Exhibit 10
$80,000,000
CREDIT AGREEMENT
AMONG
OHIO CASUALTY CORPORATION
as Borrower,
THE LENDERS NAMED HEREIN,
LASALLE BANK NATIONAL ASSOCIATION,
as Agent,
and
ING CAPITAL LLC,
as Documentation Agent
DATED AS OF
July 31, 2002
TABLE OF CONTENTS
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Page
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ARTICLE I DEFINITIONS AND RELATED MATTERS............................... 1
1.1. Definitions................................................... 1
1.2. Miscellaneous Provisions...................................... 15
ARTICLE II THE CREDITS................................................... 16
2.1. Commitment.................................................... 16
2.2. Required Payments; Termination................................ 16
2.3. Ratable Loans................................................. 16
2.4. Types of Advances............................................. 16
2.5. Non-Use Fee; Reductions in Aggregate Commitment............... 16
2.6. Minimum Amount of Each Advance................................ 17
2.7. Optional Principal Payments................................... 17
2.8. [Intentionally Omitted.]...................................... 17
2.9. Method of Selecting Types and Interest Periods for New
Advances.................................................... 17
2.10. Conversion and Continuation of Outstanding Advances........... 18
2.11. Interest Rates and Changes in Rates, etc...................... 18
2.12. Rates Applicable After Default................................ 19
2.13. Method of Payment............................................. 19
2.14. Evidence of Indebtedness...................................... 19
2.15. Telephonic Notices............................................ 20
2.16. Interest Payment Dates; Interest and Fee Basis................ 20
2.17. Notification of Advances, Interest Rates, Prepayments and
Commitment Reductions....................................... 20
2.18. Lending Installations......................................... 20
2.19. Non-Receipt of Funds by the Agent............................. 21
ARTICLE III YIELD PROTECTION; TAXES..................................... 21
3.1. Yield Protection.............................................. 21
3.2. Changes in Capital Adequacy Regulations....................... 22
3.3. Availability of Types of Advances............................. 22
3.4. Funding Indemnification....................................... 23
3.5. Taxes......................................................... 23
3.6. Lender Statements; Survival of Indemnity...................... 24
3.7. Substitution of Lender........................................ 25
ARTICLE IV CONDITIONS PRECEDENT......................................... 25
4.1. Effectiveness................................................. 25
4.2. Each Advance.................................................. 27
ARTICLE V REPRESENTATIONS AND WARRANTIES................................ 28
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5.1. Existence and Standing........................................ 28
5.2. Authorization and Validity.................................... 28
5.3. No Conflict; Government Consent............................... 28
5.4. Financial Statements.......................................... 29
5.5. Material Adverse Change....................................... 29
5.6. Taxes......................................................... 29
5.7. Litigation and Contingent Obligations......................... 29
5.8. Subsidiaries.................................................. 30
5.9. ERISA......................................................... 30
5.10. Accuracy of Information....................................... 30
5.11. Federal Reserve Regulations................................... 30
5.12. Material Agreements........................................... 30
5.13. Compliance With Laws.......................................... 31
5.14. Ownership of Properties....................................... 31
5.15. Plan Assets; Prohibited Transactions.......................... 31
5.16. Environmental Matters......................................... 31
5.17. Investment Company Act........................................ 31
5.18. Public Utility Holding Company Act............................ 32
5.19. Insurance..................................................... 32
5.20. Solvency...................................................... 32
5.21. Insurance Licenses............................................ 32
5.22. Reinsurance................................................... 33
5.23. Reserves...................................................... 33
5.24. OCIC Capital and Surplus...................................... 33
5.25. Defaults...................................................... 33
5.26. Certain Fees.................................................. 33
5.27. Indebtedness.................................................. 34
5.28. Employee Controversies........................................ 34
5.29. Dividends..................................................... 34
ARTICLE VI COVENANTS..................................................... 34
6.1. Financial Reporting........................................... 34
6.2. Use of Proceeds............................................... 37
6.3. Notice of Default............................................. 37
6.4. Conduct of Business........................................... 38
6.5. Taxes......................................................... 38
6.6. Insurance..................................................... 38
6.7. Compliance with Laws.......................................... 38
6.8. Maintenance of Properties..................................... 39
6.9. Inspection.................................................... 39
6.10. Dividends..................................................... 39
6.11. Indebtedness.................................................. 39
6.12. Merger........................................................ 40
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6.13. Sale of Assets................................................ 40
6.14. Investments................................................... 41
6.15. Acquisitions.................................................. 41
6.16. Liens......................................................... 41
6.17. Affiliates.................................................... 43
6.18. Other Indebtedness............................................ 43
6.19. Contingent Obligations........................................ 43
6.20. Financial Covenants........................................... 44
6.21. Reinsurance................................................... 44
6.22. Tax Consolidation............................................. 44
6.23. ERISA Compliance.............................................. 44
6.24. Environmental Matters......................................... 45
6.25. Change in Corporate Structure; Fiscal Year.................... 45
6.26. Inconsistent Agreements....................................... 45
ARTICLE VII DEFAULTS.................................................... 46
ARTICLE VIII ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES............. 48
8.1. Acceleration.................................................. 48
8.2. Amendments.................................................... 48
8.3. Preservation of Rights........................................ 49
ARTICLE IX GENERAL PROVISIONS........................................... 49
9.1. Survival of Representations................................... 49
9.2. Governmental Regulation....................................... 49
9.3. Headings...................................................... 49
9.4. Entire Agreement.............................................. 49
9.5. Several Obligations; Benefits of this Agreement............... 50
9.6. Expenses; Indemnification..................................... 50
9.7. Number of Documents........................................... 51
9.8. Accounting.................................................... 51
9.9. Severability of Provisions.................................... 51
9.10. Nonliability of Lenders....................................... 51
9.11. Confidentiality............................................... 51
9.12. Nonreliance................................................... 52
9.13. Disclosure.................................................... 52
ARTICLE X THE AGENT..................................................... 52
10.1. Appointment; Nature of Relationship........................... 52
10.2. Powers........................................................ 52
10.3. General Immunity.............................................. 53
10.4. No Responsibility for Loans, Recitals, etc.................... 53
10.5. Action on Instructions of Lenders............................. 53
10.6. Employment of Agents and Counsel.............................. 53
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10.7. Reliance on Documents; Counsel................................ 54
10.8. Agent's Reimbursement and Indemnification..................... 54
10.9. Notice of Default............................................. 54
10.10. Rights as a Lender............................................ 55
10.11. Lender Credit Decision........................................ 55
10.12. Successor Agent............................................... 55
10.13. Agent's Fee................................................... 56
10.14. Delegation to Affiliates...................................... 56
ARTICLE XI SETOFF; RATABLE PAYMENTS..................................... 56
11.1. Setoff........................................................ 56
11.2. Ratable Payments.............................................. 56
ARTICLE XII BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS........... 57
12.1. Successors and Assigns........................................ 57
12.2. Participations................................................ 57
12.3. Assignments................................................... 58
12.4. Dissemination of Information.................................. 59
12.5. Tax Treatment................................................. 59
ARTICLE XIII NOTICES.................................................... 59
13.1. Notices....................................................... 59
13.2. Change of Address............................................. 60
ARTICLE XIV COUNTERPARTS................................................ 60
ARTICLE XV CHOICE OF LAW; CONSENT TO JURISDICTION; WAIVER OF JURY
TRIAL................................................................. 60
15.1. CHOICE OF LAW................................................. 60
15.2. CONSENT TO JURISDICTION....................................... 60
15.3. WAIVER OF JURY TRIAL.......................................... 60
EXHIBITS
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Exhibit A - Form of Compliance Certificate
Exhibit B - Form of Assignment Agreement
Exhibit C - Form of Revolving Note
Exhibit D Form of Solvency Certificate
SCHEDULES
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Schedule 2.15 - List of Authorized Persons
Schedule 5.3 - Consents
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Schedule 5.8 - Subsidiaries
Schedule 5.21 - Insurance Licenses
Schedule 5.22 - Reinsurance
Schedule 5.23 - Reserves
Schedule 5.27 - Indebtedness
Schedule 6.16 - Liens
Schedule 6.19 - Contingent Obligations
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CREDIT AGREEMENT
This Credit Agreement, dated as of July 31, 2002, is among Ohio
Casualty Corporation, an Ohio corporation ("Borrower"), the Lenders, LaSalle
Bank National Association ("LaSalle"), as Agent, and ING Capital LLC, as
Documentation Agent.
R E C I T A L S:
WHEREAS, the Lenders have agreed to make available to Borrower a
revolving credit facility, all upon the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND RELATED MATTERS
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1.1. Definitions. As used in this Agreement:
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"Acquisition" means any transaction, or any series of related
transactions, consummated on or after the date of this Agreement, by which
Borrower or any of its Subsidiaries (a) acquires any going business or all or
substantially all of the assets of any firm, corporation or limited liability
company, or division thereof, whether through the purchase of assets, merger
or otherwise or (b) directly or indirectly acquires (in one transaction or as
the most recent transaction in a series of transactions) at least a majority
(in number of votes) of the securities of a corporation which have ordinary
voting power for the election of directors (other than securities having such
power only by reason of the happening of a contingency) or a majority (by
percentage or voting power) of the outstanding ownership interests of a
partnership or limited liability company.
"Advance" means a borrowing hereunder (or conversion or continuation
thereof) consisting of the aggregate amount of the several Revolving Loans
made on the same Borrowing Date (or date of conversion or continuation) by the
Lenders to Borrower of the same Type and, in the case of LIBOR Advances, for
the same Interest Period.
"Affiliate" of any Person means any other Person directly or
indirectly controlling, controlled by or under common control with such
Person. A Person shall be deemed to control another Person if the controlling
Person owns 10% or more of any class of voting securities (or other ownership
interests) of the controlled Person or possesses, directly or indirectly, the
power to direct or cause the direction of the management or policies of the
controlled Person, whether through ownership of stock, by contract or
otherwise.
"Affected Lender" is defined in Section 3.7.
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"Agent" means LaSalle in its capacity as contractual representative of
the Lenders pursuant to Article X, and not in its individual capacity as a
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Lender, and any successor Agent appointed pursuant to Article X.
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"Aggregate Commitment" means the aggregate of the Commitments of all
the Lenders, as reduced from time to time pursuant to the terms hereof.
"Agreement" means this Credit Agreement, as it may be amended or
modified and in effect from time to time.
"Annual Statement" means the annual statutory financial statement of
any Insurance Subsidiary required to be filed with the insurance commissioner
(or similar authority) of its jurisdiction of incorporation, which statement
shall be in the form required by such Insurance Subsidiary's jurisdiction of
incorporation or, if no specific form is so required, in the form of financial
statements permitted by such insurance commissioner (or such similar
authority) to be used for filing annual statutory financial statements and
shall contain the type of information permitted by such insurance commissioner
(or such similar authority) to be disclosed therein, together with all
exhibits or schedules filed therewith.
"Article" means an article of this Agreement unless another document
is specifically referenced.
"Authorized Officer" of a Person means the president, any executive
vice president or senior vice president or the chief financial officer or
treasurer or controller of such Person, acting singly.
"Borrowing Date" means a date on which an Advance is made hereunder.
"Borrowing Notice" is defined in Section 2.9.
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"Business Day" means (a) with respect to any borrowing, payment or
rate selection of LIBOR Advances, a day (other than a Saturday or Sunday) on
which banks generally are open in Chicago and New York for the conduct of
substantially all of their commercial lending activities and on which dealings
in United States dollars are carried on in the London interbank market and
(b) for all other purposes, a day (other than a Saturday or Sunday) on which
banks generally are open in Chicago for the conduct of substantially all of
their commercial lending activities.
"Capital Expenditures" means, without duplication, any expenditures
for any purchase or other acquisition for value of any asset that is
classified on a consolidated balance sheet of Borrower and its Subsidiaries
prepared in accordance with GAAP as a fixed or capital asset excluding (a) the
cost of assets acquired under Capitalized Lease Obligations, (b) expenditures
of insurance proceeds to rebuild or replace any asset after a casualty loss,
and (c) leasehold improvement expenditures for which Borrower or a Subsidiary
is reimbursed promptly by the lessor.
2
"Capitalized Lease" of a Person means any lease of Property by such
Person as lessee which would be capitalized on a balance sheet of such Person
prepared in accordance with GAAP.
"Capitalized Lease Obligations" of a Person means the amount of the
obligations of such Person under Capitalized Leases which would be shown as a
liability on a balance sheet of such Person prepared in accordance with GAAP.
"Change" is defined in Section 3.2.
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"Change in Control" means, with respect to Borrower, the acquisition
of ownership, directly or indirectly, beneficially or of record, by any Person
or group (within the meaning of the Securities Exchange Act of 1934 and the
rules of the Securities and Exchange Commission thereunder as in effect from
time to time) of shares representing more than 50% of the aggregate ordinary
voting power for the election of directors of the issued and outstanding
capital stock of Borrower.
"Closing Transactions" is defined Section 4.1(d).
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"Code" means the Internal Revenue Code of 1986, as amended, reformed
or otherwise modified from time to time.
"Commitment" means, for each Lender, the obligation of such Lender to
make Loans not exceeding the amount set forth opposite its signature below or
as set forth in any Notice of Assignment relating to any assignment that has
become effective pursuant to Section 12.3.2, as such amount may be modified
from time to time pursuant to the terms hereof.
"Consolidated Indebtedness" means at any time the Indebtedness of
Borrower and its Subsidiaries calculated on a consolidated basis as of such
time that consists of Indebtedness for borrowed money to any Lender or any
other financial institution including, without limitation, all Indebtedness
shown as "Notes Payable" on the consolidated financial statements of Borrower
and its Subsidiaries delivered pursuant to Section 6.1(a) or (b).
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"Consolidated Interest Expense" means, with reference to any period,
the interest expense of Borrower and its Subsidiaries calculated on a
consolidated basis for such period.
"Consolidated Net Income" means, with reference to any period, the net
income (or loss) of Borrower and its Subsidiaries calculated on a consolidated
basis for such period.
"Consolidated Net Worth" means, at any time, the consolidated
stockholders' equity of Borrower and its Subsidiaries calculated on a
consolidated basis as of such time in accordance with GAAP, after appropriate
deduction for any minority interests in Subsidiaries, excluding changes in
unrealized gain/loss on investment assets held for sale after December 31,
2001 pursuant to Statement of Financial Accounting Standards ("SFAS") No. 115
and changes in other accumulated comprehensive income after December 31, 2001
pursuant to SFAS No. 133.
3
"Consolidated Person" means, for the taxable year of reference, each
Person which is a member of the affiliated group of Borrower if consolidated
returns are or shall be filed for such affiliated group for federal income tax
purposes or any combined or unitary group of which Borrower is a member for
state income tax purposes.
"Consolidated Total Capitalization" means, at any time, the sum of
Consolidated Indebtedness and Consolidated Net Worth, each calculated at such
time.
"Contingent Obligation" of a Person means any agreement, undertaking
or arrangement by which such Person assumes, guarantees, endorses,
contingently agrees to purchase or provide funds for the payment of, or
otherwise becomes or is contingently liable upon, the obligation or liability
of any other Person, or agrees to maintain the net worth or working capital or
other financial condition of any other Person, or otherwise assures any
creditor of such other Person against loss, but excluding Contingent
Obligations in respect of (a) insurance and reinsurance policies and
guarantees in respect thereof issued in the ordinary course of business and
(b) licensing guarantees.
"Conversion/Continuation Notice" is defined in Section 2.10.
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"Controlled Group" means all members of a controlled group of
corporations or other business entities and all trades or businesses (whether
or not incorporated) under common control which, together with Borrower or any
of its Subsidiaries, are treated as a single employer under Section 414 of the
Code.
"Default" means an event described in Article VII.
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"Debtor Relief Laws" means the Bankruptcy Code of the United States of
America, and all other liquidation, conservatorship, bankruptcy, assignment
for the benefit of creditors, moratorium, rearrangement, receivership,
insolvency, reorganization, or similar debtor relief laws of the United States
of America (including any Federal, state or local equivalents) or other
applicable jurisdictions from time to time in effect and affecting the rights
of creditors generally.
"Documentation Agent" means ING Capital, LLC.
"Environmental Laws" means any and all federal, state, local and
foreign statutes, laws, judicial decisions, regulations, ordinances, rules,
judgments, orders, decrees, plans, injunctions, permits, concessions, grants,
franchises, licenses, agreements and other governmental restrictions relating
to (a) the protection of the environment, (b) the effect of the environment on
human health, (c) emissions, discharges or releases of pollutants,
contaminants, hazardous substances or wastes into surface water, ground water
or land, or (d) the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of pollutants, contaminants,
hazardous substances or wastes or the clean-up or other remediation thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any rule or regulation issued thereunder.
4
"Excluded Taxes" means, in the case of each Lender or applicable
Lending Installation and the Agent, taxes imposed on its overall net income,
and franchise taxes imposed on it by any relevant Governmental Authority.
"Exhibit" refers to an exhibit to this Agreement, unless another
document is specifically referenced.
"Existing Reinsurance Agreements" is defined in Section 5.22.
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"Facility Termination Date" means March 15, 2005.
"Federal Funds Effective Rate" means, for any day, the rate set forth
in the weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Bank of New York (including any
such successor publication, "H.15(519)") on the preceding Business Day
opposite the caption "Federal Funds (Effective)"; or, if for any relevant day
such rate is not so published on any such preceding Business Day, the rate for
such day will be the arithmetic mean as determined by the Agent of the rates
for the last transaction in overnight Federal funds arranged prior to 9:00
A.M. (New York City time) on that day by each of three leading brokers of
Federal funds transactions in New York City selected by the Agent.
"Fee Letter" means, collectively, (a) the fee letter agreement
referred to in Section 10.13 between Borrower and the Agent, for its own
-------------
account, and, (b) one or more fee letter agreements between Borrower and the
Agent, for the account of the Lenders, covering fees agreed to between
Borrower and the Agent.
"Financial Contract" of a Person means (a) any exchange-traded or
over-the-counter futures, forward, swap or option contract or other financial
instrument with similar characteristics, or (b) any agreements, devices or
arrangements providing for payments related to fluctuations of interest rates,
exchange rates or forward rates, including, but not limited to, interest rate
exchange agreements, forward currency exchange agreements, interest rate cap
or collar protection agreements, forward rate currency or interest rate
options.
"Fiscal Quarter" means one of the four three-month accounting periods
comprising a Fiscal Year.
"Fiscal Year" means the twelve-month accounting period ending
December 31 of each year.
"Fitch" means Fitch Ratings and any successor thereto that is a
nationally recognized rating agency.
"GAAP" shall mean generally accepted accounting principles in the
United States of America.
5
"Governmental Authority" means any government (foreign or domestic) or
any state or other political subdivision thereof or any governmental body,
agency, authority, department or commission (including without limitation any
board of insurance, insurance department or insurance commission and any
taxing authority or political subdivision) or any instrumentality or officer
thereof (including without limitation any court or tribunal) exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government and any corporation, partnership or other entity
directly or indirectly owned or controlled by or subject to the control of any
of the foregoing.
"Indebtedness" of a Person means such Person's (a) obligations for
borrowed money, (b) obligations representing the deferred purchase price of
Property or services (other than accounts payable arising in the ordinary
course of such Person's business payable on terms customary in the trade),
(c) obligations, whether or not assumed, secured by Liens or payable out of
the proceeds or production from Property now or hereafter owned or acquired by
such Person, (d) obligations which are evidenced by notes, acceptances, or
other instruments, (e) obligations of such Person to purchase securities or
other property arising out of or in connection with the sale of the same or
substantially similar securities or property, (f) Capitalized Lease
Obligations, (g) Contingent Obligations, (h) obligations for which such Person
is obligated pursuant to or in respect of a Letter of Credit, (i) Off-Balance
Sheet Liabilities (excluding Operating Leases), (j) obligations for which such
person is obligated pursuant to or in respect of a Sale and Leaseback
Transaction, (k) Net Mark-to-Market Exposure of Rate Hedging Agreements and
other Financial Contracts, and (l) other obligations for borrowed money or
other financial accommodations; all of which obligations in subsections (a)
through (l) hereof are in accordance with GAAP or SAP, as applicable, and all
of which obligations in subsections (a) through (h) and (j) through (l) hereof
would be required to be shown as a liability on the consolidated balance sheet
of such Person.
"Initial Closing Date" means July 31, 2002.
"Insurance Subsidiary" means any Subsidiary which is a regulated
insurance company.
"Interest Coverage Ratio" means, as of the last day of any Fiscal
Quarter, the ratio of (a) the sum of (i) the maximum aggregate amount of all
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ordinary dividends and distributions available for distribution pursuant to
applicable law, whether or not paid, from any Insurance Subsidiary for the
period of four Fiscal Quarters ending on such date, plus (ii) the maximum
----
aggregate amount of all other distributions available from all other
Subsidiaries that are not Insurance Subsidiaries for the period of four Fiscal
Quarters ending on such date, plus (iii) cash and marketable securities of
----
Borrower (not to exceed $25,000,000 in the aggregate) on such date, to
(b) Consolidated Interest Expense for the period of four Fiscal Quarters
ending on such date.
"Interest Period" means, with respect to a LIBOR Advance, a period of
one, two, three or six months commencing on a Business Day selected by
Borrower pursuant to this Agreement. Such Interest Period shall end on the
day which corresponds numerically to such date one, two, three or six months
thereafter; provided, that if there is no such numerically corresponding day
--------
in such next, second, third or sixth succeeding month, such Interest Period
shall end on the last Business Day of such next, second, third or sixth
succeeding month. If an Interest Period would
6
otherwise end on a day which is not a Business Day, such Interest Period
shall end on the next succeeding Business Day; provided, that if said next
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succeeding Business Day falls in a new calendar month, such Interest Period
shall end on the immediately preceding Business Day.
"Interest Rate" means either the LIBOR Rate or the Prime Rate.
"Investment" of a Person means (a) any loan, advance (other than
commission, travel and similar advances to officers and employees made in the
ordinary course of business), extension of credit (other than accounts
receivable arising in the ordinary course of business on terms customary in
the trade) or contribution of capital by such Person; (b) any stocks, bonds,
mutual funds, partnership interests, notes, debentures or other securities
owned by such Person; (c) any deposit accounts and certificates of deposit
owned by such Person; (d) any structured notes, derivative financial
instruments and other similar instruments or contracts owned by such Person;
and (e) any other investments permitted under the Insurance Subsidiary's
domiciliary state's investment code.
"Investment Grade Rating" means Borrower's senior unsecured debt
rating of BBB- or higher by S&P, Baa3 or higher by Moody's or the equivalent
of such ratings by Fitch.
"Lenders" means the lending institutions listed on the signature pages
of this Agreement and their respective successors and assigns.
"Lending Installation" means, with respect to a Lender or the Agent,
the office, branch, subsidiary or affiliate of such Lender or the Agent listed
on the signature pages hereof or on a Schedule or otherwise selected by such
Lender or the Agent pursuant to Section 2.18.
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"Letter of Credit" of a Person means a letter of credit or similar
instrument which is issued upon the application of such Person or upon which
such Person is an account party or for which such Person is in any way liable.
"Leverage Ratio" means, as of any date of calculation, the ratio of
(a) Consolidated Indebtedness outstanding on such date to (b) Consolidated
Total Capitalization on such date.
"LIBOR Advance" means an Advance which bears interest at the
applicable LIBOR Rate.
