6 CERTAIN RIGHTS REGARDING COLLATERAL AND LIABILITIES............ 6
SECTION 6.1 Permitted Action........................................ 6
SECTION 6.2 ........................................................ 6
SECTION 6.3 Voting Pledged Shares................................... 7
SECTION 7 DIVIDENDS, ETC................................................. 7
SECTION 7.1 No Default.............................................. 7
SECTION 7.2 Occurrence of Default................................... 8
SECTION 8 DEFAULT........................................................ 8
SECTION 8.1 Occurrence of Default................................... 8
SECTION 8.2 Sale of Collateral...................................... 8
SECTION 9 APPLICATION OF PROCEEDS........................................ 11
SECTION 10 AUTHORITY OF THE COLLATERAL AGENT; INDEMNIFICATION............. 11
SECTION 11 TERMINATION.................................................... 12
SECTION 12 MISCELLANEOUS.................................................. 12
SECTION 12.1 Amendments.............................................. 12
SECTION 12.2 Captions................................................ 12
SECTION 12.3 Notices................................................. 12
SECTION 12.4 Waivers................................................. 13
SECTION 12.5 Further Assurances...................................... 13
SECTION 12.6 SUBMISSION TO JURISDICTION; WAIVER OF VENUE............. 13
SECTION 12.7 WAIVER OF JURY TRIAL.................................... 13
SECTION 12.8 Governing Law; Terms; Interpretation.................... 14
SECTION 12.9 Filing as a Financing Statement......................... 14
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TABLE OF CONTENTS
(continued)
PAGE
SECTION 12.10 Binding Agreement; Assignment........................... 14
SECTION 12.11 Conditions of Effectiveness............................. 14
SECTION 12.12 Liabilities............................................. 14
SECTION 12.13 Counterparts............................................ 14
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CREDIT AGREEMENT
This CREDIT AGREEMENT (this "Agreement") is entered into as of December
16, 2002 among DELPHI FINANCIAL GROUP, INC., a Delaware corporation (the
"Borrower"), each lender from time to time party hereto (each a "Lender" and
collectively the "Lenders") and BANK OF AMERICA, N.A., as Administrative Agent.
The Borrower has requested that the Lenders provide a revolving credit
facility, and the Lenders are willing to do so on the terms and conditions set
forth herein.
In consideration of the mutual agreements herein contained, the parties
hereto agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
1.01 DEFINED TERMS. As used in this Agreement, the following terms
shall have the meanings set forth below:
"2001 Annual Statements" - see Section 6.05(a)(ii).
"2002 Quarterly Statements" - see Section 6.05(a)(ii).
"Acquired Person" shall mean any Person acquired upon the consummation
of an Acquisition permitted by the terms of this Agreement.
"Acquisition" shall mean any transaction or series of transactions for
the purpose of or resulting, directly or indirectly, in (a) the acquisition of
all or substantially all of the assets of a Person, or of any business or
division of a Person, (b) the acquisition of in excess of 50% of the capital
stock, partnership interests, membership interests or equity securities (or
warrants, options, or other rights to acquire any of the foregoing) of any
Person, or otherwise causing any Person to become a Subsidiary of the Borrower,
or (c) a merger or consolidation or any other combination of the Borrower or one
of its Subsidiaries with another Person (other than a Person that is a
Subsidiary of the Borrower immediately prior to such merger or consolidation);
provided that the Borrower or such Subsidiary is the surviving entity, in each
case subject to and to the extent permitted by the terms of this Agreement.
"Adjusted Capital" shall mean, as to any of the Reliance Standard
Insurance Companies as of any date, the total amount shown on line 30, page 27,
column 1 of the Annual Statement of each of the Reliance Standard Insurance
Companies and, as to Safety National as of any date, the total amount shown on
line 27, page 22, column 1 of the Annual Statement of Safety National, or, in
each case, an amount determined in a consistent manner for any date other than
one as of which an Annual Statement is prepared.
"Administrative Agent" shall mean Bank of America in its capacity as
administrative agent under any of the Loan Documents, or any successor
administrative agent.
"Administrative Agent's Office" shall mean the Administrative Agent's
address and, as appropriate, account as set forth on Schedule 11.02, or such
other address or account as the Administrative Agent may from time to time
specify to the Borrower and the Lenders.
"Administrative Questionnaire" shall mean an Administrative
Questionnaire in a form supplied by the Administrative Agent.
"Affiliate" shall mean, with respect to any Person, another Person that
directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with such Person. "Control" shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the ability
to exercise voting power, by contract or otherwise. "Controlling" and
"Controlled" have meanings correlative thereto. Without limiting the generality
of the foregoing, a Person shall be deemed to be Controlled by another Person if
such other Person possesses, directly or indirectly, power to vote 10% or more
of the securities having ordinary voting power for the election of directors,
managing general partners or the equivalent.
"Agent-Related Persons" shall mean the Administrative Agent, together
with its Affiliates (including, in the case of Bank of America in its capacity
as the Administrative Agent, the Arranger), and the officers, directors,
employees, agents and attorneys-in-fact of such Persons and Affiliates.
"Aggregate Commitments" shall mean aggregate amount of the Commitments
of all the Lenders.
"Agreement" - see the introductory paragraph.
"Amounts Available for Dividends" shall mean, as to any Person, the
maximum amount of dividends such Person is or eventually would be permitted to
pay without necessitating approval of the Department under the then-current
rules regulating such dividends whether or not such dividends are taken at such
time.
"Annual Statement" shall mean, as to any insurance company, the annual
financial statement of such insurance company as required to be filed with the
Department, together with all exhibits or schedules filed therewith, prepared in
conformity with SAP. References to amounts on particular exhibits, schedules,
lines, pages and columns of the Annual Statement are based on the format
promulgated by the NAIC for 2001 Life, Accident and Health Insurance Company
Annual Statements or 2001 Property and Casualty Insurance Company Annual
Statements, as applicable. If such format is changed in future years so that
different information is contained in such items or they no longer exist, it is
understood that the reference is to information consistent with that reported in
the referenced item in the 2001 Annual Statement of such insurance company.
"Applicable Insurance Codes" shall mean, as to any insurance company,
the insurance code of any state where such insurance company is domiciled or
doing insurance business and any successor statute of similar import, together
with the regulations thereunder, as amended or otherwise modified and in effect
from time to time. References to sections of the Applicable Insurance Code shall
be construed to also refer to successor sections.
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"Applicable Rate" shall mean, from time to time, the following
percentages per annum, based upon the Debt Rating as set forth below:
COMMITMENT EURODOLLAR
PRICING SENIOR DEBT FEE RATE + BASE RATE +
LEVEL RATING (IN BASIS POINTS) (IN BASIS POINTS) (IN BASIS POINTS)
------- ----------- ----------------- ----------------- -----------------
I BBB+/Baa1 30.0 100.0 0
or higher
II BBB/Baa2 37.5 125.0 0
III BBB-/Baa3 45.0 150.0 25.0
IV BB+/Ba1 50.0 175.0 50.0
V BB/Ba2 50.0 225.0 100.0
or lower
Each change in the Applicable Rate resulting from a publicly announced change in
the Debt Rating shall be effective during the period commencing on the date of
the public announcement thereof and ending on the date immediately preceding the
effective date of the next such change.
"Arranger" shall mean Banc of America Securities LLC, in its capacity
as joint lead arranger and sole book manager.
"Assignment and Assumption" shall mean an Assignment and Assumption
substantially in the form of Exhibit D.
"Attorney Costs" shall mean and includes all reasonable fees and
charges of any law firm or other external counsel and, without duplication,
reasonable allocated cost of internal legal services and all reasonable expenses
and disbursements of internal counsel.
"Attributable Indebtedness" shall mean, on any date, (a) in respect of
any capital lease of any Person, the capitalized amount thereof that would
appear on a balance sheet of such Person prepared as of such date in accordance
with GAAP, and (b) in respect of any Synthetic Lease Obligation, the capitalized
amount of the remaining lease payments under the relevant lease that would
appear on a balance sheet of such Person prepared as of such date in accordance
with GAAP if such lease were accounted for as a capital lease.
"Audited Financial Statements" see Section 6.05(b)(i).
"Audited Financial Statements" shall mean the audited consolidated
balance sheet of the Borrower and its Subsidiaries for the Fiscal Year ended
December 31, 2001.
"Availability Period" shall mean the period from and including the
Closing Date to the earliest of (a) the Maturity Date, (b) the date of
termination of the Aggregate Commitments pursuant to Section 2.04(a) and (c) the
date of termination of the commitment of each Lender to make Loans pursuant to
Section 9.02(a).
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"Average Life" shall mean, as of the date of determination, with
respect to any Indebtedness, the quotient obtained by dividing (a) the sum of
the products of the numbers of years from the date of determination to the dates
of each successive scheduled principal payment of such Indebtedness multiplied
by the amount of such scheduled principal payment by (b) the sum of all such
scheduled principal payments.
"Bank of America" shall mean Bank of America, N.A. and its successors.
"Base Rate" shall mean for any day a fluctuating rate per annum equal
to the higher of (a) the Federal Funds Rate plus 0.5% and (b) the rate of
interest in effect for such day as publicly announced from time to time by Bank
of America as its "prime rate." The "prime rate" is a rate set by Bank of
America based upon various factors, including Bank of America's costs and
desired return, general economic conditions and other factors, and is used as a
reference point for pricing some loans, which may be priced at, above or below
such announced rate. Any change in such rate announced by Bank of America shall
take effect at the opening of business on the day specified in the public
announcement of such change.
"Base Rate Loan" shall mean a Loan that bears interest based on the
Base Rate.
"Borrower" - see the introductory paragraph.
"Borrower Pledge Agreement" - see Section 4.01(a).
"Borrowing" shall mean a borrowing consisting of simultaneous Loans of
the same Type and, in the case of Eurodollar Rate Loans, having the same
Interest Period made by each of the Lenders pursuant to Section 2.01.
"Business Day" shall mean any day other than a Saturday, Sunday or
other day on which commercial banks are authorized to close under the Laws of,
or are in fact closed in, the state where the Administrative Agent's Office is
located and, if such day relates to any Eurodollar Rate Loan, means any such day
on which dealings in Dollar deposits are conducted by and between banks in the
London interbank eurodollar market.
"Calculation Period" shall mean, with respect to any ratio or
calculation, the period for which such ratio or calculation is being calculated.
"Capital and Surplus" shall mean, as to any of the Reliance Standard
Insurance Companies as of any date, the total amount shown on line 38, page 3,
column 1 of the Annual Statement of each of the Reliance Standard Insurance
Companies and, as to Safety National as of any date, the total amount shown on
line 32, page 3, column 1 of the Annual Statement of Safety National, or, in
each case, an amount determined in a consistent manner for any date other than
one as of which an Annual Statement is prepared.
"Cash Coverage Ratio" shall mean, for any Calculation Period, the ratio
of (a) (i) Amounts Available for Dividends of RSL-Texas and Safety National,
plus (ii) Consolidated Non-Insurance EBITDA; provided that Consolidated
Non-Insurance Net Income shall only include the Net Income of any Subsidiary of
the Borrower to the extent (and solely to the extent) of the aggregate amount of
cash actually distributed or which could have been distributed
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without restriction by such Subsidiary during such period to the Borrower
(including without limitation cash amounts which could have been generated as of
the end of the Calculation Period from the liquidation of Investments held
during such period by such Subsidiary; provided, that for purposes of this
clause (ii) only, such amounts shall be determined without regard to any
requirement of prior notice that would have been applicable to the liquidation
by the Borrower or any such Subsidiary of any such Investment, so long as,
except in the case of the Tersk Investment, such prior notice requirement did
not entail a notice period of longer than ninety (90) days), plus (iii) without
duplication, cash revenues of the Borrower, and plus (iv) cash interest expense
of the Borrower and on the SIG Notes, multiplied by the Borrower's federal
marginal income tax rate, less (v) without duplication, unreimbursed cash
operating expenses of the Borrower; provided any such reimbursement shall have
been made in cash to the Borrower, in each case calculated for the four
consecutive Fiscal Quarters immediately preceding the date of calculation, to
(b) the cash interest expense on Consolidated Funded Debt of the Borrower and
its Non-Insurance Subsidiaries for the next succeeding four consecutive Fiscal
Quarters (excluding cash interest expense of the Borrower on Preferred
Securities and on the Indebtedness of the type issued in connection with such
Preferred Securities).
"Cash Equivalents" shall mean (a) securities with maturities of six (6)
months or less from the date of acquisition issued or fully guaranteed or
insured by the United States Government or any agency thereof, (b) certificates
of deposit, eurodollar time deposits, overnight bank deposits, bankers'
acceptances and repurchase agreements of any Lender or any other commercial bank
whose unsecured long-term debt obligations are rated at least BBB- by Standard &
Poor's or Baa3 by Moody's having maturities of six (6) months or less from the
date of acquisition, and (c) commercial paper rated at least "A-2" by Standard &
Poor's or "P-2" by Moody's, or carrying an equivalent rating by a nationally
recognized rating agency, if both of the two named rating agencies cease
publishing ratings of investments.
"Change in Control" shall be deemed to have occurred at such times as:
(a) the Borrower ceases to own, free and clear of all Liens (other than Liens
created under the Borrower Pledge Agreement), at least 100% of the outstanding
shares of voting stock and voting power of RSL-Texas on a fully diluted basis
(other than as a result of any (i) merger of RSL-Texas into, or consolidation of
RSL-Texas with, RSL or (ii) liquidation or dissolution of RSL-Texas whereby all
of the capital stock and other equity interests of RSL owned by RSL-Texas
immediately prior to such liquidation or dissolution are distributed to the
Borrower); (b) except for the Persons referenced in clause (c) of this
definition, any Person, or two or more Persons, acting in concert, acquire
beneficial ownership (within the meaning of Rule 13d-3 of the Securities and
Exchange Commission under the Securities Exchange Act of 1934, as amended) of
40% or more of the voting power of the outstanding voting stock of the Borrower
on a fully diluted basis, (c) the Parent and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, together with
their respective Affiliates, cease to beneficially own (within the meaning of
Rule 13d-3 of the Securities and Exchange Commission under the Securities
Exchange Act of 1934, as amended) at least 33-1/3% of the voting power of the
outstanding voting stock of the Borrower on a fully diluted basis; or (d)
individuals who as of the Effective Date constitute the Borrower's Board of
Directors (together with any new director whose election by the Borrower's Board
of Directors or whose nomination for election by the Borrower's stockholders was
approved by a vote of at least two-thirds of the directors then still in office
who either were directors at the beginning of such period or whose election or
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nomination for election was previously so approved), for any reason, cease to
constitute a majority of the directors at any time then in office.
"Closing Date" shall mean the first date on which all conditions
precedent in Section 5.01 are satisfied or waived (or, in the case of Section
5.01(b), waived by the Person entitled to receive the applicable payment).
"Co-Arranger" shall mean Wachovia Securities, Inc., in its capacity as
joint lead arranger.
"Code" shall mean the Internal Revenue Code of 1986.
"Collateral" shall mean all of the collateral security described or
provided for in Article IV together with all property and/or rights on or in
which a Lien is now or hereafter granted by any Person to the Collateral Agent
(or to any agent, trustee or other party acting on behalf of the Collateral
Agent) for the benefit of the Lenders, pursuant to the Pledge Agreements or any
other instruments or documents provided for herein or delivered hereunder or in
connection herewith.
"Collateral Agent" shall mean Bank of America, N.A., in its capacity as
collateral agent.
"Commitment" shall mean, as to each Lender, its obligation to (a) make
Loans to the Borrower pursuant to Section 2.01, in an aggregate principal amount
at any time outstanding not to exceed the amount set forth opposite such
Lender's name on Schedule 2.01 or in the Assignment and Assumption pursuant to
which such Lender becomes a party hereto, as applicable, as such amount may be
adjusted from time to time in accordance with this Agreement.
"Compliance Certificate" shall mean a certificate substantially in the
form of Exhibit C.
"Consolidated Equity" shall mean, with respect to the Borrower, the sum
of (a) stockholders' equity of the Borrower and its Subsidiaries calculated on a
consolidated basis in accordance with GAAP, but excluding any unrealized gains
(losses) on securities as determined in accordance with FAS 115 or gains
(losses) on hedging transactions as determined in accordance with FAS 133 and
(b) the component of the capitalization reflected on the Borrower's consolidated
balance sheet constituting Preferred Securities, so long as such Preferred
Securities, the Indebtedness of the Borrower issued in connection with such
Preferred Securities, and the Guarantee, if any, of the Borrower incurred in
connection with the issuance of the Preferred Securities would not, in any case,
be included as a liability on the Borrower's consolidated balance sheet in
accordance with GAAP, as in effect on the Closing Date.
"Consolidated Funded Debt" shall mean, without duplication, the sum of
(a) all Borrowings hereunder, (b) Indebtedness as defined under clauses (a) and
(b) of the definition thereof, and (c) Guarantees of Indebtedness as defined in
clauses (a) and (b) of the definition of "Indebtedness", all as calculated on a
consolidated basis in accordance with GAAP.
"Consolidated Non-Insurance EBITDA" shall mean, for any Calculation
Period, Consolidated Non-Insurance Net Income for such period plus, to the
extent deducted in calculating Consolidated Non-Insurance Net Income for such
period, (i) interest expense on
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Consolidated Funded Debt of the Borrower's Non-Insurance Subsidiaries, (ii)
income taxes, (iii) depreciation, (iv) amortization and (v) write-downs for
other than temporary impairment in the value of Investments pursuant to FAS 115.
"Consolidated Non-Insurance Net Income" shall mean, for any Calculation
Period, the consolidated Net Income of the Borrower's Non-Insurance
Subsidiaries.
"Contractual Obligation" shall mean, as to any Person, any provision of
any security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Control" - see the definition of "Affiliate."
"Debt to Capital Ratio" shall mean, at any date of determination, the
ratio of (a) Consolidated Funded Debt to (b)(i) Consolidated Funded Debt, plus
(ii) Consolidated Equity of the Borrower.
"Debt Rating" shall mean, as of any date of determination, the rating
as determined by either Standard & Poor's or Moody's (collectively, the "Debt
Ratings") of the Borrower's non-credit-enhanced, senior unsecured long-term
debt; provided that if a Debt Rating is issued by each of the foregoing rating
agencies, then the higher of such Debt Ratings shall apply (with the Debt Rating
for Pricing Level I being the highest and the Debt Rating for Pricing Level V
being the lowest), unless there is a split in Debt Ratings of more than one
level, in which case the Pricing Level that is one level lower than the Pricing
Level of the higher Debt Rating shall apply. If for any reason such rating is
not available from Standard & Poor's or Moody's but is available from another
nationally recognized rating agency, such rating agency's equivalent rating
shall be applicable for the purpose hereof.
"Debtor Relief Laws" shall mean the Bankruptcy Code of the United
States, and all other liquidation, conservatorship, bankruptcy, assignment for
the benefit of creditors, moratorium, rearrangement, receivership, insolvency,
reorganization, or similar debtor relief Laws of the United States or other
applicable jurisdictions from time to time in effect and affecting the rights of
creditors generally.
"Default" shall mean any event or condition that has not been cured or
waived and constitutes an Event of Default or that, with the giving of any
notice, the passage of time or both, would be an Event of Default.
"Default Rate" shall mean an interest rate per annum equal to (a) in
the case of any Eurodollar Rate Loan, the interest rate otherwise applicable
thereto plus 2%; and (b) in the case of any other Obligation, the sum of (i) the
Applicable Rate for Base Rate Loans plus (ii) 2%; provided that the interest
rate applicable to any Obligation shall not at any time exceed the highest rate
permitted by applicable Law.
"Defaulting Lender" shall mean any Lender that (a) has failed to fund
any portion of the Loans required to be funded by it hereunder within one
Business Day of the date required to be funded by it hereunder, (b) has
otherwise failed to pay over to the Administrative Agent or any other Lender any
other amount required to be paid by it hereunder within one Business Day of
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the date when due, unless the subject of a good faith dispute, or (c) has been
deemed insolvent or become the subject of a bankruptcy or insolvency proceeding.
"Department" - see Section 6.05(a)(i).
"Dollar" and "$" shall mean lawful money of the United States.
"Eligible Assignee" - see Section 11.07(g).
"Environmental Laws" shall mean any and all Federal, state, local and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
governmental restrictions relating to pollution and the protection of the
environment or the release of any materials into the environment, including
those related to hazardous substances or wastes, air emissions and discharges to
waste or public systems.
"Environmental Liability" shall mean any liability, contingent or
otherwise (including any liability for damages, costs of environmental
remediation, fines, penalties or indemnities), of the Borrower, any other Loan
Party or any of their respective Subsidiaries directly or indirectly resulting
from or based upon (a) violation of any Environmental Law, (b) the generation,
use, handling, transportation, storage, treatment or disposal of any Hazardous
Materials, (c) exposure to any Hazardous Materials, (d) the release or
threatened release of any Hazardous Materials into the environment or (e) any
contract, agreement or other consensual arrangement pursuant to which liability
is assumed or imposed with respect to any of the foregoing.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974.
"ERISA Affiliate" shall mean any trade or business (whether or not
incorporated) under common control with the Borrower within the meaning of
Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for
purposes of provisions relating to Section 412 of the Code).
"ERISA Event" shall mean (a) a Reportable Event with respect to a
Pension Plan; (b) a withdrawal by the Borrower or any ERISA Affiliate from a
Pension Plan subject to Section 4063 of ERISA during a plan year in which it was
a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a
cessation of operations that is treated as such a withdrawal under Section
4062(e) of ERISA; (c) a complete or partial withdrawal by the Borrower or any
ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer
Plan is in reorganization; (d) the filing of a notice of intent to terminate,
the treatment of a Plan amendment as a termination under Sections 4041 or 4041A
of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension
Plan or Multiemployer Plan; (e) an event or condition which constitutes grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Pension Plan or Multiemployer Plan; or (f) the
imposition of any liability under Title IV of ERISA, other than for PBGC
premiums due but not delinquent under Section 4007 of ERISA, upon the Borrower
or any ERISA Affiliate.
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"Eurodollar Rate" shall mean for any Interest Period with respect to
any Eurodollar Rate Loan, a rate per annum determined by the Administrative
Agent pursuant to the following formula
IBOR
Eurodollar Rate = ------------------------------------
1.00 - Eurodollar Reserve Percentage
Where,
"Eurodollar Rate Loan" shall mean a Loan that bears interest at a rate
based on the Eurodollar Rate.
"Eurodollar Reserve Percentage" means, for any day during any Interest
Period, the reserve percentage (expressed as a decimal, carried out to five
decimal places) in effect on such day, whether or not applicable to any Lender,
under regulations issued from time to time by the FRB for determining the
maximum reserve requirement (including any emergency, supplemental or other
marginal reserve requirement) with respect to Eurocurrency funding (currently
referred to as "Eurocurrency liabilities"). The Eurodollar Rate for each
outstanding Eurodollar Rate Loan shall be adjusted automatically as of the
effective date of any change in the Eurodollar Reserve Percentage.
"Event of Default" - see Section 9.01.
"Existing Credit Agreements" shall mean the Credit Agreement dated as
of June 1, 2000 among the Borrower, Bank of America, N.A., as administrative
agent, and a syndicate of lenders, and the Fourth Amended and Restated Credit
Agreement dated as of June 1, 2000 among the Borrower, Bank of America, N.A., as
administrative agent, and a syndicate of lenders.
"Federal Funds Rate" shall mean, for any day, the rate per annum 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 on the Business Day next
succeeding such day; provided that (a) if such day is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such transactions on the
next preceding Business Day as so published on the next succeeding Business Day,
and (b) if no such rate is so published on such next succeeding Business Day,
the Federal Funds Rate for such day shall be the average rate (rounded upward,
if necessary, to a whole multiple of 1/100 of 1%) charged to Bank of America on
such day on such transactions as determined by the Administrative Agent.
"Fee Letter" shall mean the letter agreement dated October 10, 2002
among the Borrower, the Administrative Agent and the Arranger.
"Fiscal Quarter" or "FQ" shall mean any fiscal quarter of a Fiscal
Year.
"Fiscal Year" or "FY" shall mean any period of twelve consecutive
calendar months ending on December 31; references to a Fiscal Year with a number
corresponding to any calendar year (e.g., the "2002 Fiscal Year") refer to the
Fiscal Year ending on December 31 occurring during such calendar year.
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"Foreign Lender" - see Section 11.15(a)(i).
"FRB" shall mean the Board of Governors of the Federal Reserve System
of the United States.
"FRSL" shall mean First Reliance Standard Life Insurance Company, a New
York insurance company.
"GAAP" shall mean generally accepted accounting principles in the
United States set forth in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board or
such other principles as may be approved by a significant segment of the
accounting profession in the United States, that are applicable to the
circumstances as of the date of determination, consistently applied.
"Governmental Authority" shall mean any nation or government, any state
or other political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, administrative tribunal, central bank or other entity
exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government.
