1
Exhibit 10.1
CREDIT AGREEMENT
DATED AS OF DECEMBER 10, 1999
AMONG
W.R. BERKLEY CORPORATION,
BANK OF AMERICA, NATIONAL ASSOCIATION,
AS ADMINISTRATIVE AGENT,
AND
THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO
ARRANGED BY
BANC OF AMERICA SECURITIES LLC,
AS SOLE BOOK MANAGER AND SOLE LEAD ARRANGER
2
TABLE OF CONTENTS
Section Page
ARTICLE I
DEFINITIONS 1
1.1 Certain Defined Terms 1
1.2 Other Interpretive Provisions 19
1.3 Accounting Principles 21
ARTICLE II
THE CREDITS 21
2.1 Amounts and Terms of Commitments 21
2.2 Loan Accounts 21
2.3 Procedure for Borrowing 22
2.4 Conversion and Continuation Elections 23
2.5 Voluntary Termination or Reduction of Commitments 25
2.6 Optional Prepayments 25
2.7 Repayment 25
2.8 Interest 25
2.9 Fees 26
(a) Arrangement, Agency Fees 26
(b) Facility Fees 27
(c) Utilization Fees 27
2.10 Computation of Fees and Interest 27
2.11 Payments by the Company 28
2.12 Payments by the Banks to the Agent 29
2.13 Sharing of Payments, Etc. 29
2.14 Termination Date 30
2.15 Increase of Commitments 31
ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY 31
3.1 Taxes 32
3.2 Illegality 33
3.3 Increased Costs and Reduction of Return 34
3.4 Funding Losses 34
3.5 Inability to Determine Rates 35
3.6 Certificates of Banks 36
3.7 Survival 36
ARTICLE IV
CONDITIONS PRECEDENT 36
4.1 Conditions of Initial Loans 36
3
(a) Credit Agreement and Notes 36
(b) Resolutions; Incumbency 36
(c) Organization Documents; Good Standing 37
(d) Legal Opinions 37
(e) Payment of Fees 37
(f) Certificate 37
(g) Other Documents 38
4.2 Conditions to All Borrowings 38
(a) Notice of Borrowing 38
(b) Continuation of Representations and Warranties 38
(c) No Existing Default 38
ARTICLE V
REPRESENTATIONS AND WARRANTIES 38
5.1 Corporate Existence and Power 38
5.2 Corporate Authorization; No Contravention 39
5.3 Governmental Authorization 39
5.4 Binding Effect 40
5.5 Litigation 40
5.6 No Default 40
5.7 ERISA Compliance 40
5.8 Use of Proceeds; Margin Regulations 41
5.9 Title to Properties 41
5.10 Taxes 42
5.11 Financial Condition 42
5.12 Environmental Matters 42
5.13 Regulated Entities 42
5.14 No Burdensome Restrictions 43
5.15 Copyrights, Patents, Trademarks and Licenses, etc. 43
5.16 Subsidiaries 43
5.17 Insurance 43
5.18 Full Disclosure 43
5.19 Solvency 44
5.20 Insurance Subsidiaries 44
5.21 Year 2000 44
ARTICLE VI
AFFIRMATIVE COVENANTS 44
6.1 Financial Statements 45
6.2 Certificates; Other Information 47
6.3 Notices 48
6.4 Preservation of Corporate Existence, Etc. 49
6.5 Maintenance of Property 50
6.6 Insurance 50
6.7 Payment of Obligations 50
6.8 Compliance with Laws 51
-iii-
4
6.9 Compliance with ERISA 51
6.10 Inspection of Property and Books and Records 51
6.11 Environmental Laws 52
6.12 Use of Proceeds 52
ARTICLE VII
NEGATIVE COVENANTS 52
7.1 Limitation on Liens 52
7.2 Disposition of Assets 54
7.3 Consolidations and Mergers 55
7.4 Transactions with Affiliates 55
7.5 Use of Proceeds 55
7.6 ERISA 56
7.7 Change in Business 56
7.8 Accounting Changes 56
7.9 Financial Covenants 56
7.10 Deferrable Interest Debentures 57
ARTICLE VIII
EVENTS OF DEFAULT 57
8.1 Event of Default 57
(a) Non-Payment 57
(b) Representation or Warranty 57
(c) Specific Defaults 57
(d) Other Defaults 57
(e) Cross-Default 57
(f) Insolvency; Voluntary Proceedings 58
(g) Involuntary Proceedings 58
(h) Employee Benefit Plans 59
(i) Monetary Judgments 59
(j) Non-Monetary Judgments 59
(k) Change of Control 59
(l) Loss of Licenses 59
(m) Adverse Change 60
(n) Change in Regulation 60
8.2 Remedies 60
8.3 Rights Not Exclusive 61
ARTICLE IX
THE AGENT 61
9.1 Appointment and Authorization 61
9.2 Delegation of Duties 61
9.3 Liability of Agent 61
9.4 Reliance by Agent 62
9.5 Notice of Default 63
-iv-
5
9.6 Credit Decision 63
9.7 Indemnification 64
9.8 Agent in Individual Capacity 64
9.9 Successor Agent 65
9.10 Withholding Tax 65
ARTICLE X
MISCELLANEOUS 67
10.1 Amendments and Waivers 67
10.2 Notices 68
10.3 No Waiver; Cumulative Remedies 69
10.4 Costs and Expenses 69
10.5 Indemnity 70
10.6 Payments Set Aside 71
10.7 Successors and Assigns 71
10.8 Assignments, Participations, etc. 71
10.9 Confidentiality 73
10.10 Set-off 74
10.11 Notification of Addresses, Lending Offices, Etc. 75
10.12 Counterparts 75
10.13 Severability 75
10.14 No Third Parties Benefited 75
10.15 Governing Law and Jurisdiction 75
10.16 Waiver of Jury Trial 76
10.17 Entire Agreement 76
SCHEDULES
Schedule 2.1 Commitments
Schedule 5.7 ERISA
Schedule 5.16 Subsidiaries and Minority Interests
Schedule 7.1 Permitted Liens
Schedule 7.1(k) Purchase Money Security Interests
Schedule 10.2 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 Form of Legal Opinion of Company's Counsel
Exhibit E Form of Assignment and Acceptance
Exhibit F Form of Promissory Note
-v-
6
CREDIT AGREEMENT
This CREDIT AGREEMENT is entered into as of December 10, 1999, among
W.R. Berkley Corporation, a Delaware corporation (the "Company"), the several
financial institutions from time to time party to this Agreement (collectively,
the "Banks"; individually, a "Bank"), and Bank of America, National Association,
as administrative agent for the Banks.
WHEREAS, the Banks have agreed to make available to the Company a
revolving credit facility 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 1
DEFINITIONS
1.1 Certain Defined Terms. 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.
"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" means BofA in its capacity as administrative agent for
the Banks hereunder, and any successor agent arising under Section 9.9.
7
"Agent-Related Persons" means BofA and any successor
administrative agent arising under Section 9.9, 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.
"Agent's Payment Office" means the address for payments set
forth on the signature page hereto in relation to the Agent, or such
other address as the Agent may from time to time specify.
"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.
"Applicable Facility Fee Rate", "Applicable Margin" and
"Applicable Utilization Fee Rate" means the following percentages
(expressed in basis points) from time to time based upon the then
applicable senior unsecured, unsupported debt rating of the Company
assigned by S&P and Moody's:
LEVEL I LEVEL II LEVEL III LEVEL IV
> or = > or = > or = < or =
SENIOR UNSECURED DEBT RATING A+/A1 OR A-/A3 BBB+/Baa1 BBB/Baa2
A/A2
Applicable Facility Fee Rate 7.50 bps 8.50 bps 10.00 bps 15.00 bps
Applicable Margin for Offshore Rate Loans 37.50 bps 46.50 bps 55.00 bps 70.00 bps
Application Margin for Base Rate Loans 0 bps 0 bps 0 bps 0 bps
Applicable Utilization Fee Rate 5.0 bps 5.0 bps 10.0 bps 10.0 bps
Notwithstanding the foregoing, the Applicable Margin during
the period from the date hereof to and including January 31, 2000 shall
be increased by 150 basis points with respect to all Loans made on the
date hereof in excess of $35,000,000 (or for an Interest Period of one
month) and all Loans made after the date hereof.
The Applicable Facility Fee Rate, Applicable Margin and
Applicable Utilization Fee Rate shall be determined based upon the
higher of the Company's senior debt rating from S&P or Moody's except
that if the Company's senior debt rating differs by more than one level
between such ratings from S&P and Moody's, the Applicable Facility Fee
Rate, Applicable
-2-
8
Margin and Applicable Utilization Fee Rate shall be one level higher
than the lower such rating. In the event the Company's senior debt is
unrated by both S&P and Moody's, the Applicable Facility Fee Rate, the
Applicable Margin and the Applicable Utilization Fee Rate shall be
determined as if Level IV were applicable until the senior debt shall
be rated.
"Arranger" means Banc of America Securities LLC, a Delaware
limited liability company, as sole lead arranger hereunder.
"Assignee" has the meaning specified in subsection 10.8(a).
"Attorney Costs" means and includes all fees and disbursements
of any law firm or other external counsel, the 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. Section 101, et seq.).
"Base Rate" means, for any day, the higher of: (a) 0.50% per
annum above the latest Federal Funds Rate; and (b) the rate of interest
in effect for such day as publicly announced from time to time by BofA
in Charlotte, North Carolina as its "prime rate" (the "prime rate"
being 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). Any change in
the prime rate announced by BofA shall take effect at the opening of
business on the day specified in the public announcement of such
change. Each interest rate based upon the Base Rate shall be adjusted
simultaneously with any change in the Base Rate.
"Base Rate Loan" means a Loan that bears interest based on the
Base Rate.
"BofA" means Bank of America, National Association, a national
banking association.
"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 having the same Interest Period.
-3-
9
"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 San Francisco, California are
authorized or required by law to close and, if the applicable Business
Day relates to any Offshore Rate Loan, means such a day on which
dealings are carried on in the applicable offshore 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) any sale, lease, exchange or
other transfer (in one transaction or a series of related transactions)
of all, or substantially all, of the assets of the Company; (b) any
"person" as such term is used in Sections 13(d) and 14(d) of the
Exchange Act is or becomes, directly or indirectly, the "beneficial
owner," as defined in Rule 13d-3 under the Exchange Act, of securities
of the Company that represent 51% or more of the combined voting power
of the Company's then outstanding securities (other than William R.
Berkley or any Affiliate of William R. Berkley); or (c) individuals who
are Continuing Directors shall cease for any reason to constitute at
least a majority of the Board of Directors of the Company.
"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(e), 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.
"Common Stockholder's Equity" means, as of a particular date,
the common stockholder's equity (including common stock, additional
paid-in capital and retained earnings after deducting treasury stock)
which would appear on a consolidated balance sheet of the Company and
its consolidated Subsidiaries prepared as of such date in accordance
with GAAP but without giving effect to Statement of Financial
Accounting Standards No. 115.
-4-
10
"Compliance Certificate" means a certificate substantially in
the form of Exhibit C.
"Contingent Obligation" means, as to any Person, without
duplication, 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; or (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;
provided, however, that Contingent Obligations shall not include
liabilities under policies or agreements of insurance or reinsurance
entered into by the Company or its Subsidiaries in the ordinary course
of business.
"Continuing Director" means (i) any Person who on the date of
this Agreement was a member of the Board of Directors of the Company,
while such Person is a member of the Board, or (ii) any Person who
subsequently becomes a member of the Board, while such Person is a
member of the Board, if such Person's nomination for election or
election to the Board is recommended or approved by a majority of the
Continuing Directors.
"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
-5-
11
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.
"Controlled Group" means the Company and any corporation,
trade or business that is, along with the Company, a member of a
controlled group of corporations or a controlled group of trades or
businesses as described in sections 414(b) and 414(c), respectively, of
the Code or in section 4001 of ERISA.
"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 Loans of the same Type, but with a new
Interest Period, Loans having Interest Periods expiring on such date.
"Debt Ratio" shall mean the ratio of (i) all Indebtedness of
the Company (other than obligations under Swap Contracts consisting
only of options with respect to equity investments held in a merger
arbitrage portfolio of the Company or any Subsidiary which obligations
were entered into for the purpose of hedging risk with respect to such
portfolio) to (ii) Total Capital of the Company.
"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.
"Deferrable Interest Debentures" means the 8.197% Junior
Subordinated Deferrable Interest Debentures due December 15, 2045
issued pursuant to an Indenture dated as of December 20, 1996, as
amended and supplemented from time to time, between the Company and The
Bank of New York.
"Department" means the applicable Governmental Authority of
the state of domicile of an insurance company responsible for the
regulation of said insurance company.
"Dollars", "dollars" and "$" each mean lawful money of the
United States.
"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; (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, provided that such bank
-6-
12
is acting through a branch or agency located in United States; (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) a Person to which the Company and the Agent shall
agree.
"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 and safety matters.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and any successor statute of similar import, together
with the regulations promulgated thereunder and under the Code, in each
case as in effect from time to time. References to sections of ERISA
also refer to successor sections.
"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).
"Eurodollar Reserve Percentage" has the meaning specified in
the definition of "Offshore Rate".
"Event of Default" means any of the events or circumstances
specified in Section 8.1.
"Exchange Act" means the Securities Exchange Act of 1934, and
regulations promulgated thereunder.
"Federal Funds Rate" means, for any day, the rate set forth in
the weekly statistical release designated as H.15(519), or any
successor publication, published by the Federal Reserve Bank of New
York (including any such successor, "H.15(519)") on the preceding
Business Day opposite the caption "Federal Funds (Effective)"; or, if
for any relevant day such rate is not so published on any such
preceding Business Day, the rate for such day will be the
-7-
13
arithmetic mean as determined by the Agent of the rates for the last
transaction in overnight Federal funds arranged prior to 9:00 a.m. (New
York City time) on that day by each of three leading brokers of Federal
funds transactions in New York City selected by the Agent.
"Fee Letter" has the meaning specified in subsection 2.9(a).
"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
of determination.
"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."
