Exhibit 10(k)
CREDIT AGREEMENT
among
UNIVERSAL AMERICAN FINANCIAL CORP.,
VARIOUS LENDING INSTITUTIONS,
and
BANK OF AMERICA, N.A.,
as the Administrative Agent,
the Collateral Agent and the L/C Issuer
Dated as of March 31, 2003
$80,000,000
THE CIT GROUP/EQUIPMENT FINANCING, INC., as Syndication Agent
ING CAPITAL LLC, as Documentation Agent
BANC OF AMERICA SECURITIES LLC,
as Sole Lead Arranger and Book Manager
TABLE OF CONTENTS
Page
SECTION 1. Amount and Terms of Credit........................................................1
1.01 Commitments............................................................................1
1.02 Minimum Amount of Each Borrowing; Maximum Number of Borrowings.........................2
1.03 Notice of Borrowing....................................................................2
1.04 Disbursement of Funds..................................................................2
1.05 Notes..................................................................................3
1.06 Conversions............................................................................3
1.07 Letters of Credit......................................................................4
1.08 Pro Rata Borrowings...................................................................10
1.09 Interest..............................................................................11
1.10 Interest Periods......................................................................11
1.11 Increased Costs, Illegality, etc......................................................12
1.12 Compensation..........................................................................14
1.13 Change of Lending Office..............................................................15
1.14 Replacement of Banks..................................................................15
SECTION 2. Fees; Commitments................................................................15
2.01 Fees..................................................................................15
2.02 Mandatory Reductions of Commitments...................................................16
SECTION 3. Payments.........................................................................16
3.01 Termination or Reduction of the Total Revolving Loan Commitment.......................16
3.02 Voluntary Prepayments.................................................................16
3.03 Mandatory Repayments and Prepayments..................................................17
3.04 Method and Place of Payment...........................................................19
3.05 Net Payments..........................................................................19
SECTION 4. Conditions Precedent.............................................................22
4.01 Effectiveness; Notes..................................................................22
4.02 No Default; Representations and Warranties............................................22
4.03 Officer's Certificate.................................................................23
4.04 Opinions of Counsel...................................................................23
4.05 Corporate Proceedings.................................................................23
4.06 No Material Adverse Effect............................................................23
4.07 Litigation............................................................................23
4.08 Subsidiary Guaranty...................................................................23
4.09 Pledge Agreement......................................................................24
4.10 Security Agreement....................................................................24
4.11 Surplus Note..........................................................................24
4.12 Lien Searches.........................................................................25
4.13 Consummation of the Transaction.......................................................25
4.14 Acquisition Documents.................................................................25
4.15 Tax Sharing Agreements................................................................25
4.16 Financial Statements; Projections.....................................................25
4.17 Approvals, etc........................................................................26
4.18 Indebtedness..........................................................................26
4.19 Payment of Fees.......................................................................26
4.20 Notice of Borrowing...................................................................26
4.21 Insurance Policies....................................................................26
4.22 Capital Structure.....................................................................27
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SECTION 5. Representations, Warranties and Agreements.......................................27
5.01 Corporate Status......................................................................27
5.02 Corporate Power and Authority.........................................................27
5.03 No Contravention of Laws, Agreements or Organizational Documents......................27
5.04 Litigation and Contingent Liabilities.................................................28
5.05 Use of Proceeds; Margin Regulations...................................................28
5.06 Approvals.............................................................................28
5.07 Investment Company Act................................................................28
5.08 Public Utility Holding Company Act....................................................29
5.09 True and Complete Disclosure; Projections and Assumptions.............................29
5.10 Consummation of Transaction...........................................................29
5.11 Financial Condition; Financial Statements.............................................29
5.12 Security Interests....................................................................30
5.13 Tax Returns and Payments..............................................................30
5.14 Compliance with ERISA.................................................................31
5.15 Subsidiaries..........................................................................31
5.16 Intellectual Property, etc............................................................32
5.17 Pollution and Other Regulations.......................................................32
5.18 Labor Relations; Collective Bargaining Agreements.....................................32
5.19 Representations and Warranties in Transaction Documents...............................33
5.20 Indebtedness..........................................................................33
5.21 Compliance with Statutes, etc.........................................................33
5.22 Insurance Licenses....................................................................33
SECTION 6. Affirmative Covenants............................................................33
6.01 Information Covenants.................................................................33
6.02 Books, Records and Inspections........................................................36
6.03 Insurance.............................................................................37
6.04 Payment of Taxes......................................................................37
6.05 Corporate Franchises..................................................................37
6.06 Compliance with Statutes, etc.........................................................37
6.07 ERISA.................................................................................37
6.08 Performance of Obligations............................................................38
6.09 Good Repair...........................................................................38
6.10 End of Fiscal Years; Fiscal Quarters..................................................38
6.11 Maintenance of Licenses and Permits...................................................38
6.12 Register..............................................................................38
SECTION 7. Negative Covenants...............................................................39
7.01 Changes in Business...................................................................39
7.02 Consolidation, Merger, Sale or Purchase of Assets.....................................39
7.03 Liens.................................................................................41
7.04 Indebtedness..........................................................................43
7.05 Capital Expenditures..................................................................44
7.06 Advances, Investments and Loans.......................................................45
7.07 Modifications of Agreements, etc......................................................46
7.08 Dividends, Restricted Payments, etc...................................................47
7.09 Transactions with Affiliates..........................................................48
7.10 Leverage Ratio........................................................................48
7.11 Fixed Charge Coverage Ratio...........................................................48
7.12 Minimum Risk Based Capital............................................................48
7.13 Minimum Consolidated Net Worth........................................................48
7.14 Minimum Combined Adjusted Statutory Capital and Surplus...............................48
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7.15 Issuance of Stock.....................................................................49
7.16 Creation of Subsidiaries..............................................................49
7.17 Partnership Agreements................................................................49
SECTION 8. Events of Default................................................................49
8.01 Payments..............................................................................49
8.02 Representations, etc..................................................................50
8.03 Covenants.............................................................................50
8.04 Default Under Other Agreements........................................................50
8.05 Bankruptcy, etc.......................................................................50
8.06 ERISA.................................................................................51
8.07 Invalidity of Credit Documents........................................................51
8.08 Collateral Documents..................................................................51
8.09 Judgments.............................................................................51
8.10 Remedies Upon Event of Default........................................................51
8.11 Application of Funds..................................................................52
SECTION 9. Definitions......................................................................53
SECTION 10. The Administrative Agent.........................................................72
10.01 Appointment...........................................................................72
10.02 Delegation of Duties..................................................................73
10.03 Liability of the Administrative Agent.................................................73
10.04 Reliance by the Administrative Agent..................................................73
10.05 Notice of Default.....................................................................74
10.06 Credit Decision; Disclosure of Information by the Administrative Agent................74
10.07 Indemnification.......................................................................74
10.08 The Administrative Agent in its Individual Capacity...................................75
10.09 Successor Administrative Agent........................................................75
10.10 Administrative Agent May File Proofs of Claim.........................................76
10.11 Other Agents; Arrangers and Managers..................................................76
SECTION 11. Miscellaneous....................................................................76
11.01 Payment of Expenses and Taxes; Indemnification by the Borrower........................76
11.02 Right of Setoff.......................................................................78
11.03 Notices...............................................................................78
11.04 Benefit of Agreement..................................................................79
11.05 No Waiver; Remedies Cumulative........................................................81
11.06 Payments Pro Rata.....................................................................81
11.07 Payments Set Aside....................................................................82
11.08 Calculations; Computations............................................................82
11.09 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE......................................83
11.10 Counterparts..........................................................................84
11.11 Effectiveness.........................................................................84
11.12 Headings Descriptive..................................................................84
11.13 Amendment or Waiver...................................................................84
11.14 Survival..............................................................................85
11.15 Domicile of Loans.....................................................................85
11.16 Interest Rate Limitations.............................................................85
11.17 Confidentiality.......................................................................86
11.18 WAIVER OF JURY TRIAL..................................................................87
11.19 Severability..........................................................................87
11.20 Entire Agreement......................................................................87
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Schedule 1 - List of Banks and Commitments
Schedule 2 - Bank Addresses
Schedule 5.04 - Existing Litigation
Schedule 5.13 - Past Due Tax Returns and Payments
Schedule 5.14 - Pension Plans and Post-Retirement Health Care Obligations
Schedule 5.15 - Subsidiaries
Schedule 5.18 - Collective Bargaining Agreements
Schedule 5.20 - Existing Indebtedness
Schedule 7.03 - Existing Liens
Schedule 7.06 - Existing Investment Commitments
Exhibit A - Form of Notice of Borrowing
Exhibit B-1 - Form of Term Note
Exhibit B-2 - Form of Revolving Note
Exhibit C - Form of Opinion(s) of Counsel to the Credit Parties
Exhibit D - Form of Officer's Certificate
Exhibit E - Form of Section 3.05(e)(ii) Certificate
Exhibit F - Form of Subsidiary Guaranty
Exhibit G - Form of Pledge Agreement
Exhibit H - Form of Security Agreement
Exhibit I - Form of Compliance Certificate
Exhibit J - Form of Assignment and Assumption Agreement
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CREDIT AGREEMENT, dated as of March 31, 2003, among UNIVERSAL
AMERICAN FINANCIAL CORP., a New York corporation (the "Borrower"), the lending
institutions listed from time to time on Schedule 1 hereto (each a "Bank" and,
collectively, the "Banks"), and BANK OF AMERICA, N.A., as Administrative Agent
(the "Administrative Agent") and L/C Issuer (defined herein). Unless otherwise
defined herein, all capitalized terms used herein and defined in Section 9 are
used herein as so defined.
W I T N E S S E T H :
WHEREAS, subject to and upon the terms and conditions set forth
herein, the Banks are willing to make available to the Borrower the credit
facilities provided for herein.
NOW, THEREFORE, IT IS AGREED:
SECTION 1. Amount and Terms of Credit.
1.01 Commitments. Subject to and upon the terms and conditions herein
set forth, each Bank severally agrees to make a loan or loans (each a "Loan"
and, collectively, the "Loans") to the Borrower, which Loans shall be drawn, to
the extent such Bank has a commitment under such Facility, under the Term Loan
Facility and the Revolving Loan Facility, respectively, as set forth below:
(a) Each Loan under the Term Loan Facility (each, a "Term
Loan" and, collectively, the "Term Loans"):
(i) shall be incurred by the Borrower on the
Initial Borrowing Date;
(ii) shall be denominated in Dollars;
(iii) may, except as hereinafter provided, at
the option of the Borrower, be incurred and maintained as,
and/or converted into, Base Rate Loans or Eurodollar
Loans;
(iv) shall not exceed, for any Bank, the Term
Loan Commitment of such Bank; and
(v) once repaid, may not be reborrowed.
(b) Each Loan under the Revolving Loan Facility (each, a
"Revolving Loan" and, collectively, the "Revolving Loans"):
(i) may be incurred by the Borrower at any time
and from time to time on and after the Initial Borrowing
Date but prior to the Revolving Loan Maturity Date;
(ii) shall be denominated in Dollars;
(iii) may, except as hereinafter provided, at
the option of the Borrower, be incurred and maintained as,
and/or converted into, Base Rate Loans or Eurodollar
Loans, provided that all Revolving Loans incurred as part
of the same Borrowing shall, unless otherwise specifically
provided herein, consist of Revolving Loans of the same
Type;
(iv) may be repaid and reborrowed in accordance
with the provisions hereof; and
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(v) shall not exceed, for any Bank, a principal
amount which, when added to the Outstanding Amount of all
other Revolving Loans made by such Bank plus such Bank's
pro rata share of the Outstanding Amount of all L/C
Obligations, equals the Revolving Loan Commitment of such
Bank.
1.02 Minimum Amount of Each Borrowing; Maximum Number of Borrowings.
The aggregate principal amount of each Borrowing hereunder shall not be less
than $1,000,000 and, if in excess thereof, shall be in an integral multiple of
$500,000; provided, however, that a Borrowing of Revolving Loans constituting
Base Rate Loans may be equal to the Total Unutilized Revolving Loan Commitment.
More than one Borrowing may be incurred on any day; provided that at no time
shall there be outstanding more than three Borrowings of Term Loans that are
Eurodollar Loans and five Borrowings of Revolving Loans that are Eurodollar
Loans.
1.03 Notice of Borrowing.
(a) Whenever the Borrower desires to incur Loans under any
Facility, it shall give the Administrative Agent at its Notice
Office, prior to 12:00 Noon (New York time), at least three Business
Days' prior written notice (or telephonic notice promptly confirmed
in writing) of each Borrowing of Eurodollar Loans and at least one
Business Day's prior written notice (or telephonic notice promptly
confirmed in writing) of each Borrowing of Base Rate Loans to be
incurred hereunder. Each such notice (each, a "Notice of Borrowing")
shall, except as expressly provided in Section 1.11, be irrevocable,
and, in the case of each written notice and each written confirmation
of telephonic notice, shall be substantially in the form of Exhibit A
hereto, appropriately completed to specify (i) the Facility pursuant
to which such Borrowing is to be made, (ii) the aggregate principal
amount of the Loans to be made pursuant to such Borrowing, (iii) the
date of such Borrowing (which shall be a Business Day) and (iv)
whether such Borrowing shall consist of Base Rate Loans or Eurodollar
Loans and, if Eurodollar Loans, the Interest Period to be initially
applicable thereto. The Administrative Agent shall promptly give each
Bank which has a Commitment under the Facility specified in the
relevant Notice of Borrowing written notice (or telephonic notice
promptly confirmed in writing) of each proposed Borrowing, of such
Bank's proportionate share thereof and of the other matters covered
by the relevant Notice of Borrowing.
(b) Without in any way limiting the obligation of the
Borrower to confirm in writing any notice it may give hereunder by
telephone, the Administrative Agent may act prior to receipt of
written confirmation without liability upon the basis of such
telephonic notice, believed by the Administrative Agent in good faith
to be from an Authorized Officer of the Borrower.
1.04 Disbursement of Funds.
(a) Subject to the terms and conditions herein set forth,
no later than 11:00 A.M. (New York time) on the date specified in
each Notice of Borrowing, each Bank with a Commitment under the
relevant Facility will make available its pro rata share of each
Borrowing requested to be made on such date in the manner provided
below. All amounts shall be made available to the Administrative
Agent in immediately available funds, denominated in Dollars, at the
Payment Office and the Administrative Agent will promptly make
available to the Borrower by depositing to the Borrower's account at
the Payment Office or such other account as the Borrower may
designate, the amounts so made available in immediately available
funds, denominated in Dollars. Unless the Administrative Agent shall
have been notified by any Bank prior to the date of Borrowing that
such Bank does not intend to make available to the Administrative
Agent its portion of the Borrowing or Borrowings to be made on such
date, the Administrative Agent may assume that such Bank has made
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such amount available to the Administrative Agent on such date of
Borrowing, and the Administrative Agent, in reliance upon such
assumption, may (in its sole discretion and without any obligation to
do so) make available to the Borrower a corresponding amount. If such
corresponding amount is not in fact made available to the
Administrative Agent by such Bank and the Administrative Agent has
made available same to the Borrower, the Administrative Agent shall
be entitled to recover such corresponding amount from such Bank. If
such Bank does not pay such corresponding amount forthwith upon the
Administrative Agent's demand therefor, the Administrative Agent
shall promptly notify the Borrower, and the Borrower shall within two
Business Days pay such corresponding amount to the Administrative
Agent. The Administrative Agent shall also be entitled to recover
from the Bank or the Borrower, as the case may be, interest on such
corresponding amount in respect of each day from the date such
corresponding amount was made available by the Administrative Agent
to the Borrower to the date such corresponding amount is recovered by
the Administrative Agent, at a rate per annum equal to (x) if paid by
such Bank, the overnight Federal Funds Rate or (y) if paid by the
Borrower, the then applicable rate of interest, calculated in
accordance with Section 1.09, for the respective Loans.
(b) Nothing in this Section 1.04 shall, or shall be deemed
to, relieve any Bank from its obligation to fulfill its commitments
and to fully perform its obligations hereunder or to prejudice any
rights which the Borrower may have against any Bank as a result of
any default by such Bank hereunder.
1.05 Notes.
(a) The Credit Extensions made by each Bank shall be
evidenced by one or more accounts or records maintained by such Bank
and by the Administrative Agent in the ordinary course of business.
The accounts or records maintained by the Administrative Agent
(including, without limitation, the Register) and each Bank shall be
conclusive absent manifest error of the amount of the Credit
Extensions made by the Banks to the Borrower and the interest and
payments thereon. Any failure to so record or any error in doing so
shall not, however, limit or otherwise affect the obligation of the
Borrower hereunder to pay any amount owing with respect to the
Obligations. In the event of any conflict between the accounts and
records maintained by any Bank and the accounts and records of the
Administrative Agent in respect of such matters, the accounts and
records of the Administrative Agent shall control in the absence of
manifest error. Upon the request of any Bank made through the
Administrative Agent, the Borrower shall execute and deliver to such
Bank (through the Administrative Agent) one or more of the following
Notes (as the case may be): (i) a Term Note and (ii) a Revolving
Note, which shall evidence such Bank's Loans in addition to such
accounts or records. Each Bank may attach schedules to its Note(s)
and endorse thereon the date, Type (if applicable), amount and
maturity of its Loans and payments with respect thereto.
(b) In addition to the accounts and records referred to in
clause (a), each Bank and the Administrative Agent shall maintain in
accordance with its usual practice accounts or records evidencing the
purchases and sales by such Bank of participations in Letters of
Credit. In the event of any conflict between the accounts and records
maintained by the Administrative Agent and the accounts and records
of any Bank in respect of such matters, the accounts and records of
the Administrative Agent shall control in the absence of manifest
error.
1.06 Conversions. The Borrower shall have the option to convert on
any Business Day, all or a portion at least equal to $1,000,000 (and, if in
excess thereof, an integral multiple of $500,000) of the Outstanding Amount of
the Loans of one Type pursuant to a Facility into a Borrowing or Borrowings of
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the other Type of Loan under such Facility; provided that (i) no partial
conversion of a Borrowing of Eurodollar Loans shall reduce the outstanding
principal amount of the Eurodollar Loans pursuant to such Borrowing to less than
$1,000,000, (ii) Base Rate Loans may only be converted into Eurodollar Loans if
no Event of Default has occurred and is continuing on the date of such
conversion, (iii) Borrowings of Eurodollar Loans resulting from this Section
1.06 shall be limited in number as provided in Section 1.02 and (iv) each such
conversion shall be made pro rata among the Loans of each Bank of the Type being
converted. Each such conversion shall be effected by the Borrower by giving the
Administrative Agent at its Notice Office, prior to 12:00 Noon (New York time),
at least three Business Days' (or one Business Day's in the case of a conversion
into Base Rate Loans) prior written notice (or telephonic notice promptly
confirmed in writing) (each a "Notice of Conversion") specifying the Loans to be
so converted, the Type of Loans to be converted into and, if such Loans are to
be converted into a Borrowing of Eurodollar Loans, the Interest Period to be
initially applicable thereto. The Administrative Agent shall give each Bank
prompt notice of any such proposed conversion affecting any of its Loans.
1.07 Letters of Credit.
(a) The Letter of Credit Commitment.
(i) Subject to the terms and conditions set
forth herein, (A) the L/C Issuer agrees, in reliance upon
the agreements of the other Banks set forth in this
Section 1.07 (1) from time to time on any Business Day
during the period from the Initial Borrowing Date until
the Letter of Credit Expiration Date, to issue Letters of
Credit denominated in Dollars for the account of the
Borrower (provided that any of the Borrower's Subsidiaries
may be named as the account party in any Letter of
Credit), and to amend or renew Letters of Credit
previously issued by it, in each case in accordance with
clause (b) below, and (2) to honor drafts under the
Letters of Credit; and (B) the Banks severally agree to
participate in Letters of Credit issued for the account of
the Borrower; provided that the L/C Issuer shall not be
obligated to make any L/C Credit Extension with respect to
any Letter of Credit, and no Bank shall be obligated to
participate in any Letter of Credit if as of the date of
such L/C Credit Extension, (x) the aggregate Outstanding
Amount of all Revolving Loans and L/C Obligations would
exceed the Total Revolving Loan Commitment or (y) the
Outstanding Amount of all Revolving Loans of such Bank,
plus such Bank's pro rata share of the Outstanding Amount
of all L/C Obligations, would exceed such Bank's Revolving
Loan Commitment. Within the foregoing limits, and subject
to the terms and conditions hereof, the Borrower's ability
to obtain Letters of Credit shall be fully revolving, and
accordingly the Borrower may, during the foregoing period,
obtain Letters of Credit to replace Letters of Credit that
have expired or that have been drawn upon and reimbursed.
(ii) The L/C Issuer shall be under no
obligation to issue any Letter of Credit if:
(A) any order, judgment or decree of
any Governmental Authority or arbitrator shall
by its terms purport to enjoin or restrain the
L/C Issuer from issuing such Letter of Credit,
or any Legal Requirements applicable to the L/C
Issuer or any request or directive (whether or
not having the force of law, but if not having
the force of law, one which applies generally
to a class or category of financial
institutions of which the L/C Issuer is part
and compliance with which is in accordance with
the general practice of those institutions)
from any Governmental Authority with
jurisdiction over the L/C Issuer shall
prohibit, or request that the L/C Issuer
refrain from, the issuance of letters of credit
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generally or such Letter of Credit in
particular or shall impose upon the L/C Issuer
with respect to such Letter of Credit any
restriction, reserve or capital requirement
(for which the L/C Issuer is not otherwise
compensated hereunder) not in effect on the
Effective Date, or shall impose upon the L/C
Issuer any unreimbursed loss, cost or expense
which was not applicable on the Effective Date
and which the L/C Issuer in good ▇▇▇▇▇ ▇▇▇▇▇
material to it;
(B) subject to Section 1.07(b)(iii),
the expiry date of such requested Letter of
Credit would occur more than twelve months
after the date of issuance or last renewal,
unless the Required Banks have approved such
expiry date;
(C) the expiry date of such
requested Letter of Credit would occur after
the Letter of Credit Expiration Date, unless
all the Banks have approved such expiry date;
(D) the issuance of such Letter of
Credit would violate one or more policies of
the L/C Issuer; or
(E) such Letter of Credit is in an
initial amount less than $500,000.
(iii) The L/C Issuer shall be under no
obligation to amend any Letter of Credit if (A) the L/C
Issuer would have no obligation at such time to issue such
Letter of Credit in its amended form under the terms
hereof, or (B) the beneficiary of such Letter of Credit
does not accept the proposed amendment to such Letter of
Credit.
(b) Procedures for Issuance and Amendment of Letters of
Credit; Auto-Renewal Letters of Credit.
(i) Each Letter of Credit shall be issued or
amended, as the case may be, upon the request of the
Borrower delivered to the L/C Issuer (with a copy to the
Administrative Agent) in the form of a Letter of Credit
Application, appropriately completed and signed by an
Authorized Officer of the Borrower. Such Letter of Credit
Application must be received by the L/C Issuer and the
Administrative Agent not later than 11:00 a.m. at least
two Business Days (or such later date and time as the L/C
Issuer may agree in a particular instance in its sole
discretion) prior to the proposed issuance date or date of
amendment, as the case may be. In the case of a request
for an initial issuance of a Letter of Credit, such Letter
of Credit Application shall specify in detail reasonably
satisfactory to the L/C Issuer: (A) the proposed issuance
date of the requested Letter of Credit (which shall be a
Business Day); (B) the amount thereof; (C) the expiry date
thereof; (D) the name and address of the beneficiary
thereof; (E) the documents to be presented by such
beneficiary in case of any drawing thereunder; (F) the
full text of any certificate to be presented by such
beneficiary in case of any drawing thereunder; and (G)
such other matters as the L/C Issuer may reasonably
require. In the case of a request for an amendment of any
outstanding Letter of Credit, such Letter of Credit
Application shall specify in detail reasonably
satisfactory to the L/C Issuer (A) the Letter of Credit to
be amended; (B) the proposed date of amendment thereof
(which shall be a Business Day); (C) the nature of the
proposed amendment; and (D) such other matters as the L/C
Issuer may reasonably require.
(ii) Promptly after receipt of any Letter of
Credit Application, the L/C Issuer will confirm with the
Administrative Agent (by telephone or in writing) that the
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Administrative Agent has received a copy of such Letter of
Credit Application from the Borrower and, if not, the L/C
Issuer will provide the Administrative Agent with a copy
thereof. Upon receipt by the L/C Issuer of confirmation
from the Administrative Agent that the requested issuance
or amendment is permitted in accordance with the terms
hereof, then, subject to the terms and conditions hereof,
the L/C Issuer shall, on the requested date, issue a
Letter of Credit for the account of the Borrower or enter
into the applicable amendment, as the case may be, in each
case in accordance with the L/C Issuer's usual and
customary business practices. Immediately upon the
issuance of each Letter of Credit, each Bank shall be
deemed to, and hereby irrevocably and unconditionally
agrees to, purchase from the L/C Issuer a risk
participation in such Letter of Credit in an amount equal
to the product of such Bank's pro rata share of the Total
Revolving Loan Commitment times the amount of such Letter
of Credit.
(iii) If the Borrower so requests in any Letter
of Credit Application, the L/C Issuer may, in its sole and
absolute discretion, agree to issue a Letter of Credit
that has automatic renewal provisions (each, an
"Auto-Renewal Letter of Credit"); provided that any such
Auto-Renewal Letter of Credit must permit the L/C Issuer
to prevent any such renewal at least once in each
twelve-month period (commencing with the date of issuance
of such Letter of Credit) by giving prior notice to the
beneficiary thereof not later than a day (the "Nonrenewal
Notice Date") in each such twelve-month period to be
agreed upon at the time such Letter of Credit is issued.
Unless otherwise directed by the L/C Issuer, the Borrower
shall not be required to make a specific request to the
L/C Issuer for any such renewal. Once an Auto-Renewal
Letter of Credit has been issued, the Banks shall be
deemed to have authorized (but may not require) the L/C
Issuer to permit the renewal of such Letter of Credit at
any time to an expiry date not later than the Letter of
Credit Expiration Date; provided, however, that the L/C
Issuer shall not permit any such renewal if (A) the L/C
Issuer has determined, in good faith, that it would have
no obligation at such time to issue such Letter of Credit
in its renewed form under the terms hereof (by reason of
the provisions of Section 1.07(a)(ii) or otherwise), or
(B) it has received notice (which may be by telephone or
in writing) on or before the day that is two Business Days
before the Nonrenewal Notice Date from the Administrative
Agent, any Bank or the Borrower that one or more of the
applicable conditions specified in Section 4 is not then
satisfied.
(iv) Promptly after its delivery of any Letter
of Credit or any amendment to a Letter of Credit to an
advising bank with respect thereto or to the beneficiary
thereof, the L/C Issuer will also deliver to the Borrower
and the Administrative Agent a true and complete copy of
such Letter of Credit or amendment.
(c) Drawings and Reimbursements; Funding of
Participations.
(i) Upon receipt from the beneficiary of any
Letter of Credit of any notice of a drawing under such
Letter of Credit, the L/C Issuer shall promptly notify the
Borrower and the Administrative Agent thereof. Following
receipt of such notice by the L/C Issuer, the Borrower
shall, not later than 11:00 a.m. on the date of any
payment by the L/C Issuer under a Letter of Credit (each
such date, an "Honor Date"), reimburse the L/C Issuer
through the Administrative Agent in an amount equal to the
amount of such drawing. If the Borrower fails to so
reimburse the L/C Issuer by such time, the Administrative
Agent shall promptly notify each Bank of the Honor Date,
the amount of the unreimbursed drawing (the "Unreimbursed
Amount"), and the amount of such Bank's pro rata share
thereof. In such event, the Borrower shall be deemed to
have requested a Borrowing of Base Rate Loans to be
6
disbursed on the Honor Date in an amount equal to the
Unreimbursed Amount, without regard to the minimum and
multiples specified in Section 1.02 for the principal
amount of Base Rate Loans, but subject to the amount of
the Total Unutilized Revolving Loan Commitment and the
applicable conditions set forth in Section 4 (other than
the delivery of a Notice of Borrowing). Any notice given
by the L/C Issuer or the Administrative Agent pursuant to
this Section 1.07(c)(i) may be given by telephone if
immediately confirmed in writing; provided that the lack
of such an immediate confirmation shall not affect the
conclusiveness or binding effect of such notice.
(ii) Each Bank (including the Bank acting as
L/C Issuer) shall upon any notice pursuant to Section
1.07(c)(i) make funds available to the Administrative
Agent for the account of the L/C Issuer at the
Administrative Agent's Office in an amount equal to its
pro rata share of the Unreimbursed Amount not later than
1:00 p.m. on the Business Day specified in such notice by
the Administrative Agent, whereupon, subject to the
provisions of Section 1.07(c)(iii), each Bank that so
makes funds available shall be deemed to have made a Base
Rate Loan to the Borrower in such amount. The
Administrative Agent shall remit the funds so received to
the L/C Issuer.
(iii) With respect to any Unreimbursed Amount
that is not fully refinanced by a Borrowing of Base Rate
Loans because the applicable conditions set forth in
Section 4 cannot be satisfied or for any other reason, the
Borrower shall be deemed to have incurred from the L/C
Issuer an L/C Borrowing in the amount of the Unreimbursed
Amount that is not so refinanced, which L/C Borrowing
shall be due and payable on demand (together with
interest) and shall bear interest at a rate per annum
equal to the Base Rate in effect from time to time plus
the sum of (i) 2% and (ii) the Applicable Percentage then
in effect for Base Rate Loans. In such event, each Bank's
payment to the Administrative Agent for the account of the
L/C Issuer pursuant to Section 1.07(c)(ii) shall be deemed
payment in respect of its participation in such L/C
Borrowing and shall constitute an L/C Advance from such
Bank in satisfaction of its participation obligation under
this Section 1.07.
(iv) Until each Bank funds its Revolving Loan
or L/C Advance pursuant to this Section 1.07(c) to
reimburse the L/C Issuer for any amount drawn under any
Letter of Credit, interest in respect of such Bank's pro
rata share of such amount shall be solely for the account
of the L/C Issuer.
(v) Each Bank's obligation to make Revolving
Loans or L/C Advances to reimburse the L/C Issuer for
amounts drawn under Letters of Credit, as contemplated by
this Section 1.07(c), shall be absolute and unconditional
and shall not be affected by any circumstance, including
(A) any set-off, counterclaim, recoupment, defense or
other right which such Bank may have against the L/C
Issuer, the Borrower or any other Person for any reason
whatsoever; (B) the occurrence or continuance of a Default
or Event of Default, or (C) any other occurrence, event or
condition, whether or not similar to any of the foregoing;
provided, however, that each Bank's obligation to make
Revolving Loans pursuant to this Section 1.07(c) is
subject to the applicable conditions set forth in Section
4 (other than delivery by the Borrower of a Notice of
Borrowing). No such making of an L/C Advance shall relieve
or otherwise impair the obligation of the Borrower to
reimburse the L/C Issuer for the amount of any payment
made by the L/C Issuer under any Letter of Credit,
together with interest as provided herein.
7
(vi) If any Bank fails to make available to the
Administrative Agent for the account of the L/C Issuer any
amount required to be paid by such Bank pursuant to the
foregoing provisions of this Section 1.07(c) by the time
specified in Section 1.07(c)(ii), the L/C Issuer (acting
through the Administrative Agent) shall be entitled to
recover from such Bank, on demand, such amount with
interest thereon for the period from the date such payment
is required to the date on which such payment is
immediately available to the L/C Issuer at a rate per
annum equal to the Federal Funds Rate from time to time in
effect. A certificate of the L/C Issuer submitted to any
Bank (through the Administrative Agent) with respect to
any amounts owing under this clause (vi) shall be
conclusive absent manifest error.
(d) Repayment of Participations.
(i) At any time after the L/C Issuer has made a
payment under any Letter of Credit and has received from
any Bank such Bank's L/C Advance in respect of such
payment in accordance with Section 1.07(c), if the
Administrative Agent receives for the account of the L/C
Issuer any payment in respect of the related Unreimbursed
Amount or interest thereon (whether directly from the
Borrower or otherwise, including proceeds of Cash
Collateral applied thereto by the Administrative Agent),
the Administrative Agent will distribute to such Bank its
pro rata share thereof (appropriately adjusted, in the
case of interest payments, to reflect the period of time
during which such Bank's L/C Advance was outstanding) in
the same funds as those received by the Administrative
Agent.
(ii) If any payment received by the
Administrative Agent for the account of the L/C Issuer
pursuant to Section 1.07(c)(i) is required to be returned
under any of the circumstances described in Section 11.07
(including pursuant to any settlement entered into by the
L/C Issuer in its discretion), each Bank shall pay to the
Administrative Agent for the account of the L/C Issuer its
pro rata share thereof on demand of the Administrative
Agent, plus interest thereon from the date of such demand
to the date such amount is returned by such Bank, at a
rate per annum equal to the Federal Funds Rate from time
to time in effect.
(e) Obligations Absolute. The obligation of the Borrower
to reimburse the L/C Issuer for each drawing under each Letter of
Credit and to repay each L/C Borrowing shall be absolute,
unconditional and irrevocable, and shall be paid strictly in
accordance with the terms of this Agreement under all circumstances,
including the following:
(i) any lack of validity or enforceability of
such Letter of Credit, this Agreement, or any other
agreement or instrument relating thereto;
(ii) the existence of any claim, counterclaim,
set-off, defense or other right that the Borrower may have
at any time against any beneficiary or any transferee of
such Letter of Credit (or any Person for whom any such
beneficiary or any such transferee may be acting), the L/C
Issuer or any other Person, whether in connection with
this Agreement, the transactions contemplated hereby or by
such Letter of Credit or any agreement or instrument
relating thereto, or any unrelated transaction;
(iii) any draft, demand, certificate or other
document presented under such Letter of Credit proving to
be forged, fraudulent, invalid or insufficient in any
respect or any statement therein being untrue or
inaccurate in any respect; or any loss or delay in the
8
transmission or otherwise of any document required in
order to make a drawing under such Letter of Credit;
(iv) any payment by the L/C Issuer under such
Letter of Credit against presentation of a draft or
certificate that does not strictly comply with the terms
of such Letter of Credit; or any payment made by the L/C
Issuer under such Letter of Credit to any Person
purporting to be a trustee in bankruptcy,
debtor-in-possession, assignee for the benefit of
creditors, liquidator, receiver or other representative of
or successor to any beneficiary or any transferee of such
Letter of Credit, including any arising in connection with
any proceeding under the Bankruptcy Code; or
(v) any other circumstance or happening
whatsoever, whether or not similar to any of the
foregoing, including any other circumstance that might
otherwise constitute a defense available to, or a
discharge of, the Borrower.
The Borrower shall promptly examine a copy of each Letter of Credit
and each amendment thereto that is delivered to it and, in the event
of any claim of noncompliance with the Borrower's instructions or
other irregularity, the Borrower will, within two Business Days,
notify the L/C Issuer.
