EXHIBIT 10.29
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CREDIT AGREEMENT
among
ASSET GUARANTY INSURANCE COMPANY,
VARIOUS BANKS,
and
DEUTSCHE BANK AG,
NEW YORK BRANCH,
as Agent
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Dated as of February 27, 2001
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TABLE OF CONTENTS
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SECTION 1. DEFINITIONS AND PRINCIPLES OF CONSTRUCTION........................................... 1
Section 1.01 Defined Terms............................................................. 1
Section 1.02 Principles of Construction................................................ 10
SECTION 2. AMOUNT AND TERMS OF CREDIT........................................................... 11
Section 2.01 The Loans................................................................. 11
Section 2.02 Amount of Each Borrowing.................................................. 11
Section 2.03 Notice of Borrowing....................................................... 11
Section 2.04 Disbursement of Funds..................................................... 11
Section 2.05 Notes..................................................................... 11
Section 2.06 Interest.................................................................. 12
Section 2.07 Capital Adequacy.......................................................... 12
SECTION 3. COMMITMENT FEES, FEES; AND TERMINATIONS, EXTENSIONS
AND INCREASES OF COMMITMENTS AND CONTINGENT
COMMITMENTS.................................................................... 13
Section 3.01 Fees...................................................................... 13
Section 3.02 Voluntary Termination of Unutilized Commitments........................... 13
Section 3.03 Mandatory Termination of Commitments...................................... 13
Section 3.04 Expiry Date............................................................... 14
SECTION 4. PREPAYMENTS; PAYMENTS................................................................ 15
Section 4.01 Voluntary Prepayments..................................................... 15
Section 4.02 Mandatory Prepayments..................................................... 15
Section 4.03 Method and Place of Payment............................................... 15
Section 4.04 Net Payments.............................................................. 15
Section 4.05 Limitations on Sources of Payment......................................... 16
SECTION 5. CONDITIONS PRECEDENT TO EFFECTIVENESS................................................ 16
Section 5.01 Execution of Agreement; Notes............................................. 16
Section 5.02 No Default; Representations and Warranties................................ 16
Section 5.03 Opinions of Counsel....................................................... 16
Section 5.04 Corporate Documents; Proceedings.......................................... 16
Section 5.05 Security Agreement........................................................ 17
Section 5.06 Covered Portfolio, etc.................................................... 17
Section 5.07 Requisite Approvals....................................................... 17
Section 5.08 Litigation................................................................ 17
Section 5.09 Fees, etc................................................................. 18
(i)
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SECTION 6. CONDITIONS PRECEDENT TO ALL CREDIT EVENTS............................................ 18
Section 6.01 Loss Threshold Incurrence Date............................................ 18
Section 6.02 Notice of Borrowing....................................................... 18
SECTION 7. REPRESENTATIONS, WARRANTIES AND AGREEMENTS........................................... 18
Section 7.01 Corporate Status.......................................................... 18
Section 7.02 Corporate Power and Authority............................................. 18
Section 7.03 No Violation.............................................................. 19
Section 7.04 Governmental Approvals.................................................... 19
Section 7.05 Financial Statements; Financial Condition; Undisclosed Liabilities; etc... 19
Section 7.06 Litigation................................................................ 20
Section 7.07 True and Complete Disclosure.............................................. 20
Section 7.08 Use of Proceeds; Margin Regulations....................................... 20
Section 7.09 Tax Returns and Payments.................................................. 20
Section 7.10 Compliance with ERISA..................................................... 20
Section 7.11 Capitalization............................................................ 21
Section 7.12 Subsidiaries.............................................................. 21
Section 7.13 Compliance with Statutes, etc............................................. 21
Section 7.14 Investment Company Act.................................................... 22
Section 7.15 Public Utility Holding Company Act........................................ 22
Section 7.16 Compliance with Insurance Law............................................. 22
Section 7.17 Covered Portfolio......................................................... 23
SECTION 8. AFFIRMATIVE COVENANTS................................................................ 23
Section 8.01 Information Covenants..................................................... 23
Section 8.02 Books, Records and Inspections............................................ 25
Section 8.03 Corporate Franchises...................................................... 25
Section 8.04 Compliance with Statutes, etc............................................. 25
Section 8.05 ERISA..................................................................... 25
Section 8.06 Performance of Obligations................................................ 26
Section 8.07 Use of Proceeds........................................................... 26
Section 8.08 Conduct of Business....................................................... 26
Section 8.09 Underwriting Criteria..................................................... 26
Section 8.10 Collection of Pledged Recoveries and Pledged Premiums..................... 26
Section 8.11 Pledged Reserve Release Notice............................................ 26
Section 8.12 Registry.................................................................. 27
SECTION 9. NEGATIVE COVENANTS................................................................... 27
Section 9.01 Liens..................................................................... 27
Section 9.02 Consolidation, Merger, Sale of Assets, etc................................ 27
SECTION 10. EVENTS OF DEFAULT................................................................... 28
Section 10.01 Payments................................................................. 28
(ii)
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Section 10.02 Representations, etc..................................................... 28
Section 10.03 Covenants................................................................ 29
Section 10.04 Default Under Other Agreements........................................... 29
Section 10.05 Bankruptcy, etc.......................................................... 29
Section 10.06 Security Agreement....................................................... 29
Section 10.07 Judgments................................................................ 30
Section 10.08 Change of Control........................................................ 30
SECTION 11. THE AGENT........................................................................... 30
Section 11.01 Appointment.............................................................. 30
Section 11.02 Nature of Duties......................................................... 30
Section 11.03 Lack of Reliance on the Agent............................................ 31
Section 11.04 Certain Rights of the Agent.............................................. 31
Section 11.05 Reliance................................................................. 31
Section 11.06 Indemnification.......................................................... 32
Section 11.07 The Agent in Its Individual Capacity..................................... 32
Section 11.08 Resignation by the Agent................................................. 32
SECTION 12. MISCELLANEOUS....................................................................... 33
Section 12.01 Payment of Expenses, etc................................................. 33
Section 12.02 Right of Setoff.......................................................... 33
Section 12.03 Notices.................................................................. 34
Section 12.04 Benefit of Agreement..................................................... 34
Section 12.05 No Waiver; Remedies Cumulative........................................... 36
Section 12.06 Calculations; Computations............................................... 37
Section 12.07 Governing Law; Submission to Jurisdiction; Venue......................... 37
Section 12.08 Counterparts............................................................. 37
Section 12.09 Effectiveness............................................................ 37
Section 12.10 Headings Descriptive..................................................... 38
Section 12.11 Amendment or Waiver...................................................... 38
Section 12.12 Survival................................................................. 38
Section 12.13 Exclusions from Covered Portfolio........................................ 38
Section 12.14 Confidentiality.......................................................... 39
(iii)
SCHEDULES
Schedule I Commitments
Schedule II Reinsurance Agreements
Schedule III Subsidiaries of the Borrower
EXHIBITS
Exhibit A Notice of Borrowing
Exhibit B Note
Exhibit C Opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
Counsel to the Borrower
Exhibit D Officers' Certificate of the Borrower
Exhibit E Pledge and Security Agreement
Exhibit F Assignment and Assumption Agreement
(iv)
CREDIT AGREEMENT, dated as of February 27, 2001, among ASSET
GUARANTY INSURANCE COMPANY, a New York stock insurance company, (the
"Borrower"), the Banks party hereto from time to time, and DEUTSCHE BANK AG, NEW
YORK BRANCH, acting in its capacity as Agent pursuant to Section 11 (in such
capacity, the "Agent").
W I T N E S S E T H :
WHEREAS, subject to and upon the terms and conditions herein set
forth, the Banks are willing to make available to the Borrower the credit
facility provided for herein;
NOW, THEREFORE, IT IS AGREED:
SECTION 1. DEFINITIONS AND PRINCIPLES OF CONSTRUCTION.
Section 1.01 Defined Terms. As used in this Agreement, the following
terms shall have the following meanings (such meanings to be equally applicable
to both the singular and plural forms of the terms defined):
"Affiliate" shall mean, with respect to any Person, any other Person
(other than an individual) directly or indirectly controlling, controlled by, or
under direct or indirect common control with, such Person; provided, however,
that an Affiliate of the Borrower shall include any Person that directly or
indirectly owns more than 10% of the Borrower and any officer or director of the
Borrower or any such Person. A Person shall be deemed to control another Person
if such Person possesses, directly or indirectly, the power to direct or cause
the direction of the management and policies of such other Person, whether
through the ownership of voting securities, by contract or otherwise.
"Agent" shall mean Deutsche Bank AG, New York Branch, in its
capacity as Agent for the Banks hereunder, and shall include any successor to
the Agent appointed pursuant to Section 11.08.
"Agreement" shall mean this Credit Agreement, as modified,
supplemented or amended from time to time.
"Applicable Margin" shall mean a percentage per annum equal to 2.0%.
"Assignment and Assumption Agreement" shall mean any Assignment and
Assumption Agreement substantially in the form of Exhibit F entered into
pursuant to the terms hereof.
"Authorized Officer" shall mean the president, any vice president,
the chief financial officer or the treasurer of the Borrower.
"Average Annual Debt Service" as of a specified date with respect to
an Insured Obligation shall mean the applicable Retained Percentage times the
sum of (i) the aggregate outstanding principal amount of such Insured Obligation
and (ii) the aggregate amount of interest thereafter required to be paid on such
Insured Obligation (giving effect to all mandatory sinking fund payments or
other regularly scheduled required redemptions, prepayments or other retirement
of principal), divided by the number of whole and fractional years from the date
of determination to the latest maturity date of such Insured Obligation, and as
of a specified date with respect to the Covered Portfolio shall mean the sum of
the Annual Average Debt Service as of such date of all Insured Obligations
contained in the Covered Portfolio. In the event that an Insured Obligation
bears interest at a variable rate, the interest thereon for purposes of the
determination of Average Annual Debt Service shall be calculated at the rate
employed by the Borrower to compute average annual debt service with respect to
such Insured Obligation in accordance with its customary business practices.
"Bank" shall mean the banks listed on the signature pages hereof on
the Effective Date as well as any institution which becomes a Bank hereunder
pursuant to Section 12.04(b).
"Base Rate" shall mean the higher of (i) 1/4 of 1% in excess of the
Federal Funds Rate and (ii) the Prime Lending Rate.
"Bankruptcy Code" shall have the meaning provided in Section 10.05.
"Borrower" shall have the meaning provided in the first paragraph of
this Agreement.
"Borrower's Rating" shall mean the Borrower's claims-paying ability
rating.
"Borrowing" shall mean the borrowing of Loans on a given date.
"Business Day" shall mean any day except Saturday, Sunday and any
day which shall be in New York City a legal holiday or a day on which banking
institutions are authorized or required by law or other government action to
close.
"Change of Control" shall mean and include the occurrence of any of
the following events: any Person, entity or "group" (within the meaning of
Sections 13(d) or 14(d) of the Securities Exchange Act of 1934, but expressly
excluding Radian) (i) shall have acquired, directly or indirectly, beneficial
ownership of 20% or more of any outstanding class of capital stock of the
Borrower having ordinary voting power in the election of directors, provided
that any Person, entity or group shall be permitted to acquire up to 25% of the
outstanding capital stock of any such class in a transaction approved before the
consummation of same by a majority of the directors of the Borrower or (ii)
shall have obtained the power (whether or not exercised) to elect the majority
of the Board of Directors of the Borrower. Notwithstanding the preceding
sentence of this definition of "Change of Control," the transactions
contemplated by that certain Agreement and Plan of Merger, dated as of November
13, 2000, among Enhance, GOLD Acquisition Corp. and Radian, which is described
in a Joint Proxy Statement of Enhance and
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Radian dated as of January 26, 2001, shall not be deemed to be a "Change of
Control" for purposes of this Agreement, the other Credit Documents or any other
agreements, instruments or documents to be executed in connection with the
transactions contemplated by this Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and the regulations promulgated and rulings issued thereunder.
Section references to the Code are to the Code, as in effect at the date of this
Agreement and any subsequent provisions of the Code, amendatory thereof,
supplemental thereto or substituted therefor.
"Collateral" shall mean all "Collateral" as defined in the Security
Agreement.
"Collateral Account" shall have the meaning set forth in the
Security Agreement.
"Collateral Agent" shall have the meaning set forth in the Security
Agreement.
"Commitment" shall mean, for each Bank, the amount set forth
opposite such Bank's name in Schedule I hereto directly below the column
entitled "Commitment", as the same may be (i) reduced from time to time pursuant
to Section 3.02 and/or 3.03 and (ii) adjusted from time to time as a result of
assignments to or from such Bank pursuant to Section 3.04 or 12.04.
"Commitment Fees" shall have the meaning provided in Section
3.01(a).
"Commitment Period" initially shall mean the period commencing on
the Effective Date and ending on the Expiry Date and, from and after the date of
any extension of the Expiry Date, shall mean the period commencing on the date
which is seven years prior to the Expiry Date and ending on the Expiry Date.
"Contingent Obligation" shall mean, as to any Person, any obligation
of such Person guaranteeing or intended to guarantee any Indebtedness, leases,
dividends or other obligations ("primary obligations") of any other Person (the
"primary obligor") in any manner, whether directly or indirectly, including,
without limitation, any obligation of such Person, whether or not contingent,
(i) to purchase any such primary obligation or any property constituting direct
or indirect security therefor, (ii) to advance or supply funds (a) for the
purchase or payment of any such primary obligation or (b) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency of the primary obligor, (iii) to purchase property,
securities or services primarily for the purpose of assuring the holder of any
such primary obligation of the ability of the primary obligor to make payment of
such primary obligation or (iv) otherwise to assure or hold harmless the holder
of such primary obligation against loss in respect thereof; provided, however,
that the term Contingent Obligation shall not include endorsements of
instruments for deposit or collection in the ordinary course of business or
obligations under insurance or reinsurance contracts entered into in the
ordinary course of business to secure reinsurance obligations. The amount of any
Contingent Obligation shall be deemed to be an amount equal to the stated or
determinable amount of the primary obligation in respect of which such
Contingent Obligation is made or, if not stated or determinable, the
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maximum reasonably anticipated liability in respect thereof (assuming such
Person is required to perform thereunder) as determined by such Person in good
faith.