"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 (other than
obligations with respect to insurance products issued in the normal
course of business by Subsidiaries that are insurance companies); (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; (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
-8-
14
(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 the principal
portion of capital leases; (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. For all purposes of this
Agreement, the Indebtedness of any Person shall include all recourse
Indebtedness of any partnership or joint venture or limited liability
company in which such Person is a general partner or a joint venturer
or a member. For purposes of this definition, Indebtedness shall not
include the Deferrable Interest Debentures to the extent such
Deferrable Interest Debentures constitute less than 15% of Total
Capital. If the Deferrable Interest Debentures constitute more than 15%
of Total Capital, then the portion of the Deferrable Interest
Debentures exceeding 15% of Total Capital will be included in
Indebtedness. Notwithstanding the foregoing, the Deferrable Interest
Debentures shall constitute Indebtedness for the purpose of Section
8.1(e).
"Indemnified Liabilities" has the meaning specified in Section
10.5.
"Indemnified Person" has the meaning specified in Section
10.5.
"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 general
assignment for the benefit of creditors, composition, marshalling 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 of its state of domicile and any successor statute
of similar import, together with the
-9-
15
regulations thereunder, as amended or otherwise modified and in effect
from time to time. References to sections of the Insurance Code shall
be construed also to refer to successor sections.
"Insurance Subsidiary" means Berkley Regional Insurance
Company, Continental Western Insurance Company, Signet Star Reinsurance
Company, Midwest Employers Casualty Company, Admiral Insurance Company
and any other Subsidiary of the Company, including Subsidiaries of
Subsidiaries, which is engaged in the insurance business and which
shall have assets in excess of $250,000,000 on a SAP basis.
"Interest Payment Date" means, as to any Offshore 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,
provided, however, that if any Interest Period for an Offshore 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 Offshore 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 Offshore 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 for any Loan shall extend
beyond the Revolving Termination Date.
-10-
16
"IRS" means the Internal Revenue Service, and any Governmental
Authority succeeding to any of its principal functions under the Code.
"Lending Office" means, as to any Bank, the office or offices
of such Bank specified as its "Lending Office" or "Domestic Lending
Office" or "Offshore Lending Office", as the case may be, on Schedule
10.2, or such other office or offices as such Bank may from time to
time notify the Company and the 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 Offshore Rate Loan
(each, a "Type" of Loan).
"Loan Documents" means this Agreement, any Notes, the Fee
Letter and all other documents delivered to the Agent or any Bank in
connection herewith.
"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, business,
properties or condition (financial or otherwise) of the Company and its
Subsidiaries taken as a whole; (b) a material impairment of the ability
of the Company to perform under any Loan Document and to avoid any
Event of Default; or (c) a material adverse effect upon the legality,
validity, binding effect or enforceability against the Company of any
Loan Document.
"Moody's" means Moody's Investor Service, Inc.
"Multiemployer Plan" means a "multiemployer 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
-11-
17
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.
"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 to any Bank, the Agent, or any Indemnified Person,
whether direct or indirect (including those acquired by assignment),
absolute or contingent, due or to become due, now existing or hereafter
arising.
"Offshore Rate" means, for any Interest Period, with respect
to Offshore Rate Loans comprising part of the same Borrowing, the rate
of interest per annum (rounded upward to the next 1/100th of 1%)
determined by the Agent as follows:
Offshore Rate = LIBOR
------------------------------------
1.00 - Eurodollar Reserve Percentage
Where,
"Eurodollar Reserve Percentage" means for any day for
any Interest Period the maximum reserve percentage (expressed
as a decimal, rounded upward to the next 1/100th of 1%) in
effect on such day (whether or not applicable to any Bank)
under regulations issued from time to time by the FRB for
determining the maximum reserve requirement (including any
emergency, supplemental or other marginal reserve requirement)
with respect to Eurocurrency funding (currently referred to as
"Eurocurrency liabilities");
"LIBOR" means the rate per annum appearing on
Telerate Page 3750 (or any successor page) as the London
interbank offered rate for deposits in Dollars at
approximately 11:00 a.m. (London time) two Business Days prior
to the first day of such Interest Period for a term comparable
to such Interest Period. If for any reason such rate is not
available, LIBOR shall be, for
-12-
18
any Interest Period, the rate per annum appearing on Reuters
Screen LIBO Page as the London interbank offered rate for
deposits in Dollars at approximately 11:00 a.m. (London time)
two Business Days prior to the first day of such Interest
Period for a term comparable to such Interest Period;
provided, however, if more than one rate is specified on
Reuters Screen LIBO Page, the applicable rate shall be the
arithmetic mean of all such rates. If for any reason none of
the foregoing rates is available, LIBOR shall be, for any
Interest Period, the rate per annum determined by Agent as the
rate of interest at which dollar deposits in the approximate
amount of the Offshore Rate Loan comprising part of such
Borrowing would be offered by the BofA's London Branch to
major banks in the offshore dollar market at their request at
or about 11:00 a.m. (London time) two Business Days prior to
the first day of such Interest Period for a term comparable to
such Interest Period.
The Offshore Rate shall be adjusted automatically as to all
Offshore Rate Loans then outstanding as of the effective date
of any change in the Eurodollar Reserve Percentage.
"Offshore Rate Loan" means a Loan that bears interest based on
the Offshore Rate.
"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.
"Other Taxes" means any present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies
which arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this
Agreement or any other Loan Documents.
"Participant" has the meaning specified in subsection 10.8(d).
"PBGC" means the Pension Benefit Guaranty Corporation, or any
Governmental Authority succeeding to any of its principal functions
under ERISA.
"Permitted Liens" has the meaning specified in Section 7.1.
-13-
19
"Person" means an individual, partnership, corporation,
limited liability company, business trust, joint stock company, trust,
unincorporated association, joint venture or Governmental Authority.
"Plan" means any "employee pension benefit plan," as such term
is defined in ERISA, which is subject to Title IV of ERISA (other than
a "Multiemployer Plan"), and as to which any entity in the Controlled
Group has or may have any liability, including any liability by reason
of having been a substantial employer within the meaning of section
4063 of ERISA for any time within the preceding five years or by reason
of being deemed to be a contributing sponsor under section 4069 of
ERISA.
"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.
"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.
"Required Banks" means at any time Banks then holding at least
75% of the then aggregate unpaid principal amount of the Loans, or, if
no amounts are outstanding, Banks then having at least 75% of the
aggregate amount of the Commitments.
"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 the chief executive officer or the
president of the Company, 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
the Company, or any other officer having substantially the same
authority and responsibility.
"Revolving Termination Date" means the earlier to occur of:
(a) December 8, 2000 (the "Scheduled Termination
Date) as such date may be extended pursuant to Section 2.14;
and
-14-
20
(b) the date on which the Commitments terminate in
accordance with the provisions of this Agreement.
"S&P" means Standard & Poor's Ratings Group.
"SAP" shall mean, as to each Insurance Subsidiary, the
statutory accounting practices prescribed or permitted by the
Department for the preparation of annual financial statements and other
financial reports by insurance corporations, or in the event the
Department fails to prescribe or address such practices, the NAIC
guidelines.
"Scheduled Termination Date" has the meaning specified in the
definition of Revolving Termination Date.
"SEC" means the Securities and Exchange Commission, or any
Governmental Authority succeeding to any of its principal functions.
"Stockholder's Equity" means, as of a particular date, total
stockholder's equity (including capital stock, additional paid-in
capital and retained earnings after deducting treasury stock) which
would appear on a consolidated balance sheet of the Company and its
consolidated Subsidiaries prepared as of such date in accordance with
GAAP without giving effect to Statement of Financial Accounting
Standards No. 115.
"Subsidiary" of a Person means any corporation, association,
partnership, limited liability company, 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 Company.
"Surety Instruments" means all letters of credit (including
standby and commercial), banker's acceptances, bank guaranties,
shipside bonds, surety bonds and similar instruments.
"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).
-15-
21
"Taxes" means any and all present or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities with
respect thereto, excluding, in the case of each Bank and the Agent, such
taxes (including income taxes or franchise taxes) as are imposed on or
measured by each Bank's net income by the jurisdiction (or any political
subdivision thereof) under the laws of which such Bank or the Agent, as the
case may be, is organized or maintains a lending office.
"Total Capital" means Stockholder's Equity plus
Indebtedness plus the principal amount of Deferrable Interest Debentures.
"Type" has the meaning specified in the definition of
"Loan."
"United States" and "U.S." each means the United States
of America.
"Welfare Plan" means any "employee welfare benefit plan,"
as such term is defined in ERISA, as to which the Company has any liability.
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) 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
-16-
22
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.
(e) The captions and headings of this Agreement are
for convenience of reference only and shall not affect the
interpretation of this Agreement.
(f) This Agreement and the 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. Unless otherwise
expressly provided, any reference to any action of any Bank by way of consent,
approval or waiver shall be deemed modified by the phrase "in its sole
discretion."
(g) This Agreement and the other Loan Documents are
the result of negotiations among and have been reviewed by counsel to the Agent,
the Company and the other parties, and are the products of all parties.
Accordingly, they shall not be construed against the Banks or the Agent merely
because of the Agent's 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 (except for changes in which the
Independent Auditor concurs).
(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 from
time to time on any Business Day during the period from the Closing Date to the
Revolving Termination Date, in an aggregate amount not to exceed at any time
outstanding the amount set forth on Schedule 2.1 (such amount as the same may be
reduced under Section 2.5, reduced or increased as a result of one or more
assignments under Section 10.8 or increased under Section 2.15, 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
-17-
23
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 Agent and
each Bank 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
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)
and each Bank's record shall be conclusive absent manifest error; 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 Agent in the form of a
Notice of Borrowing (which notice must be received by the Agent prior to 9:00
a.m. (San Francisco time) (i) three Business Days prior to the requested
Borrowing Date, in the case of Offshore Rate Loans; and (ii) on 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) if applicable, 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
-18-
24
Borrowing comprised of Offshore Rate Loans, such Interest
Period shall be three months.
(b) The Agent will promptly notify each Bank of its
receipt of any Notice of Borrowing and of the amount of such Bank's Pro Rata
Share of that Borrowing.
(c) Each Bank will make the amount of its Pro Rata
Share of each Borrowing available to the Agent for the account of the Company at
the Agent's Payment Office by 11:00 a.m. (San Francisco time) on the Borrowing
Date requested by the Company in funds immediately available to the Agent. The
proceeds of all such Loans will then be made available to the Company by the
Agent at such office by crediting the account of the Company on the books of
BofA with the aggregate of the amounts made available to the Agent by the Banks
or by wire transfer in accordance with written instructions provided to the
Agent by the Company, of like funds as received by the Agent.
(d) After giving effect to any Borrowing, there may
not be more than five different Interest Periods in effect.
2.4 Conversion and Continuation Elections. (a) The Company
may, upon irrevocable written notice to the 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 Offshore 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
the 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 Offshore Rate Loans in
respect of any Borrowing is reduced, by payment, prepayment, or conversion of
part thereof to be less than $1,000,000, such Offshore Rate Loans shall
automatically convert into Base Rate Loans, and on and after such date the right
of the Company to continue such Loans as, and convert such Loans into, Offshore
Rate Loans shall terminate.
(b) The Company shall deliver a Notice of Conversion/
Continuation to be received by the Agent not later than 9:00 a.m. (San Francisco
time) at least (i) three Business Days in advance of the Conversion/Continuation
Date, if the Loans are to be converted
-19-
25
into or continued as Offshore Rate Loans; and (ii) on 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 renewed;
(C) the Type of Loans resulting from the
proposed conversion or continuation; and
(D) if applicable, the duration of the
requested Interest Period.
(c) If upon the expiration of any Interest Period
applicable to Offshore Rate Loans, the Company has failed to select timely a new
Interest Period to be applicable to such Offshore Rate Loans, or if any Default
or Event of Default then exists, the Company shall be deemed to have elected to
convert such Offshore Rate Loans into Base Rate Loans effective as of the
expiration date of such Interest Period.
(d) The 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 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 Required Banks otherwise agree, 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 Offshore Rate Loan.
(f) After giving effect to any conversion or
continuation of Loans, there may not be more than five different Interest
Periods in effect.
2.5 Voluntary Termination or Reduction of Commitments. The Company may,
upon not less than five Business Days' prior notice to the 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; unless,
after giving effect thereto and to any prepayments of Loans made on the
effective date thereof, the then-outstanding principal amount of the Loans would
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
-20-
26
shall be applied to each Bank according to its Pro Rata Share. All accrued
commitment 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 Agent, ratably prepay Loans in whole or in part, in
minimum aggregate 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 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 Repayment. The Company shall repay to the Banks on the Revolving
Termination Date the aggregate principal amount of Loans outstanding on such
date.
2.8 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 Offshore Rate plus the Applicable Margin or the Base Rate, plus the
Applicable Margin, as the case may be (and subject to the Company's right to
convert to other Types of Loans under Section 2.4).
(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 Offshore Rate Loans under Section 2.6 for the portion of the Loans
so prepaid and upon payment (including prepayment) in full thereof and, during
the existence of any Event of Default, interest shall be paid on demand of the
Agent at the request or with the consent of the Required Banks.
(c) Notwithstanding subsection (a) of this Section,
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 interest rate
calculated pursuant to subsection (a) above for such Loans; provided, however,
that, on and after the expiration of any Interest Period applicable to any
Offshore 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
-21-
27
after acceleration, bear interest at a rate per annum equal to the Base Rate
plus the Applicable Margin for Base Rate Loans plus 2%.
(d) Anything herein to the contrary notwithstanding,
the obligations of the Company to any Bank hereunder shall be subject to the
limitation that payments of interest shall not be required for any period for
which interest is computed hereunder, to the extent (but only to the extent)
that contracting for or receiving such payment by such Bank would be contrary to
the provisions of any law applicable to such Bank limiting the highest rate of
interest that may be lawfully contracted for, charged or received by such Bank,
and in such event the Company shall pay such Bank interest at the highest rate
permitted by applicable law.
2.9 Fees. (a) Arrangement, Agency Fees. The Company shall pay an
arrangement fee to the Arranger for the Arranger's own account, and shall pay an
agency fee to the Agent for the Agent's own account, as required by the letter
agreement ("Fee Letter") between the Company and the Arranger and Agent dated
May 26, 1999.
