SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-10994
--------------
For the quarterly period ended March 31, 1999
PHOENIX INVESTMENT PARTNERS, LTD.
DELAWARE 95-4191764
(State of Incorporation) (I.R.S. Employer Identification No.)
56 Prospect St., Hartford, Connecticut 06115-0480 (860) 403-7667
(Address of principal executive offices) (Registrant's telephone number)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No ___
On April 30, 1999, the registrant had 43,871,022 shares of $.01 par value common
stock outstanding.
PHOENIX INVESTMENT PARTNERS, LTD. AND SUBSIDIARIES
Quarter Ended March 31, 1999
Index
PART I - FINANCIAL INFORMATION:
Page
Item 1. Consolidated Financial Statements:
Consolidated Condensed Statements of Financial Condition. 3
March 31, 1999 and December 31, 1998
Consolidated Statements of Income ....................... 4
Three Months Ended March 31, 1999 and
Three Months Ended March 31, 1998
Consolidated Condensed Statements of Cash Flows ......... 5
Three Months Ended March 31, 1999 and
Three Months Ended March 31, 1998
Notes to the Consolidated Financial Statements........... 6
Item 2. Management's Discussion and Analysis of:
Results of Operations and Financial Condition............ 12
Liquidity and Capital Resources.......................... 16
Market Risk.............................................. 16
Impact of the Year 2000 Issue............................ 17
Cautionary Statement under Section 21E of the Securities
Exchange Act of 1934.................................. 18
PART II - OTHER INFORMATION:
Item 1. Legal Proceedings........................................ 19
Item 4. Submission of Matters to a Vote of Security Holders...... 19
Item 6. Exhibits and Reports on Form 8-K......................... 19
Signatures........................................................ 20
2
PART I. Financial Information
Item 1. Consolidated Financial Statements
Phoenix Investment Partners, Ltd. and Subsidiaries
Consolidated Condensed Statements of Financial Condition
(in thousands)
(Unaudited)
March 31, December31,
1999 1998
Assets
Current Assets
Cash and cash equivalents $ 22,582 $ 29,298
Marketable securities, at market 21,341 16,275
Accounts receivable 40,403 35,015
Prepaid expenses and other current assets 3,711 2,951
--------- --------
Total current assets 88,037 83,539
Deferred commissions 2,267 2,798
Furniture, equipment and leasehold improvements, net 10,606 8,589
Goodwill and intangible assets, net 579,349 446,657
Long-term investments and other assets 19,776 22,135
--------- --------
Total assets $ 700,035 $563,718
========= ========
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable and other accrued liabilities $ 35,948 $ 39,659
Payables to related parties 4,609 3,032
Broker-dealer payable 11,320 9,568
Current portion of long-term debt 889 964
--------- --------
Total current liabilities 52,766 53,223
Deferred taxes, net 53,003 53,446
Long-term debt, net of current portion 3,270 1,718
Convertible subordinated debentures 76,364 76,364
Credit facilities 275,000 140,000
Lease obligations and other long-term liabilities 4,379 4,843
--------- --------
Total liabilities 464,782 329,594
--------- --------
Minority Interest 1,290 2,531
--------- --------
Stockholders' Equity
Common stock, $.01 par value, 100,000,000 shares
authorized, 45,401,175 and 45,172,258 shares issued,
and 43,669,075 and 43,710,458 shares outstanding 454 451
Additional paid-in capital 196,844 195,224
Retained earnings 47,895 44,482
Accumulated other comprehensive income 3,695 3,571
Unearned compensation on restricted stock (2,427) (1,529)
Treasury stock, at cost, 1,732,100 and 1,461,800 shares (12,498) (10,606)
--------- --------
Total stockholders' equity 233,963 231,593
--------- --------
Total liabilities and stockholders' equity $ 700,035 $563,718
========= ========
The accompanying notes are an integral part of these statements.
3
Phoenix Investment Partners, Ltd. and Subsidiaries
Consolidated Statements of Income and Comprehensive Income
(in thousands, except per share data)
(Unaudited)
Three months ended March 31,
1999 1998
Revenues
Investment management fees $ 55,025 $ 45,654
Mutual funds - ancillary fees 7,328 6,154
Other income and fees 966 649
--------- --------
Total revenues 63,319 52,457
--------- --------
Operating Expenses
Employment expenses 26,654 22,731
Other operating expenses 14,513 11,692
Depreciation and amortization of
leasehold improvements 904 913
Amortization of goodwill and intangible assets 6,314 5,504
Amortization of deferred commissions 565 340
--------- --------
Total operating expenses 48,950 41,180
--------- --------
Operating Income 14,369 11,277
--------- --------
Equity in Earnings of Unconsolidated Affiliates 165 929
--------- --------
Other Income - Net 45 515
--------- --------
Interest (Expense) Income - Net
Interest expense (3,786) (2,952)
Interest income 727 395
--------- --------
Total interest expense - net (3,059) (2,557)
--------- --------
Income to Minority Interest (737) (488)
--------- --------
Income Before Income Taxes 10,783 9,676
Provision for income taxes 4,745 4,251
--------- --------
Net Income 6,038 5,425
Other Comprehensive Income, Net of Tax
Unrealized gains(losses)on securities available-for-sale 124 (435)
Foreign currency translation adjustment 192
--------- --------
Total other comprehensive income (loss) 124 (243)
--------- --------
Comprehensive Income $ 6,162 $ 5,182
========= ========
Net Income $ 6,038 $ 5,425
Series A preferred stock dividends 1,190
--------- --------
Income available to common stockholders $ 6,038 $ 4,235
========= ========
Weighted average shares outstanding
Basic 43,661 43,936
Diluted 53,446 44,530
Earnings per share
Basic $ .14 $ .10
Diluted $ .13 $ .10
The accompanying notes are an integral part of these statements.
4
Phoenix Investment Partners, Ltd. and Subsidiaries
Consolidated Condensed Statements of Cash Flows
(in thousands)
(Unaudited)
Three months ended March 31,
1999 1998
Cash Flows from Operating Activities:
Net income $ 6,038 $ 5,425
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization of
leasehold improvements 904 913
Amortization of goodwill and intangible assets 6,314 5,504
Amortization of deferred commissions 565 340
Income to minority interest 737 488
Compensation recognized under employee
benefit plans 308
Equity in earnings of unconsolidated
affiliates, net of dividends 27 397
Changes in other operating assets (2,403) (4,035)
Changes in other operating liabilities (6,514) (2,960)
-------- -------
Net cash provided by operating activities 5,976 6,072
-------- -------
Cash Flows from Investing Activities:
Purchase of subsidiaries, net of cash acquired (137,714) (5,853)
(Purchase) sale of marketable securities, net (2,932) 847
Capital expenditures (572) (758)
Distributions to minority interest (1,978) (643)
Purchase of long-term investments (360) (408)
Proceeds from long-term investments 490
-------- -------
Net cash used in investing activities (143,066) (6,815)
-------- -------
Cash Flows from Financing Activities:
Proceeds from (repayment of) borrowings, net 134,744 (146)
Dividends paid (2,626) (3,834)
Stock repurchases (1,892) (721)
Proceeds from issuance of stock 323 577
Other financing activities (175)
-------- --------
Net cash provided by (used in) financing activities 130,374 (4,124)
-------- -------
Net decrease in cash and cash equivalents (6,716) (4,867)
Cash and cash equivalents, beginning of period 29,298 21,872
-------- -------
Cash and Cash Equivalents, End of Period $ 22,582 $17,005
======== =======
Supplemental Cash Flow Information:
Interest paid $ 3,387 $ 3,140
Income taxes paid $ 9,996 $ 8,944
The accompanying notes are an integral part of these statements.
5
Phoenix Investment Partners, Ltd. and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)
- --------------------------------------------------------------------------------
1. Basis of Presentation
The unaudited consolidated financial statements of Phoenix Investment
Partners, Ltd. and Subsidiaries (PXP or the Company) included herein have
been prepared in accordance with the instructions to the Quarterly Report on
Form 10-Q pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted. It is
suggested that these consolidated financial statements be read in conjunction
with the financial statements and notes included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1998. Reclassifications
have been made, when necessary, to conform the prior period presentation to
the current period presentation.
2. Recent Accounting Pronouncements
PXP adopted Statement of Financial Accounting Standard (SFAS) No. 131,
"Disclosures about Segments of an Enterprise and Related Information," as of
December 31, 1998. This statement supercedes SFAS No. 14, "Financial
Reporting for Segments of a Business Enterprise," by replacing the "industry
segment" approach with the "management" approach. The management approach
designates the internal organization that is used by management for making
operating decisions and assessing performance as the source for reportable
segments. SFAS No. 131 also requires disclosures about products and services,
geographic areas, and major customers. As this pronouncement only addresses
financial statement disclosure, it has no impact on PXP's financial results.
(See Note 6)
3. Acquisition Related Activity
On March 1, 1999, PXP acquired the retail mutual fund and closed-end fund
businesses of the New York City-based Zweig Fund Group (Zweig) for
consideration of approximately $135 million. The agreement provides for an
additional payout of up to $29 million over the next three years, dependent
upon revenue growth of the purchased business.
The purchase price for Zweig represents the consideration paid and the direct
costs incurred by PXP related to the purchase. Preliminary analyses have been
performed in order to identify intangible assets and to allocate purchase
price to such assets. Additional information is necessary to complete the
purchase price allocation. The excess of purchase price over the fair value
of acquired net tangible assets of Zweig totaled $135.0 million. Of this
excess purchase price, $78.1 million has been preliminarily allocated to
intangible assets, primarily associated with investment management contracts,
which are being amortized over their estimated useful lives using the
straight-line method. The average estimated useful life of the intangible
assets is approximately 12 years. The remaining excess purchase price of
$56.9 million has been classified as goodwill and is being amortized over 40
years using the straight-line method. Related amortization of $.8 million has
been expensed for the period ended March 31, 1999.
6
The following table summarizes the preliminary calculation and allocation of
Zweig's purchase price
(in thousands):
Purchase Price:
Consideration paid or payable $ 135,000
Transaction costs 2,325
----------
Total Purchase Price $ 137,325
==========
Purchase Price Allocation:
Fair value of acquired net assets $ 2,359
Identified intangibles 78,063
Goodwill 56,903
----------
Total Allocation of Purchase Price $ 137,325
==========
4. Pro Forma Results
PXP's financial results for the first quarter of 1999 include the operations
of Zweig from March 1, 1999, while the first quarter of 1998 excludes the
operations of Zweig. Management believes that, for comparative purposes, the
most meaningful financial presentation for these periods is on a pro forma
basis.
The following pro forma financial information for the three months ended
March 31, 1999 and 1998 is derived from the historical financial statements
of PXP and Zweig, and gives effect to the acquisition of Zweig by PXP
assuming the acquisition was effected on January 1, 1998. The pro forma
financial information does not necessarily reflect the actual results that
would have been obtained had the acquisition taken effect on the
aforementioned assumed date.
Pro Forma
Three months ended March 31,
1999 1998
--------- ---------
(in thousands, except per
share amounts)
Revenues $ 70,002 $ 63,024
--------- ---------
Employment expenses 29,118 25,362
Other operating expenses 17,241 15,924
Amortization of goodwill and
intangible assets 7,969 7,969
--------- ---------
Operating income 15,674 13,769
Other income - net 210 1,444
Interest expense - net (4,343) (4,490)
Income to minority interest (737) (488)
--------- ---------
Income before income taxes 10,804 10,235
Provision for income taxes 4,786 4,579
--------- ---------
Net income $ 6,018 $ 5,656
========= =========
Earnings per share
Basic $ .14 $ .10
Diluted $ .13 $ .10
7
5. Dividends and Other Capital Transactions
On May 6, 1999, PXP's Board of Directors declared a quarterly dividend of
$.06 per common share payable June 10, 1999, to stockholders of record on May
28, 1999. PXP intends to continue to pay quarterly cash dividends, however,
future payment of cash dividends by PXP will depend upon the financial
condition, capital requirements and earnings of PXP.
On April 3, 1998, PXP exchanged 3.2 million shares of Series A Convertible
Exchangeable Preferred Stock (Preferred Stock) for 6% Convertible
Subordinated Debentures (Debentures) due 2015. Each share of outstanding
Preferred Stock, including unpaid and accrued dividends, was exchanged for a
Debenture with a $25.00 face value. Interest on the Debentures for the period
from March 10, 1999 through June 9, 1999 will be payable on June 10, 1999 to
registered holders as of May 20, 1999.
As of March 31, 1999, the Company, in accordance with the previously
announced stock repurchase program, had purchased a total of 1,732,100 shares
of PXP common stock at a cost of $12.5 million.
6. Segment Information
PXP has determined that its reportable segments are those based on the method
used for internal reporting, which disaggregates the business by customer
category. PXP's reportable segments are its retail and institutional lines of
business. The retail line primarily serves the individual investor by acting
as advisor to and, in certain instances, distributor for open-end mutual
funds and managed accounts. The institutional line provides management
services primarily to corporate entities and multi-employer retirement funds,
as well as endowment, insurance and other special purpose funds, including
closed-end funds.
The following tables summarize pertinent financial information relative to
PXP's operations:
Three Months Ended March 31, 1999 All
Retail Institutional Other Total
(in thousands)
Revenues $ 40,268 $22,526 $ 525 $ 63,319
-------- ------- ------- --------
Employment and
other operating expenses 26,383 16,127 126 42,636
Amortization of goodwill
and intangible assets 3,531 2,783 6,314
-------- ------- ------- --------
Operating income 10,354 3,616 399 14,369
Other (expense) income - net (93) 142 161 210
Interest expense (1,823) (779) (1,184) (3,786)
Interest income 153 45 529 727
Minority interest (737) (737)
-------- ------- ------- -------
Income (loss) before income taxes $ 8,591 $ 2,287 $ (95) $ 10,783
======== ======= ======= ========
(in millions)
Assets under management $ 24,778 $33,739 $ -- $ 58,517
======== ======= ======= ========
8
Three Months Ended March 31, 1998 All
Retail Institutional Other Total
(in thousands)
Revenues $ 33,721 $18,211 $ 525 $ 52,457
-------- ------- ------- --------
Employment and
other operating expenses 23,642 12,034 35,676
Amortization of goodwill
and intangible assets 3,146 2,358 5,504
-------- ------- ------- --------
Operating income 6,933 3,819 525 11,277
Other income - net 31 367 1,046 1,444
Interest expense (2,460) (442) (50) (2,952)
Interest income 116 14 265 395
Minority interest (488) (488)
-------- ------- ------- -------
Income before income taxes $ 4,620 $ 3,270 $ 1,786 $ 9,676
======== ======= ======= ========
(in millions)
Assets under management $ 20,400 $28,904 $ -- $ 49,304
======== ======= ======= ========
The "All Other" column represents corporate office revenue and expenses which
are not directly attributable to either line of business.
There are no intersegment revenues. Balance sheet asset information by line
of business is not reported as the information is not produced internally and
is not utilized in managing the business.
7. Comprehensive Income
The components of other comprehensive income, and related tax effects, are as
follows for the periods ended March 31, (in thousands):
1999 Tax
Before-Tax (Expense) Net-of-Tax
Amount Benefit Amount
Unrealized gains on securities
available-for-sale:
Unrealized holding gains arising
during period $ 210 $ (86) $ 124
------ -------- -------
Other comprehensive income $ 210 $ (86) $ 124
====== ======== =======
1998 Tax
Before-Tax (Expense) Net-of-Tax
Amount Benefit Amount
Foreign currency translation adjustment $ 325 $ (133) $ 192
Unrealized losses on securities
available-for-sale:
Unrealized holding losses arising
during period (737) 302 (435)
------ -------- -------
Other comprehensive loss $ (412) $ 169 $ (243)
====== ======== =======
9
The following tables summarize accumulated other comprehensive income
balances (in thousands):
As of March 31, 1999: Accumulated
Unrealized Other
Gains(Losses) Comprehensive
on Securities Income
Balance as of December 31, 1998 $ 3,571 $ 3,571
Current period change 124 124
-------- ---------
Balance as of March 31, 1999 $ 3,695 $ 3,695
======== =========
As of December 31, 1998: Accumulated
Foreign Unrealized Other
Currency Gains(Losses) Comprehensive
Items on Securities Income
Balance as of December 31, 1997 $ (1,171) $ 11,845 $ 10,674
Current period change 1,171 (8,274) (7,103)
-------- -------- ---------
Balance as of December 31, 1998 $ -- $ 3,571 $ 3,571
======== ======== =========
8. Earnings Per Share
Earnings per share (EPS) is calculated in accordance with SFAS No. 128,
"Earnings per Share." Basic EPS is computed by dividing income available to
common stockholders by the weighted average number of common shares
outstanding for the period. The computation of diluted EPS is similar to
basic EPS, except that the denominator is increased to include the number of
additional common shares that would have been outstanding if potentially
dilutive common shares had been issued, and the numerator is increased for
any related net income effect. Potentially dilutive shares are based on
outstanding stock options and convertible securities.
The following tables reconcile PXP's basic earnings per share to diluted
earnings per share:
For the Three Months Ended March 31, 1999
Per-Share
Income Shares Amount
(in thousands)
Basic EPS
Income available to common
stockholders $ 6,038 43,661 $ .14
======
Effect of Dilutive Securities
Stock options 285
6% convertible debentures 667 9,500
------- ------
Diluted EPS
Income available to common
stockholders and assumed
conversions $ 6,705 53,446 $ .13
======= ====== ======
10
For the Three Months Ended March 31, 1998
Per-Share
Income Shares Amount
(in thousands)
Net income $ 5,425
Less: preferred stock dividends 1,190
-------
Basic EPS
Income available to common
stockholders 4,235 43,936 $ .10
======
Effect of Dilutive Securities
Stock options 594
------- ------
Diluted EPS
Income available to common
stockholders and assumed
conversions $ 4,235 44,530 $ .10
======= ====== ======
In accordance with SFAS No. 128, the March 31, 1998 computation of diluted
earnings per share, and the respective weighted average diluted shares,
excludes the effect of the Preferred Stock since these securities were
anti-dilutive. Had the Preferred Stock not been anti-dilutive, the weighted
average diluted shares for the three months ended March 31, 1998 would have
been 54.7 million.
9. Long-term Debt
On March 17, 1999, PXP entered into a five year, $175 million Credit
Agreement with a consortium of banks. At March 31, 1999, PXP had outstanding
borrowings of $75 million under this facility. In addition, PXP had
outstanding borrowings under an existing $200 million credit facility of $200
million and $140 million at March 31, 1999 and December 31, 1998,
respectively. The Zweig acquisition was financed through borrowings from
these credit facilities. Interest rates on both credit facilities are
variable.
On March 17, 1999, PXP and the banks amended the financial covenant section
of its existing $200 million Credit Agreement to be consistent with the terms
of the new $175 million Credit Agreement.
11
Phoenix Investment Partners, Ltd. and Subsidiaries
Item 2. Management's Discussion and Analysis of Results of Operations and
Financial Condition
Business Description
Phoenix Investment Partners, Ltd. and subsidiaries (PXP or the Company) provide
a variety of financial services to a broad base of institutional, corporate and
individual clients.
PXP currently operates two lines of business: retail and institutional
investment management. The retail investment management line of business
provides investment management services on a discretionary basis (including
administrative services) with products consisting of open-end mutual funds and
individually managed accounts. Individually managed accounts are primarily
administered through broker-dealer sponsored and distributed wrap programs
offered to high net-worth individuals. The institutional investment management
line of business provides discretionary and non-discretionary investment
management services primarily to corporate entities and multi-employer
retirement funds, as well as endowment, insurance and other special purpose
funds, including closed-end funds.
The following table summarizes operating revenues, pre-tax income and assets
under management by line of business as of, and for the three months ended,
March 31, 1999 and 1998:
Assets Under
Revenues Pre-Tax Income Management
1999 1998 1999 1998 1999 1998
---- ---- ---- ---- ---- ----
(in thousands) (in thousands) (in millions)
Retail $40,268 $33,721 $ 8,591 $ 4,620 $24,778 $20,400
Institutional 22,526 18,211 2,287 3,270 33,739 28,904
All other * 525 525 (95) 1,786
------- ------- ------- ------- ------- -------
Total $63,319 $52,457 $10,783 $ 9,676 $58,517 $49,304
======= ======= ======= ======= ======= =======
* - All other represents corporate office revenue and expenses, which are not
attributed directly to either line of business.
12
Results of Operations
Assets Under Management
At March 31, 1999, PXP had $58.5 billion of assets under management, an increase
of $5.0 billion from December 31, 1998, and $9.2 billion from March 31, 1998.
The increase from December 31, 1998 is primarily the result of the acquisition
of the New York City-based Zweig Fund Group (Zweig), on March 1, 1999, which
increased assets under management by $3.7 billion as of March 31, 1999. The
increase from March 31, 1998 is primarily due to positive market performance, as
well as the acquisition of Zweig. The pro forma assets under management at March
31, 1998 assumes the Zweig assets had been acquired as of that date. Since the
revenues of the Company are substantially earned based upon assets under
management, this information is important to an understanding of the business.
Historical Pro Forma
March 31, December 31, March 31, March 31,
1999 1998 1998 1998
(in millions)
Retail:
Open-end Mutual Funds $ 16,658 $ 14,407 $ 14,085 $ 16,787
Managed Accounts * 8,120 7,322 6,315 6,315
----------- ---------- ---------- ---------
24,778 21,729 20,400 23,102
Institutional:
Closed-end Funds 4,726 3,505 3,373 4,782
Institutional Accounts** 20,196 19,468 17,207 17,477
PHL General Account 8,817 8,785 8,324 8,324
----------- ---------- ---------- ---------
33,739 31,758 28,904 30,583
----------- ---------- ---------- ---------
$ 58,517 $ 53,487 $ 49,304 $ 53,685
=========== ========== ========== =========
* Managed Accounts represent assets which are individually managed for retail
clients.
** Institutional Accounts include 100% of the assets managed by Seneca Capital
Management.
Three Months Ended March 31, 1999 Compared with Three Months Ended March 31,
1998 - Historical
Revenues for the three months ended March 31, 1999 of $63.3 million, which
includes $3.2 million for Zweig, increased $10.9 million (21%) from $52.5
million for the same period in 1998. Excluding the effects of Zweig, the
Company's revenues for the three months ended March 31, 1999 increased $7.7
million (15%) compared to the same period in 1998. Revenues for the retail and
institutional lines of business increased $6.5 million and $4.3 million,
respectively.
Investment management fees of $55.0 million for the three months ended March 31,
1999, which includes $2.7 million for Zweig, increased $9.4 million (21%) as
compared to $45.7 million for the same period in 1998. Excluding Zweig,
management fees earned from the retail line of business, including managed
accounts and open-end mutual funds, increased $3.6 million due to a $3.4 billion
increase in average assets under management offset, in part, by a decrease in
the fee schedule for certain wrap programs. Excluding Zweig, management fees
earned from the institutional line of business increased $3.1 million primarily
as a result of a $3.6 billion increase in average assets under management. The
institutional accounts contributed $2.3 million to the increase in management
fees as a result of a $3.1 billion increase in average assets managed. The
overall increase in average assets managed in both the retail and institutional
lines of business is due to strong investment performance by investment managers
both in absolute terms and relative to the strong performance of the market in
general.
13
Mutual funds - ancillary fees, a component of the retail line of business, of
$7.3 million for the three months ended March 31, 1999, which includes $.3
million for Zweig, increased $1.2 million (19%) as compared to $6.2 million for
the same period in 1998. Administrative fees earned on the Phoenix-Engemann
Funds increased $.3 million as a result of an increase in average assets
managed. Fund accounting fees earned on open-end mutual funds and Phoenix Home
Life Mutual Insurance Company (PHL) sponsored variable products increased $.4
million primarily as a result of an increase in average assets under management
and an approved change in the fee structure. This change was implemented in
order to reimburse Phoenix Equity Planning Corporation (PEPCO), a wholly-owned
subsidiary of PXP, for additional administrative costs related to the
out-sourcing of substantially all of PXP's fund accounting operations in the
first quarter of 1998.
Other income and fees of $1.0 million for the three months ended March 31, 1999
increased $.3 million (49%) as compared to $.6 million for the same period in
1998, due to fees earned administering the Zweig closed-end funds.
Operating expenses for the three months ended March 31, 1999 of $48.9 million,
which includes $2.6 million for Zweig, increased $7.8 million (19%) from $41.2
million for the same period in 1998, of which $3.1 million and $4.5 million
related to the retail and institutional lines of business, respectively.
Employment expenses of $26.7 million for the three months ended March 31, 1999,
which includes $.8 million for Zweig, increased $3.9 million (17%) as compared
to $22.7 million for the same period in 1998. An increase in incentive
compensation of $2.8 million resulted from improved sales in both the retail and
institutional lines of business, and improved performance by several portfolio
managers and research analysts. Compensation expense increased $.3 million in
the first quarter of 1999 due to the severance costs related to the elimination
of certain sales positions as a result of the Zweig acquisition. A decrease
of $.3 million resulted from the out-sourcing of substantially all of PXP's
fund accounting operations in the first quarter of 1998. Annual salary
adjustments increased compensation by $.5 million, partially offset by a
reduction in staff levels in 1998 particularly in the investment portfolio and
sales areas.
Other operating expenses of $14.5 million for the three months ended March 31,
1999, which includes $1.0 million for Zweig, increased $2.8 million (24%) as
compared to $11.7 million for the same period in 1998. Payments to a third party
administrator, relating to the out-sourcing of substantially all of PXP's fund
accounting operations in the first quarter of 1998, increased other operating
expenses in the retail line of business by $1.6 million. Additional
administrative costs incurred on behalf of the Phoenix-Engemann and
Phoenix-Seneca Funds (Funds), which were recovered by administrative fees earned
on the Funds, increased other operating expenses by $.3 million. Restructuring
charges of $.2 million in 1998 were the result of the Company's decision to
out-source substantially all of its fund accounting operations effective in the
first quarter of 1998. No such charges were incurred for the three months ended
March 31, 1999.
Depreciation and amortization of leasehold improvements of $.9 million for the
three months ended March 31, 1999, which includes $.1 million for Zweig,
remained relatively constant from $.9 million for the same period in 1998.
Amortization of goodwill and intangible assets of $6.3 million for the three
months ended March 31, 1999 increased $.8 million (15%) as compared to $5.5
million for the same period in 1998 as a result of the amortization of the
intangible assets and goodwill identified in the preliminary purchase price
allocation of Zweig.