"Guarantee" shall mean, as to any Person, any (a) any obligation,
contingent or otherwise, of such Person guaranteeing or having the economic
effect of guaranteeing any Indebtedness or other obligation payable or
performable by another Person (the "primary obligor") in any manner, whether
directly or indirectly, and including any obligation of such Person, direct or
indirect, (i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness or other obligation, (ii) to purchase or lease
property, securities or services for the purpose of assuring the obligee in
respect of such Indebtedness or other obligation of the payment or performance
of such Indebtedness or other obligation, (iii) to maintain working capital,
equity capital or any other financial statement condition or liquidity or level
of income or cash flow of the primary obligor so as to enable the primary
obligor to pay such Indebtedness or other obligation, or (iv) entered into for
the purpose of assuring in any other manner the obligee in respect of such
Indebtedness or other obligation of the payment or performance thereof or to
protect such obligee against loss in respect thereof (in whole or in part), or
(b) any Lien on any assets of such Person securing any Indebtedness or other
obligation of any other Person, whether or not such Indebtedness or other
obligation is assumed by such Person. The amount of any Guarantee shall be
deemed to be an amount equal to the stated or determinable amount of the related
primary obligation, or portion thereof, in respect of which such Guarantee is
made or, if not stated or determinable, the maximum reasonably anticipated
liability in respect thereof as determined by the guaranteeing Person in good
faith. The term "Guarantee" as a verb has a corresponding meaning.
"Hazardous Materials" shall mean all explosive or radioactive
substances or wastes and all hazardous or toxic substances, wastes or other
pollutants, including petroleum or petroleum distillates, asbestos or
asbestos-containing materials, polychlorinated biphenyls, radon gas, infectious
or medical wastes and all other substances or wastes of any nature regulated
pursuant to any Environmental Law.
10
"IBOR" shall mean, for the applicable Interest Period, the rate of
interest per annum determined by the Administrative Agent as the rate at which
dollar deposits in the approximate amount of Bank of America's Eurodollar Rate
Loan for such Interest Period would be offered by Bank of America's Grand Cayman
Branch, Grand Cayman B.W.I. (or such other office as may be designated for such
purpose by Bank of America), to major banks in the offshore dollar interbank
market at their request at approximately 10:00 A.M. (Chicago time) two (2)
Business Days prior to the commencement of such Interest Period.
"IMR/AVR" shall mean, as to any of the Reliance Standard Insurance
Companies at a particular date, the interest maintenance reserve of such
Reliance Standard Insurance Companies, computed in accordance with SAP as
reported on line 9.4, page 3, column 1 of the Annual Statement, plus the asset
valuation reserve of such Reliance Standard Insurance Companies, computed in
accordance with SAP as reported on line 24.1, page 3, column 1 of the Annual
Statement.
"Indebtedness" shall mean, as to any Person at a particular time,
without duplication, all of the following, whether or not included as
indebtedness or liabilities in accordance with GAAP:
(a) all obligations of such Person for borrowed money and
all obligations of such Person evidenced by bonds, debentures, notes,
loan agreements or other similar instruments;
(b) all direct or contingent obligations of such Person
arising under letters of credit (including standby and commercial),
bankers' acceptances, bank guaranties, surety bonds and similar
instruments;
(c) net obligations of such Person under any Swap
Contract;
(d) all obligations of such Person to pay the deferred
purchase price of property or services (other than trade accounts
payable in the ordinary course of business);
(e) indebtedness (excluding prepaid interest thereon)
secured by a Lien on property owned or being purchased by such Person
(including indebtedness arising under conditional sales or other title
retention agreements), whether or not such indebtedness shall have been
assumed by such Person or is limited in recourse;
(f) obligations under capital leases and Synthetic Lease
Obligations; and
(g) all Guarantees of such Person in respect of any of
the foregoing.
For all purposes hereof, the Indebtedness of any Person shall include
the Indebtedness of any partnership or joint venture (other than a joint venture
that is itself a corporation or limited liability company) in which such Person
is a general partner or a joint venturer, unless such Indebtedness is expressly
made non-recourse to such Person. The amount of any net obligation under any
Swap Contract on any date shall be deemed to be the Swap Termination Value
thereof as of such date. The amount of any capital lease or Synthetic Lease
Obligation as of any date
11
shall be deemed to be the amount of Attributable Indebtedness in respect thereof
as of such date. Indebtedness of a Person shall not include Permitted
Transactions of the Person.
"Indemnified Liabilities" - see Section 11.05.
"Indemnitees" - see Section 11.05.
"Indenture" shall mean the Indenture, dated as of October 8, 1993,
between the Borrower and State Street Bank and Trust Company of Connecticut,
N.A. (successor to Shawmut Bank Connecticut, N.A.), as trustee, as the same may
be amended from time to time in accordance with the terms of this Agreement.
"Intercreditor Agreement" shall mean that certain Intercreditor
Agreement, dated as of the date hereof in the form of Exhibit F hereto.
"Interest Payment Date" shall mean, (a) as to any Eurodollar Rate Loan,
the last day of each Interest Period applicable to such Loan and the Maturity
Date; provided that if any Interest Period for a Eurodollar Rate Loan exceeds
three months, the respective dates that fall every three months after the
beginning of such Interest Period shall also be Interest Payment Dates; and (b)
as to any other Loan, the last Business Day of each March, June, September and
December and the Maturity Date.
"Interest Period" shall mean, as to each Eurodollar Rate Loan, the
period commencing on the date such Eurodollar Rate Loan is disbursed or
converted to or continued as a Eurodollar Rate Loan and ending on the date one,
two, three, six, nine or, if available, twelve months thereafter, as selected by
the Borrower in its Loan Notice; provided that:
(i) any Interest Period that would otherwise end on a day
that is not a Business Day shall be extended to the following Business
Day unless such following Business Day falls in another calendar month,
in which case such Interest Period shall end on the next 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 the calendar month at the
end of such Interest Period; and
(iii) no Interest Period shall extend beyond the scheduled
Maturity Date.
"Investment" shall mean, as to any Person, any direct or indirect
acquisition or investment by such Person, whether by means of (a) the purchase
or other acquisition of capital stock or other securities of another Person, or
(b) a loan, advance or capital contribution to, Guarantee or assumption of debt
of, deposit with or purchase or other acquisition of any other debt or equity
participation or interest in, another Person, including any partnership or joint
venture interest in such other Person, other than, in either case, pursuant to
an Acquisition. For purposes of covenant compliance, the amount of any
Investment shall be the amount actually invested, without adjustment for
subsequent increases or decreases in the value of such Investment.
12
"Investment Grade Preferred Stocks" shall mean preferred stocks which
are rated at least "NAIC P2" by the NAIC, "BBB-" by Standard & Poor's, "Baa3" by
Moody's, "BBB-" by Fitch Investor Services, Inc., or carrying an equivalent
rating by a nationally recognized rating agency, if each of the named rating
agencies cease publishing ratings of investments.
"Investment Grade Securities" shall mean non-equity securities which
are rated at least "NAIC 2" by the NAIC, "BBB-" by Standard & Poor's, "Baa3" by
Moody's, "BBB-" by Fitch Investor Services, Inc., or carrying an equivalent
rating by a nationally recognized rating agency, if each of the named rating
agencies cease publishing ratings of investments.
"IRS" shall mean the United States Internal Revenue Service.
"Laws" shall mean, collectively, all international, foreign, Federal,
state and local statutes, treaties, rules, guidelines, regulations, ordinances,
codes and administrative or judicial precedents or authorities, including the
interpretation or administration thereof by any Governmental Authority charged
with the enforcement, interpretation or administration thereof, and all
applicable administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental Authority,
in each case whether or not having the force of law.
"Lender" - see the introductory paragraph hereto.
"Lending Office" shall mean, as to any Lender, the office or offices of
such Lender described as such in such Lender's Administrative Questionnaire, or
such other office or offices as a Lender may from time to time specify in
writing to the Borrower and the Administrative Agent.
"Licenses" - see Section 6.24; individually, a "License".
"Lien" shall mean any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), charge, preference,
priority or other security interest or preferential arrangement of any kind or
nature whatsoever (including any conditional sale or other title retention
agreement and any financing lease having substantially the same economic effect
as any of the foregoing, but excluding the interest of a lessor under an
operating lease).
"Limited Partnership" shall mean an entity in which any Person holds a
Limited Partnership Investment.
"Limited Partnership Investments" shall mean, as to any Person,
Investments in (a) limited partnership interests by such Person in partnerships
with general partners other than the Borrower or its Affiliates or (b) any other
Person that is managed by an investment manager other than the Borrower or its
Affiliates which is engaged primarily in the business of making Investments and
performing related activities, in each case, excluding Investments by separate
accounts of the Reliance Standard Insurance Companies in such limited
partnership interests in the ordinary course of business. For purposes of this
Agreement, the Structured Notes shall be deemed to be Limited Partnership
Investments.
13
"Litigation" shall mean any litigation (including, without limitation,
any governmental proceeding or arbitration proceeding), tax audit or
investigative proceeding, claim, lawsuit, and/or investigation pending or
threatened against or involving the Borrower, any of its Subsidiaries or other
Affiliates or any of its or their businesses or operations.
"Loan" - see Section 2.01.
"Loan" shall mean an extension of credit by a Lender to the Borrower
under Article II in the form of a Loan.
"Loan Documents" shall mean this Agreement, each Note, the Fee Letter,
the Intercreditor Agreement and the Pledge Agreements.
"Loan Notice" shall mean a notice of (a) a borrowing of Loans, (b) a
conversion of Loans from one Type to the other, or (c) a continuation of
Eurodollar Rate Loans, pursuant to Section 2.02(a), which, if in writing, shall
be substantially in the form of Exhibit A.
"Loan Parties" shall mean, collectively, the Borrower and SIG Holdings.
"Material Adverse Change" or "Material Adverse Effect" shall mean any
change, event, action, condition or effect which individually or in the
aggregate (a) impairs the validity or enforceability of this Agreement, the
Notes, if any, or any other Related Document, or (b) subjects any officer of the
Borrower or any of its Subsidiaries to criminal liability which could reasonably
be expected to materially and adversely affect the Borrower, any of the Reliance
Standard Insurance Companies or Safety National, or the Borrower and its
Subsidiaries taken as a whole, or (c) materially and adversely affects the
consolidated business, operations, prospects or financial condition of the
Borrower and its Subsidiaries taken as a whole, or (d) impairs the ability of
the Borrower or any of its Subsidiaries to perform their respective obligations
under this Agreement or any of the Related Documents.
"Material Litigation" or "Material Litigation Development" shall mean
any Litigation, or development in any Litigation, as the case may be (a) which
involves this Agreement, any Related Document or other transactions contemplated
hereby or thereby, or (b) which could reasonably be expected to have a Material
Adverse Effect.
"Maturity Date" shall mean (a) December 16, 2005, as such date may be
extended pursuant to Section 2.12, or (b) such earlier date upon which all Loans
and other Obligations become due in accordance with the terms hereof.
"Moody's" shall mean ▇▇▇▇▇'▇ Investors Service, Inc. and any successor
thereto.
"Multiemployer Plan" shall mean any employee benefit plan of the type
described in Section 4001(a)(3) of ERISA to which the Borrower or any ERISA
Affiliate makes or is obligated to make, or during the preceding five plan years
has made or been obligated to make, contributions.
"NAIC" shall mean the National Association of Insurance Commissioners,
or any successor organization.
14
"Net Income" shall mean, for any Person for any Calculation Period, the
net income (or loss) of such Person for such Calculation Period as determined in
accordance with GAAP.
"Non-Insurance Subsidiary" shall mean a Subsidiary of the Borrower that
is not engaged in the business of assuming insurance or reinsurance risk, and as
of the date hereof, shall include all Subsidiaries of the Borrower other than
the Reliance Standard Insurance Companies, Safety National, Safety First and
Safety National Re.
"Note" shall mean a promissory note made by the Borrower in favor of a
Lender evidencing Loans made by such Lender, substantially in the form of
Exhibit B.
"Obligations" shall mean all advances to, and debts, liabilities,
obligations, covenants and duties of, any Loan Party arising under any Loan
Document or otherwise with respect to any Loan, whether direct or indirect
(including those acquired by assumption), absolute or contingent, due or to
become due, now existing or hereafter arising and including interest and fees
that accrue after the commencement by or against any Loan Party or any Affiliate
thereof of any proceeding under any Debtor Relief Laws naming such Person as the
debtor in such proceeding, regardless of whether such interest and fees are
allowed claims in such proceeding.
"Organization Documents" shall mean, (a) with respect to any
corporation, the certificate or articles of incorporation and the bylaws (or
equivalent or comparable constitutive documents with respect to any non-U.S.
jurisdiction); (b) with respect to any limited liability company, the
certificate or articles of formation or organization and operating agreement;
and (c) with respect to any partnership, joint venture, trust or other form of
business entity, the partnership, joint venture or other applicable agreement of
formation or organization and any agreement, instrument, filing or notice with
respect thereto filed in connection with its formation or organization with the
applicable Governmental Authority in the jurisdiction of its formation or
organization and, if applicable, any certificate or articles of formation or
organization of such entity.
"Other Senior Indebtedness" shall mean, collectively, the Senior Notes
and the SIG Notes.
"Other Taxes" - see Section 3.01(b).
"Outstanding Amount" shall mean on any date the aggregate outstanding
principal amount of Loans after giving effect to any borrowings and payments
occurring on such date.
"Parent" shall mean ▇▇▇▇▇▇▇▇▇▇ & Company, a New York limited
partnership.
"Participant" - see Section 11.07(d).
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"Pension Plan" means any "employee pension benefit plan" (as defined in
Section 3(2) of ERISA), other than a Multiemployer Plan, that is subject to
Title IV of ERISA and is sponsored or maintained by the Borrower or any ERISA
Affiliate or to which the Borrower or any ERISA Affiliate contributes or has an
obligation to contribute, or in the case of a multiple employer or
15
other plan described in Section 4064(a) of ERISA, has made contributions at any
time during the immediately preceding five plan years.
"Permitted Liens" - see Section 8.01.
"Permitted Transactions" shall mean (a) transactions in which an
investor sells U.S. Government Securities or mortgage-backed securities,
including, without limitation, securities issued by the Government National
Mortgage Association and the Federal Home Loan Mortgage Corporation, while
simultaneously contracting to repurchase the same or "substantially the same"
(as determined by the Public Securities Association and in accordance with GAAP)
securities for a later settlement, (b) transactions in which an investor lends
cash to a primary dealer and the primary dealer collateralizes the borrowing of
the cash with certain securities, (c) transactions in which an investor lends
securities to a primary dealer and the primary dealer collateralizes the
borrowing of the securities with cash collateral, and (d) transactions in which
an investor makes loans of securities to a broker dealer under an agreement
requiring such loans to be continuously secured by cash collateral or U.S.
Government Securities.
"Person" shall mean any natural person, corporation, limited liability
company, trust, joint venture, association, company, partnership, Governmental
Authority or other entity.
"Plan" shall mean any "employee benefit plan" (as such term is defined
in Section 3(3) of ERISA) established by the Borrower or, with respect to any
such plan that is subject to Section 412 of the Code or Title IV of ERISA, any
ERISA Affiliate.
"Pledge Agreements" shall mean, collectively, the Borrower Pledge
Agreement and the SIG Holdings Pledge Agreement.
"Preferred Securities" shall mean the 9.31% Capital Securities, Series
A of Delphi Funding L.L.C., and any other preferred securities issued by a
limited liability company, business trust or similar entity, all of the common
securities of which are owned by the Borrower and which is formed solely for the
purpose of issuing such preferred securities and investing the proceeds of such
issuance in debt securities of the Borrower; provided that the Borrower's
repayment obligations under such debt securities relating to any such other
preferred securities shall be subordinated to the Liabilities on terms
satisfactory to the Required Lenders.
"Pro Rata Share" shall mean, with respect to each Lender at any time, a
fraction (expressed as a percentage, carried out to the ninth decimal place),
the numerator of which is the amount of the Commitment of such Lender at such
time and the denominator of which is the amount of the Aggregate Commitments at
such time; provided that if the Commitments have been terminated, then the Pro
Rata Share of each Lender shall be determined based on the Pro Rata Share of
such Lender immediately prior to such termination and after giving effect to any
subsequent assignments made pursuant to the terms hereof. The initial Pro Rata
Share of each Lender is set forth opposite the name of such Lender on Schedule
2.01 or in the Assignment and Assumption pursuant to which such Lender becomes a
party hereto, as applicable.
"Qualification" shall mean, with respect to any certificate covering
any financial statements, a qualification to such certificate or financial
statements (such as a "subject to" or "except for" statement therein) (a)
resulting from a limitation on the scope of examination of
16
such financial statements or the underlying data, (b) as to the capability of
the Person whose financial statements are certified to continue operations as a
going concern, or (c) which could be eliminated by changes in financial
statements or notes thereto covered by such certificate (such as by the creation
of or increase in a reserve or a decrease in the carrying value of assets) and
which if so eliminated by the making of any such change and after giving effect
thereto would occasion a Default; provided, that neither of the following shall
constitute a Qualification: (i) a consistency exception relating to a change in
accounting principles with which the independent public accountants for the
Person whose financial statements are being certified have concurred; or (ii) a
qualification relating to the outcome or disposition of threatened Litigation,
pending Litigation being contested in good faith, pending or threatened claims
or contingencies which cannot be determined with sufficient certainty to permit
such financial statements to be qualified.
"Reference Departments" shall mean the Department of the State of
Illinois, in the case of RSL, the State of Missouri, in the case of Safety
National, the State of New York, in the case of FRSL and the State of Texas, in
the case of RSL-Texas.
"Register" - see Section 11.07(c).
"Reinsurance Agreements" shall mean any agreement, contract, treaty,
certificate or other arrangement (other than a Surplus Relief Reinsurance
Agreement) by which any of the Reliance Standard Insurance Companies or Safety
National agrees to transfer or cede to another insurer all or part of the
liability assumed or assets held by any one of the Reliance Standard Insurance
Companies or Safety National under a policy or policies of insurance or under a
reinsurance agreement assumed by any one of the Reliance Standard Insurance
Companies. Reinsurance Agreements shall include, but not be limited to, any
agreement, contract, treaty, certificate or other arrangement (other than a
Surplus Relief Reinsurance Agreement) which is treated as such by the applicable
Department or Reference Department.
"Related Documents" shall mean the Notes, if any, the Pledge
Agreements, the Tax Sharing Agreements, the Intercreditor Agreement and any and
all other documents or instruments furnished or required to be furnished
pursuant to Article IV or Article V, as the same may be amended or modified from
time to time.
"Reliance Standard Insurance Companies" shall mean RSL-Texas, RSL and
FRSL.
"Reportable Event" shall mean any of the events set forth in Section
4043(c) of ERISA, other than events for which the 30 day notice period has been
waived.
"Representatives" - see Section 11.08.
"Required Lenders" shall mean, as of any date of determination, Lenders
having more than 50% of the Aggregate Commitments or, if the Commitments have
been terminated, Lenders holding in the aggregate more than 50% of the Total
Outstandings; provided that the Commitment of, and the portion of the Total
Outstandings held or deemed held by, any Defaulting Lender shall be excluded for
purposes of making a determination of Required Lenders.
17
"Responsible Officer" shall mean, with respect to any Person, the chief
executive officer, the president, the chief financial officer, the treasurer or
any assistant treasurer of such Person. Any document delivered hereunder that is
signed by a Responsible Officer of a Loan Party shall be conclusively presumed
to have been authorized by all necessary corporate, partnership and/or other
action on the part of such Loan Party and such Responsible Officer shall be
conclusively presumed to have acted on behalf of such Loan Party.
"Risk Assets" shall mean fixed income securities which are not
Investment Grade Securities, common stock (other than capital stock of any
Federal Home Loan Bank), preferred stock which is not an Investment Grade
Preferred Stock, mortgage loans (other than mortgage loans meeting the
definition of U.S. Government Securities) and real estate (other than the
property at which RSL's primary administrative offices may be located and the
property known as 2029 and ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ or any
other building and site at which Safety National's primary administrative office
may be located); provided, however that the term "Risk Assets" shall not in any
case include Investments in the Borrower or its Subsidiaries.
"Risk-Based Capital Ratio" shall mean, with respect to any insurance
company, the ratio of Adjusted Capital of such insurance company to the Company
Action Level of such insurance company (as determined by the NAIC or the
applicable Reference Department). In the event that there is a conflict between
the Risk-Based Capital formulas adopted by the NAIC and the applicable Reference
Department, the calculation of the Reference Department shall govern.
"RSL" shall mean Reliance Standard Life Insurance Company, an Illinois
insurance company.
"RSL-Texas" shall mean Reliance Standard Life Insurance Company of
Texas, a Texas insurance company.
"Safety First" shall mean Safety First Insurance Company, an Illinois
insurance company.
"Safety National" shall mean Safety National Casualty Corporation, a
Missouri insurance corporation.
"SAP" shall mean, as to any insurance company, the statutory accounting
practices prescribed or permitted by the Reference Department.
"SEC" shall mean the Securities and Exchange Commission, or any
Governmental Authority succeeding to any of its principal functions.
"Senior Notes" shall mean the $85,000,000 original principal amount of
8% Senior Notes due 2003 issued by the Borrower pursuant to the Indenture, as
such notes may be amended or modified in accordance with the terms of this
Agreement.
"SIG Holdings" shall mean SIG Holdings, Inc., a Delaware corporation,
formerly known as SIG Holdings Acquisition Corp.
18
"SIG Holdings Pledge Agreement" - see Section 4.01(c).
"SIG Note Agreement" shall mean that certain SIG Note Agreement, dated
as of May 20, 1994, among SIG Holdings and the Purchasers named in Schedule I
thereto, as the same may be amended or modified in accordance with the terms of
this Agreement.
"SIG Notes" shall mean the $45,000,000 original principal amount 8.50%
Senior Secured Notes due May 20, 2003 issued pursuant to the SIG Note Agreement
and assumed by SIG Holdings, as such notes may be amended or modified in
accordance with the terms of this Agreement.
"SIG Notes Pledge Agreement" shall mean that certain Pledge Agreement,
dated as of May 20, 1994, between SIG Holdings and The Chase Manhattan Bank,
N.A., as collateral agent, as the same may be amended or modified in accordance
with the terms of this Agreement.
"Solvent", as to any Person on a particular date, shall mean that on
such date (a) the fair value of the property of such Person is greater than the
total amount of liabilities, including, without limitation, contingent
liabilities, of such Person, (b) the present fair salable value of the assets of
such Person is not less than the amount that will be required to pay the
probable liabilities of such Person and its debts as they become absolute and
matured, (c) such Person is able to realize upon its assets and pay its debts
and other obligations, Guarantees and other commitments as they mature in the
normal course of business, (d) such Person does not intend to, and does not
believe that it will, incur debts or liabilities beyond such Person's ability to
pay as such debts and liabilities mature, (e) such Person is not engaged in
business or a transaction, and is not about to engage in business or a
transaction, for which such Person's property would constitute unreasonably
small capital after giving due consideration to the prevailing practice in the
industry in which such Person is engaged and (f) such Person has not made any
transfer or incurred any obligation, with the intent to hinder, delay or defraud
either present or future creditors of such Person. For the purposes of this
definition, in computing the amount of any Guarantee at any time, it is intended
that such Guarantee will be computed at the amount which, in light of all the
facts and circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability.
"Standard & Poor's" shall mean Standard & Poor's Ratings Services, a
division of The McGraw Hill Corporation, Inc., and any successor thereto.
"Statutory Financial Statements" - see Section 6.05(a)(i).
"Statutory Liabilities" shall mean, as to any of the Reliance Standard
Insurance Companies as of any date, the amount reported on line 26, page 3,
column 1 of the Annual Statement of each of the Reliance Standard Insurance
Companies and, as to Safety National as of any date, the amount reported on line
23, page 3, column 1 of the Annual Statement of Safety National, or, in each
case, an amount determined in a consistent manner for any date other than one as
of which an Annual Statement is prepared.
"Structured Notes" shall mean the Secured Portfolio Notes, Series
1998-1B issued in 1998 by Bankers Trust Corporation (formerly Bankers Trust New
York Corporation) to certain Subsidiaries of the Borrower.
19
"Subsidiary" of a Person shall mean a corporation, partnership, joint
venture, limited liability company or other business entity of which a majority
of the shares of securities or other interests having ordinary voting power for
the election of members of the board of directors or other governing body (other
than securities or interests having such power only by reason of the happening
of a contingency) are at the time beneficially owned, or the management of which
is otherwise controlled, directly, or indirectly through one or more
intermediaries, or both, by such Person. Unless otherwise specified, all
references herein to a "Subsidiary" or to "Subsidiaries" shall refer to a
Subsidiary or Subsidiaries of the Borrower; provided, however, that the term
"Subsidiary" shall not refer to any Person where equity interests are held
solely by separate accounts of the Reliance Standard Insurance Companies in the
ordinary course of business.
"Surplus Relief Reinsurance Agreements" shall mean any agreement
whereby any of the Reliance Standard Insurance Companies or Safety National
assumes or cedes business under a reinsurance agreement that would be considered
a "financing-type" reinsurance agreement as determined in accordance with the
Statement of Financial Accounting Standards 113 or any successor thereto.
"Swap Contract" shall mean (a) any and all rate swap transactions,
basis swaps, credit derivative transactions, forward rate transactions,
commodity swaps, commodity options, forward commodity contracts, equity or
equity index swaps or options, bond or bond price or bond index swaps or options
or forward bond or forward bond price or forward bond index transactions,
interest rate options, forward foreign exchange transactions, cap transactions,
floor transactions, collar transactions, currency swap transactions,
cross-currency rate swap transactions, currency options, spot contracts, or any
other similar transactions or any combination of any of the foregoing (including
any options to enter into any of the foregoing), whether or not any such
transaction is governed by or subject to any master agreement, and (b) any and
all transactions of any kind, and the related confirmations, which are subject
to the terms and conditions of, or governed by, any form of master agreement
published by the International Swaps and Derivatives Association, Inc., any
International Foreign Exchange Master Agreement, or any other master agreement
(any such master agreement, together with any related schedules, a "Master
Agreement"), including any such obligations or liabilities under any Master
Agreement.