(b) Facility Fees. The Company shall pay to the Agent
for the account of each Bank a facility fee on the average daily amount of such
Bank's Commitment (whether or not used), computed on a quarterly basis in
arrears on the last Business Day of each calendar quarter based upon the daily
amount of the Commitments for that quarter as calculated by the Agent, equal to
the Applicable Facility Fee Rate per annum. Such facility fee shall accrue from
the date hereof to the Revolving Termination Date and shall be due and payable
quarterly in arrears on the last Business Day of each calendar quarter
commencing on the first such date after the date hereof through the Revolving
Termination Date, with the final payment to be made on the Revolving Termination
Date; provided that, in connection with any reduction or termination of
Commitments under Section 2.5, 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) Utilization Fees. The Company shall pay to the
Agent for the account of each Bank a utilization fee on the actual daily
outstanding principal amount of the Loans for any day on which the outstanding
principal amount of the Loans exceeds one-half (1/2) of the aggregate
Commitments computed on a quarterly basis in arrears on the last Business Day of
each calendar quarter based upon the daily amount of the Commitments and
outstanding Loans for that quarter as calculated by the Agent, equal to the
Applicable Utilization Fee Rate per annum. Such utilization fee
-22-
28
shall be due and payable quarterly in arrears on the last Business Day of each
calendar quarter in which such fee shall accrue commencing on the first such
date after the date hereof through the Revolving Termination Date, with the
final payment to be made on the Revolving Termination Date.
2.10 Computation of Fees and Interest. (a) All computations of interest
for Base Rate Loans when the Base Rate is determined by BofA's "prime rate"
shall be made on the basis of a year of 365 or 366 days, as the case may be, and
actual days elapsed. All other computations of fees and interest shall be made
on the basis of a 360-day year and actual days elapsed (which results in more
interest being paid than if computed on the basis of a 365-day year). Interest
and fees shall accrue during each period during which interest or such fees are
computed from the first day thereof to the last day thereof.
(b) Each determination of an interest rate by the
Agent shall be conclusive and binding on the Company and the Banks in the
absence of manifest error.
2.11 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 Agent for the account of the Banks at the Agent's Payment Office, and
shall be made in dollars and in immediately available funds, no later than 11:00
a.m. (San Francisco time) on the date specified herein. The 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 Agent later than 11:00 a.m. (San Francisco 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 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 Agent may assume that
the Company has made such payment in full to the Agent on such date in
immediately available funds and the 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 Agent, each Bank
-23-
29
shall repay to the 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.
2.12 Payments by the Banks to the Agent. (a) Unless the 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 Agent for the account of the Company the amount of that Bank's
Pro Rata Share of the Borrowing, the Agent may assume that each Bank has made
such amount available to the Agent in immediately available funds on the
Borrowing Date and the 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 Agent in immediately available funds and the 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
Agent, together with interest at the Federal Funds Rate for each day during such
period. A notice of the 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, the principal portion of such payment to the
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 Agent on
the Business Day following the Borrowing Date, the Agent will notify the Company
of such failure to fund and, upon demand by the Agent, the Company shall pay
such principal portion of such payment to the Agent for the 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.
2.13 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 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
-24-
30
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 10.10) 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 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.
2.14 Termination Date. The Company may request an extension of the
Scheduled Termination Date by submitting a request for an extension to the Agent
(an "Extension Request") no more than 60 days or less than 45 days prior to the
then effective Scheduled Termination Date. The Extension Request must specify
the new Scheduled Termination Date requested by the Company and the date (which
must be at least 30 days after the Extension Request is delivered to the Agent)
as of which the Banks must respond to the Extension Request (the "Response
Date"). The new Scheduled Termination Date shall be no more than 364 days after
the Scheduled Termination Date in effect at the time the Extension Request is
received, including the Scheduled Termination Date as one of the days in the
calculation of the days elapsed. Promptly upon receipt of an Extension Request,
the Agent shall notify each Bank of the contents thereof and shall request each
Bank to approve the Extension Request. Each Bank approving the Extension Request
shall deliver its written consent no later than the Response Date. If the
consent of each of the Banks is received by the Agent, the Scheduled Termination
Date specified in the Extension Request shall become effective on the existing
Scheduled Termination Date and the Agent shall promptly notify the Company and
each Bank of the new Scheduled Termination Date. If any Bank shall not so
consent, the Scheduled Termination Date shall not be extended.
2.15 Increase of Commitments. The Company may from time to time, by
notice to the Agent, request that the total aggregate Commitments (the "Total
Aggregate Commitment") be increased to an amount not exceeding $100,000,000.
Each such notice shall set forth the requested amount of the increase in the
Total Aggregate Commitment and the date on which such increase is to become
effective. The increase in the Total Aggregate Commitment may be assumed by any
Bank or any other financial institution agreed to by
-25-
31
the Company and the Agent (any such Bank or other financial institution being
called an "Augmenting Bank") and shall be effective upon the consent of the
Company and the Augmenting Bank.
Upon the effectiveness of any increase pursuant to this Section 2.15 of
the Total Aggregate Commitment and any resulting adjustment in the Pro Rata
Shares, the Banks and the Augmenting Banks will purchase from each other and
sell to each other outstanding Loans sufficient to cause the outstanding Loans
of each Bank and Augmenting Bank to equal its Pro Rata Share (as so adjusted) of
the aggregate principal amount of the Total Aggregate Commitment. Such purchase
and sale shall be made pursuant to Section 10.8 except that no minimum amount
shall be required, no processing fee shall be charged and, if any Bank shall
suffer a loss or incur an expense as a result of the effectiveness of such
purchase or sale the Company shall pay such Bank the amount of such loss or
expense. Each such Bank shall furnish the Company with a certificate setting
forth the basis for determining the amount to be paid to it hereunder.
ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY
3.1 Taxes. (a) Any and all payments by the Company to each Bank or the
Agent under this Agreement and any other Loan Document shall be made free and
clear of, and without deduction or withholding for any Taxes. In addition, the
Company shall pay all Other Taxes.
(b) The Company agrees to indemnify and hold harmless
each Bank and the Agent for the full amount of Taxes or Other Taxes (including
any Taxes or Other Taxes imposed by any jurisdiction on amounts payable under
this Section) paid by the Bank or the Agent and any liability (including
penalties, interest, additions to tax and expenses) arising therefrom or with
respect thereto, whether or not such Taxes or Other Taxes were correctly or
legally asserted. Payment under this indemnification shall be made within 30
days after the date the Bank or the Agent makes written demand therefor.
(c) If the Company shall be required by law to deduct
or withhold any Taxes or Other Taxes from or in respect of any sum payable
hereunder to any Bank or the Agent, then:
(i) the sum payable shall be increased as
necessary so that after making all required deductions and withholdings
(including deductions and withholdings applicable to additional sums
payable under this Section) such Bank or the Agent, as the case may be,
receives an amount equal to the
-26-
32
sum it would have received had no such deductions or withholdings been
made;
(ii) the Company shall make such deductions and
withholdings;
(iii) the Company shall pay the full amount
deducted or withheld to the relevant taxing authority or other
authority in accordance with applicable law; and
(iv) the Company shall also pay to each Bank or
the Agent for the account of such Bank, at the time interest is paid,
all additional amounts which the respective Bank specifies as necessary
to preserve the after-tax yield the Bank would have received if such
Taxes or Other Taxes had not been imposed.
(d) Within 30 days after the date of any payment by
the Company of Taxes or Other Taxes, the Company shall furnish the Agent the
original or a certified copy of a receipt evidencing payment thereof, or other
evidence of payment satisfactory to the Agent.
(e) If the Company is required to pay additional
amounts to any Bank or the Agent pursuant to subsection (c) of this Section,
then such Bank shall use reasonable efforts (consistent with legal and
regulatory restrictions) to change the jurisdiction of its Lending Office so as
to eliminate any such additional payment by the Company which may thereafter
accrue, if such change in the judgment of such Bank is not otherwise
disadvantageous to such Bank.
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
Offshore Rate Loans, then, on notice thereof by the Bank to the Company through
the Agent, any obligation of that Bank to make Offshore Rate Loans shall be
suspended until the Bank notifies the 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 Offshore Rate Loan, the Company shall, upon its receipt of notice
of such fact and demand from such Bank (with a copy to the Agent), prepay in
full such Offshore 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
-27-
33
maintain such Offshore Rate Loans to such day, or immediately, if the Bank may
not lawfully continue to maintain such Offshore Rate Loan. If the Company is
required to so prepay any Offshore 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 Offshore Rate) 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 Offshore 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 Agent), pay to the 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
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 Offshore 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
-28-
34
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 or other payment (including after
acceleration thereof) of an Offshore 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
Offshore 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 Offshore 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 Offshore 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 LIBOR used in determining the Offshore Rate
for such Offshore 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 Offshore Rate Loan is in fact so funded.
3.5 Inability to Determine Rates. If the Required Banks determine that
for any reason adequate and reasonable means do not exist for determining the
Offshore Rate for any requested Interest Period with respect to a proposed
Offshore Rate Loan, or that the Offshore Rate applicable pursuant to subsection
2.8(a) for any requested Interest Period with respect to a proposed Offshore
Rate Loan does not adequately and fairly reflect the cost to such Banks of
funding such Loan, the Agent will promptly so notify the Company and each Bank.
Thereafter, the obligation of the Banks to make or maintain Offshore Rate Loans
hereunder shall be suspended until the Agent upon the instruction of the
Required 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
Offshore Rate Loans.
3.6 Certificates of Banks. Any Bank claiming reimbursement or
compensation under this Article III shall deliver to the Company (with a copy to
the Agent) a certificate setting forth in reasonable detail the amount payable
to the Bank hereunder and such
-29-
35
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 condition that the Agent have
received on or before the Closing Date all of the following, in form and
substance satisfactory to the Agent and each Bank, and in sufficient copies for
each Bank:
(a) Credit Agreement and Notes. This Agreement and the Notes
executed by each party thereto;
(b) Resolutions; Incumbency.
(i) Copies of the resolutions of the board of
directors of the Company authorizing the transactions
contemplated hereby, certified as of the Closing Date by the
Secretary or an Assistant Secretary of the Company; and
(ii) A certificate of the Secretary or Assistant
Secretary of the Company certifying the names and true signatures of
the officers of the Company authorized to execute, deliver and perform,
as applicable, this Agreement, and all other Loan Documents to be
delivered by it hereunder;
(c) Organization Documents; Good Standing. Each of the following
documents:
(i) the articles or certificate of incorporation
and the bylaws of the Company as in effect on the Closing
Date, certified by the Secretary or Assistant Secretary of the
Company as of the Closing Date; and
(ii) a good standing certificate for the Company
from the Secretary of State (or similar, applicable
Governmental Authority) of its state of incorporation;
(d) Legal Opinion. Opinion of Willkie Farr & Gallagher, special
counsel to the Company and addressed to the Agent and the Banks, substantially
in the form of Exhibits D.
-30-
36
(e) 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 2.9 and 10.4;
(f) Certificate. A certificate signed by a Responsible Officer,
dated as of the Closing Date, stating that:
(i) 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; and
(ii) there has occurred since December 31, 1998, no event
or circumstance that has resulted or could reasonably be expected to
result in a Material Adverse Effect except for those, if any, as may be
set forth in reports filed by the Company with the SEC after December
31, 1998 and prior to the date of this Agreement; and
(g) Other Documents. Such other approvals, opinions, documents
or materials as the Agent or any Bank may request.
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 Agent shall have received (with 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 in all
material respects 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 in all material respects as of such earlier date); and
(c) No Existing Default. No Default or Event of 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,
-31-
37
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 Company represents and warrants to the Agent and each Bank that:
5.1 Corporate Existence and Power. The Company and each of its
Insurance Subsidiaries:
(a) is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation or
domicile;
(b) has the power and authority and all governmental licenses,
authorizations, consents, certificates of authority and approvals (i) to own its
assets and carry on its business, and (ii) in the case of the Company, to
execute, deliver, and perform its obligations under the Loan Documents;
(c) is duly qualified or, in the case of any Insurance
Subsidiary, licensed as a foreign corporation or as a foreign insurance
corporation, as the case may be, and is 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 (b) (i), 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 Company of this Agreement and each other Loan Document to
which the Company is party, have been duly authorized by all necessary corporate
action, and do not:
(a) contravene the terms of any of the Company'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 the Company is a party or any order, injunction,
writ or decree of any Governmental Authority to which the Company or its
property is subject; or
-32-
38
(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 Company of
this Agreement or any other Loan Document.
5.4 Binding Effect. This Agreement and each other Loan Document to
which the Company is a party constitute the legal, valid and binding obligations
of the Company, enforceable against the Company 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. There are no actions, suits, proceedings, claims or
disputes pending, or to the best knowledge of the Company, threatened or
contemplated, at law, in equity, in arbitration or before any Governmental
Authority, against 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; or
(b) 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.
5.6 No Default. No Default or Event of Default exists or would result
from the incurring of any Obligations by the Company. As of the Closing Date,
neither the Company 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, or that would, if such default had occurred after the Closing Date,
create an Event of Default under subsection 8.1(e).
5.7 ERISA Compliance. Set forth on Schedule 5.7 is a list of all
welfare plans and all pension plans, within the meaning of sections 3(1) and (2)
of ERISA, respectively, which, to the knowledge of the Company, are maintained
with respect to employees of the Company or its Subsidiaries. Also set forth in
Schedule 5.7 is a list of all Multiemployer Plans, all Welfare Plans and all
-33-
39
Plans which the Company has adopted or expects to adopt. All required
contributions to such Multiemployer Plans, Welfare Plans and Plans have been
made, and no event has occurred with respect to any of the foregoing that would
reasonably be expected to result in the incurrence by the Company or any of its
Subsidiaries of any material liability, fine or penalty. No entity in the
Controlled Group has initiated any steps to withdraw from any Plan, or terminate
any Plan under a distress termination.
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 7.5. Neither the Company 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 in any manner that would result
in a violation by the Company or any Subsidiary of Regulation T, U or X of the
FRB.