(f) Role of L/C Issuer. Each Bank and the Borrower agree
that, in paying any drawing under a Letter of Credit, the L/C Issuer
shall not have any responsibility to obtain any document (other than
any sight draft, certificate or document expressly required by the
Letter of Credit) or to ascertain or inquire as to the validity or
accuracy of any such document or the authority of the Person
executing or delivering any such document. None of the L/C Issuer,
any Agent-Related Person or any of the respective correspondents,
participants or assignees of the L/C Issuer shall be liable to any
Bank for (i) any action taken or omitted in connection herewith at
the request or with the approval of the Banks or the Required Banks,
as applicable; (ii) any action taken or omitted in the absence of
gross negligence or willful misconduct; or (iii) the due execution,
effectiveness, validity or enforceability of any document or
instrument related to any Letter of Credit or Letter of Credit
Application. The Borrower hereby assumes all risks of the acts or
omissions of any beneficiary or transferee with respect to its use of
any Letter of Credit; provided, however, that this assumption is not
intended to, and shall not, preclude the Borrower's pursuing such
rights and remedies as it may have against the beneficiary or
transferee at law or under any other agreement. None of the L/C
Issuer, any Agent-Related Person, or any of the respective
correspondents, participants or assignees of the L/C Issuer, shall be
liable or responsible for any of the matters described in clauses (i)
through (v) of Section 1.07(e); provided, however, that anything in
such clauses to the contrary notwithstanding, the Borrower may have a
claim against the L/C Issuer, and the L/C Issuer may be liable to the
Borrower, to the extent, but only to the extent, of any direct, as
opposed to consequential or exemplary, damages suffered by the
Borrower which the Borrower proves were caused by the L/C Issuer's
willful misconduct or gross negligence or the L/C Issuer's willful
failure to pay under any Letter of Credit after the presentation to
it by the beneficiary of a sight draft and document(s) strictly
complying with the terms and conditions of a Letter of Credit. In
furtherance and not in limitation of the foregoing, the L/C Issuer
may accept documents that appear on their face to be in order,
without responsibility for further investigation, regardless of any
notice or information to the contrary, and the L/C Issuer shall not
be responsible for the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign a
Letter of Credit or the rights or benefits thereunder or proceeds
thereof, in whole or in part, which may prove to be invalid or
ineffective for any reason.
9
(g) Cash Collateral. Upon the request of the
Administrative Agent, (i) if the L/C Issuer has honored any full or
partial drawing request under any Letter of Credit and such drawing
has resulted in an L/C Borrowing, or (ii) if, as of the Letter of
Credit Expiration Date, any Letter of Credit may for any reason
remain outstanding and partially or wholly undrawn, the Borrower
shall immediately Cash Collateralize the then Outstanding Amount of
all L/C Obligations (in an amount equal to such Outstanding Amount
determined as of the date of such L/C Borrowing or the Letter of
Credit Expiration Date, as the case may be). The Borrower hereby
grants to the Administrative Agent, for the benefit of the L/C Issuer
and the Banks, a security interest in all such Cash Collateral and
all proceeds of the foregoing.
(h) Applicability of ISP98. Unless otherwise expressly
agreed by the L/C Issuer and the Borrower when a Letter of Credit is
issued, the rules of the "International Standby Practices 1998"
published by the Institute of International Banking Law & Practice
(or such later version thereof as may be in effect at the time of
issuance) shall apply to each Letter of Credit.
(i) Letter of Credit Fees. The Borrower shall pay to the
Administrative Agent for the account of each Bank in accordance with
its pro rata share a Letter of Credit fee for each Letter of Credit
equal to the Applicable Percentage times the daily maximum amount
available to be drawn under such Letter of Credit (whether or not
such maximum amount is then in effect under such Letter of Credit).
Such letter of credit fee shall be computed on a quarterly basis in
arrears. Such letter of credit fee shall be due and payable on the
last Business Day of each calendar quarter, commencing with the first
such date to occur after the issuance of such Letter of Credit, on
the Letter of Credit Expiration Date and thereafter on demand. If
there is any change in the Applicable Percentage during any quarter,
the daily maximum amount of each Letter of Credit shall be computed
and multiplied by the Applicable Percentage separately for each
period during such quarter that such Applicable Percentage was in
effect.
(j) Fronting Fee and Documentary and Processing Charges
Payable to L/C Issuer. The Borrower shall pay directly to the L/C
Issuer for its own account a fronting fee with respect to each Letter
of Credit in the amounts and at the times specified in the Fee
Letter. In addition, the Borrower shall pay directly to the L/C
Issuer for its own account the customary issuance, presentation,
amendment and other processing fees, and other standard costs and
charges, of the L/C Issuer relating to letters of credit as from time
to time in effect. Such customary fees and standard costs and charges
are due and payable within two Business Days following receipt by the
Borrower of demand and are nonrefundable.
(k) Conflict with Letter of Credit Application. In the
event of any conflict between the terms hereof and the terms of any
Letter of Credit Application, the terms hereof shall control.
1.08 Pro Rata Borrowings. All Loans, L/C Advances and participations
in Letters of Credit under this Agreement shall be made by the Banks pro rata on
the basis of their Term Loan Commitments and Revolving Loan Commitments, as the
case may be. The obligations of the Banks to make Loans and L/C Advances and to
fund participations in Letters of Credit are several and not joint. The failure
of any Bank to make any Loan or L/C Advance or to fund such participation on any
date required hereunder shall not relieve any other Bank of its corresponding
obligation to do so on such date, and no Bank shall be responsible for the
failure of any other Bank to so make its Loan or L/C Advance or to purchase its
participation.
10
1.09 Interest.
(a) The unpaid principal amount of each Base Rate Loan
shall bear interest from the date of the Borrowing thereof until the
earlier of (i) the maturity (whether by acceleration or otherwise) of
such Base Rate Loan and (ii) the conversion of such Base Rate Loan to
a Eurodollar Loan pursuant to Section 1.06, at a rate per annum which
shall at all times be equal to the Applicable Percentage then in
effect for Base Rate Loans plus the Base Rate in effect from time to
time.
(b) The unpaid principal amount of each Eurodollar Loan
shall bear interest from the date of the Borrowing thereof until the
earlier of (i) the maturity (whether by acceleration or otherwise) of
such Eurodollar Loan or (ii) the conversion of such Eurodollar Loan
to a Base Rate Loan pursuant to Section 1.06, at a rate per annum
which shall at all times be equal to the Applicable Percentage then
in effect for Eurodollar Loans plus the relevant Eurodollar Rate for
the Interest Period applicable to such Eurodollar Loan.
(c) Overdue principal and, to the extent permitted by law,
overdue interest in respect of each Loan and any other overdue amount
payable hereunder, and, during the existence of an Event of Default
under Section 8.01, the Outstanding Amount of each Loan, shall bear
interest at a rate per annum equal to 2% in excess of the rate of
interest otherwise then applicable thereto.
(d) Interest shall accrue from and including the date of
any Borrowing to but excluding the date of any repayment thereof and
shall be payable (i) in respect of each Base Rate Loan, quarterly in
arrears on the last Business Day of each calendar quarter, (ii) in
respect of each Eurodollar Loan, on the last day of each Interest
Period applicable thereto and, in the case of an Interest Period of
six months, on the date occurring three months after the first day of
such Interest Period and (iii) in respect of each Loan, on any
conversion or prepayment (on the amount so converted or prepaid), at
maturity (whether by acceleration or otherwise) and, after such
maturity, on demand.
(e) All computations of interest hereunder shall be made
in accordance with Section 11.08(b) and (c).
(f) The Administrative Agent, upon determining the
interest rate for any Borrowing of Eurodollar Loans for any Interest
Period, shall promptly notify the Borrower and the Banks thereof.
1.10 Interest Periods. At the time the Borrower gives a Notice of
Borrowing or Notice of Conversion in respect of the making of, or conversion
into, a Borrowing of Eurodollar Loans (in the case of the initial Interest
Period applicable thereto) or prior to 12:00 Noon (New York time) on the third
Business Day prior to the expiration of an Interest Period applicable to a
Borrowing of Eurodollar Loans, it shall have the right to elect by giving the
Administrative Agent written notice (or telephonic notice promptly confirmed in
writing) of the Interest Period to be applicable to such Borrowing, which
Interest Period shall, at the option of the Borrower, be a one, two, three or
six month period. Notwithstanding anything to the contrary contained above:
(i) the initial Interest Period for any
Borrowing of Eurodollar Loans shall commence on the date
of such Borrowing (including the date of any conversion
from a Borrowing of Base Rate Loans) and each Interest
Period occurring thereafter in respect of such Borrowing
shall commence on the day on which the next preceding
Interest Period expires;
11
(ii) if any Interest Period begins on a day for
which there is no numerically corresponding day in the
calendar month at the end of such Interest Period, such
Interest Period shall end on the last Business Day of such
calendar month;
(iii) if any Interest Period would otherwise
expire on a day which is not a Business Day, such Interest
Period shall expire on the next succeeding Business Day,
provided that if any Interest Period would otherwise
expire on a day which is not a Business Day but is a day
of the month after which no further Business Day occurs in
such month, such Interest Period shall expire on the next
preceding Business Day;
(iv) no Interest Period for a Borrowing under a
Facility may be elected if it would extend beyond the
Maturity Date for such Facility;
(v) no Interest Period may be elected at any
time when an Event of Default has occurred and is
continuing; and
(vi) no Interest Period with respect to any
Borrowing of Term Loans may be elected that would extend
beyond any date upon which a mandatory repayment of Term
Loans is required to be made under Section 3.02(i)(a) if,
after giving effect to the selection of such Interest
Period, the Outstanding Amount of Term Loans maintained as
Eurodollar Loans with Interest Periods ending after such
date would exceed the Outstanding Amount of Term Loans
permitted to be outstanding after such mandatory
repayment.
If upon the expiration of any Interest Period, the Borrower has failed, or is
not permitted, to elect a new Interest Period to be applicable to the respective
Borrowing of Eurodollar Loans as provided above, the Borrower shall be deemed to
have elected to convert such Borrowing into a Borrowing of Base Rate Loans
effective as of the expiration date of such current Interest Period.
1.11 Increased Costs, Illegality, etc.
(a) In the event that (x) in the case of clause (i) below,
the Administrative Agent or (y) in the case of clauses (ii) and (iii)
below, any Bank shall have determined, in each case acting in good
faith (which determination shall, absent manifest error, be final and
conclusive and binding upon all parties hereto):
(i) on any date for determining the Eurodollar
Rate for any Interest Period, that, by reason of any
changes arising after the Effective Date affecting the
London interbank market for Dollar deposits generally,
adequate and fair means do not exist for ascertaining the
applicable interest rate on the basis provided for in the
definition of Eurodollar Rate; or
(ii) at any time, that such Bank shall incur
increased costs or reductions in the amounts received or
receivable hereunder with respect to any Eurodollar Loans
(excluding any Taxes, Other Taxes and amounts relating
thereto, payment with respect to which shall be governed
solely and exclusively by SECTION 3.05) because of any
change since the Effective Date in any applicable law,
governmental rule, regulation, guideline, order or request
(whether or not having the force of law, but if not having
the force of law, one which applies generally to a class
or category of financial institutions of which such Bank
is part and compliance with which is in accordance with
12
the general practice of those institutions), or in the
interpretation or administration thereof and including the
introduction of any new law or governmental rule,
regulation, guideline, order or request (such as, for
example, but not limited to, a change in official reserve
requirements, but, in all events, excluding reserves
required under Regulation D to the extent included in the
computation of the Eurodollar Rate); or
(iii) at any time, that the making or
continuance of any Eurodollar Loan has become unlawful due
to the compliance by such Bank in good faith with any
change since the Effective Date in any law, governmental
rule, regulation, guideline or order, or the
interpretation or application thereof, or would conflict
with any thereof not having the force of law, but if not
having the force of law, one which applies generally to a
class or category of financial institutions of which such
Bank is part and compliance with which is in accordance
with the general practice of those institutions;
then, and in any such event, such Bank (or the Administrative Agent in the case
of clause (i) above) shall (x) on such date and (y) within 10 Business Days of
the date on which such event no longer exists give notice (by telephone
confirmed in writing) to the Borrower and to the Administrative Agent of such
determination (which notice the Administrative Agent shall promptly transmit to
each of the other Banks). Thereafter (x) in the case of clause (i) above,
Eurodollar Loans shall no longer be available until such time as the
Administrative Agent notifies the Borrower and the Banks that the circumstances
giving rise to such notice by the Administrative Agent no longer exist, and any
Notice of Borrowing, Notice of Conversion or notice of a new Interest Period
pursuant to Section 1.10 given by the Borrower with respect to Eurodollar Loans
which has not yet occurred shall be deemed rescinded by the Borrower or, in the
case of a Notice of Borrowing, shall, at the option of the Borrower, be deemed
converted into a Notice of Borrowing for Base Rate Loans to be made on the date
of Borrowing contained in such Notice of Borrowing or, in the case of the
selection of a new Interest Period for Eurodollar Loans pursuant to Section
1.10, shall be deemed to be a Notice of Conversion of such Borrowing to a
Borrowing of Base Rate Loans, (y) in the case of clause (ii) above, the Borrower
shall pay to such Bank, within 10 days of its receipt of written demand therefor
(which shall include sufficient detail to demonstrate the basis for the
calculation thereof, which basis shall be reasonable and consistently applied,
submitted to the Borrower by such Bank and shall, absent manifest error, be
conclusive evidence of the increased costs or reduction in the amount received
or receivable by such Bank hereunder with respect to Eurodollar Loans), such
additional amounts as shall be required to compensate such Bank for such
increased costs or reductions in amounts receivable hereunder and (z) in the
case of clause (iii) above, the Borrower shall take one of the actions specified
in Section 1.11(b) as promptly as reasonably practicable and, in any event,
within the time period required by applicable law.
(b) At any time that any Eurodollar Loan is affected by
the circumstances described in Section 1.11(a)(ii) or (iii), the
Borrower may (and in the case of a Eurodollar Loan affected pursuant
to Section 1.11(a)(iii) the Borrower shall) either (i) if the
affected Eurodollar Loan is then being made pursuant to a Borrowing,
by giving the Administrative Agent telephonic notice (confirmed
promptly in writing) thereof on the same date that the Borrower was
notified by a Bank pursuant to Section 1.11(a)(ii) or (iii), cancel
said Borrowing, convert the related Notice of Borrowing into one
requesting a Borrowing of Base Rate Loans or require the affected
Bank to make its requested Loan as a Base Rate Loan, or (ii) if the
affected Eurodollar Loan is then outstanding, upon at least one
Business Day's notice to the Administrative Agent, require the
affected Bank to convert each such affected Eurodollar Loan into a
Base Rate Loan, provided that if more than one Bank is affected at
any time, then all affected Banks must be treated in the same manner
pursuant to this Section 1.11(b).
13
(c) If, any Bank shall have determined that, after the
Effective Date, the adoption or effectiveness of any applicable law,
rule or regulation regarding capital adequacy, or any change therein,
or any change in the interpretation or administration thereof by any
Governmental Authority, central bank or comparable agency charged by
law with the interpretation or administration thereof, or compliance
by such Bank or its parent corporation with any request or directive
regarding capital adequacy (whether or not having the force of law,
but if not having the force of law, one which applies generally to a
class or category of financial institutions of which such Bank is
part and compliance with which is in accordance with the general
practice of those institutions) of any such Governmental Authority,
central bank or comparable agency, in each case made subsequent to
the Effective Date, has or would have the effect of reducing the rate
of return on such Bank's or its parent corporation's capital or
assets as a consequence of such Bank's commitments or obligations
hereunder to a level below that which such Bank or its parent
corporation could have achieved but for such adoption, effectiveness,
change or compliance (taking into consideration such Bank's or its
parent corporation's policies with respect to capital adequacy), then
from time to time, the Borrower shall within 10 days of its receipt
of written demand by such Bank (with a copy to the Administrative
Agent), pay to such Bank such additional amount or amounts as will
compensate such Bank or its parent corporation for such reduction.
Each Bank, upon determining in good faith that any additional amounts
will be payable pursuant to this Section 1.11(c), will give prompt
written notice thereof to the Borrower, which notice shall set forth
in reasonable detail the basis of the calculation of such additional
amounts, which basis must be reasonable and consistently applied.
Such written notice shall be received prior to or contemporaneously
with any demand in respect thereof.
(d) Notwithstanding anything in this Agreement to the
contrary, to the extent that any notice required by this Section 1.11
or Section 1.12 is given by any Bank more than 180 days after such
Bank obtained actual knowledge of the occurrence of the event giving
rise to the additional costs of the type described in this Section
1.11 or Section 1.12, such Bank shall not be entitled to compensation
under this Section 1.11 or Section 1.12 for any amounts incurred or
accruing more than 180 days prior to the giving of such notice to the
Borrower.
1.12 Compensation. The Borrower shall compensate each Bank, upon its
written request (which request shall set forth in reasonable detail the basis
for requesting such compensation), for all reasonable losses, expenses and
liabilities (including, without limitation, any loss, expense or liability
incurred by reason of the liquidation or reemployment of deposits or other funds
required by such Bank to fund its Eurodollar Loans but excluding any loss of
anticipated profit with respect to such Loans) which such Bank may sustain: (i)
if for any reason (other than a default by such Bank or the Administrative
Agent) a Borrowing of Eurodollar Loans does not occur on a date specified
therefor in a Notice of Borrowing or Notice of Conversion (whether or not
withdrawn by the Borrower or deemed withdrawn pursuant to Section 1.11(a)), or a
new Interest Period for Eurodollar Loans selected pursuant to Section 1.10 does
not become effective; (ii) if any repayment, prepayment or conversion of any of
its Eurodollar Loans occurs on a date which is not the last day of an Interest
Period applicable thereto; (iii) if any prepayment of any of its Eurodollar
Loans is not made on any date specified in a notice of prepayment given by the
Borrower; or (iv) as a consequence of (x) any other failure by the Borrower to
repay its Loans when required by the terms of this Agreement or (y) an election
made pursuant to Section 1.11(b). The amount payable to such Bank by the
Borrower under this Section 1.12 shall be an amount equal to the amount (if any)
by which (i) the additional interest which would have been payable on the amount
so received or recovered had it been received or recovered on the last day of
the applicable Interest Period exceeds (ii) the amount of interest, which, in
the reasonable opinion of such Bank, would have been payable to such Bank on the
last day of such Interest Period in respect of a Dollar deposit equal to the
amount so received or recovered placed by it with a prime bank in London for a
period starting on the date of such receipt or recovery and ending on the last
day of such Interest Period.
14
1.13 Change of Lending Office. The L/C Issuer and each Bank agrees
that, upon the occurrence of any event giving rise to the operation of Section
1.11(a)(ii) or (iii) or Section 3.05 with respect to the L/C Issuer or such
Bank, it will, if requested by the Borrower, use reasonable efforts (subject to
overall policy considerations of the L/C Issuer or such Bank) to designate
another lending office for any Letters of Credit or Loans affected by such
event; provided that such designation is made on such terms that, in the good
faith opinion of the L/C Issuer or such Bank, the L/C Issuer or such Bank and
its lending office suffer no economic, legal or regulatory disadvantage, with
the object of avoiding the consequence of the event giving rise to the operation
of any such Section. Nothing in this Section 1.13 shall affect or postpone any
of the obligations of the Borrower or the rights of the L/C Issuer or any Bank
provided in Section 1.11 or 3.05.
1.14 Replacement of Banks. If any Bank becomes a Defaulting Bank or
upon the occurrence of any event giving rise to the operation of Section
1.11(a)(ii) or (iii), Section 1.11(c) or Section 3.05 with respect to any Bank
which results in such Bank charging to the Borrower increased costs in excess of
those being generally charged by the other Banks, the Borrower shall have the
right, if no Event of Default has occurred and is continuing, to replace such
Bank (the "Replaced Bank") with one or more Eligible Assignees, none of whom
shall constitute a Defaulting Bank at the time of such replacement
(collectively, the "Replacement Bank"), provided that (i) at the time of any
replacement pursuant to this Section 1.14, the Replacement Bank shall enter into
one or more Assignment and Assumption Agreements pursuant to Section 11.04(b)
(and with all fees payable pursuant to said Section 11.04(b) to be paid by the
Borrower or the Replacement Bank) pursuant to which the Replacement Bank shall
acquire all of the Commitments, outstanding Loans and participations in L/C
Obligations held by the Replaced Bank and, in connection therewith, shall pay to
the Replaced Bank in respect thereof an amount equal to (A) the principal of,
and all accrued interest on, all outstanding Loans held by the Replaced Bank
plus (B) all accrued, but theretofore unpaid, Fees owing to the Replaced Bank
pursuant to Section 1.07(i) and Section 2.01, and (ii) all obligations
(including, without limitation, all such amounts, if any, due and owing under
Section 1.12) of the Borrower due and owing to the Replaced Bank (other than
those specifically described in clause (i) above in respect of which the
assignment purchase price has been, or is concurrently being, paid) shall be
paid in full to such Replaced Bank concurrently with such replacement. Upon the
execution of the respective Assignment and Assumption Agreement, the payment of
amounts referred to in clauses (i) and (ii) above, recordation of the assignment
on the Register by the Administrative Agent pursuant to Section 6.12 and, if so
requested by the Replacement Bank, delivery to the Replacement Bank of the
appropriate Note or Notes executed by the Borrower, (x) the Replacement Bank
shall become a Bank hereunder and the Replaced Bank shall cease to constitute a
Bank hereunder, except with respect to indemnification provisions under this
Agreement (including, without limitation, Sections 1.11, 1.12, 3.05, 10.07 and
11.01(b)), which shall survive as to such Replaced Bank and (y) Schedule 1
hereto shall be deemed modified to reflect the changed Commitments (and/or
outstanding Term Loans, as the case may be) resulting from the assignment from
the Replaced Bank to the Replacement Bank.
SECTION 2. Fees; Commitments.
2.01 Fees.
(a) The Borrower shall pay to the Administrative Agent for
the account of each Bank a commitment fee (the "Commitment Fee") for
the period from the Effective Date to and including the date on which
the Total Revolving Loan Commitment has been terminated, computed at
a rate for each day equal to the Applicable Percentage then in effect
for Commitment Fees multiplied by the daily Unutilized Revolving Loan
Commitment of each such Bank. Accrued Commitment Fees shall be due
15
and payable in arrears on the last Business Day of each calendar
quarter and the date upon which the Total Revolving Loan Commitment
is terminated.
(b) The Borrower shall pay to the Administrative Agent,
for its own account when and as due, the administrative fee set forth
in the Fee Letter.
(c) All computations of Fees shall be made in accordance
with Section 11.08(b).
2.02 Mandatory Reductions of Commitments.
(a) The Total Commitment (and the Commitment of each Bank)
shall terminate in its entirety at 5:00 p.m. (New York time) on March
31, 2003 unless the Initial Borrowing Date has occurred on or before
such date.
(b) The Total Term Loan Commitment (and the Term Loan
Commitment of each Bank) shall terminate on the earlier of (i) the
Initial Borrowing Date, after giving effect to the incurrence of Term
Loans on such date, and (ii) the date on which a Change of Control
occurs.
(c) The Total Revolving Loan Commitment (and the Revolving
Loan Commitment of each Bank) shall terminate on the earlier of (i)
the Revolving Loan Maturity Date, and (ii) the date on which a Change
of Control occurs.
SECTION 3. Payments.
3.01 Termination or Reduction of the Total Revolving Loan Commitment.
The Borrower may, upon notice to the Administrative Agent, terminate the Total
Revolving Loan Commitment, or from time to time permanently reduce the Total
Revolving Loan Commitment; provided that (i) any such notice shall be received
by the Administrative Agent not later than 11:00 A.M. (New York time) three
Business Days prior to the date of termination or reduction, (ii) any such
partial reduction shall be in an aggregate amount of $1,000,000 or any whole
multiple of $500,000 in excess thereof and (iii) the Borrower shall not
terminate or reduce the Total Revolving Loan Commitment if, after giving effect
thereto and to any concurrent prepayments hereunder, the aggregate Outstanding
Amount of all Revolving Loans and L/C Obligations would exceed the Total
Revolving Loan Commitment. The Administrative Agent will promptly notify the
Banks of any such notice of termination or reduction of the Total Revolving Loan
Commitment. Any reduction of the Total Revolving Loan Commitment shall be
applied to the Revolving Loan Commitment of each Bank according to its pro rata
share. All Commitment Fees accrued until the effective date of any termination
of the Total Revolving Loan Commitment shall be paid on the effective date of
such termination.
3.02 Voluntary Prepayments. The Borrower shall have the right to
prepay Loans, without premium or penalty (except for amounts payable pursuant to
Section 1.12), in whole or in part, from time to time on the following terms and
conditions: (i) the Borrower shall give the Administrative Agent at its Notice
Office written notice (or telephonic notice promptly confirmed in writing) of
its intent to prepay the Loans, whether such Loans are Term Loans or Revolving
Loans, the amount of such prepayment and (in the case of Eurodollar Loans) the
specific Borrowing(s) pursuant to which such prepayment is made, which notice
shall be received by the Administrative Agent (x) in the case of Base Rate
Loans, no later than 12:00 Noon (New York time) one Business Day prior to the
date of such prepayment, or (y) in the case of Eurodollar Loans, three Business
Days prior to the date of such prepayment, which notice shall promptly be
transmitted by the Administrative Agent to each of the Banks; (ii) each partial
prepayment of any Borrowing shall be in an aggregate principal amount of at
least $1,000,000, provided that no partial prepayment of Eurodollar Loans made
pursuant to a Borrowing shall reduce the aggregate principal amount of the Loans
16
outstanding pursuant to such Borrowing to an amount less than $1,000,000; (iii)
each prepayment in respect of any Loans made pursuant to a Borrowing shall be
applied pro rata among such Loans; and (iv) each prepayment of Term Loans
pursuant to this Section 3.02 shall be applied to reduce the then remaining
Scheduled Repayments either in inverse order of maturity or on a pro rata basis
(based upon the then remaining principal amount of each such Scheduled
Repayment), in each case as the Borrower may direct in its sole discretion.
3.03 Mandatory Repayments and Prepayments.
(i) Requirements:
(a) On each date set forth below, the Borrower shall be
required to repay the principal amount of Term Loans as is set forth
opposite such date (each such repayment, as the same may be reduced
pursuant to Sections 3.02 and/or 3.03(ii)(a), a "Scheduled
Repayment"):
------------------------------------------ ----------------
SCHEDULED REPAYMENT DATE AMOUNT
------------------------------------------ ----------------
June 30, 2003 $2,031,250
------------------------------------------ ----------------
September 30, 2003 $2,031,250
------------------------------------------ ----------------
December 31, 2003 $2,031,250
------------------------------------------ ----------------
March 31, 2004 $2,031,250
------------------------------------------ ----------------
June 30, 2004 $2,843,750
------------------------------------------ ----------------
September 30, 2004 $2,843,750
------------------------------------------ ----------------
December 31, 2004 $2,843,750
------------------------------------------ ----------------
March 31, 2005 $2,843,750
------------------------------------------ ----------------
June 30, 2005 $3,250,000
------------------------------------------ ----------------
September 30, 2005 $3,250,000
------------------------------------------ ----------------
December 31, 2005 $3,250,000
------------------------------------------ ----------------
March 31, 2006 $3,250,000
------------------------------------------ ----------------
June 30, 2006 $4,062,500
------------------------------------------ ----------------
September 30, 2006 $4,062,500
------------------------------------------ ----------------
December 31, 2006 $4,062,500
------------------------------------------ ----------------
March 31, 2007 $4,062,500
------------------------------------------ ----------------
June 30, 2007 $4,062,500
------------------------------------------ ----------------
September 30, 2007 $4,062,500
------------------------------------------ ----------------
December 31, 2007 $4,062,500
------------------------------------------ ----------------
March 31, 2008 $4,062,500
------------------------------------------ ----------------
(b) Not later than the 120th day following the last day of
each Excess Cash Flow Period (beginning with the Excess Cash Flow
Period ending December 31, 2003), the Borrower will prepay the
Outstanding Amount of the Term Loans in an amount, if positive, equal
to the Excess Cash Flow (if any) for such Excess Cash Flow Period;
provided that the Borrower will not be required to make any payment
pursuant to this Section 3.03(i)(b) in respect of any Excess Cash
Flow Period if the ratio of Consolidated Indebtedness of the Borrower
to Consolidated Total Capital of the Borrower as of the last day of
such Excess Cash Flow Period was less than or equal to 0.20:1.00.
(c) Not later than one Business Day following the date of
receipt thereof by the Borrower and/or any of its Subsidiaries of the
proceeds of any Asset Sale (other than an Asset Sale consisting of
the issuance of the Trust Preferred Securities), an amount equal to
100% of the Net Available Proceeds of such Asset Sale shall be
applied as a mandatory prepayment of the Outstanding Amount of the
17
Term Loans; provided that with respect to Assets Sales consummated in
any fiscal year, an amount equal to the Net Available Proceeds
therefrom (up to an amount not to exceed 10% of the Consolidated Net
Worth of the Borrower as of the first day of such fiscal year) shall
not be required to be so applied on such date to the extent that no
Event of Default has occurred and is continuing and the Borrower
delivers a certificate to the Administrative Agent on or prior to
such date stating that such Net Available Proceeds shall within 180
days following the date of such Asset Sale be used to purchase assets
used, or to be used, in the business described in Section 7.01(a)
(including, without limitation, the equity interest of a Person
engaged in any such business), which certificate shall set forth the
estimate of the proceeds to be so expended; provided further, that
(1) if all or any portion of such Net Available Proceeds not so
applied are not so used (or contractually committed to be used)
within such 180 day period, an amount equal to such remaining portion
shall be applied on the last day of such period as provided above in
this Section 3.03(i)(c) (without regard to the first proviso herein)
and (2) if an amount equal to all or any portion of such Net
Available Proceeds are not required to be applied on the 180th day
referred to in clause (1) above because such amount is contractually
committed to be used and subsequent to such date such contract is
terminated or expires without such portion being so used, then an
amount equal to such remaining portion shall be applied on the date
of such termination or expiration as provided in this Section
3.03(i)(c) (without regard to the first proviso herein).
(d) Not later than the Business Day following the date of
the receipt thereof by the Borrower and/or any of its Subsidiaries,
an amount equal to 100% (but 50% in the case of any Trust Preferred
Securities issued after the Effective Date) of the cash proceeds (net
of underwriting discounts and commissions and other fees, costs and
expenses incurred in connection therewith) of the incurrence of
Indebtedness for borrowed money or evidenced by bonds, notes,
debentures or similar instruments by the Borrower and/or any of its
Subsidiaries (other than Indebtedness which is permitted by Section
7.04 and is outstanding on the Effective Date) shall be applied as a
mandatory prepayment of the Outstanding Amount of the Term Loans.
(e) Not later than one Business Day following the date of
the receipt thereof by the Borrower and/or any of its Subsidiaries,
an amount equal to 50% of the cash proceeds (net of underwriting
discounts and commissions and other fees, costs and expenses incurred
in connection therewith) of the sale or issuance of equity by, or
cash capital contributions to, the Borrower or any Subsidiary of the
Borrower (other than (i) any issuance of common stock by the Borrower
to the extent issued to the employees or agents of the Borrower or
its Subsidiaries, (ii) issuances of stock by Subsidiaries of the
Borrower to the Borrower or to Wholly-Owned Subsidiaries of the
Borrower, and capital contributions by the Borrower to its
Subsidiaries, (iii) issuances of stock and capital contributions
occurring in connection with the issuance of the Trust Preferred
Securities and (iv) the first $10,000,000 of net cash proceeds from
common stock equity issuances by the Borrower), shall be applied as a
mandatory prepayment of the Outstanding Amount of the Term Loans.
(f) On the date on which any Change of Control occurs, the
outstanding amount of all Obligations shall be due and payable in
full and the Borrower shall Cash Collateralize the L/C Obligations
(in an amount equal to the Outstanding Amount thereof).
(g) The Outstanding Amount of all Revolving Loans shall be
due and payable in full on the Revolving Loan Maturity Date. In
addition, if on any date the aggregate Outstanding Amount of all
Revolving Loans and L/C Obligations exceeds the Total Revolving Loan
Commitment as then in effect, the Borrower shall repay on such date
the principal of the Revolving Loans in an amount equal to such
excess.
18
(ii) Application:
(a) Each mandatory prepayment of Term Loans pursuant to
Section 3.03(i)(b), (c), (d) or (e) shall be applied to reduce the
then remaining Scheduled Repayments either in inverse order of
maturity or on a pro rata basis (based upon the then remaining
principal amount of each such Scheduled Repayment), in each case as
the Borrower may direct in its sole discretion.
(b) With respect to each prepayment of Loans required by
this Section 3.03, the Borrower may designate the Types of Loans
which are to be prepaid and the specific Borrowing(s) pursuant to
which made; provided that (i) the Borrower shall first so designate
all Base Rate Loans and Eurodollar Loans with Interest Periods ending
on the date of repayment prior to designating any other Eurodollar
Loans; (ii) if any prepayment of Eurodollar Loans made pursuant to a
single Borrowing shall reduce the outstanding Loans made pursuant to
such Borrowing to an amount less than $1,000,000, such Borrowing
shall be immediately converted into Base Rate Loans; and (iii) each
prepayment of any Loans made pursuant to a Borrowing shall be applied
pro rata among such Loans. In the absence of a designation by the
Borrower as described in the preceding sentence, the Administrative
Agent shall, subject to the above, make such designation in its sole
discretion with a view, but no obligation, to minimize breakage costs
owing under Section 1.12. Notwithstanding the foregoing provisions of
this Section 3.03, if at any time the mandatory prepayment of Term
Loans pursuant to Section 3.03(i)(b), (c), (d) or (e) would result,
after giving effect to the first sentence of this clause (b), in the
Borrower incurring breakage costs under Section 1.12 as a result of
Eurodollar Loans being repaid other than on the last day of an
Interest Period applicable thereto (the "Affected Eurodollar Loans"),
then the Borrower may, if it so elects by notice to the
Administrative Agent, Cash Collateralize a portion (up to 100%) of
the amounts that otherwise would have been paid in respect of the
Affected Eurodollar Loans with the Administrative Agent to be held as
security for the obligations of the Borrower hereunder, with such
Cash Collateral to be released (and applied to repay the principal
amount of such Loans) upon each occurrence thereafter of the last day
of an Interest Period applicable to the relevant Eurodollar Loans (or
such earlier date or dates as shall be requested by the Borrower),
with the amount to be so released and applied on the last day of each
Interest Period to be the amount of the Loans to which such Interest
Period applies (or, if less, the amount of the remaining Cash
Collateral).
3.04 Method and Place of Payment. Except as otherwise specifically
provided herein, all payments under the Credit Documents shall be made to the
Administrative Agent for the ratable account of the Banks entitled thereto, not
later than 1:00 P.M. (New York time) on the date when due and shall be made in
immediately available funds and in lawful money of the United States of America
at the Payment Office, it being understood that written, telex or facsimile
notice by the Borrower to the Administrative Agent to make a payment from the
funds in the Borrower's account at the Payment Office shall constitute the
making of such payment to the extent of such funds held in such account. Any
payments under this Agreement which are made later than 1:00 P.M. (New York
time) shall be deemed to have been made on the next succeeding Business Day.