"Covered Portfolio" shall mean and include each Insured Obligation
as of the Effective Date and each Insured Obligation issued thereafter and prior
to the Loss Threshold Incurrence Date other than any Insured Obligation which is
excluded from the Covered Portfolio pursuant to Section 12.13.
"Credit Documents" shall mean this Agreement, each Note and the
Security Agreement.
"Credit Event" shall mean the making of any Loan.
"Cumulative Losses" for a specified period shall mean the aggregate
Losses of the Borrower determined cumulatively during such period without regard
to Pledged Recoveries; provided, however, that the aggregate amount of
Cumulative Losses related to (i) health care providers of any kind (including
long term care providers) cannot exceed 10% of the Total Coverage Amount, (ii)
universities, colleges, dormitory authorities and other higher educational
authorities cannot exceed 10% of the Total Coverage Amount and (iii) health care
providers of any kind (including long term care providers) and universities,
colleges, dormitory authorities and other higher educational authorities cannot
exceed 15% of the Total Coverage Amount.
"Declining Bank" shall have the meaning provided in Section 3.04(b).
"Default" shall mean any event, act or condition which with notice
or lapse of time, or both, would constitute an Event of Default.
"Defaulted Loan" shall mean, with respect to any Bank at any time,
the Loan or portion of any Loan required to be made by such Bank to the Borrower
pursuant to Section 2.01 at or prior to such time that has not been made by such
Bank as of such time.
"Defaulting Bank" shall mean, at any time, any Bank that, at such
time, owes a Defaulted Loan.
"Dollars" and the sign "$" shall each mean freely transferable
lawful money of the United States.
"Effective Date" shall have the meaning provided in Section 12.09.
"Eligible Transferee" shall mean and include a commercial bank,
financial institution or other "accredited investor" (as defined in Regulation D
of the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder) assigned, or the parent of which is assigned, an
unsecured senior debt rating (or shadow rating as reflected in a letter) by each
of Moody's and S&P.
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"Enhance" shall mean Enhance Financial Services Group Inc.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated and rulings
issued thereunder. Section references to ERISA are to ERISA, as in effect at the
date of this Agreement, and to any subsequent provisions of ERISA, amendatory
thereof, supplemental thereto or substituted therefor.
"ERISA Affiliate" shall mean any person (as defined in Section 3(9)
of ERISA) which together with the Borrower or any of its Subsidiaries would be
deemed to be a "single employer" within the meaning of Section 414(b), (c), (m)
or (o) of the Code.
"Event of Default" shall have the meaning provided in Section 10.
"Expiry Date" shall have the meaning set forth in Section 3.04(a).
"Extending Bank" shall have the meaning provided in Section 3.04(b).
"Extension Request" shall have the meaning set forth in Section
3.04(a).
"Federal Funds Rate" shall mean for any period, a fluctuating
interest rate equal for each day during such period to the weighted average of
the rates on overnight Federal Funds transactions with members of the Federal
Reserve System arranged by Federal Funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for such day on such
transactions received by the Agent from three Federal Funds brokers of
recognized standing selected by the Agent.
"Fees" shall mean all amounts payable pursuant to or referred to in
Section 3.01.
"holder of any Note" shall mean any Federal Reserve Bank to which a
Bank has pledged its Note to the extent such Federal Reserve Bank has foreclosed
upon such Note.
"Increasing Extending Bank" shall have the meaning provided in
Section 3.04(b).
"Indebtedness" shall mean, as to any Person, without duplication,
(i) all indebtedness (including principal, interest, fees and charges) of such
Person for borrowed money or for the deferred purchase price of property or
services, (ii) the face amount of all letters of credit issued for the account
of such Person and all drafts drawn thereunder, (iii) all liabilities secured by
any Lien on any property owned by such Person, whether or not such liabilities
have been assumed by such Person, (iv) the aggregate amount required to be
capitalized under leases under which such Person is the lessee and (v) all
Contingent Obligations of such Person.
"Installment Premiums" shall mean any and all premiums which are
required to be paid or claimed to be required to be paid to or for the account
of the Borrower in respect of
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Insured Obligations in the Covered Portfolio on a periodic basis rather than by
payment in full on the date of the effectiveness of the relevant Insurance
Contract.
"Insurance Contracts" shall have the meaning set forth in Section
7.16.
"Insured Obligation" shall mean "municipal obligation bonds",
"special revenue bonds", "industrial development bonds" and "utility first
mortgage obligations" which the Borrower is permitted to insure under the
provisions of Section 6904 (b) (1) (A), (B) or (C) of the New York Insurance Law
(without regard to clause (J) thereof) as in effect on the Effective Date and
issued by the United States of America, a state thereof or the District of
Columbia, a municipality or governmental unit or other political subdivision of
the foregoing or any public agency or instrumentality, in any event to the
extent that the payment of principal thereof, together with interest thereon, is
insured, reinsured or otherwise guaranteed by the Borrower.
"Lending Office" shall mean the office of the Agent located at ▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ or such other office, Subsidiary or
Affiliate of the Agent as the Agent may from time to time specify as such to the
Borrower.
"Lien" shall mean any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), preference,
priority or other security agreement of any kind or nature whatsoever
(including, without limitation, any conditional sale or other title retention
agreement, any financing or similar statement or notice filed under the UCC or
any other similar recording or notice statute, and any lease having
substantially the same effect as any of the foregoing).
"Loan" shall have the meaning provided in Section 2.01.
"Loss" shall mean at any time the aggregate sum of (i) the amount
paid by the Borrower at such time or required at such time to be paid by the
Borrower on claims under an Insurance Contract with respect to an Insured
Obligation in the Covered Portfolio by reason of the failure by the issuer
thereof or other obligor with respect thereto to pay insured amounts on such
Insured Obligations when due (including adjustment expenses with respect to such
claims), plus (ii) Permitted Reserves at such time minus (iii) amounts paid at
such time or reasonably expected by the Borrower at such time to be paid to the
Borrower under reinsurance agreements (whether facultative or treaty) and
similar arrangements with respect to the claims referred to in clause (i)
provided that, without limiting the generality of the foregoing, the term "Loss"
shall not include any damages or penalties required to be paid by the Borrower
in respect of an Insurance Contract by reason of the breach by the Borrower of
its obligations thereunder or the cancellation or termination thereof other than
in accordance with its terms.
"Loss Threshold Incurrence Date" shall mean the date on which the
Borrower has Cumulative Losses (net of recoveries) during the relevant
Commitment Period equal to the greater of $100,000,000 and 7% of Average Annual
Debt Service as of any date of determination thereof.
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"Majority Banks" shall mean at any time Banks owed at least 51% of
the aggregate principal amount of the Loans outstanding at such time or, if no
Loans are outstanding at such time, Banks holding at least 51% of the aggregate
Commitments at such time; provided, however, that if any Bank shall be a
Defaulting Bank at such time, there shall be excluded from the determination of
Majority Banks at such time (i) the aggregate principal amount of the Loans
owing to such Bank and outstanding at such time and (ii) the Commitment of such
Bank at such time.
"Majority Participants" shall have the meaning set forth in Section
12.04.
"Margin Stock" shall have the meaning provided in Regulation U of
the Board of Governors of the Federal Reserve System.
"Moody's" shall mean ▇▇▇▇▇'▇ Investors Service, Inc.
"Multiemployer Plan" shall mean any multiemployer plan as defined in
Section 4001(1)(3) of ERISA, which is contributed to by (or to which there is an
obligation to contribute of) the Borrower, a Subsidiary of the Borrower or an
ERISA Affiliate, and each such plan for the five-year period immediately
following the latest date on which the Borrower, a Subsidiary of the Borrower or
an ERISA Affiliate contributed to or had an obligation to contribute to such
plan.
"Note" shall have the meaning provided in Section 2.05.
"Notice of Borrowing" shall have the meaning provided in Section
2.03.
"Notice Office" shall mean the office of the Agent located at ▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or such other office as the Agent
may hereafter designate in writing as such to the Borrower.
"Obligations" shall mean all amounts owing to the Agent, Collateral
Agent or any Bank pursuant to the terms of this Agreement or any other Credit
Document.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
established pursuant to Section 4002 of ERISA or any successor thereto.
"Payment Office" shall mean the office of the Agent located at ▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or such other office as the Agent
may hereafter designate in writing as such to the Borrower.
"Permitted Liens" shall have the meaning set forth in Section 9.01.
"Permitted Reserves" shall mean, with respect to any Insured
Obligation, an amount equal to the reserves established in accordance with the
Borrower's statutory accounting practices which are deemed necessary or prudent
in the reasonable judgment of the Borrower by reason of the failure or
anticipated failure by the issuer of such Insured Obligation or other
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obligor with respect thereto to pay such Insured Obligation when due, all as
reflected on the Borrower's books and which are or will be reported by the
Borrower in its statutory financial statements.
"Person" shall mean any individual, partnership, joint venture,
firm, corporation, association, trust or other enterprise or any government or
political subdivision or any agency, department or instrumentality thereof.
"Plan" shall mean an employee pension benefit plan which is covered
by Title IV of ERISA or subject to the minimum funding standards under Section
412 of the Code, which is maintained or contributed to by (or to which there is
an obligation to contribute of), or at any time during the five calendar years
preceding the date of this Agreement was maintained or contributed to by (or to
which there was an obligation to contribute of), the Borrower or an ERISA
Affiliate.
"Pledged Premiums" shall mean at any time on and after the Loss
Threshold Incurrence Date (i) any and all Installment Premiums which are paid or
payable to the Borrower at such time with respect to an Insurance Contract
covering any defaulted Insured Obligations in the Covered Portfolio minus (ii)
the aggregate amount of such Installment Premiums referred to in the next
preceding clause (i) paid or payable to any Person other than the Borrower at
such time under reinsurance agreements (whether facultative or treaty) and
similar arrangements.
"Pledged Recoveries" shall mean at any time on and after the Loss
Threshold Incurrence Date any and all moneys and other payments, property and
other consideration and compensation received or receivable by or for the
account of the Borrower at such time (excluding the aggregate amount of any and
all monies, payments, property, consideration and compensation paid or payable
to any Person other than the Borrower under reinsurance agreements (whether
facultative or treaty) and similar arrangements) as repayment or reimbursement
of, or otherwise in respect of or arising out of, the payment of a claim by the
Borrower under an Insurance Contract covering any Insured Obligation in the
Covered Portfolio (without regard to whether such claim was paid from the
proceeds of a Loan), whether from the issuer thereof or any other Person
including without limitation under or pursuant to (i) such Insurance Contract,
any reimbursement agreement, guaranty, letter of credit, mortgage, security
agreement, pledge agreement or other contract, agreement or arrangement with
respect to such Insurance Contract, other than such items described in (ii)
through (ix) below, (ii) any account or account receivable, (iii) any
compromise, settlement or similar arrangement with respect to such payment, (iv)
any voluntary payment or gift, (v) any reinsurance of such Insured Obligation to
the extent that payment or expected payment under such reinsurance was not
deducted in determining the Loss attributed to the Borrower's payment or
required payment of such claim, (vi) any contractual, statutory, common law or
other right of subrogation, (vii) any realization upon any mortgage, security
interest or other Lien, (viii) any cause of action, whether sounding in tort,
contract or otherwise, and any judicial, arbitration or other proceeding by or
before any court, agency, tribunal, association or other governmental or private
body, or (ix) any other legal or equitable right or claim, whether or not
similar to the foregoing), less the out-of-pocket costs
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and expenses, including without limitation attorneys fees and court costs,
actually incurred by the Borrower in connection with the collection or other
realization of such moneys and other payments, property and other consideration
and compensation.
"Pledged Reserves Account" shall have the meaning set forth in the
Security Agreement.
"Pledged Reserves Account Funds" shall mean at any time the
aggregate amount of proceeds of Loans borrowed hereunder for the purpose of
establishing or maintaining Permitted Reserves, such proceeds to be deposited in
the Pledged Reserves Account in accordance with Section 2.1(b) of the Security
Agreement.
"Pledged Reserve Release Notice" shall have the meaning set forth in
Section 8.11.
"Pledged Reserve Repayment Date" shall mean the date on which the
Borrower delivers the Pledged Reserve Release Notice required by Section 8.11.
"Prime Lending Rate" shall mean the rate as announced by Deutsche
Bank AG, New York Branch, from time to time as its prime lending rate, the Prime
Lending Rate to change when and as such prime lending rate changes. The Prime
Lending Rate is a reference rate and does not necessarily represent the lowest
or best rate actually charged to any customer. Deutsche Bank AG, New York
Branch, may make commercial loans or other loans at rates of interest at, above
or below the Prime Lending Rate.
"Radian" shall mean Radian Group Inc.
"Replacement Bank" shall have the meaning provided in Section
3.04(b).
"Reportable Event" shall mean an event described in Section 4043(c)
of ERISA with respect to a Plan as to which the 30-day notice requirement has
not been waived by the PBGC.
"Retained Percentage" of an Insured Obligation shall mean the
percentage of risk assumed by the Borrower under Insurance Contracts with
respect thereto.
"Security Agreement" shall have the meaning provided in Section
5.05.
"S&P" shall mean Standard & Poor's Corporation.