Amortization of deferred commissions, a component of the retail line of
business, of $.6 million for the three months ended March 31, 1999 increased $.2
million (66%) as compared to $.3 million for the same period in 1998 due to
increased redemptions of B share mutual funds. Pasadena Capital Corporation's
deferred commissions asset established prior to February 1, 1998 continues to be
amortized.
Operating income of $14.4 million for the three months ended March 31, 1999
increased $3.1 million (27%) as compared to $11.3 million for the same period in
1998 as a result of the changes discussed above.
14
Equity in earnings of unconsolidated affiliates of $.2 million for the three
months ended March 31, 1999 decreased $.8 million (82%) as compared to $.9
million for the same period in 1998. PXP sold its investment in Beutel, Goodman
& Company, Ltd. (BG) in the fourth quarter of 1998. PXP's share of BG's income
in the first quarter of 1998 was $.9 million.
Other income - net of $45 thousand for the three months ended March 31, 1999
decreased $.5 million (91%) as compared to $.5 million for the same period in
1998. An increase in losses on marketable securities decreased other income by
$.2 million, with the remaining decrease being the result of other less
significant changes.
Interest expense - net of $3.1 million for the three months ended March 31, 1999
increased $.5 million (20%) as compared to $2.6 million for the same period in
1998. The exchange of PXP's preferred stock for convertible subordinated
debentures in April 1998 resulted in additional interest expense of $1.1 million
in the first quarter of 1999, while eliminating PXP's preferred stock dividend.
An increase of $.7 million is due to additional interest charges resulting from
the financing of the Zweig acquisition. A decrease of $.9 million is due to a
lower average outstanding principal balance on its credit facilities and a
decrease in the average interest rate in the first quarter of 1999 compared to
the same period in 1998. Other interest and dividend income decreased $.3
million.
Income to minority interest of $.7 million and $.5 million for the three months
ended March 31, 1999 and 1998, respectively, represents the minority
shareholders' interest in the equity earnings of Seneca, which is fully
consolidated in the Company's financial statements.
Net income for the three months ended March 31, 1999 of $6.0 million reflects an
increase of $.6 million (11%) from the $5.4 million for the first quarter of
1998, resulting from the increased income and expenses discussed above. The
effective tax rate of 44% for the three months ended March 31, 1999 remained
unchanged relative to the same period in 1998.
Three Months Ended March 31, 1999 Compared with Three Months Ended March 31,
1998 - Pro Forma
(see Note 4)
Except for the items noted below, the pro forma variances for March 31, 1999
compared to March 31, 1998 are substantially the same as historical.
Investment management fees - pro forma of $60.5 million for the three months
ended March 31, 1999 increased $6.1 million (10%) from $54.5 million for the
same period in 1998. In addition to the historical variances noted above, Zweig
investment management fees decreased $.6 million due to a $.6 billion decrease
in assets under management representing the net impact of performance and net
asset outflows.
Net income - pro forma of $6.0 million for the three months ended March 31, 1999
reflects an increase of $.4 million (6%)as compared to $5.7 million for the same
period in 1998, resulting from the effects of the increased income and expenses
discussed above. The effective tax rate decreased to 44% for the three months
ended March 31, 1999 from 45% for the same period in 1998.
15
Liquidity and Capital Resources
The Company's business is not considered to be capital intensive. Working
capital requirements for the Company have historically been provided by
operating cash flow. It is expected that such cash flows will continue to serve
as the principal source of working capital for the Company for the near future.
The Company's current capital structure, as of April 30, 1999, includes 43.9
million shares of common stock and $76.4 million of 6% Convertible Subordinated
Debentures with a principal value of $25.00 per debenture. The current dividend
rate on common stock is $.06 per share per quarter. If the dividend rate remains
constant for 1999, the total annual dividend on common stock would be
approximately $10.5 million based upon shares outstanding at April 30, 1999. The
total annual interest expense on the debentures based upon debentures
outstanding at April 30, 1999, at an interest rate of 6%, would be $4.6 million.
The Company has two five-year credit facilities, totaling $375 million, with no
required principal repayments prior to maturity ($200 million matures in August
2002 and $175 million matures in March 2004). The outstanding obligations under
the credit facilities at March 31, 1999 were $275 million with an interest rate
of approximately 5.4%. The credit agreements contain financial and operating
covenants including, among other provisions, requirements that the Company
maintain certain financial ratios and satisfy certain financial tests,
restrictions on the ability to incur indebtedness, and limitations on the amount
of the Company's capital expenditures. At March 31, 1999, the Company was in
compliance with all covenants contained in the credit agreements. The Company
believes that funds from operations and amounts available under the credit
facility will provide adequate liquidity for the foreseeable future.
Management considers the liquidity of the Company to be adequate to meet present
and anticipated needs.
Market Risk
The Company is exposed to the impact of interest rate changes and changes in the
market value of its investments and assets managed. The Company does not have
any derivative investments and, as of the fourth quarter of 1998, is no longer
exposed to foreign currency fluctuations.
The Company's exposure to changes in interest rates is limited to borrowings
under two five-year credit agreements, which have variable interest rates. The
average interest rate on the credit agreements in the first quarter of 1999 and
for all of 1998 was approximately 5.4% and 6.0%, respectively. In addition, the
Company has subordinated debentures bearing interest at 6%. At March 31, 1999,
the Company estimated that the fair value of the subordinated debentures
approximated market value.
The Company invests excess cash in marketable securities, which consist of
mutual fund investments, of which the Company is the advisor, and U.S.
Government obligations. The fair value of these investments approximated market
value at March 31, 1999.
The Company's revenues are largely driven by the market value of its assets
under management and is therefore exposed to fluctuations in market prices.
Management fees earned on managed accounts and certain institutional accounts
(approximately 43% of total assets under management), for any given quarter, are
based on the market value of the portfolio on the last day of the preceding
quarter. Any significant increase or decline in the market value of assets
managed on the last day of a quarter would result in a corresponding increase or
decline in revenues for the following three months.
16
Impact of the Year 2000 Issue
The Year 2000 Issue is the result of computer programs being written using two
digits rather than four to define the applicable year. Any of a company's
computer programs that have date-sensitive software may recognize a date using
"00" as the year 1900 rather than the year 2000. This could result in a system
failure or miscalculation causing disruptions of operations, including, among
other things, a temporary inability to process transactions, send invoices, or
engage in similar normal business activities. In addition, other non-business
specific systems such as security alarms, elevators, telephones, etc. are
subject to malfunction due to their dependence upon computers or computer chips
for proper operation.
Based upon Company assessments, it has been determined that the Company will be
required to modify or replace portions of its software so that its computer
systems will properly utilize dates beyond December 31, 1999. The Company
believes that with modifications to existing software and conversions to new
software, the Year 2000 Issue will be mitigated. It is anticipated that such
modifications and conversions will be completed on a timely basis. The failure
of computer programs to recognize the year 2000 could have a negative impact on,
but is not limited to, the handling of securities trades, the pricing of
securities and the servicing of client accounts. If such modifications and
conversions are not made, or are not completed timely, the Year 2000 Issue would
have a material impact on the operations of the Company. As such, the Company
has created a Year 2000 Project Office to address the Year 2000 Issue. The
assessment and inventory phases of the project have been completed. The
remediation phase is virtually complete and the testing and contingency planning
phases are in process.
The Company has initiated formal communications with all of its software
vendors, service providers and information providers to determine the extent to
which the Company is vulnerable to those third parties' failure to remediate
their own Year 2000 Issue. The Company's total Year 2000 project cost and
estimate to complete include the estimated costs and time associated with the
impact of a third party's Year 2000 Issue, and are based on presently available
information. However, if the systems of other companies on which the Company's
systems rely are not converted in a timely fashion, or are not converted at all,
or are converted in a manner that is incompatible with the Company's systems,
the Company's operations and financial results could be adversely affected.
The Company is utilizing internal resources to reprogram, or replace, and test
the software for Year 2000 modifications. Certain systems are already in the
process of being converted due to previous Company initiatives. The Company has
substantially completed the remediation phase of the Year 2000 project and
expects to complete this work by June 30, 1999. The Company expects to be
substantially complete with the testing phase of the Year 2000 project by June
30, 1999 with the remainder scheduled to be done in the third quarter of 1999.
The testing of the contingency plans will occur in the third quarter of 1999
where appropriate. The total cost of the Year 2000 project is estimated at $5.3
million and is being funded through operating cash flows, which are being
expensed as incurred. To date, the Company has incurred approximately $3.3
million related to the assessment of its Year 2000 project, the development of a
Year 2000 plan, remediation, testing, and contingency planning. The total cost
to the Company to become Year 2000 compliant is not expected to have a material
impact on the Company's results of operations.
The costs of the project and the date on which the Company plans to complete the
Year 2000 modifications are based on management's best estimates and were
derived utilizing numerous assumptions of future events including the continued
availability of certain resources, third party modification plans and other
factors. However, there can be no guarantee that these estimates will prove to
be accurate and actual results could differ materially from those plans.
Specific factors that might cause such material differences include, but are not
limited to, the availability and cost of personnel trained in this area, the
ability to locate and correct all relevant computer codes, and similar
uncertainties.
17
Cautionary Statement under Section 21E of the Securities Exchange Act of 1934
This quarterly report contains forward-looking statements that involve risks and
uncertainties, including, but not limited to, the following: The Company's
performance is highly dependent on the amount of assets under management, which
may decrease for a variety of reasons including changes in interest rates and
adverse economic conditions; the Company's performance is very sensitive to
changes in interest rates, which may increase from current levels; the Company's
performance is affected by the demand for and the market acceptance of the
Company's products and services; the Company's business is extremely competitive
with several competitors being substantially larger than the Company; and the
Company's performance may be impacted by changes in the performance of financial
markets and general economic conditions. The costs involved to complete the Year
2000 modifications are based on management's best estimates, which were derived
based upon assumptions relative to future events including the continued
availability of certain resources, third party modification plans and other
factors. There can be no guarantee that these estimates will be achieved and
actual results could differ materially from those plans. Specific factors that
might cause such material differences include, but are not limited to, the
availability and cost of personnel trained in this area, the ability to locate
and correct all relevant computer codes, and similar uncertainties. The
potential problems related to the Year 2000 Issue could affect the ability to
provide advisory services for the Company's products. Accordingly, actual
results may differ materially from those set forth in the forward-looking
statements. Attention is also directed to other risk factors set forth in
documents filed by the Company with the Securities and Exchange Commission.
18
PART II. Other Information
Item 1. Legal Proceedings
With regard to the litigation between PXP and Gigatek Memory Systems,
Inc., as outlined in PXP's 1998 Annual Report on Form 10-K, in April
1999 the court transferred the case to its docket for complex cases.
No new trial date has been set.
Item 4. Submission of Matters to a Vote of Security Holders
No items submitted.
Item 6. Exhibits and Reports on Form 8-K
(a) The following documents are filed as part of these reports:
4(v)First Amendment dated as of March 17, 1999, amending the Credit
Agreement dated as of August 14, 1997 among the Registrant, various
financial institutions, Bank of America National Trust and Savings
Association as Syndication Agent and Documentation Agent, and The Bank
of New York as Administrative Agent.
4(w)Credit Agreement dated as of March 17, 1999 among the Registrant,
various financial institutions, Bank of America National Trust and
Savings Association as Administrative Agent, Deutsche Bank AG, New York
Branch as Syndication Agent, and The Bank of New York as Documentation
Agent.
(b) Exhibits and Reports on Form 8-K.
A Current Report on Form 8-K, with Exhibits, was filed on March 15,
1999 describing the acquisitions of Zweig/Glaser Advisers, Euclid
Advisors LLC, Zweig Advisors Inc., Zweig Total Return Advisors, Inc.,
and Zweig Securities Corp. (collectively, the Zweig Fund Group).
A Current Report on Form 8-K/A was filed on May 14, 1999, which
incorporated combined historical financial statements for the Zweig
Fund Group and pro forma financial statements for the Zweig Fund Group
acquisition.
19
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Phoenix Investment Partners, Ltd.
May 14, 1999 /s/ Philip R. McLoughlin
------------------------------
Philip R. McLoughlin, Chairman and
Chief Executive Officer
May 14, 1999 /s/ William R. Moyer
------------------------------
William R. Moyer, Chief Financial Officer
20
51135317 99512352
4(v)
FIRST AMENDMENT
THIS FIRST AMENDMENT dated as of March 17, 1999 (this "First Amendment")
amends the Credit Agreement dated as of August 14, 1997 (the "Credit Agreement")
among PHOENIX INVESTMENT PARTNERS, LTD. (formerly known as Phoenix Duff & Phelps
Corporation, the "Company"), PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY (the
"Guarantor"), various financial institutions, Bank of America National Trust and
Savings Association, as Syndication Agent and Documentation Agent, and The Bank
of New York, as Administrative Agent. Terms defined in the Credit Agreement are,
unless otherwise defined herein or the context otherwise requires, used herein
as defined therein.
WHEREAS, the Company, the Guarantor, the Banks and the Administrative
Agent desire to amend the Credit Agreement as hereinafter set forth;
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1 Amendments. Effective on (and subject to the occurrence of) the First
Amendment Effective Date (as defined below), the Credit Agreement shall be
amended in accordance with Sections 1.1 through 1.13 below:
SECTION 1.1 Amendment to Definition of Eligible Assignee. The definition of
"Eligible Assignee" in Section 1.1 is amended by adding the following clause
(iv) immediately before the period at the end thereof:
"; and (iv) any other Person agreed to by the Company and the
Administrative Agent".
SECTION 1.2 Amendment to Definition of S&P Rating. The definition of "S&P
Rating" in Section 1.1 is amended by deleting the words "Insurer Claims Paying
Ability" therein and substituting the words "Insurer Financial Strength Rating"
therefor.
SECTION 1.3 Amendment to Section 5.5. Section 5.5 is amended by (a) adding the
words "Company or the" immediately prior to the first reference to "Guarantor"
therein, (b) deleting the word "or" at the end of clause (a) therein, (c)
deleting the period at the end of clause (b) and substituting "; or" therefore
and (d) adding the following new subsection (c):
"(c) seeks damages in an amount reasonably expected to have a
Material Adverse Effect."
SECTION 1.4 Addition of Representations and Warranties. The following Sections
5.21 and Section 5.22 are added to the end of Article 5:
51135317 99512352
"5.21 Compliance. The Guarantor and each of its Subsidiaries is in
compliance with all applicable laws and regulations, all applicable
ordinances, decrees, requirements, orders and judgments of, and all of the
terms of any applicable licenses and permits issued by, any governmental
body, agency or official, and all agreements and instruments to which it
may be subject or any of its properties may be bound, in each case where
the violation thereof may have a Material Adverse Effect.
5.22 Year 2000 Problem. The Guarantor and the Company and each of
their respective Subsidiaries have reviewed the areas within their
business and operations which could be adversely affected by, and have
developed or are developing a program to address on a timely basis, the
"Year 2000 Problem" (that is, the risk that computer applications used by
the Guarantor and the Company and each of their respective Subsidiaries
may be unable to recognize and perform properly date-sensitive functions
involving certain dates prior to and any date after December 31, 1999).
Based on such review and program, the Guarantor and the Company reasonably
believe that the "Year 2000 Problem" will not have a Material Adverse
Effect."
SECTION 1.5 Amendment to Section 6.2(c). Section 6.2(c) is amended by deleting
the words "Guarantor's Claims Paying Rating" therein and substituting the words
"Guarantor's Financial Strength Rating" therefor.
SECTION 1.6 Amendment to Section 7.4. Section 7.4 is amended by (a) deleting the
word "and" at the end of subsection (c) thereof, (b) changing subsection "(d)"
therein to subsection "(e)", and (c) adding the following new subsection (d):
"(d) Indebtedness of the Company in connection with the Credit
Agreement dated as of March 17, 1999 among the Company, the Guarantor,
various financial institutions, BofA, as Administrative Agent, Deutsche
Bank AG, New York Branch, as Syndication Agent, and BNY, as Documentation
Agent; and".
SECTION 1.7 Amendment to Section 7.7(c). Section 7.7(c) is amended by deleting
the reference to "Section 7.4(d)" therein and substituting "Section 7.4(e)"
therefor.
SECTION 1.8 Amendment to Section 7.8. Section 7.8 is amended by deleting the
amount "$10,000,000" therein and substituting the words "10% of the Company's
net worth (at the time of the proposed Joint Venture)" therefor.
SECTION 1.9 Amendment to Section 8.1. Section 8.1 is amended by (a) deleting the
amount "$825,000,000" therein and substituting the amount "$900,000,000"
therefor and (b) deleting the date "September 30, 1997" therein and substituting
the date "March 31, 1999" therefor.
SECTION 1.10 Amendment to Section 8.2. Section 8.2 is amended by deleting the
amount "5.5%" therein and substituting the amount "7.0%" therefor.
SECTION 1.11 Amendment to Section 9.1. Section 9.1 is amended by (a) deleting
the amount "$165,000,000" therein and substituting the amount "$185,000,000"
therefor and (b) deleting the date "September 30, 1997" therein and substituting
the date "March 31, 1999" therefor.
SECTION 1.12 Amendment to Section 9.3. Section 9.3 is amended and restated in
its entirety to read as follows:
"9.3 Total Debt to Capital Ratio. The Company shall maintain a
Total Debt to Capital Ratio of not in excess of the following percentages
at any time during the following periods:
Percentage Periods
60.0% March 17, 1999 through March 31, 2000
57.5% April 1, 2000 through March 31, 2001
52.5% April 1, 2001 and thereafter"
SECTION 1.13 Amendment to Section 9.4. Section 9.4 is amended and restated in
its entirety to read as follows:
"9.4 Senior Debt to EBITDA Ratio. The Company shall maintain a
Senior Debt to EBITDA Ratio of not in excess of the following amounts
during the following periods:
Amount Period
3.0 to 1 March 17, 1999 through March 31, 2000
2.5 to 1 April 1, 2000 through March 31, 2001
2.0 to 1 April 1, 2001 and thereafter"
SECTION 2 Representations and Warranties. Each of the Company and the Guarantor
represents and warrants to the Administrative Agent and the Banks that (a) each
representation and warranty set forth in Section 5 of the Credit Agreement is
true and correct as of the date of the execution and delivery of this First
Amendment by the Company and the Guarantor (and assuming the effectiveness
hereof), with the same effect as if made on such date (except to the extent such
representations and warranties expressly refer to an earlier date, in which case
they shall be true and correct as of such earlier date); (b) the execution and
delivery by the Company and the Guarantor of this First Amendment, and the
performance by each of the Company and the Guarantor of its obligations under
the Credit Agreement as amended hereby (as so amended, the "Amended Credit
Agreement"), (i) are within the corporate powers of the Company and the
Guarantor, (ii) have been duly authorized by all necessary corporate action on
the part of the Company and the Guarantor, (iii) have received all necessary
governmental and regulatory approval and (iv) do not and will not contravene or
conflict with, or result in or require the creation or imposition of any lien
under, any provision of law or of the charter or by-laws of the Guarantor or any
of its Subsidiaries or of any agreement, instrument, order or decree which is
binding upon the Guarantor or any of its Subsidiaries; and (c) the Amended
Credit Agreement is, and when executed and delivered will be, the legal, valid
and binding obligation of each of the Company and the Guarantor, enforceable
against the Company and the Guarantor in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency or other similar laws of
general application affecting the enforcement of creditors' rights or by general
principles of equity limiting the availability of equitable remedies.
SECTION 3 Effectiveness. The amendments set forth in Section 1 above shall
become effective on the date (the "First Amendment Effective Date") when the
Administrative Agent shall have received each of the following documents, each
in form and substance satisfactory to the Administrative Agent:
(a) counterparts of this First Amendment executed by the Company, the
Guarantor, the Majority Banks and the Administrative Agent (it being
understood that the Administrative Agent may conclusively rely on any
counterpart signature hereof received by facsimile); and
(b) such other documents as the Administrative Agent may reasonably request.
SECTION 4 Miscellaneous.
SECTION 4.1 Continuing Effectiveness, etc. As herein amended, the Credit
Agreement shall remain in full force and effect and is hereby ratified and
confirmed in all respects. After the First Amendment Effective Date, all
references in the Credit Agreement and the other Loan Documents to "Credit
Agreement" or similar terms shall refer to the Amended Credit Agreement.
SECTION 4.2 Counterparts. This First Amendment may be executed in any number of
counterparts and by the different parties on separate counterparts, and each
such counterpart shall be deemed to be an original but all such counterparts
shall together constitute one and the same First Amendment.
SECTION 4.3 Governing Law. This First Amendment shall be a contract made under
and governed by the laws of the State of New York applicable to contracts made
and to be performed entirely within such State.
SECTION 4.4 Successors and Assigns. This First Amendment shall be binding upon
the Company, the Guarantor, the Banks and the Agents and their respective
successors and assigns, and shall inure to the benefit of the Company, the
Guarantor, the Banks and the Agents and the respective successors and assigns of
the Company, the Guarantor, the Banks and the Agents.
Delivered at Chicago, Illinois, as of the day and year first above written.
PHOENIX INVESTMENT PARTNERS, LTD.
By: /s/ William R. Moyer
Title: Senior V.P. and CFO
Delivered at Chicago, Illinois, as of the day and year first above written.
PHOENIX HOME LIFE MUTUAL INSURANCE
COMPANY
By: /s/ Raymond E. Cummings
Title: Treasurer
Delivered at Chicago, Illinois, as of the day and year first above written.
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as
Syndication Agent and Documentation Agent
By: /s/ Elizabeth W.F. Bishop
Title: Vice President
Delivered at Chicago, Illinois, as of the day and year first above written.
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as a Bank
By: /s/ Elizabeth W.F. Bishop
Title: Vice President
Delivered at Chicago, Illinois, as of the day and year first above written.
THE BANK OF NEW YORK, as
Administrative Agent
By: /s/ Scott H. Buitekant
Title: Vice President
Delivered at Chicago, Illinois, as of the day and year first above written.
THE BANK OF NEW YORK, as a Bank
By: /s/ Scott H. Buitekant
Title: Vice President
Delivered at Chicago, Illinois, as of the day and year first above written.
FLEET NATIONAL BANK, as a Bank
By: /s/ Elizabeth B. Shelley
Title: Vice President
Delivered at Chicago, Illinois, as of the day and year first above written.
BANK OF MONTREAL, as a Bank
By: /s/ Bruce A. Pietka
Title: Director
Delivered at Chicago, Illinois, as of the day and year first above written.
SUNTRUST BANK, ATLANTA as a Bank
By: /s/ Jennifer Harrelson
Title: Vice President
By: /s/ John O. Fields, Jr.
Title: Vice President
Delivered at Chicago, Illinois, as of the day and year first above written.
STATE STREET BANK AND TRUST
COMPANY, as a Bank
By: /s/ Edward M. Anderson
Title: Vice President
Delivered at Chicago, Illinois, as of the day and year first above written.