Whenever any payment to be made hereunder 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 during such extension period at the applicable rate in effect
immediately prior to such extension.
3.05 Net Payments.
(a) All payments made by the Borrower under the Credit
Documents will be made without condition or deduction for any
counterclaim, defense, recoupment or setoff. In addition, except as
provided in this Section 3.05, any and all payments by the Borrower
to or for the account of the Administrative Agent, the L/C Issuer, or
19
any Bank under any Credit Document shall be made free and clear of
and without deduction for any and all present or future taxes,
duties, levies, imposts, deductions, assessments, fees, withholdings
or similar charges, and all liabilities with respect thereto,
excluding, in the case of the Administrative Agent, the L/C Issuer
and each Bank, taxes imposed on or measured by its overall net
income, and franchise taxes imposed on it (in lieu of net income
taxes), by the jurisdiction (or any political subdivision thereof)
under the laws of which the Administrative Agent, the L/C Issuer or
such Bank, as the case may be, is organized or maintains a lending
office (all such non-excluded taxes, duties, levies, imposts,
deductions, assessments, fees, withholdings or similar charges, and
liabilities being hereinafter referred to as "Taxes"). Except as
otherwise provided in clause (b) below, if the Borrower shall be
required by any laws to deduct any Taxes from or in respect of any
sum payable under any Credit Document to the Administrative Agent,
the L/C Issuer or any Bank, (i) the sum payable shall be increased as
necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section),
each of the Administrative Agent, the L/C Issuer and such Bank
receives an amount equal to the sum it would have received had no
such deductions been made, (ii) the Borrower shall make such
deductions, (iii) the Borrower shall pay the full amount deducted to
the relevant taxation authority or other authority in accordance with
applicable laws and (iv) within 30 days after the date of such
payment, the Borrower shall furnish to the Administrative Agent
(which shall forward the same to the L/C Issuer or such Bank) the
original or a certified copy of a receipt evidencing payment thereof.
(b) In addition, the Borrower agrees to pay any and all
present or future stamp, court or documentary taxes and any other
excise or property taxes or charges or similar levies (but
specifically excluding all other United States Federal taxes, other
than withholding taxes, unless such exclusion is not required as a
condition for an exemption from reporting requirements under Sections
6011, 6111 or 6112 of the Code) which arise from any payment made
under any Credit Document or from the execution, delivery,
performance, enforcement or registration of, or otherwise with
respect to, any Credit Document (hereinafter referred to as "Other
Taxes").
(c) If the Borrower shall be required to deduct or pay any
Taxes or Other Taxes from or in respect of any sum payable under any
Credit Document to the Administrative Agent, the L/C Issuer or any
Bank, the Borrower shall also pay to the Administrative Agent, the
L/C Issuer or such Bank, as the case may be, at the time interest is
paid, such additional amount that the Administrative Agent, the L/C
Issuer or such Bank specifies is necessary to preserve the after-tax
yield (after factoring in all taxes, including taxes imposed on or
measured by net income) that the Administrative Agent, the L/C Issuer
or such Bank would have received if such Taxes or Other Taxes had not
been imposed.
(d) The Borrower agrees to indemnify the Administrative
Agent, the L/C Issuer and each Bank for (i) the full amount of Taxes
and Other Taxes (including any Taxes or Other Taxes imposed or
asserted by any jurisdiction on amounts payable under this Section)
paid by the Administrative Agent, the L/C Issuer and such Bank, (ii)
amounts payable under Section 3.05(c) and (iii) any liability
(including additions to tax, penalties, interest and expenses)
arising therefrom or with respect thereto, in each case whether or
not such Taxes or Other Taxes were correctly or legally imposed or
asserted by the relevant Governmental Authority. Payment under this
clause (d) shall be made within 30 days after the date the Bank, the
L/C Issuer or the Administrative Agent, as the case may be, delivers
to the Borrower a certificate pursuant to Section 3.05(g).
20
(e) The Administrative Agent, the L/C Issuer and each Bank
that is a party to this Agreement on the Effective Date represents to
the Borrower that as of the Effective Date it is entitled to a
complete exemption from United States withholding tax with respect to
payments to be made under the Credit Documents. Upon the request of
the Administrative Agent or the Borrower, each Bank that is a "United
States person" (as such term is defined in Section 7701(a)(30) of the
Code) for U.S. Federal income tax purposes agrees to deliver to the
Borrower and the Administrative Agent on or prior to the Initial
Borrowing Date, or in the case of a Bank that is an assignee or
transferee of an interest under this Agreement pursuant to Section
11.04(b) (unless the respective Bank was already a Bank hereunder
immediately prior to such assignment or transfer), on the date of
such assignment or transfer to such Bank, two accurate and complete
original signed copies of Internal Revenue Service Form W-9. Upon the
request of the Administrative Agent or the Borrower, each Bank that
is not a "United States person" (as such term is defined in Section
7701(a)(30) of the Code) for U.S. Federal income tax purposes agrees
to deliver to the Borrower and the Administrative Agent on or prior
to the Initial Borrowing Date, or in the case of a Bank that is an
assignee or transferee of an interest under this Agreement pursuant
to Section 11.04(b) (unless the respective Bank was already a Bank
hereunder immediately prior to such assignment or transfer), on the
date of such assignment or transfer to such Bank, (i) two accurate
and complete original signed copies of Internal Revenue Service Form
▇-▇▇▇▇, ▇-▇▇▇▇ or W-8EXP (or successor forms) certifying to such
Bank's entitlement as of such date to a complete exemption from
United States withholding tax with respect to payments to be made
under the Credit Documents, or (ii) if the Bank is not a "bank"
within the meaning of Section 881(c)(3)(A) of the Code and cannot
deliver either Internal Revenue Service Form ▇-▇▇▇▇, ▇-▇▇▇▇ or W-8EXP
pursuant to clause (i) above, (x) a certificate substantially in the
form of Exhibit E (any such certificate, a "Section 3.05(e)(ii)
Certificate") and (y) two accurate and complete original signed
copies of the appropriate Internal Revenue Service Form certifying to
such Bank's entitlement as of such date to a complete exemption from
United States withholding tax with respect to payments of interest to
be made under the Credit Documents. In addition, each Bank agrees
that from time to time after the Effective Date, and from time to
time upon reasonable request, when a lapse in time or change in
circumstances renders the previous certification obsolete or
inaccurate in any material respect, it will deliver to the Borrower
and the Administrative Agent two new accurate and complete original
signed copies of Internal Revenue Service Form ▇-▇, ▇-▇▇▇▇, ▇-▇▇▇▇,
▇-▇▇▇▇ or a Section 3.05(e)(ii) Certificate, as the case may be, and
such other forms as may be required in order to confirm or establish
the entitlement of such Bank to a continued complete exemption from
United States withholding tax with respect to payments under the
Credit Documents, or it shall immediately notify the Borrower and the
Administrative Agent of its inability to deliver any such Form or
Certificate, in which case such Bank shall not be required to deliver
any such Form or Certificate pursuant to this Section 3.05(e).
Notwithstanding anything to the contrary contained in Section
3.05(a), but subject to the immediately succeeding sentence, (x) the
Borrower shall be entitled, to the extent it is required to do so by
law, to deduct or withhold income or similar taxes imposed by the
United States (or any political subdivision or taxing authority
thereof or therein) from interest, Fees or other amounts payable
under the Credit Documents for the account of any Bank to the extent
that such Bank has not provided to the Administrative Agent or the
Borrower U.S. Internal Revenue Service Forms that establish a
complete exemption from such deduction or withholding and (y) the
Borrower shall not be obligated to pay any additional amounts and to
indemnify any Bank in the manner set forth in Sections 3.05(a) and
(d) in respect of income or similar taxes imposed by the United
States if (I) such Bank has not provided to the Borrower the Internal
Revenue Service Forms required to be provided to the Administrative
Agent or the Borrower pursuant to this Section 3.05(e) or (II) in the
case of a payment, other than interest, to a Bank described in clause
(ii) above, to the extent that such Forms do not establish a complete
exemption from withholding of such taxes. Notwithstanding anything to
21
the contrary contained in the preceding sentence or elsewhere in this
Section 3.05 (other than Section 3.05(b)), except as set forth in
Section 3.05(b), the Borrower agrees to pay any additional amounts
and to indemnify each Bank in the manner set forth in Sections
3.05(a) and (d) (without regard to the identity of the jurisdiction
requiring the deduction or withholding) in respect of any Taxes
deducted or withheld by it as described in the immediately preceding
sentence as a result of any changes that are effective after the
Effective Date in any applicable law, treaty, governmental rule,
regulation, guideline or order, or in the interpretation thereof,
relating to the deducting or withholding of such Taxes.
(f) If the Borrower pays any additional amount under this
Section 3.05 to the Administrative Agent, the L/C Issuer or any Bank
and such Person determines in its sole discretion, acting in good
faith, that it has actually received or realized in connection
therewith any refund or any reduction of, or credit against, its Tax
liabilities in or with respect to the taxable year in which the
additional amount is paid (a "Tax Benefit"), such Person shall pay to
the Borrower an amount that such Person shall, in its sole
discretion, acting in good faith, determine is equal to the net
benefit, after tax, which was obtained by such Person in such year as
a consequence of such Tax Benefit; provided, however, that (i) such
Person may determine, in its sole discretion consistent with the
policies of such Person, whether to seek a Tax Benefit; (ii) any
Taxes that are imposed on such Person as a result of a disallowance
or reduction (including through the expiration of any tax credit
carryover or carryback of such Person that otherwise would not have
expired) of any Tax Benefit with respect to which such Person has
made a payment to the Borrower pursuant to this Section 3.05(f) shall
be treated as a Tax for which the Borrower is obligated to indemnify
such Person pursuant to this Section 3.05 without any exclusions or
defenses; and (iii) nothing in this Section 3.05(f) shall require
such Person to disclose any confidential information to the Borrower
(including, without limitation, its tax returns) except as may be
required by Section 11.17.
(g) A certificate of the Administrative Agent, the L/C
Issuer or any Bank claiming compensation under this Section 3.05 and
setting forth in reasonable detail the basis for the calculation of
the amount or amounts to be paid to it hereunder shall be conclusive
in the absence of manifest error. In determining such amount, the
Administrative Agent or such Bank may use any reasonable averaging
and attribution methods.
SECTION 4. Conditions Precedent. The obligation of the Banks and the L/C Issuer
to make Credit Extensions to the Borrower hereunder is subject, at the time of
the making of each such Credit Extension (except as otherwise hereinafter
indicated), to the satisfaction of each of the following conditions:
4.01 Effectiveness; Notes. On or prior to the Initial Borrowing Date,
(i) the Effective Date shall have occurred, and (ii) there shall have been
delivered to the Administrative Agent for the account of each Bank requesting a
promissory note the appropriate Term Note and/or Revolving Note dated the
Initial Borrowing Date, executed by the Borrower in the amount, maturity and as
otherwise provided herein.
4.02 No Default; Representations and Warranties. At the time of the
making of each Credit Extension and also after giving effect thereto, (i) there
shall exist no Default or Event of Default and (ii) all representations and
warranties contained herein or 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 date of the making
of such Credit Extension, unless stated to relate to a specific earlier date, in
which case such representations and warranties shall have been true and correct
in all material respects as of such earlier date.
22
4.03 Officer's Certificate. On or prior to the Initial Borrowing
Date, the Administrative Agent shall have received an officer's certificate
dated the Initial Borrowing Date, signed by an appropriate officer of the
Borrower, stating that all of the applicable conditions set forth in Sections
4.02, 4.06, 4.07, 4.13 and 4.17 exist as of such date and showing the
Consolidated Indebtedness to Consolidated Total Capital Ratio on such date after
giving effect to the Transaction.
4.04 Opinions of Counsel. On or prior to the Initial Borrowing Date,
the Administrative Agent shall have received an opinion or opinions, addressed
to the Administrative Agent and each of the Banks and dated the Initial
Borrowing Date, from Weil, Gotshal & ▇▇▇▇▇▇ LLP, counsel to the Credit Parties,
and other counsel to the Credit Parties as may be qualified to opine on
particular matters, substantially in the form of Exhibit C hereto.
4.05 Corporate Proceedings.
(a) On or prior to the Initial Borrowing Date, the Banks
shall have received from each Credit Party an officer's certificate,
dated the Initial Borrowing Date, signed by the President or any Vice
President of such Credit Party, and attested to by the Secretary or
any Assistant Secretary of such Credit Party, substantially in the
form of Exhibit D hereto with appropriate insertions, together with
(x) copies of the Articles or Certificate of Incorporation and
By-Laws of such Credit Party and (y) the resolutions of such Credit
Party and the other documents referred to in such certificate, and
the foregoing shall be reasonably satisfactory to the Administrative
Agent.
(b) All corporate, tax and legal proceedings and all
instruments and agreements in connection with the transactions
contemplated by this Agreement, the other Credit Documents and the
Transaction Documents shall be reasonably satisfactory in form and
substance to the Administrative Agent, and the Administrative Agent
shall have received all information and copies of all certificates,
documents and papers, including good standing certificates and any
other records of corporate proceedings and governmental approvals, if
any, which the Administrative Agent reasonably may have requested in
connection therewith, such documents and papers where appropriate to
be certified by proper corporate or governmental authorities.
4.06 No Material Adverse Effect. Since December 31, 2001, no event or
circumstance shall have occurred that, individually or in the aggregate, has had
or could reasonably be expected to have a Material Adverse Effect.
4.07 Litigation. Except as disclosed on Schedule 5.04, no actions,
suits or proceedings shall be pending or, to the knowledge of any Responsible
Officer of the Borrower, threatened (i) with respect to this Agreement or any
other Credit Document, the Transaction Documents or the transactions
contemplated hereby or thereby (including the Acquisition) or (ii) which,
individually or in the aggregate, could (if adversely determined) reasonably be
expected to have a Material Adverse Effect.
4.08 Subsidiary Guaranty. On or prior to the Initial Borrowing Date,
each Subsidiary Guarantor shall have duly authorized, executed and delivered the
Subsidiary Guaranty, dated the Initial Borrowing Date, and the Subsidiary
Guaranty shall be in full force and effect.
23
4.09 Pledge Agreement. On or prior to the Initial Borrowing Date,
each of the Borrower, WorldNet and CHCS Services shall have duly authorized,
executed and delivered the Pledge Agreement, dated the Initial Borrowing Date,
granting and creating Liens in favor of the Collateral Agent in and to the
collateral described in the Pledge Agreement as security for the Obligations,
which Pledge Agreement shall be in full force and effect, and shall have
delivered to the Collateral Agent, as pledgee thereunder:
(a) All of the Stock referred to therein, endorsed in
blank or together with undated stock powers executed in blank, as
appropriate;
(b) Financing Statements (Form UCC-1) in appropriate form
for filing under the UCC of each jurisdiction as may be reasonably
necessary to perfect the security interests purported to be created
by the Pledge Agreement;
(c) Evidence of the completion of all recordings and
filings of, or with respect to, the Pledge Agreement (other than the
filing of the UCC-1 Financing Statements referred to in clause (b)
above) as may be necessary or, in the reasonable opinion of the
Collateral Agent, desirable to perfect the security interests
intended to be created thereunder; and
(d) Evidence that all other actions necessary or, in the
reasonable opinion of the Collateral Agent, desirable to perfect and
protect the security interests purported to be created by the Pledge
Agreement have been taken or will be taken promptly after the Initial
Borrowing Date.
4.10 Security Agreement. On or prior to the Initial Borrowing Date,
each Subsidiary Guarantor shall have duly authorized, executed and delivered the
Security Agreement, dated the Initial Borrowing Date, granting and creating
Liens in favor of the Collateral Agent in and to the collateral described in the
Security Agreement as security for the Obligations, which Security Agreement
shall be in full force and effect, and shall have delivered to the Collateral
Agent, as secured party thereunder:
(a) Financing Statements (Form UCC-1) in appropriate form
for filing under the UCC of each jurisdiction as may be reasonably
necessary to perfect the security interests purported to be created
by the Security Agreement;
(b) Evidence of the completion of all recordings and
filings of, or with respect to, the Security Agreement (other than
the filing of the UCC-1 Financing Statements referred to in clause
(a) above) as may be necessary or, in the reasonable opinion of the
Collateral Agent, desirable to perfect the security interests
intended to be created thereunder; and
(c) Evidence that all other actions necessary or, in the
reasonable opinion of the Collateral Agent, desirable to perfect and
protect the security interests purported to be created by the
Security Agreement have been taken or will be taken promptly after
the Initial Borrowing Date.
4.11 Surplus Note. On the Initial Borrowing Date, the Borrower shall
have delivered to the Collateral Agent the Surplus Note, together with an
executed allonge endorsement in form reasonably satisfactory to the Collateral
Agent.
24
4.12 Lien Searches. Prior to the Initial Borrowing Date, the
Administrative Agent shall have received Lien searches in the name of the
Borrower and each Subsidiary Guarantor in each jurisdiction as the
Administrative Agent may deem necessary, showing no financing statements or
other Lien instruments of record except for Liens permitted hereunder or Liens
being released concurrently with the Initial Borrowing Date.
4.13 Consummation of the Transaction.
(a) Prior to or concurrently with the incurrence of Loans
on the Initial Borrowing Date, the Acquisition shall have been
consummated in accordance with the Acquisition Documents, which
Acquisition Documents shall be in form and substance reasonably
satisfactory to the Administrative Agent and the Banks, and all Legal
Requirements and each of the conditions precedent to the consummation
of the Acquisition (including, without limitation, the accuracy in
all material respects of the representations and warranties contained
in the Acquisition Agreement) shall have been satisfied in all
material respects, and not waived, except with the prior written
consent of the Administrative Agent, to the reasonable satisfaction
of the Administrative Agent.
(b) Prior to or concurrently with the incurrence of Loans
on the Initial Borrowing Date, (i) the Existing Indebtedness shall
have been repaid in full, (ii) all commitments in connection with the
Existing Indebtedness shall have been terminated, and (iii) all Liens
securing the Existing Indebtedness shall have been terminated and
released to the reasonable satisfaction of the Administrative Agent.
4.14 Acquisition Documents. On or before the Initial Borrowing Date,
there shall have been delivered to the Administrative Agent, true and correct
copies of the Acquisition Documents as in effect on the Initial Borrowing Date,
and all terms of such Acquisition Documents shall be reasonably satisfactory in
form and substance to the Administrative Agent.
4.15 Tax Sharing Agreements. On or before the Initial Borrowing Date,
there shall have been delivered to the Administrative Agent, true and correct
copies of all tax sharing, tax allocation and other similar agreements (or the
forms thereof) entered or to be entered into by the Borrower and/or any of its
Subsidiaries and Pyramid (collectively, the "Tax Sharing Agreements") as in
effect on the Initial Borrowing Date, and all terms of such Tax Sharing
Agreements shall be reasonably satisfactory in form and substance to the
Administrative Agent.
4.16 Financial Statements; Projections. On or before the Initial
Borrowing Date, the Borrower shall have delivered or caused to be delivered to
the Administrative Agent with copies for each Bank:
(a) A draft of the audited balance sheet of (i) the
Borrower and its Subsidiaries (on a consolidated basis) and (ii)
Pyramid, in each case for the fiscal year ended December 31, 2002,
and the related statements of income, stockholders' equity and cash
flows, in each case prepared in accordance with GAAP, which drafts
shall be reasonably satisfactory in form and substance to the
Administrative Agent;
(b) Projected financial statements for the Borrower and
its Subsidiaries reflecting the projected financial condition, income
and expenses of the Borrower and its Subsidiaries after giving effect
to the Transaction and the other transactions contemplated hereby,
which projected financial statements shall be reasonably satisfactory
in form and substance to the Administrative Agent;
25
(c) A closing funds flow statement in connection with the
Transaction, in form and substance reasonably satisfactory to the
Administrative Agent; and
(d) A pro forma balance sheet of Borrower, as of the
Initial Borrowing Date, after giving effect to the Transaction and
the other transactions contemplated hereby.
4.17 Approvals, etc. On or before the Initial Borrowing Date the
following shall have occurred to the reasonable satisfaction of the
Administrative Agent:
(i) all Governmental Authority and material
third party approvals (including, without limitation, any
shareholder approvals), permits and licenses (including,
without limitation, the approval of each Applicable
Insurance Regulatory Authority) required in connection
with the Transaction and this Agreement and the
transactions contemplated by the Transaction Documents and
otherwise referred to herein or therein (including without
limitation the Acquisition and the granting of Liens
contemplated by the Collateral Documents), to the extent
such approvals, consents, permits and licenses are
required to be obtained or made prior to the Initial
Borrowing Date, shall have been obtained and remain in
full force and effect, and all applicable waiting periods
shall have expired, in each case without any action being
taken by any competent authority (including any court
having jurisdiction) which restrains, prevents or imposes,
in the reasonable judgment of the Required Banks or the
Administrative Agent, materially adverse conditions upon
the consummation of the Transaction or any such agreement
or transaction; and
(ii) the Borrower shall have delivered to the
Administrative Agent the Form A (or its equivalent) filed
by the Borrower with each Applicable Insurance Regulatory
Authority in connection with the Transaction and this
Agreement and the transactions contemplated by the
Transaction Documents, together with the approval of each
such Applicable Insurance Regulatory Authority (and all
stipulations or conditions relating to such approval),
which approvals (and stipulations and conditions, if any)
shall be reasonably satisfactory to the Administrative
Agent.
4.18 Indebtedness. On the Initial Borrowing Date and after giving
effect to the consummation of the Transaction, the only Indebtedness for
borrowed money of the Borrower and its Subsidiaries shall be Indebtedness
permitted under Section 7.04.
4.19 Payment of Fees. On or prior to the Initial Borrowing Date, all
costs, fees and expenses (including, without limitation, legal fees and
expenses), and all other compensation required under the terms of the Credit
Documents to be paid on or prior to the Initial Borrowing Date shall have been
paid.
4.20 Notice of Borrowing. The Administrative Agent shall have
received a Notice of Borrowing satisfying the requirements of Section 1.03 with
respect to all Borrowings of Loans.
4.21 Insurance Policies. On or prior to the Initial Borrowing Date,
the Administrative Agent shall have received evidence of insurance complying
with the requirements of Section 6.03 for the business and properties of the
Borrower and its Subsidiaries, in form and substance reasonably satisfactory to
the Administrative Agent.
26
4.22 Capital Structure. On the Initial Borrowing Date, the corporate
and capital structure (and all agreements related thereto) of the Borrower and
its Subsidiaries and all organizational documents of the Credit Parties shall be
reasonably satisfactory to the Administrative Agent.
The acceptance of the benefits of the Credit Extensions on the Initial Borrowing
Date and on the date of each Credit Extension thereafter shall constitute a
representation and warranty by the Borrower to each of the Banks and the L/C
Issuer that all of the applicable conditions specified in this Section 4 exist
or have been satisfied as of such date. All of the certificates, legal opinions
and other documents and papers referred to in this Section 4, unless otherwise
specified, shall be delivered to the Administrative Agent at its Notice Office
(or as the Administrative Agent may otherwise direct) for the account of each of
the Banks.
SECTION 5. Representations, Warranties and Agreements. In order to induce the
Banks and the L/C Issuer to enter into this Agreement and to make the Credit
Extensions provided for herein, the Borrower makes the following representations
and warranties to, and agreements with, the Banks and the L/C Issuer, all of
which shall survive the execution and delivery of this Agreement and the making
of the Credit Extensions (with the making of each Credit Extension being deemed
to constitute a representation and warranty that the matters specified in this
Section 5 are true and correct in all material respects on and as of the date of
the making of such Credit Extension (after giving effect to the consummation of
the Transaction on such date) unless such representation and warranty expressly
indicates that it is being made as of any other specific date in which case such
representation and warranty shall have been true and correct in all material
respects as of such other specified date):
5.01 Corporate Status. The Borrower and each of its Subsidiaries (i)
is a duly organized and validly existing corporation in good standing (where
applicable) under the laws of the jurisdiction of its organization and has the
corporate or other organizational power and authority to own its property and
assets and to transact the business in which it is engaged and presently
proposes to engage and (ii) has been duly qualified and is authorized to do
business and is in good standing (where applicable) in all jurisdictions where
it is required to be so qualified, except where the failure to be so qualified
could not reasonably be expected to have a Material Adverse Effect.
5.02 Corporate Power and Authority. Each Credit Party has the
corporate power and authority to execute, deliver and carry out the terms and
provisions of the Transaction Documents to which it is a party and has taken all
necessary corporate action to authorize the execution, delivery and performance
of the Transaction Documents to which it is a party. Each Credit Party has duly
executed and delivered each Transaction Document to which it is a party and each
such Transaction Document constitutes the legal, valid and binding obligation of
such Credit Party enforceable against such Credit Party in accordance with its
terms, except to the extent that enforceability thereof may be limited by
applicable bankruptcy, insolvency, moratorium or similar laws affecting
creditors' rights generally and general principles of equity regardless of
whether enforcement is sought in a proceeding in equity or at law.
5.03 No Contravention of Laws, Agreements or Organizational
Documents. Neither the execution, delivery and performance by any Credit Party
of the Transaction Documents to which it is a party nor compliance with the
terms and provisions thereof, nor the consummation of the transactions
contemplated therein (i) will contravene any applicable provision of any law,
statute, rule, regulation, order, writ, injunction or decree of any Governmental
Authority, (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 (except for those which, individually or in the aggregate, could
not reasonably be expected to have a Material Adverse Effect), or (other than
pursuant to the Collateral Documents) result in the creation or imposition of
(or the obligation to create or impose) any Lien upon any of the property or
assets of the Borrower or any of its Subsidiaries pursuant to the terms of, any
material indenture, mortgage, deed of trust, loan agreement, credit agreement or
27
other agreement to which the Borrower or any of its Subsidiaries is a party or
by which it or any of its property or assets are bound or to which it may be
subject or (iii) will violate any provision of the Articles or Certificate of
Incorporation or By-Laws of the Borrower or any of its Subsidiaries.
5.04 Litigation and Contingent Liabilities.
(a) Except as disclosed on Schedule 5.04, there are no
actions, suits or proceedings pending or, to the knowledge of any
Responsible Officer of the Borrower, threatened in writing involving
the Borrower or any of its Subsidiaries (including, without
limitation, with respect to the Transaction, this Agreement or any
documentation executed in connection therewith or herewith) which,
individually or in the aggregate, could (if adversely determined)
reasonably be expected to have a Material Adverse Effect.
(b) Except as fairly reflected in the financial statements
described in Section 5.11(b) (including the footnotes thereto), the
Indebtedness permitted to be incurred under this Agreement and
obligations incurred in the ordinary course of business since the
date of the financial statements described in Section 5.11(b), there
are as of the Initial Borrowing Date (and after giving effect to the
Credit Extensions made on such date), no liabilities or obligations
with respect to the Borrower or any of its Subsidiaries of any nature
whatsoever (whether absolute, accrued, contingent or otherwise and
whether or not due), and no Responsible Officer of the Borrower knows
of any basis for the assertion against the Borrower or any of its
Subsidiaries of any such liability or obligation, which, in the case
of any of the foregoing referred to in this clause (b), either
individually or in the aggregate, could reasonably be expected to
have a Material Adverse Effect.
5.05 Use of Proceeds; Margin Regulations.
(a) The proceeds of all Credit Extensions shall be
utilized to effect the Transaction and for working capital, capital
expenditures and other lawful general corporate purposes.
(b) Neither the making of any Credit Extension hereunder,
nor the use of the proceeds thereof, will violate or be inconsistent
with the provisions of Regulation T, U or X of the Board of Governors
of the Federal Reserve System and no part of the proceeds of any
Credit Extension will be used to purchase or carry any Margin Stock
or to extend credit for the purpose of purchasing or carrying any
Margin Stock.
5.06 Approvals. Except for (i) filings and approvals made or obtained
on or prior to the Initial Borrowing Date, (ii) filings required to be made in
order to perfect the Liens created by the Collateral Documents and (iii) those
filings or approvals the failure of which to make or obtain, either individually
or in the aggregate, could not reasonably be expected to have a Material Adverse
Effect, no order, consent, approval, license, authorization, or validation of,
or filing, recording or registration with, or exemption by, any foreign or
domestic Governmental Authority is required to authorize or is required prior to
the Initial Borrowing Date in connection with (i) the execution, delivery and
performance of any Transaction Document, (ii) the legality, validity, binding
effect or enforceability of any Transaction Document or (iii) the consummation
of the Transaction.
5.07 Investment Company Act. No Credit Party is an "investment
company" or a company "controlled" by an "investment company," within the
meaning of the Investment Company Act of 1940, as amended.
28
5.08 Public Utility Holding Company Act. No Credit Party is a
"holding company," or a "subsidiary company" of a "holding company," or an
"affiliate" of a "holding company" or of a "subsidiary company" of a "holding
company," within the meaning of the Public Utility Holding Company Act of 1935,
as amended.
5.09 True and Complete Disclosure; Projections and Assumptions. All
written factual information (taken as a whole) heretofore or contemporaneously
herewith furnished by or on behalf of the Borrower or any of its Subsidiaries to
the Administrative Agent or any Bank (including, without limitation, all
information contained in the Transaction Documents, but excluding any
projections) for purposes of or in connection with this Agreement or any
transaction contemplated herein is true and accurate in all material respects on
the date as of which such information is dated and not materially incomplete by
omitting to state any material fact necessary to make such information (taken as
a whole) not misleading in any material respect at such time in light of the
circumstances under which such information was provided. All projections
heretofore or contemporaneously herewith furnished by or on behalf of the
Borrower or any of its Subsidiaries to the Administrative Agent or any Bank are
based on good faith estimates and assumptions believed by the Borrower to be
reasonable and attainable at the time made, it being recognized by the Banks
that such projections as to future events are not to be viewed as facts and that
actual results during the period or periods covered by any such projections may
differ from the projected results.
5.10 Consummation of Transaction. Prior to or concurrently with the
incurrence of Loans on the Initial Borrowing Date, (i) the Transaction has been
consummated in accordance with the terms and conditions of the Transaction
Documents and all Legal Requirements and (ii) PennLife, a Wholly-Owned
Subsidiary of the Borrower, is the owner of 100% of the outstanding capital
stock of Pyramid, free and clear of all Liens other than Liens permitted
pursuant to Sections 7.03(a), (b) and (e). All applicable waiting periods with
respect thereto have, or, prior to the time when required, will have, expired
without, in all such cases, any action being taken by any competent authority
which restrains, prevents, or imposes material adverse conditions upon the
consummation of the Transaction. Additionally, there does not exist any
judgment, order or injunction prohibiting or imposing material adverse
conditions upon the Transaction or the making of the Loans or the performance by
the Borrower and its Subsidiaries of their obligations under the Transaction
Documents.
5.11 Financial Condition; Financial Statements.
(a) On and as of the Initial Borrowing Date, on a pro
forma basis after giving effect to the Transaction and all
Indebtedness incurred, and to be incurred, on or prior to the Initial
Borrowing Date, and Liens created, and to be created, on or prior to
the Initial Borrowing Date, in connection with this Agreement, with
respect to each of the Borrower (on a stand-alone basis) and the
Borrower and its Subsidiaries (on a consolidated basis) (x) the sum
of the assets, at a fair valuation, of each of the Borrower (on a
stand-alone basis) and the Borrower and its Subsidiaries (on a
consolidated basis) will exceed their debts, (y) the Borrower (on a
stand-alone basis) and the Borrower and its Subsidiaries (on a
consolidated basis) will not have incurred or intended to, or believe
that they will, incur debts beyond their ability to pay such debts as
such debts mature and (z) the Borrower (on a stand-alone basis) and
the Borrower and its Subsidiaries (on a consolidated basis) will have
sufficient capital with which to conduct its or their business. For
purposes of this Section 5.11(a), "debt" means any liability on a
claim, and "claim" means (i) right to payment whether or not such a
right is reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, unmatured, disputed, undisputed, legal,
equitable, secured or unsecured, or (ii) right to an equitable remedy
for breach of performance if such breach gives rise to a payment,
whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured, unmatured, disputed,
undisputed, secured or unsecured.
29
(b) The (i) audited and unaudited balance sheets of the
Borrower and its Subsidiaries (on a consolidated basis) and (ii) the
unaudited balance sheets of Pyramid, in each case for the fiscal year
ended December 31, 2001 and the fiscal quarter ended September 30,
2002, respectively, together with the related statements of income,
stockholders' equity and cash flows of such Persons for the fiscal
year and fiscal quarter, respectively, ended on such dates,
heretofore delivered to the Banks, have been prepared in accordance
with GAAP (subject to the absence of footnotes in the case of the
September 30, 2002 financial statements) and present fairly in all
material respects the financial position of such Persons at the dates
of said statements and the results of operations for the periods
covered thereby.
(c) The audited Annual Statement and unaudited financial
statements of (i) each of the Borrower's Subsidiaries which is a
Regulated Insurance Company and (ii) Pyramid, in each case for the
fiscal year ended December 31, 2001, and the fiscal quarter ended
September 30, 2002, heretofore filed with the Applicable Insurance
Regulatory Authority and delivered to the Banks, have been prepared
in accordance with SAP and present fairly in all material respects
the financial position of such Persons at the dates of said
statements and the results of operations for the periods covered
thereby.
(d) Since December 31, 2001, there has been no event or
circumstance that, individually or in the aggregate, has had or could
reasonably be expected to have a Material Adverse Effect.
5.12 Security Interests. On and after the Initial Borrowing Date, the
Collateral Documents create, as security for the Obligations, valid and
enforceable perfected security interests in and Liens on all of the Collateral
subject thereto, superior to and prior to the rights of all third persons and
subject to no other Liens other than Liens permitted pursuant to Sections
7.03(a), (b), (d), (e), (f), (g), (h), (i), (l) and (m), in favor of the
Collateral Agent. At all times on or after the Initial Borrowing Date, the
Borrower or the applicable Credit Party, as the case may be, has good and
marketable title to all Collateral free and clear of all Liens (except as
created pursuant to the Collateral Documents and except as permitted pursuant to
▇▇▇▇▇▇▇▇ ▇.▇▇(▇), (▇), (▇), (▇), (▇), (▇), (▇), (▇), (▇) and (m)).
5.13 Tax Returns and Payments. Except as set forth on Schedule 5.13,
the Borrower and each of its Subsidiaries has filed all federal income tax
returns and all other material tax returns, domestic and foreign, required to be
filed by it and has paid all material taxes and assessments payable by it which
have become due, other than those not yet delinquent and except for those
contested in good faith and adequately disclosed and fully provided for in the
financial statements of the Borrower and each of its Subsidiaries in accordance
with GAAP or SAP, as the case may be. The Borrower and each of its Subsidiaries
has paid, or has provided adequate reserves (in the good faith judgment of the
management of such Person) for the payment of, all material federal, state and
foreign taxes applicable for all prior fiscal years and for the current fiscal
year to the date hereof. Except as disclosed on Schedule 5.13, there is no
material action, suit, proceeding, investigation, audit or claim now pending or,
to the knowledge of any Responsible Officer of the Borrower or any of its
Subsidiaries, threatened in writing by any Governmental Authority regarding any
material taxes relating to the Borrower or any of its Subsidiaries. Except as
disclosed on Schedule 5.13, neither the Borrower nor any of its Subsidiaries has
entered into an agreement or waiver or been requested to enter into an agreement
or waiver extending any statute of limitations relating to the payment or
collection of taxes of the Borrower or any of its Subsidiaries, and no
Responsible Officer of the Borrower is aware of any circumstances that would
cause the taxable years or other taxable periods of the Borrower or any of its
Subsidiaries not to be subject to the normally applicable statute of
limitations.