"LIBOR Base Rate" means, with respect to a LIBOR Advance for the
relevant Interest Period, the rate determined by the Agent to be the rate at
which Agent offers to place deposits in U.S. dollars with first-class banks in
the London interbank market at approximately 11:00 a.m. (London time) two
Business Days prior to the first day of such Interest Period, in the
approximate amount of such LIBOR Advance and having a maturity approximately
equal to such Interest Period.
"LIBOR Loan" means a Loan which bears interest at the applicable LIBOR
Rate.
"LIBOR Margin" means, at any time with respect to LIBOR Advances, the
applicable LIBOR Margin based on Borrower's lowest Investment Grade Rating and
determined in
7
accordance with the following chart. In the case of a split rating, the
lowest Investment Grade Rating shall apply; provided, however, that the LIBOR
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Margin based on the Non-Investment Grade Rating shall only apply in the event
that two or more of Borrower's ratings are Non-Investment Grade Ratings.
8
SENIOR
UNSECURED
DEBT RATING LIBOR MARGIN
----------------------------------
> Baa1/BBB+ 0.75%
-
Baa2/BBB 1.00%
Baa3/BBB- 1.25%
Non-Investment 1.50%
Grade Rating
"LIBOR Rate" means, with respect to a LIBOR Advance for the relevant
Interest Period, the sum of (a) the quotient of (i) the LIBOR Base Rate
applicable to such Interest Period, divided by (ii) one minus the Reserve
Requirement (expressed as a decimal) applicable to such Interest Period, plus
(b) the applicable LIBOR Margin. The LIBOR Rate shall be rounded to the next
higher multiple of 1/16 of 1% if the rate is not such a multiple.
"License" means any license, certificate of authority, permit or other
authorization which is required to be obtained from any Governmental Authority
in connection with the operation, ownership or transaction of insurance
business.
"Lien" means any lien (statutory or other), mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance or preference,
priority or other security agreement or preferential arrangement of any kind
or nature whatsoever (including, without limitation, the interest of a vendor
or lessor under any conditional sale, Capitalized Lease or other title
retention agreement).
"Loan" means, with respect to a Lender, such Lender's loan made
pursuant to Article II (or any conversion or continuation thereof) in the form
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of a Revolving Loan.
"Loans" means the Revolving Loans.
"Loan Documents" means this Agreement, any Notes issued pursuant to
Section 2.14, any Fee Letter and any other documents and agreements
- ------------
contemplated hereby and executed by Borrower in favor of the Agent or any
Lender.
"Margin Stock" means the term "margin stock" as defined in Regulation
U (12 CFR 221).
"Material Adverse Effect" means a material adverse effect on (a) the
business, Property, condition (financial or otherwise), operations or
performance of Borrower and its Subsidiaries taken as a whole, (b) the ability
of Borrower to perform its obligations under the Loan
9
Documents to which it is a party, or (c) the validity or enforceability of
any of the Loan Documents or the rights or remedies of the Agent or the
Lenders thereunder.
"Material Indebtedness" is defined in Section 7.5.
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"Material Insurance Subsidiary" means an Insurance Subsidiary with a
Statutory Capital and Surplus of greater than $50,000,000.
"Moody's" means Moody's Investors Service, Inc. and any successor
thereto that is a nationally recognized rating agency.
"Multiemployer Plan" means a Plan maintained pursuant to a collective
bargaining agreement or any other arrangement to which Borrower or any member
of the Controlled Group is a party to which more than one employer is
obligated to make contributions.
"NAIC" means the National Association of Insurance Commissioners or
any successor thereto, or in lieu thereof, any other association, agency or
other organization performing advisory, coordination or other like functions
among insurance departments, insurance commissioners and similar Governmental
Authorities of the various states of the United States toward the promotion of
uniformity in the practices of such Governmental Authorities.
"Net Mark-to-Market Exposure" of a Person means, as of any date of
determination, the excess (if any) of all unrealized losses over all
unrealized profits of such Person arising from Rate Hedging Agreements and
other Financial Contracts. "Unrealized losses" means the fair market value of
the cost to such Person of replacing such Rate Hedging Agreement or Financial
Contract as of the date of determination (assuming the Rate Hedging Agreement
or Financial Contract were to be terminated as of that date), and "unrealized
profits" means the fair market value of the gain to such Person of replacing
such Rate Hedging Agreement or Financial Contract as of the date of
determination (assuming such Rate Hedging Agreement or Financial Contract were
to be terminated as of that date).
"Non-Investment Grade Rating" means, as of any date, a senior
unsecured debt rating of Borrower which does not constitute an Investment
Grade Rating.
"Non-Investment Grade Securities" means bonds, debentures, notes or
other evidence of, or other obligations to repay, Indebtedness that (a) have a
rating from S&P of lower than BBB- or lower than Baa3 from Moody's, (b) have
been designated by the Securities Valuation Office of the National Association
of Insurance Commissioners as having a lower quality than "2" or (c) do not
have a rating from any of the nationally recognized statistical rating
organizations and do not have a quality designation by said Securities
Valuation Office.
"Non-U.S. Lender" is defined in Section 3.5(d).
--------------
"Non-Use Fee Rate" means, at any time, 0.20% per annum on the unused
amount of the Aggregate Commitment.
"Notes" mean, collectively, the Revolving Notes issued in favor of
each Lender.
10
"Notice of Assignment" is defined in Section 12.3.2.
--------------
"Obligations" mean all unpaid principal of and accrued and unpaid
interest on the Loans, all accrued and unpaid fees and all expenses,
reimbursements, indemnities and other obligations of Borrower to the Lenders
or to any Lender, the Agent or any indemnified party arising under the Loan
Documents and any Rate Hedging Obligations or foreign exchange contracts of
Borrower owing to the Agent or any Lender.
"OCIC" means The Ohio Casualty Insurance Company, an Ohio corporation.
"Off-Balance Sheet Liability" of a Person means (a) any repurchase
obligation or liability of such Person with respect to accounts or notes
receivable sold by such Person, (b) any liability under any financing lease or
so-called "synthetic lease" transaction entered into by such Person, or
(c) any obligation arising with respect to any other transaction which is the
functional equivalent of or takes the place of borrowing but which does not
constitute a liability on the balance sheet of such Person, but excluding
Operating Leases and Sale and Leaseback Transactions.
"Operating Lease" means any lease or other agreement conveying the
right to use of any Property by Borrower or any Subsidiary, as lessee, other
than any Capitalized Lease.
"Other Taxes" is defined in Section 3.5(b).
--------------
"Participants" is defined in Section 12.2.1.
--------------
"Payment Date" means the last day of each calendar month.
"PBGC" means the Pension Benefit Guaranty Corporation, or any
successor thereto.
"Permitted Liens" means Liens described in Section 6.16,
------------
paragraphs (a) through (m).
"Person" means any natural person, corporation, firm, joint venture,
partnership, limited liability company, association, enterprise, trust or
other entity or organization, or any government or political subdivision or
any agency, department or instrumentality thereof.
"Plan" means an employee pension benefit plan which is covered by
Title IV of ERISA or subject to the minimum funding standards under
Section 412 of the Code as to which Borrower or any member of the Controlled
Group may have any liability.
"Prime Rate" means, for any day, the rate of interest in effect for
such day as publicly announced from time to time by Agent as its prime rate
(whether or not such rate is actually charged by Agent). Any change in the
Prime Rate announced by Agent shall take effect at the opening of business on
the day specified in the public announcement of such change.
"Prime Rate Advance" means an Advance which bears interest at the
Prime Rate.
"Prime Rate Loan" means a Loan which bears interest at Prime Rate.
11
"Property" of a Person means any and all property, whether real,
personal, tangible, intangible, or mixed, of such Person, or other assets
owned, leased or operated by such Person.
"Pro Rata Share" means, as to any Lender, (a) at any time at which the
Aggregate Commitment remains outstanding, the percentage equivalent (expressed
as a decimal rounded to the ninth decimal place) at such time of such Lender's
Commitment divided by the Aggregate Commitment, and (b) after the termination
of the Aggregate Commitment, the percentage equivalent (expressed as a
decimal, rounded to the ninth decimal place) at such time of the principal
amount of such Lender's outstanding Loans divided by the aggregate principal
amount of the outstanding Loans of all of the Lenders.
"Purchasers" is defined in Section 12.3.1.
--------------
"Quarterly Statement" means the quarterly statutory financial
statement of any Insurance Subsidiary required to be filed with the insurance
commissioner (or similar authority) of its jurisdiction of incorporation or,
if no specific form is so required, in the form of financial statements
permitted by such insurance commissioner (or such similar authority) to be
used for filing quarterly statutory financial statements and shall contain the
type of financial information permitted by such insurance commissioner (or
such similar authority) to be disclosed therein, together with all exhibits or
schedules filed therewith.
"Rate Hedging Agreement" means an agreement, device or arrangement
providing for payments which are related to fluctuations of interest rates,
exchange rates or forward rates, including, but not limited to,
dollar-denominated or cross-currency interest rate exchange agreements,
forward currency exchange agreements, interest rate cap or collar protection
agreements, forward rate currency or interest rate options, puts and warrants.
"Rate Hedging Obligations" of a Person means any and all obligations
of such Person, whether absolute or contingent and howsoever and whensoever
created, arising, evidenced or acquired (including all renewals, extensions
and modifications thereof and substitutions therefor), under (a) any and all
Rate Hedging Agreements, and (b) any and all cancellations, buy backs,
reversals, terminations or assignments of any Rate Hedging Agreement.
"RBC Ratio" means the ratio of (a) Total Adjusted Capital (as defined
in the Risk Based Capital Act or in the rules and procedures prescribed from
time to time by the NAIC with respect thereto) to (b) the Company Action Level
RBC (as defined in the Risk-Based Capital Act or in the rules and procedures
prescribed from time to time by the NAIC with respect thereto).
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor
thereto or other regulation or official interpretation of said Board of
Governors relating to reserve requirements applicable to member banks of the
Federal Reserve System.
"Regulation T" means Regulation T of the Board of Governors of the
Federal Reserve System as from time to time in effect and shall include any
successor or other regulation or
12
official interpretation of such Board of Governors relating to the extension
of credit by securities brokers and dealers for the purpose of purchasing or
carrying margin stocks applicable to such Persons.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor or
other regulation or official interpretation of said Board of Governors
relating to the extension of credit by banks for the purpose of purchasing or
carrying margin stocks applicable to member banks of the Federal Reserve
System.
"Regulation X" means Regulation X of the Board of Governors of the
Federal Reserve System as from time to time in effect and shall include any
successor or other regulation or official interpretation of said Board of
Governors relating to the extension of credit by the specified lenders for the
purpose of purchasing or carrying margin stocks applicable to such Persons.
"Replacement Lender" is defined in Section 3.7.
-----------
"Reportable Event" means a reportable event as defined in Section 4043
of ERISA and the regulations issued under such section, with respect to a
Plan, excluding, however, such events as to which the PBGC has by regulation
waived the requirement of Section 4043(a) of ERISA that it be notified within
30 days of the occurrence of such event; provided, that a failure to meet the
--------
minimum funding standard of Section 412 of the Code and of Section 302 of
ERISA shall be a Reportable Event regardless of the issuance of any such
waiver of the notice requirement in accordance with either Section 4043(a) of
ERISA or Section 412(d) of the Code.
"Reports" is defined in Section 9.6.
-----------
"Required Lenders" means Lenders in the aggregate holding at least
fifty-one percent (51%) of the aggregate unpaid principal amount of the
outstanding Revolving Loans.
"Reserve Requirement" means, with respect to an Interest Period, the
maximum aggregate reserve requirement (including all basic, supplemental,
marginal and other reserves) which is imposed under Regulation D on
Eurocurrency liabilities.
"Revolving Note" is defined in Section 2.14(d).
---------------
"Revolving Loan" is defined in Section 2.1.
-----------
"Risk Based Capital Act" means the Risk-Based Capital for Insurers
Model Act (RBC), as adopted by an Insurance Subsidiary's domiciliary state,
and regulations promulgated thereunder, as amended from time to time.
"Risk Based Capital Guidelines" is defined in Section 3.2.
-----------
"S&P" means Standard and Poor's Ratings Service, a division of The
McGraw Hill Companies, Inc. and any successor thereto that is a nationally
recognized rating agency.
13
"Sale and Leaseback Transaction" means any sale or other transfer of
Property by any Person with the intent to lease such Property as lessee.
"SAP" means, with respect to any Insurance Subsidiary, the statutory
accounting practices prescribed or permitted by the insurance commissioner (or
other similar authority) in the jurisdiction of such Person for the
preparation of annual statements and other financial reports by insurance
companies of the same type as such Person in effect from time to time.
"Schedule" refers to a specific schedule to this Agreement, unless
another document is specifically referenced.
"Section" means a numbered section of this Agreement, unless another
document is specifically referenced.
"Single Employer Plan" means a Plan maintained by Borrower or any
member of the Controlled Group for employees of Borrower or any member of the
Controlled Group.
"Statutory Capital and Surplus" means, with respect to any Insurance
Subsidiary at any time, the surplus as regards policyholders of such Insurance
Subsidiary at such time, as determined in accordance with SAP ("Liabilities,
Surplus and Other Funds" statement, Page 3, Column 1, Line 32 of the 2001
Annual Statement).
"Subordinated Indebtedness" shall mean unsecured Indebtedness of
Borrower or any of its Subsidiaries which has subordination terms, covenants,
pricing and other terms which have been approved in writing by the Required
Lenders.
"Subsidiary" of a Person means (a) any corporation more than 50% of
the outstanding securities having ordinary voting power of which shall at the
time be owned or controlled, directly or indirectly, by such Person or by one
or more of its Subsidiaries or by such Person and one or more of its
Subsidiaries, or (b) any partnership, limited liability company, association,
joint venture or similar business organization more than 50% of the ownership
interests having ordinary voting power of which shall at the time be so owned
or controlled. Unless otherwise expressly provided, all references herein to
a "Subsidiary" shall mean a Subsidiary of Borrower.
"Substantial Portion" means, with respect to the Property of any
Person, Property which (a) represents more than 10% of the consolidated assets
of such Person as would be shown in the consolidated financial statements of
such Person as at the end of the Fiscal Quarter next preceding the date on
which such determination is made, or (b) is responsible for more than 10% of
the consolidated net revenues or of the consolidated net income of such Person
as reflected in the financial statements referred to in clause (a) above.
"Taxes" means any and all present or future taxes, duties, levies,
imposts, deductions, charges or withholdings, and any and all liabilities with
respect to the foregoing, but excluding Excluded Taxes.
"Transferee" is defined in Section 12.4.
------------
14
"Type" means, with respect to any Advance, its nature as a Prime Rate
Advance or a LIBOR Advance.
"Unfunded Liabilities" means the amount (if any) by which the present
value of all vested and unvested accrued benefits under all Single Employer
Plans exceeds the fair market value of all such Plan assets allocable to such
benefits, all determined as of the then most recent valuation date for such
Plans using PBGC actuarial assumptions for single employer plan terminations.
"Unmatured Default" means an event which but for the lapse of time or
the giving of notice, or both, would constitute a Default.
"Wholly-Owned Subsidiary" of a Person means (a) any Subsidiary all of
the outstanding voting securities of which shall at the time be owned or
controlled, directly or indirectly, by such Person or one or more Wholly-Owned
Subsidiaries of such Person, or by such Person and one or more Wholly-Owned
Subsidiaries of such Person, or (b) any partnership, limited liability
company, association, joint venture or similar business organization 100% of
the ownership interests having ordinary voting power of which shall at the
time be so owned or controlled. Unless otherwise expressly provided, all
references herein to a "Wholly-Owned Subsidiary" shall mean a Wholly-Owned
Subsidiary of Borrower.
1.2. Miscellaneous Provisions.
------------------------
(a) The foregoing definitions shall be equally applicable
to both the singular and plural forms of the defined terms. References herein
to particular columns, lines or sections of any Person's Annual Statement
shall be deemed, where appropriate, to be references to the corresponding
column, line or section of such Person's Quarterly Statement, or if no such
corresponding column, line or section exists or if any report form changes,
then to the corresponding item referenced thereby. References herein to the
Risk Based Capital Act shall be deemed to be references to such act as in
effect on the date of this Agreement; provided, that the Agent, the Lenders
--------
and Borrower agree to make mutually acceptable modifications hereto upon any
modification to such act so as to equitably reflect such modifications in
order that the criteria for evaluating the Insurance Subsidiaries will be the
same after such modifications as if such modifications had not occurred. Each
accounting term used herein which is not otherwise defined herein shall be
defined in accordance with GAAP unless otherwise specified.
(b) In the event that any change in GAAP, SAP and/or any
law or regulation occurs after the date of this Agreement and such change
results in a material variation in the method of calculation of financial
covenants or other terms of this Agreement, then Borrower, the Agent and the
Lenders agree to amend such provisions of this Agreement so as to equitably
reflect such changes in order that the criteria for evaluating Borrower's
financial condition will be the same after such changes as if such changes had
not occurred.
15
ARTICLE II
THE CREDITS
-----------
2.1. Commitment.
----------
(a) From and including the date of this Agreement and
prior to the Facility Termination Date, each Lender severally agrees, on the
terms and conditions set forth in this Agreement, to make Loans (each such
Loan, a "Revolving Loan") to Borrower from time to time in amounts which shall
--------------
not exceed in the aggregate at any one time outstanding the amount of its
Commitment. Subject to the terms of this Agreement, Borrower may borrow,
repay and reborrow Revolving Loans at any time prior to the Facility
Termination Date. The Commitments to lend hereunder shall expire on the
Facility Termination Date.
(b) Borrower hereby agrees that if at any time, as a
result in reductions in the Aggregate Commitment, the outstanding principal
amount of the Loans exceeds the Aggregate Commitment, Borrower shall repay
immediately its then outstanding Loans in such amount as may be necessary to
eliminate such excess.
2.2. Required Payments; Termination. Any outstanding Advances and all
------------------------------
other unpaid Obligations shall be paid in full by Borrower on the Facility
Termination Date.
2.3. Ratable Loans. Each Advance hereunder shall consist of Revolving
-------------
Loans made from the several Lenders ratably in proportion to the ratio that
their respective Commitments bear to the Aggregate Commitment.
2.4. Types of Advances. The Advances may be Prime Rate Advances or
-----------------
LIBOR Advances, or a combination thereof, selected by Borrower in accordance
with Sections 2.9 and 2.10.
------------ ----
2.5. Non-Use Fee; Reductions in Aggregate Commitment. Borrower agrees
-----------------------------------------------
to pay to the Agent for the account of each Lender a non-use fee at a per
annum rate equal to the Non-Use Fee Rate times such Lender's Pro Rata Share
(as adjusted from time to time) of the daily average of the unused amount of
the Aggregate Commitment from the date hereof to and including the Facility
Termination Date, payable in arrears on the last day of each calendar quarter
and on the Facility Termination Date. For purposes of calculating usage
hereunder for any particular day, the Aggregate Commitment shall be deemed
used to the extent of the aggregate principal amount of all outstanding
Revolving Loans on such day. Borrower may permanently reduce the Aggregate
Commitment in whole, or in part ratably among the Lenders, in a minimum
amount of $1,000,000 (and in multiples of $500,000 if in excess thereof)
upon at least three (3) Business Days' written notice to the Agent, which
notice shall specify the amount of any such reduction; provided, that the
--------
amount of the Aggregate Commitment may not be reduced below the aggregate
principal amount of the outstanding Advances. All accrued non-use fees shall
be payable on the effective date of any termination or reduction of the
obligations of the Lenders to make Loans hereunder.
16
2.6. Minimum Amount of Each Advance. Each Advance shall be in the
------------------------------
minimum amount of $1,000,000 (and in multiples of $500,000 if in excess
thereof); provided, that any Prime Rate Advance may be in the amount of the
--------
unused Aggregate Commitment.
2.7. Optional Principal Payments. Borrower may from time to time pay,
---------------------------
without penalty or premium, all outstanding Advances or, in a minimum
aggregate amount of $1,000,000 or any integral multiple of $500,000 in excess
thereof, (i) any portion of the outstanding Advances constituting LIBOR
Advances (a) at the end of the then applicable Interest Period upon three (3)
Business Days' prior notice to the Agent, or (b) in the case of any date
which is not the last day of the applicable Interest Period, any portion of
the outstanding Advances constituting LIBOR Advances upon five (5) Business
Days' prior notice to the Agent, subject to the payment of any funding
indemnification amounts required by Section 3.4 but otherwise without penalty
-----------
or premium, and (b) any portion of any outstanding Advances constituting
Prime Rate Advances upon prior notice to the Agent not later than 10:00 a.m.
(Chicago time) on the date of such payment.
2.8. [Intentionally Omitted.]
---------------------
2.9. Method of Selecting Types and Interest Periods for New Advances.
---------------------------------------------------------------
Borrower shall select the Type of Advance and, in the case of each LIBOR
Advance, the Interest Period applicable thereto from time to time. Borrower
shall give the Agent irrevocable notice (a "Borrowing Notice") not later than
----------------
10:00 a.m. (Chicago time) on the Borrowing Date of each Prime Rate Advance
and three Business Days before the Borrowing Date for each LIBOR Advance,
specifying:
(a) the Borrowing Date, which shall be a Business Day, of such
Advance,
(b) the aggregate amount of such Advance,
(c) the Type of Advance selected, and
(d) in the case of each LIBOR Advance, the Interest Period
applicable thereto, which shall end on or prior to the
Facility Termination Date.
Not later than 1:00 p.m. (Chicago time) on each Borrowing Date, each Lender
shall make available its Revolving Loan or Loans in funds immediately
available in Chicago to the Agent at its address specified pursuant to
Article XIII. The Agent will make the funds so received from the Lenders
- ------------
available to Borrower at the Agent's aforesaid address.
2.10. Conversion and Continuation of Outstanding Advances. Prime Rate
---------------------------------------------------
Advances shall continue as Prime Rate Advances unless and until such Prime
Rate Advances are converted into LIBOR Advances pursuant to this Section 2.10
------------
or are repaid in accordance with Section 2.7. Each LIBOR Advance shall
-----------
continue as a LIBOR Advance until the end of the then applicable Interest
Period therefor, at which time such LIBOR Advance shall be automatically
converted into a Prime Rate Advance unless (x) such LIBOR Advance is or was
repaid in accordance with Section 2.7 or (y) Borrower shall have given the
-----------
Agent a Conversion/Continuation Notice (as defined below) requesting that,
at the end of such Interest Period, such LIBOR Advance continue
17
as a LIBOR Advance for the same or another Interest Period. Subject to the
terms of Section 2.6, Borrower may elect from time to time to convert all or
-----------
any part of a Prime Rate Advance into a LIBOR Advance. Borrower shall give
the Agent irrevocable notice (a "Conversion/Continuation Notice") of each
------------------------------
conversion of a Prime Rate Advance into a LIBOR Advance or continuation of a
LIBOR Advance not later than 10:00 a.m. (Chicago time) at least three (3)
Business Days prior to the date of the requested conversion or continuation,
specifying:
(a) the requested date of such conversion or continuation,
which shall be a Business Day,
(b) the aggregate amount and Type of the Advance which is
to be converted or continued, and
(c) the amount of such Advance which is to be converted
into or continued as a LIBOR Advance and the duration
of the Interest Period applicable thereto.