DEUTSCHE BANK AG, NEW YORK BRANCH AND/OR
CAYMAN ISLAND BRANCH, as a Bank
By: /s/ George Korchowsky
Title: Vice President
By: /s/ Ruth Leung
Title: Director
51135219 99512352
4(w)
CREDIT AGREEMENT
Dated as of March 17, 1999
among
PHOENIX INVESTMENT PARTNERS, LTD.,
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY,
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Administrative Agent,
DEUTSCHE BANK AG
as Syndication Agent,
THE BANK OF NEW YORK,
as Documentation Agent,
THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO
and
NATIONSBANC MONTGOMERY SECURITIES LLC,
as Sole Lead Arranger and Sole Book Manager
51135219 99512352
TABLE OF CONTENTS
Section Page
||
ARTICLE I DEFINITIONS.......................................................1
1.1 Certain Defined Terms.......................................1
1.2 Other Interpretive Provisions..............................18
1.3 Accounting Principles......................................19
ARTICLE II THE CREDITS.....................................................20
2.1 Amounts and Terms of Commitments...........................20
2.2 Loan Accounts..............................................20
2.3 Procedure for Borrowing....................................20
2.4 Conversion and Continuation Elections......................21
2.5 Voluntary Termination or Reduction of
Commitments................................................22
2.6 Optional Prepayments.......................................23
2.7 Mandatory Prepayments of Loans; Mandatory
Commitment Reductions......................................23
2.8 Repayment..................................................23
2.9 Interest...................................................23
2.10 Fees.......................................................24
(a) Arrangement, Agency Fees............................24
(b) Facility Fee........................................24
(c) Closing Fee.........................................25
2.11 Computation of Fees and Interest...........................25
2.12 Payments by the Company....................................25
2.13 Payments by the Banks to the Administrative
Agent......................................................26
2.14 Sharing of Payments, Etc...................................26
ARTICLE III TAXES, YIELD PROTECTION AND ILLEGALITY.........................27
3.1 Taxes......................................................27
3.2 Illegality.................................................29
3.3 Increased Costs and Reduction of Return....................29
3.4 Funding Losses.............................................30
3.5 Inability to Determine Rates...............................31
3.6 Certificates of Banks......................................31
3.7 Survival...................................................31
ARTICLE IV CONDITIONS PRECEDENT............................................31
4.1 Conditions of Initial Loans................................32
(i) Credit Agreement....................................32
(ii) Notes...............................................32
(iii) Resolutions; Incumbency.............................32
(iv) Organization Documents; Good Standing...............32
(v) Legal Opinions......................................32
(vi) Payment of Fees.....................................33
(vii) Certificate.........................................33
(viii)Other Documents......................................33
4.2 Conditions to All Borrowings...............................33
(a) Notice of Borrowing.................................34
(b) Continuation of Representations and Warranties......34
(c) No Existing Default.................................34
ARTICLE V REPRESENTATIONS AND WARRANTIES...................................34
5.1 Corporate Existence and Power..............................34
5.2 Corporate Authorization; No Contravention..................34
5.3 Governmental Authorization.................................35
5.4 Binding Effect.............................................35
5.5 Litigation.................................................35
5.6 Contractual Obligation.....................................36
5.7 ERISA Compliance...........................................36
5.8 Use of Proceeds; Margin Regulations........................36
5.9 Title to Properties........................................36
5.10 Taxes......................................................37
5.11 Financial Condition........................................37
5.12 Environmental Matters......................................38
5.13 Regulated Entities.........................................38
5.14 No Burdensome Restrictions.................................38
5.15 Copyrights, Patents, Trademarks and
Licenses, etc..............................................38
5.16 Subsidiaries...............................................39
5.17 Insurance..................................................39
5.18 Full Disclosure............................................39
5.19 Zweig Acquisition Agreement................................39
5.20 Compliance.................................................40
5.21 Year 2000 Problem..........................................40
ARTICLE VI AFFIRMATIVE COVENANTS...........................................40
6.1 Financial Statements.......................................40
6.2 Certificates; Other Information............................41
6.3 Notices....................................................42
6.4 Preservation of Corporate Existence, Etc...................43
6.5 Maintenance of Property....................................43
6.6 Insurance..................................................43
6.7 Payment of Obligations.....................................44
6.8 Compliance with Laws.......................................44
6.9 Compliance with ERISA......................................44
6.10 Inspection of Property and Books and Records...............44
6.11 Environmental Laws.........................................45
6.12 Use of Proceeds............................................45
ARTICLE VII NEGATIVE COVENANTS.............................................45
7.1 Limitation on Liens........................................45
7.2 Mergers, Consolidations and Sales of Assets................46
7.3 Loans and Investments......................................47
7.4 Limitation on Indebtedness.................................47
7.5 Transactions with Affiliates...............................48
7.6 Use of Proceeds............................................48
7.7 Contingent Obligations.....................................48
7.8 Joint Ventures.............................................48
7.9 Lease Obligations..........................................48
7.10 Restricted Payments........................................49
7.11 ERISA......................................................49
7.12 Change in Business.........................................49
7.13 Accounting Changes.........................................49
7.14 Pari Passu.................................................49
7.15 Phoenix....................................................50
7.16 Subordinated Debt and Preferred Stock......................50
7.17 Capital Expenditures.......................................50
ARTICLE VIII GUARANTOR'S FINANCIAL COVENANTS...............................50
8.1 Guarantor's Minimum Total SAP Adjusted
Capital....................................................50
8.2 Invested Assets............................................50
8.3 NAIC Ratings...............................................50
8.4 Real Estate................................................50
8.5 Risk Based Capital.........................................50
8.6 NonPerforming Real Estate..................................50
8.7 Indebtedness to Capital....................................51
ARTICLE IX COMPANY'S FINANCIAL COVENANTS...................................51
9.1 Shareholders' Equity.......................................51
9.2 EBITDA to Interest Ratio...................................51
9.3 Total Debt to Capital Ratio................................51
9.4 Senior Debt to EBITDA Ratio................................51
ARTICLE X GUARANTY..........................................................52
10.1 Guaranty...................................................52
10.2 Guaranty Unconditional.....................................52
10.3 Discharge only upon Payment in Full;
Reinstatement in Certain Circumstances.....................53
10.4 Waiver by the Guarantor....................................53
10.5 Subrogation................................................53
10.6 Stay of Acceleration.......................................53
ARTICLE XI EVENTS OF DEFAULT...............................................53
11.1 Event of Default...........................................53
(a) NonPayment..........................................53
(b) Representation or Warranty..........................53
(c) Specific Defaults...................................54
(d) Other Defaults......................................54
(e) CrossDefault........................................54
(f) Insolvency; Voluntary Proceedings...................54
(g) Involuntary Proceedings.............................54
(h) ERISA...............................................55
(i) Monetary Judgments..................................55
(j) NonMonetary Judgments...............................55
(k) Change of Control...................................55
(l) Loss of Licenses....................................55
11.2 Remedies...................................................56
11.3 Rights Not Exclusive.......................................56
ARTICLE XII THE ADMINISTRATIVE AGENT.......................................56
12.1 Appointment................................................56
12.2 Delegation of Duties.......................................57
12.3 Exculpatory Provisions.....................................57
12.4 Reliance by Administrative Agent...........................57
12.5 Notice of Default..........................................58
12.6 NonReliance on Administrative Agent and Other Banks........58
12.7 Indemnification............................................59
12.8 Administrative Agent in Its Individual Capacity............60
12.9 Successor Administrative Agent.............................60
12.10 Syndication Agent and Documentation Agent..................61
ARTICLE XIII MISCELLANEOUS.................................................61
13.1 Amendments and Waivers.....................................61
13.2 Notices....................................................62
13.3 No Waiver; Cumulative Remedies.............................63
13.4 Costs and Expenses.........................................63
13.5 Indemnity..................................................63
13.6 Payments Set Aside.........................................64
13.7 Successors and Assigns.....................................64
13.8 Assignments, Participations, etc...........................64
13.9 Confidentiality............................................66
13.10 Setoff.....................................................67
13.11 Automatic Debits of Fees...................................67
13.12 Notification of Addresses, Lending
Offices, Etc...............................................68
13.13 Counterparts...............................................68
13.14 Severability...............................................68
13.15 No Third Parties Benefited.................................68
13.16 Governing Law and Jurisdiction.............................68
13.17 Waiver of Jury Trial.......................................68
13.18 Entire Agreement...........................................69
schedules
Schedule 1.1 Pricing Schedule
Schedule 2.1 Commitments
Schedule 5.5 Litigation
Schedule 5.7 ERISA
Schedule 5.11 Permitted Liabilities
Schedule 5.12 Environmental Matters
Schedule 5.16 Subsidiaries and Minority Interests
Schedule 5.17 Insurance Matters
Schedule 7.1 Permitted Liens
Schedule 7.4 Permitted Indebtedness
Schedule 7.7 Contingent Obligations
Schedule 13.2 Lending Offices; Addresses for Notices
EXHIBITS
Exhibit A Form of Notice of Borrowing
Exhibit B Form of Notice of Conversion/Continuation
Exhibit C Form of Compliance Certificate
Exhibit D-1 Form of Legal Opinion of Company's Counsel
Exhibit D-2 Form of Legal Opinion of Guarantor's Counsel
Exhibit E Form of Assignment and Acceptance
Exhibit F Form of Promissory Note
51135219 99512352
CREDIT AGREEMENT
This CREDIT AGREEMENT is entered into as of March 17,1999, among Phoenix
Investment Partners, Ltd., a Delaware corporation (the "Company"), Phoenix Home
Life Mutual Insurance Company, a New York domiciled mutual insurance company
(the "Guarantor"), the several financial institutions from time to time party to
this Agreement (collectively, the "Banks"; individually, a "Bank") and Bank of
America National Trust and Savings Association, as Administrative Agent for the
Banks, Deutsche Bank AG, as Syndication Agent for the Banks and The Bank of New
York, as Documentation Agent for the Banks.
WHEREAS, the Banks have agreed to make available to the Company a
revolving credit facility guaranteed by the Guarantor upon the terms and
conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained herein, the parties agree as follows:
ARTICLE I
DEFINITIONS
1.1 Certain Defined. The following terms have the following meanings:
"Acquisition" means any transaction or series of related
transactions for the purpose of or resulting, directly or indirectly, in
(a) the acquisition of all or substantially all of the assets of a Person,
or of any business or division of a Person, (b) the acquisition of in
excess of 50% of the capital stock, partnership interests or equity of any
Person, or otherwise causing any Person to become a Subsidiary, or (c) a
merger or consolidation or any other combination with another Person
(other than a Person that is a Subsidiary) provided that the Company or
the Subsidiary is the surviving entity.
"Administrative Agent" means BofA, in its capacity as administrative
agent for the Banks hereunder, and any successor administrative agent
arising under Section 12.9.
"Administrative Agent's Payment Office" means the address for
payments set forth on the signature page hereto in relation to the
Administrative Agent, or such other address as the Administrative Agent
may from time to time specify.
51135219 99512352
-5-
"Affiliate" means, as to any Person, any other Person which,
directly or indirectly, is in control of, is controlled by, or is under
common control with, such Person. A Person shall be deemed to control
another Person if the controlling Person possesses, directly or
indirectly, the power to direct or cause the direction of the management
and policies of the other Person, whether through the ownership of voting
securities, by contract, or otherwise.
"Agent-Related Persons" means BofA, BNY, Deutsche and any successor
Administrative Agent arising under Section 12.9, together with their
respective Affiliates (including, in the case of BofA, the Arranger), and
the officers, directors, employees, agents and attorneys-in-fact of such
Persons and Affiliates.
"Agents" mean the Administrative Agent, Deutsche, as Syndication
Agent, and BNY, as Documentation Agent.
"Agreement" means this Credit Agreement.
"Annual Statement" means the annual financial statement of any
insurance company as required to be filed with the Department, together
with all exhibits or schedules filed therewith, prepared in conformity
with SAP. References to amounts on particular exhibits, schedules, lines,
pages and columns on such Annual Statements are based on the formats
promulgated by the NAIC for 1997 Annual Statements for the applicable type
of insurance company. If such format is changed in future years so that
different information is contained in such items or they no longer exist,
it is understood that the reference is to information consistent with that
recorded in the referenced item in the 1997 Annual Statement of the
insurance company.
"Applicable Fee Rate" means, at any time, the rate per annum
determined in accordance with Schedule 1.1.
"Applicable Margin" means, at any time, with respect to Eurodollar
Rate Loans, the rate per annum determined in accordance with Schedule 1.1.
"Assignee" has the meaning specified in subsection 13.8(a).
"Attorney Costs" means and includes all fees and disbursements of
any law firm or other external counsel, the non-duplicative allocated cost
of internal legal services and all disbursements of internal counsel.
"Bank" has the meaning specified in the introductory clause hereto.
"Bankruptcy Code" means the Federal Bankruptcy Reform Act of 1978
(11 U.S.C. ss.101, et seq.).
"Base Rate" means, for any day, a rate per annum equal to the higher
of: (a) 0.50% per annum above the Federal Funds Rate in effect on such
date; and (b) the BofA Rate in effect on such day.
Any change in the BofA Rate shall take effect at the opening of
business on the day specified in the public announcement of such change.
"Base Rate Loan" means a Loan that bears interest based on the Base
Rate.
"BNY" means The Bank of New York, a New York banking corporation.
"BofA" means Bank of America National Trust and Savings Association,
a national banking association.
"BofA Rate" means a rate of interest per annum equal to the rate of
interest publicly announced in San Francisco, California by BofA from time
to time as its "reference rate". (The "reference rate" is a rate set by
BofA based upon various factors including BofA's costs and desired return,
general economic conditions and other factors, and is used as a reference
point for pricing some loans, which may be priced at, above, or below such
announced rate.)
"Borrowing" means a borrowing hereunder consisting of Loans of the
same Type made to the Company on the same day by the Banks under Article
II, and, other than in the case of Base Rate Loans, having the same
Interest Period.
"Borrowing Date" means any date on which a Borrowing occurs under
Section 2.3.
"Business Day" means any day other than a Saturday, Sunday or other
day on which commercial banks in New York City or Chicago are authorized
or required by law to close and, if the applicable Business Day relates to
any Eurodollar Rate Loan, means such a day on which dealings are carried
on in the applicable Eurodollar dollar interbank market.
"Capital Adequacy Regulation" means any guideline, request or
directive of any central bank or other Governmental Authority, or any
other law, rule or regulation, whether or not having the force of law, in
each case, regarding capital adequacy of any bank or of any corporation
controlling a bank.
"Change of Control" means
(a) the acquisition by any Person, or two or more Persons acting in
concert, of beneficial ownership (within the meaning of Rule 13d-3 of the
Securities and Exchange Commission under the Securities Exchange Act of
1934) of 20% or more of the voting power of the Guarantor; or
(b) the failure of the Guarantor to own either directly or
indirectly, free and clear of all Liens or other encumbrances, at least
51% of the outstanding shares of the voting stock and of the capital stock
of the Company on a fully diluted basis.
"Closing Date" means the date on which all conditions precedent set
forth in Section 4.1 are satisfied or waived by all Banks (or, in the case
of subsection 4.1(a)(vi), waived by the Person entitled to receive such
payment).
"Code" means the Internal Revenue Code of 1986, and regulations
promulgated thereunder.
"Commitment", as to each Bank, has the meaning specified in Section
2.1. As of the date of this Agreement, the amount of the combined
Commitments of all Banks is $175,000,000.
"Company Action Level" means 200% of the Authorized Control Level
Risk-Based Capital of the Guarantor. The Authorized Control Level
Risk-Based Capital of the Guarantor shall be computed in the manner from
time to time prescribed by the Insurance Department of the State of New
York for inclusion in the Annual Statement of the Guarantor of such
Department. Such Authorized Control Level Risk-Based Capital currently
appears on page 23 of such statement in column 1, line 28.
"Compliance Certificate" means a certificate substantially in the
form of Exhibit C.
"Contingent Obligation" means, as to any Person, any direct or
indirect liability of that Person, whether or not contingent, with or
without recourse, (a) with respect to any Indebtedness, lease, dividend,
letter of credit or other obligation (the "primary obligations") of
another Person (the "primary obligor"), including any obligation of that
Person (i) to purchase, repurchase or otherwise acquire such primary
obligations or any security therefor, (ii) to advance or provide funds for
the payment or discharge of any such primary obligation, or to maintain
working capital or equity capital of the primary obligor or otherwise to
maintain the net worth or solvency or any balance sheet item, level of
income or financial condition of the primary obligor, (iii) to purchase
property, securities or services primarily for the purpose of assuring the
owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation, or (iv) otherwise to assure or
hold harmless the holder of any such primary obligation against loss in
respect thereof (each, a "Guaranty Obligation"); (b) with respect to any
Surety Instrument issued for the account of that Person or as to which
that Person is otherwise liable for reimbursement of drawings or payments;
(c) to purchase any materials, supplies or other property from, or to
obtain the services of, another Person if the relevant contract or other
related document or obligation requires that payment for such materials,
supplies or other property, or for such services, shall be made regardless
of whether delivery of such materials, supplies or other property is ever
made or tendered, or such services are ever performed or tendered, or (d)
in respect of any Swap Contract. The amount of any Contingent Obligation
shall, in the case of Guaranty Obligations, be deemed equal to the stated
or determinable amount of the primary obligation in respect of which such
Guaranty Obligation is made or, if not stated or if indeterminable, the
maximum reasonably anticipated liability in respect thereof, and in the
case of other Contingent Obligations, shall be equal to the maximum
reasonably anticipated liability in respect thereof.
"Contractual Obligation" means, as to any Person, any provision of
any security issued by such Person or of any agreement, undertaking,
contract, indenture, mortgage, deed of trust or other instrument, document
or agreement to which such Person is a party or by which it or any of its
property is bound.
"Conversion/Continuation Date" means any date on which, under
Section 2.4, the Company (a) converts Loans of one Type to another Type,
or (b) continues as Eurodollar Rate Loans, but with a new Interest Period,
Eurodollar Rate Loans having Interest Periods expiring on such date.
"Default" means any event or circumstance which, with the giving of
notice, the lapse of time, or both, would (if not cured or otherwise
remedied during such time) constitute an Event of Default.
"Department" means the applicable Governmental Authority of the
state of domicile of an insurance company responsible for the regulation
of said insurance company.
"Deutsche" means Deutsche Bank Securities, Inc.
"Dollars", "dollars" and "$" each mean lawful money of the United
States.
"EBITDA" means, with respect to the Company and its Subsidiaries, as
the end of any fiscal quarter for the four fiscal quarters then ending
earnings before interest, taxes, depreciation and amortization, calculated
in accordance with GAAP; provided, that, for any four fiscal quarter
period in which the Zweig Acquisition shall have occurred, EBITDA shall be
calculated on a pro forma basis as if such acquisition had occurred on the
first day of such period.
"Eligible Assignee" means (i) a commercial bank organized under the
laws of the United States, or any state thereof, and having a combined
capital and surplus of at least $100,000,000 (or its equivalent in foreign
currency); (ii) a commercial bank organized under the laws of any other
country which is a member of the Organization for Economic Cooperation and
Development, or a political subdivision of any such country, and having a
combined capital and surplus of at least $100,000,000 (or its equivalent
in foreign currency), provided that such bank is acting through a branch
or agency located in the United States; and (iii) a Person that is
primarily engaged in the business of commercial banking and that is (A) a
Subsidiary of a Bank, (B) a Subsidiary of a Person of which a Bank is a
Subsidiary, or (C) a Person of which a Bank is a Subsidiary; and (iv) any
other Person agreed to by the Company and the Administrative Agent.
"Environmental Claims" means all claims, however asserted, by any
Governmental Authority or other Person alleging potential liability or
responsibility for violation of any Environmental Law, or for release or
injury to the environment.
"Environmental Laws" means all federal, state or local laws,
statutes, common law duties, rules, regulations, ordinances and codes,
together with all administrative orders, directed duties, requests,
licenses, authorizations and permits of, and agreements with, any
Governmental Authorities, in each case relating to environmental, health,
safety and land use matters.
"ERISA" means the Employee Retirement Income Security Act of 1974,
and regulations promulgated thereunder.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with the Company within the meaning of
Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code
for purposes of provisions relating to Section 412 of the Code).
"ERISA Event" means (a) a Reportable Event with respect to a Pension
Plan; (b) a withdrawal by the Company or any ERISA Affiliate from a
Pension Plan subject to Section 4063 of ERISA during a plan year in which
it was a substantial employer (as defined in Section 4001(a)(2) of ERISA)
or a cessation of operations which is treated as such a withdrawal under
Section 4062(e) of ERISA; (c) a complete or partial withdrawal by the
Company or any ERISA Affiliate from a Multiemployer Plan or notification
that a Multiemployer Plan is in reorganization; (d) the filing of a notice
of intent to terminate, the treatment of a Plan amendment as a termination
under Section 4041 or 4041A of ERISA, or the commencement of proceedings
by the PBGC to terminate a Pension Plan or Multiemployer Plan; (e) an
event or condition which might reasonably be expected to constitute
grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Pension Plan or Multiemployer
Plan; or (f) the imposition of any liability under Title IV of ERISA,
other than PBGC premiums due but not delinquent under Section 4007 of
ERISA, upon the Company or any ERISA Affiliate.
"Eurodollar Rate" means, with respect to the Interest Period
applicable to any Eurodollar Loan, a rate of interest per annum, as
determined by the Administrative Agent, obtained by dividing (and then
rounding to the nearest 1/16 of 1% or, if there is no nearest 1/16 of 1%,
then to the next higher 1/16 of 1%):
(a) the rate, as reported by BofA to the Administrative Agent,
quoted by BofA to leading banks in the interbank eurodollar market as the
rate at which BofA is offering Dollar deposits in an amount equal
approximately to the Eurodollar Loan of BofA to which such Interest Period
shall apply for a period equal to such Interest Period, as quoted at
approximately 11:00 a.m. two Business Days prior to the first day of such
Interest Period, by
(b) a number equal to 1.00 minus the aggregate of the then stated
maximum rates during such Interest Period of all reserve requirements
(including, without limitation, marginal, emergency, supplemental and
special reserves), expressed as a decimal, established by the Board of
Governors of the Federal Reserve System and any other banking authority to
which BofA and other major United States money center banks are subject,
in respect of eurocurrency funding (currently referred to as "Eurocurrency
liabilities" in Regulation D of the Board of Governors of the Federal
Reserve System) or in respect of any other category of liabilities
including deposits by reference to which the interest rate on Eurodollar
Loans is determined or any category of extensions of credit or other
assets which includes loans by non-domestic offices of any Bank to United
States residents. Such reserve requirements shall include, without
limitation, those imposed under such Regulation D. Eurodollar Loans shall
be deemed to constitute Eurocurrency liabilities and as such shall be
deemed to be subject to such reserve requirements without benefit of
credits for proration, exceptions or offsets which may be available from
time to time to any Bank under such Regulation D. The Eurodollar Rate
shall be adjusted automatically on and as of the effective date of any
change in any such reserve requirement.
"Eurodollar Rate Loan" means a Loan that bears interest based on the
Eurodollar Rate.
"Event of Default" means any of the events or circumstances
specified in Section 11.1.
"Exchange Act" means the Securities and Exchange Act of 1934, and
regulations promulgated thereunder.
"FDIC" means the Federal Deposit Insurance Corporation, and any
Governmental Authority succeeding to any of its principal functions.
"Federal Funds Rate" means, for any day, a rate per annum (expressed
as a decimal, rounded upwards, if necessary, to the next higher 1/100 of
1%) equal to the weighted average of the rates on overnight federal funds
transactions with members of the Federal Reserve System arranged by
federal funds brokers on such day, as published by the Federal Reserve
Bank of New York on the Business Day next succeeding such day, provided
that (i) if the day for which such rate is to be determined is not a
Business Day, the Federal Funds Rate for such day shall be such rate on
such transactions on the next preceding Business Day as so published on
the next succeeding Business Day, and (ii) if such rate is not so
published for any day, the Federal Funds Rate for such day shall be the
average of the quotations for such day on such transactions received by
BofA as determined by BofA and reported to the Administrative Agent.
"FRB" means the Board of Governors of the Federal Reserve System,
and any Governmental Authority succeeding to any of its principal
functions.
"GAAP" means generally accepted accounting principles set forth from
time to time in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board (or agencies with similar functions of comparable stature
and authority within the U.S. accounting profession), which are applicable
to the circumstances as of the date hereof.
"Governmental Authority" means any nation or government, any state
or other political subdivision thereof, any central bank (or similar
monetary or regulatory authority) thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative functions
of or pertaining to government, and any corporation or other entity owned
or controlled, through stock or capital ownership or otherwise, by any of
the foregoing.
"Guaranty Obligation" has the meaning specified in the definition
of "Contingent Obligation."
"Highest Lawful Rate" means as to any Bank, the maximum rate of
interest, if any, that at any time or from time to time may be contracted
for, taken, charged or received by such Bank on the obligations owed to it
under the laws applicable to such Bank and this transaction.
"Indebtedness" of any Person means, without duplication, (a) all
indebtedness for borrowed money; (b) all obligations issued, undertaken or
assumed as the deferred purchase price of property or services (other than
trade payables entered into in the ordinary course of business on ordinary
terms); (c) all non-contingent reimbursement or payment obligations with
respect to Surety Instruments; (d) all obligations evidenced by notes,
bonds, debentures or similar instruments, including obligations so
evidenced incurred in connection with the acquisition of property, assets
or businesses (but not including in the case of the Guarantor, Surplus
Notes); (e) all indebtedness created or arising under any conditional sale
or other title retention agreement, or incurred as financing, in either
case with respect to property acquired by the Person (even though the
rights and remedies of the seller or bank under such agreement in the
event of default are limited to repossession or sale of such property);
(f) all obligations with respect to capital leases (other than the
$2,600,000 capital lease related to the National Securities and Research
Corporation transaction); (g) all net obligations with respect to Swap
Contracts; (h) all indebtedness referred to in clauses (a) through (g)
above secured by (or for which the holder of such Indebtedness has an
existing right, contingent or otherwise, to be secured by) any Lien upon
or in property (including accounts and contracts rights) owned by such
Person, even though such Person has not assumed or become liable for the
payment of such Indebtedness; and (i) all Guaranty Obligations in respect
of indebtedness or obligations of others of the kinds referred to in
clauses (a) through (g) above.
"Indemnified Liabilities" has the meaning specified in Section 13.5.
"Indemnified Person" has the meaning specified in Section 13.5.
"Independent Auditor" has the meaning specified in subsection
6.1(a).
"Insolvency Proceeding" means (a) any case, action or proceeding
before any court or other Governmental Authority relating to bankruptcy,
reorganization, insolvency, liquidation, receivership, dissolution,
winding-up or relief of debtors, or (b) any assignment for the benefit of
creditors, composition, marshaling of assets for creditors, or other,
similar arrangement in respect of its creditors generally or any
substantial portion of its creditors; undertaken under U.S. Federal, state
or foreign law, including the Bankruptcy Code.
"Insurance Code" means with respect to any insurance company, the
insurance code at the state of domicile and any successor statute of
similar import together with the regulations thereunder as amended or
otherwise modified and in effect from time to time. References to sections
of the Insurance Code shall be construed to also refer to successor
sections.
"Interest Expense" means consolidated interest expense, calculated
in accordance with GAAP including, without limitation, interest expense
with respect to Subordinated Debt.
"Interest Payment Date" means, as to any Eurodollar Rate Loan, the
last day of each Interest Period applicable to such Loan and, as to any
Base Rate Loan, the last Business Day of each calendar quarter and each
date such Loan is converted into another Type of Loan, provided, however,
that if any Interest Period for a Eurodollar Rate Loan exceeds three
months, the date that falls three months after the beginning of such
Interest Period and after each Interest Payment Date thereafter is also an
Interest Payment Date.
"Interest Period" means, as to any Eurodollar Rate Loan, the period
commencing on the Borrowing Date of such Loan or on the
Conversion/Continuation Date on which the Loan is converted into or
continued as an Eurodollar Rate Loan, and ending on the date one, two,
three or six months thereafter as selected by the Company in its Notice of
Borrowing or Notice of Conversion/Continuation;
provided that:
(i) if any Interest Period would otherwise end on a day that is not
a Business Day, that Interest Period shall be extended to the following
Business Day unless the result of such extension would be to carry such
Interest Period into another calendar month, in which event such Interest
Period shall end on the preceding Business Day;
(ii) any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of the calendar month at the
end of such Interest Period; and
(iii) no Interest Period shall extend beyond the Termination Date.
"Invested Assets" means cash, cash equivalents, short term
investments, investments held for sale and any other assets which are
treated as investments under SAP.
"IRS" means the Internal Revenue Service, and any Governmental
Authority succeeding to any of its principal functions under the Code.
"Joint Venture" means a single-purpose corporation, partnership,
joint venture or other similar legal arrangement (whether created by
contract or conducted through a separate legal entity) now or hereafter
formed by the Company or any of its Subsidiaries with another Person in
order to conduct a common venture or enterprise with such Person.
"Lending Office" means, as to any Bank, the office or offices of
such Bank specified as its "Lending Office" or "Domestic Lending Office"
or "Eurodollar Lending Office", as the case may be, on Schedule 13.2, or
such other office or offices as such Bank may from time to time notify the
Company and the Administrative Agent.
"Lien" means any security interest, mortgage, deed of trust, pledge,
hypothecation, assignment, charge or deposit arrangement, encumbrance,
lien (statutory or other) or preferential arrangement of any kind or
nature whatsoever in respect of any property (including those created by,
arising under or evidenced by any conditional sale or other title
retention agreement, the interest of a lessor under a capital lease, any
financing lease having substantially the same economic effect as any of
the foregoing, or the filing of any financing statement naming the owner
of the asset to which such lien relates as debtor, under the Uniform
Commercial Code or any comparable law) and any contingent or other
agreement to provide any of the foregoing, but not including the interest
of a lessor under an operating lease.
"Loan" means an extension of credit by a Bank to the Company under
Article II, and may be a Base Rate Loan or an Eurodollar Rate Loan (each,
a "Type" of Loan).
"Loan Documents" means this Agreement, any Notes and all other
documents delivered to the Administrative Agent or any Bank in connection
herewith.