"Swap Termination Value" shall mean, in respect of any one or more Swap
Contracts, after taking into account the effect of any legally enforceable
netting agreement relating to such Swap Contracts, (a) for any date on or after
the date such Swap Contracts have been closed out and termination value(s)
determined in accordance therewith, such termination value(s), and (b) for any
date prior to the date referenced in clause (a), the amount(s) determined as the
▇▇▇▇-to-market value(s) for such Swap Contracts, as determined based upon one or
more mid-market or other readily available quotations provided by any recognized
dealer in such Swap Contracts (which may include a Lender or any Affiliate of a
Lender).
"Synthetic Lease Obligation" shall mean the monetary obligation of a
Person under (a) a so-called synthetic, off-balance sheet or tax retention
lease, or (b) an agreement for the use or possession of property creating
obligations that do not appear on the balance sheet of such Person but which,
upon the insolvency or bankruptcy of such Person, would be characterized as the
indebtedness of such Person (without regard to accounting treatment).
20
"Tax Returns and Reports" shall mean all returns, reports and
information required to be filed with any Governmental Authority with regard to
taxes.
"Tax Sharing Agreements" shall mean that certain Tax Preparation and
Allocation Agreement, dated February 7, 1990, between RSL and RSL-Texas and that
certain Tax Allocation Agreement among the Borrower, certain of its
Non-Insurance Subsidiaries, SIG and Safety National, dated as of December 5,
1996, as amended, certified copies of which have been delivered to the
Administrative Agent, and any other similar agreement entered into by the
Borrower, any of the Reliance Standard Insurance Companies or Safety National
from time to time, with the approval of the Administrative Agent (which approval
shall not be unreasonably withheld), as such agreements may be amended or
modified or superseded from time to time as permitted by this Agreement.
"Taxes" - see Section 3.01(a).
"Tersk Investment" shall mean the Investment by the Borrower and
certain Subsidiaries of the Borrower in equity interests and notes of Tersk LLC,
a Delaware limited liability company.
"Threshold Amount" shall mean $5,000,000.
"Total Outstandings" shall mean the aggregate Outstanding Amount of all
Loans.
"Type" shall mean, with respect to a Loan, its character as a Base Rate
Loan or a Eurodollar Rate Loan.
"Unfunded Pension Liability" shall mean the excess of a Pension Plan's
benefit liabilities under Section 4001(a)(16) of ERISA, over the current value
of that Pension Plan's assets, determined in accordance with the assumptions
used for funding the Pension Plan pursuant to Section 412 of the Code for the
applicable plan year.
"United States" and "U.S." mean the United States of America.
"U.S. Government Securities" shall mean obligations of, or obligations
guaranteed as to principal and interest by, the United States Government or any
agency or instrumentality thereof.
1.02 OTHER INTERPRETIVE PROVISIONS. With reference to this Agreement
and each other Loan Document, unless otherwise specified herein or in such other
Loan Document:
(a) The meanings of defined terms are equally applicable to the
singular and plural forms of the defined terms.
(b) (i) The words "herein," "hereto," "hereof" and
"hereunder" and words of similar import when used in any Loan Document shall
refer to such Loan Document as a whole and not to any particular provision
thereof.
(ii) Article, Section, Exhibit and Schedule references are
to the Loan Document in which such reference appears.
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(iii) The term "including" is by way of example and not
limitation. The term "documents" includes any and all instruments,
documents, agreements, certificates, notices, reports, financial
statements and other writings, however evidenced, whether in physical
or electronic form.
(c) In the computation of periods of time from a specified date to
a later specified date, the word "from" means "from and including;" the words
"to" and "until" each mean "to but excluding;" and the word "through" means "to
and including."
(d) Section headings herein and in the other Loan Documents are
included for convenience of reference only and shall not affect the
interpretation of this Agreement or any other Loan Document.
1.03 ACCOUNTING TERMS. (a) All accounting terms not specifically or
completely defined herein shall be construed in conformity with, and all
financial data (including financial ratios and other financial calculations)
required to be submitted pursuant to this Agreement shall be prepared in
conformity with, GAAP applied on a consistent basis, as in effect from time to
time, applied in a manner consistent with that used in preparing the Audited
Financial Statements, except as otherwise specifically prescribed herein.
(b) If at any time any change in GAAP would affect the computation
of any financial ratio or requirement or the application of any provision set
forth in any Loan Document, and either the Borrower or the Required Lenders
shall so request, the Administrative Agent, the Lenders and the Borrower shall
negotiate in good faith to amend such ratio, requirement or provision to
preserve the original intent thereof in light of such change in GAAP (subject to
the approval of the Required Lenders); provided that, until so amended, (i) such
ratio, requirement or provision shall continue to be computed or applied in
accordance with GAAP prior to such change therein and (ii) the Borrower shall
provide to the Administrative Agent and the Lenders financial statements and
other documents required under this Agreement or as reasonably requested
hereunder setting forth a reconciliation between calculations of such ratio or
requirement made before and after giving effect to such change in GAAP.
1.04 ROUNDING. Any financial ratio required to be maintained by the
Borrower pursuant to this Agreement shall be calculated by dividing the
appropriate component by the other component, carrying the result to one place
more than the number of places by which such ratio is expressed herein and
rounding the result up or down to the nearest number (with a rounding-up if
there is no nearest number).
1.05 REFERENCES TO AGREEMENTS AND LAWS. Unless otherwise expressly
provided herein, (a) references to Organization Documents, agreements (including
the Loan Documents) and other contractual instruments shall be deemed to include
all subsequent amendments, restatements, extensions, supplements and other
modifications thereto, but only to the extent that such amendments,
restatements, extensions, supplements and other modifications are not prohibited
by any Loan Document; and (b) references to any Law shall include all statutory
and regulatory provisions consolidating, amending, replacing, supplementing or
interpreting such Law.
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1.06 TIMES OF DAY. Unless otherwise specified, all references
herein to times of day shall be references to Eastern time (daylight or
standard, as applicable).
ARTICLE II
THE COMMITMENTS AND LOANS
2.01 LOANS. Subject to the terms and conditions set forth herein,
each Lender severally agrees to make loans (each a "Loan") to the Borrower from
time to time, on any Business Day during the Availability Period, in an
aggregate amount not to exceed at any time outstanding the amount of such
Lender's Commitment; provided that after giving effect to any Borrowing, (i) the
Total Outstandings shall not exceed the Aggregate Commitments, and (ii) the
aggregate Outstanding Amount of the Loans of any Lender shall not exceed the
amount of such Lender's Commitment. Within the foregoing limits, and subject to
the other terms and conditions hereof, the Borrower may borrow under this
Section 2.01, prepay under Section 2.03 and reborrow under this Section 2.01.
Loans may be Base Rate Loans or Eurodollar Rate Loans.
2.02 BORROWINGS, CONVERSIONS AND CONTINUATIONS OF LOANS.
(a) Each Borrowing, each conversion of Loans from one Type to the
other and each continuation of Eurodollar Rate Loans shall be made upon the
Borrower's irrevocable notice to the Administrative Agent, which may be given by
telephone. Each such notice must be received by the Administrative Agent not
later than 11:00 a.m. (i) two Business Days prior to the requested date of any
borrowing of, conversion of or to or continuation of Eurodollar Rate Loans, and
(ii) on the requested date of any borrowing of Base Rate Loans. Each telephonic
notice by the Borrower pursuant to this Section 2.02(a) must be confirmed
promptly by delivery to the Administrative Agent of a written Loan Notice,
appropriately completed and signed by a Responsible Officer of the Borrower.
Each borrowing of, conversion to or continuation of Eurodollar Rate Loans shall
be in a principal amount of $1,000,000 or a higher integral multiple of
$1,000,000. Each borrowing of or conversion to Base Rate Loans shall be in a
principal amount of $500,000 or a higher integral multiple of $100,000. Each
Loan Notice (whether telephonic or written) shall specify (i) whether the
Borrower is requesting a Borrowing, a conversion of Loans from one Type to the
other, or a continuation of Eurodollar Rate Loans, (ii) the requested date of
the borrowing, conversion or continuation, as the case may be (which shall be a
Business Day), (iii) the principal amount of Loans to be borrowed, converted or
continued, (iv) the Type of Loans to be borrowed or continued or to which
existing Loans are to be converted, and (v) if applicable, the duration of the
Interest Period with respect thereto. If the Borrower fails to specify a Type of
Loan in a Loan Notice or if the Borrower fails to give a timely notice
requesting a continuation, then the applicable Loans shall be made as, or
converted to, Base Rate Loans. Any such automatic conversion to Base Rate Loans
shall be effective as of the last day of the Interest Period then in effect with
respect to the applicable Eurodollar Rate Loans. If the Borrower requests a
borrowing of, conversion to or continuation of Eurodollar Rate Loans in a Loan
Notice, but fails to specify an Interest Period, it will be deemed to have
specified an Interest Period of one month.
(b) Following receipt of a Loan Notice, the Administrative Agent
shall promptly notify each Lender of the amount of its Pro Rata Share of the
applicable Loans, and if no timely notice of a continuation is provided by the
Borrower, the Administrative Agent shall notify each
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Lender of the details of any automatic conversion to Base Rate Loans described
in the preceding clause. In the case of a Borrowing, each Lender shall make the
amount of its Loan available to the Administrative Agent in immediately
available funds at the Administrative Agent's Office not later than 1:00 p.m. on
the Business Day specified in the applicable Loan Notice. So long as the
Administrative Agent has not received notice that the applicable conditions set
forth in Article V have not been satisfied, the Administrative Agent shall make
all funds so received available to the Borrower in like funds as received by the
Administrative Agent either by (i) crediting the account of the Borrower on the
books of Bank of America with the amount of such funds or (ii) wire transfer of
such funds, in each case in accordance with instructions provided to (and
reasonably acceptable to) the Administrative Agent by the Borrower.
(c) Except as otherwise provided herein, a Eurodollar Rate Loan
may be continued or converted only on the last day of an Interest Period for
such Eurodollar Rate Loan. During the existence of a Default, no Loans may be
requested as, converted to or continued as Eurodollar Rate Loans without the
consent of the Required Lenders.
(d) The Administrative Agent shall promptly notify the Borrower
and the Lenders of the interest rate applicable to any Interest Period for
Eurodollar Rate Loans upon determination of such interest rate. Each
determination of an applicable Eurodollar Rate by the Administrative Agent shall
be conclusive in the absence of manifest error. At any time that Base Rate Loans
are outstanding, the Administrative Agent shall notify the Borrower and the
Lenders of any change in Bank of America's prime rate used in determining the
Base Rate promptly following the public announcement of such change.
(e) After giving effect to any borrowing, conversion or
continuation of Loans, there shall not be more than ten Interest Periods in
effect.
2.03 PREPAYMENTS.
The Borrower may, upon notice to the Administrative Agent, from time to
time voluntarily prepay Loans in whole or in part without premium or penalty;
provided that (i) such notice must be received by the Administrative Agent not
later than 11:00 a.m. (A) three Business Days prior to any date of prepayment of
Eurodollar Rate Loans and (B) on the date of prepayment of Base Rate Loans; (ii)
any prepayment of Eurodollar Rate Loans shall be in a principal amount of
$1,000,000 or a higher integral multiple of $500,000; and (ii) any prepayment of
Base Rate Loans shall be in a principal amount of $500,000 or a higher integral
multiple of $100,000 (or the entire principal amount thereof then outstanding).
Each such notice shall specify the date and amount of such prepayment and the
Type(s) of Loans to be prepaid. The Administrative Agent will promptly notify
each Lender of its receipt of each such notice, and of the amount of such
Lender's Pro Rata Share of the applicable prepayment. If such a notice is given
by the Borrower, the payment amount specified in such notice shall be due and
payable on the date specified therein. Any prepayment of a Eurodollar Rate Loan
shall be accompanied by all accrued interest thereon, together with any
additional amounts required pursuant to Section 3.05. Each such prepayment shall
be applied to the Loans of the Lenders in accordance with their respective Pro
Rata Shares.
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2.04 TERMINATION OR REDUCTION OF COMMITMENTS.
The Borrower may, upon notice to the Administrative Agent, terminate
the Aggregate Commitment or from time to time permanently reduce the Aggregate
Commitments; provided that (i) any such notice shall be received by the
Administrative Agent not later than 11:00 a.m. three Business Days prior to the
date of termination or reduction, (ii) any partial reduction shall be in an
aggregate amount of $2,000,000 or a higher integral multiple of $1,000,000 and
(ii) the Borrower may not reduce the Aggregate Commitments to an amount less
than the Total Outstandings. The Administrative Agent will promptly notify the
Lenders of its receipt of any notice of termination or reduction of the
Aggregate Commitments. Any reduction of the Aggregate Commitments shall be
applied to the Commitment of each Lender according to its Pro Rata Share. All
commitment and utilization fees accrued until the effective date of any
termination of the Aggregate Commitments shall be paid on the effective date of
such termination.
Concurrently with the issuance by the Borrower of unsecured senior or
subordinated debt obligations evidenced by bonds, debentures, notes or similar
instruments (not including the Obligations) in an aggregate principal amount of
at least $75,000,000, the Aggregate Commitment will be reduced to $100,000,000.
Such reduction will be applied to the Commitments of each Lender according to
its Pro Rata Share. The Borrower shall upon such reduction prepay the Loans to
the extent such Loans exceed the reduced Aggregate Commitments.
2.05 REPAYMENT OF LOANS. The Borrower shall repay all outstanding
Loans on the Maturity Date.
2.06 INTEREST.
(a) Subject to the provisions of clause (b) below, (i) each
Eurodollar Rate Loan shall bear interest on the outstanding principal amount
thereof for each Interest Period therefor at a rate per annum equal to the
Applicable Rate for a Eurodollar Rate Loan and for such Interest Period; and
(ii) each Base Rate Loan shall bear interest on the outstanding principal amount
thereof at a rate per annum equal to the Applicable Rate for a Base Rate Loan
from time to time in effect.
(b) If any amount payable by the Borrower under any Loan Document
is not paid when due (without regard to any applicable grace period), whether at
stated maturity, by acceleration or otherwise, such amount shall (to the extent
permitted by applicable Law) thereafter bear interest at the Default Rate from
time to time in effect. Furthermore, upon request of the Required Lenders, while
any Event of Default exists, all outstanding Obligations shall (to the extent
permitted by applicable Law) bear interest at the Default Rate from time to time
in effect. Accrued and unpaid interest on past due amounts (including interest
on past due interest) shall be due and payable upon demand.
(c) Interest on each Loan shall be due and payable in arrears on
each Interest Payment Date applicable thereto and at such other times as may be
specified herein. Interest hereunder shall be due and payable in accordance with
the terms hereof before and after
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judgment and before and after the commencement of any proceeding under any
Debtor Relief Law.
2.07 FEES.
(a) Commitment Fee. The Borrower shall pay to the Administrative
Agent for the account of each Lender in accordance with its Pro Rata Share, a
commitment fee equal to the Applicable Rate for such fee times the actual daily
amount by which the Aggregate Commitments exceed the Total Outstandings. The
commitment fee shall accrue at all times during the Availability Period,
including at any time during which one or more of the conditions in Article V is
not met, and shall be due and payable quarterly in arrears on the last Business
Day of each March, June, September and December and on the Maturity Date. The
commitment fee shall be calculated quarterly in arrears, and if there is any
change in the Applicable Rate for such fee during any quarter, the actual daily
amount shall be computed and multiplied by the Applicable Rate separately for
each period during such quarter that such Applicable Rate was in effect.
(b) Utilization Fee. The Borrower shall pay to the Administrative
Agent, for the account of each Lender in accordance with its Pro Rata Share, a
utilization fee of 0.25% (or, if the Aggregate Commitments are less than or
equal to $100,000,000, 0.125%) per annum times the Total Outstandings on each
day that the Total Outstandings exceed 50% of the Aggregate Commitments. The
utilization fee shall be due and payable quarterly in arrears on the last
Business Day of each March, June, September and December and on the Maturity
Date. The utilization fee shall be calculated quarterly in arrears. The
utilization fee shall accrue at all times, including at any time during which
one or more of the conditions in Article V is not met.
(c) Other Fees. (i) The Borrower shall pay to the Arranger and the
Administrative Agent, for their own respective accounts, fees in the amounts and
at the times specified in the Fee Letter. Such fees shall be fully earned when
paid and shall not be refundable for any reason whatsoever.
(ii) The Borrower shall pay to the Administrative Agent,
for the account of each Lender, an upfront fee on the Closing Date in
the amount previously agreed to by the Borrower and such Lender.
Upfront fees shall be fully earned when paid and shall not be
refundable for any reason whatsoever.
2.08 COMPUTATION OF INTEREST AND FEES. All computations of interest
for Base Rate Loans when the Base Rate is determined by Bank of America's "prime
rate" shall be made on the basis of a year of 365 or 366 days, as the case may
be, and actual days elapsed. All other computations of fees and interest shall
be made on the basis of a 360-day year and actual days elapsed (which results in
more fees or interest, as applicable, being paid than if computed on the basis
of a 365-day year). Interest shall accrue on each Loan for the day on which the
Loan is made, and shall not accrue on a Loan, or any portion thereof, for the
day on which the Loan or such portion is paid, provided that any Loan that is
repaid on the same day on which it is made shall, subject to Section 2.10(a),
bear interest for one day.
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2.09 EVIDENCE OF DEBT. The Loans made by each Lender shall be
evidenced by one or more accounts or records maintained by such Lender and by
the Administrative Agent in the ordinary course of business. The accounts or
records maintained by the Administrative Agent and each Lender shall be
conclusive absent manifest error of the amount of the Loans made by the Lenders
to the Borrower and the interest and payments thereon. Any failure to so record
or any error in doing so shall not, however, limit or otherwise affect the
obligation of the Borrower hereunder to pay any amount owing with respect to the
Obligations. In the event of any conflict between the accounts and records
maintained by any Lender and the accounts and records of the Administrative
Agent in respect of such matters, the accounts and records of the Administrative
Agent shall control in the absence of manifest error. Upon the request of any
Lender made through the Administrative Agent, the Borrower shall execute and
deliver to such Lender (through the Administrative Agent) a Note, which shall
evidence such Lender's Loans in addition to such accounts or records. Each
Lender may attach schedules to its Note and endorse thereon the date, Type (if
applicable), amount and maturity of its Loans and payments with respect thereto.
2.10 PAYMENTS GENERALLY.
(a) All payments to be made by the Borrower hereunder shall be
made without condition or deduction for any counterclaim, defense, recoupment or
setoff. Except as otherwise expressly provided herein, all payments by the
Borrower hereunder shall be made to the Administrative Agent, for the account of
the Lenders to which such payment is owed, at the Administrative Agent's Office
in Dollars and in immediately available funds not later than 2:00 p.m. on the
date specified herein. The Administrative Agent will promptly distribute to each
Lender its Pro Rata Share (or other applicable share as provided herein) of such
payment in like funds as received by the Administrative Agent. All payments
received by the Administrative Agent after 2:00 p.m. shall be deemed received on
the next succeeding Business Day and any applicable interest or fee shall
continue to accrue.
(b) If any payment to be made by the Borrower shall come due on a
day other than a Business Day, payment shall be made on the next following
Business Day, and such extension of time shall be reflected in computing
interest or fees, as the case may be.
(c) Unless the Borrower or any Lender has notified the
Administrative Agent, prior to the date any payment is required to be made by it
to the Administrative Agent hereunder, that the Borrower or such Lender, as the
case may be, will not make such payment, the Administrative Agent may assume
that the Borrower or such Lender, as the case may be, has timely made such
payment and may (but shall not be so required to), in reliance thereon, make
available a corresponding amount to the Person entitled thereto. If and to the
extent that such payment was not in fact made to the Administrative Agent in
immediately available funds, then:
(i) if the Borrower failed to make such payment, each
Lender shall forthwith on demand repay to the Administrative Agent the
portion of such assumed payment that was made available to such Lender
in immediately available funds, together with interest thereon in
respect of each day from and including the date such amount was made
available by the Administrative Agent to such Lender to the date such
amount is repaid to
27
the Administrative Agent in immediately available funds at the Federal
Funds Rate from time to time in effect; and
(ii) if any Lender failed to make such payment, such
Lender shall forthwith on demand pay to the Administrative Agent the
amount thereof in immediately available funds, together with interest
thereon for the period from the date such amount was made available by
the Administrative Agent to the Borrower to the date such amount is
recovered by the Administrative Agent (the "Compensation Period") at a
rate per annum equal to the Federal Funds Rate from time to time in
effect. If such Lender pays such amount to the Administrative Agent,
then such amount shall constitute such Lender's Loan included in the
applicable Borrowing. If such Lender does not pay such amount forthwith
upon the Administrative Agent's demand therefor, the Administrative
Agent may make a demand therefor upon the Borrower, and the Borrower
shall pay such amount to the Administrative Agent, together with
interest thereon for the Compensation Period at a rate per annum equal
to the rate of interest applicable to the applicable Borrowing. Nothing
herein shall be deemed to relieve any Lender from its obligation to
fulfill its Commitment or to prejudice any rights which the
Administrative Agent or the Borrower may have against any Lender as a
result of any default by such Lender hereunder.
A notice of the Administrative Agent to any Lender or the Borrower with
respect to any amount owing under this clause (c) shall be conclusive, absent
manifest error.
(d) If any Lender makes available to the Administrative Agent
funds for any Loan to be made by such Lender as provided in the foregoing
provisions of this Article II, and such funds are not made available to the
Borrower by the Administrative Agent because the conditions to such Loan set
forth in Article V are not satisfied or waived in accordance with the terms
hereof, the Administrative Agent shall promptly return such funds (in like funds
as received from such Lender) to such Lender, without interest.
(e) The obligations of the Lenders hereunder to make Loans are
several and not joint. The failure of any Lender to make any Loan shall not
relieve any other Lender of its corresponding obligation to do so on such date,
and no Lender shall be responsible for the failure of any other Lender to so
make its Loan or purchase any participation.
(f) Nothing herein shall be deemed to obligate any Lender to
obtain the funds for any Loan in any particular place or manner or to constitute
a representation by any Lender that it has obtained or will obtain the funds for
any Loan in any particular place or manner.
2.11 SHARING OF PAYMENTS. If, other than as expressly provided
elsewhere herein, any Lender shall obtain on account of the Loans made by it any
payment (whether voluntary, involuntary, through the exercise of any right of
set-off, or otherwise) in excess of its ratable share (or other share
contemplated hereunder) thereof, such Lender shall immediately (a) notify the
Administrative Agent of such fact and (b) purchase from the other Lenders such
participations in the Loans made by them as shall be necessary to cause such
purchasing Lender to share the excess payment in respect of such Loans or such
participations, as the case may be, pro rata with each of them; provided that if
all or any portion of such excess payment is
28
thereafter recovered from the purchasing Lender under any of the circumstances
described in Section 11.06 (including pursuant to any settlement entered into by
the purchasing Lender in its discretion), such purchase shall to that extent be
rescinded and each other Lender shall repay to the purchasing Lender the
purchase price paid therefor, together with an amount equal to such paying
Lender's ratable share (according to the proportion of (i) the amount of such
paying Lender's required repayment to (ii) the total amount so recovered from
the purchasing Lender) of any interest or other amount paid or payable by the
purchasing Lender in respect of the total amount so recovered, without further
interest thereon. The Borrower agrees that any Lender so purchasing a
participation from another Lender may, to the fullest extent permitted by law,
exercise all its rights of payment (including the right of set-off, but subject
to Section 11.09) with respect to such participation as fully as if such Lender
were the direct creditor of the Borrower in the amount of such participation.
The Administrative Agent will keep records (which shall be conclusive and
binding in the absence of manifest error) of participations purchased under this
Section and will in each case notify the Lenders following any such purchases or
repayments. Each Lender that purchases a participation pursuant to this Section
shall from and after such purchase have the right to give all notices, requests,
demands, directions and other communications under this Agreement with respect
to the portion of the Obligations purchased to the same extent as though the
purchasing Lender were the original owner of the Obligations purchased.
2.12 EXTENSION OF MATURITY DATE.
(a) Not earlier than 90 days prior to, nor later than 45 days
prior to, each anniversary of the Closing Date, the Borrower may, upon notice to
the Administrative Agent (which shall promptly notify the Lenders), request a
one-year extension of the Maturity Date then in effect. Within 30 days of
delivery of such notice, each Lender shall notify the Administrative Agent
whether or not it consents to such extension (which consent may be given or
withheld in such Lender's sole and absolute discretion). Any Lender not
responding within the above time period shall be deemed not to have consented to
such extension. The Administrative Agent shall promptly notify the Borrower and
the Lenders of the Lenders' responses. If any Lender declines, or is deemed to
have declined, to consent to such extension, the Borrower may cause any such
Lender to be replaced as a Lender pursuant to Section 11.17.