2.11. Interest Rates and Changes in Rates, etc. Each Prime Rate Advance
----------------------------------------
shall bear interest on the outstanding principal amount thereof, for each day
from and including the date such Advance is made or is automatically
converted from a LIBOR Advance into a Prime Rate Advance pursuant to
Section 2.10, to but excluding the date it is paid or is converted into a
- ------------
LIBOR Advance pursuant to Section 2.10 hereof, at a rate per annum equal to
------------
the Prime Rate for such day. Changes in the rate of interest on that portion
of any Advance maintained as a Prime Rate Advance will take effect
simultaneously with each change in the Prime Rate. Each LIBOR Advance shall
bear interest on the outstanding principal amount thereof from and including
the first day of the Interest Period applicable thereto to (but not including)
the last day of such Interest Period at the interest rate determined by the
Agent as applicable to such LIBOR Advance based upon Borrower's selections
under Section 2.9 and 2.10 and otherwise in accordance with the terms hereof.
----------- ----
No Interest Period may end after the Facility Termination Date.
2.12. Rates Applicable After Default. Notwithstanding anything to the
------------------------------
contrary contained in Section 2.9 or 2.10, during the continuance of a
----------- ----
Default the Required Lenders may, at their option, by notice to Borrower
(which notice may be revoked at the option of the Required Lenders
notwithstanding any provision of Section 8.2 requiring unanimous consent of
-----------
the Lenders to changes in interest rates), declare that no Advance may be
made as, converted into or continued as a LIBOR Advance. During the
continuance of a Default the Required Lenders may, at their option, by notice
to Borrower (which notice may be revoked at the option of the Required
Lenders notwithstanding any provision of Section 8.2 requiring unanimous
-----------
consent of the Lenders to changes in interest rates), declare that each Loan
shall bear interest at a higher rate which is two percentage points (2.00%)
per annum above the Interest Rate then in effect hereunder; provided, that
--------
during the continuance of a Default under Section 7.6 or 7.7, the higher rate
----------- ---
set forth above shall be applicable to all Loans without any election or
action on the part of the Agent or any Lender.
18
2.13. Method of Payment. All payments of the Obligations hereunder
-----------------
shall be made, without setoff, deduction, or counterclaim, in immediately
available funds to the Agent at the Agent's address specified pursuant to
Article XIII, or at any other Lending Installation of the Agent specified in
- ------------
writing by the Agent to Borrower, by noon (local time) on the date when due
and shall be applied ratably by the Agent among the Lenders. Each payment
delivered to the Agent for the account of any Lender shall be delivered
promptly by the Agent to such Lender in the same type of funds that the Agent
received at its address specified pursuant to Article XIII or at any Lending
------------
Installation specified in a notice received by the Agent from such Lender.
The Agent is hereby authorized to charge the account of Borrower maintained
with Agent for each payment of principal, interest and fees payable thereby
as it becomes due hereunder.
2.14. Evidence of Indebtedness.
------------------------
(a) Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing the Obligations of Borrower to such Lender
resulting from each Loan made by such Lender from time to time, including the
amounts of principal and interest payable and paid to such Lender from time
to time hereunder.
(b) The Agent shall also maintain accounts in which it will record
(i) the amount of each Loan made hereunder, the Type thereof and the Interest
Period with respect thereto, (ii) the amount of any principal or interest due
and payable or to become due and payable from Borrower to each Lender
hereunder and (iii) the amount of any sum received by the Agent hereunder
from Borrower and each Lender's share thereof.
(c) The entries maintained in the accounts maintained pursuant to
paragraphs (a) and (b) above shall be prima facie evidence of the existence
and amounts of the Obligations therein recorded; provided, that the failure
--------
of the Agent or any Lender to maintain such accounts or any error therein
shall not in any manner affect the obligation of Borrower to repay the
Obligations in accordance with their terms.
(d) In addition to the foregoing, each Lender's Commitment for
Revolving Loans shall be evidenced by a promissory note (a "Revolving Note")
--------------
substantially in the form of Exhibit C hereto.
---------
2.15. Telephonic Notices. Borrower hereby authorizes the Lenders and
------------------
the Agent to extend, convert or continue Advances, effect selections of Types
of Advances and to transfer funds based in each case on telephonic notices
made by any person or persons the Agent or any Lender in good faith believes
to be a person identified on the List of Authorized Persons set forth on
Schedule 2.15 hereto, as the same may be amended in writing from time to time,
- -------------
who is acting on behalf of Borrower. Borrower agrees to deliver promptly to
the Agent a written confirmation, if such confirmation is requested by the
Agent or any Lender, of each telephonic notice signed by an Authorized
Officer. If the written confirmation differs in any material respect from
the action taken by the Agent and the Lenders, the records of the Agent and
the Lenders shall govern absent manifest error.
19
2.16. Interest Payment Dates; Interest and Fee Basis. Interest accrued
----------------------------------------------
on each Prime Rate Loan shall be payable in arrears on each Payment Date,
commencing with the first such date to occur after the date hereof and at
maturity. Interest accrued on each LIBOR Loan shall be payable on the last
day of its applicable Interest Period, on any date on which the LIBOR Loan is
prepaid, whether by acceleration or otherwise, and at maturity. Interest
accrued on each LIBOR Loan having an Interest Period longer than three months
shall also be payable on the last day of each three-month interval during
such Interest Period. Interest and non-use fees shall be calculated for
actual days elapsed on the basis of a 360-day year. Interest shall be
payable for the day an Advance is made but not for the day of any payment on
the amount paid if payment is received prior to noon (local time) at the place
of payment. If any payment of principal of or interest on an Advance shall
become due on a day which is not a Business Day, such payment shall be made
on the next succeeding Business Day and, in the case of a principal payment,
such extension of time shall be included in computing interest in connection
with such payment.
2.17. Notification of Advances, Interest Rates, Prepayments and
Commitment Reductions.
---------------------------------------------------------
Promptly after receipt thereof, the Agent will notify each Lender of the
contents of each Aggregate Commitment reduction notice, Borrowing Notice,
Conversion/Continuation Notice, and repayment notice received by it hereunder.
The Agent will notify each Lender of the interest rate applicable to each
LIBOR Advance promptly upon determination of such interest rate and will give
each Lender prompt notice of each change in the Prime Rate.
2.18. Lending Installations. Each Lender may book its Loans at any
---------------------
Lending Installation selected by such Lender and may change its Lending
Installation from time to time. All terms of this Agreement shall apply to
any such Lending Installation and the Loans and any Notes issued hereunder
shall be deemed held by each Lender for the benefit of such Lending
Installation. Each Lender may, by written notice to the Agent and Borrower
in accordance with Article XIII, designate replacement or additional Lending
------------
Installations through which Loans will be made by it and for whose account
Loan payments are to be made.
2.19. Non-Receipt of Funds by the Agent. Unless Borrower or a Lender,
---------------------------------
as the case may be, notifies the Agent prior to the date on which it is
scheduled to make payment to the Agent of (a) in the case of a Lender, the
proceeds of a Loan or (b) in the case of Borrower, a payment of principal,
interest or fees to the Agent for the account of the Lenders, that it does
not intend to make such payment, the Agent may assume that such payment has
been made. The Agent may, but shall not be obligated to, make the amount of
such payment available to the intended recipient in reliance upon such
assumption. If such Lender or Borrower, as the case may be, has not in fact
made such payment to the Agent, the recipient of such payment shall, on
demand by the Agent, repay to the Agent the amount so made available together
with interest thereon in respect of each day during the period commencing on
the date such amount was so made available by the Agent until the date the
Agent recovers such amount at a rate per annum equal to (x) in the case of
payment by a Lender, the Federal Funds Effective Rate for such day or (y) in
the case of payment by Borrower, the Interest Rate applicable to the relevant
Loan.
20
ARTICLE III
YIELD PROTECTION; TAXES
-----------------------
3.1. Yield Protection. If, on or after the Initial Closing Date, any
----------------
Lender determines that the adoption of or change in any law or any
governmental or quasi-governmental rule, regulation, policy, guideline or
directive (whether or not having the force of law), or any change in the
interpretation or administration thereof by any governmental or
quasi-governmental authority, central bank or comparable agency charged with
the interpretation or administration thereof, or compliance by any Lender or
applicable Lending Installation with any request or directive (whether or not
having the force of law) of any such authority, central bank or comparable
agency:
(a) subjects any Lender or any applicable Lending Installation to
any Taxes, or changes the basis of taxation of payments (other
than with respect to Excluded Taxes) to any Lender in respect
of its LIBOR Loans, or
(b) imposes or increases or deems applicable any reserve,
assessment, insurance charge, special deposit or similar
requirement against assets of, deposits with or for the account
of, or credit extended by, any Lender or any applicable Lending
Installation (other than reserves and assessments taken into
account in determining the interest rate applicable to LIBOR
Advances), or
(c) imposes any other condition the result of which is to increase
the cost to any Lender or any applicable Lending Installation of
agreeing to make or making, funding or maintaining its LIBOR
Loans or reduces any amount receivable by any Lender or any
applicable Lending Installation in connection with its LIBOR
Loans, or requires any Lender or any applicable Lending
Installation to make any payment calculated by reference to the
amount of LIBOR Loans held or interest received by it, by an
amount deemed material by such Lender,
and the result of any of the foregoing is to increase the cost to such Lender
or applicable Lending Installation of making, funding or maintaining its LIBOR
Loans or Commitment or to reduce the return received by such Lender or
applicable Lending Installation in connection with such LIBOR Loans or
Commitment, then, within 15 days of demand by such Lender, Borrower shall pay
such Lender such additional amount or amounts as will compensate such Lender
for such increased cost or reduction in amount received. Notwithstanding the
foregoing, if any such Lender fails to notify Borrower within 180 days of such
change, then such Lender shall only be entitled to payment for additional
amounts incurred from and after the date which is 180 days prior to the date
that such Lender gives such notice.
3.2. Changes in Capital Adequacy Regulations. If a Lender determines
---------------------------------------
the amount of capital required or expected to be maintained by such Lender,
any Lending Installation of such Lender or any corporation controlling such
Lender is increased as a result of a Change, then, within 15 days of demand
by such Lender, Borrower shall pay such Lender the amount necessary
21
to compensate for any shortfall in the rate of return on the portion of such
increased capital which such Lender determines is attributable to this
Agreement, its Loans or its Commitment to make Loans hereunder (after taking
into account such Lender's policies as to capital adequacy); provided, that
--------
if any Lender fails to notify Borrower within 180 days after it obtains
actual knowledge of any event giving rise to the payment of additional
amounts under this Section 3.2, then such Lender shall only be entitled to
-----------
payment for additional amounts incurred from and after the date which is 180
days prior to the date that such Lender gives such notice. "Change" means
------
(a) any change after the Initial Closing Date in or change in the
interpretation of the Risk-Based Capital Guidelines or (b) any adoption of
or change in or change in the interpretation of any other law, governmental or
quasi-governmental rule, regulation, policy, guideline, interpretation, or
directive (whether or not having the force of law) after the date of this
Agreement which affects the amount of capital required or expected to be
maintained by any Lender or any Lending Installation or any corporation
controlling any Lender. "Risk-Based Capital Guidelines" means (x) the
-----------------------------
risk-based capital guidelines in effect in the United States on the date of
this Agreement, including transition rules, and (y) the corresponding capital
regulations promulgated by regulatory authorities outside the United States
implementing the July 1988 report of the Basle Committee on Banking Regulation
and Supervisory Practices Entitled "International Convergence of Capital
Measurements and Capital Standards," including transition rules, and any
amendments to such regulations adopted prior to the date of this Agreement.
3.3. Availability of Types of Advances. If any Lender determines that
---------------------------------
maintenance of its LIBOR Loans at a suitable Lending Installation would
violate any applicable law, rule, regulation, or directive, whether or not
having the force of law, or if the Required Lenders determine that (a)
deposits of a type and maturity appropriate to match fund LIBOR Advances are
not available or (b) the interest rate applicable to a Type of Advance does
not accurately reflect the cost of making or maintaining such Advance, then
the Agent shall suspend the availability of the affected Type of Advance and
require any affected LIBOR Advances to be repaid or converted to Prime Rate
Advances, subject to the payment of any funding indemnification amounts
required by Section 3.4.
-----------
3.4. Funding Indemnification. If any payment of a LIBOR Advance occurs
-----------------------
on a date which is not the last day of the applicable Interest Period, whether
because of acceleration, prepayment or otherwise, or a LIBOR Advance is not
made on the date specified by Borrower for any reason other than default by
the Lenders, Borrower will indemnify each Lender for any loss or cost incurred
by it resulting therefrom, including, without limitation, any loss or cost in
liquidating or employing deposits acquired to fund or maintain such LIBOR
Advance.
3.5. Taxes.
-----
(a) Subject to Section 3.5(d), all payments by Borrower to or for
--------------
the account of any Lender or the Agent hereunder or under any Note shall be
made free and clear of and without deduction for any and all Taxes. If
Borrower shall be required by law to deduct any Taxes from or in respect of
any sum payable hereunder to any Lender or the Agent, (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 3.5) such Lender or the
- -----------
22
Agent (as the case may be) receives an amount equal to the sum it would have
received had no such deductions been made, (ii) Borrower shall make such
deductions, (iii) Borrower shall pay the full amount deducted to the relevant
authority in accordance with applicable law and (iv) Borrower shall furnish
to the Agent the original copy of a receipt evidencing payment thereof within
30 days after such payment is made. Any amounts paid by Borrower hereunder
which are subsequently determined to be overpayments shall be refunded to
Borrower within 30 days of such determination.
(b) In addition, Borrower hereby agrees to pay any present or
future stamp or documentary taxes and any other excise or property taxes,
charges or similar levies which arise from any payment made pursuant to this
Agreement or under any Note or from the execution or delivery of, or otherwise
with respect to, this Agreement or any Note ("Other Taxes").
-----------
(c) Borrower hereby agrees to indemnify the Agent and each Lender
for the full amount of Taxes or Other Taxes (including, without limitation,
any Taxes or Other Taxes imposed on amounts payable under this Section 3.5)
-----------
paid by the Agent or such Lender in respect of this Agreement or any Note and
any liability (including 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. Payments due under this indemnification shall be
made within 30 days of the date the Agent or such Lender makes demand
therefor pursuant to Section 3.6.
-----------
(d) Each Lender that is not incorporated under the laws of the
United States of America or a state thereof (each a "Non-U.S. Lender") agrees
---------------
that it will, not less than ten Business Days after the date of this Agreement,
(i) deliver to each of Borrower and the Agent two duly completed copies of
United States Internal Revenue Service Form 1001 or 4224, certifying in
either case that such Lender is entitled to receive payments under this
Agreement without deduction or withholding of any United States federal income
taxes, and (ii) deliver to each of Borrower and the Agent a United States
Internal Revenue Form W-8 or W-9, as the case may be, and certify that it is
entitled to an exemption from United States backup withholding tax. Each
Non-U.S. Lender further undertakes to deliver to each of Borrower and the
Agent (x) renewals or additional copies of such form (or any successor form)
on or before the date that such form expires or becomes obsolete, and
(y) after the occurrence of any event requiring a change in the most recent
forms so delivered by it, such additional forms or amendments thereto as may
be reasonably requested by Borrower or the Agent. All forms or amendments
described in the preceding sentence shall certify that such Lender is entitled
to receive payments under this Agreement without deduction or withholding of
any United States federal income taxes, unless an event (including without
limitation any change in treaty, law or regulation) has occurred prior to the
date on which any such delivery would otherwise be required which renders all
such forms inapplicable or which would prevent such Lender from duly
completing and delivering any such form or amendment with respect to it and
such Lender advises Borrower and the Agent that it is not capable of receiving
payments without any deduction or withholding of United States federal income
tax.
(e) For any period during which a Non-U.S. Lender has failed to
provide Borrower with an appropriate form pursuant to clause (d) above
(unless such failure is due to a
23
change in treaty, law or regulation, or any change in the interpretation or
administration thereof by any governmental authority, occurring subsequent to
the date on which a form originally was required to be provided), such
Non-U.S. Lender shall not be entitled to indemnification under this
Section 3.5 with respect to Taxes imposed by the United States; provided,
- ----------- --------
that, should a Non-U.S. Lender which is otherwise exempt from or subject to a
reduced rate of withholding tax become subject to Taxes because of its
failure to deliver a form required under clause (d) above, Borrower shall take
such steps as such Non-U.S. Lender shall reasonably request to assist such
Non-U.S. Lender to recover such Taxes.
(f) Any Lender that is entitled to an exemption from or reduction
of withholding tax with respect to payments under this Agreement or any Note
pursuant to the law of any relevant jurisdiction or any treaty shall deliver
to Borrower (with a copy to the Agent), at the time or times prescribed by
applicable law, such properly completed and executed documentation prescribed
by applicable law as will permit such payments to be made without withholding
or at a reduced rate.
3.6. Lender Statements; Survival of Indemnity. To the extent reasonably
----------------------------------------
possible, each Lender shall designate an alternate Lending Installation with
respect to its LIBOR Loans to reduce any liability of Borrower to such Lender
under Sections 3.1, 3.2 and 3.5 or to avoid the unavailability of LIBOR
------------ --- ---
Advances under Section 3.3, so long as such designation is not, in the
-----------
reasonable judgment of such Lender, disadvantageous to such Lender. Each
Lender shall deliver a written statement of such Lender to Borrower (with a
copy to the Agent) as to the amount due, if any, under Section 3.1, 3.2, 3.4
------- --- --- ---
or 3.5. Such written statement shall set forth in reasonable detail the
---
calculations upon which such Lender determined such amount and shall be
final, conclusive and binding on Borrower in the absence of manifest error.
Determination of amounts payable under such Sections in connection with a
LIBOR Loan shall be calculated as though each Lender funded its LIBOR Loan
through the purchase of a deposit of the type and maturity corresponding to
the deposit used as a reference in determining the LIBOR Rate applicable to
such Loan, whether in fact that is the case or not. Unless otherwise provided
herein, the amount specified in the written statement of any Lender shall be
payable on demand after receipt by Borrower of such written statement. The
obligations of Borrower under Sections 3.1, 3.2, 3.4 and 3.5 shall survive
------------ --- --- ---
payment of the Obligations and termination of this Agreement.
3.7. Substitution of Lender. Upon the receipt by Borrower from any
----------------------
Lender (an "Affected Lender") of a claim for compensation under
---------------
Section 3.1, 3.2 or 3.5 or a notice in accordance with Section 3.3 regarding
- ----------- --- --- -----------
the unavailability of a Type of Advance, Borrower may: (a) request the
Affected Lender to use commercially reasonable efforts to obtain a
replacement bank or other entity satisfactory to Borrower to acquire and
assume all or a ratable part of all of such Affected Lender's Loans and
Commitment at the face amount thereof (a "Replacement Lender"); (b) request
------------------
one or more of the other Lenders to acquire and assume all or part of such
Affected Lender's Loans and Commitment (which request each such other Lender
may decline or agree to in its sole discretion); or (c) designate a
Replacement Lender. Any such designation of a Replacement Lender under
clause (a) or (c) shall be subject to the prior written consent of the Agent
(which consent shall not unreasonably be withheld). Any transfer of Loans or
Commitment pursuant to this Section shall be made in accordance with
Section 12.3 and Section 3.4, if applicable.
- ------------ -----------
24
ARTICLE IV
CONDITIONS PRECEDENT
--------------------
4.1. Effectiveness. This Agreement shall not be effective unless
-------------
Borrower shall have furnished to the Agent with sufficient copies for the
Lenders:
(a) Good Standing Certificates. Good Standing Certificate
(or equivalent certificates) for Borrower and each Material Insurance
Subsidiary certified by the appropriate governmental officer in its
jurisdiction of incorporation.
(b) Corporate Documents. Copies, certified by the Secretary or
-------------------
Assistant Secretary of Borrower, of its Articles of Incorporation and By-laws
and its Board of Directors' resolutions authorizing the transactions described
herein and the entry into the Loan Documents to which Borrower is a party and
identifying by name and title the Authorized Officers of Borrower authorized
to sign the Loan Documents to which Borrower is a party, and to make
borrowings hereunder.
(c) Secretary's Certificate. Incumbency certificate, executed by
-----------------------
the Secretary or Assistant Secretary of Borrower, which shall identify by
name and title and bear the signatures of the Authorized Officers identified
in the resolutions of Borrower upon which certificate the Agent and the
Lenders shall be entitled to rely until informed of any change in writing
by Borrower.
(d) Officer's Certificate. A certificate, dated the date of this
---------------------
Agreement, signed by an Authorized Officer of Borrower, in form and substance
satisfactory to the Agent, to the effect that: (i) on such date (both before
and after giving effect to the making of the Loans hereunder and the
consummation of the other transactions contemplated hereby and by the other
Loan Documents (collectively, the "Closing Transactions") no Default or
--------------------
Unmatured Default has occurred and is continuing; (ii) no injunction or
temporary restraining order which would prohibit the making of the Loans or
the consummation of any of the Closing Transactions, or other litigation which
could reasonably be expected to have a Material Adverse Effect, is pending or,
to the best of such Person's knowledge, threatened; (iii) all orders,
consents, approvals, licenses, authorizations or validations of, or filings,
recordings or registrations with, or exemptions by, any governmental or public
body or authority, or any subdivision thereof, required to make or consummate
the Closing Transactions have been or, prior to the time required, will have
been, obtained, given, filed or taken and are or will be in full force and
effect (or Borrower has obtained effective relief with respect to the
application thereof) and all applicable waiting periods have expired;
(iv) each of the representations and warranties set forth in Article V of this
---------
Agreement is true and correct on and as of such date; and (v) since the date
of the most recent Financial Statements (as hereinafter defined) delivered to
Agent, no event or change has occurred that has caused or evidences a Material
Adverse Effect.
(e) GAAP Equity. Evidence that as of the Initial Closing Date
-----------
Borrower has a minimum GAAP equity of not less than $1,000,000,000.
25
(f) Legal Opinion. A written opinion of Borrower's general counsel,
-------------
addressed to the Agent and the Lenders in form and substance acceptable to
the Agent and its counsel.
(g) Letters of Direction. Written money transfer instructions with
--------------------
respect to the Loans in form and substance acceptable to the Agent and its
counsel addressed to the Agent and signed by an Authorized Officer, together
with such other related money transfer authorizations as the Agent may have
reasonably requested.
(h) Credit Agreement. Executed originals of this Agreement in form
----------------
and substance satisfactory to the Lenders.
(i) Notes. Executed originals of such Notes as may be requested by
-----
a Lender payable to the order of each such requesting Lender.
(j) Other Loan Documents. Executed originals of such other Loan
--------------------
Documents in form and substance satisfactory to the Lenders, together with
all schedules, exhibits, certificates, instruments, opinions, documents and
financial statements required to be delivered pursuant hereto and thereto,
also in form and substance satisfactory to the Lenders.
(k) Solvency Certificate. A written solvency certificate from the
--------------------
treasurer or chief financial officer of Borrower substantially in the form of
Exhibit D attached hereto and dated the date of this Agreement.
- ---------
(l) Regulatory Matters. Receipt of any required regulatory approvals
------------------
from any Governmental Authority with respect to the Closing Transactions.
(m) Payment of Fees and Expenses. All costs, fees and expenses
----------------------------
(including, without limitation, reasonable legal fees and expenses), and all
other compensation contemplated by this Agreement or the other Loan Documents,
due to the Agent shall have been paid to the extent due.