30
5.14 Compliance with ERISA. (a) Schedule 5.14 sets forth each Plan.
Except as disclosed on Schedule 5.14, (i) each Plan (and each related trust,
insurance contract or fund) is in substantial compliance with its terms and with
all applicable laws, including without limitation ERISA and the Code, except for
noncompliance which, either individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect; (ii) each Plan (and
each related trust, if any) which is intended to be qualified under Section
401(a) of the Code has received a determination letter from the Internal Revenue
Service to the effect that it meets the requirements of Sections 401(a) and
501(a) of the Code; (iii) no Reportable Event has occurred except for any
Reportable Event which, either individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect; (iv) no Plan which is
a multiemployer plan (as defined in Section 4001(a) (3) of ERISA) is insolvent
or in reorganization; (v) no Plan has an Unfunded Current Liability, except for
any Unfunded Current Liability which, either individually or in the aggregate,
could not reasonably be expected to have a Material Adverse Effect; (vi) no Plan
which is subject to Section 412 of the Code or Section 302 of ERISA has an
accumulated funding deficiency, within the meaning of such Sections of the Code
or ERISA, or has applied for or received a waiver of an accumulated funding
deficiency or an extension of any amortization period, within the meaning of
Section 412 of the Code or Section 303 or 304 of ERISA, except where such
deficiency, either individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect; (vii) all contributions required to
be made with respect to a Plan have been timely made, except for any such
contribution which, if not timely made, could not reasonably be expected to have
a Material Adverse Effect; (viii) neither the Borrower nor any Subsidiary of the
Borrower nor any ERISA Affiliate has incurred any material liability (including
any indirect, contingent or secondary liability) to or on account of a Plan
pursuant to Section 409, 502(i), 502(1), 515, 4062, 4063, 4064, 4069, 4201, 4204
or 4212 of ERISA or Section 401(a)(29), 4971 or 4975 of the Code or expects to
incur any material amount of such liability under any of the foregoing Sections
with respect to any Plan; (ix) to the knowledge of any Responsible Officer of
the Borrower, no condition exists which presents a material risk to the Borrower
or any Subsidiary of the Borrower or any ERISA Affiliate of incurring a material
amount of liability to or on account of a Plan pursuant to the foregoing
provisions of ERISA and the Code except for any condition which, either
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect; (x) no proceedings have been instituted by the PBGC to
terminate or appoint a trustee to administer any Plan which is subject to Title
IV of ERISA in a distress termination; (xi) no action, suit, proceeding,
hearing, audit or investigation with respect to the administration, operation or
the investment of assets of any Plan (other than routine claims for benefits or
relating to qualified domestic relations orders) is pending or, to the knowledge
of any Responsible Officer, threatened, which, either individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect; (xii)
no Plan is a multiemployer plan (as defined in Section 4001(a)(3) of ERISA);
(xiii) neither the Borrower nor any Subsidiary of the Borrower nor any ERISA
Affiliate has incurred any material liability as a result of any group health
plan (as defined in Section 607(1) of ERISA or Section 4980B(g)(2) of the Code)
other than a multiemployer plan described in Section 3(37) of ERISA which covers
or has covered employees or former employees of the Borrower, any Subsidiary of
the Borrower or any ERISA Affiliate having not been operated in compliance with
the provisions of Part 6 of subtitle B of Title I of ERISA and Section 4980B of
the Code which, either individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect; (xiv) no lien imposed under the Code
or ERISA on the assets of the Borrower or any Subsidiary of the Borrower or any
ERISA Affiliate exists or is likely to arise on account of any Plan and (xv)
except with respect to certain post-retirement health care obligations, as
disclosed on Schedule 5.14, the Borrower and its Subsidiaries may cease
contributions to or terminate any employee benefit plan maintained by any of
them without incurring any material liability.
5.15 Subsidiaries.
(a) Schedule 5.15 lists each Subsidiary of the Borrower
(and the direct and indirect ownership interest of the Borrower
therein) and also identifies the owner thereof, in each case existing
31
on the Initial Borrowing Date (after giving effect to the
Transaction). All such Subsidiaries are direct or indirect
Wholly-Owned Subsidiaries of the Borrower.
(b) All of the outstanding shares of capital stock of each
Subsidiary of the Borrower listed on Schedule 5.15 have been duly
authorized and validly issued and are fully paid and nonassessable
and free from preemptive rights.
(c) Except as set forth on Schedule 5.15, no Subsidiary of
the Borrower listed on Schedule 5.15 has 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.
(d) There are no restrictions on the Borrower or any of
its Subsidiaries which prohibit or otherwise restrict the transfer of
cash or other assets from any Subsidiary of the Borrower to the
Borrower, other than prohibitions or restrictions existing under or
by reason of (i) this Agreement or the other Credit Documents, (ii)
Legal Requirements, (iii) customary non-assignment provisions in
contracts entered into in the ordinary course of business and
consistent with past practices, and (iv) purchase money obligations
for property acquired in the ordinary course of business, so long as
such obligations are permitted under this Agreement.
5.16 Intellectual Property, etc. The Borrower and each of its
Subsidiaries own or possess the right to use all material patents, trademarks,
servicemarks, trade names, copyrights, licenses and other rights, free from
burdensome restrictions, that are necessary for the operation of their
respective businesses as presently conducted and as proposed to be conducted.
5.17 Pollution and Other Regulations. The Borrower and each of its
Subsidiaries are in compliance with all laws and regulations relating to
pollution and environmental control, equal employment opportunity and employee
safety in all domestic and foreign jurisdictions in which the Borrower and each
of its Subsidiaries is presently doing business, and the Borrower will comply
and cause each of its Subsidiaries to comply with all such laws and regulations
which may be imposed in the future in jurisdictions in which the Borrower or
such Subsidiary may then be doing business; in each case other than those the
non-compliance with which could not reasonably be expected to have a Material
Adverse Effect.
5.18 Labor Relations; Collective Bargaining Agreements.
(a) Set forth on Schedule 5.18 is a list and description
(including dates of termination) of all collective bargaining and
similar agreements between or applicable to the Borrower or any of
its Subsidiaries and any union, labor organization or other
bargaining agent in respect of the employees of the Borrower and/or
any Subsidiary on the Initial Borrowing Date.
(b) Neither the Borrower nor any of its Subsidiaries is
engaged in any unfair labor practice that is reasonably likely to
have a Material Adverse Effect. (i) There is no significant unfair
labor practice complaint pending against the Borrower or any of its
Subsidiaries or threatened in writing against any of them, before the
National Labor Relations Board, and no significant grievance or
significant arbitration proceeding arising out of or under any
Collective Bargaining Agreement is now pending against the Borrower
or any of its Subsidiaries or threatened in writing against any of
them, (ii) there is no significant strike, labor dispute, slowdown or
stoppage pending against the Borrower or any of its Subsidiaries or
threatened in writing against the Borrower or any of its Subsidiaries
and (iii) to the best knowledge of the Borrower, no union
32
representation question exists with respect to the employees of the
Borrower or any of its Subsidiaries, except (with respect to any
matter specified in clause (i), (ii) or (iii) above, either
individually or in the aggregate) such as could not reasonably be
expected to have a Material Adverse Effect.
5.19 Representations and Warranties in Transaction Documents. All
representations and warranties set forth in the Transaction Documents were true
and correct in all material respects as of the time such representations and
warranties were made and shall be true and correct in all material respects as
of the Initial Borrowing Date as if such representations and warranties were
made on and as of such date, unless stated to relate to a specific earlier date,
in which case such representations and warranties shall have been true and
correct in all material respects as of such earlier date.
5.20 Indebtedness. Schedule 5.20 sets forth a true and complete list
of all Indebtedness outstanding under Sections 7.04(c) and (k) of the Borrower
and its Subsidiaries as of the Initial Borrowing Date (after giving effect to
the Transaction), in each case showing the aggregate principal amount thereof,
the name of the lender in respect thereof and the name of the respective
borrower and any other entity which has directly or indirectly guaranteed such
Indebtedness.
5.21 Compliance with Statutes, etc. The Borrower and each of its
Subsidiaries is in compliance with all applicable statutes, regulations and
orders of, and all applicable restrictions imposed by, all Governmental
Authorities in respect of the conduct of its business and the ownership of its
property (including compliance with all applicable environmental laws), except
those the noncompliance with which could not, in the aggregate, reasonably be
expected to have a Material Adverse Effect.
5.22 Insurance Licenses. Each Regulated Insurance Company has
obtained and maintains in full force and effect all licenses and permits from
all regulatory authorities necessary to operate in the jurisdictions in which
such Regulated Insurance Company operates, in each case other than such licenses
and permits the failure to obtain or maintain, individually or in the aggregate,
could not reasonably be expected to have a Material Adverse Effect.
SECTION 6. Affirmative Covenants. The Borrower hereby covenants and agrees that
on the Effective Date and thereafter, for so long as this Agreement is in effect
and until the Loans, together with interest, Fees and all other Obligations
incurred hereunder are paid in full and all Letters of Credit are terminated or
expired:
6.01 Information Covenants. The Borrower will furnish or cause to be
furnished to each Bank:
(a) Annual Financial Statements.
(i) As soon as available or required to be
filed with the SEC and in any event within 90 days after
the close of each fiscal year of the Borrower, (x) the
consolidated balance sheet of the Borrower and its
Subsidiaries, in each case, as at the end of such fiscal
year and the related consolidated statements of income, of
stockholders' equity and of cash flows for such fiscal
year and (y) the consolidating balance sheet of the
Borrower and each of its Subsidiaries as at the end of the
fiscal year and the related consolidating statements of
income, of stockholders' equity and of cash flows for such
fiscal year; in each case prepared in accordance with GAAP
and setting forth comparative figures for the preceding
fiscal year, and, in the case of such consolidated
statements, examined by independent certified public
accountants of recognized national standing whose opinion
shall not be qualified as to the scope of audit or as to
33
the status of the Borrower and its Subsidiaries as a going
concern, together with a certificate of such accounting
firm stating that in the course of its regular audit of
the business of the Borrower and its Subsidiaries, which
audit was conducted in accordance with GAAP, such
accounting firm has obtained no knowledge of Event of
Default in respect of the financial covenants in Sections
7.10, 7.11, 7.12, 7.13 and 7.14 which has occurred and is
continuing or, if to the knowledge of such accounting firm
such Event of Default has occurred and is continuing, a
statement as to the nature thereof.
(ii) As soon as available and in any event
within 90 days after the close of each fiscal year of each
Regulated Insurance Company, the Annual Statement
(prepared in accordance with SAP) for such fiscal year of
such Regulated Insurance Company, as filed with the
Applicable Insurance Regulatory Authority in compliance
with the requirements thereof (or a report containing
equivalent information for any Regulated Insurance Company
not so required to file the foregoing with the Applicable
Insurance Regulatory Authority) together with the opinion
thereon of the chief financial officer or other Authorized
Officer of such Regulated Insurance Company stating that
such Annual Statement presents fairly in all material
respects the financial condition and results of operations
of such Regulated Insurance Company in accordance with
SAP.
(iii) in the event any Regulated Insurance
Company is required to obtain or otherwise elects to
obtain an audit of its annual financial statements
prepared in accordance with SAP, as soon as available, the
audit report and opinion of the firm of independent
certified public accountants that conducted such audit.
(iv) As soon as available and in any event
within 90 days after the close of each fiscal year of the
Borrower, a copy of the "Statement of Actuarial Opinion"
and "Management Discussion and Analysis" for each
Regulated Insurance Company (prepared in accordance with
SAP) for such fiscal year and as filed with the Applicable
Regulatory Insurance Authority in compliance with the
requirements thereof (or a report containing equivalent
information for any Regulated Insurance Company not so
required to file the foregoing with the Applicable
Regulatory Insurance Authority).
(b) Quarterly Financial Statements.
(i) As soon as available or required to be
filed with the SEC and in any event within 55 days after
the close of each of the first three quarterly accounting
periods in each fiscal year of the Borrower, (x) the
consolidated balance sheet of the Borrower and its
Subsidiaries at the end of such fiscal quarter and the
related consolidated statements of income, of
stockholders' equity and of cash flows for such quarterly
period and for the elapsed portion of the fiscal year
ended with the last day of such quarterly period and (y)
the consolidating balance sheet of the Borrower and each
of its Subsidiaries as at the end of such fiscal quarter
and the related consolidating statements of income, of
stockholders' equity and of cash flows 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, and all of which shall
be prepared in accordance with GAAP and certified by the
chief financial officer or other Authorized Officer of the
Borrower, as the case may be, subject to changes resulting
from normal year-end audit adjustments.
(ii) As soon as available or required to be
filed with an Applicable Insurance Regulatory Authority
and in any event within 55 days after the close of each of
34
the first three quarterly accounting periods in each
fiscal year of each Regulated Insurance Company, quarterly
financial statements (prepared in accordance with SAP) for
such fiscal period of such Regulated Insurance Company, as
filed with the Applicable Insurance Regulatory Authority,
together with the opinion thereon of the chief financial
officer or other Authorized Officer of such Regulated
Insurance Company stating that such financial statements
present fairly in all material respects the financial
condition and results of operations of such Regulated
Insurance Company in accordance with SAP.
(c) Financial Plans, etc. As soon as available and in any
event no later than 120 days following the first day of each fiscal
year of the Borrower, copies of the annual financial plan or budget
for such fiscal year prepared by management of the Borrower for its
internal use and distributed to the Board of Directors of the
Borrower, and together with each delivery of financial statements
pursuant to Section 6.01(a)(ii) and (b)(ii), a comparison of the
current year to date financial results (other than in respect of the
balance sheets included therein) against the plans required to be
submitted pursuant to this clause (c).
(d) Compliance Certificates. At the time of the delivery
of the financial statements provided for in Sections 6.01(a)(i) and
(ii) and (b)(i) and (ii), a Compliance Certificate executed by the
chief financial officer or other Authorized Officer of the Borrower
to the effect that no Default or Event of Default exists or, if any
Default or Event of Default does exist, specifying the nature and
extent thereof, which Compliance Certificate shall include (x) the
calculations (with supporting details) required to establish whether
the Borrower and its Subsidiaries were in compliance with the
provisions of Sections 7.10, 7.11, 7.12, 7.13 and 7.14 as at the end
of such fiscal year or quarter, as the case may be, and (y) a summary
of all outstanding litigation at the end of such fiscal year or
quarter and of all litigation settled during the fiscal quarter then
ended, in each case involving the Borrower or any of its
Subsidiaries, but only to the extent that any such litigation, either
individually or in the aggregate, could (if adversely determined)
reasonably be expected to have a Material Adverse Effect.
(e) Notice of Default or Litigation. Promptly, and in any
event within five Business Days after any Responsible Officer of the
Borrower or any of its Subsidiaries obtains knowledge thereof, (x)
notice of the occurrence of any event which constitutes a Default or
Event of Default, which notice shall specify the nature thereof, the
period of existence thereof and what action the Borrower proposes to
take with respect thereto and (y) promptly after any Responsible
Officer of the Borrower or any of its Subsidiaries obtains knowledge
thereof, notice of any outstanding litigation or governmental or
regulatory proceeding pending against the Borrower or any of its
Subsidiaries which, either individually or in the aggregate, could
(if adversely determined) reasonably be expected to have a Material
Adverse Effect.
(f) Auditors' Reports. Promptly upon receipt thereof, a
copy of (x) each other report or "management letter" submitted to the
Borrower or any of its Subsidiaries by their independent accountants
in connection with any annual, interim or special audit made by them
of the books of the Borrower or any of its Subsidiaries and (y) each
report submitted to the Borrower or any of its Subsidiaries by any
independent actuary with respect to reserve adequacy.
(g) Reserve Adequacy Report. Promptly (x) following a
request for such a report from the Administrative Agent or the
Required Banks (which request may only be made when an Event of
Default has occurred and is continuing) and (y) following the receipt
of such a report by the Borrower (if the Borrower otherwise elects to
obtain such a report), a report prepared by an independent actuarial
consulting firm of recognized professional standing reasonably
satisfactory to the Administrative Agent, the Required Banks or the
Borrower, as the case may be, reviewing the adequacy of reserves of
35
each Regulated Insurance Company determined in accordance with SAP,
which firm shall be provided access to or copies of all reserve
analyses and valuations relating to the insurance business of each
Regulated Insurance Company in the possession of or available to the
Borrower or its Subsidiaries.
(h) Other Regulatory Statements and Reports. Promptly (A)
after receipt thereof, copies of all triennial examinations and risk
adjusted capital reports of any Regulated Insurance Company,
delivered to such Person by any Applicable Insurance Regulatory
Authority, insurance commission or similar regulatory authority, (B)
after receipt thereof, written notice of any assertion by any
Applicable Insurance Regulatory Authority or any governmental agency
or agencies substituted therefor, as to a violation of any Legal
Requirement by any Regulated Insurance Company which is likely to
have a Material Adverse Effect, (C) after receipt thereof, a copy of
the final report to each Regulated Insurance Company from the NAIC
for each fiscal year, as to such Regulated Insurance Company's
compliance or noncompliance with each of the NAIC Tests, (D) after
receipt thereof, a copy of any notice of termination, cancellation or
recapture of any Reinsurance Agreement or Retrocession Agreement to
which a Regulated Insurance Company is a party to the extent such
termination or cancellation is likely to have a Material Adverse
Effect, (E) and in any event within ten Business Days after receipt
thereof, copies of any notice of actual suspension, termination or
revocation of any license of any Regulated Insurance Company by any
Applicable Insurance Regulatory Authority, including any request by
an Applicable Insurance Regulatory Authority which commits a
Regulated Insurance Company to take or refrain from taking any action
or which otherwise affects the authority of such Regulated Insurance
Company to conduct its business, and (F) and in any event within ten
Business Days after any Responsible Officer of the Borrower or any of
its Subsidiaries obtains knowledge thereof, notice of any actual
changes in the insurance laws enacted in any jurisdiction in which
any Regulated Insurance Company is domiciled which could reasonably
be expected to have a Material Adverse Effect.
(i) Other Information. Promptly upon filing thereof with
the SEC or transmission thereof, as the case may be, copies of any
final registrations and documents, and other reports specified in
Section 13 and 15(d) of the Exchange Act filed by the Borrower or any
of its Subsidiaries (other than any registration statement on Form
S-8) and copies of all financial statements and proxy statements, and
material notices and reports, as the Borrower or any of its
Subsidiaries shall send to analysts generally or the holders of their
capital stock in their capacity as such holders (in each case to the
extent not theretofore delivered to the Banks pursuant to this
Agreement) and, with reasonable promptness, such other information or
existing documents (financial or otherwise) as the Administrative
Agent or any Bank may reasonably request from time to time.
6.02 Books, Records and Inspections. The Borrower will, and will
cause each of its Subsidiaries to, permit officers and designated
representatives of the Administrative Agent or any Bank to visit and inspect any
of the properties or assets of the Borrower and any of its Subsidiaries in
whomsoever's possession (but only to the extent the Borrower or such Subsidiary
has the right to do so to the extent in the possession of another Person), and
to examine the books of account of the Borrower and any of its Subsidiaries and
discuss the affairs, finances and accounts of the Borrower and of any of its
Subsidiaries with, and be advised as to the same by, its and their officers and
independent accountants and independent actuaries, if any, all at such
reasonable times and intervals, upon reasonable prior notice and to such
reasonable extent as the Administrative Agent or any Bank may request. The
Borrower and any of its Subsidiaries shall have the right to be present during
all discussions between the relevant independent accountants and the
Administrative Agent and/or any of the Banks.
36
6.03 Insurance. The Borrower will, and will cause each of its
Subsidiaries to, at all times maintain in full force and effect insurance in
such amounts, covering such risks and liabilities and with such deductibles or
self-insured retentions as are in accordance with normal industry practice, with
the Collateral Agent named as a loss payee and an additional insured with
respect to insurance covering the Collateral.
6.04 Payment of Taxes. The Borrower will file, and will cause each of
its Subsidiaries to file, tax returns in accordance with the tax allocation
agreements among the Borrower and its Subsidiaries and with the requirements of
applicable law. The Borrower will pay and discharge, and will cause each of its
Subsidiaries to pay and discharge, all material taxes, assessments and
governmental charges or levies imposed upon it or upon its income or profits, or
upon any properties belonging to it, prior to the date on which penalties attach
thereto, and all lawful claims (other than claims relating to the adjustment or
settling, in the ordinary course of business, of claims in respect of insurance
policies or reinsurance contracts) which, if unpaid, might become a Lien or
charge upon any properties of the Borrower or any of its Subsidiaries; provided
that neither the Borrower nor any Subsidiary shall be required to pay any such
tax, assessment, charge, levy or claim which is being contested in good faith
and by proper proceedings if it has maintained adequate reserves (in the good
faith judgment of the management of the Borrower) with respect thereto in
accordance with GAAP or SAP, as may be applicable.
6.05 Corporate Franchises. The Borrower will do, and will cause each
Subsidiary to do, or cause to be done, all things reasonably necessary to
preserve and keep in full force and effect its corporate existence, rights and
authority; provided that any transaction permitted by Section 7.02 will not
constitute a breach of this Section 6.05.
6.06 Compliance with Statutes, etc. The Borrower will, and will cause
each Subsidiary to, comply with all applicable statutes, regulations and orders
of, and all applicable restrictions imposed by, all Government Authorities, 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) other than those the non-compliance with
which could not, in the aggregate, reasonably be expected to have a Material
Adverse Effect.
6.07 ERISA. As soon as possible and, in any event, within 10 Business
Days after any Responsible Officer of the Borrower, any Subsidiary of the
Borrower or any ERISA Affiliate knows of the occurrence of any of the following,
the Borrower will deliver to the Administrative Agent a certificate of the chief
financial officer of the Borrower setting forth the full details as to such
occurrence and the action, if any, that the Borrower, such Subsidiary or such
ERISA Affiliate is required or proposes to take, together with any notices
required or proposed to be given to or filed with or by the Borrower, the
Subsidiary, the ERISA Affiliate, the PBGC, a Plan participant or the Plan
administrator with respect thereto: 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 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 any contribution required to be made with respect to a Plan has not been
timely made except to the extent that any such untimely contribution would not
result in a material liability to the Borrower, any Subsidiary of the Borrower
or any ERISA Affiliate; that a Plan has been or may be terminated, reorganized,
partitioned or declared insolvent under Title IV of ERISA; that a Plan has an
Unfunded Current Liability; that proceedings may be or have been instituted to
terminate or appoint a trustee to administer a Plan which is subject to Title IV
of ERISA; that a proceeding has been instituted pursuant to Section 515 of ERISA
to collect a delinquent contribution to a Plan; that the Borrower, any
Subsidiary of the Borrower or any ERISA Affiliate will or may incur any material
amount of liability (including any indirect, contingent, or secondary liability)
37
to or on account of the termination of or withdrawal from a Plan under Section
4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or with respect to a Plan
under Section 401(a)(29), 4971, 4975 or 4980 of the Code or Section 409 or
502(i) or 502(l) of ERISA or with respect to a group health plan (as defined in
Section 607(1) of ERISA or Section 4980B(g)(2) of the Code) under Section 4980B
of the Code; or that the Borrower or any Subsidiary of the Borrower may incur
any material liability pursuant to any employee welfare benefit plan (as defined
in Section 3(1) of ERISA) that provides death, health or severance benefits to
retired employees or other former employees (other than as required by Section
601 of ERISA or applicable state law or as disclosed on Schedule 5.14) of any
Plan. At the request of any Bank, the Borrower will promptly deliver to such
Bank a complete copy of the annual report (on Internal Revenue Service Form
5500-series) of each Plan (including, to the extent required, the related
financial and actuarial statements and opinions and other supporting statements,
certifications, schedules and information) required to be filed with the
Internal Revenue Service. In addition to any certificates or notices delivered
to the Banks pursuant to the first sentence hereof, if requested by the Banks,
copies of annual reports and any material notices received by the Borrower, any
Subsidiary of the Borrower or any ERISA Affiliate with respect to any Plan shall
be delivered to the Banks no later than 10 Business Days after the date such
notice has been received by the Borrower, the Subsidiary or the ERISA Affiliate,
as applicable.
6.08 Performance of Obligations. The Borrower will, and will cause
each of its Subsidiaries to, perform in all material respects all of its
obligations under the terms of each material mortgage, indenture, security
agreement, other debt instrument and contract by which it is bound or to which
it is a party unless the failure to do so could not reasonably be expected to
have a Material Adverse Effect; provided, that the failure to pay any
Indebtedness shall not constitute a breach of this Section 6.08 unless it shall
give rise to an Event of Default under Section 8.04.
6.09 Good Repair. The Borrower will, and will cause each of its
Subsidiaries to, ensure that its material properties and equipment necessary to
carry on its business are kept in good repair, working order and condition,
normal wear and tear excepted.
6.10 End of Fiscal Years; Fiscal Quarters. The Borrower will, for
financial reporting purposes, cause (i) each of its, and each of its
Subsidiaries', fiscal years to end on December 31 of each year and (ii) each of
its, and each of its Subsidiaries', fiscal quarters to end on March 31, June 30,
September 30 and December 31 of each year.
6.11 Maintenance of Licenses and Permits. The Borrower will, and will
cause each of its Subsidiaries to, maintain all permits, licenses and consents
as may be required for the conduct of its business by any state, federal or
local government agency or instrumentality except where failure to maintain the
same could not, either individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect.
6.12 Register. The Borrower hereby designates the Administrative
Agent to serve as its agent, solely for purposes of this Section 6.12, to
maintain a register (the "Register") on which it will record the names and
addresses of each of the Banks and the L/C Issuer, the Commitments from time to
time of each of the Banks, the Loans (and Outstanding Amounts thereof) made by
each of the Banks, the Letters of Credit issued by the L/C Issuer, the
participations in L/C Obligations held by each of the Banks and each payment of
principal and interest on the Loans and the participations in the L/C
Obligations owing to each Bank. Failure to make any such recordation or any
error in such recordation shall not affect the obligations of the Borrower in
respect of such Loans or L/C Obligations. With respect to any Bank, the transfer
of the Commitments of such Bank, the rights to the principal of, and interest
on, any Loan made pursuant to such Commitments and the transfer of
participations in L/C Obligations held by such Bank, shall not be effective
until such transfer is recorded on the Register maintained by the Administrative
38
Agent with respect to ownership of such Commitments, Loans and participations in
L/C Obligations and prior to such recordation all amounts owing to the
transferor with respect to such Commitments, Loans and participations in L/C
Obligations shall remain owing to the transferor. The registration of assignment
or transfer of all or part of any Commitments, Loans and participations in L/C
Obligations shall be recorded by the Administrative Agent on the Register only
upon the acceptance by the Administrative Agent of a properly executed and
delivered Assignment and Assumption Agreement pursuant to Section 11.04(b),
together with all other items required to be delivered in accordance with
Section 11.04(b). Coincident with the delivery of such an Assignment and
Assumption Agreement to the Administrative Agent for acceptance and registration
of assignment or transfer of all or part of a Loan, or as soon thereafter as
practicable, the assigning or transferor Bank shall surrender the Note (if any)
evidencing such Loan, and thereupon one or more new Notes in the same aggregate
principal amount shall be issued to the assigning or transferor Bank and/or the
new Bank, upon each such Bank's request. Except as otherwise provided in Section
3.05(b), the Borrower agrees to indemnify the Administrative Agent from and
against any and all losses, claims, damages and liabilities of whatsoever nature
which may be imposed on, asserted against or incurred by the Administrative
Agent in performing its duties under this Section 6.12 (but excluding any such
losses, liabilities, claims, damages or expenses to the extent incurred by
reason of the gross negligence or willful misconduct of the Administrative
Agent).
SECTION 7. Negative Covenants. The Borrower hereby covenants and agrees that on
the Effective Date and thereafter, for so long as this Agreement is in effect
and until the Loans together with interest, Fees and all other Obligations
incurred hereunder are paid in full and all Letters of Credit are terminated or
expired:
7.01 Changes in Business.
(a) Except as otherwise permitted under this Agreement,
the Borrower will not permit any of its Subsidiaries to engage in any
business other than the businesses engaged in by the Borrower and its
Subsidiaries as of the Initial Borrowing Date (after giving effect to
the Transaction) and activities related, ancillary or complimentary
thereto.
(b) The Borrower will engage in no business other than (i)
the ownership of the capital stock and other equity interests in its
Subsidiaries, (ii) the incurrence of Indebtedness permitted to be
incurred by it under Section 7.04, (iii) Permitted Acquisitions, (iv)
paying taxes, (v) preparing reports to Governmental Authorities and
to its shareholders, (vi) holding directors and shareholders
meetings, preparing corporate records and engaging in other corporate
activities required to maintain its separate corporate structure,
(vii) transactions otherwise permitted under the Transaction
Documents and (viii) the entering into and performing of its
obligations under the Transaction Documents.
7.02 Consolidation, Merger, Sale or Purchase of Assets. 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 sell or otherwise dispose of any of its property or assets (including the
sale of capital stock of any of its Subsidiaries, but excluding any sale or
disposition of property or assets in the ordinary course of business), or
purchase, lease or otherwise acquire (in one transaction or a series of related
transactions) all or any part of the property or assets of any Person (excluding
any purchases, leases or other acquisitions of property or assets in, and for
use in, the ordinary course of business) or agree to do any of the foregoing at
any future time, except that the following shall be permitted:
(a) The Acquisition;
39
(b) Capital Expenditures by the Borrower and its
Subsidiaries to the extent permitted by Section 7.05;
(c) The investments, acquisitions and transfers or
dispositions of property permitted pursuant to Section 7.06;
(d) The merger or consolidation or liquidation of (i) any
Wholly-Owned Subsidiary of the Borrower with or into another
Wholly-Owned Subsidiary of the Borrower or (ii) any Non-Regulated
Company that is a Wholly-Owned Subsidiary of the Borrower with or
into the Borrower, so long as the Borrower is the surviving entity
following such merger, consolidation or liquidation;
(e) Any Regulated Insurance Company may enter into any
Insurance Contract, Reinsurance Agreement or Retrocession Agreement
in the ordinary course of business in accordance with its normal
underwriting, indemnity and retention policies, provided that no
Regulated Insurance Company shall enter into any Financial
Reinsurance Agreement;
(f) The Borrower or any of its Subsidiaries may enter into
leases of property or assets in the ordinary course of business not
otherwise in violation of this Agreement;
(g) The sale or disposition of equipment that has become
obsolete or worn out or is replaced in the ordinary course of
business and the replacement thereof;
(h) Each of the Borrower and its Subsidiaries may sell
assets, provided that (w) each such sale shall be for an amount at
least equal to the fair market value thereof (as determined in good
faith by senior management of the Borrower), (x) no less than 80% of
the aggregate sale proceeds of each such sale are in the form of cash
and (y) the aggregate sale proceeds from all assets subject to such
sales pursuant to this clause (h), in any fiscal year shall not
exceed 10% of the Consolidated Net Worth of the Borrower as of the
last day of the immediately preceding fiscal year (it being
understood and agreed that, for purposes of this clause (y), the
aggregate sale proceeds from a sale by a Regulated Insurance Company
of assets and related liabilities by way of a Reinsurance Agreement
or a Retrocession Agreement shall be deemed to be the Surplus
Increase (if positive) to such Regulated Insurance Company as a
result of such sale), provided, further, that (i) on a pro forma
basis (the pro forma adjustments made by the Borrower pursuant to
this clause (i) shall be subject to the reasonable satisfaction of
the Administrative Agent) determined as if such asset sale had been
consummated on the date occurring twelve months prior to the last day
of the most recently ended fiscal quarter of the Borrower with
respect to any asset sale, the Borrower and its Subsidiaries would
have been in compliance with Sections 7.10 through 7.14 of this
Agreement as of, or for the relevant period ended on, the last day of
such fiscal quarter and (ii) on a pro forma basis (the pro forma
adjustments made by the Borrower pursuant to this clause (ii) shall
be subject to the reasonable satisfaction of the Administrative
Agent) determined as if such asset sale had been consummated, the
covenants contained in Sections 7.10 through 7.14 will continue to be
met for the twelve-month period following the last day of the fiscal
quarter ended after the date of the consummation of such asset sale;
(i) So long as no Default or Event of Default then exists
or would result therefrom, the Borrower and its Subsidiaries may
acquire (including by means of a merger) assets or the capital stock
of any Person (any such acquisitions permitted by this clause (i), a
"Permitted Acquisition"), provided, that (i) such Person (or the
assets so acquired) was, immediately prior to such acquisition,
engaged (or used) primarily in the businesses permitted pursuant to
Section 7.01(a), (ii) each such acquisition shall be for an amount
not greater than the fair market value thereof (as determined in good
40
faith by the Board of Directors of the Borrower), (iii) the only
consideration paid by the Borrower and its Subsidiaries in connection
with any Permitted Acquisition shall be cash, common stock of the
Borrower issued in accordance with Section 7.15(a)(i) and preferred
stock of the Borrower issued in accordance with Section 7.15(a)(ii),
(iv) the aggregate amount of cash expended by the Borrower and its
Subsidiaries for Permitted Acquisitions (other than the Acquisition)
in any fiscal year shall not exceed 10% of the Consolidated Net Worth
of the Borrower and its Subsidiaries as of the last day of the
immediately preceding fiscal year, (v) the aggregate value of
Borrower common stock and preferred stock issued by the Borrower as
consideration for Permitted Acquisitions (valued in good faith by the
Borrower) in any fiscal year shall not exceed 35% of the Consolidated
Net Worth of the Borrower and its Subsidiaries as of the last day of
the immediately preceding fiscal year, (vi) on a pro forma basis (the
pro forma adjustments made by the Borrower pursuant to this clause
(vi) shall be subject to the reasonable satisfaction of the
Administrative Agent) determined as if such acquisition had been
consummated on the date occurring twelve months prior to the last day
of the most recently ended fiscal quarter of the Borrower, the
Borrower and its Subsidiaries would have been in compliance with
Sections 7.10 through 7.14 of this Agreement as of, or for the
relevant period ended on, the last day of such fiscal quarter, (vii)
on a pro forma basis (the pro forma adjustments made by the Borrower
pursuant to this clause (vii) shall be subject to the reasonable
satisfaction of the Administrative Agent) determined as if such
acquisition had been consummated, the covenants contained in Sections
7.10 through 7.14 will continue to be met for the twelve-month period
following the last day of the fiscal quarter ended after the date of
the consummation of such acquisition and (viii) no such acquisition
shall be consummated on a "hostile" basis (i.e., without the consent
of the Board of Directors of the Person to be acquired);
(j) Sales and purchases of assets between one Regulated
Insurance Company and another Regulated Insurance Company; and
(k) Sales and purchases of assets between one Credit Party
and another Credit Party.