"Subsidiary" shall mean, as to any Person, (i) any corporation more
than 50% of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such Person and/or one or
more Subsid-
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iaries of such Person and (ii) any partnership, association, joint venture or
other entity in which such Person and/or one or more Subsidiaries of such Person
has more than a 50% equity interest at the time.
"Taxes" shall have the meaning provided in Section 4.04.
"Total Coverage Amount" shall mean, at the time of any determination
thereof, the sum of (i) the aggregate Commitment of all Banks under the Loan
Facility at such time and (ii) the dollar amount of Cumulative Losses (net of
recoveries) at such time that results in the occurrence of the Loss Threshold
Incurrence Date.
"UCC" shall mean the Uniform Commercial Code as from time to time in
effect in the relevant jurisdiction.
"Unfunded Current Liability" of any Plan means the amount, if any,
by which the present value of the accrued benefits under the Plan as of the
close of its most recent plan year, determined in accordance with Statement of
Financial Accounting Standards No. 35, based upon the actuarial assumptions used
by the Plan's actuary in the most recent annual valuation of the Plan, exceeds
the fair market value of the assets allocable thereto, determined in accordance
with Section 412 of the Code.
"United States" and "U.S." shall each mean the United States of
America.
"Unutilized Commitment" shall mean, for any Bank, at any time, the
Commitment of such Bank at such time less the aggregate principal amount of all
Loans made by such Bank pursuant to Section 2.01 prior to such time.
"Wholly-Owned Subsidiary" shall mean, as to any Person, (i) any
corporation 100% of whose capital stock is at the time owned by such Person
and/or one or more Wholly-Owned Subsidiaries of such Person and (ii) any
partnership, association, joint venture or other entity in which such Person
and/or one or more Wholly-Owned Subsidiaries of such Person has a 100% equity
interest at such time.
Section 1.02 Principles of Construction. (a) All references to
sections, schedules and exhibits are to sections, schedules and exhibits in or
to this Agreement unless otherwise specified. The words "hereof", "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement.
(b) The term generally accepted accounting principles means
generally accepted accounting principles in the United States, and all
accounting terms not specifically defined herein shall be construed in
accordance therewith.
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SECTION 2. AMOUNT AND TERMS OF CREDIT.
Section 2.01 The Loans. Subject to and upon the terms and conditions
set forth herein, each Bank severally agrees, at any time and from time to time
prior to the Expiry Date, to make loans (each a "Loan" and, collectively, the
"Loans") to the Borrower, provided, however, that the principal amount of any
Loan made by a Bank at any time pursuant to this Section 2.01 shall not exceed
the Unutilized Commitment of such Bank at such time. Once repaid, Loans incurred
hereunder may not be reborrowed.
Section 2.02 Amount of Each Borrowing. The aggregate principal
amount of each Borrowing hereunder shall not (i) be less than $1,000,000, and if
greater, shall be in an integral multiple of $100,000 and (ii) exceed the lesser
of (a) Cumulative Losses incurred after the occurrence of the Loss Threshold
Incurrence Date less the aggregate principal amount of all Loans previously made
and (b) the aggregate Unutilized Commitments of all Banks as in effect on the
date such Borrowing is made.
Section 2.03 Notice of Borrowing. Whenever the Borrower desires to
make a Borrowing hereunder, it shall give the Agent at its Notice Office at
least two Business Days' prior notice made hereunder, provided that any such
notice shall be deemed to have been given on a certain day only if given before
12:00 Noon (New York time) on such day. Each such notice (each a "Notice of
Borrowing") shall be in the form of Exhibit A, appropriately completed to
specify the aggregate principal amount of the Loans to be made pursuant to such
Borrowing, and the date of such Borrowing (which shall be a Business Day).
Section 2.04 Disbursement of Funds. No later than 11:00 A.M. (New
York time) on the date specified in each Notice of Borrowing, (i) each Bank will
make available at the Payment Office of the Agent its pro rata portion (in
accordance with the Commitment of such Bank and the aggregate Commitments of all
of the Banks as in effect on such date) of the amount of the Borrowing requested
to be made on such date, in Dollars and in immediately available funds and (ii)
the Agent will make available to the Borrower the aggregate of the amounts so
made available by the Banks on such day at its Payment Office.
Section 2.05 Notes. The Borrower's obligation to pay the principal
of, and interest on, the Loans made by each Bank shall be evidenced by a
promissory note duly executed and delivered by the Borrower substantially in the
form of Exhibit B with blanks appropriately completed in conformity herewith
(each a "Note" and, collectively, the "Notes"). Each Note shall (i) be payable
to the order of such Bank and be dated the Effective Date if such Bank shall be
a party hereto on the Effective Date or the effective date of the Assignment and
Assumption Agreement pursuant to which it becomes a party hereto if such Bank
shall become a party hereto after the Effective Date, (ii) be in a stated
principal amount equal to such Bank's Commitment and be payable in the principal
amount of the Loans evidenced thereby, (iii) mature, with respect to each Loan
evidenced thereby, on the Expiry Date, (iv) bear interest as provided in the
appropriate clause of Section 2.06 in respect of the Loans evidenced thereby and
(v) be entitled to the benefits of this Agreement and be secured by the Security
Agreement. Each Bank will note on
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its internal records the amount of each Loan made by it and each payment in
respect thereof and will prior to any transfer of its Note endorse on the
reverse side thereof the outstanding principal amount of Loans evidenced
thereby. Failure to make any such notation shall not affect the Borrower's
obligations in respect of such Loans.
Section 2.06 Interest. (a) The Borrower agrees to pay interest in
respect of the unpaid principal amount of each Loan from the date the proceeds
thereof are made available to the Borrower until the maturity thereof (whether
by acceleration or otherwise) at a rate per annum which shall be equal to the
Base Rate in effect from time to time plus the Applicable Margin.
(b) Overdue principal and, to the extent permitted by law, overdue
interest in respect of each Loan and any other overdue amount payable by the
Borrower hereunder shall bear interest from the date payment thereof was due
until (but not including) the date of actual payment at a rate per annum equal
to 4.0% per annum in excess of the Base Rate in effect from time to time.
(c) Accrued (and theretofore unpaid) interest shall be payable (i)
in respect of each Loan, quarterly in arrears on the last Business Day of each
March, June, September and December, and (ii) in respect of each Loan, on any
prepayment (on the amount prepaid), at maturity (whether by acceleration or
otherwise) and, after such maturity, on demand.
Section 2.07 Capital Adequacy. If any Bank determines at any time
that any applicable law or governmental rule, regulation, order or request
(whether or not having the force of law) concerning capital adequacy, or any
change in interpretation or administration thereof by any governmental
authority, central bank or comparable agency, will have the effect of increasing
the amount of capital required or expected to be maintained by such Bank based
on the existence of its Commitment hereunder or its obligations hereunder, then
the Borrower shall pay to such Bank, upon its written demand therefor, such
additional amounts as shall be required to compensate such Bank for the
increased cost to such Bank as a result of such increase of capital. In
determining such additional amounts, such Bank will act reasonably and in good
faith and will use averaging and attribution methods which are reasonable,
provided that such Bank's determination of compensation owing under this Section
2.07 shall, absent manifest error, be final and conclusive and binding on all
the parties hereto. Each Bank, upon determining that any additional amounts will
be payable pursuant to this Section 2.07, will give prompt written notice
thereof to the Borrower, which notice shall show the basis for the calculation
of such additional amounts. The failure to give any such notice shall not be
deemed to be a waiver of any of the Borrower's obligations to pay additional
amounts pursuant to this Section 2.07, provided that the Borrower shall not be
required to pay any such amounts until it receives written notice from a Bank in
accordance with this Section 2.07.
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SECTION 3. COMMITMENT FEES, FEES; AND TERMINATIONS, EXTENSIONS AND INCREASES OF
COMMITMENTS AND CONTINGENT COMMITMENTS.
Section 3.01 Fees. (a) The Borrower agrees to pay to the Agent for
distribution to the Banks pro rata in accordance with their respective
Unutilized Commitments a commitment fee (such commitment fee, together with the
commitment fee payable pursuant to Section 3.01(b), being the "Commitment Fees")
for the period from the Effective Date until the Expiry Date (or such earlier
date as the Commitments shall have been terminated) computed at a rate equal to
0.6% per annum on the daily average Unutilized Commitments of the Banks;
provided, however, that any Commitment Fee accrued with respect to the
Unutilized Commitment of a Defaulting Bank during the period prior to the time
such Bank became a Defaulting Bank and unpaid at such time shall not be payable
by the Borrower so long as such Bank shall be a Defaulting Bank except to the
extent that such Commitment Fee shall otherwise have been due and payable by the
Borrower prior to such time; and provided further that no Commitment Fee shall
accrue on the Unutilized Commitment of a Defaulting Bank so long as such Bank
shall be a Defaulting Bank.
(b) Accrued Commitment Fees shall be due and payable quarterly in
arrears on the last Business Day of each March, June, September and December of
each year and on the Expiry Date or upon such earlier date as the Commitments
shall be terminated, and shall be based on a 365/366-day year and actual days
elapsed.
(c) The Borrower shall pay to the Agent such fees in connection with
the Credit Documents as may be agreed to from time to time between the Borrower
and the Agent.
Section 3.02 Voluntary Termination of Unutilized Commitments. Upon
at least five Business Days' prior notice to the Agent at its Notice Office, the
Borrower shall have the right to terminate the Unutilized Commitments, in whole
or in part, in minimum aggregate amounts of $1,000,000 (or, if greater, in
integral multiples of $1,000,000), provided that the Borrower shall concurrently
satisfy its obligations, if any, at such time under Section 3.01.
Section 3.03 Mandatory Termination of Commitments. (a) The
Commitment of each Bank shall be permanently reduced on each date a Loan is made
by such Bank pursuant to Section 2.01 by the amount of such Loan.
(b) Notwithstanding anything herein to the contrary, the Borrower
shall have the right to unilaterally terminate the Commitment of any Bank if, at
any time after the Effective Date (with respect to any Bank that is a party
hereto on the Effective Date) or at any time after the effective date of the
relevant Assignment and Assumption Agreement (with respect to any Bank that
becomes a party hereto after the Effective Date pursuant to Section 3.04 or
12.04), the unsecured senior debt rating (or shadow rating as reflected in a
letter) of such Bank or its parent shall be downgraded by ▇▇▇▇▇'▇ or S&P, such
termination to be effective 60 days after the Borrower delivers to such Bank a
notice of termination. The Borrower shall, concurrent with
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such termination, pay to such Bank the aggregate amount, if any, owing at such
time by the Borrower to such Bank under this Agreement.
(c) In addition to any other mandatory Commitment reductions
pursuant to this Section 3.03, the Commitment of each Bank shall each terminate
in its entirety on the Expiry Date.
Section 3.04 Expiry Date. (a) The expiration of the Commitments
shall occur on February 27, 2008 (the "Expiry Date"); provided, however, that
before (but not earlier than 120 days nor later than 60 days before) each
anniversary of the Effective Date, the Borrower may make a written request (an
"Extension Request") to the Agent at the Notice Office that the Expiry Date be
extended by one calendar year. Such Extension Request (a copy of which shall be
forwarded by the Agent to each of the Banks) shall include a certification by a
senior officer of the Borrower that no Default or Event of Default has occurred
and is continuing and all representations and warranties contained herein and
the other Credit Documents are true and correct in all material aspects on and
as of the date of the Extension Request (it being understood and agreed that any
representation or warranty which expressly refers by its terms to a specified
date shall be required to be true only as of such date). If by the date
occurring 30 days next succeeding the Agent's receipt of such Extension Request,
any Bank agrees thereto in writing by so indicating on counterparts of the
Extension Request and delivering such counterpart to the Borrower, "Expiry Date"
as to such Bank shall mean the February 27 occurring in the calendar year next
succeeding the Expiry Date then in effect, provided that any failure to so
notify the Borrower shall be deemed to be a disapproval by such Bank of the
Borrower's Extension Request. The Commitment of any Bank which does not so
agree, shall terminate upon the Expiry Date then in effect. No Bank shall be
obligated to grant any extension pursuant to this Section 3.04(a), and any such
extension shall be in the sole discretion of each Bank. The Borrower shall pay
to each Bank which does not so agree all amounts owing under its Note and this
Agreement on the effective date of the termination of such Bank's Commitment.
(b) If fewer than all of the Banks consent to an Extension Request
(each Bank that has not so consented being a "Declining Bank", and each other
Bank being an "Extending Bank"), the Borrower shall have the right to require
any Declining Bank to assign in full its rights and obligations under this
Agreement (i) to any one or more Extending Banks designated by the Borrower that
have offered in their returned counterpart of the Extension Request to increase
their respective Commitments in an aggregate amount at least equal to the amount
of such Declining Bank's Commitment (each such Extending Bank being an
"Increasing Extending Bank") and (ii) to the extent of any shortfall in the
aggregate amount of extended Commitments to any one or more Eligible Transferees
designated by the Borrower that agree to assume all of such rights and
obligations (each such Eligible Transferee being a "Replacement Bank"), provided
that (1) such Declining Bank shall have received payment of all amounts owing
under its Note and this Agreement on the effective date of such assignment, (2)
such assignment shall otherwise have occurred in compliance with Section 12.04
including, without limitation, clauses (iii) and (iv) of subsection (b) thereof
and (3) the effective date of such assignment shall be the
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date specified by the Borrower and agreed to by the Replacement Bank or
Increasing Extending Bank, as the case may be, which date shall be on or prior
to the applicable Expiry Date.
SECTION 4. PREPAYMENTS; PAYMENTS.
Section 4.01 Voluntary Prepayments. The Borrower shall have the
right to prepay the Loans, without premium or penalty, in whole or in part from
time to time, provided that the Borrower shall give the Agent at its Notice
Office at least three Business Days' prior notice of its intent to prepay the
Loans.