(n) Insurance. The Agent shall have received evidence of insurance
---------
complying with the terms hereof for the business and properties of Borrower
and its Subsidiaries, in form and substance reasonably satisfactory to the
Agent.
(o) Other. Such other documents as the Agent, any Lender or their
-----
counsel may have reasonably requested including information regarding
litigation, tax, accounting, labor, insurance, pension liabilities (actual or
contingent), real estate leases, material contracts, debt agreements, property
ownership, and contingent liabilities of Borrower and its Subsidiaries.
4.2. Each Advance. The Lenders shall not be required to make any Advance
------------
(other than an Advance that, after giving effect thereto and to the
application of the proceeds thereof, does not increase the aggregate amount of
outstanding Advances) unless on the applicable Borrowing Date:
(a) There exists no Default or Unmatured Default.
26
(b) The representations and warranties contained in Article V below
are true and correct as of such Borrowing Date except to the
extent any such representation or warranty is stated to relate
solely to an earlier date, in which case such representation
or warranty shall have been true and correct on and as of such
earlier date.
(c) All legal matters incident to the making of such Advance shall
be satisfactory to the Lenders and their counsel.
Each Borrowing Notice and/or Conversion/Continuation Notice with respect
to each such Advance shall constitute a representation and warranty by
Borrower that the conditions contained in Section 4.2(a) and (b) have been
-------------- ---
satisfied. Any Lender may require a duly completed compliance certificate in
substantially the form of Exhibit A as a condition to making an Advance.
---------
ARTICLE V
REPRESENTATIONS AND WARRANTIES
------------------------------
Borrower represents and warrants to the Lenders that, both before and
after giving effect to the Closing Transactions:
5.1. Existence and Standing. Each of Borrower and its Subsidiaries is a
----------------------
corporation, partnership or limited liability company duly and properly
incorporated or organized, as the case may be, validly existing and (to the
extent such concept applies to such entity) in good standing under the laws
of its jurisdiction of incorporation or organization and has all requisite
authority to conduct its business in each jurisdiction in which its business
is conducted, except where the failure to be so qualified, licensed or
authorized could not reasonably be expected to have a Material Adverse Effect.
5.2. Authorization and Validity. Borrower has the power and authority
--------------------------
and legal right to execute and deliver the Loan Documents to which it is a
party and to perform its obligations thereunder. The execution and delivery
by Borrower of the Loan Documents to which it is a party and the performance
of its obligations thereunder have been duly authorized by proper corporate
proceedings, and the Loan Documents to which Borrower is a party constitute
legal, valid and binding obligations of Borrower enforceable against Borrower
in accordance with their terms, except as enforceability may be limited by
bankruptcy, insolvency or similar laws affecting the enforcement of creditors'
rights generally.
5.3. No Conflict; Government Consent. Neither the execution and
-------------------------------
delivery by any of Borrower of the Loan Documents to which it is a party, the
consummation of the Closing Transactions nor compliance with the provisions
of the Loan Documents will, or at the relevant time did, violate (a) any law,
rule, regulation (including Regulations T, U and X), order, writ, judgment,
injunction, decree or award binding on Borrower or any of its Subsidiaries,
(b) Borrower's or any of its Subsidiaries' articles or certificate of
incorporation, partnership agreement, certificate of partnership, articles or
certificate of organization, by-laws, or operating or other management
agreement, as the case may be, or (c) the provisions of any indenture,
instrument or agreement to which Borrower or any of its Subsidiaries is a
party or is subject, or
27
by which it, or its Property, is bound, or conflict with or constitute a
default thereunder, or result in, or require, the creation or imposition of
any Lien in, of or on the Property of Borrower or any Subsidiary pursuant to
the terms of any such indenture, instrument or agreement, except for any
violation of any such law, rule, regulation, order, writ, judgment,
injunction, decree, award, indenture, instrument or agreement that could not
reasonably be expected to have a Material Adverse Effect. Except as set forth
in Schedule 5.3 hereto, no order, consent, adjudication, approval, license,
------------
authorization, or validation of, or filing, recording or registration with, or
exemption by, or other action in respect of any Governmental Authority, or
any subdivision thereof, or any other Person (including without limitation
the stockholders of any Person) is required to be obtained by Borrower or any
Subsidiary in connection with the execution and delivery of the Loan
Documents, the borrowings under this Agreement, the payment and performance by
Borrower of the Obligations or the legality, validity, binding effect or
enforceability of any of the Loan Documents or the consummation of any of
the Closing Transactions.
5.4. Financial Statements. Borrower has heretofore furnished to the
--------------------
Agent and each of the Lenders (a) the December 31, 2001 audited consolidated
financial statements of Borrower and its Subsidiaries, (b) the unaudited
consolidated financial statements of Borrower and its Subsidiaries through
March 31, 2002, (c) the December 31, 2001 audited Annual Statement of each
Material Insurance Subsidiary and (d) the March 31, 2002 Quarterly Statement of
each Material Insurance Subsidiary (collectively, the "Financial Statements").
--------------------
Each of the Financial Statements was prepared in accordance with GAAP or
statutory accounting practices, as applicable, and (in the case of the
Financial Statements prepared in accordance with GAAP) fairly presents the
consolidated financial condition and operations of Borrower and its
Subsidiaries at such dates and the consolidated results of their operations
for the respective periods then ended (except, in the case of such unaudited
statements, for normal year-end audit adjustments).
5.5. Material Adverse Change. Since March 31, 2002, there has been no
-----------------------
change in the business, Property, performance, condition (financial or
otherwise) or operations of Borrower and its Subsidiaries which could
reasonably be expected to have a Material Adverse Effect.
5.6. Taxes. Borrower and each of its Subsidiaries have filed all United
-----
States federal tax returns and all other tax returns which are required to be
filed and have paid all taxes due pursuant to said returns or pursuant to any
assessment received by Borrower or any such Subsidiary, except such taxes, if
any, as are being contested in good faith and as to which adequate reserves
have been provided in accordance with GAAP or SAP, as applicable, and as to
which no Lien exists. No tax liens have been filed and no claims are being
asserted with respect to any such taxes. The charges, accruals and reserves
on the books of Borrower and its Subsidiaries in respect of any taxes or other
governmental charges are in accordance with GAAP or SAP, as applicable.
5.7. Litigation and Contingent Obligations. There is no litigation,
-------------------------------------
arbitration, governmental investigation, proceeding or inquiry pending or,
to the knowledge of any of their officers, threatened against or affecting
Borrower or any of its Subsidiaries which could reasonably be expected to
have a Material Adverse Effect or which seeks to prevent, enjoin or
28
delay the making of any Loans or the consummation of any other Closing
Transaction. Other than any liability incident to any litigation,
arbitration or proceeding that could not reasonably be expected to have a
Material Adverse Effect, none of Borrower or any of its Subsidiaries has any
material contingent obligations not provided for or disclosed in the
Financial Statements.
5.8. Subsidiaries. Schedule 5.8 contains an accurate list of all
------------ ------------
Subsidiaries of Borrower as of the date of this Agreement, setting forth
their respective jurisdictions of organization and the percentage of their
respective capital stock or other ownership interests owned by Borrower or
other Subsidiaries. All of the issued and outstanding shares of capital
stock or other ownership interests of such Subsidiaries have been (to the
extent such concepts are relevant with respect to such ownership interests)
duly authorized and issued and are fully paid and non-assessable.
5.9. ERISA. Borrower and each of its Subsidiaries are in compliance in
-----
all material respects with all applicable provisions of ERISA, except where
such failure could not reasonably be expected to have a Material Adverse
Effect. Each Plan complies in all material respects with all applicable
requirements of law and regulations and no Reportable Event has occurred with
respect to any Plan, except where such failure could not reasonably be
expected to have a Material Adverse Effect.
5.10. Accuracy of Information. No information, exhibit or report
-----------------------
furnished by Borrower or any of its Subsidiaries to the Agent or to any
Lender in connection with the negotiation of, or compliance with, the Loan
Documents contained any material misstatement of fact or omitted to state a
material fact or any fact necessary to make the statements contained therein
not misleading.
5.11. Federal Reserve Regulations. Neither Borrower nor any of its
---------------------------
Subsidiaries is engaged, directly or indirectly, principally, or as one of
its important activities, in the business of extending, or arranging for the
extension of, credit for the purpose of purchasing or carrying Margin Stock.
No part of the proceeds of any Loan will be used in a manner which would
violate, or result in a violation of, Regulation T, Regulation U or
Regulation X. Neither the making of any Loan hereunder nor the use of the
proceeds thereof will violate or be inconsistent with the provisions of
Regulation T, Regulation U or Regulation X. Following the application of the
proceeds of the Loans, less than 25% of the value (as determined by any
reasonable method) of the assets of Borrower and its Subsidiaries which are
subject to any limitation on sale, pledge, or other restriction hereunder
taken as a whole will be represented by Margin Stock.
5.12. Material Agreements. Neither Borrower nor any Subsidiary is a
-------------------
party to any agreement or instrument or subject to any charter or other
corporate restriction which could reasonably be expected to have a Material
Adverse Effect. Neither Borrower nor any Subsidiary is in default in the
performance, observance or fulfillment of any of the obligations, covenants
or conditions contained in (a) any agreement to which it is a party, which
default could reasonably be expected to have a Material Adverse Effect or (b)
any agreement or instrument evidencing or governing any Material Indebtedness.
29
5.13. Compliance With Laws. Borrower and its Subsidiaries have complied
--------------------
with all applicable statutes, rules, regulations, orders and restrictions of
any domestic or foreign government or any instrumentality or agency thereof
having jurisdiction over the conduct of their respective businesses or the
ownership of their respective Property except for any failure to comply with
any of the foregoing which could not reasonably be expected to have a
Material Adverse Effect.
5.14. Ownership of Properties. On the date of this Agreement, Borrower
-----------------------
and its Subsidiaries have good title, free of all Liens other than Permitted
Liens, to all of the Property and assets reflected in Borrower's most recent
consolidated financial statements provided to the Agent as owned by Borrower
and its Subsidiaries.
5.15. Plan Assets; Prohibited Transactions. Borrower is not an entity
------------------------------------
deemed to hold "plan assets" within the meaning of 29 C.F.R. Section 2510.3-101
of an employee benefit plan (as defined in Section 3(3) of ERISA) which is
subject to Title of ERISA or any plan (within the meaning of Section 4975 of
the Code), and neither the execution of this Agreement nor the making of
Loans hereunder gives rise to a prohibited transaction within the meaning of
Section 406 of ERISA or Section 4975 of the Code.
5.16. Environmental Matters. In the ordinary course of its business,
---------------------
the officers of Borrower consider the effect of Environmental Laws on the
business of Borrower and its Subsidiaries, in the course of which they
identify and evaluate potential risks and liabilities accruing to Borrower
due to Environmental Laws. On the basis of this consideration, Borrower has
concluded that Environmental Laws cannot reasonably be expected to have a
Material Adverse Effect. Neither Borrower nor any of its Subsidiaries has
received any notice to the effect that its operations are not in material
compliance with any of the requirements of applicable Environmental Laws or
are the subject of any federal or state investigation evaluating whether any
remedial action is needed to respond to a release of any toxic or hazardous
waste or substance into the environment, which non-compliance or remedial
action could reasonably be expected to have a Material Adverse Effect.
5.17. Investment Company Act. Neither Borrower nor any Subsidiary is an
----------------------
"investment company" or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended.
5.18. Public Utility Holding Company Act. Neither Borrower nor any
----------------------------------
Subsidiary 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.
5.19. Insurance. Borrower and its Subsidiaries maintain insurance on
---------
their Property with such companies, in such amounts and covering such risks
as is, in each case, consistent with sound business practice and which may
include self-insurance.
5.20. Solvency. Immediately after the consummation of the Closing
--------
Transactions and immediately following the making of each Loan, if any, made
on the date hereof and after giving
30
effect to the application of the proceeds of such Loans, (a) the value (in
accordance with GAAP or SAP) of the assets of Borrower and its Subsidiaries
on a consolidated basis will exceed the debts and liabilities, subordinated,
contingent or otherwise, of Borrower and its Subsidiaries on a consolidated
basis; (b) the present value (in accordance with GAAP or SAP) of the assets
of Borrower and its Subsidiaries on a consolidated basis will be greater than
the amount that will be required to pay the probable liability of Borrower
and its Subsidiaries on a consolidated basis on their debts and other
liabilities, subordinated, contingent or otherwise, as such debts and other
liabilities become absolute and matured; (c) Borrower and its Subsidiaries on
a consolidated basis will be able to pay their debts and liabilities,
subordinated, contingent or otherwise, as such debts and liabilities become
absolute and matured; and (d) Borrower and its Subsidiaries on a consolidated
basis will not have unreasonably small capital with which to conduct the
businesses in which they are engaged as such businesses are now conducted and
are proposed to be conducted after the date hereof.
5.21. Insurance Licenses. Schedule 5.21 hereto lists the jurisdiction
------------------
of domicile of each Material Insurance Subsidiary, the line or lines of
insurance in which each Material Insurance Subsidiary is engaged and the
jurisdictions in which each Material Insurance Subsidiary holds a License and
is authorized to transact insurance business, in each case as of the date of
this Agreement. No License, the loss of which could reasonably be expected
to have a Material Adverse Effect, is the subject of a proceeding for
suspension or revocation. To Borrower's knowledge, there is no sustainable
basis for such suspension or revocation, and no such suspension or revocation
has been threatened by any Governmental Authority. To Borrower's knowledge,
no Material Insurance Subsidiary has received written notice from any
Governmental Authority that it is deemed to be "commercially domiciled" for
insurance regulatory purposes in any jurisdiction other than that indicated
on Schedule 5.21.
-------------
5.22. Reinsurance. Schedule 5.22 lists all ceded or assumed reinsurance
----------- -------------
agreements to which any Material Insurance Subsidiary is, as of the date of
this Agreement, a party, which are currently in force, and under which there
is liability by either party to the agreement (collectively, the "Existing
--------
Reinsurance Agreements"). Each of the Existing Reinsurance Agreements is in
- ----------------------
full force and effect, is valid and binding in all material respects in
accordance with its terms, and, as of the date hereof, no Material Insurance
Subsidiary has, to Borrower's knowledge, received notice (other than
provisional notices of cancellation received in the ordinary course of
business) that any other party to an in-force Existing Reinsurance Agreement
will cancel or not renew such agreement, which cancellation or nonrenewal
could reasonably be expected to have a Material Adverse Effect. Borrower has
no knowledge as of the date hereof that any material amount recoverable by
any Material Insurance Subsidiary pursuant to any Existing Reinsurance
Agreement is not fully collectible in due course. To the knowledge of
Borrower, no Material Insurance Subsidiary is in default in any material
respect as to any Existing Reinsurance Agreement. Except as disclosed in
Schedule 5.22, each Material Insurance Subsidiary is entitled to take full
- -------------
credit in its statutory financial statements for ceded reinsurance under the
Existing Reinsurance Agreements pursuant to applicable insurance laws.
Except as disclosed in Schedule 5.22, there is no claim under any Existing
-------------
Reinsurance Agreement in excess of $1,000,000 which is disputed by any other
party to such agreement.
31
5.23. Reserves. Except as set forth on Schedule 5.23, each loss and
-------- -------------
loss adjustment expense reserve and other material liability amount in
respect of the insurance business, including, without limitation, material
reserve and other material liability amounts in respect of insurance policies
of each Material Insurance Subsidiary was determined in accordance with
generally accepted actuarial standards consistently applied, was fairly stated
in accordance with sound actuarial principles and was in compliance with the
requirements of the insurance laws, rules and regulations of its state of
domicile as of the date thereof. Each Material Insurance Subsidiary owns
assets that qualify as admitted assets under applicable law in an amount at
least equal to the sum of all such reserves and liability amounts and its
minimum capital and surplus as required by the insurance laws, rules and
regulations of its state of domicile.
5.24. OCIC Capital and Surplus. As of the date of this Agreement, OCIC
------------------------
has a Statutory Capital and Surplus of at least $625,000,000.
5.25. Defaults. No Default or Unmatured Default has occurred and is
--------
continuing.
5.26. Certain Fees. No broker's or finder's fee or commission was, is
------------
or will be payable by Borrower or any Subsidiary with respect to any of the
transactions contemplated by this Agreement or any other Closing Transaction.
No other similar fee or commissions will be payable by Borrower or any
Subsidiary for any other services rendered to Borrower or any Subsidiary
ancillary to any of the transactions contemplated by this Agreement or any
other Closing Transaction.
5.27. Indebtedness. Attached hereto as Schedule 5.27 is a complete and
------------ -------------
correct list of all Indebtedness of Borrower and its Subsidiaries outstanding
on the date of this Agreement (other than Indebtedness in a principal amount
not exceeding $500,000 for a single item of Indebtedness and $1,000,000 in
the aggregate for all such Indebtedness listed), showing the aggregate
principal amount which was outstanding on such date after giving effect to the
Closing Transactions.
5.28. Employee Controversies. There are no strikes, work stoppages or
----------------------
controversies pending or threatened between Borrower or any of its
Subsidiaries and any of its employees, other than employee grievances arising
in the ordinary course of business, which, in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.
5.29. Dividends. No Insurance Subsidiary is subject to any regulatory
---------
prohibition regarding the declaration or payment of dividends that is not
generally applicable to all insurance companies which are domiciled in the
same jurisdiction and are engaged in the same line of business as such
Insurance Subsidiary.
ARTICLE VI
COVENANTS
----------
During the term of this Agreement, unless the Required Lenders shall
otherwise consent in writing:
32
6.1. Financial Reporting. Borrower will maintain, for itself and each
-------------------
Subsidiary, a system of accounting established and administered in accordance
with GAAP and/or SAP, consistently applied, and furnish to the Lenders:
(a) As soon as practicable and in any event within 90 days
after the close of each of its Fiscal Years, an unqualified (except for
qualifications relating to changes in accounting principles or practices
reflecting changes in GAAP and required or approved by Borrower's independent
certified public accountants) audit report certified by independent certified
public accountants acceptable to the Lenders, prepared in accordance with GAAP
on a consolidated and consolidating basis (consolidating statements need not
be certified by such accountants) for itself and its Subsidiaries, including
balance sheets as of the end of such period and related statements of income,
retained earnings and cash flows, accompanied by (i) any management letter
prepared by said accountants, and (ii) a certificate of said accountants that,
in the course of their examination necessary for their certification of the
foregoing, they have obtained no knowledge of any Default or Unmatured
Default, or if, in the opinion of such accountants, any Default or Unmatured
Default shall exist, stating the nature and status thereof.
(b) As soon as practicable and in any event within 60 days
after the close of each Fiscal Quarter, consolidated and consolidating
unaudited balance sheets of Borrower as of the close of each such period and
consolidated and consolidating statements of income, retained earnings and
cash flows for the period from the beginning of such fiscal year to the end of
such quarter, all prepared in accordance with GAAP and certified by its chief
financial officer or its controller if such controller is an officer of
Borrower.
(c) As soon as practicable and in any event within 75 days
after the close of each Fiscal Year of each Material Insurance Subsidiary,
copies of the unaudited Annual Statement of such Material Insurance
Subsidiary, all such statements to be prepared in accordance with SAP
consistently applied throughout the periods reflected therein.
(d) No later than each June 15 of each Fiscal Year, copies
of the audited statement entitled "The Ohio Casualty Insurance Company and its
Affiliated Fire and Casualty Insurers Audited Combined Financial Statements
(Statutory Basis)" for the prior Fiscal Year, prepared in accordance with SAP,
audited and certified by independent certified public accountants of
recognized national standing.
(e) As soon as practicable and in any event within 60 days
after the close of each of the first three Fiscal Quarters of each Material
Insurance Subsidiary, copies of the Quarterly Statement of each of the
Material Insurance Subsidiaries, all such statements to be prepared in
accordance with SAP consistently applied through the period reflected herein.
(f) Promptly and in any event within ten Business Days
after (i) learning thereof, notification of any changes after the date hereof
in the rating given by A.M. Best Co., S&P, Moody's or Fitch in respect of
Borrower or any Material Insurance Subsidiary and (ii) receipt thereof, copies
of any ratings analysis by A.M. Best Co., S&P, Moody's or Fitch relating to
Borrower or any Material Insurance Subsidiary.
33
(g) As soon as available and in any event not later than
April 30 of each Fiscal Year, a "Statement of Actuarial Opinion" and
"Management Discussion and Analysis" including review of year-end loss
reserves for each Material Insurance Subsidiary (prepared in accordance with
SAP) for such Fiscal Year by an actuary reasonably acceptable to Agent and
Borrower (which may include Borrower's certified public accountants) as filed
with the applicable regulatory insurance authority in compliance with the
requirements thereof (or a report containing equivalent information for any
Material Insurance Subsidiary not so required to file the foregoing with the
applicable regulatory insurance authority).
(h) As soon as available, and in any event by March 31 of
each Fiscal Year, copies showing the Risk Based Capital Ratio calculations and
IRIS (Insurance Regulatory Information System) ratio calculations provided by
NAIC for the previous Fiscal Year for each Material Insurance Subsidiary.
(i) Copies of any other externally prepared actuarial
reserve reports, if any, prepared with respect to any Material Insurance
Subsidiary, promptly after the receipt thereof.
(j) As soon as available, but in any event within 90 days
after the beginning of each Fiscal Year of Borrower, a copy of the projected
income statement of Borrower and its Subsidiaries for such Fiscal Year.
(k) Together with the financial statements required by
clauses (a) and (b) above, a compliance certificate in substantially the form
of Exhibit A signed by its chief financial officer or its treasurer showing
---------
the calculations necessary to determine compliance with this Agreement and
stating that no Default or Unmatured Default exists, or if any Default or
Unmatured Default exists, stating the nature and status thereof.
(l) As soon as possible and in any event within 10 days
after Borrower knows that any Reportable Event has occurred with respect to
any Plan, a statement, signed by the chief financial officer or the treasurer
of Borrower, describing said Reportable Event and the action proposed to be
taken with respect thereto, and as soon as possible and in any event within
ten (10) days after learning thereof, notification of any Lien imposed by the
PBGC or the IRS on the assets of any member of the Controlled Group in respect
of any Plan maintained by any such member (or any other employee pension
benefit plan as to which any such member may be liable) which, together with
all such Liens, relates to liabilities in excess of ten percent of the net
worth (determined according to GAAP and without reduction for any reserve for
such liabilities) of Borrower and its Subsidiaries.
(m) Promptly upon the furnishing thereof to the shareholders of
Borrower, copies of all financial statements, reports and proxy statements
so furnished.
(n) Promptly upon the filing thereof, copies of all
registration statements and annual, quarterly, monthly or other regular
reports which Borrower or any of its Subsidiaries files with the Securities
and Exchange Commission, the National Association of Securities Dealers, any
securities exchange, the NAIC or any insurance commission or department or
analogous Governmental Authority (including without limitation, any filing
made by Borrower
34
or any Subsidiary pursuant to any insurance holding company act or related
rules or regulations), but excluding routine or non-material filings with the
NAIC, any insurance commissioner or department or analogous Governmental
Authority (such routine or non-material filings to include, but not be
limited to, (i) new or renewal applications for licensure as a third party
administrator, managing general agent, agent, agency, adjuster, multiple
employer trust, multiple employer welfare arrangement, managed care
organization, utilization review agent or any related filing, (ii) Form B or
Form C filings, (iii) Form D filings made in the ordinary course of business,
(iv) applications for a Certificate of Authority to act as a foreign insurer,
(v) Secretary of State or County Clerk filings, or (vi) State Department of
Commerce or Department of Financial Institution filings).