(b) The Maturity Date shall be extended only if all Lenders (after
giving effect to any replacements of Lenders permitted herein) (the "Consenting
Lenders") have consented thereto. If so extended, the Maturity Date, as to the
Consenting Lenders, shall be extended to the same date in the following year,
effective as of the anniversary of the Closing Date then in effect (such
existing Maturity Date being the "Extension Effective Date"). The Administrative
Agent and the Borrower shall promptly confirm to the Lenders such extension and
the Extension Effective Date. As a condition precedent to such extension, the
Borrower shall deliver to the Administrative Agent a certificate of each Loan
Party dated as of the Extension Effective Date (in sufficient copies for each
Lender) signed by a Responsible Officer of such Loan Party (i) certifying and
attaching the resolutions adopted by such Loan Party approving or consenting to
such extension and (ii) in the case of the Borrower, certifying that, before and
after giving effect to such extension, (A) the representations and warranties
contained in Article V and the other Loan Documents are true and correct on and
as of the Extension Effective Date, except to the extent that such
representations and warranties specifically refer to an earlier date, in which
case
29
they are true and correct as of such earlier date, and except that for purposes
of this Section 2.12, the representations and warranties contained in
subsections (a) and (b) of Section 6.05 shall be deemed to refer to the most
recent statements furnished pursuant to subsection (a) and (b) and subsection
(d), respectively, of Section 7.01, and (B) no Default exists.
(c) This Section shall supersede any provisions in Section 2.11 or
11.01 to the contrary.
ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY
3.01 TAXES.
(a) Any and all payments by the Borrower to or for the account of
the Administrative Agent or any Lender under any Loan Document shall be made
free and clear of and without deduction for any and all present or future taxes,
duties, levies, imposts, deductions, assessments, fees, withholdings or similar
charges, and all liabilities with respect thereto, excluding, in the case of the
Administrative Agent and each Lender, taxes imposed on or measured by its
overall net income, and franchise taxes imposed on it (in lieu of net income
taxes), by the jurisdiction (or any political subdivision thereof) under the
Laws of which the Administrative Agent or such Lender, as the case may be, is
organized or maintains a lending office (all such non-excluded taxes, duties,
levies, imposts, deductions, assessments, fees, withholdings or similar charges
and liabilities, "Taxes"). If the Borrower shall be required by any Laws to
deduct any Taxes from or in respect of any sum payable under any Loan Document
to the Administrative Agent or any Lender, (i) the sum payable shall be
increased as necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section), each of
the Administrative Agent and such Lender receives an amount equal to the sum it
would have received had no such deductions been made, (ii) the Borrower shall
make such deductions, (iii) the Borrower shall pay the full amount deducted to
the relevant taxation authority or other authority in accordance with applicable
Laws and (iv) within 30 days after the date of such payment, the Borrower shall
furnish to the Administrative Agent (which shall forward the same to such
Lender) the original or a certified copy of a receipt evidencing payment
thereof.
(b) In addition, the Borrower agrees to pay any and all present or
future stamp, court or documentary taxes and any other excise or property taxes
or charges or similar levies which arise from any payment made under any Loan
Document or from the execution, delivery, performance, enforcement or
registration of, or otherwise with respect to, any Loan Document (all of the
foregoing, "Other Taxes").
(c) If the Borrower shall be required to deduct or pay any Taxes
or Other Taxes from or in respect of any sum payable under any Loan Document to
the Administrative Agent or any Lender, the Borrower shall also pay to the
Administrative Agent or to such Lender, as the case may be, at the time interest
is paid, such additional amount that the Administrative Agent or such Lender
specifies is necessary to preserve the after-tax yield (after factoring in all
taxes, including taxes imposed on or measured by net income) that the
Administrative Agent or such Lender would have received if such Taxes or Other
Taxes had not been imposed.
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(d) The Borrower agrees to indemnify the Administrative Agent and
each Lender for (i) the full amount of Taxes and Other Taxes (including any
Taxes or Other Taxes imposed or asserted by any jurisdiction on amounts payable
under this Section) paid by the Administrative Agent and such Lender, (ii)
amounts payable under Section 3.01(c) and (iii) any liability (including
additions to tax, penalties, interest and expenses) arising therefrom or with
respect thereto, in each case whether or not such Taxes or Other Taxes were
correctly or legally imposed or asserted by the relevant Governmental Authority.
Payment under this clause (d) shall be made within 30 days after the date the
Lender or the Administrative Agent makes a demand therefor.
3.02 ILLEGALITY. If any Lender determines that any Law has made it
unlawful, or that any Governmental Authority has asserted that it is unlawful,
for such Lender or its applicable Lending Office to make, maintain or fund
Eurodollar Rate Loans, or to determine or charge interest rates based upon the
Eurodollar Rate, then, on notice thereof by such Lender to the Borrower and the
Administrative Agent, any obligation of such Lender to make or continue
Eurodollar Rate Loans or to convert Base Rate Loans to Eurodollar Rate Loans
shall be suspended until the circumstances giving rise to such determination no
longer exist. Upon receipt of such notice, the Borrower shall, upon demand from
such Lender (with a copy to the Administrative Agent), prepay or, if applicable,
convert each Eurodollar Rate Loan of such Lender to a Base Rate Loan, either on
the last day of the Interest Period therefor or on such earlier date on which
such Lender may no longer lawfully continue to maintain such Eurodollar Rate
Loan. Upon any such prepayment or conversion, the Borrower shall also pay
accrued interest on the amount so prepaid or converted. Thereafter, for so long
as such circumstances continue, all Loans which would otherwise be made or
maintained by such Lender as Eurodollar Rate Loans shall be Base Rate Loans.
Each Lender agrees to designate a different Lending Office if such designation
will avoid the need for any notice described above and will not, in the good
faith judgment of such Lender, otherwise be materially disadvantageous to such
Lender.
3.03 INABILITY TO DETERMINE RATES. If the Required Lenders in good
faith determine that for any reason adequate and reasonable means do not exist
for determining IBOR for any requested Interest Period with respect to a
proposed Eurodollar Rate Loan, or that the Eurodollar Rate for any requested
Interest Period with respect to a proposed Eurodollar Rate Loan does not
adequately and fairly reflect the cost to such Lenders of funding such Loan, the
Administrative Agent will promptly so notify the Borrower and each Lender.
Thereafter, the obligation of the Lenders to make or maintain Eurodollar Rate
Loans shall be suspended until the Administrative Agent (upon the instruction of
the Required Lenders) revokes such notice. Upon receipt of such notice, the
Borrower may revoke any pending request for a borrowing of, conversion to or
continuation of Eurodollar Rate Loans or, failing that, will be deemed to have
converted such request into a request for a Borrowing of Base Rate Loans in the
amount specified therein.
3.04 INCREASED COST AND REDUCED RETURN; CAPITAL ADEQUACY.
(a) If any Lender in good faith determines that as a result of the
introduction of or any change in or in the interpretation of any Law, or such
Lender's compliance therewith, there shall be any increase in the cost to such
Lender of agreeing to make or making, funding or maintaining Eurodollar Rate
Loans, or a reduction in the amount received or receivable by such Lender in
connection with any of the foregoing (excluding for purposes of this clause (a)
any such increased costs or reduction in amount resulting from (i) Taxes or
Other Taxes (as to which
31
Section 3.01 shall govern), (ii) changes in the basis of taxation of overall net
income or overall gross income by the jurisdiction under the laws of which such
Lender is organized or in which such Lender has its Lending Office and (iii)
reserve requirements utilized in the determination of the Eurodollar Rate, then
from time to time upon demand of such Lender (with a copy of such demand to the
Administrative Agent), the Borrower shall pay to such Lender such additional
amounts as will compensate such Lender for such increased cost or reduction.
(b) If any Lender in good faith determines that the introduction
of, or any change in or in the interpretation of, any Law after the date hereof,
regarding capital adequacy has the effect of reducing the rate of return on the
capital of such Lender or any corporation controlling such Lender as a
consequence of such Lender's obligations hereunder (taking into consideration
such Lender's or such corporation's policies with respect to capital adequacy),
then from time to time upon demand of such Lender (with a copy of such demand to
the Administrative Agent), the Borrower shall pay to such Lender such additional
amounts as will compensate such Lender for such reduction, provided that such
Lender shall have used reasonable efforts to mitigate said additional amounts.
3.05 FUNDING LOSSES. Upon demand of any Lender (with a copy to the
Administrative Agent) from time to time, the Borrower shall promptly compensate
such Lender for and hold such Lender harmless from any loss, cost or expense
incurred by it as a result of:
(a) any continuation, conversion, payment or prepayment of a
Eurodollar Rate Loan on a day other than the last day of an Interest Period for
such Loan (whether voluntary, mandatory, by reason of acceleration or
otherwise);
(b) any failure by the Borrower (for a reason other than the
failure of such Lender to make a Loan) to borrow, continue or convert any Loan
into a Eurodollar Rate Loan on the date or in the amount notified by the
Borrower; or
(c) any assignment of a Eurodollar Rate Loan on a day other than
the last day of the Interest Period therefor as a result of a request by the
Borrower pursuant to Section 11.16;
including any loss or expense arising from the liquidation or reemployment of
funds obtained by such Lender to maintain such Loan or from fees payable to
terminate any deposit from which such funds were obtained. The Borrower shall
also pay any customary administrative fees charged by such Lender in connection
with the foregoing. For purposes of calculating amounts payable by the Borrower
to the Lenders under this Section 3.05, each Lender shall be deemed to have
funded each Eurodollar Rate Loan made by such Lender at the Eurodollar Rate for
such Loan by a matching deposit or other borrowing in the London interbank
eurodollar market for a comparable amount and for a comparable period, whether
or not such Eurodollar Rate Loan was in fact so funded.
3.06 MATTERS APPLICABLE TO ALL REQUESTS FOR COMPENSATION. (a) A
certificate of the Administrative Agent or any Lender claiming compensation
under this Article III and setting forth the additional amount or amounts to be
paid to it hereunder shall be conclusive in the absence of manifest error. In
determining such amount, the Administrative Agent or any Lender may use any
reasonable averaging and attribution methods.
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(b) Upon any Lender's making a claim for compensation under
Section 3.01 or 3.04 or giving notice under Section 3.02, the Borrower may
replace such Lender in accordance with Section 11.17.
3.07 SURVIVAL. All of the Borrower's obligations under this Article
III shall survive termination of the Aggregate Commitments and repayment of all
other Obligations hereunder.
ARTICLE IV
COLLATERAL
4.01 PLEDGE.
(a) Concurrently with or prior to the Closing Date, the Borrower
shall execute and deliver to the Collateral Agent a pledge agreement (herein, as
the same may be amended or modified, called the "Borrower Pledge Agreement") in
substantially the form attached hereto as Exhibit G covering, among other
things, all of the issued and outstanding capital stock of RSL-Texas and the
issued and outstanding capital stock of the Borrower's other Subsidiaries
directly owned by the Borrower.
(b) Concurrently with or prior to any Acquisition permitted by the
terms of this Agreement, the Borrower shall comply with Section 7.11; provided,
however, that no such compliance shall be required after a release pursuant to
the terms of Section 4.02.
(c) Concurrently with or prior to the Effective Date, the Borrower
shall cause SIG Holdings to execute and deliver to the Collateral Agent a pledge
agreement, in substantially the form attached hereto as Exhibit H (herein, as
the same may be amended or modified, called the "SIG Holdings Pledge
Agreement"), covering, among other things, all of the issued and outstanding
capital stock of Safety National.
4.02 RELEASE OF COLLATERAL. Concurrently with the issuance by the
Borrower of senior or subordinated unsecured debt obligations evidenced by
bonds, debentures, notes or similar instruments (not including the Obligations)
in an aggregate principal amount of at least $75,000,000 at such time as no
Default shall have occurred and be continuing, the Collateral shall be released.
ARTICLE V
CONDITIONS PRECEDENT TO LOANS
5.01 CONDITIONS OF INITIAL LOAN. The obligation of each Lender to
make its initial Credit Loan is subject to satisfaction of the following
conditions precedent:
(a) The Administrative Agent's receipt of the following, each of
which shall be originals or facsimiles (followed promptly by originals) unless
otherwise specified, each properly executed by a Responsible Officer of the
signing Loan Party, each dated the Closing Date (or, in the case of certificates
of governmental officials, a recent date before the Closing Date) and each in
form and substance satisfactory to the Administrative Agent and its legal
counsel:
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(i) executed counterparts of this Agreement, the Borrower
Pledge Agreement, the SIG Holdings Pledge Agreement and the
Intercreditor Agreement, sufficient in number for distribution to the
Administrative Agent, each Lender and the Borrower;
(ii) a Note executed by the Borrower in favor of each
Lender requesting a Note;
(iii) such certificates of resolutions or other action,
incumbency certificates and/or other certificates of Responsible
Officers of each Loan Party as the Administrative Agent may require
evidencing the identity, authority and capacity of each Responsible
Officer thereof authorized to act in connection with this Agreement and
the other Loan Documents to which such Loan Party is a party;
(iv) such documents and certifications as the
Administrative Agent may reasonably require to evidence that each Loan
Party is duly organized or formed and validly existing in the
jurisdiction of its organization or formation;
(v) a favorable opinion of ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, general
counsel to the Loan Parties, substantially in the form of Exhibit E;
(vi) a certificate of a Responsible Officer of each Loan
Party either (A) attaching copies of all consents, licenses and
approvals required in connection with the execution, delivery and
performance by such Loan Party, and the validity against such Loan
Party, of the Loan Documents to which it is a party (and such consents,
licenses and approvals shall be in full force and effect) or (B)
stating that no such consents, licenses or approvals are so required;
(vii) a certificate signed by a Responsible Officer of the
Borrower certifying (A) that the conditions specified in Sections
5.02(a) and (b) have been satisfied, and (B) that there has been no
event or circumstance since the date of the Audited Financial
Statements that has had or could be reasonably expected to have, either
individually or in the aggregate, a Material Adverse Effect;
(viii) evidence that the Existing Credit Agreements have
been or concurrently with the Closing Date are being terminated and all
outstanding obligations thereunder paid in full; and
(ix) such other assurances, certificates, documents,
consents or opinions as the Administrative Agent or the Required
Lenders reasonably may require.
(b) The Borrower shall have paid to the Administrative Agent, the
Arranger, the Co-Arranger or any Lender all fees required to be paid on or
before the Closing Date.
(c) The Borrower shall have paid all Attorney Costs of the
Administrative Agent to the extent invoiced prior to or on the Closing Date,
plus such additional amounts of Attorney Costs as shall constitute the
Administrative Agent's reasonable estimate of Attorney Costs incurred or to be
incurred by it through the closing proceedings (provided that such estimate
34
shall not thereafter preclude a final settling of accounts between the Borrower
and the Administrative Agent).
(d) The Closing Date shall have occurred before December 31, 2002.
5.02 CONDITIONS TO ALL LOANS. The obligation of each Lender to
honor any request for a Loan is subject to the following conditions precedent:
(a) Each representation and warranty of the Borrower and each
other Loan Party contained in Article VI or any other Loan Document, or which is
contained in any document furnished at any time under or in connection herewith
or therewith, as updated from time to time in a manner reasonably acceptable to
the Required Lenders, shall be true and correct in all material respects on and
as of the date of the requested Loan, except to the extent that such
representation and warranty specifically refers to an earlier date, in which
case it shall be true and correct as of such earlier date.
(b) No Default shall exist or would result from the requested
Loan.
(c) The Administrative Agent shall have received a Loan Notice in
accordance with the requirements hereof.
Each Loan Notice (other than a Loan Notice requesting only a conversion
of Loans to the other Type or a continuation of Eurodollar Rate Loans) submitted
by the Borrower shall be deemed to be a representation and warranty that the
conditions specified in Sections 5.02(a) and (b) have been satisfied on and as
of the date of the applicable Loan.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Administrative Agent and
the Lenders that:
6.01 EXISTENCE, QUALIFICATION AND POWER; COMPLIANCE WITH LAWS. Each
Loan Party (a) is duly organized or formed, validly existing and in good
standing under the Laws of the jurisdiction of its organization or formation,
(b) has all requisite power and authority and all requisite governmental
licenses, authorizations, consents and approvals to (i) own its assets and carry
on its business substantially as now conducted and (ii) execute, deliver and
perform its obligations under the Loan Documents to which it is a party, (c) is
duly qualified and is licensed and in good standing under the Laws of each
jurisdiction where its ownership, lease or operation of properties or the
conduct of its business requires such qualification or license and (d) is in
compliance with all Laws except, in each case referred to in clause (b)(i), (c)
or (d), to the extent that failure to do so could not reasonably be expected to
have a Material Adverse Effect.
6.02 AUTHORIZATION; NO CONTRAVENTION. The execution, delivery and
performance by each Loan Party of each Loan Document to which such Person is
party have been duly authorized by all necessary organizational action on the
part of such Person and do not and will not (a) contravene the terms of any of
such Person's Organization Documents; (b) conflict with or result in any breach
or contravention of, or result in or require the creation or imposition of any
Lien (other than for the benefit of the Administrative Agent and the Lenders)
under, (i) any
35
Contractual Obligation to which such Person is a party or (ii) any order,
injunction, writ or decree of any Governmental Authority or any arbitral award
to which such Person or its property is subject; or (c) violate any Law.
6.03 GOVERNMENTAL AUTHORIZATION; OTHER CONSENTS. No approval,
consent, exemption, authorization or other action by, or notice to, or filing
with, any Governmental Authority or any other Person is necessary or required in
connection with the execution, delivery or performance by, or enforcement
against, any Loan Party of this Agreement or any other Loan Document.
6.04 BINDING EFFECT. This Agreement has been, and each other Loan
Document, when delivered hereunder, will have been, duly executed and delivered
by each Loan Party that is party thereto. This Agreement constitutes, and each
other Loan Document when so delivered will constitute, a legal, valid and
binding obligation of each Loan Party that is a party thereto, enforceable
against such Loan Party in accordance with its terms.
6.05 FINANCIAL STATEMENTS; NO MATERIAL ADVERSE EFFECT.
(a) Statutory Financial Statements.
(i) The Annual Statements, or the quarterly statements,
as the case may be, of each of the Reliance Standard Insurance
Companies and Safety National including, without limitation, the
provisions made therein for investments and the valuation thereof,
reserves, policy and contract claims and Statutory Liabilities, in each
case as filed with the appropriate Governmental Authority of its state
of domicile (the "Department") and delivered to each Lender prior to
the execution and delivery of this Agreement, as of, and for the 2001
Fiscal Year, and as of the end of, and for, the Fiscal Quarter ended
June 30, 2002 (collectively, the "Statutory Financial Statements"),
have been prepared in accordance with SAP applied on a consistent
basis. Each such Statutory Financial Statement was in compliance in all
material respects with applicable law when filed. The Statutory
Financial Statements fairly present the financial condition, the
results of operations, changes in equity and changes in financial
position of each of the Reliance Standard Insurance Companies and
Safety National as of and for the respective dates and periods
indicated therein in accordance with SAP applied on a consistent basis.
Except for liabilities and obligations, including, without limitation,
reserves, policy and contract claims and Statutory Liabilities (all of
which have been computed in accordance with SAP), disclosed or provided
for in the Statutory Financial Statements, the Reliance Standard
Insurance Companies and Safety National did not have, as of the
respective dates of each of such financial statements any liabilities
or obligations (whether absolute or contingent and whether due or to
become due) which, in conformity with SAP, applied on a consistent
basis, would have been required to be or should be disclosed or
provided for in such financial statements. All books of account of the
Reliance Standard Insurance Companies and Safety National fully and
fairly disclose, in all material respects, all of the transactions,
properties, assets, investments, liabilities and obligations of the
Reliance Standard Insurance Companies and Safety National and all of
such books of account are in the possession of each of the Reliance
Standard Insurance Companies and Safety National and are true, correct
and complete in all material respects.
36
(ii) The investments of each of the Reliance Standard
Insurance Companies and Safety National reflected in the Annual
Statements filed with the Department with respect to each of the
Reliance Standard Insurance Companies' and Safety National's 2001
Fiscal Year (the "2001 Annual Statements"), as updated through the June
30, 2002 quarterly statements (the "2002 Quarterly Statements"), comply
in all material respects with all applicable requirements of the
applicable Department as to investments which may be made by such
Reliance Standard Insurance Company and Safety National.
(iii) The provisions made in the 2001 Annual Statements and
in the 2002 Quarterly Statements for reserves, policy and contract
claims and Statutory Liabilities are in compliance in all material
respects with the requirements of the applicable Department and have
been computed in accordance with SAP.
(iv) Marketable securities and short term investments
reflected, with respect to the Reliance Standard Insurance Companies,
in line 11, page 2, column 3 and, with respect to Safety National, in
line 9, page 2, column 3, of their respective 2001 Annual Statements
and in the 2002 Quarterly Statements are valued at cost, amortized cost
or market value, as noted on such Statutory Financial Statements and as
required by applicable law.
(v) There has been no change, event, action, condition or
effect which individually or in the aggregate materially and adversely
affects the consolidated business, operations, financial prospects or
condition of the Reliance Standard Insurance Companies taken as a whole
or Safety National since December 31, 2001. Except as set forth on
Schedule 6.05, no dividends or other distributions have been declared,
paid or made upon any shares of capital stock of any of the Reliance
Standard Insurance Companies or Safety National nor have any shares of
capital stock of any of the Reliance Standard Insurance Companies or
Safety National been redeemed, retired, purchased or otherwise acquired
since December 31, 2001, other than as reflected in the balance sheets
of the Reliance Standard Insurance Companies or Safety National.
(b) GAAP Financial Statements.
(i) The audited consolidated financial statements of the
Borrower as of the end of, and for, the 2001 Fiscal Year (the "Audited
Financial Statements"), and the unaudited consolidated financial
statements of the Borrower as of the end of, and for, the Fiscal
Quarter ended September 30, 2002, copies of which have been furnished
to the Administrative Agent and each of the Lenders, have been prepared
in conformity with GAAP applied on a consistent basis (except to the
extent necessitated by changes in GAAP during the relevant periods),
and accurately present the financial condition of the Borrower and each
of its Subsidiaries as at such dates and the results of operations for
the periods then ended.
(ii) There has been no change, event, action, condition or
effect which individually or in the aggregate materially and adversely
affects the consolidated business, operations, financial prospects or
financial condition of the Borrower or its Subsidiaries taken as a
whole since December 31, 2001. Except as set forth on Schedule
37
6.05, no dividends or other distributions have been declared, paid or
made upon any shares of capital stock of the Borrower or any of its
Subsidiaries, nor have any shares of capital stock of the Borrower or
any of its Subsidiaries been redeemed, retired, purchased or otherwise
acquired, since December 31, 2001.
(iii) With respect to any representation and warranty which
is deemed to be made after the date hereof by the Borrower, the
condensed balance sheet and condensed statements of operations, of
stockholders' equity and of cash flows, which as of such date shall
most recently have been furnished by or on behalf of the Borrower to
each Lender for the purposes of or in connection with this Agreement or
any transaction contemplated hereby, shall have been prepared in
accordance with GAAP consistently applied (except as disclosed
therein), and shall present fairly (in a condensed manner) the
consolidated financial condition of the corporations covered thereby as
at the dates thereof and for the periods then ended, subject, in the
case of quarterly financial statements, to normal year-end and audit
adjustments.
(c) Material Adverse Change. No Material Adverse Change has
occurred since December 31, 2001.
6.06 LITIGATION AND GUARANTEES. No Material Litigation is pending
or threatened except as set forth (including estimates of the Dollar amounts
involved) in Schedule 6.06. The Borrower and its Subsidiaries have no material
Guarantees other than (a) as provided for or disclosed on Schedule 6.06 or in
the financial statements referred to in Section 6.05 or (b) any Guarantees
consisting of a guarantee by the Borrower with respect to any payment
obligations under Preferred Securities.
6.07 NO DEFAULT. Neither the Borrower nor any Subsidiary is in
default under or with respect to any Contractual Obligation that could, either
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. No Default has occurred and is continuing or would result from
the consummation of the transactions contemplated by this Agreement or any other
Loan Document.
6.08 OWNERSHIP OF PROPERTY; LIENS. Each of the Borrower and each
Subsidiary has good record and marketable title in fee simple to, or valid
leasehold interests in, all real property necessary or used in the ordinary
conduct of its business, except for such defects in title as could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. The property of the Borrower and its Subsidiaries is subject to
no Liens, other than Permitted Liens.
6.09 ENVIRONMENTAL COMPLIANCE. There are no claims alleging
potential liability or responsibility for violation of any Environmental Law or
any such violation on the Borrower's and its Subsidiaries' respective
businesses, operations and properties, that could individually or in the
aggregate reasonably be expected to have a Material Adverse Effect.
6.10 TAXES. The Borrower and its Subsidiaries have filed all
Federal and other material tax returns and reports required to be filed, and
have paid all Federal and other material taxes, assessments, fees and other
governmental charges levied or imposed upon them or their
38
properties, income or assets otherwise due and payable, except those which are
being contested in good faith by appropriate proceedings diligently conducted
and for which adequate reserves have been provided in accordance with GAAP.
There is no proposed tax assessment against the Borrower or any Subsidiary that
would, if made, have a Material Adverse Effect.
6.11 ERISA COMPLIANCE.
(a) Each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code and other Federal and state Laws. Each
Plan that is intended to qualify under Section 401(a) of the Code has received a
favorable determination letter from the IRS or an application for such a letter
is currently being processed by the IRS with respect thereto and, to the best
knowledge of the Borrower, nothing has occurred which would prevent, or cause
the loss of, such qualification. The Borrower and each ERISA Affiliate have made
all required contributions to each Plan subject to Section 412 of the Code, and
no application for a funding waiver or an extension of any amortization period
pursuant to Section 412 of the Code has been made with respect to any Plan.
(b) There is no pending or, to the best knowledge of the Borrower,
threatened claim, action or lawsuit, or action by any Governmental Authority,
with respect to any Plan that could be reasonably be expected to have a Material
Adverse Effect. There has been no prohibited transaction or violation of the
fiduciary responsibility rules with respect to any Plan that has resulted or
could reasonably be expected to result in a Material Adverse Effect.