Section 4.02 Mandatory Prepayments. On each Pledged Reserve
Repayment Date, an amount equal to 100% of the Pledged Reserves Account Funds
with respect to which the Borrower has delivered a Pledged Reserve Release
Notice as required by Section 8.11 shall be applied as a mandatory prepayment of
principal of outstanding Loans.
Section 4.03 Method and Place of Payment. Except as otherwise
specifically provided herein, all payments under this Agreement or any Note
shall be made to the Agent not later than 12:00 Noon (New York time) on the date
when due and shall be made in Dollars in immediately available funds at the
Agent's Payment Office. Whenever any payment to be made hereunder or under the
Note shall be stated to be due on a day which is not a Business Day, the due
date thereof shall be extended to the next succeeding Business Day and, with
respect to payments of principal, interest shall be payable at the applicable
rate during such extension.
Section 4.04 Net Payments. All payments made by the Borrower
hereunder or under any Note will be made without setoff, counterclaim or other
defense. All such payments will be made free and clear of, and without deduction
or withholding for, any present or future taxes, levies, imposts, duties, fees,
assessments or other charges of whatever nature now or hereafter imposed by any
jurisdiction or by any political subdivision or taxing authority thereof or
therein with respect to such payment (but excluding any tax imposed on or
measured by the net income or gross income or gross receipts of any Bank (other
than withholding taxes or taxes in lieu of withholding taxes) pursuant to the
laws of the jurisdiction (or any political subdivision or taxing authority
thereof or therein) in which the principal office or lending office of such Bank
is located or in which such Bank is organized or in which such Bank is doing
business through a branch or office from which such jurisdiction treats a Loan
as having been made) and all interest, penalties or similar liabilities with
respect thereto (collectively, "Taxes"). If any Taxes are so levied or imposed,
the Borrower agrees to pay the full amount of such Taxes and such additional
amounts as may be necessary so that every payment of all amounts due hereunder
or under any Note, after withholding or deduction for or on account of any
Taxes, will not be less than the amount provided for herein or in such Note. The
Borrower shall also reimburse each Bank, upon its written request, which request
shall show the basis for calculation of such reimbursement, for taxes imposed on
or measured by the net income of such Bank pursuant to the laws of the
jurisdiction (or any political subdivision or taxing authority thereof or
therein) in which its principal office or lending office is located or in which
such Bank is organized or in which such Bank is doing business through a branch
or office from which such jurisdiction treats a Loan as having
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been made as it shall determine are payable by it in respect of amounts paid to
or on behalf of such Bank pursuant to the preceding sentence. The Borrower will
furnish to the applicable Bank within 45 days after the date the payment of any
Taxes is due pursuant to applicable law certified copies of any tax receipts
available to the Borrower evidencing such payment by the Borrower. The Borrower
will indemnify and hold harmless each Bank, and reimburse each Bank upon its
written request, for the amount of any Taxes so levied or imposed and paid by
such Bank.
Section 4.05 Limitations on Sources of Payment. Notwithstanding any
other provision of this Agreement or of any other Credit Document, the
obligations of the Borrower to make payments of principal and interest on the
Loans and the Notes are limited recourse obligations of the Borrower payable
solely from the Pledged Recoveries, the Pledged Premiums, the Pledged Reserves
Account Funds and the other Collateral, and none of the Agent, the Collateral
Agent, any Bank or any other Person shall be entitled to procure any money
judgment against or to levy or foreclose upon or attach any other assets or
properties of the Borrower for payment of such obligations; provided, however,
that nothing herein contained shall limit, restrict or impair the lien created
by the Security Agreement or the right of any Bank to exercise any of its rights
herein or in any of the other Credit Documents upon the occurrence of an Event
of Default or otherwise, or to bring suit and obtain a judgment against the
Borrower (recourse thereon being limited as to payment of principal and interest
on the Loans and the Notes as provided in this Section 4.05).
SECTION 5. CONDITIONS PRECEDENT TO EFFECTIVENESS.
This Agreement shall become effective subject to the satisfaction
(or waiver by the Banks) of the following conditions:
Section 5.01 Execution of Agreement; Notes. The Borrower and each
Bank shall have signed a copy hereof (whether the same or different copies) and
shall have delivered the same to the Agent at its Notice Office and there shall
have been delivered to each Bank a Note executed by the Borrower in the amount,
maturity and as otherwise provided herein.
Section 5.02 No Default; Representations and Warranties. There shall
exist no Default or Event of Default and all representations and warranties
contained herein and in the other Credit Documents shall be true and correct in
all material respects with the same effect as though such representations and
warranties had been made on and as of the Effective Date.
Section 5.03 Opinions of Counsel. The Agent shall have received an
opinion addressed to it and the Banks and dated the Effective Date from ▇▇▇▇▇▇
▇▇▇▇▇▇▇, General Counsel for the Borrower, covering the matters set forth in
Exhibit C.
Section 5.04 Corporate Documents; Proceedings. (a) The Agent shall
have received a certificate, dated the Effective Date, signed by the president
or any vice president of the Borrower, and attested to by the secretary or any
assistant secretary of the Borrower, in the
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form of Exhibit D with appropriate insertions, together with copies of the
charter documents and resolutions of the Borrower referred to in such
certificate.
(b) All corporate and legal proceedings and all instruments and
agreements in connection with the transactions contemplated in this Agreement
and the other Credit Documents shall be satisfactory in form and substance to
the Agent, and it shall have received all information and copies of all
documents and papers, including records of corporate proceedings and
governmental approvals, if any, which the Agent reasonably may have requested in
connection therewith, such documents and papers where appropriate to be
certified by proper corporate or governmental authorities.
Section 5.05 Security Agreement. The Borrower shall have duly
authorized, executed and delivered a Pledge and Security Agreement in the form
of Exhibit E (as modified, supplemented or amended from time to time, the
"Security Agreement") covering all the Borrower's present and future Collateral,
together with:
(a) evidence of all filings as may be necessary or, in the opinion
of the Collateral Agent, desirable to perfect the security interests
purported to be created by the Security Agreement; and
(b) evidence that all other actions necessary or, in the opinion of
the Collateral Agent, desirable to perfect and protect the security
interests purported to be created by the Security Agreement have been
taken.
Section 5.06 Covered Portfolio, etc. The Agent shall have received a
certificate, dated the Effective Date, signed by the president, the chief
financial officer or other senior financial officer of the Borrower, setting
forth in reasonable detail as of December 31, 2000 (i) each Insured Obligation
in the Covered Portfolio and each reinsurance agreement or similar arrangement
which covers any material amount of such Insured Obligations, (ii) each default
by the issuer of any such Insured Obligation or other obligor with respect
thereto which has formed or the Borrower reasonably expects to form the basis of
a claim under an Insurance Contract of which the Borrower is aware, (iii) each
default by any party to any such reinsurance agreement or similar arrangement of
which the Borrower is aware, (iv) each claim paid by the Borrower under any
Insurance Contract with respect to such Insured Obligations and (v) the
Borrower's reasonable estimate as of December 31, 2000 of Installment Premiums
payable with respect to the Covered Portfolio.
Section 5.07 Requisite Approvals. All necessary governmental
(domestic and foreign) and third party approvals in connection with the
transactions contemplated by the Credit Documents and otherwise referred to
herein or therein shall have been obtained and remain in effect, and all
applicable waiting periods shall have expired without any action being taken by
any competent authority which restrains, prevents or imposes materially adverse
conditions upon the consummation of the transactions contemplated by the Credit
Documents and otherwise referred to herein or therein. Additionally, there shall
not exist any judgment, order, injunction
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or other restraint issued or filed or a hearing seeking injunctive relief or
other restraint pending or notified prohibiting or imposing materially adverse
conditions upon the making of the Loans.
Section 5.08 Litigation. No litigation by any entity (private or
governmental) shall be pending or threatened with respect to this Agreement or
any documentation executed in connection herewith or the transactions
contemplated hereby, or with respect to any material Indebtedness of the
Borrower or which any Bank shall determine would reasonably be expected to have
a materially adverse effect on the business, operations, property, assets,
liabilities, prospects or condition (financial or otherwise) of the Borrower.
Section 5.09 Fees, etc. The Borrower shall have paid to the Agent
and to the Banks all costs, fees and expenses (including, without limitation,
legal fees and expenses) payable to the Agent and/or the Banks to the extent
then due.
All of the certificates, legal opinions and other documents and papers referred
to in this Section 5, unless otherwise specified, shall have been delivered to
the Agent at its Notice Office.
SECTION 6. CONDITIONS PRECEDENT TO ALL CREDIT EVENTS.
The obligation of the Banks to make Loans is subject, at the time of
each such Credit Event, to the satisfaction of the following conditions:
Section 6.01 Loss Threshold Incurrence Date. At or prior to the time
of each such Credit Event, the Loss Threshold Incurrence Date shall have
occurred.
Section 6.02 Notice of Borrowing. Prior to the making of each Loan,
the Agent shall have received a Notice of Borrowing meeting the requirements of
Section 2.03.
The acceptance of the proceeds of each Credit Event shall constitute a
representation and warranty by the Borrower to each Bank that the Loss Threshold
Incurrence Date has occurred.
SECTION 7. REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
In order to induce the Banks to enter into this Agreement, the
Borrower makes the following representations, warranties and agreements as of
the Effective Date, which shall survive the execution and delivery of this
Agreement and the Notes (it being understood and agreed that any representation
or warranty which expressly refers by its terms to a specified date shall be
required to be true and correct in all material respects only as of such date):
Section 7.01 Corporate Status. The Borrower (i) is a duly organized
and validly existing stock insurance company in good standing under the laws of
the State of New York, (ii) has the power and authority to own its property and
assets and to transact the business in which it is engaged and (iii) is duly
qualified as a foreign corporation and in good standing in each jurisdiction
where the ownership, leasing or operation of property or the conduct of its
business requires such qualification, except where the failure to qualify would
not have a material adverse
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effect on the business, operations, property, assets, liabilities, prospects or
condition (financial or otherwise) of the Borrower.
Section 7.02 Corporate Power and Authority. The Borrower has the
corporate power to execute, deliver and perform the terms and provisions of each
of the Credit Documents to which it is party and has taken all necessary
corporate action to authorize the execution, delivery and performance by it of
each of such Credit Documents. The Borrower has, or in the case of the Credit
Documents other than this Agreement, by the Effective Date will have, duly
executed and delivered each of the Credit Documents to which it is party, and
each of such Credit Documents constitutes or, in the case of each such other
Credit Document when executed and delivered, will constitute, its legal, valid
and binding obligation enforceable in accordance with its terms, subject to the
qualifications that enforcement of the rights and remedies created hereby or
thereby is subject to (i) bankruptcy, insolvency, reorganization, moratorium and
other laws of general application affecting the rights and remedies of creditors
and (ii) general principles of equity (regardless of whether such enforcement is
considered in a proceeding in equity or at law).
Section 7.03 No Violation. Neither the execution, delivery or
performance by the Borrower of the Credit Documents to which it is a party, nor
compliance by it with the terms and provisions thereof, nor the use of the
proceeds of the Loans (i) will contravene any provision of any law, statute,
rule or regulation or any order, writ, injunction or decree of any court or
governmental instrumentality, (ii) will conflict or be inconsistent with or
result in any breach of any of the terms, covenants, conditions or provisions
of, or constitute a default under, or result in the creation or imposition of
(or the obligation to create or impose) any Lien (other than Permitted Liens)
upon any of the property or assets of the Borrower pursuant to the terms of any
indenture, mortgage, deed of trust, credit agreement, loan agreement or any
other agreement, contract or instrument to which the Borrower is a party or by
which it or any of its property or assets is bound or to which it may be subject
or (iii) will violate any provision of the Charter or By-Laws of the Borrower.
Section 7.04 Governmental Approvals. No order, consent, approval,
license, authorization or validation of, or filing, recording or registration
with (except as have been obtained or made prior to the Effective Date), or
exemption by, any governmental or public body or authority, or any subdivision
thereof, is required to authorize, or is required in connection with, (i) the
execution, delivery and performance of any Credit Document to which the Borrower
is a party or (ii) the legality, validity, binding effect or enforceability of
any such Credit Document.
Section 7.05 Financial Statements; Financial Condition; Undisclosed
Liabilities; etc. (a) The balance sheet of the Borrower at December 31, 1999,
and the related statements of income and retained earnings and changes in
financial position of the Borrower for the fiscal year ended on such date, all
heretofore furnished to the Banks, present fairly the financial condition of the
Borrower at December 31, 1999, and the results of the operations of the Borrower
for the fiscal year ended on such date. All such financial statements have been
prepared in accordance
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with generally accepted accounting principles and practices consistently applied
and audited by Deloitte & Touche LLP. Since December 31, 1999, there has been no
material adverse change in the business, operations, property, assets,
liabilities, prospects or condition (financial or otherwise) of the Borrower,
except as may be set forth in any unaudited quarterly financial statements
prepared by the Borrower since the date of the audited financial statements or
in a quarterly report on Form 10-Q/A filed by Enhance with the Securities and
Exchange Commission (all of which have heretofore been furnished to the Banks).
(b) Except as fully reflected in the financial statements delivered
pursuant to Section 7.05(a), there are no liabilities or obligations with
respect to the Borrower of any nature whatsoever (whether absolute, accrued,
contingent or otherwise and whether or not due) which, either individually or in
aggregate, would be material to the Borrower. The Borrower does not know of any
basis for the assertion against the Borrower of any liability or obligation of
any nature whatsoever that is not fully reflected in the financial statements
delivered pursuant to Section 7.05(a) which, either individually or in the
aggregate, would be material to the Borrower. At December 31, 2000, Average
Annual Debt Service was $591,495,481.