(o) Promptly and in any event within ten (10) days after
learning thereof, notification of (i) any tax assessment, demand, notice of
proposed deficiency or notice of deficiency received by Borrower or any other
Consolidated Person or (ii) the filing of any tax Lien or commencement of any
judicial proceeding by or against any such Consolidated Person, if any such
assessment, demand, notice, Lien or judicial proceeding (or all such
assessments, demands, notices, Liens and judicial proceedings, in the
aggregate) relates to tax liabilities in excess of ten percent (10%) of the
net worth (determined according to generally accepted accounting standards and
without reduction for any reserve for such liabilities) of Borrower and its
Subsidiaries taken as a whole.
(p) As soon as practicable and in any event within 60 days
after the close of each Fiscal Quarter, either copies of or a summary report
of any material modifications or amendments to material reinsurance contracts
which were entered into by any Insurance Subsidiary during such Fiscal
Quarter.
(q) Such other information as the Agent or any Lender may
from time to time reasonably request.
6.2. Use of Proceeds. Borrower will, and will cause each Subsidiary to,
---------------
use the proceeds of the Loans to meet general corporate needs of Borrower and
its Subsidiaries, including, but not limited to, working capital,
acquisitions financing, and share repurchases.
6.3. Notice of Default. Borrower will, and will cause each Subsidiary
-----------------
to, give prompt notice in writing to the Agent and the Lenders of (a) the
occurrence of any Default or Unmatured Default, (b) the occurrence of any
other development, financial or otherwise, relating specifically to Borrower
or any of its Subsidiaries (and not of a general economic or political nature)
which could reasonably be expected to have a Material Adverse Effect, (c) the
receipt of any notice from any Governmental Authority of the expiration
without renewal, revocation or suspension of, or the institution of any
proceedings to revoke or suspend, any License now or hereafter held by any
Insurance Subsidiary which is required to conduct insurance business in
compliance with all applicable laws and regulations and the expiration,
revocation or suspension of which could reasonably be expected to have a
Material Adverse Effect, (d) the receipt of any notice from any Governmental
Authority of the institution of any disciplinary proceedings against or in
respect of any Insurance Subsidiary, or the issuance of any order, the taking
of any action or any request for an extraordinary audit for cause by any
Governmental Authority which, if adversely determined,
35
could reasonably be expected to have a Material Adverse Effect, (e) any
judicial or administrative order limiting or controlling the insurance
business of any Insurance Subsidiary (and not the insurance industry
generally) which has been issued or adopted and which has had, or could
reasonably be expected to have, a Material Adverse Effect, or (f) the
commencement of any litigation which could reasonably be expected to create
a Material Adverse Effect.
Each such notice pursuant to this Section 6.3 shall be accompanied by
-----------
a written statement of an Authorized Officer of Borrower setting forth the
nature and status of the occurrence and what action is being taken by Borrower
with respect thereto.
6.4. Conduct of Business. Borrower will, and will cause each Insurance
-------------------
Subsidiary to, (a) carry on and conduct its business in substantially the
same manner and in substantially the same fields of enterprise as it is
presently conducted, (b) engage in insurance-related businesses, (c) do all
things necessary to remain duly incorporated, validly existing and in good
standing in its jurisdiction of incorporation and its jurisdiction of domicile
and maintain all requisite authority to conduct its business in each other
jurisdiction in which its business is conducted, and (d) do all things
necessary to renew, extend and continue in effect all Licenses which may at
any time and from time to time be necessary for any such Insurance Subsidiary
to operate its insurance business in compliance with all applicable laws and
regulations; provided, that an Insurance Subsidiary may withdraw from one or
--------
more states (other than its state of domicile) as an admitted insurer if such
withdrawal is determined by such Insurance Subsidiary's Board of Directors to
be in the best interest of such Insurance Subsidiary and could not reasonably
be expected to have a Material Adverse Effect. No Material Insurance
Subsidiary shall change its state of domicile or incorporation without prior
written notice to the Lenders. Each Material Insurance Subsidiary in
existence as of the date of this Agreement shall continue to be a Wholly-Owned
Subsidiary; provided, that any Material Insurance Subsidiary may be merged
--------
into Borrower or into any Wholly-Owned Subsidiary if permitted by appropriate
regulatory authorities. Notwithstanding the foregoing, Borrower or any
Insurance Subsidiary may engage in other non-insurance related businesses so
long as the revenues from such activities do not constitute more than twenty
percent (20%) of the total GAAP revenues of Borrower and its Subsidiaries on
a consolidated basis at any time.
6.5. Taxes. Borrower will, and will cause each Subsidiary to, timely
-----
file complete and correct United States federal and applicable foreign, state
and local tax returns required by law and pay when due all taxes, assessments
and governmental charges and levies upon it or its income, profits or Property,
except those which are being contested in good faith by appropriate
proceedings and with respect to which adequate reserves have been set aside in
accordance with GAAP.
6.6. Insurance. Borrower will, and will cause each Subsidiary to,
---------
maintain with financially sound and reputable insurance companies insurance,
including self insurance, on all their Property in such amounts and covering
such risks as is consistent with sound business practice, and Borrower will
furnish to the Agent or any Lender upon request full information as to the
insurance carried.
36
6.7. Compliance with Laws. Borrower will, and will cause each
--------------------
Subsidiary to, comply with all laws, rules, regulations, orders, writs,
judgments, injunctions, decrees or awards to which it may be subject
including, without limitation, all Environmental Laws, the failure to comply
with which could reasonably be expected to have a Material Adverse Effect.
6.8. Maintenance of Properties. Borrower will, and will cause each
-------------------------
Subsidiary to, do all things necessary to maintain, preserve, protect and
keep its Property in good repair, working order and condition, and make all
necessary and proper repairs, renewals and replacements so that its business
carried on in connection therewith may be properly conducted at all times.
6.9. Inspection. Borrower will, and will cause each Subsidiary to,
----------
permit the Agent and the Lenders, by their respective representatives and
agents, to inspect any of the Property, books and financial records of
Borrower and its Subsidiaries, to examine and make copies of the books of
accounts and other financial records of Borrower and its Subsidiaries, and to
discuss the affairs, finances and accounts of Borrower and its Subsidiaries
with, and to be advised as to the same by, their respective officers at such
reasonable times and intervals as the Agent or any Lender may designate;
provided, that so long as no Default or Unmatured Default has occurred and is
- --------
continuing, the agent and the Lenders shall provide at least five (5) Business
Days' advance notice of any inspection or examination. Borrower will keep or
cause to be kept, and cause each Subsidiary to keep or cause to be kept,
appropriate records and books of account in which complete entries are to be
made reflecting its and their business and financial transactions, such entries
to be made in accordance with GAAP or SAP, as applicable, consistently applied.
6.10. Dividends. Borrower will not, nor will it permit any Subsidiary to,
---------
declare or pay any dividends or make any distributions on its capital stock
(other than dividends payable in its own capital stock) or redeem, repurchase
or otherwise acquire or retire any of its capital stock at any time
outstanding, except that any Subsidiary may declare and pay dividends, whether
ordinary or extraordinary, to a Wholly-Owned Subsidiary or to Borrower;
provided, however, that so long as no Default or Unmatured Default has occurred
- -------- -------
and is continuing, (i) Borrower, or any Subsidiary of Borrower, may declare or
pay any dividends or make any distributions on its capital stock in the
ordinary course of business, and (ii) Borrower may repurchase its outstanding
stock in an amount not to exceed $225,000,000 in the aggregate; provided,
--------
further, that if an Unmatured Default has occurred and is continuing, Borrower
- -------
may pay any declared dividends or other declared distributions on its capital
stock which are payable during the occurrence and continuation of an Unmatured
Default under (i) above so long as such declared dividends or other
distributions do not exceed $5,000,000 in the aggregate.
6.11. Indebtedness. Borrower will not, nor will it permit any Subsidiary
------------
to, create, incur or suffer to exist any Indebtedness, except:
(a) the Loans;
(b) Indebtedness existing on the Initial Closing Date and
described in Schedule 5.27 and refinancings thereof or amendments or
-------------
modifications thereto which do not have the effect of increasing the principal
amount thereof or changing the amortization thereof (other than to extend the
same) and which are otherwise on terms and conditions no less
37
favorable to Borrower, any Subsidiary, the Agent or any Lender than the terms
of the Indebtedness being refinanced, amended or modified;
(c) Indebtedness arising under Rate Hedging Agreements related to
the Loans;
(d) Contingent Obligations permitted pursuant to Section 6.19;
------------
(e) Indebtedness owing by Borrower to any Wholly-Owned Subsidiary
or by any Wholly-Owned Subsidiary to Borrower or any other Wholly-Owned
Subsidiary;
(f) additional Indebtedness so long as no Default or Unmatured
Default would occur after giving effect to the Leverage Ratio set forth in
Section 6.20.2, which additional Indebtedness shall include secured
- --------------
Indebtedness in an aggregate amount not to exceed the limits permitted by
Section 6.16; and
- ------------
(g) Subordinated Indebtedness.
6.12. Merger. Borrower will not, nor will it permit any Subsidiary to,
merge or consolidate with or into any other Person, except that (a) a
Subsidiary may merge into Borrower or a Wholly-Owned Subsidiary, and (b)
Borrower may merge or consolidate with another Person so long as (i) the
surviving or successor corporation is organized under the laws of any state
of the United States and assumes the Obligations by written instrument
acceptable in form and substance to the Agent and each Lender, (ii) no
Default or Unmatured Default has occurred and is continuing or would occur
after giving effect thereto (determined with respect to the covenants set
forth in Section 6.20 on a pro forma basis as of the last day of the most
------------
recent Fiscal Quarter for which financial statements are available) and
Borrower delivers pro forma financial statements, reasonably satisfactory to
Agent and Lenders, for the next four Fiscal Quarters demonstrating such
compliance, and (iii) unless Borrower is the surviving corporation, each
Lender has given its prior written consent to such transaction, which consent
shall not unreasonably be withheld.
6.13. Sale of Assets. Borrower may, and may permit any Subsidiary to,
--------------
lease, sell or otherwise dispose of its Property to any other Person for
reasonably equivalent or fair value.
6.14. Investments. Borrower will not, nor will it permit any Subsidiary
-----------
to, make or suffer to exist:
(a) any Investments, excluding Acquisitions, that consist
of capital stock, partnership or other ownership interests or other equity
investments or securities in any Person (other than a Subsidiary of Borrower)
in an aggregate amount for all such Investments in excess of 30% of the total
Investments of Borrower and its Subsidiaries (determined on a consolidated
basis in accordance with GAAP);
(b) any Investments that are Non-Investment Grade Securities
(excluding loans to Subsidiaries) in an aggregate amount for all such
Investments in excess of 10% of the
38
total Investments of Borrower and its Subsidiaries (determined on a
consolidated basis in accordance with GAAP);
(c) any Investments in assets constituting real estate
determined in accordance with SAP in an aggregate amount for all such assets
in excess of 5% of the total Investments of Borrower and its Subsidiaries
(determined on a consolidated basis in accordance with GAAP); or
(d) any other investments by an Insurance Subsidiary which
are not permitted under the investment code of the Insurance Subsidiary's
domiciliary state.
Notwithstanding the foregoing, Borrower may, and may permit its
Subsidiaries to make and maintain Investments in Wholly-Owned Subsidiaries of
Borrower.
6.15. Acquisitions. So long as no Default or Unmatured Default has
------------
occurred and is continuing, Borrower may make the following acquisitions:
(a) Acquisitions of insurance and insurance-related businesses
or entities for an amount less than or equal to 30% of the consolidated
GAAP equity of Borrower and its Subsidiaries;
(b) Acquisitions of non-insurance related businesses or
entities for an amount less than or equal to 25% of the consolidated GAAP
equity of Borrower and its Subsidiaries; and
(c) Acquisitions of blocks of any insurance business
through assumptive reinsurance, coinsurance or indemnity reinsurance.
Notwithstanding the foregoing, the aggregate amount of Acquisitions
made under (a) and (b) above shall not at any time exceed $400,000,000.
6.16. Liens. Borrower will not, nor will it permit any Subsidiary to,
-----
create, incur, or suffer to exist any lien or encumbrance in, of or on the
Property of Borrower or any of its Subsidiaries, except the following
Permitted Liens:
(a) Liens for taxes, assessments or governmental charges or levies
on its Property if the same shall not at the time be delinquent or thereafter
can be paid without penalty, or are being contested in good faith and by
appropriate proceedings and for which adequate reserves in accordance with
GAAP or SAP, as applicable, shall have been set aside on its books;
(b) Liens imposed by law, such as carriers', warehousemen's and
mechanics' liens and other similar liens arising in the ordinary course of
business which secure payment of obligations not more than 60 days past due
or which are being contested in good faith by appropriate proceedings and
for which adequate reserves shall have been set aside on its books;
(c) Liens arising out of pledges or deposits under worker's
compensation laws, unemployment insurance, old age pensions, or other
social security or retirement benefits, or similar legislation;
39
(d) Utility easements, building restrictions and such other
encumbrances or charges against real property as are of a nature generally
existing with respect to properties of a similar character and which do not
in any material way affect the marketability of the same or interfere with
the use thereof in the business of Borrower or its Subsidiaries;
(e) Deposits made by any Insurance Subsidiary with the
insurance regulatory authority in its jurisdiction of domicile or other
statutory Liens or Liens or claims imposed or required by applicable insurance
law or regulation against the assets of any Insurance Subsidiary, in each case
in favor of all policy holders of such Insurance Subsidiary and in the
ordinary course of such Insurance Subsidiary's business;
(f) Liens existing on the Initial Closing Date and described in
Schedule 6.16;
- -------------
(g) Liens to secure the performance of bids, trade contracts
(including covered call transactions), leases, statutory obligations
(including those in respect of insurance compliance qualification
requirements), surety and appeal bonds, performance bonds and other
obligations of a like nature incurred in the ordinary course of business;
(h) Liens securing the Indebtedness described in Section 6.11(e)
---------------
and Section 6.11(f);
---------------
(i) Liens on Property of any corporation which becomes a
Subsidiary of Borrower after the date of this Agreement in an aggregate amount
not to exceed $25,000,000 at any time outstanding, provided that such Liens
are in existence at the time such corporation becomes a Subsidiary of Borrower
and were not created in anticipation thereof;
(j) Liens upon real and/or tangible personal Property acquired
after the date hereof (by purchase, construction or otherwise) by Borrower or
any of its Subsidiaries each of which Liens either (a) existed on such
Property before the time of its acquisition and was not created in
anticipation thereof or (b) was created solely for the purpose of securing
Indebtedness representing, or incurred to finance, refinance or refund, the
cost (including the cost of construction) of such Property; provided, that no
--------
such Lien shall extend to cover any Property of Borrower or any Subsidiary
other than the Property so acquired and improvements thereon;
(k) Liens on marketable direct obligations issued or
unconditionally guaranteed or insured by the United States of America or any
agency or instrumentality thereof and backed by the full faith and credit of
the United States of America sold by Borrower or any of its Subsidiaries under
a repurchase agreement with a bank or a primary dealer of United States
government securities maturing within thirty (30) days from the date of sale,
provided, that the terms of such agreement complies with the guidelines set
- --------
forth in the Federal Financial Institutions Examination Council Supervisory
Policy - Repurchase Agreements of Depository Institutions With Securities
Dealers and Others, as adopted by the Comptroller of the Currency on October
31, 1985 (or any successor guidelines);
40
(l) any extension, renewal or replacement of the foregoing;
provided, however, that the Liens permitted hereunder shall not be spread to
- -------- -------
cover any additional Indebtedness or Property (other than a substitution of
like Property); and
(m) other Liens securing Indebtedness or obligations in an
aggregate principal amount not to exceed $50,000,000 in the aggregate at any
one time outstanding.
6.17. Affiliates. Borrower will not, nor will it permit any Subsidiary
----------
to, enter into any transaction (including, without limitation, the purchase
or sale of any Property or service) with, or make any payment or transfer to,
any Affiliate that is not a Subsidiary except in the ordinary course of
business and pursuant to the reasonable requirements of Borrower's or such
Subsidiary's business and upon fair and reasonable terms no less favorable
to Borrower or such Subsidiary than Borrower or such Subsidiary would obtain
in a comparable arms-length transaction.
6.18. Other Indebtedness. Borrower will not, nor will it permit any
------------------
Subsidiary to, directly or indirectly voluntarily prepay, defease or in
substance defease, purchase, redeem, retire or otherwise acquire, any
Indebtedness prior to the date due (other than the Loans) while a Default or
Unmatured Default has occurred and is continuing or would occur after giving
effect thereto (determined, in respect of the covenants set forth in
Section 6.20, on a pro forma basis as of the last day of the most recent
- ------------
Fiscal Quarter for which financial statements are available).
6.19. Contingent Obligations. Borrower will not, nor will it permit any
----------------------
Subsidiary to, make or suffer to exist any Contingent Obligation, except (a)
the Contingent Obligations described on Schedule 6.19, (b) Contingent
-------------
Obligations in respect of insurance contracts or policies issued in the
ordinary course of business, (c) Contingent Obligations in respect of the
endorsement of instruments for deposit or collection in the ordinary course
of business, (d) Contingent Obligations in respect of the obligations of a
Subsidiary (i) concerning which all necessary governmental and regulatory
approvals have been obtained, or (ii) if no such approvals are required,
which are incurred in the ordinary course of business, and (e) Contingent
Obligations not to exceed $25,000,000 in the aggregate at any time
outstanding in respect of guarantees of Indebtedness of Insurance Subsidiary
agents.
6.20. Financial Covenants.
-------------------
6.20.1 Interest Coverage Ratio. Borrower will not permit its
-----------------------
Interest Coverage Ratio, determined as of the end of each Fiscal Quarter to be
less than 4.0 to 1.0.
6.20.2 Leverage Ratio. Borrower will not permit its Leverage
--------------
Ratio, determined as of the end of each Fiscal Quarter, to be greater than
0.30 to 1.0.
6.20.3 Consolidated Net Worth. Borrower will maintain a
----------------------
Consolidated Net Worth of not less than $800,000,000 as of the end of each
Fiscal Quarter.
6.20.4 Statutory Capital and Surplus. Borrower will cause
-----------------------------
OCIC to maintain a Statutory Capital and Surplus of not less than $625,000,000
as of the end of each Fiscal Quarter
41
ending on or before September 30, 2003, increasing to $650,000,000 as of the
end of each Fiscal Quarter thereafter.
6.20.5 Risk Based Capital. As of the end of each Fiscal Year,
------------------
Borrower will cause OCIC to maintain an RBC Ratio of at least 175%.
6.21. Reinsurance. Borrower will not permit any Insurance Subsidiary to
-----------
enter into any reinsurance arrangements (or renew, extend or materially
modify any existing reinsurance arrangements) which could reasonably be
expected to have a Material Adverse Effect.
6.22. Tax Consolidation. Neither Borrower nor any Subsidiary will (a)
-----------------
file or consent to the filing of any consolidated, combined or unitary income
tax return with any Person other than Borrower and its Subsidiaries or (b)
enter into any tax sharing agreement or similar arrangement other than a tax
sharing agreement among Borrower and its Subsidiaries.
6.23. ERISA Compliance. With respect to any Plan, neither Borrower nor
----------------
any Subsidiary shall:
(a) engage in any "prohibited transaction" (as such term is
defined in Section 406 of ERISA or Section 4975 of the Code) for which a
civil penalty pursuant to Section 502(i) of ERISA or a tax pursuant to
Section 4975 of the Code could reasonably be expected to be imposed and which
could reasonably be expected to have a Material Adverse Effect;
(b) permit an "accumulated funding deficiency" (as such
term is defined in Section 302 of ERISA) to be incurred whether or not waived,
or permit any Unfunded Liability, which, in either instance, could reasonably
be expected to have a Material Adverse Effect;
(c) permit the occurrence of any Reportable Event which
could reasonably be expected to result in liability to Borrower or any
Subsidiary in an amount which could reasonably be expected to have a Material
Adverse Effect;
(d) fail to make any contribution or payment to any
Multiemployer Plan which may be required to be made under any agreement
relating to such Multiemployer Plan or any law pertaining thereto which
results in or could result in a liability of Borrower or any Subsidiary which
could reasonably be expected to have a Material Adverse Effect; or
(e) permit the establishment or amendment of any Plan or
cause or permit any Plan to fail to comply with the applicable provisions of
ERISA and the Code, which establishment, amendment or failure could reasonably
be expected to result in liability to Borrower or any Subsidiary which
individually or in the aggregate could reasonably be expected to have a
Material Adverse Effect.
6.24. Environmental Matters. Borrower shall, and shall cause each of
---------------------
its Subsidiaries to, (a) at all times comply in all material respects with
all applicable Environmental Laws and (b) promptly take any and all necessary
remedial actions in response to the presence, storage, use, disposal,
transportation or release of any hazardous or toxic materials on, under or
about any
42
real property owned, leased or operated by Borrower or any of its
Subsidiaries, in each instance in which the failure to do so, individually or
in the aggregate, could reasonably be expected to have a Material Adverse
Effect.
6.25. Change in Corporate Structure; Fiscal Year. Borrower shall not,
------------------------------------------
nor shall it permit any Subsidiary to, (a) permit any amendment or
modification to be made to its certificate or articles of incorporation or
by-laws which is materially adverse to the interests of the Lenders (provided
that Borrower shall notify the Agent of any other amendment or modification
thereto as soon as practicable thereafter) or (b) change its Fiscal Year to
end on any date other than December 31 of each year.
6.26. Inconsistent Agreements. Borrower shall not, nor shall it permit
-----------------------
any Subsidiary to, enter into any indenture, agreement, instrument or other
arrangement which, (a) directly or indirectly prohibits or restrains, or has
the effect of prohibiting or restraining, or imposes materially adverse
conditions upon, the incurrence of the Obligations, the amending of the Loan
Documents, or the ability of any Subsidiary to (i) pay dividends or make
other distributions on its capital stock, (ii) make loans or advances to
Borrower or (iii) repay loans or advances from Borrower or (b) contains any
provision which would be violated or breached by the making of Advances or by
the performance by Borrower of any of its obligations under any Loan Document.
ARTICLE VII
DEFAULTS
-----------
The occurrence of any one or more of the following events shall
constitute a Default:
7.1. Any representation or warranty made or deemed made by or on
behalf of Borrower or any of its Subsidiaries to the Lenders or the Agent
under or in connection with this Agreement, any Loan, or any certificate or
information delivered in connection with this Agreement or any other Loan
Document shall be materially false on the date as of which made.
7.2. Nonpayment of principal of any Loan when due, or nonpayment of
interest upon any Loan or of any non-use fee or other obligations under any of
the Loan Documents within three (3) Business Days of when due.
7.3. The breach by Borrower (i) of any of the terms or provisions
of Section 6.20, or (ii) of any of the terms of provisions of Section 6.1,
------------ -----------
Section 6.2, Section 6.4 or Sections 6.10 through 6.26 (excluding Section
- ----------- ----------- ------------- ---- -------
6.20) which is not remedied within fifteen (15) Business Days after the
- ----
earlier of (a) the receipt by Borrower of notice thereof from Agent or any
Lender or (b) having obtained knowledge thereof.