"Majority Banks" means at any time Banks then holding at least
66-2/3% of the then aggregate unpaid principal amount of the Loans, or, if
no such principal amount is then outstanding, Banks then having at least
66-2/3% of the aggregate Commitments.
"Margin Stock" means "margin stock" as such term is defined in
Regulation T, U or X of the FRB.
"Material Adverse Effect" means (a) a material adverse change in, or
a material adverse effect upon, the operations, management, business,
properties, condition (financial or otherwise) or prospects of the
Guarantor, the Company or the Company and its Subsidiaries taken as a
whole or the Guarantor and its Subsidiaries taken as a whole; (b) a
material impairment of the ability of the Company or the Guarantor to
perform under any Loan Document and to avoid any Event of Default; or (c)
an adverse effect upon the legality, validity, binding effect or
enforceability against the Company or the Guarantor of any Loan Document.
"Moody's" means Moody's Investors Services, Inc.
"Moody's Rating" shall mean at any time the Insurance Financial
Strength Rating of the Guarantor assigned by Moody's.
"Multiemployer Plan" means a "Multi employer plan", within the
meaning of Section 4001(a)(3) of ERISA, to which the Company or any ERISA
Affiliate makes, is making, or is obligated to make contributions or,
during the preceding three calendar years, has made, or been obligated to
make, contributions.
"NAIC" means the National Association of Insurance Commissioners or
any successor thereto.
"NAIC Ratings" shall mean the quality ratings assigned by the
Securities Valuation Office of the NAIC to investments of the Guarantor
and the Primary Insurance Subsidiaries. References in this Agreement to
particular NAIC ratings are references to such ratings as currently
defined and classified by the Securities Valuation Office of the National
Association of Insurance Commissioners and if such rating system is
changed then each reference to a particular rating in this Agreement shall
be deemed to be a reference to the rating under such changed rating system
which most closely approximates the credit quality of the particular
rating as currently defined. The Guarantor will use its best efforts to at
all times have not less than 90% of its bond portfolio and that of the
Primary Insurance Subsidiaries covered by NAIC Ratings. If for any reason
beyond the control of the Guarantor NAIC Ratings are unavailable for such
percentage of the bond portfolios of the Guarantor and the Primary
Insurance Subsidiaries or the NAIC rating system is discontinued then in
that event the Guarantor and the Banks agree to negotiate in good faith
for an amendment to this Agreement replacing Sections 8.2 and 8.3 hereof
with new covenants measuring the credit quality of the bond portfolio of
the Guarantor and the Primary Insurance Subsidiaries and which are not
materially more liberal nor restrictive than Sections 8.2 and 8.3 hereof
as presently in effect, but in the event that the Guarantor and the
Majority Banks are unable to agree to such an amendment within 60 days of
the date the NAIC rating system is discontinued or the Guarantor is unable
to comply with the preceding sentence then in that event this Agreement
may, at the option of the Majority Banks or the Guarantor, terminate
whereupon the Commitments shall terminate and all outstanding Loans,
together with interest thereon and any amounts due the Banks under this
Agreement, including under Section 3.4 hereof, shall be repaid.
"Net Cash Proceeds" means with respect to the sale, transfer, or
other disposition by the Guarantor or any Subsidiary of any asset
(including any stock of any Subsidiary), the aggregate cash proceeds
(including cash proceeds received by way of deferred payment of principal
pursuant to a note, installment receivable or otherwise, but only as and
when received) received by the Guarantor or any Subsidiary pursuant to
such sale, transfer or other disposition, net of (i) the direct costs
relating to such sale, transfer or other disposition (including, without
limitation, sales commissions and legal, accounting and investment banking
fees), (ii) taxes paid or payable as a result thereof (after taking into
account any available tax credits or deductions and any tax sharing
arrangements), (iii) amounts required to be applied to the repayment of
any Indebtedness secured by a Lien on the asset subject to such sale,
transfer or other disposition (other than the Loans) and (iv) any reserve
for adjustment in respect of the sale price of such asset (until such
amount is available to the Guarantor or the applicable Subsidiary).
"Net Invested Assets" shall mean the Guarantor's and the Primary
Insurance Subsidiaries' portfolios of stocks, bonds, mortgage loans, real
estate, policy loans and other assets classified as invested assets under
SAP less Separate Account assets.
"Non-Performing Real Estate" shall mean the book value of the sum of
(i) real estate acquired by the Guarantor and the Primary Insurance
Subsidiaries in satisfaction of indebtedness, whether by foreclosure, deed
in lieu of foreclosure or otherwise, which during the period of 180 days
prior to the date of determination had a net operating income (gross
income less taxes, maintenance and other operating expenses and also less
principal and interest on indebtedness not owing to the Guarantor or the
applicable Primary Insurance Subsidiary) of less than 6% of book value,
(ii) mortgage loans the terms of which have been modified because of the
borrower's inability to comply with the terms as originally agreed or
which are in the process of foreclosure and under which the amount
received by the Guarantor or the applicable Primary Insurance Subsidiary
(exclusive of amounts received for taxes or insurance or in payment of
expenses) during the 90 days preceding the date of determination is an
amount which on an annual basis would return to the Guarantor or the
applicable Primary Insurance Subsidiary less than 6% of the book value of
the mortgage loan in question and (iii) mortgage loans on which any
payment of principal or interest is more than 90 days past due.
"Note" means a promissory note executed by the Company in favor of a
Bank pursuant to subsection 2.2(b), in substantially the form of Exhibit
F.
"Notice of Borrowing" means a notice in substantially the form of
Exhibit A.
"Notice of Conversion/Continuation" means a notice in substantially
the form of Exhibit B.
"Obligations" means all advances, debts, liabilities, obligations,
covenants and duties arising under any Loan Document owing by the Company
or the Guarantor to any Bank, any Agent, or any other Indemnified Person,
whether direct or indirect (including those acquired by assignment),
absolute or contingent, due or to become due, now existing or hereafter
arising.
"Organization Documents" means, for any corporation, the certificate
or articles of incorporation, the bylaws, any certificate of determination
or instrument relating to the rights of preferred shareholders of such
corporation, any shareholder rights agreement, and all applicable
resolutions of the board of directors (or any committee thereof) of such
corporation.
"Participant" has the meaning specified in subsection 13.8(d).
"PBGC" means the Pension Benefit Guaranty Corporation, or any
Governmental Authority succeeding to any of its principal functions under
ERISA.
"Pension Plan" means a pension plan (as defined in Section 3(2) of
ERISA) subject to Title IV of ERISA which the Company sponsors, maintains,
or to which it makes, is making, or is obligated to make contributions, or
in the case of a multiple employer plan (as described in Section 4064(a)
of ERISA) has made contributions at any time during the immediately
preceding five (5) plan years.
"Permitted Liens" has the meaning specified in Section 7.1.
"Person" means an individual, partnership, limited liability
company, corporation, business trust, joint stock company, trust,
unincorporated association, joint venture or Governmental Authority.
"Plan" means an employee benefit plan (as defined in Section 3(3) of
ERISA) which the Company sponsors or maintains or to which the Company
makes, is making, or is obligated to make contributions and includes any
Pension Plan.
"Primary Insurance Subsidiaries" shall mean those Primary
Subsidiaries principally engaged in the business of insurance.
"Primary Subsidiaries" shall mean Phoenix American Life Insurance
Co., the Company, and any other Subsidiary of the Guarantor which at the
time of determination has capital or a net worth in excess of $25,000,000.
"Pro Rata Share" means, as to any Bank at any time, the percentage
equivalent (expressed as a decimal, rounded to the ninth decimal place) at
such time of such Bank's Commitment divided by the combined Commitments of
all Banks.
"Rating" means the Moody's Rating or the S&P Rating. All references
in this Agreement to particular Moody's Ratings and S&P Ratings are
references to such ratings as currently defined by Moody's and S&P, and in
the event either of such corporations changes its rating system, each
reference to a particular rating set forth in this Agreement shall be
deemed to be a reference to the rating under such changed rating system
which, in the reasonable judgment of the Administrative Agent, after
consultation with the rating service involved, most closely approximates
the level of claims paying ability associated with the particular rating
as currently defined.
Whenever a determination of compliance with any provision of this
Agreement or any interest rate or fee is dependent upon the availability
of both a Moody's Rating and an S&P Rating and one or the other (but not
both) of such rating services ceases to rate the claims paying ability of
the Guarantor, compliance with the applicable provisions of this Agreement
and determinations of interest rates and fees shall be made on the basis
of the rating which is available. If for any reason neither a Moody's
Rating nor an S&P Rating is available for the Guarantor then in that event
compliance with the provisions of this Agreement where a determination of
such a rating is necessary, determinations of interest rates and fees
shall be made by the Majority Banks, after consultation with the
Guarantor, based on the Majority Banks' good faith estimates of what such
ratings would have been had they been available, the determination of the
Majority Banks in such regards to be final and conclusive provided that
they have been made in good faith.
"Reportable Event" means, any of the events set forth in Section
4043(b) of ERISA or the regulations thereunder, other than any such event
for which the 30-day notice requirement under ERISA has been waived in
regulations issued by the PBGC.
"Requirement of Law" means, as to any Person, any law (statutory or
common), treaty, rule or regulation or determination of an arbitrator or
of a Governmental Authority, in each case applicable to or binding upon
the Person or any of its property or to which the Person or any of its
property is subject.
"Responsible Officer" means, with respect to any Person, the chief
executive officer, or the president of such Person, or any other officer
having substantially the same authority and responsibility; or, with
respect to compliance with financial covenants, the chief financial
officer or the treasurer of such Person, or any other officer having
substantially the same authority and responsibility.
"Risk Based Capital Ratio" shall mean, as of any time the same is to
be determined, the ratio of adjusted capital of the Guarantor to the
Company Action Level of the Guarantor. Adjusted capital, for the purpose
of this definition, shall be computed in the manner from time to time
prescribed by the Insurance Department of the State of New York as total
adjusted capital for inclusion in the Annual Statement of the Guarantor to
such department (currently appearing on page 23 of such annual statement
in column 1, line 27 and currently consisting of capital and surplus, the
asset valuation reserve of the Guarantor and 50% of the Guarantor's
dividend liability).
"S&P" means Standard & Poor's Ratings Group.
"S&P Rating" shall mean at any time the Insurer Financial Strength
Rating of the Guarantor assigned by Standard & Poor's Ratings Services, a
Division of the McGraw Hill Companies, Inc.
"SAP" means, as to the Guarantor, the statutory accounting
principles prescribed or permitted by the Department, or in the event that
the Department fails to prescribe or address such practices, the NAIC
guidelines.
"SAP Capital" means unrestricted surplus accounts plus asset
valuation reserve plus surplus notes, all calculated in accordance with
SAP.
"SEC" means the Securities and Exchange Commission, or any
Governmental Authority succeeding to any of its principal functions.
"Senior Debt" means Indebtedness less Subordinated Debt.
"Senior Debt to EBITDA Ratio" means the ratio for the Company, on a
consolidated basis in accordance with GAAP, as at the end of any fiscal
quarter of Senior Debt as of such quarter end to EBITDA as of such quarter
end for the four fiscal quarters then ending.
"Separate Accounts" shall mean accounts maintained by the Guarantor
and the Primary Insurance Subsidiaries pursuant to the New York Insurance
Law of a character such that the assets allocated thereto are to provide
for annuities or life insurance benefits under specific annuity and/or
insurance contracts and are not chargeable with other liabilities of the
Guarantor or the Primary Insurance Subsidiaries.
"Shareholders' Equity" means shareholders' equity determined in
accordance with GAAP.
"Sole Book Manager" means NationsBanc Montgomery Securities LLC.
"Sole Lead Arranger" means NationsBank Montgomery Securities LLC.
"Subordinated Debt" means Indebtedness subordinated to the
Obligations in form and substance satisfactory to the Majority Banks.
"Subsidiary" of a Person means any corporation, limited liability
company, association, partnership, joint venture or other business entity
of which more than 50% of the voting stock or other equity interests (in
the case of Persons other than corporations), is owned or controlled
directly or indirectly by the Person, or one or more of the Subsidiaries
of the Person, or a combination thereof. Unless the context otherwise
clearly requires, references herein to a "Subsidiary" refer to a
Subsidiary of the Guarantor.
"Surety Instruments" means all letters of credit (including standby
and commercial), banker's acceptances, bank guaranties, shipside bonds,
surety bonds and similar instruments.
"Surplus Notes" means surplus notes issued in accordance with
Section 1307 of the New York Insurance Law and which are payable only out
of free and divisible surplus with the prior approval of the Department.
"Swap Contract" means any agreement (including any master agreement
and any agreement, whether or not in writing, relating to any single
transaction) that is an interest rate swap agreement, basis swap, forward
rate agreement, commodity swap, commodity option, equity or equity index
swap or option, bond option, interest rate option, forward foreign
exchange agreement, rate cap, collar or floor agreement, currency swap
agreement, cross-currency rate swap agreement, swaption, currency option
or any other, similar agreement (including any option to enter into any of
the foregoing).
"Termination Date" means the earlier to occur of:
(a) March 16, 2004; and
(b) the date on which the Commitments terminate in accordance with
the provisions of this Agreement.
"Total Debt to Capital Ratio" means the ratio for the Company, on a
consolidated basis in accordance with GAAP, of its Indebtedness to the sum
of its Indebtedness plus its Shareholders' Equity. For the purpose of the
calculations of Indebtedness for this ratio, Indebtedness shall be reduced
by an amount equal to the lesser of (i) 50% of any outstanding
Subordinated Debt which has been exchanged for Subordinated Debt from
preferred stock outstanding on the Closing Date and (ii) $40,000,000.
"Total SAP Adjusted Capital" means SAP Capital plus reserves for
losses on real estate.
"12b-1 Asset" means, with respect to any Person, such Person's right
to receive payments arising in connection with the sale of shares in a
registered open-end management investment company, which payment shall be
permitted pursuant to Rule 12b-1(b) (such payment, a so-called "12b-1
fee") or Rule 6c-10 (such payment, a so-called "contingent deferred sales
load") of the Investment Company Act of 1940.
"Type" has the meaning specified in the definition of "Loan."
"Unfunded Pension Liability" means the excess of a Plan's benefit
liabilities under Section 4001(a)(16) of ERISA, over the current value of
that Plan's assets, determined in accordance with the assumptions used for
funding the Pension Plan pursuant to Section 412 of the Code for the
applicable plan year.
"United States" and "U.S." each means the United States of America.
"Wholly-Owned Subsidiary" means any corporation in which (other than
directors' qualifying shares required by law) 100% of the capital stock of
each class having ordinary voting power, and 100% of the capital stock of
every other class, in each case, at the time as of which any determination
is being made, is owned, beneficially and of record, by the Guarantor or
by one or more of the other Wholly-Owned Subsidiaries, or both.
"Zweig Group" means Zweig Glaser Advisers, a New York general
partnership, Zweig Securities Corp., a New York corporation, Zweig
Advisors Inc., a Delaware corporation, Zweig Total Return Advisors Inc., a
Delaware corporation, and Euclid Advisors LLC, a New York limited
liability company.
"Zweig Acquisition" means the acquisition by the Company of the
Zweig Group pursuant to the Zweig Acquisition Agreement.
"Zweig Acquisition Agreement" means the Acquisition Agreement dated
as of December 15, 1998 among the Company, each of the members of the
Zweig Group, Glaser Corp., Zweig Management Corp. and Martin E. Zweig,
individually and as attorney-in-fact for the shareholders of Zweig
Securities Corp., Zweig Advisors Inc. and Zweig Total Return Advisors Inc.
1.2 Other Interpretive Provisions. (a) The meanings of defined terms
are equally applicable to the singular and plural forms of the defined terms.
(b) The words "hereof", "herein", "hereunder" and similar words
refer to this Agreement as a whole and not to any particular provision of this
Agreement; and subsection, Section, Schedule and Exhibit references are to this
Agreement unless otherwise specified.
(c) (i) The term "documents" includes any and all instruments,
documents, agreements, certificates, indentures, notices and other
writings, however evidenced.
(ii) The term "including" is not limiting and means
"including without limitation."
(iii) In the computation of periods of time from a specified
date to a later specified date, the word "from" means "from and
including"; the words "to" and "until" each mean "to but excluding", and
the word "through" means "to and including."
(d) Except as otherwise stated, the terms "determine" or
"determination" mean to reasonably determine or reasonable determination,
respectively.
(e) Unless otherwise expressly provided herein, (i) references to
agreements (including this Agreement) and other contractual instruments shall be
deemed to include all subsequent amendments and other modifications thereto, but
only to the extent such amendments and other modifications are not prohibited by
the terms of any Loan Document, and (ii) references to any statute or regulation
are to be construed as including all statutory and regulatory provisions
consolidating, amending, replacing, supplementing or interpreting the statute or
regulation.
(f) The captions and headings of this Agreement are for convenience
of reference only and shall not affect the interpretation of this Agreement.
(g) This Agreement and other Loan Documents may use several
different limitations, tests or measurements to regulate the same or similar
matters. All such limitations, tests and measurements are cumulative and shall
each be performed in accordance with their terms.
(h) This Agreement and the other Loan Documents are the result of
negotiations among and have been reviewed by counsel to the Agents, the Company
and the other parties, and are the products of all parties. Accordingly, they
shall not be construed against the Banks or the Agents merely because of the
Agents' or Banks' involvement in their preparation.
1.3 Accounting Principles. (a) Unless the context otherwise clearly
requires, all accounting terms not expressly defined herein shall be construed,
and all financial computations required under this Agreement shall be made, in
accordance with GAAP, consistently applied.
(b) References herein to "fiscal year" and "fiscal quarter" refer to
such fiscal periods of the Company.
ARTICLE II
THE CREDITS
2.1 Amounts and Terms of Commitments. Each Bank severally agrees, on the
terms and conditions set forth herein, to make loans to the Company (each such
loan, a "Loan") from time to time on any Business Day during the period from the
Closing Date to the Termination Date, in an aggregate amount not to exceed at
any time outstanding, together with the principal amount of Loans outstanding in
favor of such Bank at such time, the amount set forth next to such Bank's name
on Schedule 2.1 (such amount as the same may be reduced under Section 2.5 or as
a result of one or more assignments under Section 13.8, the Bank's
"Commitment"); provided, however, that, after giving effect to any Borrowing,
the aggregate principal amount of all outstanding Loans shall not at any time
exceed the combined Commitments. Within the limits of each Bank's Commitment,
and subject to the other terms and conditions hereof, the Company may borrow
under this Section 2.1, prepay under Section 2.6 and reborrow under this Section
2.1.
2.2 Loan Accounts. (a) The Loans made by each Bank shall be evidenced by
one or more loan accounts or records maintained by such Bank in the ordinary
course of business. The loan accounts or records maintained by the
Administrative Agent shall be conclusive absent manifest error of the amount of
the Loans made by the Banks to the Company and the interest and payments
thereon. Any failure so to record or any error in doing so shall not, however,
limit or otherwise affect the obligation of the Company hereunder to pay any
amount owing with respect to the Loans.
(b) Upon the request of any Bank made through the Administrative
Agent, the Loans made by such Bank may be evidenced by one or more Notes,
instead of loan accounts. Each such Bank shall endorse on the schedules annexed
to its Note(s) the date, amount and maturity of each Loan made by it and the
amount of each payment of principal made by the Company with respect thereto.
Each such Bank is irrevocably authorized by the Company to endorse its Note(s);
provided, however, that the failure of a Bank to make, or an error in making, a
notation thereon with respect to any Loan shall not limit or otherwise affect
the obligations of the Company hereunder or under any such Note to such Bank.
2.3 Procedure for Borrowing. (a) Each Borrowing shall be made upon the
Company's irrevocable written notice delivered to the Administrative Agent in
the form of a Notice of Borrowing (which notice must be received by the
Administrative Agent prior to 11:00 a.m. (New York City time) (i) three Business
Days prior to the requested Borrowing Date, in the case of Eurodollar Rate
Loans; and (ii) one Business Day prior to the requested Borrowing Date, in the
case of Base Rate Loans, specifying:
(A) the amount of the Borrowing, which shall be in an
aggregate minimum amount of $5,000,000 or any multiple of $1,000,000
in excess thereof;
(B) the requested Borrowing Date, which shall be a Business
Day;
(C) the Type of Loans comprising the Borrowing; and
(D) in the case of Eurodollar Rate Loans, the duration of the
Interest Period applicable to such Loans included in such notice. If
the Notice of Borrowing fails to specify the duration of the
Interest Period for any Borrowing comprised of Eurodollar Rate
Loans, such Interest Period shall be three months.
(b) After giving effect to any Borrowing, there may be no more than 10
different Interest Periods in effect.
2.4 Conversion and Continuation Elections. (a) The Company may, upon
irrevocable written notice to the Administrative Agent in accordance with
subsection 2.4(b):
(i) elect, as of any Business Day, in the case of Base Rate
Loans, or as of the last day of the applicable Interest Period, in the
case of Eurodollar Rate Loans, to convert any such Loans (or any part
thereof in an amount not less than $5,000,000, or that is in an integral
multiple of $1,000,000 in excess thereof) into Loans of any other Type; or
(ii) elect, as of the last day of the applicable Interest
Period, to continue any Loans having Interest Periods expiring on such day
(or any part thereof in an amount not less than $5,000,000, or that is in
an integral multiple of $1,000,000 in excess thereof);
provided, that if at any time the aggregate amount of Eurodollar Rate Loans in
respect of any Borrowing is reduced, by payment, prepayment, or conversion of
part thereof to be less than $5,000,000, such Eurodollar Rate Loans shall
automatically convert into Base Rate Loans.
(b) The Company shall deliver a Notice of Conversion/ Continuation
to be received by the Administrative Agent not later than 11:00 a.m. (New York
City time) at least (i) three Business Days in advance of the
Conversion/Continuation Date, if the Loans are to be converted into or continued
as Eurodollar Rate Loans; and (ii) one Business Day in advance of the
Conversion/Continuation Date, if the Loans are to be converted into Base Rate
Loans, specifying:
(A) the proposed Conversion/Continuation Date;
(B) the aggregate amount of Loans to be converted or
continued;
(C) the Type of Loans resulting from the proposed conversion
or continuation; and
(D) in the case of continuations of or conversions into
Eurodollar Rate Loans, the duration of the requested Interest Period.
(c) If upon the expiration of any Interest Period applicable to
Eurodollar Rate Loans, the Company has failed to select timely a new Interest
Period to be applicable to such Eurodollar Rate Loans, or if any Default or
Event of Default then exists, the Company shall be deemed to have elected to
convert such Eurodollar Rate Loans into Base Rate Loans effective as of the
expiration date of such Interest Period.
(d) The Administrative Agent will promptly notify each Bank of its
receipt of a Notice of Conversion/Continuation, or, if no timely notice is
provided by the Company, the Administrative Agent will promptly notify each Bank
of the details of any automatic conversion. All conversions and continuations
shall be made ratably according to the respective outstanding principal amounts
of the Loans with respect to which the notice was given held by each Bank.
(e) Unless the Majority Banks otherwise agree, with respect to all
Loans during the existence of a Default or Event of Default, the Company may not
elect to have a Loan converted into or continued as an Eurodollar Rate Loan.
(f) After giving effect to any conversion or continuation of Loans,
there may not be more than 10 different Interest Periods in effect.
2.5 Voluntary Termination or Reduction of Commitments. The Company may,
upon not less than three Business Days' prior notice to the Administrative
Agent, terminate the Commitments, or permanently reduce the Commitments by an
aggregate minimum amount of $5,000,000 or any multiple of $1,000,000 in excess
thereof; provided, however, that after giving effect thereto and to any
prepayments of Loans made on the effective date thereof, the then-outstanding
principal amount of the Loans may not exceed the amount of the combined
Commitments then in effect. Once reduced in accordance with this Section, the
Commitments may not be increased. Any reduction of the Commitments shall be
applied to each Bank according to its Pro Rata Share. All accrued facility fees
to, but not including the effective date of any reduction or termination of
Commitments, shall be paid on the effective date of such reduction or
termination.
2.6 Optional Prepayments. Subject to Section 3.4, the Company may, at any
time or from time to time, upon not less than three Business Days' irrevocable
notice to the Administrative Agent, ratably prepay Loans in whole or in part, in
minimum amounts of $5,000,000 or any multiple of $1,000,000 in excess thereof.
Such notice of prepayment shall specify the date and amount of such prepayment
and the Type(s) of Loans to be prepaid. The Administrative Agent will promptly
notify each Bank of its receipt of any such notice, and of such Bank's Pro Rata
Share of such prepayment. If such notice is given by the Company, the Company
shall make such prepayment and the payment amount specified in such notice shall
be due and payable on the date specified therein, together with accrued interest
to each such date on the amount prepaid and any amounts required pursuant to
Section 3.4.
2.7 Mandatory Prepayments of Loans; Mandatory Commitment Reductions. The
Company shall make a prepayment of the Loans within 30 days after receipt of
proceeds from any sale, transfer or other disposition by the Company or any
Subsidiary of the Company of any asset outside the ordinary course of its
business (other than any sale of 12b-1 Assets pursuant to the Purchase and Sale
Agreement among Phoenix Equity Planning Corporation, the Company and FEP Capital
L.P. dated as of June 1, 1997, and additional sales of 12b-1 Assets for up to an
aggregate amount of $4,000,000, so long as in either case the proceeds of such
sale shall be reinvested within 365 days in businesses or assets substantially
similar to the business or assets of the Company) in an amount equal to 100% of
the Net Cash Proceeds of such sale, to the extent the aggregate proceeds thereof
shall exceed $5,000,000 in any fiscal year. On the date of any prepayment
pursuant to this Section 2.7, accrued interest on the amount of such prepayment,
together with any amounts owing under Section 3.4, shall be due and payable. The
Commitments shall be reduced by the amount of such prepayments.
2.8 Repayment. The Company shall repay to the Banks on the Termination Date
the aggregate principal amount of Loans outstanding on such date.
2.9 Interest. (a) Each Loan shall bear interest on the outstanding
principal amount thereof from the applicable Borrowing Date at a rate per annum
equal to the Eurodollar Rate or the Base Rate, as the case may be (and subject
to the Company's right to convert to other Types of Loans under Section 2.4),
plus the Applicable Margin, in the case of Eurodollar Rate Loans.
(b) Interest on each Loan shall be paid in arrears on each Interest
Payment Date. Interest shall also be paid on the date of any prepayment of Loans
under Section 2.6 or 2.7 for the portion of the Loans so prepaid and upon
payment (including prepayment) in full thereof and, with respect to any Loan
during the existence of any Event of Default, interest shall be paid on demand
of the Administrative Agent at the request or with the consent of the Majority
Banks.