Section 7.06 Litigation. There are no actions, suits or proceedings
pending or, to the best knowledge of the Borrower, threatened (i) with respect
to any Credit Document or (ii) that are reasonably likely to materially and
adversely affect the business, operations, property, assets, liabilities,
prospects or condition (financial or otherwise) of the Borrower.
Section 7.07 True and Complete Disclosure. All factual information
(taken as a whole) heretofore or contemporaneously furnished by or on behalf of
the Borrower in writing to the Banks (including without limitation all
information contained in the Credit Documents) for purposes of or in connection
with this Agreement or any transaction contemplated herein is, and all other
such factual information (taken as a whole) hereafter furnished by or on behalf
of the Borrower in writing to the Banks will be, true and accurate in all
material respects on the date as of which such information is dated or certified
and not incomplete by omitting to state any fact necessary to make such
information (taken as a whole) not misleading at such time in light of the
circumstances under which such information was provided.
Section 7.08 Use of Proceeds; Margin Regulations. All proceeds of
each Loan shall be used by the Borrower only to establish and/or maintain
Permitted Reserves in the Pledged Reserves Account and/or to pay or reimburse
itself for the payment of Losses in respect of the Covered Portfolio, and no
part of the proceeds of any Loan will be used by the Borrower to purchase or
carry any Margin Stock or to extend credit to others for the purpose of
purchasing or carrying any Margin Stock. Neither the making of any Loan nor the
use of the proceeds thereof will violate or be inconsistent with the provisions
of Regulations T, U or X of the Board of Governors of the Federal Reserve
System.
Section 7.09 Tax Returns and Payments. The Borrower has filed all
tax returns required to be filed by it and has paid all income taxes payable by
it which have become due pursuant to such tax returns and all other taxes and
assessments payable by it which have become
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due, other than those not yet delinquent and except for those contested in good
faith and for which adequate reserves have been established. The Borrower has
paid, or has provided adequate reserves (in the good faith judgment of the
management of the Borrower) for the payment of, all federal and state income
taxes applicable for all prior fiscal years and for the current fiscal year to
the date hereof.
Section 7.10 Compliance with ERISA. Each Plan is in substantial
compliance with all applicable provisions of ERISA and the Code; no Reportable
Event has occurred with respect to any Plan; no Plan has an accumulated or
waived funding deficiency or has applied for an extension of any amortization
period within the meaning of Section 412 of the Code or Section 302 of ERISA;
neither the Borrower nor any ERISA Affiliate has incurred any material liability
to or on account of a Plan or a Multiemployer Plan pursuant to Section 409,
502(i), 515, 4201, 4204, 4212, 4062, 4063, 4064 or 4069 of ERISA or Section
401(a)(29), 4971 or 4975 of the Code which has not been satisfied in full or
expects to incur any material liability under any of the foregoing sections with
respect to any such Plan or Multiemployer Plan; no condition exists which
presents a material risk to the Borrower or any ERISA Affiliate of incurring a
material liability to or on account of a Plan pursuant to the foregoing
provisions of ERISA and the Code; neither the Borrower nor any of its ERISA
Affiliates is or has ever been a party to, or is or has ever been required to
make contributions to, or has terminated any Multiemployer Plan; no Lien imposed
under the Code or ERISA on the assets of the Borrower or any ERISA Affiliate
exists or is likely to arise on account of any Plan or Multiemployer Plan; and
the Borrower does not maintain or contribute to any employee welfare benefit
plan (as defined in Section 3(1) of ERISA) which provides benefits to retired
employees or other former employees (other than as required by Section 601 of
ERISA) or any employee pension benefit plan (as defined in Section 3(2) of
ERISA) the obligations with respect to which would reasonably be expected to
have a material adverse effect on the ability of the Borrower to perform its
obligations under this Agreement.
Section 7.11 Capitalization. As of the date hereof, the authorized
capital stock of the Borrower consists of 100,000 shares of common stock,
$150.00 par value per share, all of which are issued and outstanding. All such
outstanding shares have been duly and validly issued, and are fully paid and
non-assessable. The Borrower does not have outstanding any securities
convertible into or exchangeable for its capital stock or outstanding any rights
to subscribe for or to purchase, or any options for the purchase of, or any
agreements providing for the issuance (contingent or otherwise) of, or any
calls, commitments or claims of any character relating to, its capital stock
except as otherwise disclosed in its financial statements.
Section 7.12 Subsidiaries. Set forth on Schedule III hereto is a
complete and correct list, as of the date hereof, of all of the Subsidiaries of
the Borrower, together with, for each subsidiary, (i) the jurisdiction of
organization of such Subsidiary, the Persons having an ownership interest
therein and (ii) the nature of the ownership represented by such ownership
interests. As of the Effective Date, (a) the Borrower and, to the extent
applicable, the appropriate Subsidiary owns free and clear of Liens, and has the
unencumbered right to vote all outstanding ownership interest in each Person
shown to be held by it in Schedule III, (b) all of the issued and
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outstanding capital stock of each such Person organized as a corporation has
been duly and validly issued, and are fully paid and nonassessable, and (c) no
Subsidiary of the borrower has any outstanding securities convertible into or
exchangeable for capital stock or outstanding any rights to subscribe for or to
purchase, or any option for the purchase of, or any agreements providing for the
issuance (contingent or otherwise) of, or any calls, commitments or claims of
any character relating to, its capital stock except as otherwise disclosed on
Schedule III.
Section 7.13 Compliance with Statutes, etc.. The Borrower is in
compliance with all applicable statutes, regulations and orders of, and all
applicable restrictions imposed by, all governmental bodies, domestic or
foreign, in respect of the conduct of its business and the ownership of its
property (including applicable statutes, regulations, orders and restrictions
relating to environmental standards and controls), except such noncompliances as
would not reasonably be expected to have, in the aggregate, a material adverse
effect on the business, operations, property, assets, liabilities, prospects or
condition (financial or otherwise) of the Borrower.
Section 7.14 Investment Company Act. The Borrower is not an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
Section 7.15 Public Utility Holding Company Act. The Borrower is not
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,
as amended.
Section 7.16 Compliance with Insurance Law. The Borrower is duly
licensed to transact business as a financial guaranty insurance corporation by
the New York Insurance Department and (a) has all other requisite federal, state
and other governmental licenses, authorizations, permits, consents and approvals
to conduct its insurance and other business as currently conducted and proposed
to be conducted in New York and in each jurisdiction in which it writes or
issues policies of insurance (including without limitation any form of financial
guaranty insurance, certain lines of surety insurance or credit insurance),
surety bonds, guaranties, contracts of reinsurance or other undertakings similar
to the foregoing (collectively, "Insurance Contracts") or in which it conducts
business, except for failures, if any, to have such licenses, authorizations,
permits, consents and approvals which singly or in the aggregate would not
reasonably be expected to have a material adverse effect on the business,
operations, property, assets, liabilities, prospects or condition (financial or
otherwise) of the Borrower or the ability of the Borrower to perform its
obligations under this Agreement or any of the other Credit Documents, (b) has
made all filings of each of its forms of Insurance Contracts and of its rates
and charges with the New York Insurance Department and all other federal, state
and other administrative or governmental bodies required for the use thereof and
has obtained all requisite approvals thereof, except for failures, if any, to
file or to obtain such approvals which singly or in the aggregate would not
reasonably be expected to have a material adverse effect on the business,
assets, operations or financial condition of the Borrower or the ability of the
Borrower to perform its obligations under this Agreement or any of the other
Credit Documents, (c) has duly
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established and maintains all reserves required under the New York Insurance Law
and other applicable federal, state and other laws, rules and regulations,
except for failures, if any, to maintain reserves which would not reasonably be
expected to have a material adverse effect on the business, assets, operations,
property or condition (financial or otherwise) of the Borrower or the ability of
the Borrower to perform its obligations under this Agreement or any of the
Credit Documents and (e) is in compliance (and has not received any notice from
the New York Insurance Department or similar administrative or governmental body
or an authorized representative thereof claiming that it is not in compliance)
with the New York Insurance Law and with all other applicable federal, state and
other laws relating to its insurance and other businesses, except with respect
to failures, if any, to comply which singly or in the aggregate would not
reasonably be expected to have a material adverse effect on the business,
assets, operations, property or condition (financial or otherwise) of the
Borrower or the ability of the Borrower to perform its obligations under this
Agreement or any of the other Credit Documents.
Section 7.17 Covered Portfolio. Substantially all of the Insured
Obligations in the Covered Portfolio are insured or reinsured by the Borrower
under Insurance Contracts in the form or forms heretofore supplied to the Agent
in accordance with the Borrower's underwriting criteria. The Borrower has no
reason to believe that its rights included among the Collateral are not valid
and binding against the obligors thereunder in accordance with their respective
terms, except insofar as enforceability may be limited by bankruptcy,
insolvency, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and the availability of equitable remedies, except
for such Collateral which, in the aggregate, would not reasonably be expected to
have a material adverse effect on the right and ability of the Collateral Agent,
in accordance with the Security Agreement, to realize upon the Collateral as a
whole. Schedule II attached hereto sets forth a listing, as of December 31,
2000, of the reinsurer and the related amounts (both ceded par inforce and ceded
principal and interest inforce) of reinsured Insured Obligations as of such
date.
SECTION 8. AFFIRMATIVE COVENANTS.
The Borrower covenants and agrees that on and after the Effective
Date and until the Commitments have terminated and the Loans and the Notes,
together with interest, Fees and all other obligations incurred hereunder and
thereunder, are paid in full:
Section 8.01 Information Covenants. The Borrower will furnish to the
Agent and, upon the request of any Bank, to such Bank:
(a) Quarterly Financial Statements. Within 60 days after the close
of each of the first three quarterly accounting periods in each fiscal year of
the Borrower, the balance sheet of the Borrower as at the end of such quarterly
period and the related statements of income and retained earnings for such
quarterly period and for the elapsed portion of the fiscal year ended with the
last day of such quarterly period, in each case setting forth comparative
figures for the related periods in the prior fiscal year, all of which shall be
certified by the president, chief financial officer or the treasurer or other
senior financial officer of the Borrower, subject to
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normal year-end audit adjustments which unaudited financial statements are not
required to contain footnotes.
(b) Annual Financial Statements. Within 180 days after the close of
each fiscal year of the Borrower, but in any event as promptly as shall be
available, the balance sheet of the Borrower as at the end of such fiscal year
and the related combined statements of income and retained earnings and of cash
flows for such fiscal year setting forth comparative figures for the preceding
fiscal year and audited by Deloitte & Touche LLP, or such other independent
certified public accountants of recognized national standing reasonably
acceptable to the Agent, together with a report of such accounting firm stating
that in the course of its regular audit of the financial statements of the
Borrower, the audit was conducted in accordance with generally accepted auditing
standards.
(c) Management Letters. Promptly after the receipt thereof by the
Borrower or any of its Subsidiaries, a copy of any "management letter" received
by the Borrower or such Subsidiary from its certified public accountants and the
management's responses thereto.
(d) Officer's Certificates. At the time of the delivery of the
financial statements provided for in Section 8.01(a) or 8.01(b), a certificate
of the president, chief financial officer or treasurer or other senior financial
officer of the Borrower (i) listing the Insured Obligations in the Covered
Portfolio (and if the Loss Threshold Incurrence Date has occurred identifying
the Insurance Contracts with respect thereto) and calculating in reasonable
detail as of the date of such financial statements (A) if such date is prior to
the Loss Threshold Incurrence Date, (1) the Borrower's Cumulative Losses
(stating separately any Permitted Reserves included therein) for the current
Commitment Period and (2) the Average Annual Debt Service, and (B) if such date
is on or after the occurrence of the Loss Threshold Incurrence Date, (1) the
date of the occurrence thereof, (2) evidence of the occurrence thereof, (3) the
amount of Permitted Reserves as of the date of such financial statements, and
(4) the aggregate amount of Pledged Recoveries received by or for the account of
the Borrower during the current Commitment Period on or prior to the date of
such financial statements, (ii) certifying information with respect to reinsured
Insured Obligations as of the date of such financial statements in a format
comparable to Schedule II attached hereto and (iii) to the effect that, to the
best of his knowledge, no Default or Event of Default has occurred and is
continuing or, if any Default or Event of Default has occurred and is
continuing, specifying the nature and extent thereof.
(e) Notice of Default or Litigation. Promptly, and in any event
within two Business Days, after an Authorized Officer obtains knowledge thereof,
written notice of (i) the occurrence of any event which constitutes a Default or
Event of Default, (ii) any litigation or governmental proceeding pending (A)
against the Borrower or any of its Subsidiaries which would have a materially
adverse effect upon the business, operations, property, assets, liabilities, or
condition (financial or otherwise) of the Borrower and its Subsidiaries taken as
a whole or (B) with respect to any Credit Document, (iii) any other event which
would have a materially adverse effect upon the business, operations, property,
assets, liabilities, prospects or condition (financial or otherwise) of the
Borrower and its Subsidiaries taken as a whole, (iv) any rating report
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received by the Borrower published by ▇▇▇▇▇'▇, S&P or, if either ▇▇▇▇▇'▇ or S&P
no longer rates the claims-paying ability of the Borrower, any other nationally
recognized rating agency which, with the consent of the Borrower, rates the
creditworthiness of obligations insured by the Borrower, (v) each Loss in excess
of $1,000,000, including without limitation, identification of the Insured
Obligation with respect to which such Loss occurred, (vi) each default by the
issuer of any Insured Obligation in the Covered Portfolio or other obligor with
respect thereto which could form the basis of a claim in excess of $1,000,000
under an Insurance Contract and (vii) each default by any party to a reinsurance
agreement or similar arrangement with the Borrower which covers at least
$1,000,000 of Insured Obligations in the Covered Portfolio.