7.4. The breach by Borrower (other than a breach which constitutes
a Default under another Section of this Article VII) of any of the terms or
-----------
provisions of any Loan Document which is not remedied within thirty (30) days
after the earlier of (a) the receipt by Borrower of notice thereof from Agent
or any Lender or (b) having obtained knowledge thereof.
43
7.5. The default by Borrower or any of its Subsidiaries for failure
to make any payment when due beyond all applicable grace or cure periods with
respect thereto, if any, (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise) in respect of any Indebtedness aggregating
in excess of $10,000,000 ("Material Indebtedness"); or the default by Borrower
---------------------
or any of its Subsidiaries in the performance (beyond the applicable grace
period with respect thereto, if any) of any term, provision or condition
contained in any agreement under which any such Material Indebtedness was
created or is governed, or any other event shall occur or condition exist, the
effect of which default or event is to cause, or to permit the holder or
holders of such Material Indebtedness to cause, such Material Indebtedness to
become due prior to its stated maturity; or any Material Indebtedness of
Borrower or any of its Subsidiaries shall be declared to be due and payable or
required to be prepaid or repurchased (other than by a regularly scheduled
payment) prior to the stated maturity thereof; or Borrower or any of its
Subsidiaries becomes unable, or admits in writing its inability or fails
generally to pay its debts as they become due.
7.6. Borrower or any of its Subsidiaries shall (a) have an order
for relief entered with respect to it under any Debtor Relief Laws as now or
hereafter in effect, (b) make an assignment for the benefit of creditors,
(c) apply for, seek, consent to, or acquiesce in, the appointment of a
receiver, custodian, trustee, examiner, liquidator or similar official for it
or any Substantial Portion of its Property, (d) institute (or consent to the
institution of) any proceeding seeking an order for relief under any Debtor
Relief Laws as now or hereafter in effect or seeking to adjudicate it a
bankrupt or insolvent, or seeking dissolution, winding up, liquidation,
reorganization, arrangement, adjustment or composition of it or its debts
under any law relating to bankruptcy, insolvency or reorganization or relief
of debtors or fail to file an answer or other pleading denying the material
allegations of any such proceeding filed against it, (e) take any corporate or
partnership action to authorize or effect any of the foregoing actions set
forth in this Section 7.6 or (f) fail to contest in good faith any appointment
-----------
or proceeding described in Section 7.7.
-----------
7.7. Without the application, approval or consent of Borrower or
any of its Subsidiaries, a receiver, trustee, examiner, liquidator or similar
official shall be appointed for Borrower or any of its Subsidiaries or any
Substantial Portion of its Property, or a proceeding described in
Section 7.6(a) shall be instituted against Borrower or any of its Subsidiaries
- --------------
and such appointment continues undischarged or such proceeding continues
undismissed or unstayed for a period of 60 consecutive days.
7.8. Any court, government or governmental agency shall condemn,
seize or otherwise appropriate, or take custody or control of, all or any
portion of the Property of Borrower or any of its Subsidiaries which, when
taken together with all other Property of Borrower and its Subsidiaries so
condemned, seized, appropriated, or taken custody or control of, during the
twelve-month period ending with the month in which any such action occurs,
constitutes a Substantial Portion.
7.9. Borrower or any of its Subsidiaries shall fail within 45 days
to pay, bond or otherwise discharge any judgment or order for the payment of
money in an aggregate amount of $10,000,000 or more in excess of insurance
proceeds, which is not stayed on appeal or otherwise
44
being appropriately contested in good faith and as to which no enforcement
actions have been commenced.
7.10. Any Change in Control shall occur.
7.11. Nonpayment by Borrower of any Rate Hedging Obligation owed to
any Lender when due or the breach by Borrower of any term, provision or
condition contained in any agreement, device or arrangement giving rise to any
such Rate Hedging Obligation.
7.12. Any License of any Material Insurance Subsidiary issued in its
state of domicile or in a state in which its earned premiums in the prior
Fiscal Year constituted 10% or more of net earned premiums, on a consolidated
basis, in such period (a) shall be revoked by the Governmental Authority which
issued such License, or any formal action (administrative or judicial) to
revoke such License shall have been commenced against such Material Insurance
Subsidiary and shall not have been dismissed within 30 days after the
commencement thereof, (b) shall be suspended by such Governmental Authority
for a period in excess of 30 days or (c) shall not be reissued or renewed by
such Governmental Authority upon the expiration thereof following application
for such reissuance or renewal of such Material Insurance Subsidiary.
7.13. Any Insurance Subsidiary shall be the subject of a final non-
appealable order imposing a fine in an amount in excess of $5,000,000 in any
single instance or other such orders imposing fines in excess of $10,000,000
in the aggregate after the date of this Agreement in any Fiscal Year by or at
the request of any state insurance regulatory agency as a result of the
violation by such Insurance Subsidiary of such state's applicable insurance
laws or the regulations promulgated in connection therewith.
7.14. Any Material Insurance Subsidiary shall become subject to
(a) any conservation or liquidation order, directive or mandate issued by any
Governmental Authority or (b) any other directive or mandate issued by any
Governmental Authority which could reasonably be expected to have a Material
Adverse Effect, which in either case is not stayed within twenty (20) days.
ARTICLE VIII
ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES
----------------------------------------------
8.1. Acceleration. If any Default described in Section 7.6 or 7.7
------------ ----------- ---
occurs with respect to Borrower, the obligations of the Lenders to make Loans
hereunder shall automatically terminate and the Obligations shall immediately
become due and payable without any election or action on the part of the
Agent or any Lender. If any other Default occurs, the Required Lenders (or
the Agent with the consent of the Required Lenders) may terminate or suspend
the obligations of the Lenders to make Loans hereunder, or declare the
Obligations to be due and payable, or both, whereupon the Obligations shall
become immediately due and payable, without presentment, demand, protest or
notice of any kind, all of which Borrower hereby expressly waives.
If, within ten (10) Business Days after acceleration of the maturity
of the Obligations or termination of the obligations of the Lenders to make
Loans hereunder as a result of any Default
45
(other than any Default as described in Section 7.6 or 7.7 with respect to
----------- ---
Borrower) and before any judgment or decree for the payment of the
Obligations due shall have been obtained or entered, the Required Lenders
(in their sole discretion) shall so direct, the Agent shall, by notice to
Borrower, rescind and annul such acceleration and/or termination.
8.2. Amendments. Subject to the provisions of this Article VIII, the
---------- ------------
Required Lenders (or the Agent with the consent in writing of the Required
Lenders) and Borrower may enter into agreements supplemental hereto for the
purpose of adding or modifying any provisions to the Loan Documents or
changing in any manner the rights of the Lenders or Borrower hereunder or
waiving any Default hereunder; provided, that no such supplemental agreement
--------
shall, without the consent of all of the Lenders:
(a) Extend the final maturity of any Loan or forgive all
or any portion of the principal amount thereof, or reduce the rate or extend
the time of payment of interest or fees thereon;
(b) Reduce the percentage specified in the definition of
Required Lenders;
(c) Extend the Facility Termination Date, or reduce the
amount or extend the payment date for, the mandatory payments required under
Section 2.2 or increase the amount of the Commitment of any Lender hereunder,
- -----------
or permit Borrower to assign its rights under this Agreement; or
(d) Amend this Section 8.2.
-----------
No amendment of any provision of this Agreement relating to the Agent shall be
effective without the written consent of the Agent. The Agent may waive
payment of the fee required under Section 12.3.2 without obtaining the consent
--------------
of any other party to this Agreement. No amendment, waiver or consent
relating to any Lender shall be effective without the written consent of the
Required Lenders.
8.3. Preservation of Rights. No delay or omission of the Lenders or the
----------------------
Agent to exercise any right under the Loan Documents shall impair such right
or be construed to be a waiver of any Default or an acquiescence therein, and
the making of a Loan notwithstanding the existence of a Default or the
inability of Borrower to satisfy the conditions precedent to such Loan shall
not constitute any waiver or acquiescence. Any single or partial exercise of
any such right shall not preclude other or further exercise thereof or the
exercise of any other right, and no waiver, amendment or other variation of
the terms, conditions or provisions of the Loan Documents whatsoever shall be
valid unless in writing signed by the Lenders required pursuant to
Section 8.2, and then only to the extent in such writing specifically set
- -----------
forth. All remedies contained in the Loan Documents or by law afforded shall
be cumulative and all shall be available to the Agent and the Lenders until
the Obligations have been paid in full.
46
ARTICLE IX
GENERAL PROVISIONS
------------------
9.1. Survival of Representations. All representations and warranties of
---------------------------
Borrower contained in this Agreement shall survive the making of the Loans
herein contemplated.
9.2. Governmental Regulation. Anything contained in this Agreement to
-----------------------
the contrary notwithstanding, no Lender shall be obligated to extend credit
to Borrower in violation of any limitation or prohibition provided by any
applicable statute or regulation.
9.3. Headings. Section headings in the Loan Documents are for convenience
--------
of reference only, and shall not govern the interpretation of any of the
provisions of the Loan Documents.
9.4. Entire Agreement. The Loan Documents embody the entire agreement
----------------
and understanding among Borrower, the Agent and the Lenders and supersede all
prior agreements and understandings among Borrower, the Agent and the Lenders
relating to the subject matter thereof other than the fee letter described in
Section 10.13.
- -------------
9.5. Several Obligations; Benefits of this Agreement. The respective
-----------------------------------------------
obligations of the Lenders hereunder are several and not joint and no Lender
shall be the partner or agent of any other (except to the extent to which the
Agent is authorized to act as such). The failure of any Lender to perform
any of its obligations hereunder shall not relieve any other Lender from any
of its obligations hereunder. This Agreement shall not be construed so as to
confer any right or benefit upon any Person other than the parties to this
Agreement and their respective successors and assigns.
9.6. Expenses; Indemnification. (a) Borrower shall reimburse the Agent
-------------------------
for all reasonable costs associated with the closing of the transactions
contemplated by this Agreement including, but not limited to, all of Agent's
out-of-pocket expenses in an amount not to exceed $3,500, and all reasonable
attorneys' fees and expenses of attorneys engaged by the Agent. Borrower also
agrees to reimburse the Agent and the Lenders for any costs, internal charges
and out-of-pocket expenses (including attorneys' fees and time charges of
attorneys for the Agent and the Lenders, which attorneys may be employees of
the Agent or the Lenders) paid or incurred by the Agent or any Lender in
connection with the collection and enforcement of the Loan Documents.
Expenses being reimbursed by Borrower under this Section include, without
limitation, costs and expenses incurred in connection with the Reports
described in the following sentence. Borrower acknowledges that from time to
time Agent may prepare and may distribute to the Lenders (but shall have no
obligation or duty to prepare or to distribute to the Lenders) certain audit
reports (the "Reports") pertaining to Borrower's assets for internal use by
-------
Agent from information furnished to it by or on behalf of Borrower, after
Agent has exercised its rights of inspection pursuant to this Agreement.
(b) Borrower hereby further agrees to indemnify the Agent and each
Lender and the directors, officers and employees of each against all losses,
claims, damages, penalties, judgments, liabilities and expenses (including,
without limitation, all expenses of litigation or
47
preparation therefor whether or not the Agent or any Lender is a party
thereto) which any of them may pay or incur arising out of or relating to
this Agreement, the other Loan Documents, the transactions contemplated
hereby, the other Closing Transactions or the direct or indirect application
or proposed application of the proceeds of any Loan hereunder except to the
extent that (i) they are determined in a final non-appealable judgment by a
court of competent jurisdiction to have resulted from the gross negligence
or willful misconduct of the party seeking indemnification or (ii) that they
arise solely from any dispute of or any litigation or other proceeding
instituted by any Lender against the Agent (if the Agent was determined to
have breached its obligations to such Lender hereunder) or (for Persons other
than the Agent and its directors, officers and employees) any other Lender.
The obligations of Borrower under this Section 9.6 shall survive the
-----------
termination of this Agreement.
9.7. Number of Documents. All statements, notices, closing documents,
-------------------
and requests hereunder shall be furnished to the Agent with sufficient
counterparts so that the Agent may furnish one to each of the Lenders.
9.8. Accounting. Except as provided to the contrary herein, all
----------
accounting terms used herein shall be interpreted and all accounting
determinations hereunder shall be made in accordance with GAAP or SAP, as the
case may be.
9.9. Severability of Provisions. Any provision in any Loan Document that
--------------------------
is held to be inoperative, unenforceable, or invalid in any jurisdiction
shall, as to that jurisdiction, be inoperative, unenforceable, or invalid
without affecting the remaining provisions in that jurisdiction or the
operation, enforceability, or validity of that provision in any other
jurisdiction, and to this end the provisions of all Loan Documents are
declared to be severable.
9.10. Nonliability of Lenders. The relationship between Borrower on the
-----------------------
one hand and the Lenders and the Agent on the other hand shall be solely that
of borrower and lender. Neither the Agent nor any Lender shall have any
fiduciary responsibilities to Borrower. Neither the Agent nor any Lender
undertakes any responsibility to Borrower to review or inform Borrower of any
matter in connection with any phase of Borrower's business or operations.
Borrower agrees that neither the Agent nor any Lender shall have liability to
Borrower (whether sounding in tort, contract or otherwise) for losses
suffered by Borrower in connection with, arising out of, or in any way
related to, the transactions contemplated and the relationship established by
the Loan Documents, or any act, omission or event occurring in connection
therewith, unless it is determined in a final non-appealable judgment by a
court of competent jurisdiction that such losses resulted from (a) the gross
negligence or willful misconduct of the party from which recovery is sought
or (b) the failure of the party from which recovery is sought to honor its
Commitment hereunder. Neither the Agent nor any Lender shall have any
liability with respect to, and Borrower hereby waives, releases and agrees
not to sue for, any special, indirect or consequential damages suffered by
Borrower in connection with, arising out of, or in any way related to the
Loan Documents or the transactions contemplated thereby.
9.11. Confidentiality. Each of the Agent and each Lender agrees to hold
---------------
any confidential information which it may receive from Borrower pursuant to
this Agreement in confidence, except for disclosure (a) to its Affiliates and
to other Lenders and their respective
48
Affiliates, (b) to legal counsel, accountants, and other professional
advisors to that Lender or to a Transferee, (c) to regulatory officials, (d)
to any Person as requested pursuant to or as required by law, regulation, or
legal process, provided that if not prohibited by law, the Agent or such
Lender will use reasonable efforts to provide notice to Borrower of the
requested disclosure and give Borrower a reasonable opportunity to seek a
protective order with respect to such information prior to delivering
confidential information in response thereto, (e) to any Person in connection
with any legal proceeding to which that Lender is a party, to the extent
reasonably necessary, and (f) permitted by Section 12.4.
------------
9.12. Nonreliance. Each Lender hereby represents that it is not relying
-----------
on or looking to any margin stock (as defined in Regulation U of the Board of
Governors of the Federal Reserve System) for the repayment of the Loans
provided for herein.
9.13. Disclosure. Borrower and each Lender hereby (a) acknowledge and
----------
agree that Agent and/or its Affiliates from time to time may make other loans
to or have other relationships with Borrower, and (b) waive any liability of
Agent or such Affiliate to Borrower or any Lender, respectively, arising out
of or resulting from such loans or relationships other than liabilities
arising out of the gross negligence or willful misconduct of Agent or its
Affiliates.
ARTICLE X
THE AGENT
---------
10.1. Appointment; Nature of Relationship. LaSalle is hereby appointed
-----------------------------------
by each of the Lenders as its contractual representative (herein referred to
as the "Agent") hereunder and under each other Loan Document, and each of the
-----
Lenders irrevocably authorizes the Agent to act as the contractual
representative of such Lender with the rights and duties expressly set forth
herein and in the other Loan Documents. The Agent agrees to act as such
contractual representative upon the express conditions contained in this
Article X. Notwithstanding the use of the defined term "Agent," it is
- ---------
expressly understood and agreed that the Agent shall not have any fiduciary
responsibilities to any Lender by reason of this Agreement or any other Loan
Document and that the Agent is merely acting as the contractual representative
of the Lenders with only those duties as are expressly set forth in this
Agreement and the other Loan Documents. In its capacity as the Lenders'
contractual representative, the Agent (a) does not hereby assume any
fiduciary duties to any of the Lenders, (b) is a "representative" of the
Lenders within the meaning of Section 9-105 of the Uniform Commercial Code
and (c) is acting as an independent contractor, the rights and duties of
which are limited to those expressly set forth in this Agreement and the other
Loan Documents. Each of the Lenders hereby agrees to assert no claim against
the Agent on any agency theory or any other theory of liability for breach of
fiduciary duty, all of which claims each Lender hereby waives. The
Documentation Agent shall have no duties or responsibilities under this
Agreement or any other Loan Document.
10.2. Powers. The Agent shall have and may exercise such powers under
------
the Loan Documents as are specifically delegated to the Agent by the terms of
each thereof, together with such powers as are reasonably incidental thereto.
The Agent shall have no implied duties to the Lenders, or any obligation to
the Lenders to take any action thereunder, except any action specifically
provided by the Loan Documents to be taken by the Agent.
49
10.3. General Immunity. Neither the Agent nor any of its directors,
----------------
officers, agents or employees shall be liable to Borrower, the Lenders or any
Lender for any action taken or omitted to be taken by it or them hereunder or
under any other Loan Document or in connection herewith or therewith except
to the extent such action or inaction is determined in a final non-appealable
judgment by a court of competent jurisdiction to have arisen from the gross
negligence or willful misconduct of such Person.
10.4. No Responsibility for Loans, Recitals, etc. Neither the Agent nor
------------------------------------------
any of its directors, officers, agents or employees shall be responsible for
or have any duty to ascertain, inquire into, or verify (a) any statement,
warranty or representation made in connection with any Loan Document or any
borrowing hereunder; (b) the performance or observance of any of the
covenants or agreements of any obligor under any Loan Document, including,
without limitation, any agreement by an obligor to furnish information
directly to each Lender; (c) the satisfaction of any condition specified in
Article IV, except receipt of items required to be delivered solely to the
- ----------
Agent; (d) the existence or possible existence of any Default or Unmatured
Default; (e) the validity, enforceability, effectiveness, sufficiency or
genuineness of any Loan Document or any other instrument or writing furnished
in connection therewith; (f) the value, sufficiency, creation, perfection or
priority of any Lien in any collateral security; or (g) the financial
condition of Borrower or of any of Borrower's Subsidiaries. The Agent shall
have no duty to disclose to the Lenders information that is not required to
be furnished by Borrower to the Agent at such time, but is voluntarily
furnished by Borrower to the Agent (either in its capacity as Agent or in its
individual capacity as a Lender).
10.5. Action on Instructions of Lenders. The Agent shall in all cases
be fully protected in acting, or in refraining from acting, hereunder and
under any other Loan Document in accordance with written instructions signed
by the Required Lenders, and such instructions and any action taken or
failure to act pursuant thereto shall be binding on all of the Lenders. The
Lenders hereby acknowledge that the Agent shall be under no duty to take any
discretionary action permitted to be taken by it pursuant to the provisions
of this Agreement or any other Loan Document unless it shall be requested in
writing to do so by the Required Lenders. The Agent shall be fully justified
in failing or refusing to take any action hereunder and under any other Loan
Document unless it shall first be indemnified to its satisfaction by the
Lenders pro rata against any and all liability, cost and expense that it may
incur by reason of taking or continuing to take any such action.
10.6. Employment of Agents and Counsel. The Agent may execute any of its
--------------------------------
duties as Agent hereunder and under any other Loan Document by or through
employees, agents, and attorneys-in-fact and shall not be answerable to the
Lenders, except as to money or securities received by it or its authorized
agents, for the default or misconduct of any such agents or attorneys-in-fact
selected by it with reasonable care. The Agent shall be entitled to advice
of counsel concerning the contractual arrangement between the Agent and the
Lenders and all matters pertaining to the Agent's duties hereunder and under
any other Loan Document.
10.7. Reliance on Documents; Counsel. The Agent shall be entitled to
------------------------------
rely upon any note, notice, consent, certificate, affidavit, letter, telegram,
statement, paper or document believed by it to be genuine and correct and to
have been signed or sent by the proper person or
50
persons, and, in respect to legal matters, upon the opinion of counsel
selected by the Agent, which counsel may be employees of the Agent.
10.8. Agent's Reimbursement and Indemnification. The Lenders agree to
-----------------------------------------
reimburse and indemnify the Agent ratably in proportion to their respective
Commitments (or, if the Commitments have been terminated, in proportion to
their Commitments immediately prior to such termination) (a) for any amounts
not reimbursed by Borrower for which the Agent is entitled to reimbursement
by Borrower under the Loan Documents, (b) for any other expenses incurred by
the Agent on behalf of the Lenders, in connection with the preparation,
execution, delivery, administration and enforcement of the Loan Documents
(including, without limitation, for any expenses incurred by the Agent in
connection with any dispute between the Agent and any Lender or between two
or more of the Lenders) and (c) for any liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind and nature whatsoever which may be imposed on,
incurred by or asserted against the Agent in any way relating to or arising
out of the Loan Documents or any other document delivered in connection
therewith or the transactions contemplated thereby (including, without
limitation, for any such amounts incurred by or asserted against the Agent
in connection with any dispute between the Agent and any Lender or between
two or more of the Lenders), or the enforcement of any of the terms of the
Loan Documents or of any such other documents; provided, that no Lender
--------
shall be liable for any of the foregoing to the extent any of the
foregoing is found in a final non-appealable judgment by a court of competent
jurisdiction to have resulted from the gross negligence or willful misconduct
of the Agent. The obligations of the Lenders under this Section 10.8 shall
------------
survive payment of the Obligations and termination of this Agreement.
10.9. Notice of Default. The Agent shall not be deemed to have
-----------------
knowledge or notice of the occurrence of any Default or Unmatured Default
hereunder unless the Agent has received written notice from a Lender or
Borrower referring to this Agreement describing such Default or Unmatured
Default and stating that such notice is a "notice of default". In the event
that the Agent receives such a notice, the Agent shall give prompt notice
thereof to the Lenders.
10.10. Rights as a Lender. In the event the Agent is a Lender, the
------------------
Agent shall have the same rights and powers hereunder and under any other
Loan Document with respect to its Commitment and its Loans as any Lender and
may exercise the same as though it were not the Agent, and the term "Lender"
or "Lenders" shall, at any time when the Agent is a Lender, unless the
context otherwise indicates, include the Agent in its individual capacity.
The Agent and its Affiliates may accept deposits from, lend money to, and
generally engage in any kind of trust, debt, equity or other transaction, in
addition to those contemplated by this Agreement or any other Loan Document,
with Borrower or any Subsidiary in which Borrower or such Subsidiary is not
restricted hereby from engaging with any other Person. The Agent, in its
individual capacity, is not obligated to remain a Lender.
10.11. Lender Credit Decision. Each Lender acknowledges that it has,
----------------------
independently and without reliance upon the Agent or any other Lender and
based on the financial statements prepared by Borrower and such other
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement and the other Loan
Documents. Each Lender also acknowledges that it will, independently and
without reliance
51
<PAGEa>
upon the Agent or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under this
Agreement and the other Loan Documents.