(c) Notwithstanding subsection (a) of this Section with respect to
any Loan, while any Event of Default exists or after acceleration, the Company
shall pay interest (after as well as before entry of judgment thereon to the
extent permitted by law) on the principal amount of all outstanding Loans, at a
rate per annum which is determined by adding 2% per annum to the Applicable
Margin then in effect for such Loans and, in the case of Base Rate Loans, at a
rate per annum equal to the Base Rate plus 2%; provided, however, that, on and
after the expiration of any Interest Period applicable to any Eurodollar Rate
Loan outstanding on the date of occurrence of such Event of Default or
acceleration, the principal amount of such Loan shall, during the continuation
of such Event of Default or after acceleration, bear interest at a rate per
annum equal to the Base Rate plus 2%.
(d) Highest Lawful Rate. At no time shall the interest rate payable
on the Loans of any Bank, together with the fees and all other amounts payable
under the Loan Documents to such Bank, to the extent the same are construed to
constitute interest, exceed the Highest Lawful Rate applicable to such Bank. If
with respect to any Bank for any period during the term of this Agreement, any
amount paid to such Bank under the Loan Documents, to the extent the same shall
(but for the provisions of this Section) constitute or be deemed to constitute
interest, would exceed the maximum amount of interest permitted by the Highest
Lawful Rate applicable to such Bank during such period (such amount being
hereinafter referred to as an "Unqualified Amount"), then (i) such Unqualified
Amount shall be applied or shall be deemed to have been applied as a prepayment
of the Loans of such Bank, and (ii) if in any subsequent period during the term
of this Agreement, all amounts payable under the Loan Documents to such Bank in
respect of such period which constitute or shall be deemed to constitute
interest shall be less than the maximum amount of interest permitted by the
Highest Lawful Rate applicable to such Bank during such period, then the Company
shall pay to such Bank in respect of such period an amount (each a "Compensatory
Interest Payment") equal to the lesser of (x) a sum which, when added to all
such amounts, would equal the maximum amount of interest permitted by the
Highest Lawful Rate applicable to such Bank during such period, and (y) an
amount equal to the Unqualified Amount less all other Compensatory Interest
Payments made in respect thereof.
2.10 Fees. (a) Arrangement, Agency Fees. The Company shall pay such fees to
the Arranger and the Agents for their own accounts as may be agreed to between
the Company and the Arranger and the Agents from time to time.
(b) Facility Fee. The Company shall pay to the Administrative Agent
for the account of each Bank a facility fee on the Bank's Commitment, computed
on a quarterly basis in arrears on the last Business Day of each calendar
quarter as calculated by the Administrative Agent, equal to the Applicable Fee
Rate per annum. Such facility fee shall accrue from the date hereof to the
Termination Date and shall be due and payable quarterly in arrears on the last
Business Day of each calendar quarter commencing on March 31, 1999 through the
Termination Date, with the final payment to be made on the Termination Date;
provided that, in connection with any reduction or termination of Commitments
under Section 2.5 or Section 2.7, the accrued facility fee calculated for the
period ending on such date shall also be paid on the date of such reduction or
termination, with the following quarterly payment being calculated on the basis
of the period from such reduction or termination date to such quarterly payment
date. The facility fees provided in this subsection shall accrue at all times
after the above-mentioned commencement date, including at any time during which
one or more conditions in Article IV are not met.
(c) Closing Fee. On the Closing Date, the Company shall pay to the
Administrative Agent for the account of each Bank a closing fee in an amount
equal to 0.03% of such Bank's Commitment (the amount of which is set forth next
to such Bank's name on Schedule 2.1).
2.11 Computation of Fees and Interest. (a) All computations of interest for
Base Rate Loans when the Base Rate is determined by the BofA Rate and all
computations of facility fees shall be made on the basis of a year of 365 or 366
days, as the case may be, and actual days elapsed. All other computations of
interest shall be made on the basis of a 360-day year and actual days elapsed
(which results in more interest being paid than if computed on the basis of a
365-day year). Interest and fees shall accrue during each Interest Period or
other period during which interest or such fees are computed from the first day
thereof to but excluding the last day thereof.
(b) Each determination of an interest rate by the Administrative
Agent shall be conclusive and binding on the Company and the Banks in the
absence of manifest error.
2.12 Payments by the Company. (a) All payments to be made by the Company
shall be made without set-off, recoupment or counterclaim. Except as otherwise
expressly provided herein, all payments by the Company shall be made to the
Administrative Agent for the account of the Banks at the Administrative Agent's
Payment Office, and shall be made in dollars and in immediately available funds,
no later than 12:00 p.m. (New York City time) on the date specified herein. The
Administrative Agent will promptly distribute to each Bank its Pro Rata Share
(or other applicable share as expressly provided herein) of such payment in like
funds as received. Any payment received by the Administrative Agent later than
12:00 p.m. (New York City time) shall be deemed to have been received on the
following Business Day and any applicable interest or fee shall continue to
accrue.
(b) Subject to the provisions set forth in the definition of
"Interest Period" herein, whenever any payment is due on a day other than a
Business Day, such payment shall be made on the following Business Day, and such
extension of time shall in such case be included in the computation of interest
or fees, as the case may be.
(c) Unless the Administrative Agent receives notice from the Company
prior to the date on which any payment is due to the Banks that the Company will
not make such payment in full as and when required, the Administrative Agent may
assume that the Company has made such payment in full to the Administrative
Agent on such date in immediately available funds and the Administrative Agent
may (but shall not be so required), in reliance upon such assumption, distribute
to each Bank on such due date an amount equal to the amount then due such Bank.
If and to the extent the Company has not made such payment in full to the
Administrative Agent, each Bank shall repay to the Administrative Agent on
demand such amount distributed to such Bank, together with interest thereon at
the Federal Funds Rate for each day from the date such amount is distributed to
such Bank until the date repaid.
2.13 Payments by the Banks to the Administrative Agent. (a) Unless the
Administrative Agent receives notice from a Bank on or prior to the Closing Date
or, with respect to any Borrowing after the Closing Date, at least one Business
Day prior to the date of such Borrowing, that such Bank will not make available
as and when required hereunder to the Administrative Agent for the account of
the Company the amount of that Bank's Pro Rata Share of the Borrowing, the
Administrative Agent may assume that each Bank has made such amount available to
the Administrative Agent in immediately available funds on the Borrowing Date
and the Administrative Agent may (but shall not be so required), in reliance
upon such assumption, make available to the Company on such date a corresponding
amount. If and to the extent any Bank shall not have made its full amount
available to the Administrative Agent in immediately available funds and the
Administrative Agent in such circumstances has made available to the Company
such amount, that Bank shall on the Business Day following such Borrowing Date
make such amount available to the Administrative Agent, together with interest
at the Federal Funds Rate for each day during such period. A notice of the
Administrative Agent submitted to any Bank with respect to amounts owing under
this subsection (a) shall be conclusive, absent manifest error. If such amount
is so made available, such payment to the Administrative Agent shall constitute
such Bank's Loan on the date of Borrowing for all purposes of this Agreement. If
such amount is not made available to the Administrative Agent on the Business
Day following the Borrowing Date, the Administrative Agent will notify the
Company of such failure to fund and, upon demand by the Administrative Agent,
the Company shall pay such amount to the Administrative Agent for the
Administrative Agent's account, together with interest thereon for each day
elapsed since the date of such Borrowing, at a rate per annum equal to the
interest rate applicable at the time to the Loans comprising such Borrowing.
(b) The failure of any Bank to make any Loan on any Borrowing Date
shall not relieve any other Bank of any obligation hereunder to make a Loan on
such Borrowing Date, but no Bank shall be responsible for the failure of any
other Bank to make the Loan to be made by such other Bank on any Borrowing Date.
2.14 Sharing of Payments, Etc. If, other than as expressly provided
elsewhere herein, any Bank shall obtain on account of the Loans made by it any
payment (whether voluntary, involuntary, through the exercise of any right of
set-off, or otherwise) in excess of its Pro Rata Share, such Bank shall
immediately (a) notify the Administrative Agent of such fact, and (b) purchase
from the other Banks such participations in the Loans made by them as shall be
necessary to cause such purchasing Bank to share the excess payment pro rata
with each of them; provided, however, that if all or any portion of such excess
payment is thereafter recovered from the purchasing Bank, such purchase shall to
that extent be rescinded and each other Bank shall repay to the purchasing Bank
the purchase price paid therefor, together with an amount equal to such paying
Bank's ratable share (according to the proportion of (i) the amount of such
paying Bank's required repayment to (ii) the total amount so recovered from the
purchasing Bank) of any interest or other amount paid or payable by the
purchasing Bank in respect of the total amount so recovered. The Company agrees
that any Bank so purchasing a participation from another Bank may, to the
fullest extent permitted by law, exercise all its rights of payment (including
the right of set-off, but subject to Section 13.10) with respect to such
participation as fully as if such Bank were the direct creditor of the Company
in the amount of such participation. The Administrative Agent will keep records
(which shall be conclusive and binding in the absence of manifest error) of
participations purchased under this Section and will in each case notify the
Banks following any such purchases or repayments.
ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY
3.1 Taxes. (a) Payments to be Free and Clear. All payments by the Company
or the Guarantor under the Loan Documents to or for the account of the
Administrative Agent, or any Bank (each, an "Indemnified Tax Person") shall be
made free and clear of, and without any deduction or withholding for or on
account of, any and all current or future taxes, levies, imposts, deductions,
charges or withholdings, and all liabilities with respect thereto (including
interest, additions to tax, and penalties thereon) imposed, levied, collected,
withheld or assessed by the United States or any political subdivision or taxing
authority thereof (collectively, "Taxes"), excluding as to any Indemnified Tax
Person, (i) a Tax on the Income imposed on such Indemnified Tax Person and (ii)
any interest, fees, additions to tax or penalties for late payment thereof (each
such nonexcluded Tax, an "Indemnified Tax"). For purposes hereof, "Tax on the
Income" shall mean, as to any Person, a Tax imposed by one of the following
jurisdictions or by any political subdivision or taxing authority thereof: (i)
the United States, (ii) the jurisdiction in which such Person is organized,
(iii) the jurisdiction in which such Person's principal office is located, or
(iv) in the case of each Bank, any jurisdiction in which such Bank's applicable
Lending Office is located; which Tax is an income tax or franchise tax imposed
on all or part of the net income or net profits of such Person or which Tax
represents interest, fees, or penalties for late payment of such an income tax
or franchise tax.
(b) Grossing Up of Payments. If the Company, the Guarantor or any
other Person is required by law, rule, regulation, order, directive, treaty or
guideline to make any deduction or withholding (which deduction or withholding
would constitute an Indemnified Tax) from any amount required to be paid by the
Company or the Guarantor to or on behalf of an Indemnified Tax Person under any
Loan Document (i) the Company or the Guarantor shall pay such Indemnified Tax
before the date on which penalties attach thereto, such payment to be made for
its own account (if the liability to pay is imposed on the Company or the
Guarantor) or on behalf of and in the name of such Indemnified Tax Person (if
the liability is imposed on such Indemnified Tax Person), and (ii) the sum
payable to such Indemnified Tax Person shall be increased as may be necessary so
that after making all required deductions and withholdings (including deductions
and withholdings applicable to additional sums payable under this Section) such
Indemnified Tax Person receives an amount equal to the sum it would have
received had no such deductions or withholdings been made.
(c) Other Taxes. The Company and the Guarantor agree to pay any
current or future stamp or documentary taxes or any other excise or property
taxes, charges or similar levies that rise from any payment made hereunder or
from the execution, delivery or registration of, or any amendment, supplement or
modification of, or any waiver or consent under or in respect of, the Loan
Documents or otherwise with respect to, the Loan Documents (collectively, the
"Other Taxes").
(c) Evidence of Payment. Within 30 days after the reasonable request
therefor by the Administrative Agent in connection with any payment of
Indemnified Taxes or Other Taxes, the Company or the Guarantor, as applicable,
will furnish to the Administrative Agent the original or a certified copy of an
official receipt from the jurisdiction to which payment is made evidencing
payment thereof or, if unavailable, a certificate from a Responsible Officer
that states that such payment has been made and that sets forth the date and
amount of such payment.
(d) U.S. Tax Certificates. Each Indemnified Tax Person that is
organized under the laws of any jurisdiction other than the United States or any
political subdivision thereof that is exempt from United States federal
withholding tax, or that is subject to such tax at a reduced rate under an
applicable treaty, with respect to payments under the Loan Documents shall
deliver to the Administrative Agent for transmission to the Company, on or prior
to the Closing Date (in the case of each Indemnified Tax Person listed on the
signature pages hereof) or on the effective date of the Assignment and
Acceptance Agreement or other document pursuant to which it becomes an
Indemnified Tax Person (in the case of each other Indemnified Tax Person), and
at such other times as the Company or the Administrative Agent may reasonably
request, Internal Revenue Form 4224 or Form 1001 or other certificate or
document required under United States law to establish entitlement to such
exemption or reduced rate. Neither the Company nor the Guarantor shall be
required to pay any additional amount to any such Indemnified Tax Person under
subsection (b) above if such Indemnified Tax Person shall have failed to satisfy
the requirements of the immediately preceding sentence; provided that if such
Indemnified Tax Person shall have satisfied such requirements on the Closing
Date (in the case of each Indemnified Tax Person listed on the signature pages
hereof) or on the effective date of the Assignment and Acceptance Agreement or
other document pursuant to which it became an Indemnified Tax Person (in the
case of each other Indemnified Tax Person), nothing in this subsection shall
relieve the Company or the Guarantor of its obligation to pay any additional
amounts pursuant to subsection (b) in the event that, as a result of any change
in applicable law or treaty, such Indemnified Tax Person is no longer properly
entitled to deliver certificates, documents or other evidence at a subsequent
date establishing the fact that such Indemnified Tax Person is no longer
entitled to such exemption or reduced rate.
3.2 Illegality. (a) If any Bank determines that the introduction of any
Requirement of Law, or any change in any Requirement of Law, or in the
interpretation or administration of any Requirement of Law, has made it
unlawful, or that any central bank or other Governmental Authority has asserted
that it is unlawful, for any Bank or its applicable Lending Office to make
Eurodollar Rate Loans, then, on notice thereof by the Bank to the Company
through the Administrative Agent, any obligation of that Bank to make Eurodollar
Rate Loans shall be suspended until the Bank notifies the Administrative Agent
and the Company that the circumstances giving rise to such determination no
longer exist.
(b) If a Bank determines that it is unlawful to maintain any
Eurodollar Rate Loan, the Company shall, upon its receipt of notice of such fact
and demand from such Bank (with a copy to the Administrative Agent), prepay in
full such Eurodollar Rate Loans of that Bank then outstanding, together with
interest accrued thereon and amounts required under Section 3.4, either on the
last day of the Interest Period thereof, if the Bank may lawfully continue to
maintain such Eurodollar Rate Loans to such day, or immediately, if the Bank may
not lawfully continue to maintain such Eurodollar Rate Loan. If the Company is
required to so prepay any Eurodollar Rate Loan, then concurrently with such
prepayment, the Company shall borrow from the affected Bank, in the amount of
such repayment, a Base Rate Loan.
3.3 Increased Costs and Reduction of Return. (a) If any Bank determines
that, due to either (i) the introduction of or any change (other than any change
by way of imposition of or increase in reserve requirements included in the
calculation of the Eurodollar Rate or in respect of the assessment rate payable
by any Bank to the FDIC for insuring U.S. deposits) in or in the interpretation
of any law or regulation or (ii) the compliance by that Bank with any guideline
or request from any central bank or other Governmental Authority (whether or not
having the force of law), there shall be any increase in the cost to such Bank
of agreeing to make or making, funding or maintaining any Eurodollar Rate Loans,
then the Company shall be liable for, and shall from time to time, upon demand
(with a copy of such demand to be sent to the Administrative Agent), pay to the
Administrative Agent for the account of such Bank, additional amounts as are
sufficient to compensate such Bank for such increased costs.
(b) If any Bank shall have determined that (i) the introduction of
any Capital Adequacy Regulation, (ii) any change in any Capital Adequacy
Regulation, (iii) any change in the interpretation or administration of any
Capital Adequacy Regulation by any central bank or other Governmental Authority
charged with the interpretation or administration thereof, or (iv) compliance by
the Bank (or its Lending Office) or any corporation controlling the Bank with
any Capital Adequacy Regulation, affects or would affect the amount of capital
required or expected to be maintained by the Bank or any corporation controlling
the Bank and (taking into consideration such Bank's or such corporation's
policies with respect to capital adequacy and such Bank's desired return on
capital) determines that the amount of such capital is increased as a
consequence of its Commitment, loans, credits or obligations under this
Agreement, then, upon demand of such Bank to the Company through the
Administrative Agent, the Company shall pay to the Bank, from time to time as
specified by the Bank, additional amounts sufficient to compensate the Bank for
such increase.
3.4 Funding Losses. The Company shall reimburse each Bank and hold each
Bank harmless from any loss or expense which the Bank may sustain or incur as a
consequence of:
(a the failure of the Company to make on a timely basis any
payment of principal of any Eurodollar Rate Loan;
(b the failure of the Company to borrow, continue or convert a Loan
after the Company has given (or is deemed to have given) a Notice of Borrowing
or a Notice of Conversion/ Continuation;
(c the failure of the Company to make any prepayment in
accordance with any notice delivered under Section 2.6;
(d the prepayment (including pursuant to Section 2.7) or other
payment (including after acceleration thereof) of an Eurodollar Rate Loan on a
day that is not the last day of the relevant Interest Period; or
(e the automatic conversion under Section 2.4 of any Eurodollar Rate
Loan to a Base Rate Loan on a day that is not the last day of the relevant
Interest Period;
including any such loss or expense arising from the liquidation or reemployment
of funds obtained by it to maintain its Eurodollar Rate Loans or from fees
payable to terminate the deposits from which such funds were obtained. For
purposes of calculating amounts payable by the Company to the Banks under this
Section and under subsection 3.3(a), each Eurodollar Rate Loan made by a Bank
(and each related reserve, special deposit or similar requirement) shall be
conclusively deemed to have been funded at the Dollar deposits used in
determining the Eurodollar Rate for such Eurodollar Rate Loan by a matching
deposit or other borrowing in the interbank eurodollar market for a comparable
amount and for a comparable period, whether or not such Eurodollar Rate Loan is
in fact so funded.
3.5 Inability to Determine Rates. If the Majority Banks determine that for
any reason adequate and reasonable means do not exist for determining the
Eurodollar Rate for any requested Interest Period with respect to a proposed
Eurodollar Rate Loan, or that the Eurodollar Rate applicable pursuant to
subsection 2.9(a) for any requested Interest Period with respect to a proposed
Eurodollar Rate Loan does not adequately and fairly reflect the cost to the
Banks of funding such Loan, the Administrative Agent will promptly so notify the
Company and each Bank. Thereafter, the obligation of the Banks to make or
maintain Eurodollar Rate Loans, as the case may be, hereunder shall be suspended
until the Administrative Agent upon the instruction of the Majority Banks
revokes such notice in writing. Upon receipt of such notice, the Company may
revoke any Notice of Borrowing or Notice of Conversion/Continuation then
submitted by it. If the Company does not revoke such Notice, the Banks shall
make, convert or continue the Loans, as proposed by the Company, in the amount
specified in the applicable notice submitted by the Company, but such Loans
shall be made, converted or continued as Base Rate Loans instead of Eurodollar
Rate Loans.
3.6 Certificates of Banks. Any Bank or Agent claiming reimbursement or
compensation under this Article III shall deliver to the Company (with a copy to
the Administrative Agent) a certificate setting forth in reasonable detail the
amount payable to the Bank or Agent hereunder and such certificate shall be
conclusive and binding on the Company in the absence of manifest error.
3.7 Survival. The agreements and obligations of the Company in this Article
III shall survive the payment of all other Obligations.
ARTICLE IV
CONDITIONS PRECEDENT
4.1 Conditions of Initial Loans. The obligation of each Bank to make its
initial Loan hereunder is subject to the following conditions:
(a) The Administrative Agent shall have received on or before the
initial borrowing date all of the following, in form and substance satisfactory
to the Administrative Agent and each Bank, and in sufficient copies for each
Bank (except for the Notes, of which only the originals shall be signed):
(i) Credit Agreement. This Agreement executed by each party hereto;
(ii) Notes. The Notes (if any);
(iii) Resolutions; Incumbency.
(A) Copies of the resolutions of the board of directors of the
Company and the Guarantor authorizing the transactions contemplated hereby,
certified as of the Closing Date by the Secretary or an Assistant Secretary
of such Person; and
(B) A certificate of the Secretary or Assistant Secretary of
the Company and the Guarantor certifying the names and true signatures of
the officers of the Company or the Guarantor authorized to execute, deliver
and perform, as applicable, this Agreement, and all other Loan Documents to
be delivered by it hereunder;
(iv Organization Documents; Good Standing. Each of the following
documents:
(A) the articles or certificate of incorporation and the bylaws
of the Company and the Guarantor as in effect on the Closing Date,
certified by the Secretary or Assistant Secretary of the Company or the
Guarantor as of the Closing Date; and
(B) a good standing certificate for the Company and the
Guarantor from the Secretary of State (or similar, applicable Governmental
Authority) of its state of incorporation;
(v) Legal Opinions.
(A) An opinion of Thomas Steenburg, counsel to the Company and
addressed to the Agents and the Banks, substantially in the form of Exhibit
D-1; and
(B) An opinion of John T. Mulrain, counsel to the Guarantor and
addressed to the Agents and the Banks, substantially in the form of Exhibit
D-2;
(vi)Payment of Fees. Evidence of payment by the Company of all
accrued and unpaid fees, costs and expenses to the extent then due and payable
on the Closing Date, together with Attorney Costs of BofA to the extent invoiced
prior to or on the Closing Date, plus such additional amounts of Attorney Costs
as shall constitute BofA's reasonable estimate of Attorney Costs incurred or to
be incurred by it through the closing proceedings (provided that such estimate
shall not thereafter preclude final settling of accounts between the Company and
BofA); including any such costs, fees and expenses arising under or referenced
in Sections 2.10 and 13.4;
(vii) Certificate. A certificate signed by a Responsible Officer of
each of the Company and the Guarantor, dated as of the Closing Date, stating
that:
(A) the representations and warranties contained in Article V
are true and correct on and as of such date, as though made on and as of
such date;
(B) no Default or Event of Default exists or would result from
the initial Borrowing; and
(C) there has occurred since December 31, 1997, no event or
circumstance that has resulted or could reasonably be expected to result in
a Material Adverse Effect; and
(viii) Other Documents. Such other approvals, opinions,
documents or materials as the Administrative Agent or any Bank may request.
(b The Administrative Agent shall have received a certificate signed
by a Responsible Officer of the Company stating that all material governmental,
creditor, shareholder and other third party approvals and consents necessary in
connection with the execution and delivery by each of the Company and the
Guarantor of the Loan Documents to which it is a party, and the performance by
each of the Company and the Guarantor of its obligations under the Loan
Documents, shall have been obtained and remain in effect and any applicable
waiting periods shall have expired.
(c) The Administrative Agent shall have received evidence
(satisfactory to the Administrative Agent) that the Zweig Acquisition has been
completed on substantially similar terms to those described in the Zweig
Acquisition Agreement.
4.2 Conditions to All Borrowings. The obligation of each Bank to make any
Loan to be made by it (including its initial Loan) is subject to the
satisfaction of the following conditions precedent on the relevant Borrowing
Date:
(a) Notice of Borrowing. The Administrative Agent shall have received
(with, in the case of the initial Loan only, a copy for each Bank) a Notice of
Borrowing;
(b) Continuation of Representations and Warranties. The
representations and warranties in Article V shall be true and correct on and as
of such Borrowing Date with the same effect as if made on and as of such
Borrowing Date (except to the extent such representations and warranties
expressly refer to an earlier date, in which case they shall be true and correct
as of such earlier date and in the case of Section 5.16, as otherwise permitted
hereunder); and
(c) No Existing Default. No Event of Default or Default shall exist
or shall result from such Borrowing.
Each Notice of Borrowing submitted by the Company hereunder shall constitute a
representation and warranty by the Company hereunder, as of the date of each
such notice and as of each Borrowing Date, that the conditions in Section 4.2
are satisfied.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Guarantor and the Company represent and warrant to each Agent and each
Bank that:
5.1 Corporate Existence and Power. The Guarantor and each of its
Subsidiaries:
(a is a corporation duly organized, alidly existing and in good
standing under the laws of the jurisdiction of its incorporation;
(b has the power and authority and all governmental licenses,
authorizations, consents and approvals to own its assets, carry on its business
and to execute, deliver, and perform its obligations under the Loan Documents;
(c is duly qualified as a foreign corporation and is licensed and in
good standing under the laws of each jurisdiction where its ownership, lease or
operation of property or the conduct of its business requires such qualification
or license; and
(d is in compliance with all Requirements of Law; except, in each
case referred to in clause (c) or clause (d), to the extent that the failure to
do so could not reasonably be expected to have a Material Adverse Effect.
5.2 Corporate Authorization; No Contravention. The execution, delivery and
performance by the Guarantor and its Subsidiaries of this Agreement and each
other Loan Document to which such Person is party, have been duly authorized by
all necessary corporate action, and do not and will not:
(a contravene the terms of any of that Person's Organization
Documents;
(b conflict with or result in any breach or contravention of, or the
creation of any Lien under, any document evidencing any Contractual Obligation
to which such Person is a party or any order, injunction, writ or decree of any
Governmental Authority to which such Person or its property is subject; or
(c violate any Requirement of Law.
5.3 Governmental Authorization. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority is necessary or required in connection with the
execution, delivery or performance by, or enforcement against, the Guarantor or
any of its Subsidiaries of the Agreement or any other Loan Document, except
filings made prior to the date hereof and other filings which will be made as
required by law.
5.4 Binding Effect. This Agreement and each other Loan Document to which
the Guarantor or the Company is a party constitute the legal, valid and binding
obligations of the Guarantor and the Company, enforceable against such Person in
accordance with their respective terms, except as enforceability may be limited
by applicable bankruptcy, insolvency, or similar laws affecting the enforcement
of creditors' rights generally or by equitable principles relating to
enforceability.