To the extent the Required Banks (or all the Banks to the extent required by
Section 11.13) waive the provisions of this Section 7.02 with respect to the
disposition of any Collateral, or any Collateral is disposed of as permitted by
this Section 7.02, (i) such Collateral in each case shall be sold free and clear
of the Liens in favor of the Collateral Agent created by the Collateral
Documents, (ii) if such Collateral includes any of the assets and/or capital
stock of a Subsidiary, such assets and/or capital stock shall be released from
the Pledge Agreement and/or Security Agreement, as applicable, and such
Subsidiary shall be released from the Subsidiary Guaranty and (iii) the
Administrative Agent and the Collateral Agent shall be authorized to take such
actions as the Administrative Agent or the Collateral Agent reasonably deems
appropriate in connection therewith.
7.03 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 property or assets of any kind (real or personal, tangible or
intangible) of the Borrower or any such Subsidiary whether now owned or
hereafter acquired, or sell any such property or assets subject to an
understanding or agreement, contingent or otherwise, to repurchase such property
or assets (including sales of accounts receivable or notes with recourse to the
Borrower or any of its Subsidiaries) or assign any right to receive income, or
file or permit the filing of any financing statement under the UCC or any other
similar notice of Lien under any similar recording or notice statute relating to
any such property, except:
(a) Liens for taxes and other assessments not yet due or
being contested in good faith and by appropriate proceedings for
which adequate reserves (in the good faith judgment of the management
41
of the Borrower) have been established in accordance with GAAP or
SAP, as may be applicable;
(b) Liens in respect of property or assets of any of the
Borrower's Subsidiaries imposed by law which were incurred in the
ordinary course of business, such as carriers', warehousemen's and
mechanics' Liens and other similar Liens arising in the ordinary
course of business, and (x) which do not in the aggregate materially
detract from the value of such property or assets or materially
impair the use thereof in the operation of the business of the
Borrower or any Subsidiary or (y) 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 asset subject
to such Lien;
(c) Liens created by this Agreement or the other Credit
Documents;
(d) Liens in existence on the Effective Date which are
listed, and the property subject thereto on the Effective Date
described, on Schedule 7.03, without giving effect to any extensions
or renewals thereof (provided that the securities subject to any such
Lien may be replaced by other securities of no greater principal
amount);
(e) Liens arising from judgments, decrees or attachments
in circumstances not constituting an Event of Default under Section
8.09;
(f) Liens (other than any Lien imposed by ERISA) incurred
or deposits made in the ordinary course of business in connection
with workers' compensation, unemployment insurance and other types of
social security, or to secure the performance of tenders, statutory
obligations, surety and appeal bonds, bids, leases, government
contracts, performance and return-of-money bonds, Reinsurance
Agreements, Retrocession Agreements and other similar obligations
incurred in the ordinary course of business (exclusive of obligations
in respect of the payment for borrowed money);
(g) Leases or subleases granted to others not interfering
in any material respect with the business of the Borrower or any of
its Subsidiaries and any interest or title of a lessor under any
lease not in violation of this Agreement;
(h) Easements, rights-of-way, restrictions, minor defects
or irregularities in title and other similar charges or encumbrances
not interfering in any material respect with the ordinary conduct of
the business of the Borrower or any of its Subsidiaries;
(i) Liens arising from UCC financing statements regarding
leases not in violation of this Agreement;
(j) Liens on pledges or deposits of cash or securities
made by any Regulated Insurance Company as a condition to obtaining
or maintaining any licenses issued to it by any Applicable Insurance
Regulatory Authority;
(k) Liens arising pursuant to purchase money mortgages,
Capital Leases or security interests securing Indebtedness
representing the purchase price (or financing of the purchase price
within 90 days after the respective purchase) of assets acquired
after the Initial Borrowing Date, provided that (i) any such Liens
attach only to the assets so purchased, (ii) the Indebtedness secured
by any such Lien does not exceed 100%, nor is less than 80%, of the
lesser of the fair market value or the purchase price of the property
being purchased at the time of the incurrence of such Indebtedness
42
and (iii) the Indebtedness secured thereby is permitted to be
incurred pursuant to Section 7.04(b);
(l) Liens on property or assets acquired pursuant to a
Permitted Acquisition, or on property or assets of a Subsidiary of
the Borrower in existence at the time such Subsidiary is acquired
pursuant to a Permitted Acquisition, provided that (i) any
Indebtedness that is secured by such Liens is permitted to exist
under Section 7.04(g) and (ii) such Liens are not incurred in
connection with or in contemplation or anticipation of such Permitted
Acquisition and do not attach to any other asset of the Borrower or
any of its Subsidiaries; and
(m) Liens consisting of customary set-off rights or
bankers' liens on amounts on deposit, whether arising by contract or
operation of law, to the extent incurred in the ordinary course of
business.
7.04 Indebtedness. The Borrower will not, and will not permit any of
its Subsidiaries to, contract, create, incur, assume or suffer to exist any
Indebtedness, except:
(a) Indebtedness incurred pursuant to this Agreement and
the other Credit Documents;
(b) Capitalized Lease Obligations and Indebtedness of the
Borrower and its Subsidiaries incurred pursuant to purchase money
Liens permitted under Section 7.03(k), provided, that (x) all such
Capitalized Lease Obligations are permitted under Section 7.05 and
(y) the sum of (i) the aggregate Capitalized Lease Obligations plus
(ii) the aggregate principal amount of such purchase money
Indebtedness shall not exceed at any time outstanding an amount equal
to $5,000,000;
(c) Indebtedness in existence on the Effective Date which
is listed on Schedule 5.20, without giving effect to any subsequent
extension, renewal or refinancing thereof;
(d) Obligations of any Regulated Insurance Company with
respect to (i) letters of credit (other than the Letters of Credit)
securing obligations under Reinsurance Agreements entered into in the
ordinary course of business of any such Regulated Insurance Company,
(ii) letters of credit (other than the Letters of Credit) issued in
lieu of deposits to satisfy Legal Requirements or (iii) letters of
credit (other than the Letters of Credit) or surety bonds issued in
lieu of depositing securities with any Applicable Insurance
Regulatory Authority to satisfy regulatory requirements; in any case
to the extent (x) such letters of credit are not drawn upon or, if
and to the extent drawn upon, such drawing is reimbursed no later
than 10 days following receipt by the Borrower or such Subsidiary of
notice of payment on such letter of credit, (y) in the case of
clauses (i) and (ii), the aggregate outstanding amount of such
obligations shall not exceed $10,000,000 at any time and (z) in the
case of clause (iii), the aggregate outstanding amount of such
obligations shall not exceed $2,500,000 at any time;
(e) Indebtedness under Interest Rate Agreements or Other
Hedging Agreements entered into in respect of the Obligations or
otherwise in the conduct of its business and not for speculative
purposes;
(f) Indebtedness of American Exchange owing to the
Borrower evidenced by the Surplus Note;
43
(g) Indebtedness of the Borrower or a Wholly-Owned
Subsidiary of the Borrower acquired pursuant to a Permitted
Acquisition (or Indebtedness assumed at the time of a Permitted
Acquisition of an asset securing such Indebtedness), and any
refinancing of such Indebtedness so long as the principal amount
thereof is not increased, provided that (i) such Indebtedness was not
incurred in connection with or in contemplation of such Permitted
Acquisition, (ii) such Indebtedness does not constitute Indebtedness
for borrowed money, it being understood and agreed that Capitalized
Lease Obligations and purchase money Indebtedness shall not
constitute Indebtedness for borrowed money for purposes of this
clause (i), and (iii) at the time of such Permitted Acquisition, such
Indebtedness does not exceed 10% of the total value of the assets of
the Subsidiary so acquired, or of the assets so acquired, as the case
may be;
(h) Indebtedness of the Borrower or any of its
Subsidiaries arising under letters of credit (other than the Letters
of Credit) issued for the account of any such person in the ordinary
course of business; provided that, the aggregate outstanding amount
of such letters of credit shall not exceed $2,500,000 at any time;
(i) Indebtedness arising under the Trust Preferred
Securities;
(j) Indebtedness constituting a loan from (i) any
Regulated Insurance Company to another Regulated Insurance Company,
(ii) any Regulated Insurance Company to the Borrower, (iii) any
Subsidiary Guarantor to another Subsidiary Guarantor, (iv) the
Borrower to any Subsidiary Guarantor or (v) the Borrower or any
Subsidiary Guarantor to any Regulated Insurance Company; and
(k) Other Indebtedness of the Borrower in an aggregate
outstanding principal amount not to exceed $7,500,000 at any time.
7.05 Capital Expenditures.
(a) The Borrower will not incur, and will not permit any
of its Subsidiaries to incur, Capital Expenditures, provided that the
Borrower and its Subsidiaries may incur Capital Expenditures so long
as the aggregate amount so incurred by the Borrower and its
Subsidiaries (on a consolidated basis) does not exceed (i) $5,000,000
during any fiscal year, or (ii) $15,000,000 after the Effective Date.
(b) Notwithstanding the foregoing, in the event that the
amount of Capital Expenditures permitted to be made by the Borrower
and its Subsidiaries pursuant to clause (a) above in any fiscal year
is greater than the amount of such Capital Expenditures actually made
by the Borrower and its Subsidiaries during such fiscal year
(excluding Capital Expenditures made under clause (c) below), such
excess (the "Rollover Amount") may be carried forward and utilized to
make Capital Expenditures in the immediately succeeding fiscal year.
(c) In addition to the Capital Expenditures permitted
above in this Section 7.05, the Borrower and its Subsidiaries may
make Capital Expenditures at any time with the net cash proceeds of
Asset Sales and with the net cash proceeds of any equity issuance by
the Borrower (in each case to the extent such proceeds are not
required to be applied to prepay the Term Loans pursuant to Section
3.02).
(d) In addition to the Capital Expenditures permitted
above in this Section 7.05, the Borrower and its Subsidiaries may
make Permitted Acquisitions.
44
7.06 Advances, Investments and Loans. The Borrower will not, and will
not permit any of its Subsidiaries to, lend money or credit or make advances to
any Person, or purchase or acquire any stock, obligations or securities of, or
any other interest in, or make any capital contribution to, any Person, except:
(a) The Acquisition shall be permitted;
(b) The Borrower and its Subsidiaries which are not
Regulated Insurance Companies may invest in cash, Cash Equivalents
and Investment Grade Securities other than investments which are Risk
Derivatives (determined at the time of acquisition); provided that
any investment in Investment Grade Securities (other than U.S.
Government Obligations) issued by any single Issuer shall not exceed
on the date such investment is made an amount which, when added to
all other investments by all Regulated Insurance Companies and the
Borrower in such Issuer and outstanding on such date, is equal to 5%
of Invested Assets at such time;
(c) The Borrower and its Subsidiaries may acquire and hold
receivables owing to them in the ordinary course of business and
payable or dischargeable in accordance with customary trade terms;
(d) Loans and advances to employees for business-related
travel expenses, moving expenses and other similar expenses, in an
aggregate outstanding amount that does not exceed $2,500,000 at any
time, in each case incurred in the ordinary course of business;
(e) The transactions described in Section 7.02 shall be
permitted;
(f) Regulated Insurance Companies may invest in (i) cash,
(ii) Cash Equivalents, (iii) Investment Grade Securities and (iv)
Non-Investment Grade Securities; provided that (A) no investment will
be made in (i) any debt securities which are Non-Investment Grade
Securities or (ii) any equity securities, at a time when, or if after
giving effect thereto, the aggregate principal amount of all
Non-Investment Grade Securities held by all Regulated Insurance
Companies plus the aggregate outstanding investment made by all
Regulated Insurance Companies in equity securities (other than
securities of Persons which are Affiliates of the Borrower on the
Effective Date) equals or exceeds or would equal or exceed 10% of
Invested Assets; (B) no investment will be made in any real estate or
loan secured by real estate (other than (I) credit tenant loans (as
defined by the NAIC on the Effective Date), (II) those existing on
the Effective Date (without giving effect to any increase thereto)
and (III) loans secured by owner-occupied real estate, if made at a
time when, and if after giving effect thereto, the aggregate of all
such investments in mortgage loans does not exceed, and would not
exceed, 5% of Invested Assets; and (C) no investment (other than U.S.
Government Obligations) in any single Issuer shall exceed on the date
such investment is made an amount which, when added to all other
investments by the Borrower and its Subsidiaries in the same Issuer
and outstanding on such date, is equal to 5% of Invested Assets at
such time;
(g) Any Regulated Insurance Company may make investments
in companies which are Wholly-Owned Subsidiaries of such Person (or
any other Subsidiary of such Person created or acquired in accordance
with Section 7.16) but only to the extent that any such investment,
at the time made, does not reduce Statutory Surplus of such Regulated
Insurance Company;
(h) Investments pursuant to commitments in effect as of
the Effective Date and described (as to matter and amount) on
Schedule 7.06;
45
(i) Investments acquired by the Borrower or any of its
Subsidiaries (x) in exchange for any other investment held by the
Borrower or any such Subsidiary in connection with or as a result of
a bankruptcy, workout, reorganization or recapitalization of the
issuer of such other investment, (y) as a result of a foreclosure by
the Borrower or any of its Subsidiaries with respect to any secured
investment or other transfer of title with respect to any secured
investment in default or (z) in settlement of delinquent obligations
of, and other disputes with, customers and suppliers arising in the
ordinary course of business;
(j) Investments existing on the Effective Date which are
identified on Schedule 7.06;
(k) The Borrower may acquire and hold obligations of one
or more agents, officers or employees of the Borrower or its
Subsidiaries in connection with such agents', officers' or employees'
acquisition of shares of capital stock of the Borrower or options to
purchase shares of capital stock of the Borrower (other than
obligations that would be in violation of Section 402 of the United
States ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002) so long as no cash is paid by the
Borrower or any of its Subsidiaries in connection with the
acquisition of any such obligations and such obligations do not
exceed $2,500,000 in aggregate principal amount outstanding at any
time;
(l) Investments consisting of intercompany loans to the
extent permitted under Section 7.04(j);
(m) Investments by the Borrower in Subsidiary Guarantors,
and investments by Subsidiary Guarantors in other Subsidiary
Guarantors;
(n) Investments by the Borrower and Subsidiary Guarantors
in Regulated Insurance Companies;
(o) Investments consisting of prepaid expenses;
(p) Investments consisting of advances made by the
Borrower and its Subsidiaries to agents, which advances are either
(i) repayable and repaid within one year from the date of the making
of such advance or (ii) repayable within a time period longer than
one year from the date of the making of such advance, provided that
the aggregate outstanding amount of advances under this clause (ii)
shall not exceed $1,000,000 at any time;
(q) Investments consisting of non-cash consideration
received in connection with a sale of assets pursuant to Section
7.02(h); and
(r) Investments not otherwise permitted hereby; provided,
however, that the aggregate outstanding amount of all such
Investments shall not exceed $5,000,000 at any time.
7.07 Modifications of Agreements, etc. The Borrower will not, and
will not permit any of its Subsidiaries to:
(a) Amend or modify (or permit the amendment or
modification of) any of the terms or provision of the Acquisition
Documents in any manner materially adverse to the interests of the
Borrower and its Subsidiaries or the Banks;
(b) Amend, modify or change in any manner materially
adverse to the interests of the Banks the Articles or Certificate of
Incorporation (including, without limitation, by the filing of any
certificate of designation) or By-Laws of the Borrower or any of its
Subsidiaries, or any other agreement entered into by the Borrower or
46
any of its Subsidiaries with respect to its capital stock, or enter
into any new agreement with respect to the capital stock of the
Borrower (to the extent adverse to the interests of the Banks) or any
of its Subsidiaries; and/or
(c) Amend, modify or terminate (or permit the amendment,
modification or termination of) in any manner materially adverse to
the interests of the Borrower and its Subsidiaries or the Banks, the
Tax Sharing Agreements.
7.08 Dividends, Restricted Payments, etc.
(a) The Borrower will not, and will not permit any of its
Subsidiaries to, declare or pay any dividends (other than dividends
payable solely in common stock of such Person) or return any capital
to, its stockholders or authorize or make any other distribution,
payment or delivery of property or cash to its stockholders as such,
or prepay, redeem, retire, purchase, defease or otherwise acquire,
directly or indirectly, for a consideration, any shares of any class
of its capital stock (the Trust Preferred Securities being deemed to
be capital stock for the purpose of this Section 7.08) now or
hereafter outstanding (or any warrants for or options or stock
appreciation rights in respect of any of such shares), or set aside
any funds for any of the foregoing purposes, or purchase or otherwise
acquire or permit any of its Subsidiaries to purchase or otherwise
acquire for consideration any shares of any class of the capital
stock (the Trust Preferred Securities being deemed to be capital
stock for the purpose of this Section 7.08) of the Borrower or any of
its Subsidiaries, as the case may be, now or hereafter outstanding
(or any options or warrants or stock appreciation rights issued by
such Person with respect to its capital stock), except that:
(i) Any Subsidiary of the Borrower may pay cash
dividends to its parent if such parent is the Borrower or
a Wholly-Owned Subsidiary of the Borrower;
(ii) So long as no Event of Default has
occurred and is continuing or results therefrom, the
Borrower may redeem or purchase its capital stock
(including capital stock held by officers and employees of
the Borrower or any of its Subsidiaries but excluding the
Trust Preferred Securities and excluding capital stock
redeemed or purchased pursuant to clause (iii) below) (A)
solely with the cash proceeds of capital stock issued by
the Borrower or any of its Subsidiaries after the Initial
Borrowing Date, to the extent such proceeds are not
required to be applied to prepay the Term Loans pursuant
to Section 3.03(e) and (B) other than with the cash
proceeds of capital stock issued by the Borrower or any of
its Subsidiaries after the Initial Borrowing Date, in an
aggregate amount not to exceed $1,000,000 in any fiscal
year or $5,000,000 after the Effective Date;
(iii) So long as no Event of Default has
occurred and is continuing or results therefrom, the
Borrower may redeem or purchase its capital stock in an
aggregate amount not to exceed $1,000,000 in any fiscal
year for the purpose of awarding stock compensation to its
officers and employees;
(iv) So long as no Event of Default (under
Section 8.01 or under Section 8.03 as a result of the
default by any Credit Party in the due performance or
observance by it of Section 7.10, 7.11, 7.12, 7.13 or
7.14) has occurred and is continuing at the time of the
payment thereof, regularly accruing interest and dividends
on the Trust Preferred Securities may be paid in cash; and
47
(v) The Borrower may pay regularly accruing
dividends on preferred stock issued in accordance with
Section 7.15(a) through the issuance of additional shares
of such preferred stock, or by accrual or accretion, but
not in cash.
(b) The Borrower will not, and will not permit any of its
Subsidiaries to, create or otherwise cause or suffer to exist any
encumbrance or restriction which prohibits or otherwise restricts (i)
the ability of any Subsidiary to (A) pay dividends or make other
distributions or pay any Indebtedness owed to the Borrower or any of
its Subsidiaries, as applicable, (B) make loans or advances to the
Borrower or any Subsidiary, as applicable, (C) transfer any of its
properties or assets to the Borrower or any Subsidiary, as
applicable, or (D) guarantee the Obligations or (ii) the ability of
the Borrower or any Subsidiary of the Borrower to create, incur,
assume or suffer to exist any Lien upon its property or assets to
secure the Obligations, other than prohibitions or restrictions
existing under or by reason of (I) this Agreement and the other
Credit Documents and (II) Legal Requirements.
7.09 Transactions with Affiliates. The Borrower will not, and will
not permit any Subsidiary to, enter into any transaction or series of
transactions with any Affiliate (excluding the Borrower or any Wholly-Owned
Subsidiary of the Borrower) other than on terms and conditions substantially as
favorable to the Borrower or such Subsidiary as would be obtainable by the
Borrower or such Subsidiary at the time in a comparable arm's-length transaction
with a Person other than an Affiliate.
7.10 Leverage Ratio. The Borrower will not permit the ratio of (i)
Consolidated Indebtedness of the Borrower to (ii) Consolidated Total Capital of
the Borrower as of the end of any fiscal quarter set forth below to be greater
than the ratio set forth opposite such fiscal quarter:
----------------------------------- ----------------------
FISCAL QUARTER RATIO
----------------------------------- ----------------------
March 31, 2003 through March 31, 0.30:1.00
2004
----------------------------------- ----------------------
June 30, 2004 through September 30, 0.25:1.00
2005
----------------------------------- ----------------------
December 31, 2005 and thereafter 0.20:1.00
----------------------------------- ----------------------
7.11 Fixed Charge Coverage Ratio. The Borrower will not permit the
Fixed Charge Coverage Ratio as of the end of any fiscal quarter ending on or
after June 30, 2003 and for the four fiscal quarters then ended to be less than
1.50:1.00.
7.12 Minimum Risk Based Capital. The Borrower will not permit the
Risk Based Capital Ratio for any Regulated Insurance Company (other than
PennCorp) as of the end of any fiscal year to be less than 150%. The Borrower
will not permit the ratio (expressed as a percentage) of the "total capital
available" to the "total capital required" for PennCorp, each as reported on
Form OSFI 87 (2000 Revision) (or its successor) to the Canadian Office of the
Superintendent of Financial Institutions, as of the end of any fiscal year to be
less than 200%.
7.13 Minimum Consolidated Net Worth. The Borrower will not permit its
Consolidated Net Worth at any time to be less than the sum of (i) $220,000,000
plus (ii) an amount equal to 50% of the Borrower's Consolidated Net Income for
each fiscal quarter ending after the Initial Borrowing Date (without deduction
for any fiscal quarter in which the Borrower's Consolidated Net Income is
negative).
7.14 Minimum Combined Adjusted Statutory Capital and Surplus. From
and after March 31, 2003, the Borrower will not permit the Adjusted Statutory
Capital and Surplus of the Regulated Insurance Companies which are Domestic
48
Subsidiaries of the Borrower (determined on a Combined basis) at any time to be
less than an amount equal to 85% of the Adjusted Statutory Capital and Surplus
of such Regulated Insurance Companies as of March 31, 2003.
7.15 Issuance of Stock.
(a) The Borrower will not directly or indirectly issue,
sell, assign, pledge, or otherwise encumber or dispose of any shares
of its capital stock or other equity securities (or warrants, rights
or options to acquire shares or other equity securities), except (i)
the issuance of common stock (and warrants, options and other rights
to acquire common stock), so long as no Change of Control has
occurred or results therefrom, and (ii) the issuance of preferred
stock, so long as (x) no part of such preferred stock is mandatorily
redeemable (whether on a scheduled basis or as a result of the
occurrence of any event or circumstance) and (y) any dividends
associated with such preferred stock are solely payable in kind.
(b) The Borrower will not permit any of its Subsidiaries
directly or indirectly to issue, sell, assign, pledge, or otherwise
encumber or dispose of any shares of its capital stock or other
equity securities (or warrants, rights or options to acquire shares
or other equity securities) of such Subsidiary, except (i) to the
Borrower or to a Wholly-Owned Subsidiary of the Borrower, (ii) to
qualify directors if required by applicable law or (iii) capital
stock issued as part of the issuance of the Trust Preferred
Securities.
7.16 Creation of Subsidiaries. The Borrower shall not create or
acquire any Subsidiary other than (i) Regulated Insurance Companies which are
direct or indirect Subsidiaries of the Borrower, so long as all of the capital
stock of any direct Subsidiary (if a Domestic Subsidiary) and 65% of the capital
stock of any direct Subsidiary (if a Foreign Subsidiary) is pledged pursuant to
the Pledge Agreement; (ii) Non-Regulated Companies which are direct or indirect
Subsidiaries of the Borrower and are not Subsidiaries of any Regulated Insurance
Company, so long as (x) all of the capital stock of any such Subsidiary (if a
Domestic Subsidiary) and 65% of the capital stock of any direct Subsidiary (if a
Foreign Subsidiary) is pledged pursuant to the Pledge Agreement, (y) all of the
assets of any such Subsidiary (if a Domestic Subsidiary) are pledged pursuant to
the Security Agreement and (z) any such Subsidiary (if a Domestic Subsidiary)
executes the Subsidiary Guaranty and (iii) Non-Regulated Companies (other than
any Non-Regulated Company described in clause (ii) preceding) which are created
or acquired solely for the purpose of issuing the Trust Preferred Securities,
engage in no other business and have no assets other than assets acquired in
connection with the issuance of the Trust Preferred Securities. In addition, at
the request of the Administrative Agent, each new Subsidiary that is required to
execute any Credit Document shall execute and deliver, or cause to be executed
and delivered, all other relevant documentation of the type described in Section
4 as such new Subsidiary would have had to deliver if such new Subsidiary were a
Credit Party on the Initial Borrowing Date. For purposes of this Section 7.16,
the Borrower shall be deemed to have created or acquired an Initially Excluded
Subsidiary if and at the time that such Initially Excluded Subsidiary has or
acquires assets having a book value of $250,000 or more.
7.17 Partnership Agreements. The Borrower will not enter into any
partnership agreement as a general partner.
SECTION 8. Events of Default. Upon the occurrence of any of the following
specified events (each an "Event of Default"):
8.01 Payments. The Borrower shall (i) default in the payment when due
of any principal of any Loan or any L/C Obligation, (ii) default, and such
default shall continue for five or more days, in the payment when due of any
49
interest on any Loan or on any L/C Obligation, or any Fees or (iii) default in
the prompt payment following notice or demand in respect of any other amounts
owing hereunder or under any other Credit Document; or
8.02 Representations, etc. Any representation, warranty or statement
made or deemed made by the Borrower or any other Credit Party herein or in any
other Credit Document or in any statement or certificate delivered or required
to be 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
8.03 Covenants. Any Credit Party shall (a) default in the due
performance or observance by it of any term, covenant or agreement contained in
Section 6.10 or 7, or (b) default in the due performance or observance by it of
any term, covenant or agreement (other than those referred to in Section 8.01 or
clause (a) of this Section 8.03) contained in this Agreement and such default
shall continue unremedied for a period of at least 30 days; or
8.04 Default Under Other Agreements. (a) The Borrower or any of its
Subsidiaries shall (i) default in any payment with respect to Indebtedness
(other than the Obligations), in excess of $3,000,000 individually or in the
aggregate, for the Borrower and its Subsidiaries, beyond the period of grace, if
any, provided in the instrument or agreement under which such Indebtedness was
created, (ii) default in any payment of any interest due on the Trust Preferred
Securities (provided that a deferral of interest in accordance with terms of the
Trust Preferred Securities shall not be deemed to be a default) or (iii) default
in the observance or performance of any agreement or condition relating to any
such Indebtedness or contained in any instrument or agreement evidencing,
securing or relating thereto, or any other event shall occur or condition exist,
the effect of which 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 (b) any such 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
8.05 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 dismissed within 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 or any of
its Subsidiaries; or the Borrower or any of its Subsidiaries commences
(including by way of applying for or consenting to the appointment of, or the
taking of possession by, a rehabilitator, receiver, custodian, trustee,
conservator or liquidator (collectively, a "conservator") of itself or all or
any substantial portion of its property) any other proceeding under any
reorganization, arrangement, adjustment of debt, relief of debtors, dissolution,
insolvency, liquidation, rehabilitation, conservatorship or similar law of any
jurisdiction whether now or hereafter in effect relating to the Borrower or any
of its Subsidiaries; or any such proceeding is commenced against the Borrower or
any of its Subsidiaries and remains undismissed 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 (a) any Regulated Insurance Company which is engaged in the business of
underwriting insurance and/or reinsurance in the United States suffers any
appointment of any conservator or the like for it or any substantial part of its
property, or (b) the Borrower or any of its Subsidiaries (other than any
Regulated Insurance Company described in the immediately preceding clause (a))
suffers any appointment of any conservator or the like for it or any substantial
part of its property which continues undischarged or unstayed for a period of 60
days; or the Borrower or any of its Subsidiaries makes a general assignment for
50
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
8.06 ERISA. (a) Any Plan shall fail to satisfy the minimum funding
standard required for any plan year or part thereof under Section 412 of the
Code or Section 302 of ERISA or a waiver of such standard or extension of any
amortization period is sought or granted under Section 412 of the Code or
Section 303 or 304 of ERISA, a Reportable Event shall have occurred, any Plan
which is subject to Title IV of ERISA shall have had or is likely to have a
trustee appointed by the PBGC to administer such Plan, any Plan which is subject
to Title IV of ERISA is, shall have been or is likely to be terminated or to be
the subject of termination proceedings under ERISA, any Plan shall have an
Unfunded Current Liability, a contribution required to be made with respect to a
Plan has not been timely made, the Borrower or any Subsidiary of the Borrower or
any ERISA Affiliate has incurred any liability to or on account of a Plan under
Section 409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of
ERISA or Section 401(a)(29), 4971 or 4975 of the Code or on account of a group
health plan (as defined in Section 607(1) of ERISA or Section 4980B(g)(2) of the
Code) under Section 4980B of the Code, or the Borrower or any Subsidiary of the
Borrower has incurred or is likely to incur liabilities (other than as disclosed
on Schedule 5.14) pursuant to one or more employee welfare benefit plans (as
defined in Section 3(1) of ERISA) that provide death, health or severance
benefits to retired employees or other former employees (other than as required
by Section 601 of ERISA or applicable state law) or Plans; (b) there shall
result from any such event or events the imposition of a lien, the granting of a
security interest, or a liability and (c) such lien, security interest or
liability, individually or in the aggregate, has had, or could reasonably be
expected to have, a Material Adverse Effect; or
8.07 Invalidity of Credit Documents. Any Credit Document, at any time
after its execution and delivery and for any reason other than as expressly
permitted hereunder or satisfaction in full of all the Obligations, ceases to be
in full force and effect; or any Credit Party or any other Person contests in
any manner the validity or enforceability of any Credit Document; or any Credit
Party denies that it has any or further liability or obligation under any Credit
Document, or purports to revoke, terminate or rescind any Credit Document; or
8.08 Collateral Documents. Any Collateral Document, at any time after
its execution and delivery and for any reason other than as expressly permitted
hereunder or satisfaction in full of all the Obligations, ceases to create a
valid and perfected first priority Lien on and security interest in the
Collateral purported to be covered thereby, or any Credit Party shall default in
the due performance or observance of any material term, covenant or agreement on
its part to be performed or observed pursuant to any Collateral Document to
which it is a party and such default shall continue beyond any cure or grace
period specifically applicable thereto pursuant to the terms of such Collateral
Document; or
8.09 Judgments. One or more judgments or decrees shall be entered
against the Borrower or any of its Subsidiaries involving a liability, net of
undisputed reinsurance, of $5,000,000 or more in the case of any one such
judgment or decree or in the aggregate for all such judgments and decrees for
the Borrower and its Subsidiaries and any such judgments or decrees shall not
have been vacated, discharged, stayed or bonded pending appeal within 60 days
from the entry thereof.
8.10 Remedies Upon Event of Default. If any Event of Default occurs
and is continuing, the Administrative Agent shall, at the request of, or may,
with the consent of, the Required Banks, take any or all of the following
actions:
(a) Declare the commitment of each Bank to make Loans and
any obligation of the L/C Issuer to make L/C Credit Extensions to be
terminated, whereupon such commitments and obligation shall be
terminated;
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(b) Declare the unpaid principal amount of all outstanding
Loans, all interest accrued and unpaid thereon, and all other amounts
owing or payable hereunder or under any other Credit Document to be
immediately due and payable, without presentment, demand, protest or
other notice of any kind, all of which are hereby expressly waived by
the Borrower;
(c) Require that the Borrower Cash Collateralize the L/C
Obligations (in an amount equal to the then Outstanding Amount
thereof);
(d) Exercise on behalf of itself and the Banks all rights
and remedies available to it and the Banks under the Credit Documents
or applicable law; and
(e) Enforce, as Collateral Agent (or direct the Collateral
Agent to enforce), any or all of the Liens and security interests
created pursuant to the Collateral Documents;
provided, however, if an Event of Default specified in Section 8.05 shall occur
with respect to the Borrower, the obligation of each Bank to make Loans and any
obligation of the L/C Issuer to make L/C Credit Extensions shall automatically
terminate, the unpaid principal amount of all outstanding Loans and all interest
and other amounts as aforesaid shall automatically become due and payable, and
the obligation of the Borrower to Cash Collateralize the L/C Obligations as
aforesaid shall automatically become effective, in each case without further act
of the Administrative Agent or any Bank. Notwithstanding the foregoing, neither
the Collateral Agent nor any Bank shall be entitled to vote, sell or in any
manner exercise control as to any Regulated Insurance Company the capital stock
of which is pledged pursuant to the Pledge Agreement without first making all
required filings with, and obtaining prior written approval from, the Applicable
Insurance Regulatory Authority.
8.11 Application of Funds. After the exercise of remedies provided
for in Section 8.10 (or after the L/C Obligations have automatically been
required to be Cash Collateralized as set forth in the proviso to Section 8.10),
any amounts received on account of the Obligations shall be applied by the
Administrative Agent in the following order:
(a) To payment of that portion of the Obligations
constituting Fees, indemnities, expenses and other amounts (including
Attorney Costs and amounts payable under Sections 1.11, 1.12 and
3.05) payable to the Administrative Agent in its capacity as such;
(b) To payment of that portion of the Obligations
constituting Fees, indemnities and other amounts (other than
principal and interest) payable to the Banks (including Attorney
Costs and amounts payable under Sections 1.11, 1.12, and 3.05),
ratably among them in proportion to the amounts described in this
clause (b) payable to them;
(c) To payment of that portion of the Obligations
constituting accrued and unpaid interest on the Loans and L/C
Borrowings, ratably among the Banks in proportion to the respective
amounts described in this clause (c) payable to them;
(d) To payment of that portion of the Obligations
constituting unpaid principal of the Loans and L/C Borrowings,
ratably among the Banks in proportion to the respective amounts
described in this clause (d) held by them;
(e) To the Administrative Agent for the account of the L/C
Issuer, to Cash Collateralize that portion of L/C Obligations
comprised of the aggregate undrawn amount of Letters of Credit; and
52
(f) The balance, if any, after all of the Obligations have
been indefeasibly paid in full, to the Borrower or as otherwise
required by law.
Subject to Section 1.07(c), amounts used to Cash Collateralize the aggregate
undrawn amount of Letters of Credit pursuant to clause (e) above shall be
applied to satisfy drawings under such Letters of Credit as they occur. If any
amount remains on deposit as Cash Collateral after all Letters of Credit have
either been fully drawn or expired, such remaining amount shall be applied to
the other Obligations, if any, in the order set forth above.
SECTION 9. Definitions. As used herein, the following terms shall have the
meanings herein specified unless the context otherwise requires. Defined terms
in this Agreement shall include in the singular number the plural and in the
plural the singular:
"Acquisition" shall mean the acquisition by the Borrower (directly or
through PennLife) of 100% of the equity interests in Pyramid.
"Acquisition Agreement" shall mean the Purchase Agreement dated as of
December 20, 2002, by and among the Borrower, PennLife, Continental General
Insurance Company and Ceres Group, Inc.