10.12. Successor Agent. The Agent may resign at any time by giving
---------------
written notice thereof to the Lenders and Borrower, such resignation to be
effective upon the appointment of a successor Agent or, if no successor Agent
has been appointed, forty-five days after the retiring Agent gives notice of
its intention to resign. The Agent may be removed at any time with or
without cause by written notice received by the Agent from the Required
Lenders, such removal to be effective on the date specified by the Required
Lenders. Upon any such resignation or removal, the Required Lenders shall
have the right to appoint, with the consent of Borrower (which consent shall
not be unreasonably withheld), on behalf of Borrower and the Lenders, a
successor Agent. If no successor Agent shall have been so appointed by the
Required Lenders within thirty days after the resigning Agent giving notice
of its intention to resign, then the resigning Agent may appoint, on behalf of
Borrower and the Lenders, a successor Agent. Notwithstanding the previous
sentence, the Agent may at any time without the consent of Borrower or any
Lender, appoint any of its Affiliates which is a commercial bank as a
successor Agent hereunder. If the Agent has resigned or been removed and no
successor Agent has been appointed, the Lenders may perform all the duties of
the Agent hereunder and Borrower shall make all payments in respect of the
Obligations to the applicable Lender and for all other purposes shall deal
directly with the Lenders. No successor Agent shall be deemed to be
appointed hereunder until such successor Agent has accepted the appointment.
Any such successor Agent shall be a commercial bank having capital and
retained earnings of at least $500,000,000. Upon the acceptance of any
appointment as Agent hereunder by a successor Agent, such successor Agent
shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the resigning or removed Agent. Upon the
effectiveness of the resignation or removal of the Agent, the resigning or
removed Agent shall be discharged from its duties and obligations hereunder
and under the Loan Documents. After the effectiveness of the resignation or
removal of an Agent, the provisions of this Article X shall continue in
---------
effect for the benefit of such Agent in respect of any actions taken or
omitted to be taken by it while it was acting as the Agent hereunder and
under the other Loan Documents. In the event that there is a successor to
the Agent by merger, or the Agent assigns its duties and obligations to an
Affiliate pursuant to this Section 10.12, then the term "Prime Rate" as used
-------------
in this Agreement shall mean the prime rate, base rate or other analogous rate
of the new Agent.
10.13. Agent's Fee. Borrower agrees to pay to the Agent, for its own
-----------
account, the fees agreed to by Borrower and the Agent pursuant to that
certain fee letter agreement dated as of even date herewith, or as otherwise
agreed from time to time.
10.14. Delegation to Affiliates. Borrower and the Lenders agree that
------------------------
the Agent may delegate any of its duties under this Agreement to any of its
Affiliates. Any such Affiliate (and such Affiliate's directors, officers,
agents and employees) which performs duties in connection with this Agreement
shall be entitled to the same benefits of the indemnification, waiver and
other protective provisions to which the Agent is entitled under Articles IX
-----------
and X.
-
52
ARTICLE XI
SETOFF; RATABLE PAYMENTS
------------------------
11.1. Setoff. In addition to, and without limitation of, any rights of
------
the Lenders under applicable law, if Borrower becomes insolvent, however
evidenced, or any Default occurs, any and all deposits (including all account
balances, whether provisional or final and whether or not collected or
available) and any other Indebtedness at any time held or owing by any Lender
or any Affiliate of any Lender to or for the credit or account of Borrower may
be offset and applied toward the payment of the Obligations owing to such
Lender, whether or not the Obligations, or any part thereof, shall then be
due. Notwithstanding the above, this right of setoff shall not apply to any
deposits held by Borrower or a Subsidiary in a fiduciary or custodial
capacity.
11.2. Ratable Payments. If any Lender, whether by setoff or otherwise,
----------------
has payment made to it upon its Loans (other than payments received pursuant
to Section 3.1, 3.2, 3.4 or 3.5) in a greater proportion than that received
----------- --- --- ---
by any other Lender, such Lender agrees, promptly upon demand, to purchase a
portion of the Loans held by the other Lenders so that after such purchase
each Lender will hold its ratable proportion of Loans or, in the alternative,
to submit such overpayment received by such Lender to Agent for application
by Agent to the other Lenders such that each Lender will hold its ratable
proportion of Loans. If any Lender, whether in connection with setoff or
amounts which might be subject to setoff or otherwise, receives collateral or
other protection for its Obligations or such amounts which may be subject to
setoff, such Lender agrees, promptly upon demand, to take such action
necessary such that all Lenders share in the benefits of such collateral
ratably in proportion to their Loans. In case any such payment is disturbed
by legal process, or otherwise, appropriate further adjustments shall be made.
If an amount to be setoff is to be applied to the Obligations of Borrower to
a Lender other than Indebtedness comprised of Loans made by such Lender, such
amount shall be applied ratably to such other Indebtedness and to the
Indebtedness comprised of the Loans.
ARTICLE XII
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
-------------------------------------------------
12.1. Successors and Assigns. The terms and provisions of the Loan
----------------------
Documents shall be binding upon and inure to the benefit of Borrower and the
Lenders and their respective successors and assigns, except that (a) Borrower
shall not have the right to assign its rights or obligations under the Loan
Documents and (b) any assignment by any Lender must be made in compliance
with Section 12.3. Notwithstanding clause (b) of this Section, any Lender
------------
may at any time, without the consent of Borrower or the Agent, assign all or
any portion of its rights under this Agreement and any Note to a Federal
Reserve Bank; provided, that no such assignment to a Federal Reserve Bank
--------
shall release the transferor Lender from its obligations hereunder. The Agent
may treat the Person which made any Loan or which holds any Note as the owner
thereof for all purposes hereof unless and until such Person complies with
Section 12.3 in the case of an assignment thereof or, in the case of any other
- ------------
transfer, a written notice of the transfer is filed with the Agent. Any
assignee or transferee of the rights to any Loan or any Note agrees by
acceptance of such transfer or assignment to be bound by all the terms and
provisions of the Loan Documents. Any request, authority or consent of any
Person, who at the time of making such request or giving such authority or
consent is the owner of the rights to any
53
Loan (whether or not a Note has been issued in evidence thereof), shall be
conclusive and binding on any subsequent holder, transferee or assignee of
the rights to such Loan.
12.2. Participations.
--------------
12.2.1 Permitted Participants; Effect. Any Lender may, in
------------------------------
the ordinary course of its business and in accordance with applicable law, at
any time sell to one or more banks or other entities ("Participants")
------------
participating interests in any Loan owing to such Lender, any Note held by
such Lender, any Commitment of such Lender or any other interest, right and/or
obligation of such Lender under the Loan Documents. In the event of any such
sale by a Lender of participating interests to a Participant, such Lender's
obligations under the Loan Documents shall remain unchanged, such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations, such Lender shall remain the owner of its Loans and the
holder of any Note issued to it in evidence thereof for all purposes under the
Loan Documents, all amounts payable by Borrower under this Agreement shall be
determined as if such Lender had not sold such participating interests, and
Borrower and the Agent shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under the Loan
Documents.
12.2.2 Voting Rights. Each Lender shall retain the sole
-------------
right to approve, without the consent of any Participant, any amendment,
modification or waiver of any provision of the Loan Documents other than any
amendment, modification or waiver with respect to any Loan or Commitment in
which such Participant has an interest which forgives principal, interest or
fees or reduces the Interest Rate or fees payable with respect to any such
Loan or Commitment, extends the Facility Termination Date, postpones any date
fixed for any regularly-scheduled payment of principal of, or interest or fees
on, any such Loan or Commitment, or releases all or substantially all of the
collateral, if any, securing any such Loan.
12.2.3 Benefit of Setoff. Borrower agrees that each
-----------------
Participant shall be deemed to have the right of setoff provided in
Section 11.1 in respect of its participating interest in amounts owing under
- ------------
the Loan Documents to the same extent as if the amount of its participating
interest were owing directly to it as a Lender under the Loan Documents,
provided that each Lender shall retain the right of setoff provided in
Section 11.1 with respect to the amount of participating interests sold to
- ------------
each Participant. The Lenders agree to share with each Participant, and each
Participant, by exercising the right of setoff provided in Section 11.1,
------------
agrees to share with each Lender, any amount received pursuant to the exercise
of its right of setoff, such amounts to be shared in accordance with
Section 11.2 as if each Participant were a Lender.
- ------------
12.3. Assignments.
-----------
12.3.1 Permitted Assignments. Any Lender may, in the
---------------------
ordinary course of its business and in accordance with applicable law, at any
time assign to one or more banks or other entities ("Purchasers") all or any
----------
part of its rights and obligations under the Loan Documents. Such assignment
shall be substantially in the form of Exhibit B or in such other form as may
---------
be agreed to by the parties thereto. The consent of Borrower, the Lender and
the Agent shall be required prior to an assignment becoming effective with
respect to a Purchaser which is not a
54
Lender or an Affiliate thereof; provided, that if a Default has occurred and
--------
is continuing, the consent of Borrower shall not be required. Such consent
shall not be unreasonably withheld or delayed. Each such assignment shall
(unless (x) each of Borrower and the Agent otherwise consents or (y) the
proposed Purchaser is already a Lender) be in an amount not less than the
lesser of (a) $5,000,000 or (b) the remaining amount of the assigning
Lender's Commitment (calculated as at the date of such assignment).
12.3.2 Effect; Effective Date. Upon (a) delivery to the
----------------------
Agent of a notice of assignment, substantially in the form attached as
Exhibit I to Exhibit B (a "Notice of Assignment"), together with any consents
--------- --------------------
required by Section 12.3.1, and (b) payment of a $3,500 fee (payable by the
--------------
assigning Lender or its assignee) to the Agent for processing such assignment,
such assignment shall become effective on the effective date specified in such
Notice of Assignment. The Notice of Assignment shall contain a representation
by the Purchaser to the effect that none of the consideration used to make the
purchase of the Commitment and Loans under the applicable assignment agreement
are "plan assets" as defined under ERISA and that the rights and interests of
the Purchaser in and under the Loan Documents will not be "plan assets" under
ERISA. On and after the effective date of such assignment, such Purchaser
shall for all purposes be a Lender party to this Agreement and any other Loan
Document executed by or on behalf of the Lenders and shall have all the rights
and obligations of a Lender under the Loan Documents, to the same extent as if
it were an original party hereto, and no further consent or action by
Borrower, the Lenders or the Agent shall be required to release the transferor
Lender with respect to the percentage of the Aggregate Commitment and Loans
assigned to such Purchaser. Upon the consummation of any assignment to a
Purchaser pursuant to this Section 12.3.2, the transferor Lender, the Agent
--------------
and Borrower shall, if the transferor Lender or the Purchaser desires that its
Loans be evidenced by Notes, make appropriate arrangements so that new Notes
or, as appropriate, replacement Notes are issued to such transferor Lender and
new Notes or, as appropriate, replacement Notes, are issued to such Purchaser,
in each case in principal amounts reflecting their respective Commitments, as
adjusted pursuant to such assignment.
12.4. Dissemination of Information. Borrower authorizes each Lender to
----------------------------
disclose to any Participant or Purchaser or any other Person acquiring an
interest in the Loan Documents by operation of law (each a "Transferee") and
----------
any prospective Transferee any and all information in such Lender's
possession concerning the creditworthiness of Borrower and its Subsidiaries,
including without limitation any information contained in any Reports;
provided, that each Transferee and prospective Transferee agrees to be bound
- --------
by Section 9.11 of this Agreement.
------------
12.5. Tax Treatment. If any interest in any Loan Document is transferred
-------------
to any Transferee which is organized under the laws of any jurisdiction other
than the United States or any State thereof, the transferor Lender shall
cause such Transferee, concurrently with the effectiveness of such transfer,
to comply with the provisions of Section 3.5(d).
--------------
55
ARTICLE XIII
NOTICES
------------
13.1. Notices. Except as otherwise permitted by Section 2.15 with
------- ------------
respect to telephonic Borrowing Notices, all notices, requests and other
communications to any party hereunder shall be in writing (including
electronic transmission, facsimile transmission or similar writing) and
shall be given to such party: (x) at its address or facsimile number set
forth on the signature pages hereof, or (y) at such other address or
facsimile number as such party may hereafter specify for the purpose by
notice to the Agent and Borrower in accordance with the provisions of this
Section 13.1. Each such notice, request or other communication shall be
- ------------
effective (a) if given by facsimile transmission, when transmitted to the
facsimile number specified in this Section and confirmation of receipt is
received, (b) if given by mail, 72 hours after such communication is
deposited in the mail with first class postage prepaid, addressed as
aforesaid, or (c) if given by any other means, when delivered at the address
specified in this Section; provided, that notices to the Agent under
--------
Article II shall not be effective until received.
- ----------
13.2. Change of Address. Borrower, the Agent and any Lender may each
-----------------
change the address for service of notice upon it by a notice in writing to
the other parties hereto.
ARTICLE XIV
COUNTERPARTS
------------
This Agreement may be executed in any number of original counterparts, all of
which taken together shall constitute one agreement, and any of the parties
hereto may execute this Agreement by signing any such original counterpart.
This Agreement may also be executed in any number of e-mailed counterparts,
all of which taken together shall constitute one agreement, even if printed
separately from different print servers, and any of the parties hereto may
execute this Agreement by signing any such e-mailed counterpart. This
Agreement shall be effective when it has been executed by Borrower, the Agent
and the Lenders and each party has notified the Agent by facsimile
transmission or telephone that it has taken such action.
ARTICLE XV
CHOICE OF LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL
------------------------------------------------------------
15.1. CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING A
-------------
CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN ACCORDANCE
WITH THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF
ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
15.2. CONSENT TO JURISDICTION. BORROWER HEREBY IRREVOCABLY SUBMITS TO
-----------------------
THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR ILLINOIS STATE
COURT SITTING IN CHICAGO, ILLINOIS IN ANY ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO ANY LOAN DOCUMENTS AND BORROWER HEREBY IRREVOCABLY AGREES THAT
ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE
56
HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION
IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT
FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE AGENT OR ANY LENDER TO
BRING PROCEEDINGS AGAINST BORROWER IN THE COURTS OF ANY OTHER JURISDICTION.
ANY JUDICIAL PROCEEDING BY BORROWER AGAINST THE AGENT OR ANY LENDER OR ANY
AFFILIATE OF THE AGENT OR ANY LENDER INVOLVING, DIRECTLY OR INDIRECTLY, ANY
MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN
DOCUMENT SHALL BE BROUGHT ONLY IN A COURT IN CHICAGO, ILLINOIS.
15.3. WAIVER OF JURY TRIAL. BORROWER, THE AGENT AND EACH LENDER HEREBY
--------------------
WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN
ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT OR
THE RELATIONSHIP ESTABLISHED THEREUNDER.
[Remainder of Page Intentionally Left Blank]
57
IN WITNESS WHEREOF, Borrower, the Lenders and the Agent have executed
this Agreement as of the date first above written.
BORROWER:
OHIO CASUALTY CORPORATION
By:
-----------------------------------
Name: A. Larry Sisk
Title: Vice President and Treasurer
Address: 9450 Seward Road
Fairfield, Ohio 45014
Attention: A. Larry Sisk
Telephone: (513) 603-2174
Telecopy: (513) 682-5228
Commitments
- -----------
$30,000,000 LASALLE BANK NATIONAL ASSOCIATION,
as a Lender and as Agent
By:
-----------------------------------
Name: Linda A. Whittaker
Title: Assistant Vice President
Address: 135 South LaSalle Street
Chicago, Illinois 60603
Attention: Linda A. Whittaker
Telephone: (312) 904-2639
Telecopy: (312) 904-6189
$25,000,000 ING CAPITAL LLC, as a Lender and as
Documentation Agent
By:
------------------------------------
Name: Mark R. Newsome
Title: Associate
Address: Address: 1325 Avenue of the Americas
New York, New York 10019
Attention: Mark R. Newsome, CFA
Telephone: (646) 424-8453
Telecopy: (646) 424-8577
58
$15,000,000 CITICORP USA, INC., as a Lender
By:
------------------------------------
Name:
---------------------------------
Title:
---------------------------------
Address: Address: 388 Greenwich Street, Floor 22
New York, New York 10013
Attention: Gregory Kroitzsh
Telephone: (212) 816-4018
Telecopy: (212) 801-4109
$10,000,000 FIRST FINANCIAL BANK, N.A., as a Lender
By:
-----------------------------------
Name: Brendan J. Burns
Title: Senior Vice President
Address: 300 High Street
Hamilton, Ohio 45011
Attention: Vaden W. Fitton
Telephone: (513) 867-5530
Telecopy: (513) 867-4515
____________
$80,000,000 Aggregate Commitment
59
EXHIBIT A
COMPLIANCE CERTIFICATE
----------------------
I, , certify that I am the
------------------------------
of Ohio Casualty Corporation
- ------------------------------------------
("Borrower"), and that as such I am authorized to execute this Compliance
Certificate on behalf of Borrower, and DO HEREBY FURTHER CERTIFY on behalf
of Borrower that:
1. I have reviewed the terms of that certain Credit Agreement, dated
as of July 31, 2002, among Borrower, the financial institutions named
therein (the "Lenders"), LaSalle Bank National Association, as agent
(the "Agent") and ING Capital LLC, as Documentation Agent (as amended,
supplemented or modified from time to time, the "Credit Agreement")
and I have made, or have caused to be made, a detailed review of the
transactions and conditions of Borrower and its Subsidiaries (as this
and other capitalized terms not defined herein are defined in the
Credit Agreement) during the accounting period covered by the attached
financial statements;
2. The above-referenced examinations did not disclose, and I have no
knowledge of, the existence of any condition or event which
constitutes a Default or Unmatured Default as of the date of this
Compliance Certificate, except as set forth below; and
3. Schedule I attached hereto sets forth financial data and
computations evidencing compliance with the covenants set forth in
Section 6.20 of the Credit Agreement, all of which data and
computations are true, complete and correct.
Described below are the exceptions, if any, to paragraph 2 above by
listing, in detail, the nature of the condition or event, the period during
which it has existed and the action which the Borrower has taken, is taking,
or proposes to take with respect to each such condition or event:
--------------------------------------------------------------
--------------------------------------------------------------
--------------------------------------------------------------
The foregoing certifications, together with the computations set forth in
Schedule I hereto and the financial statements delivered with this Compliance
Certificate in support hereof, are made and delivered this day
------
of , 2002.
-------------
OHIO CASUALTY CORPORATION
By:
------------------------------
Title:
---------------------------
2
SCHEDULE I
----------
Section 6.20.1 Interest Coverage Ratio
- -------------- -----------------------
1. Required Interest Coverage Ratio: 4.0 to 1.0
2. Actual Interest Coverage Ratio
(a) the maximum aggregate amount of all ordinary $
dividends and distributions available for ----------
distribution, whether or not paid, from any
Insurance Subsidiary for the period of four
Fiscal Quarters ending on
-----------------
(b) the maximum aggregate amount of all other $
distributions available from all other ----------
Subsidiaries that are not Insurance Subsidiaries
for the period of four Fiscal Quarters ending
on
------------------------------
(c) cash and marketable securities of Borrower (not $
to exceed $25,000,000) on ----------
--------------------
(d) sum of (a) plus (b) plus (c) $
----------
(e) Consolidated Interest Expense for the period of
four Fiscal Quarters ending on $
---------------- ----------
(f) ratio of (d) to (e) to 1.0
----
Section 6.20.2 -- Leverage Ratio
- -------------- --------------
1. Required Leverage Ratio 0.30 to 1.0
2. Actual Leverage Ratio:
(a) Consolidated Indebtedness as of the end $
of the Fiscal Quarter ending on ----------
-----------
(b) Consolidated Total Capitalization as of the $
end of the Fiscal Quarter ending on ----------
----------
(c) ratio of (a) to (b) to 1.0
----
Section 6.20.3 -- Consolidated Net Worth
- -------------- ----------------------
1. Required Consolidated Net Worth: $800,000,000
3
2. Actual Consolidated Net Worth as of the end of $
the Fiscal Quarter ending on ----------
-------------------
Section 6.20.4 - OCIC Statutory Capital and Surplus
- -------------- ----------------------------------
1. Required OCIC Statutory Capital and Surplus:
(a) Through September 30, 2003 $625,000,000
(b) On December 31, 2003 and as of the end of $650,000,000
each Fiscal Quarter thereafter
2. Actual OCIC Statutory Capital and Surplus as of $
the end of the Fiscal Quarter ending on ----------
---------
Section 6.20.5-OCIC Risk Based Capital
- -------------- -----------------------
1. Required RBC Ratio 175%
2. Actual RBC Ratio:
(a) Total Adjusted Capital as of the end of
the Fiscal Year ending on -----------
---------------
(b) Company Action Level RBC as of the end
of the Fiscal Year ending on -----------
-------------
(c) ratio of (a) to (b) %
---------
4
Exhibit B
---------
FORM OF
ASSIGNMENT AGREEMENT
This Assignment Agreement (this "Assignment Agreement") between
(the "Assignor") and (the
- -------------- -------------------------------
"Assignee") is dated as of . The parties hereto agree as
--------------------
follows:
1. PRELIMINARY STATEMENT. The Assignor is a party to the Credit
---------------------
Agreement (which, as it may be amended, supplemented, modified, renewed or
extended from time to time is herein called the "Credit Agreement") described
in Item 1 of Schedule 1 attached hereto. Capitalized terms used but not
----------
otherwise defined herein shall have the meanings ascribed thereto in the
Credit Agreement.
2. ASSIGNMENT AND ASSUMPTION. The Assignor hereby sells and
-------------------------
assigns to the Assignee, and the Assignee hereby purchases and assumes from
the Assignor, an interest in and to the Assignor's rights and obligations
under the Credit Agreement such that after giving effect to such assignment
the Assignee shall have purchased pursuant to this Assignment Agreement the
percentage interest specified in Item 3 of Schedule 1 of all outstanding
----------
rights and obligations under the Credit Agreement relating to the Loans and
the other Loan Documents. The aggregate Commitment (or Loans, if the
applicable Commitment has been terminated) purchased by the Assignee hereunder
is set forth in Item 4 of Schedule 1.
----------
3. EFFECTIVE DATE. The effective date of this Assignment
--------------
Agreement (the "Effective Date") shall be the later of the date specified in
Item 5 of Schedule 1 or two Business Days (or such shorter period agreed to by
----------
the Agent) after a Notice of Assignment substantially in the form of Exhibit I
---------
attached hereto has been delivered to the Agent. Such Notice of Assignment
must include any consents required to be delivered to the Agent pursuant to
Section 12.3.1 of the Credit Agreement. In no event will the Effective Date
occur if the payments required to be made by the Assignee to the Assignor on
the Effective Date under Section 4 hereof are not made on the proposed
---------
Effective Date. The Assignor will notify the Assignee of the proposed
Effective Date no later than the Business Day prior to the proposed Effective
Date. As of the Effective Date, (a) the Assignee shall have the rights and
obligations of a Lender under the Loan Documents with respect to the rights
and obligations assigned to the Assignee hereunder, and (b) the Assignor shall
relinquish its rights and be released from its corresponding obligations under
the Loan Documents with respect to the rights and obligations assigned to the
Assignee hereunder.
4. PAYMENT OBLIGATIONS. On and after the Effective Date, the
-------------------
Assignee shall be entitled to receive from the Agent all payments of
principal, interest and fees with respect to the interest assigned hereby.