5.5 Litigation. Except as specifically disclosed in Schedule 5.5, there are
no actions, suits, proceedings, claims or disputes pending, or to the best
knowledge of the Company or the Guarantor, threatened or contemplated, at law,
in equity, in arbitration or before any Governmental Authority, against the
Guarantor or the Company or its Subsidiaries or any of their respective
properties which:
(a purport to affect or pertain to this Agreement or any other
Loan Document, or any of the transactions contemplated hereby or thereby;
(b as to which there exists a substantial likelihood of an adverse
determination, which determination would reasonably be expected to have a
Material Adverse Effect. No injunction, writ, temporary restraining order or any
order of any nature has been issued by any court or other Governmental Authority
purporting to enjoin or restrain the execution, delivery or performance of this
Agreement or any other Loan Document, or directing that the transactions
provided for herein or therein not be consummated as herein or therein provided;
or
(c seeks damages in an amount reasonably expected to have a
Material Adverse Effect.
5.6 Contractual Obligation. As of the Closing Date, neither the Guarantor
nor any Subsidiary is in default under or with respect to any Contractual
Obligation in any respect which, individually or together with all such
defaults, could reasonably be expected to have a Material Adverse Effect.
5.7 ERISA Compliance. Except as specifically disclosed in Schedule 5.7:
(a Each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code and other federal or state law. The
Guarantor and each ERISA Affiliate has made all required contributions to any
Plan subject to Section 412 of the Code, and no application for a funding waiver
or an extension of any amortization period pursuant to Section 412 of the Code
has been made with respect to any Plan.
(b There are no pending or, to the best knowledge of Guarantor,
threatened claims, actions or lawsuits, or action by any Governmental Authority,
with respect to any Plan which has resulted or could reasonably be expected to
result in a Material Adverse Effect. There has been no prohibited transaction or
violation of the fiduciary responsibility rules with respect to any Plan which
has resulted or could reasonably be expected to result in a Material Adverse
Effect.
(c (i) No ERISA Event has occurred or is reasonably expected to
occur; (ii) no Pension Plan has any Unfunded Pension Liability; (iii) neither
the Guarantor nor any ERISA Affiliate has incurred, or reasonably expects to
incur, any liability under Title IV of ERISA with respect to any Pension Plan
(other than premiums due and not delinquent under Section 4007 of ERISA); (iv)
neither the Guarantor nor any ERISA Affiliate has incurred, or reasonably
expects to incur, any liability (and no event has occurred which, with the
giving of notice under Section 4219 of ERISA, would result in such liability)
under Section 4201 or 4243 of ERISA with respect to a Multiemployer Plan; and
(v) neither the Guarantor nor any ERISA Affiliate has engaged in a transaction
that could be subject to Section 4069 or 4212(c) of ERISA.
5.8 Use of Proceeds; Margin Regulations. The proceeds of the Loans are to
be used solely for the purposes set forth in and permitted by Section 6.12 and
Section 7.6. Neither the Guarantor nor any Subsidiary is generally engaged in
the business of purchasing or selling Margin Stock or extending credit for the
purpose of purchasing or carrying Margin Stock.
5.9 Title to Properties. The Guarantor and its Subsidiaries have good
record and marketable title in fee simple to, or valid leasehold interests in,
all real property necessary or used in the ordinary conduct of their respective
businesses, except for such defects in title as could not, individually or in
the aggregate, have a Material Adverse Effect. As of the Closing Date, the
property of the Guarantor and its Subsidiaries is subject to no Liens, other
than Permitted Liens.
5.10 Taxes. The Guarantor and its Subsidiaries have filed all Federal and
other material tax returns and reports required to be filed, and have paid all
Federal and other material taxes, assessments, fees and other governmental
charges levied or imposed upon them or their properties, income or assets
otherwise due and payable, except those which are being contested in good faith
by appropriate proceedings and for which adequate reserves have been provided in
accordance with GAAP. There is no proposed tax assessment against the Guarantor
or any Subsidiary that would, if made, have a Material Adverse Effect.
5.11 Financial Condition. (a) The statutory financial statements of the
Guarantor and its Primary Insurance Subsidiaries dated December 31, 1997 and the
statutory statements of the Guarantor and its Primary Insurance Subsidiaries
dated September 30, 1998, and the related statements of income or operations,
surplus or capital and surplus and cash flows for the fiscal periods ended on
those dates:
(i were prepared in accordance with SAP consistently applied
throughout the period covered thereby, except as otherwise expressly noted
therein, subject in the case of the September 30, 1998 statements to
ordinary, good faith year end audit adjustments;
(ii fairly present the financial condition of the Guarantor and
its Primary Insurance Subsidiaries as of the date thereof and results of
operations for the period covered thereby; and
(iii except as specifically disclosed in Schedule 5.11, show
all material indebtedness and other liabilities, direct or contingent, of
the Guarantor and its Primary Insurance Subsidiaries as of the date
thereof, including liabilities for taxes, material commitments and
Contingent Obligations.
(b The audited consolidated financial statements of the Company and
its Subsidiaries dated December 31, 1997, and the unaudited consolidated
statements of the Company and its Subsidiaries dated September 30, 1998, and the
related consolidated statements of income or operations, shareholders' equity
and cash flows for the fiscal periods ended on those dates:
(i were prepared in accordance with GAAP consistently applied
throughout the period covered thereby, except as otherwise expressly noted
therein, subject in the case of the September 30, 1998, statements to
ordinary, good faith year end audit adjustments;
(ii fairly present the financial condition of the Company and
its Subsidiaries as of the date thereof and results of operations for the
period covered thereby; and
(iii except as specifically disclosed in Schedule 5.11, show
all material indebtedness and other liabilities, direct or contingent, of
the Company and its consolidated Subsidiaries as of the date thereof,
including liabilities for taxes, material commitments and Contingent
Obligations.
(c Since December 31,1997, there has been no Material Adverse Effect.
5.12 Environmental Matters. The Guarantor conducts in the ordinary course
of business a review of the effect of existing Environmental Laws and existing
Environmental Claims on its business, operations and properties, and as a result
thereof the Guarantor has reasonably concluded to the best of its knowledge
that, except as specifically disclosed in Schedule 5.12, such Environmental Laws
and Environmental Claims could not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect.
5.13 Regulated Entities. The Company is not subject to regulation under the
Public Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act, any state public utilities code, or any other Federal
or state statute or regulation limiting its ability to incur Indebtedness. No
filings, approvals or consents are required under the Investment Company Act of
1940 for the enforceability of this Agreement or any other Loan Document.
5.14 No Burdensome Restrictions. Neither the Guarantor nor any Subsidiary
is a party to or bound by any Contractual Obligation, or subject to any
restriction in any Organization Document, or any Requirement of Law, which could
reasonably be expected to have a Material Adverse Effect.
5.15 Copyrights, Patents, Trademarks and Licenses, etc. The Guarantor or
its Subsidiaries own or are licensed or otherwise have the right to use all of
the patents, trademarks, service marks, trade names, copyrights, contractual
franchises, authorizations and other rights that are reasonably necessary for
the operation of their respective businesses, without conflict with the rights
of any other Person. To the best knowledge of the Guarantor, no slogan or other
advertising device, product, process, method, substance, part or other material
now employed, or now contemplated to be employed, by the Guarantor or any
Subsidiary infringes upon any rights held by any other Person. Except as
specifically disclosed in Schedule 5.5, no claim or litigation regarding any of
the foregoing is pending or threatened, and no patent, invention, device,
application, principle or any statute, law, rule, regulation, standard or code
is pending or, to the knowledge of the Guarantor, proposed, which, in either
case, could reasonably be expected to have a Material Adverse Effect.
5.16 Subsidiaries. As of the Closing Date, the Guarantor has no
Subsidiaries other than those specifically disclosed in part (a) of Schedule
5.16 hereto and the Company has no equity investments in any other corporation
or entity other than those specifically disclosed in part (b) of Schedule 5.16.
5.17 Insurance. Except as specifically disclosed in Schedule 5.17, the
properties of the Guarantor and its Subsidiaries are insured with financially
sound and reputable insurance companies not Affiliates of the Guarantor, in such
amounts, with such deductibles and covering such risks as are customarily
carried by companies engaged in similar businesses and owning similar properties
in localities where the Guarantor or such Subsidiary operates.
5.18 Full Disclosure. None of the representations or warranties made by the
Guarantor or any Subsidiary in the Loan Documents as of the date such
representations and warranties are made or deemed made, and none of the
statements contained in any exhibit, report, statement or certificate furnished
by or on behalf of the Guarantor or any Subsidiary in connection with the Loan
Documents (including the offering and disclosure materials delivered by or on
behalf of the Guarantor to the Banks prior to the Closing Date), contains any
untrue statement of a material fact or omits any material fact required to be
stated therein or necessary to make the statements made therein, in light of the
circumstances under which they are made, not misleading as of the time when made
or delivered; provided, that, to the extent the representations and warranties
set forth in this Section 5.18 relate to the Zweig Group, they shall be made to
the best of the knowledge of the Guarantor and the Company after due inquiry.
5.19 Zweig Acquisition Agreement. The representations and warranties of the
Company and, to the best of the knowledge of the Company after due inquiry, the
sellers contained in the Zweig Acquisition Agreement (a true and correct copy of
which Zweig Acquisition Agreement, together with all schedules and exhibits
thereto, has been delivered to the Banks), are true and correct in all respects
which, upon consummation of the Zweig Acquisition, could have a Material Adverse
Effect. As of the date of the Zweig Acquisition, (i) the Company shall have
taken all necessary corporate actions to authorize the Zweig Acquisition; and
(ii) no representation made by the Company or, to the best of the knowledge of
the Company after due inquiry, the sellers, under such Zweig Acquisition
Agreement, in any notices or filings with the shareholders of the Company or
such sellers, with the SEC or any applicable state securities commissions or
with any governmental authority including, without limitation, any
representations concerning any agreement with, or financing provided by, the
Banks, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements made therein, in light of the circumstances under which they are
made, not misleading as of the time when made or delivered.
5.20 Compliance. The Guarantor and each of its Subsidiaries is in
compliance with all applicable laws and regulations, all applicable ordinances,
decrees, requirements, orders and judgments of, and all of the terms of any
applicable licenses and permits issued by, any governmental body, agency or
official, and all agreements and instruments to which it may be subject or any
of its properties may be bound, in each case where the violation thereof may
have a Material Adverse Effect.
5.21 Year 2000 Problem. The Guarantor and the Company and each of their
respective Subsidiaries have reviewed the areas within their business and
operations which could be adversely affected by, and have developed or are
developing a program to address on a timely basis, the "Year 2000 Problem" (that
is, the risk that computer applications used by the Guarantor and the Company
and each of their respective Subsidiaries may be unable to recognize and perform
properly date-sensitive functions involving certain dates prior to and any date
after December 31, 1999). Based on such review and program, the Guarantor and
the Company reasonably believe that the "Year 2000 Problem" will not have a
Material Adverse Effect.
ARTICLE VI
AFFIRMATIVE COVENANTS
So long as any Bank shall have any Commitment hereunder, or any Loan or
other Obligation shall remain unpaid or unsatisfied, unless the Majority Banks
waive compliance in writing:
6VI.1 Financial Statements. The Guarantor and/or the Company shall deliver
to the Administrative Agent, in form and detail satisfactory to the
Administrative Agent and the Majority Banks, with sufficient copies for each
Bank:
(a as soon as available, but not later than 120 days after the end of
each fiscal year, a copy of the audited consolidated balance sheet of the
Company and its Subsidiaries as at the end of such year and the related
consolidated statements of income or operations, shareholders' equity and cash
flows for such year, setting forth in each case in comparative form the figures
for the previous fiscal year, and accompanied by the opinion of
PricewaterhouseCoopers or another nationally-recognized independent public
accounting firm ("Independent Auditor") which report shall state that such
consolidated financial statements present fairly the financial position for the
periods indicated in conformity with GAAP applied on a basis consistent with
prior years. Such opinion shall not be qualified or limited because of a
restricted or limited examination by the Independent Auditor of any material
portion of the Company's or any Subsidiary's records;
(b as soon as available, but not later than 60 days after the end of
each of the first three fiscal quarters of each fiscal year, a copy of the
unaudited consolidated balance sheet of the Company and its Subsidiaries as of
the end of such quarter and the related consolidated statements of income,
shareholders' equity and cash flows for the period commencing on the first day
and ending on the last day of such quarter, and certified by a Responsible
Officer of the Company as fairly presenting, in accordance with GAAP (subject to
ordinary, good faith year-end audit adjustments), the financial position and the
results of operations of the Company and the Subsidiaries;
(c as soon as available, but not later than 120 days after the end of
each fiscal year, a copy of the Annual Statement of the Guarantor for such
fiscal year prepared in accordance with SAP and accompanied by the certification
of a Responsible Officer of the Guarantor that such Annual Statement presents
fairly in accordance with SAP the financial position of the Guarantor for the
period then ended;
(d as soon as possible, but no later than 60 days after the end of
each of the first three fiscal quarters of each fiscal year, a copy of the
quarterly consolidated statement of the Guarantor for each such fiscal quarter,
all prepared in accordance with GAAP and accompanied by the certification of a
Responsible Officer of the Guarantor that all such quarterly consolidated
statements present fairly in accordance with GAAP the financial position of the
Guarantor for the period then ended;
(e as soon as available, a copy of the Guarantor's "Statement of
Actuarial Opinion" which is provided to the Department (or equivalent
information should the Department no longer require such a statement) as to the
adequacy of loss reserves of the Guarantor, which opinion shall be in the format
prescribed by the Insurance Code;
(f as soon as available, a copy of the Management Discussion and
Analysis filed with the Department with respect to any of the foregoing
financial statements and such other information; and
(g within 90 days after each fiscal year, projections of the
Company's financial performance on an annual basis for the next fiscal year,
prepared by the Company's management.
6VI.2 Certificates; Other Information. The Company shall furnish to the
Administrative Agent, with sufficient copies for each Bank:
(a concurrently with the delivery of the financial statements
referred to in subsections 6.1(a) and (b), a Compliance Certificate executed by
a Responsible Officer of the Company;
(b promptly, copies of all financial statements and reports that the
Guarantor or the Company sends to its policyholders or shareholders, and copies
of all financial statements and regular, periodical or special reports that the
Guarantor or any Subsidiary may make to, or file with, the SEC;
(c promptly, upon a change in the Guarantor's Financial Strength
Rating, written notice of such change by a Responsible Officer; and
(d promptly, such additional information regarding the business,
financial or corporate affairs of the Guarantor or any Subsidiary as the
Administrative Agent, at the request of any Bank, may from time to time
reasonably request.
6.3 Notices. The Company and the Guarantor shall promptly notify the
Administrative Agent and each Bank:
(a of any change in a Rating;
(b of the occurrence of any Default or Event of Default and of the
occurrence or existence of any event or circumstance that foreseeably will
become a Default or Event of Default;
(c of any matter that has resulted or may result in a Material
Adverse Effect, including (i) breach or non-performance of, or any default
under, a Contractual Obligation of the Guarantor or any Subsidiary; (ii) any
dispute, litigation, investigation, proceeding or suspension between the
Guarantor or any Subsidiary and any Governmental Authority; or (iii) the
commencement of, or any material development in, any litigation or proceeding
affecting the Guarantor or any Subsidiary; including pursuant to any applicable
Environmental Laws;
(d of the occurrence of any of the following events affecting the
Guarantor or any ERISA Affiliate (but in no event more than 10 days after such
event), and deliver to the Administrative Agent and each Bank a copy of any
notice with respect to such event that is filed with a Governmental Authority
and any notice delivered by a Governmental Authority to the Guarantor or any
ERISA Affiliate with respect to such event:
(i) an ERISA Event;
(ii) a material increase in the Unfunded Pension Liability of
any Pension Plan;
(iii) the adoption of, or the commencement of contributions to,
any Plan subject to Section 412 of the Code by the Company or any ERISA
Affiliate; or
(iv) the adoption of any amendment to a Plan subject to Section
412 of the Code, if such amendment results; in a material increase in
contributions or Unfunded Pension Liability;
(e) of any material change in accounting policies or financial
reporting practices by the Guarantor or any of its Primary Subsidiaries; and
(f) of any proposed Acquisition by the Company or any of its
Subsidiaries, the total consideration for which shall exceed $10,000,000,
together with pro forma financial statements giving effect to such Acquisition
but subject to the requirements of any applicable confidentiality agreement.
Each notice under this Section shall be accompanied by a written
statement by a Responsible Officer of the Company or the Guarantor setting forth
details of the occurrence referred to therein, and stating what action the
Company, the Guarantor or any affected Subsidiary proposes to take with respect
thereto and at what time. Each notice under subsection 6.3(b) shall describe
with particularity any and all clauses or provisions of this Agreement or other
Loan Document that have been (or foreseeably will be) breached or violated.
6.4 Preservation of Corporate Existence, Etc. The Guarantor and the Company
shall, and shall cause each of their respective Subsidiaries to:
(a) preserve and maintain in full force and effect its corporate
existence and good standing under the laws of its state or jurisdiction of
incorporation;
(b) preserve and maintain in full force and effect all governmental
rights, privileges, qualifications, permits, licenses and franchises necessary
or desirable in the normal conduct of its business;
(c) use reasonable efforts, in the ordinary course of business, to
preserve its business organization and goodwill; and
(d) preserve or renew all of its registered patents, trademarks,
trade names and service marks, the non-preservation of which could reasonably be
expected to have a Material Adverse Effect.
6.5 Maintenance of Property. The Guarantor and the Company shall maintain,
and shall cause each of their respective Subsidiaries to maintain, and preserve
all its property which is used or useful in its business in good working order
and condition, ordinary wear and tear excepted.
6.6 Insurance. The Guarantor and the Company shall maintain, and shall
cause each of their respective Subsidiaries to maintain, with financially sound
and reputable independent insurers, insurance with respect to its properties and
business against loss or damage of the kinds customarily insured against by
Persons engaged in the same or similar business, of such types and in such
amounts as are customarily carried under similar circumstances by such other
Persons.
6.7 Payment of Obligations. The Guarantor and the Company shall, and shall
cause each of their respective Subsidiaries to, pay and discharge as the same
shall become due and payable, all their respective obligations and liabilities,
including:
(a) all tax liabilities, assessments and governmental charges or
levies upon it or its properties or assets, unless the same are being contested
in good faith by appropriate proceedings and adequate reserves in accordance
with GAAP are being maintained by the Guarantor, the Company or such Subsidiary;
(b) all lawful claims which, if unpaid, would by law become a Lien
upon its property; and
(c) all indebtedness, as and when due and payable, but subject to any
subordination provisions contained in any instrument or agreement evidencing
such Indebtedness.
6.8 Compliance with Laws. The Guarantor and the Company shall comply, and
shall cause each of their respective Subsidiaries to comply, in all material
respects with all Requirements of Law of any Governmental Authority having
jurisdiction over it or its business (including the Federal Fair Labor Standards
Act), except such as may be contested in good faith or as to which a bona fide
dispute may exist.
6.9 Compliance with ERISA. The Company shall, and shall cause each of its
ERISA Affiliates to: (a) maintain each Plan in compliance in all material
respects with the applicable provisions of ERISA, the Code and other federal or
state law; (b) cause each Plan which is qualified under Section 401(a) of the
Code to maintain such qualification; and (c) make all required contributions to
any Plan subject to Section 412 of the Code.
6.10 Inspection of Property and Books and Records. The Guarantor and the
Company shall maintain, and shall cause each of their respective Subsidiaries to
maintain, proper books of record and account, in which full, true and correct
entries in conformity with GAAP or SAP, as applicable, consistently applied
shall be made of all financial transactions and matters involving the assets and
business of the Guarantor, the Company and such Subsidiary. The Guarantor and
the Company shall permit, and shall cause each of their respective Subsidiaries
to permit, representatives and independent contractors of the Administrative
Agent or any Bank to visit and inspect any of their respective properties, to
examine their respective corporate, financial and operating records, and make
copies thereof or abstracts therefrom, and to discuss their respective affairs,
finances and accounts with their respective directors, officers, and independent
public accountants, all at the expense of the Guarantor and the Company and at
such reasonable times during normal business hours and as often as may be
reasonably desired, upon reasonable advance notice to the Company; provided,
however, when an Event of Default or Default exists the Administrative Agent or
any Bank may do any of the foregoing during normal business hours and without
advance notice.
6.11 Environmental Laws. The Guarantor and the Company shall, and shall
cause each of their respective Subsidiaries to, conduct its operations and keep
and maintain its property in compliance with all Environmental Laws.
6.12 Use of Proceeds. The Company shall use the proceeds of the Loans for
working capital purposes including the acquisition of the Zweig Group and
Acquisitions not in contravention of any Requirement of Law or of any Loan
Document; provided, however, that such proceeds shall not be used for any
Acquisition, if the board of directors of the entity to be acquired shall not
have approved such Acquisition.
ARTICLE VII
NEGATIVE COVENANTS
So long as any Bank shall have any Commitment hereunder, or any Loan or
other Obligation shall remain unpaid or unsatisfied, unless the Majority Banks
waive compliance in writing:
7.1 Limitation on Liens. The Guarantor shall not, and shall not suffer or
permit any Subsidiary to, directly or indirectly, make, create, incur, assume or
suffer to exist any Lien upon or with respect to any part of its property,
whether now owned or hereafter acquired, other than the following ("Permitted
Liens"):
(a) any Lien existing on property of the Guarantor or any Subsidiary
on the Closing Date and set forth in Schedule 7.1 securing Indebtedness
outstanding on such date;
(b) any Lien created under any Loan Document;
(c) Liens for taxes, fees, assessments or other governmental charges
which are not delinquent or remain payable without penalty, or to the extent
that non-payment thereof is permitted by Section 6.7, provided that no notice of
lien has been filed or recorded under the Code;
(d) Liens on 12b-1 Assets which have been sold;
(e) carriers', warehousemen's, mechanics', landlords', materialmen's,
repairmen's or other similar Liens arising in the ordinary course of business
which are not delinquent or remain payable without penalty;
(f) Liens (other than any Lien imposed by ERISA) consisting of
pledges or deposits required in the ordinary course of business in connection
with workers' compensation, unemployment insurance and other social security
legislation;
(g) Liens consisting of judgment or judicial attachment liens,
provided that the enforcement of such Liens is effectively stayed and all such
liens in the aggregate at any time outstanding for the Guarantor and its
Subsidiaries do not exceed $10,000,000;
(h) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount, and which do not in any case
materially detract from the value of the property subject thereto or interfere
with the ordinary conduct of the businesses of the Guarantor and its
Subsidiaries;
(i) Liens arising solely by virtue of any statutory or common law
provision relating to banker's liens, securities intermediary's liens, rights of
set-off or similar rights and remedies as to deposit accounts, securities
accounts or other funds maintained with a creditor depository institution;
provided that (i) such deposit account is not a dedicated cash collateral
account and is not subject to restrictions against access by the Guarantor in
excess of those set forth by regulations promulgated by the FRB, and (ii) such
deposit account or securities account is not intended by the Guarantor or any
Subsidiary to provide collateral to the depository institution providing such
account;
(j) Liens on real property and related assets of the Guarantor
granted to any home loan bank, provided that the aggregate amount of
Indebtedness secured by all such Liens, when taken together with the aggregate
amount of Indebtedness secured by Liens permitted by clause (k) of this Section
7.1 shall not exceed $100,000,000 at any one time outstanding; and
(k) additional Liens securing Indebtedness not in excess of
$10,000,000 at any time outstanding.
7.2 Mergers, Consolidations and Sales of Assets. The Guarantor will not,
and will not permit any Primary Subsidiary to
(a) consolidate with or be a party to a merger with any other Person
or
(b) sell, lease or otherwise dispose of any substantial part of its
Properties, provided that the foregoing shall not apply to or operate to
prevent (i) reinsurance and similar risk sharing arrangements entered into
in the ordinary course of business, (ii) sales or other dispositions of
assets acquired in satisfaction of obligations owing the Guarantor or a
Primary Subsidiary, (iii) mergers of a Primary Subsidiary with and into the
Guarantor and other mergers not involving the Guarantor, or (iv) the sale
of all or any substantial part of the assets of, or of the equity interests
held by the Guarantor in, any Primary Subsidiary so long as in the case of
each of the matters described in clauses (i) through (iv) above, no Default
or Event of Default shall have occurred and be continuing or would occur as
a result thereof. The foregoing to the contrary notwithstanding, the
Guarantor will not in any event sell, transfer or otherwise dispose of
capital stock of the Company or permit the merger of the Company into any
other Person other than the Guarantor if after giving effect thereto the
Company would no longer be a Subsidiary of the Guarantor or would not be
the survivor of the merger in question.
7.3 Loans and Investments. The Guarantor shall not purchase or acquire, or
suffer or permit any Subsidiary to purchase or acquire, or make any commitment
therefor, any capital stock, equity interest, or any obligations or other
securities of, or any interest in, any Person, or make or commit to make any
Acquisitions, or make or commit to make any advance, loan, extension of credit
or capital contribution to or any other investment in, any Person including any
Affiliate of the Company, except for:
(a) investments in cash equivalents;
(b) investments by the Guarantor in compliance with all applicable
regulatory requirements;
(c) investments by the Company in the ordinary course of business
consistent with past practices; and
(d) Acquisitions, so long as (i) the acquired entity is in the
similar or related business as the Guarantor and its Subsidiaries and (ii) after
giving effect to the Acquisition, (A) no Default or Event of Default shall have
occurred and be continuing and (B) the Guarantor and the Company would be in
compliance with all financial covenants hereof, calculated on a pro forma basis
at the time of the Acquisition and as if the Acquisition had taken place at the
beginning of the four fiscal quarter period ending as of the last fiscal quarter
end, with the Guarantor providing a certificate with respect thereto.
7.4 Limitation on Indebtedness. The Company shall not, and shall not suffer
or permit any Subsidiary to, create, incur, assume, suffer to exist, or
otherwise become or remain directly or indirectly liable with respect to, any
Indebtedness, except:
(a) Indebtedness available pursuant to this Agreement;
(b) Indebtedness consisting of Contingent Obligations permitted
pursuant to Section 7.7;
(c) Indebtedness existing on the Closing Date and set forth in
Schedule 7.4;
(d) Indebtedness of the Company in connection with the Credit
Agreement dated as of August 14, 1997 among the Company, the Guarantor, various
financial institutions, BofA, as Syndication and Documentation Agent, and The
Bank of New York, as Administrative Agent; and
(e) other Indebtedness of the Company and its Subsidiaries in an
amount at any time outstanding not in excess of (i) $20,000,000 or (ii)
$30,000,000 when added to the Contingent Obligations permitted pursuant to
Section 7.7(c).