"Acquisition Documents" shall mean the Acquisition Agreement and all
other agreements and documents relating to the Acquisition including the Annexes
and Exhibits to the Acquisition Agreement, in the form delivered pursuant to
Section 4.14 and as the same may be amended or modified pursuant to the terms
thereof and hereof.
"Adjusted Statutory Capital and Surplus" shall mean, at any date for
any Regulated Insurance Company, the total amount as would be shown on line 38,
page 3, column 1 of a Benchmark Statement for such Regulated Insurance Company
prepared as of such date; provided that such total amount shall include asset
valuation reserves as would be shown on line 24.1, page 3, column 1 of a
Benchmark Statement for such Regulated Insurance Company.
"Administrative Agent" shall have the meaning provided in the first
paragraph of this Agreement and shall include any successor to the
Administrative Agent appointed pursuant to Section 10.09.
"Affected Eurodollar Loans" shall have the meaning provided in
Section 3.02(ii)(b).
"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling (including but not limited to all directors
and officers of such Person), controlled by, or under direct or indirect common
control with, such Person. A Person shall be deemed to control a corporation if
such Person possesses, directly or indirectly, the power (i) to vote 10% or more
of the securities having ordinary voting power for the election of directors of
such corporation or (ii) to direct or cause the direction of the management and
policies of such corporation, whether through the ownership of voting
securities, by contract or otherwise.
"Agent-Related Persons" shall mean the Administrative Agent and the
Collateral Agent, together with their Affiliates (including, in the case of Bank
of America in its capacity as the Administrative Agent, the Arranger), and the
officers, directors, employees, agents and attorneys-in-fact of such Persons and
Affiliates.
"Agreement" shall mean this Credit Agreement, as the same may be from
time to time modified, amended and/or supplemented.
53
"American Exchange" shall mean American Exchange Life Insurance
Company, a Texas corporation.
"Annual Statement" shall mean the annual financial statement required
to be filed by any Regulated Insurance Company with the Applicable Insurance
Regulatory Authority.
"Applicable Insurance Regulatory Authority" shall mean, when used
with respect to any Regulated Insurance Company, the insurance department or
similar administrative authority or agency located in (x) each state or other
jurisdiction in which such Regulated Insurance Company is domiciled or (y) to
the extent asserting regulatory jurisdiction over such Regulated Insurance
Company, the insurance department, authority or agency in each state or other
jurisdiction in which such Regulated Insurance Company is licensed, and shall
include any Federal or national insurance regulatory department, authority or
agency that may be created and that asserts regulatory jurisdiction over such
Regulated Insurance Company.
"Applicable Percentage" shall mean, on any date of determination, the
percentages per annum set forth in the table below for the Type of Borrowing,
Letters of Credit or Commitment Fee (as the case may be), that corresponds to
the ratio of Consolidated Indebtedness of the Borrower to Consolidated Total
Capital of the Borrower at such date of determination, as calculated based on
the officer's certificate of the Borrower most recently delivered pursuant to
Section 6.01(d) (or initially determined based on the officer's certificate
delivered pursuant to Section 4.03; provided, however, that for the period
beginning on the Initial Borrowing Date and ending six months thereafter, the
Applicable Percentage for Eurodollar Loans shall not be less than 3.00% and the
Applicable Percentage for Base Rate Loans shall not be less than 1.75%; and
provided further that, solely for the purpose of determining the Applicable
Percentage on any date occurring on and after the first anniversary of the
Initial Borrowing Date, Consolidated Indebtedness of the Borrower, as used in
this definition, shall be deemed to include only 50% of the outstanding
principal amount of the Trust Preferred Securities on such date:
APPLICABLE PERCENTAGE
RATIO OF CONSOLIDATED
INDEBTEDNESS TO EURODOLLAR LOANS
PRICING LEVEL CONSOLIDATED TOTAL CAPITAL COMMITMENT FEE LETTERS OF CREDIT BASE RATE LOANS
---------------- ----------------------------- --------------------- -------------------- ------------------
1 >= .25 to 1.0 0.50% 3.25% 2.00%
2 < .25 to 1.0 and 0.50% 3.00% 1.75%
>= .20 to 1.0
3 < .20 to 1.0 and 0.50% 2.75% 1.50%
>= .15 to 1.0
4 < .15 to 1.0 0.50% 2.50% 1.25%
"Approved Bank" shall have the meaning provided in the definition of
"Cash Equivalents."
"Approved Company" shall have the meaning provided in the definition
of "Cash Equivalents."
"Approved Fund" means any Fund that is administered or managed by (a)
a Bank, (b) an Affiliate of a Bank or (c) an entity or an Affiliate of an entity
that administers or manages a Bank.
54
"Arranger" shall mean Banc of America Securities LLC and its
successors and assigns in its capacity as "Sole Lead Arranger and Book Manager."
"Asset Sale" shall mean any sale, transfer or other disposition
effected on or after the Initial Borrowing Date by the Borrower or any of its
Subsidiaries of (i) any capital stock or equity securities of a Subsidiary of
the Borrower or (ii) any other asset, in each case to any Person other than the
Borrower or any of its Wholly-Owned Subsidiaries (other than sales, transfers or
other dispositions in the ordinary course of business).
"Assignment and Assumption Agreement" shall have the meaning provided
in Section 11.04(b).
"Attorney Costs" shall mean and includes all reasonable fees,
expenses and disbursements of any law firm or other external counsel.
"Authorized Officer" shall mean, as to any Person, any senior officer
of such Person designated as such in writing by such Person to, and reasonably
acceptable to, the Administrative Agent.
"Bank" shall have the meaning provided in the first paragraph of this
Agreement.
"Bank Default" shall mean (i) the refusal (which has not been
retracted) of a Bank to make available its portion of any Borrowing or L/C
Advance or (ii) a Bank having notified the Administrative Agent and the Borrower
that it does not intend to comply with its obligations under Section 1.01, in
the case of either clause (i) or (ii) above as a result of the appointment of a
receiver or conservator with respect to such Bank at the direction or request of
any regulatory agency or authority.
"Bank of America" shall mean Bank of America, N.A. and its
successors.
"Bankruptcy Code" shall have the meaning provided in Section 8.05.
"Base Rate" shall mean for any day a fluctuating rate per annum equal
to the higher of (a) the Federal Funds Rate plus 0.5% and (b) the rate of
interest in effect for such day as publicly announced from time to time by Bank
of America as its "prime rate." The "prime rate" is a rate set by Bank of
America based upon various factors including Bank of America's costs and desired
return, general economic conditions and other factors, and is used as a
reference point for pricing some loans, which may be priced at, above, or below
such announced rate. Any change in such rate announced by Bank of America shall
take effect at the opening of business on the day specified in the public
announcement of such change.
"Base Rate Loan" shall mean each Loan bearing interest at the rates
provided in Section 1.09(a).
"Benchmark Statement" shall mean, as of any date, an annual financial
statement of the Regulated Insurance Companies as would be prepared as of such
date utilizing the identical format utilized by American Exchange in preparing
its December 31, 2001 Annual Statement filed with the Insurance Department of
the State of Texas, with each page, line item and column of a Benchmark
Statement to contain substantially the same type of information, computed in
substantially the same manner, as contained in the identically numbered page,
line item and column of such Annual Statement.
"Borrower" shall have the meaning provided in the first paragraph of
this Agreement.
"Borrower Cash Flow" shall mean, for any fiscal quarter period, the
sum, without duplication, of (i) the Quarterly Adjusted Dividend Capacity for
such period plus (ii) whether positive or negative, tax sharing payments made by
55
the Regulated Insurance Companies to the Borrower or American Exchange during
such period (less cash taxes paid by the Borrower or American Exchange during
such period), plus (iii) the combined interest income of the Borrower and
American Exchange on an unconsolidated basis during such period, plus (iv) the
TPA EBITDA for such period, minus (v) the combined cash selling, general and
administrative expenses of the Borrower and American Exchange on an
unconsolidated basis during such period.
"Borrowing" shall mean the incurrence by the Borrower of one Type of
Loan pursuant to a single Facility from all of the Banks having Commitments with
respect to such Facility, on a pro rata basis on a given date (or resulting from
conversions on a given date), having in the case of Eurodollar Loans the same
Interest Period, provided that Base Rate Loans incurred pursuant to Section
1.11(b) shall be considered part of any related Borrowing of Eurodollar Loans.
"Business Day" shall mean (i) for all purposes other than as covered
by clause (ii) below, any day, excluding Saturday, Sunday and any day which
shall be in the City of New York a legal holiday or a day on which banking
institutions are authorized by law or other governmental actions to close, and
(ii) with respect to all notices and determinations in connection with, and
payments of principal and interest on, Eurodollar Loans, any day which is a
Business Day described in clause (i) and which is also a day for trading by and
between banks in Dollar deposits in the London interbank market.
"Capital Expenditures" shall mean expenditures (whether paid in cash
or accrued as liabilities and including in all events all amounts expended or
capitalized under Capital Leases but excluding any amount representing
capitalized interest) by the Borrower and its Subsidiaries that, in conformity
with GAAP, are or are required to be included in the property, plant or
equipment reflected in the consolidated balance sheet of the Borrower and its
Subsidiaries, provided that Capital Expenditures shall in any event include the
purchase price paid in connection with the acquisition of any Person (including
through the purchase of all of the capital stock or other ownership interests of
such Person or through merger or consolidation) to the extent allocable to
property, plant and equipment.
"Capital Lease" as applied to any Person, shall mean any lease of any
property (whether real, personal or mixed) by that Person as lessee which, in
conformity with GAAP, is, or is required to be, accounted for as a capital lease
on the balance sheet of that Person.
"Capitalized Lease Obligations" shall mean all obligations under
Capital Leases of the Borrower or any of its Subsidiaries in each case taken at
the amount thereof accounted for as liabilities in accordance with GAAP.
"Capital Z" shall mean Capital Z Financial Services Fund II, L.P. and
Capital Z Financial Services Private Fund II, L.P., each a Bermuda limited
partnership.
"Cash Collateralize" shall mean to pledge and deposit with or deliver
to the Administrative Agent, for the benefit of the L/C Issuer and/or the Banks
(as appropriate), as collateral for the L/C Obligations or the prepayment
obligations as provided for in Sections 1.07(g) and 3.02(ii)(b), respectively,
cash or deposit account balances pursuant to documentation in form and substance
reasonably satisfactory to the Administrative Agent, which documents are hereby
consented to by the Banks. Derivatives of such term have corresponding meanings.
Cash Collateral shall be maintained in interest bearing blocked deposit accounts
at Bank of America bearing interest at a rate generally offered by Bank of
America on such accounts.
"Cash Equivalents" shall mean (i) securities issued or directly and
fully guaranteed or insured by the United States of America or any agency or
56
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof) having maturities of not more
than one year from the date of acquisition, (ii) Dollar denominated time
deposits, certificates of deposit and bankers acceptances of (x) any FDIC
insured bank, in amounts up to the FDIC insured limit, (y) any Bank having
capital and surplus in excess of $500,000,000 or the Dollar equivalent thereof
or (z) any bank whose short-term commercial paper rating from S&P is at least
A-1 or the equivalent thereof or from ▇▇▇▇▇'▇ is at least P-1 or the equivalent
thereof (any such bank, an "Approved Bank"), in each case with maturities of not
more than one year from the date of acquisition, (iii) commercial paper issued
by any Bank or Approved Bank or by the parent company of any Bank or Approved
Bank and commercial paper issued by, or guaranteed by, any industrial or
financial company with a short-term commercial paper rating of at least A-2 or
the equivalent thereof by S&P or at least P-2 or the equivalent thereof by
Moody's (any such company, an "Approved Company"), or guaranteed by any
industrial company with a long term unsecured debt rating of at least A or A2,
or the equivalent of each thereof, from S&P or Moody's, as the case may be, and
in each case maturing within six months after the date of acquisition, provided,
however, that commercial paper rated A-2 or the equivalent thereof by S&P or P-2
or the equivalent thereof by Moody's and held by the Borrower and all Regulated
Insurance Companies under this clause (iii) shall not exceed (x) for any Issuer,
1% of Invested Assets, and (y) in the aggregate, 3% of Invested Assets, (iv)
commercial paper of any United States municipal, state or local government rated
at least A-1 or the equivalent thereof by S&P or at least P-1 or the equivalent
thereof by Moody's and maturing within one year after the date of acquisition,
(v) any fund or funds investing solely in investments of the type described in
clauses (i) through (iv) above, and (vi) agreements to sell and repurchase
direct obligations of, or obligations that are fully guaranteed as to principal
and interest by, the U.S. Treasury, such agreements to be with primary treasury
dealers, to be evidenced by standard industry forms and to have maturities of
not more than six months from the date of commencement of the repurchase
transaction.
"Cash Proceeds" shall mean, with respect to any Asset Sale, the
aggregate cash payments (including any cash received by way of deferred payment
pursuant to a note receivable issued in connection with such Asset Sale, other
than the portion of such deferred payment constituting interest, but only as and
when received) received by the Borrower and/or any Subsidiary from such Asset
Sale, provided that any such proceeds received in currency other than Dollars
shall be converted into Dollars at the spot exchange rate for the currency in
question on the date of receipt by the Borrower and/or its Subsidiaries of such
proceeds.
"Change of Control" shall mean (a) Capital Z and its Affiliates
collectively shall cease to own directly or indirectly at least 25% of the
Borrower's capital stock on a fully diluted basis, (b) Capital Z and its
Affiliates collectively shall cease to own directly or indirectly an amount of
the economic and voting interest in the Borrower's capital stock equal to at
least 51% of the amount of the economic and voting interest in the Borrower's
capital stock that was owned by Capital Z and its Affiliates collectively as of
the Initial Borrowing Date; (c) the Borrower shall cease to own directly or
indirectly (other than as a result of a transaction permitted under Section
7.02(d) hereof) 100% of the capital stock of each of its Subsidiaries; (d) any
Person (together with its affiliates) shall own directly or indirectly, on a
fully diluted basis, more of the economic and voting interest in the capital
stock of the Borrower than that owned by Capital Z and its Affiliates
(collectively); or (e) a majority of the Board of Directors of the Borrower
shall cease to consist of Continuing Directors.
"CHCS Services" shall mean CHCS Services Inc., a Florida corporation.
"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.
57
"Collateral" shall mean all of the items and types of property
described as "Collateral" in now existing or hereafter created Collateral
Documents and all cash and non-cash proceeds thereof.
"Collateral Agent" shall mean the Administrative Agent acting as
collateral agent for the Banks.
"Collateral Documents" shall mean the Pledge Agreement, the Security
Agreement and financing statements at any time delivered to the Collateral
Agent, together with all reaffirmations, amendments, modifications or
supplements thereto.
"Combined" shall mean, when used with reference to any amount or
financial statement, such amount as determined, or financial statement as
prepared, on a combined basis for all of the specified Persons and their
respective Subsidiaries; provided that any such amount or financial statement
determined or prepared for any specified Person and its Subsidiaries separately
shall be determined or prepared on a consolidated basis in accordance with GAAP
or SAP, as the case may be.
"Commitment" shall mean, with respect to each Bank, such Bank's Term
Loan Commitment and Revolving Loan Commitment.
"Commitment Fee" shall have the meaning provided in Section 2.01(a).
"Company Action Level" shall mean "Company Action Level" as defined
by the NAIC from time to time and as applied in the context of the Risk Based
Capital Guidelines promulgated by the NAIC (or any term substituted therefor by
the NAIC).
"Compliance Certificate" shall mean a certificate substantially in
the form of Exhibit I hereto.
"Consolidated Indebtedness" shall mean, at any time and as to any
Person, the aggregate outstanding principal amount of all Indebtedness for
borrowed money of such Person and its Subsidiaries at such time determined on a
consolidated basis in accordance with GAAP; provided that, in any event, the
Indebtedness evidenced by the Trust Preferred Securities shall be deemed to be
Consolidated Indebtedness.
"Consolidated Interest Expense" shall mean, for any period and as to
any Person, total cash interest expense (including the interest component in
respect of Capital Lease Obligations in accordance with GAAP) of such Person and
its Subsidiaries during such period on a consolidated basis including, without
limitation, all commissions, discounts and other fees and charges owed with
respect to letters of credit and bankers' acceptance financing and net costs
under Interest Rate Agreements, but excluding however, any amortization of
deferred financing costs.
"Consolidated Net Income" shall mean, for any period for the Borrower
and its Subsidiaries on a consolidated basis, the net income of the Borrower and
its Subsidiaries for such period determined in accordance with GAAP.
"Consolidated Net Worth" shall mean, with respect to any Person, the
Net Worth of such Person and its Subsidiaries determined on a consolidated basis
in accordance with GAAP after appropriate deduction for any minority interests
in Subsidiaries.
"Consolidated Total Capital" shall mean, at any time and as to any
Person, the sum of (i) Consolidated Indebtedness of such Person at such time and
(ii) Consolidated Net Worth of such Person at such time.
58
"Contingent Obligations" 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,
(a) to purchase any such primary obligation or any property constituting direct
or indirect security therefor, (b) to advance or supply funds (i) for the
purchase or payment of any such primary obligation or (ii) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency of the primary obligor, (c) to purchase property,
securities or services primarily for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to make payment of
such primary obligation or (d) otherwise to assure or hold harmless the owner of
such primary obligation against loss in respect thereof; provided, however, that
the term Contingent Obligation shall not include (x) endorsements of instruments
for deposit or collection in the ordinary course of business or (y) obligations
of any Regulated Insurance Company under Insurance Contracts, Reinsurance
Agreements or Retrocession Agreements. 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 maximum reasonably anticipated liability
in respect thereof (assuming such Person is required to perform thereunder) as
determined by such Person in good faith.
"Continuing Directors" shall mean the directors of the Borrower on
the Initial Borrowing Date and each other director if such director's nomination
for the election to the Board of Directors of the Borrower is recommended by a
majority of the then Continuing Directors.
"Credit Documents" shall mean this Agreement, the Fee Letter, the
Notes (if any), the Letter of Credit Applications, the Subsidiary Guaranty and
the Collateral Documents.
"Credit Extension" shall mean each of the following: (a) a Borrowing
and (b) an L/C Credit Extension.
"Credit Party" shall mean the Borrower and each Subsidiary Guarantor.
"Default" shall mean any event, act or condition which with notice or
lapse of time, or both, would constitute an Event of Default.
"Defaulting Bank" shall mean any Bank with respect to which a Bank
Default is in effect.
"Dollars" and "$" shall mean lawful money of the United States.
"Domestic Subsidiary" shall mean each direct or indirect Subsidiary
of the Borrower which is not a Foreign Subsidiary.
"Eligible Assignee" shall mean (a) a Bank; (b) an Affiliate of a
Bank; (c) an Approved Fund and (d) any other Person (other than a natural
person) approved by (i) the Administrative Agent and the L/C Issuer, and (ii)
unless an Event of Default has occurred and is continuing, the Borrower (each
such approval not to be unreasonably withheld or delayed); provided that
notwithstanding the foregoing, "Eligible Assignee" shall not include the
Borrower or any of the Borrower's Affiliates or Subsidiaries.
"Effective Date" shall have the meaning provided in Section 11.11.
59
"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 any subsequent provisions of ERISA, amendatory
thereof, supplemental thereto or substituted therefor.
"ERISA Affiliate" shall mean each person (as defined in Section 3(9)
of ERISA) which together with the Borrower or a Subsidiary of the Borrower would
be deemed to be a "single employer" within the meaning of Section 414(b),(c),
(m) or (o) of the Code.
"Eurodollar Loan" shall mean each Loan bearing interest at the rates
provided in Section 1.09(b).
"Eurodollar Rate" shall mean for any Interest Period with respect to
any Eurodollar Loan:
(a) The rate per annum equal to the rate determined by the
Administrative Agent to be the offered rate that appears on the page
of the Telerate screen (or any successor thereto) that displays an
average British Bankers Association Interest Settlement Rate for
deposits in Dollars (for delivery on the first day of such Interest
Period) with a term equivalent to such Interest Period, determined as
of approximately 11:00 a.m. (London time) two Business Days prior to
the first day of such Interest Period, or
(b) If the rate referenced in the preceding clause (a)
does not appear on such page or service or such page or service shall
not be available, the rate per annum equal to the rate determined by
the Administrative Agent to be the offered rate on such other page or
other service that displays an average British Bankers Association
Interest Settlement Rate for deposits in Dollars (for delivery on the
first day of such Interest Period) with a term equivalent to such
Interest Period, determined as of approximately 11:00 a.m. (London
time) two Business Days prior to the first day of such Interest
Period, or
(c) If the rates referenced in the preceding clauses (a)
and (b) are not available, the rate per annum determined by the
Administrative Agent as the rate of interest at which deposits in
Dollars for delivery on the first day of such Interest Period in same
day funds in the approximate amount of the Eurodollar Loan being
made, continued or converted by Bank of America and with a term
equivalent to such Interest Period would be offered by Bank of
America's London Branch to major banks in the London interbank
eurodollar market at their request at approximately 4:00 p.m. (London
time) two Business Days prior to the first day of such Interest
Period.
"Event of Default" shall have the meaning provided in Section 8.
"Excess Cash Flow" shall mean, for any Excess Cash Flow Period, an
amount equal to (a) 50% of the sum, without duplication, of: (i) the aggregate
amount of dividends which the Regulated Insurance Companies that are Domestic
Subsidiaries could pay (plus, after that certain Debenture due December 31,
2005, in the original principal amount of $15,511,250, payable by the Borrower
to PennLife, has been paid in full, the aggregate amount of dividends which
PennCorp actually pays) directly to the Borrower or American Exchange under
applicable Legal Requirements during such Excess Cash Flow Period (without
obtaining extraordinary dividend approval from any Applicable Insurance
Regulatory Authority), while still maintaining a Risk Based Capital Ratio for
each Regulated Insurance Company of at least 200%, plus (ii) whether positive or
negative, tax sharing payments made by the Regulated Insurance Companies to the
Borrower or American Exchange during such Excess Cash Flow Period (less cash
taxes paid by the Borrower or American Exchange during such Excess Cash Flow
Period), plus (iii) the combined interest income of the Borrower and American
Exchange on an unconsolidated basis during such Excess Cash Flow Period, plus
60
(iv) the TPA EBITDA for such Excess Cash Flow Period, minus (v) Fixed Charges
during such Excess Cash Flow Period, minus (vi) the combined cash selling,
general and administrative expenses of the Borrower and American Exchange on an
unconsolidated basis during such Excess Cash Flow Period, minus (vii) all
voluntary prepayments of Term Loans made during such Excess Cash Flow Period,
minus (b) all mandatory prepayments of Term Loans made during such Excess Cash
Flow Period resulting from the issuance of the Trust Preferred Securities.
"Excess Cash Flow Period" shall mean (i) the period from the Initial
Borrowing Date to the last day of the Borrower's fiscal year ending December 31,
2003, and (ii) each fiscal year of the Borrower thereafter.
"Existing Indebtedness" means the Indebtedness arising under or
pursuant to that certain Credit Agreement dated as of July 30, 1999, as amended,
among the Borrower, various lending institutions, and JPMorgan Chase Bank (f/k/a
The Chase Manhattan Bank), as administrative agent.
"Facility" shall mean the Term Loan Facility or the Revolving Loan
Facility, as the case may be.
"Federal Funds Rate" shall mean, for any day, the rate per annum
equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published by the Federal Reserve Bank on the
Business Day next succeeding such day; provided that (a) if such day is not a
Business Day, the Federal Funds Rate for such day shall be such rate on such
transactions on the next preceding Business Day as so published on the next
succeeding Business Day, and (b) if no such rate is so published on such next
succeeding Business Day, the Federal Funds Rate for such day shall be the
average rate (rounded upward, if necessary, to a whole multiple of 1/100 of 1%)
charged to Bank of America on such day on such transactions as determined in
good faith by the Administrative Agent.
"Fee Letter" shall mean that certain confidential letter agreement
dated as of December 20, 2002, among the Borrower, the Administrative Agent and
the Arranger.
"Fees" shall mean all amounts payable pursuant to, or referred to in,
Section 1.07(i) or (j) or Section 2.01.
"Financial Reinsurance Agreement" shall mean any "financing type"
retrocession agreement or reinsurance agreement in which an insurer or reinsurer
cedes business, which retrocession agreement or reinsurance agreement does not
involve actual transfer of risk, and is deemed not to qualify as reinsurance
under SAP at the time such agreement is entered into.
"Fixed Charges" shall mean, for any fiscal quarter period for the
Borrower and its Subsidiaries on a consolidated basis, the sum of the following:
(i) Consolidated Interest Expense with respect to Indebtedness (including,
without limitation, interest expense on the Trust Preferred Securities) for such
period, plus (ii) scheduled principal repayments on Indebtedness (other than
Indebtedness of the Borrower or any of its Subsidiaries to the Borrower or any
of its Subsidiaries) for such period.
"Fixed Charge Coverage Ratio" shall mean, for any four fiscal quarter
period, the ratio of (i) Borrower Cash Flow for such period to (ii) Fixed
Charges for such period; provided that, (x) Borrower Cash Flow and Fixed
Charges, respectively, for the four fiscal quarter period ending June 30, 2003
shall be deemed to be Borrower Cash Flow and Fixed Charges, respectively, for
the fiscal quarter ended June 30, 2003 multiplied by four, (y) Borrower Cash
Flow and Fixed Charges, respectively, for the four fiscal quarter period ending
September 30, 2003 shall be deemed to be Borrower Cash Flow and Fixed Charges,
respectively, for the two fiscal quarter period ended September 30, 2003
61
multiplied by two and (z) Borrower Cash Flow and Fixed Charges, respectively,
for the four fiscal quarter period ending December 31, 2003 shall be deemed to
be Borrower Cash Flow and Fixed Charges, respectively, for the three fiscal
quarter period ended December 31, 2003 multiplied by four-thirds.
"Foreign Subsidiary" shall mean each Subsidiary of the Borrower that
is incorporated under the laws of any jurisdiction other than the United States
of America or any State thereof.
"Fund" shall mean any Person (other than a natural person) that is
(or will be) engaged in making, purchasing, holding or otherwise investing in
commercial loans and similar extensions of credit in the ordinary course of its
business.
"GAAP" shall mean generally accepted accounting principles in the
United States of America; it being understood and agreed that determinations in
accordance with GAAP for purposes of Section 7, including defined terms as used
therein, are subject (to the extent provided therein) to Section 11.08(a).
"Governmental Authority" shall mean any nation or government, any
state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Indebtedness" of any Person shall mean (i) all indebtedness of such
Person for borrowed money, including, without limitation, the indebtedness
evidenced by the Trust Preferred Securities, (ii) the deferred purchase price of
assets or services which in accordance with GAAP would be shown on the liability
side of the balance sheet of such Person, (iii) the face amount of all letters
of credit issued for the account of such Person and, without duplication, all
drafts drawn thereunder, (iv) all Indebtedness of a second Person secured by any
Lien on any property owned by such first Person, whether or not such
Indebtedness has been assumed, (v) the principal portion of all Capitalized
Lease Obligations of such Person, (vi) all obligations of such Person to pay a
specified purchase price for goods or services whether or not delivered or
accepted, i.e., take-or-pay and similar obligations, (vii) all obligations of
such Person under Interest Rate Agreements and Other Hedging Agreements, (viii)
all Contingent Obligations of such Person and (ix) all Off-Balance Sheet
Liabilities of such Person; provided that Indebtedness shall not include trade
payables (including payables under insurance contracts and reinsurance payables)
and accrued expenses, in each case arising in the ordinary course of business.
"Indemnified Liabilities" shall have the meaning provided for in
Section 11.01(b).
"Indemnitees" shall have the meaning provided for in Section
11.01(b).
"Information" shall have the meaning provided for in Section 11.17.
"Initial Borrowing Date" shall mean the date upon which Loans are
initially incurred hereunder.
"Initially Excluded Subsidiaries" means Midwest Region, Inc., an Iowa
corporation, Midwest Region Inc. of Colorado, a Colorado corporation, and Safe
Drivers Agency Limited, an English corporation.
"Insurance Business" shall mean one or more aspects of the business
of selling, issuing or underwriting insurance or reinsurance.
"Insurance Contract" shall mean any insurance contract or policy
issued by a Regulated Insurance Company but shall not include any Reinsurance
Agreement or Retrocession Agreement.
62
"Interest Period" shall mean, with respect to any Eurodollar Loan,
the interest period applicable thereto, as determined pursuant to Section 1.10.
"Interest Rate Agreement" shall mean any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement, interest
rate hedging agreement or other similar agreement or arrangement.
"Invested Assets" shall mean, at any date for the Regulated Insurance
Companies (on a consolidated basis), the total amount as would be shown on line
11, page 2, column 4 of a Benchmark Statement for the Regulated Insurance
Companies (on a consolidated basis) prepared as of such date.
"Investment Grade Securities" shall mean and include (i) U.S.
Government Obligations (other than Cash Equivalents), (ii) debt securities or
debt instruments with a rating of BBB- or higher by S&P, Baa3 or higher by
Moody's, Class (2) or higher by NAIC or the equivalent of such rating by S&P,
Moody's or NAIC, or if none of S&P, Moody's and NAIC shall then exist, the
equivalent of such rating by any other nationally recognized securities rating
agency, but excluding any debt securities or instruments constituting loans or
advances among the Borrower and its Wholly-Owned Subsidiaries, and (iii) any
fund investing exclusively in investments of the type described in clauses (i)
and (ii) which funds may also hold immaterial amounts of cash pending investment
and/or distribution.
"Issuer" shall mean any issuer of Investment Grade Securities or
Non-Investment Grade Securities acquired or proposed to be acquired by the
Borrower or any of its Subsidiaries pursuant to Section 7.06.
"L/C Advance" shall mean, with respect to each Bank, such Bank's
funding of its participation in any L/C Borrowing in accordance with its pro
rata share.
"L/C Borrowing" shall mean an extension of credit resulting from a
drawing under any Letter of Credit which has not been reimbursed on the date
when made or refinanced as a Borrowing.
"L/C Credit Extension" shall mean, with respect to any Letter of
Credit, the issuance thereof or extension of the expiry date thereof, or the
renewal or increase of the amount thereof.
"L/C Issuer" shall mean Bank of America in its capacity as issuer of
Letters of Credit hereunder, or any successor issuer of Letters of Credit
hereunder.
"L/C Obligations" shall mean, as at any date of determination, the
aggregate undrawn amount of all outstanding Letters of Credit plus the aggregate
of all Unreimbursed Amounts, including all L/C Borrowings.
"Legal Requirements" shall mean all applicable laws, rules and
regulations made by any Governmental Authority or any Applicable Insurance
Regulatory Authority having jurisdiction over the Borrower or a Subsidiary of
the Borrower.
"Letter of Credit" shall mean any standby letter of credit issued
hereunder.
"Letter of Credit Application" shall mean an application and
agreement for the issuance or amendment of a Letter of Credit substantially in
the form from time to time in use by the L/C Issuer.
63
"Letter of Credit Expiration Date" shall mean the earlier of (a) the
day that is seven days prior to the Revolving Loan Maturity Date then in effect
(or, if such day is not a Business Day, the next preceding Business Day) and (b)
the date on which a Change of Control occurs.
"Lien" shall mean any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including any agreement to give any of
the foregoing, any conditional sale or other title retention agreement or any
lease in the nature thereof).
"Loan" shall have the meaning provided in Section 1.01.
"Margin Stock" shall have the meaning provided in Regulation U.
"Material Adverse Effect" shall mean (a) a material adverse change
in, or a material adverse effect upon, the operations, business, properties,
liabilities (actual or contingent), condition (financial or otherwise) or
prospects of the Borrower and its Subsidiaries taken as a whole or, prior to the
consummation of the Acquisition, of Pyramid; (b) a material impairment of the
ability of any Credit Party to perform its obligations under any Credit Document
to which it is a party; or (c) a material adverse effect upon the legality,
validity, binding effect or enforceability against any Credit Party of any
Credit Document to which it is a party.
"Maturity Date" with respect to any Facility shall mean either the
Term Loan Maturity Date or the Revolving Loan Maturity Date, as the case may be.
"Moody's" shall mean ▇▇▇▇▇'▇ Investors Service, Inc. and its
successors.
"NAIC" shall mean the National Association of Insurance Commissioners
or any successor organization thereto.
"NAIC Tests" shall mean the ratios and other financial measurements
developed by the NAIC under its Insurance Regulatory Information System, as in
effect from time to time.
"Net Available Proceeds" shall mean (i) with respect to any Asset
Sale consummated by a Regulated Insurance Company, the Surplus Increase with
respect to such Regulated Insurance Company as a result of such Asset Sale, (ii)
with respect to any Asset Sale consummated by the Borrower or any Non-Regulated
Company which is not a Subsidiary of a Regulated Insurance Company, the Net Cash
Proceeds resulting therefrom and (iii) with respect to any Asset Sale
consummated by a Non-Regulated Company which is a Subsidiary of a Regulated
Insurance Company, an amount equal to the dividend that such Regulated Insurance
Company would be permitted to pay in accordance with the Legal Requirements
applicable to it as a result of the receipt by such Regulated Insurance Company
of a dividend from such Non-Regulated Company in an amount equal to the Net Cash
Proceeds resulting from such Asset Sale; in each case as determined in good
faith by the Borrower and certified in writing by the Borrower to the
Administrative Agent (showing the calculation thereof and supporting
assumptions) on or prior to the date on which the Borrower or any Subsidiary is
to receive the initial proceeds from such Asset Sale.
"Net Cash Proceeds" shall mean, with respect to any Asset Sale, the
Cash Proceeds resulting therefrom net of (a) cash expenses of sale (including
payment of principal, premium and interest on Indebtedness other than the Loans
required to be repaid as a result of such Asset Sale), (b) incremental taxes
paid or payable as a result thereof and (c) amounts provided as a reserve, in
accordance with GAAP, against any liabilities under any indemnification
obligations, purchase price adjustments or similar items associated with such
Asset Sale, in each case as determined in good faith by the Borrower and
64
certified in writing by the Borrower to the Administrative Agent (showing the
calculation thereof and supporting assumptions) on or prior to the date on which
the Borrower or any Subsidiary is to receive the initial proceeds from such
Asset Sale.
"Net Worth" shall mean, as to any Person, the sum of its capital
stock (including, without limitation, its preferred stock), capital in excess of
par or stated value of shares of its capital stock (including, without
limitation, its preferred stock), retained earnings and any other account which,
in accordance with GAAP, constitutes stockholders equity, but excluding (i) any
treasury stock and (ii) the effects of Financial Accounting Statement No. 115.
"Non-Defaulting Bank" shall mean any Bank other than a Defaulting
Bank.
"Non-Investment Grade Securities" shall mean debt and equity
securities and debt and equity instruments that do not constitute Investment
Grade Securities or Cash Equivalents (but excluding any debt or equity
securities or instruments constituting loans or advances among the Borrower and
its Wholly-Owned Subsidiaries), it being understood that for the purposes of any
determination under Section 7.06(f), the amounts, if any, paid by such Regulated
Insurance Company to purchase such equity securities or warrants shall be
included in the principal amounts of Non-Investment Grade Securities.