The Assignee shall advance funds directly to the Agent
B-1
with respect to all Loans and reimbursement payments made on or after the
Effective Date with respect to the interest assigned hereby. [In
consideration for the sale and assignment of Loans hereunder, (a) the
Assignee shall pay the Assignor, on the Effective Date, an amount equal to
the principal amount of the portion of all Prime Rate Advances assigned to
the Assignee hereunder, and (b) with respect to each LIBOR Advance made by
the Assignor and assigned to the Assignee hereunder which is outstanding on
the Effective Date, (i) on the last day of the Interest Period therefor,
(ii) on such earlier date agreed to by the Assignor and the Assignee, or
(iii) on the date on which any such LIBOR Advance either becomes due (by
acceleration or otherwise) or is prepaid (the date as described in the
foregoing clauses (i), (ii) or (iii) being hereinafter referred to as the
"Payment Date"), the Assignee shall pay the Assignor an amount equal to the
principal amount of the portion of such LIBOR Advance assigned to the
Assignee which is outstanding on the Payment Date. If the Assignor and the
Assignee agree that the Payment Date for such LIBOR Advance shall be the
Effective Date, they shall agree to the interest rate applicable to the
portion of such Loan assigned hereunder for the period from the Effective
Date to the end of the existing Interest Period applicable to such LIBOR
Advance (the "Agreed Interest Rate") and any interest received by the
Assignee in excess of the Agreed Interest Rate shall be remitted to the
Assignor. In the event interest for the period from the Effective Date to but
not including the Payment Date is not paid by Borrower with respect to any
LIBOR Advance sold by the Assignor to the Assignee hereunder, the Assignee
shall pay to the Assignor interest for such period on the portion of such
LIBOR Advance sold by the Assignor to the Assignee hereunder at the applicable
rate provided by the Credit Agreement. In the event a prepayment of any LIBOR
Advance which is existing on the Payment Date and assigned by the Assignor to
the Assignee hereunder occurs after the Payment Date but before the end of the
Interest Period applicable to such LIBOR Advance, the Assignee shall remit to
the Assignor the excess of the prepayment penalty paid with respect to the
portion of such LIBOR Advance assigned to the Assignee hereunder over the
amount which would have been paid if such prepayment penalty was calculated
based on the Agreed Interest Rate. The Assignee will also promptly remit to
the Assignor (x) any principal payments received from the Agent with respect
to LIBOR Advances prior to the Payment Date, and (y) any amounts of interest
on Loans and fees received from the Agent which relate to the portion of the
Loans assigned to the Assignee hereunder for periods prior to the Effective
Date, in the case of Prime Rate Loans, or the Payment Date, in the case of
LIBOR Loans, and not previously paid by the Assignee to the Assignor.]* In the
event that either party hereto receives any payment to which the other party
hereto is entitled under this Assignment Agreement, then the party receiving
such amount shall promptly remit it to the other party hereto.
* Each Assignor may insert its standard payment provisions in lieu of
the payment terms included in this Exhibit.
5. FEES PAYABLE BY THE ASSIGNEE. The Assignee shall pay to the
----------------------------
Assignor a fee on each day on which a payment of interest or non-use fees is
made under the Credit Agreement with respect to the amounts assigned to the
B-2
Assignee hereunder (other than a payment of interest or non-use fees for the
period prior to the Effective Date or, in the case of LIBOR Loans, the Payment
Date, which the Assignee is obligated to deliver to the Assignor pursuant to
Section 4 hereof). The amount of such fee shall be the difference between
- ---------
(a) the interest or fee, as applicable, paid with respect to the amounts
assigned to the Assignee hereunder and (b) the interest or fee, as applicable,
which would have been paid with respect to the amounts assigned to the
Assignee hereunder if each interest rate was of 1% less than the interest
rate paid by Borrower or if the non-use fee was of 1% less than the non-
---
use fee paid by Borrower, as applicable. In addition, the Assignee agrees to
pay % of the recordation fee required to be paid to the Agent in
---
connection with this Assignment Agreement.
6. REPRESENTATIONS OF THE ASSIGNOR; LIMITATIONS ON THE ASSIGNOR'S
LIABILITY.
- ----------------------------------------------------------------------
The Assignor represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim created by the Assignor. It
is understood and agreed that the assignment and assumption hereunder are made
without recourse to the Assignor and that the Assignor makes no other
representation or warranty of any kind to the Assignee. Neither the Assignor
nor any of its officers, directors, employees, agents or attorneys shall be
responsible for (a) the due execution, legality, validity, enforceability,
genuineness, sufficiency or collectibility of any Loan Document, including,
without limitation, documents granting the Assignor and the other Lenders a
security interest in assets of Borrower or any guarantor, (b) any
representation, warranty or statement made in or in connection with any of the
Loan Documents, (c) the financial condition or creditworthiness of Borrower or
any guarantor, (d) the performance of or compliance with any of the terms or
provisions of any of the Loan Documents, (e) inspecting any of the Property,
books or records of Borrower, (f) the validity, enforceability, perfection,
priority, condition, value or sufficiency of any collateral securing or
purporting to secure the Loans, or (g) any mistake, error of judgment, or
action taken or omitted to be taken in connection with the Loans or the Loan
Documents.
7. REPRESENTATIONS OF THE ASSIGNEE. The Assignee (a) confirms
-------------------------------
that it has received a copy of the Credit Agreement, together with copies of
the financial statements requested by the Assignee and such other documents
and information as it has deemed appropriate to make its own credit analysis
and decision to enter into this Assignment Agreement, (b) agrees that it will,
independently and without reliance upon the Agent, the Assignor or any other
Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking
or not taking action under the Loan Documents, (c) appoints and authorizes the
Agent to take such action as agent on its behalf and to exercise such powers
under the Loan Documents as are delegated to the Agent by the terms thereof,
together with such powers as are reasonably incidental thereto, (d) agrees
that it will perform in accordance with their terms all of the obligations
which by the terms of the Loan Documents are required to be performed by it as
a Lender, (e) agrees that its
B-3
payment instructions and notice instructions are as set forth in the
attachment to Schedule 1, (f) confirms that none of the funds, monies, assets
----------
or other consideration being used to make the purchase and assumption
hereunder are "plan assets" as defined under ERISA and that its rights,
benefits and interests in and under the Loan Documents will not be "plan
assets" under ERISA, [and (g) attaches the forms prescribed by the
Internal Revenue Service of the United States certifying that the Assignee is
entitled to receive payments under the Loan Documents without deduction or
withholding of any United States federal income taxes].*
* to be inserted if the Assignee is not incorporated under the laws of
the United States, or a state thereof.
8. INDEMNITY. The Assignee agrees to indemnify and hold the
---------
Assignor harmless against any and all losses, costs and expenses (including,
without limitation, reasonable attorneys' fees) and liabilities incurred by
the Assignor in connection with or arising in any manner from the Assignee's
non-performance of the obligations assumed under this Assignment Agreement.
The obligations of the Assignee under this Section 8 shall survive the payment
---------
of all amounts hereunder and the termination of this Agreement.
9. SUBSEQUENT ASSIGNMENTS. After the Effective Date, the
----------------------
Assignee shall have the right pursuant to and in accordance with Section 12.3
of the Credit Agreement to assign the rights which are assigned to the
Assignee hereunder to any entity or person; provided, that (a) any such
--------
subsequent assignment does not violate any of the terms and conditions of the
Loan Documents or any law, rule, regulation, order, writ, judgment, injunction
or decree and that any consent required under the terms of the Loan Documents
has been obtained, and (b) unless the prior written consent of the Assignor is
obtained, the Assignee is not thereby released from its obligations to the
Assignor hereunder, if any remain unsatisfied, including, without limitation,
its obligations under Sections 4, 5, 6, 7 and 8 hereof.
---------- - - - -
10. REDUCTIONS OF AGGREGATE COMMITMENT. If any reduction in the
----------------------------------
Aggregate Commitment occurs between the date of this Assignment Agreement and
the Effective Date, the percentage interest specified in Item 3 of Schedule 1
----------
shall remain the same, but the dollar amount purchased shall be recalculated
based on the reduced Aggregate Commitment.
11. ENTIRE AGREEMENT. This Assignment Agreement and the attached
----------------
Notice of Assignment embody the entire agreement and understanding between the
parties hereto and supersede all prior agreements and understandings between
the parties hereto relating to the subject matter hereof.
12. GOVERNING LAW. THIS ASSIGNMENT AGREEMENT SHALL BE GOVERNED BY
-------------
THE INTERNAL LAWS, WITHOUT REGARD TO CONFLICT OF LAWS PROVISIONS, OF THE STATE
OF ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
B-4
13. NOTICES. Notices shall be given under this Assignment
-------
Agreement in the manner set forth in the Credit Agreement. For the purpose
hereof, the addresses of the parties hereto (until notice of a change is
delivered) shall be the address set forth in the attachment to Schedule 1.
----------
[signature page to follow]
B-5
IN WITNESS WHEREOF, the parties hereto have executed this Assignment
Agreement by their duly authorized officers as of the date first above
written.
[NAME OF ASSIGNOR] [NAME OF ASSIGNEE]
By: By:
------------------ ------------------
Title: Title:
--------------- ---------------
B-6
SCHEDULE 1
TO ASSIGNMENT AGREEMENT
1. Description and Date of Credit Agreement:
That certain Credit Agreement dated as of July 31, 2002 among Ohio
Casualty Corporation, the financial institutions named therein,
LaSalle Bank National Association, as Agent and ING Capital LLC, as
Documentation Agent.
2. Date of Assignment Agreement: , 20
-------------- --
3. Amounts (As of Date of Item 2 above):
(a) Total of Commitments (Loans)*
under Credit Agreement $
----------------
(b) Assignee's percentage of the
(Loans)* Commitments purchased
under the Assignment Agreement** %
----------
4. Assignee's aggregate (Loan amount)*
Commitment amount purchased hereunder: $
-------------
5. Proposed Effective Date:
-----------
Accepted and Agreed:
[NAME OF ASSIGNOR] [NAME OF ASSIGNEE]
By: By:
--------------------- ---------------------
Title: Title:
------------------ ------------------
* If a Commitment has been terminated, insert outstanding Loans in place of
Commitment
** Percentage taken to 10 decimal places
B-7
ATTACHMENT TO SCHEDULE 1 to ASSIGNMENT AGREEMENT
Attach Assignor's Administrative Information Sheet, which must
include notice address for the Assignor and the Assignee
(sample form shown below)
ASSIGNOR INFORMATION
- --------------------
CONTACT:
- -------
Name:
-------------------
Telephone No.:
----------
Fax No:
-----------------
Payment Information:
- -------------------
Name & ABA No. of Destination Bank:
----------------------
Account Name & Number for Wire Transfer:
-----------------
Other Instructions:
--------------------------------------
Address for Notices for Assignor:
- --------------------------------
ASSIGNEE INFORMATION
- --------------------
Credit Contact:
- --------------
Name:
-------------------
Telephone No.:
----------
Fax No:
-----------------
KEY OPERATIONS CONTACTS:
- -----------------------
Booking Installation:
Name:
-------------------
Telephone No.:
----------
Fax No:
-----------------
B-8
PAYMENT INFORMATION:
- -------------------
Name & ABA No. of Destination Bank:
----------------------
Account Name & Number for Wire Transfer:
-----------------
Other Instructions:
--------------------------------------
ADDRESS FOR NOTICES FOR ASSIGNEE:
- --------------------------------
LASALLE INFORMATION
- -------------------
Assignee will be called promptly upon receipt of the signed agreement.
Initial Funding Contact: Subsequent Operations Contact:
- ----------------------- -----------------------------
Name: Name:
----------------- ---------------
Telephone No.: (312) Telephone No.: (312)
Fax No.: (312) Fax No.: (312)
Initial Funding Standards
- -------------------------
LIBOR - Fund 2 days after rates are set.
LaSalle Wire Instructions:
- -------------------------
LaSalle Bank National Association, ABA
---------------
BNF = / , Ref:
---------- ---
Address for Notices for LaSalle:
- -------------------------------
Chicago, IL
Attn:
Fax No. (312) or (312)
------------ -----------
B-9
EXHIBIT I
TO ASSIGNMENT AGREEMENT
NOTICE OF ASSIGNMENT
,
-------------- -- --
To: Ohio Casualty Corporation
9450 Seward Road
Fairheid, Ohio 45014
LaSalle Bank National Association
135 South LaSalle Street
Chicago, Illinois 60603
From: [NAME OF ASSIGNOR] (the "Assignor")
[NAME OF ASSIGNEE] (the "Assignee")
1. We refer to the Credit Agreement (the "Credit Agreement")
described in Item 1 of Schedule 1 attached hereto. Capitalized terms used
----------
herein and not otherwise defined herein or in such consent shall have the
meanings attributed to them in the Credit Agreement.
2. This Notice of Assignment (this "Notice") is given and delivered
to Borrower and the Agent pursuant to Section 12.3.2 of the Credit Agreement.
3. The Assignor and the Assignee have entered into an Assignment
Agreement, dated as of , (the "Assignment"), pursuant
------------------ ----
to which, among other things, the Assignor has sold, assigned, delegated and
transferred to the Assignee, and the Assignee has purchased, accepted and
assumed from the Assignor the percentage interest specified in Item 3 of
Schedule 1 of all outstanding, rights and obligations under the Credit
- ----------
Agreement relating to the facilities listed in Item 3 of Schedule 1,
----------
including, without limitation, such interest in the Assignor's Commitment (if
applicable) and the Loans owing to the Assignor relating to such facilities.
The effective date of the Assignment (the "Effective Date") shall be the later
of the date specified in Item 5 of Schedule 1 or two Business Days (or such
----------
shorter period as agreed to by the Agent) after this Notice of Assignment and
any consents and fees required by Sections 12.3.1 and 12.3.2 of the Credit
Agreement have been delivered to the Agent; provided, that the Effective Date
--------
shall not occur if any condition precedent agreed to by the Assignor and the
Assignee has not been satisfied.
B-10
4. The Assignor and the Assignee hereby give to Borrower and the
Agent notice of the assignment and delegation referred to herein. The
Assignor will confer with the Agent before the date specified in Item 5 of
Schedule 1 to determine if the Assignment Agreement will become effective on
- ----------
such date pursuant to Section 3 hereof and will confer with the Agent to
---------
determine the Effective Date pursuant to Section 3 hereof if it occurs
---------
thereafter. The Assignor shall notify the Agent if the Assignment does not
become effective on any proposed Effective Date as a result of the failure to
satisfy the conditions precedent agreed to by the Assignor and the Assignee.
At the request of the Agent, the Assignor will give the Agent written
confirmation of the satisfaction of the conditions precedent.
5. The Assignor or the Assignee shall pay to the Agent on or before
the Effective Date the processing fee of $3,500 required by Section 12.3.2 of
the Credit Agreement.
6. If Notes are outstanding on the Effective Date, the Assignor and
the Assignee request and direct that the Agent prepare and cause Borrower to
execute and deliver new Notes or, as appropriate, replacement Notes, to the
Assignor and the Assignee. The Assignor and, if applicable, the Assignee each
agree to deliver to the Agent the original Notes received by it from Borrower
upon its receipt of new Notes in the appropriate amount.
7. The Assignee advises the Agent that notice and payment
instructions are set forth in the attachment to Schedule 1.
----------
8. Each party consenting to the Assignment in the space indicated
below hereby releases the Assignor from any obligations to it which have been
assigned to the Assignee. The Assignee hereby represents and warrants that
none of the funds, monies, assets or other consideration being used to make
the purchase pursuant to the Assignment are "plan assets" as defined under
ERISA and that its rights, benefits and interests in and under the Loan
Documents will not be "plan assets" under ERISA.
9. The Assignee authorizes the Agent to act as its agent under the
Loan Documents in accordance with the terms thereof. The Assignee
acknowledges that the Agent has no duty to supply information with respect to
Borrower or the Loan Documents to the Assignee until the Assignee becomes a
party to the Credit Agreement.
[NAME OF ASSIGNOR] [NAME OF ASSIGNEE]
By: By:
----------------- -----------------
Title: Title:
--------------- --------------
B-11
Acknowledged And Consented [Acknowledged And Consented
To by LaSalle Bank National To by Ohio Casualty
Corporation]
Association, As Agent
By: By:
----------------------- -----------------------
Title: Title:
-------------------- --------------------
[Attach photocopy of Schedule 1 to Assignment]
B-12
Exhibit C
---------
FORM OF
REVOLVING NOTE
$ Dated: July 31, 2002
-------------
FOR VALUE RECEIVED, Ohio Casualty Corporation ("Borrower") HEREBY
PROMISES TO PAY to the order of
---------------------------------------
(the "Lender") the principal sum of United States
-------------------------
Dollars ($ ) or, if less, the aggregate unpaid principal amount of
----------
the Revolving Loans made by the Lender to Borrower pursuant to Section 2.1 of
-----------
the Credit Agreement (as hereinafter defined), on or before the Facility
Termination Date; together, in each case, with interest on any and all
principal amounts remaining unpaid hereunder from time to time. Interest upon
the unpaid principal amount hereof shall accrue at the rates, shall be
calculated in the manner and shall be payable on the dates set forth in the
Credit Agreement. After maturity, whether by acceleration or otherwise,
accrued interest shall be payable upon demand. Both principal and interest
shall be payable in accordance with the Credit Agreement to LaSalle Bank
National Association, as Agent (the "Agent") on behalf of the Lender in
immediately available funds. The Revolving Loans made by the Lender to
Borrower pursuant to the Credit Agreement and all payments on account of
principal hereof shall be recorded by the Lender and, prior to any transfer
thereof, endorsed on Schedule A attached hereto which is part of this
----------
Revolving Note or otherwise in accordance with its usual practices; provided,
--------
however, that the failure to so record shall not affect Borrower's obligations
- -------
under this Revolving Note.
This Revolving Note is a Revolving Note referred to in, and is
entitled to the benefits of, the Credit Agreement dated as of July 31, 2002 by
and among Borrower, the financial institutions signatory thereto (including
the Lender), the Agent and ING Capital LLC, as Documentation Agent (as
amended, modified or supplemented from time to time, the "Credit Agreement")
and the other Loan Documents. Capitalized terms used but not otherwise
defined herein shall have the respective meanings ascribed thereto in the
Credit Agreement. The Credit Agreement, among other things, contains
provisions for acceleration of the maturity hereof upon the happening of
certain stated events and also for prepayments on account of principal hereof
prior to the maturity hereof upon the terms and conditions therein specified.
Borrower hereby waives presentment, demand, protest or notice of any
kind in connection with this Revolving Note.
THIS REVOLVING NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE INTERNAL LAWS, WITHOUT REGARD TO CONFLICT OF LAWS PROVISIONS, OF THE
STATE OF ILLINOIS BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL
BANKS.
OHIO CASUALTY CORPORATION
By:
------------------------------
Title:
---------------------------
Schedule A
----------
Revolving Credit Note
dated July 31, 2002
payable to the order of
[Lender]
--------
- -----------------------------------------------------------------------------
PRINCIPAL PAYMENTS
- -----------------------------------------------------------------------------
Amount of Amount of Unpaid
Principal Principal Principal Notation
Date Borrowed Repaid Balance Made by
- -----------------------------------------------------------------------------
EXHIBIT D
SOLVENCY CERTIFICATE
The undersigned, , hereby certifies that the
-----------------------
undersigned (a) is the of Ohio Casualty
----------------------------
Corporation (the "Borrower"), (b) is familiar with the properties, business
--------
and assets of the Borrower and (c) is authorized to execute and deliver this
Certificate on behalf of the Borrower. The undersigned further certifies that
the undersigned has carefully reviewed the contents of this Certificate and,
in connection herewith, has made such investigations and inquiries as the
undersigned deemed necessary and prudent. The undersigned further certifies
that the undersigned believes that the financial information and assumptions
which underlie and form the basis for the representations made in this
Certificate were reasonable when made and continue to be reasonable as of the
date hereof. Capitalized terms used herein that are defined in the Credit
Agreement dated as of July 31, 2002 (as amended or otherwise modified from
time to time, the "Credit Agreement") among the Borrower, the Lenders named
----------------
therein (the "Lenders"), LaSalle Bank National Association, as agent for the
-------
Lenders (in such capacity, the "Agent") and ING Capital LLC, as Documentation
-----
Agent, are used herein as so defined. The undersigned hereby further
certifies that it is the belief of the undersigned that:
1. As of the date hereof, and after giving effect to the initial
Loans under the Credit Agreement, the value (in accordance with GAAP or SAP)
of the assets of the Borrower and its Subsidiaries, on a consolidated basis
will exceed the debts and liabilities, subordinated, contingent or otherwise
of the Borrower and its Subsidiaries on a consolidated basis.
2. As of the date hereof, and after giving effect to the initial
Loans under the Credit Agreement, the present value (in accordance with GAAP
or SAP) of the assets of the Borrower and its Subsidiaries on a consolidated
basis will be greater than the amount that will be required to pay the
probable liability of the Borrower and its Subsidiaries on a consolidated
basis on their debts and other liabilities, subordinated, contingent or
otherwise, as such debts and liabilities become absolute and matured.
3. As of the date hereof, and after giving effect to the initial
Loans under the Credit Agreement, the Borrower and its Subsidiaries on a
consolidated basis will be able to pay their debts and liabilities,
subordinated, contingent or otherwise, as such debts and liabilities become
absolute and matured.
4. As of the date hereof, and after giving effect to the initial
Loans under the Credit Agreement, the Borrower and its Subsidiaries on a
consolidated basis will not have unreasonably small capital with which to
conduct the businesses in which they are engaged as such businesses are now
conducted and are proposed to be conducted after the date hereof.
5. The Borrower or its Subsidiaries do not intend, in
consummating the transactions contemplated by the Credit Agreement, to delay
hinder or defraud either present or future
creditors or other Persons to which the Borrower or its Subsidiaries is or
will become, on or after the date hereof, indebted.
6. The Credit Agreement was executed and delivered by or on
behalf of the Borrower to the Agent and the Lenders in good faith and in
exchange for a reasonably equivalent value.
7. In reaching the conclusions set forth in this Certificate, I
have considered, among other things,:
(a) the cash and other current assets of the Borrower and
its Subsidiaries;
(b) refinancing or other replacements of existing
liabilities, debts, obligations and commitments which the Borrower and
its Subsidiaries reasonably expect will be available on the dates of
their respective maturities;
(c) the estimated value of all property, real and
personal, tangible and intangible, of the Borrower and its
Subsidiaries;
(d) the audited financial statements of the Borrower dated
December 31, 2001 and the unaudited financial statements of the
Borrower dated March 31, 2002, all as previously delivered to the
Agent and the Lenders;
(e) all liabilities of the Borrower and its Subsidiaries
known to me on all claims, whether or not reduced to judgment,
liquidated, unliquidated, matured, unmatured, disputed, undisputed,
legal, equitable, secured, unsecured, fixed or contingent, including,
among other things, claims arising out of pending or, to my knowledge,
threatened litigation against the Borrower and its Subsidiaries;
(f) historical growth in revenues and cash flows of the
Borrower and its Subsidiaries and anticipated growth in revenues and
cash flows of the Borrower and its Subsidiaries and (1) certain pro
forma financial information of the Borrower and its Subsidiaries and
(2) the Borrower's business plan, both as previously delivered to the
Agent and the Lenders; and
(g) the amount of equity capital of the Borrower.
2
IN WITNESS WHEREOF, the undersigned has executed this Certificate on
behalf of the Borrower as of July 31, 2002.
OHIO CASUALTY CORPORATION
By:
--------------------------
Name:
------------------------
Title:
-----------------------
3