7.5 Transactions with Affiliates. The Guarantor shall not, and shall not
suffer or permit any Subsidiary to, enter into any transaction with any
Affiliate of the Guarantor, except upon fair and reasonable terms no less
favorable to the Guarantor or such Subsidiary than would obtain in a comparable
arm's-length transaction with a Person not an Affiliate of the Guarantor or such
Subsidiary.
7.6 Use of Proceeds. The Company shall not, and shall not suffer or permit
any Subsidiary to, use any portion of the Loan proceeds, directly or indirectly,
(i) to purchase or carry Margin Stock, (ii) to repay or otherwise refinance
indebtedness of the Company or others incurred to purchase or carry Margin
Stock, (iii) to extend credit for the purpose of purchasing or carrying any
Margin Stock, or (iv) to acquire any security in any transaction that is subject
to Section 13 or 14 of the Exchange Act.
7.7 Contingent Obligations. The Company shall not, and shall not suffer or
permit any Subsidiary to, create, incur, assume or suffer to exist any
Contingent Obligations except:
(a) endorsements for collection or deposit in the ordinary course
of business;
(b) Contingent Obligations of the Company and its Subsidiaries
existing as of the Closing Date and listed in Schedule 7.7;
(c) other Contingent Obligations in aggregate amounts not to exceed
(i) $15,000,000 or (ii) $30,000,000 when added to the Indebtedness permitted
pursuant to Section 7.4(e), at any time outstanding; and
(d) Guarantees of Indebtedness of Subsidiaries.
7.8 Joint Ventures. The Company shall not enter into or permit any
Subsidiary to enter into, any Joint Venture involving an investment by it in
excess of 10% of the Company's net worth (at the time of the proposed Joint
Venture) for all Joint Ventures after the date hereof except Joint Ventures with
its Affiliates.
7.9 Lease Obligations. The Guarantor shall not, and shall not suffer or
permit any Subsidiary to, create or suffer to exist any obligations for the
payment of rent for any property under lease or agreement to lease, except for:
(a) operating leases entered into by the Guarantor or any
Subsidiary in the ordinary course of business; and
(b) capital leases entered into by the Guarantor or any Subsidiary
to finance the acquisition of equipment;
7.10 Restricted Payments. The Guarantor shall not, and shall not suffer or
permit any Subsidiary to, declare or make any dividend payment or other
distribution of assets, properties, cash, rights, obligations or securities to
its policy holders or shareholders, except that:
(a) the Guarantor and its Insurance Subsidiaries may pay policy
holder dividends;
(b) the Company may make dividends and distributions, payable
solely in common stock;
(c) the Company may in any fiscal quarter pay cash dividends and
repurchase stock not in excess of its income in such fiscal quarter, so long as
after giving effect thereto, no Default or Event of Default shall have occurred
and be continuing; and
(d) Any Subsidiary of the Guarantor (other than the Company) may pay
in any fiscal quarter cash dividends, so long as after giving effect thereto, no
Default or Event of Default shall have occurred and be continuing.
7.11 ERISA. The Guarantor shall not, and shall not suffer or permit any of
its ERISA Affiliates to: (a) engage in a prohibited transaction or violation of
the fiduciary responsibility rules with respect to any Plan which has resulted
or could reasonably be expected to result in liability of the Company in an
aggregate amount in excess of $5,000,000 or (b) engage in a transaction that
could be subject to Section 4069 or 4212(c) of ERISA.
7.12 Change in Business. The Guarantor shall not, and shall not suffer or
permit any Subsidiary to, engage in any material line of business substantially
different from those lines of business carried on by the Guarantor and its
Subsidiaries on the date hereof.
7.13 Accounting Changes. The Guarantor shall not, and shall not suffer or
permit any Subsidiary to, make any significant change in accounting treatment or
reporting practices, except as required by GAAP or SAP, or change the fiscal
year of the Guarantor or of any Subsidiary.
7.14 Pari Passu. The Guarantor shall cause the Obligations to rank at least
pari passu with all other senior unsecured Indebtedness of the Guarantor. The
Company shall cause the Obligations to rank at least pari passu with all other
senior unsecured Indebtedness of the Company.
7.15 Phoenix. The Company shall retain the word "Phoenix" in its name.
7.16 Subordinated Debt and Preferred Stock. The Company shall not make any
payments, or set aside funds to make payments, on preferred stock or any
Subordinated Debt into which preferred stock is converted; except that the
Company may make regularly scheduled interest and dividend payments thereon so
long as after giving effect thereto, no Default or Event of Default shall have
occurred and be continuing.
7.17 Capital Expenditures. The Company and its Subsidiaries shall not make
any capital expenditures in excess of $15,000,000 in any fiscal year.
ARTICLE VIII
GUARANTOR'S FINANCIAL COVENANTS
So long as any Bank shall have any Commitments hereunder, or any Loan or
other Obligations shall remain unpaid or unsatisfied, unless the Majority Banks
waive compliance in writing:
8.1 Guarantor's Minimum Total SAP Adjusted Capital. The Guarantor shall
maintain a Total SAP Adjusted Capital of not less than $900,000,000 plus 50% of
net income (if greater than zero) for each fiscal quarter ending on or after
March 31, 1999.
8.2 Invested Assets. The Guarantor shall not permit Invested Assets of the
Guarantor and its Primary Insurance Subsidiaries consisting of notes, bonds and
other obligations classified as bonds which bear NAIC Ratings from three to six,
both inclusive, to exceed 7.0% of Net Invested Assets.
8.3 NAIC Ratings. The Guarantor shall not permit the portion of the
Invested Assets of the Guarantor and its Primary Insurance Subsidiaries
consisting of notes, bonds and other obligations classified as bonds which bear
NAIC Ratings from five to six to exceed 13% of Total SAP Adjusted Capital.
8.4 Real Estate. The Guarantor shall not permit the portion of the Invested
Assets of the Guarantor and its Primary Insurance Subsidiaries in real estate,
real estate acquired in satisfaction of indebtedness (exclusive of such
investments of either category occupied by the Guarantor or its Primary
Insurance Subsidiaries for use in their business) plus mortgage loans on real
estate to exceed 32% of Net Invested Assets.
8.5 Risk Based Capital. The Guarantor shall maintain a minimum Risk-Based
Capital Ratio of not less than 1.75 to 1.0.
8.6 Non-Performing Real Estate. The Guarantor shall not permit the book
value of the investment of the Guarantor and its Primary Insurance Subsidiaries
in non-performing real estate under SAP, prior to any reserves or write-offs
with respect thereto, to exceed 30% of Total SAP Adjusted Capital.
8.7 Indebtedness to Capital. The Guarantor shall not permit the
consolidated Indebtedness of the Guarantor and its Subsidiaries to exceed 75% of
Total SAP Adjusted Capital.
ARTICLE IX
COMPANY'S FINANCIAL COVENANTS
So long as any Bank shall have any Commitments hereunder, or any Loan or
other Obligation shall remain unpaid or unsatisfied, unless the Majority Banks
waive compliance in writing:
9.1 Shareholders' Equity. The Company shall maintain a minimum
Shareholders' Equity (excluding any preferred shares) of $185,000,000 plus 50%
of net income (if greater than zero) for each quarter ending on or after March
31, 1999.
9.2 EBITDA to Interest Ratio. The Company shall maintain a ratio of EBITDA
to Interest Expense as at the end of any fiscal quarter for the four fiscal
quarters then ending of not less than 4.0 to 1.0.
9.3 Total Debt to Capital Ratio. The Company shall maintain a Total Debt to
Capital Ratio of not in excess of the following percentages at any time during
the following periods:
Percentage Periods
60.0% Date hereof through March 31, 2000
57.5% April 1, 2000 through March 31, 2001
52.5% April 1, 2001 and thereafter
9.4 Senior Debt to EBITDA Ratio. The Company shall maintain a Senior Debt
to EBITDA Ratio of not in excess of the following amounts during the following
periods:
Amount Period
3.0 to 1 Date hereof through March 31, 2000
2.5 to 1 April 1, 2000 through March 31, 2001
2.0 to 1 April 1, 2001 and thereafter
ARTICLE X
GUARANTY
10.1 Guaranty. The Guarantor hereby unconditionally and irrevocably
guarantees the full and punctual payment (whether at stated maturity, upon
acceleration or otherwise) of the principal of and interest on each Note issued
by the Company pursuant to this Agreement, and the full and punctual payment of
all other Obligations of the Company under this Agreement. Upon failure by the
Company to pay punctually any such amount, the Guarantor shall forthwith on
demand pay the amount not so paid at the place and in the manner specified in
this Agreement.
10.2 Guaranty Unconditional. The obligations of the Guarantor under this
Article X shall be unconditional and absolute and, without limiting the
generality of the foregoing, shall not be released, discharged or otherwise
affected by:
(a) any extension, renewal, settlement, compromise, waiver or release
in respect of any obligation of the Company under this Agreement or any
Note, by operation of law or otherwise;
(b) any modification or amendment of or supplement to this
Agreement or any Note;
(c) any release, impairment, non-perfection or invalidity of any
direct or indirect security for any obligation of the Company under this
Agreement or any Note;
(d) any change in the corporate existence, structure or ownership of
the Company or any insolvency, bankruptcy, reorganization or other similar
proceeding affecting the Company or its assets or any resulting release or
discharge of any obligation of the Company contained in this Agreement or
any Note;
(e) the existence of any claim, set-off or other right which the
Guarantor may have at any time against the Company, the Administrative
Agent, any Bank or any other Person, whether in connection herewith or any
unrelated transaction, provided that nothing herein shall prevent the
assertion of any such claim by separate suit or compulsory counterclaim;
(f) any invalidity or unenforceability relating to or against the
Company for any reason of this Agreement or any Note, or any provision of
applicable law or regulation purporting to prohibit the payment by the
Company of the principal of or interest on any Note or any other amount
payable by the Company under this Agreement; or
(g) any other act or omission to act or delay of any kind by the
Company, the Administrative Agent, any Bank or any other Person or any
other circumstance whatsoever which might, but for the provisions of this
paragraph, constitute a legal or equitable discharge of the Company or the
Guarantor obligations as guarantor hereunder.
10.3 Discharge only upon Payment in Full; Reinstatement in Certain
Circumstances. The Guarantor's obligations as guarantor hereunder shall remain
in full force and effect until the Commitments shall have terminated and all
Obligations shall have been paid in full in money. If at any time any payment of
principal, interest or any other amount payable by the Company under this
Agreement or any Note is rescinded or must be otherwise restored or returned
upon the insolvency, bankruptcy or reorganization of the Company or otherwise,
the Guarantor's obligations hereunder with respect to such payment shall be
reinstated as though such payment had been due but not made at such time.
10.4 Waiver by the Guarantor. The Guarantor irrevocably waives acceptance
hereof, presentment, demand, protest and any notice not provided for herein, as
well as any requirement that at any time any action be taken by any Person
against the Company or any other Person.
10.5 Subrogation. Notwithstanding any payment made by or for the account of
the Guarantor pursuant to this Article X, the Guarantor shall not be subrogated
to any right of the Administrative Agent or any Bank until such time as the
Administrative Agent and the Banks shall have received final payment in cash of
the full amount of all Obligations.
10.6 Stay of Acceleration. If acceleration of the time for payment of any
amount payable by the Company under this Agreement or any Note is stayed upon
the insolvency, bankruptcy or reorganization of the Company, all such amounts
otherwise subject to acceleration under the terms of this Agreement shall
nonetheless be payable by the Guarantor hereunder forthwith on demand by the
Administrative Agent made at the request of the Majority Banks.
ARTICLE XI
EVENTS OF DEFAULT
11.1 Event of Default. Any of the following shall constitute an "Event of
Default":
(a) Non-Payment. The Company fails to pay, (i) when and as required
to be paid herein, any amount of principal of any Loan, or (ii) within five days
after the same becomes due, any interest, fee or any other amount payable
hereunder or under any other Loan Document; or
(b) Representation or Warranty. Any representation or warranty by the
Guarantor or any Subsidiary made or deemed made herein, in any other Loan
Document, or which is contained in any certificate, document or financial or
other statement by the Guarantor, any Subsidiary, or any Responsible Officer of
the Guarantor or any Subsidiary, furnished at any time under this Agreement, or
in or under any other Loan Document, is incorrect in any material respect on or
as of the date made or deemed made; or
(c) Specific Defaults. The Guarantor or the Company, as applicable,
fails to perform or observe any term, covenant or agreement contained in any of
Section 6.1, 6.2, 6.3 or 6.9 or in Article VII, VIII or IX hereof; or
(d) Other Defaults. The Guarantor or the Company fails to perform or
observe any other term or covenant contained in this Agreement or any other Loan
Document, and such default shall continue unremedied for a period of 20 days
after the date upon which written notice thereof is given to the Guarantor by
the Administrative Agent or any Bank; or
(e) Cross-Default. The Guarantor or any Subsidiary (i) fails to make
any payment in respect of any Indebtedness or Contingent Obligation having an
aggregate principal amount (including undrawn committed or available amounts and
including amounts owing to all creditors under any combined or syndicated credit
arrangement) of more than $10,000,000 with respect to the Guarantor, or
$5,000,000 with respect to the Company or any other Subsidiary of the Guarantor,
when due (whether by scheduled maturity, required prepayment, acceleration,
demand, or otherwise); or (ii) fails to perform or observe any other condition
or covenant, or any other event shall occur or condition exist, under any
agreement or instrument relating to any such Indebtedness or Contingent
Obligation, if the effect of such failure, event or condition is to cause, or to
permit the holder or holders of such Indebtedness or beneficiary or
beneficiaries of such Indebtedness (or a trustee or agent on behalf of such
holder or holders or beneficiary or beneficiaries) to cause such Indebtedness to
be declared to be due and payable prior to its stated maturity, or such
Contingent Obligation to become payable or cash collateral in respect thereof to
be demanded; or
(f) Insolvency; Voluntary Proceedings. The Guarantor or any
Subsidiary (i) ceases or fails to be solvent, or generally fails to pay, or
admits in writing its inability to pay, its debts as they become due, subject to
applicable grace periods, if any, whether at stated maturity or otherwise; (ii)
voluntarily ceases to conduct its business in the ordinary course; (iii)
commences any Insolvency Proceeding with respect to itself or its property; or
(iv) takes any action to effectuate or authorize any of the foregoing; or
(g) Involuntary Proceedings. (i) Any involuntary Insolvency
Proceeding is commenced or filed against the Guarantor or any Subsidiary or its
property, or any writ, judgment, warrant of attachment, execution or similar
process, is issued or levied against a substantial part of the Guarantor's or
any Subsidiary's properties, and any such proceeding or petition shall not be
dismissed, or such writ, judgment, warrant of attachment, execution or similar
process shall not be released, vacated or fully bonded within 60 days after
commencement, filing or levy; (ii) the Guarantor or any Subsidiary admits the
material allegations of a petition against it in any Insolvency Proceeding, or
an order for relief (or similar order under non-U.S. law) is ordered in any
Insolvency Proceeding; or (iii) the Guarantor or any Subsidiary acquiesces in
the appointment of a receiver, trustee, custodian, conservator, liquidator,
mortgagee in possession (or agent therefor), or other similar Person for itself
or a substantial portion of its property or business; or
(h) ERISA. (i) An ERISA Event shall occur with respect to a Pension
Plan or Multi employer Plan which has resulted or could reasonably be expected
to result in liability of the Guarantor under Title IV of ERISA to the Pension
Plan, Multi employer Plan or the PBGC; (ii) there exists an Unfunded Pension
Liability; or (iii) the Company or any ERISA Affiliate shall fail to pay when
due, after the expiration of any applicable grace period, any installment
payment with respect to its withdrawal liability under Section 4201 of ERISA
under a Multi employer Plan; or
(i) Monetary Judgments. One or more non-interlocutory judgments,
non-interlocutory orders, decrees or arbitration awards is entered against the
Guarantor or any Subsidiary involving in the aggregate a liability (to the
extent not covered by independent third-party insurance as to which the insurer
does not dispute coverage) as to any single or related series of transactions,
incidents or conditions, of $10,000,000 or more, and the same shall remain
unsatisfied, unvacated and unstayed pending appeal for a period of 10 days after
the entry thereof; or
(j) Non-Monetary Judgments. Any non-monetary judgment, order or
decree is entered against the Guarantor or any Subsidiary which does or would
reasonably be expected to have a Material Adverse Effect, and there shall be any
period of 10 consecutive days during which a stay of enforcement of such
judgment or order, by reason of a pending appeal or otherwise, shall not be in
effect; or
(k) Change of Control. There occurs any Change of Control; or
(l) Loss of Licenses. Any Governmental Authority revokes or fails to
renew any material license, permit or franchise of the Guarantor or any
Subsidiary, or the Guarantor or any Subsidiary for any reason loses any material
license, permit or franchise, or the Guarantor or any Subsidiary suffers the
imposition of any restraining order, escrow, suspension or impound of funds in
connection with any proceeding (judicial or administrative) with respect to any
material license, permit or franchise.
11.2 Remedies. If any Event of Default occurs, the Administrative Agent
shall, at the request of, or may, with the consent of, the Majority Banks,
(a) declare the commitment of each Bank to make Loans to be
terminated, whereupon such commitments shall be terminated;
(b) declare the unpaid principal amount of all outstanding Loans, all
interest accrued and unpaid thereon, and all other amounts owing or payable
hereunder or under any other Loan Document to be immediately due and payable,
without presentment, demand, protest or other notice of any kind, all of which
are hereby expressly waived by the Company; and
(c) exercise on behalf of itself and the Banks all rights and
remedies available to it and the Banks under the Loan Documents or applicable
law;
provided, however, that upon the occurrence of any event specified in subsection
(f) or (g) of Section 11.1 (in the case of clause (i) of subsection (g) upon the
expiration of the 60-day period mentioned therein), the obligation of each Bank
to make Loans shall automatically terminate and the unpaid principal amount of
all outstanding Loans and all interest and other amounts as aforesaid shall
automatically become due and payable without further act of the Administrative
Agent or any Bank.
11.3 Rights Not Exclusive. The rights provided for in this Agreement and
the other Loan Documents are cumulative and are not exclusive of any other
rights, powers, privileges or remedies provided by law or in equity, or under
any other instrument, document or agreement now existing or hereafter arising.
ARTICLE XII
THE ADMINISTRATIVE AGENT
12.1 Appointment. Each Bank hereby irrevocably designates and appoints BofA
as the Administrative Agent of such Bank under the Loan Documents and each Bank
hereby irrevocably authorizes the Administrative Agent to take such action on
its behalf under the provisions of the Loan Documents and to exercise such
powers and perform such duties as are expressly delegated to the Administrative
Agent by the terms of the Loan Documents, together with such powers as are
reasonably incidental thereto. The duties of the Administrative Agent shall be
mechanical and administrative in nature, and, notwithstanding any provision to
the contrary elsewhere in any Loan Document, the Administrative Agent shall not
have any duties or responsibilities other than those expressly set forth
therein, or any fiduciary relationship with, or fiduciary duty to, any Bank, and
no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into the Loan Documents or otherwise exist against the
Administrative Agent.
12.2 Delegation of Duties. The Administrative Agent may execute any of its
duties under the Loan Documents by or through agents or attorneys-in-fact and
shall be entitled to rely upon, and shall be fully protected in, and shall not
be under any liability for, relying upon, the advice of counsel concerning all
matters pertaining to such duties.
12.3 Exculpatory Provisions. Neither the Administrative Agent nor any of
its officers, directors, employees, agents, attorneys-in-fact or affiliates
shall be (i) liable for any action lawfully taken or omitted to be taken by it
or such Person under or in connection with the Loan Documents (except the
Administrative Agent for its own gross negligence or willful misconduct), or
(ii) responsible in any manner to any of the Banks for any recitals, statements,
representations or warranties made by the Company or the Guarantor or any
officer thereof contained in the Loan Documents or in any certificate, report,
statement or other document referred to or provided for in, or received by the
Administrative Agent under or in connection with, the Loan Documents or for the
value, validity, effectiveness, genuineness, perfection, enforceability or
sufficiency of any of the Loan Documents or for any failure of the Company or
the Guarantor or any other Person to perform its obligations thereunder. The
Administrative Agent shall not be under any obligation to any Bank to ascertain
or to inquire as to the observance or performance of any of the agreements
contained in, or conditions of, the Loan Documents, or to inspect the property,
books or records of the Company or the Guarantor. The Banks acknowledge that the
Administrative Agent shall not be under any duty to take any discretionary
action permitted under the Loan Documents unless the Administrative Agent shall
be instructed in writing to do so by the Majority Banks and such instructions
shall be binding on the Banks and all holders of the Notes; provided, however,
that the Administrative Agent shall not be required to take any action which
exposes the Administrative Agent to personal liability or its contrary to law or
any provision of the Loan Documents. The Administrative Agent shall not be under
any liability or responsibility whatsoever, as Administrative Agent, to the
Company or the Guarantor or any other Person as a consequence of any failure or
delay in performance, or any breach, by any Bank of any of its obligations under
any of the Loan Documents.
12.4 Reliance by Administrative Agent. The Administrative Agent shall be
entitled to rely, and shall be fully protected in relying, upon any writing,
resolution, notice, consent, certificate, affidavit, opinion, letter, cablegram,
telegram, telecopy, telex or teletype message, statement, order or other
document or conversation believed by it to be genuine and correct and to have
been signed, sent or made by a proper Person or Persons and upon advice and
statements of legal counsel (including, without limitation, counsel to the
Company or the Guarantor), independent accountants and other experts selected by
the Administrative Agent. The Administrative Agent may treat each Bank, or the
Person designated in the last notice filed with it under this Section, as the
holder of all of the interests of such Bank, in its Loans and Notes, until
written notice of transfer, signed by such Bank (or the Person designated in the
last notice filed with the Administrative Agent) and by the Person designated in
such written notice of transfer, in form and substance satisfactory to the
Administrative Agent, shall have been filed with the Administrative Agent. The
Administrative Agent shall not be under any duty to examine or pass upon the
validity, effectiveness, enforceability or genuineness of the Loan Documents or
any instrument, document or communication furnished pursuant thereto or in
connection therewith, and the Administrative Agent shall be entitled to assume
that the same are valid, effective and genuine, have been signed or sent by the
proper parties and are what they purport to be. The Administrative Agent shall
be fully justified in failing or refusing to take any action under the Loan
Documents unless it shall first receive such advice or concurrence of the
Majority Banks as it deems appropriate. The Administrative Agent shall in all
cases be fully protected in acting, or in refraining from acting, under the Loan
Documents in accordance with a request or direction of the Majority Banks, and
such request or direction and any action taken or failure to act pursuant
thereto shall be binding upon all the Banks and all future holders of the Notes.
12.5 Notice of Default. The Administrative Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default or Event of Default
unless the Administrative Agent has received written notice thereof from a Bank,
the Company or the Guarantor. In the event that the Administrative Agent
receives such a notice, the Administrative Agent shall promptly give notice
thereof to the Banks, the Company or the Guarantor. The Administrative Agent
shall take such action with respect to such Default or Event of Default as shall
be directed by the Majority Banks, provided, however, that unless and until the
Administrative Agent shall have received such directions, the Administrative
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it shall
deem to be in the best interests of the Banks.
12.6 Non-Reliance on Administrative Agent and Other Banks. Each Bank
expressly acknowledges that neither the Administrative Agent nor any of its
respective officers, directors, employees, agents, attorneys-in-fact or
affiliates has made any representations or warranties to it and that no act by
the Administrative Agent hereinafter, including any review of the affairs of the
Company or the Guarantor, shall be deemed to constitute any representation or
warranty by the Administrative Agent to any Bank. Each Bank represents to the
Administrative Agent that it has, independently and without reliance upon the
Administrative Agent or any Bank, and based on such documents and information as
it has deemed appropriate made its own evaluation of and investigation into the
business, operations, property, financial and other condition and
creditworthiness of the Company and the Guarantor and made its own decision to
enter into this Agreement. Each Bank also represents that it will, independently
and without reliance upon the Administrative Agent or any Bank, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, evaluations and decisions in taking or
not taking action under any Loan Document, and to make such investigation as it
deems necessary to inform itself as to the business, operations, property,
financial and other condition and creditworthiness of the Company or the
Guarantor. Except for notices, reports and other documents expressly required to
be furnished to the Banks by the Administrative Agent hereunder, the
Administrative Agent shall not have any duty or responsibility to provide the
Bank with any credit or other information concerning the business, operations,
property, financial and other condition or creditworthiness of the Company or
the Guarantor which at any time may come into the possession of the
Administrative Agent or any of its officers, directors, employees, agents,
attorneys-in-fact or affiliates.
12.7 Indemnification. Each Bank agrees to indemnify and hold harmless the
Administrative Agent in its capacity as such (to the extent not promptly
reimbursed by the Company or the Guarantor and without limiting the obligation
of the Company or the Guarantor to do so), pro rata according to the aggregate
of the outstanding principal balance of the Loans (or at any time when no Loans
are outstanding, according to its Pro Rata Share), from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind whatsoever including, without
limitation, any amounts paid to the Banks (through the Administrative Agent) by
the Company or the Guarantor pursuant to the terms of the Loan Documents, that
are subsequently rescinded or avoided, or must otherwise be restored or
returned) which may at any time (including, without limitation, at any time
following the payment of the Loans or the Notes) be imposed on, incurred by or
asserted against the Administrative Agent in any way relating to or arising out
of the Loan Documents or any other documents contemplated by or referred to
therein or the transactions contemplated thereby or any action taken or omitted
to be taken by the Administrative Agent under or in connection with any of the
foregoing; provided, however, that no Bank shall be liable for the payment of
any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements to the extent
resulting solely from the finally adjudicated gross negligence or willful
misconduct of the Administrative Agent. Without limitation of the foregoing,
each Bank agrees to reimburse the Administrative Agent promptly upon demand for
its pro rata share of any unpaid fees owing to the Administrative Agent, and any
costs and expenses (including, without limitation, reasonable fees and expenses
of counsel) payable by the Company or the Guarantor under Section 13.4, to the
extent that the Administrative Agent has not been paid such fees or has not been
reimbursed for such costs and expenses, by the Company or the Guarantor. The
failure of any Bank to reimburse the Administrative Agent promptly upon demand
for its pro rata share of any amount required to be paid by the Banks to the
Administrative Agent as provided in this Section shall not relieve any other
Bank of its obligation hereunder to reimburse the Administrative Agent for its
pro rata share of such amount, but no Bank shall be responsible for the failure
of any other Bank to reimburse the Administrative Agent for such other Bank's
pro rata share of such amount. If after having been indemnified or reimbursed by
the Banks as provided by this Section, the Administrative Agent shall have
received payment from the obligor in respect of the obligation or liability for
which it received such indemnification or reimbursement from the Banks, the
Administrative Agent shall disburse to the Banks an amount equal to the amount
of the payment so received on a pro rata basis. The agreements in this Section
shall survive the termination of the Commitments of all of the Banks, and the
payment of all amounts payable under the Loan Documents.