"Non-Regulated Company" shall mean each Subsidiary of the Borrower
which is not a Regulated Insurance Company.
"Note" shall mean each Term Note and each Revolving Note.
"Notice of Borrowing" shall have the meaning provided in Section
1.03.
"Notice of Conversion" shall have the meaning provided in Section
1.06.
"Notice Office" shall mean the office of the Administrative Agent at
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇., Mail Code: CA4-706-05-09, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇,
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇, Telephone: (▇▇▇) ▇▇▇-▇▇▇▇, Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇,
or such other office as the Administrative Agent may designate by notice in
writing to the Borrower and the Banks from time to time.
"Obligations" shall mean all amounts, direct or indirect, contingent
or absolute, of every type or description, and at any time existing, owing to
the Administrative Agent, the L/C Issuer, the Collateral Agent or any Bank
pursuant to the terms of this Agreement or any other Credit Document, including
obligations arising under Interest Rate Agreements or Other Hedging Agreements
of the Borrower to which a Bank or its Affiliate is a party and interest and
fees that accrue after the commencement by or against any Credit Party or any
Affiliate thereof of any proceeding under the Bankruptcy Code or other debtor
relief laws naming such Person as the debtor in such proceeding, regardless of
whether such interest and fees are allowed claims in such proceeding.
"Off-Balance Sheet Liabilities" shall mean with respect to any Person
as of any date of determination thereof, without duplication and to the extent
not included as a liability on the consolidated balance sheet of such Person and
its Subsidiaries in accordance with GAAP: (a) with respect to any asset
securitization transaction (including any accounts receivable purchase facility)
(i) the unrecovered investment of purchasers or transferees of assets so
transferred and (ii) any other payment, recourse, repurchase, hold harmless,
indemnity or similar obligation of such Person or any of its Subsidiaries in
respect of assets transferred or payments made in respect thereof, other than
limited recourse provisions that are customary for transactions of such type and
that neither (x) have the effect of limiting the loss or credit risk of such
purchasers or transferees with respect to payment or performance by the obligors
65
of the assets so transferred nor (y) impair the characterization of the
transaction as a true sale under applicable laws (including debtor relief laws);
(b) the monetary obligations under any financing lease or so-called "synthetic,"
tax retention or off-balance sheet lease transaction which, upon the application
of any debtor relief law to such Person or any of its Subsidiaries, would be
characterized as indebtedness; (c) the monetary obligations under any sale and
leaseback transaction which does not create a liability on the consolidated
balance sheet of such Person and its Subsidiaries; or (d) any other monetary
obligation arising with respect to any other transaction which (i) upon the
application of any debtor relief law to such Person or any of its Subsidiaries,
would be characterized as indebtedness or (ii) is the functional equivalent of
or takes the place of borrowing but which does not constitute a liability on the
consolidated balance sheet of such Person and its Subsidiaries (for purposes of
this clause (d), any transaction structured to provide tax deductibility as
interest expense of any dividend, coupon or other periodic payment will be
deemed to be the functional equivalent of a borrowing.
"Other Hedging Agreements" shall mean any foreign exchange contracts,
currency swap agreements or other similar agreements or arrangements designed to
protect against fluctuations in currency values.
"Outstanding Amount" shall mean (i) with respect to Term Loans on any
date, the aggregate outstanding principal amount thereof after giving effect to
any Borrowings under the Term Loan Facility and prepayments or repayments of
Term Loans occurring on such date; (ii) with respect to Revolving Loans on any
date, the aggregate outstanding principal amount thereof after giving effect to
any Borrowings under the Revolving Loan Facility and prepayments or repayments
of Revolving Loans occurring on such date and (iii) with respect to any L/C
Obligations on any date, the amount of such L/C Obligations on such date after
giving effect to any L/C Credit Extension occurring on such date and any other
changes in the aggregate amount of the L/C Obligations as of such date,
including as a result of any reimbursements of outstanding unpaid drawings under
any Letters of Credit or any reductions in the maximum amount available for
drawing under Letters of Credit taking effect on such date.
"Payment Office" shall mean the office of the Administrative Agent at
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇., Mail Code: CA4-706-05-09, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇,
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇, Telephone: (▇▇▇) ▇▇▇-▇▇▇▇, Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇,
or such other office as the Administrative Agent may designate by notice in
writing to the Borrower and the Banks from time to time.
"Participant" shall have the meaning provided in Section 11.04(c).
"PennCorp" shall mean PennCorp Life Insurance Company, a Canadian
corporation.
"PennLife" shall mean Pennsylvania Life Insurance Company, a
Pennsylvania corporation.
"Permitted Acquisition" shall have the meaning provided in Section
7.02(i).
"Person" shall mean any individual, partnership, joint venture, firm,
corporation, limited liability company, association, trust or other enterprise
or any government or political subdivision or any agency, department or
instrumentality thereof.
"Plan" shall mean any pension plan as defined in Section 3(2) of
ERISA, which is maintained or contributed to by (or to which there is an
obligation to contribute of) the Borrower or 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, or a Subsidiary of the Borrower
or an ERISA Affiliate maintained, contributed to or had an obligation to
contribute to such plan.
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"Pledge Agreement" shall mean the Pledge Agreement substantially in
the form of Exhibit G hereto (as modified, amended or supplemented from time to
time in accordance with the terms thereof and hereof).
"Pyramid" shall mean The Pyramid Life Insurance Company, a Kansas
stock insurance company.
"Quarterly Adjusted Dividend Capacity" shall mean, for any fiscal
quarter period, the aggregate amount of dividends that the Regulated Insurance
Companies (other than PennCorp so long as that certain Debenture due December
31, 2005, in the original stated principal amount of $18,511,250, payable by the
Borrower to PennLife, is outstanding) could pay directly to the Borrower or
American Exchange during the fiscal year in which such fiscal quarter period
occurs under applicable Legal Requirements (without obtaining extraordinary
dividend approval from any Applicable Insurance Regulatory Authority), divided
by four.
"Quarterly Statement" shall mean the quarterly financial statement
required to be filed by any Regulated Insurance Company with the Applicable
Regulatory Insurance Authority.
"Register" shall have the meaning provided in Section 6.12.
"Regulated Insurance Company" shall mean any Subsidiary of the
Borrower, whether now owned or hereafter acquired, that is authorized or
admitted to carry on or transact Insurance Business in any jurisdiction and is
regulated by any Applicable Insurance Regulatory Authority.
"Regulation D" shall mean Regulation D of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof establishing reserve requirements.
"Regulation U" shall mean Regulation U of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof establishing margin requirements.
"Reinsurance Agreement" shall mean any agreement, contract, treaty or
other arrangement whereby one or more insurers, as reinsurers, assume
liabilities under insurance policies or agreements issued by another insurance
or reinsurance company or companies.
"Replaced Bank" shall have the meaning provided in Section 1.14.
"Replacement Bank" shall have the meaning provided in Section 1.14.
"Reportable Event" shall mean an event described in Section 4043(c)
of ERISA with respect to a Plan, other than those events as to which the 30-day
notice period is waived.
"Required Banks" shall mean Non-Defaulting Banks the sum of whose
outstanding Term Loans and Revolving Loan Commitment (or, if after the Total
Revolving Loan Commitment has been terminated, outstanding Revolving Loans and
participations in L/C Obligations) constitute a majority of the sum of (i) the
total outstanding Term Loans of Non-Defaulting Banks and (ii) the Total
Revolving Loan Commitment less the aggregate Revolving Loan Commitments of
Defaulting Banks, if any, (or, if after the Total Revolving Loan Commitment has
been terminated, the total outstanding Revolving Loans and participations in L/C
Obligations of Non-Defaulting Banks).
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"Responsible Officer" shall mean, with respect to the Borrower or any
of its Subsidiaries, the chief executive officer, president, chief operating
officer, any vice-president or secretary of such Person and, with respect to
financial matters, the chief financial officer, treasurer or controller of such
Person.
"Retrocession Agreement" shall mean any agreement, contract, treaty
or other arrangement whereby one or more insurers or reinsurers, as
retrocessionaires, assume liabilities of reinsurers under a Reinsurance
Agreement or other retrocessionaires under another Retrocession Agreement.
"Revolving Loan" shall have the meaning provided in Section 1.01(b).
"Revolving Loan Commitment" shall mean, with respect to each Bank,
the amount set forth opposite such Bank's name on Schedule 1 directly below the
column entitled "Revolving Loan Commitment," as the same may be reduced from
time to time or terminated pursuant to Sections 2.02, 3.01 and/or 8.
"Revolving Loan Facility" shall mean the Facility evidenced by the
Total Revolving Loan Commitment.
"Revolving Loan Maturity Date" shall mean March 31, 2008 or, if
earlier, the date on which the Total Revolving Loan Commitment is reduced to
zero or terminated pursuant to Section 2.02 or 3.01.
"Revolving Note" shall mean a promissory note substantially in the
form of Exhibit B-2, and all renewals and extension of all or any part thereof.
"Risk Based Capital Ratio" shall mean, for any Regulated Insurance
Company, the ratio (expressed as a percentage), at any time, of the Total
Adjusted Capital of such Regulated Insurance Company to the Company Action Level
of such Regulated Insurance Company.
"Risk Derivatives" shall mean Z bonds, floaters/inverse floaters, PAC
II, PAC III, Ioettes, support bonds, Interest Only Investments, Principal Only
Investments residuals, inverse IO's, super floaters, any other instruments with
similar economic risk factors and any bonds backed in whole or in part by any of
the foregoing (including component or "kitchen sink" bonds).
"Rollover Amount" shall have the meaning provided in Section 7.05(b).
"S&P" shall mean Standard & Poor's Ratings Group and its successors.
"S&P Credit Rating" shall mean the rating level (it being understood
that a rating level shall include numerical modifiers and (+) and (-) modifiers)
assigned by S&P to the senior unsecured long-term debt of an Issuer.
"S&P Equivalent Rating" shall mean, with respect to any Investment
Grade Security or Non-Investment Grade Security, the rating given such security
by S&P or the S&P equivalent rating of the rating given such security by Moody's
or NAIC, it being understood that if any such security is rated by more than one
of S&P, Moody's and NAIC and any of such ratings (or the S&P equivalent of such
ratings) differ, then the S&P Equivalent Rating for such security shall be the
lower or lowest, as the case may be, of such ratings (or the S&P equivalent of
such ratings).
"SAP" shall mean, with respect to any Regulated Insurance Company,
the accounting procedures and practices prescribed or permitted by the
Applicable Insurance Regulatory Authority of the state in which such Regulated
Insurance Company is domiciled; it being understood and agreed that
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determinations in accordance with SAP for purposes of Section 7, including
defined terms as used therein, are subject (to the extent provided therein) to
Section 11.08(a).
"Scheduled Repayments" shall have the meaning provided in Section
3.02(i)(a).
"SEC" shall mean the Securities and Exchange Commission or any
successor thereto.
"SEC Regulation D" shall mean Regulation D as promulgated under the
Securities Act of 1933, as amended, as the same may be in effect from time to
time.
"Section 3.05(e)(ii) Certificate" shall have the meaning provided in
Section 3.05(e)(ii).
"Security Agreement" shall mean the Security Agreement substantially
in the form of Exhibit H hereto (as modified, amended or supplemented from time
to time in accordance with the terms thereof and hereof).
"Stock" shall mean all the Stock as defined in the Pledge Agreement.
"Subsidiary" of any Person shall mean and include (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 directly or
indirectly through Subsidiaries and (ii) any partnership, association, joint
venture or other entity in which such Person directly or indirectly through
Subsidiaries has more than a 50% equity or voting interest at the time. Unless
otherwise expressly provided, all references herein to "Subsidiary" shall mean a
Subsidiary of the Borrower.
"Subsidiary Guarantor" shall mean each Domestic Subsidiary of the
Borrower which is a Non-Regulated Company; provided that none of the Initially
Excluded Subsidiaries is a Subsidiary Guarantor on the Effective Date.
"Subsidiary Guaranty" shall mean the Subsidiary Guaranty
substantially in the form of Exhibit F (as modified, amended or supplemented
from time to time in accordance with the terms hereof and thereof).
"Surplus Increase" shall mean, with respect to each Asset Sale
effected by a Regulated Insurance Company, the increase in Statutory Surplus of
such Regulated Insurance Company as a result of such Asset Sale.
"Surplus Note" shall mean the surplus note dated as of July 30, 1999,
as amended, issued by American Exchange to the Borrower.
"Tax Benefit" shall have the meaning provided in Section 3.05(c).
"Tax Sharing Agreements" shall have the meaning provided in Section
4.15.
"Taxes" shall have the meaning provided in Section 3.05(a).
"Term Loan" shall have the meaning provided in Section 1.01(a).
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"Term Loan Commitment" shall mean, with respect to each Bank, the
amount set forth opposite such Bank's name on Schedule 1 directly below the
column entitled "Term Loan Commitment," as the same may be terminated pursuant
to Sections 2.02 and/or 8.
"Term Loan Facility" shall mean the Facility evidenced by the Total
Term Loan Commitment.
"Term Loan Maturity Date" shall mean March 31, 2008.
"Term Note" shall mean a promissory note substantially in the form of
Exhibit B-1, and all renewals and extensions of all or any part thereof.
"Total Adjusted Capital" shall mean "Total Adjusted Capital" as
defined by the NAIC from time to time and as applied in the context of the Risk
Based Capital Guidelines promulgated by the NAIC (or any term substituted
therefor by the NAIC).
"Total Commitment" shall mean the sum of the Total Term Loan
Commitment and the Total Revolving Loan Commitment.
"Total Revolving Loan Commitment" shall mean the sum of the Revolving
Loan Commitments of each of the Banks.
"Total Term Loan Commitment" shall mean the sum of the Term Loan
Commitments of each of the Banks.
"Total Unutilized Revolving Loan Commitment" shall mean, at any time,
the Total Revolving Loan Commitment at such time less (i) the Outstanding Amount
of all Revolving Loans at such time and (ii) the Outstanding Amount of all L/C
Obligations at such time.
"TPA EBITDA" shall mean, for any period for the TPA Operations on a
consolidated basis, an amount equal to the TPA Net Income for such period plus
(a) the following to the extent deducted in calculating such TPA Net Income: (i)
Consolidated Interest Expense for such period, (ii) the provision for federal,
state, local and foreign income taxes payable by the TPA Operations for such
period and (iii) the amount of depreciation and amortization expense deducted in
determining such TPA Net Income.
"TPA Net Income" shall mean, for any period for the TPA Operations on
a consolidated basis, the net income of the TPA Operations (excluding
extraordinary gains but including extraordinary losses) for such period
determined in accordance with GAAP.
"TPA Operations" shall mean WorldNet and its Subsidiaries that are
Non-Regulated Companies and any other Subsidiary of the Borrower that is a
Non-Regulated Company but is not a Subsidiary of a Regulated Insurance Company
and that is engaged in an administrative services business similar to that of
the TPA Operations on the Effective Date.
"Transaction" shall mean, collectively, (i) the Acquisition, (ii) the
repayment of the Existing Indebtedness, (iii) the incurrence by the Borrower of
Loans hereunder on the Initial Borrowing Date and (iv) the payment of fees and
expenses in connection with the foregoing.
"Transaction Documents" shall mean, collectively, (i) the Acquisition
Documents and (ii) the Credit Documents.
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"Trust Preferred Securities" shall mean (i) the Floating Rate Junior
Subordinated Deferrable Interest Debentures issued by the Borrower pursuant to
the Indenture dated as of December 4, 2002 (as amended, modified or supplemented
from time to time), between the Borrower and State Street Bank and Trust Company
of Connecticut, National Association, as Trustee, and the guaranty executed in
connection therewith, (ii) the Floating Rate Junior Subordinated Deferrable
Interest Debentures issued by the Borrower pursuant to the Indenture dated as of
March 27, 2003 (as amended, modified or supplemented from time to time), between
the Borrower and ▇▇▇▇▇ Fargo Bank, National Association, as Trustee, and the
guaranty executed in connection therewith and (iii) any floating rate junior
subordinated deferrable interest debentures in an aggregate amount up to
$30,000,000, issued by the Borrower after the Effective Date pursuant to an
indenture and guaranty executed in connection therewith having terms (including
subordination provisions, redemption or prepayment rights or obligations, tenor,
deferral of interest rights, covenants and defaults) no less favorable to the
Banks than those set forth in the Trust Preferred Securities described in clause
(i) preceding as such Trust Preferred Securities are in effect on the Effective
Date.
"Type" shall mean a Base Rate Loan or a Eurodollar Loan.
"UCC" shall mean the Uniform Commercial Code, as the same may be
amended from time to time.
"Unfunded Current Liability" of any Plan shall mean the amount, if
any, by which the actuarial present value of the accumulated plan benefits under
the Plan as of the close of its most recent plan year exceeds the fair market
value of the assets allocable thereto, each determined in accordance with
Statement of Financial Accounting Standards No. 87, based upon the actuarial
assumptions used by the Plan's actuary in the most recent annual valuation of
the Plan.
"Unreimbursed Amount" shall have the meaning provided in Section
1.07(c)(i).
"Unutilized Revolving Loan Commitment" with respect to any Bank at
any time shall mean such Bank's Revolving Loan Commitment at such time less (i)
the Outstanding Amount of all Revolving Loans made by such Bank at such time and
(ii) such Bank's pro rata share of the Outstanding Amount of all L/C Obligations
at such time.
"U.S. Government Obligations" shall mean and include (A) securities
that are (x) direct obligations of the United States of America for the timely
payment of which its full faith and credit is pledged or (y) obligations of a
Person controlled or supervised by and acting as an agency or instrumentality of
the United States of America the timely payment of which is unconditionally
guaranteed as a full faith and credit obligation by the United States of
America, which, in either case, are not callable or redeemable at the option of
the issuer thereof, and shall also include a depository receipt issued by a bank
(as defined in Section 3(a)(2) of the Securities Act of 1933, as amended), as
custodian with respect to any such U.S. Government Obligation or a specific
payment of principal of or interest on any such U.S. Government Obligation held
by such custodian for the account of the holder of such depository receipt;
provided that (except as required by law) such custodian is not authorized to
make any deduction from the amount payable to the holder of such depository
receipt from any amount received by the custodian in respect of the U.S.
Government Obligation or the specific payment of principal of or interest on the
U.S. Government Obligation evidenced by such depository receipt and (B) to the
extent in each case having an S&P Equivalent Rating of AAA, obligations issued
or guaranteed by the Federal Home Loan Mortgage Corporation, the Federal
National Mortgage Association, the Government National Mortgage Association, the
Student Loan Marketing Association and the Federal Home Loan Bank.
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"Wholly-Owned Subsidiary" of any Person shall mean any Subsidiary of
such Person to the extent all of the capital stock or other ownership interests
in such Subsidiary, other than directors' or nominees' qualifying shares, is
owned directly or indirectly by such Person.
"WorldNet" shall mean WorldNet Services Corp., a Florida corporation.
"Written" or "in writing" shall mean any form of written
communication or a communication by means of telex, facsimile device, telegraph
or cable.
SECTION 10. The Administrative Agent.
10.01 Appointment.
(a) Each Bank hereby irrevocably appoints, designates and
authorizes Bank of America as the Administrative Agent (such term as
used in this Section 10 to include Bank of America acting as
Collateral Agent) to take such action on its behalf under the
provisions of this Agreement and each other Credit Document and to
exercise such powers and perform such duties as are expressly
delegated to it by the terms of this Agreement or any other Credit
Document, together with such powers as are reasonably incidental
thereto. Notwithstanding any provision to the contrary contained
elsewhere herein or in any other Credit Document, the Administrative
Agent shall not have any duties or responsibilities, except those
expressly set forth herein, nor shall the Administrative Agent have
or be deemed to have any fiduciary relationship with any Bank or
participant, and no implied covenants, functions, responsibilities,
duties, obligations or liabilities shall be read into this Agreement
or any other Credit Document or otherwise exist against the
Administrative Agent. Without limiting the generality of the
foregoing sentence, the use of the term "agent" herein and in the
other Credit Documents with reference to the Administrative Agent is
not intended to connote any fiduciary or other implied (or express)
obligations arising under agency doctrine of any applicable law.
Instead, such term is used merely as a matter of market custom, and
is intended to create or reflect only an administrative relationship
between independent contracting parties.
(b) Each Bank hereby authorizes and directs the Collateral
Agent to enter into the Collateral Documents and to take such action
on its behalf under the provisions of the Collateral Documents and to
exercise such powers and perform such duties as are expressly
delegated to it by the terms of the Collateral Documents, together
with such powers as are reasonably incidental thereto. In any case,
each Bank agrees that any action taken by the Collateral Agent under
the Collateral Documents with the consent or at the request of the
Required Banks (or each Bank if required by Section 11.13) shall be
binding upon all the Banks. The Collateral Agent is authorized on
behalf of all the Banks, without the necessity of any notice to or
further consent from any Bank, from time to time before an Event of
Default, to take any action with respect to any of the Collateral
that may be necessary to perfect and maintain the Collateral Agent's
Liens and security interests in the Collateral. The Collateral Agent
has no obligation whatsoever to any Bank or to any other Person
(except to use the same standard of care that it ordinarily uses for
collateral for its sole benefit) to assure that the Collateral exists
or is owned by the applicable Credit Party or is cared for,
protected, or insured or has been encumbered or that the Collateral
Agent's Liens and security interests have been properly or
sufficiently or lawfully created, perfected, protected, or enforced
or are entitled to any particular priority.
(c) The L/C Issuer shall act on behalf of the Banks with
respect to any Letters of Credit issued by it and the documents
associated therewith, and the L/C Issuer shall have all of the
benefits and immunities (i) provided to the Administrative Agent in
this Section 10 with respect to any acts taken or omissions suffered
72
by the L/C Issuer in connection with Letters of Credit issued by it
or proposed to be issued by it and the applications and agreements
for letters of credit pertaining to such Letters of Credit as fully
as if the term "Administrative Agent" as used in this Section 10 and
in the definition of "Agent-Related Person" included the L/C Issuer
with respect to such acts or omissions, and (ii) as additionally
provided herein with respect to the L/C Issuer.
10.02 Delegation of Duties. The Administrative Agent may execute any
of its duties under this Agreement or any other Credit Document by or through
agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Administrative Agent shall
not be responsible for the negligence or misconduct of any agent or
attorney-in-fact that it selects in the absence of gross negligence or willful
misconduct.
10.03 Liability of the Administrative Agent. No Agent-Related Person
shall (a) be liable for any action taken or omitted to be taken by any of them
under or in connection with this Agreement or any other Credit Document or the
transactions contemplated hereby (except for its own gross negligence or willful
misconduct in connection with its duties expressly set forth herein), or (b) be
responsible in any manner to any Bank or participant for any recital, statement,
representation or warranty made by any Credit Party or any officer thereof,
contained herein or in any other Credit Document, or in any certificate, report,
statement or other document referred to or provided for in, or received by the
Administrative Agent under or in connection with, this Agreement or any other
Credit Document, or the validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or any other Credit Document, or for any failure
of any Credit Party or any other party to any Credit Document to perform its
obligations hereunder or thereunder. No Agent-Related Person shall be under any
obligation to any Bank or participant to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Agreement or any other Credit Document (other than the obligation of
the Administrative Agent to ascertain whether payments on the Obligations have
been made on their scheduled due dates), or to inspect the properties, books or
records of any Credit Party or any Affiliate thereof.
10.04 Reliance by the Administrative Agent.
(a) The Administrative Agent shall be entitled to rely,
and shall be fully protected in relying, upon any writing,
communication, signature, resolution, representation, notice,
consent, certificate, affidavit, letter, telegram, facsimile, telex
or telephone message, electronic mail message, statement or other
document or conversation believed by it to be genuine and correct and
to have been signed, sent or made by the proper Person or Persons,
and upon advice and statements of legal counsel (including counsel to
any Credit Party), independent accountants and other experts selected
by the Administrative Agent. The Administrative Agent shall be fully
justified in failing or refusing to take any action under any Credit
Document unless it shall first receive such advice or concurrence of
the Required Banks as it deems appropriate and, if it so requests, it
shall first be indemnified to its satisfaction by the Banks against
any and all liability and expense which may be incurred by it by
reason of taking or continuing to take any such action. The
Administrative Agent shall in all cases be fully protected in acting,
or in refraining from acting, under this Agreement or any other
Credit Document in accordance with a request or consent of the
Required Banks (or such greater number of Banks as may be expressly
required hereby in any instance) and such request and any action
taken or failure to act pursuant thereto shall be binding upon all
the Banks.
(b) For purposes of determining compliance with the
conditions specified in Section 4 that are applicable on or prior to
the Initial Borrowing Date, each Bank that has signed this Agreement
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shall be deemed to have consented to, approved or accepted or to be
satisfied with, each document or other matter required thereunder to
be consented to or approved by or acceptable or satisfactory to a
Bank unless the Administrative Agent shall have received notice from
such Bank prior to the proposed Initial Borrowing Date specifying its
objection thereto.
10.05 Notice of Default. The Administrative Agent shall not be deemed
to have knowledge or notice of the occurrence of any Default or Event of Default
hereunder, except with respect to defaults in the payment of principal, interest
and fees required to be paid to the Administrative Agent for the account of the
Banks, unless the Administrative Agent shall have received written notice from a
Bank or any other Credit Party referring to this Agreement, describing such
Default or Event of Default and stating that such notice is a "notice of
default." In the event that the Administrative Agent receives such a notice, the
Administrative Agent shall give prompt notice thereof to the Banks. The
Administrative Agent shall take such action with respect to such Default or
Event of Default as shall be reasonably directed by the Required Banks, provided
that unless and until the Administrative Agent shall have received such
directions, the Administrative Agent may (but shall not be obligated to) take
such action, or refrain from taking such action, with respect to such Default or
Event of Default as it shall deem advisable in the best interests of the Banks.
10.06 Credit Decision; Disclosure of Information by the
Administrative Agent. Each Bank acknowledges that no Agent-Related Person has
made any representation or warranty to it, and that no act by the Administrative
Agent hereafter taken, including any consent to and acceptance of any assignment
or review of the affairs of any Credit Party or any Affiliate thereof, shall be
deemed to constitute any representation or warranty by any Agent-Related Person
to any Bank as to any matter, including whether Agent-Related Persons have
disclosed material information in their possession. Each Bank represents to the
Administrative Agent that it has, independently and without reliance upon any
Agent-Related Person and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of the Credit Parties and their respective Subsidiaries, and
all applicable bank or other regulatory laws relating to the transactions
contemplated hereby, and made its own decision to enter into this Agreement and
to extend credit to the Borrower hereunder. Each Bank also represents that it
will, independently and without reliance upon any Agent-Related Person and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this Agreement and the other Credit Documents, and to
make such investigations as it deems necessary to inform itself as to the
business, prospects, operations, property, financial and other condition and
creditworthiness of the Borrower and the other Credit Parties. Except for
notices, reports and other documents expressly required to be furnished to the
Banks by the Administrative Agent herein, the Administrative Agent shall not
have any duty or responsibility to provide any Bank with any credit or other
information concerning the business, prospects, operations, property, financial
and other condition or creditworthiness of any of the Credit Parties or any of
their respective Affiliates which may come into the possession of any
Agent-Related Person.
10.07 Indemnification. Whether or not the transactions contemplated
hereby are consummated, the Banks shall indemnify upon demand each Agent-Related
Person (to the extent not reimbursed by or on behalf of any Credit Party and
without limiting the obligation of any Credit Party to do so), pro rata, and
hold harmless each Agent-Related Person from and against any and all Indemnified
Liabilities incurred by it; provided, however, that no Bank shall be liable for
the payment to any Agent-Related Person of any portion of such Indemnified
Liabilities to the extent determined in a final, nonappealable judgment by a
court of competent jurisdiction to have resulted from such Agent-Related
Person's own gross negligence or willful misconduct; provided, however, that no
action taken in accordance with the directions of the Required Banks shall be
deemed to constitute gross negligence or willful misconduct for purposes of this
Section. Without limitation of the foregoing, each Bank shall reimburse the
74
Administrative Agent upon demand for its ratable share of any costs or
out-of-pocket expenses (including Attorney Costs) incurred by the Administrative
Agent in connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Credit Document, or any
document contemplated by or referred to herein, to the extent that the
Administrative Agent is not reimbursed for such expenses by or on behalf of the
Borrower. The undertaking in this Section shall survive termination of the Total
Commitments, the expiration or termination of all Letters of Credit, the payment
of all other Obligations and the resignation of the Administrative Agent.
10.08 The Administrative Agent in its Individual Capacity. Bank of
America and its Affiliates may make loans to, issue letters of credit for the
account of, accept deposits from, acquire equity interests in and generally
engage in any kind of banking, trust, financial advisory, underwriting or other
business with each of the Credit Parties and their respective Affiliates as
though Bank of America were not the Administrative Agent or the L/C Issuer
hereunder and without notice to or consent of the Banks. The Banks acknowledge
that, pursuant to such activities, Bank of America or its Affiliates may receive
information regarding any Credit Party or its Affiliates (including information
that may be subject to confidentiality obligations in favor of such Credit Party
or such Affiliate) and acknowledge that the Administrative Agent shall be under
no obligation to provide such information to them. With respect to its Loans,
Bank of America shall have the same rights and powers under this Agreement as
any other Bank and may exercise such rights and powers as though it were not the
Administrative Agent or the L/C Issuer, and the terms "Bank" and "Banks" include
Bank of America in its individual capacity.
10.09 Successor Administrative Agent. The Administrative Agent may
resign as the Administrative Agent upon 30 days' notice to the Banks; provided
that any such resignation by Bank of America shall also constitute its
resignation as the L/C Issuer. If the Administrative Agent resigns under this
Agreement, the Required Banks shall appoint from among the Banks a successor
administrative agent for the Banks, which successor administrative agent shall
be consented to by the Borrower at all times other than during the existence of
an Event of Default (which consent of the Borrower shall not be unreasonably
withheld or delayed). If no successor administrative agent is appointed prior to
the effective date of the resignation of the Administrative Agent, the
Administrative Agent may appoint, after consulting with the Banks and the
Borrower, a successor administrative agent from among the Banks. Upon the
acceptance of its appointment as successor administrative agent hereunder, the
Person acting as such successor administrative agent shall succeed to all the
rights, powers and duties of the retiring Administrative Agent and the L/C
Issuer and the respective terms "Administrative Agent" and "L/C Issuer" shall
mean such successor administrative agent and Letter of Credit issuer and the
retiring Administrative Agent's appointment, powers and duties as Administrative
Agent shall be terminated and the retiring L/C Issuer's rights, powers and
duties as such shall be terminated, without any other or further act or deed on
the part of such retiring L/C Issuer or any other Bank, other than the
obligation of the successor L/C Issuer to issue letters of credit in
substitution for the Letters of Credit, if any, outstanding at the time of such
succession or to make other arrangements satisfactory to the retiring L/C Issuer
to effectively assume the obligations of the retiring L/C Issuer with respect to
such Letters of Credit. After any retiring Administrative Agent's resignation
hereunder as Administrative Agent, the provisions of this Section 10 and Section
11.01 shall inure to its benefit as to any actions taken or omitted to be taken
by it while it was Administrative Agent under this Agreement. If no successor
administrative agent has accepted appointment as Administrative Agent by the
date which is 30 days following a retiring Administrative Agent's notice of
resignation, the retiring Administrative Agent's resignation shall nevertheless
thereupon become effective and the Banks shall perform all of the duties of the
Administrative Agent hereunder until such time, if any, as the Required Banks
appoint a successor agent as provided for above.
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10.10 Administrative Agent May File Proofs of Claim. In the case of
the pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relative to any Credit Party, the Administrative Agent (irrespective
of whether the principal of any Loan or L/C Obligation shall then be due and
payable as herein expressed or by declaration or otherwise and irrespective of
whether the Administrative Agent shall have made any demand on the Borrower)
shall be entitled and empowered, by intervention in such proceeding or otherwise
(a) To file and prove a claim for the whole amount of the
principal and interest owing and unpaid in respect of the Loans, L/C
Obligations and all other Obligations that are owing and unpaid and
to file such other documents as may be necessary or advisable in
order to have the claims of the Banks and the Administrative Agent
(including any claim for the reasonable compensation, expenses,
disbursements and advances of the Banks and the Administrative Agent
and their respective agents and counsel and all other amounts due the
Banks and the Administrative Agent under Sections 1.07(i) and (j),
2.01 and 11.01(a)) allowed in such judicial proceeding; and
(b) To collect and receive any monies or other property
payable or deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Bank to make such payments to the Administrative Agent and, in the event
that the Administrative Agent shall consent to the making of such payments
directly to the Banks, to pay to the Administrative Agent any amount due for the
reasonable compensation, expenses, disbursements and advances of the
Administrative Agent and its agents and counsel, and any other amounts due the
Administrative Agent under Sections 2.01 and 11.01(a).
Nothing contained herein shall be deemed to authorize the Administrative Agent
to authorize or consent to or accept or adopt on behalf of any Bank any plan of
reorganization, arrangement, adjustment or composition affecting the Obligations
or the rights of any Bank or to authorize the Administrative Agent to vote in
respect of the claim of any Bank in any such proceeding.
10.11 Other Agents; Arrangers and Managers. None of the Banks or
other Persons identified on the facing page or signature pages of this Agreement
as a "syndication agent," "documentation agent," "co-agent," "book manager,"
"lead manager," "arranger," "lead arranger" or "co-arranger" shall have any
right, power, obligation, liability, responsibility or duty under this Agreement
other than, in the case of such Banks, those applicable to all Banks as such.
Without limiting the foregoing, none of the Banks or other Persons so identified
shall have or be deemed to have any fiduciary relationship with any Bank. Each
Bank acknowledges that it has not relied, and will not rely, on any of the Banks
or other Persons so identified in deciding to enter into this Agreement or in
taking or not taking action hereunder.
SECTION 11. Miscellaneous.
11.01 Payment of Expenses and Taxes; Indemnification by the Borrower.
(a) The Borrower agrees (i) to pay or reimburse the
Administrative Agent for all reasonable costs and expenses incurred
in connection with the development, preparation, negotiation and
execution of this Agreement and the other Credit Documents and any
amendment, waiver, consent or other modification of the provisions
hereof and thereof (whether or not the transactions contemplated
hereby or thereby are consummated), and the consummation and
administration of the transactions contemplated hereby and thereby,
including all Attorney Costs, and (ii) to pay or reimburse the
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Administrative Agent, the Collateral Agent and each Bank for all
costs and expenses incurred in connection with the enforcement,
attempted enforcement, or preservation of any rights or remedies
under this Agreement or the other Credit Documents (including all
such costs and expenses incurred during any "workout" or
restructuring in respect of the Obligations and during any legal
proceeding, including any proceeding under the Bankruptcy Code or
other debtor relief laws), including all Attorney Costs. The
foregoing costs and expenses shall include all search, filing,
recording and other out-of-pocket expenses incurred by the
Administrative Agent and the Collateral Agent and the cost of
independent public accountants and other outside experts retained by
the Administrative Agent, the Collateral Agent or any Bank. All
amounts due under this Section 11.01(a) shall be payable within ten
Business Days after demand therefor. The agreements in this Section
shall survive the termination of the Total Commitments, the
expiration or termination of all Letters of Credit and repayment of
all other Obligations.