(f) Other Reports and Filings. Within 10 Business Days following the
filing thereof with the Securities and Exchange Commission or any successor
thereto, copies of all financial information, proxy materials and other
information and reports, if any, which the Borrower or any Affiliate of the
Borrower shall file with the Securities and Exchange Commission or any successor
thereto.
(g) Other Information. From time to time, such other information or
documents (financial or otherwise) as any Bank may reasonably request,
including, without limitation, information with respect to, and copies of, any
relevant reinsurance agreement.
Section 8.02 Books, Records and Inspections. The Borrower will, and
will cause each of its Subsidiaries to, keep proper books of record and account
in which full, true and correct entries in conformity with generally accepted
accounting principles in the United States and all requirements of law shall be
made of all dealings and transactions in relation to its business and
activities. The Borrower will, and will cause each of its Subsidiaries to,
permit officers and designated representatives of the Agent or any Bank to visit
and inspect, during regular business hours and under guidance of officers of the
Borrower or such Subsidiary, any of the properties of the Borrower or such
Subsidiary, and to examine the books of account of the Borrower or such
Subsidiary and discuss the affairs, finances and accounts of the Borrower or
such Subsidiary with, and be advised as to the same by, its and their officers
and independent accountants, all at such reasonable times and intervals and to
such reasonable extent as the Agent or such Bank may request.
Section 8.03 Corporate Franchises. The Borrower will do or cause to
be done all things necessary to preserve and keep in full force and effect its
existence and its material rights, franchises, licenses and patents; provided,
however, that nothing in this Section 8.03 shall prevent (i) transactions by the
Borrower or any of its Subsidiaries which are permitted as exceptions to the
restrictions of Section 9.02 or (ii) the withdrawal by the Borrower of its
qualification as a foreign corporation in any jurisdiction where such withdrawal
would not have a material adverse effect on the business, operations, property,
assets, liabilities, prospects or condition (financial or otherwise) of the
Borrower or of the Borrower and its Subsidiaries taken as a whole.
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Section 8.04 Compliance with Statutes, etc. The Borrower will, and
will cause each of its Subsidiaries to, comply with all applicable statutes,
regulations and orders of, and all applicable restrictions imposed by, all
governmental bodies, domestic or foreign, in respect of the conduct of its
business and the ownership of its property (including applicable statutes,
regulations, orders and restrictions relating to environmental standards and
controls), except such noncompliances as would not, individually or in the
aggregate, have a material adverse effect on the business, operations, property,
assets, liabilities, prospects or condition (financial or otherwise) of the
Borrower or of the Borrower and its Subsidiaries taken as a whole.
Section 8.05 ERISA. Promptly after an Authorized Officer of the
Borrower has received notice or otherwise has knowledge thereof, the Borrower
shall deliver to the Agent a written notice describing in reasonable detail the
occurrence of any of the following: that a Reportable Event has occurred; that
an accumulated funding deficiency, within the meaning of Section 412 of the Code
or Section 302 of ERISA, has been incurred or an application may be or has been
made to the Secretary of the Treasury for a waiver or modification of the
minimum funding standard (including any required installment payments) or an
extension of any amortization period under Section 412 of the Code or Section
303 or 304 of ERISA with respect to a Plan; that a Plan has an Unfunded Current
Liability giving rise to a Lien under ERISA; or that the Borrower or any ERISA
Affiliate will or may incur any material liability (including any contingent or
secondary liability) to or on account of the termination of or withdrawal from a
Plan or Multiemployer Plan under Section 4062, 4063, 4064, 4069, 4201, 4204 or
4212 of ERISA. Upon written request of the Agent, the Borrower will deliver to
each Bank a complete copy of the annual report (Form 5500) of each Plan required
to be filed with the Internal Revenue Service.
Section 8.06 Performance of Obligations. The Borrower will, and will
cause each of its Subsidiaries to, perform all of its obligations under the
terms of each mortgage, indenture, security agreement and other debt instrument
by which it is bound, except such non-performances as would not, individually or
in the aggregate, have a material adverse effect on the business, operations,
property, assets, liabilities, prospects or condition (financial or otherwise)
of the Borrower or of the Borrower and its Subsidiaries taken as a whole.
Section 8.07 Use of Proceeds. The Borrower will use the proceeds of
the Loans only to pay or reimburse itself for the payment of Losses (including
establishing and/or maintaining Permitted Reserves in the Pledged Reserves
Account) in respect of the Covered Portfolio.
Section 8.08 Conduct of Business. The Borrower will continue to
engage in business of the same general type as conducted by it on the Effective
Date.
Section 8.09 Underwriting Criteria. The Borrower shall maintain its
criteria for underwriting (including reinsuring) Insurance Contracts
substantially as heretofore in effect.
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Section 8.10 Collection of Pledged Recoveries and Pledged Premiums.
The Borrower shall at all times use its commercially reasonable efforts to
collect and otherwise realize upon all Pledged Recoveries and Pledged Premiums
in compliance with applicable law and in a commercially reasonable manner.
Section 8.11 Pledged Reserve Release Notice. The Borrower hereby
acknowledges and agrees that if, at any time, it shall cease to maintain all or
any portion of Permitted Reserves in respect of which Pledged Reserves Account
Funds have been deposited in the Pledged Reserves Account, the Borrower as
promptly as possible (and in any event within three Business Days) after it
shall cease to maintain such Permitted Reserves shall give written notice
thereof (each such notice, a "Pledged Reserve Release Notice") to the Agent and
the Collateral Agent which notice shall provide the amount of such Pledged
Reserves Account Funds that have been released.
Section 8.12 Registry. The Borrower hereby covenants that it shall
maintain a register on which it will record the Commitment from time to time of
each of the Banks, the Loans made by each of the Banks and each repayment in
respect of the principal amount of the Loans of each Bank. Failure to make any
such recordation, or any error in such recordation, shall not affect the
Borrower's obligations in respect of such Loans. Upon the request of the
Borrower, the Agent hereby agrees to use its reasonable efforts to provide to
the Borrower such information not otherwise available to the Borrower, as the
Borrower shall reasonably request from time to time in order to enable it to
fulfill its obligations pursuant to this Section 8.12.
SECTION 9. NEGATIVE COVENANTS.
The Borrower covenants and agrees that on and after the Effective
Date and until the Commitments have terminated and the Loans and the Notes,
together with interest, Fees and all other obligations incurred hereunder and
thereunder, are paid in full:
Section 9.01 Liens. The Borrower will not, and will not permit any
of its Subsidiaries to, create, incur, assume or suffer to exist any Lien upon
or with respect to any Pledged Recoveries, Pledged Premiums, Pledged Reserves
Account Funds or other Collateral, provided that the provisions of this Section
9.01 shall not prevent the creation, incurrence, assumption or existence of the
following (Liens described below are herein referred to as "Permitted Liens"):
(i) the Lien in favor of the Banks under the Security Agreement or
otherwise permitted thereunder;
(ii) inchoate Liens for taxes, assessments or governmental charges
or levies not yet due or Liens for taxes, assessments or governmental charges or
levies being contested in good faith and by appropriate proceedings for which
adequate reserves have been established in accordance with generally accepted
accounting principles;
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(iii) Liens in respect of property or assets of the Borrower or any
of its Subsidiaries imposed by law, which were incurred in the ordinary course
of business and do not secure Indebtedness for borrowed money, such as
carriers', warehousemen's, materialmen's and mechanics' liens and other similar
Liens arising in the ordinary course of business, which relate to Indebtedness
which has not been paid when due and payable in accordance with its terms and
which are being contested in good faith by appropriate proceedings, which
proceedings have the effect of preventing the forfeiture or sale of the property
or assets subject to any such Lien; and
(iv) Liens incurred in connection with reinsurer trust agreements
entered into pursuant to Section 114 of the New York Insurance Law.
Section 9.02 Consolidation, Merger, Sale of Assets, etc. The
Borrower will not, and will not permit any of its Subsidiaries to, wind up,
liquidate or dissolve its affairs or enter into any transaction of merger or
consolidation, or convey, sell, lease or otherwise dispose of (or agree to do
any of the foregoing at any future time) all or any substantial part of its
property or assets, or purchase or otherwise acquire (in one or a series of
related transactions) all or substantially all of the property or assets (other
than purchases or other acquisitions of inventory, materials and equipment in
the ordinary course of business) of any Person, or permit any of its
Subsidiaries so to do any of the foregoing, except that:
(i) each of the Borrower and its Subsidiaries may in the ordinary
course of business sell or lease assets;
(ii) any Subsidiary may wind up its affairs or liquidate or dissolve
into, and may consolidate or merge with or into, the Borrower or any other
Subsidiary of the Borrower;
(iii) the assets or stock of any Subsidiary of the Borrower may be
purchased or otherwise acquired by the Borrower or any other Subsidiary of the
Borrower;
(iv) the Borrower or any of its Subsidiaries may purchase or
otherwise acquire all or substantially all of the properties or assets of any
Person (other than the Borrower) or acquire such Person by merger so long as (a)
no Default or Event of Default has occurred and is continuing or would occur
after giving effect thereto, (b) such purchase, acquisition or merger shall not
result in any downgrading of the Borrower's Rating assigned by ▇▇▇▇▇'▇ or S&P
from that in effect immediately prior to such purchase, acquisition or merger
and (c) the Borrower shall deliver to the Agent a certificate of the president,
chief financial officer or the treasurer of the Borrower stating that such
purchase, merger or acquisition complied with the conditions contained in this
clause (iv); and
(v) the Borrower's indirect Subsidiary, Van-American Insurance
Company, may wind up, liquidate or dissolve its affairs and convey, sell, lease
or otherwise dispose of (or agree to do any of the foregoing at any future time)
all or any substantial part of its property or assets in accordance with the
Run-off Plan approved by the Commonwealth of Kentucky Department of Insurance on
or about December 27, 2000.
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SECTION 10. EVENTS OF DEFAULT.
Upon the occurrence of any of the following specified events (each
an "Event of Default"):
Section 10.01 Payments. The Borrower shall (i) default in the
payment when due of any principal of any Loan or any Note or (ii) default, and
such default shall continue unremedied for two or more Business Days, in the
payment when due of any interest on any Loan or any Note or any Fees or any
other amounts owing hereunder or under any Note; or
Section 10.02 Representations, etc. Any representation, warranty or
statement made by or on behalf of the Borrower herein or in any other Credit
Document or in any certificate delivered pursuant hereto or thereto shall prove
to be untrue in any material respect on the date as of which made or deemed
made; or
Section 10.03 Covenants. The Borrower shall (i) default in the due
performance or observance by it of any term, covenant or agreement contained in
Section 8.01(e)(i), 8.07, 8.08, 8.09, 8.10, 8.11 or 9 or (ii) default in the due
performance or observance by it of any term, covenant or agreement (other than
those referred to in Sections 10.01 and 10.02 and clause (i) of this Section
10.03) contained in this Agreement and such default shall continue unremedied
for a period of 30 days after written notice to the Borrower by the Agent or, in
the event there is no Agent, any Bank; or
Section 10.04 Default Under Other Agreements. The Borrower or any of
its Subsidiaries shall (i) default in any payment of any Indebtedness (other
than the Notes) with an outstanding principal balance in excess of $5,000,000
beyond the period of grace, if any, provided in the instrument or agreement
under which such Indebtedness was created or (ii) default in the observance or
performance of any agreement or condition relating to any such Indebtedness
beyond the grace period as provided therein (other than the Notes) or contained
in any instrument or agreement evidencing, securing or relating thereto, or any
other event shall occur or condition exist, the effect of any such default or
other event or condition is to cause, or to permit the holder or holders of such
Indebtedness (or a trustee or agent on behalf of such holder or holders) to
cause any such Indebtedness to become due prior to its stated maturity; or any
Indebtedness of the Borrower or any of its Subsidiaries shall be declared to be
due and payable, or required to be prepaid other than by a regularly scheduled
required prepayment, prior to the stated maturity thereof; or
Section 10.05 Bankruptcy, etc. The Borrower or any of its
Subsidiaries shall commence a voluntary case concerning itself under Title 11 of
the United States Code entitled "Bankruptcy," as now or hereafter in effect, or
any successor thereto (the "Bankruptcy Code"); or an involuntary case is
commenced against the Borrower or any of its Subsidiaries, and the petition is
not controverted within 10 days, or is not stayed or dismissed and remains in
effect after 60 days, after commencement of the case; or a custodian (as defined
in the Bankruptcy Code) is appointed for, or takes charge of, all or
substantially all of the property of the Borrower
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or any of its Subsidiaries, or the Borrower or any of its Subsidiaries commences
any other proceeding under any reorganization, arrangement, adjustment of debt,
relief of debtors, dissolution, insolvency or liquidation or similar law of any
jurisdiction whether now or hereafter in effect relating to the Borrower or any
of its Subsidiaries, or there is commenced against the Borrower or any of its
Subsidiaries any such proceeding which remains undismissed or unstayed for a
period of 60 days, or the Borrower or any of its Subsidiaries is adjudicated
insolvent or bankrupt; or any order of relief or other order approving any such
case or proceeding is entered; or the Borrower or any of its Subsidiaries
suffers any appointment of any custodian or the like for it or any substantial
part of its property to continue undischarged or unstayed for a period of 60
days; or the Borrower or any of its Subsidiaries makes a general assignment for
the benefit of creditors; or any corporate action is taken by the Borrower or
any of its Subsidiaries for the purpose of effecting any of the foregoing; or
Section 10.06 Security Agreement. (i) The Security Agreement or any
provision thereof shall cease to be in full force and effect, or shall cease in
any material respect to give the Collateral Agent for the benefit of the Banks,
the Liens, rights, powers and privileges purported to be created thereby, or
(ii) the Borrower shall otherwise default in any material respect in the due
performance or observance of any term, covenant or agreement on its part to be
performed or observed pursuant to the Security Agreement and such default shall
continue unremedied for a period of 30 days after written notice to the Borrower
by the Agent or, in the event there is no Agent, any Bank; or
Section 10.07 Judgments. One or more judgments or decrees shall be
entered against the Borrower or any of its Subsidiaries involving in the
aggregate for the Borrower and its Subsidiaries a liability (not paid or fully
covered by insurance) of $3,000,000 or more at any one time, and all such
judgments or decrees shall not have been vacated, discharged or stayed or bonded
pending appeal within 60 days after the entry thereof; or
Section 10.08 Change of Control. A Change of Control shall occur;
then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing, the Agent may or shall upon direction from the
Majority Banks, by written notice to the Borrower, take the following actions to
the extent permitted below (provided, that, if an Event of Default specified in
Section 10.05 shall occur with respect to the Borrower, the result which would
occur upon the giving of written notice to the Borrower as specified below shall
occur automatically without the giving of any such notice): if any Event of
Default has occurred and is continuing, the Agent may declare the principal of
and any accrued interest in respect of all Loans and the Notes and all
obligations owing hereunder and thereunder to be, whereupon the same shall
become, forthwith due and payable without presentment, demand, protest or other
notice of any kind, all of which are hereby waived by the Borrower.