5.9 Title to Properties. The Company and each of the Insurance
Subsidiaries have good and marketable title to all material properties and
assets owned by them free and clear of all Liens except for such Liens that
could not, individually or in the aggregate, have a Material Adverse Effect. All
of the leases and subleases material to the business of the Company and the
Insurance Subsidiaries, under which either the Company or any of the Insurance
Subsidiaries holds properties, are in full force and effect, and neither the
Company nor any of the Insurance Subsidiaries is in default in respect of any of
the terms or provisions of any of such leases or subleases, the effect of which
would reasonably be expected to have a Material Adverse Effect. The Company has
no notice of any material claim of any kind which has been asserted by anyone
adverse either to the Company's or any of its Insurance Subsidiaries' rights as
lessee or sublessee under any of the leases or subleases mentioned above, or
affecting or questioning the Company's or any of its Insurance Subsidiaries'
rights to the continued possession of the leased or subleased premises under any
such lease or sublease, which if determined adversely, would reasonably be
expected to have a Material Adverse Effect.
5.10 Taxes. The Company 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 Company or
any Subsidiary that would, if made, have a Material Adverse Effect.
-34-
40
5.11 Financial Condition. The audited consolidated balance sheet of the
Company and its Subsidiaries dated December 31, 1998, and the unaudited
consolidated balance sheet of the Company and its Subsidiaries dated September
30, 1999, and the related consolidated statements of income or operations and
cash flows for the fiscal year and quarter, respectively, ended on such dates:
(i) were prepared in accordance with GAAP consistently applied throughout the
period covered thereby, except as otherwise expressly noted therein, subject to
ordinary, good faith year end audit adjustments; and (ii) fairly present the
consolidated financial condition of the Company and its Subsidiaries as of the
date thereof and results of operations for the period covered thereby. Since
December 31, 1998, there has been no Material Adverse Effect except as may be
set forth in reports filed by the Company with the SEC after December 31, 1998
and prior to the date of this Agreement.
5.12 Environmental Matters. The Company's and its Subsidiaries'
business, operations and properties are conducted and maintained in all material
respects in compliance with Environmental Laws.
5.13 Regulated Entities. None of the Company, any Person controlling
the Company, or any Subsidiary, is an "Investment Company" within the meaning of
the Investment Company Act of 1940. 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.
5.14 No Burdensome Restrictions. Neither the Company 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 Company and
the Insurance Subsidiaries own or possess, or can acquire on reasonable terms,
adequate trademarks, service marks and trade names necessary to conduct the
business now operated by them, and neither the Company nor any of the Insurance
Subsidiaries has received any notice of infringement of or conflict with
asserted rights of others with respect to any trademarks, service marks or trade
names which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would reasonably be expected to have a Material
Adverse Effect.
5.16 Subsidiaries. As of the Closing Date, the Company has no
Significant Subsidiaries, as defined in Rule 12b-2 under the Exchange Act, other
than as set forth in Exhibit 21 of the
-35-
41
Company's Annual Report on Form 10-K for its fiscal year ended December 31, 1998
and has no equity investments in any other corporation or entity other than
wholly owned Subsidiaries and other than those specifically disclosed in
Schedule 5.16.
5.17 Insurance. The properties of the Company and its Insurance
Subsidiaries are insured with financially sound and reputable insurance
companies not Affiliates of the Company, 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 Company
or such Insurance Subsidiary operates.
5.18 Full Disclosure. None of the representations or warranties made by
the Company 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
Company in connection with the Loan Documents, 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.
5.19 Solvency. After giving effect to the funding of the initial Loans,
the application of proceeds thereof as contemplated by this Agreement and the
payment of all estimated legal, accounting and other fees related hereto, the
Company will be solvent as of and on the Closing Date.
5.20 Insurance Subsidiaries. All of the Annual Statements or any other
financial or similar statement of the Insurance Subsidiaries provided to the
Agent, or which shall hereafter be provided to the Agent pursuant to the terms
of this Agreement and any other Loan Document, are, in all material respects,
true and complete statements of all of the assets and liabilities and of the
condition and affairs of the said insurer prepared in accordance with SAP.
5.21 Year 2000. The Company reasonably believes that (a) it and its
Subsidiaries are taking all necessary and appropriate steps to ascertain the
extent of, and to address appropriately, business and financial risks facing the
Company and its Subsidiaries as a result of what is commonly referred to as the
"Year 2000 problem" (i.e., the inability of certain computer applications to
recognize correctly and perform date-sensitive functions involving certain dates
prior to and after December 31, 1999), including risks resulting from the
failure of key vendors and customers of the Company and its Subsidiaries to
successfully address the Year 2000 problem, and (b) its and its Subsidiaries'
material computer
-36-
42
applications will, on a timely basis, adequately address the Year 2000 problem
in all material respects.
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 Required Banks
waive compliance in writing:
6.1 Financial Statements. The Company shall deliver to the Agent, in
form and detail satisfactory to the Agent and the Required Banks (it being
agreed that the delivery to the Agent of the Annual Report on Form 10-K and
Quarterly Reports on Form 10-Q for the Company shall satisfy the requirements
for the delivery of financial statements set forth in subparagraphs (a) and (b)
below), with sufficient copies for each Bank:
(a) as soon as available, but not later than 90 days after the
end of each fiscal year (commencing with the fiscal year ended December 31,
1999), 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, stockholders' 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 KPMG LLP or another
nationally-recognized independent public accounting firm ("Independent Auditor")
which report shall state that such consolidated financial statements present
fairly, in all material respects, the financial position for the periods
indicated in conformity with GAAP applied on a basis consistent with prior years
(except for changes in which the Independent Auditor concurs). 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 and shall be delivered to the Agent pursuant to a reliance
agreement between the Agent and Banks and such Independent Auditor in form and
substance satisfactory to the Agent;
(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 (commencing
with the fiscal quarter ended March 30, 2000), 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, stockholders'
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 as fairly
presenting, in accordance with GAAP (subject to ordinary, good faith year-end
audit adjustments), the financial
-37-
43
position and the results of operations of the Company and its Subsidiaries;
(c) as soon as available, but not later than 90 days after the
end of each fiscal year (commencing with the fiscal year ended December 31,
1999), a copy of an unaudited consolidating balance sheet of the Company and its
Subsidiaries as at the end of such year and the related consolidating statements
of income, stockholders' equity and cash flows for such year, certified by a
Responsible Officer as having been developed and used in connection with the
preparation of the financial statements referred to in subsection 6.1(a);
(d) 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 (commencing
with the fiscal quarter ended March 30, 2000), a copy of the unaudited
consolidating balance sheets of the Company and its Subsidiaries, and the
related consolidating statements of income, stockholders' equity and cash flows
for such quarter, all certified by a Responsible Officer as having been
developed and used in connection with the preparation of the financial
statements referred to in subsection 6.1(b).
(e) as soon as available, but not later than 90 days after the
end of each fiscal year, a copy of the Annual Statement of each Insurance
Subsidiary for such fiscal year prepared in accordance with SAP and accompanied
by the certification of the chief executive officer or the chief financial
officer of such Insurance Subsidiary that such Annual Statement is complete and
correct in all material respects and presents fairly in accordance with SAP the
financial position of such Insurance Subsidiary for the period then ended; and
(f) as soon as possible, 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 quarterly statement of each Insurance Subsidiary for each such fiscal
quarter, all prepared in accordance with SAP and accompanied by the
certification of the chief executive officer or the chief financial officer of
such Insurance Subsidiary that such quarterly statements are complete and
correct in all material respects and present fairly in accordance with SAP the
financial position of such Insurance Subsidiary for the period then ended.
6.2 Certificates; Other Information. The Company shall furnish to the
Agent, with sufficient copies for each Bank:
(a) concurrently with the delivery of the financial statements
referred to in subsection 6.1(a), a letter of the Independent Auditor stating
that in making the examination necessary therefor no knowledge was obtained by
such Independent
-38-
44
Auditor of any Default or Event of Default, except as specified in such letter;
(b) concurrently with the delivery of the financial statements
referred to in subsections 6.1(a), (b), (e) and (f), a Compliance Certificate
executed by a Responsible Officer;
(c) promptly, copies of all financial statements and regular,
periodic or special reports (including Form 10-K, 10-Q and 8-K) that the Company
makes to, or files with, the SEC and copies of any other communications made to
its stockholders that would be of material interest to the Banks;
(d) the following certificates and other information:
(i) upon request of the Agent, a copy of any
financial examination report or market conduct examination report by a
Governmental Authority with respect to any Insurance Subsidiary (or with respect
to the Company if it at any time becomes involved in the business of insurance),
relating to the insurance business of such Insurance Subsidiary or, if
applicable, the Company (when, and if, prepared); provided, that such Insurance
Subsidiary or, if applicable, the Company, shall not have to deliver any interim
report hereunder so long as, if requested by the Agent, a final report is issued
and delivered to the Agent within 60 days of such interim report;
(ii) within two Business Days of the receipt of
such notice, notice of the actual suspension, termination or revocation of any
material license of the Company or any Insurance Subsidiary by any Governmental
Authority, the loss of which is reasonably likely to have a Material Adverse
Effect, or notice from any Governmental Authority notifying the Company or any
Insurance Subsidiary of a hearing relating to such a suspension, termination or
revocation, including any request by a Governmental Authority which commits the
Company or any Insurance Subsidiary to take, or refrain from taking, any action
which is reasonably likely to have a Material Adverse Effect;
(iii) within two Business Days of the receipt by
the Company or an Insurance Subsidiary of such notice, notice of any material
pending or threatened investigation or regulatory proceeding (other than routine
periodic investigations or reviews) by any Governmental Authority concerning the
business, practices or operations of the Company or any Insurance Subsidiary,
including any agent or managing general agent thereof;
(iv) promptly upon the receipt by the Company or
any Insurance Subsidiary of such notice, notice of any actual material changes
in the Insurance Code governing the investment or dividend practices of
insurance companies domiciled in any of the
-39-
45
states in which any Insurance Subsidiary is domiciled, which could reasonably be
expected to have a Material Adverse Effect; and
(e) promptly, such additional information regarding the
business, financial or corporate affairs of the Company or any Subsidiary as the
Agent, at the request of any Bank, may from time to time request.
6.3 Notices. The Company shall promptly notify the Agent and each Bank:
(a) of the occurrence of any Default or Event of Default, and of
the occurrence or existence of any event or circumstance that would reasonably
be expected to become a Default or Event of Default;
(b) of any matter known to the Company that has resulted or
could reasonably be expected to result in a Material Adverse Effect, including
(i) breach or non-performance of, or any default under, a Contractual Obligation
of the Company or any Insurance Subsidiary; (ii) any dispute, litigation,
investigation, proceeding or suspension between the Company or any Insurance
Subsidiary and any Governmental Authority (including any Internal Revenue
Service or Department of Labor proceeding with respect to any Plan or Welfare
Plan); or (iii) the commencement of, or any material development in, any
litigation or proceeding affecting the Company or any Insurance Subsidiary;
including pursuant to any applicable Environmental Laws;
(c) of the failure of any Person in the Controlled Group to make
a required contribution to any Plan if such failure is sufficient to give rise
to a Lien under section 302(f)(1) of ERISA;
(d) of the institution of any steps by any entity in the
Controlled Group to withdraw from, or the institution of any steps by the
Company or any other Person to terminate under a distress termination, any Plan,
or the occurrence of any event with respect to any Plan, in each case, which
would reasonably be expected to result in the incurrence by the Company or any
of its Subsidiaries of any material liability (other than a liability for
contributions or premiums), fine or penalty; and
(e) of any material change in accounting policies or financial
reporting practices by the Company or any of the Insurance Subsidiaries.
Each notice under this Section shall be accompanied by a written
statement by a Responsible Officer setting forth in reasonable detail the
occurrence referred to therein, and stating
-40-
46
what action the Company or any affected Subsidiary proposes to take with respect
thereto and at what time.
6.4 Preservation of Corporate Existence, Etc. The Company shall, and
shall cause each Insurance Subsidiary to:
(a) except as otherwise may be permitted pursuant to Section 7.3
hereof, preserve and maintain in full force and effect its corporate existence
and good standing under the laws of its state or jurisdiction of incorporation
where the failure so to preserve and maintain its corporate existence and good
standing would reasonably be expected to have a Material Adverse Effect;
(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 except
in connection with transactions permitted by Section 7.3 and sales of assets
permitted by Section 7.2, the failure of which to preserve or maintain would
reasonably be expected to have a Material Adverse Effect;
(c) use reasonable efforts, in the ordinary course of business,
to preserve its business organization and goodwill, the failure of which to
preserve or maintain would reasonably be expected to have a Material Adverse
Effect; and
(d) preserve or renew all of its registered patents, trademarks,
trade names and service marks, the non-preservation of which would reasonably be
expected to have a Material Adverse Effect.
6.5 Maintenance of Property. The Company shall maintain, and shall
cause each Insurance Subsidiary 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, the failure of which to preserve or maintain would
reasonably be expected to have a Material Adverse Effect.
6.6 Insurance. The Company shall maintain, and shall cause each
Insurance Subsidiary to maintain, with financially sound and reputable 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 Company shall, and shall cause each
Insurance Subsidiary to, pay and discharge as the same shall become due and
payable, all their respective obligations and liabilities, including:
-41-
47
(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 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 Company shall comply, and shall cause
each Insurance Subsidiary 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, and
except where the failure so to comply would not be reasonably likely to have a
Material Adverse Effect.
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 Company shall
maintain and shall cause each consolidated Subsidiary 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 (except for changes in
which the Independent Auditor concurs) shall be made of all financial
transactions and matters involving the assets and business of the Company and
such consolidated Subsidiary. The Company shall permit, and shall cause each
Insurance Subsidiary to permit, representatives and independent contractors of
the 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 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 exists the Agent or any Bank may do any of the foregoing at the
expense of the Company at any time during normal business hours and without
advance notice.
-42-
48
6.11 Environmental Laws. The Company shall, and shall cause each
Insurance Subsidiary to, conduct its operations and keep and maintain its
property in compliance in all material respects with all Environmental Laws.