(c)(i) No ERISA Event has occurred or is reasonably expected to occur
that could reasonably be expected to result in a liability in excess of
$10,000,000; (ii) no Pension Plan has any Unfunded Pension Liability in excess
of $10,000,000 in the aggregate for all Pension Plans; (iii) neither the
Borrower nor any ERISA Affiliate has incurred, or reasonably expects to incur,
any liability under Title IV of ERISA with respect to any Pension Plan (other
than premiums due and not delinquent under Section 4007 of ERISA) in excess of
$10,000,000 in the aggregate for all Pension Plans; (iv) neither the Borrower
nor any ERISA Affiliate has incurred, or reasonably expects to incur, any
liability under Section 4201 or 4243 of ERISA with respect to a Multiemployer
Plan (and no event has occurred which, with the giving of notice under Section
4219 of ERISA, would result in such liability) in excess of $10,000,000 in the
aggregate; and (v) neither the Borrower nor any ERISA Affiliate has engaged in a
transaction that could be subject to Section 4069 or 4212(c) of ERISA that could
reasonably be expected to result in a liability in excess of $10,000,000.
6.12 SUBSIDIARIES. As of the Closing Date, the Borrower has no
Subsidiaries other than those specifically disclosed in Part (a) of Schedule
6.12.
6.13 MARGIN REGULATIONS; INVESTMENT COMPANY ACT; PUBLIC UTILITY
HOLDING COMPANY ACT.
(a) The Borrower is not engaged and will not engage, principally
or as one of its important activities, in the business of purchasing or carrying
margin stock (within the meaning of Regulation U of the FRB) or extending credit
for the purpose of purchasing or carrying margin stock. Following the
application of the proceeds of each Borrowing not more than 25%
39
of the value of the assets (either of the Borrower only or of the Borrower and
its Subsidiaries on a consolidated basis) subject to the provisions of Section
8.01 or subject to any restriction contained in any agreement or instrument
between the Borrower and any Lender or any Affiliate of any Lender relating to
Indebtedness and within the scope of Section 9.01(e) will be margin stock.
(b) None of the Borrower, any Person Controlling the Borrower or
any Subsidiary (i) is a "holding company," or a "subsidiary company" of a
"holding company," or an "affiliate" of a "holding company" or of a "subsidiary
company" of a "holding company," within the meaning of the Public Utility
Holding Company Act of 1935, or (ii) is or is required to be registered as an
"investment company" under the Investment Company Act of 1940.
6.14 DISCLOSURE. The Borrower has disclosed to the Administrative
Agent and the Lenders all agreements, instruments and corporate or other
restrictions to which it or any Subsidiary is subject, and all other matters
known to it, that, individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect. No report, financial statement,
certificate or other information furnished (whether in writing or orally) by or
on behalf of any Loan Party to the Administrative Agent or any Lender in
connection with the transactions contemplated hereby or delivered hereunder (as
modified or supplemented by other information so furnished) contains any
material misstatement of fact or omits to state any material fact necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading; provided that, with respect to projected financial
information, the Borrower represents only that such information was prepared in
good faith based upon assumptions believed to be reasonable at the time.
6.15 COMPLIANCE WITH LAWS. Each of the Borrower and each Subsidiary
is in compliance in all material respects with the requirements of all Laws and
all orders, writs, injunctions and decrees applicable to it or to its
properties, except in such instances in which (a) such requirement of Law or
order, writ, injunction or decree is being contested in good faith by
appropriate proceedings diligently conducted or (b) the failure to comply
therewith, either individually or in the aggregate with all other such failures,
could not reasonably be expected to have a Material Adverse Effect.
6.16 COLLATERAL. As security for the Liabilities, the Collateral
Agent has possession of all Collateral which consists of instruments or
securities as defined in the UCC, other than the Safety National shares pledged
to the holders of the SIG Notes, and, subject to the terms of the Intercreditor
Agreement, has a valid, first priority perfected Lien on the Collateral. Except
as set forth on Schedule 8.01, there are no Liens or UCC financing statements on
file naming the Borrower or any of its Subsidiaries as debtor, except for
Permitted Liens.
6.17 RESERVES.
(a) All life insurance reserves shown as such on federal tax
returns (other than individual annuity contracts) of each of the Reliance
Standard Insurance Companies qualify as life insurance reserves under section
816(b) of the Code or under former section 801(b) of the Code.
40
(b) All current Reinsurance Agreements among the Reliance Standard
Insurance Companies and Safety National and their respective Affiliates have, at
all times, been conducted on an arm's-length basis.
(c) Each of RSL and RSL-Texas is a life insurance company as
defined in section 816 of the Code.
(d) RSL and RSL-Texas are includable life insurance companies as
described in section 1504(c)(1) of the Code.
6.18 PROCEEDS. The proceeds of the Loans will be used for general
corporate purposes.
6.19 INSURANCE. Schedule 6.19 sets forth a true and correct summary
of all insurance carried by the Borrower and its Subsidiaries. The Borrower and
its Subsidiaries are adequately insured for their benefit under policies issued
by insurers of recognized responsibility. No notice of any pending or threatened
cancellation or material premium increase has been received by the Borrower or
any of its Subsidiaries with respect to any of such insurance policies. The
Borrower and its Subsidiaries are in compliance with all material conditions
contained in such insurance policies.
6.20 GOVERNMENTAL AUTHORIZATIONS. The Borrower and its Subsidiaries
have all licenses, franchises, permits and other governmental authorizations
necessary for all businesses presently carried on by them (including ownership
and leasing of the real and personal property owned and leased by them), except
where failure to obtain such licenses, franchises, permits and other
governmental authorizations would not have a Material Adverse Effect.
6.21 REPRESENTATIONS IN OTHER AGREEMENTS TRUE AND CORRECT. Each of
the representations and warranties contained in each Related Document (each as
originally executed notwithstanding any amendment, modification or termination
thereof except to the extent consented to by the Required Lenders) is true and
correct.
6.22 BUSINESS LOCATIONS; TRADE NAMES. Schedule 6.22 lists each of
the locations where the Borrower or any of its Subsidiaries maintains an office,
a place of business or any records together with each corporate, fictitious or
trade name under or by which the Borrower or any of its Subsidiaries conducts or
has conducted its business.
6.23 SOLVENCY. The Borrower and each of its Subsidiaries is, and
after consummation of this Agreement and after giving effect to all Indebtedness
incurred and Liens created by the Borrower and each of its Subsidiaries in
connection herewith and therewith and the application of proceeds therefrom will
be, Solvent.
6.24 INSURANCE LICENSES. Schedule 6.24 lists all of the
jurisdictions in which each of the Reliance Standard Insurance Companies, Safety
National, and after consummation of any other Acquisition permitted by this
Agreement, each Acquired Person (to the extent applicable) hold licenses
(including, without limitation, licenses or certificates of authority from
applicable insurance departments), permits or authorizations to transact
insurance and reinsurance business (collectively, the "Licenses"). No such
License is the subject of a proceeding for suspension or revocation or any
similar proceedings and, to the best knowledge of the Borrower, there is no
41
sustainable basis for such a suspension or revocation and no such suspension or
revocation is threatened by any state insurance department. Schedule 6.24
indicates that line or lines of insurance which each of the Reliance Standard
Insurance Companies, Safety National and such Acquired Person are permitted to
be engaged in with respect to each License therein listed. The Reliance Standard
Insurance Companies, Safety National and such Acquired Person do not transact
any insurance business, directly or indirectly, in any state or jurisdiction
other than those enumerated on Schedule 6.24, where such business requires any
license, permit, governmental approval, consent or other authorization (other
than those obtained).
6.25 NO DEFAULT. Neither the Borrower nor any of its Subsidiaries
is in default under any agreement or instrument to which the Borrower or any of
its Subsidiaries is a party or by which any of their respective properties or
assets is bound or affected, which default could reasonably be expected to
materially and adversely affect the financial condition or operations of the
Borrower and its Subsidiaries taken as a whole.
6.26 PLEDGED SHARES. All of the shares of capital stock of the
Borrower and its Subsidiaries are duly authorized and validly issued and are
fully paid and non-assessable. The shares of capital stock of the Borrower's
Subsidiaries pledged pursuant to the Pledge Agreements represent 100% of the
issued and outstanding capital stock of such Subsidiaries. All of the shares of
capital stock and surplus debentures, if any, of the Borrower's Subsidiaries
pledged as Collateral are owned by the Borrower (other than the capital stock of
Safety National, which is wholly-owned by SIG Holdings).
6.27 INDEBTEDNESS PERMITTED. The Loans to be made with respect to
any Notice of Borrowing submitted by the Borrower under this Agreement are and
at the time of the incurrence of the Indebtedness evidenced by such Loans will
be permitted under the Indenture, and the Other Senior Indebtedness and will not
be in violation or breach of any term contained therein.
6.28 SECURITIES LAWS. Neither the Borrower nor any of its
Affiliates, nor, to the best of their knowledge, anyone acting on behalf of any
such Person, has directly or indirectly offered any interest in the Loans or any
other Liabilities for sale to, or solicited any offer to acquire any such
interest from, or has sold any such interest to, any Person that would subject
the issuance or sale of the Loans or any other Liabilities to registration under
the Securities Act of 1933, as amended.
6.29 REPLACEMENT OF SCHEDULES. Any Schedule delivered to the
Lenders under this Article VI may be amended and replaced with the consent of
the Required Lenders (such consent not to be unreasonably withheld) so that the
representations and warranties set forth in this Article VI shall be true and
correct at the time made by the Borrower; provided that the consent of the
Required Lenders shall not be required to (a) amend Schedule 6.19, (b) to amend
Schedule 6.22 to add additional locations thereto within the continental United
States of America or (c) to amend Schedule 6.22 to add additional Licenses.
42
ARTICLE VII
AFFIRMATIVE COVENANTS
So long as any Lender shall have any Commitment hereunder, any Loan or
other Obligation hereunder shall remain unpaid or unsatisfied, the Borrower
shall, and shall (except in the case of Sections 7.01, 7.02, and 7.11) cause
each Subsidiary to:
7.01 REPORTS, CERTIFICATES AND OTHER INFORMATION. Unless otherwise
provided herein, furnish or cause to be furnished to the Administrative Agent
and each Lender:
(a) Audit Report. As soon as available, but in any event within
one hundred (100) days after the end of each Fiscal Year of the Borrower:
(i) copies of the audited consolidated balance sheet,
statement of earnings, stockholders' equity and cash flows of the
Borrower as at the end of such Fiscal Year and an unaudited
consolidating balance sheet of the Borrower as of the end of such
Fiscal Year and the related statements of earnings for such Fiscal
Year, in each case setting forth the figures as of the end of, and for,
the previous year, prepared in reasonable detail and in accordance with
GAAP applied consistently throughout the periods reflected therein,
certified (as to the consolidated balance sheet, statement of earnings,
stockholders' equity and cash flows only) without Qualification by
Ernst & Young (or such other independent certified public accountants
of recognized standing acceptable to the Required Lenders); and
(ii) a certificate from such accountants containing a
computation of, and showing compliance with, each of the financial
ratios and restrictions contained in Sections 8.16 through 8.20, and to
the effect that, in making the examination necessary for the signing of
the annual audit report of the Borrower by such accountants, they have
not become aware of any non-compliance by the Borrower under this
Agreement or the Related Documents or any Default;
(b) Quarterly Reports. As soon as available, but in any event
within fifty-two (52) days after the end of each Fiscal Quarter of each Fiscal
Year of the Borrower, copies of the unaudited consolidated balance sheet,
statement of earnings, stockholders' equity and cash flows of the Borrower as at
the end of and for such Fiscal Quarter and an unaudited consolidating balance
sheet of the Borrower as at the end of such Fiscal Quarter and the related
unaudited statements of earnings for such Fiscal Quarter and the portion of the
Fiscal Year through such Fiscal Quarter, and with respect to the consolidated
balance sheet, statement of earnings, stockholders' equity and cash flows
setting forth in comparative form the figures as of the end of, and for, the
corresponding periods of the previous Fiscal Year and the previous Fiscal
Quarter, prepared in reasonable detail and in accordance with GAAP applied
consistently throughout the periods reflected therein and certified by the chief
financial officer of the Borrower as presenting fairly the financial condition
and results of operations of the Borrower and its Subsidiaries (subject to
normal year-end and audit adjustments);
43
(c) Tax Returns and Reports. If requested by the Administrative
Agent or a Lender, copies of all federal, state, local and foreign Tax Returns
and Reports filed by the Borrower and any of its Subsidiaries;
(d) SAP Financial Statements.
(i) As soon as possible, but in any event within seventy
(70) days after the end of each Fiscal Year of each of the Reliance
Standard Insurance Companies, Safety National, and, after the
consummation of any other Acquisition permitted under this Agreement,
each Acquired Person (to the extent applicable), a copy of the Annual
Statement of such Reliance Standard Insurance Company, Safety National
and such Acquired Person for such Fiscal Year prepared in accordance
with SAP and accompanied by the certification of the chief financial
officer of such Reliance Standard Insurance Company, Safety National
and such Acquired Person that such financial statement presents fairly,
in accordance with SAP, the financial condition and results of
operations of such Reliance Standard Insurance Company, Safety National
and such Acquired Person as of the end of, and for, the period then
ended;
(ii) As soon as possible, but in any event within
fifty-two (52) days after the end of each Fiscal Quarter of each Fiscal
Year of each of the Reliance Standard Insurance Companies, Safety
National, and, after the consummation of any other Acquisition
permitted under this Agreement, each Acquired Person (to the extent
applicable) a copy of the quarterly statement of such Reliance Standard
Insurance Company, Safety National and such Acquired Person for such
Fiscal Quarter, all prepared in accordance with SAP and accompanied by
the certification of the chief financial officer of such Reliance
Standard Insurance Company, Safety National and such Acquired Person
that all such financial statements present fairly in accordance with
SAP the financial condition and results of operations of such Reliance
Standard Insurance Company, Safety National and such Acquired Person as
of the end of, and for, the period then ended;
(iii) Within thirty (30) days after being delivered to any
of the Reliance Standard Insurance Companies, Safety National, and,
after consummation of any other Acquisition permitted under this
Agreement, each Acquired Person (to the extent applicable), any final
Triennial Examination Report issued by the Department or the NAIC;
(iv) Within one hundred (100) days after the close of each
Fiscal Year of each of the Reliance Standard Insurance Companies,
Safety National, and, after consummation of any other Acquisition
permitted under this Agreement, each Acquired Person (to the extent
applicable), a copy of the "Statement of Actuarial Opinion" and
"Management Discussion and Analysis" for such Reliance Standard
Insurance Company, Safety National and such Acquired Person which is
provided to the applicable Department (or equivalent information should
the Department no longer require such a statement) as to the adequacy
of loss reserves of such company. Such opinion shall be in the format
prescribed by the Department;
44
(e) Compliance Certificate. Contemporaneously with the furnishing
of a copy of each set of the statements and reports provided for in Sections
7.01(a) and (b), a duly completed certificate, substantially in the form of
Exhibit C (the "Compliance Certificate"), signed by the chief financial officer
of the Borrower, containing, among other things, a computation of, and showing
compliance with, each of the applicable financial ratios and restrictions
contained in Sections 8.05(c)(ii) and (iii) and Sections 8.16 through 8.20 and
to the effect that as of such date, to the best of Borrower's knowledge, no
Default has occurred and is continuing, or, if there is any such event,
describing it and the steps, if any, being taken to cure it;
(f) Auditors' Materials. Promptly upon receipt thereof, copies of
all management letters and reports regarding the Borrower or any of its
Subsidiaries submitted to the Borrower or its Subsidiaries by independent public
accountants in connection with each annual audit report made by such accountants
of the books of the Borrower or any of its Subsidiaries;
(g) Business Plan and Projections. As soon as available, but in
any event no later than sixty (60) days after the beginning of each Fiscal Year,
updated projections of the Borrower, including, without limitation, the
operating cash flow of the Borrower for such Fiscal Year and the statutory
income statement of RSL, Safety National and, after consummation of any other
Acquisition permitted by this Agreement, each Acquired Person (to the extent
applicable) for such Fiscal Year and, if available, additional future Fiscal
Years;
(h) Reports to SEC and to Shareholders. Promptly upon the filing
or making thereof, copies of each filing and report made by the Borrower or any
of its Subsidiaries with or to any securities exchange or the Securities and
Exchange Commission and of each communication from the Borrower to shareholders
generally in their capacity as shareholders;
(i) Notice of Default, Litigation and License Matters. Promptly
and without delay upon learning of the occurrence of any of the following,
written notice thereof, describing the same and the steps being taken by the
Borrower with respect thereto:
(i) the occurrence of a Default,
(ii) the institution of any Material Litigation or the
occurrence of any Material Litigation Development,
(iii) the commencement of any dispute which might lead to
the material modification, transfer, revocation, suspension or
termination of this Agreement or any Related Document,
(iv) any Material Adverse Change, or
(v) any announcement by Standard & Poor's or ▇▇▇▇▇'▇ or
such other rating agency whose rating becomes applicable pursuant to
the provisions of the definition of "Applicable Rate" of any change of
any Debt Rating of the Borrower.
(j) Insurance and Actuarial Reports.
45
(i) written notification thirty (30) days prior to any
cancellation or material change of any insurance policy listed on
Schedule 6.19 by the Borrower or any of its Subsidiaries, and within
five (5) Business Days after receipt of any notice (whether formal or
informal) of cancellation or material change by any of its insurers if,
in either case, such cancellation or change could reasonably be
expected to cause a Material Adverse Change; and
(ii) promptly for each Reliance Standard Insurance
Company, Safety National, and after consummation of any other
Acquisition permitted by this Agreement, each Acquired Person (to the
extent applicable) to the Administrative Agent (which shall promptly
furnish to the Lenders) all actuarial reports required to be delivered
to the Department;
(k) ERISA Liability. Promptly upon learning of the occurrence of
an ERISA Event, written notice thereof describing the same and the steps being
taken by Borrower with respect thereto;
(l) Information Concerning the Parent and the Subsidiaries.
Promptly upon learning thereof, written notice of
(i) the occurrence with respect to any of its
Subsidiaries or the Parent of any of the events the occurrence of which
in relation to the Borrower would constitute an Event of Default under
Section 9.01(f);
(ii) the execution of any agreement by any of its
Subsidiaries to merge with or consolidate into or with, or purchase or
otherwise acquire all or substantially all of the assets or stock of
any class of, or any partnership or joint venture interest in, any
other Person, or for the sale, transfer, lease or conveyance by any of
its Subsidiaries of all or any substantial part of its assets or sale
or assignment without recourse of any of its receivables; and
(iii) any action which may reasonably be expected to result
in a Change in Control;
(m) Insurance Holding Company Filings. Copies of all material
Insurance Holding Company System Act filings with Governmental Authorities by
the Borrower which seek approval of Governmental Authorities with respect to
transactions between the Borrower and its Affiliates or which relate to
dividends no later than ten (10) Business Days after such filings are made;
(n) Insurance Licenses. Within ten (10) Business Days of such
notice, notice of actual suspension, termination or revocation of any License or
material restriction thereon of any of the Reliance Standard Insurance
Companies, Safety National, and after consummation of any other Acquisition
permitted hereunder, each Acquired Person (to the extent applicable) by any
Governmental Authority or of receipt of notice from any Governmental Authority
notifying any of the Reliance Standard Insurance Companies, Safety National or
such Acquired Person of a scheduled hearing (which is not withdrawn within ten
(10) days) relating to such a suspension, termination, revocation or
restriction, including any request by a Governmental Authority which
46
commits any of the Reliance Standard Insurance Companies, Safety National or
such Acquired Person to take, or refrain from taking, any action or which
otherwise materially and adversely affects the authority of any of the Reliance
Standard Insurance Companies, Safety National or such Acquired Person to conduct
its business;
(o) Insurance Proceedings. Within ten (10) Business Days of such
notice, notice of any pending or threatened investigation or regulatory
proceeding (other than routine periodic investigations or reviews) by any
Governmental Authority concerning the business, practices or operations of any
of the Reliance Standard Insurance Companies, Safety National, and, after
consummation of any other Acquisition permitted under this Agreement, each
Acquired Person (to the extent applicable) including any agent or managing
general agent thereof, which could reasonably be expected to have a Material
Adverse Effect;
(p) Changes in Applicable Insurance Code. Promptly, upon knowledge
of the Borrower, any of the Reliance Standard Insurance Companies, Safety
National, or, after consummation of any other Acquisition permitted under this
Agreement, each Acquired Person (to the extent applicable) to the Administrative
Agent (who shall promptly deliver such notice to the Lenders), notice of any
actual or proposed material changes in any Applicable Insurance Code which could
reasonably be expected to cause a Material Adverse Change;
(q) Reinsurance Agreements. Promptly, notice of any material
change or modification to any Reinsurance Agreements or Surplus Relief
Reinsurance Agreements whether entered into before or after the Closing Date
including Reinsurance Agreements, if any, which were in a runoff mode on the
Closing Date, which change or modification could have a Material Adverse Effect;
(r) Investments. Within fifty-two (52) days of the end of each
Fiscal Quarter and one hundred (100) days of the end of each Fiscal Year, (a) a
list of the Limited Partnership Investments of the Borrower and its Subsidiaries
and the Borrower's best estimates of capital account changes and performance as
to each of such Limited Partnership Investments (based on information provided
by the managers of such partnerships) and (b) an updated calculation of the
aggregate Limited Partnership Investments' standard deviation of monthly rates
of return and a comparison of such standard deviation to that of the S&P 500 and
the ▇▇▇▇▇▇▇ ▇▇▇▇ Index (or their equivalents);
(s) Revenue Agent Notices. Promptly, and in any event within ten
(10) days of receipt, any revenue agent's reports or statutory notices of
deficiency related to the Borrower or any of its Subsidiaries which could
reasonably be expected to have a Material Adverse Effect;
(t) Notice of Tax Claim. Prompt notice to the Administrative Agent
of the commencement of any claim, audit, examination, notice of deficiency, or
other change or adjustment by any Governmental Authority (a "Tax Claim"), or of
the extension of any statute of limitations regarding Taxes which could
reasonably be expected to have a Material Adverse Effect;
(u) Other Tax Information. Upon request of the Administrative
Agent or a Lender, promptly to the Administrative Agent copies of all
correspondence (including without limitation,
47
notices, requests, explanations, determinations, schedules, charts and lists)
delivered to any Governmental Authority in connection with any Tax Claim or
Taxes and any protest, petition or refund suit filed on behalf of any
Subsidiaries in connection with any Tax Claim or Taxes;
(v) Tax Sharing Agreements. Promptly upon execution, an executed
copy of any Tax Sharing Agreement permitted by this Agreement executed after the
Effective Date; and
(w) Other Information. From time to time such other information
and certifications concerning the Borrower and any of its Subsidiaries as the
Administrative Agent, the Collateral Agent or a Lender may reasonably request.
To the extent reasonably possible, the Borrower will deliver any such
documents electronically. If not delivered electronically, the Borrower will
deliver sufficient copies for all Lenders.
7.02 PAYMENT OF OBLIGATIONS. Pay and discharge, as the same shall
become due and payable, all its material obligations and liabilities, including
(a) all material tax liabilities, assessments and governmental charges or levies
upon it or its properties or assets, (b) all lawful claims which, if unpaid,
would by law become a Lien upon its property; and (c) all material Indebtedness,
as and when due and payable, but subject to any subordination provisions
contained in any instrument or agreement evidencing such Indebtedness, unless
any of the foregoing is being contested in good faith by appropriate proceedings
diligently conducted and adequate reserves in accordance with GAAP or SAP, as
the case may be, are being maintained by the Borrower or such Subsidiary.
7.03 PRESERVATION OF EXISTENCE, ETC. (a) Preserve, renew and
maintain in full force and effect its legal existence and good standing under
the Laws of the jurisdiction of its organization except in a transaction
permitted by Section 8.02; (b) take all reasonable action to maintain all
rights, privileges, permits, licenses and franchises necessary or desirable in
the normal conduct of its business, except to the extent that failure to do so
could not reasonably be expected to have a Material Adverse Effect; and (c)
preserve or renew all of its registered patents, trademarks, trade names and
service marks, the non-preservation of which could reasonably be expected to
have a Material Adverse Effect.
7.04 MAINTENANCE OF PROPERTIES. (a) Maintain, preserve and protect
all of its material properties and equipment necessary in the operation of its
business in good working order and condition, ordinary wear and tear excepted;
and (b) make all necessary repairs thereto and renewals and replacements thereof
except where the failure to do so could not reasonably be expected to have a
Material Adverse Effect.
7.05 MAINTENANCE OF INSURANCE. Maintain, with financially sound and
reputable insurance companies which are not Affiliates of the Borrower,
insurance with respect to its properties and business against loss or damage of
the kinds customarily insured against by Persons engaged in the same or similar
business, of such types and in such amounts as are customarily carried under
similar circumstances by such other Persons.
7.06 COMPLIANCE WITH LAWS; MATERIAL CONTRACTUAL OBLIGATIONS. Comply
in all material respects with (a) the requirements of all Laws (including ERISA
and Environmental
48
Laws) and all orders, writs, injunctions and decrees applicable to it or to its
business or property, except in such instances in which (i) such requirement of
Law or order, writ, injunction or decree is being contested in good faith by
appropriate proceedings diligently conducted; or (ii) the failure to comply
therewith could not reasonably be expected to have a Material Adverse Effect;
and (b) all material Guarantees, except in such instances in which (i) such
material Guarantee is being contested in good faith by appropriate proceedings
diligently conducted; or (ii) the failure to comply therewith could not
reasonably be expected to have a Material Adverse Effect.