12.8 Administrative Agent in Its Individual Capacity. BofA and its
affiliates may make secured or unsecured loans to, accept deposits from, issue
letters of credit for the account of, act as trustee under indentures of, and
generally engage in any kind of business with, the Company or the Guarantor as
though BofA were not an Agent hereunder and NationsBanc Montgomery Securities
LLC did not arrange the transactions contemplated hereby. With respect to the
Commitment made or renewed by BofA and the Note issued to BofA, BofA shall have
the same rights and powers under the Loan Documents as any Bank and may exercise
the same as though it were not the Administrative Agent, and the terms "Bank"
and "Banks" shall in each case include BofA.
12.9 Successor Administrative Agent. If at any time the Administrative
Agent deems it advisable, in its sole discretion, it may submit to the Banks a
written notice of its resignation as Administrative Agent under the Loan
Documents, such resignation to be effective upon the earlier of (i) the written
acceptance of the duties of the Administrative Agent under the Loan Documents by
a successor Administrative Agent and (ii) on the 30th day after the date of such
notice. Upon any such resignation, the Majority Banks shall have the right to
appoint from among the Banks a successor Administrative Agent. If no successor
Administrative Agent shall have been so appointed by the Majority Banks and
accepted such appointment in writing within 30 days after the retiring
Administrative Agent's giving of notice of resignation, then the retiring
Administrative Agent may, on behalf of the Bank, appoint a successor
Administrative Agent, which successor Administrative Agent shall be a commercial
bank organized under the laws of the United States or any State thereof and
having a combined capital, surplus, and undivided profits of at least
$100,000,000. Upon the acceptance of any appointment as Administrative Agent
hereunder by a successor Administrative Agent, such successor Administrative
Agent shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Administrative Agent, and the retiring
Administrative Agent's rights, powers, privileges and duties as Administrative
Agent under the Loan Documents shall be terminated. The Company, the Guarantor
and the Banks shall execute such documents as shall be necessary to effect such
appointment. After any retiring Administrative Agent's resignation as
Administrative Agent, the provisions of the Loan Documents shall inure to its
benefit as to any actions taken or omitted to be taken by it, and any amounts
owing to it, while it was Administrative Agent under the Loan Documents. If at
any time there shall not be a duly appointed and acting Administrative Agent,
the Company and the Guarantor agree to make each payment due under the Loan
Documents directly to the Banks entitled thereto during such time.
12.10 Syndication Agent and Documentation Agent. None of the Banks
identified on the facing page or signature pages of this Agreement as a
"syndication agent" or "documentation agent" shall have any right, power,
obligation, liability, responsibility or duty under this Agreement other than
those applicable to all Banks as such. Without limiting the foregoing, none of
the Banks so identified as a "co-agent" or "lead manager" shall have or be
deemed to have any fiduciary relationship with any Bank. Each Bank acknowledges
that it has not relied, and will not rely, on any of the Banks so identified in
deciding to enter into this Agreement or in taking or not taking action
hereunder.
ARTICLE XIII
MISCELLANEOUS
13.1 Amendments and Waivers. No amendment or waiver of any provision of
this Agreement or any other Loan Document, and no consent with respect to any
departure by the Guarantor or any applicable Subsidiary therefrom, shall be
effective unless the same shall be in writing and signed by the Majority Banks
(or by the Administrative Agent at the written request of the Majority Banks)
and the Company and acknowledged by the Administrative Agent, and then any such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given; provided, however, that no such waiver,
amendment, or consent shall, unless in writing and signed by all the Banks, the
Company and the Guarantor and acknowledged by the Administrative Agent, do any
of the following:
(a) increase or extend the Commitment of any Bank (or reinstate any
Commitment terminated pursuant to Section 11.2);
(b) postpone or delay any date fixed by this Agreement or any other
Loan Document for any payment of principal, interest, fees or other amounts due
to the Banks (or any of them) hereunder or under any other Loan Document;
(c) reduce the principal of, or the rate of interest specified herein
on any Loan, or (subject to clause (ii) below) any fees or other amounts payable
hereunder or under any other Loan Document;
(d) change the percentage of the Commitments or of the aggregate
unpaid principal amount of the Loans which is required for the Banks or any of
them to take any action hereunder; or
(e) amend this Section, or Section 2.14, or any provision herein
providing for consent or other action by all Banks;
(f) amend or terminate any guaranty including the guaranty pursuant
to Article X;
and, provided further, that no amendment, waiver or consent shall, unless in
writing and signed by the Administrative Agent in addition to the Majority Banks
or all the Banks, as the case may be, affect the rights or duties of the
Administrative Agent under this Agreement or any other Loan Document.
13.2 Notices. (a) All notices, requests and other communications shall be
in writing (including, unless the context expressly otherwise provides, by
facsimile transmission, provided that any matter transmitted by the Company or
the Guarantor by facsimile (i) shall be immediately confirmed by a telephone
call to the recipient at the number specified on Schedule 13.2, and (ii) shall
be followed promptly by delivery of a hard copy original thereof) and mailed,
faxed or delivered, to the address or facsimile number specified for notices on
Schedule 13.2; or, as directed to the Guarantor, the Company or the
Administrative Agent, to such other address as shall be designated by such party
in a written notice to the other parties, and as directed to any other party, at
such other address as shall be designated by such party in a written notice to
the Guarantor, the Company and the Administrative Agent.
(b) All such notices, requests and communications shall, when
transmitted by overnight delivery, or faxed, be effective when delivered for
overnight (next-day) delivery, or transmitted in legible form by facsimile
machine, respectively, or if mailed, upon the third Business Day after the date
deposited into the U.S. mail, or if delivered, upon delivery; except that
notices pursuant to Article II or XII shall not be effective until actually
received by the Administrative Agent.
(c) Any agreement of the Administrative Agent and the Banks herein to
receive certain notices by telephone or facsimile is solely for the convenience
and at the request of the Company. The Administrative Agent and the Banks shall
be entitled to rely on the authority of any Person purporting to be a Person
authorized by the Company to give such notice and the Administrative Agent and
the Banks shall not have any liability to the Company or other Person on account
of any action taken or not taken by the Administrative Agent or the Banks in
reliance upon such telephonic or facsimile notice. The obligation of the Company
to repay the Loans shall not be affected in any way or to any extent by any
failure by the Administrative Agent and the Banks to receive written
confirmation of any telephonic or facsimile notice or the receipt by the
Administrative Agent and the Banks of a confirmation which is at variance with
the terms understood by the Administrative Agent and the Banks to be contained
in the telephonic or facsimile notice.
13.3 No Waiver; Cumulative Remedies. No failure to exercise and no delay in
exercising, on the part of the Administrative Agent or any Bank, any right,
remedy, power or privilege hereunder, shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, remedy, power or privilege
hereunder preclude any other or further exercise thereof or the exercise of any
other right, remedy, power or privilege.
13.4 Costs and Expenses. The Guarantor and the Company, jointly and
severally shall:
(a) whether or not the transactions contemplated hereby are
consummated, pay or reimburse BofA within five Business Days after demand
(subject to subsection 4.1(a)(v)) for all costs and expenses incurred by BofA in
connection with the development, preparation, delivery, administration and
execution of, and any amendment, supplement, waiver or modification to (in each
case, whether or not consummated), this Agreement, any Loan Document and any
other documents prepared in connection herewith or therewith, and the
consummation of the transactions contemplated hereby and thereby, including
reasonable Attorney Costs incurred by BofA with respect thereto; and
(b) pay or reimburse each Agent, the Arranger and each Bank within
five Business Days after demand (subject to subsection 4.1(a)(v)) for all costs
and expenses (including reasonable Attorney Costs) incurred by them in
connection with the enforcement, attempted enforcement, or preservation of any
rights or remedies under this Agreement or any other Loan Document during the
existence of an Event of Default or after acceleration of the Loans (including
in connection with any "workout" or restructuring regarding the Loans, and
including in any Insolvency Proceeding or appellate proceeding).
13.5 Indemnity. Whether or not the transactions contemplated hereby are
consummated, the Guarantor and the Company, jointly and severally, shall
indemnify and hold the Agent-Related Persons, and each Bank and each of its
respective officers, directors, employees, counsel, agents and attorneys-in-fact
(each, an "Indemnified Person") harmless from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, charges, expenses and disbursements (including Attorney Costs) of any
kind or nature whatsoever which may at any time (including at any time following
repayment of the Loans and the termination, resignation or replacement of the
Administrative Agent or replacement of any Bank) be imposed on, incurred by or
asserted against any such Person in any way relating to or arising out of this
Agreement or any document contemplated by or referred to herein, or the
transactions contemplated hereby, or any action taken or omitted by any such
Person under or in connection with any of the foregoing, including with respect
to any investigation, litigation or proceeding (including any Insolvency
Proceeding or appellate proceeding) related to or arising out of this Agreement
or the Loans or the use of the proceeds thereof, whether or not any Indemnified
Person is a party thereto (all the foregoing, collectively, the "Indemnified
Liabilities"); provided, that the Guarantor and the Company shall have no
obligation hereunder to any Indemnified Person with respect to Indemnified
Liabilities resulting solely from the gross negligence or willful misconduct of
such Indemnified Person; and provided, further, that the Indemnified Persons
shall, at the Company's request, only use one counsel among them unless any such
Indemnified Person determines in its sole discretion that its interests may
differ from any other Indemnified Person. The agreements in this Section shall
survive payment of all other Obligations.
13.6 Payments Set Aside. To the extent that the Company or the Guarantor
makes a payment to the Administrative Agent or the Banks, or the Administrative
Agent or the Banks exercise their right of set-off, and such payment or the
proceeds of such set-off or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside or required (including
pursuant to any settlement entered into by the Administrative Agent or such Bank
in its discretion) to be repaid to a trustee, receiver or any other party, in
connection with any Insolvency Proceeding or otherwise, then (a) to the extent
of such recovery the obligation or part thereof originally intended to be
satisfied shall be revived and continued in full force and effect as if such
payment had not been made or such set-off had not occurred, and (b) each Bank
severally agrees to pay to the Administrative Agent upon demand its pro rata
share of any amount so recovered from or repaid by the Administrative Agent.
13.7 Successors and Assigns. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns, except that the Guarantor and the Company may not assign
or transfer any of its rights or obligations under this Agreement without the
prior written consent of the Administrative Agent and each Bank.
13.8 Assignments, Participations, etc. (a) Any Bank may, with the written
consent of the Company at all times other than during the existence of an Event
of Default, and the Administrative Agent, which consents shall not be
unreasonably withheld, at any time assign and delegate to one or more Eligible
Assignees (provided that no written consent of the Company or the Administrative
Agent shall be required in connection with any assignment and delegation by a
Bank to an Eligible Assignee that is an Affiliate of such Bank) (each an
"Assignee") all, or any ratable part of all, of the Loans, the Commitments and
the other rights and obligations of such Bank hereunder, in a minimum amount
such that the Assignee after giving effect to such assignment shall hold at
least $10,000,000 of the Commitments (or if less the aggregate amount of the
Commitments of the Bank so assigning); provided, however, that the Company and
the Administrative Agent may continue to deal solely and directly with such Bank
in connection with the interest so assigned to an Assignee until (i) written
notice of such assignment, together with payment instructions, addresses and
related information with respect to the Assignee, shall have been given to the
Company and the Administrative Agent by such Bank and the Assignee; (ii) such
Bank and its Assignee shall have delivered to the Company and the Administrative
Agent an Assignment and Acceptance in the form of Exhibit E ("Assignment and
Acceptance") together with any Note or Notes subject to such assignment and
(iii) the assignor Bank or Assignee has paid to the Administrative Agent a
processing fee in the amount of $3,500 (such processing fee to be payable,
without limitation, in connection with assignments from a Bank to another Bank).
(b) From and after the date that the Administrative Agent notifies
the assignor Bank that it has received (and provided its consent with respect
to) an executed Assignment and Acceptance and payment of the above-referenced
processing fee, (i) the Assignee thereunder shall be a party hereto and, to the
extent that rights and obligations hereunder have been assigned to it pursuant
to such Assignment and Acceptance, shall have the rights and obligations of a
Bank under the Loan Documents, and (ii) the assignor Bank shall, to the extent
that rights and obligations hereunder and under the other Loan Documents have
been assigned by it pursuant to such Assignment and Acceptance, relinquish its
rights and be released from its obligations under the Loan Documents.
(c) Within five Business Days after its receipt of notice by the
Administrative Agent that it has received an executed Assignment and Acceptance
and payment of the processing fee, (and provided that it consents to such
assignment in accordance with subsection 13.8(a)), the Company shall execute and
deliver to the Administrative Agent, a new Note evidencing such Assignee's
assigned Loans and Commitment and, if the assignor Bank has retained a portion
of its Loans and its Commitment, a replacement Note in the principal amount of
the Loans retained by the assignor Bank (such Note to be in exchange for, but
not in payment of, the Note held by such Bank). Immediately upon each Assignee's
making its processing fee payment under the Assignment and Acceptance, this
Agreement shall be deemed to be amended to the extent, but only to the extent,
necessary to reflect the addition of the Assignee and the resulting adjustment
of the Commitments arising therefrom. The Commitment allocated to each Assignee
shall reduce such Commitment of the assigning Bank pro tanto.
(d) Any Bank may at any time sell to one or more commercial banks or
other Persons not Affiliates of the Company (a "Participant") participating
interests in any Loans, the Commitment of that Bank and the other interests of
that Bank (the "originating Bank") hereunder and under the other Loan Documents;
provided, however, that (i) the originating Bank's obligations under this
Agreement shall remain unchanged, (ii) the originating Bank shall remain solely
responsible for the performance of such obligations, (iii) the Company and the
Administrative Agent shall continue to deal solely and directly with the
originating Bank in connection with the originating Bank's rights and
obligations under this Agreement and the other Loan Documents, and (iv) no Bank
shall transfer or grant any participating interest under which the Participant
has rights to approve any amendment to, or any consent or waiver with respect
to, this Agreement or any other Loan Document, except to the extent such
amendment, consent or waiver would require unanimous consent of the Banks as
described in the first proviso to Section 13.1. In the case of any such
participation, the Participant shall be entitled to the benefit of Sections 3.1,
3.3 and 13.5 as though it were also a Bank hereunder, and not have any rights
under this Agreement, or any of the other Loan Documents, and all amounts
payable by the Company hereunder shall be determined as if such Bank had not
sold such participation; except that, if amounts outstanding under this
Agreement are due and unpaid, or shall have been declared or shall have become
due and payable upon the occurrence of an Event of Default, each Participant
shall be deemed to have the right of set-off in respect of its participating
interest in amounts owing under this Agreement to the same extent as if the
amount of its participating interest were owing directly to it as a Bank under
this Agreement.
(e) Notwithstanding any other provision in this Agreement, any Bank
may at any time create a security interest in, or pledge, all or any portion of
its rights under and interest in this Agreement and the Note held by it in favor
of any Federal Reserve Bank in accordance with Regulation A of the FRB or U.S.
Treasury Regulation 31 CFR ss.203.14, and such Federal Reserve Bank may enforce
such pledge or security interest in any manner permitted under applicable law.
13.9 Confidentiality. Each Bank agrees to take and to cause its Affiliates
to take normal and reasonable precautions and exercise due care to maintain the
confidentiality of all information identified as "confidential" or "secret" by
the Company and provided to it by the Guarantor or any Subsidiary, or by any
Agent or the Arranger on such Guarantor's or Subsidiary's behalf, under this
Agreement or any other Loan Document, and neither it nor any of its Affiliates
shall use any such information other than in connection with or in enforcement
of this Agreement and the other Loan Documents or in connection with other
business now or hereafter existing or contemplated with the Guarantor or any
Subsidiary; except to the extent such information (i) was or becomes generally
available to the public other than as a result of disclosure by the Bank, or
(ii) was or becomes available on a non-confidential basis from a source other
than the Guarantor or the Company, provided that such source is not bound by a
confidentiality agreement with the Guarantor or the Company known to the Bank;
provided, however, that any Bank may disclose such information (A) at the
request or pursuant to any requirement of any Governmental Authority to which
the Bank is subject or in connection with an examination of such Bank by any
such authority; (B) pursuant to subpoena or other court process; (C) when
required to do so in accordance with the provisions of any applicable
Requirement of Law; (D) to the extent reasonably required in connection with any
litigation or proceeding to which the Administrative Agent, any Bank or their
respective Affiliates may be party; (E) to the extent reasonably required in
connection with the exercise of any remedy hereunder or under any other Loan
Document; (F) to such Bank's independent auditors and other professional
advisors; (G) to any Participant or Assignee, actual or potential, provided that
such Person agrees in writing to keep such information confidential to the same
extent required of the Banks hereunder; (H) as to any Bank or its Affiliate, as
expressly permitted under the terms of any other document or agreement regarding
confidentiality to which the Guarantor or any Subsidiary is party or is deemed
party with such Bank or such Affiliate; and (I) to its Affiliates.
13.10 Set-off. In addition to any rights and remedies of the Banks provided
by law, if an Event of Default exists or the Loans have been accelerated, each
Bank is authorized at any time and from time to time, without prior notice to
the Company or the Guarantor, any such notice being waived by the Company and
the Guarantor to the fullest extent permitted by law, to set off and apply any
and all deposits (general or special, time or demand, provisional or final) at
any time held by, and other indebtedness at any time owing by, such Bank to or
for the credit or the account of the Company or the Guarantor against any and
all Obligations owing to such Bank by the Company or the Guarantor, as
applicable, now or hereafter existing, irrespective of whether or not the
Administrative Agent or such Bank shall have made demand under this Agreement or
any Loan Document and although such Obligations may be contingent or unmatured.
Each Bank agrees promptly to notify the Company and the Administrative Agent
after any such set-off and application made by such Bank; provided, however,
that the failure to give such notice shall not affect the validity of such
set-off and application.
13.11 Automatic Debits of Fees. With respect to any fee, or any other cost
or expense (including Attorney Costs) due and payable to the Agents, BofA, BNY
or Deutsche or the Arranger under the Loan Documents, the Company hereby
irrevocably authorizes BNY, Deutsche and BofA to debit any deposit account of
the Company with BNY, Deutsche or BofA in an amount such that the aggregate
amount debited from all such deposit accounts does not exceed such fee or other
cost or expense. If there are insufficient funds in such deposit accounts to
cover the amount of the fee or other cost or expense then due, such debits will
be reversed (in whole or in part, in BofA's, BNY's or Deutsche's sole
discretion) and such amount not debited shall be deemed to be unpaid. No such
debit under this Section shall be deemed a set-off.
13.12 Notification of Addresses, Lending Offices, Etc. Each Bank shall
notify the Administrative Agent in writing of any changes in the address to
which notices to the Bank should be directed, of addresses of any Lending
Office, of payment instructions in respect of all payments to be made to it
hereunder and of such other administrative information as the Administrative
Agent shall reasonably request.
13.13 Counterparts. This Agreement may be executed in any number of
separate counterparts, each of which, when so executed, shall be deemed an
original, and all of said counterparts taken together shall be deemed to
constitute but one and the same instrument.
13.14 Severability. The illegality or unenforceability of any provision of
this Agreement or any instrument or agreement required hereunder shall not in
any way affect or impair the legality or enforceability of the remaining
provisions of this Agreement or any instrument or agreement required hereunder.
13.15 No Third Parties Benefited. This Agreement is made and entered into
for the sole protection and legal benefit of the Guarantor, the Company, the
Banks, the Agents and the Agent-Related Persons, and their permitted successors
and assigns, and no other Person shall be a direct or indirect legal beneficiary
of, or have any direct or indirect cause of action or claim in connection with,
this Agreement or any of the other Loan Documents.
13.16 Governing Law and Jurisdiction. (a) This Agreement and the Notes
Shall be Governed By, and Construed in Accordance With, the Law of the State of
New York; Provided That the Agents and the Banks Shall Retain All Rights Arising
Under Federal Law.
(b) Any Legal Action or Proceeding With Respect to This Agreement or
Any Other Loan Document May be Brought in the Courts of the State of New York or
of the United States for the Southern District of New York, and by Execution and
Delivery of This Agreement, Each of the Guarantor, the Company, the Agents and
the Banks Consents, for Itself and in Respect of Its Property, to the
Non-exclusive Jurisdiction of Those Courts. Each of the Guarantor, the Company,
the Agents and the Banks Irrevocably Waives Any Objection, Including Any
Objection to the Laying of Venue or Based On the Grounds of Forum Non
Conveniens, Which It May Now or Hereafter Have to the Bringing of Any Action or
Proceeding in Such Jurisdiction in Respect of This Agreement or Any Document
Related Hereto. the Guarantor, the Company, the Agents and the Banks Each Waive
Personal Service of Any Summons, Complaint or Other Process, Which May be Made
by Any Other Means Permitted by New York Law.
13.17 Waiver of Jury Trial. the Guarantor, the Company, the Banks and the
Agents Each Waive Their Respective Rights to a Trial by Jury of Any Claim or
Cause of Action Based Upon or Arising Out of or Related to This Agreement, the
Other Loan Documents, or the Transactions Contemplated Hereby or Thereby, in Any
Action, Proceeding or Other Litigation of Any Type Brought by Any of the Parties
Against Any Other Party or Any Agent-related Person, Participant or Assignee,
Whether With Respect to Contract Claims, Tort Claims, or Otherwise. the
Guarantor, the Company, the Banks and the Agents Each Agree That Any Such Claim
or Cause of Action Shall be Tried by a Court Trial Without a Jury. Without
Limiting the Foregoing, the Parties Further Agree That Their Respective Right to
a Trial by Jury is Waived by Operation of This Section as to Any Action,
Counterclaim or Other Proceeding Which Seeks, in Whole or in Part, to Challenge
the Validity or Enforceability of This Agreement or the Other Loan Documents or
Any Provision Hereof or Thereof. This Waiver Shall Apply to Any Subsequent
Amendments, Renewals, Supplements or Modifications to This Agreement and the
Other Loan Documents.
13.8 Entire Agreement. This Agreement, together with the other Loan
Documents, embodies the entire agreement and understanding among the Guarantor,
the Company, the Banks and the Agents, and supersedes all prior or
contemporaneous agreements and understandings of such Persons, verbal or
written, relating to the subject matter hereof and thereof.
51135219 99512352
S-13
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
PHOENIX INVESTMENT PARTNERS, LTD
By: /s/ William R. Moyer
Title: Senior V.P. and CFO
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their proper and duly authorized officers as of the
day and year first above written.
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
By: /s/ Raymond E. Cummings
Title: Treasurer
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their proper and duly authorized officers as of the
day and year first above written.
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as
Administrative Agent
By: /s/ Elizabeth W.F. Bishop
Title: Vice President
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their proper and duly authorized officers as of the
day and year first above written.
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as a
Bank
By: /s/ Elizabeth W.F. Bishop
Title: Vice President
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their proper and duly authorized officers as of the
day and year first above written.
DEUTSCHE BANK AG, New York branch,
as Syndication Agent
By: /s/ George Kudnosky
Title: Vice President
By: /s/ Ruth Leung
Title: Director
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their proper and duly authorized officers as of the
day and year first above written.
DEUTSCHE BANK AG, New York branch
and/or Cayman Islands branch,
as a Bank
By: /s/ George Korchowsky
Title: Vice President
By: /s/ Ruth Leung
Title: Director
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their proper and duly authorized officers as of the
day and year first above written.
THE BANK OF NEW YORK,
as Documentation Agent
By: /s/ Scott H. Buitekant
Title: Vice President
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their proper and duly authorized officers as of the
day and year first above written.
THE BANK OF NEW YORK,
as a Bank
By: /s/ Scott H. Buitekant
Title: Vice President
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their proper and duly authorized officers as of the
day and year first above written.
FLEET NATIONAL BANK,
as a Bank
By: /s/ Elizabeth B. Shelley
Title: Vice President
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their proper and duly authorized officers as of the
day and year first above written.
BANK OF MONTREAL,
as a Bank
By: /s/ Bruce A. Pietka
Title: Vice President
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their proper and duly authorized officers as of the
day and year first above written.
SUNTRUST BANK, ATLANTA,
as a Bank
By: /s/ Jennifer Harrelson
Title: Vice President
By: /s/ John O. Fields, Jr.
Title: Vice President
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their proper and duly authorized officers as of the
day and year first above written.
STATE STREET BANK AND TRUST COMPANY,
as a Bank
By: /s/ Edward M. Anderson
Title: Vice President
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their proper and duly authorized officers as of the
day and year first above written.
BANKBOSTON, N.A.,
as a Bank
By: /s/ Charles A. Garrity
Title: Vice President
51135219 99512352
SCHEDULE 1.1
PRICING SCHEDULE
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Applicable
Margin for
S&P Rating/Moody's Rating of Eurodollar Rate
Guarantor Loans Applicable Fee Rate
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
AA/Aa2 0.22% 0.08%
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- -------------------------------------------------------------------------------
AA-/Aa3 0.26% 0.09%
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- -------------------------------------------------------------------------------
A+/A1 0.30% 0.10%
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- -------------------------------------------------------------------------------
A/A2 0.34% 0.11%
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
A-/A3 or lower 0.375% 0.125%
- -------------------------------------------------------------------------------
Initially, the Applicable Margin for Eurodollar Rate Loans and the
Applicable Fee Rate shall be 0.26% and 0.09%, respectively. The Applicable
Margin and the Applicable Fee Rate shall be adjusted concurrently with any
change in the Rating of the Guarantor. In the event of a split between the
Moody's Rating and the S&P Rating, the higher Applicable Margin and Applicable
Fee Rate shall be applicable.
SCHEDULE 2.1
COMMITMENTS
AND PRO RATA SHARES
- -------------------------------------------------------------------------------
Bank Commitments
Pro Rata Share
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Bank of America National Trust $30,000,000 17.14286%
and Savings Association
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Deutsche Bank Securities, Inc. $27,500,000 15.71429%
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
The Bank of New York $27,500,000 15.71429%
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Fleet National Bank $22,500,000 12.85714%
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Bank of Montreal $22,500,000 12.85714%
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Bank Boston, N.A. $15,000,000 8.57143%
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
State Street Bank and Trust $15,000,000 8.57143%
Company
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SunTrust Bank, Atlanta $15,000,000 8.57143%
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
TOTAL $175,000,000 100.0%
- -------------------------------------------------------------------------------