6.12 Use of Proceeds. The Company shall use the proceeds of the Loans
for working capital and other general corporate purposes, including the
refinancing of the Company's existing debt and acquisition of common stock of
the Company but not for purposes of undertaking an 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 Required Banks
waive compliance in writing:
7.1 Limitation on Liens. The Company shall not, and shall not suffer or
permit any Insurance 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 Company 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) 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 or which
are being contested in good faith and by appropriate proceedings, which
proceedings have the effect of preventing the forfeiture or sale of the property
subject thereto;
(e) 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;
-43-
49
(f) Liens on the property of the Company or any Subsidiary
securing (i) the non-delinquent performance of bids, trade contracts (other than
for borrowed money), leases or statutory obligations, (ii) contingent
obligations on surety and appeal bonds, and (iii) other non-delinquent
obligations of a like nature; in each case, incurred in the ordinary course of
business provided all such Liens in the aggregate would not (even if enforced)
cause a Material Adverse Effect;
(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 Company and the Insurance
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 Company and the Insurance
Subsidiaries;
(i) deposits made by an Insurance Subsidiary, or other statutory
Liens against the assets of any Insurance Subsidiary, in each case made or
incurred in favor of policyholders of such Insurance Subsidiary in the ordinary
course of business pursuant to insurance regulatory requirements;
(j) Liens on assets of corporations which become Insurance
Subsidiaries after the date of this Agreement, provided, however, that such
Liens existed at the time the respective corporations became Subsidiaries and
were not created in anticipation thereof;
(k) purchase money security interests on any property acquired
or held by the Company or its Insurance Subsidiaries in the ordinary course of
business, securing Indebtedness incurred or assumed for the purpose of financing
all or any part of the cost of acquiring such property (which property shall
include the property set forth on Schedule 7.1(k) hereto); provided that (i) any
such Lien attaches to such property concurrently with or within 20 days after
the acquisition thereof, (ii) such Lien attaches solely to the property so
acquired in such transaction and (iii) the principal amount of the debt secured
thereby does not exceed 100% of the cost of such property;
(l) Liens securing obligations in respect of capital leases on
assets subject to such leases, provided that such capital leases are otherwise
permitted hereunder;
-44-
50
(m) Liens in favor of securities brokers or other securities
intermediaries arising in the ordinary course of the merger arbitage investment
activities of the Company or any Insurance Subsidiary which activities do not
involve leverage in excess of 50%, and which activities are conducted in
accordance with applicable margin rules; and
(n) Liens arising solely by virtue of any statutory or common
law provision relating to banker's liens, rights of set-off or similar rights
and remedies as to deposit accounts or other funds maintained with a creditor
depository institution; provided that (i) such deposit account is not a
dedicated cash collateral account and is not subject to restrictions against
access by the Company in excess of those set forth by regulations promulgated by
the FRB, and (ii) such deposit account is not intended by the Company or any
Subsidiary to provide collateral to the depository institution.
7.2 Disposition of Assets. The Company: (i) shall not, and shall not
suffer or permit any Subsidiary to, directly or indirectly, sell, assign, lease,
convey, transfer or otherwise dispose of (whether in one transaction or in a
series of related transactions) any property (including accounts and notes
receivable, with or without recourse) or enter into any agreement to do any of
the foregoing, except in the ordinary course of business consistent with past
practices; and (ii) shall not, and shall not permit any Subsidiary to, directly
or indirectly, sell, assign, lease, convey, transfer or otherwise dispose of
(whether in one transaction or in a series of related transactions) shares of
stock held by it in any of the Subsidiaries, or enter into any agreement to do
any of the foregoing; provided, however, that notwithstanding the foregoing, the
Company and such Subsidiaries may engage in the transactions described in
subsections (i) and (ii) above, if the fair value of such transactions does not
exceed $50,000,000, and if fair value shall have been determined in good faith
by the Board of Directors of the Company, in the case of transactions in excess
of $10,000,000, or if such transaction is otherwise permitted by Section 7.3
and, provided, further that sales, assignments, leases, conveyances, transfers
or dispositions may be made to the Company or wholly owned Subsidiaries.
7.3 Consolidations and Mergers. The Company shall not, and shall not
suffer or permit any Insurance Subsidiary to, merge, consolidate with or into
any Person, except:
(a) any merger or consolidation in which the Company or an
Insurance Subsidiary is the continuing or surviving corporation; and
(b) any Insurance Subsidiary may merge with the Company,
provided that the Company shall be the continuing or
-45-
51
surviving corporation, or may merge with any one or more Insurance Subsidiaries.
7.4 Transactions with Affiliates. The Company shall not suffer or
permit any Subsidiary to, enter into any transaction with any Affiliate of the
Company (other than a wholly owned Subsidiary), except upon fair and reasonable
terms no less favorable to the Company or such Subsidiary than would obtain in a
comparable arm's-length transaction with a Person not an Affiliate of the
Company or such Subsidiary.
7.5 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; provided, however, that the
Company may purchase its own stock with the proceeds of the Loans.
7.6 ERISA. The Company 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 expected to result in liability of the Company in an
aggregate amount in excess of $10,000,000; or (b) engage in a transaction that
could be subject to Section 4069 or 4212(c) of ERISA.
7.7 Change in Business. The Company shall not, and shall not suffer or
permit any Subsidiary to, engage in any material line of business substantially
different from the types of lines of business carried on by the Company and its
Subsidiaries on the date hereof and that would result in the Company and its
Subsidiaries, taken as a whole, no longer remaining primarily engaged in the
property and casualty insurance and reinsurance business and businesses directly
related thereto.
7.8 Accounting Changes. The Company shall not, and shall not suffer or
permit any Insurance 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 Company or of any Insurance Subsidiary.
7.9 Financial Covenants.
(a) Minimum Common Stockholder's Equity. The Company shall not
at any time permit Common Stockholder's Equity to be less than $625,000,000 plus
25% of net income (if positive) determined on a cumulative basis for the period
commencing October 1, 1999.
-46-
52
(b) Debt Ratio. The Company shall not permit the Debt Ratio to
be greater than 0.40:1 at the end of any fiscal quarter.
7.10 Deferrable Interest Debentures. The Company shall not
permit any prepayment of the Deferrable Interest Debentures.
ARTICLE VIII
EVENTS OF DEFAULT
8.1 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
four 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 Company 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
Company or any Responsible Officer, 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 Company fails to perform or observe
any term, covenant or agreement contained in any of Sections 6.2(d)(ii)-(iv),
6.3 or 6.4 or in Article VII; or
(d) Other Defaults. 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 30 days after the
earlier of (i) the date upon which a Responsible Officer knew or reasonably
should have known of such failure or (ii) the date upon which written notice
thereof is given to the Company by the Agent or any Bank; or
(e) Cross-Default. The Company or any Subsidiary (i) fails to
make any payment in respect of any Indebtedness or Contingent Obligation in
excess of $10,000,000 when due (whether by scheduled maturity, required
prepayment, acceleration, demand, or otherwise) and such failure continues after
the applicable grace or notice period, if any, specified in the relevant
document on the date of such failure; 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, and such failure continues
-47-
53
after the applicable grace or notice period, if any, specified in the relevant
document on the date of such failure 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 Company or any
Insurance 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
(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 Company or any Insurance
Subsidiary, or any writ, judgment, warrant of attachment, execution or similar
process, is issued or levied against a substantial part of the Company's or any
Insurance 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 Company or any Insurance 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 Company or any Insurance
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) Employee Benefit Plans. A contribution failure occurs with
respect to any Plan sufficient to give rise to a Lien against the Company or any
of its Subsidiaries under section 302(f)(1) of ERISA (as in effect on the
Closing Date); or withdrawal by one or more companies in the Controlled Group
from one or more Multiemployer Plans to which it or they have an obligation to
contribute and the withdrawal liability (without unaccrued interest) to
Multiemployer Plans as a result of such withdrawal or withdrawals (including any
outstanding withdrawal liability that the Controlled Group has incurred on the
date of such liability) is $10,000,000 or more; or the occurrence of any other
event with respect to a Plan which would reasonably be expected to result in the
incurrence by the Company or any of its
-48-
54
Subsidiaries of a liability, fine or penalty of $10,000,000 or more; or
(i) Monetary Judgments. One or more non-interlocutory judgments,
non-interlocutory orders, decrees or arbitration awards is entered against the
Company or any Insurance 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
30 days after the entry thereof; or
(j) Non-Monetary Judgments. Any non-monetary judgment, order or
decree is entered against the Company or any Subsidiary which does or would
reasonably be expected to have a Material Adverse Effect, and there shall be any
period of 30 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. The insurance department of any state in
which any of the Insurance Subsidiaries is licensed or any other Governmental
Authority revokes or fails to renew any material license, permit or franchise of
the Company or any Insurance Subsidiary, or the Company or any Insurance
Subsidiary for any reason loses any material license, permit or franchise, or
the Company or any Insurance 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, and any of the foregoing results or is reasonably likely to
result in a Material Adverse Effect; or
(m) Adverse Change. There occurs a Material Adverse Effect; or
(n) Change in Regulation. Any change is made in the laws or
regulations of the states of organization or domicile of any Insurance
Subsidiary affecting the investment or dividend practices of any Insurance
Subsidiary and which would reasonably be expected to result in a Material
Adverse Effect.
8.2 Remedies. If any Event of Default occurs, the Agent shall, at the
request of, or may, with the consent of, the Required Banks,
-49-
55
(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 8.1 (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 Agent or any
Bank.
8.3 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 IX
THE AGENT
9.1 Appointment and Authorization. Each Bank hereby irrevocably
(subject to Section 9.9) appoints, designates and authorizes the Agent to take
such action on its behalf under the provisions of this Agreement and each other
Loan Document and to exercise such powers and perform such duties as are
expressly delegated to it by the terms of this Agreement or any other Loan
Document, together with such powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary contained elsewhere in this
Agreement or in any other Loan Document, the Agent shall not have any duties or
responsibilities, except those expressly set forth herein, nor shall the Agent
have or be deemed to have any fiduciary relationship with any Bank, and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against the Agent.
-50-
56
9.2 Delegation of Duties. The Agent may execute any of its duties under
this Agreement or any other Loan Document by or through agents, employees or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects with
reasonable care.
9.3 Liability of Agent. None of the Agent-Related Persons shall (i) be
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or (ii) be responsible in any manner to any of the Banks for any recital,
statement, representation or warranty made by the Company or any Subsidiary or
Affiliate of the Company, or any officer thereof, contained in this Agreement or
in any other Loan Document, or in any certificate, report, statement or other
document referred to or provided for in, or received by the Agent under or in
connection with, this Agreement or any other Loan Document, or the validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
any other Loan Document, or for any failure of the Company or any other party to
any Loan Document to perform its obligations hereunder or thereunder. No
Agent-Related Person shall be under any obligation to any Bank to ascertain or
to inquire as to the observance or performance of any of the agreements
contained in, or conditions of, this Agreement or any other Loan Document, or to
inspect the properties, books or records of the Company or any of the Company's
Subsidiaries or Affiliates.
9.4 Reliance by Agent. The Agent shall be entitled to rely, and shall
be fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone message,
statement or other document or conversation believed by it to be genuine and
correct and to have been signed, sent or made by the proper Person or Persons,
and upon advice and statements of legal counsel (including counsel to the
Company), independent accountants and other experts selected by the Agent. The
Agent shall be fully justified in failing or refusing to take any action under
this Agreement or any other Loan Document unless it shall first receive such
advice or concurrence of the Required Banks as it deems appropriate and, if it
so requests, it shall first be indemnified to its satisfaction by the Banks
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action. The Agent shall in all cases be
fully protected in acting, or in refraining from acting, under this Agreement or
any other Loan Document in accordance with a request or consent of the Required
Banks and such request and any action taken or failure to act pursuant thereto
shall be binding upon all of the Banks.
-51-
57
9.5 Notice of Default. The Agent shall not be deemed to have knowledge
or notice of the occurrence of any Default or Event of Default, except with
respect to defaults in the payment of principal, interest and fees required to
be paid to the Agent for the account of the Banks, unless the Agent shall have
received written notice from a Bank or the Company referring to this Agreement,
describing such Default or Event of Default and stating that such notice is a
"notice of default". The Agent will notify the Banks of its receipt of any such
notice. The Agent shall take such action with respect to such Default or Event
of Default as may be requested by the Required Banks in accordance with Article
VIII; provided, however, that unless and until the Agent has received any such
request, the Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable or in the best interest of the Banks.
9.6 Credit Decision. Each Bank acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that no
act by the Agent hereinafter taken, including any review of the affairs of the
Company and its Subsidiaries, shall be deemed to constitute any representation
or warranty by any Agent-Related Person to any Bank. Each Bank represents to the
Agent that it has, independently and without reliance upon any Agent-Related
Person and based on such documents and information as it has deemed appropriate,
made its own appraisal of and investigation into the business, prospects,
operations, property, financial and other condition and creditworthiness of the
Company and its Subsidiaries, and all applicable bank regulatory laws relating
to the transactions contemplated hereby, and made its own decision to enter into
this Agreement and to extend credit to the Company hereunder. Each Bank also
represents that it will, independently and without reliance upon any
Agent-Related Person and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement and
the other Loan Documents, and to make such investigations as it deems necessary
to inform itself as to the business, prospects, operations, property, financial
and other condition and creditworthiness of the Company. Except for notices,
reports and other documents expressly herein required to be furnished to the
Banks by the Agent, the Agent shall not have any duty or responsibility to
provide any Bank with any credit or other information concerning the business,
prospects, operations, property, financial and other condition or
creditworthiness of the Company which may come into the possession of any of the
Agent-Related Persons.
9.7 Indemnification. Whether or not the transactions contemplated
hereby are consummated, the Banks shall indemnify upon demand the Agent-Related
Persons (to the extent not reimbursed by
-52-
58
or on behalf of the Company and without limiting the obligation of the Company
to do so), pro rata, from and against any and all Indemnified Liabilities;
provided, however, that no Bank shall be liable for the payment to the
Agent-Related Persons of any portion of such Indemnified Liabilities resulting
solely from such Person's gross negligence or willful misconduct. Without
limitation of the foregoing, each Bank shall reimburse the Agent upon demand for
its ratable share of any costs or out-of-pocket expenses (including Attorney
Costs) incurred by the Agent in connection with the preparation, execution,
delivery, administration, modification, amendment or enforcement (whether
through negotiations, legal proceedings or otherwise) of, or legal advice in
respect of rights or responsibilities under, this Agreement, any other Loan
Document, or any document contemplated by or referred to herein, to the extent
that the Agent is not reimbursed for such expenses by or on behalf of the
Company. The undertaking in this Section shall survive the payment of all
Obligations hereunder and the resignation or replacement of the Agent.