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SECTION 11. THE AGENT.
Section 11.01 Appointment. The Banks hereby designate Deutsche Bank
AG, New York Branch as Agent (for purposes of this Section 11, the term "Agent"
shall also include Deutsche Bank AG, New York Branch in its capacity as
Collateral Agent pursuant to the Security Documents) to act as specified herein
and in the other Credit Documents. Each Bank hereby irrevocably authorizes, and
each holder of any Note by the acceptance of such Note shall be deemed
irrevocably to authorize, the Agent to take such action on its behalf under the
provisions of this Agreement, the other Credit Documents and any other
instruments and agreements referred to herein or therein and to exercise such
powers and to perform such duties hereunder and thereunder as are specifically
delegated to or required of the Agent by the terms hereof and thereof and such
other powers as are reasonably incidental thereto. The Agent may perform any of
its duties hereunder by or through its officers, directors, agents or employees.
Section 11.02 Nature of Duties. The Agent shall not have any duties
or responsibilities except those expressly set forth in this Agreement and the
Security Agreement. Neither the Agent nor any of its officers, directors, agents
or employees shall be liable for any action taken or omitted by it or them
hereunder or under any other Credit Document or in connection herewith or
therewith, unless caused by its or their gross negligence or willful misconduct.
The duties of the Agent shall be mechanical and administrative in nature; the
Agent shall not have by reason of this Agreement or any other Credit Document a
fiduciary relationship in respect of any Bank or the holder of any Note; and
nothing in this Agreement or any other Credit Document, expressed or implied, is
intended to or shall be so construed as to impose upon the Agent any obligations
in respect of this Agreement or any other Credit Document except as expressly
set forth herein or therein.
Section 11.03 Lack of Reliance on the Agent. Independently and
without reliance upon the Agent, each Bank and the holder of each Note, to the
extent it deems appropriate, has made and shall continue to make (i) its own
independent investigation of the financial condition and affairs of the Borrower
in connection with the making and the continuance of the Loans and the taking or
not taking of any action in connection herewith and (ii) its own appraisal of
the creditworthiness of the Borrower and, except as expressly provided in this
Agreement, the Agent shall not have any duty or responsibility, either initially
or on a continuing basis, to provide any Bank with any credit or other
information with respect thereto, whether coming into its possession before the
making of the Loans or at any time or times thereafter. The Agent shall not be
responsible to any Bank or the holder of any Note for any recitals, statements,
information, representations or warranties herein or in any document,
certificate or other writing delivered in connection herewith or for the
execution, effectiveness, genuineness, validity, enforceability, perfection,
collectability, priority or sufficiency of this Agreement or any other Credit
Document or the financial condition of the Borrower or be required to make any
inquiry concerning either the performance or observance of any of the terms,
provisions or conditions of this Agreement or any other Credit Document, or the
financial condition of the Borrower or the existence or possible existence of
any Default or Event of Default.
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Section 11.04 Certain Rights of the Agent. If the Agent shall
request instructions from the Banks with respect to any act or action (including
failure to act) in connection with this Agreement or any other Credit Document,
the Agent shall be entitled to refrain from such act or taking such action
unless and until the Agent shall have received instructions from the Majority
Banks or all the Banks to the extent required by Section 12.11; and the Agent
shall not incur liability to any Person by reason of so refraining. Without
limiting the foregoing, no Bank or the holder of any Note shall have any right
of action whatsoever against the Agent as a result of the Agent acting or
refraining from acting hereunder or under any other Credit Document in
accordance with the instructions of the Majority Banks or the Banks, as the case
may be.
Section 11.05 Reliance. The Agent shall be entitled to rely, and
shall be fully protected in relying, upon any note, writing, resolution, notice,
statement, certificate, telex, teletype or telecopier message, cablegram,
radiogram, order or other document or telephone message signed, sent or made by
any Person that the Agent believed to be the proper Person, and, with respect to
all legal matters pertaining to this Agreement and any other Credit Document and
its duties hereunder and thereunder, upon advice of counsel selected by the
Agent.
Section 11.06 Indemnification. To the extent the Agent is not
reimbursed and indemnified by the Borrower, each Bank will reimburse and
indemnify the Agent for and against any and all liabilities, obligations,
losses, damages, penalties, claims, actions, judgments, costs, expenses or
disbursements of whatsoever kind or nature which may be imposed on, asserted
against or incurred by the Agent in performing its duties hereunder or under any
other Credit Document, in any way relating to or arising out of this Agreement
or any other Credit Document; provided that no Bank shall be liable for any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from the Agent's
gross negligence or willful misconduct.
Section 11.07 The Agent in Its Individual Capacity. With respect to
its obligation to make Loans under this Agreement, the Agent shall have the
rights and powers specified herein for a "Bank" and may exercise the same rights
and powers as though it was not performing the duties specified herein; and the
term "Banks," "holders of Notes" or any similar terms shall, unless the context
clearly otherwise indicates, include the Agent in its individual capacity. The
Agent may accept deposits from, lend money to, and generally engage in any kind
of banking, trust or other business with the Borrower or any Affiliate of the
Borrower as if they were not performing the duties specified herein, and may
accept fees and other consideration from the Borrower for services in connection
with this Agreement and otherwise without having to account for the same to the
Banks.
Section 11.08 Resignation by the Agent. (a) The Agent may resign
from the performance of all its functions and duties hereunder and/or under the
other Credit Documents at any time by giving 15 Business Days' prior written
notice to the Borrower and the Banks. In the case of the resignation by the
Agent, such resignation shall take effect upon the appointment of a successor
Agent pursuant to Section 11.08(b) or 11.08(c) or as otherwise provided in
Section 11.08(d).
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(b) Upon any such notice of resignation by the Agent, the Banks
shall appoint a successor Agent hereunder or thereunder who shall be a
commercial bank or trust company reasonably acceptable to the Borrower (it being
understood and agreed that any Bank is deemed to be acceptable to the Borrower).
(c) If a successor Agent shall not have been so appointed within
such 15 Business Day period, the Agent, with the consent of the Borrower, shall
then appoint a successor Agent who shall serve as Agent hereunder or thereunder
until such time, if any, as the Banks appoint a successor Agent as provided
above.
(d) If no successor Agent has been appointed pursuant to Section
11.08(b) or 11.08(c) by the 20th Business Day after the date such notice of
resignation was given by the Agent, the Agent may appoint any other Bank which
agrees to such appointment to act as successor Agent.
SECTION 12. MISCELLANEOUS.
Section 12.01 Payment of Expenses, etc. The Borrower shall: (i)
whether or not the transactions herein contemplated are consummated, pay all
reasonable out-of-pocket costs and expenses (a) of the Agent (including, without
limitation, the reasonable fees and disbursements of White & Case, LLP, counsel
for the Agent) in connection with the preparation, execution and delivery of
this Agreement and the other Credit Documents and the documents and instruments
referred to herein and therein and any amendment, waiver or consent relating
hereto or thereto and (b) of the Agent and the Banks in connection with the
enforcement of this Agreement and the other Credit Documents and the documents
and instruments referred to herein and therein (including, without limitation,
the reasonable fees and disbursements of counsel for the Agent and the Banks);
(ii) pay and hold each Bank harmless from and against any and all present and
future stamp and other similar taxes with respect to the foregoing matters and
save such Bank harmless from and against any and all liabilities with respect to
or resulting from any delay or omission (other than to the extent attributable
to such Bank) to pay such taxes; and (iii) except as otherwise provided in
Section 4.05, indemnify each Bank, its officers, directors, employees,
representatives and agents from and hold each of them harmless against any and
all liabilities, obligations, losses, damages, penalties, claims, actions,
judgments, suits, and reasonable costs, expenses and disbursements incurred by
any of them as a result of, or arising out of, or in any way related to, or by
reason of, any investigation, litigation or other proceeding (whether or not
such Bank is a party thereto) related to the entering into and/or performance of
this Agreement or any other Credit Document or the use of the proceeds of any
Loans hereunder or the consummation of any transactions contemplated herein or
in any other Credit Document, including, without limitation, the reasonable fees
and disbursements of counsel incurred in connection with any such investigation,
litigation or other proceeding (but excluding any such liabilities, obligations,
losses, etc., to the extent incurred by reason of the gross negligence or
willful misconduct of the Person to be indemnified).
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Section 12.02 Right of Setoff. Except as otherwise provided in
Section 4.05, in addition to any rights now or hereafter granted under
applicable law or otherwise, and not by way of limitation of any such rights and
to the extent permitted by applicable law, during the continuance of an Event of
Default, each Bank is hereby authorized at any time or from time to time,
without presentment, demand, protest or other notice of any kind to the Borrower
or to any other Person, any such notice being hereby expressly waived, to set
off and to appropriate and apply any and all deposits (general or special), and
any other Indebtedness at any time held or owing by such Bank (including without
limitation by branches and agencies of such Bank wherever located) to or for the
credit or the account of the Borrower against and on account of the Obligations
and liabilities of the Borrower to such Bank under this Agreement or under any
of the other Credit Documents, and all other claims of any nature or description
arising out of or connected with this Agreement or any other Credit Document,
irrespective of whether or not the Bank shall have made any demand hereunder and
although said Obligations, liabilities or claims, or any of them, shall be
contingent or unmatured, provided however that (i) except to the extent provided
in the next succeeding clause (ii), no Bank is authorized hereunder to take any
of the foregoing actions, nor shall any Bank exercise any other right of setoff
or bankers' lien or any other right now or hereafter granted under applicable
law with respect to the Pledged Reserves Account or any portion of the Pledged
Reserves Account Funds or any Collateral contained in the Pledged Reserves
Account (each of the Agent, the Collateral Agent and each Bank hereby waiving,
to the extent permitted by applicable law, any such right) and (ii) from and
after receipt by the Agent or the Collateral Agent of any Pledged Reserve
Release Notice, the Agent, the Collateral Agent or any Bank is authorized to and
may exercise, to the extent permitted by applicable law, any of such foregoing
actions or such rights only with respect to the amount of Pledged Reserves
Account Funds described in such Pledged Reserve Release Notice and the other
Collateral contained in the Pledged Reserves Account in an amount equal to the
interest and other earnings on such Pledged Reserves Account Funds.
Section 12.03 Notices. Except as otherwise expressly provided
herein, all notices and other communications provided for hereunder shall be in
writing (including telegraphic, telex, facsimile or cable communication) and
mailed, telegraphed, telexed, telecopied, cabled or delivered: if to the
Borrower or any Bank, at its address listed opposite its name on the signature
page hereto; and if to the Agent at its Notice Office; or, as to any Bank or the
Agent, at such other address as shall be designated by such party in a written
notice to the other parties hereto and, as to each other party, at such other
address as shall be designated by such party in a written notice to the Borrower
and the Agent. All such notices and communications shall not be effective until
received by the Agent or the Borrower.
Section 12.04 Benefit of Agreement. (a) This Agreement shall be
binding upon and inure to the benefit of and be enforceable by the respective
successors and assigns of the parties hereto; provided, however, that the
Borrower may not assign or transfer any of its rights or obligations hereunder
without the prior written consent of the Banks and, provided further, that, no
Bank may transfer or assign its rights or obligations hereunder or under any of
the other Credit Documents, except as provided in this Section 12.04, provided
further, that no Bank shall transfer, grant or assign any participation under
which the participant shall have rights to approve
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any amendment to or waiver of this Agreement or any of the other Credit
Documents (i) except to the extent such amendment or waiver (A) extends the
final maturity of any Loan or Note other than in accordance with Section 3.04,
or reduces the rate or extends the time of payment of interest or Fees thereon,
or reduces the principal amount thereof, or increases the Commitment of any Bank
over the amount thereof then in effect (it being understood that a waiver of any
Default or Event of Default shall not constitute a change in the terms of any
Commitment of any Bank), (B) releases any material portion of the Collateral
under the Security Agreement except as shall be otherwise provided in any Credit
Document, (C) consents to the assignment or transfer by the Borrower of any of
its rights and obligations under any Credit Document, (D) amends the definition
of Loss Threshold Incurrence Date other than to increase the dollar amount or
the percentage specified therein, (E) reduces the percentage specified in the
definition of Majority Participants or (F) amends, modifies or waives any
provision of this Section 12.04 or (ii) except to the extent that a Bank may
permit its Majority Participants to approve any material written amendment,
modification, waiver or release of any other provision of this Agreement or any
other Credit Document which would, if effected, materially adversely affect the
interests of its participants. "Majority Participants" for purposes of this
Section 12.04 shall mean, with respect to each Bank, at any time participants of
such Bank participating in at least 51% of the aggregate principal amount of
Loans made by such Bank and outstanding at such time, or if no such Loans are
outstanding at such time, participants of such Bank participating in at least
51% of the Commitment of such Bank at such time. In the case of any such
participation, the participant shall not constitute a "Bank" hereunder and shall
not have any rights under this Agreement or any of the other Credit Documents
(the participant's rights against any Bank in respect of such participation to
be those set forth in the agreement executed by such Bank in favor of the
participant relating thereto) and all amounts payable by the Borrower hereunder
shall be determined as if such Bank had not sold such participation, except that
the participant shall be entitled to the benefits of Section 2.07 or 4.04 of
this Agreement to the extent that such Bank would be entitled to such benefits
if the participation had not been transferred, granted or assigned.