7.07 BOOKS AND RECORDS. Maintain proper books of record and
account, in which full, true and correct entries sufficient to prepare financial
statements in conformity with GAAP or SAP, as the case may be, consistently
applied shall be made of all financial transactions and matters involving the
assets and business of the Borrower or such Subsidiary, as the case may be; and
maintain such books of record and account in material conformity with all
applicable requirements of any Governmental Authority having regulatory
jurisdiction over the Borrower or such Subsidiary, as the case may be.
7.08 INSPECTION RIGHTS. Subject to the Administrative Agent's and
the Lenders' obligations under Section 11.08, permit the Representatives of the
Administrative Agent and each Lender to visit and inspect any of its properties,
to examine its corporate, financial and operating records, and make copies
thereof or abstracts therefrom, and to discuss its affairs, finances and
accounts with its directors, officers, and independent public accountants, all
at the expense of the Borrower and at such reasonable times during normal
business hours and as often as may be reasonably desired, upon reasonable
advance notice to the Borrower; provided that when an Event of Default exists
the Administrative Agent or any Lender (or any of their respective
representatives or independent contractors) may do any of the foregoing at the
expense of the Borrower at any time during normal business hours and without
advance notice.
7.09 LIABILITIES.
(a) Cause each of the Reliance Standard Insurance Companies (other
than FRSL) to continue to qualify as life insurance companies under section 816
of the Code, except to the extent failure to so qualify would not materially
adversely impact the cash under the Tax Sharing Agreements which would have been
available to the Borrower if such Reliance Standard Insurance Company had
continued to qualify as a life insurance company; and
(b) Cause each of the Reliance Standard Insurance Companies to
promptly file consolidated federal tax returns and to include all such companies
on such returns, except to the extent failure to so file a consolidated federal
tax return would not adversely impact the cash under the Tax Sharing Agreements
which would have been available to the Borrower if such Reliance Standard
Insurance Company had filed a consolidated federal tax return.
7.10 DIVIDENDS. To the maximum extent permitted by law, without
necessitating approval of the Department, cause each of the Reliance Standard
Insurance Companies and Safety National to make dividends or principal or
interest payments on surplus debentures to the Borrower, RSL-Texas, RSL or SIG
Holdings, as applicable, to the extent necessary to satisfy the Obligations.
49
7.11 FURTHER ASSURANCES. Upon any Acquisition, if such Acquisition
is made by the acquisition by the Borrower directly of capital stock,
partnership interests, membership interests or equity interests (or warrants,
options or other rights to acquire any of the foregoing), the Borrower shall
take such action as may be reasonably requested by the Administrative Agent to
cause such interests in the Acquired Person acquired by the Borrower to be
subject to a first priority security interest of the Administrative Agent as
Collateral for the Obligations, subject, however, to any Liens on such interests
existing at the time a Person becomes an Acquired Person.
7.12 TAX RETURN. File a consolidated federal income tax return for
the Borrower and its Subsidiaries which are eligible for inclusion therein, for
the year ended December 31, 2002.
ARTICLE VIII
NEGATIVE COVENANTS
So long as any Lender shall have any Commitment hereunder or any Loan
or other Obligation hereunder shall remain unpaid or unsatisfied, the Borrower
shall:
8.01 LIENS. Not, and not permit any Subsidiary to create, incur,
assume or suffer to exist any Lien upon any of its property, assets or revenues,
whether now owned or hereafter acquired, other than the following (which shall
be referred to as "Permitted Liens"):
(a) Liens in favor of the Collateral Agent for the benefit of the
Lenders pursuant to this Agreement and the Related Documents;
(b) Liens for current Taxes not delinquent or for Taxes being
contested in good faith and by appropriate proceedings and with respect to which
adequate reserves are being maintained in accordance with GAAP;
(c) Liens in connection with the acquisition or leasing of fixed
or capital assets after the date hereof attaching only to the property being
acquired, provided the Indebtedness secured thereby does not exceed ninety
percent (90%) of the fair market value of such property at the time of
acquisition thereof;
(d) Liens shown on Schedule 8.01;
(e) Liens incurred in the ordinary course of business in
connection with workers' compensation, unemployment insurance or other forms of
governmental insurance or benefits or to secure performance of tenders,
statutory obligations, leases and contracts (other than for borrowed money)
entered into in the ordinary course of business or to secure obligations on
surety or appeal bonds;
(f) Liens of mechanics, carriers, materialmen and other like Liens
arising in the ordinary course of business in respect of obligations which are
not delinquent or which are being contested in good faith and by appropriate
proceedings and with respect to which adequate reserves are being maintained in
accordance with GAAP;
50
(g) Liens arising in the ordinary course of business for sums
being contested in good faith and by appropriate proceedings and with respect to
which adequate reserves are being maintained in accordance with GAAP, or for
sums not due, and in either case not involving any deposits or advances for
borrowed money or the deferred purchase price of property or services;
(h) Liens in favor of any Federal Home Loan Bank;
(i) Liens incurred in connection with the acquisition of
Investments permitted by this Agreement, including, without limitation, Liens in
favor of the holders of the SIG Notes with respect to the capital stock of
Safety National pursuant to the SIG Notes Pledge Agreement, and Liens permitted
by Section 7.11;
(j) Liens arising in connection with reverse repurchase agreements
and Swap Contracts entered into in the ordinary course of business;
(k) Liens pursuant to trust or other security arrangements in
connection with reinsurance agreements under which insurance liabilities are
ceded to any of the Reliance Standard Insurance Companies, Safety National,
Safety First or Safety National Re;
(l) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount, and which do not in any case
materially detract from the value of the property subject thereto or interfere
with the ordinary conduct of the businesses of the Borrower and its
Subsidiaries;
(m) Liens arising solely by virtue of any statutory or common Law
provision relating to banker's liens, rights of set-off or similar rights and
remedies as to deposit accounts or other funds maintained with a creditor
depository institution; provided, that (i) such deposit account is not a
dedicated cash collateral account and is not subject to restrictions against
access by the Borrower in excess of those set forth by regulations promulgated
by the FRB, and (ii) such deposit account is not intended by the Borrower or any
Subsidiary to provide collateral to the depository institution;
(n) Liens consisting of deposits made by any Subsidiary of the
Borrower (other than a Non-Insurance Subsidiary) with the insurance regulatory
authority in its jurisdiction of domicile or other statutory Liens or Liens or
claims imposed or required by applicable insurance Law or regulation against the
assets of such Subsidiary, in each case in favor of all policyholders of such
Subsidiary and in the ordinary course of such Subsidiary's business; and
(o) Liens securing obligations owed to the Borrower by a
Subsidiary or owed by any Subsidiary of the Borrower to any of its other
Subsidiaries.
8.02 CONSOLIDATION, MERGER, ETC. Not, and not permit any of its
Subsidiaries to, liquidate or dissolve, consolidate with, or merge into or with,
any other Person, or make any Acquisition except:
(a) any Subsidiary of the Borrower may liquidate or dissolve
voluntarily into, and may merge with and into, the Borrower or any other
Subsidiary of the Borrower; provided that with respect to any merger between
Subsidiaries of the Borrower the percentage of the equity
51
and voting power of the surviving Subsidiary owned by the Borrower immediately
after such merger shall not be less than the greatest percentage of the equity
and voting power owned by the Borrower in any Subsidiary party to such merger
immediately prior thereto;
(b) so long as no Default has occurred and is continuing or would
occur after giving effect thereto, the Borrower and its Subsidiaries may make an
Acquisition, through merger, consolidation, or purchase of all or substantially
all of the assets or capital stock of a Person so long as the purchase price of
all such assets and capital stock plus the purchase price paid for books of
insurance business purchased by any of the Reliance Standard Insurance Companies
and Safety National pursuant to Section 8.14, taken in the aggregate from and
after December 31, 2001 does not exceed thirty percent (30%) of the Consolidated
Equity of the Borrower, as determined after giving effect to the applicable
purchase or acquisition, including for such purpose any increase in Consolidated
Equity of the Borrower arising from the issuance by the Borrower of common stock
or warrants, options or other rights with respect to the Borrower's common stock
in connection with such purchase or acquisition (not including, for purposes of
calculating any purchase price with respect to any purchase or acquisition under
this Section 8.02(b), any part of such price that is represented by such common
stock, warrants, options or other rights); and
(c) any Subsidiary (other than any of the Reliance Standard
Insurance Companies and Safety National) engaged primarily in investing in
securities may voluntarily dissolve or liquidate so long as its net assets are
distributed in accordance with the proportionate equity interests of its
shareholders, partners or other beneficial owners.
8.03 ASSET DISPOSITION, ETC. Not, and not permit any of its
Subsidiaries to, sell, or assign, lease, transfer, contribute, convey or
otherwise dispose of, or grant options, warrants or other rights with respect
to, any of its assets to any Person, unless:
(a) such sale, assignment, transfer, lease, contribution,
conveyance or other disposition is in the ordinary course of its business;
(b) the book value of such assets net of related liabilities,
together with the net book value of all other assets sold, transferred, leased,
contributed or conveyed otherwise than in the ordinary course of business by the
Borrower or any of its Subsidiaries pursuant to this clause since December 31,
2001, does not exceed $25,000,000;
(c) such sale, transfer, lease, contribution, conveyance or other
disposition has been consented to in writing by the Required Lenders (it being
understood such Required Lenders shall have no obligation to so consent); or
(d) such sale, transfer, contribution or conveyance is in
connection with any liquidation, dissolution, consolidation or merger permitted
under Section 8.02.
8.04 DIVIDENDS, ETC. Except for (a) dividends made on preferred
stock of the Borrower when no Default has occurred, (b) dividends made on common
stock of the Borrower and the repurchase or redemption of capital stock of the
Borrower, in each case, when no Default has occurred and which do not, in the
aggregate in any Fiscal Year, exceed 5% of the Consolidated Equity of the
Borrower as of December 31 of the Fiscal Year immediately
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preceding the Fiscal Year in which such dividend, repurchase or redemption is to
be made; provided, further, that, to the extent the aggregate amount of such
dividends, repurchases or redemptions in any Fiscal Year is less than the amount
permitted for such Fiscal Year, the Borrower may carry over the additional
amount to any succeeding Fiscal Year, and (c) in addition to clauses (a) and
(b), repurchases of capital stock of the Borrower when no Default has occurred
in an aggregate amount not to exceed $20,000,000 during the term of this
Agreement, not (i) declare, pay or make any dividend or distribution (in cash,
property or obligations) on any shares of any class of capital stock (now or
hereafter outstanding) of the Borrower or on any warrants, options or other
rights with respect to any shares of any class of capital stock (now or
hereafter outstanding) of the Borrower (other than dividends or distributions
payable in its common stock or warrants to purchase its common stock or splitups
or reclassifications of its stock into additional or other shares of its common
stock) or apply, or permit any of its Subsidiaries to apply, any of its funds,
property or assets to the purchase, redemption, sinking fund or other retirement
of any shares of any class of capital stock (now or hereafter outstanding) of
the Borrower or any option, warrant or other right to acquire shares of the
Borrower's capital stock (other than any such payment pursuant to stock
appreciation rights granted and exercised in accordance with applicable rules
and regulations of the Securities and Exchange Commission); or (ii) make any
deposit for any of the foregoing purposes.
8.05 INVESTMENTS. Not, and not permit any of its Subsidiaries to,
make, incur, assume or suffer to exist any Investment in any other Person,
except:
(a) Investments in Cash Equivalents;
(b) in the ordinary course of business, Investments by the
Borrower in any of its Subsidiaries, or by any such Subsidiary in any of its or
the Borrower's Subsidiaries or the Borrower, by way of contributions to capital
or loans or advances; and
(c) other Investments by any of the Borrower and its Subsidiaries
which shall not violate any of the following guidelines:
(i) All Investments by the Reliance Standard Insurance
Companies, Safety National and any Acquired Person (if an insurance
company) shall be in compliance with the Applicable Insurance Code(s)
of each Reliance Standard Insurance Company's, Safety National's and
such Acquired Person's state of domicile or approved by the applicable
Department;
(ii) Investments by the Borrower and its Non-Insurance
Subsidiaries in Risk Assets and Limited Partnership Investments shall
not exceed 25% of the Consolidated Equity of the Borrower in the
aggregate; provided that the value of any Investment constituting a
Risk Asset shall be reduced, for such purposes, to take into account
any transaction in the ordinary course of business by the Borrower or
such Non-Insurance Subsidiary, as the case may be, with respect to
Investments of (or Investments convertible into or exchangeable for
Investments of) the same issuer of such Investment, including, but not
limited to, a short position established or put option held with
respect to such Investment or an Investment into which such Investment
is convertible;
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(iii) Investments by the Borrower and its Subsidiaries in
securities of a single issuer (other than (A) U.S. Government
Securities; (B) overnight investments in securities rated at least A-2
by Standard & Poor's or P-2 by ▇▇▇▇▇'▇ which are purchased through
short-term asset management accounts offered by any commercial banks
organized under the laws of the United States which are Lenders or
which have a combined capital and surplus in excess of $500,000,000;
(C) repurchase agreements collateralized by any of the securities
referenced in clauses (A) and (B), above or clause (2) below; and (D)
investments in the Borrower or any of its Affiliates) shall not exceed
(1) except as to securities covered by clause (2) below, the lesser of
3% of the consolidated total assets of the Borrower and its
Subsidiaries or 20% of Consolidated Equity of the Borrower; or (2) as
to asset-backed securities backed by a single pool of assets that are
Investment Grade Securities, 5% of the consolidated total assets of the
Borrower and its Subsidiaries; provided that for the purposes of
determining compliance with this Section 8.05(c)(iii), (1) the Tersk
Investment shall not be considered as an Investment in a single issuer;
instead, the Investments of Tersk LLC, to the extent of the Borrower's
and its Subsidiaries' proportionate interests therein, shall be deemed
to be Investments of the Borrower and its Subsidiaries (but not to
exceed in the aggregate for such purpose, however, the amount of the
Tersk Investment), and (2) Investments of the Borrower and its
Subsidiaries in the Structured Notes shall not be considered as
Investments in a single issuer;
provided, however, that for purposes of applying Section 8.05(c), Investments by
Subsidiaries of the Borrower which are not wholly-owned Subsidiaries shall only
be taken into account to the extent that the Borrower's direct or indirect
proportionate equity interest of such Subsidiary is taken into account in
calculating Consolidated Equity of the Borrower.
8.06 OTHER SENIOR INDEBTEDNESS. Not, and not permit any of its
Subsidiaries to, other than as permitted by this Agreement, enter into any
amendment or modification of the Other Senior Indebtedness which (i) increases
the principal of or rate of interest on the Other Senior Indebtedness, (ii)
shortens the stated maturity or Average Life of the Other Senior Indebtedness,
or (iii) would otherwise have a Material Adverse Effect.
8.07 TAKE OR PAY CONTRACTS. Not, and not permit any of its
Subsidiaries to, enter into or be a party to any arrangement for the purchase of
materials, supplies, other property or services if such arrangement by its
express terms requires that payment be made by the Borrower or such Subsidiary
regardless of whether such materials, supplies, other property or services are
delivered or furnished to it.
8.08 REGULATION U. Not, and not permit any of its Subsidiaries to,
use or permit any proceeds of the Loans to be used, either directly or
indirectly, for the purpose, whether immediate, incidental or ultimate, of
"purchasing or carrying margin stock" within the meaning of Regulation U.
8.09 SUBSIDIARIES. Notwithstanding any provision of this Agreement
to the contrary, not, and not permit any of its Subsidiaries to, create or
permit to exist any Subsidiary other than the Subsidiaries listed on Schedule
6.13 unless the Administrative Agent and the Lenders are promptly notified of
the creation or existence of any such Subsidiary.
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8.10 OTHER AGREEMENTS. Not, and not permit any of its Subsidiaries
to, enter into any agreement containing any provision which (a) would be
violated or breached by the performance of its obligations hereunder or under
any instrument or document delivered or to be delivered by it hereunder or in
connection herewith, (b) other than in connection with the SIG Note Agreement,
prohibits or restricts the creation or assumption of any Lien (other than
Permitted Liens) upon its properties, revenues or assets (whether now owned or
hereafter acquired) as security for the Liabilities hereunder, (c) other than
the SIG Note Agreement, prohibits or restricts the ability of any of its
Subsidiaries to make dividends or advances or payments to the Borrower, or (d)
other than the SIG Note Agreement, constitutes an agreement to a limitation or
restriction of the type described in clauses (a) through (c) with respect to any
other Indebtedness.
8.11 BUSINESS ACTIVITIES. Not, and not permit any of its
Subsidiaries to, engage in any type of business except (a) the businesses in
which the Borrower and its Subsidiaries are engaged as of the date hereof, (b)
insurance and insurance-related businesses and insurance services of all types,
(c) investment management services for Persons other than the Borrower and its
Subsidiaries and (d) the acquisition or origination of financial assets,
including but not limited to mortgage, automobile and other consumer finance
loans, and the origination of securitizations based on such financial assets.
8.12 CHANGE OF LOCATION OR NAME. Not, and not permit any of its
Subsidiaries to, change (a) its jurisdiction of organization, (b) the location
of its principal place of business, chief executive office, major executive
office, chief place of business or records concerning its business and financial
affairs, or (c) its name or the name under or by which it conducts its business,
in each case without first giving the Administrative Agent at least thirty (30)
days' advance written notice thereof (which notice shall promptly be delivered
to the Lenders by the Administrative Agent) and having taken any and all action
required or desirable to maintain and preserve the Lien on Collateral in favor
of the Collateral Agent for the benefit of the Lenders as contemplated hereby
free and clear of any other Lien whatsoever except for Permitted Liens;
provided, however, that notwithstanding the foregoing, neither the Borrower nor
any of its Subsidiaries shall change the location of its principal place of
business, chief executive office, major executive office, chief place of
business or records concerning its business and financial affairs to any place
outside the contiguous continental United States of America.
8.13 TRANSACTIONS WITH AFFILIATES. Not, and not permit any of its
Subsidiaries to, enter into, or cause, suffer or permit to exist any
arrangement, Reinsurance Agreement, Surplus Relief Reinsurance Agreement,
contract with or investment in any of its other Affiliates which is not a
directly or indirectly wholly-owned Subsidiary of the Borrower unless such
arrangement (a) is fair and equitable to the Borrower or such Subsidiary, (b) is
of a sort which would be entered into by a prudent Person in the position of the
Borrower or such Subsidiary with a Person which is not one of its Affiliates,
and (c) is on terms which are not less favorable to the Borrower or such
Subsidiary than are obtainable from a Person which is not one of its Affiliates.
8.14 BOOKS OF BUSINESS. Not, and not permit any of the Reliance
Standard Insurance Companies, Safety National or any Acquired Person to,
purchase books of insurance business with a purchase price which, when
aggregated with the purchase price for all other books of business and for
assets and capital stock purchases pursuant to Section 8.02, taken in the
55
aggregate from and after December 31, 2001, exceeds thirty percent (30%) of the
Consolidated Equity of the Borrower, determined as provided in Section 8.02(b).
8.15 OWNERSHIP OF RSL; SIG HOLDINGS AND SAFETY NATIONAL. (a) Not
cease to own, free and clear of all Liens (other than Liens created under the
Borrower Pledge Agreement), 100% of the outstanding shares of voting stock of
RSL-Texas on a fully diluted basis, except as a result of any merger,
consolidation, liquidation or dissolution referenced in clause (a) of the
definition of Change of Control; (b) Not permit RSL-Texas to cease to own, free
and clear of all Liens (other than Liens created under the Borrower Pledge
Agreement), 100% of the outstanding shares of voting stock and voting power of
RSL on a fully diluted basis, except as a result of any merger, consolidation,
liquidation or dissolution referenced in clause (a) of the definition of Change
of Control, whereafter this clause (b) shall apply to the Borrower rather than
to RSL-Texas; (c) not cease to own, free and clear of all Liens (other than
Liens created under the Borrower Pledge Agreement), 100% of the outstanding
voting stock and voting power of SIG Holdings and (d) not permit SIG Holdings to
cease to own, free and clear of all Liens (other than Liens created by the SIG
Notes Pledge Agreement and the SIG Holdings Pledge Agreements), 100% of the
outstanding shares of voting stock and voting power of Safety National on a
fully diluted basis.
8.16 MINIMUM SURPLUS. Not permit Capital and Surplus plus IMR/AVR
of RSL to be less than $225,000,000 at any time and not permit Capital and
Surplus of Safety National to be less than $160,000,000 at any time.
8.17 DEBT TO CAPITAL. Not permit the Debt to Capital Ratio to
exceed 0.30:1 at any time.
8.18 RISK-BASED CAPITAL RATIO. Not permit the Risk-Based Capital
Ratio of RSL to fall below 200% and not permit the Risk-Based Capital Ratio of
Safety National to fall below 130%. This ratio shall be measured as of the end
of each Fiscal Year for the Fiscal Year then ended.
8.19 CASH COVERAGE RATIO. Not permit the Cash Coverage Ratio of the
Borrower to be less than 3.0 to 1 as of the end of any Fiscal Quarter.
8.20 PRO FORMA RISK-BASED CAPITAL. Not permit the Risk-Based
Capital Ratio of Safety National (calculated as if Safety National's excess
workers' compensation premiums were reported under the workers' compensation
line of business for purposes of calculating Safety National's Risk Based
Capital Ratio) to fall below 200%. This ratio shall be measured as of the end of
each Fiscal Year for the Fiscal Year then ended.
8.21 CONSOLIDATED FUNDED DEBT. Subject to the following sentence,
not incur, or permit any Subsidiary to incur, Consolidated Funded Debt having
either (a) a maturity prior to the Maturity Date or (b) covenants that are more
restrictive than those for which this Agreement provides. The foregoing
restriction shall not apply to (i) any Indebtedness in existence as of the
Closing Date and listed on the attached Schedule 8.21, (ii) any Indebtedness of
RSL, RSL-Texas or Safety National to any Federal Home Loan Bank, (iii) any
Indebtedness under reverse repurchase or securities lending agreements, (iv) any
Indebtedness owed to the Borrower or any
56
of its Subsidiaries, (v) any Indebtedness incurred in connection with the
acquisition of Investments permitted by this Agreement, (vi) any Indebtedness
under letters of credit or other credit support arrangements or surety bonds
issued or obtained by any of the Reliance Standard Insurance Companies, Safety
National, Safety First or Safety National Re in the ordinary course of business
, or (vii) any Indebtedness other than the types specified in the preceding
clauses (i) through (vi), so long as the aggregate principal amount of such
Indebtedness outstanding at any one time does not exceed $50,000,000. Compliance
with clause (a) of this Section 8.21 shall be determined based on the Maturity
Date as in effect as of the time of the incurrence of any Indebtedness, and no
extension of such Maturity Date pursuant to Section 2.12 shall give rise to a
violation of this Section 8.21 with respect to any Indebtedness that was in
compliance herewith when originally incurred.