9.8 Agent in Individual Capacity. BofA and its Affiliates may make
loans to, issue letters of credit for the account of, accept deposits from,
acquire equity interests in and generally engage in any kind of banking, trust,
financial advisory, underwriting or other business with the Company and its
Subsidiaries and Affiliates as though BofA were not the Agent hereunder and
without notice to or consent of the Banks. The Banks acknowledge that, pursuant
to such activities, BofA or its Affiliates may receive information regarding the
Company or its Affiliates (including information that may be subject to
confidentiality obligations in favor of the Company or such Subsidiary) and
acknowledge that the Agent shall be under no obligation to provide such
information to them. With respect to its Loans, BofA shall have the same rights
and powers under this Agreement as any other Bank and may exercise the same as
though it were not the Agent, and the terms "Bank" and "Banks" include BofA in
its individual capacity.
9.9 Successor Agent. The Agent may, and at the request of the Required
Banks shall, resign as Agent upon 30 days' notice to the Banks. If the Agent
resigns under this Agreement, the Required Banks shall appoint from among the
Banks a successor agent for the Banks which successor agent shall be approved by
the Company. If no successor agent is appointed prior to the effective date of
the resignation of the Agent, the Agent may appoint, after consulting with the
Banks and the Company, a successor agent from among the Banks. Upon the
acceptance of its appointment as successor agent hereunder, such successor agent
shall succeed to all the rights, powers and duties of the retiring Agent and the
term "Agent" shall mean such successor agent and the retiring Agent's
appointment, powers and duties as Agent shall be terminated. After any retiring
Agent's resignation hereunder as Agent, the provisions of this
-53-
59
Article IX and Sections 10.4 and 10.5 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under this
Agreement. If no successor agent has accepted appointment as Agent by the date
which is 30 days following a retiring Agent's notice of resignation, the
retiring Agent's resignation shall nevertheless thereupon become effective and
the Banks shall perform all of the duties of the Agent hereunder until such
time, if any, as the Required Banks appoint a successor agent as provided for
above.
9.10 Withholding Tax. (a) If any Bank is a "foreign corporation,
partnership or trust" within the meaning of the Code and such Bank claims
exemption from, or a reduction of, U.S. withholding tax under Sections 1441 or
1442 of the Code, such Bank agrees with and in favor of the Agent, to deliver to
the Agent:
(i) if such Bank claims an exemption from, or a
reduction of, withholding tax under a United States tax treaty,
properly completed IRS Forms 1001 and W-8 before the payment of any
interest in the first calendar year and before the payment of any
interest in each third succeeding calendar year during which interest
may be paid under this Agreement;
(ii) if such Bank claims that interest paid under
this Agreement is exempt from United States withholding tax because it
is effectively connected with a United States trade or business of such
Bank, two properly completed and executed copies of IRS Form 4224
before the payment of any interest is due in the first taxable year of
such Bank and in each succeeding taxable year of such Bank during which
interest may be paid under this Agreement, and IRS Form W-9; and
(iii) such other form or forms as may be required
under the Code or other laws of the United States as a condition to
exemption from, or reduction of, United States withholding tax.
Such Bank agrees to promptly notify the Agent of any change in circumstances
which would modify or render invalid any claimed exemption or reduction.
(b) If any Bank claims exemption from, or reduction of,
withholding tax under a United States tax treaty by providing IRS Form 1001 and
such Bank sells, assigns, grants a participation in, or otherwise transfers all
or part of the Obligations of the Company to such Bank, such Bank agrees to
notify the Agent of the percentage amount in which it is no longer the
beneficial owner of Obligations of the Company to such Bank. To the extent of
such percentage amount, the Agent will treat such Bank's IRS Form 1001 as no
longer valid.
-54-
60
(c) If any Bank claiming exemption from United States
withholding tax by filing IRS Form 4224 with the Agent sells, assigns, grants a
participation in, or otherwise transfers all or part of the Obligations of the
Company to such Bank, such Bank agrees to undertake sole responsibility for
complying with the withholding tax requirements imposed by Sections 1441 and
1442 of the Code.
(d) If any Bank is entitled to a reduction in the applicable
withholding tax, the Agent may withhold from any interest payment to such Bank
an amount equivalent to the applicable withholding tax after taking into account
such reduction. If the forms or other documentation required by subsection (a)
of this Section are not delivered to the Agent, then the Agent may withhold from
any interest payment to such Bank not providing such forms or other
documentation an amount equivalent to the applicable withholding tax.
(e) If the IRS or any other Governmental Authority of the United
States or other jurisdiction asserts a claim that the Agent did not properly
withhold tax from amounts paid to or for the account of any Bank (because the
appropriate form was not delivered, was not properly executed, or because such
Bank failed to notify the Agent of a change in circumstances which rendered the
exemption from, or reduction of, withholding tax ineffective, or for any other
reason) such Bank shall indemnify the Agent fully for all amounts paid, directly
or indirectly, by the Agent as tax or otherwise, including penalties and
interest, and including any taxes imposed by any jurisdiction on the amounts
payable to the Agent under this Section, together with all costs and expenses
(including Attorney Costs). The obligation of the Banks under this subsection
shall survive the payment of all Obligations and the resignation or replacement
of the Agent.
ARTICLE X
MISCELLANEOUS
10.1 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 Company therefrom, shall be effective unless the same shall be
in writing and signed by the Required Banks (or by the Agent at the written
request of the Required Banks) and the Company and acknowledged by the 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 and the Company and acknowledged by the Agent, do any of the
following:
-55-
61
(a) increase or extend the Commitment of any Bank (or reinstate
any Commitment terminated pursuant to Section 8.2);
(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;
and, provided further, that (i) no amendment, waiver or consent shall, unless in
writing and signed by the Agent in addition to the Required Banks or all the
Banks, as the case may be, affect the rights or duties of the Agent under this
Agreement or any other Loan Document, and (ii) the Fee Letter may be amended, or
rights or privileges thereunder waived, in a writing executed by the parties
thereto.
10.2 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 by
facsimile (i) shall be immediately confirmed by a telephone call to the
recipient at the number specified on Schedule 10.2, 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
10.2; or, as directed to the Company or the 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 Company and the 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 IX shall not be effective until actually
received by the Agent.
-56-
62
(c) Any agreement of the 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 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 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 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 Agent and the Banks to receive written
confirmation of any telephonic or facsimile notice or the receipt by the Agent
and the Banks of a confirmation which is at variance with the terms understood
by the Agent and the Banks to be contained in the telephonic or facsimile
notice.
10.3 No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of the 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.
10.4 Costs and Expenses. The Company shall:
(a) whether or not the transactions contemplated hereby are
consummated, pay or reimburse BofA (including in its capacity as Agent) within
five Business Days after demand (subject to subsection 4.1(e)) for all costs and
expenses incurred by BofA (including in its capacity as Agent) 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 (including in its capacity as Agent) with respect
thereto; and
(b) pay or reimburse the Agent, the Arranger and each Bank
within five Business Days after demand (subject to subsection 4.1(e)) for all
costs and expenses (including 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).
-57-
63
10.5 Indemnity. Whether or not the transactions contemplated hereby are
consummated, the Company 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 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 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 or to any Bank on account of interest required to be paid by
such Bank to the Agent pursuant to Section 2.12. The agreements in this Section
shall survive payment of all other Obligations.
10.6 Payments Set Aside. To the extent that the Company makes a payment
to the Agent or the Banks, or the 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
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 Agent upon demand its pro rata share of
any amount so recovered from or repaid by the Agent.
10.7 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 Company may not assign or transfer any
of its rights or obligations under this Agreement without the prior written
consent of the Agent and each Bank.
-58-
64
10.8 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 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 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 of $10,000,000;
provided, however, that the Company and the 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 Agent by such Bank and the
Assignee; (ii) such Bank and its Assignee shall have delivered to the Company
and the 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 has paid to the Agent a processing fee in the amount of
$3,500.
(b) From and after the date that the 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,
and provided that the consent of the Company, if required pursuant to subsection
10.8(a), shall have been obtained, (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
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 10.8(a), the Company shall execute and deliver to the
Agent, new Notes evidencing such Assignee's assigned Loans and Commitment and,
if the assignor Bank has retained a portion of its Loans and its Commitment,
replacement Notes in the principal amount of the Loans retained by the assignor
Bank (such Notes to be in exchange for, but not in payment of, the Notes 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
-59-
65
the addition of the Assignee and the resulting adjustment of the Commitments
arising therefrom. The Commitment allocated to each Assignee shall reduce such
Commitments 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 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 10.1. In the case of any such
participation, the Participant shall be entitled to the benefit of Sections 3.1,
3.3 and 10.5 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 CAR Section203.14, and such Federal Reserve
Bank may enforce such pledge or security interest in any manner permitted under
applicable law.
10.9 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 Company or any Subsidiary, or
by the Agent on such Company's or Subsidiary's behalf, under this
-60-
66
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 Company 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 Company, provided that such source is not bound by a confidentiality
agreement with 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 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 Company or any
Subsidiary is party or is deemed party with such Bank or such Affiliate; and (I)
to its Affiliates.
10.10 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, any such notice being waived by the Company 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 against any and all Obligations owing to such Bank,
now or hereafter existing, irrespective of whether or not the 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 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.
10.11 Notification of Addresses, Lending Offices, Etc. Each Bank
shall notify the Agent in writing of any changes in the address to which notices
to the Bank should be directed, of
-61-
67
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 Agent shall reasonably request.
10.12 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.
10.13 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.
10.14 No Third Parties Benefited. This Agreement is made and entered
into for the sole protection and legal benefit of the Company, the Banks, the
Agent 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.
10.15 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
ILLINOIS; PROVIDED THAT THE AGENT 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 ILLINOIS OR OF THE UNITED STATES FOR THE NORTHERN DISTRICT OF ILLINOIS, AND
BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE COMPANY, THE AGENT AND
THE BANKS CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE
NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE COMPANY, THE AGENT 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
COMPANY, THE AGENT AND THE BANKS EACH WAIVE PERSONAL SERVICE OF ANY SUMMONS,
COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY
ILLINOIS LAW.
10.16 Waiver of Jury Trial. THE COMPANY, THE BANKS AND THE AGENT 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
-62-
68
OTHER PARTY OR ANY AGENT-RELATED PERSON, PARTICIPANT OR ASSIGNEE, WHETHER WITH
RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE COMPANY, THE BANKS
AND THE AGENT 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.
10.17 Entire Agreement. This Agreement, together with the other Loan
Documents, embodies the entire agreement and understanding among the Company,
the Banks and the Agent, and supersedes all prior or contemporaneous agreements
and understandings of such Persons, verbal or written, relating to the subject
matter hereof and thereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered in by their proper and duly authorized officers as
of the day and year first above written.
W.R. BERKLEY CORPORATION
By:
-----------------------------------
Title:
--------------------------------
BANK OF AMERICA, NATIONAL ASSOCIATION,
as Administrative Agent
By:
-----------------------------------
Title:
--------------------------------
BANK OF AMERICA, NATIONAL ASSOCIATION,
as a Bank
By:
-----------------------------------
Title:
--------------------------------
WELLS FARGO BANK, N. A.
By:
-----------------------------------
Title:
--------------------------------
-63-
69
SCHEDULE 2.1
COMMITMENTS
AND PRO RATA SHARES
Pro Rata
Bank Commitment Share
---- ---------- -----
Bank of America,
National Association $50,000,000 66 2/3%
Wells Fargo Bank, N.A. $25,000,000 33 1/3%
TOTAL $75,000,000 100%
-64-
70
SCHEDULE 10.2
OFFSHORE AND DOMESTIC LENDING OFFICES,
ADDRESSES FOR NOTICES
BANK OF AMERICA, NATIONAL ASSOCIATION,
as Agent
Bank of America, National Association
1850 Gateway Boulevard,
Fifth Floor
Concord, California 94521
Attention: Clayton Choo/Corwin Lewis
Telephone: 925-675-8368/925-675-8357
Facsimile: 925-969-2804
BANK OF AMERICA, NATIONAL ASSOCIATION,
as a Bank
Domestic and Offshore Lending Office:
1850 Gateway Boulevard, Fourth Floor
Concord, California 94520
Notices (other than Notices of Borrowing and Notices of
Conversion/Continuation):
Bank of America, National Association
231 South LaSalle Street
10th Floor
Chicago, Illinois 60697
Attention: Elizabeth Bishop
Telephone: 312-828-6550
Facsimile: 312-987-0889
WELLS FARGO BANK, N.A.
Domestic and Offshore Lending Office:
201 Third Street, MAC 0187-081
San Francisco, California 94103
-65-
71
Notices (other than Notices of Borrowing and Notices of
Conversion/Continuation):
Wells Fargo Bank, N.A.
230 West Monroe Street
Suite 2900
Chicago, Illinois 60606
Attention: Robert Meyer
Telephone: 312-345-8623
Facsimile: 312-553-4783
-66-
72
EXHIBIT A
NOTICE OF BORROWING
Date: _________________________
To: Bank of America, National Association as Administrative Agent for
the Banks parties to the Credit Agreement dated as of December 10,
1999 (as extended, renewed, amended or restated from time to time,
the "Credit Agreement") among W.R. Berkley Corporation, certain
Banks which are signatories thereto and Bank of America, National
Association, as administrative agent
Ladies and Gentlemen:
The undersigned, W.R. Berkley Corporation (the "Company"), refers
to the Credit Agreement, the terms defined therein being used herein as therein
defined, and hereby gives you notice irrevocably, pursuant to Section 2.3 of the
Credit Agreement, of the Borrowing specified below:
1. The Business Day of the proposed Borrowing is __________.
2. The aggregate amount of the proposed Borrowing is $_____.
3. The Borrowing is to be comprised of $__________ of [Base
Rate] [Offshore Rate] Loans.
4. [The duration of the Interest Period for the Offshore
Rate Loans included in the Borrowing shall be _____ months.]
The undersigned hereby certifies that the following statements are
true on the date hereof, and will be true on the date of the proposed Borrowing,
before and after giving effect thereto and to the application of the proceeds
therefrom:
(a) the representations and warranties of the Company
contained in Article V of the Credit Agreement are true and correct
in all material respects as though made on and as of such date
(except to the extent such representations and warranties relate to
an earlier date, in which case they are true and correct in all
material respects as of such date);
-67-
73
(b) no Default or Event of Default has occurred and is
continuing, or would result from such proposed Borrowing; and
(c) The proposed Borrowing will not cause the aggregate
principal amount of all outstanding Loans to exceed the combined
Commitments of the Banks.