(b) Whether or not the transactions contemplated hereby
are consummated, the Borrower shall indemnify and hold harmless each
Agent-Related Person, each Bank and their respective Affiliates,
directors, officers, employees, counsel, agents and attorneys-in-fact
(collectively the "Indemnitees") from and against any and all
liabilities, obligations, losses, damages, penalties, claims,
demands, actions, judgments, suits, costs, expenses and disbursements
(including Attorney Costs) of any kind or nature whatsoever which may
at any time be imposed on, incurred by or asserted against any such
Indemnitee in any way relating to or arising out of or in connection
with (i) the execution, delivery, enforcement, performance or
administration of any Credit Document or other Transaction Document,
or any other agreement, letter or instrument delivered in connection
with the transactions contemplated thereby or the consummation of the
transactions contemplated thereby, (ii) any Commitment, Loan or
Letter of Credit or the use or proposed use of the proceeds therefrom
(including any refusal by the L/C Issuer to honor a demand for
payment under a Letter of Credit if the documents presented in
connection with such demand do not strictly comply with the terms of
such Letter of Credit) or (iii) any actual or prospective claim,
litigation, investigation or proceeding relating to any of the
foregoing, whether based on contract, tort or any other theory
(including any investigation of, preparation for, or defense of any
pending or threatened claim, investigation, litigation or proceeding)
and regardless of whether any Indemnitee is a party thereto (all the
foregoing, collectively, the "Indemnified Liabilities"), in all
cases, whether or not caused by or arising, in whole or in part, out
of the negligence of the Indemnitee; provided that such indemnity
shall not, as to any Indemnitee, be available to the extent that such
liabilities, obligations, losses, damages, penalties, claims,
demands, actions, judgments, suits, costs, expenses or disbursements
are determined by a court of competent jurisdiction by final and
nonappealable judgment to have resulted from the gross negligence or
willful misconduct of such Indemnitee; and provided further that such
indemnity shall not be available in respect of Taxes, Other Taxes and
amounts related thereto, payment with respect to which shall be
governed solely by Section 3.05. No Indemnitee shall be liable for
any damages arising from the use by others of any information or
other materials obtained through IntraLinks or other similar
electronic information transmission systems in connection with this
Agreement, nor shall any Indemnitee have any liability for any
indirect or consequential damages relating to this Agreement or any
other Credit Document or arising out of its activities in connection
herewith or therewith (whether before or after the Initial Borrowing
Date). All amounts due under this Section 11.01(b) shall be payable
within ten Business Days after demand therefor. The agreements in
this Section shall survive the resignation of the Administrative
Agent, the replacement of any Bank, the termination of the Total
Commitments, the expiration or termination of all Letters of Credit
and the repayment, satisfaction or discharge of all the other
Obligations.
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11.02 Right of Setoff. In addition to any rights now or hereafter
granted under applicable law or otherwise, and not by way of limitation of any
such rights, if an Event of Default has occurred and is continuing, each Bank is
hereby authorized at any time or from time to time, except to the extent
prohibited by applicable law, without presentment, demand, protest or other
notice of any kind to any Credit Party 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 such Credit
Party against and on account of the Obligations and liabilities of such Credit
Party to such Bank or any other Bank under this Agreement or under any of the
other Credit Documents, including, without limitation, all interests in
Obligations of such Credit Party purchased by such Bank or any other Bank
pursuant to Section 11.06(b), 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 such Bank shall have made any demand hereunder
and although said Obligations, liabilities or claims, or any of them, shall be
contingent or unmatured. Each Bank is hereby designated the agent of all other
Banks for purposes of effecting set off pursuant to this Section 11.02 and each
Credit Party hereby grants to each Bank for such Bank's own benefit and as agent
for all other Banks a continuing security interest in any and all deposits,
accounts or moneys of such Credit Party maintained from time to time with such
Bank.
11.03 Notices.
(a) General. Unless otherwise expressly provided herein,
all notices and other communications provided for hereunder shall be
in writing (including by facsimile transmission). All such written
notices shall be mailed, faxed or delivered to the applicable
address, facsimile number or (subject to clause (c) below) electronic
mail address, and all notices and other communications expressly
permitted hereunder to be given by telephone shall be made to the
applicable telephone number, as follows: (i) if to any Credit Party,
to the address, facsimile number, electronic mail address or
telephone number of the Borrower specified opposite its signature
below or to such other address, facsimile number, electronic mail
address or telephone number as shall be designated by such Person in
a notice to the other parties; and (ii) if to the Administrative
Agent, the Collateral Agent, the L/C Issuer or any Bank, to the
address, facsimile number, electronic mail address or telephone
number specified on Schedule 2 hereto or to such other address,
facsimile number, electronic mail address or telephone number as
shall be designated by such Person in a notice to the other parties.
All such notices and other communications shall be deemed to be given
or made upon the earlier to occur of (x) actual receipt by the
relevant party hereto and (y) (A) if delivered by hand or by courier,
when signed for by or on behalf of the relevant party hereto; (B) if
delivered by mail, four Business Days after deposit in the mails,
postage prepaid; (C) if delivered by facsimile, when sent and receipt
has been confirmed by telephone; and (D) if delivered by electronic
mail (which form of delivery is subject to the provisions of clause
(c) below), when delivered; provided, however, that notices and other
communications to the Administrative Agent and the L/C Issuer
pursuant to Section 1 shall not be effective until actually received
by such Person. In no event shall a voicemail message be effective as
a notice, communication or confirmation hereunder.
(b) Effectiveness of Facsimile Documents and Signatures.
Credit Documents may be transmitted and/or signed by facsimile. The
effectiveness of any such documents and signatures shall, subject to
applicable law, have the same force and effect as manually-signed
originals and shall be binding on all Credit Parties, the
Administrative Agent and the Banks. The Administrative Agent may also
require that any such documents and signatures be confirmed by a
manually-signed original thereof; provided, however, that the failure
to request or deliver the same shall not limit the effectiveness of
any facsimile document or signature.
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(c) Limited Use of Electronic Mail. Electronic mail and
Internet and intranet websites may be used only to distribute routine
communications, such as financial statements and other information as
provided in Section 6.01, and to distribute Credit Documents for
execution by the parties thereto, and may not be used for any other
purpose.
(d) Reliance by Administrative Agent and the Bank. The
Administrative Agent and the Banks shall be entitled to rely and act
upon any notices (including telephonic Notices of Borrowing)
purportedly given by or on behalf of the Borrower even if (i) such
notices were not made in a manner specified herein, were incomplete
or were not preceded or followed by any other form of notice
specified herein, or (ii) the terms thereof, as understood by the
recipient, varied from any confirmation thereof. Except as otherwise
provided in Section 3.05(b), the Borrower shall indemnify each
Agent-Related Person and each Bank from all losses, costs, expenses
and liabilities resulting from the reliance by such Person on each
notice purportedly given by or on behalf of the Borrower. All
telephonic notices to and other communications with the
Administrative Agent may be recorded by the Administrative Agent, and
each of the parties hereto hereby consents to such recording.
11.04 Benefit of Agreement.
(a) The provisions of this Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective
successors and assigns permitted hereby, except that the Borrower may
not assign or otherwise transfer any of its rights or obligations
hereunder without the prior written consent of each Bank and no Bank
may assign or otherwise transfer any of its rights or obligations
hereunder except (i) to an Eligible Assignee in accordance with the
provisions of clause (b) of this Section, (ii) by way of a
participation in accordance with the provisions of clause (c) of this
Section or (iii) by way of a pledge or assignment of a security
interest subject to the restrictions of clause (d) of this Section,
(and any other attempted assignment or transfer by any party hereto
shall be null and void). Nothing in this Agreement, expressed or
implied, shall be construed to confer upon any Person (other than the
parties hereto, their respective successors and assigns permitted
hereby, Participants to the extent provided in clause (c) of this
Section and, to the extent expressly contemplated hereby, the
Indemnitees) any legal or equitable right, remedy or claim under or
by reason of this Agreement.
(b) Any Bank may at any time assign to one or more
Eligible Assignees all or a portion of its rights and obligations
under this Agreement (including all or a portion of its Commitment
and the Loans (including for purposes of this clause (b),
participations in L/C Obligations) at the time owing to it); provided
that (i) except in the case of an assignment of the entire remaining
amount of the assigning Bank's Commitment and the Loans at the time
owing to it or in the case of an assignment to a Bank or an Affiliate
of a Bank or an Approved Fund with respect to a Bank, the aggregate
amount subject to each such assignment, determined as of the date the
Assignment and Assumption with respect to such assignment is
delivered to the Administrative Agent or, if "Trade Date" is
specified in the Assignment and Assumption, as of the Trade Date,
shall not be less than $5,000,000 unless each of the Administrative
Agent and, so long as no Event of Default has occurred and is
continuing, the Borrower otherwise consents (each such consent not to
be unreasonably withheld or delayed); (ii) each partial assignment
shall be made as an assignment of a proportionate part of all the
assigning Bank's rights and obligations under this Agreement with
respect to the Loans or the Commitment assigned; and (iii) the
parties to each assignment shall execute and deliver to the
Administrative Agent an Assignment and Assumption Agreement
substantially in the form of Exhibit J, appropriately completed, (the
"Assignment and Assumption Agreement"), together with a processing
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and recordation fee of $3,500 (unless such assignment is being made
to an Affiliate of the assigning Bank or is being made pursuant to
Section 11.15). Subject to acceptance and recording thereof by the
Administrative Agent pursuant to Section 6.12, from and after the
effective date specified in each Assignment and Assumption, the
Eligible Assignee thereunder shall be a party to this Agreement and,
to the extent of the interest assigned by such Assignment and
Assumption, have the rights and obligations of a Bank under this
Agreement, and the assigning Bank thereunder shall, to the extent of
the interest assigned by such Assignment and Assumption, be released
from its obligations under this Agreement (and, in the case of an
Assignment and Assumption covering all of the assigning Bank's rights
and obligations under this Agreement, such Bank shall cease to be a
party hereto but shall continue to be entitled to the benefits of
Sections 1.11, 1.12, 3.05 and 11.01 with respect to facts and
circumstances occurring prior to the effective date of such
assignment). Upon request, the Borrower shall execute and deliver one
or more new Notes to the assignee Bank. Any assignment or transfer by
a Bank of rights or obligations under this Agreement that does not
comply with this subsection shall be treated for purposes of this
Agreement as a sale by such Bank of a participation in such rights
and obligations in accordance with clause (c) of this Section.
(c) Any Bank may at any time, without the consent of, or
notice to, the Borrower or the Administrative Agent, sell
participations to any Person (other than a natural person or the
Borrower or any of the Borrower's Affiliates or Subsidiaries) (each,
a "Participant") in all or a portion of such Bank's rights and/or
obligations under this Agreement (including all or a portion of its
Commitment and/or the Loans (including such Bank's participations in
L/C Obligations) owing to it); provided that (i) such Bank's
obligations under this Agreement shall remain unchanged, (ii) such
Bank shall remain solely responsible to the other parties hereto for
the performance of such obligations and (iii) the Borrower, the
Administrative Agent and the other Banks shall continue to deal
solely and directly with such Bank in connection with such Bank's
rights and obligations under this Agreement. Any agreement or
instrument pursuant to which a Bank sells such a participation shall
provide that such Bank shall retain the sole right to enforce this
Agreement and to approve any amendment, modification or waiver of any
provision of this Agreement; provided that such agreement or
instrument may provide that such Bank will not, without the consent
of the Participant, agree to any amendment, waiver or other
modification described in the first proviso to Section 11.13 that
directly affects such Participant. Subject to clause (d) of this
Section, the Borrower agrees that each Participant shall be entitled
to the benefits of Sections 1.11, 1.12 and 3.05 to the same extent as
if it were a Bank and had acquired its interest by assignment
pursuant to clause (b) of this Section; provided that no Participant
shall be entitled to compensation at a greater rate pursuant to any
such Section than the Bank that sold such Participant its
participation, unless the Borrower has consented to such
participation. To the extent permitted by law, each Participant also
shall be entitled to the benefits of Section 11.02 as though it were
a Bank, provided such Participant agrees to be subject to Section
11.06(b) as though it were a Bank. In addition, each Bank that
transfers or grants any participation to a participant under this
Section 11.04(c) shall (i) keep a register, meeting the requirements
of U.S. Treasury Regulation Section 5f.163-1(c), relating to each
such Participant, specifying such Participant's entitlement to
payments of principal and interest with respect to such
participation, and (ii) collect prior to the time such Participant
receives payments with respect to such participation, from each such
Participant the appropriate forms, certificates and statements
described in Section 3.05(e) (and updated as required) as if such
Participant were a Bank under Section 3.05.
(d) Any Bank may at any time pledge or assign a security
interest in all or any portion of its rights under this Agreement
(including under its Notes, if any) to secure obligations of such
Bank, including any pledge or assignment to secure obligations to a
Federal Reserve Bank; provided that no such pledge or assignment
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shall release such Bank from any of its obligations hereunder or
substitute any such pledgee or assignee for such Bank as a party
hereto.
(e) Notwithstanding anything to the contrary contained
herein, if at any time Bank of America assigns all of its rights and
obligations under this Agreement pursuant to clause (b) above, Bank
of America may, upon 30 days' notice to the Borrower and the Banks,
resign as the L/C Issuer. In the event of any such resignation as the
L/C Issuer, the Borrower shall be entitled to appoint from among the
Banks a successor L/C Issuer hereunder; provided, however, that no
failure by the Borrower to appoint any such successor shall affect
the resignation of Bank of America as the L/C Issuer. If Bank of
America resigns as the L/C Issuer, it shall retain all the rights and
obligations of the L/C Issuer hereunder with respect to all Letters
of Credit outstanding as of the effective date of its resignation as
the L/C Issuer and all L/C Obligations with respect thereto
(including the right to require the Banks to make Base Rate Loans or
fund risk participations in Unreimbursed Amounts pursuant to Section
1.07(c)).
(f) Notwithstanding any other provisions of this Section
11.04, no transfer or assignment of the interests or obligations of
any Bank hereunder or any grant of participations therein shall be
permitted if such transfer, assignment or grant would require the
Borrower to file a registration statement with the SEC or to qualify
the Loans under the "Blue Sky" laws of any state.
(g) Each Bank initially party to this Agreement hereby
represents, and each Person that becomes a Bank pursuant to an
assignment permitted by clause (b) above will upon its becoming party
to this Agreement represent, that it is a commercial lender, other
financial institution or other "accredited investor" (as defined in
SEC Regulation D) which makes loans in the ordinary course of its
business or is acquiring the Loans without a view to distribution of
the Loans within the meaning of the federal securities laws, and that
it will make or acquire Loans for its own account in the ordinary
course of such business, provided that, subject to the preceding
clauses (a) through (d), the disposition of any promissory notes or
other evidences of or interests in Indebtedness held by such Bank
shall at all times be within its exclusive control.
11.05 No Waiver; Remedies Cumulative. No failure or delay on the part
of the Administrative Agent or any Bank in exercising any right, power or
privilege hereunder or under any other Credit Document and no course of dealing
between any Credit Party and the Administrative Agent, the Collateral Agent or
any Bank 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. The rights and remedies
herein expressly provided are cumulative and not exclusive of any rights or
remedies which the Administrative Agent, the Collateral Agent or 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 the Administrative Agent,
the Collateral Agent or the Banks to any other or further action in any
circumstances without notice or demand.
11.06 Payments Pro Rata.
(a) The Administrative Agent agrees that promptly after
its receipt of each payment from or on behalf of the Borrower in
respect of any Obligations of the Borrower, it shall distribute such
payment to the Banks (other than any Bank that has consented in
writing to waive its pro rata share of such payment) pro rata based
upon their respective shares, if any, of the Obligations with respect
to which such payment was received.
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(b) Each of the Banks agrees that, if it should receive
any amount hereunder (whether by voluntary payment, by realization
upon security, by the exercise of the right of setoff or banker's
lien, by counterclaim or cross action, by the enforcement of any
right under the Credit Documents, or otherwise) which is applicable
to the payment of the principal of, or interest on, the Loans, Fees
or the L/C Obligations held by it, of a sum which with respect to the
related sum or sums received by other Banks is in a greater
proportion than the total of such Obligation then owed and due to
such Bank bears to the total of such Obligation then owed and due to
all of the Banks immediately prior to such receipt, then such Bank
receiving such excess payment shall (i) purchase for cash without
recourse or warranty from the other Banks an interest in the
Obligations of the Borrower to such Banks in such amount as shall
result in a proportional participation by all of the Banks in such
amount, provided that if all or any portion of such excess amount is
thereafter recovered from such Bank, such purchase shall be rescinded
and the purchase price restored to the extent of such recovery, but
without interest, or (ii) otherwise share such excess payment with
the other Banks so that all of the Banks share in such excess payment
on a pro rata basis.
(c) Notwithstanding anything to the contrary contained
herein, the provisions of the preceding Sections 11.06(a) and (b)
shall be subject to the express provisions of this Agreement which
require, or permit, differing payments to be made to Non-Defaulting
Banks as opposed to Defaulting Banks.
11.07 Payments Set Aside. To the extent that any payment by or on
behalf of the Borrower is made to the Administrative Agent or any Bank, or the
Administrative Agent or any Bank exercises its right of set-off, and such
payment or the proceeds of such set-off or any part thereof is subsequently
invalidated, declared to be fraudulent or preferential, set aside or required
(including pursuant to any settlement entered into by the Administrative Agent
or such Bank in its discretion) to be repaid to a trustee, receiver or any other
party, in connection with any proceeding under the Bankruptcy Code or other
debtor relief laws, then (a) to the extent of such recovery, the obligation or
part thereof originally intended to be satisfied shall be revived and continued
in full force and effect as if such payment had not been made or such set-off
had not occurred, and (b) each Bank severally agrees to pay to the
Administrative Agent upon demand its applicable share of any amount so recovered
from or repaid by the Administrative Agent, plus interest thereon from the date
of such demand to the date such payment is made at a rate per annum equal to the
Federal Funds Rate from time to time in effect.
11.08 Calculations; Computations.
(a) The financial statements to be furnished to the Banks
pursuant hereto shall be made and prepared in accordance with GAAP or
SAP, as the case may be, 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). In addition,
except as otherwise specifically provided herein, all computations
determining compliance with Section 7, including definitions used
therein, shall utilize accounting principles and policies in effect
from time to time; provided that (i) if any such accounting principle
or policy (whether GAAP or SAP or both) shall change after the
Effective Date, the Borrower shall give reasonable notice thereof to
the Administrative Agent and each of the Banks and if within 30 days
following such notice the Borrower, the Administrative Agent or the
Required Banks shall elect by giving written notice of such election
to the other parties hereto, such computations shall not give effect
to such change unless and until this Agreement shall be amended
pursuant to Section 11.13 to give effect to such change, and (ii) if
at any time the computations determining compliance with Section 7
utilize accounting principles different from those utilized in the
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financial statements then being furnished to the Banks pursuant to
Section 6.01, such financial statements shall be accompanied by
reconciliation work-sheets.
(b) All computations of interest on Eurodollar Loans and
Fees hereunder shall be made on the actual number of days elapsed
over a year of 360 days.
(c) All computations of interest on Base Rate Loans
hereunder shall be made on the actual number of days elapsed over a
year of 365/366 days.
11.09 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. ANY LEGAL ACTION OR PROCEEDING 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, EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY ACCEPTS FOR
ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY,
THE NON-EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS. EACH OF THE
PARTIES HERETO HEREBY FURTHER IRREVOCABLY WAIVES ANY CLAIM THAT ANY
SUCH COURTS LACK JURISDICTION OVER SUCH CREDIT PARTY, AND AGREES NOT
TO PLEAD OR CLAIM, IN ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO
THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT BROUGHT IN ANY OF THE
AFORESAID COURTS, THAT ANY SUCH COURT LACKS JURISDICTION OVER SUCH
CREDIT PARTY. EACH OF THE PARTIES HERETO FURTHER 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 SUCH PARTY AT ITS
ADDRESS FOR NOTICES PURSUANT TO SECTION 11.03, SUCH SERVICE TO BECOME
EFFECTIVE 30 DAYS AFTER SUCH MAILING. EACH OF THE PARTIES HERETO
HEREBY IRREVOCABLY WAIVES ANY OBJECTION TO SUCH SERVICE OF PROCESS
AND FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN
ANY ACTION OR PROCEEDING HEREUNDER OR UNDER ANY OTHER CREDIT DOCUMENT
THAT SERVICE OF PROCESS WAS IN ANY WAY INVALID OR INEFFECTIVE.
NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE PARTIES HERETO TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL
PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY OF THE OTHER PARTIES
HERETO IN ANY OTHER JURISDICTION.
(b) EACH OF THE PARTIES HERETO 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 CLAUSE (A) ABOVE 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.
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11.10 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
Administrative Agent.
11.11 Effectiveness. This Agreement shall become effective on the
date (the "Effective Date") on which the Borrower and each of the Banks shall
have signed a copy hereof (whether the same or different copies) and shall have
delivered the same to the Administrative Agent at the Administrative Agent's
Notice Office or, in the case of the Banks, shall have given to the
Administrative Agent telephonic (confirmed in writing), written, telex or
telecopy notice (actually received) at such office that the same has been signed
and mailed to it. The Administrative Agent will give the Borrower and each Bank
prompt written notice of the occurrence of the Effective Date.
11.12 Headings Descriptive. The headings of the several Sections and
sub-Sections 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.
11.13 Amendment or Waiver. No amendment or waiver of any provision of
this Agreement or any other Credit Document or any other Loan Document, and no
consent to any departure by the Borrower or any other Credit Party therefrom,
shall be effective unless in writing signed by the Required Banks and the
Borrower or the applicable Credit Party, as the case may be, and acknowledged by
the Administrative Agent, and each such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given;
provided, however, that no such amendment, waiver or consent shall:
(a) Extend or increase the Commitments of any Bank (or
reinstate any commitment terminated pursuant to Section 8.10) without
the written consent of such Bank;
(b) Postpone any date fixed by this Agreement or any other
Credit Document for any payment or mandatory prepayment of principal,
interest, fees or other amounts due to the Banks (or any of them)
hereunder or under any other Credit Document without the written
consent of each Bank directly affected thereby;
(c) Reduce the principal of, or the rate of interest
specified herein on, any Loan or L/C Borrowing, or (subject to clause
(iv) of the second proviso to this Section 11.13) any fees or other
amounts payable hereunder or under any other Credit Document without
the written consent of each Bank directly affected thereby; provided,
however, that only the consent of the Required Banks shall be
necessary to amend any financial covenant hereunder (or any defined
term used therein) even if the effect of such amendment would be to
reduce the rate of interest on any Loan or L/C Borrowing or to reduce
any fee payable hereunder;
(d) Change Section 8.11 or Section 11.06 in a manner that
would alter the pro rata sharing of payments required thereby without
the written consent of each Bank;
(e) Change any provision of this Section or the definition
of "Required Banks" or any other provision hereof specifying the
number or percentage of Banks required to amend, waive or otherwise
modify any rights hereunder or make any determination or grant any
consent hereunder, without the written consent of each Bank;
84
(f) Release any Subsidiary Guarantor from the Guaranty
Agreement or release all or substantially all of the Collateral
(except as expressly provided in the Collateral Documents or in a
transaction permitted by Section 7.02) without the written consent of
each Bank; or
(g) Permit the assignment or transfer by the Borrower of
any of its rights and obligations under this Agreement without the
written consent of each Bank,
and, provided further, that (i) no amendment, waiver or consent shall, unless in
writing and signed by the L/C Issuer in addition to the Banks required above,
affect the rights or duties of the L/C Issuer under this Agreement or any Letter
of Credit Application relating to any Letter of Credit issued or to be issued by
it; (ii) no amendment, waiver or consent shall, unless in writing and signed by
the Administrative Agent in addition to the Banks required above, affect the
rights or duties of the Administrative Agent under this Agreement or any other
Credit Document; (iii) no amendment, waiver or consent shall, unless in writing
and signed by the Collateral Agent in addition to the Banks required above,
affect the rights or duties of the Collateral Agent under this Agreement or any
other Credit Document and (iv) the Fee Letter may be amended, or rights or
privileges thereunder waived, in a writing executed only by the parties thereto.
Notwithstanding anything to the contrary herein, no Defaulting Bank shall have
any right to approve or disapprove any amendment, waiver or consent hereunder,
except that the Commitment of such Bank may not be increased or extended without
the consent of such Bank. For purposes of this Agreement and the other Credit
Documents, a Default or an Event of Default that has been waived in writing in
accordance with this Section 11.13 shall no longer be deemed continuing, unless
such written waiver expressly provides otherwise.
11.14 Survival.
(a) All indemnities set forth herein including, without
limitation, in Section 1.11, 1.12, 3.05, 10.07 or 11.01(b) shall
survive the execution and delivery of this Agreement and the making
of the Loans, the repayment of the Obligations, the termination of
the Total Commitment and the expiration or termination of all Letters
of Credit.
(b) All representations and warranties made hereunder and
in any other Credit Document or other document delivered pursuant
hereto or thereto or in connection herewith or therewith shall
survive the execution and delivery hereof and thereof. Such
representations and warranties have been or will be relied upon by
the Administrative Agent and each Bank, regardless of any
investigation made by the Administrative Agent or any Bank or on
their behalf and notwithstanding that the Administrative Agent or any
Bank may have had notice or knowledge of any Default or Event of
Default at the time of any Credit Extension, and shall continue in
full force and effect as long as any Loan or any other Obligation
hereunder shall remain unpaid or unsatisfied or any Letter of Credit
shall remain outstanding.
11.15 Domicile of Loans. Subject to Section 11.04, each Bank may
transfer and carry its Loans at, to or for the account of any branch office,
subsidiary or affiliate of such Bank; provided that the Borrower shall not be
responsible for costs arising under Section 1.11 or 3.05 resulting from any such
transfer to the extent not otherwise applicable to such Bank prior to such
transfer; and provided further that, in the case of any transfer to a subsidiary
or affiliate of such Bank, the transferring Bank shall maintain a register as
provided in Section 11.04(c).
11.16 Interest Rate Limitations. Notwithstanding anything to the
contrary contained in any Credit Document, the interest paid or agreed to be
paid under the Credit Documents shall not exceed the maximum rate of
non-usurious interest permitted by applicable law (the "Maximum Rate"). If the
Administrative Agent or any Bank shall receive interest in an amount that
exceeds the Maximum Rate, the excess interest shall be applied to the principal
85
of the Loans or, if it exceeds such unpaid principal, refunded to the Borrower.
In determining whether the interest contracted for, charged, or received by the
Administrative Agent or a Bank exceeds the Maximum Rate, such Person may, to the
extent permitted by applicable law, (a) characterize any payment that is not
principal as an expense, fee, or premium rather than interest, (b) exclude
voluntary prepayments and the effects thereof, and (c) amortize, prorate,
allocate, and spread in equal or unequal parts the total amount of interest
throughout the contemplated term of the Obligations hereunder.
11.17 Confidentiality. Each of the Administrative Agent, the
Collateral Agent and the Banks agrees to maintain the confidentiality of the
Information (as defined below), except that Information may be disclosed (a) to
its and its Affiliates' directors, officers, employees and agents, including
accountants, legal counsel and other advisors (it being understood that the
Persons to whom such disclosure is made will be informed of the confidential
nature of such Information and instructed to keep such Information
confidential); (b) to the extent requested by any regulatory authority; (c) to
the extent required by applicable laws or regulations or by any subpoena or
similar legal process; (d) to any other party to this Agreement; (e) in
connection with the exercise of any remedies hereunder or any suit, action or
proceeding relating to this Agreement or the enforcement of rights hereunder;
(f) subject to an agreement containing provisions substantially the same as
those of this Section, to (i) any Eligible Assignee of or Participant in, or any
prospective Eligible Assignee of or Participant in, any of its rights or
obligations under this Agreement or (ii) any direct or indirect contractual
counterparty or prospective counterparty (or such contractual counterparty's or
prospective counterparty's professional advisor) to any credit derivative
transaction relating to obligations of the Credit Parties; (g) with the consent
of the Borrower; (h) to the extent such Information (i) becomes publicly
available other than as a result of a breach of this Section or (ii) becomes
available to the Administrative Agent, the Collateral Agent or any Bank on a
nonconfidential basis from a source other than the Borrower; or (i) to the
National Association of Insurance Commissioners or any other similar
organization. In addition, the Administrative Agent and the Banks may disclose
the existence of this Agreement and information about this Agreement to market
data collectors, similar service providers to the lending industry, and service
providers to the Administrative Agent and the Banks in connection with the
administration and management of this Agreement, the other Credit Documents, the
Commitments, and the Credit Extensions. For the purposes of this Section,
"Information" means all information received from any Credit Party relating to
any Credit Party or its business, other than any such information that is (i)
"structure" or "tax aspects" of the transactions contemplated by this Agreement,
as such terms are used in Code sections 6011, 6111 or 6112, and the regulations
promulgated thereunder, or (ii) available to the Administrative Agent or any
Bank on a nonconfidential basis prior to disclosure by any Credit Party;
provided that, in the case of information received from a Credit Party after the
date hereof, such information is clearly identified in writing at the time of
delivery as confidential. Any Person required to maintain the confidentiality of
Information as provided in this Section shall be considered to have complied
with its obligation to do so if such Person has exercised the same degree of
care to maintain the confidentiality of such Information as such Person would
accord to its own confidential information. For the avoidance of doubt, the
Credit Parties, the Administrative Agent and the Banks (and each of their
Affiliates, directors, officers, agents, attorneys, employees and
representatives) are permitted to disclose to any and all Persons, without
limitation of any kind, the "structure" and "tax aspects" of the transactions
contemplated by this Agreement, as such terms are used in Code sections 6011,
6111 or 6112, and the regulations promulgated thereunder, and all materials of
any kind (including opinions and other tax analyses) that are provided to the
Administrative Agent and the Banks related to such structure and tax aspects.
The preceding sentence and clause (i) in the definition of "Information" above
are set forth herein solely to come within certain "safe harbor" provisions set
forth in certain temporary regulations promulgated under Code sections 6011,
6111 and 6112.
86
11.18 WAIVER OF JURY TRIAL. EACH PARTY TO THIS AGREEMENT HEREBY
EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION ARISING UNDER ANY CREDIT DOCUMENT OR IN ANY WAY CONNECTED WITH
OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM
WITH RESPECT TO ANY CREDIT DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN
EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN
CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT
ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT
TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE
CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
11.19 Severability. If any provision of Agreement or the other Credit
Documents is held to be illegal, invalid or unenforceable, (a) the legality,
validity and enforceability of the remaining provisions of this Agreement and
the other Credit Documents shall not be affected or impaired thereby and (b) the
parties shall endeavor in good faith negotiations to replace the illegal,
invalid or unenforceable provisions with valid provisions the economic effect of
which comes as close as possible to that of the illegal, invalid or
unenforceable provisions. The invalidity of a provision in a particular
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
11.20 Entire Agreement. This Agreement, together with the other
Credit Documents, comprises the complete and integrated agreement of the parties
on the subject matter hereof and thereof and supersedes all prior agreements,
written or oral, on such subject matter. In the event of any conflict between
the provisions of this Agreement and those of any other Credit Document, the
provisions of this Agreement shall control; provided that the inclusion of
supplemental rights or remedies in favor of the Administrative Agent, the
Collateral Agent, the L/C Issuer or the Banks in any other Credit Document shall
not be deemed a conflict with this Agreement. Each Credit Document was drafted
with the joint participation of the respective parties thereto and shall be
construed neither against nor in favor of any party, but rather in accordance
with the fair meaning thereof. THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS
REPRESENT THE FINAL AGREEMENT AMONG THE ADMINISTRATIVE AGENT, THE COLLATERAL
AGENT, THE L/C ISSUER, THE BANKS AND THE CREDIT PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
OF SUCH PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG SUCH PARTIES.
[Remainder of page intentionally blank.
Signature pages follow.]
87
Signature Page to that certain Credit Agreement dated as of the date first set
forth above, among Universal American Financial Corp., as the Borrower, Bank of
America, N.A., as the Administrative Agent, the Collateral Agent and the L/C
Issuer, and certain Banks party thereto.
SIGNATURE PAGE TO CREDIT AGREEMENT
UNIVERSAL AMERICAN FINANCIAL CORP., as Borrower
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Executive Vice President
and Chief Financial Officer
Address:
Six ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇ 10573-1068
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
E-mail: ▇▇▇▇▇▇▇▇@▇▇▇▇.▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
SIGNATURE PAGE TO CREDIT AGREEMENT
Signature Page to that certain Credit Agreement dated as of the date first set
forth above, among Universal American Financial Corp., as the Borrower, Bank of
America, N.A., as the Administrative Agent, the Collateral Agent and the L/C
Issuer, and certain Banks party thereto.
BANK OF AMERICA, N.A., Individually and as the
Administrative Agent, the Collateral Agent and
the L/C Issuer
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
SIGNATURE PAGE TO CREDIT AGREEMENT
Signature Page to that certain Credit Agreement dated as of the date first set
forth above, among Universal American Financial Corp., as the Borrower, Bank of
America, N.A., as the Administrative Agent, the Collateral Agent and the L/C
Issuer, and certain Banks party thereto.
THE CIT GROUP/EQUIPMENT FINANCING, INC., as a Bank
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Executive Vice President
SIGNATURE PAGE TO CREDIT AGREEMENT
Signature Page to that certain Credit Agreement dated as of the date first set
forth above, among Universal American Financial Corp., as the Borrower, Bank of
America, N.A., as the Administrative Agent, the Collateral Agent and the L/C
Issuer, and certain Banks party thereto.
ING CAPITAL LLC, as a Bank
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
SIGNATURE PAGE TO CREDIT AGREEMENT
Signature Page to that certain Credit Agreement dated as of the date first set
forth above, among Universal American Financial Corp., as the Borrower, Bank of
America, N.A., as the Administrative Agent, the Collateral Agent and the L/C
Issuer, and certain Banks party thereto.
SUNTRUST BANK, as a Bank
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Director
SIGNATURE PAGE TO CREDIT AGREEMENT
Signature Page to that certain Credit Agreement dated as of the date first set
forth above, among Universal American Financial Corp., as the Borrower, Bank of
America, N.A., as the Administrative Agent, the Collateral Agent and the L/C
Issuer, and certain Banks party thereto.
U.S. BANK NATIONAL ASSOCIATION, as a Bank
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President
SIGNATURE PAGE TO CREDIT AGREEMENT
Signature Page to that certain Credit Agreement dated as of the date first set
forth above, among Universal American Financial Corp., as the Borrower, Bank of
America, N.A., as the Administrative Agent, the Collateral Agent and the L/C
Issuer, and certain Banks party thereto.
▇▇▇▇▇▇▇ ▇▇▇▇▇ BANK, FSB, as a Bank
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Executive Vice President
SIGNATURE PAGE TO CREDIT AGREEMENT