ARTICLE IX
EVENTS OF DEFAULT AND REMEDIES
9.01 EVENTS OF DEFAULT. Any of the following shall constitute an
Event of Default:
(a) Non-Payment. The Borrower or any other Loan Party fails to pay
(i) when and as required to be paid herein, any amount of principal of any Loan,
or (ii) within three days after the same becomes due, any interest on any Loan,
or any commitment, utilization or other fee due hereunder, or (iii) within five
days after the same becomes due, any other amount payable hereunder or under any
other Loan Document; or
(b) Specific Covenants. The Borrower fails to perform or observe
any term, covenant or agreement contained in any of Section 7.01(i), or Article
VIII (other than Sections 8.05, 8.07, 8.09 or 8.12 which shall be governed by
Section 9.01(c)); or
(c) Other Defaults. Any Loan Party fails to perform or observe
any other covenant or agreement (not specified in clause (a) or (b) above)
contained in any Loan Document on its part to be performed or observed and such
failure continues for 30 days; or
(d) Representations and Warranties. Any representation, warranty,
certification or statement of fact made or deemed made by or on behalf of the
Borrower or any other Loan Party herein, in any other Loan Document, or in any
document delivered in connection herewith or therewith shall be incorrect or
misleading in any material respect when made or deemed made; or
(e) Cross-Default. (i) The Borrower or any Subsidiary (A) fails to
make any payment when due (whether by scheduled maturity, required prepayment,
acceleration, demand, or otherwise) in respect of any Indebtedness or Guarantee
(other than Indebtedness hereunder and Indebtedness under Swap Contracts) having
an aggregate principal amount (including undrawn committed or available amounts
and including amounts owing to all creditors under any combined or syndicated
credit arrangement) of more than the Threshold Amount, or (B) fails to observe
or perform any other agreement or condition relating to any such Indebtedness or
Guarantee or contained in any instrument or agreement evidencing, securing or
relating thereto, or any other event occurs, the effect of which default or
other event is to cause, or to permit the holder or holders of such Indebtedness
or the beneficiary or beneficiaries of such Guarantee (or a
57
trustee or agent on behalf of such holder or holders or beneficiary or
beneficiaries) to cause, with the giving of notice if required, such
Indebtedness to be demanded or to become due or to be repurchased, prepaid,
defeased or redeemed (automatically or otherwise), or an offer to repurchase,
prepay, defease or redeem such Indebtedness to be made, prior to its stated
maturity, or such Guarantee to become payable or cash collateral in respect
thereof to be demanded; or (ii) there occurs under any Swap Contract an Early
Termination Date (as defined in such Swap Contract) resulting from (C) any event
of default under such Swap Contract as to which the Borrower or any Subsidiary
is the Defaulting Party (as defined in such Swap Contract) or (D) any
Termination Event (as so defined) under such Swap Contract as to which the
Borrower or any Subsidiary is an Affected Party (as so defined) and, in either
event, the Swap Termination Value owed by the Borrower or such Subsidiary as a
result thereof is greater than the Threshold Amount and the amount owed by the
Borrower or Subsidiary thereunder is not paid within 15 days of the date such
payment is due; or
(f) Insolvency Proceedings, Etc. The Borrower or any Subsidiary
institutes or consents to the institution of any proceeding under any Debtor
Relief Law, or makes an assignment for the benefit of creditors; or applies for
or consents to the appointment of any receiver, trustee, custodian, conservator,
liquidator, rehabilitator or similar officer for it or for all or any material
part of its property; or any receiver, trustee, custodian, conservator,
liquidator, rehabilitator or similar officer is appointed without the
application or consent of such Person and the appointment continues undischarged
or unstayed for 60 calendar days; or any proceeding under any Debtor Relief Law
relating to any such Person or to all or any material part of its property is
instituted without the consent of such Person and continues undismissed or
unstayed for 60 calendar days, or an order for relief is entered in any such
proceeding; or
(g) Inability to Pay Debts; Attachment. (i) The Borrower or any
Subsidiary becomes unable or admits in writing its inability or fails generally
to pay its debts as they become due, or (ii) any writ or warrant of attachment
or execution or similar process is issued or levied against all or any material
part of the property of any such Person and is not released, vacated or fully
bonded within 30 days after its issue or levy; or
(h) Judgments. There is entered against the Borrower or any
Subsidiary (i) a final non-appealable judgment or order for the payment of money
in an aggregate amount exceeding the Threshold Amount (to the extent not covered
by independent third-party insurance (including but not limited to reinsurance
coverage) as to which the insurer or reinsurer does not dispute coverage) which
is not satisfied within fifteen (15) days from the date thereof, or (ii) any one
or more non-monetary final judgments that have, or could reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect and, in
either case, (A) enforcement proceedings are commenced by any creditor upon such
judgment or order, or (B) there is a period of 10 consecutive days during which
a stay of enforcement of such judgment, by reason of a pending appeal or
otherwise, is not in effect; or
(i) ERISA. (i) An ERISA Event occurs with respect to a Pension
Plan or Multiemployer Plan which has resulted or could reasonably be expected to
result in liability of the Borrower under Title IV of ERISA to the Pension Plan,
Multiemployer Plan or the PBGC in an aggregate amount in excess of the
$10,000,000, or (ii) the Borrower or any ERISA Affiliate fails to pay when due,
after the expiration of any applicable grace period, any installment
58
payment with respect to its withdrawal liability under Section 4201 of ERISA
under a Multiemployer Plan in an aggregate amount in excess of the $10,000,000;
or
(j) Invalidity of Loan Documents. Any Loan Document, at any time
after its execution and delivery and for any reason other than as expressly
permitted hereunder or satisfaction in full of all the Obligations, ceases to be
in full force and effect; or any Loan Party or any other Person contests in any
manner the validity or enforceability of any Loan Document; or any Loan Party
denies that it has any or further liability or obligation under any Loan
Document, or purports to revoke, terminate or rescind any Loan Document; or
(k) Change of Control. Any Change of Control occurs.
9.02 REMEDIES UPON EVENT OF DEFAULT. If any Event of Default occurs
and is continuing, the Administrative Agent shall, at the request of, or may,
with the consent of, the Required Lenders, take any or all of the following
actions:
(a) declare the commitment of each Lender to make Loans to be
terminated, whereupon such commitments and obligation shall be terminated;
(b) declare the unpaid principal amount of all outstanding Loans,
all interest accrued and unpaid thereon, and all other amounts owing or payable
hereunder or under any other Loan Document to be immediately due and payable,
without presentment, demand, protest or other notice of any kind, all of which
are hereby expressly waived by the Borrower; and
(c) exercise on behalf of itself and the Lenders all rights and
remedies available to it and the Lenders under the Loan Documents or applicable
law;
provided that upon the occurrence of an actual or deemed entry of an order for
relief with respect to the Borrower under the Debtor Relief Laws, the obligation
of each Lender to make Loans shall automatically terminate, and the unpaid
principal amount of all outstanding Loans and all interest and other amounts as
aforesaid shall automatically become due and payable.
9.03 APPLICATION OF FUNDS. After the exercise of remedies provided
for in Section 9.02 (or after the Loans have automatically become immediately
due and payable as set forth in the proviso to Section 9.02), any amounts
received on account of the Obligations shall be applied by the Administrative
Agent in the following order:
First, to payment of that portion of the Obligations constituting fees,
indemnities, expenses and other amounts (including Attorney Costs and amounts
payable under Article III) payable to the Administrative Agent in its capacity
as such;
Second, to payment of that portion of the Obligations constituting fees,
indemnities and other amounts (other than principal and interest) payable to the
Lenders (including Attorney Costs and amounts payable under Article III),
ratably among them in proportion to the amounts described in this clause Second
payable to them;
59
Third, to payment of that portion of the Obligations constituting accrued and
unpaid interest on the Loans, ratably among the Lenders in proportion to the
respective amounts described in this clause Third payable to them;
Fourth, to payment of that portion of the Obligations constituting unpaid
principal of the Loans, ratably among the Lenders in proportion to the
respective amounts described in this clause Fourth held by them; and
Last, the balance, if any, after all of the Obligations have been
indefeasibly paid in full, to the Borrower or as otherwise required by Law.
ARTICLE X
ADMINISTRATIVE AGENT
10.01 APPOINTMENT AND AUTHORIZATION OF ADMINISTRATIVE AGENT. Each
Lender hereby irrevocably appoints, designates and authorizes the Administrative
Agent to take such action on its behalf under the provisions of this Agreement
and each other Loan Document and to exercise such powers and perform such duties
as are expressly delegated to it by the terms of this Agreement or any other
Loan Document, together with such powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary contained elsewhere herein or in
any other Loan Document, the Administrative Agent shall not have any duties or
responsibilities, except those expressly set forth herein, nor shall the
Administrative Agent have or be deemed to have any fiduciary relationship with
any Lender or participant, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the
Administrative Agent. Without limiting the generality of the foregoing sentence,
the use of the term "agent" herein and in the other Loan Documents with
reference to the Administrative Agent is not intended to connote any fiduciary
or other implied (or express) obligations arising under agency doctrine of any
applicable Law. Instead, such term is used merely as a matter of market custom,
and is intended to create or reflect only an administrative relationship between
independent contracting parties.
10.02 DELEGATION OF DUTIES. The Administrative Agent may execute any
of its duties under this Agreement or any other Loan Document by or through
agents, employees or attorneys-in-fact and shall be entitled to advice of
counsel and other consultants or experts concerning all matters pertaining to
such duties. The Administrative Agent shall not be responsible to any Lender for
the negligence or misconduct of any agent or attorney-in-fact that it selects in
the absence of gross negligence or willful misconduct.
10.03 LIABILITY OF ADMINISTRATIVE AGENT. No Agent-Related Person
shall (a) be liable for any action taken or omitted to be taken by any of them
under or in connection with this Agreement or any other Loan Document or the
transactions contemplated hereby (except for its own gross negligence or willful
misconduct in connection with its duties expressly set forth herein), or (b) be
responsible in any manner to any Lender or participant for any recital,
statement, representation or warranty made by any Loan Party or any officer
thereof, contained herein or in any other Loan Document, or in any certificate,
report, statement or other document referred to or provided for in, or received
by the Administrative Agent under or in connection
60
with, this Agreement or any other Loan Document, or the validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other Loan
Document, or for any failure of any Loan Party or any other party to any Loan
Document to perform its obligations hereunder or thereunder. No Agent-Related
Person shall be under any obligation to any Lender or participant to ascertain
or to inquire as to the observance or performance of any of the agreements
contained in, or conditions of, this Agreement or any other Loan Document, or to
inspect the properties, books or records of any Loan Party or any Affiliate
thereof.
10.04 RELIANCE BY ADMINISTRATIVE AGENT.
(a) The Administrative Agent shall be entitled to rely, and shall
be fully protected in relying, upon any writing, communication, signature,
resolution, representation, notice, consent, certificate, affidavit, letter,
telegram, facsimile, telex or telephone message, electronic mail message,
statement 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 counsel to any Loan
Party), independent accountants and other experts selected by the Administrative
Agent. The Administrative Agent shall be fully justified in failing or refusing
to take any action under any Loan Document unless it shall first receive such
advice or concurrence of the Required Lenders as it deems appropriate and, if it
so requests, it shall first be indemnified to its satisfaction by the Lenders
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action. The Administrative Agent shall
in all cases be fully protected in acting, or in refraining from acting, under
this Agreement or any other Loan Document in accordance with a request or
consent of the Required Lenders (or such greater number of Lenders as may be
expressly required hereby in any instance) and such request and any action taken
or failure to act pursuant thereto shall be binding upon all the Lenders.
(b) For purposes of determining compliance with the conditions
specified in Section 5.01, each Lender that has signed this Agreement shall be
deemed to have consented to, approved or accepted or to be satisfied with, each
document or other matter required thereunder to be consented to or approved by
or acceptable or satisfactory to a Lender unless the Administrative Agent shall
have received notice from such Lender prior to the proposed Closing Date
specifying its objection thereto.
10.05 NOTICE OF DEFAULT. The Administrative Agent shall not be
deemed to have knowledge or notice of the occurrence of any Default, except with
respect to defaults in the payment of principal, interest and fees required to
be paid to the Administrative Agent for the account of the Lenders, unless the
Administrative Agent shall have received written notice from a Lender or the
Borrower referring to this Agreement, describing such Default and stating that
such notice is a "notice of default." The Administrative Agent will notify the
Lenders of its receipt of any such notice. The Administrative Agent shall take
such action with respect to such Default as may be directed by the Required
Lenders in accordance with Article IX; provided that unless and until the
Administrative Agent has received any such direction, the Administrative Agent
may (but shall not be obligated to) take such action, or refrain from taking
such action, with respect to such Default as it shall deem advisable or in the
best interest of the Lenders.
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10.06 CREDIT DECISION; DISCLOSURE OF INFORMATION BY ADMINISTRATIVE
AGENT. Each Lender acknowledges that no Agent-Related Person has made any
representation or warranty to it, and that no act by the Administrative Agent
hereafter taken, including any consent to and acceptance of any assignment or
review of the affairs of any Loan Party or any Affiliate thereof, shall be
deemed to constitute any representation or warranty by any Agent-Related Person
to any Lender as to any matter, including whether Agent-Related Persons have
disclosed material information in their possession. Each Lender represents to
the Administrative Agent that it has, independently and without reliance upon
any Agent-Related Person and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of the Loan Parties and their respective Subsidiaries, and all
applicable bank or other regulatory Laws relating to the transactions
contemplated hereby, and made its own decision to enter into this Agreement and
to extend credit to the Borrower hereunder. Each Lender also represents that it
will, independently and without reliance upon any Agent-Related Person and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this Agreement and the other Loan Documents, and to make
such investigations as it deems necessary to inform itself as to the business,
prospects, 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
Administrative Agent herein, the Administrative Agent shall not have any duty or
responsibility to provide any Lender with any credit or other information
concerning the business, prospects, operations, property, financial and other
condition or creditworthiness of any of the Loan Parties or any of their
respective Affiliates which may come into the possession of any Agent-Related
Person.
10.07 INDEMNIFICATION OF ADMINISTRATIVE AGENT. Whether or not the
transactions contemplated hereby are consummated, the Lenders shall indemnify
upon demand each Agent-Related Person (to the extent not reimbursed by or on
behalf of any Loan Party and without limiting the obligation of any Loan Party
to do so), pro rata (which pro rata share shall be determined as of the date a
claim is made), and hold harmless each Agent-Related Person from and against any
and all Indemnified Liabilities incurred by it; provided that no Lender shall be
liable for the payment to any Agent-Related Person of any portion of such
Indemnified Liabilities to the extent determined in a final, nonappealable
judgment by a court of competent jurisdiction to have resulted from such
Agent-Related Person's own gross negligence or willful misconduct; provided that
no action taken in accordance with the directions of the Required Lenders shall
be deemed to constitute gross negligence or willful misconduct for purposes of
this Section. Without limitation of the foregoing, each Lender shall reimburse
the Administrative Agent upon demand for its ratable share of any reasonable
costs or out-of-pocket expenses (including reasonable Attorney Costs) incurred
by the Administrative Agent in connection with the preparation, execution,
delivery, administration, modification, amendment or enforcement (whether
through negotiations, legal proceedings or otherwise) of, or legal advice in
respect of rights or responsibilities under, this Agreement, any other Loan
Document, or any document contemplated by or referred to herein, to the extent
that the Administrative Agent is not reimbursed for such expenses by or on
behalf of the Borrower. The undertaking in this Section shall survive
termination of the Aggregate Commitments, the payment of all other Obligations
and the resignation of the Administrative Agent.
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10.08 ADMINISTRATIVE AGENT IN ITS INDIVIDUAL CAPACITY. Bank of
America and its Affiliates may make loans to, issue letters of credit for the
account of, accept deposits from, acquire equity interests in and generally
engage in any kind of banking, trust, financial advisory, underwriting or other
business with each of the Loan Parties and their respective Affiliates as though
Bank of America were not the Administrative Agent hereunder and without notice
to or consent of the Lenders. The Lenders acknowledge that, pursuant to such
activities, Bank of America or its Affiliates may receive information regarding
any Loan Party or its Affiliates (including information that may be subject to
confidentiality obligations in favor of such Loan Party or such Affiliate) and
acknowledge that the Administrative Agent shall be under no obligation to
provide such information to them. With respect to its Loans, Bank of America
shall have the same rights and powers under this Agreement as any other Lender
and may exercise such rights and powers as though it were not the Administrative
Agent, and the terms "Lender" and "Lenders" include Bank of America in its
individual capacity.
10.09 SUCCESSOR ADMINISTRATIVE AGENT. The Administrative Agent may
resign as Administrative Agent upon 30 days' notice to the Lenders. If the
Administrative Agent resigns under this Agreement, the Required Lenders shall
appoint from among the Lenders a successor administrative agent for the Lenders,
which successor administrative agent shall be consented to by the Borrower at
all times other than during the existence of an Event of Default (which consent
of the Borrower shall not be unreasonably withheld or delayed). If no successor
administrative agent is appointed prior to the effective date of the resignation
of the Administrative Agent, the Administrative Agent may appoint, after
consulting with the Lenders and the Borrower, a successor administrative agent
from among the Lenders. Upon the acceptance of its appointment as successor
administrative agent hereunder, the Person acting as such successor
administrative agent shall succeed to all the rights, powers and duties of the
retiring Administrative Agent and the term "Administrative Agent" shall mean
such successor administrative agent, and the retiring Administrative Agent's
appointment, powers and duties as Administrative Agent shall be terminated.
After any retiring Administrative Agent's resignation hereunder as
Administrative Agent, the provisions of this Article X and Sections 11.04 and
11.05 shall inure to its benefit as to any actions taken or omitted to be taken
by it while it was Administrative Agent under this Agreement. If no successor
administrative agent has accepted appointment as Administrative Agent by the
date which is 30 days following a retiring Administrative Agent's notice of
resignation, the retiring Administrative Agent's resignation shall nevertheless
thereupon become effective and the Lenders shall perform all of the duties of
the Administrative Agent hereunder until such time, if any, as the Required
Lenders appoint a successor agent as provided for above.
10.10 ADMINISTRATIVE AGENT MAY FILE PROOFS OF CLAIM. In case of the
pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relative to any Loan Party, the Administrative Agent (irrespective of
whether the principal of any Loan shall then be due and payable as herein
expressed or by declaration or otherwise and irrespective of whether the
Administrative Agent shall have made any demand on the Borrower) shall be
entitled and empowered, by intervention in such proceeding or otherwise
(a) to file and prove a claim for the whole amount of the
principal and interest owing and unpaid in respect of the Loans and all other
Obligations that are owing and unpaid and to file
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such other documents as may be necessary or advisable in order to have the
claims of the Lenders and the Administrative Agent (including any claim for the
reasonable compensation, expenses, disbursements and advances of the Lenders and
the Administrative Agent and their respective agents and counsel and all other
amounts due the Lenders and the Administrative Agent under Section 2.07, Section
11.04 and Section 11.05) allowed in such judicial proceeding; and
(b) to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Lender to make such payments to the Administrative Agent and, in the event
that the Administrative Agent shall consent to the making of such payments
directly to the Lenders, to pay to the Administrative Agent any amount due for
the reasonable compensation, expenses, disbursements and advances of the
Administrative Agent and its agents and counsel, and any other amounts due the
Administrative Agent under Sections 2.07, 11.04 and 11.05.
Nothing contained herein shall be deemed to authorize the
Administrative Agent to authorize or consent to or accept or adopt on behalf of
any Lender any plan of reorganization, arrangement, adjustment or composition
affecting the Obligations or the rights of any Lender or to authorize the
Administrative Agent to vote in respect of the claim of any Lender in any such
proceeding.
10.11 COLLATERAL MATTERS. The Lenders irrevocably authorize the
Administrative Agent, at its option and in its discretion,
(a) to release any Lien on any property granted to or held by the
Administrative Agent under any Loan Document (i) upon termination of the
Aggregate Commitments and payment in full of all Obligations (other than
contingent indemnification obligations), (ii) that is sold or to be sold as part
of or in connection with any sale permitted hereunder or under any other Loan
Document, (iii) subject to Section 11.01, if approved, authorized or ratified in
writing by the Required Lenders, or (iv) as permitted under Section 4.02; and
(b) to subordinate any Lien on any property granted to or held by
the Administrative Agent under any Loan Document to the holder of any Lien on
such property that is permitted by Section 8.01(i).
Upon request by the Administrative Agent at any time, the Required
Lenders will confirm in writing the Administrative Agent's authority to release
or subordinate its interest in particular types or items of property pursuant to
this Section 10.11.
10.12 OTHER AGENTS; ARRANGERS AND MANAGERS. None of the Lenders or
other Persons identified on the facing page or signature pages of this Agreement
as a "syndication agent," "documentation agent," "co-agent," "book manager,"
"lead manager," "arranger," "joint arranger," "lead arranger", "co-arranger" or
"joint lead arranger" shall have any right, power, obligation, liability,
responsibility or duty under this Agreement other than, in the case of such
Lenders, those applicable to all Lenders as such. Without limiting the
foregoing, none of the
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Lenders or other Persons so identified shall have or be deemed to have any
fiduciary relationship with any Lender. Each Lender acknowledges that it has not
relied, and will not rely, on any of the Lenders or other Persons so identified
in deciding to enter into this Agreement or in taking or not taking action
hereunder.
ARTICLE XI
MISCELLANEOUS
11.01 AMENDMENTS, ETC. No amendment or waiver of any provision of
this Agreement or any other Loan Document, and no consent to any departure by
the Borrower or any other Loan Party therefrom, shall be effective unless in
writing signed by the Required Lenders and the Borrower or the applicable Loan
Party, as the case may be, and acknowledged by the Administrative Agent, and
each such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given; provided that no such amendment,
waiver or consent shall:
(a) waive any condition set forth in Section 5.01(a) without the
written consent of each Lender;
(b) extend or increase the Commitment of any Lender (or reinstate
any Commitment terminated pursuant to Section 9.02) without the written consent
of such Lender;
(c) postpone any date fixed by this Agreement or any other Loan
Document for any payment of principal, interest, fees or other amounts due to
the Lenders (or any of them) hereunder or under any other Loan Document without
the written consent of each Lender directly affected thereby;
(d) reduce the principal of, or the rate of interest specified
herein on, any Loan or (subject to clause (ii) of the second proviso to this
Section 11.01) any fees or other amounts payable hereunder or under any other
Loan Document without the written consent of each Lender directly affected
thereby; provided that only the consent of the Required Lenders shall be
necessary to amend the definition of "Default Rate" or to waive any obligation
of the Borrower to pay interest at the Default Rate;
(e) change Section 2.11 or Section 9.03 in a manner that would
alter the pro rata sharing of payments required thereby without the written
consent of each Lender;
(f) change any provision of this Section or the definition of
"Required Lenders" or any other provision hereof specifying the number or
percentage of Lenders required to amend, waive or otherwise modify any rights
hereunder or make any determination or grant any consent hereunder, without the
written consent of each Lender; or
(g) release all or substantially all the Collateral;
and, provided further, that (i) no amendment, waiver or consent shall, unless in
writing and signed by the Administrative Agent in addition to the Lenders
required above, affect the rights or duties of the Administrative Agent under
this Agreement or any other Loan Document; and (ii) the Fee Letter may be
amended, or rights or privileges thereunder waived, in a writing executed
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only by the parties thereto. Notwithstanding anything to the contrary herein, no
Defaulting Lender shall have any right to approve or disapprove any amendment,
waiver or consent hereunder, except that the Commitment of such Lender may not
be increased or extended without the consent of such Lender.
11.02 NOTICES AND OTHER COMMUNICATIONS; FACSIMILE COPIES.
(a) General. Unless otherwise expressly provided herein, all
notices and other communications provided for hereunder shall be in writing
(including by facsimile transmission). All such written notices shall be mailed,
faxed or delivered to the applicable address, facsimile number or (subject to
clause (c) below) electronic mail address, and all notices and other
communications expressly permitted hereunder to be given by telephone shall be
made to the applicable telephone number, as follows:
(i) if to the Borrower or the Administrative Agent, to
the address, facsimile number, electronic mail address or telephone
number specified for such Person on Schedule 11.02 or to such other
address, facsimile number, electronic mail address or telephone number
as shall be designated by such party in a notice to the other parties;
and
(ii) if to any other Lender, to the address, facsimile
number, electronic mail address or telephone number specified in its
Administrative Questionnaire provided to the Borrower or to such other
address, facsimile number, electronic mail address or telephone number
as shall be designated by such party in a notice to the Borrower or the
Administrative Agent.
All such notices and other communications shall be deemed to be given or made
upon the earlier to occur of (i) actual receipt by the relevant party hereto and
(ii) (A) if delivered by hand or by courier, when signed for by or on behalf of
the relevant party hereto; (B) if delivered by mail, four Business Days after
deposit in the mails, postage prepaid; (C) if delivered by facsimile, when sent
and receipt has been confirmed by telephone; and (D) if delivered by electronic
mail (which form of delivery is subject to the provisions of clause (c) below),
when delivered; provided that notices and other communications to the
Administrative Agent pursuant to Article II shall not be effective until
actually received by such Person. In no event shall a voicemail message be
effective as a notice, communication or confirmation hereunder.
(b) Effectiveness of Facsimile Documents and Signatures. Loan
Documents may be transmitted and/or signed by facsimile. The effectiveness of
any such documents and signatures shall, subject to applicable Law, have the
same force and effect as manually-signed originals and shall be binding on all
Loan Parties, the Administrative Agent and the Lenders. The Administrative Agent
may also require that any such documents and signatures be confirmed by a
manually-signed original thereof; provided that the failure to request or
deliver the same shall not limit the effectiveness of any facsimile document or
signature.
(c) Limited Use of Electronic Mail. Electronic mail and Internet
and intranet websites may be used only to distribute routine communications,
such as financial statements and other information as provided in Section 7.01,
and to distribute Loan Documents for execution by the parties thereto, and may
not be used for any other purpose.
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(d) Reliance by Administrative Agent and Lenders. The
Administrative Agent and the Lenders shall be entitled to rely and act upon any
notices (including telephonic Loan Notices) purportedly given by or on behalf of
the Borrower even if (i) such notices were not made in a manner specified
herein, were incomplete or were not preceded or followed by any other form of
notice specified herein, or (ii) the terms thereof, as understood by the
recipient, varied from any confirmation thereof. The Borrower shall indemnify
each Agent-Related Person and each Lender from all losses, costs, expenses and
liabilities resulting from the reliance by such Person on each notice
purportedly given by or on behalf of the Borrower. All telephonic notices to and
other communications with the Administrative Agent may be recorded by the
Administrative Agent, and each of the parties hereto hereby consents to such
recording.
11.03 NO WAIVER; CUMULATIVE REMEDIES. No failure by any Lender or
the Administrative Agent to exercise, and no delay by any such Person in
exercising, any right, remedy, power or privilege hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, remedy,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and privileges herein provided are cumulative and not exclusive
of any rights, remedies, powers and privileges provided by law.
11.04 ATTORNEY COSTS, EXPENSES AND TAXES. The Borrower agrees (a) to
pay or reimburse the Administrative Agent for all reasonable out-of-pocket costs
and expenses incurred in connection with the development, preparation,
negotiation and execution of this Agreement and the other Loan Documents and any
amendment, waiver, consent or other modification of the provisions hereof and
thereof (whether or not the transactions contemplated hereby or thereby are
consummated), and the consummation and administration of the transactions
contemplated hereby and thereby, including all Attorney Costs (which shall be
deemed to be out-of-pocket expenses for the purpose hereof), and (b) to pay or
reimburse the Administrative Agent and each Lender for all reasonable
out-of-pocket costs and expenses incurred in connection with the enforcement,
attempted enforcement, or preservation of any rights or remedies under this
Agreement or the other Loan Documents (including all such costs and expenses
incurred during any "workout" or restructuring in respect of the Obligations and
during any legal proceeding, including any proceeding under any Debtor Relief
Law), including all Attorney Costs (which shall be deemed to be out-of-pocket
expenses for the purpose hereof). The foregoing costs and expenses shall include
all search, filing, recording, title insurance and appraisal charges and fees
and taxes related thereto, and other reasonable out-of-pocket expenses incurred
by the Administrative Agent and the cost of independent public accountants and
other outside experts retained by the Administrative Agent or any Lender. All
amounts due under this Section 11.04 shall be payable within 10 Business Days
after demand therefor. The agreements in this Section shall survive the
termination of the Aggregate Commitments and repayment of all other Obligations.