W.R. BERKLEY CORPORATION
By:______________________________________
Title:___________________________________
-68-
74
EXHIBIT B
NOTICE OF CONVERSION/CONTINUATION
Date:____________________
To: Bank of America ,National Association, as Administrative Agent for the
Banks parties to the Credit Agreement dated as of December 10, 1999 (as
extended, renewed, amended or restated from time to time, the "Credit
Agreement") among W.R. Berkley Corporation, certain Banks which are
signatories thereto and Bank of America, National Association, as
administrative agent
Ladies and Gentlemen:
The undersigned, W.R. Berkley Corporation (the "Company"), refers to
the Credit Agreement, the terms defined therein being used herein as therein
defined, and hereby gives you notice irrevocably, pursuant to Section 2.4 of the
Credit Agreement, of the [conversion] [continuation] of the Loans specified
herein, that:
1. The Conversion/Continuation Date is ___________________,
__________________.
2. The aggregate amount of the Loans to be [converted]
[continued] is $_______________.
3. The Loans are to be [converted into] [continued as]
[Offshore Rate] [Base Rate] Loans.
4. [If applicable:] The duration of the Interest Period for
the Offshore Rate Loans included in the [conversion] [continuation]
shall be _____ months.
W.R. BERKLEY CORPORATION
By:______________________________________
Title:___________________________________
-69-
75
EXHIBIT C
W.R. BERKLEY CORPORATION
COMPLIANCE CERTIFICATE
Financial
Statement Date:____________________________,
Reference is made to that certain Credit Agreement dated as of December
10, 1999 (as extended, renewed, amended or restated from time to time, the
"Credit Agreement") among W.R. Berkley (the "Company"), the several financial
institutions from time to time parties thereto (the "Banks") and Bank of
America, National Association, as administrative agent for the Banks (in such
capacity, the "Agent"). Unless otherwise defined herein, capitalized terms used
herein have the respective meanings assigned to them in the Credit Agreement.
The undersigned Responsible Officer of the Company, hereby
certifies as of the date hereof that he/she is the _____________________________
of the Company, and that, as such, he/she is authorized to execute and deliver
this Certificate to the Banks and the Agent on the behalf of the Company and its
consolidated Subsidiaries, and that:
1. Enclosed herewith is a copy of the [annual audit/quarterly] report
of the Company as at consolidated (the "Computation Date") which report fairly
presents the financial condition and results of operation of the Company and its
Subsidiaries, as of the Computation Date.
2. The undersigned has reviewed and is familiar with the terms of the
Credit Agreement and has made, or has caused to be made under his/her
supervision, a detailed review of the transactions and conditions (financial or
otherwise) of the Company during the accounting period covered by the attached
financial statements.
3. To the best of the undersigned's knowledge, the Company, during such
period, has observed, performed or satisfied all of its covenants and other
agreements, and satisfied every condition in the Credit Agreement to be
observed, performed or satisfied by the Company, and the undersigned has no
knowledge of any Default or Event of Default.
4. The following financial covenant analyses and information set forth
on Schedule 2 attached hereto are true and accurate on and as of the date of
this Certificate.
-70-
76
IN WITNESS WHEREOF, the undersigned has executed this
Certificate as of __________________________, ____________.
W.R. BERKLEY CORPORATION
By:______________________________________
Title:___________________________________
-71-
77
Date: ______________, ____
For the fiscal quarter/year
ended ______________, ____
SCHEDULE 2
to the Compliance Certificate
Actual Required/Permitted
------ ------------------
1. Section 7.9(a)
a. Common Stockholders' a. $625,000,000 $______
Equity
b. 25% of net income $______
(if positive) for
period since
October 1, 1999
c. Required (a) plus $______
(b)
Actual $______
-72-
78
[SAMPLE]
2. Section 7.9(b) Maximum Permitted
-------------- -----------------
a. Indebtedness (excluding $______
Deferrable Interest
Debentures)
b. Portion of Deferrable $______
Interest Debentures
treated as Indebtedness
c. Total Indebtedness (a) $______
plus (b)
d. Common Stockholders' $______
Equity
e. Deferrable Interest $______
Debenture treated as
Common Stockholders'
Equity
f. Total Capital $______
(c) plus (d) plus (e) ____to 0.40 to 1.0
1.0
e. Indebtedness to Total
Capital (c) to (f)
-73-
79
EXHIBIT D
_______________________, 1999
Bank of America, National Association,
as Administrative Agent
231 South LaSalle Street
Chicago, Illinois 60697
Ladies and Gentlemen:
We have acted as counsel to W.R. Berkley Corporation ("Company") in
connection with the preparation, execution and delivery of the Credit Agreement,
dated as of December 10, 1999 (the "Credit Agreement") (together with the
documents referred to therein, the "Loan Documents"), among the Company, certain
banks and Bank of America, National Association, as administrative agent. This
opinion is rendered to you pursuant to Section 4.1(d) of the Credit Agreement.
Capitalized terms used herein and not otherwise defined herein shall have the
respective meanings ascribed to them in the Credit Agreement.
In so acting, we have examined originals or copies, certified or
otherwise identified to our satisfaction, of such documents as we have deemed
necessary or appropriate as a basis for the opinions hereinafter set forth. In
examining such documents, we have assumed the genuineness of the signatures of
all parties, the authenticity of all documents purporting to be originals and
the conformity to originals of all documents purporting to be copied.
As to various questions of fact material to such opinions, we have
relied upon certificates of responsible officers of the Company and public
officials.
Based upon the foregoing, and subject to the qualifications set forth
below, we are of the opinion that:
1. The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware.
2. The Company is duly qualified as a foreign corporation to do or
transact business in, and is in good standing under the laws of, each
jurisdiction in which the ownership or lease of its property or the conduct of
its business requires such qualification, except for jurisdictions in which
failure by it so to qualify would not have a Material Adverse Effect.
3. The Company has the requisite corporate power and
authority and all governmental licenses, authorizations,
-74-
80
consents, certificates of authority and approvals to own or lease its assets or
properties and to conduct its business as currently conducted. The Company has
the requisite corporate power and authority to execute, deliver and enter into,
and to incur and perform its obligations under, the Loan Documents.
4. The execution, delivery and performance by the Company of its
obligations under the Loan Documents: (a) have been duly and validly authorized
by all necessary corporate action; (b) do not violate, conflict with or result
in a violation or breach of, accelerate any performance required by the Company
under, or create or impose any Lien on, any of the Company's properties or
assess (except as may be provided in and pursuant to the Loan Documents) by
reason of the terms of (i) the Certificate of Incorporation or by laws of the
Company, (ii) any law, rule or regulation of any Governmental Authority
applicable to the Company or by or to which the Company or its properties are
bound or subject; or (iii) to our knowledge, any order, writ, judgment,
injunction or decree of any court or other Governmental Authority, or, to our
knowledge, any indenture, mortgage, deed of trust, lease, security agreement or
any other instrument or agreement to which the Company is a party or subject or
by which the Company or its properties are bound; and (c) do not require any
consent or approval of, or registration or filing with, any court, Governmental
Authority or other Person which has not been obtained or filed as of the date
hereof.
5. The Loan Documents have been duly executed and delivered by the
Company and constitute the legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms, subject only to
(i) bankruptcy, insolvency, reorganization, moratorium, arrangement or similar
laws relating to or affecting the rights of creditors generally and (ii) general
principles of equity with respect to availability of equitable remedies,
regardless of whether enforcement is sought in proceedings at law or in equity.
6. To our knowledge, there are no actions, suits, investigations or
proceedings (whether or not purportedly on behalf of the Company) pending or
threatened against the Company before or by any governmental agency, or court,
arbitrator or grand jury that, if adversely determined, could reasonably be
expected to have a Material Adverse Effect. To our knowledge, the Company is not
in default with respect to any judgment, order, writ, injunction, decree,
demand, rule or regulation of any court, arbitrator, grand jury, or of any
governmental agency, which default could reasonably be expected to have a
Material Adverse Effect.
We are members only of the Bar of the Sate of New York and do not
purport to be experts in the laws of jurisdictions other than the State of New
York, except for The General Corporation Law of the State of Delaware and
federal laws of the United States of America, and the opinions set forth herein
are accordingly limited to said laws of those jurisdictions. To the
-75-
81
extent the opinions expressed herein involve the laws of the State of Illinois,
we have assumed that the laws of the State of Illinois are the same as those of
the State of New York.
The opinions hereinbefore expressed are limited by principles of equity
which may limit the availability of certain rights and remedies, and do not
reflect the effect of bankruptcy, insolvency, reorganization, moratorium and
other laws applicable to creditors' rights and debtors' obligations generally.
This opinion is being provided to the Banks in connection with the
transactions contemplated by the Loan Documents and may not be relied upon by
the Banks for any other purpose and may not be relied upon by any other person,
firm, corporation or entity, except for successors to the Banks and Assignees
and Participants.
Very truly yours,
-76-
82
EXHIBIT E
[FORM OF] ASSIGNMENT AND ACCEPTANCE AGREEMENT
This ASSIGNMENT AND ACCEPTANCE AGREEMENT (this "Assignment and
Acceptance") dated as of __________, ____ is made between
______________________________ (the "Assignor") and __________________________
(the "Assignee").
RECITALS
WHEREAS, the Assignor is party to that certain Credit
Agreement dated as of December 10, 1999 (as amended, amended and restated,
modified, supplemented or renewed, the "Credit Agreement") among W.R. Berkley
Corporation (the "Company"), the financial institutions from time to time party
thereto (including the Assignor, the "Banks"), and Bank of America, National
Association, as administrative agent for the Banks (the "Agent"). Any terms
defined in the Credit Agreement and not defined in this Assignment and
Acceptance are used herein as defined in the Credit Agreement;
WHEREAS, as provided under the Credit Agreement, the Assignor
has committed to making Loans (the "Loans") to the Company in an aggregate
amount not to exceed $__________ (the "Commitment");
WHEREAS, [the Assignor has made Loans in the aggregate
principal amount of $__________ to the Company] [no Loans are outstanding under
the Credit Agreement]; and
WHEREAS, the Assignor wishes to assign to the Assignee [part
of the] [all] rights and obligations of the Assignor under the Credit Agreement
in respect of its Commitment, [together with a corresponding portion of each of
its outstanding Loans] in an amount equal to $__________ (the "Assigned Amount")
on the terms and subject to the conditions set forth herein and the Assignee
wishes to accept assignment of such rights and to assume such obligations from
the Assignor on such terms and subject to such conditions;
NOW, THEREFORE, in consideration of the foregoing and the
mutual agreements contained herein, the parties hereto agree as follows:
1. Assignment and Acceptance.
(a) Subject to the terms and conditions of this
Assignment and Acceptance, (i) the Assignor hereby sells, transfers and assigns
to the Assignee, and (ii) the Assignee
-77-
83
hereby purchases, assumes and undertakes from the Assignor, without recourse and
without representation or warranty (except as provided in this Assignment and
Acceptance) __% (the "Assignee's Percentage Share") of (A) the Commitment [and
the Loans] of the Assignor and (B) all related rights, benefits, obligations,
liabilities and indemnities of the Assignor under and in connection with the
Credit Agreement and the Loan Documents.
[If appropriate, add paragraph specifying payment to Assignor
by Assignee of outstanding principal of, accrued interest on, and fees with
respect to, Loans assigned.]
(b) With effect on and after the Effective Date (as defined in
Section 5 hereof), the Assignee shall be a party to the Credit Agreement and
succeed to all of the rights and be obligated to perform all of the obligations
of a Bank under the Credit Agreement, including the requirements concerning
confidentiality and the payment of indemnification, with a Commitment in an
amount equal to the Assigned Amount. The Assignee agrees that it will perform in
accordance with their terms all of the obligations which by the terms of the
Credit Agreement are required to be performed by it as a Bank. It is the intent
of the parties hereto that the Commitment of the Assignor shall, as of the
Effective Date, be reduced by an amount equal to the Assigned Amount and the
Assignor shall relinquish its rights and be released from its obligations under
the Credit Agreement to the extent such obligations have been assumed by the
Assignee; provided, however, the Assignor shall not relinquish its rights under
Sections 10.4 and 10.5 of the Credit Agreement to the extent such rights relate
to the time prior to the Effective Date.
(c) After giving effect to the assignment and assumption set
forth herein, on the Effective Date the Assignee's Commitment will be
$__________.
(d) After giving effect to the assignment and assumption set
forth herein, on the Effective Date the Assignor's Commitment will be
$__________.
2. Payments.
(a) As consideration for the sale, assignment and transfer
contemplated in Section 1 hereof, the Assignee shall pay to the Assignor on the
Effective Date in immediately available funds an amount equal to $__________,
representing the Assignee's Pro Rata Share of the principal amount of all Loans.
(b) The Assignor further agrees to pay to the Agent a
processing fee in the amount specified in Section 10.8 of the Credit Agreement.
-78-
84
3. Reallocation of Payments.
Any interest, fees and other payments accrued to the Effective Date
with respect to the Commitment and Loans shall be for the account of the
Assignor. Any interest, fees and other payments accrued on and after the
Effective Date with respect to the Assigned Amount shall be for the account of
the Assignee. Each of the Assignor and the Assignee agrees that it will hold in
trust for the other party any interest, fees and other amounts which it may
receive to which the other party is entitled pursuant to the preceding sentence
and pay to the other party any such amounts which it may receive promptly upon
receipt.
4. Independent Credit Decision.
The Assignee (a) acknowledges that it has received a copy of the Credit
Agreement and the Schedules and Exhibits thereto, together with copies of the
most recent financial statements referred to in Section 6.1 of the Credit
Agreement, and such other documents and information as it has deemed appropriate
to make its own credit and legal analysis and decision to enter into this
Assignment and Acceptance; and (b) agrees that it will, independently and
without reliance upon the Assignor, the Agent or any other Bank and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit and legal decisions in taking or not taking
action under the Credit Agreement.