(b) Notwithstanding the foregoing, any Bank (or any Bank together
with one or more other Banks) may (and, at the direction of the Borrower
following a rating downgrade of such Bank, shall) assign all or a portion of its
Commitment and related outstanding rights and Obligations hereunder to one or
more Eligible Transferees, each of which assignees shall become a party to this
Agreement as a Bank by execution of an Assignment and Assumption Agreement and
delivery of such Assignment and Assumption Agreement to the Borrower and the
Agent, provided that (i) new Notes will be issued to such new Bank in the stated
amount of its assumed Commitment, and to the assigning Bank in the stated amount
of the Commitment if any, retained by it, upon the request of such new Bank or
assigning Bank and the surrender of the Note previously issued to the assigning
Bank (or the execution and delivery to the Borrower of an indemnity satisfactory
to the Borrower), such new Notes to be in conformity with the requirements of
Section 2.05 to the extent needed to reflect the revised Commitments, (ii)
unless such assignment is to an Affiliate of such assigning Bank with the same
or higher unsecured senior debt rating, and so long as no Default or Event of
Default exists at the time of such assignment, the Borrower shall have consented
to such assignment, (iii) at the time of such assignment, the
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new Bank or (except to the extent the new Bank is an affiliate of the assigning
Bank) its parent shall have an unsecured senior debt rating (or shadow rating as
reflected in a letter) by each of ▇▇▇▇▇'▇ and S&P (A) acceptable to the Borrower
(if such assignment is at the direction of the Borrower) or (B) no lower than
the unsecured senior debt rating (or shadow rating as reflected in a letter) by
each of Moody's and S&P of the assigning Bank or its parent (if such assignment
is not at the direction of the Borrower), (iv) such assignment shall not result
in a downgrading of the Borrower's Rating by Moody's or S&P from that in effect
immediately prior to such assignment, (v) the assigning Bank shall provide
notice of any such assignment to the Agent and the Borrower and the Borrower
shall provide notice of same to Moody's and S&P and (vi) the new Bank shall
deliver a legal opinion addressed to each of the Borrower, Moody's and S&P dated
the effective date of the applicable assignment to the effect that this
Agreement constitutes its legal, valid and binding obligation enforceable in
accordance with its terms, except to the extent that the enforceability thereof
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws generally affecting creditor's rights and by equitable
principles (regardless of whether enforcement is sought in equity or at law) as
the same may be applied in the event of bankruptcy or similar proceedings with
respect to such new Bank. To the extent of any assignment pursuant to this
Section 12.04(b), the assigning Bank shall be relieved of its obligations
hereunder with respect to its assigned Commitment. To the extent that an
assignment of all or any portion of a Bank's Commitment and related outstanding
Obligations pursuant to this Section 12.04(b) would at the time of such
assignment, result in increased costs under Section 2.07 or 4.04 from those
being charged by the respective assigning Bank prior to such assignment, then
the Borrower shall not be obligated to pay such increased costs (although the
Borrower shall be obligated to pay any other increased costs of the type
described above resulting from changes in applicable law, or government rules,
regulations, orders or requests after the date of the respective assignment).
(c) Upon the execution and delivery of an Assignment and Assumption
Agreement in accordance with, and subject to the restrictions of, Section
12.04(b), the assignee thereunder shall be a party hereto and, to the extent
that rights and obligations hereunder and under the other Credit Documents have
been assigned to it pursuant to such Assignment and Assumption Agreement, have
the rights and obligations of a "Bank" hereunder and thereunder.
(d) Any Bank claiming any amounts payable pursuant to Section 4.04
shall use reasonable efforts (consistent with legal and regulatory restrictions
and subject to overall policy considerations of such Bank) to designate another
lending office for its Commitment or Loans or take such other action to minimize
such amounts, as may be reasonably requested by the Borrower, provided that such
designation is made or such other action is taken on such terms that such Bank
and its lending office suffer no economic, legal or regulatory disadvantage.
(e) Nothing in this Agreement shall prevent or prohibit any Bank
from pledging its Loans and Notes hereunder to a Federal Reserve Bank in support
of borrowings made by such Bank from such Federal Reserve Bank.
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(f) Each Bank shall promptly notify the Borrower of any change in
the location of its applicable lending office.
Section 12.05 No Waiver; Remedies Cumulative. No failure or delay on
the part of any Bank or the holder of any Note in exercising any right, power or
privilege hereunder or under any other Credit Document and no course of dealing
between the Borrower and any Bank or the holder of any Note shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder or under any other Credit Document preclude any other or
further exercise thereof or the exercise of any other right, power or privilege
hereunder or thereunder. Except as otherwise expressly provided herein or in any
other Credit Document, the rights, powers and remedies herein or in any other
Credit Document expressly provided are cumulative and not exclusive of any
rights, powers or remedies which any Bank would otherwise have. No notice to or
demand on the Borrower in any case shall entitle the Borrower to any other or
further notice or demand in similar or other circumstances or constitute a
waiver of the rights of any Bank or the holder of any Note to any other or
further action in any circumstances without notice or demand.
Section 12.06 Calculations; Computations. (a) The financial
statements to be furnished to the Banks pursuant to Section 8.01(a) and (b)
shall be made and prepared in accordance with generally accepted accounting
principles in the United States consistently applied throughout the periods
involved (except as set forth in the notes thereto or as otherwise disclosed in
writing by the Borrower to the Banks).
(b) All computations of interest hereunder shall be made on the
basis of a year of 360 days for the actual number of days (including the first
day but excluding the last day) occurring in the period for which such interest
is payable.
Section 12.07 Governing Law; Submission to Jurisdiction; Venue. (a)
This Agreement and the other Credit Documents and the rights and obligations of
the parties hereunder and thereunder shall be construed in accordance with and
be governed by the law of the State of New York, without regard to the conflict
of law provisions thereof. Any legal action or proceeding against the Borrower
with respect to this Agreement or any other Credit Document may be brought in
the courts of the State of New York or of the United States for the Southern
District of New York, and, by execution and delivery of this Agreement, the
Borrower hereby irrevocably accepts for itself and in respect of its property,
generally and unconditionally, the jurisdiction of the aforesaid courts. The
Borrower irrevocably consents to the service of process out of any of the
aforementioned courts in any such action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, to the Borrower at its
address set forth opposite its signature below (or to such other address as the
Borrower may from time to time notify the Agent in writing), such service to
become effective 30 days after such mailing. Except as otherwise provided in
Section 4.05, nothing herein shall affect the right of the Agent or any Bank
under this Agreement to serve process in any other manner permitted by law or to
commence legal proceedings or otherwise proceed against the Borrower in any
other jurisdiction.
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(b) The Borrower hereby irrevocably waives any objection which it
may now or hereafter have to the laying of venue of any of the aforesaid actions
or proceedings arising out of or in connection with this Agreement or any other
Credit Document brought in the courts referred to in Section 12.07(a) and hereby
further irrevocably waives and agrees not to plead or claim in any such court
that any such action or proceeding brought in any such court has been brought in
an inconvenient forum.
Section 12.08 Counterparts. This Agreement may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall together constitute one and the same instrument. A set of
counterparts executed by all the parties hereto shall be lodged with the
Borrower and the Agent.
Section 12.09 Effectiveness. This Agreement shall become effective
on the date (the "Effective Date") on which the Borrower and the Banks shall
have signed a copy hereof (whether the same or different copies) and shall have
delivered the same to the Agent at its Notice Office and the conditions set
forth in Section 5 shall have been satisfied or waived by the Banks, as
evidenced by a written notice by the Agent to the Borrower confirming that the
Agreement has become effective and setting forth the Effective Date.
Section 12.10 Headings Descriptive. The headings of the several
sections and subsections of this Agreement are inserted for convenience only and
shall not in any way affect the meaning or construction of any provision of this
Agreement.
Section 12.11 Amendment or Waiver. Neither this Agreement nor any
other Credit Document nor any terms hereof or thereof may be changed, waived,
discharged or terminated unless such change, waiver, discharge or termination is
in writing signed by the Borrower and the Majority Banks and the Agent;
provided, however, that no such change, waiver, discharge or termination shall,
without the consent of each Bank (other than any Bank that is, at the time of
the proposed extension, release, amendment, reduction or consent, a Defaulting
Bank; provided, however, that, with respect to any matter described in clause
(i) or (ii) of this Section 12.11, the consent of each Defaulting Bank which at
such time has a Loan outstanding shall also be required) (i) extend the final
maturity of any Loan or Note other than in accordance with Section 3.04 or
reduce the rate or extend the time of payment of interest or Fees thereon, or
reduce the principal amount thereof, or increase the Commitment of any Bank over
the amount thereof then in effect (it being understood that a waiver of any
Default or Event of Default shall not constitute a change in the terms of any
Commitment of any Bank), (ii) release any material portion of the Collateral
under any Security Document except as shall be otherwise provided in any Credit
Document, (iii) amend, modify or waive any provision of this Section 12.11, (iv)
reduce the percentage specified in the definition of Majority Banks, (v) consent
to the assignment or transfer by the Borrower of any of its rights and
obligations under any Credit Document or (vi) amend the definition of Loss
Threshold Incurrence Date other than to increase the dollar amount or the
percentage specified therein.
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Section 12.12 Survival. All indemnities set forth herein including,
without limitation, in Sections 2.07, 4.04 and 12.01 shall survive the execution
and delivery of this Agreement and the Notes and the making and repayment of the
Loans.
Section 12.13 Exclusions from Covered Portfolio. In the event that
any Bank (or any participant to whom such Bank has transferred, granted or
assigned any participation in its rights and obligations hereunder and under the
other Credit Documents) is, or upon the occurrence of any contingency would be,
obligated under the terms of a line of credit, standby bond purchase agreement,
letter of credit, liquidity agreement or similar agreement or arrangement to
purchase any Insured Obligation listed in a certificate delivered by the
Borrower to the Agent pursuant to Section 5.06 or 8.01(d), such Bank (or such
participant) shall promptly notify the Agent, and the Agent shall promptly
notify the Borrower, that such Bank (or such participant) is or would be so
obligated to purchase such Insured Obligation. Upon delivery by the Agent to the
Borrower of any such notice with respect to an Insured Obligation, such Insured
Obligation shall, effective upon delivery of such notice by the Agent to the
Borrower, be excluded from the Covered Portfolio.
Section 12.14 Confidentiality. Each of the Agent and each Bank
agrees to take and cause its respective Affiliates to take normal and reasonable
precautions and exercise due care to maintain the confidentially of all
financial information and all other information reasonably identified as
"confidential" or "secret" by the Borrower and provided to it by the Borrower or
by the Agent on the Borrower's behalf, and neither it nor any of its Affiliates
shall use such information other than is connection with or in enforcement of
this Agreement and the other Credit Documents or in connection with other
business now or hereafter existing or contemplated with the Borrower, except to
the extent such information (i) was or becomes generally available to the public
other than as a result of a disclosure by the Agent or any Bank or (ii) was or
becomes available on a non-confidential basis from a source other than the
Borrower, provided that such source is not bound by a confidentiality agreement
with the Borrower known to the Agent or such Bank; provided, however, that the
Agent or any Bank may disclose such information (a) at the request or pursuant
to any requirement of any authority to which the Agent or such Bank is subject
or in connection with an examination of the Agent or such Bank by any such
authority; (b) pursuant to subpoena or other court process, provided that if not
prohibited by law, the Agent or such Bank will make reasonable efforts to
provide notice to the Borrower of the receipt of such subpoena prior to
delivering confidential material in response thereto, and the Agent and the
Banks will cooperate with the Borrower in any attempt to obtain a protective
order, at the Borrower's expense, as may be reasonably requested by the
Borrower; (c) when required to do so in accordance with the provisions of any
applicable law or regulation; (d) to the extent reasonably required in
connection with any litigation or proceeding with respect to the transactions
contemplated hereby to which the Agent or any Bank or their respective
Affiliates may be party; (e) to the extent reasonably required in connection
with the exercise of any remedy hereunder or under any other Credit Document;
(f) to the Agent's or such Bank's independent auditors and other professional
advisors with a need to know and who agrees to keep such information
confidential to the extent required of the Agent or such Bank hereunder; and (g)
to
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any assignee or participant, actual or potential, provided that such Person
agrees to keep such information confidential to the same extent required of the
Agent or the Bank hereunder.
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IN WITNESS WHEREOF, the parties hereto have caused their respective
duly authorized officers to execute and deliver this Agreement as of the date
first above written.
Address:
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ASSET GUARANTY INSURANCE COMPANY
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ By_________________________________
Attention: President Title:
DEUTSCHE BANK AG,
31 West 52nd Street NEW YORK BRANCH,
New York, New York 10019 Individually and as Agent
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇
By_________________________________
Title:
By_________________________________
Title:
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SCHEDULE I
COMMITMENTS
Name Commitment
Deutsche Bank AG, $25,000,000
New York Branch -----------
Total $25,000,000
===========
SCHEDULE II
REINSURANCE AGREEMENTS