11.05 INDEMNIFICATION BY THE BORROWER. Whether or not the
transactions contemplated hereby are consummated, the Borrower shall indemnify
and hold harmless each Agent-Related Person, each Lender and their respective
Affiliates, directors, officers, employees, counsel, agents and
attorneys-in-fact (collectively the "Indemnitees") from and against any and all
liabilities, obligations, losses, damages, penalties, claims, demands, actions,
judgments, suits, costs, expenses and disbursements (including reasonable
Attorney Costs) of any kind or nature
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whatsoever which may at any time be imposed on, incurred by or asserted against
any such Indemnitee in any way relating to or arising out of or in connection
with (a) the execution, delivery, enforcement, performance or administration of
any Loan Document or any other agreement, letter or instrument delivered in
connection with the transactions contemplated thereby or the consummation of the
transactions contemplated thereby, (b) any Commitment or Loan or the use or
proposed use of the proceeds therefrom, or (c) any actual or alleged presence or
release of Hazardous Materials on or from any property currently or formerly
owned or operated by the Borrower, any Subsidiary or any other Loan Party, or
any Environmental Liability related in any way to the Borrower, any Subsidiary
or any other Loan Party, or (d) any actual or prospective claim, litigation,
investigation or proceeding relating to any of the foregoing, whether based on
contract, tort or any other theory (including any investigation of, preparation
for, or defense of any pending or threatened claim, investigation, litigation or
proceeding) and regardless of whether any Indemnitee is a party thereto (all the
foregoing, collectively, the "Indemnified Liabilities"; provided that such
indemnity shall not, as to any Indemnitee, be available to the extent that such
liabilities, obligations, losses, damages, penalties, claims, demands, actions,
judgments, suits, costs, expenses or disbursements are determined by a court of
competent jurisdiction by final and nonappealable judgment to have resulted from
the gross negligence or willful misconduct of such Indemnitee. No Indemnitee
shall be liable for any damages arising from the use by others of any
information or other materials obtained through IntraLinks or other similar
information transmission systems in connection with this Agreement, nor shall
any Indemnitee have any liability for any indirect or consequential damages
relating to this Agreement or any other Loan Document or arising out of its
activities in connection herewith or therewith (whether before or after the
Closing Date); provided, however, that this sentence shall not relieve any
Indemnitee from liability arising from a breach of Section 11.08. All amounts
due under this Section 11.05 shall be payable within 10 Business Days after
demand therefor. The agreements in this Section shall survive the resignation of
the Administrative Agent, the replacement of any Lender, the termination of the
Aggregate Commitments and the repayment, satisfaction or discharge of all the
other Obligations.
11.06 PAYMENTS SET ASIDE. To the extent that any payment by or on
behalf of the Borrower is made to the Administrative Agent or any Lender, or the
Administrative Agent or any Lender exercises its right of set-off, and such
payment or the proceeds of such set-off or any part thereof is subsequently
invalidated, declared to be fraudulent or preferential, set aside or required
(including pursuant to any settlement entered into by the Administrative Agent
or such Lender in its discretion) to be repaid to a trustee, receiver or any
other party, in connection with any proceeding under any Debtor Relief Law or
otherwise, then (a) to the extent of such recovery, the obligation or part
thereof originally intended to be satisfied shall be revived and continued in
full force and effect as if such payment had not been made or such set-off had
not occurred, and (b) each Lender severally agrees to pay to the Administrative
Agent upon demand its applicable share of any amount so recovered from or repaid
by the Administrative Agent, plus interest thereon from the date of such demand
to the date such payment is made at a rate per annum equal to the Federal Funds
Rate from time to time in effect.
11.07 SUCCESSORS AND ASSIGNS.
(a) The provisions of this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns permitted hereby, except that the
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Borrower may not assign or otherwise transfer any of its rights or obligations
hereunder without the prior written consent of each Lender and no Lender may
assign or otherwise transfer any of its rights or obligations hereunder except
(i) to an Eligible Assignee in accordance with the provisions of clause (b) of
this Section, (ii) by way of participation in accordance with the provisions of
clause (d) of this Section, or (iii) by way of pledge or assignment of a
security interest subject to the restrictions of clause (f) of this Section (and
any other attempted assignment or transfer by any party hereto shall be null and
void). Nothing in this Agreement, expressed or implied, shall be construed to
confer upon any Person (other than the parties hereto, their respective
successors and assigns permitted hereby, Participants to the extent provided in
clause (d) of this Section and, to the extent expressly contemplated hereby, the
Indemnitees) any legal or equitable right, remedy or claim under or by reason of
this Agreement.
(b) Any Lender may at any time assign to one or more Eligible
Assignees all or a portion of its rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans at the time owing to
it); provided that (i) except in the case of an assignment of the entire
remaining amount of the assigning Lender's Commitment and the Loans at the time
owing to it or in the case of an assignment to a Lender or an Affiliate of a
Lender or an Approved Fund (as defined in clause (g) of this Section) with
respect to a Lender, the aggregate amount of the Commitment (which for this
purpose includes Loans outstanding thereunder) subject to each such assignment,
determined as of the date the Assignment and Assumption with respect to such
assignment is delivered to the Administrative Agent or, if "Trade Date" is
specified in the Assignment and Assumption, as of the Trade Date, shall not be
less than $5,000,000 unless each of the Administrative Agent and, so long as no
Event of Default has occurred and is continuing, the Borrower otherwise consents
(such consent of the Borrower not to be unreasonably withheld or delayed); (ii)
each partial assignment shall be made as an assignment of a proportionate part
of all the assigning Lender's rights and obligations under this Agreement with
respect to the Loans or the Commitment assigned; (iii) any assignment of a
Commitment must be approved by the Administrative Agent and, so long as no Event
of Default has occurred and is continuing, the Borrower, unless the Person that
is the proposed assignee is itself a Lender (whether or not the proposed
assignee would otherwise qualify as an Eligible Assignee); and (iv) the parties
to each assignment shall execute and deliver to the Administrative Agent an
Assignment and Assumption, together with a processing and recordation fee of
$3,500 (except upon an assignment by a Lender to an Affiliate of such Lender).
Subject to acceptance and recording thereof by the Administrative Agent pursuant
to clause (c) of this Section, from and after the effective date specified in
each Assignment and Assumption, the Eligible Assignee thereunder shall be a
party to this Agreement and, to the extent of the interest assigned by such
Assignment and Assumption, have the rights and obligations of a Lender under
this Agreement, and the assigning Lender thereunder shall, to the extent of the
interest assigned by such Assignment and Assumption, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Assumption covering all of the assigning Lender's rights and obligations under
this Agreement, such Lender shall cease to be a party hereto but shall continue
to be entitled to the benefits of Sections 3.01, 3.04, 3.05, 11.04 and 11.05
with respect to facts and circumstances occurring prior to the effective date of
such assignment and shall continue to be bound by the provisions of Section
11.08. Upon request, the Borrower (at its expense) shall execute and deliver a
Note to the assignee Lender. Any assignment or transfer by a Lender of rights or
obligations under this Agreement that does not comply with this clause shall be
treated
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for purposes of this Agreement as a sale by such Lender of a participation in
such rights and obligations in accordance with clause (d) of this Section.
(c) The Administrative Agent, acting solely for this purpose as an
agent of the Borrower, shall maintain at the Administrative Agent's Office a
copy of each Assignment and Assumption delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitments of,
and principal amounts of the Loans owing to, each Lender pursuant to the terms
hereof from time to time (the "Register"). The entries in the Register shall be
conclusive, absent manifest error and the Borrower, the Administrative Agent and
the Lenders may treat each Person whose name is recorded in the Register
pursuant to the terms hereof as a Lender hereunder for all purposes of this
Agreement, notwithstanding notice to the contrary. The Register shall be
available for inspection by the Borrower and any Lender, at any reasonable time
and from time to time upon reasonable prior notice.
(d) Any Lender may at any time, without the consent of, or notice
to, the Borrower or the Administrative Agent, sell participations to any Person
(other than a natural person or the Borrower or any of the Borrower's Affiliates
or Subsidiaries) (each, a "Participant") in all or a portion of such Lender's
rights and/or obligations under this Agreement (including all or a portion of
its Commitment and/or the Loans owing to it); provided that (i) such Lender's
obligations under this Agreement shall remain unchanged, (ii) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations and (iii) the Borrower, the Administrative Agent and the other
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement. Any
agreement or instrument pursuant to which a Lender sells such a participation
shall provide that such Lender shall retain the sole right to enforce this
Agreement and to approve any amendment, modification or waiver of any provision
of this Agreement; provided that such agreement or instrument may provide that
such Lender will not, without the consent of the Participant, agree to any
amendment, waiver or other modification described in the first proviso to
Section 11.01 that directly affects such Participant. Subject to clause (e) of
this Section, the Borrower agrees that each Participant shall be entitled to the
benefits of Sections 3.01, 3.04 and 3.05 to the same extent as if it were a
Lender and had acquired its interest by assignment pursuant to clause (b) of
this Section. To the extent permitted by law, each Participant as to which the
Borrower has provided prior written consent also shall be entitled to the
benefits of Section 11.09 as though it were a Lender, provided such Participant
agrees to be subject to Section 2.11 as though it were a Lender.
(e) A Participant shall not be entitled to receive any greater
payment under Sections 3.01, 3.02, 3.04 or 3.05 than the applicable Lender would
have been entitled to receive with respect to the participation sold to such
Participant. A Participant that would be a Foreign Lender if it were a Lender
shall not be entitled to the benefits of Section 3.01 unless the Borrower is
notified of the participation sold to such Participant and such Participant
agrees, for the benefit of the Borrower, to comply with Section 11.15 as though
it were a Lender.
(f) Any Lender may at any time pledge or assign a security
interest in all or any portion of its rights under this Agreement (including
under its Note, if any) to secure obligations of such Lender, including any
pledge or assignment to secure obligations to a Federal Reserve Bank; provided
that no such pledge or assignment shall release such Lender from any of its
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obligations hereunder or substitute any such pledgee or assignee for such Lender
as a party hereto.
(g) As used herein, the following terms have the following
meanings:
"Eligible Assignee" means (a) a Lender; (b) an Affiliate of a Lender; (c) an
Approved Fund; and (d) any other Person (other than a natural person) approved
by (i) the Administrative Agent, and (ii) unless an Event of Default has
occurred and is continuing, the Borrower (each such approval not to be
unreasonably withheld or delayed); provided that notwithstanding the foregoing,
"Eligible Assignee" shall not include the Borrower or any of the Borrower's
Affiliates or Subsidiaries.
"Fund" means any Person (other than a natural person) that is (or will be)
engaged in making, purchasing, holding or otherwise investing in commercial
loans and similar extensions of credit in the ordinary course of its business.
"Approved Fund" means any Fund that is administered or managed by (a) a Lender,
(b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that
administers or manages a Lender.
11.08 CONFIDENTIALITY. Each of the Administrative Agent and the
Lenders agrees to maintain the confidentiality of the Information (as defined
below), except that Information may be disclosed (a) to its and its Affiliates'
directors, officers, employees and agents, including accountants, legal counsel
and other advisors (collectively "Representatives") (it being understood that
the Persons to whom such disclosure is made will be informed of the confidential
nature of such Information and instructed to keep such Information
confidential); (b) to the extent requested by any regulatory authority; (c) to
the extent required by applicable laws or regulations or by any subpoena or
similar legal process; (d) to any other party to this Agreement; (e) in
connection with the exercise of any remedies hereunder or any suit, action or
proceeding relating to this Agreement or the enforcement of rights hereunder;
(f) subject to an agreement substantially in the form of Exhibit I, as
applicable to the contemplated transaction, to (i) any Eligible Assignee of or
Participant in, or any prospective Eligible Assignee of or Participant in, any
of its rights or obligations under this Agreement or (ii) any direct or indirect
contractual counterparty or prospective counterparty (or such contractual
counterparty's or prospective counterparty's professional advisor) to any credit
derivative transaction relating to obligations of the Loan Parties; (g) with the
prior written consent of the Borrower; (h) to the extent such Information (i)
becomes publicly available other than as a result of a breach of this Section or
(ii) becomes available to the Administrative Agent or any Lender on a
nonconfidential basis from a source other than the Borrower; or (i) to the
National Association of Insurance Commissioners or any other similar
organization. In addition, the Administrative Agent and the Lenders may disclose
the existence of this Agreement and information about this Agreement to market
data collectors, similar service providers to the lending industry, and service
providers to the Administrative Agent and the Lenders in connection with the
administration and management of this Agreement, the other Loan Documents, the
Commitments, and the Loan. For the purposes of this Section, "Information" means
all information received from any Loan Party relating to any Loan Party or its
business, other than any such information that is available to the
Administrative Agent or any Lender on a nonconfidential basis prior to
disclosure by any
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Loan Party. Any Person required to maintain the confidentiality of Information
as provided in this Section shall be considered to have complied with its
obligation to do so if such Person has exercised the same degree of care to
maintain the confidentiality of such Information as such Person would accord to
its own confidential information.
11.09 SET-OFF. In addition to any rights and remedies of the Lenders
provided by law, upon the occurrence and during the continuance of any Event of
Default, each Lender is authorized at any time and from time to time, without
prior notice to the Borrower or any other Loan Party, any such notice being
waived by the Borrower (on its own behalf and on behalf of each Loan Party) to
the fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held by,
and other indebtedness at any time owing by, such Lender to or for the credit or
the account of the respective Loan Parties against any and all Obligations owing
to such Lender hereunder or under any other Loan Document, now or hereafter
existing, irrespective of whether or not the Administrative Agent or such Lender
shall have made demand under this Agreement or any other Loan Document and
although such Obligations may be contingent or unmatured or denominated in a
currency different from that of the applicable deposit or indebtedness. Each
Lender agrees promptly to notify the Borrower and the Administrative 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.
11.10 INTEREST RATE LIMITATION. Notwithstanding anything to the
contrary contained in any Loan Document, the interest paid or agreed to be paid
under the Loan Documents shall not exceed the maximum rate of non-usurious
interest permitted by applicable Law (the "Maximum Rate"). If the Administrative
Agent or any Lender shall receive interest in an amount that exceeds the Maximum
Rate, the excess interest shall be applied to the principal of the Loans or, if
it exceeds such unpaid principal, refunded to the Borrower. In determining
whether the interest contracted for, charged, or received by the Administrative
Agent or a Lender exceeds the Maximum Rate, such Person may, to the extent
permitted by applicable Law, (a) characterize any payment that is not principal
as an expense, fee, or premium rather than interest, (b) exclude voluntary
prepayments and the effects thereof, and (c) amortize, prorate, allocate, and
spread in equal or unequal parts the total amount of interest throughout the
contemplated term of the Obligations hereunder.
11.11 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11.12 INTEGRATION. This Agreement, together with the other Loan
Documents, comprises the complete and integrated agreement of the parties on the
subject matter hereof and thereof and supersedes all prior agreements, written
or oral, on such subject matter. In the event of any conflict between the
provisions of this Agreement and those of any other Loan Document, the
provisions of this Agreement shall control; provided that the inclusion of
supplemental rights or remedies in favor of the Administrative Agent or the
Lenders in any other Loan Document shall not be deemed a conflict with this
Agreement. Each Loan Document was drafted with the joint participation of the
respective parties thereto and shall be construed neither against nor in favor
of any party, but rather in accordance with the fair meaning thereof.
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11.13 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties made hereunder and in any other Loan Document or
other document delivered pursuant hereto or thereto or in connection herewith or
therewith shall survive the execution and delivery hereof and thereof. Such
representations and warranties have been or will be relied upon by the
Administrative Agent and each Lender, regardless of any investigation made by
the Administrative Agent or any Lender or on their behalf and notwithstanding
that the Administrative Agent or any Lender may have had notice or knowledge of
any Default at the time of any Loan, and shall continue in full force and effect
as long as any Loan or any other Obligation hereunder shall remain unpaid or
unsatisfied.
11.14 SEVERABILITY. If any provision of this Agreement or the other
Loan Documents is held to be illegal, invalid or unenforceable, (a) the
legality, validity and enforceability of the remaining provisions of this
Agreement and the other Loan Documents shall not be affected or impaired thereby
and (b) the parties shall endeavor in good faith negotiations to replace the
illegal, invalid or unenforceable provisions with valid provisions the economic
effect of which comes as close as possible to that of the illegal, invalid or
unenforceable provisions. The invalidity of a provision in a particular
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
11.15 TAX FORMS. (a)(i) Each Lender that is not a "United States
person" within the meaning of Section 7701(a)(30) of the Code (a "Foreign
Lender") shall deliver to the Administrative Agent, prior to receipt of any
payment subject to withholding under the Code (or upon accepting an assignment
of an interest herein), two duly signed completed copies of either IRS Form
W-8BEN or any successor thereto (relating to such Foreign Lender and entitling
it to an exemption from, or reduction of, withholding tax on all payments to be
made to such Foreign Lender by the Borrower pursuant to this Agreement) or IRS
Form W-8ECI or any successor thereto (relating to all payments to be made to
such Foreign Lender by the Borrower pursuant to this Agreement) or such other
evidence satisfactory to the Borrower and the Administrative Agent that such
Foreign Lender is entitled to an exemption from, or reduction of, U.S.
withholding tax, including any exemption pursuant to Section 881(c) of the Code.
Thereafter and from time to time, each such Foreign Lender shall (A) promptly
submit to the Administrative Agent such additional duly completed and signed
copies of one of such forms (or such successor forms as shall be adopted from
time to time by the relevant United States taxing authorities) as may then be
available under then current United States laws and regulations to avoid, or
such evidence as is satisfactory to the Borrower and the Administrative Agent of
any available exemption from or reduction of, United States withholding taxes in
respect of all payments to be made to such Foreign Lender by the Borrower
pursuant to this Agreement, (B) promptly notify the Administrative Agent of any
change in circumstances which would modify or render invalid any claimed
exemption or reduction, and (C) take such steps as shall not be materially
disadvantageous to it, in the reasonable judgment of such Lender, and as may be
reasonably necessary (including the re-designation of its Lending Office) to
avoid any requirement of applicable Laws that the Borrower make any deduction or
withholding for taxes from amounts payable to such Foreign Lender.
(ii) Each Foreign Lender, to the extent it does not act or
ceases to act for its own account with respect to any portion of any
sums paid or payable to such Lender under any of the Loan Documents
(for example, in the case of a typical participation by
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such Lender), shall deliver to the Administrative Agent on the date
when such Foreign Lender ceases to act for its own account with respect
to any portion of any such sums paid or payable, and at such other
times as may be necessary in the determination of the Administrative
Agent (in the reasonable exercise of its discretion), (A) two duly
signed completed copies of the forms or statements required to be
provided by such Lender as set forth above, to establish the portion of
any such sums paid or payable with respect to which such Lender acts
for its own account that is not subject to U.S. withholding tax, and
(B) two duly signed completed copies of IRS Form W-8IMY (or any
successor thereto), together with any information such Lender chooses
to transmit with such form, and any other certificate or statement of
exemption required under the Code, to establish that such Lender is not
acting for its own account with respect to a portion of any such sums
payable to such Lender.
(iii) The Borrower shall not be required to pay any
additional amount to any Foreign Lender under Section 3.01 (A) with
respect to any Taxes required to be deducted or withheld on the basis
of the information, certificates or statements of exemption such Lender
transmits with an IRS Form W-8IMY pursuant to this Section 11.15(a) or
(B) if such Lender shall have failed to satisfy the foregoing
provisions of this Section 11.15(a); provided that if such Lender shall
have satisfied the requirement of this Section 11.15(a) on the date
such Lender became a Lender or ceased to act for its own account with
respect to any payment under any of the Loan Documents, nothing in this
Section 11.15(a) shall relieve the Borrower of its obligation to pay
any amounts pursuant to Section 3.01 in the event that, as a result of
any change in any applicable law, treaty or governmental rule,
regulation or order, or any change in the interpretation,
administration or application thereof, such Lender is no longer
properly entitled to deliver forms, certificates or other evidence at a
subsequent date establishing the fact that such Lender or other Person
for the account of which such Lender receives any sums payable under
any of the Loan Documents is not subject to withholding or is subject
to withholding at a reduced rate.
(iv) The Administrative Agent may, without reduction,
withhold any Taxes required to be deducted and withheld from any
payment under any of the Loan Documents with respect to which the
Borrower is not required to pay additional amounts under this Section
11.15(a).
(b) Upon the request of the Administrative Agent, each Lender that
is a "United States person" within the meaning of Section 7701(a)(30) of the
Code shall deliver to the Administrative Agent two duly signed completed copies
of IRS Form W-9. If such Lender fails to deliver such forms, then the
Administrative Agent may withhold from any interest payment to such Lender an
amount equivalent to the applicable back-up withholding tax imposed by the Code,
without reduction.
(c) If any Governmental Authority asserts that the Administrative
Agent did not properly withhold or backup withhold, as the case may be, any tax
or other amount from payments made to or for the account of any Lender, such
Lender shall indemnify the Administrative Agent therefor, including all
penalties and interest, any taxes imposed by any jurisdiction on the amounts
payable to the Administrative Agent under this Section, and costs
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and expenses (including Attorney Costs) of the Administrative Agent. The
obligation of the Lenders under this Section shall survive the termination of
the Aggregate Commitments, repayment of all other Obligations hereunder and the
resignation of the Administrative Agent.
11.16 AUTOMATIC DEBITS OF FEES. With respect to any interest,
commitment fee, or other fee due and payable to the Administrative Agent, Bank
of America or the Arranger under the Loan Documents, the Borrower hereby
irrevocably authorizes Bank of America to debit any deposit account of the
Borrower with Bank of America in an amount such that the aggregate amount
debited from all such deposit accounts does not exceed such fee or other cost or
expense. If there are insufficient funds in such deposit accounts to cover the
amount of the interest or fees then due, such debits will be reversed (in whole
or in part, in Bank of America's sole discretion) and such amount not debited
shall be deemed to be unpaid. No such debit under this Section shall be deemed a
set-off.
11.17 REPLACEMENT OF LENDERS. Under any circumstance set forth
herein providing that the Borrower shall have the right to replace a Lender as a
party to this Agreement, the Borrower may, upon notice to such Lender and the
Administrative Agent, replace such Lender by causing such Lender to assign its
Commitment (with the assignment fee to be paid by the Borrower in such instance)
pursuant to Section 11.07(b) to one or more other Lenders or Eligible Assignees
procured by the Borrower; provided, however, that if the Borrower elects to
exercise such right with respect to any Lender pursuant to Section 3.06(b), it
shall be obligated to replace all Lenders that have made similar requests for
compensation pursuant to Section 3.01 or 3.04. The Borrower shall (x) pay in
full all principal, interest, fees and other amounts owing to such Lender
through the date of replacement (including any amounts payable pursuant to
Section 3.05), and (y) release such Lender from its obligations (other than
pursuant to Section 11.08) under the Loan Documents. Any Lender being replaced
shall execute and deliver an Assignment and Assumption with respect to such
Lender's Commitment and outstanding Loans.
11.18 GOVERNING LAW.
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF ILLINOIS APPLICABLE TO AGREEMENTS MADE
AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE; PROVIDED THAT THE ADMINISTRATIVE
AGENT AND EACH LENDER SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT
OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF ILLINOIS
SITTING IN CHICAGO OR OF THE UNITED STATES FOR THE NORTHERN DISTRICT OF SUCH
STATE, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE BORROWER, THE
ADMINISTRATIVE AGENT AND EACH LENDER CONSENTS, FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. THE BORROWER, THE
ADMINISTRATIVE Agent AND EACH LENDER IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING
ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR
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PROCEEDING IN SUCH JURISDICTION IN RESPECT OF ANY LOAN DOCUMENT OR OTHER
DOCUMENT RELATED THERETO. THE BORROWER, THE ADMINISTRATIVE Agent AND EACH LENDER
WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE
MADE BY ANY OTHER MEANS PERMITTED BY THE LAW OF SUCH STATE.
11.19 WAIVER OF RIGHT TO TRIAL BY JURY. EACH PARTY TO THIS AGREEMENT
HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION
OR CAUSE OF ACTION ARISING UNDER ANY LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH
OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM
WITH RESPECT TO ANY LOAN DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH
CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT
OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT
A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR
A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE
SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
11.20 ENTIRE AGREEMENT. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
DELPHI FINANCIAL GROUP, INC.
By: ________________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Executive Vice President
BANK OF AMERICA, N.A., as
Administrative Agent and as a Lender
By: ________________________________________
Name: ______________________________________
Title: _____________________________________
WACHOVIA BANK, NATIONAL
ASSOCIATION
By: ________________________________________
Name: ______________________________________
Title: _____________________________________
FLEET NATIONAL BANK
By: ________________________________________
Name: ______________________________________
Title: _____________________________________
ING CAPITAL LLC
By: ________________________________________
Name: ______________________________________
Title: _____________________________________
US BANK NATIONAL ASSOCIATION
By: ________________________________________
Name: ______________________________________
Title: _____________________________________
THE NORTHERN TRUST COMPANY
By: ________________________________________
Name: ______________________________________
Title: _____________________________________