5. Effective Date; Notices.
(a) As between the Assignor and the Assignee, the effective
date for this Assignment and Acceptance shall be __________, (the "Effective
Date"); provided that the following conditions precedent have been satisfied on
or before the Effective Date:
(i) this Assignment and Acceptance shall be
executed and delivered by the Assignor and the Assignee;
(ii) the consent of the Company and the Agent
required for an effective assignment of the Assigned Amount by the Assignor to
the Assignee under Section 10.8 of the Credit Agreement shall have been duly
obtained and shall be in full force and effect as of the Effective Date;
(iii) the Assignee shall pay to the Assignor
all amounts due to the Assignor under this Assignment and
Acceptance;
(v) the processing fee referred to in
Section 2(b) hereof and in Section 10.8(a) of the Credit
Agreement shall have been paid to the Agent; and
-79-
85
(vi) the Assignor shall have assigned and the
Assignee shall have assumed a percentage equal to the Assignee's Percentage
Share of the rights and obligations of the Assignor under the Credit Agreement
(if such agreement exists).
(b) Promptly following the execution of this Assignment and
Acceptance, the Assignor shall deliver to the Company and the Agent for
acknowledgment by the Agent, a Notice of Assignment substantially in the form
attached hereto as Schedule 1.
[6. Agent. [INCLUDE ONLY IF ASSIGNOR IS AGENT]
(a) The Assignee hereby appoints and authorizes the Assignor
to take such action as agent on its behalf and to exercise such powers under the
Credit Agreement as are delegated to the Agent by the Banks pursuant to the
terms of the Credit Agreement.
(b) The Assignee shall assume no duties or obligations held by
the Assignor in its capacity as Agent under the Credit Agreement.]
7. Withholding Tax.
The Assignee (a) represents and warrants to the Bank, the Agent and the
Company that under applicable law and treaties no tax will be required to be
withheld by the Bank with respect to any payments to be made to the Assignee
hereunder, (b) agrees to furnish (if it is organized under the laws of any
jurisdiction other than the United States or any State thereof) to the Agent and
the Company prior to the time that the Agent or Company is required to make any
payment of principal, interest or fees hereunder, duplicate executed originals
of either U.S. Internal Revenue Service Form 4224 or U.S. Internal Revenue
Service Form 1001 (wherein the Assignee claims entitlement to the benefits of a
tax treaty that provides for a complete exemption from U.S. federal income
withholding tax on all payments hereunder) and agrees to provide new Forms 4224
or 1001 upon the expiration of any previously delivered form or comparable
statements in accordance with applicable U.S. law and regulations and amendments
thereto, duly executed and completed by the Assignee, and (c) agrees to comply
with all applicable U.S. laws and regulations with regard to such withholding
tax exemption.
8. Representations and Warranties.
(a) The Assignor represents and warrants that (i) it is the
legal and beneficial owner of the interest being assigned by it hereunder and
that such interest is free and clear of any Lien or other adverse claim; (ii) it
is duly organized and existing and it has the full power and
-80-
86
authority to take, and has taken, all action necessary to execute and deliver
this Assignment and Acceptance and any other documents required or permitted to
be executed or delivered by it in connection with this Assignment and Acceptance
and to fulfill its obligations hereunder; (iii) no notices to, or consents,
authorizations or approvals of, any Person are required (other than any already
given or obtained) for its due execution, delivery and performance of this
Assignment and Acceptance, and apart from any agreements or undertakings or
filings required by the Credit Agreement, no further action by, or notice to, or
filing with, any Person is required of it for such execution, delivery or
performance; and (iv) this Assignment and Acceptance has been duly executed and
delivered by it and constitutes the legal, valid and binding obligation of the
Assignor, enforceable against the Assignor in accordance with the terms hereof,
subject, as to enforcement, to bankruptcy, insolvency, moratorium,
reorganization and other laws of general application relating to or affecting
creditors' rights and to general equitable principles.
(b) The Assignor makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with the Credit Agreement or the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of the Credit Agreement or any other instrument or document furnished pursuant
thereto. The Assignor makes no representation or warranty in connection with,
and assumes no responsibility with respect to, the solvency, financial condition
or statements of the Company, or the performance or observance by the Company,
of any of its respective obligations under the Credit Agreement or any other
instrument or document furnished in connection therewith.
(c) The Assignee represents and warrants that (i) it is duly
organized and existing and it has full power and authority to take, and has
taken, all action necessary to execute and deliver this Assignment and
Acceptance and any other documents required or permitted to be executed or
delivered by it in connection with this Assignment and Acceptance, and to
fulfill its obligations hereunder; (ii) no notices to, or consents,
authorizations or approvals of, any Person are required (other than any already
given or obtained) for its due execution, delivery and performance of this
Assignment and Acceptance; and apart from any agreements or undertakings or
filings required by the Credit Agreement, no further action by, or notice to, or
filing with, any Person is required of it for such execution, delivery or
performance; (iii) this Assignment and Acceptance has been duly executed and
delivered by it and constitutes the legal, valid and binding obligation of the
Assignee, enforceable against the Assignee in accordance with the terms hereof,
subject, as to enforcement, to bankruptcy, insolvency, moratorium,
reorganization and other
-81-
87
laws of general application relating to or affecting creditors' rights and to
general equitable principles; and (iv) it is an Eligible Assignee.
9. Further Assurances.
The Assignor and the Assignee each hereby agree to execute and deliver
such other instruments, and take such other action, as either party may
reasonably request in connection with the transactions contemplated by this
Assignment and Acceptance, including the delivery of any notices or other
documents or instruments to the Company or the Agent, which may be required in
connection with the assignment and assumption contemplated hereby.
10. Miscellaneous.
(a) Any amendment or waiver of any provision of this
Assignment and Acceptance shall be in writing and signed by the parties hereto.
No failure or delay by either party hereto in exercising any right, power or
privilege hereunder shall operate as a waiver thereof and any waiver of any
breach of the provisions of this Assignment and Acceptance shall be without
prejudice to any rights with respect to any other or further breach thereof.
(b) All payments made hereunder shall be made without any
set-off or counterclaim.
(c) The Assignor and the Assignee shall each pay its own costs
and expenses incurred in connection with the negotiation, preparation, execution
and performance of this Assignment and Acceptance.
(d) This Assignment and Acceptance may be executed in any
number of counterparts and all of such counterparts taken together shall be
deemed to constitute one and the same instrument.
(e) THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF ILLINOIS. The Assignor and
the Assignee each irrevocably submits to the non-exclusive jurisdiction of any
State or Federal court sitting in Illinois over any suit, action or proceeding
arising out of or relating to this Assignment and Acceptance and irrevocably
agrees that all claims in respect of such action or proceeding may be heard and
determined in such Illinois State or Federal court. Each party to this
Assignment and Acceptance hereby irrevocably waives, to the fullest extent it
may effectively do so, the defense of an inconvenient forum to the maintenance
of such action or proceeding.
(f) THE ASSIGNOR AND THE ASSIGNEE EACH HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS
-82-
88
THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR
ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS ASSIGNMENT AND ACCEPTANCE, THE
CREDIT AGREEMENT, ANY RELATED DOCUMENTS AND AGREEMENTS OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, OR STATEMENTS (WHETHER ORAL OR WRITTEN).
[Other provisions to be added as may be negotiated between the
Assignor and the Assignee, provided that such provisions are not inconsistent
with the Credit Agreement.]
IN WITNESS WHEREOF, the Assignor and the Assignee have caused this
Assignment and Acceptance to be executed and delivered by their duly authorized
officers as of the date first above written.
[ASSIGNOR]
By:___________________________________
Title:________________________________
Address:______________________________
-83-
89
[ASSIGNEE]
By:___________________________________
Title:________________________________
Address:______________________________
-84-
90
SCHEDULE 1
NOTICE OF ASSIGNMENT AND ACCEPTANCE
_______________, _____
Bank of America, National Association,
as Administrative Agent
1850 Gateway Boulevard
Fifth Floor
Concord, California 94521
W.R. Berkley Corporation
165 Mason Street
P.O. Box 2518
Greenwich, CT 06836-2518
Ladies and Gentlemen:
We refer to the Credit Agreement dated as of December 10, 1999(as
amended, amended and restated, modified, supplemented or renewed from time to
time the "Credit Agreement") among W.R. Berkley Corporation (the "Company"), the
Banks referred to therein and Bank of America, National Association, as
administrative agent for the Banks (the "Agent"). Terms defined in the Credit
Agreement are used herein as therein defined.
1. We hereby give you notice of, and request your consent to, the
assignment by __________________ (the "Assignor") to _______________ (the
"Assignee") of _____% of the right, title and interest of the Assignor in and to
the Credit Agreement (including, without limitation, the right, title and
interest of the Assignor in and to the Commitments of the Assignor and all
outstanding Loans made by the Assignor) pursuant to the Assignment and
Acceptance Agreement attached hereto (the "Assignment and Acceptance"). Before
giving effect to such assignment the Assignor's Commitment is $ ___________[,]
[and] the aggregate amount of its outstanding Loans is $_____________.
2. The Assignee agrees that, upon receiving the consent of the Agent
and, if applicable, the Company to such assignment, the Assignee will be bound
by the terms of the Credit Agreement as fully and to the same extent as if the
Assignee were the Bank originally holding such interest in the Credit Agreement.
3. The following administrative details apply to the Assignee:
-85-
91
(A) Notice Address:
Assignee name: __________________________
Address: _______________________________
_______________________________
_______________________________
Attention: _____________________________
Telephone: (___) _______________________
Telecopier: (___) ______________________
(B) Payment Instructions:
Account No.: ___________________________
At: ___________________________
___________________________
___________________________
Reference: ___________________________
Attention: ___________________________
4. You are entitled to rely upon the representations, warranties and
covenants of each of the Assignor and Assignee contained in the Assignment and
Acceptance.
IN WITNESS WHEREOF, the Assignor and the Assignee have caused this
Notice of Assignment and Acceptance to be executed by their respective duly
authorized officials, officers or agents as of the date first above mentioned.
Very truly yours,
[NAME OF ASSIGNOR]
By:_________________________________________
Title:______________________________________
[NAME OF ASSIGNEE]
By:_________________________________________
Title:______________________________________
-86-
92
ACKNOWLEDGED AND ASSIGNMENT
CONSENTED TO:
W.R. BERKLEY CORPORATION
By:_______________________________
Title: __________________________
BANK OF AMERICA, NATIONAL ASSOCIATION,
as Administrative Agent
By: ______________________________
Its: _____________________________
-87-
93
EXHIBIT F
[FORM OF] PROMISSORY NOTE
$____________________ _____________, 199_
FOR VALUE RECEIVED, the undersigned, W.R. Berkley Corporation, a
Delaware corporation (the "Company"), hereby promises to pay to the order
of the "Bank") the principal sum of Dollars ($ ) or, if
less, the aggregate unpaid principal amount of all Loans made by the Bank to the
Company pursuant to the Credit Agreement, dated as of December 10, 1999 (such
Credit Agreement, as it may be amended, restated, supplemented or otherwise
modified from time to time, being hereinafter called the "Credit Agreement"),
among the Company, the Bank, the other banks parties thereto, and Bank of
America, National Association, as Administrative Agent for the Banks, on the
dates and in the amounts provided in the Credit Agreement. The Company further
promises to pay interest on the unpaid principal amount of the Loans evidenced
hereby from time to time at the rates, on the dates, and otherwise as provided
in the Credit Agreement.
The Bank is authorized to endorse the amount and the date on
which each Loan is made, the maturity date therefor and each payment of
principal with respect thereto on the schedules annexed hereto and made a part
hereof, or on continuations thereof which shall be attached hereto and made a
part hereof; provided, that any failure to endorse such information on such
schedule or continuation thereof shall not in any manner affect any obligation
of the Company under the Credit Agreement and this Promissory Note (the "Note").
This Note is one of the Notes referred to in, and is entitled to
the benefits of, the Credit Agreement, which Credit Agreement, among other
things, contains provisions for acceleration of the maturity hereof upon the
happening of certain stated events and also for prepayments on account of
principal hereof prior to the maturity hereof upon the terms and conditions
therein specified.
-88-
94
Terms defined in the Credit Agreement are used herein with their
defined meanings therein unless otherwise defined herein. This Note shall be
governed by, and construed and interpreted in accordance with, the laws of the
State of Illinois applicable to contracts made and to be performed entirely
within such State.
W.R. BERKLEY CORPORATION
By:_______________________________________
Title:_____________________________________
-89-
95
Schedule A to Note
BASE RATE LOANS AND REPAYMENT OF BASE RATE LOANS
(2) (3) (4)
Amount Maturity Amount of
of Date of Base (5)
(1) Base Base Rate Loan Notation
Date Rate Loan Rate Loan Repaid Made By
__________ __________ __________ __________ __________
__________ __________ __________ __________ __________
__________ __________ __________ __________ __________
__________ __________ __________ __________ __________
__________ __________ __________ __________ __________
__________ __________ __________ __________ __________
__________ __________ __________ __________ __________
__________ __________ __________ __________ __________
__________ __________ __________ __________ __________
__________ __________ __________ __________ __________
__________ __________ __________ __________ __________
__________ __________ __________ __________ __________
__________ __________ __________ __________ __________
__________ __________ __________ __________ __________
__________ __________ __________ __________ __________
__________ __________ __________ __________ __________
__________ __________ __________ __________ __________
__________ __________ __________ __________ __________
-90-
96
Schedule B to Note
OFFSHORE RATE LOANS AND REPAYMENT OF OFFSHORE RATE LOANS
(2) (3) (4)
Amount Maturity Amount of
of Date of Offshore (5)
(1) Offshore Offshore Rate Notation
Date Rate Loan Rate Loan Loan Repaid Made By
__________ __________ __________ ___________ __________
__________ __________ __________ ___________ __________
__________ __________ __________ ___________ __________
__________ __________ __________ ___________ __________
__________ __________ __________ ___________ __________
__________ __________ __________ ___________ __________
__________ __________ __________ ___________ __________
__________ __________ __________ ___________ __________
__________ __________ __________ ___________ __________
__________ __________ __________ ___________ __________
__________ __________ __________ ___________ __________
__________ __________ __________ ___________ __________
__________ __________ __________ ___________ __________
__________ __________ __________ ___________ __________
__________ __________ __________ ___________ __________
__________ __________ __________ ___________ __________
__________ __________ __________ ___________ __________
__________ __________ __________ ___________ __________
__________ __________ __________ ___________ __________
-91-